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Anglo African O&G (AAOG)

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Friday 28 September, 2018

Anglo African O&G

Half-year Report

RNS Number : 2310C
Anglo African Oil & Gas PLC
28 September 2018
 

 

Anglo African Oil & Gas / Index: AIM / Epic: AAOG / Sector: Oil & Gas

 

Anglo African Oil & Gas plc ('AAOG' or the 'Company')

Half-year Report

 

Anglo African Oil & Gas plc, an independent oil and gas developer, is pleased to publish its unaudited results for the six months ended 30 June 2018.

HIGHLIGHTS

·        Appointment of James Berwick as Chief Executive Officer

·        Three non-executive directors appointed to the board

·        Operational team in-country restructured and strengthened

·        Completion of two successful workovers on TLP-101 and TLP-102

·        Drilling rig contracted, mobilised and operational ahead of schedule

·        Spud of well TLP-103C scheduled for week commencing 8 October

·        Strengthening of the Company's relationships with government and SNPC

·        Expansion of the Tilapia site in preparation for the future development programme

·        Placing raised US$10m (£7.4m) in June.

CHAIRMAN'S LETTER

Dear shareholder,

This report and accounts cover the six months to 30 June 2018, during which, with new management in place, the Company finally moved to deliver on the potential of its Tilapia asset and build up to the drilling of a new well.

Capital and financial planning

As I mentioned in the recent annual report, the entire board and I are very grateful to members for their support in the placing that closed in June 2018.  That placing has enabled the Company to move forward with drilling the new well, whether or not its partners contribute to the upfront costs.  This well is pivotal to the value of the Company.

In addition to the placing, and as part of our contingency planning, we also took the precautionary step of discussing with interested providers debt facilities which, if agreed, will be structured in a way that gives the Company and its members control over any dilutive effect on the shares.  These negotiations took place over the summer and the importance of having done so was evident when the Company faced the situation of having to absorb costs relating to the re-spud of the new well.

This approach to capital planning is an ongoing process.  We are very aware of the need to protect the interests of members and are actively developing plans that will enable the Company to grow and develop the Tilapia asset, as well as to acquire new assets, while at the same time ensuring that in doing so there must be accretive value to the shareholders.

New management team

As I mentioned in my letter in the annual report, we now have in place an experienced operational team led by James Berwick supported by a strong board with complementary skills and experience.  The new directors have proved to be invaluable in our deliberations over the past nine months.

James Berwick's letter provides an up-to-date review of the operational progress made by the Company since his appointment.  I would add that AAOG's team in-country have proved to be dedicated and professional, and we are most grateful to them for their hard work and determined approach to the challenges that we have faced.

I would also like to take this opportunity to introduce two new members of the non-board, executive team.  Jeremy Patullo has joined from Chevron to provide further support on the finance side and brings with him a wealth of experience in budgeting and managing capital projects.  In addition, David Livingston has joined from Upstream Risk Management and is providing much needed support to James Berwick in managing the operations.

New licence

As I reported in June, the Company's investment in the Tilapia field has been welcomed by the Congolese authorities.  We have been told by the authorities that the drilling of TLP-103C, and our interest in other fields in the country, are the significant factors in the granting a new licence for Tilapia, and we expect the process to complete shortly.

Overall strategy

At the moment, the focus remains on drilling what is now designated as TLP-103C.  We have also developed plans for the full development of the Tilapia field, with the variations on that plan depending on the results of TLP-103C.

In addition, we have progressed discussions on new asset opportunities which fit with the Company's continued strategy of becoming a lean, profitable oil producer with a focus on the bottom line and a clear and unswerving commitment to the payment of dividends.  We look forward to progressing these discussions further.

We look forward to keeping members updated on progress.

