TIDMFRI
RNS Number : 7095A
Frontier Resources International
30 September 2015
For immediate release
30 September 2015
Frontier Resources International Plc
("Frontier" or the "Company")
Unaudited interim results for the six months ended 30 June
2015
The Board of Frontier (AIM Ticker: FRI), the AIM-traded
international oil and gas exploration company with its principal
assets in Oman and Namibia is pleased to provide shareholders with
the unaudited results for the six months ended 30 June 2015.
A copy of this announcement is available from the Company's
website www.friplc.com
Enquiries:
Frontier Resources International Plc
Jack Keyes, Chief Executive Tel: +1 (281)
Officer 920 0061
--------------------------------- ------------------
Neil Herbert, Chairman Tel: 020 3475
8108
--------------------------------- ------------------
Beaumont Cornish Limited (Nomad)
--------------------------------- ------------------
Michael Cornish Tel: 020 7628
3396
--------------------------------- ------------------
Roland Cornish
--------------------------------- ------------------
Beaufort Securities Limited Tel: 020
(Broker) 7382 8300
--------------------------------- ------------------
Zoe Alexander
--------------------------------- ------------------
CHAIRMAN'S STATEMENT
Frontier Resources International Plc, which was founded in April
2008, is currently focused on onshore oil and gas exploration in
the Middle East and Southern Africa where the Company has technical
knowledge and expertise. The Company's principal exploration
projects are in Oman and Namibia.
Operating review
Current volatility in global financial markets and the recent
steep decline this year in oil prices have created very challenging
conditions for oil companies at all stages of development, and not
just junior exploration companies like Frontier. Across the oil
industry, there is currently large-scale retrenchment and cost
cutting and major and independent oil companies are looking to
dispose of under-performing and non-core assets rather then add to
their exploration portfolios. This market background makes it
exceptionally difficult for the industry to progress potential
farm-out discussions, as potential partners defer their own plans
to acquire exploration acreage with upside potential.
Nevertheless, Frontier still believes that its present onshore
portfolio of assets in Africa and the Middle East present
attractive exploration targets. Oman, were we have excellent terms
and a drill-ready large structure close to infrastructure we
believe should eventually attract a suitable and funded farm-in
partner, but inevitably this is a process that is taking longer
than planned due to the present crisis within the industry. The
Company has already submitted an application for an extension to
the first phase of the Oman licence before the renewal date of 25
November 2015 and a further update will provided this year as the
extension application and farm-out process progresses.
Financial review
As previously reported, we were disappointed that the
conditional subscription agreement entered into with AGR Energy
Limited No.11 (AGR Energy) in March this year did not complete. As
a result, and to assist the Company with its ongoing discussions
regarding potential alternative funding, it was necessary to
reorganise the Company's share capital after the period end in July
to reduce the nominal value of each share to 0.1p per share.
Following the share capital reorganisation, the Company was able
to raise some additional working capital and reduce its outstanding
liabilities by the conversion of some significant outstanding
creditor balances, including amounts owed to directors. In
aggregate, the Company concluded a fund raising and conversion of
outstanding creditor balances that resulted in GBP296,291
(US$465,680)(gross before costs) being raised in cash and
GBP259,227 (US$407,427) of outstanding creditor balance being paid
in shares, including the AGR Energy loan amounting to GBP132,109
(USD206,164).
The Group is still reliant on the continuing support from its
existing and future shareholders. Cash balances at the date of
approval of these interim results are approximately US$150,000. The
Group has prepared cash flow projections reflecting the
requirements of the Group's operations and exploration plans, the
expected funds to be raised and the potential proceeds of any
farm-out during 2015-16. The Group is continuing to have
discussions with interested parties relating to the ongoing
farm-out process, but it will be challenging to conclude a farm-out
within the current financial year due to the current status of the
oil exploration sector.
The directors are taking the necessary steps to ensure that the
Board is considering all options for the potential ongoing
development of the Group, including further funding and the
potential disposal of its current exploration projects, together
with investment in possible new projects, but in current markets
there can be no certainty as to the outcome of this process, or
that the funds required will become available within the
foreseeable future. If future funding does not become available in
an appropriate timescale, the directors would need to consider
alternative strategies and an impairment review may at that time be
required in respect of the carrying value of the Group's
assets.
