Half-year Report

RNS Number : 6667S

Westmount Energy Limited

13 March 2019

 

WESTMOUNT ENERGY LIMITED

("Westmount" or the "Company")

Interim Results

The Company is pleased to announce its Interim Results for the six months ended 31 December 2018. A copy of the results is available on the Company's website, www.westmountenergy.com, and will be posted to shareholders shortly.

CHAIRMAN'S REVIEW

2018 Highlights

·      Focus remains on Guyana-Suriname Basin - a global exploration hotspot

·      Operating Profit of £364,445 for the 6 month period to 31 December 2018

·      £1,600,000 raised via Convertible Loan Note in October 2018

·      Investments in Eco (Atlantic) Oil & Gas Limited, Ratio Petroleum and JHI Associates Inc performing strongly

·      Positioned for exposure to multi-well, funded, drilling campaign offshore Guyana, during 2019/2020
 

·      Acquisition of Net Profits Interests in three Offshore UK Petroleum Licences
  

·      Evaluation of Exploration & Production opportunities with potential for a substantial transaction continue

In spite of a volatile oil price environment in the second half of 2018 offshore Guyana continued to be a major 'good news story' attracting strong industry and investor interest. A number of proven oil plays, high quality reservoirs, substantial light oil discoveries and an exploration drilling success rate of circa 85% to date have all confirmed the deepwater Guyana-Suriname Basin as an emerging prolific hydrocarbon province. In late August 2018 ExxonMobil announced its 9th oil discovery (Hammerhead-1) on the Stabroek Block, which is reported to be a new play (Tertiary) opening discovery adjacent to the Orinduik Block. This was followed by further announcements in early December of the 10^th oil discovery (Pluma-1), bringing cumulative discovered recoverable resources in the basin to in excess of five billion oil equivalent barrels. Two additional discoveries were announced in early February 2019 - an oil discovery (Tilapia-1) and a gas-condensate discovery (Haimara-1).  

Your Company's investments in Eco (Atlantic) Oil & Gas Limited ("EOG"), JHI Associates Inc ("JHI") and Ratio Petroleum Energy Limited Partnership ("Ratio Petroleum") provide exposure to three highly prospective blocks (Orinduik, Canje and Kaieteur - all adjacent to the Stabroek Block) which offer near term carried or pre-funded drilling opportunities with the potential for transformational value changes in
their success cases.

A circa 2% equity stake in EOG provides exposure to pre-funded drilling on the Orinduik Block which is located up-dip of the Liza-1 (Cretaceous) and Hammerhead-1 (Tertiary) discoveries. EOG has a 15% participating interest in the block with their share of the planned 2019 drilling campaign fully funded by a Total Farm-in agreement announced in September 2018. The block operator, Tullow, has announced that the first of two planned wells on the block will be spudded, on the Jethro Prospect, in the second quarter of 2019. It has also been announced that the Orinduik partners have contracted the Stena Forth, a sixth generation drillship, to execute this drilling campaign.

Post the current accounting period your Company announced that it had increased its equity position in JHI to circa 3% of the issued share capital. JHI's main asset is a 17.5% carried interest in the Canje Block covering over 6,000 square kilometres, immediately outboard of the Stabroek Block.  As a result of a farm-in by Total, announced in February 2018, JHI is carried for the drilling of up to four wells and is funded for the drilling of additional wells. Subject to Guyanese government approvals and drillship availability, it is anticipated that the first well in the Canje Block will be drilled in late 2019 or early 2020, with the possibility to drill two or three additional wells by the end of 2020.

Your Company holds a circa 1% equity position in Ratio Petroleum which includes amongst its assets a 25% carried interest in the Kaieteur block, offshore Guyana. The block operator Exxon-Mobil, acquired a 5,700 km² 3D seismic survey in 2016 and subsequent to the processing and interpretation of this dataset, in February 2019, it informed Ratio Petroleum that it had elected to drill a well on the Kaieteur Block.

Continued exploration success on the Stabroek Block combined with the pre-drill de-risking and high-grading of drilling opportunities, on the neighbouring Orinduik, Canje and Kaieteur blocks, have all contributed to rising asset values which is reflected in your Company's financial performance. The reported net operating profit of £364,445, for the six months to 31 December 2018, is primarily driven by the share price performance of the various investments including EOG (+500% since February 2017) and Ratio Petroleum (+200% since June 2018).

In October 2018 the Company announced that it had raised £1,600,000 through the issue of 10% unsecured Convertible Loan Notes 2021, in spite of the challenging environment of steeply declining oil prices during Q4 2018 and general market nervousness pertaining to global economic outlook and Brexit related uncertainties. As a result, your Company held approximately £1,350,000 in cash resources at the end of this accounting period.

