Interim Results

RNS Number : 5074K

Silvermere Energy PLC

22 August 2012

 



22 August 2012

Silvermere Energy plc

("Silvermere" or the "Company")

Interim Results for the Six Months ended 30 June 2012

Silvermere, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in the US, is pleased to announce its interim results for the six months ended 30 June 2012.

Chairman's Review

The first half of 2012 saw the Company making further progress in the development of its asset base acquired a year ago. This progress culminated in the commencement of load-out operations at the I-1 well at the end of the period, with the new production platform then being substantially completed by early August 2012. During the period, the Company's pipeline of business development opportunities has grown further and additional new capital has been raised, laying the groundwork for future expansion and development of the Company.

Financial Results

Given current activities ahead of first production, the Company reported no turnover during the six months ended 30 June 2012 (2011: Nil) and made a loss before tax of £672,098 (2011: loss of £249,029) after taking into account administrative costs of £585,164 (2011: £249,029).These increased costs reflect the development of the Company from a non-trading vehicle looking for assets to acquire into an operational oil & gas business.

During the period the Company invested approximately £0.5 million in the development of its Mustang Island 818-L asset, offshore Texas.

Following a placing raising £629,000 in June 2012, the Company ended the period with cash and cash equivalents of £703,668 (2011: £177,138). The placing was conducted to finance the remaining tie-in costs associated with the start of production from the I-1 well at Mustang Island and to enable the Company to undertake preparatory work in connection with future expansion and development.

Review of Operations

During the first half of 2012 the Company was primarily focused on preparations for first production from the I-1 well and the building of its portfolio of business development opportunities as a basis for future expansion. Operations at Mustang Island were conducted under the supervision of the designated operator, Dominion Production Company LLC.

Load-out of the first barge, containing the platform jacket for the I-1 well, from its base at a Galveston shipyard was completed on 29 June 2012 and the period end signalled the start of the completion process for the turn-key installation and tie-in contract.

The period was characterised by declining gas prices in the US, with spot market prices at one point falling below US$2.00 per thousand cubic feet although this was offset to some extent by better than forecast oil prices.

The Directors believe that the longer term outlook for the natural gas market is favourable. In the shorter term, targeted new business development opportunities will reflect the need to diversify our asset portfolio through oil production and development opportunities as well as commercially viable gas assets.

Post Balance Sheet Events

Following load-out which occurred during the period, the installation and tie-in work proceeded steadily and without significant weather delay. The I-1 well production platform was completed in all material respects on 4 August 2012 and connection of the pipeline between the platform and sub-sea tie-in point was subsequently completed on 18 August 2012. At the time of writing, hook-up to the well-head is expected imminently which will be followed by pipeline charging and then by a programme of production testing which is expected to lead to initial commercial production by the end of September 2012.

The completion and tie-in of the platform and commencement of production testing bring the Company to an exciting stage in its early development.  However, this will not represent the end of the journey but merely the completion of the first phase of development. Future development work on other existing prospects within the Mustang Island licence area has the potential to significantly upgrade the Company's reserves and valuation.

It currently seems that many market participants do not view the second half of 2012 with much optimism. Should markets prove to be sluggish this may present the Company and its peers with both potentially material threats and significant opportunities. We continue to evaluate the possible acquisition, referenced within an announcement dated 27 June 2012, of an interest in an oil producing asset in New Mexicoand also to assess other projects within the Company's business development portfolio with the intention of increasing the size and scope of the core business within the short to medium term. 

I would like to thank my fellow directors for their efforts and our shareholders for their continued support. I look forward to reporting on further progress in due course.

These interim results will be available on the Company's web-site at www.silvermere-energy.com.

On behalf of the board

Frank Moxon

Chairman

For further information please contact: Silvermere Energy plc Andy Morrison, Chief Executive	[phone]
Merchant Securities Limited (Nominated Adviser and Broker) Lindsay Mair / Virginia Bull / Catherine Miles Peterhouse Corporate Finance Limited Jon Levinson	+ 44(0)20 7628 2200  [phone]
Bishopgate Communications Nick Rome/ Anna Michniewicz/ Ivana Petkova	[phone]

Statement of Comprehensive Income

for the 6 months ended 30 June 2012

							6 months to 30 Jun 2012		6 months to 30 Jun 2011		12 months to 31 Dec 2011
						Notes	£		£		£
Administration costs							(585,164)		(249,029)		(152,826)
Exceptional items							-		-		(505,978)
Operating loss							(585,164)		(249,029)		(1,292,581)
Financial income							13		-		126
Finance costs							(86,947)		-		(78,100)
Loss before tax							(672,098)		(249,029)		(1,370,555)
Income tax							-		-		-
Loss for the period							(672,098)		(249,029)		(1,370,555)
Loss per share
Basic							(3 p)		(5 p)		(14 p)
Diluted							(3 p)		(5 p)		(14 p)

