TIDMGPX
RNS Number : 2105V
Gulfsands Petroleum PLC
05 August 2015
Gulfsands Petroleum Plc
("Gulfsands" or the "Company")
Results for the six months ended 30 June 2015
5 August 2015
Gulfsands, the AIM listed oil and gas company (AIM:GPX) with
activities in Syria, Morocco, Tunisia and Colombia, is pleased to
announce its results for the six months ended 30 June 2015.
Gulfsands Petroleum Plc
Alastair Beardsall, Chairman +44 (0)20 7024 2130
Cantor Fitzgerald Europe
Sarah Wharry
David Porter +44 (0)20 7894 7000
Gulfsands Petroleum plc
Interim Report 2015
Gulfsands Petroleum plc is an independent oil and gas
exploration and production company, incorporated in the United
Kingdom, whose shares are traded on the Alternative Investment
Market of the London Stock Exchange (symbol: GPX).
The Group's major focus is on the Middle East and North Africa
where it has oil exploration and development projects in the Syrian
Arab Republic (where operations are suspended owing to EU
sanctions) and oil and gas exploration projects in Morocco and
Tunisia. Gulfsands also has interests in two exploration licences
in Colombia.
2015 Half-Yearly Summary
-- Group working interest Proved plus Probable Reserves of 73.5 MMboe.
-- Syrian assets remain shut-in and secure during continuation of sanctions.
-- Cash available for use by the Group of $1.5 million.
-- Restricted cash balances after provisions for recoverability of $6.4 million.
-- Drilling and testing of DRC-1 and DOB-1 proved up two further gas discoveries.
-- Exploration and evaluation assets were impaired by $22.1 million in the period.
-- Continued significant reduction in the ongoing office expenses across the Group.
-- Initiated farm-out process for Moroccan and Colombian assets.
-- The Company is preparing to raise approximately $22 million
via an open offer to all shareholders.
Executive Chairman's Statement
In the 2014 Annual Report I referred to several challenges for
2015, including restructuring of our portfolio, and refinancing of
our business; I believe we are making progress on both of
these.
The Group holds interests in several projects in Morocco, all at
different stages in the exploration, development and production
cycle; what is common to all our interests is that each has
significant outstanding work commitments that need to be completed
within the coming months. We have invested heavily in these assets,
both in the acquisition of the interests and also in the field
activities undertaken over the last two years. This investment has
led to a better understanding of the sub-surface structures which
in turn culminated in the three discoveries at LTU-1, DOB-1 and
DRC-1. However, we have decided that our financial exposure to
these Moroccan assets should be reduced and we are actively working
with several parties who have expressed an interest in partnering
Gulfsands, particularly in the Rharb Centre gas development
area.
Gulfsands holds a 100% interest in the Chorbane contract in
Tunisia. The current exploration period under the contract
originally ran to mid-July 2015 and Gulfsands has submitted an
application for a two year extension to this period, during which
the work obligation of acquiring 200 km of 2D seismic and drilling
one exploration well must be completed. If the application is
successful the Group will look to farm-down its 100% interest in
exchange for a carried work programme; if the application is
unsuccessful, the contract will terminate.
The Group holds 100% interests in two Colombian exploration
blocks. Under the contracts for Llanos Block 50 and Putumayo Block
14, the Group has a minimum work obligation of acquiring
approximately 100 km of 2D seismic and drilling one exploration
well on each block before November 2016 for Llanos Block 50 and
November 2017 for Putumayo Block 14. The Group is actively seeking
farm-in candidates to share the cost of the exploration programme
on these blocks.
In addition Gulfsands is the operator of the Block 26 Production
Sharing Contract ("PSC") in Syria and holds a 50% working interest.
The PSC is currently in force majeure as a result of the EU
sanctions against Syria.
Financial overview
The Group posted a loss for the period of $31.3 million,
predominantly as a result of exploration and evaluation asset
impairments in the period of $22.1 million in relation to the
Moroccan Fes permit. The financial commitments of the Fes contract
are inconsistent with the Group's revised strategy, and therefore
Gulfsands has initiated a farm-out process for the Fes contract.
However, given the Fes licence expiry date in September 2015, the
outstanding work commitments on the permit which could not
physically be fulfilled before this date, and the uncertainty of
securing an industry partner before the licence expiry date, the
expenditure to date attributed to the Fes permit of $22.1 million,
inclusive of $10.5 million fair value attributed at acquisition,
has been fully impaired at 30 June 2015.
Gulfsands completed exploration and evaluation asset investments
of $5.7 million during the period, principally in Morocco. At 30
June 2015 the Group has unrestricted cash balances of $1.5 million
with net current trade and other payables of $3.2 million and
ongoing costs currently of $0.7 million per month.
The Company is preparing a financing to raise approximately $22
million via an open offer to all shareholders ("Fundraising"). The
Company is preparing a circular for shareholders to include details
of the Fundraising and a notice of an extraordinary general meeting
to approve the resolutions to facilitate the Fundraising. The open
offer to all shareholders will require the publication of an open
offer prospectus.
At the end of June 2015 Arawak Energy Bermuda Limited assigned
the Arawak Loan Facility to Weighbridge Trust Limited, for the
benefit of Waterford Finance and Investment Limited ("Waterford")
and Richard Griffiths (and companies owned and controlled by him)
("Griffiths"). The facility is now referred to as the Weighbridge
Loan Facility. It remains the intention of the Company to repay the
Weighbridge Loan Facility as soon as the Fundraising is completed.
The assignment allowed for the possibility of further draw-downs
under the facility and in July 2015 a further $1.0 million has been
drawn-down. A total of $11 million has been drawn-down under this
facility at the date of this Report. Further draw-downs may be
required prior to completion of the Fundraising, and based on
discussions with all parties, the Directors have a reasonable
expectation that the Group will be able to draw-down another $1.0
million under the facility.
The Group has material work obligations that must be completed
under its various exploration contracts/licences and if these
obligations are not met the Group may be forced to forfeit both its
interest in these contracts/licences and any sums of restricted
cash lodged with host governments as guarantees for our performance
of the minimum work obligations.
The Group is currently engaged in discussions to restructure its
minimum work obligations and to bring in partners to reduce the
Group's net exposure to such obligations to a level that the Board
considers sustainable and financeable. Alternatively, it may divest
itself of assets as is deemed necessary.
Notwithstanding the confidence that the Board has in its ability
to finance the Group's re-shaped business, the Directors conclude
that at this time there is material uncertainty that such finance
can be procured and failure to do so might cast significant doubt
upon the Company's and the Group's ability to continue as a going
concern and that the Company and the Group may therefore be unable
to realise their assets and discharge their liabilities in the
normal course of business.
Board and Management changes
In February 2015 Ken Judge left the Board and was served notice
to terminate his executive services contract as legal counsel.
In April 2015 Mahdi Sajjad was removed from his role as the
Company's Chief Executive. Mayer Brown International LLP, acting on
behalf of Mr Sajjad, claim that the action taken constituted a
material adverse change to Mr Sajjad's employment which he had not
consented to. Furthermore, Mr Sajjad has elected to treat his
employment terminated as of 8 May 2015 and claims certain payments
are now due under his employment contract with Gulfsands Petroleum
Levant Limited and in relation to his role as the Company's Chief
Executive. He further claims unfair dismissal. Mayer Brown
International LLP have advised that Mr Sajjad intends to commence
formal litigation proceedings. At the Company's Annual General
Meeting on 30 June 2015, Mr Sajjad was not re-elected as a Director
of Gulfsands.
In April 2015 Andrew West stood down as Non-Executive Chairman
and remains on the Board as a Non-Executive Director.
Simultaneously I was appointed to the Board as a Director and
Executive Chairman.
Also in April 2015 Andrew Morris was appointed to the Board as a
Non-Executive Director.
In April 2015 Alan Cutler resigned from his executive role as
Director - Finance and Administration; it is expected that Alan
will step down from the Board and leave the Company during the
third quarter of 2015.
At the Company's Annual General Meeting in June 2015 Ian Conway
retired as a Director and did not stand for re-election.
Following the above changes the Audit Committee is chaired by
Andrew Morris and the Remuneration Committee is chaired by Joe
Darby; John Bell and James Ede-Golightly are members of both
committees.
Outlook for 2015 and beyond
The Group remains committed to maintaining its presence in
Syria, and it considers its partnership with General Petroleum
Corporation ("GPC") as a key element for the safe stewardship of
Block 26 while the various sanctions prevent Gulfsands from a more
active role.
In Morocco the portfolio of interests vary greatly in nature;
however to capitalise on these opportunities the Group will need to
secure funds from existing and new investors or engage with new
industry partners to farm-in to the projects to reduce the
financial exposure to the Group. We shall continue to encourage
potential partners to visit our data room so they may properly
assess, firsthand, the opportunities on offer.
We shall seek to farm-out the assets we hold in Colombia and
Tunisia ensuring we can benefit from any success but without being
exposed to the full cost of exploration.
The Group faces many challenges over the coming months,
including seeking extensions to contracts/licences and completing
our work programmes, securing new funds sufficient to repay the
Weighbridge Loan Facility and to provide the necessary working
capital to allow progress to be made on our assets.
