TIDMGED
RNS Number : 7419Z
Global Energy Development PLC
21 March 2012
Immediate Release 21 March 2012
GLOBAL ENERGY DEVELOPMENT PLC
(the "Company" or "Global")
AUDITED FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011
Global Energy Development PLC, the South America focused
petroleum production and development company (AIM: GED) with
operations in Colombia, is pleased to announce its audited final
results for the year ended 31 December 2011.
2011 Highlights:
-- Revenue increased 81% to $43.1 million due primarily to
increased production volumes and oil price recovery (2010: $23.8
million)
-- Oil prices increased 38% averaging $95 per barrel ("bbl") (2010: $69 per bbl)
-- Oil production increased 29% to 519,000 gross bbls (2010: 401,000 gross bbls)
-- Operating profit increased to $8.3 million (2010: Operating loss of $1.4 million)
-- Net profit of $2.0 million (2010: net loss of $2.1 million)
-- Reduced outstanding debt by 41% through cash redemptions from
increased cash flow from operations
Mikel Faulkner, Chairman of Global Energy Development,
commenting said; "With the Company's strong 2P reserve base of over
118 million barrels of oil, we have a large upside for increased
production levels and added value to the Company. We are moving in
the right direction and believe our efforts in 2012, alongside our
third-party experts and service providers, will lay the groundwork
for a successful year for the Company and its shareholders."
For further information please contact:
Global Energy Development PLC
Anna Williams, Director of Business
Development and Company Secretary +001 817 310 0240
awilliams@globalenergyplc.com
www.globalenergyplc.com
Buchanan (Financial PR)
Tim Thompson +44 (0)20 7466 5000
Ben Romney
Helen Chan
Northland Capital Partners Limited
+44 (0)20 7796
Louis Castro 8800
Lauren Kettle
Westhouse Securities Limited
Tom Price +44 (0) 20 7601 6100
Petre Norton
Notes to Editors:
The Company's shares have been traded on AIM, a market operated
by the London Stock Exchange, since March 2002 (AIM: GED). The
Company's balanced portfolio includes the countries of Colombia and
Peru and comprises a base of production, developmental drilling and
workover opportunities. The Company currently holds five operated
contracts in Colombia and one non-operated contract 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, Inc., ("RED"), an independent
petroleum engineering firm, 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 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
While much of the world is unfamiliar with the country of
Colombia, South America, Global has operated through its
subsidiaries in the country for over 20 years. The Company has seen
Colombia grow from a net oil importer to a country in the midst of
an energy boom with national production projected to surpass one
million barrels of oil per day during 2012. Over the years,
Colombia's tightening security regime and improved credit ratings
have led to higher levels of foreign investment overwhelmingly
directed to oil and mining sectors. These positive improvements in
the country of Colombia have also led to renewed interest from
international oil companies. Recent industry research estimates
that South America, as an emerging market, will average growth in
2012 second only to emerging markets in Asia. Currently, the United
States is the largest destination for Colombia's oil exports,
followed by China and Japan. During the Company's tenure in
Colombia, we have been proud to operate in a country progressing in
such a strong and dynamic manner.
During 2011, the Company was able to increase annual oil
production to 519,000 gross barrels; an increase of 29 per cent
over the prior year through our workover efforts on our oil assets
in the Llanos basin in Colombia. Our Contract Areas within the
competitive Llanos basin continue to provide a strong and
increasing level of cash flow from operations to the Company. Even
with higher transportation costs from pipeline capacity
restrictions in the country and increased trucking efforts, the
Company was able to significantly increase its profit from
operations to $8.3 million compared to a loss from operations of
$1.4 million in 2010. The Company also made efforts to reduce and
simplify its debt structure during 2011 by renegotiating a new
facility and redeeming approximately $9.2 million of short-term
debt and convertible notes with cash flow from operations.
With the Company's strong 2P reserve base of over 118 million
barrels of oil, we have a large upside for increased production
levels and added value to the Company, primarily from our Contract
Areas located in the Middle Magdalena valley in Colombia. These
Contract Areas, Bocachico and Bolivar, contain the majority of our
undeveloped 2P reserves. We are moving in the right direction and
believe our efforts in 2012, alongside our third-party experts and
service providers, will lay the groundwork for a successful year
for the Company and its shareholders.
