Interim Results

RNS Number : 8579D
Xtract Energy plc
30 March 2011
 



Xtract Energy Plc

Interim Results for the six months ended 31 December 2010

 

AIM: XTR

 

Xtract Energy Plc ("Xtract" or "the Company") announces its unaudited interim results for the six months ended 31 December 2010.

 

Financial Highlights

 

·      Net profit of £0.79 million (31 December 2009: £2.2 million loss)

·      Cash of £8.78 million (30 June 2010: £6.87 million)

·      Net assets of £10.56 million (30 June 2010: £9.7 million)

 

Operational Highlights

 

·      Elko entered into and completed a transaction to sell its P1 and P2 blocks offshore the Netherlands to Chevron for a consideration which included past costs and a royalty on revenue.

·      Elko and the 02/05 licence partners submitted an application for additional acreage immediately to the west of the existing 02/05 licence area.

·      Extrem Energy reported disappointing results from the Sarikiz 2 well such that commercial oil production was unlikely. The Sarikiz 2 well was subsequently plugged and abandoned.

·      A comprehensive review of the Turkish business, assets and licence portfolio was undertaken.

·      Board restructuring strengthened the company's management adding more operational and commercial focus, as well as more industry experience to the non-executive representatives.

 

Post-period Highlights

 

·      Elko was awarded a new license 01/11 in Denmark covering 1,900 square km, immediately to the west of the original 02/05 license. Revised 02/05 license in Denmark extended till 27th January 2013.

·      Elko acquired a CPR on the total Danish license area which estimates that there will be a 28% chance of getting a positive result in terms of hydrocarbon presence when the Luna prospect is drilled.

·      Elko completed the Danish asset farm out transaction with Noreco and secured a drilling rig to drill the Luna prospect in Q3 2011.

·      All the outstanding 60,000,000 warrants issued at 2.5p were exercised in Q1 2011.

·      Significant reductions from previously anticipated tax liabilities agreed with ATO and HMRC.

Outlook

·      Drilling anticipated on the Luna prospect in Denmark in Q3 2011.

·      Chevron expected to drill a well on Netherlands Block P2 in Q4 2011.

 

Peter Moir, Chief Executive of Xtract commented, "The company continues to direct more focus towards its underlying asset base. Successful progression of the Elko assets encourages management that our approach of enhancing asset value before progressing the assets via structured commercial deals will benefit the company".

 

Enquiries please contact:

 

 

CHAIRMAN'S STATEMENT

 

The first six months of the current financial year have seen additional strengthening in the executive management of the company, as well as changes to the non-executive membership of our board. Both Andy Morrison and Sue Wickerson resigned from the board. Peter Moir was appointed CEO in July and in October, Alan Hume joined the board as Group Finance Director. Both Peter and Alan have significant industry experience and can provide a more detailed knowledge of one of the company's main assets as Peter and Alan are CEO and CFO respectively of Elko Energy Inc also. Paul Butcher was appointed as an independent non-executive director in July. With the introduction of the strengthened executive management team, I stepped down from the role of Executive Chairman and undertook the Chairman position on a non-executive basis.

 

Xtract's subsidiary company, Elko Energy Inc, made good progress with its interests in The Netherlands and Denmark. A royalty agreement was reached with Chevron for Elko's interests in the P1 and P2 licences in the Netherlands. Elko Energy A/S farmed down to a 33% interest in the 02/05 blocks offshore Denmark with Noreco ASA taking over 47% of the licence and operatorship. An application for additional acreage immediately to the west of our existing acreage was submitted in the third quarter of 2010. 

 

The Company continues to hold mineral extraction rights over its significant oil shale tenements in Australia.

 

During 2007 to 2009, the company traded out of its investments in MEO Australia, Wasabi and Aviva resulting in taxable gains for Xtract Energy Plc and a subsidiary company. Calculations were made at the time of the sales to determine the tax payable on the gains. The tax liability was fully provided for in earlier financial statements of the company but no payment was made until recently. During the previous six months we have thoroughly reviewed our tax provisions and, after discussions with the Australian Tax Office and HMRC in the UK, we have been able to make significant reductions in our tax liabilities. We have already made some payments of the tax liability and have an agreed payment schedule for the remaining amounts.

 

The combined task force made up of both Xtract and Elko directors which was announced in Q3 2010 is close to finalising its activities and we hope to be able to report fully on that exercise in the near future.  

