TIDMPET
RNS Number : 2621S
Petrel Resources PLC
22 June 2018
22(nd) June 2018
Petrel Resources plc
("Petrel" or "the Company")
Preliminary Results for the Year Ended 31(st) December 2017
Petrel announces its results for the year ended 31(st) December
2017.
A copy of the Company's Annual Report and Accounts for 2017 will
be mailed shortly only to those shareholders who have elected to
receive it. Otherwise shareholders will be notified that the Annual
Report will be available on the website at www.petrelresources.com.
Copies of the Annual Report will also be available for collection
from the Company's registered office, 162 Clontarf Road, Dublin 3,
Ireland.
The Company's Annual General Meeting will be held on 25(th) July
2018 in the Gresham Hotel, 23 O'Connell Street Upper, Dublin 1, D01
C3W7 at 10:30 am.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
S
For further information please visit
http://www.petrelresources.com/ or contact:
Enquiries:
Petrel Resources
John Teeling, Chairman +353 (0) 1 833 2833
David Horgan, Director
Nominated Adviser and Broker
Northland Capital Partners Limited
David Hignell / Edward Hutton (Corporate
Finance) +44 (0) 203 861 6625
John Howes
Joint Broker
Novum Securities Limited
Colin Rowbury +44 (0) 207 399 9400
Public Relations
Blytheweigh +44 (0) 207 138 3204
Tim Blythe +44 (0) 781 692 4626
Simon Woods +44 (0) 746 643 9633
Teneo PSG
Luke Hogg +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
Statement Accompanying the Preliminary Results
The headline figures of a loss for the year of some EUR4.4
million is likely to be newsworthy, but mostly reflects the EUR4.1
million impairment of our investment in Iraq. The underlying loss
is roughly EUR300,000.
Iraq
In August 2013, Petrel did a deal with Amira in Iraq whereby,
for US$500,000 in cash plus 18,947,368 initial consideration shares
(which were to be locked-in until spudding of the first oil well by
our partners), Petrel acquired a 5% full free carry in Amira's
activities in the Wasit province in Iraq which was then, and still
is, a relatively stable Shia dominated province. The expectation
was that provinces in Iraq would offer licences in their own right
rather than solely through the central government in Baghdad. This
did not happen. In fact, nothing happened. As mentioned above, we
have therefore impaired our investment.
Proposed buy back and cancellation of shares
We have also reached agreement to buy back the initial
consideration shares for a nominal consideration although, as we
reported on 15 December 2017, 2.2 million of the shares had been
sold in breach of the lock-in agreement. Permission is being sought
at the forthcoming AGM to buy back and cancel the remaining
16,747,368 shares. Cancellation of these shares would reduce the
number of shares in issue by approximately 17%.
Iraq remains one of the very best oil provinces in the world.
The oil exploration potential is outstanding. The improving
political situation in Iraq has resulted in Petrel re-awakening an
interest. We have been there since 1999 and like the country. We
are discussing with Amira, our partner, how best to declare an
interest in certain fields. We are also re-establishing contacts in
the administration. It is very early days, but it does look as if
Iraq is slowly re-opening for business, and we want to be
there.
Offshore Ireland
Our main focus in recent times has been the Atlantic Offshore
Ireland, particularly the Porcupine Basin. Results are mixed. We
did very well in recent licencing rounds, winning two licences
seven years ago and another two in 2016. In 2013, we joint ventured
our two 2011 licences with Woodside Energy of Australia, recovering
our cash investment and getting a carry. They did extensive work
including, in 2016, a multi-million euro 3D seismic campaign. Their
ongoing work led them to relinquish FEL 4/14 in 2016. The review of
the latest seismic has led them to surrender their FEL 3/14
interest as of end August 2018. FEL 3/14 could revert 100% to
Petrel if an extension can be negotiated with the authorities. We
believe that the ground has potential not recognised by Woodside,
and that we can bring in a partner.
In the meantime, as we reported on 27 February 2018, Woodside
have offered and Petrel have accepted a 10% participating interest
in licence FEL 11/18, thus satisfactorily resolving the prior
issues under arbitration in relation to FEL 4/14. Work on FEL 11/18
has identified targets, which are being tested by the
state-of-the-art 3D seismic which has recently been acquired.
The two licence options acquired in 2016 (LO 16/24 and LO 16/25)
have been analysed and worked up, and potential opportunities
identified. Despite extensive work by Petrel, we found no interest
from likely partners in joint venturing the two options.
