RNS Number:7906P
Nighthawk Energy plc
11 March 2008
NIGHTHAWK ENERGY PLC
HALF YEARLY REPORT
The Directors of Nighthawk Energy plc ("Nighthawk" or "the Company") (AIM:
HAWK), the US focused hydrocarbon production and development company, are
pleased to announce the Company's half yearly report for the six months ended 31
December 2007.
HIGHLIGHTS
* Excellent progress on the drilling and development programme at Cisco
Springs, including implementation of Broadhead tap and new natural gas
production facilities and significant increase in project acreage
* Acquisition of further 12.5 per cent. in Cisco Springs, raising Nighthawk's
interest to 50 per cent. and proven P90 reserves to approximately 100 BCF
* Jolly Ranch project area increased to 140,000 acres following positive
interpretation of 3-D seismic with expanded drilling programme scheduled to
commence in March
* Waterflood and test production to commence shortly at Devon Oilfield
* Acquisition of Buchanan and Worden projects in Missouri, targeting the
same Bartlesville sandstone channels as at the Devon Oilfield
* Oversubscribed secondary fundraising in January 2008 of �14.0 million
* Current cash and liquid investments in excess of �17 million
David Bramhill, Managing Director of Nighthawk, commented: "Excellent progress
was made during the half year. We believe that the Company is well positioned
to deliver increasing production and strong news flow throughout 2008 and
beyond."
Enquiries:
Nighthawk Energy plc 01271 882160
David Bramhill, Managing Director office@nighthawkenergy.net
www.nighthawkenergy.com
Hanson Westhouse Limited 0113 246 2610
Tim Feather tim.feather@hansonwesthouse.com
Matthew Johnson matthew.johnson@hansonwesthouse.com
Bishopsgate Communications Limited 020 7562 3350
Dominic Barretto
Managing Director's Statement
I am pleased to report to the shareholders of Nighthawk Energy plc ("Nighthawk"
or the "Company") continuing progress, growth and development during the six
months ended 31 December 2007. This is the Company's first half yearly report
prepared under International Financial Reporting Standards ("IFRS") and a full
explanation of the transition to IFRS is provided in the notes to the financial
information.
Nighthawk is focused on growth and cash flow from the development of, and
production from hydrocarbon projects in the United States. The Company holds
substantial equity in seven projects across the US mid-continent, all of which
are operated by Running Foxes Petroleum Inc. ("Running Foxes"), Nighthawk's
partner and holder of the remaining interest in each project.
Nighthawk holds 50 per cent. interests in the following projects, Cisco Springs
in Utah, Jolly Ranch in Colorado, Centurion in Kansas and Buchanan and Worden in
Missouri. 80 per cent. interests are held in the Devon Oilfield in Kansas and
the Cliffs Shale project in Illinois.
Our objective is to become self-funding through the successful development of
the Company's projects and I am pleased to report that events during the half
year significantly advanced this strategy.
Cisco Springs, Grand County, Utah
A drilling and development programme of over 60 wells is ongoing at Cisco
Springs. To date, the results of 28 new wells have been reported, of which 26
were commercial discoveries.
In December 2007, Nighthawk acquired additional equity in the Cisco Springs
project, raising its interest from 37.5 to 50 per cent. This acquisition
increased Nighthawk's proven P90 reserves to approximately 100 billion cubic
feet ("BCF") of natural gas and P50 reserves to 125 BCF.
The commissioning of the Broadhead tap and new production facilities, also
announced in December, provide a reliable means of natural gas transportation
with sufficient capacity for the planned increase in production. In addition,
the ability to sell gas at spot price or on long term contract provides a strong
competitive advantage in the Cisco Springs region.
Following the period end, Nighthawk and Running Foxes successfully bid for an
additional 5,977 acres in the Cisco Springs area, increasing the project acreage
to approximately 24,000 acres.
Nighthawk has commissioned Oilfield Production Consultants Limited ("OPC") to
conduct a further evaluation of the expanded Cisco Springs project as the first
stage in their review of all of Nighthawk's projects. The Directors anticipate
that OPC's report on Cisco Springs will reflect a value materially higher than
reported in the Competent Person's Report at the time of the Company's flotation
in March 2007.
The Board is particularly pleased with the progress at Cisco Springs. 18 months
ago the project was at an early stage of development with little drilling
activity having taken place for decades. The ongoing drilling and development
programme has advanced the project significantly and progress has been extremely
encouraging.
Jolly Ranch, Lincoln County, Colorado
Nighthawk acquired a 50 per cent. interest in the Jolly Ranch project in June
2007. At that time the project area was approximately 40,000 acres. An
aggressive acquisition programme has now increased the project area to
approximately 140,000 acres.
