Final Results

RNS Number : 5836J

Aminex PLC

01 April 2010

 



AMINEX PLC

("Aminex" or "the Company")

1 April 2010

Preliminary results for the year ended 31 December 2009

HIGHLIGHTS

·    Gross revenues $7.8 million (2008 $10.2 million) and net loss for period $2.9 million (2008 $9.7 million)

·    First well in the Ruvuma Basin establishes 800 feet reservoir potential and strong indications of both oil and gas

·    Kiliwani North gas volumes now determined, together with remaining Nyuni prospects, expressed in BCF:

Contingent resources                          P90                  Pmean               P10

            Kiliwani North                                        22                         40                 62

            Nyuni                                                     57                       207                414   

            Prospective resources                                    

Nyuni                                                   160                       764             1,616

Okuza                                                    97                       419                868

·    Interest in Nyuni PSA and Kiliwani North discovery increased from 40% to 50%

·    Shoats Creek drilling programme underway; first well successfully drilled and now testing

·    90 day farm-in option granted at Shoats Creek

·    North Korea PSA being renegotiated and agreement signed with investing partner

·    South Malak-1 well in Egypt now producing limited quantities of oil with PSC extended to 2^nd period

Brian Hall, Chairman of Aminex, said:

            "The Likonde-1 well potentially opens up a new oil play in Tanzania and a follow-up well is planned. Also in Tanzania the results of an independent evaluation of the Kiliwani North discovery and neighbouring prospects at Nyuni, coupled with the likelihood of an imminent go-ahead for expansion of the gas handling plant at Songo-Songo Island, mean that we can now plan for commercial gas development.  In North Korea we are now making good progress and we have secured a partner for the next stage.  At Shoats Creek, Louisiana, we have drilled our first well to test Cockfield sands as well as recently selling a 90-day option for participation in further drilling. The current year promises to be very active with potential upside for the Aminex group."

Glossary of terms used

PSA:                                        Production Sharing Agreement

PSC:                                         Production Sharing Contract

BCF:                                        Billions of cubic feet of natural gas

TCF:                                         Trillions of cubic feet of natural gas

MMcfd                                     Millions of cubic feet per day of natural gas

BBLS:                                      Barrels of oil

Pmean                                      The average (mean) probability of occurrence

P90                                          90% probability of occurrence

P10                                          10% probability of occurrence

Contingent Resources                Discovered resources, not yet fully commercial

Prospective Resources              Undiscovered resources

For further information please contact:

Aminex PLC

Brian Hall - Chairman                                                   [phone]

Max Williams - Chief Financial Officer

Pelham Bell Pottinger                                                           

Archie Berens                                                               [phone] or [phone]

Website www.aminex-plc.com

Dear Shareholder,

Below please find Aminex's preliminary financial results and accompanying statement in respect of the year ended 31 December 2009

OVERVIEW

In 2009 Aminex increased its interest in the Nyuni PSA and Kiliwani North appraisal licence in Tanzania by 25%, from 40% to 50%, raised new capital to finance its exploration programme, brought Shoats Creek in Louisiana, USA and Ruvuma in Tanzania to the drill-ready stage, drilled a third well on the West esh el Mellaha (WEEM-2) licence in Egypt and acquired new seismic over the Kiliwani North gas discovery in Tanzania to assist in evaluating its potential. 

Since the year end our activity has further progressed as follows:

·     Likonde-1 in the Ruvuma PSA was drilled to an extended total depth of 3,647 metres, encountering over 800 feet of good quality reservoir sands with strong indications of both oil and gas and establishing the presence of oil in this large and under-explored basin.  The well was not a flowing, commercial discovery but provides important pointers and great encouragement for the continuing exploration programme.

·     On the Nyuni PSA in Tanzania, evaluation of Kiliwani North and the surrounding prospects is now complete and the results are tabulated below.  Kiliwani North is estimated to contain 40 BCF in place at the Pmean level with the likelihood of a high recovery factor.  The Nyuni prospect, first drilled in 2003/4, is estimated to contain 207 BCF from Aptian/Albian sands.  Resources in place from other prospects, unrisked, total 1.2 TCF at the Pmean level and 2.5TCF at the P10 level.

·     The Olympia Minerals-1 well at Shoats Creek, Louisiana was drilled to a total depth of 9,508 feet/2898 metres in Q1 2010 and encountered several hydrocarbon-bearing zones in Cockfield sands.  The well is now being tested.

·     At Shoats Creek we have been able to acquire additional adjoining acreage to the west of our leases and, further, we are pleased to announce that we have in recent days granted a 90 day exclusive option to Ninox Petroleum Ltd. to farm into this property with a commitment to fund either 2 deep wells and 1 shallow well or 1 deep well and 4 shallow wells, to earn a 50% interest.

·     South Malak-1 at WEEM-2, Egypt, which was drilled to a depth of 3,415 metres during 2009, encountering high gas readings over a 900 foot interval and logging oil in three zones, is currently on pump and producing non-commercial quantities of high quality crude oil to surface.  The joint venture has elected to extend the licence into a second period and further drilling will be scheduled.  Aminex's 10% beneficial interest is free-carried through to commercial production.

