TIDMLOGP
RNS Number : 8799R
Lansdowne Oil & Gas plc
27 September 2017
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain. If you have any queries on this, then please contact
Steve Boldy, the Chief Executive Officer of the Company
(responsible for arranging release of this announcement).
Preliminary Results for the year ended 31 December 2016
30(th) June 2017
Lansdowne Oil & Gas ("Lansdowne" or "the Company") is
pleased to announce its audited results, for the year ended 31
December 2016. Lansdowne is an upstream oil and gas company,
focused on exploration and appraisal activities in the North Celtic
Sea Basin, off the south coast of Ireland. The Company has targeted
the Irish offshore shelf areas close to existing operating
infrastructure for exploration, as these provide shallow water
(generally less than 100 metres), and relatively low drilling costs
and the Directors believe that these factors, combined with
favourable fiscal terms, have the potential to deliver high value
reserves.
Lord Torrington, Chairman commented:
"The long running litigation with Transocean, with the
requirement to make substantial payments, dominated events in 2016.
However, the Company was successful in its re-financing and all
issues relating to the litigation have concluded.
The focus now is to create value from our 20% interest in the
Barryroe oilfield, which is by any standards a significant
resource, with attractive costs of development and production,
against a background of greatly reduced drilling and operating
costs. With the recovery of the oil price, activity within the
industry has started to recover and the Barryroe Farm-Out process
is continuing with discussions ongoing with a number of
parties."
Operational highlights
-- Barryroe Oil Field
o In April 2016, a judgement was handed down by the Court of
Appeal overturning an earlier ruling against Transocean, in a
dispute relating to the use of semi-submersible drilling unit, the
Arctic III, on the Barryroe oilfield in 2011/2012.
o In line with its 20 per cent working interest in the field,
Lansdowne was liable for c US $1.4 million
o In order to satisfy these obligations and to meet its working
capital requirements, in June 2016 the Company issued 210 million
shares at 1p each to raise GBP2.1 million before expenses.
o Coincident with the placing a portion (GBP930,000) of the LC
Master Fund loan was converted into equity at a placing price of 1p
pershare, the remaining loan was extended to the end of June 2017
and the interest rate was reduced from 10% per annum to 5% per
annum
o In October 2016 the issue of costs in the dispute with
Transocean was addressed in the Commercial Court in London.
Transocean were awarded a portion, c. 40% of the costs they were
claiming.
o In December 2016, the Company triggered its option agreement
with Brandon Hill Capital and placed 30,000,000 new ordinary shares
("Additional Placing Shares") at a Placing Price of 1p per share to
raise GBP300,000 before costs to settle its share of the Transocean
costs award and to provide general working capital
o All litigation issues with Transocean have now concluded
o Providence Resources continued its farm-out efforts on behalf
of the partners in the Barryroe oil field (Lansdowne 20%) and
discussions are continuing with a number of parties.
-- Standard Exploration Licence 4/07
o Post well studies confirmed the Midleton gas discovery was
considered too small to be commercial
o Following a comprehensive review, it was concluded that none
of the other prospective structures on the acreage were attractive
enough to offer drillable targets and the Licence was relinquished
with effect from 31 December 2016.
Board Changes
-- In addition to portfolio rationalisation, the Company took
other actions to further reduce running costs, with Richard Slape,
Commercial Director, leaving after the successful completion of the
refinancing and Johnny Greenall, Chairman, retiring at the AGM on
20 July 2016.
Financial
-- Cash balances at 31 December 2016 of GBP0.17 million (2015: GBP0.32 million).
-- Operating expenses for the year were GBP0.7 million (2015: GBP1.05 million).
-- Loss for the year after tax of GBP1.2 million (2015: loss GBP15.1 million).
-- Loss per share of 0.4 pence (2015: loss 10.2 pence).
Post-balance sheet events
* The LC Master Fund Loan has been further extended to
1 July 2018
For further information please contact:
Lansdowne Oil & Gas plc
Steve Boldy +353 1 495 9259
Cantor Fitzgerald Europe
Nominated Advisor and
Joint Broker
Sarah Wharry
David Porter
Beaufort Securities +44
(0)20 7382 8300
Joint Broker
Jon Belliss +44 (0)20 7894 7000
Results for the year ended 31 December 2016
Chairman's Statement
Introduction
This year proved to be very challenging for the Company. Oil
prices continued to decline, reaching a low-point below $30/bbl in
the first quarter. Furthermore, on 13 April 2016, a judgement was
handed down by the Court of Appeal overturning an earlier ruling
against Transocean in a dispute with Providence Resources
("Providence") about certain spread costs.
