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Empyrean Energy PLC (EME)

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Tuesday 12 December, 2017

Empyrean Energy PLC

Interim Results

RNS Number : 1293Z
Empyrean Energy PLC
12 December 2017
 

This announcement contains inside information

 

Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil & Gas

12 December 2017

Empyrean Energy PLC ("Empyrean" or the "Company")

 

Interim Results

 

Empyrean Energy (EME: AIM), the oil and gas development company with interests in China, Indonesia and the United States, is pleased to provide its Interim Report for the six months ended 30 September 2017.

 

Highlights

·     Block 29/11, Pearl River Mouth Basin, China (EME 100%)

580km2 3D seismic survey successfully completed in August 2017

Preliminary interpretation of onboard processed seismic data confirms structural validity of Jade and Topaz Prospects

Third significant target identified "Pearl", located north of Topaz

Total Preliminary Prospective Resources (Best) Estimate of 591 mmbbls from Jade, Topaz and Pearl prospects

·     Duyung PSC Project, Indonesia (EME 10%)

Secured a 10% interest in the Duyung PSC, offshore Indonesia

Mako South-1 well completed in June 2017, reaching completion at total depth of 1,707ft

Mako South-1 exceeds expectations encountering excellent reservoir quality, gas saturation, porosity, permeability and flow rates

Mako South-1 well flowed at a stabilised rate of 10.9 million cubic feet of gas per day with multi Darcy permeability

·     Sacramento Basin, California (EME 25-30%)

Negotiated a 25-30% working interest in the Sacramento Basin package of projects

Sacramento Basin package includes the 1Tcf+ potential Dempsey prospect and the 2.4Tcf+ Alvares prospect plus a Dempsey Trend AMI with multiple targets

Dempsey 1-15 well spudded on 2 August 2017 reaching completion at total depth of 2,970 metres

Wireline logs confirmed numerous gas zones for production testing

Dempsey 1-15 flow testing commenced in November 2017

 

For further information:

 

Empyrean Energy plc

 

Tom Kelly

Tel: +61 8 9380 9920

 

 

Cenkos Securities plc

 

Neil McDonald

Tel: +44 (0) 131 220 9771

Beth McKiernan

Tel: +44 (0) 131 220 9778

 

 

St Brides Partners Ltd

 

Lottie Wadham

Olivia Vita

 

Tel: +44 (0) 20 7236 1177

Tel: +44 (0) 20 7236 1177

 

 

Chairman's Statement

Following the sale of our interest in the Marathon Oil operated Sugarloaf asset in Texas and post-completion restructuring and re-financing throughout 2016, Empyrean has been successfully transformed into an active exploration company in 2017, having built an exciting portfolio comprising high impact and value creating projects in China, Indonesia and the United States.

 

All three projects have already returned encouraging results, with early exploration success achieved in both Indonesia and the United States following the completion of a 3D seismic survey and positive early interpretation work in China exceeding expectations.  The positive project news flow throughout the past six months has also been translated into strong gains in the Company's share price and market value.

 

In China, the Company announced preliminary internal interpretation of the fast-tracked processing of the raw data from the 3D seismic acquired on the offshore Block 29/11 oil permit.  This preliminary interpretation, announced in September 2017, confirmed the structural validity of the Jade and Topaz prospects and also identified a third significant target named Pearl, located to the north of Topaz.  All three prospects have significant resource potential and are located on trend to world class oil and gas discoveries.

 

In Indonesia, following the acquisition of a 10% interest in the offshore Duyung Production Sharing Contract in April 2017, the Company participated in the drilling of the Mako South-1 well in July 2017.  The well exceeded expectations with a stabilised flow rate of 10.9 million cubic feet of high quality methane gas per day with excellent permeability (in the multi Darcy range).  The results significantly de-risked this project and also confirmed a very large accumulation of gas with extremely good reservoir quality.

 

In May 2017 the Company entered into a joint venture on a suite of projects in the Sacramento Basin in onshore California with ASX listed Sacgasco Limited, including two mature, multi-Tcf gas prospects in Dempsey (EME 30%) and Alvarez (EME 25%) and further identified follow up prospects along trend (EME 30%).  In September 2017 the joint venture completed drilling of a 2,970 metre combined appraisal and exploration well, Dempsey 1-15, with wireline logs confirming numerous gas zones for production testing.  The testing of the deepest of these zones is currently underway and the Company will relay news to the market as it comes to hand.