 

In Turkey, Extrem attempted to re-establish production from the Sarikiz-2 well, however, the reservoir inflow performance of the well had deteriorated to the point where only small volumes of formation water with traces of oil were produced. In August 2010, it was reluctantly concluded that there was no realistic prospect of achieving commercial oil production from this well. It was therefore decided to plug and abandon the well. 

 

The Company intends to continue to manage its investments as a portfolio in order to manage its cash position and optimise value for existing investors. The board actively monitors the financial position of the Company and is prepared to take the necessary steps to maintain an appropriate balance between a strong growth orientation and the need for an acceptable risk profile.

 

John Newton

Non-Executive Chairman

 

CHIEF EXECUTIVE'S REVIEW

 

Elko Energy Inc ("Elko")

 

Through its Danish subsidiary, Elko held the largest exploration licence in offshore Denmark.  Elko successfully farmed out 47% of the licence to Altinex Oil Denmark A/S, ("Altinex"). Altinex is part of the Noreco Group ("Noreco"). Post this farm-out, the ownership of the licence is Elko 33%, Noreco 47% with 20% held by a Danish government entity.

 

During the review period, the licence partners applied for additional acreage immediately adjacent to the existing licence area. The application was made under the same ownership percentages as discussed above. The application also contained a proposal for a significant partial relinquishment of the original 02/05 licensed area. Subsequent to the review period, the 02/05 license group was awarded a new license 01/11, immediately to the west of the original 02/05 license area.  The 01/11 partners have selected the specific well location and intend to drill the well in Q3 2011.  The licence partners have secured a latest generation jack up drilling rig to drill the Luna prospect in Q3 of 2011. The 'Luna' well location has been selected to test the Rotliegendes play in the optimum position in terms of reservoir quality, thickness and hydrocarbon charge for the combined prospective area.

 

The Noreco transaction closed on the 23rd March 2011 when all conditions precedent had been met. As part of the closing arrangements Elko were paid $1.1m for past costs.

 

There are a number of outcomes which can be described as technically successful as they prove the presence of reservoir and source. The latest CPR from TRACS estimates that there will be a 28% chance of getting a positive result in terms of hydrocarbon presence when the Luna prospect is drilled. The CPR reported a Gross Oil Prospective Resources range for Luna of 107 mmbbls to 464 mmbbls in the oil case scenario.

 

Elko was also successful in completing a transaction with Chevron in relation to Blocks P1 and P2 in the Netherlands during this reporting period. In consideration for Elko's total interests in the Blocks, Elko will receive an overriding royalty up to 5% of the sales value from Chevron gas delivered into the Dutch National Transmission System and Chevron condensate delivered onshore. Chevron also reimbursed Elko for its past costs incurred in developing these assets. Chevron anticipates drilling the first well on the acreage in Q4 2011.

 

Extrem Energy AS ("Extrem")

 

Extrem is a Turkish joint stock company in which Xtract holds 50%. The remaining 50% is held by partner Merty Energy, Petroleum Exploration, Education and Services Inc ("Merty"). Extrem has a portfolio of licenses interests onshore and offshore Turkey.

 

Attempts continued to be made in July and August 2010 to re-establish production under natural flow from the Sarikiz-2 well, however, the reservoir inflow performance of the well had deteriorated to the point where only small volumes of formation water with a trace of oil were produced. In August 2010, it was reluctantly concluded that there was no realistic prospect of achieving commercial oil production from this well, with or without down hole pumping. It was therefore decided to plug and abandon the well.

 

The evidence for a working petroleum system and good quality sands in the Alasehir licence area remains but the complex reservoir geology precludes immediate identification of an effective reservoir trap for the oil generated. Management has reviewed the assets held in Turkey through Extrem. The Company is in active discussions with Merty, and others, to determine the most advantageous way to progress the portfolio given competing demands on resources, whilst retaining value for shareholders.

 

Other Interests

 

Xtract continues to hold a 25% interest in former subsidiary Zhibek Resources Ltd ("Zhibek") following the farm-out of the major share to Santos International Holdings Pty Ltd in October 2008. Recent political unrest and democratic elections to appoint a new government have delayed Santos' operational activity in country. A well site has been identified and Santos anticipates drilling in late 2011. Further details will be available once drilling plans have been finalised.

 

Through its subsidiary Xtract Oil Ltd ("XOL"), the Company continued to maintain mineral rights over its 2.12 billion barrels of indicated and inferred oil shale resources at Julia Creek in Queensland, Australia. By maintaining the mineral rights at limited cash expense, Xtract retains the option to exploit the resource when investment conditions are more supportive. No significant activity was undertaken during the period under review either in Queensland or in Morocco through Xtract Energy (Oil Shale) Morocco SA.

