Final Results

RNS Number : 9987F

Petrel Resources PLC

25 June 2012

 



25 June 2012

Petrel Resources plc

("Petrel" or "the Company")

Preliminary Results for the Year Ended 31 December 2011

Petrel Resources announces its results for the year ending 31 December 2011.

Highlights:

·     Strong cash position of € 4.2m (2010; € 2.7m) aided by receipt of payments of $2.5m in relation to the Engineering, Procurement and Supervision of Services (EPC) contract on the Subba and Luhais oil field

·     Gained two exploration licenses in the Irish Atlantic Margin 

·     Diversified asset portfolio with planned expansion into Africa

·     Provided further financial comfort to the Ghanaian National Petroleum Company to assist ratification of our signed Petroleum Agreement on Tano 2A Block, Ghana

John Teeling, Chairman of Petrel Resources, said "We have a strong cash position, expertise, data, skills and live operations. But we are not satisfied.  We are examining ways in which we can use all of the assets and expertise in Petrel to revitalise interest in the company.  In a time of massive economic uncertainty, Petrel, with cash, is in a good position."

Enquiries:

Petrel Resources Plc
David Horgan, Managing Director	[phone]
John Teeling	[phone]
Northland Capital Partners Limited
Katie Shelton / Alice Lane Gavin Burnell	[phone]
Public Relations Blythe Weigh Communication	[phone]
Tim Blythe	[phone]
Robert Kellner	[phone]
Pembroke Communications
David O'Siochain	[phone]

www.petrelresources.com

Statement Accompanying the Preliminary Results

Petrel is an Irish Hydrocarbon exploration company with current activities in Iraq, Ghana and now offshore Ireland.  First formed in the 1980's to explore offshore Ireland, Petrel entered into Iraq in 1999.  We worked diligently with the Iraqi Oil Ministry and in 2002 agreed an exploration lease on a 10,000 sq km area in the Western Desert. This was approved by the Oil Ministry but not the supreme authority. Post 2004, Petrel was successful in obtaining a large oil field construction contract, Subba and Luhais, and Technical Cooperation Agreements on two undeveloped oil fields, Merjan and Dhufriyah.  A local partner was imposed on Petrel at the signing of the Subba and Luhais agreement.  Difficulties arose in the execution of the contract and after extensive negotiations Petrel withdrew from the contract with $ 7m in compensation and a 10% net profits interest.  The project is virtually complete but we expect no further payment.

Since 2008 we have applied to be pre-qualified for four licencing rounds. To date we have been unsuccessful.  When compared to the super-major and giant national oil companies who applied in the early rounds, our small size militated against us - though we had strong in country experience.  It must be said that even had we pre-qualified there is no certainty that we would have completed a deal.  Iraqi terms are very difficult and it is not clear how economic they are for investors.  But we remain committed to Iraq.  It is the best and cheapest place in the world to find oil and gas.  The current political, economic and legal uncertainties will be ironed out but it could take time.  We have recognised that our existing structure has been unsuccessful so we are in the process of establishing a new Baghdad based specialist oil team who will further our Block 6 interests as well as seeking out new opportunities.

In 2007 we got an opportunity to join with an associate company, Pan Andean Resources, now Clontarf Energy, in an application to explore the Tano 2A Block onshore/offshore Ghana. Petrel brought a successful body of technical experience to the application. Our share was, and is, 30% (Clontarf Energy 60%, local Ghanaian interests 10%). An agreement was finalised in 2008 with the Ghanaian National Petroleum Company (GNPC). The agreement was revised in 2010 and then awaited cabinet and parliamentary approval. This has not yet been given. Delays in national resource agreements are common. Ghana has become in recent years an emerging world class oil province. Close to the Tano 2A Block, the Jubilee field and surrounding finds are estimated to contain billions of barrels of oil. Heightened levels of interest and activity in Ghanaian oil places pressure on all parties involved. There is now far greater interest in the Tano area than there was in 2008. While accepting and understanding the delays, your directors have engaged directly with the GNPC to determine how best to move the application through the process. We have agreed to certain guarantees and bonds. We are hopeful that current efforts will lead to a successful conclusion in 2012.

