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Clontarf Energy PLC (CLON)

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Thursday 27 September, 2018

Clontarf Energy PLC

Interim Results

RNS Number : 0603C
Clontarf Energy PLC
27 September 2018
 

 

 

27th September 2018

 


Clontarf Energy plc

("Clontarf" or the "Company")

 

Interim Statement for the period ended 30 June 2018

 

 

The principal focus in the period ended 30 June 2018 was ongoing discussions with the Ghanaian authorities on Tano 2A Block, and initial discussions on developing one of the world's leading lithium deposits.

 

Ghanaian Tano 2A Petroleum Agreement

 

All outstanding issues have now been resolved with GNPC on our Tano 2A Block.  The signed Petroleum Agreement is now being sent to the Cabinet.  All legal proceedings have been dropped and all issues resolved to our satisfaction.

 

After a period of slow progress, Ghana's current NPP Government has galvanised the licensing effort.  The administration is pro-development, and actively reviewing historic Petroleum Agreements, with stated focus on early exploration, discoveries and output.  During 2018 the Ghanaian Ministry of Energy and the Ghanaian National Petroleum Commission considered the current re-application by Pan Andean Resources Ltd (30% Petrel, 60% Clontarf, 10% local interests) over the original Tano 2A licence block acreage in the prospective Tano Basin, West Africa. 

 

There is a mutual desire to complete the ratification process.  Our strong preference is to honour as far as possible the terms of the existing signed Petroleum Agreement, adjusting the revised coordinates and any other fine-tuning necessary.

 

 

Lithium in Bolivia

 

Lithium from salt pan deposits is in high demand. The Clontarf Energy plc group has long been interested in Lithium evaporates for high performance batteries.  From 2008 through 2010 we operated a study joint venture on the world's largest salt-lake deposit in Bolivia.  The technical results were encouraging but progress was frustrated by political developments.  Following clarification of the applicable legal regime and fiscal terms, and the establishment of a National Lithium Company (YLB) under the Bolivian Ministry of Energy in 2017, we have re-established our interest, and are in initial discussions on a possible joint venture to study the second largest salt-lake lithium deposit worldwide.

 

 

Equatorial Guinea 2017 Bid Round

 

Clontarf Energy was awarded Block 18 (EG-18) in the Equatorial Guinea June 2017 Bid Round.  The successful bidders then entered into discussions to finalise fiscal terms, work programme and bonus details.

 

Clontarf has long been interested in Cretaceous sands plays in the Atlantic Margin.  Though its current output is small, Equatorial Guinea's largely unexplored deep-water potential is among some of the most intriguing in West Africa.  EG-18 is part of the Northern Rio Muni Basin, which Clontarf had previously studied.  Our initial interest is principally in Cretaceous sands plays, particularly a distal fan and turbidite channels visible on historic seismic.  This has proven a prolific play elsewhere along the Atlantic Margin and offers potential in Equatorial Guinea.

 

Block 18 covers approximately 5,056 km2 of undrilled deep water acreage with several play types.  Clontarf Energy's focus was on working on large structural and / or stratigraphic trap targets - given the deep water depth and uncertainties.

The main amplitude anomaly trend is extensive, at circa 220 km2.  We believe that approaches that have worked in nearby offshore provinces could also be fruitful in Equatorial Guinea: in particular, 'mid-Cretaceous intervals' aged between 94 million years and 72 million years appear to feature meandering sand deposits across Block 18.  Initial seismic interpretation suggested that a prime play could be confined turbidite channels and distal fans sealed by up-dip pinch-outs.  This echoes play types we have studied elsewhere on the 'Atlantic Transform Margin' in the Cretaceous.

 

However, water depth is challenging at circa 1.8km - though dozens of wells have been drilled at greater depths.  Drilling costs have fallen by about 70% since 2014 - while operational safety has improved.