Mikel Faulkner Chairman 20 March 2012
Managing Director's Review of Operations
The Company's workover programme of the Tilodiran #2 and
Tilodiran #3 wells within the Llanos basin Rio Verde Contract area
was successful in raising overall production levels by 29 per cent
compared to the prior year. Subsequent to the workover programme,
annual gross oil production for 2011 totaled 519,000 barrels.
Following the workover programme and increased oil volumes, the
Company experienced increasing water levels of approximately five
barrels of water for every one barrel of oil. Production levels
were voluntarily reduced from the Tilodiran wells in order to
address the excessive water disposal costs. The Company has now
completed a design and progressed the necessary permitting process
to convert the shut-in Rio Verde #2 into a water disposal well.
This project, scheduled for April 2012, will provide for low cost
water disposal for the Tilodiran field with savings of an estimated
$200,000 per month as well as facilitating increased oil production
levels.
During 2011, revenues from our oil assets increased 80 per cent
to $43 million (2010: $24 million) from higher production volumes
and favourable oil pricing. Realised oil prices for our production
volumes averaged $95.49 per barrel in 2011 as compared to $68.97
per barrel in 2010. The Company currently trucks the majority of
its oil production due to the limited available capacity within
Colombia's Llanos basin pipeline infrastructure which has resulted
in higher transportation costs. Cost of sales increased 51 per cent
in 2011 to $28.1 million (2010: $18.6 million). Despite the
increase, the Company earned a gross profit of $15.0 million during
2011 against gross profit of $5.2 million in 2010. The Company
ended 2011 with net profit after taxation of $2.0 million compared
to a net loss of $2.1 million in 2010.
The Company generated net cash flows from operating activities
of $14.2 million (2010: $7.0 million) and expended $6.0 million on
capital projects primarily related to the Tilodiran workover
programme, improved surface facilities, wellbore revisions at
Torcaz #5 as well as environmental and social programs in Colombia
and Peru. Approximately $9.1 million of cash was utilised to reduce
short-term debt obligations and convertible notes during the year
leaving the Company with cash at bank of $4.3 million at 31
December 2011.
In previous years, the Company has accelerated the development
of its oil reserves in the Llanos basin of Colombia which has been
the primary focus for the Company and its contractual obligatory
capital investment. The Company will continue to maximize oil
production and cash flow in our Llanos basin producing assets while
optimizing margins through various low-cost production enhancement
and development projects in 2012. However, the Company's growth
potential lies in our Middle Magdalena valley assets, the Bolivar
and Bocachico Contract areas, which will be the focus of future
discretionary capital investment funded from our producing assets.
In light of technology advances in heavy oil production (Cold Heavy
Oil Production with Sand, "CHOPs") and unconventional reservoir
hydraulic fracturing, the Company is re-directing its capital to
advance production from our 2P oil reserves within these Contract
areas in 2012.
With our strategy for development in the Middle Magdalena
valley, increased cash flow from our Llanos production base, a
streamlined organization, and a portfolio of development
opportunities within our 118.3 million barrels of 2P oil reserves,
the Company is well positioned to enhance value for its
shareholders in 2012.
Stephen Voss
Managing Director
20 March 2012
Oil and Gas Reserves Information (unaudited) As at 31 December
2011
The reserve estimates shown in this report were developed by
Ralph E. Davis Associates, Inc., an independent petroleum
engineering firm, and are based on the joint reserve and resource
definitions of the Society of Petroleum Engineers, the World
Petroleum Council, the American Association of Petroleum Geologists
and the Society of Petroleum Evaluation Engineers consistent with
UK reporting purposes. In 2011, the Company also completed an
additional reserve report reflecting the requirements of Canadian
Form 51-101. Proved and probable reserve estimates are based on a
number of underlying assumptions including oil prices, future
costs, oil in place and reservoir performance, which are inherently
uncertain. Management uses established industry techniques to
generate its estimates and regularly references its estimates
against those of joint venture partners or external consultants.
However, the amount of reserves that will ultimately be recovered
from any field cannot be known with certainty until the end of the
field's life.
All reserves are in the South America production and development
area.
Estimated net proved and probable reserves of crude oil
Proved Probable Total
South America South America All
Barrels
Barrels ('000s) Barrels ('000s) ('000s)
------------------------------------- --------------- --------------- --------
At 1 January 2011
Developed 1,911 - 1,911
Undeveloped 45,112 77,560 122,672
------------------------------------- --------------- --------------- --------
47,023 77,560 124,583
------------------------------------- --------------- --------------- --------
Changes in year attributable to:
Revision of previous estimates(1) (1,521) (3,381) (4,902)
Production (458) - (458)
Developed 2,209 - 2,209
Undeveloped 43,898 74,179 118,077
------------------------------------- --------------- --------------- --------
At 31 December 2011 44,128 74,179 118,307
------------------------------------- --------------- --------------- --------
(1) The overall decrease in reserve volumes is due primarily to
accelerated reversionary interest, end of contract life effects and
minor field revision.
