Audited Results

RNS Number : 4740O

Lansdowne Oil & Gas plc

28 May 2015

 



Audited Results for the year ended 31 December 2014

28^th May 2015

Lansdowne Oil & Gas ("Lansdowne" or "the Company") is pleased to announce its audited results, for the year ended 31 December 2014. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and the Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.

Operational highlights

·     Farm-out of 80% of SEL 4/07 to PSE Kinsale Energy, which will carry Lansdowne's retained 20% share of the cost of drilling a well on the 268 bcf Midleton prospect.

·     Providence Resources continued its farm-out efforts on behalf of the partners in the Barryroe oil field (Lansdowne 20%) and this resulted in commercial terms being agreed with a third party.

·     Completion of the Barryroe farm-out remains subject to certain closing conditions and, in the meantime, commercial discussions are continuing with a number of other interested parties.

Financial

·     Cash balances at 31 December 2014 of £0.3 million (2013: £2.5 million).

·     Operating expenses for the year were £1.3 million (2013: £1.0 million).

·     Loss for year after tax of £1.3 million (2013: loss £0.8 million).

·     Loss per share of 0.9 pence (2013: loss 0.6 pence).

Post-balance sheet events ·     In the first quarter of 2015, the Company secured an additional £2.9 million of funding by way of a placing and loan note. ·     In April 2015, the Company launched a strategic review to ensure that all opportunities for maximising value for shareholders are considered. For further information please contact:
Lansdowne Oil & Gas plc Steve Boldy Richard Slape	[phone]
Cantor Fitzgerald Europe Sarah Wharry David Porter	[phone]

Lansdowne Oil and Gas plc

Results for the year ended 31 December 2014

Chairman's Statement

Operations

The focus of our activities in 2014 was to conclude farm-out agreements for the various assets in our Celtic Sea portfolio. Although the market for such deals was challenging even before the oil price collapsed in the fourth quarter of the year, we were able to make some progress in this regard.

Under the terms of a deal completed by the company in February 2015, PSE Kinsale Energy Limited (KEL) will acquire an 80% interest in SEL 4/07 in return for paying 100% of the cost of an exploration well. In addition, KEL will pay Lansdowne's share of any testing costs up to a maximum of US$2.5 million (net). The well will target the 268 bcf Midleton prospect and will be drilled either later this year or in 2016.

Meanwhile, throughout 2014 Providence Resources continued its farm-out efforts on behalf of the Barryroe partnership. Lansdowne has a 20% stake in this oil field that, subject to further appraisal, has the potential to be a truly significant asset. Indeed, its gross 2C resources have been independently estimated at 339 MMBOE.

There has been considerable industry interest in Barryroe and many well known companies have visited the dataroom. This culminated in commercial terms being agreed with a potential new partner but completion of the transaction remains subject to the satisfaction of a number of conditions. Most notable of these is the farminee raising the required level of finance.

Litigation

In a dispute relating to the use of the Arctic III semi-submersible drilling unit on the Barryroe oilfield in 2011/12, Transocean Drilling UK claimed approximately US$19 million from Providence Resources. In line with its working interest in the field, Lansdowne Oil & Gas was liable for 20% of any amount paid to Transocean and supported Providence in its decision to defend its position and launch a counter-claim.

After hearing evidence in October 2014, a Judgment was handed down by the Hon. Mr Justice Popplewell in the Commercial Court in London in December 2014. This concluded that Transocean was in breach of contract for failing to maintain various parts of its subsea equipment and that Transocean was not, therefore, entitled to the full amount claimed. Recently, the Company has been informed that Transocean have been granted leave to appeal this Judgement.

Financial results

In the year to 31 December 2014, the Group's administrative expenses were £1.3 million (2013 £1.0 million) and this resulted in a pre-tax loss of £1.3 million (2013 £1.0 million). At the end of 2014 group cash balances were £0.3 million (2013 £2.5 million) and total equity attributable to the ordinary shareholders was £24.4 million (2013 £25.6 million).

Post-balance sheet events and outlook

Over the last few years, Lansdowne has participated in the rejuvenation of the North Celtic Sea Basin, offshore Ireland. The next phase of activity, which requires the successful conclusion of our farm-out processes, will be a new drilling campaign. We remain focused on delivering this programme, starting with a well at Midleton, but it is taking longer than originally anticipated.

Hence, in order to satisfy our on-going working capital requirements, we secured access to £2.9 million of additional funding in the first quarter of 2015. Of this, £1.04 million came from a placing of 20.75 million new shares at 5p each while £1.86 million came from issuing a senior secured loan note to our largest shareholder, LC Capital Master Fund.

