TIDMGED
RNS Number : 7702S
Global Energy Development PLC
16 September 2010
+-------------------------------+-------------------------------+
| Immediate Release | 16 September 2009 |
+-------------------------------+-------------------------------+
GLOBAL ENERGY DEVELOPMENT PLC
("Global" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010
Global Energy Development PLC, the Latin America focused petroleum exploration
and production company (LSE-AIM: "GED"),announces its interim results for the
six months ended 30 June 2010.
HIGHLIGHTS:
* Revenue increased by 25% to $11.3m (first half of 2009: $9.0 million) largely
as a direct consequence of a recovery in the oil price;
* Production in line with expectations as the Company's base of production
continued to show moderate decline rates;
* Increased production in the country of Colombia caused capacity issues during
the period leaving the Company with production inventory at 30 June 2010;
* Gross Profit increased 63% to $4.3 million (first half of 2009: $2.6 million);
* Profit from Operations recorded at $0.2 million due to inclusion of a charge
of $1.2 million relating to relinquishment of a non-core contract;
* The Company's excess inventory held at period end now largely sold; and
* Activity in second half of 2010 focused on Colombian Rio Verde contract as
Company proceeds with its Three Year Plan.
For further information:
Global Energy Development PLC
+---------------------------------------+--------------------+
| Catherine Miles, Company Secretary | +44 (0)20 3178 |
| | 5156 |
+---------------------------------------+--------------------+
| www.globalenergyplc.com | +44 (0)7909918034 |
+---------------------------------------+--------------------+
Matrix Corporate Capital LLP
+---------------------------------------+--------------------+
| Louis Castro | +44 (0)20 3206 |
| | 7000 |
+---------------------------------------+--------------------+
| Tim Graham | |
+---------------------------------------+--------------------+
Notes to Editors:
The Company's shares have been traded on AIM, a market operated by the London
Stock Exchange, since March 2002 (LSE-AIM: "GED"). The Company's balanced
portfolio covers the countries of Colombia and Peru, and comprises a base of
production, workover opportunities and high potential developmental drilling.
The Company currently holds six contracts: five in Colombia and one in Peru.
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 Ralph E. Davis Associates, Inc.
("RED"), independent petroleum engineers, conform to the definition approved by
the Society of Petroleum Engineers ("SPE") and the World Petroleum Council
("WPC"). The probable and possible reserves reported by RED conform to
definitions of probable and possible reserves approved by the SPE/WPC using the
deterministic methodology. The information contained within this announcement
has previously been reviewed by RED.
In addition, the information contained within this announcement has been
reviewed by Mr. Stephen Voss, a Director of the Company, for the purpose of the
Guidance Note for Mining, Oil and Gas Companies issued by the London Stock
Exchange in respect of AIM companies which outlines standards of disclosure for
natural resource projects. Mr. Voss is a Registered Professional Engineer in
Texas and has been a Member of SPE for 27 years.
Forward-looking statements
This release may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be identified
by the use of forward-looking terminology, including the terms "believes",
"estimates", "plans", "projects", "anticipates", "expects", "intends", "may",
"will" or "should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans, objectives, goals,
future events or intentions. These forward-looking statements include all
matters that are not historical facts. They appear in a number of places
throughout this release and include, but are not limited to, statements
regarding the Group's intentions, beliefs or current expectations concerning,
among other things, the Group's results of operations, financial position,
liquidity, prospects, growth, strategies and expectations of the industry. By
their nature, forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Forward-looking statements are
not guarantees of future performance and the development of the markets and the
industry in which the Group operates may differ materially from those described
in, or suggested by, any forward-looking statements contained in this release.
In addition, even if the development of the markets and the industry in which
the Group operates are consistent with the forward-looking statements contained
in this release, those developments may not be indicative of developments in
subsequent periods. A number of factors could cause developments to differ
materially from those expressed or implied by the forward-looking statements
including, without limitation, general economic and business conditions,
industry trends, competition, commodity prices, changes in law or regulation,
currency fluctuations (including the US dollar), the Group's ability to recover
its reserves or develop new reserves, changes in its business strategy,
political and economic uncertainty. Save as required by law, the Company is
under no obligation to update the information contained in this release.