PRIMARY FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2011
2011 2010
$'000 $'000
------------------------------------------- -------- --------
Revenue 43,070 23,763
Impairment of oil assets - (1,185)
Other cost of sales including DD&A (28,075) (17,419)
------------------------------------------- -------- --------
Cost of sales (28,075) (18,604)
------------------------------------------- -------- --------
Gross profit 14,995 5,159
------------------------------------------- -------- --------
Other income 12 26
Administrative expenses (6,669) (6,558)
------------------------------------------- -------- --------
Operating profit/(loss) 8,338 (1,373)
------------------------------------------- -------- --------
Finance income 34 28
Finance expense (2,438) (1,840)
Profit/(loss) before tax 5,934 (3,185)
Tax (expense)/credit (3,938) 1,125
Profit/(loss) for the year 1,996 (2,060)
------------------------------------------- -------- --------
Total comprehensive income /(loss) for the
year attributable to the equity owners of
the parent 1,996 (2,060)
------------------------------------------- -------- --------
Earnings/(loss) per share attributable to
the equity owners of the parent
Basic $ 0.06 $(0.06)
Diluted $ 0.05 $(0.06)
------------------------------------------- -------- --------
Consolidated Statement of Changes in Equity
Share Share Capital Other Retained Total
Capital Premium Reserve Reserve Losses Equity
$'000 $'000 $'000 $'000 $'000 $'000
--------------------------- ------- ------- ------- ------- --------- ------------
At 1 January 2010 540 26,544 210,844 1,826 (158,120) 81,634
Total comprehensive loss
for the year - - - - (2,060) (2,060)
Share-based payment -
options equity settled - - - - 252 252
At 1 January 2011 540 26,544 210,844 1,826 (159,928) 79,826
--------------------------- ------- ------- ------- ------- --------- ------------
Total comprehensive income
for the year - - - - 1,996 1,996
Share-based payment -
options equity settled - - - - 107 107
Redemption of convertible
notes 6 595 - (899) 874 576
--------------------------- ------- ------- ------- ------- --------- ------------
At 31 December 2011 546 27,139 210,844 927 (156,951) 82,505
--------------------------- ------- ------- ------- ------- --------- ------------
Consolidated Statement of Financial Position as at 31 December
2011
2011 2010
$'000 $'000
---------------------------------------- --------- ---------
Assets
Non-current assets
Intangible assets 3,427 5,034
Property, plant and equipment 99,845 102,896
---------------------------------------- --------- ---------
103,272 107,930
---------------------------------------- --------- ---------
Current assets
Inventories 1,939 1,550
Trade and other receivables 5,452 4,522
Prepaids & other assets 1,299 359
Term deposits 1,718 1,466
Cash and cash equivalents 4,331 7,344
---------------------------------------- --------- ---------
Total current assets 14,739 15,241
---------------------------------------- --------- ---------
Total assets 118,011 123,171
---------------------------------------- --------- ---------
Liabilities
Non-current liabilities
Convertible loan notes - (16,967)
Deferred tax liabilities (10,116) (8,034)
Equity tax liability (968) -
Long-term provisions (280) (91)
Financing leases (227) -
Decommissioning liability (2,499) (2,891)
---------------------------------------- --------- ---------
Total non-current liabilities (14,090) (27,983)
---------------------------------------- --------- ---------
Current liabilities
Convertible loan notes (9,372) -
Trade and other payables (5,556) (7,274)
Corporate and equity tax liability (1,184) (700)
Provision (82) (96)
Short term loans payables and financing
leases (5,222) (7,292)
Total current liabilities (21,416) (15,362)
---------------------------------------- --------- ---------
Total liabilities (35,506) (43,345)
---------------------------------------- --------- ---------
Total net assets 82,505 79,826
---------------------------------------- --------- ---------
Capital and reserves attributable
to equity holders of the Company
Share capital 546 540
Share premium 27,139 26,544
Other reserve 927 1,826
Capital reserve 210,844 210,844
Retained losses (156,951) (159,928)
---------------------------------------- --------- ---------
Total equity 82,505 79,826
---------------------------------------- --------- ---------
Consolidated Statement of Cash Flows for the year ended 31
December 2011
2011 2010
$'000 $'000
------------------------------------------------------ ------------------ --------
Cash flows from operating activities
Operating profit/(loss) before interest and taxation 8,338 (1,373)
Depreciation, depletion and amortization 8,424 6,031
Decrease in trade and other receivables (930) (26)
Increase in inventories (389) (402)
Increase in trade and other payables 437 1,670
Decrease / increase in long-term provisions (482) 1,959
Loss on disposal of assets 5 692
Other non-cash items - (11)
Shared-based payments 107 252
