Final Results

RNS Number : 0840E

Lansdowne Oil & Gas plc

25 May 2012

 

Lansdowne Oil & Gas plc

Audited Results for the year ended 31 December 2011

Lansdowne Oil & Gas ("Lansdowne" or "the Company") is pleased to announce its audited results, for the year ended 31 December 2011. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal opportunities offshore Ireland. The Company has targeted the Irish offshore shelf areas for exploration as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.

Operational highlights

·    Barryroe appraisal well spudded in November 2011 and suspended in March 2012 after successfully testing oil and gas at stabilised rate of 3,514 bopd and 2.93 mmscfd exceeding pre-drill expectations.

·    240 sq km of 3D seismic acquired over Barryroe oil discovery.

·    Upgraded mapping and resources estimates in progress.

·    274 sq km of seismic acquired over Amergin, Rosscarbery and Midleton prospects.

·    Data room open for industry review.

·    Macquarie Capital leading farm out process.

Financial

·    Funds of £12.5 million (2010:£1.4 million) raised through placing of new shares and conversion of loans to equity.

·    Cash balances at 31 December £3.2 million (2010: £26,000).

·    Borrowings reduced to £248,000  (2010: £1.4 million)

·    Loss for year after tax £780,000 (2010: loss £1.1 million).

·    Loss per share 0.8 pence (2010: loss 2.9 pence).

Contacts:

Lansdowne Oil & Gas plc
Steve Boldy	Chief Executive Officer	[phone]
Chris Moar	Finance Director	[phone]
finnCap
Sarah Wharry	Corporate Finance	[phone]

Lansdowne Oil & Gas plc

Results for the year ended 31 December 2011

Chairman's Statement

I am delighted to be able to state that 2011 was a year of great progress for the Company.

In December 2010 the Group appointed finnCap as NOMAD and Broker and in March 2011 the Group announced the placing of new ordinary shares to raise £5 million. In addition our two largest shareholders converted £1.9 million of loans into equity. Following the placing and loan conversion in March 2011, the Group had cash balances of £4.7 million and loans were reduced to £248,000.

These new funds were used primarily to acquire 3D seismic data over existing discoveries and prospects in the Celtic Sea.

A 3D seismic survey over the Barryroe oil discovery, in which Lansdowne has a 20% interest, was acquired using the Polarcus Samur vessel in late June 2011. A total of some 240 sq km of 3D data were acquired over Barryroe.

Following completion of the Barryroe survey, Lansdowne took over operatorship of the Polarcus Samur and during July 2011 acquired 3D seismic data over the Amergin, Rosscarbery and Midleton prospects, covering an aggregate area of approximately 274 sq km.

Later in July the Group announced the placing of new ordinary shares to raise £6 million net of expenses. These funds were used to participate in the drilling of an appraisal well on the Barryroe oil discovery.

The Barryroe appraisal well 48/24-10z, operated by Providence Resources, commenced in November 2011 and was suspended in March 2012 after successfully testing oil and gas from a Basal Wealden Sandstone reservoir sequence at a stabilised rate of 3,514 bopd and 2.93

mmscfd.

The flow rates achieved from the Barryroe appraisal well greatly exceeded pre-drill expectations and have demonstrated the potential for this Basal Wealden reservoir, not just in the Barryroe discovery, but elsewhere in the Celtic Sea, such as in the Amergin prospect where the Basal Wealden forms a key target.

The results of the Barryroe appraisal well are being integrated with the 3D seismic data and this will lead to new maps and resource estimates later this year, along with plans for further appraisal and pre-development studies.

The 3D seismic data over Midleton, Rosscarbery and Amergin was processed by CGGV with data delivered in late 2011. We are very pleased with the quality of our 3D seismic data, which has confirmed drillable prospects on all three licences and has, we believe, substantially reduced the risk.

Following interpretation of the data Lansdowne opened a data room for industry review. Macquarie have been appointed to assist with the farm-out process which is aimed at seeking a partner(s) to drill wells on the Amergin, Midleton and Rosscarbery Licences as part of a three well programme in the North Celtic Sea.

Financial Results

The Group recorded an after tax loss of £800,000 for the year ended 31 December 2011 compared to a loss of £1.1 million for the year ended 31 December 2010.

Group operating expenses for the year were £1.0 million, compared to £1.0 million in 2010.