A successful 3-D seismic programme covering 21 square miles was shot over key
sections of the Jolly Ranch project area including the Bolero and Craig Ranch
oilfields which were abandoned in the 1990s due to low oil prices. In addition,
a detailed soil gas and iodine geochemical survey was completed and numerous
anomalies correlating with targets identified by the 3-D surveys were
identified.
This work led to a re-evaluation of the project and an expanded drilling
programme has been planned for 2008. Drilling permits have been submitted for
18 wells to date, of which six have been granted already. Drilling of the first
four wells, termed the Four Kings, namely Elizabeth, Henri, Phillip and Sixtus,
which will test multiple stacked targets in the Marmaton, Morrow, Atoka,
Cherokee and Mississippian horizons, is scheduled to commence before the end of
March 2008.
Devon Oilfield, Bourbon County, Kansas
Since acquisition, the Devon Oilfield waterflood project area has been expanded
from 160 acres to 1,764 acres. A successful appraisal well programme, targeting
Bartlesville channel sandstones between depths of 350 and 500 feet, has been
undertaken with the wells logged and cased as future producers.
Permits have been received from the State of Kansas for the injection of a total
of 1,200 barrels of fluids per day in the initial four injector wells for the
purpose of enhancing the recovery of oil. Water injection and test production
are expected to commence shortly.
Buchanan and Worden, Vernon County, Missouri
In October 2007, Nighthawk acquired a 50 per cent. interest in the Buchanan and
Worden projects which together cover 774 acres and are targeting the same
Bartlesville sandstone reservoirs as the Devon Oilfield project.
A test drilling programme on the Buchanan and Worden projects is underway and
the initial results are encouraging.
Centurion, Sumner County, Kansas
The Centurion project covers an area of 12,000 acres in the Sedgwick Basin
targeting eight conventional oil zones at depths of less than 4,500 feet.
Additional potential exists for the production of shale gas from the Chattanooga
and Simpson horizons.
A two well and 3-D seismic programme is planned to be undertaken in 2008.
Cliffs Shale, Clark, Cumberland, Jasper and Crawford Counties, Illinois
Nighthawk acquired an 80 per cent. interest in the Cliffs Shale gas project in
June 2007. The project covers an area of 15,591 acres within the Illinois
Basin, a prolific region which has produced over four billion barrels of oil
from numerous reservoirs below 2,900 feet. Shale gas is seen as a long term
energy resource that will help to replace conventional US hydrocarbon reserves
as they are depleted. A test well is planned for later in 2008.
Corporate and Financial
In January 2008, Nighthawk undertook an oversubscribed placing with
institutional investors in London and Europe, raising �14 million before
expenses. The proceeds will be used to fund the extended drilling programme at
Jolly Ranch and expanded programmes at the Buchanan and Worden projects.
The financial results for the half year reflect the operations of an active
hydrocarbon development company. Cash and liquid investments as at 31 December
2007 were approximately �6.8 million. However, through the recent placing, this
has increased to a current position of in excess of �17 million.
Summary
There is work to be done before we achieve our planned objectives. However,
excellent progress was made during the half year. We expect to see an
increasing production profile during 2008.
I would like to take this opportunity to thank our shareholders, my fellow
Directors and management, advisers in the UK and the US and especially our
partner Running Foxes for their efforts.
I look forward to the results of our continuing development programmes and
believe that Nighthawk is well positioned to deliver increasing production and
strong news flow throughout 2008 and beyond.