 

As disclosed in the last annual report, Xtract has relinquished its licence portfolio in Mexico. This  is still subject to regulatory processes.

 

Xtract continues to focus on its strategy of identifying and building a diversified portfolio of high-potential businesses in the energy sector to provide growth opportunities over the short, medium and longer term. Xtract works closely with the management teams of its investee companies to help them reach critical milestones and build value.

 

Peter Moir

Chief Executive Officer

 

Notes

 

XOL

The information in this announcement relating to XOL's resources estimates has been provided using the JORC Code and has been reviewed by Dr John E. Shirley, Managing Director of XOL. Dr. Shirley has a BSc and PhD in Geophysics from the University of Tasmania; over 40 years experience in the resources and energy sector and is a member of the Society of Petroleum Engineers.

 

Definitions

 

"mbbl" - million barrels

 

 

CONSOLIDATED INCOME STATEMENT

 

 



Six months ended

Year ended


Notes


31 December

2010

Unaudited

£'000

31 December

2009 Unaudited

£'000

30 June

2010

Audited

£'000

Continuing operations






Administrative and operating expenses



(1,104)

652

(2,730)

Share of results of associates



(23)

(140)

(604)

Share of results of joint venture



(83)

-

(9,578)







Operating profit/(loss)



(1,210)

512

(12,912)







Investment revenue

3


42

82

153

Finance costs



154

(266)

(95)

Other gains and losses

3


1,133

(1,418)

31







Profit/(loss) before tax



119

(1,090)

(12,823)







Tax credit/(expense)



667

(1,074)

310







Profit/(loss) for the period



786

(2,164)

(12,513)







Attributable to:

Equity holders of the parent

638

(2,164)

(11,771)

Non-controlling interest

148

-

(742)









786

(2,164)

(12,513)







Net profit/(loss) per share












Basic (pence)

5

0.07

(0.29)

(1.47)







Diluted (pence)

5

0.07

(0.29)

(1.47)







All profit and losses recognised in the current period and prior year relate to continuing operations.

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 


Six months ended

Year ended



31 December

2010

Unaudited

£'000

31 December

2009 Unaudited

£'000

30 June

2010

Audited

£'000






Profit/(loss) for the period


786

(2,164)

(12,513)






Gain on revaluation of available-for-sale investments taken to equity


306

70

1,530






Transferred to income statement on sale of available-for-sale investments


-

2,566

1,016






Movements in share based payments reserve of associates taken to equity


-

277

-






Exchange differences on translation of foreign operations


(822)

(126)

1,043






Other comprehensive (loss)/gain for the period


(516)

2,787

3,589






Total comprehensive (loss)/gain for the period


270

623

(8,924)






Attributable to:





Equity holders of the parent


138

623

(8,292)

Non-controlling interest


132

-

(632)



270

623

(8,924)

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION




Notes


31 December

2010

Unaudited

£'000

31 December

2009 Unaudited

£'000

30 June

2010 Audited

£'000







Non-current assets






Intangible assets

6


2,047

-

4,407

Property, plant and equipment



4

20

8

Investments in associates

8


428

10,684

445

Investment in joint venture

9


2,230

-

2,322

Financial assets

10


497

281

191

Deferred consideration



291

300

297










5,497

11,285

7,670







Current assets






Trade and other receivables



217

96

287

Advance payment



-

424

-

Cash and cash equivalents



8,784

7,378

6,869










9,001

7,898

7,156







Total assets



14,498

19,183

14,826







Current liabilities






Trade and other payables



686

780

1,391

Current tax liabilities



2,778

4,544

3,248










3,464

5,324

4,639







Net current assets



5,537

2,574

2,517







Non-current liabilities






Deferred tax liabilities



471

-

471







Total liabilities



3,935

5,324

5,110







Net assets



10,563

13,859

9,716







 

 

Equity






Share capital

11


855

812

855

Share premium account



26,006

25,509

26,006

Warrant reserve



538

-

538

Share-based payments reserve



1,157

1,446

823

Available-for-sale reserve



(93)

(309)

(399)

Foreign currency translation reserve



882

1,390

1,704

Accumulated losses



(23,151)

(14,989)

(23,789)