 

We have seen Company and shareholder value grow in recent months on encouraging results from drilling in Indonesia and the United States and the positive internal analysis of the seismic data in China, and we expect to see further value accretive milestones reached in the near future.  Overall, with three promising high impact exploration projects being progressed and a consistent stream of news flow expected moving forward, we anticipate that it will be an exciting period ahead for Empyrean and its shareholders.

 

The Company is continuously reviewing other acquisition opportunities in parallel to the current activities and will also evaluate any attractive divestment opportunities in due course.

 

Empyrean's cash at the end of the period was US$4,649,659.  

 

Patrick Cross

Non-Executive Chairman

12 December 2017

 

 

Operational Review

 

Block 29/11, Pearl River Mouth Basin, China (EME 100%)

 

Block 29/11 is located in the Pearl River Mouth Basin, offshore China (approximately 200km SE of Hong Kong). Empyrean is operator with 100% of the exploration rights of the 1,800km2 permit during the exploration phase of the project. The initial contractual term is for two years with a work programme commitment of acquisition, processing and interpretation of 500km2 of 3D seismic data. In the event of a commercial discovery and subject to Empyrean first entering a Production Sharing Contract ("PSC"), the China National Offshore Oil Company ("CNOOC") will have a back in right to 51% of the permit.

 

Empyrean commenced a 580km2 3D seismic acquisition survey in June 2017, which included the two key prospects, Jade and Topaz, which had already been identified in 2D seismic surveys. The 3D seismic survey acquisition was completed successfully in August 2017 and exceeded the work obligation of the permit for the current Geophysical Service Agreement ("GSA") phase. The survey was completed on schedule with excellent quality 3D data acquired.

 

Processing and interpretation work commenced in late August and in September 2017 Empyrean announced the results of preliminary internal interpretation of the raw seismic data which confirmed the structural validity of the Jade and Topaz prospects and identified a third significant target named Pearl, located to the north of Topaz.

 

A summary of the internal interpretation of gross unrisked mean prospective resources for Jade, Topaz and Pearl is provided in the table below.

 

Prospect

Preliminary Prospective Resources Estimates (mmbbls)

 

Low estimates

Best estimates

High estimates

Jade

89

103

143

Topaz

280

365

498

Pearl

84

123

206

 

These estimates are expected to be revised towards the end of Q1 2018 when the comprehensive interpretation of the fully processed 3D seismic data is expected to be completed.

 

In addition, geological work continues during Q4 2017, focusing on migration pathways of oil in the basin. The seismic interpretation and geological work is expected to finalise the prospective resources and geological risks of the Jade, Topaz and Pearl prospects.

 

Duyung PSC Project, Indonesia (EME 10%)

 

In May 2017, Empyrean acquired from Conrad Petroleum Pte Ltd ("Conrad Petroleum") a 10% shareholding in West Natuna Exploration Ltd ("WNEL"), which holds a 100% Participating Interest in the Duyung Production Sharing Contract ("Duyung PSC") in offshore Indonesia and is the operator of the Duyung PSC. 

 

The Duyung PSC covers an offshore permit of approximately 1,100km2 in the prolific West Natuna Basin.  The main asset in the permit is the Mako shallow gas discovery that has an independently verified 2C and 3C gas resource of between 430-650 Bcf recoverable gas, that was completed before drilling the Mako South-1 well. On the back of results from the Mako South-1 well it is expected that the operator will commission an updated independent resource assessment in due course as further data is analysed and comes to hand. In addition, numerous prospects and leads have been identified in the permit using 3D seismic data.

 

The appraisal well, Mako South-1, was spudded on 16 June 2017 using a jackup rig located in water depths of 308 ft.  The well reached a Total Depth ("TD") of 1,707 ft on 22 June 2017.

 

The Mako South-1 well exceeded the Company's expectations encountering excellent reservoir quality rock with high permeability sands in the multi Darcy range with 23 feet of gas bearing reservoir. This zone flowed gas at a stabilized rate of 10.9 million cubic feet per day through a 2 inch choke. The gas is of high-quality being close to 100% methane.

 

Initial interpretation of the test results demonstrated that the sandstone reservoir is expected to be laterally contiguous, and has exceptional permeabilities in the multi Darcy range.

 

Two conventional cores were recovered successfully and further analysis is currently underway to assist with the overall assessment of results and provide a development plan.