Material uncertainties therefore continue to exist that may cast
doubt on the Group's and Company's ability to continue as a going
concern and its ability to meet its commitments and discharge its
liabilities in the normal course of business and to continue to
develop its license areas.
However, after making enquiries and considering the
uncertainties described above, the directors have a reasonable
expectation that the various initiatives being pursued by the Board
will result in an acceptable solution to the Company's current
funding requirements and that the Company will therefore continue
to trade for the foreseeable future, and at least for one year from
the date of approval of these accounts. The accounts have,
therefore, been prepared on the going concern basis. The accounts
do not contain any adjustments relating to the recoverability and
classification of recorded assets that might be necessary should
the Company and Group be not able to continue as a going
concern.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Financial Performance in the Period
-- The Group's total comprehensive loss for the six months to 30
June 2015 was USD 707,000 (30 June 2014: USD 681,000).
-- The basic and diluted loss per share was 0.62 cents (six
months to 30 June 2014: 0.40 cents).
-- Frontier raised USD NIL in the six months ended 30 June 2015
(USD 914,000 net of expenses (40 million shares placed at 1.5p) in
the six months ended 30 June 2014).
As foreseen at the time of Admission to AIM, given that the
Company is at an early stage of development, it is not anticipated
that there will be any earnings arising from the Company's
activities in the short to medium term. Accordingly, the Board does
not expect to recommend or pay any dividends in the foreseeable
future.
Operational Performance
Oman
Frontier's 100% owned Block 38, located in the Dhofar Region of
southwest Oman, covers an area of approximately 17,425 square
kilometers. A six-year Exploration and Production Sharing Agreement
(EPSA) was signed on 25 November 2012. Frontier is the operator.
The Oman EPSA is a six-year agreement comprising two three-year
phases. The approval from the Oman Government for the second
three-year phase is subject to Frontier's completion of the first
three-year of an agreed upon work program and the Company has
already applied for an extension to the first phase to complete
this work program. A further update will be provided this year as
the renewal application and farm-out process progresses.
The Company has in first half 2015 continued interpretation of
available legacy 2D seismic data as a result of which it has
identified several leads, one of which has sufficient seismic
coverage to be suitable for drilling. Consequently the Company
received approval to exchange the Phase 1 work commitment of a 3D
seismic survey for an exploration well with a 2 D seismic survey. A
proposed drilling location has subsequently been approved and the
Company is preparing to initiate the Environmental Impact Study of
this location.
As stated in recent releases, the farm-out process continues
with several interested parties but with no conclusion to date. The
Company has retained the services of Dallas-based Moyes & Co.,
a Company that specialises in international oil and gas mergers and
acquisitions, to assist and provide general transaction advice on
the ongoing farm-out process by the Company for its Oman Block.
Namibia
Frontier's Blocks, located in the Owambo Basin in northern
Namibia, cover an area of approximately 18,933 square kilometres. A
two year exploration licence was granted on 20th January 2012 and
extended in January 2014 for an additional two years to end January
2016. Frontier is the operator with a 90% working interest. The
National Petroleum Corporation of Namibia ("NAMCOR"), the Namibian
National Oil Company, has a 10% carried interest in the
licence.
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As part of its ongoing strategy to develop a comprehensive,
regional understanding of the Owambo basin, Frontier recently
completed a data exchange of high resolution airborne magnetic data
and the associated technical interpretation, over a large area
covering nearby blocks. The data interpretation was undertaken by
Exploration Technology Inc. in Houston, Texas, and has determined
the sediment thickness in the area by calculating and mapping the
depth to the basement rocks. It has also identified regional
geologic trends in the subsurface. This technology, when integrated
with gravity and seismic data, was used successfully by Frontier in
the identification of drillable structures on its block in
Oman.
