RNS Number:7495Y
Global Energy Development PLC
22 February 2006
Immediate Release 22 February 2006
GLOBAL ENERGY DEVELOPMENT PLC
UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED
31 DECEMBER 2005
"Record Financial Results"
Global Energy Development PLC ("Global" or the "Company"), the Latin America
focused petroleum exploration and production company (LSE-AIM: "GED"), today
announces unaudited results for the year ended 31 December 2005.
Financial Highlights
*Turnover up 74% to $19,045,000 (2004: $10,974,000)
*Gross profit up 74% to $9,290,000 (2004: $5,349,000)
*Profit before tax up 63% to $5,094,000 (2004: $3,127,000)
*Finding and development cost of $6.88 per proved barrel for the year
ended 31 December 2005
*Average cash netback per barrel of $29.15 in 2005
*Capital expenditure in 2005, fully funded from cash flow and cash
available, up 114% against 2004 at $18,603,000
*2006 capital expenditure anticipated to be up to $26,000,000, again
expected to be fully funded from cash flow from production and cash
available
Operational Highlights
*Acreage position enlarged by almost 74% in 2005 to approximately 5.16
million acres as at 31 December 2005
*Independently audited proved and probable reserves enlarged to 17,474,000
BOE as at 31 December 2005
*Proved and probable reserve replacement ratio for 2005 of approximately
327%
*Exited 2005 with several new high-potential exploration assets and
production from five Colombian contracts
*Two new contracts and a new Technical Evaluation Agreement secured in
Colombia during 2005, 100% owned by Global as with all other contracts
*Two new contracts pending in both Colombia and Peru following proposals
submitted in late 2005
*80% of 2006 capital expenditure to be directed at exploration activities
Commenting on the results for 2005 and outlook for the Company, Mikel Faulkner,
Chairman, and Stephen Voss, Managing Director, said:
"The year ended 31 December 2005 continued the Company's record of unbroken
growth since its listing on the AIM Market of the London Stock Exchange in March
2002. In addition to record financial results achieved through enlarged
production, historically high oil prices and a new crude oil sales contract, the
Company has added considerable potential in 2005, unrivalled by any other year
since admission, through securing additional exploration acreage and identifying
future acreage positions which should considerably transform the Company.
Global benefits from its long association in Latin America and unblemished,
extensive operating history in its countries of choice. These qualities along
with the extensive prospects already secured, validated by an independent
reserve engineering company and all 100% owned by Global, should enable the
Company to continue to prosper and grow. 2006 looks to be a very active and
transitional year for Global."
For further information:
Global Energy Development PLC
Catherine Miles, director of Investor Relations +44 (0) 20 7763 7177
www.globalenergyplc.com +44 (0) 7909918034
Notes to Editors:
Global has been listed on the AIM Market of the London Stock Exchange since
March 2002. The Company currently holds approximately 5.16 million acres through
eight contracts in Colombia and Peru, an exclusive Technical Evaluation
Agreement ("TEA") in Colombia and a concluded exclusive TEA in Panama which is
in the process of being converted into an exclusive contract. Global's portfolio
comprises production from five contracts, developmental drilling and workover
opportunities and several high-potential exploration projects. All Global's
contracts and agreements are 100% owned by Global.
CHAIRMAN'S STATEMENT
The year ended 31 December 2005 continued the Company's record of unbroken
growth since its listing on the AIM Market of the London Stock Exchange in March
2002. In addition to record financial results achieved through enlarged
production, historically high oil prices and a new crude oil sales contract, the
Company has added considerable potential in 2005, unrivalled by any other year
since admission, through securing additional exploration acreage and identifying
future acreage positions which should considerably transform the Company.
The Company held approximately 5.16 million acres under contract or agreement in
Latin America as at 31 December 2005, representing an uplift of almost 74%
against the acreage held as at 31 December 2004 and placing the Company as one
of the top independent acreage holders in the region. The new acreage secured in
2005, through two new contracts and a Technical Evaluation Agreement ("TEA") in
Colombia, represented a deliberate move to add more high-potential exploration
assets with compelling historical data to the existing exploration projects and
established, lower-risk producing assets which the Company has been aggregating
since the early 1990s.