Alastair Beardsall
Executive Chairman
4 August 2015
Operations Review
Syria
Gulfsands is the operator of the Block 26 PSC and holds a 50%
working interest in the PSC along with Sinochem. The Group is not
presently involved in any production or exploration activities on
Block 26 as force majeure has been declared in respect of the
contract following the introduction of EU sanctions against
Syria.
The Group has ensured that it remains compliant with all
applicable sanctions in relation to Syria and intends to return to
production and exploration activities as soon as permitted.
Position in H1 2015
-- Maintained an office presence in Damascus.
-- Block 26 facilities remain safe and secure.
-- Retained technical capabilities through staff redeployment.
-- Continued compliance with applicable sanctions.
Block 26 covers an area of 5,414 km(2) in north east Syria and
the PSC grants rights to explore, develop and produce hydrocarbons
from all depths outside the pre-existing fields within the area and
from the deeper stratigraphic levels below the pre-existing
discovered fields. The final exploration period of the PSC was set
to expire in August 2012 when force majeure was declared in
December 2011. It is anticipated that an extension in the
exploration period can be negotiated with the Syrian authorities to
at least replace that period of time which was remaining when force
majeure was declared. Rights to the benefits of production from
discovered fields last for a minimum of 25 years from the date of
development approval with extension thereto at the partners'
option.
Under the Group's operatorship, two oil fields containing
reservoirs of Cretaceous age have been discovered and developed
within the PSC area, Khurbet East (2008) and Yousefieh (2010).
During 2011 combined production from these fields reached a level
of just under 25,000 barrels of oil per day ("bopd") before the
impact of EU sanctions resulted in the curtailing of production
levels. In addition, two further oil and gas discoveries with
reservoirs of Triassic age have been identified beneath the
Cretaceous aged oil producing reservoir in the Khurbet East field
and within the Kurrachine and Butmah Dolomite formations.
Development approvals for these discoveries were granted in 2008
and 2011 respectively. A further oil discovery was made late in
2011 by Gulfsands in the Cretaceous aged reservoirs at the Al
Khairat exploration well, this discovery awaits further evaluation
and development work.
The operation of these fields during the production phase is
undertaken by Dijla Petroleum Corporation ("DPC"), a joint
operating company formed between Gulfsands, Sinochem and the GPC
for this purpose, to which staff of both Gulfsands and GPC had
previously been seconded. Since the introduction of EU sanctions on
1 December 2011 and the subsequent declaration of force majeure
under the PSC, Gulfsands has had no involvement with the operations
of DPC, and Gulfsands staff seconded to DPC have been withdrawn,
leaving DPC under the management of GPC secondees.
Sanction compliance
Gulfsands has taken extensive legal advice with respect to its
obligations under the sanctions in place at the time and has
liaised regularly with relevant regulators and generally acted
cautiously to ensure it remains compliant with all relevant
sanctions. The Board is determined to ensure that the Group's
activities remain compliant and Management will continue to liaise
closely with the relevant regulatory authorities to ensure this
objective is achieved while continuing to keep GPC fully informed
of the breadth and scope of restrictions on our activities as a
result of continuing to comply with applicable sanctions.
Morocco
Gulfsands is the operator of a contiguous portfolio of onshore
oil and gas exploration permits covering an area of approximately
7,210 km(2) in northern Morocco which incorporate proven petroleum
systems. The Group has material equity interests in the three
contracts which govern the Moulay Bouchta, Fes, Rharb Centre and
Rharb Sud permits.
Progress in H1 2015
-- The Group announced gas discoveries at the DRC-1 and DOB-1
well locations on the Rharb Centre permit, with maximum well test
gas flow rates for each well in excess of 10 million standard cubic
feet per day.
-- 100% exploration success record maintained when drilling
utilising data from Gulfsands Rharb Centre permit 3D seismic
survey.
-- Reprocessing of Gulfsands Fes permit 2D seismic data by
specialist consultants has been completed, and subsequent in-house
re-interpretation and remapping of lead concepts is yielding
promising results.
-- Increase in Group Moroccan Contingent and Prospective
Resources following completion of 2015 reserves and resources
report undertaken by UK subsurface consultancy Senergy (GB) Limited
("Senergy Report").
-- Tender processes undertaken for 2D seismic surveys on Moulay
Bouchta (530 km) and Fes (350 km) permits.
Moulay Bouchta contract
Contract expiry First exploration phase, June 2016.
date:
Minimum work Acquisition of 500 km of 2D seismic
obligation: data to be captured in a new survey;
reprocessing and interpretation
of selected legacy 2D seismic lines
and the existing 3D seismic data;
and a legacy oil field reactivation
study.
Further details are provided in
note 8 to the Half-Yearly Financial
Report.
---------------- --------------------------------------
Gulfsands acquired operatorship of the Moulay Bouchta permit
during 2014, taking a 75% participating interest while Office
National des Hydrocarbures et des Mines ("ONHYM") retained a 25%
participating interest, the attributable cost of which will be
carried by Gulfsands upon the usual terms for such participation
through the exploration phase of the permit.
The Moulay Bouchta permit encompasses an area of approximately
2,850 km(2) and is located to the north of the Group's Rharb Sud
permit and extends eastwards to surround the western, northern and
eastern boundaries of the Fes permit onshore in northern Morocco.
It covers terrain where the existence of a working petroleum system
has been confirmed with the discovery and development of three oil
fields, the most recent of which was the Haricha Field which had
produced a total of 2.8 MMboe of oil and 4.2 Bcf of gas when
production ceased in 1990. It is the intention of the Group to
evaluate the potential for deeper and possibly larger structures
containing Jurassic and Cretaceous aged reservoirs within the
permit area.
Work programmes are continuing with respect to the meeting of
the minimum work obligation activities on the permit;
-- a tender process is being undertaken for the acquisition by a
contractor company of 530 km of 2D line seismic within the
permit;
-- legacy 2D seismic data from the permit area have been selected for reprocessing ;
-- contractors with a good track record for performing
reprocessing work within this type of geological terrain are under
evaluation to conduct the work on the 2D data set, and in addition
to reprocess the entire Haricha Field 3D survey data set;
-- a reservoir modeling study of the depleted Haricha Field is
in progress with the aim to identify any potential for infield
and/or area re-activation; and
-- prospectivity for exploration and near field appraisal
drilling opportunities from existing seismic data is under
evaluation.
During the period the Senergy Report has been issued whereby,
net unrisked Prospective Resources have been granted for leads
identified within the permit of (in million barrels of oil
recoverable, "MMbo"):
Low Case 0.5
Best Estimate 11.4
High Case 74.9
The exploration risk level associated with the drilling of these
leads is considered to be in the medium to high range.
The Group is pursuing options with respect to funding this work
programme including bringing in industry partners.
Fes contract
Contract expiry September 2015.
date:
Minimum work Acquisition of an additional 350
obligation: km of 2D seismic data to be captured
in a new survey; 100 km(2) of new
3D seismic data; and drilling three
exploration wells.
Further details are provided in
note 8 to the Half-Yearly Financial
Report.
---------------- --------------------------------------
During the period the Senergy Report has been issued whereby,
net unrisked Prospective Resources have been granted for leads
identified within the permit of (in MMbo);
Low Case 21.4
Best Estimate 478.0
High Case 2,250.2
The exploration risk level associated with the drilling of these
leads is considered to be in the medium to high range. This result
is unchanged versus the Senergy Report issued a year earlier in H1
2014.
2D seismic data had been acquired across the Fes permit area in
a 650 km survey that commenced in 2013 and was completed in early
2014. Following this a conventional seismic processing of the data
was undertaken that was completed in July 2014, however the results
of this processing work did not yield the step change uplift in
data quality and imaging that was anticipated.
In H1 2015 an advanced and bespoke approach was applied to
further reprocess and upgrade the entire 2D data set that was more
specifically tailored to the geological fold and thrust belt
setting in the Fes permit where the data was acquired. This
additional seismic data reprocessing was carried out in Calgary,
Canada, by specialists using techniques not previously applied in
Morocco. Results from this reprocessed data set have yielded
greater clarity in data imaging, which in turn offers opportunities
to improve upon the geological interpretation of the data and on
the reliability of mapping of key prospective potential oil bearing
horizons.
The results from this H1 2015 reprocessing work have been
followed by a further phase of re-interpretation and mapping work
conducted in-house during this period. Early indications are that
the current levels of net unrisked prospective resources booked for
the permit are supported by the latest re-interpretation and
mapping work, and that the upgraded lead concepts can consider to
have been de-risked as compared to those presented in the Senergy
Report.
Although progress has been made with the interpretation of the
seismic data during the period, the financial commitments of the
Fes contract are inconsistent with the Group's revised strategy,
and therefore Gulfsands has initiated a farm-out process for the
Fes contract.
Rharb contract
Contract expiry November 2015.
date:
Minimum work Drilling three exploration wells.
obligation: Further details are provided in
note 8 to the Half-Yearly Financial
Report.
---------------- -------------------------------------
A ten month extension to the Rharb exploration contract was
granted by ONHYM in January 2015 extending the licence period to 9
November 2015. The contract governs the Rharb Centre and Rharb Sud
permits.
During H1 2015, Gulfsands completed the drilling and testing of
its fifth and sixth biogenic gas exploration wells in the Rharb
Centre permit area, at the Dardara South East location ("DRC-1")
and the Douar Ouled Balkhair location ("DOB-1") respectively. Both
wells proved to be gas discoveries, and both were completed and
then suspended as future gas production wells.