·     In North Korea we are currently finalising revised and updated PSC terms for the East Korea Bay Basin offshore area after a long period of inactivity which has been beyond our control.  This is expected to be signed before the middle of the year.  We have also introduced Chosun Energy Pte Ltd ("Chosun") as a shareholder into our subsidiary Korex Ltd.  Chosun will provide Korex with financing and management support from a regional base in Singapore.

  FINANCIAL REVIEW

A combination of higher production but much lower average oil and gas prices resulted in a reduction of 23% in total revenues to US$7.8 million.

Gas production increased by 56% to 489,000 mcf from 314,000 mcf in 2008, reflecting a full year's production from the Sunny Ernst-2 well at Alta Loma.  The Alta Loma field contributed 75% of gas production with 24% contributed by the South Weslaco field.  Production from Sunny Ernst-2 also helped increase oil production by 17% to 42,000 bbls from 36,000 bbls in the previous year.  The Somerset field contributed 46% of oil production and the Alta Loma field 41%.   However, average oil and gas prices were markedly lower in 2009.  The average oil price was US$55.25 and average gas price was US$3.91 compared with US$86.79 and US$7.75 for 2008.

Equipment sales by the oilfield services division were comparable with those for 2008 but the reduction in revenues arose from reduced charges to joint venture operations during 2009 as Aminex did not drill an international well as operator during the year.

Cost of sales of US$5.4 million was US$1.1 million less than in 2008 mainly due to reduced costs in the oilfield services division. The depletion and decommissioning charge increased by US$832,000 to US$1.59 million due to increased oil and gas production between the two periods and the reduction in proved and probable reserves.

The effect of the decrease in revenues and increased depletion charges was to reduce gross profit to US$871,000 from US$2.9 million in 2008.

Group administrative expenses of US$3.6 million were 20% lower than 2008, mainly due to a reduced  share options charge and favourable movements in foreign currency exchange rates which reduced the dollar value of sterling-based costs.

The loss from operating activities was US$2.8 million reduced from US$9.7 million in 2008.  The loss in 2008 included the loss of US$3.4 million arising on the disposal of the Manja licence in Madagascar and the impairment provision of US$4.7 million against the cost of exploration and evaluation assets.

After taking into account net finance costs of US$130,000 (2008: net finance income of US$46,000) the resulting loss before tax for the year ended 31 December 2009 was US$2.9 million (2008: loss US$9.66 million).

Total non-current assets of US$45.8 million have increased during the year by US$4.5 million. The increase comprises additions to exploration and evaluation assets of US$5.0 million, a net reduction in property, plant and equipment of US$0.4 million and a further decrease in other investments of US$0.1 million.

The increase of US$5.0 million in exploration and evaluation assets consists mainly of the pre-drilling, long lead items and mobilisation expenses for the Likonde-1 well on the Ruvuma Production Sharing Agreement and the acquisition and processing of transition zone seismic over the Kiliwani North gas discovery on the Nyuni licence.  The increase also reflects the acquisition of an additional 10% interest in the Nyuni licence and ongoing exploration and evaluation costs on the West Songo-Songo licence.  During the year, the Group disposed of its 25% interest in a licence in Kenya as part of the agreement to increase its interest in the Nyuni licence.

The net reduction to property plant and equipment includes the pre-drilling expenses incurred for the Olympia Minerals-1 well on the Shoats Creek field and workover costs at Alta Loma and South Weslaco. These additions together with an increase in the decommissioning provision have been offset by the depletion, depreciation and decommissioning charge for the year.  The reduction in other investments of US$0.1 million arose on the disposal of Aminex's interest in the shareholding of Key Petroleum Ltd.

The Group's current assets at 31 December 2009 amounted to US$14.3 million, comprising cash balances of US$11.7 million (2008: US$4.1 million) and trade and other receivables of US$2.6 million (2008: US$3.9 million).  The increase in the cash balance reflects funds of US$15.3 million (after transaction expenses) raised by Aminex in July and August through two share placings and an open offer.  Current liabilities of US$2.7 million are 50% lower than the previous year. Non-current liabilities have been increased by an amount of US$269,000 to US$1.64 million due mainly to an increase in the decommissioning provision.

The net increase of US$7.6 million in cash and cash equivalents reflects the net proceeds of US$15.3 million from the new shares issued during the year offset by the net cash outflow from operating activities of US$1.7 million (2008: outflow US$0.1 million) and capital expenditure of US$7.3 million (2008: US$15.0 million).  The Group also received US$1.25 million under the terms of a farmout agreement for the Ruvuma PSA, US$91,000 for the disposal of the interest in Key Petroleum Ltd and reduced debt by a net amount of US$48,000.

OPERATIONS REPORT

TANZANIA - Ruvuma PSA

The Likonde-1 well at Ruvuma has just finished drilling and encountered thick sands with hydrocarbon shows.  The well was drilled to an extended total depth of 3,647 metres and results of drilling, wireline logs and side-wall coring have shown that the well has intersected two sandstone intervals of over 250 metres (820 feet) combined thickness with evidence of residual oil and gas.  The well, which will now be plugged and abandoned, is the first of a 2-well programme within the prospective Ruvuma Delta.  The encouraging results will be followed up with detailed technical work prior to selecting the next drilling location.  The timing of future programme will be disclosed to shareholders when available.