Past performance cannot be relied on as a guide to future performance.
CHAIRMAN'S STATEMENT & REVIEW OF OPERATIONS
Revenue for the six months ended 30 June 2010 (the "Period") increased by 25% to
$11.3 million when compared to the same period in the prior year (2009: $9.0
million). This uplift was largely a direct consequence of a recovery in the oil
price, with West Texas Intermediate ("WTI") averaging $78 during the Period
against $51 in the same period in the prior year.
Production during the Period was 183,660 barrels of oil ("bbls") (net to the
Company) against 199,403 bbls for the first half of 2009, which was in line with
expectations since the Company's base of production continued to show moderate
decline rates and no new production was added during the Period. Compared with
the second half of 2009, the decline rate for the period was 7.9%.
During the Period, the country of Colombia experienced a significant increase in
the daily production of hydrocarbons that in turn led to pipeline and port
capacity issues. As a result, hydrocarbon producers, including the Company,
experienced unforeseen delays between production and delivery / sales in the
Period, whereas in 2009 sales were realised on a more timely basis.
Approximately 20,000 bbls produced by the Company during the Period were not
sold prior to the Period end and remained in inventory at the Period end. The
Company's excess inventory is currently almost eliminated having been sold, and
efforts are underway throughout Colombia to improve the capacity issues.
Cost of Sales was relatively stable at $7.0 million (2009: $6.4 million) as the
increase in the unit price of fuel and lubricants and crude transportation costs
(again due to increased production and capacity issues) was offset by net gains
related to the variation of crude inventories. Gross Profit was up by 63% at
$4.3 million compared to the first half of 2009. As expected, Administrative
Expenses were higher at $2.9 million due to the Company supplementing the
organisation to support the Three Year Plan (the "Plan") which was announced and
commenced during the Period, and involves much increased future drilling
activity when compared to historic levels.
There was a charge of $1.2 million during the Period relating to the
relinquishment of the Panamanian Garachine contract, details of which have been
previously announced and are given below. Were it not for this charge, Profit
from Operations would have been $1.4 million instead of $0.2 million, against
$0.3 million for the same period in the prior year. The Company recorded a Loss
before Taxation of $0.6 million compared to a loss before taxation of $0.4
million in the same period in the prior year.
The Company announced its updated independently audited Reserve Report at the
beginning of 2010, which detailed proved plus probable reserves ("2P Reserves")
of 147.1 million barrels of oil equivalent ("BOE") and proved plus probable plus
possible reserves ("3P Reserves") of 272.9 million BOE, both net to the Company
as at 31 December 2009. The Company subsequently outlined the Plan, with its
purpose being to increase production volumes whilst developing the reserve base
through much increased drilling activity when compared to historic levels.
Unfortunately the first well of the Plan, the Rio Verde 2 exploratory well, was
non-productive. This well was contractually required to be drilled during the
Period and was drilled on the last remaining untested fault block in the
Colombian Rio Verde contract. It accounted for the vast majority of the $8.7
million capital expenditure during the Period, with this being funded from cash
flow from operations and cash in hand.
While the Rio Verde 2 well was not successful it nevertheless provided the
Company with valuable data for future drilling purposes on the contract area,
and the Company has done further interpretation of the 3D seismic acquired over
the area in 2009. In light of the Rio Verde 2 well, the originally announced
Plan was slightly modified and the next three wells to be drilled within the
Plan are now situated in the Tilodiran field of the Rio Verde contract. This
field already accounts for over half of the Company's current daily production
volumes.
Activity in the second half of 2010 will therefore be predominately focused on
the Rio Verde contract as the Company prepares for the drilling of its second
well within the Plan, the Tilodiran 4 development well, and in addition performs
a workover on the Boral 1 well also on the same contract area.