 

Sacramento Basin, California (EME 25-30%)

 

In May 2017 Empyrean entered into an agreement with ASX listed Sacgasco Limited ("Sacgasco"), a Sacramento Basin focused natural gas developer and producer, to farm-in to a package of gas projects in the Sacramento Basin, onshore California. The package includes two mature, multi-Tcf gas prospects, Dempsey and Alvarez, and an Area of Mutual Interest (AMI) along trend from Dempsey that includes at least three already identified Dempsey style follow up prospects.

 

Empyrean has earned a 30% interest in the Dempsey Prospect targeting 1 Tcf of gas by paying US$2,100,000 towards the cost of drilling the Dempsey 1-15 exploration well.  These drilling costs have a promoted cap of US$3,200,000 and Empyrean is paying its working interest of 30% towards any additional costs towards Dempsey 1-15, including completion costs.  The Dempsey 1-15 well was spudded on 2 August 2017 and drilled to a TD of 2,970 metres (9,747 feet) in September 2017. Wireline logs confirmed numerous gas zones for production testing, which is currently underway. The deepest of these zones is being tested first and Empyrean will provide further updates as the testing programme progresses.

 

The Alvares structure has been mapped with 2D seismic and is interpreted by Sacgasco to hold prospective resources of over 2 Tcf of recoverable gas. A 25% working interest will be earned in the Alvares appraisal prospect, by Empyrean paying 33.33% of the costs of the next Alvares appraisal well.

 

Finally, the Dempsey Trend AMI, in which Empyrean will earn a 30% interest, extends to approximately 250,000 acres (including the Dempsey structure) and includes at least three large Dempsey style identified follow up prospects.  Empyrean will provide technical assistance to Sacgasco to further mature prospects within the Dempsey Trend AMI and will also have an option to participate in the already identified prospects on the following basis:

 

·     Prospect #1: EME pays 60% of dry hole cost (i.e. to testing and setting production casing or abandonment) to earn 30% WI

·     Prospect #2: EME pays 45% of dry hole cost (i.e. to testing and setting production casing or abandonment) to earn 30% WI

·     Prospect #3: EME pays 45% of dry hole cost (i.e. to testing and setting production casing or abandonment) to earn 30% WI

 

Riverbend Project (10%) and Eagle Oil Pool Development Project (58.084% WI)

 

In light of current market conditions, little or no work has been completed on these projects during the year and no budget has been prepared for 2017/18 whilst the Company focuses on other projects.

 

Definitions

 

MMBOE  Million barrels of oil equivalent

Production  Production available for sale

WTI  West Texas intermediate crude, type of oil used as a benchmark in oil pricing

 

 

Frank Brophy BSc (Hons)

Technical Director

12 December 2017

 

 

Statement of Comprehensive Income                  

For the Period Ended 30 September 2017

 

 

 

6 months to 30 September 2017 (unaudited)

6 months to 30 September 2016 (unaudited)

Year ended 31 March 2017 (audited)

 

 

Notes

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

Revenue

 

-

1

1

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

Operating costs

 

(1)

2

(23)

 

Impairment of oil and gas properties

 

(45)

(3)

(6,960)

 

Amortisation

 

-

(6)

(11)

 

Total cost of sales

 

(46)

(7)

(6,994)

 

 

 

 

 

 

 

Gross loss

 

(46)

(6)

(6,993)

 

 

 

 

 

 

 

Administrative expenditure

 

 

 

 

 

Administrative expenses

 

(186)

(110)

(2,202)

 

Directors' remuneration

 

(229)

(443)

(284)

 

Compliance fees

 

(62)

(162)

(637)

 

Foreign exchange differences

 

134

(1,777)

-

 

Total administrative expenditure

 

(344)

(2,492)

(3,121)

 

 

 

 

 

 

 

Operating loss

 

(390)

(2,498)

(10,116)

 

 

 

 

 

 

 

Finance (expense)/income

 

(3,982)

60

(3,005)

 

 

 

 

 

 

 

Loss from continuing operations before taxation

 

(4,372)

(2,438)

(13,121)

 

Deferred tax credit

 

18

709

2,839

 

Loss from continuing operations after taxation

 

 

(4,354)

 

(1,729)

 

(10,282)

 

 

Profit on discontinued operations net of tax

 

 

73

 

-

 

-

 

 

 

 

 

 

 

Loss after taxation

 

(4,281)

(1,729)

(10,282)

 

 

 

 

 

 

 

Total comprehensive loss for the year

 