Equity attributable to equity holders of the parent



6,194

13,859

5,738







Non-controlling interest



4,369

-

3,978







Total equity



10,563

13,859

9,716







 

The financial statements of Xtract Energy plc, registered number 5267407, were approved by the Board of directors and authorised for release on 30 March 2011. They were signed on its behalf by:

 

 

Peter Moir

Director

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

 





 

 


6 month period ended

31 December

2010

Unaudited

£'000

6 month period ended

31 December

2009 Unaudited

£'000

Year ended

30 June

2010

Audited

£'000






Cash flow (used) in/from operating activities

12

(1,840)

464

(1,734)






Investing activities










Interest received


42

82

153

Government grants


-

202

213

Acquisition of intangible assets


(25)

-

(54)

Disposal of intangible assets


3,612

-

-

Purchase of property, plant and equipment


-

-

(1)

Disposal of available-for-sale investments


-

4,935

4,305

Purchase of additional shares in associates


-

(2,366)

(2,366)

Purchase of joint venture


-

-

(3,911)

Acquisition of subsidiaries, net of cash acquired


-

-

4,784






Net cash from investing activities


3,629

2,853

3,123






Financing activities










Proceeds on issue of shares and warrants


-

1,200

1,176

Share issue expenses


-

(25)

-






Net cash from financing activities


-

1,175

1,176






Net increase in cash and cash equivalents


1,789

4,492

2,565






Cash and cash equivalents at beginning of period


6,869

3,182

3,182






Effect of foreign exchange rate changes


126

(296)

1,122






Cash and cash equivalents at end of period


8,784

7,378

6,869

 

 

 

NOTES TO THE INTERIM FINANCIAL STATEMENTS

 

1.         General information

The interim consolidated financial statements of the Group for the six months ended 31 December 2010 were authorised for issue in accordance with a resolution of the directors on 29 March 2010.

 

Xtract Energy Plc is a company incorporated in Great Britain under the Companies Act 2006. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange.

 

2.         Basis of preparation

Xtract Energy Plc prepares its financial statements on the basis of International Financial Reporting Standards (IFRSs) as adopted for use by the European Union (EU). The interim financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing the financial statements for the year ending 30 June 2011 which do not differ significantly from those used for the 2010 Group financial statements, except for the adoption of the following:

 

IFRS 1 'First time adoption of International Financial Reporting Standards'

The Group has adopted amendments to IFRS 1 'First time adoption of International Financial Reporting Standards' relating to oil and gas assets and determining whether an arrangement contains a lease with effect from 1 July 2010.

 

The Group has adopted amendments to IFRS 1 'First time adoption of International Financial Reporting Standards' relating to a limited exemption from comparative IFRS 7 disclosures for first-time adopters with effect from 1 July 2010.

 

IFRS 2 'Share Based Payments'

The Group has adopted amendments to IFRS 2 'Share Based Payments' relating to group cash-settled share-based payment transactions with effect from 1 July 2010.

 

IFRS 3 'Business Combinations'

The Group has adopted amendments to IFRS 'Business Combinations' resulting from May 2010 annual improvements to IFRSs with effect from 1 July 2010.

 

IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'

The Group has adopted amendments to IFRS 5 ''Non-current Assets Held for Sale and Discontinued Operations' resulting from May 2008 Annual Improvements to IFRSs with effect from 1 July 2010.

 

IFRS 8 'Operating Segments'

The Group has adopted amendments to IFRS 8 'Operating Segments' resulting from April 2009 annual improvements to IFRSs with effect from 1 July 2010.

 

IAS 1 'Presentation of Financial Statements'

The Group has adopted amendments to IFRS 8 'Operating Segments' resulting from May 2008 annual improvements to IFRSs with effect from 1 July 2010.

 

IAS 7 'Statement of Changes in Cash Flow'

The Group has adopted amendments to IAS 7 'Statement of Changes in Cash Flow' resulting from April 2009 annual improvements to IFRSs with effect from 1 July 2010.

IAS 17 'Leases'

The Group has adopted amendments to IAS 17 'Leases' resulting from May 2010 annual improvements to IFRSs with effect from 1 July 2010.

 

IAS 27 'Consolidated and Separate Financial Statements'

The Group has adopted amendments to IAS 27 'Consolidated and Separate Financial Statements' resulting from May 2010 annual improvements to IFRSs from 1 July 2010.

 

IAS 32 'Financial Instruments: Presentation'

The Group has adopted amendments to IAS 32 'Financial Instruments: Presentation' relating to classification of rights issues with effect from 1 July 2010.