Net finance income for the year was £122,000 (2010 expense: £137,000). Interest expense on loans from shareholders amounted to £29,000 (2010: £134,000).

Total equity attributable to the shareholders of the Group has increased from £6.1 million as at 31 December 2010 to £17.8 million as at 31 December 2011.

Cash balances of £3.2 million (2010: £26,000) were held at the end of the financial year.

Details of loan facilities provided by shareholders are given in note 5.

Outlook

A great deal of progress has been made over the last year across our portfolio of interests in the Celtic Sea.

The Board and management of the Company are looking forward to the completion of the full technical appreciation of the results of the Barryroe appraisal well, which will lead to a resource update later in the year. We are also hopeful of securing farm-in partners for drilling our other exploration and appraisal prospects.

I would once again like to thank all our shareholders for their continued support.

John Greenall

Chairman

Lansdowne Oil & Gas plc

Consolidated Balance Sheet

As at 31 December 2011

		2011	2010
		Audited	Audited
	Note	£'000	£'000
Assets
Non- current assets
Goodwill and other intangible assets	4	17,786	10,194
Property, plant & equipment		1	-
		17,787	10,194
Current Assets
Trade and other receivables		36	22
Cash at bank and on hand		3,228	26
		3,264	48
Liabilities
Current Liabilities
Trade and other payables		(1,719)	(1,365)
Borrowings	5	(173)	(1,391)
Net Current Liabilities		(1,892)	(2,708)
Non-Current Liabilities
Deferred income tax liabilities		(1,316)	(1,421)
Net Assets		17,843	6,065
Shareholders' Equity
Share capital	6	6,118	2,685
Share premium	6	16,736	7,672
Other reserves		65	70
Accumulated deficit		(5.076)	(4,362)
Total Equity		17,843	6,065

Lansdowne Oil & Gas plc

Consolidated Income Statement

For the year ended 31 December 2011

		2011	2010
		Audited	Audited
	Note	£'000	£'000
Administrative  expenses		(1,007)	(1,002)
Operating loss		(1,007)	(1,002)
Finance income		152	-
Finance costs		(30)	(137)
Loss before income tax		(885)	(1,139)
Income tax credit		105	-
Loss for the year		(780)	(1,139)
Loss per share
Basic and diluted	3	(0.8p)	(2.9p)

All activities relate to continuing operations.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2011

	2011 £'000	2010 £'000
Loss for the year	(780)	(1,139)
Currency translation differences	(5)	(15)
Total comprehensive loss for the year	(785)	(1,154)

Lansdowne Oil & Gas plc

Consolidated Statement of Changes in Equity

For the years ended 31 December

	Share capital £'000	Share premium £'000	Other reserves £'000	Accumulated deficit £'000	Total equity £'000
Year ended 31 December 2010
At 1 January 2010	1,756	7,153	85	(3,291)	5,703
Loss for the financial year	-	-	-	(1,139)	(1,139)
Currency translation difference	-	-	(15)	-	(15)
Total comprehensive income for the year	-	-	(15)	(1,139)	(1,154)
Share based payments charge	-	-	-	68	68
Issues of new shares - gross consideration	176	35	-	-	211
Issues of new shares - debt conversion	753	484	-	-	1,237
At 31 December 2010	2,685	7,672	70	(4,362)	6,065
Year ended 31 December 2011
At 1 January 2011	2,685	7,672	70	(4,362)	6,065
Loss for the financial year	-	-	-	(780)	(780)
Currency translation difference	-	-	(5)	-	(5)
Total comprehensive income for the year	2,685	7,672	65	(5,142)	5,280
Share based payments charge	-	-	-	66	66
Issues of new shares - gross consideration (note 6)	3,043	8,087	-	-	11,130
Issues of new shares - debt conversion (note 6)	390	1,558	-	-	1,948
Cost of shares issues	-	(581)	-	-	(581)
At 31 December 2011	6,118	16,736	65	(5,076)	17,843