David Bramhill
Managing Director
11 March 2008
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 31 December 2007
Notes Six months ended Six months Year
31 December ended 31 ended 30
December June
2007 2006 2007
� � �
Continuing operations:
Revenue 4 23,563 15,824 65,620
Administrative expenses (732,190) (420,053) (780,811)
Exceptional item - AIM admission costs - - (205,223)
Operating loss (708,627) (404,229) (920,414)
Finance income 226,941 32,554 165,742
Profit on disposal of financial assets 7,785 14,016 14,016
Loss before taxation (473,901) (357,659) (740,656)
Taxation - - -
Loss for the period 7 (473,901) (357,659) (740,656)
Attributable to:
Equity shareholders of the Company (473,901) (357,659) (740,656)
Loss per share from continuing operations
attributable to the equity shareholders of the
Company
Basic and diluted loss per share 5 0.28p 0.41p 0.66p
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME
AND EXPENSE for the six months ended 31 December 2007
Notes Six months Six months Year
ended 31 ended 31 ended
December December 30 June
2007 2006 2007
� � �
Foreign exchange translation difference 7 117,000 (6,645) (327,000)
Income and expense recognised directly in equity 117,000 (6,645) (327,000)
Loss for the period 7 (473,901) (357,659) (740,656)
Total income and expense recognised in the period (356,901) (364,304) (1,067,656)
Attributable to:
Equity shareholders of the Company (356,901) (364,304) (1,067,656)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET as at 31 December 2007
Notes 31 December 31 December 30 June
2007 2006 2007
� � �
ASSETS
Non-current assets
Property, plant and equipment 850,165 5,198 339,594
Intangibles 6 14,168,939 4,261,848 7,344,657
Investment in associates - - 252,545
Financial assets 857,218 558,104 767,368
15,876,322 4,825,150 8,704,164
Current assets
Trade and other receivables 23,919 43,454 198,460
Cash and cash equivalents 5,960,892 2,279,144 11,285,559
5,984,811 2,322,598 11,484,019
TOTAL ASSETS 21,861,133 7,147,748 20,188,183
EQUITY AND LIABILITIES
Capital and reserves attributable to the Company's
equity shareholders
Share capital 7 431,611 279,558 419,870
Share premium account 7 20,688,291 5,875,183 20,277,354
Foreign exchange translation reserve 7 (210,000) (6,645) (327,000)
Retained earnings 7 (1,261,104) (404,206) (787,203)
Share-based payment reserve 7 350,807 16,908 43,929
Merger reserve 7 99,588 99,588 99,588
Total equity 20,099,193 5,860,386 19,726,538
Non-current liabilities
Trade and other payables - 255,297 -
Current liabilities
Trade and other payables 1,761,940 1,032,065 461,645
Total liabilities 1,761,940 1,287,362 461,645
TOTAL EQUITY AND LIABILITIES 21,861,133 7,147,748 20,188,183
UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 December 2007
Notes Six months Six months Year ended
ended 31 ended 31 30 June
December December
2007 2006 2007
� � �
Cash (outflow)/inflow from operating activities 8 (538,929) 600,521 (1,160,095)
Cash flow from investing activities
Purchase of investment on associated undertaking - - (252,545)
Purchase of investment in jointly controlled entity - - (112,298)
Purchase of intangible non current assets (4,625,582) (4,115,333) (7,501,038)
Proceeds on disposal of intangible non current assets - - 56,400
Purchase of property, plant and equipment. (755,825) (4,373) (6,048)
Proceeds on disposal of property, plant and equipment 3,751 - 700
Purchase of financial assets (140,390) (659,428) (868,692)
Proceeds on disposal of financial assets 58,325 115,340 115,340
Dividend received 200,129 14,027 140,476
Interest received 26,812 18,527 25,266
Net cash outflow from investing activities (5,232,780) (4,631,240) (8,402,439)
Cash flow from financing activities
Proceeds on issue of new shares 422,679 4,772,356 20,348,605
Share issue costs - (212,028) (1,245,794)
Net cash inflow from financing activities 422,679 4,560,328 19,102,811
Net (decrease)/increase in cash and cash equivalents (5,349,030) 529,609 9,540,277
Cash and cash equivalents at beginning of period 11,285,559 1,752,048 1,752,048
Effects of foreign exchange movements 24,363 (2,513) (6,766)
Cash and cash equivalents at end of period 5,960,892 2,279,144 11,285,559
NOTES TO THE UNAUDITED FINANCIAL INFORMATION
for the six months ended 31 December 2007
1 Accounting policies
Basis of preparation
The next annual financial statements of Nighthawk Energy plc ("the Group") will
be prepared in accordance with International Financial Reporting Standards ("
IFRS") as adopted by the European Union ("EU") applied in accordance with the
provisions of the Companies Act 1985.
Accordingly, the interim financial information in this report has been prepared
using accounting policies consistent with IFRS. IFRS is subject to amendment
and interpretation by the International Accounting Standards Board ("IASB") and
the International Financial Reporting Interpretations Committee ("IFRIC") and
there is an ongoing process of review and endorsement by the European
Commission. The financial information has been prepared on the basis of the
recognition and measurement principles of IFRS that the Directors expect to be
applicable as at 30 June 2008.
The financial information has been prepared under the historical cost convention
as modified by the revaluation of available-for-sale investments which are
carried at fair value. The principal accounting policies set out below have
been consistently applied to all periods presented.
IFRS transition
IFRS 1 "First-time Adoption of International Financial Reporting Standards"
("IFRS 1") permits companies adopting IFRS for the first time to take certain
exemptions from the full retrospective application of IFRS. The interim
financial information has been prepared on the basis of the following exemption:
Business combinations prior to 1 July 2006 have not been restated to comply with
IFRS 3 "Business Combinations"
The effect of translation differences arising on fair value adjustments and
goodwill in business combinations is not applied retrospectively before 1 July
2006 thereby treating the fair value adjustments as assets of the Company as
opposed to the entities acquired by the Company.