David Sefton
Executive chairman
27 September 2018

CHIEF EXECUTIVE'S LETTER

Dear shareholder,

I would like to take this opportunity to summarise the progress that the Company has made in the six months to 30 June 2018 and provide an operational update on works completed and future plans for the Tilapia site during this and the next financial period:

Six months to 30 June 2018

During the period under review, the Company made considerable strides towards its primary goal of turning the Tilapia site into a profitable, cash-generative asset.  We have recruited new members to the operational team and restructured our operations in the Congo so that the Company now has a balanced and highly experienced group of oilfield specialists.  Their expertise has enabled the Company to prepare and execute on a revised and greatly improved drilling programme that takes account of the increased knowledge of the asset and its geology that we have acquired since the start of the year.  We have introduced a more stringent health and safety code of practice for our operations that provides the reassurance of best practice to our extensive team of employees and contractors on site (the majority of whom are Congolese nationals).  In addition, we have built strong relationships with, among many others, the government department supervising our activities, and with SNPC, the national oil company.  I am delighted to report that the group as a whole has worked collaboratively and most effectively during an intense period of planning and execution.

TLP-101 and TLP-102

The Company has during this period completed two successful workovers on wells TLP-101 and TLP-102 and is now in the process of analysing the results with a view to increasing production from its existing infrastructure.

TLP-103C

The TLP-103 well was spudded on 15 August but at approximately 290 metres we encountered a thief zone in the formation which caused the rig to shift on its pads some 50cm.  It was decided, because of this movement, that it would be unsafe to continue drilling in this location.  As a result, the Company gave instructions to abandon the current location and move 95m northwest of the 103 well and re-spud the well as TLP-103C.

A specialist rig, drilling and site inspector was despatched to the Tilapia site immediately on notification of the incident.  Contingency planning has been included in the new 103C well design in order best to mitigate any further issues in the troublesome formation encountered on well 103.  In order to accommodate the location change, the Company was required to complete remedial civil works to extend the drilling pad by some 50m, giving ample room for future development on the site.  Construction of the new pad is now complete, and the Company expects to spud well TLP-103C during the week commencing 8 October 2018.

The Company through its contacts has been able to secure all the required long lead items to replace and enhance the new well.

Summary

Whilst we have encountered a short delay in the drilling of well 103, the operational team, drilling contractor and support services have all performed superbly over this period. 

We will continue to conduct our operations in line with best industry practice and we look forward to announcing positive news flow in the next financial period.

James Berwick
Chief executive officer
27 September 2018

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2018 (unaudited)

 

 

 

Six months ended
30 June 2018

Six months ended

30 June 2017

Year ended
31 December 2017

 

 

 

 

(audited)

 

Notes

£

£

£

 

 

 

 

 

CONTINUING OPERATIONS

 

 

 

 

 

Revenue

 

106,378

65,661

226,757

Cost of sales

 

(385,121)

(285,500)

(405,349)

 

 

 

 

 

GROSS (LOSS)

 

(278,743)

(219,839)

(178,592)

 

 

 

 

 

Administrative expenses

 

(1,605,175)

(587,186)

(2,405,864)

Share-based payment charges

 

(153,633)

-

(138,332)

 

 

 

 

 

OPERATING LOSS BEFORE EXCEPTIONAL ITEMS

 

(2,037,551)

(807,025)

(2,722,788)

 

 

 

 

 

Fundraising costs

 

(133,254)

-

-

AIM admission costs                                        

 

-

(287,615)

(363,869)

 

 

 

 

 

LOSS FROM OPERATING ACTIVITIES

 

(2,170,805)

(1,094,640)

(3,086,657)

 

 

 

 

 

Finance income

 

-

-

8,131

Finance costs

 

(801)

(61,941)

(62,543)

 

 

 

 

 

LOSS BEFORE TAX

 

(2,171,606)

(1,156,581)

(3,141,069)

 

 

 

 

 

Taxation

 

-

(3,196)

-

 

 

 

 

 

LOSS FOR THE PERIOD FROM OPERATING ACTIVITIES

 

(2,171,606)

(1,159,777)

(3,141,069)

 

 

 

 

 

Exchange translation on foreign operations

 

(41,349)

-

215,514

 

 

 

 

 