------------------------------------------------------ ------------------ --------
Cash generated from operations 15,510 8,792
------------------------------------------------------ ------------------ --------
Taxes paid (1,344) (1,766)
------------------------------------------------------ ------------------ --------
Net cash flows from operating activities 14,166 7,026
------------------------------------------------------ ------------------ --------
Investing activities
* Expenditure on property, plant and equipment (5,596) (10,354)
* Expenditure on intangible assets (393) (462)
Disposal of office equipment and other 65 687
Interest received 34 28
Increase in short-term deposits (252) (61)
------------------------------------------------------ ------------------ --------
Net cash flows from investing activities (6,142) (10,162)
------------------------------------------------------ ------------------ --------
Financing activities
Loans (paid) /subscribed for the period (9,124) 8,768
Finance lease payments (95)
Interest paid (1,818) (1,356)
------------------------------------------------------ ------------------ --------
Net cash flows from financing activities (11,037) 7,412
------------------------------------------------------ ------------------ --------
(Decrease)/increase in cash and cash equivalents (3,013) 4,276
Cash and cash equivalents at the beginning of year 7,344 3,068
------------------------------------------------------ ------------------ --------
Cash and cash equivalents at the end of year 4,331 7,344
------------------------------------------------------ ------------------ --------
ABRIDGED NOTES TO THE PRIMARY FINANCIAL STATEMENTS
For the twelve months ended 31 December 2011
1. Accounting Policies
Basis of preparation
The financial statements of the Group for the twelve months
ended 31 December 2011 have been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRS) issued
by the International Accounting Standards Board (IASB) as adopted
by European Union.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2011
or 2010 as defined by section 435 of the Companies Act 2006 but is
derived from those accounts. Statutory accounts for 2010 have been
delivered to the registrar of companies, and those for 2011 will be
delivered in due course. The auditors have reported on those
accounts; their reports were (i) unqualified, and (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006 in respect of the accounts.
2. Earnings per share (EPS)
Basic earnings per share amounts is calculated by dividing the
profit/(loss) for the period attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
shares outstanding during the year.
Diluted earnings per share are calculated by dividing the
profit/ (loss) for the year attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares
outstanding at the end of the year, plus the weighted average
number of shares that would be issued on the conversion of dilutive
potential ordinary shares into ordinary shares. The calculation of
the dilutive potential ordinary shares related to employee and
Director share option plans includes only those options with
exercise prices below the average share trading price for each
period.
2011 2010
$'000 $'000
------------------------------------------------------------------------------- -------------------- ----------
Net profit/(loss) attributable to equity holders used in basic calculation 1,996 (2,060)
Add back interest and accretion charge in respect of convertible loan notes(1) - -
------------------------------------------------------------------------------- -------------------- ----------
Net profit/(loss) attributable to equity holders used in dilutive calculation 1,996 (2,060)
------------------------------------------------------------------------------- -------------------- ----------
Basic weighted average number of shares 35,752,049 35,439,009
------------------------------------------------------------------------------- -------------------- ----------
Dilutive potential ordinary shares
Shares related to convertible notes(2) - -
Employee and Director share option plans 3,993,529 3,651,862
------------------------------------------------------------------------------- -------------------- ----------
Diluted weighted average number of shares 39,745,578 39,090,871
------------------------------------------------------------------------------- -------------------- ----------
Earnings /(loss) Per Share
Basic $ 0.06 $ (0.06)
Diluted $ 0.05 $ (0.06)
------------------------------------------------------------------------------- -------------------- ----------
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 31 December
2010 the Group reported a loss. Therefore, because the effect of
the potentially dilutive shares related to convertible loan notes
and outstanding share options would be anti-dilutive, a separate
diluted loss per share has not been reported because it is deemed
to equal the basic loss per share.