On a wider industry front, oil prices have recovered and majors
are making money. It was expected that the results of the 2017
drilling in the Porcupine would have ignited interest but there is
little sign of it to date.
Unfortunately there is growing political uncertainty in Ireland
in relation to resources. Oil exploration dollars are nomadic. They
will go where they are welcome. Ireland is no longer welcoming. A
ban on onshore fracking and a bill to outlaw new offshore oil
exploration licences currently in the Dáil sends out bad messages.
Combine these with the increases in taxation and royalties
introduced in 2015 and you have a toxic cocktail.
Exploration in deep hostile expensive waters with unknown
potential is high risk. Add political uncertainty to this and the
inevitable consequence is reduced interest. The farm out market for
early stage projects, whereby junior explorers do the initial work
and de-risk the geology, then bring in majors to do the drilling,
has thinned out. We are seeking to convert LO 16/24 into a Frontier
Exploration Licence as we believe there is potential on the
acreage. LO 16/25 was too limited in acreage and structure size to
be worth converting.
Ghana
We have been in Ghana since 2008. We signed an oil exploration
agreement in 2010. But to date it has not been ratified by cabinet
or parliament. Petrel holds a 30% interest in the agreement (held
through its interest in Pan Andean Resources Limited), Clontarf
Energy, a sister company holds 60% and local interests hold
10%.
Since 2010, there has been a series of obstacles placed in the
way of ratification. We believed a court settlement in 2014 would
expedite the decision. It has not. Recent changes in government has
returned to power the party who first made the agreement with us.
There is now renewed energy to attempt to finalise a deal. While
there is goodwill on both sides, actually concluding a deal has
been difficult.
Future
Petrel is a small tightly held listed company. Shareholders over
many years have not been asked to invest new money. In recent
years, we have been investing the proceeds of an Iraqi exit in 2009
into Iraq, Offshore Ireland and Ghana. In Ireland, we recovered
most of our investment with the Woodside joint venture. Ghana,
where we hold 30%, is not a big drain on resources.
Once again, it is time to reassess our strategy. We will
continue to work with Woodside in the Atlantic and with our
partners in Ghana. We will once more dip our toe into opportunities
in the Middle East.
John Teeling
Chairman
22(nd) June 2018
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 31 DECEMBER 2017
2017 2016
EUR EUR
CONTINUING OPERATIONS
Administrative expenses (297,381) (257,675)
Impairment of investments (4,094,804) -
OPERATING LOSS (4,392,185) (257,675)
Investment revenue - 1,170
LOSS BEFORE TAXATION (4,392,185) (256,505)
Income tax expense - -
LOSS FOR THE FINANCIAL YEAR: all attributable
to equity holders of the parent (4,392,185) (256,505)
Other comprehensive (expense)/income - -
Items that are or may be reclassified
subsequently to profit or loss - -
Exchange differences (321,858) 66,830
TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL
YEAR (4,714,043) (189,675)
Loss per share - basic and diluted (4.40c) (0.26c)
PETREL RESOURCES PLC
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2017
2017 2016
EUR EUR
Assets
Non-Current Assets
Financial asset - 4,211,123
Intangible assets 2,179,283 2,138,159
2,179,283 6,349,282
Current Assets
Trade and other receivables 27,573 23,003
Cash and cash equivalents 371,380 745,195
398,953 768,198
Total Assets 2,578,236 7,117,480
Current Liabilities
Trade and other payables (584,693) (409,894)
Net Current (Liabilities)/Assets (185,740) 358,304
NET ASSETS 1,993,543 6,707,586
Equity
Called-up share capital 1,246,025 1,246,025
Capital conversion reserve fund 7,694 7,694
Share premium 21,416,085 21,416,085
Share based payment reserve 26,871 26,871
Translation reserve 399,461 721,319
Retained deficit (21,102,593) (16,710,408)
TOTAL EQUITY 1,993,543 6,707,586
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 31 DECEMBER 2017
Capital Share
Conversion Based
Share Share Reserve Payment Translation Retained
Capital Premium fund Reserve Reserve Deficit Total
EUR EUR EUR EUR EUR EUR EUR
At 1 January
2016 1,246,025 21,416,085 7,694 26,871 654,489 (16,453,903) 6,897,261
Total comprehensive
income for
the financial
year - - - - 66,830 (256,505) (189,675)
---------- ----------- ------------ --------- ------------ ------------- ------------
At 31 December
2016 1,246,025 21,416,085 7,694 26,871 721,319 (16,710,408) 6,707,586
Total comprehensive
income for
the financial
year - - - - (321,858) (4,392,185) (4,714,043)
---------- ----------- ------------ --------- ------------ ------------- ------------
At 31 December
2017 1,246,025 21,416,085 7,694 26,871 399,461 (21,102,593) 1,993,543
========== =========== ============ ========= ============ ============= ============
Share premium
Share premium comprises of the excess of monies received in
respect of the issue of share capital over the nominal value of
shares issued.