Lansdowne Oil & Gas plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2011

	Note	2011	2010
		Audited	Audited
		£'000	£'000
Cash flows from operating activities
Cash generated by / (used in) operations	7	192	(112)
Net finance (income) / expense		(122)	137
Net cash generated by operating activities		70	25
Cash flows from investing activities
Acquisition of intangible exploration assets		(7,632)	(606)
Acquisition of property, plant & equipment		(1)	-
Net cash used in investing activities		(7,633)	(606)
Cash flows from financing activities
Proceeds of issue of share capital		10,550	211
Proceeds from borrowings (note 5)		65	963
Repayment of borrowings		-	(500)
Interest received		19	-
Interest paid		(2)	(90)
Net cash generated by financing activities		10,632	584
Effect of exchange rate fluctuations on cash held		133	(3)
Net increase in cash and cash equivalents		3,202	-
Opening cash and cash equivalents		26	26
Closing cash and cash equivalents		3,228	26

Lansdowne Oil & Gas plc

Notes to the Financial Information

For the year ended 31 December 2011

1.      Basis of Presentation

The consolidated financial information is presented in Sterling and all values are rounded to the nearest thousand (£'000) except where otherwise indicated. It has been prepared on the basis of the IFRS accounting policies to be adopted in the financial statements for the year ended 31 December 2011.

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

During the year the Group and Company successfully raised funds of £12.5 million (net) through placings of new ordinary shares and the conversion of shareholder loans to equity. This enabled the company to progress the development of the exploration licences held by way of further appraisal and 3D seismic surveys and participation in the successful drilling campaign on the Barryroe oil discovery. The results from the 3D seismic surveys and the flow rates from the Barryroe well exceeded expectations. The Directors have appointed Macquarie Capital to commence a farm out process across its portfolio of licences, in order to find a partner(s) to participate in the next stage drilling. A data room is operational with a number of interested parties currently reviewing the information contained therein.

The Directors are confident that with the positive results from the seismic surveys and the successful Barryroe well test, they will be able to conclude a farm out deal(s) which will provide sufficient resources for the Company to continue with the development of the licences

held. The Directors believe that the Company has a number of available funding options; the Company'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 is also in discussions with certain financial institutions regarding a structured financing package that would provide the Company with sufficient resources to progress the licences in the near term. The Company retains the financial support of its main shareholders, if required, in order to allow the Company time to evaluate these future requirements in the best interest of the Company and its shareholders.

The Directors believe that at the date of these financial statements there exists a material uncertainty regarding whether or not the Company will be successful in raising the required future funding to progress the development of the licences held, which may cast significant doubt upon the ability of the Company to continue as a going concern and therefore to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, after making enquiries and considering all the relevant factors, the Directors are of the opinion that with the current level of interest in the farm out process and the other available funding options, the Company will be able to source the necessary funds.

If for any reason the uncertainty described above cannot be successfully resolved, the going concern basis may no longer be appropriate. The financial statements do not include any adjustments that would result if the Group and Company was unable to continue as a going concern.

Although this material uncertainty exists, the Directors have a reasonable expectation that the Group and Company will have adequate resources to continue in operational existence for the foreseeable future and have therefore concluded that it is appropriate to adopt the going concern basis in preparing these financial statements.

The figures and financial information for the year ended 2011 do not constitute the statutory financial statements for that year under section 435 of the Companies Act 2006. The auditors  report will contain reference to the significant uncertainties disclosed above. The 2010 comparatives are derived from the statutory accounts for 2010 which have been delivered to the Registrar of Companies and received an unqualified audit report containing an emphasis of matter paragraph relating to going concern and did not contain a statement under the Companies Act 2006, s498(2) or (3).

2.      Segmental Reporting

The Directors believe that the Group has only one reportable operating segment, which is the exploration of oil and gas reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the operating segment. The Chief Operating Decision Maker monitors the operating results of its operating segment separately for the purpose of making decisions and performance assessment. Segment performance is evaluated based on operating profit or loss and is reviewed consistently with operating profit or loss in the consolidated financial statements.

3.      Loss per Ordinary Share

The loss for the year was wholly from continuing operations. 

	Year ended 31 December
	(pence per share)
	2011	2010
Loss per share arising from continuing operations attributable to the equity holders of the Company
- basic and diluted	(0.8)	(2.9)

The calculations were based on the following information.

Loss attributable to equity holders of the Company	(£780,000)	(£1,139,000)
Weighted average number of shares in issue
- basic and diluted	93,929,858	38,930,669

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 two classes of dilutive potential ordinary shares; share options and share warrants.  As a loss was incurred for both 2011 and 2010 the issue of new shares would have been antidilutive.

