Final Results

RNS Number : 4871B

Lansdowne Oil & Gas plc

17 June 2016

 

Lansdowne Oil & Gas plc 

Preliminary Results for the year ended 31 December 2015

17^th June 2016

Lansdowne Oil & Gas ("Lansdowne" or "the Company") is pleased to announce its unaudited preliminary results, for the year ended 31 December 2015. 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

·     The Midleton exploration well (49/11-3), located on Standard Exploration Licence (SEL) 4/07, in which the Company holds a 20% interest, found gas in good quality reservoir sands in the Lower Cretaceous Greensand formation. However, the volumes were not considered commercial.

·     A two-year extension to the first phase of SEL 1/11 (Lansdowne 20%), which contains the Barryroe oilfield, was secured to July 2017. A two-year extension to the second phase to July 2019 was also secured.

·     Providence Resources continued its farm-out efforts on behalf of the partners in the Barryroe oil field (Lansdowne 20%) and has also held discussions with a contractor alliance.

Financial

·     Cash balances at 31 December 2015 of £0.32 million (2014: £0.28 million).

·     Operating expenses for the year were £1.05 million (2014: £1.30 million).

·     Loss for the year after tax of £15.10 million (including an impairment charge of £14.95 million) (2014: loss £1.32 million).

·     Loss per share of 10.2 pence (2014: loss 0.9 pence).

Post-balance sheet events ·     In April 2016, a judgement was handed down by the Court of Appeal overturning an earlier ruling against Transocean in a dispute with Providence Resources. Lansdowne is liable for 20% of the amounts payable by Providence as a result of this decision. ·     In order to satisfy these obligations and to meet its working capital requirements, in June 2016 the Company has today agreed to issue 210 million shares at 1p each to raise £2.1 million before expenses. For further information please contact:
Lansdowne Oil & Gas plc Steve Boldy Richard Slape	[phone]
Cantor Fitzgerald Europe Sarah Wharry David Porter	[phone]

Results for the year ended 31 December 2015

Chairman's Statement

Introduction

The depressed oil and gas prices that prevailed through 2015 made life extremely difficult for small oil and gas exploration and production companies like Lansdowne. With capital expenditure budgets cut dramatically across the industry, the strategy that Lansdowne has followed of farming-out for the drilling phase, having acquired 3D seismic and high graded prospects, proved to be extremely challenging. Furthermore, the potential to access new funds via the equity capital markets was very limited.

Nevertheless, in March of 2015 the Company secured £2.9 million of additional funding. This was to satisfy Lansdowne's share of certain costs associated with litigation between Providence Resources and Transocean in relation to the drilling of the 48/24-10z well in 2011/12 and also for ongoing working capital requirements. Of this, £1.04 million came from a placing of new shares, while £1.86 million came from the issuance of a senior secured loan note to our largest shareholder, LC Capital Master Fund.

Operations

The Midleton exploration well (49/11-3), located on Standard Exploration Licence (SEL) 4/07, in which the Company holds a 20% interest, commenced in July and was completed in August. The well was drilled by PSE Seven Heads Limited, a wholly owned subsidiary of PSE Kinsale Energy Limited ("Kinsale Energy") under a farm-out agreement whereby Kinsale Energy funded 100% of the costs of the well. The well found good quality reservoir sands in the targeted Lower Cretaceous Greensand and Upper Wealden formations and gas was discovered in the former. Unfortunately, the volumes were not considered commercial and the well was plugged and abandoned.

Despite our best efforts, we were unable to secure a farminee to drill our Amergin (SEL 5/08) or our Rosscarbery (SEL 5/07) prospects and, as Lansdowne was not able to demonstrate that drilling would be achieved in 2016, these licences lapsed from 31 December 2015.

The lack of success in our exploration portfolio renders our 20% in SEL 1/11, containing the Barryroe oilfield, even more important. In November 2015, a two year extension was secured for the first phase of SEL 1/11, to July 2017 as well as an extension of the term of the second phase to July 2019. The areal extent of SEL 1/11 was also increased by 118km² to accommodate mapped potential extensions of the Barryroe accumulation.

Providence Resources has continued a farm-out process on behalf of the Barryroe partnership and has also held discussions with a contractor alliance. Barryroe, with independently estimated 2C resources of 339 MMBOE, is located some 70km offshore in shallow water (c.100m) offers a significant potential prize. With combined capital and operating costs estimated at c.$30/bbl, we believe the economics remain robust even in the low oil price environment that has prevailed over the last 18 months.