The Tilodiran 4 development well is classified as a proved undeveloped location
and is a contractually required well under the terms of the contract, with total
depth required to be reached by mid December 2010. It is currently intended to
be drilled directionally from an existing Tilodiran well platform which will
reduce civil works costs, simplify property right issues and involve slightly
higher drilling costs. The well now has a proposed total depth of approximately
13,800 feet and will target the Gacheta formation (currently producing in the
Tilodiran 2 and 3 wells) and the Ubaque formation (currently producing in the
Tilodiran 3 well). The Tilodiran 4 well is not expected to contribute to
production in 2010. The Company is currently in discussions with several rig
providers to determine the best option available for the drilling of the
Tilodiran 4 well.
New production is anticipated from the Boral 1 well in the second half of 2010.
The Boral 1 well within the Boral field had initial production rates of
approximately 600 barrels of oil per day ("bopd") from the Ubaque formation when
it was first put on production in June 2008. However, after several months the
tubing became badly corroded and the well was shut-in in December 2009 and it
did not contribute to production in the Period. The workover in the second
half of 2010, which is supplemental to the Plan, will replace the current tubing
with chrome alloy tubing. The well will also be added to the electrical power
grid following the workover to improve efficiency and reduce costs. The
Company is also planning to further improve operating efficiencies through
installing replacement generators at the Palo Blanco field within the Colombian
Alcaravan contract to reduce downtime.
The Peruvian Block 95 contract continues to be in force majeure and, therefore,
temporarily suspended at the Company's request. This is due to delays in the
Company receiving sub-permits requested from the Peruvian government and which
are necessary in order for the Company to initiate Phase III. This Phase
involves the drilling of the Bretaña 2 exploratory well. The Bretaña 2 well is
scheduled in the Plan for 2011 but its exact timing is dependent on the receipt
of the now one outstanding sub-permit. Once this remaining sub-permit is
received the Company will have, at the very least, six months to drill the
Bretaña 2 well. Logistical planning for the well is advanced.
The Plan details the drilling of seven wells plus one re-entry on the Colombian
Bolivar and Bocachico contracts in 2012, with these two contracts accounting for
115.7 million BOE of 2P reserves between them. In addition, the Company is also
evaluating ways of accelerating the full development of these contracts post
completion of, or in tandem with, the Plan.
Post the Period end, the Panama Garachine contract was relinquished by mutual
consent with the Panamanian government, with this decision taken as the contract
was purely of an exploratory nature and deemed non-core to the Company's future
plans which consist of developmental drilling. The contract did not account for
any of the Company's reserves. The relinquishment of this contract will allow
expenditures to be focused on other contracts which form part of the Plan. Also
since the Period end, the Company agreed a line of credit for US$3.3 million
with the Colombian arm of an international bank in July 2010 and a separate
US$5.0 million loan agreement with HKN, Inc. in September 2010.
In conclusion, while the result of the first well in the Plan was disappointing
it was just one small constituent part of it and has no effect on the future
success of the remaining wells. The Company is committed to unlocking the
tremendous value within the Company's reserve base.
Mikel Faulkner
Executive Chairman
Stephen Voss
Vice Chairman
16 September 2010
INDEPENDENT REVIEW REPORT TO GLOBAL ENERGY DEVELOPMENT PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
information in the half-yearly financial report for the six months ended 30 June
2010 which comprises the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Financial Position, the Consolidated Cash Flow
Statement, the Consolidated Statement of Changes in Equity and related
explanatory notes 1 to 7.
We have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
information.
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 AIM 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.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial information in the half-yearly financial report based on our
review.