The disclosures required by IFRS 1 concerning the transition from UK Generally
Accepted Accounting Practice ("UK GAAP") to IFRS are given in note 10.
Non-statutory accounts
The financial information for the year ended 30 June 2007 set out in this
interim report does not comprise the Group's statutory accounts as defined in
section 240 of the Companies Act 1985.
The statutory accounts for the year ended 30 June 2007, which were prepared
under UK GAAP, have been delivered to the Registrar of Companies. The auditors
reported on those accounts; their report was unqualified and did not contain a
statement under either Section 237 (2) or Section 237 (3) of the Companies Act
1985.
The financial information for the 6 months ended 31 December 2007 and 31
December 2006 is unaudited.
Basis of consolidation
The financial information incorporates the results of the Company and entities
controlled by the Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities.
The accounts consolidate the results and balance sheet of the Company and its
wholly owned subsidiaries using the acquisition method of accounting. The
Company's associate is accounted for using the equity method of accounting based
on the Company's power to exert significant influence over this entity. The
Company's jointly controlled entities are accounted for using proportionate
consolidation based on joint control.
Intra-group transactions with subsidiaries are eliminated on consolidation.
Transactions, balances, income and expenses with jointly controlled entities and
associates are eliminated to the extent of the Group's interest in these
entities.
Revenue recognition
The Group's revenue to date represents that earned from its royalty interests
and is recognised on an accrual basis, in accordance with the substance of the
relevant agreement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less and bank overdrafts.
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Trade and other receivables are measured at initial recognition at fair value,
and are subsequently measured at amortised cost using the effective interest
method. A provision is established when there is objective evidence that the
Group will not be able to collect all amounts due. The amount of any provision
is recognised in the income statement.
Trade and other payables are initially measured at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method.
An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received, net of direct issue
costs.
Investments are classified as 'available-for-sale' and are initially recognised
at fair value and are measured at subsequent reporting dates at fair value, the
gains and losses arising from changes in fair value are included directly in
equity.
Foreign currency
The functional currency is United States dollars being the currency, in which
the majority of the operations are conducted. The presentational currency for
the Group's consolidated financial information is Great British pounds and it is
this currency in which the Group reports. Foreign currency transactions by
Group companies are recorded in their functional currencies at the exchange rate
at the date of the transaction. Monetary assets and liabilities have been
transferred at rates in effect at the balance sheet date, with any exchange
adjustments being charged or credited to the income statement. On consolidation
the accounts of overseas subsidiary undertakings are translated into the Group's
presentational currency at the exchange rate at the balance sheet date, the
income and expenditure account items are translated at the average rate for the
period. The exchange difference arising on translation from functional currency
to presentational currency is classified within equity as a translation reserve.
Share based payments
Where share options have been granted to Directors and Employees, IFRS 2 has
been applied, whereby the fair value of the options is measured at the grant
date and spread over the period during which the employees become entitled to
the options. An options valuation model is used to assess the fair value,
taking into account the terms and conditions attached to the options. The fair
value of goods and services received are measured by reference to the fair value
of options. The share based payments are recognised as an expense in the income
statement with a corresponding credit to equity.
Exploration costs
Exploration and evaluation expenditure relates to costs incurred on the
exploration and evaluation of potential mineral reserves and includes costs such
as exploratory drilling and sample testing and the costs of feasibility studies.
All exploration and evaluation expenditures including related overheads on the
acquisition, exploration and evaluation of interests in licences not yet
transferred to a cost pool are capitalised under intangible assets.
When it is determined that such costs will be recouped through successful
development and exploration or alternatively by sale of the interest,
expenditure will be transferred to property plant and equipment or intangible
assets depending upon their nature and depreciated over the expected productive
life of the asset.
All capitalised exploration and evaluation expenditure is monitored for
indications of impairment. An impairment review is performed when there are
indicators that the carrying amount of the assets may exceed their recoverable
amounts or when such assets are to be reclassified as property, plant and
equipment or intangibles. To the extent that this occurs, the excess is fully
provided against, in the financial period in which this is determined. Whenever
a project is considered no longer viable the associated capitalised expenditure
is written off to the income statement.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation
less any recognised impairment losses. Cost includes expenditure that is
directly attributable to the acquisition or construction of these items.
Subsequent costs are included in the asset's carrying amount only when it is
probable that future economic benefits associated with the item will flow to the
Group and the costs can be measured reliably. All other costs, including
repairs and maintenance costs, are charged to the income statement in the period
in which they are incurred.
Depreciation is provided on all property, plant and equipment other than
freehold land and is calculated on a straight-line basis as follows:
Office equipment 25%
Motor vehicles 25%
Plant and equipment 5%
Depreciation is provided on cost less residual value. The residual value,
depreciation methods and useful lives are annually reassessed.