 

However, detailed analysis of the available 3D seismic data by our technical team during 2018 raised new issues: we struggled with an apparent lack of trap formation and clear structures of adequate size in order to justify deep-water exploration.  There are certainly drill targets, but they may be marginal given the water and rock depth - even at current oil prices.  Overall, seismic amplitudes gave us limited encouragement, which made us reluctant to commit to major up-front expenditure.  Nonetheless, during negotiations, the authorities pressed us to enter into a binding contract to buy historic 3D seismic, at higher than current acquisition costs, including a substantial up-front payment. 

 

While Block-18 remains potentially prospective, we could not justify this substantial up-front expenditure for limited licence access on terms which were by then in excess of market rates for this standard and vintage of data.

 

Accordingly, we made a counter-proposal which has not been accepted by the authorities.

 

 

Future:

 

The oil price has recovered to over $75 and world stock levels have returned to normal.  The OPEC + Russia output cuts have worked.  Yet financial markets seem sanguine about a production collapse in Venezuela, tightening sanctions on Iran and Russia, and ongoing conflict in Iraq.  World oil shares are still being valued on an implicit oil price of $27.  The farm-out market is subdued and exploration shares depressed.  A trillion dollars has been cut from necessary investment plans.  This is not sustainable.  There will be a re-rating of oil stocks. 

 

Clontarf plans to ride this wave. 

 

In September 2018 the company raised £500,000 by issuing 135,135,135 new ordinary shares at a price of 0.37p per share. The proceeds will fund any costs associated with the ongoing negotiations in Ghana and provide additional working capital.

 

John Teeling

Chairman

26th September 2018

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

 

ENDS

 

 

For further information please visit http://clontarfenergy.com or contact:

 

Clontarf Energy


John Teeling, Chairman

+353 (0) 1 833 2833

David Horgan, Director




Nominated Adviser and Broker


Northland Capital Partners Limited


Tom Price and Dugald Carlean

 (Corporate Finance)

+44 (0) 20 3861 6625

Rob Rees / Isabella Pierre 






Joint Broker


Novum Securities Limited

Colin Rowbury

 

Public Relations

Blythweigh

+44 (0) 20 7399 9400

Simon Woods

+44 (0) 746 643 9633

Camilla Horsfall

+44 (0) 787 184 1793





Teneo PSG


Luke Hogg

+353 (0) 1 661 4055

Alan Tyrrell

+353 (0) 1 661 4055

 

 

 

 

 

 

 

 

 

 

 

 

Clontarf Energy plc

Financial Information (Unaudited)











CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


















Six Months Ended


Year Ended






30 June 18


30 June 17


31 Dec 17






unaudited


unaudited


audited






£'000


£'000


£'000











REVENUE





                   -


                    -


                    -

Cost of sales





                   -


                    -


                    -

GROSS PROFIT





                   -


                    -


                    -











Impairment of exploration and evaluation assets


           (115)


                    -


( 2,552 )

Administrative expenses





( 122 )


( 115 )


( 226 )

OPERATING LOSS





( 237 )


( 115 )


( 2,778 )











LOSS BEFORE TAXATION





( 237 )


( 115 )


( 2,778 )











Income Tax





                   -


                    -


                    -











TOTAL COMPREHENSIVE LOSS FOR THE PERIOD




( 237 )


( 115 )


( 2,778 )











LOSS PER SHARE - basic and diluted





 (0.04p)


 (0.02p)


 (0.48p)































CONDENSED CONSOLIDATED BALANCE SHEET




 30 June 18


 30 June 17


 31 Dec 17






 unaudited


 unaudited


 audited






 £'000


 £'000


 £'000

ASSETS:










NON-CURRENT ASSETS










Intangible assets





             720


           3,160


               703






             720


           3,160


               703

CURRENT ASSETS










Other receivables





                  6


                   7


                   4

Cash and cash equivalents





             237


              600


               434






              243


              607


               438











TOTAL ASSETS





          963


           3,767


            1,141











LIABILITIES:










CURRENT LIABILITIES










Trade payables





( 82 )


( 76 )


( 68 )

Other payables





( 1,026 )


( 936 )


( 981 )






( 1,108 )


( 1,012 )


( 1,049 )











TOTAL LIABILITIES





( 1,108 )


( 1,012 )


( 1,049 )

NET ASSETS





( 145 )


           2,755


                 92





















EQUITY










Share capital





           1,455


           1,455


            1,455

Share premium





        10,773


         10,773


         10,773

Share based payment reserve





             191


              191


               191

Retained earnings - (Deficit)





( 12,564 )


( 9,664 )


( 12,327 )

TOTAL EQUITY





( 145 )


           2,755


                 92





















CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY




















 Share based






 Share


 Share


 Payment


 Retained


 Total


 Capital


 Premium


 Reserves


 Losses


 Equity


 £'000


 £'000


 £'000


 £'000


 £'000











As at 1 January 2017

       1,455


     10,773


             191


( 9,549 )


            2,870

Total comprehensive loss







( 115 )


( 115 )

As at 30 June 2017

       1,455


     10,773


              191


( 9,664 )


            2,755











Total comprehensive loss



                   -


( 2,663 )


( 2,663 )

As at 31 December 2017

       1,455


     10,773


             191


( 12,327 )


                 92











Total comprehensive loss

                -


                -


                   -


( 237 )


( 237 )

As at 30 June 2018

       1,455


     10,773


              191


( 12,564 )


( 145 )









































CONDENSED CONSOLIDATED CASH FLOW




 Six Months Ended


 Year Ended






 30 June 18


 30 June 17


 31 Dec 17






 unaudited


 unaudited


 audited






 £'000


 £'000


 £'000

CASH FLOW FROM OPERATING ACTIVITIES









Loss for the period





( 237 )


( 115 )


( 2,778 )

Impairment of exploration and evaluation assets


              115


                    -


            2,552

Exchange movements





                  2


                   1


                   3






( 120 )


( 114 )


( 223 )











Movements in Working Capital





                57


                51


                 76

CASH USED BY OPERATIONS





( 63 )


( 63 )


( 147 )











NET CASH USED IN OPERATING ACTIVITIES




( 63 )


( 63 )


( 147 )











CASH FLOWS FROM INVESTING ACTIVITIES









Payments for intangible assets





( 132 )


( 13 )


( 93 )

NET CASH USED IN INVESTING ACTIVITIES




( 132 )


( 13 )


( 93 )











NET DECREASE IN CASH AND CASH EQUIVALENTS



( 195 )


( 76 )


( 240 )











Cash and cash equivalents at beginning of the period


             434


              677


               677











Effect of exchange rate changes on cash held




( 2 )


( 1 )


( 3 )

CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD


              237


              600


               434











 

 

 

 

 

 

 

 

 

Notes:

 

1.     INFORMATION

The financial information for the six months ended 30 June 2018 and the comparative amounts for the six months ended 30 June 2017 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006.

 

The Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The accounting policies and methods of computation used in the preparation of the Interim Financial Report are consistent with those used in the Group 2017 Annual Report, which is available at www.clontarfenergy.com

 

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

 

2.     No dividend is proposed in respect of the period.

 

3.     LOSS PER SHARE

Basic loss per share is computed by dividing the loss after taxation for the year available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted earnings per share is computed by dividing the loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

 

The following table sets out the computation for basic and diluted earnings per share (EPS):

 


Six months Ended


Year Ended


30 June 18


30 June 17


31 Dec 17


£'000


£'000


£'000

Numerator






For basic and diluted EPS

(237)


(115)


(2,778)







Denominator

For basic and diluted EPS 

 

581,844,829


 

581,844,829


 

581,844,829







Basic EPS

(0.04p)


(0.02p)