The fund-raising exercise was followed in April 2015 by a decision to launch a Strategic Review. Although continuing with the current strategy and structure of the Group remains a viable option, this process is designed to ensure that all opportunities for maximising value for shareholders are considered. Other options may include a corporate transaction such as a merger with, acquisition of, or subscription for the Company's securities by a third party, a sale of the business or a farm down or disposal of assets.

John Greenall

Chairman

Lansdowne Oil & Gas plc

Consolidated Statement of Financial Position

As at 31 December 2014

		2014		2013
		Audited		Audited
	Note	£'000		£'000
Assets
Non- current assets
Intangible assets	4	27,151		27,217
Property, plant and equipment		-		1
		27,151		27,218
Current Assets
Trade and other receivables		197		146
Cash at bank and on hand		276		2,478
		473		2,624
Total Assets		27,624		29,842
Equity and Liabilities
Shareholders' Equity
Share capital	5	7,027		7,027
Share premium		25,273		25,273
Currency translation reserve		59		56
Share-based payment reserve		894		803
Accumulated deficit		(8,876)		(7,556)
Total Equity			24,377		25,603
Non-Current Liabilities
Provision for liabilities Deferred income tax liabilities                                                      Current Liabilities Trade and other payables		217 1,052 1,269 1978		197 1,052 1,249 2,990
		-------		-------
Total Liabilities		3247		4,239
Total Equity and Liabilities		27,624		29,842

Lansdowne Oil & Gas plc

Consolidated Income Statement

For the year ended 31 December 2014

		2014	2013
		Audited	Audited
	Note	£'000	£'000
Administrative expenses		(1,302)	(984)
Operating loss		(1,302)	(984)
Finance costs		(21)	(61)
Finance income		3	24
Loss for the year before tax		(1,320)	(1,021)
Income tax credit		-	211
Loss for the year		(1,320)	(810)
Loss per share (pence):
Basic loss per ordinary share	3	(0.9p)	(0.6p)
Diluted loss per ordinary share	3	(0.9p)	(0.6p)

The results for the period all arise on continuing operations

Lansdowne Oil & Gas plc

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

	2014 £'000	2013 £'000
Loss for the year	(1,320)	(810)
Items that may be reclassified to profit and loss account
Currency translation differences	(3)	(62)
Total comprehensive loss for the year	(1,317)	(872)

Lansdowne Oil & Gas plc

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

	Share capital £'000	Share premium £'000	Share based payment Reserve £'000	Currency translation reserves £'000	Accumulated deficit £'000	Total equity £'000
At 1 January 2013	7,027	25,273	676	118	(6,746)	26,348
Loss for the financial year	-	-	-	-	(810)	(810)
Currency translation difference	-	-	-	(62)	-	(62)
Total comprehensive income for the year	-	-	-	(62)	(810)	(872)
Share based payments charge	-	-	127	-	-	127
At 31 December 2013	7,027	25,273	803	56	(7,556)	25,603
At 1 January 2014	7,027	25,273	803	56	(7,556)	25,603
Loss for the financial year	-	-	-	-	(1,320)	(1,320)
Currency translation difference	-	-	-	3	-	(3)
Total comprehensive income for the year	-	-	-	3	(1,320)	(1,317)
Share based payments charge	-	-	91	-		91
At 31 December 2014	7,027	25,273	894	59	(8,876)	24,377

Lansdowne Oil & Gas plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2014

	Note	2014	2013
		Audited	Audited
		£'000	£'000
Cash flows from operating activities
Cash from operations	6	(2,268)	(1,674)
Net finance expense		(2)	3
Net cash from operating activities		(2,270)	(1,671)
Cash flows from investing activities
Acquisition of intangible exploration assets, net		66	(1,397)
Interest received		3	24
Net cash from investing activities		69	(1,373)
Net (decrease) in cash and cash equivalents		(2,201)	(3,044)
Cash and cash equivalents at beginning of year		2,478	5,549
Effect of exchange rate fluctuations on cash held		(1)	(27)
Cash and cash equivalents at end of year		276	2,478

Lansdowne Oil & Gas plc

Notes to the Financial Information

For the year ended 31 December 2014

1.         Basis of presentation

The consolidated financial statements are presented in Sterling, the company's functional currency, and all values are rounded to the nearest thousand (£000) except where otherwise indicated.

The Directors have prepared the financial statements on the going concern basis which assumes that the Group and Company will continue in operational existence for at least twelve months from the date of the approval of these financial statements as described below.

The Directors have carried out a detailed assessment of the Group's current and prospective exploration activity, its relationship with the holder of its loan note, and the cash flow projections for the period to 30 June 2016.  The following represent the key assumptions underpinning the cash flow projections:

Barryroe farm out

The Directors remain confident that, with the positive results from the seismic surveys and the successful Barryroe well test, as well as the level of interest shown by potential partners in the prospect, they will be able to conclude a farm out deal(s) on attractive commercial terms which will provide sufficient resources for the Group to continue with the development of the licences it holds.