At each balance sheet date, the Directors review the carrying amount of
property, plant and equipment, to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss, if any. The recoverable amount is measured at
the higher of fair value less costs to sell and value in use.
The recoverable amount of an asset is measured as the higher of fair value less
costs to sell and value in use. Fair value is determined as the amount that
would be obtained from the sale of the asset in an arm's length transaction
between knowledgeable and willing parties. Value in use is generally determined
as the present value of the estimated future cash flows. Present values are
determined using a risk-adjusted pre-tax discount rate appropriate to the risks
inherent in the asset. Future cash flow estimates are based on expected
production and sales volumes, commodity prices, reserves, operating costs,
restoration and rehabilitation costs and future capital expenditure.
Exceptional items
The Group presents as exceptional items on the face of the income statement
those significant items of income and expense which, because of their size,
nature and infrequency of the events giving rise to them, merit separate
presentation to allow shareholders to understand better the elements of
financial performance in the year, so as to facilitate comparison with prior
periods to assess trends in financial performance more readily.
Current taxation
Current tax for each taxable entity in the Group is based on the local taxable
income at the local statutory tax rate enacted or substantively enacted at the
balance sheet date and includes adjustments to tax payable or recoverable in
respect of previous periods.
Deferred taxation
Deferred taxation is calculated using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, if the
deferred tax arises from the initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss, it is not
accounted for. Deferred tax is determined using tax rates and laws that have
been enacted (or substantially enacted) by the balance sheet date and are
expected to apply when the related deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax liabilities are provided in full.
Deferred tax assets are recognised to the extent that it is probable that future
taxable profits will be available against which the temporary differences can be
utilised.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity in which case the related deferred tax is
also charged or credited directly to equity.
International Financial Reporting Standards in issue but not yet effective
At the date of authorisation of this condensed consolidated financial
information, the IASB and IFRIC have issued the following standards and
interpretations which are effective for annual accounting periods beginning on
or after the stated effective date. These standards and interpretations are not
effective for and have not been applied in the preparation of the condensed
consolidated financial information:
* IAS 27: Consolidated and Separate Financial Statements (Amended)
(effective as of 1 July 2009)
* IFRS 3: Business Combinations (Revised) (effective as of 1 July 2009)
* IFRS 8: Operating Segments (effective as of 1 January 2009 - not yet
endorsed by the EU)
* IAS 23: Borrowing Costs (amended) (effective as of 1 January 2009 -
not yet endorsed by the EU)
* IFRIC Interpretation 12: Service Concession Arrangements (effective as
of 1 January 2008 - not yet endorsed by the EU)
* IFRIC Interpretation 13: Customer Loyalty Programmes (effective as of
1 July 2008 - not yet endorsed by the EU)
* IFRIC Interpretation 14: IAS 19 - The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction (effective as of 1
January 2008)
The Directors do not anticipate that the adoption of these standards and
interpretations will have a material impact on the Group's financial statements
in the period of initial adoption.
2 Critical accounting judgments and key sources of estimation uncertainty
The preparation of financial information in conformity with generally accepted
accounting practice requires management to make estimates and judgments that
affect the reported amounts of assets and liabilities as well as the disclosure
of contingent assets and liabilities at the balance sheet date and the reported
amounts of revenues and expenses during the reporting period.
Estimates and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Reserve estimates
Reserves are estimates of the amount of product that can be economically and
legally extracted from the Group's properties. In order to calculate the
reserves, estimates and assumptions are required about a range of geological,
technical and economic factors, including quantities, production techniques,
recovery rates, production costs, transport costs, commodity demand, commodity
prices and exchange rates.
Estimating the quantity and/or grade of reserves requires the size, shape and
depth of fields to be determined by analysing geological data such as drilling
samples. This process may require complex and difficult geological judgements
and calculations to interpret the data.
Given the economic assumptions used to estimate reserves change from period to
period, and because additional geological data is generated during the course of
operations, estimates of reserves may change from period to period. Changes in
reported reserves may affect the Group's financial results and financial
position in a number of ways, including the following:
* Asset carrying values may be affected by possible impairment due to
adverse changes in estimated future cash flows.
* Depreciation, depletion and amortisation charged in the income
statement may change where such charges are determined by the units of
production basis, or where the useful economic lives of assets change.
Exploration and evaluation costs
The Group's accounting policy leads to the development of tangible and
intangible fixed asset, where it is considered likely that the amount will be
recoverable by future exploitation or sale or alternatively where the activities
have not reached a stage which permits a reasonable assessment of the existence
of reserves. This requires management to make estimates and assumptions as to
the future events and circumstances, especially in relation to whether an
economically viable extraction operation can be established. Such estimates are
subject to change and following initial capitalisation, should it become
apparent that recovery of the expenditure is unlikely, the relevant capitalised
amount will be written off to the income statement.