The Company's producing assets continue to provide a solid financial base and
increasing internal cash resources with which to grow the Company via workovers,
developmental drilling, accelerated exploration activities and the sourcing and
securing of new contracts.
The work programme outlined for 2006 should once again boost production and as a
result cash flow in 2006 should be considerably greater than in 2005 allowing a
further substantial increase in capital expenditure in the year and the first
significant spend on the Company's exploration projects.
Global's reserve report, as prepared by a pre-eminent independent engineering
company, validates the Company's confidence in all its prospects and as at 31
December 2005, Global's portfolio had a proved and probable reserve life of just
under 40 years based on 2005 net production.
The Company's strategy remains the same: to continue building on the prospect
rich portfolio focused in Latin America through securing new contracts, all 100%
owned by Global, whilst utilising the existing production and lower-risk, near
production assets to generate increasing cash flow to fully fund the Company's
exploration projects which are capable of transforming the Company.
Global continues to be one of very few established, independent exploration and
production companies operating in Latin America, a region that has attracted
considerable new interest in 2005 and looks set to be a region of increasing
focus. With an extensive and diverse work programme and many high-potential
prospects being rapidly progressed, 2006 is likely to be the most exciting year
yet in the Company's history.
Mikel Faulkner
Executive Chairman 21 February 2006
MANAGING DIRECTOR'S REVIEW
Financials
Turnover for the year ended 31 December 2005 was $19,045,000, an increase of 74%
against the prior year (31 December 2004: $10,974,000), with gross profit up 74%
at $9,290,000 (31 December 2004: $5,349,000). Profit before tax increased by 63%
to $5,094,000 (31 December 2004: $3,127,000).
These financial results were achieved on production net to Global of 442,805
barrels of oil during 2005, an increase of 21% against 2004, and influenced by
prevailing historically high oil prices in 2005 and the Company's new crude oil
sales contract with Petrobras, the state oil company of Brazil, which came into
effect on 1 May 2005 and contained improved financial terms for Global.
The Company had a finding and development cost of $6.88 per proved barrel in
2005. During the year, Global averaged a cash netback per barrel of $29.15
compared with $23.09 for 2004. These netback figures are derived after deducting
all production costs from net wellhead prices.
Reserves
As at 31 December 2005, the Company's independent engineers reported that net
proved and probable reserves totalled 17,474,000 BOE, an increase of 6% against
the prior year, with 5,034,000 BOE and 12,440,000 BOE being attributed to proved
reserves and probable reserves respectively. Both the proved and probable
reserve cases were an improvement against 2004. Of the exploration contracts
held by the Company and listed below, the Bretana field within the Peruvian
Block 95 Area Licence contract was again attributed just under 4,000,000 BOE of
probable reserves and the Colombian Luna Llena contract was attributed 85,000
BOE of probable reserves for the first time since being signed in November 2005.
The Company's proved plus probable reserves replacement ratio for the year,
defined as proved plus probable net reserve additions divided by 2005 net
production, was approximately 327%.
Based on Global's 2005 net production, Global's proved reserve life is 11.4
years and proved plus probable reserve life is 39.5 years.
Review of Operations
Production Contracts
Global currently has production from five contracts, namely the older Alcaravan,
Bolivar and Bocachico Association contracts all currently subject to a 20%
royalty and the newer Rio Verde and Los Hatos Exploration and Production
Concession contracts subject to a 10.5% and 8% royalty respectively. The Company
successfully commenced production from the Los Hatos contract during October
2005 whilst all the other contracts had production during 2005.