(1) Interest and accretion charges of $1.5 million (2010: $1.4
million) in respect of convertible loan notes are not included in
the calculation of diluted earnings per share as the effect would
be anti-dilutive.
(2) Shares numbering 2,811,232 (2010: 4,565,027) in respect of
outstanding convertible loan notes are not included in the
calculation of diluted earnings per share as the effect would be
anti-dilutive.
3. Income tax
The Group is subject to UK and Colombian taxation.
UK taxation
The Company does not expect to be liable for UK corporation tax
in the foreseeable future because, as of the date of the last UK
tax return, the Group had trading losses carried forward of $28.5
million as at 31 December 2011 and $25.6 million as at 31 December
2010 and these are expected to increase in the future.
Colombian taxation
The Group pays taxes in Colombia through the branch office of
its wholly-owned subsidiary CEDCO. The Colombian corporation tax is
calculated as the higher of net income tax or presumptive income
tax which are determined as follows:
-- Presumptive income tax. An alternative minimum tax calculated
on the prior year gross equity less liabilities at a rate of 3 per
cent to determine the presumptive income. A rate of 33 per cent is
applied to the presumptive income to arrive at the tax obligation;
or
-- Net income tax. Calculated at a rate of 33 per cent taking
into account revenues minus costs, and standard deductions.
Currently, CEDCO pays its income Tax based on Presumptive Income
Tax.
Additionally, the Group pays an Equity Tax calculated using a
taxable base of the Net Equity as at 1 January 2011 at a rate of 6
per cent. The payment of the tax is over four years with payments
made twice per year.
The major components of income tax expense for the periods ended
31 December 2011 and 2010 are:
Consolidated statement of comprehensive income:
2011 2010
$'000 $'000
--------------------------------------------------------------------------- ------ -------
Current taxes:
Current income tax charge 256 789
Current equity tax charge 1,549 820
Other withholding tax 51 107
Deferred Tax:
Relating to origination and reversal of temporary differences (See note 4) 2,082 (2,841)
--------------------------------------------------------------------------- ------ -------
Total income tax expense reported in the income statement 3,938 (1,125)
--------------------------------------------------------------------------- ------ -------
Accounting (loss)/profit before income tax 5,934 (3,185)
Tax on Group (loss)/profit at UK Corporation tax rate of 26.5% (2010 28%) 1,572 (892)
Effects of:
Permanent differences (511) -
UK tax on losses carried forward 798 577
Non taxable income / Non-deductible expenses for tax purposes 709 2,176
Temporary differences (see note 4) 2,082 (2,841)
Effect of higher tax rates in the UK (712) (145)
--------------------------------------------------------------------------- ------ -------
Total corporation tax expense reported in the income statement 3,938 (1,125)
--------------------------------------------------------------------------- ------ -------
4. Deferred tax
The gross movement in net deferred tax liabilities are reported
as follows:
2011 2010
$'000 $'000
---------------------------------------------- -------- --------
Opening balance as of 1 January (8,034) (10,875)
Tax (expense)/income in the period recognized
in income statement (2,082) 2,841
---------------------------------------------- -------- --------
Closing balance as at 31 December (10,116) (8,034)
---------------------------------------------- -------- --------
The Group offsets deferred tax assets and liabilities if, and
only if, it has a legally enforceable right to offset current tax
assets and current tax liabilities and the deferred tax assets and
deferred tax liabilities related to corporation taxes levied by the
same tax authority. Deferred tax assets and liabilities listed are
related to corporation taxes levied by the Colombian tax authority
with jurisdiction over CEDCO.
Temporary differences between the tax base and carrying values
arise in relation to the effect of inflation adjustments,
differences in exchange rate of non-monetary assets, differences
between tax and accounting depreciation and the adjustment and use
of tax losses generated in 2008 and tax losses generated in 2010
that could be compensated with future profits with no due date.
The movement in deferred income tax assets and liabilities
during the year is as follows:
Tax losses Provisions Total
Deferred tax assets $'000 $'000 $'000
----------------------------- ----------------- ---------------- -------
As at 1 January 2010 - 1,358 1,358
Credited to income statement 14,979 40 15,019
As at 1 January 2011 14,979 1,398 16,377
Debited to income statement (1,721) (382) (2,103)
As at 31 December 2011 13,258 1,016 14,274
----------------------------- ----------------- ---------------- -------
The reduction in deferred tax assets during the year is
primarily due to the use of tax losses carry forwards to offset
2011 taxable net profit in Colombia. There are certain expenses
which are incurred by the Group outside of Colombia which are not
deductible for Colombian income tax purposes. Therefore, taxable
net profit in Colombia was higher than net profit recorded by the
Group in its consolidated financial statements.
