Interim Results

RNS Number : 5016K

Prospex Oil and Gas PLC

22 September 2016

 

Prospex Oil and Gas Plc / Index: AIM / Epic: PXOG / Sector: Oil and Gas

22 September 2016

Prospex Oil and Gas Plc ('Prospex' or the 'Company')
Interim Results

Prospex Oil and Gas Plc, the AIM quoted investment company, announces its interim results for the sixth month period ended 30 June 2016.

Highlights:

·    Acquisition of 49% stake in Hutton Poland in line with strategy to invest in high impact onshore and shallow offshore European opportunities with short timelines to production

·    Hutton Poland owns 100% of the 1,150 sq km Kolo Licence, onshore Poland which includes the drill-ready Boleslaw Prospect

·     Competent Person's Report highlights Boleslaw's attractive economics:

o  Gross best estimate of 87 bcsf

o  US$44 million to US$95 million NPV range net to Prospex

o  £5 million to £8.4 million risked valuation range net to Prospex, - provides asset backing to Company's current market capitalisation and is a significant premium to initial investment costs of £620,000

·     Boleslaw fully funded and on track to be drilled in Q4 2016

·     Additional highly prospective targets on Kolo licence

·   Strong cash position following successful raise of £2.521m, £1.746m during the period and £775,000 post

·   Continue to evaluate other investment opportunities in the European onshore and shallow offshore oil and gas sector

Edward Dawson, Managing Director of Prospex, said, "In the Kolo Licence, we have an excellent short-term investment opportunity, and have confidence Hutton Poland will exploit this highly prospective resource which has transformational potential.  With contractors secured drilling operations at the first target, Boleslaw-1 exploration well, are on course to commence in Q4 2016, which we believe on its own, has the potential to re-rate our valuation.  This is the first of a number of targets on the licence area which are prospective and Hutton Poland remain focused on achieving milestones at Boleslaw.

"At the same time we continue to explore other opportunities that we believe will allow us to deliver on our wider strategy to invest in high impact European opportunities with short timelines to production in the coming months and years ahead.  As with Boleslaw, we are looking at undervalued projects that would benefit from low cost re-evaluation/re-working, with multiple, tangible value trigger points within 12 months of acquisition, as we look to build a leading oil and gas investment company."

For further information visit www.prospexoilandgas.com or contact the following:

Edward Dawson	Prospex Oil and Gas Plc	Tel: [phone]
Katy Mitchell Nick Prowting Jay Ashfield	WH Ireland Limited WH Ireland Limited WH Ireland Limited	Tel: [phone] Tel: [phone]
Jon Belliss	Beaufort Securities Limited	Tel: [phone]
Lucy Williams Charles Goodfellow Eran Zucker	Peterhouse Corporate Finance Peterhouse Corporate Finance Peterhouse Corporate Finance	Tel: [phone]
Charlotte Heap Frank Buhagiar	St Brides Partners Ltd St Brides Partners Ltd	Tel: [phone]

Chairman's Statement

We have made excellent progress over the period and I am delighted with what we have been able to achieve in such a short space of time.  Our focus over the past six months centred on investing in high impact offshore and shallow onshore opportunities in Europe, where we believe our proven team, which has successfully built and sold oil and gas companies, can identify and secure exciting and value accretive opportunities.  We evaluated a huge amount of projects during the period, with the acquisition of a 49% stake in the attractive but undervalued Hutton Poland ('Hutton') being the most significant.

Since acquisition, considerable progress has been made towards advancing work at the 1,150 sq km Kolo Licence ('Kolo'), located in the productive Polish Central Basin, which holds multiple opportunities including the Boleslaw prospect as well as an independent oil prospect and a further gas anomaly.  The opportunities present at Kolo was one of the key tenets that attracted us to this investment, and we were delighted that an independent Competent Person's Report ('CPR') prepared by AGR TRACS in May 2016 identified the significant, untapped potential value present at the project, deeming it "a worthwhile and attractive exploration opportunity". 

At the drill-ready Boleslaw prospect, where Hutton Poland are targeting two mapped reservoirs, the CPR assigned a gross best estimate of 87 bscf and a risked current valuation ranging from £5m to £8.4m (net to Prospex), representing a significant premium to the initial investment price £620,000 (see announcements dated 8 January 2016 and 08 April 2016).

Exalo Drilling ('Exalo') has been contracted to drill the Boleslaw-1 exploration well, marking another significant milestone in the Project's advancement.  The immediate next steps involve the completion of the Boleslaw permitting effort and final approval of the drilling programme from the Polish government's Ministry of Environment, which will be followed by pad construction and the mobilisation of the drill rig ahead of the commencement of drilling operations, which are on track to commence in Q4 2016.  With significant high impact milestones being achieved in the near term, we anticipate that the months ahead will be an exciting period for the Company; a period in which we will endeavour to continue to build value, explore prospective opportunities and generate uplift for our shareholders.