During the first quarter of 2005, the Company worked-over and recommenced
production from the Macarenas 1 and Canacabare 1 wells within the Rio Verde and
Alcaravan contracts respectively. In August 2005, the Company commenced rig
mobilisation to its first exploratory well on the Los Hatos contract with the
Los Hatos 1 well being successfully placed onto production in October 2005. Also
within October 2005, the Company commenced the Pilot Test Phase of a Cyclic CO2
Injection Project on the Torcaz field within the Bocachico contract area
representing an improved recovery programme that the Company hopes will
substantially increase production and reserve recovery rates on the contract
area. The Company expects to be able to assess the initial impact of this
Project during the first quarter of 2006. In December 2005, the Company
commenced rig mobilisation to the exploratory Tilodiran 2 well within the Rio
Verde contract and as at February 2006 Global is proceeding to complete and test
more than one potentially oil productive zone following the well being
successfully drilled to a final depth of 13,350 feet.
There was no drilling or workover activity on the Bolivar contract during 2005
except for the conversion of the Catalina 1 well to gas injection service. It is
anticipated that an improved recovery programme will be initiated on the
contract area during 2006. This improved recovery programme will likely follow
the proposed acquisition by Global of existing wells on the Bolivar contract
area from Ecopetrol, the state owned Colombian oil company, which would allow
the improved recovery programme to be expanded and more effectively managed.
Negotiations for the acquisition of these existing wells are near conclusion.
No expenditure is anticipated for the Alcaravan or Los Hatos contracts in 2006
as particularly the Alcaravan contract has been the predominate focus of
drilling investment activity over the last three years and now provides a
consistent base of production. As referred to above, both the Bolivar and
Bocachico contracts are the focus of improved recovery programmes in 2006 and it
is anticipated that the royalties on these contracts will be reduced from the
current 20% to 8% under Colombian law that provides for royalty reduction
incentives when improved recovery programs such as gas injection are initiated
in existing producing fields. After the work on Tilodiran 2 the Company expects
to drill another exploratory well on the Rio Verde contract acreage in 2006 in
order to rapidly increase production on this contract. Additional near term
drilling opportunities in 2006 are expected to come with the signing of a new
contract in Colombia currently anticipated during the first half of 2006.
Through its drilling programme and improved recovery initiatives to be
undertaken in 2006 Global expects to record an improvement in its net production
for 2006 against 2005.
Exploration Contracts
Colombia
Valle Lunar TEA and Luna Llena contract
In May 2005, Global signed the approximate 2.1 million acre Valle Lunar
Technical Evaluation Agreement ("TEA") with the National Hydrocarbons Agency of
the Republic of Colombia ("ANH") and in November 2005 it elected to convert
369,000 acres of the TEA area into the Luna Llena Exploration and Production
Concession contract, subject only to an initial 8% royalty, whilst retaining the
remainder TEA acreage. The Company took the decision to contract the Luna Llena
area in order to accelerate its work programme due to the compelling data
initial analysis had yielded. During mid 2005, the Company conducted Landsat
analysis of the TEA acreage which yielded a considerable amount of surface data,
particularly within the Luna Llena area. The Luna Llena acreage contains the
identified El Miedo field which has substantial well tests and subsurface
geologic control that was acquired by two international oil companies in the
1980s from an extensive drilling effort conducted by them. Oil production tests
were successful at this time. Global completed engineering and geologic studies
on the El Miedo field in 2005 and during the first half of 2006 will look to
acquire new 2D seismic, reprocess existing seismic and then drill two
exploratory wells in the second half of 2006. Whilst rig availability will
likely constrain all the Company's drilling timetables, light rigs appear to be
currently available for the two shallow exploratory Luna Llena wells.
Caracoli contract
In December 2005 Global signed the Caracoli Exploration and Production
Concession contract with ANH. The contract, subject only to an initial 10%
royalty, is located in the Catatumbo basin, a sub-basin of the prolific
Maracaibo basin which extends in a south-westerly direction from Venezuela into
Colombia. This contract is considered by the management to be one of the most
significant it has ever signed based upon the average field size in this area of
Colombia and nearby Venezuela and following extensive studies and preliminary
geologic analysis completed by Global and its technical staff prior to signing
the contract. Several mapped structures in the contract area have the same
geologic history as prominent adjacent oil fields. In the second half of 2006
the Company will proceed with acquiring new 2D seismic, with the location
already identified, and reprocess existing seismic. The first exploratory well
will then be drilled in the second half of 2007, with this dependent upon
environmental permit timing and heavy rig availability.