 

IAS 39 'Financial Instruments: Recognition and Measurement'

The Group has adopted amendments to IAS 39 'Financial Instruments: Recognition and Measurement' resulting from April 2009 annual improvements to IFRSs with effect from 1 July 2010.

 

IFRIC 19 ' Extinguishing Financial Liabilities with Equity Instruments'

The Group has adopted IFRIC 19 'Extinguishing Financial Liabilities with Equity Instruments' with effect from 1 July 2010.

 

The interim financial information is presented in pound sterling and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated.

 

Going concern

The Group is not currently generating revenues from its operations, and its forecasts and projections show that it would not have sufficient cash to make further investments in its existing and new projects in line with the Group's strategy nor settle its current liabilities when due and meet its ongoing overheads without gaining access to additional funds. The Group continues to manage its investments as a portfolio, seeking to dispose of investments, bring in strategic partners and raise funds as appropriate to finance its obligations and to fund new investments. Management plans to address the Group's funding requirements through a combination of these measures. Management believes that it will be able to manage the Group's liquidity position successfully, but at this stage there is no committed transaction which would address the Group's cash requirements.

 

The directors have concluded that, given that the general economic climate remains challenging, these circumstances represent a material uncertainty that casts doubt upon the Group's and the Company's ability to continue as a going concern. Nevertheless, after making enquiries, and considering the uncertainties above, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and financial statements.

 

3.        Other gains and losses

An analysis of the Group's other gains and losses are as follows:

Six months ended

31 December   2010

Six months ended

31 December 2009

Year ended

30 June

2010


£'000

£'000

£'000

Investment revenue




Interest on bank deposits

42

82

153





Other gains and losses




Gains on disposals of associates

-

-

78

Transfer of foreign currency translation reserve on disposal of associates

 

-

 

-

 

745

Disposal of intangible assets (a)

1,127

-

-

Disposal of available-for-sale assets

-

(1,620)

(1,016)

Other income

6

-

11

Research and development grants

-

202

213


1,133

(1,418)

31

 

In December 2010, the Company's subsidiaries, Elko Energy BV and Elko Exploration BV (Elko) completed an agreement to sell their interests in the Netherlands Blocks P1 and P2 licences to Chevron Exploration and Production BV (Chevron). In consideration for their total Interest in the Blocks, Elko will receive an overriding royalty up to 5% of the sales value from Chevron gas delivered into the Dutch National Transmission System and Chevron condensate delivered onshore. Chevron anticipates drilling the first well on the acreage in 2011. As the future recovery of the overriding royalty is uncertain, nil consideration was recognised in relation to this royalty. Under the terms of the agreement, Chevron also paid EUR 4.3 million in cash for past costs.

 

The gain on disposal of intangible assets was calculated as follows:

 

Consideration - EUR 4.3M past costs

3,612

Consideration - overriding royalty

-

Less: Capitalised intangible and exploration assets

(2,485)

 

 

1,127

4.        Segment information

Business segments

For management purposes, the Group is currently organised into two operating divisions - oil & gas exploration, evaluation and development and oil shale exploitation. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

 

·      Oil & gas exploration, evaluation and development - of the Group's interests in Turkey, the Netherlands, Denmark and the Kyrgyz Republic. 

·      Oil shale exploitation - of the Group's interests in Queensland, Australia and Tarfaya, Morocco.

·      Investment and other - in various listed resource companies.

 

Segment information about businesses is presented below.


Oil & Gas exploration and production

Oil shale exploitation

Investment and other

Consolidated

£'000






Segment revenue





Administrative and operating expenses

 

(854)

 

(93)

 

(209)

 

(1,156)

Share of results of associates

 

(23)

 

-

 

-

 

(23)

Share of results of joint venture

 

(83)

 

-

 

-

 

(83)

Segment result

(960)

(93)

(209)

(1,262)






Investment revenue

6

1

35

42

Finance costs

-

-

154

154

Other gains and losses

1,134

-

51

1,185






Profit/(loss) before tax

180

(92)

31

119






Tax credit




667






Loss for the period




786






Attributable to:





     Equity holders 

     of the parent




638

     Non-controlling  

     interest




148





786

 

Oil & Gas exploration and production

Oil shale exploitation

Investment and

other

Consolidated


£'000

£'000

£'000

£'000






Depreciation and amortisation

2

-

2

4

 