These two wells were located and drilled utilising Gulfsands
Rharb Centre 3D seismic survey data that was acquired in 2013 and
processed in 2014. Together with the gas discovery made at the
Lalla Yetou Updip location ("LTU-1") in 2014, Gulfsands has now
drilled three exploration wells on this 3D survey and has achieved
three discoveries, constituting a 100% successful exploration
record when drilling utilising this 3D data set.
Subsequent to these drilling operations the Group has conducted
a detailed technical assessment over the LTU-1, DOB-1 and DRC-1 gas
discoveries that has included the identification of potential
locations for further drilling in the near vicinity of these
discoveries. The Group has additionally been working with its
partner, ONHYM, on strategies to commercialise the discoveries
made. These discussions are ongoing at the date of this Report.
During the period the Senergy Report has been issued whereby,
net unrisked Contingent and Prospective Resources have been granted
for all gas discoveries, prospects and leads identified within the
Rharb Centre permit. The booked Contingent and Prospective
Resources therefore have increased for the permit versus the
Senergy Report issued a year earlier in H1 2014 to the following
(in Bcf) ;
Contingent Resources Prospective Resources
1C 3.3 Low Case 8.9
2C 9.3 Best Estimate 24.7
3C 26.3 High Case 53.4
The exploration risk level associated with the drilling of the
identified prospects and leads is considered to be in the low to
medium range.
On the Rharb Sud permit, work continues on the identification of
viable exploration lead concepts from legacy seismic and well
data.
During the period the Senergy Report has been issued whereby,
net unrisked Prospective Resources have been granted for leads
identified within the Rharb Sud permit of (in MMbo);
Low Case 0.4
Best Estimate 11.0
High Case 66.4
The exploration risk level associated with the drilling of these
leads is considered to be in the medium to high range.
Following the drilling and completion of DOB-1 in H1 2015,
Gulfsands now has three remaining wells to drill across the Rharb
concession (inclusive of both Rharb Centre and Sud permits) to meet
work obligation commitments by the end of the licence period on 9
November 2015. The Group is in discussions with ONHYM with regards
to re-scheduling these work obligations.
In parallel, the Group are considering options for funding this
work programme and the development of discoveries which may include
bringing in industry partners and an active farm-out process is
underway.
Tunisia
Gulfsands has a 100% interest in the operated Chorbane
exploration permit onshore Tunisia covering approximately 1,942
km(2).
Chorbane contract
Contract expiry Second phase July 2015.
date:
Minimum work Drilling one exploration well.
obligation: Further details are provided in
note 8 to the Half-Yearly Financial
Report.
---------------- -------------------------------------
The current exploration period under the contract originally ran
to-mid July 2015 and Gulfsands has submitted an application for a
two year extension to this period during which the work obligation
of acquiring 200 km 2D seismic and drilling one exploration well
must be completed. If the application is successful the Group will
look to farm-down its 100% interest in exchange for a carried work
programme; if the application is unsuccessful, the contract will
terminate.
During the period the Senergy Report has been issued whereby,
net unrisked Prospective Resources have been granted for prospects
and leads identified within the Chorbane contract of (in
MMboe);
Low Case 12
Best Estimate 44
High Case 129
The exploration risk level associated with the drilling of these
identified prospects and leads is considered to be high.
Colombia
Gulfsands has Exploration and Production Contracts ("E&P
contracts") over two onshore contract areas, Llanos Block 50 ("LLA
50") and Putumayo Block 14 ("PUT 14"), covering approximately 514
km(2) and 464 km(2) respectively.
Llanos Block 50
Contract expiry First exploration phase, November
date: 2016.
Minimum work Acquisition of an additional 103
obligation: km of 2D seismic data to be captured
in a new survey; and drilling one
exploration well.
Further details are provided in
note 8 to the Half-Yearly Financial
Report.
---------------- --------------------------------------
Putumayo Block 14
Contract expiry First exploration phase, November
date: 2017.
Minimum work Acquisition of an additional 93
obligation: km of 2D seismic data to be captured
in a new survey; and drilling one
exploration well.
Further details are provided in
note 8 to the Half-Yearly Financial
Report.
---------------- --------------------------------------
The Group continues to undertake the preliminary studies
required to be completed prior to the commencement of either 2D or
possibly exploration-oriented 3D seismic acquisition programmes on
the contract areas.
The next phase of the work programme on PUT 14 includes both a
"Consulta Previa" consultation with local indigenous and tribal
peoples regarding operations to be conducted in the area, and a PMA
"Plan de Manejo Ambiental" (Environmental Management Plan) that is
required for the commencement of a seismic survey.
On LLA 50, a MMA "Medidas Manejo Ambiental" (Environmental
Management Measures), is being prepared across the contract area,
completion of which will allow the commencement of a seismic
survey
The Group has recently initiated a farm-out exercise for its
interests in the contract areas prior to any significant financial
commitment with respect to further exploration work.
Financial Review
Financial highlights for the six months ended 30 June 2015
-- The loss from continuing operations for the first half of
2015 was $31.3 million (H1 2014: $7.2 million).
-- Gulfsands has continued to reduce its office expenses which,
excluding restructuring costs have reduced by 31% in the first half
of the year compared to the first half of 2014.
-- Investment in exploration and evaluation ("E&E") assets
during the period of $5.7 million (H1 2014: $11.6 million),
predominantly the drilling of DRC-1 and DOB-1 on the Rharb Centre
permit.
-- $22.1 million of E&E assets related to the Moroccan Fes
permit have been impaired in the period; in addition the related
restricted cash balances of $5.0 million has also been provided
against.
-- The Group continues to value its investment in its Syrian interest at $102.0 million.
-- Cash and cash equivalents reduced by $6.4 million in the
period to $1.5 million at 30 June 2015 (31 December 2014: $7.9
million).
Operating performance
General administrative Six months Six months
expenses ended ended
30 June 2015 30 June 2014
$' 000 $' 000
------------------------------- ------------- -------------
Office expenses (4,919) (7,138)
Partner recoveries 418 1,374
Restructuring costs (786) -
Depreciation and amortisation (100) (354)
Office expenses capitalised 1,864 3,453
------------------------------- ------------- -------------
General administrative
expenses (3,523) (2,665)
------------------------------- ------------- -------------
General administrative expenses for the first half of 2015 total
$3.5 million (H1 2014: $2.7 million). This increase reflects
one-off restructuring costs incurred in the period as well as a
decreased level of partner recoveries resulting in part from the
termination of the Colombian joint venture agreement at the start
of 2015. Underlying office expenses have decreased significantly,
by some 31%, resulting from the increasing efforts to manage costs
to fit the current business model and strategy.
Exploration write-offs for the period were $1.4 million (H1
2014: $4.4 million) and predominantly consist of the write-off of
costs associated with re-structuring and terminating drilling
operations contracts for the Moroccan Rharb Centre permit.
E&E asset impairments for the period were $22.1 million and
relate to the Moroccan Fes permit only. The financial commitments
of the Fes contract are inconsistent with the Group's revised
strategy, and therefore Gulfsands has initiated a farm-out process
for the Fes contract. However given the Fes licence expiry date in
September 2015, the outstanding work commitments on the permit
which could not physically be fulfilled before this date and the
uncertainty of securing an industry partner before the licence
expiry date, the expenditure to date attributed to the Fes permit
of $22.1 million, inclusive of $10.5 million fair value attributed
at acquisition, has been fully impaired at 30 June 2015. In
addition to the impairment of E&E assets a provision has been
made against related restricted cash balances securing minimum work
obligations on the Fes contract of $5.0 million, as these may not
be recoverable if the licence is not extended. As part of this
restricted cash is payable to a third party on its release the
resulting net charge to the Income Statement is reduced to $3.5
million.
The Group reported a loss before tax for continuing operations
for the half year ended 30 June 2015 of $31.3 million (H1 2014:
loss from continuing operations $7.2 million). The first half of
2014 also included a loss from discontinued operations of $1.9
million in respect of the US Gulf of Mexico operations which were
disposed of in December 2014.
Balance Sheet
The Group's intangible exploration and evaluation assets are
held at a net book value of $36.0 million at 30 June 2015 (31
December 2014: $53.0 million). Capital expenditures for the six
months to June 2015 totalled $5.7 million (H1 2014: $11.6 million)
including: external third party drilling costs of $2.8 million on
the sixth Rharb Centre well, DOB-1, for which drilling commenced on
28 January 2015; $0.8 million of external third party drilling
costs remaining for the DRC-1 well which commenced drilling in
December 2014; and $1.8 million of capitalised general office
expenditure against the Moroccan and Colombian licences, relating
to operational offices. Both the DRC-1 and DOB-1 wells were
successfully drilled in the period to target depth, discoveries
declared and the wells temporarily suspended as future gas
producers. $0.8 million has also been capitalised in the period in
relation to an increase in estimates for Rharb Centre
decommissioning provisions as a result of these wells being
drilled.
There have been write-offs totaling $1.4 million in the period
predominantly relating to costs associated with re-structuring and
terminating drilling operations contracts for the Moroccan Rharb
Centre permit. Expenditure attributed to the Moroccan Fes permit of
$22.1 million, including $10.5 million of fair value attributed at
acquisition, has been fully impaired in the period.