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 AIM 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.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity", issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial information in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London W1U 7EU
UK
16 September 2010
+--------------------------+------+-------------+-------------+------------+
| CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
+--------------------------------------------------------------------------+
| For the period ended 30 June 2010 |
+--------------------------------------------------------------------------+
| |Note | Six | Six | Twelve |
| | | Months | Months | Months |
| | | ended | ended | ended |
| | | 30 June | 30 June | 31 |
| | | 2010 | 2009 | December |
| | | $'000 | $'000 | 2009 |
| | | (Unaudited) | (Unaudited) | $'000 |
| | | | | (Audited) |
+--------------------------+------+-------------+-------------+------------+
| Revenue | | 11,265 | 9,003 | 22,166 |
+--------------------------+------+-------------+-------------+------------+
| Cost of sales | | (6,957) | (6,361) | (13,843) |
+--------------------------+------+-------------+-------------+------------+
| Gross profit | | 4,308 | 2,642 | 8,323 |
+--------------------------+------+-------------+-------------+------------+
| | | | | |
+--------------------------+------+-------------+-------------+------------+
| Other income | | 5 | 54 | 219 |
+--------------------------+------+-------------+-------------+------------+
| Administrative expenses | | (2,914) | (2,363) | (4,448) |
+--------------------------+------+-------------+-------------+------------+
| Unsuccessful exploration | | (1,204) | - | - |
| costs | | | | |
+--------------------------+------+-------------+-------------+------------+
| Profit from operations | | 195 | 333 | 4,094 |
+--------------------------+------+-------------+-------------+------------+
| | | | | |
+--------------------------+------+-------------+-------------+------------+
| Finance income | | 6 | 15 | 41 |
+--------------------------+------+-------------+-------------+------------+
| Finance expense | | (776) | (705) | (1,440) |
+--------------------------+------+-------------+-------------+------------+
| (Loss)/Profit before | | (575) | (357) | 2,695 |
| taxation | | | | |
+--------------------------+------+-------------+-------------+------------+
| | | (759) | (464) | (1,997) |
| Tax expense | | | | |
+--------------------------+------+-------------+-------------+------------+
| (Loss)/Profit from | | (1,334) | (821) | 698 |
| continuing operations | | | | |
+--------------------------+------+-------------+-------------+------------+
| | | | | |
+--------------------------+------+-------------+-------------+------------+
| Total Comprehensive | (1,334) | (821) | 698 |
| (loss)/income attributable to | | | |
| the equity holders of the | | | |
| parent | | | |
+---------------------------------+-------------+-------------+------------+
| | | | | |
+--------------------------+------+-------------+-------------+------------+
| (Loss)/Earnings Per | | | | |
| Share | | | | |
+--------------------------+------+-------------+-------------+------------+
| - Basic | 4 | ( | ($0.02) | $0.02 |
| | | $0.04) | | |
+--------------------------+------+-------------+-------------+------------+
| - Diluted | 4 | ( | ($0.02) | $0.05 |
| | | $0.04) | | |
+--------------------------+------+-------------+-------------+------------+
| | | | | |
+--------------------------+------+-------------+-------------+------------+
| | | | | |
+--------------------------+------+-------------+-------------+------------+
+--------------------+---+-------------+-+-------------+-+-----------+
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL |
| POSITION |
+--------------------------------------------------------------------+
| As at 30 June 2010 |
+--------------------------------------------------------------------+
| | | 30 | | 30 | | 31 |
| | | June | | June | | December |
| | | 2010 | | 2009 | | 2009 |
| | | $'000 | | $'000 | | $'000 |
| | | (Unaudited) | | (Unaudited) | | (Audited) |
+--------------------+---+-------------+-+-------------+-+-----------+
| Assets | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Non-current assets | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Intangible assets | | 4,758 | | 5,598 | | 5,757 |
+--------------------+---+-------------+-+-------------+-+-----------+
| Property, plant | | 104,428 | | 95,928 | | 98,413 |
| and equipment | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Deferred tax | | 1,239 | | 1,809 | | 1,358 |
| assets | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Total non-current | | 110,425 | | 103,335 | | 105,528 |
| assets | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Current assets | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Inventories | | 1,948 | | 1,265 | | 1,148 |
+--------------------+---+-------------+-+-------------+-+-----------+
| Trade and other | | 6,595 | | 7,662 | | 4,805 |
| receivables | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Short term | | 1,518 | | 1,444 | | 1,405 |
| investments | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Cash & cash | | 1,043 | | 995 | | 3,068 |
| equivalents | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Total current | | 11,104 | | 11,366 | | 10,426 |