Fixed
Assets
value Inventory Total
Deferred tax liabilities $'000 $'000 $'000
---------------------------- ---------------- --------- --------
As at 1 January 2010 (12,233) - (12,233)
Charged to income statement (12,138) (40) (12,178)
As at 1 January 2011 (24,371) (40) (24,411)
Charged to income statement (41) 62 21
As at 31 December 2011 (24,412) 22 (24,390)
---------------------------- ---------------- --------- --------
5. Convertible loan notes
2011 2010
$'000 $'000
----------------------------------------- ------- -------
Balance bought forward 16,967 16,582
Purchase and cancelled convertible notes (7,950) -
Cash paid interest (1,179) (1,072)
Coupon interest 1,179 1,072
Accreted interest 355 385
----------------------------------------- ------- -------
Balance carried forward 9,372 16,967
----------------------------------------- ------- -------
At 1 January 2011, the Group had two convertible loan note
agreements outstanding as follows:
-- Variable Coupon Convertible Notes Due October 2012 (the "2005
Notes") with an outstanding principal balance of $5.8 million, and
a conversion price of 179p, and
-- Variable Coupon Convertible Notes Due December 2012 (the
"2006 Notes") with an outstanding principal balance of $11.9
million and a conversion price of 305.8p
All convertible notes incurred an interest charge of 5 per cent
per annum for the first three years, 6 per cent per annum for the
next two years and thereafter an interest rate of 7 per cent.
Interest was payable quarterly. The effective interest rate was
therefore 5.96 per cent. The convertible notes were not secured
against any assets of any Group company. In accordance with the
provisions of IAS 32, the Group had determined the convertible loan
notes to be a compound financial instrument requiring a proportion
of the loan to be classified as equity. The reclassified element
represents the difference between the fair value of a similar
liability with no equity conversion option and the fair value of
the existing convertible notes in current terms. Accordingly, an
amount of $512,000 was reclassified to equity in 2006. Accreted
interest was charged to the statement of comprehensive income over
the life of the notes.
2005 Notes: In November 2011, the Group redeemed the outstanding
principal amount ($5.8 million) of its 2005 Notes, along with
accrued and unpaid interest, with existing cash resources. As at 31
December 2011, the 2005 Notes are no longer outstanding.
2006 Notes: In January 2011, in a privately negotiated
transaction, the Group purchased and cancelled $600,000 of the 2006
Notes in consideration for the issuance of 317,000 ordinary shares
of the Company. In December 2011, the Group repurchased and
cancelled a further $1.7 million of the 2006 Notes for cash in
addition to accrued and unpaid interest. Subsequently, in March
2012, the Group redeemed and cancelled the remaining principal
amount ($9.6 million) of 2006 Notes along with accrued and unpaid
interest.
6. Post reporting date events
(i) In December 2011, the assignment of 60 per cent of the
Peruvian Block 95 License Contract to GTE was approved by the
Peruvian authorities through Supreme Decree No. 050-2011-EM.
Further to this, the agreement was duly signed in January 2012 by
involved parties completing the farm-out contractual
conditions.
(ii) In January 2012 the Group received approval of the
extension of the Boral Area from the Rio Verde Contract to include
the Rio Verde #2 well, which will be subject to a workover to
convert it to a water injection well, thus allowing for the
disposal of water and the recovery of secondary reserves.
(iii) In January 2012 the Group closed a Fixed Rate Note Payable
with HKN for the principal amount of $12 million (the "Note
Payable"). The Group has drawn down of $9.6 million of the Note
Payable. The Note Payable is not convertible into shares and is
subject to an interest charge of 10.5 per cent per annum, payable
quarterly in arrears, with the principal amount being repayable in
full on 30 September 2013. The Note Payable is currently unsecured,
but HKN can require the Company to provide adequate collateral
security in the event of a material adverse effect. The Group paid
to HKN a 1.75 per cent transaction fee of approximately $210,000
upon closing of the Note Payable in January 2012.
(iv) In February 2012, the Group announced it has exercised the
option to redeem the outstanding principal amount of its remaining
2006 Notes totaling $9.6 million. The 2006 Notes were redeemed for
cash in March 2012 (the "Redemption Date") at the principal amount
of the Notes together with interest accrued up to (but excluding)
the Redemption Date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URORRURAOUUR
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