Management has reviewed the carrying value of all its remaining
E&E assets at the date of this Report and notes that there are
uncertainties caused by the upcoming expiry dates on certain
contracts and the potential non fulfillment of work obligations in
the necessary timeframes which could result in termination of those
contracts. Management's strategy is to protect the value of all of
its exploration and evaluation assets, and it is seeking contract
extensions and the restructuring of certain of its work obligations
to allow the contracts to be appropriately re-financed or divested
in part or whole. It should be noted that if Management is
unsuccessful in their strategies for the E&E assets, the
carrying value of the related assets and the restricted cash
securing those work obligations could become impaired. The
contract/licence expiry dates, capital commitments and restricted
cash balances held are detailed further in note 8 to the
Half-Yearly Financial Report.
The fair value of the Group's net investment in its Syrian
interests remains unchanged at $102.0 million. The Board have
reviewed the status of the investment and the valuation thereof.
The Board's view is that there has been little significant change
to the circumstances and status of the Group's Syrian interests.
The Board are still unable to provide a firm view as to the
eventual outcome and the timing of resolution of the situation in
Syria that would lead to the EU lifting sanctions against Syria,
allowing Gulfsands to return, however, they continue to consider
that its position in respect of its interests remains strong and
all indications are that the Syrian authorities expect Gulfsands
and its partner to return to operational control of their interests
in accordance with the terms of the PSC as soon as circumstances
permit. The carrying value of the Syrian interest continues to be
supported by the Group's valuation model based on the estimated
future cash flows that could be generated from the Group's
remaining entitlement reserves in Block 26 in Syria. The Board
continues to hold the view that its current valuation of $102.0
million, remains fair and appropriate.
Decommissioning provisions relate to abandonment and restoration
provisions for the Rharb Centre Moroccan wells and total $1.8
million at 30 June 2015 (31 December 2014: $1.0 million).
Decommissioning provisions increased during the period as a result
of the completion of the DOB-1 and DRC-1 wells on the Rharb Centre
permit.
The outstanding loan balance at 30 June 2015 is $10.4 million
(31 December 2014: $4.9 million) following the draw-down of the
second $5.0 million tranche on 9 January 2015 and interest and
facility fees rolled up in the period. At the end of June 2015 the
lender, Arawak Energy Bermuda Limited, entered into an assignment
agreement ("Assignment") with Weighbridge Trust Limited
("Weighbridge"), which is acting as agent for Waterford Finance and
Investment Limited and Richard Griffiths (and companies owned and
controlled by him) and, under the assignment, Weighbridge acquired
the loan facility (now referred to as the Weighbridge Loan
Facility). The loan matures on 30 November 2017 and is repayable in
full on that date. Gulfsands intend to re-pay the loan balance post
Fundraising and in certain circumstances the loan may be callable
in advance of this date, therefore the loan balance has been
reclassified as a current liability at 30 June 2015.
Cash flow
The total decrease in cash and cash equivalents during the
period was $6.4 million (six months ended 30 June 2014: $25.4
million). Operating cash outflow from continuing operations
increased in the period to $3.9 million (H1 2014: $2.2 million)
largely as a result of exceptional recoveries from partners in 2014
in relation to historic expenditure. Investing cash outflow from
continuing operations during the period totalled $7.4 million (H1
2014: $21.0 million). This predominantly consists of exploration
expenditure inclusive of $5.5 million spent on Moroccan operations
and $1.5 million paid in final settlement of the amount payable for
the 2013 acquisition of the additional interest in the Chorbane
contract. Cash received from financing activities totalled $5.0
million, due to the draw-down of the second tranche of the Arawak
Loan Facility.
Financial position
At 30 June 2015 the Group had total unrestricted cash and cash
equivalents of $1.5 million (31 December 2014: $7.9 million).
Restricted cash balances at the end of the period (which are
presented as long-term financial assets in the Balance Sheet)
totaled $6.4 million (31 December 2014: $11.5 million), and
represent funds securitised as collateral in respect of future work
obligations - principally in respect of the Group's Moroccan and
Colombian interests. At 30 June 2015 a provision was made against
the restricted cash balance securitised as collateral in respect of
future work obligations on the Fes permit of $5.0 million,
consistent with the impairment of the Fes E&E asset. Of this
amount, $1.5 million (31 December 2014: $1.5 million) would be
payable to a third party if the deposit were to be released by
ONHYM and, consequently, this payable has also been provided
against. The remaining restricted cash balances should continue to
be released to the Group as work programmes are completed with $0.5
million to be repaid to a third party upon release. It should be
noted that if Management are unsuccessful in their strategy of
contract/licence extensions and farm-outs then the carrying value
of the remaining restricted cash securing the work obligations may
become impaired.
The condensed set of financial statements included in this
Half-Yearly Financial Report have been prepared on a going concern
basis of accounting which has been approved by the Board. The basis
on which the Board has reached this decision is detailed in note 2
to the Half-Yearly Financial Report.
INDEPENDENT REVIEW REPORT TO GULFSANDS PETROLEUM PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the Half-Yearly Financial Report for the
six months ended 30 June 2015 which comprises the Consolidated
Income Statement, the Consolidated Balance Sheet, the Consolidated
Changes in Equity, the Consolidated Cash Flow Statement and notes
to the Half-Yearly Financial Report.
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 statements.
Directors' responsibilities
The Half-Yearly Financial 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 Half-Yearly Financial Report in accordance with the
rules of the London Stock Exchange for companies trading securities
on AIM which require that the Half-Yearly Financial 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 statements 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 statements
in the Half-Yearly Financial Report for the six months ended 30
June 2015 is not prepared, in all material respects, in accordance
with the rules of the London Stock Exchange for companies trading
securities on AIM.
Emphasis of matter - Fair value of the Group's producing
operations in Syria
Without modifying our conclusion on the Half-Yearly Financial
Report for the period ended 30 June 2015, we draw attention to the
disclosures made in note 9 to the Half-Yearly Financial Report
concerning the valuation of the Group's suspended producing
operations in Syria, which are recorded at the Directors' best
estimate of their fair value following the loss of joint control in
December 2011. There is significant uncertainty as to the duration
of the EU sanctions imposed in December 2011 and the eventual
outcome of events in Syria. The potential impact any outcome will
have on the recoverable amount from the producing operations in
Syria (current value of $102.0 million) is not known.
Emphasis of matter - Going concern
Without modifying our conclusion on the Half-Yearly Financial
Report for the period ended 30 June 2015, we have considered the
adequacy of the disclosures made by the Directors in note 2 to the
Half-Yearly Financial Report and the Executive Chairman's Statement
concerning the Group's ability to continue as a going concern. The
Group requires additional funding and careful management of its
commitments in order to meet both capital and administrative
obligations and liabilities as they fall due. The Directors
believe, based upon discussions with major shareholders that the
Group will be able to secure the necessary funds required within
the timescale, but there are currently no binding agreements in
place.
These conditions, along with the other matters explained in note
2 to the Half-Yearly Financial Report and the Executive Chairman's
Statement, indicate the existence of a material uncertainty which
may cast significant doubt about the Group's ability to continue as
a going concern. The condensed financial statements do not include
the adjustments that would result if the Group was unable to
continue as a going concern, which would principally relate to the
impairment of the Group's non-current assets as licence commitments
would not be met and licences may then be revoked with restricted
cash balances not recovered.
BDO LLP
Chartered Accountants and Registered Auditors
London
United Kingdom
4 August 2015
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2015
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
Notes $' 000 $' 000 $' 000
Continuing operations
General administrative expenses (3,523) (2,665) (5,469)
Share-based payments - (47) (56)
------------------------------------ ------ ------------ ------------ -------------
Total administrative expenses 3 (3,523) (2,712) (5,525)
------------------------------------ ------ ------------ ------------ -------------
Impairment of exploration
and evaluation assets 7 (22,107) - -
Provision against restricted
cash balances 4 (3,500) - -
Exploration costs written
off 7 (1,439) (4,390) (6,040)
Other Syrian adjustments - - (202)
------------------------------------ ------ ------------ ------------ -------------
Operating loss 3 (30,569) (7,102) (11,767)
Loan financing cost 10 (536) - (70)
Other finance income 8 14 18
Other finance expenses (152) (28) (76)
Foreign exchange losses (65) (129) (218)
Loss before taxation from
continuing activities (31,314) (7,245) (12,113)
------------------------------------- ------ ------------ ------------ -------------
Taxation - - -
------------------------------------ ------ ------------ ------------ -------------
Loss for the period from
continuing activities (31,314) (7,245) (12,113)
------------------------------------- ------ ------------ ------------ -------------
Discontinued operations
Loss for the period from
discontinued operations 5 - (1,913) (3,978)
------------------------------------ ------ ------------ ------------ -------------
Loss for the period - attributable
to owners of the parent
company (31,314) (9,158) (16,091)
===================================== ====== ============ ============ =============
Loss per share from continuing
operations (cents)
Basic and diluted 6 (26.52) (6.14) (10.28)
------------------------------------- ------ ------------ ------------ -------------
Loss per share attributable
to the owners of parent
company (cents)
Basic and diluted 6 (26.52) (7.77) (13.65)
------------------------------------- ------ ------------ ------------ -------------
There are no items of comprehensive income not included in the
Income Statement.