| assets | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Total assets | | 121,529 | | 114,701 | | 115,954 |
+--------------------+---+-------------+-+-------------+-+-----------+
| | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Liabilities | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Non-current | | | | | | |
| liabilities | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Convertible loan | | (16,773) | | (16,388) | | (16,582) |
| notes | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Deferred tax | | (12,073) | | (12,068) | | (12,233) |
| liabilities | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Long term | | (923) | | (839) | | (1,031) |
| provisions | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Total non-current | | (29,769) | | (29,295) | | (29,846) |
| liabilities | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Current | | | | | | |
| liabilities | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Trade and other | | (11,340) | | (5,418) | | (4,474) |
| payables | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Total liabilities | | (41,109) | | (34,713) | | (34,320) |
+--------------------+---+-------------+-+-------------+-+-----------+
| Net assets | | 80,420 | | 79,988 | | 81,634 |
+--------------------+---+-------------+-+-------------+-+-----------+
| | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Capital and reserves | | | | |
| attributable to | | | | |
| equity holders of the company | | | | |
+--------------------------------------+-+-------------+-+-----------+
| Share capital | | 540 | | 540 | | 540 |
+--------------------+---+-------------+-+-------------+-+-----------+
| Share premium | | 26,544 | | 26,543 | | 26,544 |
| account | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
| Other reserve | | 1,826 | | 1,826 | | 1,826 |
+--------------------+---+-------------+-+-------------+-+-----------+
| Capital reserve | | 210,844 | | 210,844 | | 210,844 |
+--------------------+---+-------------+-+-------------+-+-----------+
| Retained deficit | | (159,334) | | (159,765) | | (158,120) |
+--------------------+---+-------------+-+-------------+-+-----------+
| Total equity | | 80,420 | | 79,988 | | 81,634 |
+--------------------+---+-------------+-+-------------+-+-----------+
| | | | | | | |
+--------------------+---+-------------+-+-------------+-+-----------+
The financial information was approved and authorised for issue by the Board of
Directors on 16 September 2010 and is signed on its behalf by:
+-------------------------------+-------------------------------+
| Mikel Faulkner | Stephen Voss |
| Executive Chairman | Vice Chairman |
| | |
+-------------------------------+-------------------------------+
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| CONDENSEDCONSOLIDATED CASH FLOW STATEMENT |
| For the period ended 30 June 2010 |
+---------------------------------------------------------------------------------------------------------+
| | | Six | | Six | | |
| | | months | | months | | Twelve |
| | | ended | | ended | | months |
| | | 30 June | | 30 June | | ended |
| | | 2010 | | 2009 | | 31 |
| | | $'000 | | $'000 | | December |
| | | (Unaudited) | | (Unaudited) | | 2009 |
| | | | | | | $'000 |
| | | | | | | (Audited) |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Cash flows from operating | | | | | | |
| activities | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Operating profit before | | 195 | | 333 | | 4,094 |
| interest and taxation | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Depreciation, depletion and | | 2,493 | | 2,910 | | 5,641 |
| amortisation | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| (Increase) / decrease in trade | | (1,790) | | (2,136) | | 390 |
| and other receivables | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| (Increase) / decrease in | | (801) | | 23 | | 142 |
| inventories | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Increase / (decrease) in | | 6,866 | | (2,376) | | (2,775) |
| trade and other payables | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| (Decrease) / increase in | | (108) | | 162 | | 30 |
| long-term provisions | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Loss on disposal of assets | | - | | 55 | | 143 |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Write-off unsuccessful | | 1,204 | | - | | - |
| exploration costs (see note 7) | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Other non-cash items | | (40) | | (56) | | 58 |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Share-based payments | | 120 | | 243 | | 370 |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Cash generated from / (used | | 8,139 | | (842) | | 8,093 |
| in) operations | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Income taxes paid | | (804) | | (651) | | (1,628) |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Net cash flows from operating | | 7,335 | | (1,493) | | 6,465 |
| activities | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Investing activities | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Capital expenditure | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| - Expenditure on property, | | (8,508) | | (584) | | (5,917) |
| plant and equipment | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| - Expenditure on intangible | | (204) | | (253) | | (457) |