The Ruvuma PSA comprises two adjoining licences, Lindi and Mtwara, approximately 80% of the licence area being onshore and the remainder in shallow coastal waters.  The PSA area lies within the under-explored Ruvuma Basin which extends from south-eastern Tanzania into north-eastern Mozambique.  The Ruvuma River (known as Rovuma in Mozambique) forms the border between the two countries.  There are currently active drilling programmes in progress on both sides of the border. 

Seismic data acquired in 2007 resulted in the identification of a number of prospects and leads in the onshore area, following which operator Tullow Oil carried out selective reprocessing of key seismic lines over prospective structures in 2009 and the Likonde Prospect was selected as the first choice for drilling.  Likonde is only one of several prospects and leads located along a prominent hinge line in the Ruvuma Basin. 

Aminex and Tullow Oil (operator) each holds 50% interest in the Ruvuma PSA.  In November 2009 Aminex announced a farm-out of a 12.5% interest in the Likonde-1 well to Solo Oil PLC, for which Solo reimbursed Aminex for back costs and is paying a disproportionate share of the drilling costs of this well.  Now that Likonde-1 has been drilled, Solo has an option during the next 6 months to become a full party to the Ruvuma PSA and, in this case, the Aminex interest will reduce to 37.5%. 

Operator Tullow Oil was granted a one year extension to the Initial Exploration Period under the PSA by the Tanzanian Government.  The Likonde-1 well is the first of two commitment wells to be drilled in the Initial Period and the second well is likely to be spudded within 12 months. 

TANZANIA - Nyuni PSA and Kiliwani North Appraisal Licence

Following successful testing of the Kiliwani North-1 gas discovery in 2008 (40 MMcfd from Lower Cretaceous sandstones), a two year Appraisal Licence was granted by the Tanzanian Government.  Analysis of the well test data confirmed the excellent production characteristics of the Neocomian reservoir.  A key element of the appraisal programme was the acquisition of 48 line kilometres of land and transition zone seismic over Kiliwani North in July 2009.  This was the first land seismic ever acquired on Songo-Songo Island and the resulting high quality processed data has made a strong contribution to our understanding of the Kiliwani North structure. 

Various options to commercialise Kiliwani North gas have been and are being studied but, given its proximity to the Songas Plant which is only 3kms from the Kiliwani North-1 wellhead, this remains the obvious choice.  However, in order to be able to access the Songas pipeline system which delivers gas from the Songo-Songo gas field to market in Dar es Salaam, the gas handling plant at Songo-Songo needs to be expanded and there has been a planning consent deadlock for some time between the plant operator and the government authorities.  Aminex now believes that a positive outcome will soon be achieved in near time and that the expansion of both plant and pipeline will be more than adequate for Nyuni's needs.  Aminex also believes that the expanding gas market in Dar es Salaam will be more than capable of accepting the additional production. 

The remainder of the Nyuni Licence is held as an exploration area under the second extension of the PSA with a further work programme commitment.  Previously acquired seismic has now been reprocessed and reinterpreted, then integrated with the new seismic acquired over Songo-Songo Island.  The new mapping, which has been independently assessed, has considerably upgraded the sizes of the main prospects and provides us with a much better understanding of the geological potential of the licence as well as allowing prospects to be mapped  with a far greater level of confidence than previously.

Contingent resources at Kiliwani North and prospective resources on the exploration prospects have been evaluated by Isis Petroleum Consultants Pty. Ltd. ("Isis") and their conclusions are tabulated below.  It should be noted that Isis is attributing some "contingent" as well as "prospective" resources to the Nyuni prospects which lie close to Nyuni Island.  This results from their review of the Nyuni-1 well drilled by Aminex and partners at Nyuni Island in 2003/4.  Nyuni-1 recorded several gas-bearing intervals in Aptian/Albian sands but operational difficulties at the time meant that these were never tested and the well was subsequently suspended, although not plugged and abandoned in case re-entry was ever required.  Isis therefore attributes the same resource category to these Nyuni-1 reservoirs as to the successfully-tested discovery at Kiliwani North. 

Unexplored prospects at Fanjove Island, Songo-Songo South and elsewhere on the licence have not yet been fully evaluated.  However Aminex initially concludes that the prospect in and around Nyuni Island offer the best potential for further exploration drilling.

In September 2009, Aminex reached an agreement with East Africa Exploration Limited (EAX) under which EAX assigned its 10% interest in the Nyuni PSA, including the Kiliwani North discovery, to Aminex in exchange for Aminex's 25% interest in Kenya blocks L17/L18 Licence in which EAX was already a partner.  In addition to swapping acreage, Aminex made a cash payment to EAX of $1 million.  For Aminex this represents a 25% increase in its holding in Nyuni, consolidating our overall position in Tanzania where we are a well established operator, as well as a favourable exit from Kenya where we had concluded that exploration was relatively more high-risk and long-term than the acreage at Nyuni.

With a firm timetable for plant expansion and pipeline capacity increase now more likely, Kiliwani North reserves now established and further drillable prospects - now well-defined -  which could tap into much larger gas reserves and feed into a hub at Songo-Songo, all the ingredients are falling into place for development of a gas business based on the Nyuni PSA.