Impairment of property, plant and equipment
Management review property, plant and equipment at each balance sheet date to
determine whether there are any indications of impairment. If any such
indication exists, an estimate of the recoverable amount is performed, and an
impairment loss is recognised to the extent that carrying amount exceeds
recoverable amount.
3 Financial risk management
The Group's current activities result in the following financial risks and
management's responses to those risks in order to minimise any resulting adverse
effects on the Group's financial performance.
Foreign exchange risk
The Group is exposed to foreign currency risks on purchases and cash holdings
that are denominated in a currency other than Sterling. The currencies giving
rise to this risk are primarily US dollar. The Group's policy is to reduce the
risk associated with fluctuations in the US dollar/Sterling exchange rate by
maintaining a US dollar account for future purchases and working capital
requirements.
Interest rate risk
The Group does not have any borrowing and as such does not have significant
exposure to interest rate risk. The Group has a significant level of cash and
cash equivalents, and uses high interest deposit accounts to ensure a market
rate of return is achieved.
Credit risk
The Directors have a credit policy in place and the exposure to credit risk is
monitored on an ongoing basis. Credit evaluations are performed on all customers
requiring credit over a certain amount. The Group does not require collateral
in respect of financial assets.
At each balance sheet date, there were no significant concentrations of credit
risk. The maximum exposure to credit risk is represented by the carrying amount
of each financial asset in the balance sheet.
Liquidity risk
The availability of adequate cash resources is such that there are no liquidity
risks identified.
4 Segmental reporting
Primary reporting format - business segments
The Group operates in one business segment, the production of, exploration for
and investment in hydrocarbons. The relevant disclosure has been given in this
unaudited financial information.
Secondary reporting format - geographical segments
For management purposes, the Group is organised and reports its performance in
one geographical segment, North America. The relevant disclosure has been given
in this unaudited financial information.
5 Earnings per share from continuing operations Six months ended Six months Year
attributable to the equity shareholders of the 31 December ended 31 ended 30
Company December June
2007 2006 2007
� � �
Earnings
Earnings for the purposes of basic and diluted (473,901) (357,658) (740,656)
earnings per share being net loss attributable
to equity shareholders
Number of shares
Weighted average number of ordinary shares for 172,180,462 87,458,586 112,893,363
the purposes of basic earnings per share
Loss per share
Basic and diluted loss per share 0.28p 0.41p 0.66p
As at 31 December 2007, 30 June 2007 and 31 December 2006 the options in issue are not dilutive under
IAS 33, Earnings per Share, because they would have the effect of decreasing the loss per share. As
such there is no difference between the basic and dilutive loss per share.
Number of shares
Weighted average number of ordinary shares for 180,559,151 96,571,552 129,179,077
the purposes of the diluted loss per share
6
Exploration costs Royalty Total
interests
� � �
Cost
At 1 July 2006 101,244 50,500 151,744
Additions 4,111,202 - 4,111,202
At 31 December 2006 4,212,446 50,500 4,262,946
Additions 3,147,404 250,312 3,397,716
Disposals (56,400) - (56,400)
Transfer to property, plant and equipment (220,004) - (220,004)
At 30 June 2007 7,083,446 300,812 7,384,258
Additions 7,354,414 - 7,354,414
Transfer to property, plant and equipment (507,362) - (507,362)
At 31 December 2007 13,930,498 300,812 14,231,310
Amortisation
At 1 July 2006 - - -
Charge - 1,098 1,098
At 31 December 2006 - 1,098 1,098
Charge 37,038 1,465 38,503
At 30 June 2007 37,038 2,563 39,601
Charge 21,552 1,218 22,770
At 31 December 2007 58,590 3,781 62,371
Net book value
At 31 December 2006 4,212,446 49,402 4,261,848
At 30 June 2007 7,046,408 298,249 7,344,657
At 31 December 2007 13,871,908 297,031 14,168,939
7 Statement of changes in equity
Share Share premium Foreign Retained Share-based Merger Total
capital account exchange earnings payment reserve
Translation reserve
reserve
� � � � � � �
As at 1 July 2006 157,663 1,436,750 - (46,547) - 99,588 1,647,454
Issue of share 121,895 4,438,433 - - - - 4,560,328
capital, net of
expenses
Share- based expense - - - - 16,908 - 16,908
Exchange rate - - (6,645) - - - (6,645)
difference on
exchange of foreign
subsidiaries
Loss for the period - - - (382,997) - - (382,997)
As at 31 December 279,558 5,875,183 (6,645) (404,206) 16,908 99,588 5,860,386
2006
Issue of share 140,312 14,402,171 - - - - 14,542,483
capital, net of
expenses
Share- based expense - - - - 27,021 - 27,021