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2015
31 December
30 June 2015 2014
(Unaudited) (Audited)
Notes $' 000 $' 000
ASSETS
Non-current assets
Property, plant and
equipment 244 285
Intangible assets 7 36,303 53,352
Long-term financial
assets 6,431 11,514
Investments 9 102,000 102,000
144,978 167,151
---------------------------------------- ------ ------------- ------------
Current assets
Inventory 2,213 2,361
Trade and other receivables 1,150 1,028
Cash and cash equivalents 1,509 7,907
4,872 11,296
---------------------------------------- ------ ------------- ------------
Total assets 149,850 178,447
----------------------------------------- ------ ------------- ------------
LIABILITIES
Current liabilities
Trade and other payables 4,316 5,882
Loan facility 10 10,391 -
Provision for decommissioning 380 580
15,087 6,462
---------------------------------------- ------ ------------- ------------
Non-current liabilities
Trade and other payables 4,090 6,178
Loan facility 10 - 4,855
Provision for decommissioning 1,463 397
5,553 11,430
---------------------------------------- ------ ------------- ------------
Total liabilities 20,640 17,892
----------------------------------------- ------ ------------- ------------
Net assets 129,210 160,555
==================================== === ====== ============= ============
EQUITY
Capital and reserves attributable
to equity holders
Share capital 11 13,131 13,131
Share premium 105,926 105,926
Merger reserve 11,709 11,709
Treasury shares (11,502) (11,502)
Retained profit 9,946 41,291
Total equity 129,210 160,555
===================================== ====== ============= ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Share Share Merger Treasury Retained Total
capital premium reserve shares profit equity
$'000 $'000 $'000 $'000 $'000 $'000
----------------- --------- --------- --------- --------- --------- ---------
At 31 December
2013 13,131 105,926 11,709 (11,502) 57,387 176,651
Options settled
or exercised - - - - (16) (16)
Share-based
payment charge - - - - 47 47
Loss for the
period - - - - (9,158) (9,158)
----------------- --------- --------- --------- --------- --------- ---------
At 30 June 2014 13,131 105,926 11,709 (11,502) 48,260 167,524
Options settled
or exercised - - - - (45) (45)
Share-based
payment charge - - - - 9 9
Loss for the
period - - - - (6,933) (6,933)
----------------- --------- --------- --------- --------- --------- ---------
At 31 December
2014 13,131 105,926 11,709 (11,502) 41,291 160,555
Options settled
or exercised - - - - (31) (31)
Loss for the
period - - - - (31,314) (31,314)
At 30 June 2015 13,131 105,926 11,709 (11,502) 9,946 129,210
================= ========= ========= ========= ========= ========= =========
The merger reserve arose on the acquisition of Gulfsands
Petroleum Ltd and its subsidiaries by the Company by way of
share-for--share exchange in April 2005, in conjunction with the
flotation of the Company on the Alternative Investment Market of
the London Stock Exchange.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2015
6 months Year
6 months ended ended
ended 30 June 31 December
30 June 2015 2014 2014
(Unaudited) (Unaudited) (Audited)
Notes $' 000 $' 000 $' 000
--------------------------------- ------ -------------- ------------ -------------
Cash flows from operating
activities
Operating loss for continuing
operations (30,569) (7,102) (11,767)
Depreciation, depletion
and amortisation 100 354 602
Impairment of exploration
and evaluation assets 7 22,107 - -
Provision against long
term financial assets 4 3,500 - -
Exploration costs written
off 7 1,439 4,390 6,040
Other Syrian adjustments - - 202
Share-based payment charge - 47 56
(Increase)/decrease in
receivables (79) (673) 1,598
(Decrease)/increase in
payables (341) 976 (254)
Finance expenses paid (19) (28) (76)
Interest received 8 14 18
Foreign exchange losses (65) (129) (218)
---------------------------------- ------ -------------- ------------ -------------
Net cash used in operating
activities by continuing
operations (3,919) (2,151) (3,799)
---------------------------------- ------ -------------- ------------ -------------
Net cash generated by operating
activities of discontinued
operations - 137 2,347
---------------------------------- ------ -------------- ------------ -------------
Net cash used in operating
activities (3,919) (2,014) (1,452)
---------------------------------- ------ -------------- ------------ -------------
Investing activities
Exploration and evaluation
expenditure (7,387) (18,828) (26,987)
Inventory purchased (49) (78) (1,420)
Other capital expenditures (12) (296) (340)
Change in restricted cash
balances - (1,750) 4,750
---------------------------------- ------ -------------- ------------ -------------
Net cash used in investing
activities by continuing
operations (7,448) (20,952) (23,997)
---------------------------------- ------ -------------- ------------ -------------
Net cash used in investing
activities of discontinued
operations - (2,454) (5,011)
Net cash used in investing
activities (7,448) (23,406) (29,008)
---------------------------------- ------ -------------- ------------ -------------
Financing activities
Loan draw-down 10 5,000 - 5,000
Transaction costs paid
on loan facility - - (215)
Other payments in connection
with options exercised (31) (16) (61)
Net cash generated by/(used
in) financing activities
of continuing operations 4,969 (16) 4,724
---------------------------------- ------ -------------- ------------ -------------
Net cash used in financing -
activities of discontinued
operations - -
---------------------------------- ------ -------------- ------------ -------------
(16)
Total net cash generated
by/(used in) financing
activities 4,969 (16) 4,724
---------------------------------- ------ -------------- ------------ -------------
Cash disposed as part of
disposal of discontinued
operations - - (181)
Decrease in cash and cash
equivalents (6,398) (25,436) (25,917)
Cash and cash equivalents
at beginning of period 7,907 33,824 33,824
Cash and cash equivalents
at end of period 1,509 8,388 7,907
================================== ====== ============== ============ =============
NOTES TO THE HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2015
1. General information
This Half-Yearly Financial Report was approved by the Board of
Directors and authorised for issue on 4 August 2015.
This condensed set of financial statements for the six months
ended 30 June 2015 is unaudited and does not constitute statutory
accounts as defined by the Companies Act.
The information for the year ended 31 December 2014 contained
within the condensed financial statements does not constitute
statutory accounts as defined in Section 435 of the Companies Act
2006. The financial statements for the year ended 31 December 2014
have been delivered to the Registrar of Companies and the auditor's
report on those financial statements was unqualified, and did not
contain a statement made under Section 498 of the Companies Act
2006. The auditor's report included an emphasis of matter in
respect of the fair value of the Group's suspended operations in
the Syrian Arab Republic, and in respect of the Group's ability to
continue as a going concern.
2. Accounting policies
This Half-Yearly Financial Report, which includes a condensed
set of financial statements of the Company and its subsidiary
undertakings ("the Group") has been prepared in accordance with the
recognition and measurement criteria of International Financial
Reporting Standards ("IFRS").
Basis of preparation
The condensed set of financial statements included in this
Half-Yearly Financial Report has been prepared on a going concern
basis of accounting which has been approved by the Board. The basis
on which the Board has reached this decision is as follows:
Going concern
As at the date of this Report, the Group has cash balances
immediately available to it totaling approximately $2.0 million
with net current trade and other payables of approximately $3.3
million and ongoing costs currently approximating to $0.7 million
per month. Restricted cash balances and the work commitments to
which they relate are described in note 8. In addition the Company
intends to repay the loan facility as soon as practicable, which at
the date of this Report $11.0 million has been drawn-down, this
loan is described in note 10. Early repayment will cause a minimum
of $1.0 million of interest and fees to also become payable.
The Board is in the process of restructuring the business and
actioning its strategy for each asset as laid out in the Operations
Review on pages 3 to 7 of this Report. This includes substantially
reducing its costs whilst, farming-down, divesting or otherwise
rationalising certain interests and the associated work
commitments.
The Company is preparing a financing to raise approximately $22
million via an open offer to all shareholders ("Fundraising"). The
Company is preparing a circular for shareholders to include details
of the Fundraising and a notice of an extraordinary general meeting
to approve the resolutions to facilitate the Fundraising. The open
offer to all shareholders will require the publication of an open
offer prospectus.
In the short-term the Group has been tightly managing its
payables on a daily basis and has been able to draw-down some
limited interim funding from the newly-assigned loan facility. At
the end of June 2015 Arawak Energy Bermuda Limited entered into an
assignment agreement ("Assignment") with Weighbridge Trust Limited
("Weighbridge"), which is acting as agent for Waterford Finance and
Investment Limited ("Waterford") and Richard Griffiths (and
companies owned and controlled by him) ("Griffiths"). Under the
Assignment, Weighbridge acquired the Arawak Loan Facility for the
benefit of Waterford and Griffiths (now referred to as the
Weighbridge Loan Facility). It is the intention of the Group to
repay the Loan Facility as soon as the Fundraising is completed.
Waterford and Griffiths, as existing shareholders in the Company,
acquired the Loan Facility on this basis, and they have given a
firm undertaking to subscribe for up to $11 million of new shares
in Gulfsands as part of the proposed Fundraising to facilitate
repayment of the facility in full. In July 2015 a further $1.0
million has been drawn-down under the facility and further
draw-downs may be required prior to completion of the Fundraising.
Based on discussions with all parties, the Directors have
reasonable expectation that the Group will be able to draw-down
another $1.0 million under the facility.
This Fundraising should allow the Group to achieve the
following:
-- repayment of the Weighbridge Loan Facility;
-- rationalisation of existing minimum work commitments; and
-- further appraisal and exploitation of selected assets.