The case related to amounts claimed by Transocean against
Providence regarding the use of the semi-submersible drilling unit,
the Arctic III, in 2011/12 on the Barryroe oilfield, offshore
Ireland. The total claim, which was made by Transocean in 2012,
amounted to approximately US$19 million. Providence, in defence of
its position, counterclaimed against Transocean. The Hon. Mr
Justice Popplewell, in his judgement of 19 December 2014 in the
Commercial Court in London, found that Transocean was in breach of
contract for failing to maintain various parts of its sub-sea
equipment and that Transocean was not, therefore, entitled to the
full amount claimed. The ruling also supported Providence's
position that Providence was entitled to set off certain spread
costs against Transocean's claim.
Transocean sought and was granted the right to appeal one aspect
of Mr Justice Popplewell's judgement. This specifically related to
Providence's right of set off and the appeal turned on the Court's
interpretation of the wording of the consequential loss clause in
the rig contract. The appeal was heard in March 2016.
The financial implications of the Court of Appeal's judgement
resulted in the payment of approximately US$7 million (excluding
interest and costs) to Transocean by the Barryroe partners. In line
with its working interest in the field, Lansdowne was liable for
20% of this amount (c. US $1.4 million) and any amounts to be paid
in the future.
Given the financial implications of this, Lansdowne shares were
suspended pending clarification of the Company's financial
position. The Company moved to address the situation and a General
Meeting held on 9 June 2016 gave shareholder approval to allot new
shares and for a necessary share capital re-organisation. A placing
was then completed to raise GBP2.1 million to settle the
outstanding amounts due and to provide working capital and
Lansdowne's shares returned to trading on 22 June 2016.
Coincident with the placing, a portion (GBP930,000) of the LC
Capital Master Fund loan was converted into equity at a placing
price of 1p pershare, the remaining loan was extended to the end of
June 2017 and the interest rate was reduced from 10% per annum to
5% per annum.
In addition, the Company entered into an option, exercisable on
one or more occasions at any time for 12 months from June 2016, to
require Brandon Hill Capital to use its reasonable endeavours to
procure subscribers for new ordinary shares in the capital of the
Company to raise up to an aggregate additional GBP500,000 (the
"Additional Placing"). Exercise of the option was conditional,
inter alia, upon the Company being required to reimburse Providence
Resources in respect of further costs and/or awards associated with
the Transocean dispute.
A hearing of Transocean's application in respect of Part 36 of
the English Civil Procedure Rules was heard by Mr Justice
Popplewell in the Commercial Court in London on 14 October 2016 and
Judgement was handed down on 20 October 2016.
The Judgement stated that, as a result of the decision of the
Court of Appeal in April 2016, Transocean was entitled to its costs
of the first instance proceedings from 30 August 2014 on the
Standard Basis (i.e. approximately 70%) but that the other Part 36
cost consequences in relation to obtaining costs on the indemnity
basis, interest on costs and the principal sum and the surcharge of
GBP75,000 did not apply. Based on the Judgement, Providence paid
Transocean a sum amounting to some 40% of Transocean's claim for
costs. Under the Joint Operating Agreement, Lansdowne reimbursed
Providence for its 20% share of these costs.
On 9 November 2016, the Company announced that the Supreme Court
ordered that permission to appeal be refused as the appeal does not
raise a point of law of general public importance.
This dispute arose as a result of the failure of equipment on
the rig whilst drilling the Barryroe appraisal well, leading to
extensive delay and cost over-run. The long-running litigation has
been a painful and distracting experience for the Company and it is
a great relief to finally put this behind us.
In December 2016, the Company triggered its outstanding option
agreement with Brandon Hill Capital and placed 30,000,000 new
ordinary shares ("Additional Placing Shares") at a Placing Price of
1p per share to raise GBP300,000 before costs to settle its share
of costs and to provide general working capital.
Standard Exploration Licence 4/07 was relinquished with effect
from 31 December 2016.
Lansdowne retained a 20% interest in the licence after farming
out to PSE Kinsale Energy Limited ("Kinsale Energy"), who acquired
an 80% interest and operatorship and who drilled the 49/11-3 well
on the Midleton Prospect in 2015. The well found gas in the
Greensand, the main reservoir target, but the volume was considered
too small to be commercial.
Kinsale Energy conducted a comprehensive post-well evaluation of
the other prospective structures on the acreage, but concluded
that, based on the current data available, none of these were
attractive enough in terms of risk and reward to offer drillable
targets.
Midleton was considered the prime prospect on SEL 4/07 and,
following the disappointing results of the 49/11-3 well, it made
sense to relinquish the acreage. This further portfolio
rationalisation reduced Lansdowne's running costs and allowed the
Company to focus all its resources upon the Barryroe Field where
substantial 2C resources have been established.
In addition to portfolio rationalisation, the Company has taken
other actions to further reduce running costs, with Richard Slape,
Commercial Director, leaving after the successful completion of the
re-financing and Johnny Greenall, Chairman, retiring at the AGM on
20 July 2016.
I would like to thank both of them for all their efforts and
wish them the very best for the future.