(0.48p)

Diluted EPS

(0.04p)


(0.02p)


(0.48p)







 

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

 

 

4.    INTANGIBLE ASSETS

 

Exploration and evaluation assets:


30 June 18


30 June 17


31 Dec 17






£'000


£'000


£'000

Cost:










At 1 January




8,302


8,179


8,179

Additions





132


28


123

Closing Balance




8,434


8,207


8,302











Impairment:









At 1 January




7,599


5,047


5,047

Provision for impairment



115


-


2,552

Closing Balance




7,714


5,047


7,599











Carrying value:









At 1 January




703


3,132


3,132











At period end




720


3,160


703















Regional Analysis                                                                                                           


30 Jun 18

£'000


30 Jun 17

£'000


31 Dec17

£'000

Peru


-


2,474


-

Ghana


720


686


703

Guinea


-


-


-



720


3,160


703

 

 

Exploration and evaluation assets relates to expenditure incurred in prospecting and exploration for oil and gas in Peru, Ghana and Equatorial Guinea. The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. 

 

On 26 September 2017 the board of Clontarf Energy had been informed that Union Oil (the 80% owner of the concession held in Peru) had returned to the Peruvian Authorities the licence held on Block 183.  They gave as their reason an inability over a 3 year period to obtain the permits, particularly environmental permits, necessary to explore.

 

Clontarf held a 3% royalty on revenue arising from future operations on the Block.  Clontarf did not incur any liabilities as a result of Union Oil's decision but has written off the carrying value of the asset. Accordingly an impairment charge of £2,473,538 in respect of the full carrying value of the Group' Peruvian assets has been recorded by the Group in the current year.

 

During the six months to 30 June 2018 the Group incurred expenditure of £114,607 on evaluating licences in Equatorial Guinea. An impairment charge of £114,607 has been recorded by the Group in the period in respect of those licences.

 

The realisation of these intangible assets is dependent on the discovery and successful development of economic oil and gas reserves the ongoing title to the license, the ability of the company to finance the development of the asset and on the future profitable production or process from the asset which is affected by the uncertainties outlined above and risks outlined below. Should this prove unsuccessful the value included in the balance sheet would be written off to the statement of comprehensive income. 

 

  The group's activities are subject to a number of significant potential risks including:

 

                - licence obligations

                - requirement for further funding

                - geological and development risks

                - title to assets

- political risks

 

 

5.    TRADE PAYABLES



30 June 18


30 June 17


31 Dec 17






£'000


£'000


£'000











Trade payables



78


52


52

Other accruals



4


24


16





82


76


68

 

 

6.    OTHER PAYABLES



30 June 18


30 June 17


31 Dec 17






£'000


£'000


£'000











Amounts due to directors



1,026


936


981





1,026


936


981

 

Other payables relate to remuneration due to directors' accrued but not paid at period end.

      

 

 

 

 

7.    SHARE CAPITAL

 

Allotted, called-up and fully paid:







Number


Share Capital


 Premium




          £


£

At 1 January 2017

581,844,829


1,454,612


10,773,211

Issued during the period

-


-


-

At 30 June 2017

581,844,829


1,454,612


10,773,211







Issued during the period

-


-


-

At 31 December 2017

581,844,829


1,454,612


10,773,211







Issued during the period

-


-


-

At 30 June 2018

581,844,829


1,454,612


10,773,211

 

Movements in issued share capital

                                                                                                                                                       

There was no movement in share capital during the current or prior year.

 

 

8.    POST BALANCE SHEET EVENTS

 

 

On September 19th, 2018 a total of 135,135,135 Ordinary Shares were issued at a price of .37p per share to raise £500,000.

 

 

9.    The Interim Report for the six months to 30th June 30 2018 was approved by the Directors on 26th September 2018.

 

 

10. The Interim Report will be available on the company's website at www.clontarfenergy.com

 

 

 

 

 

 


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