Balance sheet










Assets





Intangible assets

2,047

-

-

2,047

Property, plant and equipment

1

-

3

4

Interests in associates

428

-

-

428

Interest in joint venture

2,230

-

-

2,230

Financial assets

7,428

60

2,010

9,498

Deferred consideration

291

-

-

291






Consolidated total assets




14,498






Liabilities





Financial liabilities

264

2

3,198

3,464

Deferred tax liability

-

-

471

471






Consolidated total liabilities




3,935






Period ended 31 December 2009

Oil & Gas exploration and production

Oil shale exploitation

Investment and other

Consolidated

£'000






Segment revenue





Administrative and operating expenses

-

(88)

740

652

Share of results of associates

(140)

-

-

(140)

Segment result

(140)

(88)

740

512






Investment revenue

-

1

81

82

Finance costs

-

-

(266)

(266)

Other gains and losses

-

202

(1,620)

(1,418)






Profit/(loss) before tax

(140)

115

(1,065)

(1,090)






Tax expense




(1,074)






Loss for the period




(2,164)






Attributable to:





     Equity holders    

     of the parent

 

 

 

 

 

 

 

(2,164)

     Non-controlling     

     interest

 

 


 

 

 

-





(2,164)

               

 

Oil & Gas exploration and production

Oil shale exploitation

Investment and

other

Consolidated


£'000

£'000

£'000

£'000






Depreciation and amortisation

-

-

2

2

 

 

Balance sheet










Assets





Property, plant and equipment

-

14

6

20

Interests in associates

10,684

-

-

10,684

Financial assets

-

205

7,974

8,179

Deferred consideration

300

-

-

300






Consolidated total assets




19,183






Liabilities





Financial liabilities

-

-

780

780

Unallocated corporate liabilities

-

-

-

4,544






Consolidated total liabilities




5,324






Year ended 30 June 2010

Oil & Gas exploration and production

Oil shale exploitation

Investment and other

Consolidated

£'000






Segment revenue





Administrative and operating expenses

(1,493)

(192)

(1,045)

(2,730)

Share of results of associates

(604)

-

-

(604)

Share of results of joint venture

(9,578)

-

-

(9,578)

Segment result

(11,675)

(192)

(1,045)

(12,912)






Investment revenue

3

4

146

153

Finance costs

-

-

(95)

(95)

Other gains and (losses)

9

213

(191)

31






Profit/(loss) before tax

(11,663)

25

(1,185)

(12,823)






Tax credit




310






Loss for the year




(12,513)






 Attributable to:





     Equity holders    

     of the parent

 

 

 

 

 

 

 

(11,771)

     Non-controlling     

     interest

 

 


 

 

 

(742)





(12,513)

 

 

Oil & Gas exploration

and

production

Oil shale exploitation

Investment and

other

Consolidated


£'000

£'000

£'000

£'000






Capital additions - property, plant and equipment

3

-

-

3

Capital additions on acquisition of subsidiary - property, plant and equipment

4

-

-

4

Depreciation and amortisation

2

14

4

20






Balance sheet










Assets





Intangible assets

4,407

-

-

4,407

Property, plant and equipment

3

-

5

8

Interests in associates

445

-

-

445

Interest in joint venture

2,322

-

-

2,322

Financial assets

4,912

111

2,324

7,347

Deferred consideration

297

-

-

297






Consolidated total assets




14,826






Liabilities





Financial liabilities

290

2

4,347

4,639

Deferred tax liability

-

-

471

471






Consolidated total liabilities




5,110






 

Geographical segments

The Group's operations are located in Europe (including UK and Turkey), Central Asia and Australia.

 

The following table provides an analysis of the Group's revenue by geographical market, irrespective of the origin of the goods/services.

 

Period ended 31 December 2010

Europe (including UK)

Central Asia

Australia

Total of segments


£'000

£'000

£'000

£'000






Segment revenue

-

-

-

-






Segment assets

14,010

428

60

14,498






Capital additions

-

-

-

-






 

Period ended 31 December 2009

Europe (including UK)

Central Asia

Australia

Total of segments


£'000

£'000

£'000

£'000






Segment revenue

-

-

-

-






Segment assets

18,132

770

281

19,183






Capital additions

-

-

-

-






 

Year ended 30 June 2010

Europe (including UK)

Central Asia

Australia

Total of segments


£'000

£'000

£'000

£'000






Segment revenue

-

-

-

-






Segment assets

14,270

445

111

14,826






Capital additions

3

-

-

3






Capital additions acquired on acquisition of subsidiary

 