| assets | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Disposal of property, plant | | - | | - | | 83 |
| and equipment | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Interest received | | 6 | | 15 | | 41 |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| (Increase) / Decrease in | | (113) | | 64 | | 103 |
| short-term investments | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Net cash flows from investing | | (8,819) | | (758) | | (6,147) |
| activities | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Financing activities | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Interest paid | | (541) | | (476) | | (972) |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Net cash flows from financing | | (541) | | (476) | | (972) |
| activities | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Decrease in cash and cash | | (2,025) | | (2,727) | | (654) |
| equivalents | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Cash and cash equivalents at | | 3,068 | | 3,722 | | 3,722 |
| beginning of period | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| Cash and cash equivalents at | | 1,043 | | 995 | | 3,068 |
| end of period | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
| | | | | | | |
+--------------------------------+-+-------------+----------+-------------+----------+--------------------+
+--------------------------+---------+---------+----------+----------+-----------+---------+
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
| For the six months ended 30 June 2010 |
+------------------------------------------------------------------------------------------+
| | Share | Share | Other | Capital | Retained | Total |
| | Capital | Premium | Reserves | Reserve | deficit | $'000 |
| | $'000 | $'000 | $'000 | $'000 | $'000 | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| At 1 January 2009 | 539 | 26,439 | 1,826 | 210,844 | (159,082) | 80,566 |
| (Audited) | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| Total comprehensive loss | - | - | - | - | (821) | (821) |
| for the period | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| Share-based payments | 1 | 104 | - | - | 138 | 243 |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| At 30 June 2009 | 540 | 26,543 | 1,826 | 210,844 | (159,765) | 79,988 |
| (Unaudited) | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| Total comprehensive | - | - | | - | 1,519 | 1,519 |
| income for the period | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| Share-based payments | | 1 | | - | 126 | 127 |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| At 31 December 2009 | 540 | 26,544 | 1,826 | 210,844 | (158,120) | 81,634 |
| (Audited) | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| Total comprehensive loss | - | - | - | - | (1,334) | (1,334) |
| for the period | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| Share-based payments | - | - | - | - | 120 | 120 |
+--------------------------+---------+---------+----------+----------+-----------+---------+
| At 30 June 2010 | 540 | 26,544 | 1,826 | 210,844 | (159,334) | 80,420 |
| (Unaudited) | | | | | | |
+--------------------------+---------+---------+----------+----------+-----------+---------+
UNAUDITED NOTES FORMING PART OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2010
1. Accounting Policies
Basis of Preparation
The condensed interim financial information has been prepared using policies
based on International Financial Reporting Standards (IFRS and IFRIC
interpretations) issued by the International Accounting Standards Board ("IASB")
as adopted for use in the EU. The condensed interim financial information has
been prepared using the accounting policies which will be applied in the Group's
statutory financial information for the year ended 31 December 2010.
2. Financial reporting period
The condensed interim financial information for the period 1 January 2010 to 30
June 2010 is unaudited. In the opinion of the Directors the condensed interim
financial information for the period presents fairly the financial position,
results from operations and cash flows for the period in conformity with the
generally accepted accounting principles consistently applied. The condensed
interim financial information incorporates comparative figures for the interim
period 1 January 2009 to 30 June 2009 and the audited financial year to 31
December 2009.
The financial information contained in this interim report does not constitute
statutory accounts as defined by section 435 of the Companies Act 2006. The
comparatives for the full year ended 31 December 2009 are not the Company's full
statutory accounts for that year. A copy of the statutory accounts for that
year has been delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified, did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and did not contain a statement under section 498(2)-(3) of the Companies
Act 2006.
3. Revenue
Revenue is attributable to one continuing activity, which is oil production from
Colombia Energy Development Company ("CEDCo"), a wholly-owned subsidiary of the
Group, located in Colombia, South America. This subsidiary's name was changed
from Harken de Colombia Limited during the period.
4. Loss per share
Basic earnings per share amounts are calculated by dividing (loss)/profit for
the period attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding for the period.