Following completion of a review of the going concern position
of the Company and Group at the meeting of the Board of Directors
on 4 August 2015, including the uncertainties described above, the
Board has concluded that, with current consolidated cash and cash
equivalents totaling $2.0 million and taking into account both the
revised strategy of farming-down or divesting assets and the new
financial resources that the Board might reasonably expect to
become available, the Company and the Group will have sufficient
resources to continue in operational existence for the foreseeable
future, a period not less than twelve months from the date of
approval of this Half-Yearly Financial Report. Accordingly, the
Directors consider it appropriate to continue to adopt the going
concern basis in preparing these Financial Statements.
Notwithstanding the confidence that the Board has in its ability
to stabilise and finance the Group's re-shaped business, the
Directors, in accordance with Financial Reporting Council guidance
in this area, conclude that at this time there is material
uncertainty that such finance can be procured and failure to do so
might cast significant doubt upon the Company's and the Group's
ability to continue as a going concern and that the Company and the
Group may therefore be unable to realise their assets and discharge
their liabilities in the normal course of business. Such scenario
could impact upon the carrying value of intangible exploration and
evaluation assets as disclosed in note 7 and on the recoverability
of certain restricted cash amounts held in escrow to support
guarantees of performance of minimum work obligations, as disclosed
in note 8.
New accounting standards, amendments and interpretations issued
and effective during the period
The condensed set of financial statements have been prepared
using accounting bases and policies consistent with those used in
the preparation of the audited financial statements of the Group
for the year ended 31 December 2014 and those to be used in the
year ending 31 December 2015.
Since the 2014 annual report and accounts was published, no new
standards and interpretations have been issued that would have a
material financial impact on adoption on the condensed financial
statements for the six months ended 30 June 2015.
3. Segmental information
The Group currently operates in three principal geographical
areas: Morocco, Colombia and Tunisia with suspended operations in
Syria. All segments are involved with oil and gas exploration or
production activities. The other column represents corporate and
head office costs. The Group's revenue, results and certain asset
and liability information for the period are analysed by reportable
segment as follows. The comparatives for the six months ended 30
June 2014 and the year end 31 December 2014 have been re-presented
to reflect the US Gulf of Mexico operations as discontinued
operations.
30 June 2015 (Unaudited) Syria Morocco Tunisia Colombia Other Total
$'000 $'000 $'000 $'000 $'000 $'000
------------------------------ -------- --------- -------- --------- --------- ---------
Total administrative
expenses (111) (57) (198) (94) (3,063) (3,523)
Exploration costs
written-off - (1,439) - - - (1,439)
Impairment of exploration
and evaluation assets - (22,107) - - - (22,107)
Provision against
restricted cash balances - (3,500) - - - (3,500)
Operating loss (111) (27,103) (198) (94) (3,063) (30,569)
Net financing (costs)/income (745)
---------
Net loss from continuing
operations (31,314)
------------------------------ -------- --------- -------- --------- --------- ---------
Total assets 102,382 28,581 5,278 1,582 12,027 149,850
Total liabilities (3,723) (5,652) (45) (43) (11,177) (20,640)
E&E capital expenditure - 5,455 25 245 - 5,725
------------------------------ -------- --------- -------- --------- --------- ---------
30 June 2014 (Unaudited) Syria Morocco Tunisia Colombia Other Total
$'000 $'000 $'000 $'000 $'000 $'000
------------------------------ -------- -------- -------- --------- --------- ---------
Total administrative
expenses (344) (107) (3) (54) (2,204) (2,712)
Exploration costs
written-off - (3,936) (454) - - (4,390)
------------------------------ -------- -------- -------- --------- --------- ---------
Operating loss (344) (4,043) (457) (54) (2,204) (7,102)
Net financing (costs)/income (143)
---------
Net loss from continuing
operations (7,245)
------------------------------ -------- -------- -------- --------- --------- ---------
Total assets 105,116 44,905 5,288 1,161 41,906 198,376
Total liabilities (4,049) (6,783) (1,510) (26) (18,484) (30,852)
E&E capital expenditure - 10,852 454 331 - 11,637
------------------------------ -------- -------- -------- --------- --------- ---------
31 December 2014 Syria Morocco Tunisia Colombia Other Total
(Audited) $'000 $'000 $'000 $'000 $'000 $'000
------------------------------ -------- -------- -------- --------- -------- ---------
Total administrative
expenses (482) (149) 10 (168) (4,736) (5,525)
Exploration costs
written-off - (5,246) (794) - - (6,040)
Other Syrian adjustments (202) - - - - (202)
------------------------------ -------- -------- -------- --------- -------- ---------
Operating loss (684) (5,395) (784) (168) (4,736) (11,767)
Net financing (costs)/income (346)
---------
Net loss from continuing
operations (12,113)
------------------------------ -------- -------- -------- --------- -------- ---------
Total assets 102,325 51,845 5,256 1,324 17,697 178,447
Total liabilities (3,827) (6,486) (1,587) (69) (5,923) (17,892)
E&E capital expenditure - 19,188 794 982 - 20,964
------------------------------ -------- -------- -------- --------- -------- ---------
4. Provision against restricted cash balances
At 30 June 2015 a provision has been made against restricted
cash balances securing minimum work obligations on the Fes contract
of $5.0 million, as these may not be recoverable if the licence is
not extended as minimum work commitments will not have been
completed. As $1.5 million of this restricted cash is payable to a
third party on its release the resulting net charge to the Income
Statement is reduced to $3.5 million on derecognition of this
liability.
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$'000 $'000 $'000
----------------------------- ---------- --------- -------------
Provision against restricted 5,000 - -
cash balances
Derecognition of amounts
due to third parties (1,500) - -
on release of restricted
cash balances
----------------------------- ---------- --------- -------------
Net provision against 3,500 - -
restricted cash balances
----------------------------- ---------- --------- -------------
5. Discontinued operations
In November 2014 the Group entered into a sale agreement with
Hillcrest Resources Ltd to dispose of its wholly-owned US
subsidiary Gulfsands Petroleum USA, Inc. The disposal completed on
the 18 December 2014.
The comparative condensed Income Statement has been restated to
show the discontinued operation separately from continuing
operations.
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
$'000 $'000 $'000
----------------------------- ---------- ---------- -------------
Revenue - 3,105 5,366
Expenses - (5,018) (6,870)
----------------------------- ---------- ---------- -------------
Loss before tax - (1,913) (1,504)
Loss on disposal of
discontinued operations - - (2,474)
----------------------------- ---------- ---------- -------------
Net loss attributable
to discontinued operations
(attributable to owners
of the parent company) - (1,913) (3,978)
----------------------------- ---------- ---------- -------------
6. Loss per share
The calculation of the basic and diluted earnings per share is
based on the following shares in issue:
6 months ended 6 months ended Year ended
30 June 2015 30 June 2014 31 December 2014
(Unaudited) (Unaudited) (Audited)
-------------------------------------------- --- --------------- --------------- ------------------
Weighted average number of ordinary shares 117,886,145 117,886,145 117,886,145
Options 197,102 323,716 204,749
------------------------------------------------- --------------- --------------- ------------------
Weighted average number of diluted shares 118,083,247 118,209,861 118,090,894
------------------------------------------------- --------------- --------------- ------------------
The basic and diluted loss per share has been calculated using
the loss for the six months ended 30 June 2015 of $31.3 million
(six months ended 30 June 2014: $7.2 million, year ended 31
December 2014: $12.1 million) for continuing operations and $31.3
million (six months ended 30 June 2014: $9.2 million, year ended 31
December 2014: $16.1 million) for the loss attributable to the
owners of the parent company. The basic loss per share was
calculated using a weighted average number of shares in issue less
treasury shares held of 117,886,145 for all periods. The weighted
average number of ordinary shares, allowing for the exercise of
share options, for the purposes of calculating the diluted loss per
share was 118,083,247 (six months ended 30 June 2014: 118,209,861
and year ended 31 December 2014: 118,090,894).
Where there is a loss, the impact of share options is
anti-dilutive and hence, basic and diluted loss per share are the
same.
7. Intangible assets
Exploration and Evaluation
Assets Computer
Syria Morocco Tunisia Colombia software Total
$'000 $'000 $'000 $'000 $'000 $'000
---------------------------- --------- --------- -------- --------- --------- ---------
Cost:
At 31 December
2014 10,505 46,555 5,195 1,225 2,370 65,850
Additions - 5,455 25 245 1 5,726
Change in decommissioning
estimates - 821 - - - 821
Exploration expenditure
written-off - (1,439) - - - (1,439)
At 30 June 2015 10,505 51,392 5,220 1,470 2,371 70,958
---------------------------- --------- --------- -------- --------- --------- ---------
Accumulated amortisation:
At 31 December
2014 - - - - (1,518) (1,518)
Charge for period - - - - (50) (50)
At 30 June 2015 - - - - (1,568) (1,568)
---------------------------- --------- --------- -------- --------- --------- ---------
Accumulated impairment:
At 31 December
2014 (10,505) - - - (475) (10,980)
Charge for the
period - (22,107) - - - (22,107)
---------------------------- --------- --------- -------- --------- --------- ---------
At 30 June 2015 (10,505) (22,107) - - (475) (33,087)
---------------------------- --------- --------- -------- --------- --------- ---------
Net book value
at 30 June 2015 - 29,285 5,220 1,470 328 36,303
---------------------------- --------- --------- -------- --------- --------- ---------
Net book value
at 31 December
2014 - 46,555 5,195 1,225 377 53,352
---------------------------- --------- --------- -------- --------- --------- ---------
Syria
The accumulated costs of E&E assets in Syria represent the
Group's share of the drilling costs of the Al Khairat, Twaiba and
Wardieh wells and certain 3D seismic surveys. The Al Khairat well
was successfully tested but commercial development approval is yet
to be granted by the government of the Syrian Arab Republic. The
Twaiba and Wardieh wells are still under evaluation.
