RNS Number:7302I
Global Energy Development PLC
11 September 2006
For Immediate Release 11 September 2006
GLOBAL ENERGY DEVELOPMENT PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
Global Energy Development PLC ("Global" or the "Company"), the Latin America
focused petroleum exploration and production company (LSE-AIM: "GED"), announces
its interim results for the six months ended 30 June 2006.
Highlights:
* Revenues for the six months ended 30 June 2006 of $9,006,000 (six months
ended 30 June 2005: $9,103,000);
* Gross profit of $4,667,000 (six months ended 30 June 2005: $4,997,000);
* Administration expenses significantly increased at $2,658,000 (six months
ended June 2005: $1,859,000) due in part to much expanded operations
warranting an enlarged organisational team;
* Net cash inflow from operating activities totalling $5,688,000 (six months
ended 30 June 2005: outflow of $220,000) enabled through prevailing high oil
prices;
* Average cash netback per barrel of oil of $37.41 (six months ended 30 June
2005: $27.26);
* Capital expenditure, funded out of cash flow from production and cash
available, of $10,261,000 (six months ended 30 June 2005: $6,361,000);
* Capital expenditure of approximately $20,000,000 anticipated for the whole
of 2006;
* Commencement of active drilling programme with seven new wells to be
drilled or spudded between now and first half of 2007; and
* Additional seismic acquisition and new contracts anticipated in the short
term.
Commenting, Mikel Faulkner, Executive Chairman, said:
"We have done much to add key personnel over the last few months to reflect our
expanded operations and this combined with the Company's independently audited
high potential exploration projects, anticipated new contracts and escalating
production volumes predicted for the short-term though an active drilling
programme, leaves us optimistic for the future."
For further information:
Global Energy Development PLC
Catherine Miles, director of Investor Relations +44 (0) 20 7763 7177
www.globalenergyplc.com +44 (0) 79 0991 8034
Notes to Editors:
Global's shares have been traded on AIM, a market operated by the London Stock
Exchange, since March 2002 (LSE-AIM: "GED"). The Company currently holds in
excess of 5.2 million acres through nine contracts in Colombia and Peru, an
exclusive Technical Evaluation Agreement ("TEA") in Colombia and a concluded
exclusive TEA in Panama. Global's portfolio comprises a base of production,
developmental drilling and workover opportunities and several high-potential
exploration projects.
Ryder Scott Company, LP ("Ryder Scott"), the Company's independent petroleum
consultants, reported that as at 31 December 2005, proved plus probable reserves
("2P reserves") net to Global totalled 17.5 million barrels of oil and proved
plus probable plus possible reserves ("3P reserves") net to Global totalled 67.5
million barrels of oil. Based upon an approximate Brent Price of $58 per
barrel, this being the closing price as at 31 December 2005, Future Net Revenues
("FNR") for the 2P reserves net to Global totalled $621 million and FNR for the
3P reserves net to Global totalled approximately $2.8 billion.
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 reported by Ryder Scott conform to the
definition approved by the Society of Petroleum Engineers ("SPE") and the World
Petroleum Congress ("WPC"). The probable and possible reserves reported by
Ryder Scott conform to definitions of probable and possible reserves approved by
the SPE/WPC using the deterministic methodology.
This information has been reviewed by Ryder Scott.
CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT
Financials
Revenues for the six months ended 30 June 2006 totalled $9,006,000 (six months
ended 30 June 2005: $9,103,000) with gross profit for the period of $4,667,000
(six months ended 30 June 2005: $4,997,000). Administration expenses rose
significantly to $2,658,000 (six months ended 30 June 2005: $1,859,000) due in
part to the full-time employee headcount having risen from 13 as at 30 June 2005
to 22 as at 30 June 2006. This reflects the much expanded Company operations
warranting an enlarged organisational team. As a consequence profit before tax
for the six months ended 30 June 2006 was $2,148,000 (six months ended 30 June
2005: $3,138,000).
Net cash flow from operating activities for the six months ended 30 June 2006
totalled $5,688,000 (six months ended 30 June 2005: ($220,000)), enabled through
prevailing high oil prices during the period. The Company averaged a cash
netback per barrel of oil of $37.41 for the six months ended 30 June 2006 (six
months ended 30 June 2005: $27.26). Capital expenditure for the six months
ended 30 June 2006, funded out of cash flow from production and cash available,
was $10,261,000 (six months ended 30 June 2005: $6,361,000). This is
approximately half of the $20 million anticipated for the whole of 2006, again
predicted to be funded out of cash flow from production and cash available.