4

 

-

 

-

 

4






5.        Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

 


Six months ended

Year ended

Earnings

 

31 December 2010

£'000

31 December 2009
£'000

 30 June  2010

£'000





Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent

786

(2,164)

(11,771)





Number of shares




Weighted average number of ordinary shares for the purposes of basic earnings per share

854,965,026

755,351,983

801,017,629





Effect of dilutive potential ordinary shares - options and warrants

30,296,104

-

-





Weighted average number of ordinary shares for the purposes of diluted earnings per share

885,261,130

755,351,983

801,017,629





Where a loss has occurred, basic and diluted earnings per share are the same because the outstanding share options and warrants are anti-dilutive.

 

6.         Intangible assets - exploration and evaluation

Details of the Group's intangible assets as at 31 December 2010 are as follows:

31 December 2010

£'000

31 December 2009
£'000

30 June 2010

£'000





Opening balance

4,407

-

-

Acquisition of subsidiary

-

-

4,353

Additions

25

-

54

Disposals (a)

(2,485)

-

-

Amortisation

(1)

-

-

Exchange translation

101

-

-


2,047

-

4,407





(a)   This relates to the disposal of the Netherlands Blocks P1 and P2 which is discussed in Note 3.

 

7.        Subsidiaries

            Details of the Group's subsidiaries as at 31 December 2010 are as follows:

Name

Place of incorporation

Date controlling interest acquired

Proportion of ownership & voting power

%

Principal activity

Sermines de Mexico S.A. de C.V.

Mexico

08/08/2005

100

Mining exploration

Xtract Oil Limited

Australia

17/02/2006

100

Mining exploration and technology development

Xtract International Limited

Great Britain

15/11/2006

100

Holding Company

Xtract Energy Spain SL

Spain

10/09/2009

100

Holding Company

Xtract Energy Holdings Limited

Great Britain

03/12/2007

100

Holding Company

Xtract Energy (Oil Shale) Morocco SA

Morocco

23/07/2008

70

Mining exploration

Elko Energy Inc

Canada

11/01/2010

50.02

Oil & Gas exploration and evaluation

Elko Energy International

Cayman Islands

11/01/2010

50.02

Holding Company

Elko MEA

Cayman Islands

11/01/2010

50.02

Holding Company

Elko Americas

Cayman Islands

11/01/2010

50.02

Holding Company

Elko Europe

Cayman Islands

11/01/2010

50.02

Holding Company

Elko (UK) Limited

Great Britain

11/01/2010

50.02

Holding Company

Elko Energy Business Services Ltd

Great Britain

11/01/2010

50.02

Administration services

Elko Energy A/S

Denmark

11/01/2010

50.02

Oil & Gas exploration and evaluation

RPK Finance & Holdings BV

The Netherlands

11/01/2010

50.02

Holding Company

Elko Energy BV

The Netherlands

11/01/2010

50.02

Oil & Gas exploration and evaluation

Elko Exploration BV

The Netherlands

11/01/2010

50.02

Oil & Gas exploration and evaluation

 

All of these subsidiaries have been consolidated for the period of ownership.

 

8.         Associates

            Details of the Group's associates as at 31 December 2010 are as follows:

31 December 2010

£'000

31 December 2009
£'000

30 June 2010

£'000





Opening balance

445

5,619

5,619

Investment in associate

-

4,905

5,329

Release of deferred consideration

6

11

43

Share of associates' losses for the period

(23)

(140)

(604)

Share of associates' share-based-payments reserve

-

277

461

Transferred to joint venture

-

-

(7,019)

Transferred to subsidiary

-

-

(3,395)

Gain on disposal of associate

-

-

78

Exchange translation

-

12

-

Share of associates' foreign currency translation reserve

-

-

(67)






428

10,684

445





 

Name

Place of Incorporation and Operation

Date associate interest acquired

Proportion of ownership & voting  power held %

Principal Activity

Zhibek Resources Limited

Great Britain/  Kyrgyzstan

17/11/08

25

Oil & gas exploration and production

 

9.         Joint venture

             Details of the Group's joint venture as at 31 December 2010 are as follows:

31 December 2010

£'000

31 December 2009
£'000

30 June 2010

£'000





Opening balance

2,322

-

-

Transferred from associates

-

-

7,019

Investment in joint venture

-

-

4,613

Share of joint venture losses

(83)

-

(9,578)

Exchange translation

(9)

-

268






2,230

-

2,322





 

Name

Place of Incorporation and Operation

Date associate interest acquired

Proportion of ownership & voting  power held %

Principal Activity

Extrem Energy A.S.