These new data are now being integrated with Frontier's existing
database over Blocks 1717 and 1817 that includes magnetic, gravity
and seismic data. High resolution magnetic and gravity data are
very useful tools in helping identify anomalous features seen on
the seismic, especially in sparsely drilled areas such as this
which, from the evidence of the previously acquired soil gas survey
could contain very large volumes of undiscovered hydrocarbons.
Zambia
A four year exploration licence was granted on 25 March 2011 to
Frontier over Block 34 ("the Block") located in the Kafue Trough in
southwestern Zambia, which covers an area of approximately 6,427
square kilometers. As previously announced, on 8 January 2015 the
Company announced that it had filed for an extension to the
exploration license in the Block and the extension application is
still pending. Accordingly, the initial four-year exploration
licence, which was granted on 25 March 2011, has expired.
M J Keyes
Chief Executive Officer
30 September 2015
Enquiries:
Frontier Resources International
Plc
Jack Keyes, Chief Executive Tel: +1 (713) 962 0887
Officer
Barbara Spurrier, Finance Tel: 020 3475 8108
Director
Beaumont Cornish Limited Tel: 0207 628 3396
(Nomad)
Michael Cornish / Roland
Cornish
Beaufort Securities Tel: 020 7382 8300
Limited (Broker)
Zoe Alexander
A copy of this announcement is available from the Company's
website www.friplc.com
Frontier Resources International Plc
Interim consolidated statement of comprehensive income
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
USD'000 USD'000 USD'000
----------------------------- ------ ----------- ----------- -------------
Unaudited Unaudited Audited
----------------------------- ------ ----------- ----------- -------------
Revenue - - -
----------------------------- ------ ----------- ----------- -------------
Cost of sales - - -
----------------------------- ------ ----------- ----------- -------------
Gross loss - - -
Administrative expenses (806) (373) (1,117)
Share-based payments 4 (16) (69) (106)
----------------------------- ------ ----------- ----------- -------------
Operating loss (822) (442) (1,223)
Finance costs - - (2)
----------------------------- ------ ----------- ----------- -------------
Loss before tax (822) (442) (1,225)
Taxation 5 - - -
----------------------------- ------ ----------- ----------- -------------
Loss for the period (822) (442) (1,225)
Other comprehensive income:
Exchange differences
arising on translation
of foreign operations 115 (239) (52)
Total comprehensive loss
for the period (707) (681) (1,277)
----------------------------- ------ ----------- ----------- -------------
Loss per share (cents) 6
Basic and diluted (0.62c) (0.40c) (0.92c)
----------------------------- ------ ----------- ----------- -------------
Frontier Resources International Plc
Interim consolidated statement of financial position
Notes 30 June 30 June 31 December
2015 2014 2014
USD'000 USD'000 USD'000
------------------------------- ------ ---------- ---------- ------------
Unaudited Unaudited Audited
------------------------------- ------ ---------- ---------- ------------
ASSETS
Non-current assets
Property, plant and equipment 2 3 2
Exploration and evaluation
assets 7 3,017 2,526 3,012
Total non-current assets 3,019 2,529 3,014
------------------------------- ------ ---------- ---------- ------------
Current assets
Trade and other receivables 57 905 49
Cash and cash equivalents 20 144 165
------------------------------- ------ ---------- ---------- ------------
Total current assets 77 1,049 214
------------------------------- ------ ---------- ---------- ------------
TOTAL ASSETS 3,096 3,578 3,228
------------------------------- ------ ---------- ---------- ------------
EQUITY AND LIABILITIES
Equity attributable to
holders of the parent
Share capital 8 2,652 2,412 2,652
Share premium 8 5,081 5,094 5,081
Share-based payment reserve 506 529 490
Foreign exchange reserve 285 (17) 170
Retained losses (7,069) (5,540) (6,247)
------------------------------- ------ ---------- ---------- ------------
Total equity 1,455 2,478 2,146
------------------------------- ------ ---------- ---------- ------------
Current liabilities
Trade and other payables 1,641 1,100 1,082
------------------------------- ------ ---------- ---------- ------------
TOTAL EQUITY AND LIABILITIES 3,096 3,578 3,228
------------------------------- ------ ---------- ---------- ------------
Frontier Resources International Plc
Interim consolidated statement of changes in equity
Share Share Premium Retained Share-based Payment Foreign Exchange Total
Capital Losses Reserve Reserve Equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