Operations
The Company currently holds in excess of 5.2 million acres through nine
contracts in Colombia and Peru, an exclusive Technical Evaluation Agreement ("
TEA") in Colombia and a concluded exclusive TEA in Panama. This portfolio
comprises a base of production, developmental drilling and workover
opportunities and several newer high-potential exploration projects. The
current base of production enables the Company to pursue and fund exploration
projects. The recently announced results of the Company's Exploration Potential
Resources study prepared by the petroleum consultants Ryder Scott Company, LP ("
Ryder Scott") independently validates the scope of the Company's current
exploration projects. Given the exploration status of the properties included
within the study there is substantial risk associated with these projects. As
such the total risked, most likely case recoverable barrels of gross resources
was 218.6 million barrels of oil equivalent ("boe").
The Company currently owns 100% of all its contracts and royalties payable
average 12.5% across the portfolio allowing the Company to retain approximately
87.5% of gross production. Gross production for the six months ended 30 June
2006 was 197,960 barrels of oil ("bbls"), with production net to Global of
171,444 bbls (six months ended 30 June 2005: 233,119 bbls). All of this
production was from legacy assets as no new wells were placed on to production
during the period due to the 2006 drilling programme being second half weighted.
The reduction in production between the two six month periods was principally
due to the loss of two wells through mechanical failure in the second half of
2005 which subsequently did not contribute to production in the first half of
2006. The two wells were existing wells located on the Colombian Rio Verde
contract which the Company recompleted and brought on to production in December
2004 and January 2005. They are not expected to contribute to future
production.
Nevertheless, the Company has had a successful start to its 2006 drilling
programme with the first well, Tilodiran 2 on the Colombian Rio Verde contract,
being successfully placed on continuous production at the end of July 2006.
This well has since produced in line with the Company's expectations, averaging
624 barrels of oil per day ("bopd") since that time and currently producing at
760 bopd at approximately 90% of the maximum possible pump speed. As a
consequence, production, net to Global, has risen from an average of 947 bopd
for the six months ended 30 June 2006 to approximately 1,440 bopd to date.
The Company expects to see daily production volumes continue to escalate in the
short-term through an active drilling programme. Between now and the end of the
first half of 2007 the Company anticipates drilling or spudding seven new wells,
working over an existing well on the Colombian Alcaravan contract and commencing
a new hydraulic fracturing project on the Colombian Bolivar contract.
A rig has been secured for the drilling of five delineation wells in the
Primavera field located within the Colombian Luna Llena contract. These wells
are quick and cheap to drill with the first of these wells expected to begin
contributing to production in December 2006, subject to weather conditions. All
five wells are expected to be placed on continuous production during the first
half of 2007. The management team have a high confidence level for these wells
which are each estimated to initially produce a few hundred barrels of oil per
day.
Due to the success of the Tilodiran 2 well, the Company is focusing in the
short-term on the Colombian Rio Verde and adjoined Los Sauces contracts. The
first well on the Los Sauces contract, Los Sauces 1, should be spudded and
completed during the first quarter of 2007 with the same rig being used to then
spud the Tilodiran 3 well during the first quarter of 2007. The Tilodiran 3
well is considered to form part of the Tilodiran field while the Los Sauces 1
well is part of separate fault structure on trend with the Tilodiran field.
Both wells should therefore be analogous to the successful Tilodiran 2 well with
similar daily production volumes from the same target formations of the Gacheta,
Ubaque and Mirador. The Company anticipates drilling these wells to a final
depth of 13,000 feet with an estimated drilling and completion time per well of
75 days.
Near to medium-term seismic plans include the acquisition of 50 kms of 2D
seismic on the Los Sauces contract, preceding the drilling of the Los Sauces 1
well, and up to 90 kms of 2D seismic on the Luna Llena contract following the
initial five well Primavera delineation drilling program. At the Peruvian Block
95 contract, the Company is seeking environmental permits for the acquisition of
2D seismic and anticipates receiving permit approval in the near future. The
Company expects to commence a pressure pulse test by mid September 2006 of its
Cajaro 1 and Los Hatos 1 wells within the adjoined Colombian Alcaravan and Los
Hatos contracts respectively for purposes of determining their hydraulic
connectivity. This is being done in relation to pending unitization and the
information collected will be used, together with previously obtained seismic
and well log information, to determine the oil production drainage pattern
existing between the two wells and ultimately the appropriate ownership
allocation of the oil being produced between Global and Ecopetrol, the state
owned Colombian oil company. The management are confident that the outcome of
this process will be favourable.
The Company expects to supplement further its portfolio of contracts over the
next few months and is actively working on signing the pending contract in
Panama, which continues to be negotiated with outstanding legal issues, and
securing new contracts in Colombia and Peru. The management team remains
completely committed to pursuing opportunities in these three countries that
offer, in the management's opinion, some of the most favourable contract terms
in the world with improving security and continued political stability.