Turkey

15/02/2010

50

Oil & gas exploration and production

 

10.      Investments

Details of the Group's available-for-sale investments as at 31 December 2010 are as follows:

31 December 2010

£'000

31 December 2009
£'000

30 June

2010

£'000





At beginning of the period

191

3,215 

3,215

Acquired during the period

-

-

-

Rights issue purchased during the period

-

-

-

Disposed during the period

-

(4,554)

(4,554)

Movement in fair value

306

1,620

1,530






497

281

191





Available-for-sale investments comprise the Group's investment in listed securities, which have been held by the Group for long term returns.

 

11.       Share capital


As at

31 December

 2010

Number

As at

31 December

2009

Number

As at

30 June

 2010

Number

Issued and fully paid ordinary shares of 0.1p

854,965,026

811,765,026

854,965,026

 

£

£

£

Issued and fully paid ordinary shares of 0.1p

854,965

811,765

854,965

 

12.       Cash flows from operating activities

6 months period ended

31 December 2010

£'000

6 months period ended

31 December 2009

   £'000

Year ended 30 June 2010

£'000





Profit/(loss) for the period

786

(2,164)

(12,513)





Adjustments for:




Share of results of associates

23

140

604

Share of result of joint venture

83

-

9,578

Investment revenue/(expense)

(42)

(82)

(153)

Other (gains) and losses

(1,127)

1,620

182

Income tax expense/(credit)

(987)

1,074

 (310)

Government grants

-

(202)

(213)

Depreciation of property, plant and equipment

3

2

20

Amortisation of intangible assets

1

-

-

Share-based payments expense

463

193

193





Operating cash flows before movements in working capital

(797)

581

(2,612)

(Increase)/decrease in receivables

71

(8)

429

Increase/(decrease) in payables

(138)

1,098

414





Cash (used)/generated in operations

(864)

1,671

(1,769)





Income taxes paid

-

-

-

Interest expenses

(154)

266

95





Foreign currency exchange differences

(822)

(1,473)

(60)









Net cash (used) in/from operating activities

(1,840)

464

(1,734)





 

 

13.       Subsequent events

On 12 January 2011, Xtract Energy Plc announced that 20,000,000 ordinary shares of 0.1p each had been issued following an exercise of warrants at an exercise price of 2.5p.

 

On 27 January 2011, Xtract Energy Plc announced that 20,000,000 ordinary shares of 0.1p each had been issued following an exercise of warrants at an exercise price of 2.5p.

 

On 1 February 2011, Elko Energy announced that the 02/05 Danish license group had been awarded a new license 01/11 covering 1,900 square km, immediately to the West of the original 02/05 license. The 02/05 license group has relinquished 3,645 square km of the original 02/05 license. The balance of 1,745 square km of the original 02/05 license area combined with the new license totals 3,645 square km. The new license 01/11 requires that an exploration well is drilled no later than 24 months after issuance of the license. The 01/11 license is for an overall six year period and has a series of work program commitments and options as are typical in licenses of this nature. The 01/11 partners have already selected the specific well location and intend to drill the well in 2011.

 

On 7 February 2011, Elko Energy Inc issued 100,000 ordinary shares following an exercise of options at an exercise price of CAD$0.20. This increase in the number of ordinary shares of Elko Energy Inc reduced Xtract's proportion of ownership from 50.02% to 49.97%. The directors have determined that this does not constitute a loss of de facto control as Xtract continues to govern the financial and operating policies of Elko due to the joint management of both companies.

 

On 11 February 2011, Xtract Energy Plc announced that 20,000,000 ordinary shares of 0.1p each had been issued following an exercise of warrants at an exercise price of 2.5p.

 

On 18 March 2011, Elko Energy Inc announced that the revised 02/05 License was extended until 27 January 2013, which corresponds to the Phase 1 deadline in the 01/11 License. Danish Legislation does not allow extension of more than two years at a time. If by the end of this extension period the 02/05 License partners want to apply for a further extension, the work program associated with such an extension will be coordinated with the 01/11 License.

 

On 28 March 2011, Elko Energy Inc announced that all approvals and conditions pertaining to the 02/05 farm in agreement with Noreco had been satisfied and that the agreement closed on 23 March 2011. Noreco has paid Elko approximately USD$1.1 million cash for its share of past costs.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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