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD

 

 

(2,212,955)

 

(1,159,777)

 

(2,925,555)

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the company

 

(2,212,955)

(1,191,282)

(2,925,555)

Non-controlling interests

 

-

31,505

-

 

 

 

 

 

Basic and diluted loss per ordinary share (pence)

6

(2.71)

(3.41)

(5.75)

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2018 (unaudited)

 

 

 

30 June

30 June

31 December

 

 

2018

2017

2017

 

 

 

 

(audited)

 

Notes

£

£

£

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

Property, plant and equipment

7

2,818,066

227,138

3,048,818

Intangible assets

8

8,378,540

3,208,148

7,592,008

 

 

 

 

 

 

 

11,196,606

3,435,286

10,640,826

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

Trade and other receivables

 

1,546,955

1,114,740

245,275

Prepayments

 

8,305

-

4,215

Cash and cash equivalents

 

6,502,407

5,040,661

2,696,911

 

 

 

 

 

 

 

8,057,667

6,155,401

2,946,401

 

 

 

 

 

TOTAL ASSETS

 

19,254,273

9,590,687

13,587,227

 

 

 

 

 

EQUITY

SHAREHOLDERS' EQUITY

 

 

 

 

Share capital

9

12,478,811

7,033,537

7,851,238

Share premium

 

14,286,058

8,091,064

12,003,418

Currency revaluation reserve

 

330,722

205,444

372,071

Retained deficit

 

(12,311,610)

(8,482,182)

(10,293,637)

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY

 

14,783,981

6,847,863

9,933,090

 

 

 

 

 

Non-controlling interests

 

-

(1,164,227)

-

 

 

 

 

 

TOTAL EQUITY

 

14,783,981

5,683,636

9,933,090

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Trade and other payables

 

1,858,246

1,194,705

1,027,091

Loans and borrowings

 

-

-

15,000

Provisions

 

123,524

123,524

123,524

 

 

1,981,770

1,318,229

1,165,615

LONG TERM LIABILITIES

 

 

 

 

Provisions

 

2,488,522

2,588,822

2,488,522

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

19,254,273

9,590,687

13,587,227

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2018 (unaudited)

 

 

Share capital

Share premium

Currency revaluation reserve

Retained deficit

Non- controlling interest

Total

 

£

£

£

£

£

£

 

 

 

 

 

 

 

Balance at 31 December 2016

4,463,008

1,555,144

156,557

(7,290,900)

-

(1,116,191)

 

 

 

 

 

 

 

Changes in equity

 

 

 

 

 

 

Acquisition of subsidiary

-

-

-

-

(1,195,732)

(1,195,732)

Issue of share capital

2,570,529

7,630,065

-

-

-

10,200,594

Costs of issuing equity

-

(1,094,145)

-

-

-

(1,094,145)

Currency translation

-

-

48,887

-

-

48,887

Total comprehensive expense

-

-

-

(1,191,282)

31,505

(1,159,777)

 

 

 

 

 

 

 

Balance at 30 June 2017

7,033,537

8,091,064

205,444

(8,482,182)

(1,164,227)

5,683,636

 

 

 

 

 

 

 

Changes in equity

 

 

 

 

 

 

Acquisition of subsidiary

-

-

-

-

1,164,227

1,164,227

Issue of share capital

817,701

3,954,964

-

-

-

4,772,665

Costs of issuing equity

-

(42,610)

-

-

-

(42,610)

Share-based payment charges

-

-

-

138,332

-

138,332

Currency translation

-

-

166,627

-

-

166,627

Total comprehensive expense

-

-

-

(1,949,787)

-

(1,949,787)

 

 

 

 

 

 

 

Balance at 31 December 2017

7,851,238

12,003,418

372,071

(10,293,637)

-

9,933,090

 

 

 

 

 

 

 

Changes in equity

 

 

 

 

 

 

Issue of share capital

4,627,573

2,776,544

-

-

-

7,404,117

Costs of issuing equity instruments

-

(493,904)