Peru
Block 95 Area Licence contract
In December 2004, Global received approval for the Block 95 Area Licence
contract in the Maranon Basin of North-eastern Peru and during April 2005 the
contract was signed with Perupetro S.A., the national oil company of Peru. This
contract is subject only to an initial 5% royalty. The Company proceeded with
acquiring micro-magnetic data and updating geologic maps in 2005 and during late
2006 intends acquiring new 2D or 3D seismic within the identified Bretana field
located on Block 95. Global will then likely drill its first exploratory well in
the Bretana field in late 2007, again dependent upon environmental permit timing
and rig availability. The Bretana field was identified in the early 1970s and in
1974 an international oil company drilled the Bretana 1 well which tested 18
degree API gravity oil at rates of approximately 800 bopd. The Company and its
independent reserve engineers have extensively evaluated the acreage and the
management believe the contract to have significant exploration potential.
Panama
Garachine Block Area
The Garachine Block Area covering 1.4 million acres in and offshore Panama and
less than 100 miles from the Panama Canal continues to be a pending contract
following the concluded TEA. The delay in the signing of this contract has been
due to resolving several contract issues whilst negotiating the contract with
the Ministry of Commerce and Industry for the Republic of Panama (the
"Ministry"). A final contract draft will shortly be submitted to the Ministry by
the Company and Global currently expects to sign the contract within the first
half of 2006.
The Garachine Block Area represents a Pinnacle Reef reservoir play with a number
of oil seeps located within the contract boundaries that are producing various
quantities and qualities of crude oil. The area was first identified in the
1920s when several shallow wells were drilled onshore by an international oil
company encountering good oil shows in the Mid Miocene rock section. More recent
offshore exploration in the eastern Gulf substantiated Miocene source potential
and outlined the regional basin structure with a reconnaissance grid of seismic
data. Once the Garachine Block Area contract is fully approved Global will
immediately commence exploratory geologic studies and anticipates the need to
acquire 3D seismic over some or all of its prospects. Timing for seismic
acquisition is uncertain due to the currently high utilization rate of oil
service equipment. Drilling timing is also highly dependent on jack-up rig
availability.
Capital Expenditure
Capital expenditure in 2005, fully funded as expected from cash flow from the
enlarged production and cash available, totalled $18,603,000 in line with
previous expectations and was a 114% increase on 2004 which totalled $8,700,000.
2006 should see another material uplift in capital expenditure to up to $26
million, again using the Company's internally generated cash flow and enabled
through the anticipated continued enlargement of production coupled with
expected historically high oil prices. As only approximately $8 million is
anticipated to be contractually required this leaves up to $18 million to be
utilised at the Company's discretion. Therefore Global can retain a high degree
of flexibility and has complete confidence that it will fully comply with all
the terms of its contracts as it has done throughout its long operating history.
Highlighting the breadth of exploration projects now within the portfolio,
roughly 80% of the 2006 capital expenditure budget is anticipated to be directed
towards exploration activities with 2006 heralding the Company's first
significant exploration drilling since admission to AIM.
Additional Contracts
In Colombia the Company is awaiting feedback and approval on two new contract
proposals it submitted in late 2005, one of these having been referred to above,
and the Company would hope that at least one of these would be signed within the
first half of 2006.
In Peru, the Company has also submitted proposals to Perupetro S.A. for two new
contracts and is preparing to submit a third. In anticipation of securing at
least one of these in the first half of 2006, the Company established a
subsidiary office in Lima in December 2005 with one full-time professional. This
office also allows the more effective management of the existing Block 95 Area
Licence contract.