RESOURCES ESTIMATES IN BCF
	P-90		P-Mean		P-10
CONTINGENT IN-PLACE RESOURCES
Kiliwani N - Neocomian sands	22		40		62
Nyuni - Aptian/Albian sands	57		207		414
TOTAL CONTINGENT	79		247		476
PROSPECTIVE IN-PLACE RESOURCES*
Nyuni - Neocomian sands	160		764		1,616
Okuza - Neocomian sands	78		314		642
Okuza - Aptian/Albian sands	19		105		226
TOTAL PROSPECTIVE	257		1,183		2,484
*Prospective resource in place numbers are unrisked

The Prospective and Contingent resources have been prepared by Isis Petroleum Consultants Pty Ltd.

Aminex's interest in the above is 50%

TANZANIA - West Songo-Songo

The West Songo-Songo PSA area is located between the Songo-Songo Gas Field and the coast of Tanzania.  One of its eastern boundaries is contiguous with the Nyuni PSA.  In terms of the petroleum system, West Songo-Songo lies within the Rufiji Basin, a proven producing trend containing the Songo-Songo Gas Field, and the Kiliwani North discovery.  The operator Key Petroleum Ltd. ("Key") has completed an interpretation of all existing seismic on the block and identified a number of structural prospects and leads at Lower Cretaceous Neocomian level where the reservoir target would be the Neocomian sandstones, the main producing reservoir at the Songo-Songo Field and Kiliwani North.  Additional potential involving stratigraphic trapping has been identified at higher levels in the Cretaceous and Tertiary. 

In order to evaluate further the structural and stratigraphic definition of the existing prospects and leads, Key plans to reprocess the existing seismic over these areas.  Within the Initial Exploration Period of the PSA there is an obligation to drill one firm well in the first three years. 

Aminex holds a 50% interest in the licence.

EGYPT

Gulf of Suez - West Esh el Mellaha-2 PSC

The West Esh el Mellaha-2 (WEEM-2) Licence is a large onshore block in the Eastern Desert of Egypt, geologically positioned on the southwest margins of the Gulf of Suez Basin, a prolific oil producing basin with multiple reservoirs, including several giant fields. 

In 2009, the third obligation well for the Initial Exploration Period was drilled on the South Malak Prospect.  South Malak-1 was spudded in August 2009 and was drilled to a total depth of 11,200 feet, terminating in Basement rocks.  Strong gas shows were recorded while drilling over a 900 foot interval from 10,300ft to target depth.  Oil shows were also recorded in an Eocene Dolomite sequence and in sandstones of the Upper Cretaceous Matulla Formation.  An open-hole test in the section of granite wash overlying basement and the fractured basement was not successful, most probably due to contamination from the casing cementing operation.  High quality oil (38°API gravity) was recovered from the Matulla Sandstone after hydraulic fracturing and placing the well on artificial lift with a submersible pump.  Minor amounts of similar quality oil were also recovered from the Eocene Dolomite interval, although hydraulic fracturing was not successful.  At year end the testing operation continued on the Matulla interval and the well is currently producing limited quantities of oil.

WEEM-2 lies in an oil-prone but highly faulted area.  The very encouraging shows from South Malak-1, which did not even intersect the Nubian sandstones, being the best producing formation in the area, has provided the joint venture with sufficient encouragement to extend the licence into a second period ending September 2012 and commit to drill two further exploration wells.

In the case of establishing commercial production, WEEM-2 is located within a few kilometres of the Esh el Mellaha oil production facilities with an export pipeline to the coast. 

Aminex has a 10% interest in the PSC with a free carry continuing until first production under a Development Lease. 

USA

Shoats Creek Field, Louisiana

At Shoats Creek a drilling programme based on interpretation of recent 3D seismic is now under way with one successful well (Olympia Minerals-1 or "OM-1") which has been drilled to a total vertical depth of 9,508 feet and encountered multiple zones in the Cockfield sands, very closely matching the targets identified from interpretation of the 3D seismic.  The drilling rig has now been demobilised and a testing unit has been brought in to test several Cockfield sands in the shallower area (less than 10,000 feet).  At  the end of March 2010, Aminex formally granted an option, in return for a non-refundable fee of $100,000, to Ninox Pty. Petroleum Ltd., a privately-owned company, giving it a 90 day option to enter into a farm-in agreement which would involve Ninox funding the cost of either 2 deep wells and 1 shallow or alternatively 1 deep well and 4 shallow wells in order to earn a 50% interest in the property.  Discussions are also in progress to unitise part of Aminex's deep rights at Shoats Creek with the deep rights held by a neighbouring company.  This would entail drilling a joint exploration well to test the deep (below 10,000 feet) Wilcox sands recognised on 3D seismic and actually encountered in a well drilled on the property more than 20 years ago by a previous operator.   The precise timing and location of the next well in the drilling programme may depend on the results of these negotiations.

Aminex has a 100% working interest in this property which covers approximately 1,500 acres.  Existing production is light crude oil which sells at a premium to market due its high quality and proximity to market.  Oil and gas pipelines cross this property.

Alta Loma Field, Texas

Aminex participated in a successful oil and gas well in 2008, Sunny Ernst-2 (SE-2).  SE-2 has been producing from Upper Andrau sands since inception, production from which has now declined. Above the Upper Andrau lies a thick section of gas logged when the well was drilled in a formation known as the "S" Sand.  This formation offers the possibility of much more significant production than is yielded by the Upper Andrau but commingling or dual completion is considered risky.  However, no firm timetable has yet been fixed for plugging off the Upper Andrau and to carry out a completion in the "S" Sand.  Sunny Ernst-3 is now likely to be drilled in the second half of 2010, probably during the summer.