The successful equity raise of £1.6 million in May 2016 and a subsequent raise of £775,000 post period end in August 2016, places us in a strong position and ensures the advancement of the Boleslaw-1 investment, which provides us with high impact potential in the short-term, while allowing us to explore longer term opportunities, a number of which we are actively evaluating.

I believe we have an excellent platform in place for growth.  The market is conducive to our model and we believe we can acquire assets that fit our investment criteria and have the ability to add long-term value.  This would not be possible without our team, and I would like to take this opportunity to thank them, as well as our advisers and shareholders for their continued support as we look forward to the period ahead with confidence.  Prospex continues to establish itself as an oil and gas investment company, which I believe will generate significant value for shareholders in the process.

Bill Smith

Non-Executive Chairman

Consolidated statement of comprehensive income

		Six months ended		Six months ended		Year ended
		30 June		30 June		31 December
		2016		2015		2015
		(unaudited)		(unaudited)		(audited)
		£		£		£
Administrative expenses		(198,163)		(257,814)		(601,892)
Gain arising on restructuring		-		152,361		98,885
Operating loss		(198,163)		(105,453)		(503,007)
Finance income		-		162		162
Loss before income taxation		(198,163)		(105,291)		(502,845)
Income tax expense		-		-		411
Loss for the period from continuing operations		(198,163)		(105,291)		(502,434)
Discontinued operations
Profit for the period from discontinued operations		-		521,745		571,745
		(198,163)		416,454		69,311
Other comprehensive income
Change in fair value of available for sale assets		2,374,650		-		-
Currency translation differences on disposal of foreign operation		-		(39,467)		-
Loss/(profit) for the period and total comprehensive income attributable to owners of the parent for the period		2,176,487		376,987		69,311
Earnings/(loss) per share - basic and diluted
Continuing operations		3.61p		(0.52)p		(1.64)p
Discontinued activities		-		2.56p		1.86p

Consolidated statement of financial position

As at 30 June 2016

		30 June		30 June		31 December
		2016		2015		2015
		(unaudited)		(unaudited)		(audited)
		£		£		£
ASSETS
Non-current assets
Property, plant and equipment		35,383		-		1,274
Investment in associate		3,621,656		-		-
Non-current financial assets		198,080		-		-
Total non-current assets		3,855,119		-		1,274
Current assets
Trade and other receivables		45,702		169,448		155,909
Cash and cash equivalents		523,392		859,407		382,216
Total current assets		569,094		1,028,855		538,125
LIABILITIES
Current liabilities
Trade and other payables		(108,015)		(256,858)		(80,875)
Total liabilities		(108,015)		(256,858)		(80,875)
Net current assets/(liabilities)		461,079		771,997		457,250
Net assets		4,316,198		771,997		458,524
EQUITY
Equity attributable to owners of the parent
Called up share capital		4,403,234		2,657,234		2,657,234
Share premium account		6,667,901		6,732,715		6,732,714
Capital redemption reserve		43,333		43,333		43,333
Merger reserve		2,416,667		2,416,667		2,416,667
Retained earnings		(9,214,937)		(11,077,952)		(11,391,424)
Total equity		4,316,198		771,997		458,524

Statement of changes in equity

For the six months ended 30 June 2016

								Foreign		Capital				Non
		Share		Share		Retained		currency		redemption		Merger		controlling		Convertible
		capital		premium		earnings		reserve		reserve		reserve		interests		loan note		Total
		£		£		£		£		£		£		£		£		£
Unaudited
Balance at 1 January 2016		2,657,234		6,732,714		(11,391,424)		-		43,333		2,416,667		-		-		458,524
Total comprehensive income for the period		-		-		2,176,487		-		-		-		-		-		2,176,487
Issue of shares		1,746,000		-		-		-		-		-		-		-		1,746,000
Share issue costs		-		(64,813)		-		-		-		-		-		-		(64,813)
Balance at 30 June 2016		4,403,234		6,667,901		(9,214,937)		-		43,333		2,416,667		-		-		4,316,198
Unaudited
Balance at 1 January 2015		2,304,398		6,063,208		(11,531,728)		39,467		43,333		2,416,667		(166,865)		100,216		(731,304)
Total comprehensive income for the period		-		-		416,454		(39,467)		-		-		-		-		376,987
Issue of shares		352,836		723,314		-		-		-		-		-		-		1,076,150
Share issue costs		-		(53,807)		-		-		-		-		-		-		(53,807)
Equity settled share based payment		-		-		37,322		-		-		-		-		-		37,322
On completion of CVA		-		-		-		-		-		-		-		(100,216)		(100,216)
On disposal of subsidiaries		-		-		-		-		-		-		166,865		-		166,865
Balance at 30 June 2015		2,657,234		6,732,715		(11,077,952)		-		43,333		2,416,667		-		-		771,997
Audited
Balance at 1 January 2015		2,304,398		6,063,208		(11,531,728)		39,467		43,333		2,416,667		(166,865)		100,216		(731,304)
Total comprehensive income for the year		-		-		69,311		-		-		-		-		-		69,311
Issue of shares		352,836		723,314		-		-		-		-		-		-		1,076,150
Share issue costs		-		(53,808)		-		-		-		-		-		-		(53,808)
On completion of CVA		-		-		-		-		-		-		-		(100,216)		(100,216)
Equity settled share based payment		-		-		70,993		-		-		-		-		-		70,993
On disposal of subsidiaries		-		-		-		(39,467)		-		-		166,865		-		127,398
Balance at 31 December 2015		2,657,234		6,732,714		(11,391,424)		-		43,333		2,416,667		-		-		458,524