Financial Results
The Group recorded an after tax loss of GBP1.2 million for the
year ended 31 December 2016 compared to a loss of GBP15.1 million
for the year ended 31 December 2015.
Group operating expenses for the year were GBP0.7 million,
compared to GBP1.0 million in 2015.
Net finance expense for the year was GBP571,000 (2015:
GBP129,000).
Cash balances of GBP0.17 million (2015: GBP0.32 million) were
held at the end of the financial year.
Total equity attributable to the ordinary shareholders of the
Group has increased to GBP12.5 million as at 31 December 2016 from
GBP10.4 million as at 31 December 2015.
Outlook
The Court of Appeal ruling posed a real problem at what was
already a difficult time for your Company. However, the Company was
successful in its re-financing efforts and I would like to thank
all that took part, but in particular the support of Brandon Hill
Capital, Beaufort Securities and LC Capital, was essential to
providing a successful outcome. I would also like to thank LC
Capital for further extending the LC Capital Master Fund Load to 1
July 2018.
Now that the immediate problems associated with the litigation
payment have been resolved, it is time to look forward to creating
value from our 20% interest in Barryroe. This is by any standards a
significant resource with attractive costs of development and
production and our entire focus is to move this project forward
against a background of greatly reduced drilling and operating
costs and a stabilising oil price environment.
With the recovery of the oil price, farm-in activity within the
industry has started to recover and the Barryroe Farm Out process
is continuing.
Again, I would like to thank all our shareholders for your
continued support.
Tim Torrington
Chairman
Lansdowne Oil & Gas plc
Consolidated Statement of Financial Position
As at 31 December 2016
2016 2015
Note GBP'000 GBP'000
Assets
Non- current assets
Intangible assets 4 14,399 14,335
Current Assets
Trade and other receivables 38 92
Cash at bank and on hand 165 320
203 412
Total Assets 14,602 14,747
Equity and Liabilities
Shareholders' Equity
Share capital 5 11,571 8,087
Share premium 25,126 25,247
Currency translation reserve 59 59
Share-based payment reserve 923 923
Accumulated deficit (25,186) (23,950)
Total Equity 12,493 10,366
Non-Current Liabilities
Provisions for liabilities 261 240
Current Liabilities 1.968
Shareholder loan 1587 2,173
Trade and other payables 261
Total Liabilities 2,109 4,381
Total Equity and Liabilities 14,602 14,747
Lansdowne Oil & Gas plc
Consolidated Income Statement
For the year ended 31 December 2016
2016 2015
Note GBP'000 GBP'000
Administrative expenses (665) (1,048)
Impairment of intangible assets - (14,949)
Operating loss (665) (15,997)
Finance costs (571) (129)
Loss for the year before tax (1,236) (16,126)
Income tax credit - 1,052
-------- ----------
Loss for the year (1.236) (15,074)
-------- ----------
Loss per share (pence):
Basic loss per ordinary share 3 (0.4p) (10.2p)
-------- ----------
Diluted loss per ordinary share 3 (0.4p) (10.2p)
-------- ----------
The results for the period all arise on continuing operations.
The group has no other comprehensive income or expense in the
current or prior year.
Lansdowne Oil & Gas plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share Currency
Share Share based translation Accumulated Total
capital premium payment reserves deficit equity
GBP'000 GBP'000 Reserve GBP'000 GBP'000 GBP'000
GBP'000
At 1 January 2015 7,027 25,273 894 59 (8,876) 24,337
Loss for the financial
year - - - - (15,074) (15,074)
Total comprehensive
loss for the year - - - - (15,074) (15,074)
Share based payments
charge - - 29 - - 29
Issue of new shares 1,060 - - - - 1,060
Cost of share issues - (26) - - - (26)
---------- ---------- --------- ------------- -------------- ----------
At 31 December 2015 8,087 25,247 923 59 (23,950) 10,366
---------- ---------- --------- ------------- -------------- ----------
At 1 January 2016 8,087 25,247 923 59 (23,950) 10,366
Loss for the financial
year - - - - (1,236) (1,236)
Total comprehensive
loss for the year - - - - (1,236) (1,236)
Issue of new shares 3,484 - - - - 3,484
Cost of share issues - (121) - - - (121)
At 31 December 2016 11,571 25,126 923 59 (25,186) 12,493
---------- ---------- --------- ------------- -------------- ----------
Lansdowne Oil & Gas plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Cash flows from operating activities
Loss for the year (1,236) (15,074)
Adjustment for:
Impairment of assets - 14,949
Interest payable and similar charges 571 127
Equity settled share-based payment
expenses - 29
Tax credit - (1,052)
Decrease in trade and other receivables 54 105
(Decrease)/increase in trade and
other payables (1,913) 196
Net cash used in operating activities (2,524) (720)
-------- ---------
Cash flows from investing activities
Acquisition of intangible exploration
assets (64) (2,133)
Net cash from investing activities (64) (2,133)
-------- ---------
Cash flows from financing activities
Proceeds from issue of shares 3,363 1,034
Proceeds from borrowing - 1,863
Repayment of loan (930) -
-------- ---------
Net cash from financing activities 2,433 2,897
-------- ---------
Net (decrease)/increase in cash
and cash equivalents (155) 44
Cash and cash equivalents at 1 January 320 276
Cash and cash equivalents at 31
December 165 320
-------- ---------
Lansdowne Oil & Gas plc
Notes to the Financial Information
For the year ended 31 December 2016
1. Basis of presentation
The consolidated financial statements are presented in Sterling,
the Group's functional currency, and all values are rounded to the
nearest thousand (GBP000) except where otherwise indicated.