(4,281)

(1,729)

(10,282)

 

Attributable to:

 

 

 

 

 

Equity shareholders of the Company

 

(4,281)

(1,729)

(10,282)

 

 

 

 

 

 

 

Loss per share from continuing operations (expressed in cents)

 

 

 

 

- Basic

2

(1.21)c

(1.70)c

(4.62)c

- Diluted

 

(1.12)c

(1.70)c

(4.62)c

Earnings per share from discontinued operations (expressed in cents)

 

 

 

 

- Basic

2

0.02c

-

-

- Diluted

 

0.02c

-

-

               

 

Statement of Financial Position                               

As at 30 September 2017

 

 

 

 

6 months to 30 September 2017 (unaudited)

6 months to 30 September 2016 (unaudited)

Year ended 31 March 2017 (audited)

 

Notes

US$'000

US$'000

US$'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Contingent consideration receivable

3

-

623

-

Oil and gas properties: exploration and evaluation

4

9,468

6,859

87

Oil and gas properties: development and production

 

5

 

-

 

152

 

57

Total non-current assets

 

9,468

7,634

144

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

 

26

3,271

65

Corporation tax receivable

 

540

-

540

Contingent consideration receivable

3

-

-

554

Cash and cash equivalents

 

4,650

27,053

6,106

Total current assets

 

5,216

30,324

7,265

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

3,675

520

2,178

Provisions

 

51

9

25

Provision for corporation tax

 

-

1,302

-

Derivative financial liabilities

6

3,887

401

459

Total current liabilities

 

7,613

2,232

2,662

 

 

 

 

 

 

 

 

 

 

Net current (liabilities)/assets

 

(2,397)

28,092

4,603

 

 

 

 

 

Non-current liabilities

 

 

 

 

Provision for corporation tax

 

-

750

-

Total non-current liabilities

 

-

750

-

 

 

 

 

 

 

 

 

 

 

Net assets

 

7,071

34,976

4,747

 

 

 

 

 

Shareholders' equity

 

 

 

 

Share capital

7

1,164

710

754

Share premium

 

24,661

40,250

18,466

Share based payment reserve

 

2,421

2,357

2,421

Retained losses

 

(21,175)

(8,341)

(16,894)

 

 

 

 

 

Total equity

 

7,071

34,976

4,747

 

 

Statement of Cash Flows                            

For the Period Ended 30 September 2017

 

 

 

6 months to 30 September 2017 (unaudited)

6 months to 30 September 2016 (unaudited)

Year ended 31 March 2017 (audited)

 

Notes

US$'000

US$'000

US$'000

 

 

 

 

 

Cash generated from operating activities - continuing operations

 

 

(655)

 

(795)

 

(1,309)

Cash generated from operating activities - discontinued operations

 

 

-

 

(116)

 

(116)

Receipt/(payment) of corporation tax

 

18

(1,545)

(2,007)

Net cash (outflow)/inflow from operating activities

 

 

(637)

 

(2,456)

 

(3,432)

 

 

 

 

 

Net proceeds from disposal of discontinued operations

 

 

73

 

-

 

-

Amounts held in escrow

 

-

13,800

16,875

Purchase of oil and gas properties: exploration and evaluation - continuing operations

 

 

(7,632)

 

(17)

 

(17)

Purchase of oil and gas properties: development and production - continuing operations

 

 

-

 

-

 

(80)

Net cash (outflow)/inflow for investing activities

 

(7,559)

13,783

16,778

 

 

 

 

 

Issue of ordinary share capital

 

6,713

-

44

Return of value

 

-

-

(21,785)

Payment of equity issue costs

 

(108)

-

(63)

Finance income received/(expenses paid)

 

-

19

22

Net cash inflow / (outflow) from financing activities

 

 

6,605

 

19

 

(21,782)

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

 

(1,591)

 

11,346

 

(8,436)

Cash and cash equivalents at the start of the year

 

6,106

17,473

17,473

Forex on cash held

 

135

(1,766)

(2,931)

 

 

 

 

 

Cash and cash equivalents at the end of the period

 

4,650

27,053

6,106

 

 

Statement of Changes in Equity                               

For the Year Period 30 September 2017

 

 

Share capital

Share premium reserve

Share based payment reserve

Retained losses

Total equity

 

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

Balance at 31 March 2016

710

40,250

2,946

(7,201)

36,705

 

 

 

 

 

 