---------------------- --------- -------------- --------- --------------------- --------------------- --------
As at 1 January 2015 2,652 5,081 (6,247) 490 170 2,146
Loss for the period - - (822) - - (822)
Other comprehensive
income - - - - 115 115
Share-based payments - - - 16 - 16
---------------------- --------- -------------- --------- --------------------- --------------------- --------
As at 30 June 2015
(Unaudited) 2,652 5,081 (7,069) 506 285 1,455
---------------------- --------- -------------- --------- --------------------- --------------------- --------
As at 1 January 2014 1,731 4,861 (5,098) 460 222 2,176
Loss for the period - - (442) - - (442)
Other comprehensive
loss - - - - (239) (239)
Issue of share
capital 681 341 - - - 1,022
Issue costs
recognised in equity - (108) - - - (108)
Share-based payments - - - 69 - 69
---------------------- --------- -------------- --------- --------------------- --------------------- --------
As at 30 June 2014
(Unaudited) 2,412 5,094 (5,540) 529 (17) 2,478
---------------------- --------- -------------- --------- --------------------- --------------------- --------
The following describes the nature and purpose of each reserve
within owners' equity.
Share capital Amount subscribed for share capital at nominal
value.
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Share premium Amount subscribed for share capital in excess of
nominal value.
Retained losses Cumulative net losses recognised in the
financial statements.
Share-based payment reserve Amounts recognised for the fair value of share options granted
Foreign exchange reserve Exchange differences on translating foreign operations.
Frontier Resources International Plc
Interim consolidated statement of cash flows
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
USD'000 USD'000 USD'000
------------------------------- ------- ----------- ----------- -------------
Unaudited Unaudited Audited
------------------------------- ------- ----------- ----------- -------------
Cash flows from operating
activities
Profit before interest
and taxation (822) (442) (1,225)
Adjustments for:
Other non-cash items - 1 -
Depreciation of plant
& equipment - - 1
Restricted cash - - -
(Increase)/decrease in
trade and other receivables (8) (597) 259
Increase / (decrease)
in trade and other payables 559 422 405
Share-based payments 16 69 106
Net Cash used in continuing
operations (255) (547) (454)
Net cash used in discontinued - - -
operations
Net cash (used in)/ from
operating activities (255) (547) (454)
---------------------------------------- ----------- ----------- -------------
Cash flows from investing
activities
Purchase of plant and - - -
equipment
Expenditures for exploration
and evaluation (5) (350) (836)
Net cash used in investing
activities (5) (350) (836)
---------------------------------------- ----------- ----------- -------------
Cash flows from financing
activities
Net proceeds from issue
of share capital - 914 1,141
Interest paid - - (2)
---------------------------------------- ----------- ----------- -------------
Net cash from financing
activities - 914 1,139
---------------------------------------- ----------- ----------- -------------
Net (decrease) / increase
in cash and cash equivalents (260) 17 (151)
Cash and cash equivalents
at the beginning of period 165 366 366
Effect of foreign exchange
rate changes 115 (239) (50)
---------------------------------------- ----------- ----------- -------------
Cash and cash equivalents
at end of period 20 144 165
---------------------------------------- ----------- ----------- -------------
Notes to the Unaudited Interim Financial Information
1 General information
Frontier Resources International Plc is a Public Company
incorporated in the United Kingdom under registered number 06573154
with its registered office at Staple Court, 11 Staple Inn
Buildings, London, WC1V 7QH, England.
The Company is an AIM-traded company in London.
2 Significant accounting policies
Basis of preparation
The interim financial information for the six months ended 30
June 2015, which was approved by the Board of Directors on 29
September 2015, does not constitute statutory accounts as defined
by section 434 of the Companies Act 2006. The financial information
presented is unaudited and has been prepared using the same
accounting policies as those adopted in the financial statements
for the year ended 31 December 2015 and expected to be adopted in
the financial year ending 31 December 2016. The financial
statements for the year ended 31 December 2015 were reported on by
the Company's auditors and delivered to the Registrar of Companies.