During the year a workover was attempted on an older well, Sunny Ernst-1, production from which had fallen to very low levels.  This workover was not successful and the well has been plugged and abandoned.

Aminex has a 37.5% working interest and El Paso is operator.

Somerset Field, Texas

Production continues from several hundred stripper wells and total production averages 95 bbls/oil per day.  Somerset produces oil of a lower quality than WTI and suffers a discount.  Annual production decline is negligible.

Aminex has a 100% working interest and is field operator.

South Weslaco, Texas

South Weslaco produces gas and Aminex has participated in several wells.  Continuous drilling is required in order to hold additional prospects but the net result has been that revenues have tended to be ploughed back into relatively short life wells.  Given a weaker overall market for gas, Aminex is not currently planning to participate in any further drilling on South Weslaco but will continue to enjoy production from the existing wells it has drilled.

Aminex has a 25% interest in this property which is operated by Kaler Energy.

US Reserves summary

Aminex has employed Sojen Petroleum Consulting ("Sojen") to prepare an evaluation of its reserves this year, excluding reserves for Shoats Creek, evaluation of which is pending test results from the recently drilled OM-1 well, and Somerset.  Sojen has taken a more stringent approach to Aminex USA's reserves and there has been some downgrading and reclassification of Alta Loma and South Weslaco reserves.  Part of the downgrading of Alta Loma results from the abandonment of SE-1, referred to above.  Shoats Creek reserves will be re-evaluated later in the year but in the meantime the end-2008 reserves evaluation has been used.

Summary of Oil and Gas Reserves in the USA, P50 Basis
Lease	Area	Oil mmbbls (1)	Gas bcf (2)
Shoats Creek (3)	Calcasieu County, Louisiana	1.7	16.7
Alta Loma	Galveston County, Texas	0.17	4.8
South Weslaco	Hidalgo County, Texas	0	1.6
Somerset	Bexar/Atascosa Counties, Texas	0.1	0
Net proven plus probable (P50) reserves at 31 December 2009.		1.97	23.1
(1) mmbbls - millions barrels crude oil, (2) bcf  - billions cubic feet of natural gas
(3) Due to current drilling activity, Shoats Creek reserves have not been updated from 2008.

NORTH KOREA

Aminex first signed a Petroleum Agreement with the government of the Democratic People's Republic of Korea ("DPRK") in 2004 and subsequently signed a PSC.  Due to a combination of difficult international politics and some political changes at a high level, however, progress was slow for some time.

The situation has now greatly improved and the Korea Oil Industry Ministry together with a state oil company, Korea Oil Exploration Company, now has the authority to negotiate.  Aminex is currently negotiating a new and updated PSC with both these bodies for an offshore area of approximately 58,000 square kilometres and known as The East Korea Bay Basin (EKBB), covering both shallow and deep water.  If negotiations are successfully completed, it is anticipated that this PSC will be signed in the first half of 2010.  Aminex believes that the EKBB is very prospective for oil and gas.

To assist with this project Aminex has introduced a new foreign partner, Singapore-based Chosun Energy Pte Ltd ("Chosun"), which will provide finance for the initial stages and a regional base in Singapore.   Chosun is acquiring 50% of our special purpose vehicle Korex Ltd. in return for a consideration of $500,000 and in addition will cover the first $500,000 of licence costs.  We are pleased to welcome Chosun and believe its experienced management team will make a strong contribution to this project going forward.

STRATEGY AND PROSPECTS

Although not a commercial discovery, we are very encouraged by the results of the Likonde-1 well in the Ruvuma Basin and the new oil play which it potentially could open up in southern Tanzania.  At Nyuni in Tanzania we are now making progress with the Kiliwani North discovery as well as identifying much more clearly the potential of the larger, outlying prospects which we intend to drill within a year from now.  After much groundwork we have finally commenced drilling at Shoats Creek in the USA and expect this project, based on new 3D seismic, will continue to gather momentum.  On the Korean peninsula we are now looking to move ahead and expect progress in the current year.  We have several wells to drill in 2010 and have a busy year ahead.  The current year promises to be very active with potential upside for the Aminex group.

This is the moment for me to thank our shareholders, old and new, for all their support and encouragement, especially those who took up new shares in our 2009 funding exercise, and to pay tribute to our small, hard-working team, many members of which have been with us for a long time now.

Yours sincerely,

BRIAN HALL

Chairman

  

Group Income Statement

for the year ended 31 December 2009

	Notes	2009 US$'000	2009 US$'000	2008 US$'000	2008 US$'000
Revenue	2		7,848		10,177
Cost of sales		(5,387)		(6,486)
Depletion, depreciation and decommissioning of oil and gas interests		(1,590)		(758)
			(6,977)		(7,244)
Gross profit			871		2,933
Administrative expenses		(3,586)		(4,455)
Depreciation of other assets		(50)		(79)
			(3,636)		(4,534)
Loss from operating activities before other costs			(2,765)		(1,601)
Loss on disposal of interest in Manja licence			-		(3,379)
Impairment write down of exploration and evaluation assets			-		(4,728)
Loss from operating activities			(2,765)		(9,708)
Finance income	3		7		202
Finance costs	4		(137)		(156)
Loss before tax			(2,895)		(9,662)
Income tax expense			-		-
Loss for the financial year attributable to equity holders of the Company	2		(2,895)		(9,662)
Basic and diluted loss per Ordinary Share (in US cents)	5		(0.92)		(3.99)