In addition, during the second half of 2018, the Company reported that it had acquired Net Profit Interests ("NPI") in three Offshore UK blocks - being a 0.5% NPI in licence P1918 (Colter Prospect), a 0.5% NPI in licence P2222 (Oulton Discovery) and a 1.0% NPI in licence P2235 (Wick Prospect). In January 2019, the Wick Prospect (11/24b-4) was reported to be unsuccessful.  On 8 March 2019 operations were completed at the Colter Prospect (98/11a-6) where a new oil discovery, Colter South, was reported in the initial vertical wellbore. A side-track to the North Colter target encountered the Sherwood Sandstone reservoir deeper than expected, indicating the Colter accumulation is smaller than pre-drill estimates. Further work will now commence to fully evaluate all the data from the well and assess forward work programmes and options for commercialisation.

Outlook

The London market has started to take notice of developments in Guyana and there is significant appetite for access to investment opportunities in this area, as evidenced by the recent doubling of the EOG share price. There are currently few ways for investors to gain material exposure to the Guyana story. Westmount now offers shareholders and potential investors' access to this opportunity as your Company's focus remains on seeking additional exposure and deployment of capital towards exploration opportunities in the Guyana-Suriname basin.

To date all of the deepwater drilling activity, offshore Guyana, has been on the ExxonMobil operated Stabroek block. However, in the coming months we expect to see drilling commence on the adjacent blocks. There is an exciting time ahead, as Westmount now owns approximately 3% of JHI, 2% of EOG, and 1% of Ratio Petroleum, which provides shareholders with exposure to an estimated 3-7 carried wells, in the most prolific emerging hydrocarbon province worldwide, over the next 12-18 months. Success in any of these wells could result in transformational value changes for your Company.

GERARD WALSH

Chairman

12 March 2019

For further information, please contact:

Westmount Energy Limited                             www.westmountenergy.com

David King, Director                                            Tel: [phone]

Jane Vlahopoulou                                              

Cenkos Securities plc (Nomad and Broker)

Harry Hargreaves                                               Tel: [phone]

Nicholas Wells 

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 DECEMBER 2018

	Six months ended 31 Dec 2018 (unaudited) £		Six months ended 31 Dec 2017 (unaudited) £		Year ended 30 Jun 2018 (audited) £
Net profit on financial assets held at fair value through profit or loss	424,084		254,106		722,333
Net profit on financial liabilities held at fair value through profit or loss	49,564		-		-
Administration expenses	(106,203)		(53,461)		(150,166)
Share options expensed	(3,000)		(3,000)		(11,087)
Operating profit	364,445		197,645		561,080
Finance charges
Loan interest expense	(105,024)		-		-
Profit before tax	259,421		197,645		561,080
Tax	-		-		-
Comprehensive income for the period / year	259,421		197,645		561,080
Basic profit per share (pence)	0.55		0.48		1.34
Diluted profit per share (pence)	0.55		0.39		1.34

All results are derived from continuing operations.

The Company had no items of other comprehensive income during the period / year.

CONDENSED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

	31 Dec 2018 (unaudited) £		31 Dec 2017 (unaudited) £		30 Jun 2018 (audited) £
ASSETS
Non-current assets
Financial assets at fair value through profit or loss	2,818,357		974,697		1,727,539
Current assets
Other receivables	3,063		2,984		8,213
Cash and cash equivalents	1,343,190		466,839		557,182
	1,346,253		469,823		565,395
Total assets	4,164,610		1,444,520		2,292,934
LIABILITIES AND EQUITY
Non-current liabilities
Derivative financial instruments	49,500		-		-
Borrowings	598,375		-		-
	647,875		-		-
Current liabilities
Trade and other payables	46,360		38,200		43,170
Derivative financial instruments	936		-		-
Borrowings	957,254		-		-
	1,004,550		38,200		43,170
Total liabilities	1,652,425		38,200		43,170
EQUITY
Share capital	4,244,166		3,772,244		4,244,166
Share option account	366,993		355,906		363,993
Retained earnings	(2,098,974)		(2,721,830)		(2,358,395)
Total equity	2,512,185		1,406,320		2,249,764
Total liabilities and equity	4,164,610		1,444,520		2,292,934

CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2018

		Share capital account £	Share option account £	Deficit £	Total equity £
As at 1 July 2017		3,772,244	352,906	(2,919,475)	1,205,675
Comprehensive Income Profit for the year ended 30 June 2018		-	-	561,080	561,080
Transactions with owners Warrants converted at 7.5p per nil par value ordinary share		471,922	-	-	471,922
Share options expensed		-	11,087	-	11,087
As at 30 June 2018		4,244,166	363,993	(2,358,395)	2,249,764
Comprehensive Income
Profit for the period ended 31 December 2018		-	-	259,421	259,421
Transactions with owners
Share options expensed		-	3,000	-	3,000
As at 31 December 2018		4,244,166	366,993	(2,098,974)	2,512,185