Financial results

The Group recorded a loss after tax of £15.10 million for the year ended 31 December 2015 compared to a loss of after tax of £1.32 million for the year ended 31 December 2014. The loss recorded in 2015 was struck after writing-off £14.95 million previously capitalised in respect of the Amergin, Midleton, and Rosscarbery licences.

Group operating expenses for 2015 were £1.05 million, compared to £1.30 million for 2014, while net finance expense for the year was £0.13 million versus £0.02 million in 2014.

Total equity attributable to the ordinary shareholders of the Group has decreased to £10.40 million as at 31 December 2015 from £24.40 million as at 31 December 2014.

Cash balances of £0.32 million (2014: £0.28 million) were held at the end of the financial year.

Post-balance sheet events

On 13th April 2016, a judgment was handed down by the Court of Appeal overturning an earlier ruling against Transocean in a dispute with Providence Resources about certain spread costs. On the basis of this issued judgment, Lansdowne has made a provision for its net share of the amount in its Financial Accounts for the year ending 31 December 2015.

The case related to amounts claimed by Transocean against Providence regarding the use of the semi-submersible drilling unit, the Arctic III, in 2011/12 on the Barryroe oilfield, offshore Ireland.  The total claim, which was made by Transocean in 2012, amounted to approximately US$19 million.  Providence, in defence of its position, counterclaimed against Transocean. The Hon. Mr Justice Popplewell, in his judgment of 19 December 2014 in the Commercial Court in London, found that Transocean was in breach of contract for failing to maintain various parts of its sub-sea equipment and that Transocean was not, therefore, entitled to the full amount claimed. The ruling also supported Providence's position that Providence was entitled to set off certain spread costs against Transocean's claim.

As previously announced, Transocean sought and was granted the right to appeal one aspect of Mr Justice Popplewell's judgment. This specifically related to Providence's right of set off and the appeal turned on the Court's interpretation of the wording of the consequential loss clause in the rig contract. The appeal was heard in March 2016.

The financial implications of the Court of Appeal's judgment will result in the payment of approximately US$7 million (excluding interest and costs) to Transocean by the Barryroe partners. In line with its working interest in the field, Lansdowne is liable for 20% of this amount (c.US$1.4 million) and of any amounts to be paid in future.

In order to satisfy its obligations under the Barryroe Joint Operating Agreement and to meet its on-going working capital requirements, on 17th June 2016 the Company announced that it had agreed to issue 210 million new shares at 1p each to raise £2.1 million before expenses. In addition, Lansdowne renegotiated the terms of its loan note with LC Capital Master Fund. This is now repayable on 30^th June 2017 rather than 9^th September 2016 and the coupon has been reduced from 10% per annum to 5% per annum. Furthermore, LC Capital Master Fund agreed to convert £930,000 of the amount outstanding into equity at 1p/share.

Outlook

The Court of Appeal ruling delivered a real body blow at what was already a difficult time for your company. However, we continue to recognise that great value can be created in Barryroe, particularly in the rising oil price environment that now seems to be taking hold. Therefore, after gaining access to new funds to secure our interest in the Barryroe Joint Venture, we are looking to the future with optimism.

John Greenall

Chairman

 

Lansdowne Oil & Gas plc

Unaudited Consolidated Statement of Financial Position

As at 31 December 2015

		2015		2014
		Unaudited		Audited
	Note	£'000		£'000
Assets
Non- current assets
Intangible assets	4	14,335		27,151
Current Assets
Trade and other receivables		92		197
Cash at bank and on hand		320		276
		412		473
Total Assets		14,747		27,624
Equity and Liabilities
Shareholders' Equity
Share capital	5	8,087		7,027
Share premium		25,247		25,273
Currency translation reserve		59		59
Share-based payment reserve		923		894
Accumulated deficit		(23,950)		(8,876)
Total Equity			10,366		24,377
Non-Current Liabilities
Provisions for liabilities Deferred tax liability Current Liabilities Shareholder loan Trade and other payables		240 - 1,968 2,173		217 1,052 - 1,978
		-------		-------
Total Liabilities		4,381		3,247
Total Equity and Liabilities		14,747		27,624

 

Lansdowne Oil & Gas plc

Unaudited Consolidated Income Statement

For the year ended 31 December 2015

		2015	2014
		Unaudited	Audited
	Note	£'000	£'000
Administrative expenses		(1,048)	(1,302)
Impairment of intangible assets		(14,949)	-
Operating loss		(15,997)	(1,302)
Finance costs		(129)	(21)
Finance income		-	3
Loss for the year before tax		(16,126)	(1,320)
Income tax credit		1,052	-
Loss for the year		(15,074)	(1,320)
Loss per share (pence):
Basic loss per ordinary share	3	(10.2p)	(0.9p)
Diluted loss per ordinary share	3	(10.2p)	(0.9p)