Strategy and Outlook
The management and its technical staff continually evaluate prospective acreage
in Latin America for new contracts, particularly in Colombia and Peru, utilising
their long-standing knowledge of the region. Areas are extensively studied and
preliminary geologic analysis completed prior to securing contracts in order to
provide a high degree of confidence going forward. Competition has intensified
in Colombia and Peru especially over the past year as investment has been
attracted by the world-leading contract terms, contract sanctity and the very
under-explored large oil and gas reserve potential. Global benefits from its
long associations in the region and unblemished extensive operating history in
its countries of choice. These qualities along with the extensive prospects
already secured, validated by an independent reserve engineering company and all
100% owned by Global, should enable the Company to continue to prosper and grow.
2006 looks to be a very active and transitional year for Global.
Stephen Voss
Managing Director 21 February 2006
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2005
2005 2004
(unaudited) (audited)
(figures in thousands except for per share
information) $000 $000
TURNOVER 19,045 10,974
Cost of sales (9,755) (5,625)
--------- ----------
GROSS PROFIT 9,290 5,349
Administrative expenses (4,364) (2,241)
Other Income 176 24
--------- ----------
OPERATING PROFIT 5,102 3,132
Interest Receivable 79 18
Interest payable (87) (23)
--------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 5,094 3,127
Taxation on profit from ordinary activities (715) (561)
--------- ----------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 4,379 2,566
--------- ----------
TRANSFER TO RESERVES 4,379 2,566
--------- ----------
EARNINGS PER ORDINARY SHARE
- Basic and diluted 0.13 0.09
--------- ----------
There are no recognised gains and losses other than the profit of $4,378,946
(2004: $2,565,555) for the year ended 31 December 2005.
All amounts relate to continuing operations.
GROUP BALANCE SHEET
At 31 December 2005
2005 2004
(unaudited) (audited)
$000 $000
FIXED ASSETS
Intangible assets 2,049 1,221
Tangible assets 70,587 57,170
--------- ----------
72,636 58,392
CURRENT ASSETS
Stocks 451 474
Debtors 5,697 2,005
Cash at bank and in hand 8,212 2,857
--------- ----------
14,360 5,336
Creditors: amounts falling due within one year (3,772) (5,107)
--------- ----------
NET CURRENT ASSETS 10,588 229
--------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 83,224 58,620
Convertible Loan Notes (12,500) -
Provision for liabilities and charges (575) (529)
--------- ----------
70,149 58,091
--------- ----------
CAPITAL AND RESERVES
Called up share capital 537 406
Capital reserve 210,844 210,844
Share premium account 26,288 18,740
Profit and loss account (167,520) (171,899)
--------- ----------
70,149 58,091
--------- ----------
GROUP CASH FLOW STATEMENT
Year ended 31 December 2005
2005 2004
(unaudited) (audited)
$000 $000
Net cash inflow from operating activities 4,729 8,196
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest received 79 18
Interest paid (87) -
TAXATION (715) (65)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Expenditure on intangible and tangible fixed assets (18,603) (8,700)
--------- ----------
NET CASH OUTFLOW BEFORE FINANCING (14,597) (551)
--------- ----------
FINANCING
Issue of share capital 7,677 5
Convertible Loan Notes issued 12,500 -
--------- ----------
INCREASE/(DECREASE) IN CASH 5,580 (546)
--------- ----------
CASH AT BEGINNING OF YEAR 2,632 3,178
--------- ----------
CASH AT END OF YEAR 8,212 2,632
--------- ----------
NOTES TO THE FINANCIAL STATEMENTS
1. COST OF SALES AND OPERATING EXPENSES
2005 2004
$000 $000
Production costs 5,396 2,538
Depletion of oil properties 3,672 2,664
Depletion of other tangible fixed assets 687 423
--------- ----------
Total cost of sales 9,755 5,625
--------- ----------