Hedge transactions

-

-

(589)

589

-

 

 

 

 

 

 

Profit after tax for the period

-

-

-

(1,729)

(1,729)

Total comprehensive income for the period

 

-

 

-

 

-

(1,729)

(1,729)

 

 

 

 

 

 

Balance at 30 September 2016

710

40,250

2,357

(8,341)

34,976

 

 

 

 

 

 

Balance at 31 March 2016

710

40,250

2,946

(7,201)

36,705

 

 

 

 

 

 

(Loss) after tax for the year

-

-

-

(10,282)

(10,282)

Total comprehensive loss for the year

-

-

-

(10,282)

(10,282)

Shares issued following exercise of options

44

-

-

-

44

Creation of B shares

21,784

(21,784)

-

-

-

Return of value (cancellation of B shares)

 

(21,784)

 

-

 

-

 

-

 

(21,784)

Transfer of expired options

-

-

(589)

589

-

Share based payment expense

-

-

64

-

64

 

 

 

 

 

 

Balance at 31 March 2017

754

18,466

2,421

(16,894)

4,747

 

 

 

 

 

 

(Loss) after tax for the period

-

-

-

(4,281)

(4,281)

Total comprehensive loss for the period

 

-

 

-

 

-

 

(4,281)

 

(4,281)

Shares issued in the period

410

6,303

-

-

6,713

Equity issue costs

-

(108)

-

-

(108)

 

 

 

 

 

 

Balance at 30 September 2017

1,164

24,661

2,421

(21,175)

7,071

 

The accompanying accounting policies and notes form an integral part of these financial statements.

 

Statement of Accounting Policies                           

For the Period Ended 30 September 2017

 

Basis of preparation

 

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and Companies Act 2006.  The principal accounting policies are summarised below.  The financial report is presented in the functional currency, US dollars and all values are shown in thousands of US dollars (US$'000).  The financial statements have been prepared on a historical cost basis and fair value for certain assets and liabilities.  These condensed interim financial statements of the Company for the six months ended 30 September 2017 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The same accounting policies, presentation and methods of computation are followed in these financial statements as were applied in the Company's latest audited financial statements for the year ended 31 March 2017.

 

The financial information for the period ended 30 September 2017 does not constitute the full statutory accounts for that period.  They have not been reviewed by the Company's auditor. The Annual Report and financial statements for the year ended 31 March 2017 have been filed with the Registrar of Companies. The independent auditor's report on the Annual Report and financial statements was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

 

Going Concern

 

The Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing its financial statements.  The Company had a cash balance of US$4.650m at 30 September 2017 (US$6.106m: 31 March 2017).

 

Notes to the Financial Statements                           

For the Period Ended 30 September 2017

 

1.    Segmental analysis

 

 

 

 

 

The Directors consider the Company to have the business segments of exploration for, and development and production of oil and gas properties.  There are three geographical trading segments, being North America, Indonesia and China. The Company's registered office is located in the United Kingdom.

 

 

  

 

Details

Oil and Gas Properties: Exploration and Evaluation

Oil and Gas Properties: Development and Production

Total

 

30 Sep 17

30 Sep 16

31 Mar 17

30 Sep 17

30 Sep 16

31 Mar 17

30 Sep 17

30 Sep 16

31 Mar 17

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

 

 

 

Revenue from continued operations

-

-

-

-

1

1

-

1

1

Profit/(loss) on sale of discontinued operations

-

-

-

73

-

-

73

-

-

Cost of sales of continued operations

(45)

(3)

(6,871)

-

(4)

(123)

(45)

(7)

(6,994)

Cost of sales of discontinued operations

-

-

-

(1)

-

-

(1)

-

-

Segment result

(45)

(3)

(6,871)

72

(3)

(122)

27

(6)

(6,993)

 

 

 

 

 

 

 

 

 

 

Unallocated corporate expenses

 

 

 

 

 

 

(344)

(2,492)

(3,121)

Operating (loss)/profit

 

 

 

 

 

 

(317)

(2,498)

(10,116)

Finance income and expense

 

 

 

 

 

 

(3,982)

60

(3,005)

(Loss)/profit before taxation

 

 

 

 

 

 

(4,299)

(2,438)

(13,121)

Deferred tax revenue/(tax expense)

 

 

 

 

 

 

18

709

2,839

(Loss)/profit after taxation

 

 

 

 

 

 

(4,281)

(1,729)

(10,282)