Group Statement of Comprehensive Income

for the year ended 31 December 2009

			2009 US$'000		2008 US$'000
Loss for the financial year			(2,895)		(9,662)
Comprehensive income:
Currency translation differences			235		(982)
Total comprehensive income for the financial year attributable to the equity holders of the Company			(2,660)		(10,644)

Group Balance Sheet

 at 31 December 2009

	Notes		2009  US$'000		2008  US$'000
ASSETS
Exploration and evaluation assets	6		33,682		28,708
Property, plant and equipment	7		11,718		12,119
Other investments			374		485
Total non-current assets			45,774		41,312
Inventory			-		385
Trade and other receivables			2,628		3,910
Cash and cash equivalents			11,689		4,097
Total current assets			14,317		8,392
Total assets			60,091		49,704
LIABILITIES Current liabilities
Loans and borrowings			(64)		(60)
Trade and other payables			(2,515)		(5,267)
Decommissioning provision			(109)		(24)
Total current liabilities			(2,688)		(5,351)
Non-current liabilities
Loans and borrowings			(71)		(123)
Decommissioning provision			(1,565)		(1,244)
Total non-current liabilities			(1,636)		(1,367)
Total liabilities			(4,324)		(6,718)
NET ASSETS			55,767		42,986
EQUITY
Issued capital			32,399		17,844
Share premium			60,463		59,768
Capital conversion reserve fund			234		234
Share option reserve			2,729		2,538
Share warrant reserve			5,665		5,665
Foreign currency translation reserve			(619)		(854)
Retained earnings			(45,104)		(42,209)
TOTAL EQUITY			55,767		42,986

Group Statement of Changes in Equity

for  the year ended 31 December 2009

	Attributable to equity holders of the Company
	Share capital	Share premium	Capital conversion reserve fund	Share option reserve	Share warrant reserve	Foreign currency translation reserve	Retained earnings	Total equity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
At 1 January 2008	17,835	59,719	234	2,065	5,682	128	(32,547)	53,116
Shares issued	9	35	-	-	-	-	-	44
Share issue expenses paid	-	(3)	-	-	-	-	-	(3)
Share based payment charge	-	-	-	473	-	-	-	473
Released on exercise of warrants	-	17	-	-	(17)	-	-	-
Comprehensive income:
Currency translation differences	-	-	-	-	-	(982)	-	(982)
Loss for the financial year	-	-	-	-	-	-	(9,662)	(9,662)
At 1 January 2009	17,844	59,768	234	2,538	5,665	(854)	(42,209)	42,986
Shares issued	14,555	695	-	-	-	-	-	15,250
Share based payment charge	-	-	-	191	-	-	-	191
Comprehensive income:
Currency translation differences	-	-	-	-	-	235	-	235
Loss for the financial year	-	-	-	-	-	-	(2,895)	(2,895)
At  31 December 2009	32,399	60,463	234	2,729	5,665	(619)	(45,104)	55,767

Group Statement of Cashflows

for the year ended 31 December 2009

	2009 US$'000		2008 US$'000
Operating activities
Loss for the financial year	(2,895)		(9,662)
Depletion, depreciation and decommissioning	1,640		837
Impairment write down of exploration and evaluation assets	-		4,728
Other provisions	-		11
Foreign exchange losses/(gains)	215		(924)
Finance income	(7)		(202)
Finance costs	137		156
Loss on disposal of exploration assets	-		3,379
Loss/(gain) on sale of financial investment	20		(26)
Impairment provision against financial investment	-		328
Equity-settled share-based payment charge	191		473
Decrease/(increase)  in inventory	385		(287)
Decrease in trade and other receivables	1,282		1,268
Decrease in trade and other payables	(2,635)		(204)
Net cash absorbed by operations	(1,667)		(125)
Interest paid	(13)		(17)
Net cash outflows from operating activities	(1,680)		(142)
Investing activities
Acquisition of property, plant and equipment	(1,360)		(4,292)
Expenditure on exploration and evaluation assets	(5,918)		(10,748)
Contribution from Ruvuma farm-in partner	1,250		-
Proceeds from sale of interest in Manja licence	-		250
Proceeds from sale of property, plant and equipment	-		152
Proceeds from sale of financial investments	91		26
Interest received	7		226
Net cash outflows from investing activities	(5,930)		(14,386)
Financing activities
Proceeds from the issue of share capital	16,920		44
Payment of transaction costs on the issue of share capital	(1,670)		(3)
Loans repaid	(61)		(102)
Loans received	13		44
Net cash inflows/ (outflows) from financing activities	15,202		(17)
Net increase/(decrease)  in cash and cash equivalents	7,592		(14,545)
Cash and cash equivalents at 1 January	4,097		18,642
Cash and cash equivalents at 31 December	11,689		4,097

Notes to the Financial Information
for the year ended 31 December 2009

1          Statement of accounting polices

The financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), including interpretations issued by the International Accounting Standards Board ("IASB") and its committees and endorsed or expected to be endorsed by the European Commission.

The accounting policies used are consistent with those set out in the audited Annual Report for the year ended 31 December 2008, which is available on the Company's website, www.aminex-plc.com, except as noted below.