The industry continues to be characterised by equipment and personnel shortages
which cause ongoing delays and escalating costs. Evidence of this was the
unanticipated one month delay in placing the Tilodiran 2 well on to continuous
production caused by receiving workover rig equipment late. This well was
originally expected to begin contributing to production from end of June 2006 /
early July 2006. Solely as a consequence of this delay, the Company feels it is
prudent to edge down its production estimate for the year ended 31 December 2006
from 500,000 bbls net to Global to approximately 470,000 bbls, equivalent to
approximately 537,000 bbls gross. Nevertheless, this reflects almost no
contribution from the short-term drilling programme and the Company has done
much to add key personnel, recently appointing a director of Exploitation to
oversee drilling and production operations. This combined with the Company's
independently audited high potential exploration projects, anticipated new
contracts and escalating production volumes predicted for the short-term though
an active drilling programme, leaves the Company optimistic for the future.
Mikel Faulkner
Executive Chairman
Stephen Voss
Managing Director
11 September 2006
UNAUDITED FINANCIAL HIGHLIGHTS
for the six months ended 30 June 2006
(Figures in thousands except for per share information)
Six Months Six Months Twelve Months
Ending Ending Ending
30 June 2006 30 June 2005 31 December 2005
$000 $000 $000
TURNOVER 9,006 9,103 19,045
Earnings per share 0.05 0.10 0.14
Expenditures on capital assets 10,261 6,361 14,597
Net current assets 3,680 5,967 10,588
Capital and Reserves 73,118 68,365 71,453
Common shares outstanding
End of period 35,328,428 34,965,047 35,235,430
RESERVE INFORMATION - UK GAAP BASIS AS OF
31 December 2005 (1)
Quantity Future NPV
(Bbls) Net Revenue At 10%
Thousands $000 $000
Proved 5,034 173,294 117,855
Probable 12,440 448,171 283,341
Total 17,474 621,465 401,196
Note (1):
The reserve information for Global Energy Development PLC has been certificated
by a third-party firm, Ryder Scott, at 31 December 2005.
INDEPENDENT REVIEW REPORT TO GLOBAL ENERGY DEVELOPMENT PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2006 on pages 8 to 13. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the rules of
the London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the company's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom by auditors
of fully listed companies. A review consists principally of making enquiries of
management and applying analytical procedures to the financial information and
underlying financial data and based thereon, assessing whether the accounting
policies and presentation have been consistently applied unless otherwise
disclosed. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit performed in accordance with International Standards on
Auditing (United Kingdom and Ireland) and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on the
financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
BDO STOY HAYWARD LLP
Chartered Accountants
London
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2006
Un-audited Un-audited Audited
Six Months Six Months Twelve Months
Ending Ending Ending
30 June 2006 30 June 2005 31 December 2005
$000 $000 $000
TURNOVER 9,006 9,103 19,045
Cost of Sales (4,339) (4,106) (9,755)
GROSS PROFIT 4,667 4,997 9,290
Administration Expenses (2,658) (1,859) (4,364)
Other income 247 18 176
OPERATING PROFIT 2,256 3,156 5,102
Net interest payable (108) (18) (18)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,148 3,138 5,084
Tax charge on profit for the financial period (483) (341) (715)
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION AND
TRANSFER TO RESERVES 1,665 2,797 4,369
EARNINGS PER ORDINARY SHARE
- Basic $ 0.05 $ 0.10 $ 0.14
- Diluted $ 0.05 $ 0.09 $ 0.13
Note:
- All amounts relate to continuing operations.
- All recognised gains and losses are included in the profit and loss account.
UNAUDITED CONSOLIDATED BALANCE SHEET
as at 30 June 2006
Un-audited Un-audited Audited
30 June 2006 30 June 2005 31 December 2005
$000 $000 $000
FIXED ASSETS
Intangible Assets 2,414 1,494 2,049
Tangible Assets 78,106 61,433 69,873
80,520 62,927 71,922
CURRENT ASSETS
Stocks 462 448 451
Debtors and prepayments 3,538 5,447 5,697
Cash 2,180 2,621 7,664
Restricted funds 868 548 548
7,048 9,064 14,360
CREDITORS: amounts falling due within one year (3,368) (3,097) (3,772)
NET CURRENT ASSETS 3,680 5,967 10,588
TOTAL ASSETS LESS CURRENT LIABILITIES 84,200 68,894 82,510
Convertible loan notes (10,482) - (10,482)
Provisions for liabilities and charges (600) (529) (575)
73,118 68,365 71,453
CAPITAL AND RESERVES
Called up share capital 538 532 537
Other reserve 1,314 - 1,314
Capital reserve 210,844 210,844 210,844
Share premium account 26,287 26,091 26,288
Profit and loss account (165,865) (169,102) (167,530)
Shareholders' funds 73,118 68,365 71,453