Total comprehensive profit/(loss) for the financial year

 

 

 

 

 

 

 

(4,281)

 

(1,729)

 

(10,282)

 

 

 

 

 

 

 

 

 

 

Segment assets

9,468

7,020

87

-

3,850

611

9,468

10,870

698

Unallocated corporate assets

 

 

 

 

 

 

5,216

27,088

6,711

Total assets

 

 

 

 

 

 

14,684

37,958

7,409

 

 

 

 

 

 

 

 

 

 

Segment liabilities

3,502

133

148

-

188

189

3,502

321

337

Unallocated corporate liabilities

 

 

 

 

 

 

4,111

3,373

2,325

Total liabilities

 

 

 

 

 

 

7,613

3,694

2,662

 

 

6 months to 30 September 2017 (unaudited)

6 months to 30 September 2016 (unaudited)

Year ended 31 March 2017

 

(audited)

 

 

 

 

2.    Earnings per share

 

 

 

 

 

 

 

The basic earnings per share is derived by dividing the profit/(loss) after taxation for the year attributable to ordinary shareholders by the weighted average number of shares in issue being 358,675,105 (2016: 221,833,853).

 

 

 

 

 

 

Earnings per share from continuing operations

 

 

 

 

(Loss)/profit after taxation from continuing operations

 

(US$4,354,000)

 

(US$1,729,000)

 

(US$10,282,000)

 

(Loss)/earnings per share - basic

(1.21)c

(0.78)c

(4.62)c

 

 

 

 

 

 

(Loss)/profit after taxation from continuing operations adjusted for dilutive effects

 

(US$4,354,000)

 

(US$1,729,000)

 

(US$10,282,000)

 

(Loss)/earnings per share - diluted

(1.12)c

(0.78)c

(4.62)c

 

 

 

 

 

 

Earnings per share from discontinued operations

 

 

 

 

Profit after taxation from discontinued operations

 

73

 

-

 

-

 

Earnings per share - basic

0.02c

-

-

 

 

 

 

 

 

Profit after taxation from discontinued operations adjusted for dilutive effects

 

73

 

-

 

-

 

Earnings per share - diluted

0.02c

-

-

 

 

 

 

 

 

 

 

 

 

 

6 months to 30 September 2017 (unaudited)

6 months to 30 September 2016 (unaudited)

Year ended 31 March 2017

 

(audited)

 

 

 

 

3.    Derivative financial asset

 

 

 

 

 

 

 

 

 

Derivative associated with sale of Sugarloaf AMI:

 

 

 

 

Balance brought forward

554

371

371

 

Additions

-

-

-

 

Revaluation of derivative financial asset(a)

(554)

252

183

 

 

 

 

 

 

Net book value

-

623

554

 

                     

 

(a)  Derivative financial assets consist of the fair value of contingent consideration amounts attached to the sale of Sugarloaf AMI on 19 February 2016.  The fair value of the options was initially measured at the effective date of the sale and subsequently remeasured at each reporting period. At 30 September 2017, the value has been assessed as nil, with the final contingency expiring 31 December 2017.

 

 

 

 

 

 

 

 

 

 

The fair value is measured using a Black Average (Asian) Model with the following inputs:

 

 

 

 

 

 

Fair value assumptions

At 30 September 2017

At 30 September 2016

At 31 March 2017

 

 

 

 

 

 

Spot price

US$51.67

US$48.24

US$50.60

 

Expected volatility

50-day historical

720-day historical

50-day historical

 

Risk-free interest rate

1.158%

0.415% to 0.579%

0.901% to 1.056%

 

 

 

 

 

 

 

6 months to 30 September 2017 (unaudited)

6 months to 30 September 2016 (unaudited)

Year ended 31 March 2017

 

(audited)

 

 

 

 

 

 

4.    Oil and gas properties: exploration and evaluation

 

 

 

 

 

 

 

 

 

Balance brought forward

87

6,842

6,842

 

Additions(a)

9,426

20

116

 

Impairment

(45)

(3)

(6,871)

 

 

 

 

 

 

Net book value

9,468

6,859

87

 

 

 

 

 

                     

(a)  The Company was awarded its permit in China in December 2016 and acquired working interests in the Duyung PSC Project in Indonesia and the Sacramento Basin, California during the period. For further information, please refer to the Operational Review.