Statement of Financial Position

for the 6 months ended 30 June 2012

			30 Jun  2012		30 Jun  2011		31 Dec 2011
		Notes	£		£		£
Assets
Investment in oil and natural gas assets			3,804,929		-		3,339,980
Loan to Core Oil & Gas Inc			-		1,823,675		-
Non-current assets			3,804,929		1,823,675		3,339,980
Current assets
Trade and other receivables			289,508		528,756		452,712
Cash and cash equivalents			703,668		177,138		202,352
			993,176		705,894		655,064
Total assets			4,798,106		2,529,569		3,995,044
Equity attributable to the Company's equity holders
Share capital		4	1,296,547		1,274,900		1,287,815
Share premium			5,923,905		3,712,914		5,179,647
Loan note equity reserve			25,274		-		25,274
Share option and warrant reserve			795,689				839,274
Retained earnings			(4,668,612)		(2,874,988)		(3,996,514)
			3,436,988		2,112,826		3,335,496
Current liabilities
Trade and other payables			747,368		335,096		157,345
Non-current liabilities
Convertible loan notes			555,906		81,647		468,958
Decommissioning obligation			57,844				33,245
Total liabilities			1,361,118		416,743		659,548
Total equity and liabilities			4,798,106		2,529,569		3,995,044

Statement of Cash flow

for the 6 months ended 30 June 2012

		6 months to 30 Jun 2012		6 months to 30 Jun 2011			12 months to 31 Dec 2011
	Notes	£		£			£
Cash flows from operating activities
Cash used in operations	5	191,663		(362,494)			(1,100,199)
Net cash from operating activities		191,663			(362,494)		(1,100,199)
Cash flows from investing activities
Investment in oil and gas assets		(440,350)			-		(3,248,127)
Loans repayable in more than one year		-			(1,515,067)		-
Net cash from investing activities		(440,350)		(1,515,067)			(3,248,127)
Cash flows from financing activities
Proceeds on issue of shares		759,990		1,921,303			3,851,803
Share issue expenses		(10,000)		-			(184,647)
Proceeds from issue of convertible loan notes		-		-			750,000
Finance income		13		-			126
Net cash from financing activities		750,003		1,921,303			4,417,282
Increase in cash and cash equivalents		501,316		43,742			68,956
Cash and cash equivalents at beginning of period		202,352		133,396			133,396
Cash and cash equivalents at end of period		703,668		177,138			202,352

Notes to the interim statement

for the 6 months ended 30 June 2012

1. General information

Silvermere Energy Plc is an investor in oil and gas assets.

The Company is a public limited company listed on AIM and is incorporated in England and Wales.

The address of its registered office is 42 Brook Street, London, W1K 5DB. Items included in the financial statements of the Company are measured in Pound Sterling which is the currency of the primary economic environment in which the entity operates. The financial statements are also presented in Pound Sterling which is the Company's presentational currency.

2. Basis of preparation

The interim financial statements of Silvermere Energy Plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and on the historical cost basis using the accounting policies which are consistent with those set out in the Company's Annual Report and Accounts for the year ended 31 December 2011.

This interim financial information for the six months to 30 June 2012 was approved by the board on xx August 2012.

The unaudited interim financial information for the period ended 30 June 2012 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the year ended 31 December 2011 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and which contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.

3. Loss per share

Loss per share is calculated by reference to the weighted average of 20,926,393 ordinary shares in issue during the period (30 June 2011 - 5,257,091 and 31 December 2011 - 9,986,069).

The diluted loss per share is the same as the basic loss per share as the losses in each period have an anti-dilutive effect.

4.         Share capital
	30 Jun 2012		30 Jun 2011		31 Dec 2011
	No		No		No
Issued and fully paid:
Ordinary shares of £0.001	29,179,310		7,532,223		20,447,226
Deferred shares of £29.999	42,247		42,247		42,247
	£		£		£
Issued and fully paid:
Ordinary shares of £0.001	29,179		7,532		20,447
Deferred shares of £29.999	1,267,368		1,267,368		1,267,368
	1,296,547		1,274,900		1,287,815

The deferred shares have negligible value, being subject to restrictions as to voting, participation and redemption according to the new Articles of Association then adopted, nor are they quoted on the Stock Exchange.

On 21 February 2012, 148,079 shares were issued to directors at 18.875p per share in respect of remuneration entitlement and directors fees.  And on the same date 126,741 shares were issued for cash at 0.1p per share on the exercise of warrants.

On 22 March 2012, 56,478 shares were issued for cash at 0.1p per share on the exercise of warrants.

On 27 April 2012, 514,286 were issued for cash at 20p per share on the exercise of warrants under the incentive plan.

On 31 May 2012, 24,000 shares were issued at 12.5p per share in settlement of directors fees.

On 26 June 2012, 7,862,500 shares were issued for cash at 8p per share as the result of a private placing.

5.	Note to the cash flow statement
		6 months to 30 Jun 2012		6 months to 30 Jun 2011		12 months to 31 Dec 2011
		£		£		£
Loss for the period		(672,098)		(249,029)		(1,370,555)
Adjustments for items not included in cash flow:
Share-based payment expense		20,600		-		71,444
Shares issued in lieu of fees and remuneration		3,000		-		12,600
Finance expense		86,947		-		78,100
Finance income		(13)		-		(126)
		(476,564)		(249,029)		(1,208,537)
Adjustments for changes in working capital:
- Decrease/(increase) in trade and other receivables		163,204		(405,359)		(79,315)
- Increase/(decrease) in trade and other payables		590,023		291,894		187,653
Cash generated from/(used in) operations		191,663		(362,494)		(1,100,199)

 

END

 

 

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