Petrel began life in the early 1980s as a minority partner in Irish offshore exploration. Given the technology of the times, tough Irish terms, the oil price, and alternative opportunities, it was a brave initiative.  It failed, as it did for almost all offshore Irish drilling - only a few hits from 215 holes.  But times change, exploration technology improves, as have fiscal terms. In recent years there has been a revival of interest. Success in the Corrib area of the Atlantic and more recently in the Celtic sea has sparked a revival. As always it is the juniors who are first in. Using the best expertise in Irish offshore hydrocarbons, Petrel applied for and obtained licence options over two groups of offshore blocks in the Porcupine Basin. Since the award of the licences, Petrel has added to their large 1980s database and began a seismic mapping and well analysis. We have specific areas within the licences where we expect to identify promising targets. It is still very early days in the revival but it is promising.

Looking Forward

For almost 30 years Petrel has been an oil explorer. Exploring is a high risk strategy which means we have a high probability of failure. To date we have failed to deliver real value to our investors but we have survived.  In that time we have reinvented ourselves to work in three different continents, in Europe, Asia and Africa.  Where do we stand now?  We have cash, over $4m, expertise, data, skills and live operations. We will continue to work in Iraq, we are hopeful of a successful conclusion in Ghana and exciting prospects are opening up in Ireland. But we are not satisfied. We are examining ways in which we can use all of the assets and expertise in Petrel to revitalise interest in the company. In a time of massive economic uncertainty, Petrel, with cash, is in a good position.

John Teeling

Chairman

25 June 2012

__________________________________________________________________________________

PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2011

	2011	2010
	€	€
CONTINUING OPERATIONS
Administrative expenses	(466,961)	(462,646)
OPERATING LOSS	(466,961)	(462,646)
Investment revenue	7,140	13,774
LOSS BEFORE TAXATION	(459,821)	(448,872)
Income tax expense	-	-
LOSS FOR THE YEAR: all attributable
to equity holders of the parent	(459,821)	(448,872)
Exchange differences on translation of foreign operations	160,587	(258,694)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	(299,234)	(707,566)
Loss per share - basic and diluted	(0.60c)	(0.59c)

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2011

	2011	2010
	€	€
ASSETS
NON-CURRENT ASSETS
Intangible assets	2,700,960	2,149,670
CURRENT ASSETS
Trade and other receivables	32,474	2,139,269
Cash and cash equivalents	4,150,649	2,748,831
	4,183,123	4,888,100
TOTAL ASSETS	6,884,083	7,037,770
CURRENT LIABILITIES
Trade and other payables	(230,760)	(85,213)
NET CURRENT ASSETS	3,952,363	4,802,887
NET ASSETS	6,653,323	6,952,557
EQUITY
Called-up share capital	958,308	958,308
Capital conversion reserve fund	7,694	7,694
Share premium	17,784,268	17,784,268
Share based payment reserve	205,971	205,971
Retained deficit	(12,302,918)	(12,003,684)
TOTAL EQUITY	6,653,323	6,952,557

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2011

			Capital	Share
			Conversion	Based
	Share	Share	Reserve	Payment	Retained
	Capital	Premium	fund	Reserve	Deficit	Total
	€	€	€	€	€	€
At 1 January 2010	958,308	17,784,268	7,694	205,971	(11,296,118)	7,660,123
Total comprehensive income for the year	-	-	-	-	(707,566)	(707,566)
At 31 December 2010	958,308	17,784,268	7,694	205,971	(12,003,684)	6,952,557
Total comprehensive income for the year	-	-	-	-	(299,234)	(299,234)
At 31 December 2011	958,308	17,784,268	7,694	205,971	(12,302,918)	6,653,323

Share premium

The share premium comprises of the excess of monies received in respect of the issue of share capital over the nominal value of shares issued.