 

5.    Oil and gas properties: development and production

 

 

 

 

 

 

 

Balance brought forward

57

156

156

Additions

-

2

1

Impairment

-

-

(11)

Amortisation

-

(6)

(89)

Discontinued operations

(57)

-

-

 

 

 

 

Net book value

-

152

57

 

 

 

 

 

 

 

6 months to 30 September 2017 (unaudited)

6 months to 30 September 2016 (unaudited)

Year ended 31 March 2017

 

(audited)

 

 

 

 

 

 

6.    Derivative financial liabilities

 

 

 

 

 

 

 

 

 

Opening balance

459

195

195

 

Revaluation

-

-

205

 

Extinguishment following substantial modification

-

-

(400)

 

Recognition of modified derivative financial liability

-

-

111

 

Period end revaluation

3,428

206

348

 

 

 

 

 

 

Net book value

3,887

401

459

 

                       

 

Derivative financial liabilities represent the fair value of 15,000,000 options granted to Macquarie Bank and linked to the extension of a now repaid loan facility held with Macquarie Bank.  The options were granted on 27 July 2015 and are referred to as the Tranche 4 options.  At the date of grant these were considered to fall outside of the scope of IFRS 2 and unlike Tranches 1-3 were not accounted for as a share based payment.   The Macquarie Bank loan facility was repaid in 2016 but the options did not expire at that point. 

 

During the prior financial year, the Company modified the exercise price of the options.  This was deemed to be a substantial modification under IAS 32 and IAS 39.  The value of the derivative financial liability was extinguished at that point and the fair value of the modified options recognised at the date that they were granted.  As a financial liability at fair value through the profit or loss these were revalued at period end.  The fair value is measured using a Black-Scholes Model with the following inputs:

 

Fair value of share options and assumptions

 

 

 

 

At 30 September 2017

At 30 September 2016

31 March 2017

Grant date

27 July 2015

27 July 2015

27 July 2015

Expiry date

26 July 2019

26 July 2019

26 July 2019

Share price

£0.214

£0.076

£0.039

Exercise price

£0.021

£0.100

£0.021

Volatility

78%

50%

83%

Option life

1.83

2.83

2.33

Expected dividends

-

-

-

Risk-free interest rate (based on national government bonds)

0.46%

0.61%

0.12%

         

 

Expected volatility was determined by calculating the historical volatility of the Company's share price over the expected remaining life of the options.

 

7.    Called up share capital

 

 

 

 

 

 

 

Issued and fully paid

 

 

 

398,995,110 (2016: 221,833,853) ordinary shares of 0.2p each

US$754

US$710

US$754

 

 

 

 

Opening balance (number: 239,833,853)

754

710

710

Share issue (number: 70,000,000)

180

-

-

Share issue (number: 34,316,551)

89

-

-

Exercise of options (number: 15,000,000)

38

-

-

Placement (number: 16,080,000)

41

-

-

Placement (number: 12,000,000)

31

-

-

Placement (number: 11,764,706)

31

-

-

Exercise of options (number: 18,000,000)

-

-

44

 

 

 

 

Closing balance (number: 398,995,110)

1,164

710

754

 

 

 

 

Ordinary B shares of 7.9p each

 

 

 

Opening balance (number: nil)

-

-

-

New shares issued (number: 221,833,853)

-

-

21,784

Cancellation/return of value

-

-

(21,784)

 

Closing balance (number: nil)

 

-

 

-

 

-

 

 

 

 

The Companies Act 2006 (as amended) abolishes the requirement for a company to have an authorised share capital.  Therefore, the Company has taken advantage of these provisions and has an unlimited authorised share capital.

 

 

 

 

 

Share options and warrants

 

 

 

 

 

 

 

The following equity instruments have been issued by the Company and have not been exercised at 30 September 2017:

 

             

 

Option Class

Financier options

Financier options

Grant Date

25 March 2013

27 July 2015

Options / warrants held 31 Mar 2017

15,000,000

15,000,000

Options / warrants granted during period

-

-

Options / warrants held 30 Sep 2017

15,000,000

15,000,000

Exercise price (£)

£0.04

£0.02

Expiry date

25 March 2018

26 July 2019

 

The options outstanding at 30 September 2017 had a weighted average remaining contractual life of 1.15 years and a weighted average exercise price of £0.03.

 

 

 

8.    Events after the reporting date

 

 

 

 

 

There were no significant events post reporting date other than the commencement of flow testing of the Dempsey 1-15 well in the Sacramento Basin, California.

 

         

 


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