Capital conversion reserve fund
The ordinary shares of the company were renominalised from
EUR0.0126774 each to EUR0.0125 each in 2001 and the amount by which
the issued share capital of the company was reduced was transferred
to the capital conversion reserve fund.
Share based payment reserve
The share based payment reserve represents share options granted
which are not yet exercised and issued as shares.
Translation Reserve
The translation reserve comprises of foreign exchange movement
on translation from US Dollars (functional currency) to Euro
(presentation currency).
Retained deficit
Retained deficit comprises accumulated losses in the current and
prior financial years.
PETREL RESOURCES PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEARED 31 DECEMBER 2017
2017 2016
EUR EUR
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the financial year (4,392,185) (256,505)
Write off of financial asset 4,094,804 -
Investment revenue recognised in loss - (1,170)
OPERATING CASHFLOW BEFORE
MOVEMENTS IN WORKING CAPITAL (297,381) (257,675)
Movements in working capital:
Increase in trade and other payables 129,799 49,285
Increase in trade and other receivables (4,570) (3,800)
CASH USED IN OPERATIONS (172,152) (212,190)
- 1,170
Investment revenue
(172,152) (211,020)
NET CASH USED IN OPERATING ACTIVITIES
INVESTING ACTIVITIES
Payments for exploration and evaluation assets (259,161) (160,699)
Funds on disposal of financial assets 116,319 -
NET CASH USED IN INVESTING ACTIVITIES (142,842) (160,699)
NET DECREASE IN CASH AND CASH EQUIVALENTS (314,994) (371,719)
Cash and cash equivalents at beginning of
financial year 745,195 1,111,257
Effect of exchange rate changes on cash held
in
foreign currencies (58,821) 5,657
Cash and cash equivalents at end of financial
year 371,380 745,195
NOTES:
1. ACCOUNTING POLICIES
There were no changes in accounting policies from those used to
prepare the Group's Annual Report for financial year ended 31
December 2016. The financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
2. LOSS PER SHARE
2017 2016
EUR EUR
Loss per share - basic and diluted (4.40c) (0.26c)
Basic loss per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic loss per share are as follows:
2017 2016
EUR EUR
Loss for the financial year attributable to
equity holders (4,392,185) (256,505)
2017 2016
Number Number
Weighted average number of ordinary shares
for the
purpose of basic earnings per share 99,681,992 99,681,992
Basic and diluted loss per share are the same as the effect of
the outstanding share options is anti-dilutive.
3. FINANCIAL ASSET
Investment
2017 2016
EUR EUR
At the beginning of the financial year 4,211,123 4,211,123
Additions - -
Disposal (116,319) -
Impairment (4,094,804) -
At the end of the financial year - 4,211,123
The Company's investment in its financial asset, held through
its wholly owned subsidiary Petrel Resources (TCI) Limited,
consisted of a 20 per cent shareholding in Amira Hydrocarbons Wasit
B.V.("Amira") which was acquired from Amira Petroleum N.V. on 14
August 2013. Amira is a special purpose vehicle which holds a 25
per cent carried to production interest in an early stage oil
opportunity in the large, underexplored and underdeveloped province
of Wasit.
The consideration for the acquisition included the issue of
18,947,368 shares in Petrel. The Initial Consideration Shares were
agreed to be locked-in until the date of spudding the first
conventional oil well in respect of Amira's interest in the Wasit
province but that, if the Spudding Date had not occurred by 19
August 2018, Petrel could, amongst other things, elect to
re-acquire the Initial Consideration Shares for a nominal amount.