General and Administrative 4,364 2,241
--------- ----------
Total Cost of Sales and Administration 14,119 7,866
--------- ----------
2. TANGIBLE FIXED ASSETS
Oil & Gas Facilities Office Total
Properties and Equipment
Pipelines & Other
Group $000 $000 $000 $000
Cost:
At 1 January 2005 182,673 15,740 1,182 199,595
Additions 15,098 2,374 304 17,776
-------- -------- -------- --------
At 31 December 2005 197,771 18,114 1,486 217,371
-------- -------- -------- --------
Depreciation:
At 1 January 2005 (136,300) (5,349) (776) (142,425)
Provided during the year (3,672) (494) (193) (4,359)
-------- -------- -------- --------
At 31 December 2005 (139,972) (5,843) (969) (146,784)
-------- -------- -------- --------
Net book value at 31 December 57,799 12,271 517 70,587
2005
-------- -------- -------- --------
Net book value at 31 December 46,373 10,391 406 57,170
2004
3. RECONCILIATION OF MOVEMENTS ON SHAREHOLDERS' FUNDS
2005 2004
$000 $000
Total recognised gains and losses 4,379 2,566
New share capital subscribed less issue costs 7,679 5
-------- --------
Total movements during the year 12,058 2,571
Shareholders' funds at 1 January 58,091 55,520
-------- --------
Shareholders' funds at 31 December 2005 70,149 58,091
-------- --------
4. NOTES TO THE STATEMENT OF CASH FLOWS
2005 2004
$000 $000
Reconciliation of operating profit to net cash inflow from
Operating activities
Operating profit 5,102 3,132
Depreciation and decommissioning 4,412 3,087
Decrease in debtors and prepayments (3,494) (2,070)
Increase/(Decrease) in creditors (1,334) 4,039
Loss on sale of fixed assets - 34
Increase/(Decrease) in inventory 43 (26)
-------- --------
Net cash inflow from operating activities 4,729 8,196
-------- --------
5. RECONCILIATION OF NET CASH OUTFLOW TO MOVEMENTS IN NET FUNDS
2005 2004
$000 $000
Increase /(Decrease) in cash in the year 5,580 (546)
Opening net funds 2,632 3,178
-------- --------
Closing net funds 8,212 2,632
-------- --------
SUPPLEMENTARY OIL AND GAS INFORMATION
(Unaudited)
Oil and gas reserves
Proven and probable oil and gas reserves are estimated quantities of
commercially producible hydrocarbons which the existing geological, geophysical
and engineering data show to be recoverable in future years from known
reservoirs. The proved reserves included herein conform to the definition
approved by the Society of Petroleum Engineers (SPE) and the World Petroleum
Congress (WPC). The probable reserves included herein conform to definitions of
probable reserves approved by the SPE/WPC using the deterministic methodology.
The following tables show estimates of the Group's net proved and probable
reserves of crude oil and natural gas at 1 January and 31 December 2005.
( Source: Ryder Scott Petroleum Consultants)
ESTIMATED NET PROVED AND PROBABLE RESERVES OF CRUDE OIL.
PROVED PROBABLE TOTAL
LATIN LATIN ALL
AMERICA AMERICA
(Thousands of barrels)
2005
Subsidiary undertakings
At 1 January
Developed 1,582 468 2,050
Undeveloped 2,617 10,552 13,169
_______ _______
4,199 11,020 15,219
_______ _______ _______
Changes in year attributable to
Revision of previous estimates 1,285 (195) 1,090
Production (451) - (451)
At 31 December 2005 5,033 10,825 15,858
_______ _______ _______
Developed 2,248 62 2,310
Undeveloped 2,785 10,763 13,584
_______ _______ _______
5,033 10,825 15,858
_______ _______ _______
ESTIMATED NET PROVED AND PROBABLE RESERVES OF NATURAL GAS.
PROVED PROBABLE TOTAL
LATIN LATIN ALL
AMERICA AMERICA
(Millions of cubic feet)
2005
Subsidiary undertakings
At 1 January
Developed - - -
Undeveloped - 7,377 7,377
_______ _______ _______
- 7,377 7,377
_______ _______ _______
Changes in year attributable to
Production - 2,313 2,313
_______ _______ _______
At 31 December 2005 - 9,690 9,690
_______ _______ _______
Developed - - -
Undeveloped - 9,690 9,690
_______ _______ _______
- 9,690 9,690
_______ _______ _______
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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