The report of the auditors was unqualified and did not contain an
adverse statement under section 498 (2) or (3) of the Companies Act
2006. The auditors' report included an 'emphasis of matter' in
connection with the Group's going concern position.
In the opinion of the Directors, the condensed half-year
accounts for the period present fairly the financial position and
the results from operations and cash flows for the period.
The condensed half-year accounts include unaudited comparative
figures for the half year ended 30 June 2014 and comparatives for
the year ended 31 December 2014 that have been extracted from the
audited financial statements for that year.
No new IFRS standards, amendments or interpretations became
effective in the six months to the 30 June 2015 which had a
material effect on this consolidated interim financial
information.
The interim financial information is presented in US Dollars
(USD or US$) rounded to the nearest thousand dollars (USD'000).
Accounting Policies
The condensed half year accounts have been prepared using
accounting policies based on International Financial Reporting
Standards (IFRS and IFRIC Interpretations) issued by the
International Accounting Standards Board ("IASB") as adopted by the
European Union, including IAS 34 'Interim Financial Reporting' and
IFRS 6 'Exploration for and Evaluation of Mineral Resources' and on
the historical cost basis.
The Group's financial risk management objectives and policies
are consistent with those disclosed in the 2014 annual report.
Going Concern
The half-year accounts have been prepared on a going concern
basis. The Group made a loss of USD 822,000 during the half year
ended 30 June 2015 and continues to be loss making. At 30 June
2015, the Group had cash balances of USD 20,000 and net assets of
USD 1,455,000. Included in Trade and other receivables at that date
is USD200,000 AGR Energy short term loan and USD 5,227 interest due
on the AGR Energy loan, which following the period end was
converted into ordinary shares. Trade and other payables at that
date include USD773,734 for amounts due to the directors of the
Company (see note 10).
Cash balances at the date of approval of these accounts are
approximately USD150,000.
The Group is not yet revenue generating so is therefore still
reliant on the continuing support from its existing and future
shareholders. In July 2015, the Company concluded a fund raising
and conversion of outstanding creditor balances that resulted in
GBP296,291 (USD465,680) (gross before costs) being raised in cash
and GBP259,227 (USD407,427) of outstanding creditor balance being
paid in shares, including the AGR Energy loan.
The placing proceeds will not provide enough working capital to
fund the Group's planned activities for the next 12 months from the
date of approval of these accounts. The Group is evaluating all
avenues available to it for its ongoing financing needs such as
farming-out its interests in exploration projects and entering into
joint ventures or partnerships with other firms. The Group has
created a data room and approached industry partners with the
intention of farming-out an interest in each of its exploration
projects in Oman and Namibia. The Company anticipates funding any
further exploration activity and general working capital from the
proceeds of these intended financing actions.
The directors believe that they are taking the necessary steps
to ensure that the Board is considering all options for the
potential ongoing development of the Group, including further
funding and the potential disposal of its current exploration
projects, together with investment in possible new projects, but in
current markets there can be no certainty as to the outcome of this
process, or that the funds required will become available within
the foreseeable future.
The Group has prepared cash flow projections reflecting the
requirements of the Group's operations and exploration plans, the
expected funds to be raised and the potential proceeds of any
farm-outs during 2015-16. The detailed assessment indicates that
the Group should be able to continue to meet its liabilities as
they fall due and meet its minimum spend commitments on its
licenses for a period of not less than 12 months from the date of
the approval of these interim results.
Whilst the directors are confident that they are taking all the
necessary steps to ensure that the funding will be available, there
can be no guarantee or certainty that the funds required will
become available within the foreseeable future. If future funding
was not to become available in an appropriate timescale, the
directors would need to consider alternative strategies and an
impairment review may be required in respect of the carrying value
of the Group's assets.
Material uncertainties therefore exist that may cast doubt on
the Group's and Company's ability to continue as a going concern
and its ability to meet its commitments and discharge its
liabilities in the normal course of business and to continue to
develop its license areas.
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