Further fundraising

Should a farm out deal not be concluded in relation to Barryroe, the Directors believe

that the Group has a number of available funding options; while the Group's primary aim is to conclude the ongoing farm out campaign with a view to attracting industry partners to drill wells, the Company also has the option of issuing new equity, and, as stated in the post balance sheet event note, the Company raised £1.04 million before costs by placing 20,753,636 new ordinary shares with new and existing shareholders. The Company also issued a loan note to the value of £1.9 million to LC Capital Master Fund, a significant shareholder of the Company.

The Directors have considered the various matters set out above and have concluded that these assumptions are affected by material uncertainties that may cast significant doubt on the ability of the Group and Company to continue as going concerns and that they may therefore be unable to realise assets and discharge liabilities in the normal course of business.  Nevertheless, having considered the assumptions underlying the Group's cashflow projections, the directors have a reasonable expectation that the Group and Company will have sufficient cash resources available to meet their liabilities for at least 12 months from the date of approval of these financial statements.

It is on this basis that the directors consider it appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustment that would result from the going concern basis of preparation being inappropriate.

2.         Segmental reporting

The Group has one reportable operating and geographic segment, which is the exploration for oil and gas reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the operating segment.

3.         Loss per ordinary share

The loss for the year was wholly from continuing operations. 

	(pence per share)
	2014	2013
Loss per share arising from continuing operations attributable to the equity holders of the Company
- basic and diluted	(0.9)	(0.6)

The calculations were based on the following information.

Loss for the year attributable to equity holders	(1,320)	(810)
Weighted average number of ordinary shares in issue
- basic and diluted	140,540,159	140,540,159

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.  The Group has one class of potential ordinary shares being share options. As a loss was recorded for both 2014 and 2013, potentially issuable shares would have been antidilutive. The number of potentially issuable shares at 31 December 2014 is 143,306,029 (2013: 143,372,659).

4.          Intangible assets 

Group	Exploration / appraisal assets
Cost	£'000
At 1 January 2013	24,399
Additions	1,397
Reclassification of goodwill	1,421
At 31 December 2013	27,217
Cost
At 1 January 2014	27,217
Additions, net of re-imbursement from partners	(66)
At 31 December 2014	27,151

Oil and gas project expenditures, all of which relate to Ireland, including geological, geophysical and seismic costs, are accumulated as intangible fixed assets prior to the determination of commercial reserves.

5.         Share capital and premium- Group and Company                                                               

	Number of shares (thousands)	Ordinary shares £'000	Share premium £'000	Total £'000
At 1 January 2014	140,540	7,027	25,273	32,300
Issued in year	-	-	-	-
At 31 December 2014	140,540	7,027	25,273	32,300

6.          Reconciliation of loss before income tax to cash used in operations

                                                                                                                                  2014                                                      2013

                                                                                                                                         £                                                             £

             Loss before income tax                                                                       (1,320)                                                      (810)

             Adjustment for:

             Tax credit                                                                                                                                                                 (211)

             Equity settled share-based payment transactions                                91                                                        127

             Unrealised foreign exchange gains                                                             5                                                         (62

                                                                                                                         _________                                                              

             Operating cash flows before movements

             in working capital                                                                                 (1,224)                                                      (956)

             Change in trade and other receivables                                                 (51)                                                        (45)

             Change in trade and other payables                                                    (993)                                                      (673)

                                                                                                                  _________                                                    _________

             Net cash used in operations/financing                                            (2,268)                                                  (1,674)

7.             Accounts

Copies of the annual accounts for the year ended 31 December 2014 will be sent to shareholders shortly and will be available from the Company's office at 6 Northbrook Road, Ranelagh, Dublin 6, Ireland and the Company's website www.lansdowneoilandgas.com.

Notes to Editors

About Lansdowne

Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focussed, oil and gas exploration company quoted on the AIM market and head quartered in Dublin.

Lansdowne holds extensive acreage and has acquired widespread proprietary 3D seismic data in the North Celtic Sea basin, an emerging under-explored province. Lansdowne has a balanced, technically mature portfolio, covering both  oil and gas prospects, in three play types with substantial equity stakes and adjacent to existing infrastructure.

In addition to its 20% stake in the transformational Barryroe field, Lansdowne has three drill ready prospects defined on 2011 3D seismic data , with a farm-out data room exercise on-going to identify partners for a three well drilling programme.

For more information on Lansdowne, please refer to www.lansdowneoilandgas.com

 

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