Diluted earnings per share amounts are calculated by dividing the (loss) /
profit for the period attributable to ordinary equity holders of the parent by
the weighted average number of ordinary share outstanding during the year plus
the weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the (loss) / profit and share data used in the basic and
diluted earnings per share calculations:
+---------------------------------+-------------+-------------+------------+
| | Six | Six | Twelve |
| | months | months | months |
| | ended | ended | ended |
| | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | $'000 | $'000 | 2009 |
| | (Unaudited) | (Unaudited) | $'000 |
| | | | Audited |
+---------------------------------+-------------+-------------+------------+
| Net (loss)/profit attributable | (1,334) | (821) | 698 |
| to equity holders used in basic | | | |
| calculation | | | |
+---------------------------------+-------------+-------------+------------+
| | | | |
| Add back interest and accretion | 722 | 667 | 1,338 |
| charge in respect of | | | |
| convertible loan notes | | | |
+---------------------------------+-------------+-------------+------------+
| Net (loss)/profit attributable | (612) | (154) | 2,036 |
| to equity holders used in | | | |
| dilutive calculation | | | |
+---------------------------------+-------------+-------------+------------+
| | | | |
+---------------------------------+-------------+-------------+------------+
| Basic weighted average number | 35,439,009 | 35,333,927 | 35,386,898 |
| of shares | | | |
+---------------------------------+-------------+-------------+------------+
| | | | |
+---------------------------------+-------------+-------------+------------+
| Dilutive potential ordinary | | | |
| shares | | | |
+---------------------------------+-------------+-------------+------------+
| Shares related to | 4,565,027 | 4,565,027 | 4,565,027 |
| convertible notes | | | |
+---------------------------------+-------------+-------------+------------+
| Employee and Director | 2,945,196 | 2,945,196 | 2,945,196 |
| share option plans | | | |
+---------------------------------+-------------+-------------+------------+
| Diluted weighted average number | 42,949,232 | 42,844,150 | 42,897,121 |
| of shares | | | |
+---------------------------------+-------------+-------------+------------+
The calculation of the diluted EPS assumes all criteria giving rise to the
dilution of the EPS are achieved and all outstanding share options are
exercised. During the period ended 30 June 2010 the Group reported a loss,
therefore, because the effect of the dilutive shares related to convertible loan
notes and outstanding share options are anti-dilutive, the diluted loss per
share equals the basic loss per share for this period.
5. Interim dividends
No interim dividend has been declared.
6. Cash generating units
As noted in the Chairman's Statement, the pipeline capacity issues in Colombia
during the reporting period has required the Group to review the way in which
its crude is sold to third parties. In accordance with the Group's year end
accounting policies, the Group continues to define its cash generating units
("CGU") as being assets or groups of assets representing the smallest
identifiable segments generating cash flows that are largely independent of cash
flows from other assets or groups of assets. As defined, each CGU includes the
relevant properties, wells, facilities, pipelines, and other key components of
the included operations. Cash generating units are identified in accordance with
IAS 36 'Impairment of Assets', where cash flows are largely independent of other
significant assets groups and are normally, but not always, single development
or production areas. When an impairment is identified, the depletion is charged
through the statement of comprehensive income if the net book value of
capitalised costs relating to the cash generating unit exceeds the associated
estimated future discounted cash flows of the related commercial oil and gas
reserves. In the current reporting period the Group's CGUs have continued to be
defined in accordance with the same principles applied in the 2009 financial
statements and accordingly, with the exception of the write-off of the costs
related to the Garachine exploration and exploitation contract (see note 7) no
further write-offs against assets are considered to be required by the Company.
7. Subsequent events
On 30 July 2010, the Company announced that it had reached agreement with the
government of Panama to terminate the Garachine exploration and exploitation
contract. The Company elected not to proceed beyond the initial contract phase
in order to focus expenditures on other core opportunities in the Company's
development portfolio. The contract accounted for none of the Company's
independently audited reserves. Resulting from the contract termination, the
financial statements as of 30 June 2010 include an adjustment reflecting the
write-off of $1.2 million corresponding to past exploratory investment, as the
termination is considered to be an adjusting post balance sheet event.
In addition, the Company agreed a line of credit for US$3.3 million with the
Colombian arm of an international bank in July 2010 and a separate US$5.0
million loan agreement with HKN, Inc. in September 2010.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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