4.         Goodwill and Other Intangible Assets         

	Exploration / appraisal assets	Goodwill		Total
	£'000	£'000		£'000
Year ended 31 December 2010
Opening net book amount at 1 January 2010	8,218	1,421	9,639
Additions	606	-	606
Exchange differences	(51)	-	(51)
Closing net book amount at 31 December 2010	8,773	1,421	10,194
Year ended 31 December 2011
Opening net book amount at 1 January 2011	8,773	1,421	10,194
Additions	7,632	-	7,632
Exchange differences	(40)	-	(40)
Closing net book amount at 31 December 2011	16,365	1,421	17,786

Oil and gas project expenditures, including geological, geophysical and seismic costs, are accumulated as intangible fixed assets prior to the determination of commercial reserves. At 31 December 2011, intangible fixed assets totalled £16.4 million (2010 £8.8 million), all of which relate to Ireland.

An annual impairment review is carried out in respect of goodwill. The Group commissioned an update of its Competent Persons Report which was completed in February 2011. The Directors are satisfied that no impairment adjustment is required.

5.      Borrowings

	2011 £'000	2010 £'000
Loans from shareholders	173	1,391
	173	1,391

2009 Loan facilities

In February 2009 the Company entered into a loan agreement with one of its principal shareholders, LC Capital Master Fund Ltd ("LC"), pursuant to which LC agreed to provide Lansdowne with an initial loan facility of up to £500,000. The amount of the facility was subsequently extended, ultimately to a total of £1.6 million, in December 2010.

Interest initially accrued at the rate of LIBOR plus 2 per cent. per annum. Interest on amounts drawn under the facility after 13 October 2010 accrued at the rate of LIBOR plus 4 per cent. per annum.

By way of security for this Facility the Company granted legal charges in favour of LC over the Company's shareholdings in its wholly owned subsidiaries, Lansdowne Celtic Sea Limited and Milesian Oil & Gas Limited.

Repayment of the facilities was initially due on 12 March 2010 but had subsequently been extended until 31 December 2011.

On 16 December 2010 the Company allotted and issued new ordinary shares in the share capital of the Company to LC at a subscription price of 9 pence per share to satisfy the repayment of £102,971 due by the Company pursuant to this facility (note 13).

On 7 March 2011 the Company and LC agreed to convert a further part of the amount outstanding in respect of the facility by the issue of 5,131,909 new Ordinary Shares at a subscription price of 25 pence per share.

The remainder of the facility, amounting to £248,000 at that date, including accrued interest, remains outstanding and is repayable on 31 December 2012.

6.      Share capital and premium                                                                     

	Number of shares (thousands)	Ordinary shares £'000	Share premium £'000	Total £'000
At 1 January 2010	35,107	1,756	7,153	8,909
23 April 2010	3,520	176	35	211
6 October 2010	3,980	199	40	239
16 December 2010	11,088	554	444	998
At 31 December 2010	53,695	2,685	7,672	10,357
7 March 2011	27,792	1,389	5,150	6,539
28 July 2011	40,871	2,044	3,914	5,958
At 31 December 2011	122,358	6,118	16,736	22,854

On 7 March 2011 the Company raised £5 million before expenses, by the placing for cash of 20,000,000 new ordinary shares of £0.05 each at 25 pence per share. The Company and its lenders also agreed to convert loans to share capital by the issue of a further 7,791,743 new Ordinary shares at the same price.

On 26 July 2011 the Company raised £6.13 million before expenses, by the placing for cash of 40,871,172 new ordinary shares of £0.05 each at 15 pence per share.

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

	2011	2010
	£'000	£'000
Loss before income tax	(885)	(1,139)
Adjustments for:
Depreciation of property, plant & equipment	-	4
Equity settled share-based payment transactions	66	68
Unrealised foreign exchange gains	35	36
Operating cash flows before movements in working capital	(784)	(1,031)
Change in trade and other receivables	(14)	(11)
Change in trade and other payables	990	930
Cash generated by / (used in) operations	192	(112)

8.         Accounts

Copies of the annual accounts for the year ended 31 December 2011 will be sent to shareholders shortly and will be available from the Company's office at Britannia House, Endeavour Drive, Arnhall Business Park, Westhill, Aberdeenshire and the Company's website www.lansdowneoilandgas.com.

 

END

 

 

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