The IASB and the International Financial Reporting Interpretations Committee ('IFRIC') have issued the following standards which are effective for the Group's financial statements for the year ending 31 December 2009:

IFRS 8 "Operating Segments" became applicable to the Group from 1 January 2009.  This requires that operating segments are determined based on information that is provided internally to the Group's "Chief Operating Decision Maker".  Previously, operating segments were determined in accordance with IAS 14 "Segment Reporting", which required an operational and geographic analysis of segments.  Under IFRS 8, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components.  An operating segment's operating results are those that are reviewed regularly by the Executive Chairman to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.  On this basis, the Group considers that its operating segments consist of: (i) Producing Oil and Gas Properties, (ii) Exploration Activities and (iii) Oilfield Services and Supplies.  However it further analyses these by region for information purposes.  Segment results include items directly attributable to the segment as well as those that can be allocated on a reasonable basis.  Unallocated items comprise mainly head office expenses, cash balances and certain other items.  Based on this analysis of the Group's segments, there has been no material change in the manner in which segment results have been reported and accordingly there has been no change to the segment disclosures prepared for the current and prior comparative periods.  Since the change of accounting policy impacts on presentation only, there has also been no change to reported losses or loss per share of prior periods.

IAS 1 "Presentation of Financial Statements (2007)" became applicable to the Group in the period.  As a result, the Group has chosen to present any non-owner related changes in equity as a separate Income Statement and Statement of Comprehensive Income, in addition to presenting all owner and non-owner related changes of equity in a further separate Statement of Changes in Equity, as required by IAS 1.  This presentation has been adopted in these consolidated financial statements and comparative information has been re-presented so that it also is in conformity with the revised standard.  Since the change in the accounting policy only impacts on the presentation of the accounts, reported losses and loss per share from prior periods have not been restated.

 IAS 23 "Borrowing Costs" requires that borrowing costs relating to qualifying assets are capitalised and is applicable to the Group from 1 January 2009.  This is not expected to have a material effect on the Group as this policy has already been applied and in any event, borrowing costs are not significant for the Group.

Revision to IFRS 2 "Non-vesting Conditions for Share Based Payments" sets out the required accounting for certain non-vesting conditions attaching to certain share based payments.  The Group has no non-vesting conditions attaching to its share option arrangements.  Accordingly, this revision has no material impact.

New accounting pronouncements

Certain other new accounting pronouncements have been issued which will be effective for the Group in the near term.  However, none of these is expected to have a material effect on the Group's activities, as follows:

● IFRS 3 "Business Combinations" requires significant changes to the manner in which business combinations are accounted for and will be applicable to the Group from January 2010.  Aminex has had no significant business combinations in recent years, but will apply the revised standard on a prospective basis, as applicable.

● IAS 27 "Consolidated and Separate Financial Statements" changes how controlling and non-controlling interests in entities are accounted for and is applicable to the Group from January 2010.  This standard has no immediate impact on the Group, however, this will be applied on a prospective basis, as applicable.

There are various other revised accounting standards that will be applicable.  However none is expected to have any impact on the Group's results in the near term.

2          Operating segments

The basis for operating segments has been set out above in the statement of accounting policies.

Segmental revenue - continuing operations

	Producing oil and gas properties				Provision of oilfield goods and services				Total
	2009 US$'000		2008 US$'000		2009 US$'000		2008 US$'000		2009 US$'000		2008 US$'000
Country of destination
America	4,247		5,539		109		77		4,356		5,616
Africa	-		-		505		1,704		505		1,704
Asia	-		-		2,714		2,773		2,714		2,773
Europe	-		-		273		84		273		84
Revenue	4,247		5,539		3,601		4,638		7,848		10,177

The exploration activities in Africa and Asia do not give rise to any revenue at present.

 

2          Segmental disclosure (continued)

	2009 US$'000		2008 US$'000
Segment profit/(loss) for the financial year
US - producing assets	(317)		1,502
Africa and Asia - exploration assets	(550)		(8,786)
Europe - oilfield services and supplies assets	170		211
Europe - group costs (*)	(2,198)		(2,589)
Total group loss for the financial year	(2,895)		(9,662)
Segment assets
US - producing assets	12,572		13,552
Africa and Asia - exploration assets	36,668		31,496
Europe - oilfield services and supplies assets	1,013		1,067
Europe - group assets (**)	9,838		3,589
Total assets	60,091		49,704
* Group costs primarily comprise mainly salary and related costs.
** Group assets primarily comprise cash and working capital.
Segment liabilities
US - producing assets	(2,296)		(2,407)
Africa and Asia - exploration assets	(1,080)		(3,414)
Europe - oilfield services and supplies	(476)		(425)
Europe - group activities	(472)		(472)
Total liabilities	(4,324)		(6,718)
Capital expenditure
US - producing assets	945		4,348
Africa and Asia - exploration assets	5,663		9,758
Europe - group assets	8		7
Total capital expenditure	6,616		14,113
Other non-cash items:
US: depletion and decommissioning charge	1,590		758
Africa: impairment charge against exploration and evaluation assets	-		4,728
Africa: loss on the disposal of interest in Manja licence	-		3,379
Europe: depreciation - Group assets	50		79
Europe: impairment charge against other investments held	-		328
Europe: loss on disposal of other investments	20		-

3          Finance income

		2009 US$'000		2008 US$'000
Deposit interest income		7		202

4          Finance costs 

		2009 US$'000		2008 US$'000
Bank loans and overdraft interest		1		4
Other finance charges		12		13
Other finance costs -decommissioning provision interest charge		124		139
		137		156

5          Loss per Ordinary Share

The basic loss per Ordinary Share is calculated using a numerator of the loss for the financial year and a denominator of the weighted average number of Ordinary Shares in issue for the financial year.  The diluted loss per Ordinary Share is calculated using a numerator of the loss for the financial year and a denominator of the weighted average number of Ordinary Shares outstanding and adjusting for the effect of all potentially dilutive shares, including share options, assuming that they had been converted.