Cash flow statement

For the six months ended 30 June 2016

		Six months ended		Six months ended		Year ended
		30 June		30 June		31 December
		2016		2015		2015
		(unaudited)		(unaudited)		(audited)
		£		£		£
Operating activities
Operating loss		(198,163)		(257,814)		(601,892)
Depreciation of property plant and equipment		8,400		-		425
Decrease/(increase) in trade and other receivables		110,207		(14,174)		(130,552)
Increase/(decrease) in trade and other payables		27,140		68,604		(96,409)
Equity-settled share based payment		-		37,322		70,993
Other movement		-		(31,824)		33,955
Net cash used in operating activities - continuing operations		(52,416)		(197,886)		(723,480)
Investing activities
Finance income		-		162		162
Net generated from investing activities		-		162		162
Capital expenditure
Payments to acquire property, plant and equipment		(42,509)		-		(1,699)
Net cash outflow for capital expenditure		(42,509)		-		(1,699)
Acquisitions and disposals
Purchase of investments		(1,445,086)		-		-
Cash on disposal of subsidiary undertaking		-		-		(247)
Net cash used in acquisitions and disposals		(1,445,086)		-		(247)
Financing activities
Issue of share capital		1,746,000		1,076,150		1,076,150
Costs in respect of share issue		(64,813)		(53,808)		(53,808)
Convertible loan notes		-		-		50,000
Proceeds received from the issue of derivative financial assets		-		12,055		12,404
Net cash generated from financing activities		1,681,187		1,034,397		1,084,746
Net increase in cash and cash equivalents		141,176		836,673		359,482
Cash and cash equivalents at start of period		382,216		22,734		22,734
Cash and cash equivalents at end of period		523,392		859,407		382,216

Notes to the interim financial statements

1          General information

Prospex Oil and Gas Plc is a company incorporated in the United Kingdom, which is listed on the Alternative Investment Market of the London Stock Exchange Plc. The address of its registered office is Stonebridge House, Chelmsford Road, Hatfield Heath, Essex CM22 7BD. The Group is primarily involved in the exploration for gold.

2          Financial information

The interim financial information for the six months ended 30 June 2016 has not been audited or reviewed and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative financial information for the year ended 31 December 2015 has been derived from the audited financial statements for that period. A copy of those statutory financial statements for the year ended 31 December 2015 has been delivered to the Registrar of Companies. The report of the independent auditors on those financial statements was unqualified and did not contain a statement under Sections 498 (2) or (3) of the Companies Act 2006.

The interim financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union, IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS and under the historical cost convention. They have also been on a basis consistent with the accounting policies expected to be applied for the year ending 31 December 2016 and which are also consistent with those set out in the statutory accounts of the Company for the year ended 31 December 2015, except for the adoption of new standards and interpretations.

3          Taxation

On the basis of these accounts there is no tax charge for the period.

4          Earnings per share

The earnings and number of shares used in the calculation of earnings per share are as follows:

		Six months ended		Six months ended		Year ended
		30 June		30 June		31 December
		2016		2015		2015
		(unaudited)		(unaudited)		(audited)
Basic and diluted
Continuing operations		2,176,487		(105,291)		(502,434)
Discontinued operations		-		521,745		571,745
Profit  for the financial period		2,176,487		416,454		69,311
Weighted average number of shares		60,327,994		20,345,260		30,677,884
Loss per share  - continuing activities		3.61p		(0.52)p		(1.64)p
Earnings per share - discontinued activities		-		2.56p		1.86p

There was no dilutive effect in respect of the share options outstanding during the period.

5          Non-current investment

The Group owns 49% of the equity share capital of Hutton Poland Limited. The investment is accounted for at fair value through the profit and loss, as the Company is deemed to be an Investment Entity.

The carrying value of the Group's investment was as follows:

		Six months ended		Six months ended		Year ended
		30 June		30 June		31 December
		2016		2015		2015
		(unaudited)		(unaudited)		(audited)
At 1 January		-		-		-
Addition, at cost		1,247,006   2,374,650 2,176,487		-          416,454		-                  69,311
Fair value adjustment
At 30 June

6          Dividends

The directors do not propose to declare a dividend for the period.

7          Copies of interim results

Copies of the interim results can be obtained from the website www.prospexoiland gas.com. From this site you may access our financial reports and presentations, recent press releases and details about the company and its operations.

* * ENDS * *

 

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