		Share capital account £	Share option account £	Deficit £	Total equity £
As at 1 July 2016		2,966,720	349,906	(2,718,975)	597,651
Comprehensive Income
Loss for the year ended 30 June 2017		-	-	(200,500)	(200,500)
Transactions with owners Subscription and open offer at 5p per nil par value ordinary share		805,524	-	-	805,524
Share options expensed		-	3,000	-	3,000
As at 30 June 2017		3,772,244	352,906	(2,919,475)	1,205,675

CONDENSED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31 DECEMBER 2018

	Six months ended 31 Dec 2018 (unaudited) £		Six months ended 31 Dec 2017 (unaudited) £				Year ended 30 Jun 2018 (audited) £
Cash flows from operating activities
Total comprehensive income for the period / year	259,421		197,645			561,080
Adjustments for:
Net profit on financial assets at fair value through profit or loss	(424,084)		(254,106)			(722,333)
Net profit on financial liabilities at fair value through profit or loss	(49,564)		-			-
Interest on borrowings	105,024		-			-
Share options expensed	3,000		3,000			11,087
Decrease in other receivables	5,150		7,794			2,565
Increase / (decrease) in trade and other payables	3,190		(35,536)			(30,566)
Purchase of investments	(808,999)		-			(284,615)
Proceeds from sale of investments	142,265		-			-
Net cash out flow from operating activities	(764,597)		(81,203)			(462,782)
Cash flows from financing activities
Proceeds from borrowings	1,600,000		-			-
Interest and charges on borrowings	(49,395)		-			-
Proceeds from issue of ordinary shares	-		-			471,922
Net cash generated from financing activities	1,550,605		-			471,922
Net increase / (decrease) in cash and cash equivalents	786,008		(81,203)			9,140
Cash and cash equivalents at the beginning of the period / year	557,182		548,042			548,042
Cash and cash equivalents at the end of the period / year	1,343,190		466,839			557,182

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2018

1. Accounting Policies

Basis of accounting

The interim financial statements have been prepared in accordance with the International Accounting Standard
("IAS") 34, Interim Financial Reporting.

The interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements for the year ended
30 June2018. The annual financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS").

In preparing these interim financial statements the management has applied IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers, which are applicable for accounting period beginning on or after 1 January 2018.

The application IFRS 9 has not had a material impact on the interim financial statements of the Company as the Company's classification and measurement of financial assets that was applied under IAS 39, Financial Instruments: Recognition and Measurement, remains consistent with IFRS 9.

The application of IFRS 15 has not had a material impact on the interim financial statements of the Company as it is the opinion of management that the Company had no material revenue streams from contracts during the current of prior period.

Accordingly, the same accounting policies and methods of computation are followed in the interim financial statements as in the Company's annual financial statements for the year ended 30 June 2018.

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2018 (CONTINUED)

2. Investments

	Six months ended 31 December 2018		Six months ended 31 December 2017		Year ended 30 June 2018
	(unaudited)		(unaudited)		(audited)
	£		£		£
Argos Resources Limited, at market value	26,000		28,000		63,000
Cost, 1,000,000 shares	310,775		310,775		310,775
(31 December 2017: 1,000,000 shares, 30 June 2018: 1,000,000 shares)
Eco Atlantic Oil & Gas Oil Limited, at market value	1,193,750		790,625		987,500
Cost,  3,125,000 shares	500,000		500,000		500,000
(31 December 2017: 3,125,000 shares, 30 June 2018: 3,125,000 shares)
Rockhopper Exploration plc, at market value	-		75,210		146,838
Cost, nil shares	-		799,081		799,081
(31 December 2017: 358,142 shares, 30 June 2018: 358,142 shares)
Pancontinental Oil and Gas NL, at market value	-		6,939		6,716
Cost, nil shares	-		393,246		393,246
(31 December 2017: 3,000,000 shares, 30 June 2018: 3,000,000 shares)
JHI Associates Inc, at market value	1,121,100		73,923		110,555
Cost, 1,110,000 shares	809,840		61,274		100,841
(31 December 2017: 100,000 shares, 30 June 2018: 160,000 shares)
Ratio Petroleum Energy Limited Partnership, at market value	377,507		-		412,930
Cost, 1,200,000 shares	245,048		-		245,048
(31 December 2017: nil, 30 June 2018: 1,200,000 shares)
NPI Investments, at market value	100,000		-		-
At cost	100,000		-		-
Total market value	2,818,357		974,697		1,727,539
Total cost	1,965,663		2,064,376		2,348,991
Total fair value adjustment	852,694		(1,089,679)		(621,452)
Reverse prior year fair value adjustment	621,452		1,343,785		1,343,785
Current period fair value movement	1,474,146		254,106		722,333
Realised loss	(1,050,062)		-		-
Unrealised gain	1,474,146		254,106		722,333
Current period income statement impact	424,084		254,106		722,333

 

END

 

 

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