Following the imposition of EU sanctions against the oil
industry in Syria, an impairment test was conducted and the
carrying value of all E&E assets in Syria was impaired to nil
as it is was unclear whether the Group would be able to apply for
commercial development approval in the manner contemplated by the
Production Sharing Contract. That position remains at the date of
this Report.
Morocco
Moroccan E&E assets at 30 June 2015 represent exploration
expenditure on the Rharb Centre, Rharb Sud, Fes and Moulay Bouchta
permits, in addition to $17.8 million of fair value attributed to
the Fes, Rharb Centre and Rharb Sud permits at acquisition in 2013,
less write-offs of unsuccessful exploration expenditure on the Fes
and Rharb Centre permits and impairment of the expenditure
attributed to the Fes permit.
In respect of the Rharb petroleum contract, drilling of the
fifth well, DRC-1, commenced in December 2014 and completed in
January 2015. Shortly after, drilling of the sixth well, DOB-1
commenced and completed in February 2015. Both wells were
successfully drilled to target depths, hydrocarbon discoveries made
and the wells have both been temporarily suspended as future gas
producers.
Management has reviewed the carrying value of all its interests
in Morocco as at the date of this Report. The financial commitments
of the Fes contract are inconsistent with the Group's revised
strategy, and therefore Gulfsands have initiated a farm-out process
for the Fes contract. However given the Fes licence expiry date in
September 2015, the outstanding work commitments on the permit
which could not physically be fulfilled before this date and the
uncertainty of securing an industry partner before the licence
expiry date, the expenditure to date attributed to the Fes permit
of $22.1 million, inclusive of $10.5 million fair value attributed
at acquisition, has been fully impaired at 30 June 2015.
Management notes that the Rharb contract expires in November
2015 and there currently remain work obligations to be performed on
this contract which, if not completed before expiry, could lead to
ONHYM terminating the Rharb contract. Three discoveries have been
made on the Rharb permit over the last year and the Management
believe that within the time frame to licence expiry it is still
realistic to complete the outstanding work obligations if funding
were available to finance these commitments. Management has
commenced a farm-out process and would seek to restructure some of
the work obligations to allow the contracts to be appropriately
re-financed or divested in part or whole. The Moulay Bouchta
contract expires in June 2016, again providing sufficient time to
complete work obligations should funding be available. Should
Management be unsuccessful in this strategy, the carrying value of
those assets and the restricted cash securing those work
obligations would become impaired. However, Management has
considered the risks and determined that no further impairment in
the carrying value of its remaining Moroccan interests is
appropriate at this time.
Tunisia
At 30 June 2015 the Tunisian E&E assets represent
expenditures under the Chorbane contract including amounts paid
during 2013 and 2015 to increase participation in the contract. The
Chorbane contract was due to expire on 12 July 2015. Gulfsands
lodged a joint official extension application with the Entreprise
Tunisienne d'Activités Pétrolières on 11 May 2015 to the Direction
Générale de l'Energie for a two year extension but are awaiting a
meeting of the Consultative Commission on Hydrocarbons for this
extension to be granted. Until a decision is made the contract will
not expire and Management feels confident that an extension will be
granted. If an extension is granted, a farm-down or divestment of
the Group's interests would be anticipated. Management have
reviewed its intention for this asset and the carrying value
thereof as at the date of this Report and concluded that no
impairment of its carrying value is required. Management notes
however, that if the contract is not extended or if satisfactory
terms in any farm-down or divestment cannot be obtained then the
carrying value of this asset might become impaired. There is no
security deposit or other guarantee in place with respect to these
work obligations.
Colombia
The Group has interests in E&P contracts over two blocks in
Colombia: Llanos 50 and Putumayo 14, which expire in November 2016
and November 2017 respectively. At 30 June 2015 the E&E assets
of $1.5 million represent costs incurred in respect of these blocks
which are in the early stages of exploration. Management's strategy
is to farm-down or divest the Group's interests in these contracts
and a broker has been engaged to run the farm-out process
in-country. Management has reviewed its intentions for these
assets, and believes it is too early to make a prediction on the
likelihood of a successful farm-out or to determine what price
could be achieved. Therefore they have concluded that no impairment
of the carrying value is required. Both the asset carrying values
and the restricted cash amounts could become impaired should the
Group fail to satisfy the work obligations or to realise sufficient
value from any divestment or farm-out.
8. Work obligation commitments
At 30 June 2015 the Group had the following capital commitments
in respect of its exploration activities:
Morocco
Fes permit - licence expiry date and deadline for fulfilment of
capital commitments; September 2015
-- Drilling of three exploration wells.
-- Acquisition of a further 350 km of 2D seismic.
-- Acquisition of 100 km(2) of 3D seismic.
-- Total cost of commitments outstanding estimated at $32.8
million inclusive of a $5.7 million carry in favour of a third
party.
$5.0 million (31 December 2014: $5.0 million) of deposits have
been lodged to support guarantees given to ONHYM in respect of
completion of these minimum work commitments, however at 30 June
2015 the recoverability of these amounts has been fully provided
against. Of these amounts, $1.5 million (31 December 2014: $1.5
million) that would be payable to a third party if the deposits
were to be released by ONHYM has been provided against but remains
a contingent liability.
Rharb permit - licence expiry date and deadline for fulfilment
of capital commitments extended to November 2015
-- Drilling of a further three exploration wells.
-- Total cost of commitments outstanding estimated at $7.3 million.
$1 million (31 December 2014: $1 million) of deposits have been
lodged to support guarantees given to ONHYM in respect of
completion of these minimum work commitments. Of these amounts $0.5
million (31 December 2014: $1 million) is payable to a third party
following release of deposits by ONHYM.
Moulay Bouchta permit - licence expiry date and deadline for
fulfilment of capital commitments; June 2016
-- Acquisition of 500 km of 2D seismic.
-- Reprocessing and interpretation of existing seismic data.
-- Legacy oil field reactivation survey.
-- Total cost of commitments estimated at $6.5 million.
$1.75 million (31 December 2014: $1.75 million) of deposits have
been lodged to support guarantees given to ONHYM in respect of
completion of these minimum work commitments.
Tunisia
Chorbane permit - contract expiry date and deadline for
fulfilment of capital commitments; July 2015 (subject to an
application for extension)
-- Drilling of one exploration well.
-- Total commitments outstanding estimated at $7.0 million.
Colombia
Putumayo 14 - licence expiry date and deadline for fulfilment of
capital commitments; November 2017
-- Drilling of one exploration well.
-- 2D seismic minimum 93 km.
-- Total commitments outstanding estimated at $22.2 million.
Llanos 50 - licence expiry date and deadline for fulfilment of
capital commitments; November 2016
-- Drilling of one exploration well.
-- 2D seismic minimum 103 km.
-- Total commitments outstanding estimated at $15.2 million.
$3.2 million (2013: $3.2 million) of deposits have been lodged
to support guarantees given to the Agencia Nacional de
Hidrocarburos in respect of completion of these minimum work
commitments on Putumayo 14 and Llanos 50.
The deposits referenced in this note are shown as restricted
cash amounts within long-term financial assets on the Balance
Sheet. There were no other material obligations or contracts
outstanding in relation to ongoing projects not provided or
disclosed in this Half-Yearly Financial Report.
9. Available-for-sale financial assets
Available-for-sale financial assets are stated at fair value.
Gains and losses arising from changes in fair value are recognised
in other comprehensive income and accumulated in the investments
revaluation reserve with the exception of impairment losses which
are recognised directly in profit or loss. Where the investment is
disposed of or is determined to be impaired, the cumulative gain or
loss previously recognised in the investments revaluation reserve
is reclassified to profit or loss.
The Group is party to a PSC for the exploitation of hydrocarbon
production in Block 26 in Syria. Pursuant to the PSC the Group
operates its Syrian oil and gas production assets through a joint
venture administered by DPC in which the Group has a 25% equity
interest. The Group lost joint control of DPC on 1 December 2011
following the publication of European Union Council Decision
2011/782/CFSP. For the purposes of EU sanctions, DPC is considered
to be controlled by GPC. Since the Group has neither joint control
nor significant influence over the financial and operating policy
decisions of the entity, it carries its investment in DPC and the
associated rights under the Block 26 PSC as an available-for-sale
financial asset. The fair value attributed to DPC at 30 June 2015
is $102 million (31 December 2014: $102 million).