The calculations for the basic loss per Ordinary Share for the years ended 31 December 2009 and 2008 are as follows:

		2009		2008
Loss for the financial year (US$'000)		(2,895)		(9,662)
Weighted average number of Ordinary Shares ('000)		315,176		242,118
Basic and diluted loss per Ordinary Share (US cents)		(0.92)		(3.99)

There is no difference between the basic loss per Ordinary Share and the diluted loss per Ordinary Share for the years 31 December 2009 and 2008 as all potentially dilutive Ordinary Shares outstanding are anti-dilutive.  There were 15,625,000 (2008: 16,021,000) anti-dilutive share options and 36,423,689 (2008: 36,423,689) anti-dilutive share warrants in issue as at 31 December 2009.

6          Exploration and evaluation assets

	Tanzania US$'000	Kenya US$'000	Asia US$'000		Total US$'000
Cost
At 1 January 2009	32,404	644	388		33,436
Additions	5,272	50	-		5,322
Employment costs capitalised	329	12	-		341
Increase in decommissioning provision	17	-	-		17
Released by disposal	-	(706)	-		(706)
At 31 December 2009	38,022	-	388		38,410
Provisions for impairment
At 1 January and  31 December 2009	4,728	-	-		4,728
Net book value
At 31 December 2009	33,294	-	388		33,682
At 31 December 2008	27,676	644	388		28,708

The Directors have considered the licence, exploration and appraisal costs incurred in respect of its exploration and evaluation assets, which are, with the exception of the partial write down on the Nyuni-1 well in Tanzania, carried at historical cost.  These assets have been assessed for impairment and in particular with regard to remaining licence terms, likelihood of renewal, likelihood of further expenditures and ongoing acquired data for each area, as more fully described in the Operations Report.  The Directors are satisfied that there are no further indicators of impairment but recognise that future realisation of these oil and gas assets is dependent on further successful exploration and appraisal activities and the subsequent economic production of hydrocarbon reserves.

7          Property, plant and equipment

	Developed and producing oil and gas properties - USA US$'000	Other assets US$'000		Total US$'000
Cost
At 1 January 2009	16,574	354		16,928
Additions in the year	945	8		953
Increase in decommissioning provision	265	-		265
Exchange rate adjustment	-	52		52
At 31 December 2009	17,784	414		18,198
Depreciation
At 1 January 2009	4,582	227		4,809
Charge for the year	1,590	50		1,640
Exchange rate adjustment	-	31		31
At 31 December 2009	6,172	308		6,480
Net book value
At 31 December 2009	11,612	106		11,718
At 31 December 2008	11,992	127		12,119

The majority of the Group's property, plant and equipment comprises its producing oil and gas properties which are depleted on a unit of production basis, based on proven and probable reserves at each field.  At 31 December 2008, an independent valuation was carried out based on estimated future discounted cash flows of each producing property, as set out in more detail in the Operations Report, and at 31 December 2009 updated independent valuations were prepared for the South Weslaco and Alta Loma fields.  The Directors are satisfied that no impairment of the property, plant and equipment is considered to have occurred.

8          Going concern

The Directors have given careful consideration to the Group's ability to continue as a going concern.  The Directors have concluded that, following the placing and open offer in 2009 which raised US$15.3 million net of transaction costs, the Group has sufficient ongoing operating cash flows to continue as a going concern.  The Group's ability to continue to make planned capital expenditure, in particular in its areas of interest in Africa and the USA, can be assisted if necessary by the successful sale of assets, deferral of planned expenditure or an alternative method of raising capital.  The Directors have a reasonable expectation that the Group will be able to implement this strategy.

We understand that, as in prior years, the auditors will likely make reference to this in their report.  We understand that their opinion will not be qualified in this respect. 

9          2009 Annual Report and financial statements

The 2009 Annual Report and financial statements will be posted to shareholders shortly.

10        Statutory information

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2009 within the meaning of the Companies (Amendment) Act, 1986.  The statutory accounts will be finalised on the basis of the financial information presented by the Directors in the preliminary announcement and together with the independent auditor's report thereon will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

11        Estimates, key risks and uncertainties

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.  Key estimates and judgments related to the preparation of these financial statements have been set out in notes 6 (Exploration and evaluation assets), 7 (Property, plant and equipment) and 8 (Going concern) and these were the same as those applied in the most recent published financial statements for the Group.  Principal risks and uncertainties affecting the Group relate to exploration and production risk, commodity and currency prices and other political risks particular to the countries in which we operate, as more fully described in the operations report, and in our most recent published financial statements.

12        Board approval

The Board of Directors approved the preliminary financial statements for the year ended 31 December 2009 on 31 March 2010.

 

END

 

 

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