-

-

-

(493,904)

Share-based payment charges

-

-

-

153,633

-

153,633

Currency translation

-

-

(41,349)

-

-

(41,349)

Total comprehensive expense

-

-

-

(2,171,606)

-

(2,171,606)

 

 

 

 

 

 

 

Balance at 30 June 2018

12,478,811

14,286,058

330,722

-

14,783,981

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2018 (unaudited)

 

 

 

Six months ended
30 June 2018

Six months ended

30 June 2017

Year ended
31 December 2017

 

 

 

 

(audited)

 

 

£

£

£

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Loss for the period

 

(2,171,606)

(1,156,581)

(3,141,069)

Adjustments for:

 

 

 

 

Taxation

 

-

(3,196)

-

Depreciation and amortisation

 

901

38,167

86,473

Provision movement

 

-

16,560

2,488,522

Currency exchange movement

 

(41,349)

48,887

215,514

Share-based payment charge

 

153,633

- 

138,332

 

 

(2,058,421)

(1,056,163)

(212,228)

 

 

 

 

 

 

 

 

 

 

Increase in trade and other receivables

 

(1,301,680)

(493,759)

(160,929)

Increase in prepayments

 

(4,090)

-

(4,215)

Decrease/(increase) in trade and other payables

 

831,155

(587,929)

(2,000)

 

 

 

 

 

Cash used in operating activities

 

(2,533,036)   

(2,137,851)

(379,372)

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of tangible fixed assets

 

(108,747)

(73,202)

(3,112,816)

Purchase of intangible fixed assets

 

(786,532)

-

(1,051,348)

Disposal of tangible fixed assets

 

338,598

-

-

Acquisition of subsidiaries net of cash received

 

-

(1,806,813)

(6,563,135)

 

 

 

 

 

Cash used in investing activities

 

(556,681)

(1,880,015)

(10,727,299)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Loan repayment

 

(15,000)

(50,000)

(35,000)

Issue of share capital

 

7,404,117

10,200,594   

14,973,259

Costs of issuing equity instruments

 

(493,904)

(1,094,145)

(1,136,755)

 

 

 

 

 

Cash from financing activities

 

6,895,213

9,056,449

13,801,504

 

 

 

 

 

Increase in cash and cash equivalents

 

3,805,496

5,038,583

2,694,833

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

2,696,911

2,078

2,078

 

 

 

 

 

Cash and cash equivalents at end of period

 

6,502,407

5,040,661

2,696,911

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018 (unaudited)

 

1.            REPORTING ENTITY

The Company is incorporated and domiciled in England and Wales. The registered office address can be found on the Company Information page. The consolidated interim financial statements for the six months ended 30 June 2018 comprise the Company and subsidiaries. The Group will continue to be primarily involved in the extraction and exploration of natural resources in Africa.

 

2.            ACCOUNTING POLICIES

Statement of compliance

This consolidated interim financial report does not include all the information required for full annual financial statements prepared in accordance with International Financial Reporting Standards.  The financial statements are unaudited and do not constitute statutory accounts as defined in section 434(3) of the Companies Act 2006.  Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial performance and position of the Group since the last annual consolidated financial statements for the year ended 31 December 2017.

A copy of the audited annual report for the year ended 31 December 2017 has been delivered to the Registrar of Companies.  The auditor's report on these accounts was unqualified and did not contain statements under s498(2) or s498(3) of the Companies Act 2006.

This consolidated interim financial report was approved by the Board of Directors on 27 September 2018.

3.            SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2017.

4.            OPERATING SEGMENTS

The Company manages a group primarily involved in the extraction and exploration of natural resources in Africa and is, therefore, considered to operate in a single geographical and business segment.

5.            LOSS FROM OPERATING ACTIVITIES

                The loss before taxation is stated after charging:

 

Six months ended
30 June 2018

Six months ended

30 June 2017

Year ended
31 December 2017

 

£

£

£

Costs associated with fundraising

133,254

-

-

Costs associated with admission to AIM

-

287,615

363,869

Directors' remuneration

378,083

245,860

509,705

 

 

 

 

The directors are considered to be key management personnel.