As part of the agreement with Amira Petroleum, 2.8 million of the
Initial Consideration Shares were, at the direction of Amira
Petroleum, issued to its advisers in satisfaction of fees payable
by Amira Petroleum and were subject to a lock in agreement as
detailed above.
During December 2017, the Directors learnt that 2.2 million of
the Adviser Shares had been sold between March and July 2017,
notwithstanding the lock-in agreement. The parties reached a
settlement and agreed that the vendors of the 2.2 million Adviser
Shares make a payment of GBP100,000 to the Company, which has been
received per year end (representing approximately 4.5p per Adviser
Share sold). The remaining Adviser Shares shall remain subject to
the lock-in agreed in 2013.
As of the date of this announcement, the Spudding Date has not
occurred. Accordingly, the directors have decided to write off the
investment in Amira Hydrocarbons Wasit B.V. and an impairment
charge of EUR4,094,804 was recorded. No further shares will be
issued to Amira and the 16,747,368 shares already issued will be
re-acquired for nominal consideration, subject to shareholder
approval at the AGM and the shares will be cancelled.
4. INTANGIBLE ASSETS
2017 2016
EUR EUR
Exploration and evaluation assets:
Cost:
Opening balance 2,138,159 1,871,288
Additions 304,159 205,699
Exchange translation adjustment (263,035) 61,172
Closing balance 2,179,283 2,138,159
Segmental Analysis
2017 2016
EUR EUR
Ghana 843,988 962,377
Ireland 1,335,295 1,175,782
2,179,283 2,138,159
Exploration and evaluation assets at 31 December 2017 represent
exploration and related expenditure in respect of projects in
Ireland and Ghana. The directors are aware that by its nature there
is an inherent uncertainty in relation to the recoverability of
amounts capitalised on the exploration projects.
Relating to the remaining exploration and evaluation assets at
the financial year end, the directors believe there were no facts
or circumstances indicating that the carrying value of the
intangible assets may exceed their recoverable amount and thus no
impairment review was deemed necessary by the directors. The
realisation of these intangible assets is dependent on the
successful discovery and development of economic reserves and is
subject to a number of significant potential risks, as set out
below.
The Group's exploration activities are subject to a number of
significant and potential risks including:
-- Licence obligations;
-- Funding requirements;
-- Political and legal risks, including title to licence, profit sharing and taxation;
-- Geological and development risks;
-- Exchange rate risk;
-- Political risk; and
-- Financial risk management.
Directors' remuneration of EUR30,000 (2016: EUR30,000) and
salaries of EUR15,000 (2016: EUR15,000) were capitalised as
exploration and evaluation expenditure during the financial
year.
5. SHARE CAPITAL
2017 2016
EUR EUR
Authorised:
200,000,000 ordinary shares of EUR0.0125 2,500,000 2,500,000
Allotted, called-up and fully
paid:
Number Share Share
Capital Premium
EUR EUR
At 1 January 2016 99,681,992 1,246,025 21,416,085
Issued during the financial - - -
year
At 31 December 2016 99,681,992 1,246,025 21,416,085
At 1 January 2017 99,681,992 1,246,025 21,416,085
Issued during the financial - - -
year
At 31 December 2017 99,681,992 1,246,025 21,416,085
Movements in share capital
There was no movement in share capital in the current year.
6. POST BALANCE SHEET EVENTS
There were no material post balance sheet events affecting the
company or group.
7. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on 25(th) July
2018 in the Gresham Hotel, 23 O'Connell Street Upper, Dublin 1 ,
D01 C3W7 at 10:30 am.
8. GENERAL INFORMATION
The financial information set out above does not constitute the
Company's financial statements for the year ended 31 December 2017.
The financial information for 2016 is derived from the financial
statements for 2016 which have been delivered to the Companies
Registration Office. The auditors have reported on 2016 statements;
their report was unqualified with an emphasis of matter in respect
of considering the adequacy of the disclosures made in the
financial statements concerning the valuation of intangible assets,
investment in subsidiaries and amounts due by group undertakings.
The financial statements for 2017 will be delivered to the
Companies Registration Office.
A copy of the Company's Annual Report and Accounts for 2017 will
be mailed shortly only to those shareholders who have elected to
receive it. Otherwise shareholders will be notified that the Annual
Report will be available on the website at www.petrelresources.com.
Copies of the Annual Report will also be available for collection
from the Company's registered office, 162 Clontarf Road, Dublin 3,
Ireland.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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