The results for the period all arise on continuing operations

Lansdowne Oil & Gas plc

Unaudited Consolidated Statement of Comprehensive Income

For the year ended 31 December 2015

	2015 £'000	2014 £'000
Loss for the year	(15,074)	(1,320)
Items that may be reclassified to profit and loss account
Currency translation differences	-	3
Total comprehensive loss for the year	(15,074)	(1,317)

 

Lansdowne Oil & Gas plc

Unaudited Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

	Share capital £'000	Share premium £'000	Share based payment Reserve £'000	Currency translation reserves £'000	Accumulated deficit £'000	Total equity £'000
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 loss 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
At 1 January 2015	7,027	25,273	894	59	(8,876)	24,377
Loss for the financial year	-	-	-	-	(15,074)	(15,074)
Total comprehensive loss for the year	-	-	-	-	(15,074)	(15,074)
Share based payments charge	-	-	29	-		29
Issue of new shares	1,060	-	-	-		1,060
Cost of share issues	-	(26)	-	-		(26)
At 31 December 2015	8,087	25,247	923	59	(23,950)	10,366

 

Lansdowne Oil & Gas plc

Unaudited Consolidated Statement of Cash Flows

For the year ended 31 December 2015

	Note	2015	2014
		Unaudited	Audited
		£'000	£'000
Cash flows from operating activities
Loss for the year		(15,074)	(1,320)
Adjustment for:
Impairment of assets		14,949	-
Foreign exchange gains		-	5
Interest receivable and similar income		-	(3)
Interest payable and similar charges		127	21
Equity settled share-based payment expenses		29	91
Tax credit		(1,052)	-
Decrease/(increase) in trade and other receivables		105	(51)
Increase/(decrease) in trade and other payables		196	(1,014)
Net cash used in operating activities		(720)	(2,271)
Cash flows from investing activities
Acquisition of intangible exploration assets		(2,133)	66
Interest received		-	3
Net cash from investing activities		(2,133)	69
Cash flows from financing activities
Proceeds from issue of shares		1,034	-
Proceeds from borrowing		1,863	-
Net cash from financing activities		2,897
Net increase/(decrease) in cash and cash equivalents		44	(2,202)
Cash and cash equivalents at beginning of year		276	2,478
Cash and cash equivalents at end of year		320	276

 

Lansdowne Oil & Gas plc

Notes to the Financial Information

For the year ended 31 December 2015

1.         Basis of presentation

The consolidated financial statements are presented in Sterling, the Group'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 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.

Other options

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 Group also has the option of issuing new equity, and, as stated in the post balance sheet event note, the Group has announced today that it has agreed to issue 210 million shares to raise £2.10 million before costs by way of a placing with new and existing shareholders.

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 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 cash flow projections, the directors have a reasonable expectation that the Group 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)
	2015	2014
Loss per share arising from continuing operations attributable to the equity holders of the Group
- basic and diluted	(10.2)	(0.9)

The calculations were based on the following information.

	£'000	£'000
Loss for the year attributable to equity holders	(15,074)	(1,320)
Weighted average number of ordinary shares in issue
- basic and diluted	157,698,252	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 2015 and 2014, potentially issuable shares would have been antidilutive. The number of potentially issuable shares at 31 December 2015 is 165,007,665 (2014: 143,306,029).

4.          Intangible assets 

Group	Exploration / appraisal assets
Cost	£'000
At 1 January 2014	27,217
Additions, net of reimbursement from partners	(66)
At 31 December 2014	27,151
Cost
At 1 January 2015	27,151
Additions	2,133
Disposals	(14,949)
At 31 December 2015	14,335

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.

As a result of their annual review, the Directors have impaired capitalised exploration expenditure relating to all licence areas excluding Barryroe in full, as they no longer meet the recognised criteria of IFRS 6, 'Exploration for and Evaluation of Mineral Resourses'.

5.         Share capital and premium- Group                                                                                         

	Number of shares (thousands)	Ordinary shares £'000	Share premium £'000	Total £'000
At 1 January 2015	140,540	7,027	25,273	32,300
Issued in year	21,202	1,060	-	1,060
Share issue costs	-	-	(26)	(26)
At 31 December 2015	161,742	8,087	25,247	33,334

6.             Accounts

Copies of the annual accounts for the year ended 31 December 2015 will be sent to shareholders shortly and will be available from the Group's office at 6 Northbrook Road, Ranelagh, Dublin 6, Ireland and the Group'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 headquartered in Dublin. Lansdowne's acreage holdings include a 20% stake in SEL 1/11, which contains the Barryroe oil field.

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

 

END

 

 

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