The Directors have prepared the financial statements on the
going concern basis which assumes that the Group will continue in
operational existence for at least twelve months from the date of
the approval of these financial statements as described below.
The Directors have carried out a detailed assessment of the
Group's current and prospective exploration activity, its
relationship with the holder of its loan note, and the cash flow
projections for the period to 30 June 2018. The following represent
the key assumptions underpinning the cash flow projections:
Barryroe farm out
Discussions are continuing with a view to concluding a farm-out
deal(s) on attractive commercial terms.
Other options
Should a farm out deal not be concluded in relation to Barryroe,
the Directors believe that the Group has a number of available
funding options; while the Group's primary aim is to conclude the
ongoing farm out campaign with a view to attracting industry
partners to drill wells, the Company also has the option of issuing
new equity.
The Directors have considered the various matters set out above
and have concluded that these assumptions are affected by material
uncertainties that may cast significant doubt on the ability of the
Group and Company to continue as going concerns and that they may
therefore be unable to realise assets and discharge liabilities in
the normal course of business. Nevertheless, the Directors are of
the view that the Group and Company will have sufficient cash
resources available to meet their liabilities for at least 12
months from the date of approval of these financial statements.
It is on this basis that the directors consider it appropriate
to prepare the financial statements on a going concern basis. These
financial statements do not include any adjustment that would
result from the going concern basis of preparation being
inappropriate.
2. Segmental reporting
The Group has one reportable operating and geographic segment,
which is the exploration for oil and gas reserves in Ireland. All
operations are classified as continuing and currently no revenue is
generated from the operating segment.
3. Loss per ordinary share
The loss for the year was wholly from continuing operations.
(pence per share)
2016 2015
Loss per share arising
from continuing operations
attributable to the equity
holders of the Group
- basic and diluted (0.4) (10.2)
The calculations were based on the following information.
GBP'000 GBP'000
Loss for the year attributable
to equity holders (1,236) (15,074)
Weighted average number
of ordinary shares in
issue
- basic and diluted 334,116,800 157,698,252
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The Group has one class of
potential ordinary shares being share options. As a loss was
recorded for both 2016 and 2015, potentially issuable shares would
have been antidilutive. The number of potentially issuable shares
at 31 December 2016 is 513,704,394 (2015: 165,007,665).
4. Intangible assets
Exploration
/ appraisal
Group assets
Cost GBP'000
At 1 January 2015 27,151
Additions 2,133
Impairment (14,949)
-------------
At 31 December 2015 14,335
-------------
Cost
At 1 January 2016 14,335
Additions 64
Impairment -
-------------
At 31 December 2016 14,399
-------------
Oil and gas project expenditures, all of which relate to
Ireland, including geological, geophysical and seismic costs, are
accumulated as intangible fixed assets prior to the determination
of commercial reserves.
5. Share capital and premium- Group and Company
Number
of Ordinary Share
shares shares premium Total
(thousands) GBP'000 GBP'000 GBP'000
------------- --------- --------- ----------
At 1 January 2016 161,742 8,087 25,247 33,334
Issued in year 348,422 3,484 - 3,484
Share issue costs - - (121) (121)
------------- --------- --------- ----------
At 31 December 2016 510,164 11,571 25,126 36,697
6. Accounts
Copies of the annual accounts for the year ended 31 December
2016 will be sent to shareholders shortly and will be available
from the Group's office at 6 Northbrook Road, Ranelagh, Dublin 6,
Ireland and the Group's website www.lansdowneoilandgas.com.
Notes to Editors
About Lansdowne
Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea
focussed, oil and gas exploration company quoted on the AIM market
and headquartered in Dublin. Lansdowne's acreage holdings include a
20% stake in SEL 1/11, which contains the Barryroe oil field.
For more information on Lansdowne, please refer to
www.lansdowneoilandgas.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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