6.            BASIC AND DILUTED LOSS PER SHARE

Basic

The calculation of loss per share for the six months to 30 June 2018 is based on the loss for the period attributable to ordinary shareholders of £2,212,955 divided by a weighted average number of ordinary shares in issue of 81,776,582 (December 2017 - £2,925,555/50,901,726).

In the opinion of the directors, all the outstanding share options and warrants are anti-dilutive and, hence, basic and fully diluted loss per share are the same.

7.            PROPERTY, PLANT AND EQUIPMENT

 

Six months
ended
30 June 2018

Six months
ended
30 June 2017

Year ended
31 December
2017

 

£

£

£

Cost

 

 

 

At start of period 

4,263,055

1,150,239

1,150,239

Assets acquired as part of a business combination

-

192,103

-

Additions 

108,747

128,425

3,112,816

Recharges/disposals

(338,598)

(55,223)

-

 

 

 

 

At end of period

4,033,204

1,415,544

4,263,055

 

 

 

 

Depreciation

 

 

 

At start of period

1,214,237

1,150,239

1,150,239

Depreciation

901

38,167

63,998

Impairment

-

-

-

 

1,215,138

1,188,406

1,214,237

 

 

 

 

Carrying amounts

 

 

 

At end of period

2,818,066

227,138

3,048,818

 

 

 

 

 

8.            INTANGIBLE ASSETS

 

Six months ended
30 June 2018

Six months ended

30 June 2017

Year ended
31 December 2017

 

£

£

£

Cost

 

 

 

At start of period

8,768,335

1,153,852

1,153,852

Additions

786,532

3,208,148

7,614,483

At end of period

9,554,867

4,362,000

8,768,335

 

 

 

 

Amortisation

 

 

 

At start of period 

1,176,327

1,153,852

1,153,852

Depreciation

-

-

22,475

Impairment

-

-

-

At end of period

1,176,327

1,153,852

1,176,327

 

 

 

 

Carrying amounts

 

 

 

At end of period

8,378,540

3,208,148

7,592,008

 

 

 

 

 

9.            SHARE CAPITAL

                Allotted, issued and fully paid: 

Number:

Class:

Nominal value:

30 June

30 June

31 December

 

 

 

2018

2017

2017

 

 

 

£

£

£

162,056,024

Ordinary

£0.05

8,102,802

2,657,528

3,475,229

39,922,460

Deferred

£0.09

3,593,021

3,593,021

3,593,021

86,998,615

B Deferred

£0.009

782,988

782,988

782,988

 

 

 

 

 

 

The holders of deferred shares are not entitled to receive dividends or to vote at meetings of the Company and have no material interest in the Company's residual assets.

On 5 June 2018, the Company issued 92,551,459 ordinary shares at a premium of three pence per share, raising £7,404,117 (US$10 million) (£6,763,740 net of costs).

10.             PROVISIONS

 

Six months ended
30 June 2018

Six months ended
30 June 2017

Year ended
31 December 2017

 

£

£

£

Provision for rehabilitation of drilling sites  

2,488,522

2,588,822

2,488,522

Provision for rehabilitation of mining sites

123,524

123,524

123,524

 

 

 

 

At end of period

2,612,046

2,712,346

2,612,046

 

 

 

 

**ENDS** 

 

For further information please visit www.aaog.com or contact:

 

Telephone

Anglo African Oil & Gas plc

c/o St Brides Partners

David Sefton, Executive Chairman

James Berwick, Chief Executive Officer

 

 

 

finnCap Ltd (Nominated Adviser and Broker)

+44 20 7220 0500

Christopher Raggett, Giles Rolls, Anthony Adams (Corporate Finance)

 

Camille Gochez (Corporate Broking)

 

 

 

St Brides Partners (Financial PR)

+44 20 7236 1177

Frank Buhagiar, Juliet Earl

 

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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