Exchange rate - - (320,355) - - - (320,355)
difference on
exchange of foreign
subsidiaries
Loss for the period - - - (336,450) - - (336,450)
As at 30 June 2007 419,870 20,277,354 (327,000) (787,203) 43,929 99,588 19,726,538
Share Share premium Foreign Retained Share-based Merger Total
capital account exchange earnings payment reserve
translation reserve
reserve
� � � � � � �
As at 1 July 2007 419,870 20,277,354 (327,000) (787,203) 43,929 99,588 19,726,538
Issue of share 11,741 410,937 - - - - 422,678
capital, net of
expenses
Share-based expense - - - - 306,878 - 306,878
Exchange rate - - 117,000 - - - 117,000
difference on
exchange of foreign
subsidiaries
Loss for the period - - - (473,901) - - (473,901)
As at 31 December 431,611 20,688,291 (210,000) (1,261,104) 350,807 99,588 20,099,193
2007
During the period to 31 December 2007, 4,696,428 shares were issued on exercise of existing share
warrants. The shares issued are summarised as follows:
Date Shares issued Share price Share premium Share capital
Number � � �
6 July 2007 3,625,000 0.09 317,187 9,062
23 July 2007 571,428 0.09 50,000 1,429
9 October 2007 500,000 0.09 43,750 1,250
4,696,428 410,937 11,741
8 Cash flow from operating activities
Six months Six months ended 31 Year
ended 31 December ended 30
December 2006 June
2007 2007
� � �
Loss for the period (473,901) (357,659) (740,656)
Investment income (226,941) (32,554) (165,742)
Profit on disposal of financial assets (7,785) (14,016) (14,016)
Amortisation 22,770 1,098 39,601
Depreciation 1,138 743 1,485
Gain on disposal of fixed assets (653) - -
Share based payments 306,879 16,908 43,929
Operating cash outflow before changes in working (378,493) (385,480) (835,399)
capital
Changes in working capital
Decrease/(increase) in trade and other 174,541 7,548 (147,457)
receivables
(Decrease)/increase in trade and other payables (334,977) 978,453 (177,239)
(160,436) 986,001 (324,696)
Net cash (outflow)/inflow from operating (538,929) 600,521 (1,160,095)
activities
9 Post balance sheet events
On 18 January 2008 30,434,783 new ordinary shares were issued at a price of 46p raising �14,000,000.
10 Transition to IFRS
Nighthawk Energy plc reported under UK GAAP in its previously published financial statements for the year ended 30
June 2007. The analysis shown in note 10 provides a reconciliation of net assets and loss as reported under UK GAAP
as at 30 June 2007 to the revised net assets and loss under IFRS as reported in this unaudited financial
information. In addition, there is a reconciliation of net assets under UK GAAP to IFRS at the transition date for
this Company, being 1 July 2006. There is also a reconciliation of net assets and loss under UK GAAP to IFRS at the
comparative interim date, being 31 December 2006.
Significant changes to the cash flow statement
None of the adjustments arising from the IFRS transition relate to cash and therefore there is no impact on reported
cash flow.
Reconciliation of equity and loss under UK GAAP to IFRS
(a) Reconciliation of equity at 1 July 2006
UK GAAP Adjustment IFRS
1 July 2006 1 July 2006
� � �
ASSETS
Non-current assets
Property, plant and equipment 1,568 - 1,568
Intangible assets 151,744 - 151,744
153,312 - 153,312
Current assets
Trade and other receivables 51,003 - 51,003
Cash and cash equivalents 1,752,048 - 1,752,048
1,803,051 - 1,803,051
TOTAL ASSETS 1,956,363 - 1,956,363
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
Company
Share capital 157,663 - 157,663
Share premium account 1,436,750 - 1,436,750
Retained earnings (46,547) - (46,547)
Merger reserve 99,588 - 99,588
Total equity 1,647,454 - 1,647,454
Current liabilities
Trade and other payables 308,909 - 308,909
TOTAL EQUITY AND LIABILITIES 1,956,363 - 1,956,363
There are no adjustments on transition to IFRS from UK GAAP
(b) Reconciliation of equity at 31 December 2006
UK GAAP Adjustment IFRS
31 December 2006 1 31 December 2006
ASSETS � � �
Non-current assets
Property, plant and equipment 5,198 - 5,198
Intangible assets 4,261,848 - 4,261,848
Financial assets 558,104 - 558,104
4,825,150 - 4,825,150
Current assets
Trade and other receivables 43,454 - 43,454
Cash and cash equivalents 2,279,144 - 2,279,144
2,322,598 - 2,322,598
TOTAL ASSETS 7,147,748 - 7,147,748
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
Company
Share capital 279,558 - 279,558
Share premium account 5,875,183 - 5,875,183
Foreign exchange translation reserve - (6,645) (6,645)
Retained earnings (410,851) 6,645 (404,206)
Share-based payment reserve 16,908 - 16,908
Merger reserve 99,588 - 99,588
Total equity 5,860,386 - 5,860,386
Non current liabilities
Trade and other payables 255,297 - 255,297
Current liabilities
Trade and other payables 1,032,065 - 1,032,065
Total liabilities 1,287,362 - 1,287,362
TOTAL EQUITY AND LIABILITIES 7,147,748 - 7,147,748
Recognition of exchange differences on translation of foreign subsidiaries in
equity, as required by IAS 21, The Effects of Changes in Foreign Exchange Rates.