UNAUDITED CONSOLIDATED RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENT ON
RESERVES
for the six months ended 30 June 2006
Total
Share Capital Share Profit Other Shareholders'
Capital Reserve Premium And Loss Reserve Equity
Account Account Account Account Account Account
$000 $000 $000 $000 $000 $000
AT 1 JANUARY 2005 406 210,844 18,740 (171,899) - 58,091
Placement for new share 131 - 7,548 - - 7,679
capital
Profit for the period - - - 4,369 - 4,369
Equity portion of - - - - 1,314 1,314
convertible loan note
AT 31 DECEMBER 2005 537 210,844 26,288 (167,530) 1,314 71,453
Placement for new share 1 - (1) - - -
capital
Profit for the period - - - 1,665 - 1,665
AT 30 JUNE 2006 538 210,844 26,287 (165,865) 1,314 73,118
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2006
Un-audited Un-audited Audited
Six Months Six Months Twelve Months
Ending Ending Ending
30 June 2006 30 June 2005 31 December 2005
$000 $000 $000
NET CASH IN / (OUT) FLOW FROM OPERATING ACTIVITIES 5,688 (220) 4,651
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest paid (108) (18) (18)
TAXATION PAID (483) (341) (715)
5,097 (579) 3,918
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Expenditure on tangible fixed assets (10,261) (6,361) (18,515)
NET CASH OUT FLOW BEFORE FINANCING (5,164) (6,940) (14,597)
MANAGEMENT OF LIQUID RECOURCES
Movements of restricted funds (320) (340) (340)
NET CASH OUT FLOW FROM MANAGEMENT OF LIQUID (320) (340) (340)
RECOURCES
FINANCING
Issue of share capital - 7,477 7,677
Convertible loan notes issued - - 12,500
(DECREASE) / INCREASE IN CASH (5,484) 197 5,240
Cash at beginning of period 7,664 2,424 2,424
CASH AT END OF PERIOD 2,180 2,621 7,664
NOTES TO THE FINANCIAL INFORMATION
for the six months ended 30 June 2006
1. ACCOUNTING POLICIES
BASIS OF PREPARATION The financial statements have been prepared under the
historical cost convention. The financial statements for the year ended 31
December 2005 and the periods ending 30 June 2006 and 2005 have been prepared in
accordance with accounting standards and the Statement of Recommended Practice "
Accounting for Oil and Gas Exploration, Development and Decommissioning
Activities".
BASIS OF CONSOLIDATION The financial statements have been prepared using the
principles of merger accounting. Under merger accounting, the results of the
Group are combined from the beginning of the financial period in which the
combination occurred and their assets and liabilities combined at the amounts at
which they were previously recorded.
The financial information shown in this publication is unaudited and does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.
The comparative figures for the year ended 31 December 2005 were derived from
the statutory accounts for that year which have been delivered to the Registrar
of Companies. Those accounts received an unqualified audit report, which did
not contain statements under section 237(2) or (3) of the Companies Act 1985.
During the period the company has adopted FRS 20 "Share based payments." The
directors consider that the impact on the interim statement is immaterial and
therefore no charge has been made to the profit and loss account in respect of
the charge for the current and prior periods.
2. Turnover is attributable to one continuing activity, which is oil production
from the Harken de Colombia, Ltd. branch located in Colombia, South America.
3. The calculation of basic earnings per ordinary share for the six months ended
30 June 2006 is based on the weighted average number of ordinary shares of
35,286,527 (six months ended 30 June 2005: 29,079,645; year ended 31
December 2005: 31,647,889 ). The calculation of diluted earnings per share
for the six months ended 30 June 2006 is based on the weighted average
number of ordinary shares of 41,475,589 (six months ended 30 June 2005
33,140,028; year ended 31 December 2005: 32,796,102). The profit after tax
used in the calculation is $1,665,000 (six months ending 30 June 2005:
$2,797,000; year ended 31 December 2005: $4,369,000).
4. No interim dividend has been declared.
5. Reconciliation of operating profit to net cash flow from operating activities
Un-audited Un-audited Audited
Six Months Six Months Twelve Months
Ending Ending Ending
30 June 2006 30 June 2005 31 December 2005
$000 $000 $000
OPERATING PROFIT ON ORDINARY ACTIVITIES 2,256 3,156 5,102
Depreciation, depletion and amortisation 1,663 1,881 4,359
Decrease / (Increase) in debtors and prepayments 2,159 (3,442) (3,433)
(Increase) / Decrease in inventory (10) 25 (43)
(Decrease) / Increase in creditors (380) (1,840) (1,334)
NET CASH IN / (OUT) FLOW FROM OPERATING ACTIVITIES 5,688 (220) 4,651
6. Analysis of net funds
At 1 January Net At 30 June
2006 Cash flows 2006
$000 $000 $000
Cash 7, 664 (5,484) 2,180
Restricted funds 548 320 868
Total cash and restricted funds 8,212 (5,163) 3,049
This information is provided by RNS
The company news service from the London Stock Exchange
END
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