The valuation that the Group carries for its investment in DPC
is supported by the Group's economic model of the estimated future
cash flows that could be generated in respect of the Group's
entitlement reserves in Block 26. The model uses oil prices quoted
on the current forward Brent oil price curve, with an assumption of
2% price inflation beyond the end of the quoted curve discounted
using a 15% discount rate. The basic model also assumes a
short-term resumption of production. The net present value ("NPV")
derived from this model ("the base case NPV") is then subjected to
scenario analysis taking into account the Board's view of specific
risks associated with investments in the Syrian oil and gas sector
at the current time including the potential for significant delay
in resumption of oil production and in receipt of revenues,
potential additional costs associated with re-establishment of
operations and, ultimately, a potential inability to resume
operations. This methodology supports a valuation for the Group's
investment in DPC of $102 million which represents a 74% discount
to the base case NPV. The valuation represents a level 3
measurement basis as defined by IFRS 7 'Financial Instruments:
Disclosures.'
There is a high degree of subjectivity inherent in the valuation
due to the unknown duration of the sanctions and the eventual
outcome of events in Syria. Accordingly it may change materially in
future periods depending on a wide range of factors.
The following table sets out the impact that changes in the key
variables would have on the carrying value of the asset:
Change
in
carrying
value
Change of investment
% $'000
--------------------------------- ------- --------------
Increase in forecast capital
expenditure 5% (1,888)
Decrease in long-term commodity
prices 5% (6,214)
Increase in forecast operating
expenditure 5% (1,015)
Change in discount rate to 10% 5% 40,022
Change in discount rate to 20% 5% (25,267)
--------------------------------- ------- --------------
The Directors have reviewed the carrying value of this
available-for-sale financial asset at 30 June 2015 and are of the
opinion that the valuation, although subject to significant
uncertainty, remains appropriate in the circumstances, although not
necessarily reflective of the value of the Group's investments in
its Syrian operations over the long-term.
10. Convertible loan facility
At the end of June 2015 Arawak Energy Bermuda Limited entered
into an assignment agreement with Weighbridge Trust Limited, which
is acting as agent for Waterford Finance and Investment Limited and
Richard Griffiths (and companies owned and controlled by him).
Under the assignment Weighbridge acquired the loan facility.
The convertible loan facility has an initial available facility
of $10 million, followed by a further two tranches of $5 million
which are subject to certain conditions precedent. The loan bears
interest at the rate of 10% per annum on the drawn-down facility,
which is rolled up into the loan balance quarterly from the date of
the draw-down. A commitment fee of 3% is charged on the initial $10
million available facility undrawn during the initial twelve month
availability period and is rolled up into the loan balance
quarterly from the date of the loan draw-down. The loan matures on
30 November 2017 and is repayable in full on that date. Gulfsands
intend to re-pay the loan balance post Fundraising and in certain
circumstances the loan may be callable in advance of this date,
therefore the loan balance has been reclassified as a current
liability at 30 June 2015. Weighbridge however, have given a firm
undertaking that they will not exercise their rights to call for
repayment of the loan for a period of three months from the date of
assignment.
The loan facility is secured by a share mortgage over the shares
in Gulfsands Petroleum Morocco Ltd (the holding company for the
Group's interests in Morocco) and a floating charge over all of the
assets of Gulfsands Petroleum Holdings Ltd (a subsidiary company)
with further credit support provided by a guarantee from the
Company.
The loan amount (including amounts drawn and, accrued unpaid
interest and fees) is convertible at any time prior to maturity
into ordinary shares of the Company, initially at a price of
GBP0.80. In the event that the Company issues new shares prior to:
conversion, repayment or maturity of the loan facility; the lender
shall have the right but not the obligation to subscribe for new
shares, up to the amount of the loan amount at that time, at the
same subscription price per share as paid by the other subscribers.
If the lender elects not to participate in such issue of new
shares, the mechanics of conversion of the loan amount provide that
an adjustment be made in order that the lender's conversion rights
will continue to represent an entitlement to the same proportion of
the Company's issued share capital, after the new issue of shares,
as they represented prior to such new issue of shares. Weighbridge
have given a firm undertaking that they will not exercise their
conversion rights under the loan agreement for a period of three
months from the date of assignment.
Gulfsands may require conversion of the outstanding balance of
the loan facility into ordinary shares of the Company, initially at
a price of GBP0.80, in the event Gulfsands' share price, on an
unadjusted basis, exceeds GBP1.04 per share for a period of more
than 20 consecutive trading days at any time prior to the expiry of
the term of the facility.
On 9 January 2015 the Group drew-down the second $5.0 million
tranche of the loan facility.
The movement on the loan balance in the year is represented as follows: $'000
------------------------------------------------------------------------- -------
At 1 January 2015 4,855
Loan draw-down 5,000
Interest expense 500
Commitment fee 5
Amortisation of transaction costs 31
------------------------------------------------------------------------- -------
At 30 June 2015 10,391
------------------------------------------------------------------------- -------
11. Share capital
30 June 31 December
2015 2014
--------------------------------------- ---------------- ------------
Authorised: Number Number
---------------------------------- --- ---------------- ------------
Ordinary shares of 5.714
pence each 175,000,000 175,000,000
--------------------------------------- --- ------------ ------------
Allotted, called
up and fully paid: $' 000 $' 000
121,989,500 (31 December 2014:
121,989,500) ordinary shares of
5.714 pence each 13,131 13,131
-------------------------------------------- ------------ ------------
The movements in share capital, share options and restricted
shares were as follows:
Weighted
average
Number Number Number price
of ordinary of share of restricted of options
shares options shares GBP
At 31 December 2014 121,989,500 1,386,000 233,736 2.87
Restricted share options
cash settled - - (87,303)
Share options lapsed - (855,000) - 3.20
At 30 June 2015 121,989,500 531,000 146,433 2.35
--------------------------- ------------- ---------- --------------- ------------
The restricted shares have an exercise price of 5.714 pence per
share.
The Company holds 4,103,355 shares in Treasury at 30 June 2015
(31 December 2014: 4,103,355).
12. Post balance sheet events
In July 2015 a further $1.0 million has been drawn-down under
the Weighbridge Loan Facility.
Glossary of Terms
1C Low estimate (P90) Contingent Resources
2C Best estimate (P50) Contingent Resources
3C High estimate (P10) Contingent Resources
Bcf Billion cubic feet of gas
boe Barrels of oil equivalent where the gas component is
converted into an equivalent amount of oil using a conversion rate
of 1 Bcf to 0.1667 MMboe
bopd Barrels of oil per day
Chance of Development In accordance with the 2007 SPE PRMS, a
guideline risk factor should be stated associated with the
Contingent Resources quoted for each category; the risk factor
indicates the likelihood that the Group will ultimately
commercially develop the resource. The risk factor considers all
technical and non-technical factors that are impacting or are
likely to impact on the likelihood of development, and is termed
the "Chance of Development".
Chance of Discovery In accordance with the 2007 SPE PRMS, a
guideline risk assessment should be provided associated with the
Prospective Resources quoted for Low, Best and High estimate
categories. The risk assessment here is the Chance of Discovery;
the additional risk assessment relating to the Chance of
Development is not normally quantified at this level of resource
classification.
Contingent Resources Contingent Resources are those quantities
of petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations by the application of
development projects, but are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingent Resources are further categorised by the SPE into 1C, 2C
and 3C according to the level of uncertainty associated with the
estimates.
DPC Dijla Petroleum Company
E&E Exploration and evaluation
E&P contracts Exploration and production contracts
GPC General Petroleum Corporation
Griffiths Companies owned and controlled by Richard Griffiths
IFRS International Financial Reporting Standards
MMbo Millions of barrels of oil
MMboe Millions of barrels of oil equivalent
NPV Net present value
ONHYM Office National des Hydrocarbures et des Mines (Morocco)
Prospective Resources Prospective Resources are those quantities
of petroleum estimated, as of a given date, to be potentially
recoverable from undiscovered accumulations. They are further
categorised by the 2007 SPE PRMS into Low, Best and High estimates.
The quoted Low, Best and High estimates are the 90% probability
("P90"), 50% probability ("P50") and 10% probability ("P10") values
respectively derived from probabilistic estimates generated using a
Monte Carlo statistical approach.
Probable reserves Probable reserves are those unproved reserves
which analysis of geological and engineering data suggests are more
likely than not to be recoverable. In this context, when
probabilistic methods are used, there should be more than a 50%
probability that the quantities actually recovered will equal or
exceed the sum of estimated Proved plus Probable reserves.
Proved reserves Proved reserves are those quantities of
petroleum which, by analysis of geological and engineering data,
can be estimated with reasonable certainty (normally over 90% if
measured on a probabilistic basis) to be commercially recoverable,
from a given date forward, from known reservoirs and under defined
economic conditions, operating methods, and government
regulations.
PSC Production Sharing Contract
P10 There exists a 10% probability that the true quantity or
value is greater than or equal to the stated P10 quantity or
value
P50 There exists a 50% probability that the true quantity or
value is greater than or equal to the stated P50 quantity or
value
P90 There exists a 90% probability that the true quantity or
value is greater than or equal to the stated P90 quantity or
value
Senergy Report Reserves and resources report issued by UK
subsurface consultancy Senergy (GB) Limited
Waterford Waterford Finance and Investment Limited
Weighbridge Weighbridge Trust Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PKPDDNBKDPFK
Gulfsands Petroleum (LSE:GPX)
Historical Stock Chart
From Jun 2024 to Jul 2024
Gulfsands Petroleum (LSE:GPX)
Historical Stock Chart
From Jul 2023 to Jul 2024