(c) Reconciliation of loss for the period ended 31 December 2006
UK GAAP Adjustment IFRS
Period ended 31 1 Period ended 31
December 2006 December 2006
� � �
Revenue 15,824 - 15,824
Administrative expenses (426,697) 6,645 (420,052)
Operating profit (410,873) 6,645 (404,228)
Finance income 32,554 - 32,554
Profit on disposal of fixed asset investment 14,016 - 14,016
Loss before taxation (364,303) 6,645 (357,658)
Taxation - - -
Loss for the period (364,303) 6,645 (357,658)
Attributable to:
Equity holders of Nighthawk Energy plc (364,303) 6,645 (357,658)
(d) Reconciliation of equity at 30 June 2007
UK GAAP Adjustment IFRS
30 June 2007 1 2 3 4 30 June 2007
ASSETS � � � � � �
Non-current assets
Property, plant and equipment 5,431 114,159 231,583 (11,579) - 339,594
Intangibles 7,564,661 - (231,583) 11,579 - 7,344,657
Investments in joint ventures-
-share of gross assets 114,159 (114,159) - - - -
-share of gross liabilities (1,862) 1,862 - - - -
Investment in associated 252,545 - - - - 252,545
undertakings
Financial assets 767,368 - - - - 767,368
8,702,303 1,862 - - - 8,704,164
Current assets
Trade and other receivables 198,460 - - - - 198,460
Cash and cash equivalents 11,285,559 - - - - 11,285,559
11,484,019 - - - - 11,484,019
TOTAL ASSETS 20,186,322 1,862 - - - 20,188,183
UK GAAP Adjustment IFRS
30 June 2007 1 2 3 4 30 June 2007
EQUITY AND LIABILITIES � � � � � �
Equity attributable to equity holders
of the Company
Share capital 419,870 - - - - 419,870
Share premium account 20,277,354 - - - - 20,277,354
Foreign exchange translation reserve - - - - (327,000) (327,000)
Retained earnings (1,114,203) - - - 327,000 (787,203)
Share-based payment reserve 43,929 - - - - 43,929
Merger reserve 99,588 - - - - 99,588
Total equity 19,726,538 - - - - 19,726,538
Current liabilities
Trade and other payables 459,784 1,862 - - - 461,645
TOTAL EQUITY AND LIABILITIES 20,186,322 1,862 - - - 20,188,183
1. Recognition of the joint venture as a jointly controlled entity applying
proportionate consolidation, as required by IAS 31, Joint Ventures.
2. Reclassification of exploration and evaluation assets based on their
nature in accordance with IFRS 6, Exploration for and Evaluation of Mineral
Resources.
3. Recognition of the depreciation on the property, plant and equipment that
have been reclassified from intangible assets in accordance with IFRS 6,
Exploration for and Evaluation of Mineral Resources.
4. Recognition of exchange differences on translation of foreign
subsidiaries in equity, as required by IAS 21, the Effects of Changes in Foreign
Exchange Rates.
(e) Reconciliation of loss for the year ended 30 June 2007
UK GAAP Adjustment IFRS
Year ended 30 Year ended 30 June
June 2007 2007
� � �
Revenue 65,620 - 65,620
Administrative expenses (1,107,811) 327,000 (780,811)
Exceptional item: AIM admission costs (205,223) - (205,223)
Operating loss (1,247,414) 327,000 920,414
Finance income 165,742 - 165,742
Profit on disposal of financial assets 14,016 - 14,016
Loss before taxation (1,067,656) 327,000 740,656
Taxation - - -
Loss for the period (1,067,656) 327,000 740,656
Attributable to:
Equity holders of Nighthawk Energy plc (1,067,656) 327,000 740,656
1. Recognition of exchange differences on translation of foreign
subsidiaries in equity, as required by IAS 21, the Effects of Changes in Foreign
Exchange Rates.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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