Capital conversion reserve fund

The ordinary shares of the company were renominalised from €0.0126774 each to €0.0125 each in 2001 and the amount by which the issued share capital of the company was reduced was transferred to the capital conversion reserve fund.

Share based payment reserve

The share based payment reserve represents share based payments granted which are not yet exercised and issued as shares.

Retained deficit

Retained deficit comprises accumulated losses in the current year and prior years.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2011

	2011	2010
	€	€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year	(459,821)	(448,872)
Investment revenue recognised in loss	(7,140)	(13,774)
OPERATING CASHFLOW BEFORE
MOVEMENTS IN WORKING CAPITAL	(466,961)	(462,646)
Movements in working capital:
Decrease in construction contracts	-	5,361,939
Increase/(Decrease) in trade and other payables	145,547	(37,592,237)
Decrease in trade and other receivables	1,949,465	34,888,918
CASH GENERATED BY OPERATIONS	1,628,051	2,195,974
Investment revenue	7,140	13,774
NET CASH GENERATED FROM OPERATING ACTIVITIES	1,635,191	2,209,748
INVESTING ACTIVITIES
Payments for exploration and evaluation assets	(481,014)	(376,702)
NET CASH USED IN INVESTING ACTIVITIES	(481,014)	(376,702)
NET INCREASE IN CASH AND CASH EQUIVALENTS	1,154,177	1,833,046
Cash and cash equivalents at beginning of financial year	2,748,831	923,429
Effect of exchange rate changes on cash held in
foreign currencies	247,641	(7,644)
Cash and cash equivalents at end of financial year	4,150,649	2,748,831

Notes:

1.    Accounting Policies

There were no changes in accounting policies from those used to prepare the Group's Annual Report for the financial year ended 31 December 2010. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRSs as adopted by the European Union.

2.    Loss per share

	2011	2010
	€	€
Loss per share - basic and diluted	(0.60c)	(0.59c)
Basic loss per share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
	2011	2010
	€	€
Loss for the year attributable to equity holders	(459,821)	(448,872)
	2011	2010
	Number	Number
Weighted average number of ordinary shares for the
purpose of basic earnings per share	76,664,624	76,664,624

Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.

3.    Intangible Assets

	2011	2010
	€	€
Exploration and evaluation assets:
Cost:
Opening balance	2,149,670	1,644,482
Additions	481,014	376,702
Exchange translation adjustment	70,276	128,486
Closing balance	2,700,960	2,149,670
Segmental Analysis
	2011	2010
	€	€
Western Dessert Block 6	2,068,931	1,900,663
Ghana	418,228	249,007
Ireland	213,801	-
	2,700,960	2,149,670

Exploration and evaluation assets at 31 December 2011 represent exploration and related expenditure in respect of projects in Ireland, Iraq and Ghana. The directors are aware that by its nature there is an inherent uncertainty in relation to the recoverability of amounts capitalised on the exploration projects.  In addition, the current economic and political situation in Iraq is uncertain. 

The directors believe there were no facts or circumstances indicating that the carrying value of the intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors.  The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves and is subject to a number of significant potential risks, as set out below:                 

·  Foreign exchange risks;

·  Uncertainties over development and operational costs;

·  Political and legal risks, including arrangements for licenses, profit sharing and taxation;

·  Foreign investment risks including increases in taxes, royalties and renegotiation of contracts;

·  Liquidity risks;

·  Operation and environmental risks;

·  Going Concern.

Directors' remuneration of €110,378 (2010: €100,000) was capitalised as exploration and evaluation expenditure during the year.

4.    General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2011. The financial information for 2010 is derived from the financial statements for 2010 which have been delivered to the Companies Registration Office. The auditors have reported on 2010 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets. The financial statements for 2011 will be delivered to the Companies Registration Office following the Company's Annual General Meeting.

A copy of the Company's Annual Report and Accounts for 2011 will be mailed to all shareholders shortly and will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland. The Annual Report will shortly be available for viewing at Petrel Resources PLC's website at www.petrelresources.com

 

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