TIDMPGR
RNS Number : 1705S
Phoenix Global Resources PLC
29 September 2017
29 September 2017
Phoenix Global Resources plc
("Phoenix" or the "Company" or with its subsidiaries the
"Group")
UNAUDITED INTERIM RESULTS FOR "ANDES"
FOR THE PERIOD TO 30 JUNE 2017
Phoenix (AIM: PGR; BCBA: PGR), the independent Argentina-focused
oil and gas exploration and production company, announces its
unaudited interim results for Andes Energia plc ("Andes") for the
six month period ending 30 June 2017 prior to the combination with
Trefoil Holdings B.V..
Operational review
Period highlights
-- Average oil production during the period of 2,369 bpd in
Argentina; average net price of approximately US$51.95/bbl
-- Average oil production during the period of 583 bpd in
Colombia; average net price of approximately US$49.36/bbl
-- Average gas production during the period of 383 boepd in
Colombia; average net price of US$2.90/mbtu
-- 41 development wells drilled on the Chachahuén licence in
Argentina, in partnership with YPF, all successfully brought into
production
-- An oil discovery was made in the exploration well Vikingo-1
in LLA-47 in Colombia in the sandstone of the Carbonera C5
formation
-- Commenced a workover campaign on the La Paloma and Cerro
Alquitrán blocks to extend the working life of the assets
-- Further to changes in the corporate structure through which
the Company holds its 26.01% interest in Interoil Exploration &
Production ASA ("Interoil") and changes in the composition of the
board and senior management, with effect from 8 June 2017 Interoil
has no longer been consolidated in the results of the Group
-- EBITDA* of US$ 2.4 million compared to US$7.7 million for the
comparable period last year
-- At the period end the net debt position was US$76.4 million
Post period highlights
-- The Vega Grande exploitation licence has been extended for a
further period of one year commencing on the 28 July 2017
-- The workover performed in LP5 well on La Paloma licence was
successful with the well self-flowing at more than 120 bopd from
Hutrin formation, while the Company continues to evaluate the main
target in Grupo Neuquén
-- A second exploratory period of one year has been awarded for
the Laguna El Loro licence
-- On 10 August the Company completed the combination with
Trefoil Holdings B.V., the holding company that indirectly owns
over 99.99% of Petrolera El Trébol S.A. ("PETSA"), the operating
company for the oil and gas exploration and production business of
Mercuria Energy Group Limited ("Mercuria EG") in Argentina and
changed its name to Phoenix Global Resources plc
-- On completion the Company drew down US$87 million of a new
US$160 million bridging and working capital facility from Mecuria
Energy Trading S.A. and has since repaid all Company loans
outstanding at the date of completion
-- Proposed demerger of Colombian interests held through the
Company's holding in Interoil and the Board intends to convene
another general meeting in due course to propose new resolutions to
effect the demerger
-- Pursuant to the acceptance by the Province of a new
exploitation plan presented by the operator of the Chañares
Herrados ("CH") and Puesto Pozo Cercado ("PPC") blocks in Mendoza
in which the Group has a 78% interest, the joint venture partners
will relinquish 100% of the PPC block
-- The Company drew down US$45 million of the remaining US$73
million of the US$160 million bridging and working capital facility
provided by Mercuria Energy Trading S.A.
*Before gain of US$13.6 million recognised on the
deconsolidation of Interoil
Enquiries:
Phoenix Global Anuj Sharma, T: +54 11 5258
Resources plc CEO 7500
Philip Wolfe, T: +44 (0) 207
CFO 839 4974
Stockdale Securities Antonio Bossi T: +44 (0) 207
David Coaten 601 6100
Panmure Gordon Adam James T: +44 (0) 207
Atholl Tweedie 886 2500
Camarco Billy Clegg T: +44 (0) 203
Gordon Poole 757 4980
James Crothers
Qualified Person Review
In accordance with AIM guidance for mining, oil and gas
companies, Mr. Javier Vallesi and Mr. Greg Easley have reviewed the
information contained in this announcement. Mr. Vallesi, Chief
Operating Officer of the Group, is a petroleum engineer with over
22 years of experience in the oil and gas industry and is a member
of the Argentinian Institute of Oil and Gas. Mr. Easley, Senior
Manager Reservoir and Engineering, is a petroleum engineer with
over 10 years of experience in the oil and gas industry, is a
licenced Professional Engineer in the State of Texas and is a
member of the Society of Petroleum Engineers.
Chief Executive Officer's Review
Introduction
At the end of the period, the Company had an interest in 30
licences in Argentina (including 11 licences which Andes is in the
process of relinquishing); a direct interest in 9 licences in
Colombia (including 2 licences currently suspended and 3 licences
which Andes is in the process of relinquishing); and an indirect
interest in a further 4 licences in Colombia through its 26.01%
interest in Interoil.
Oil and Gas Interests
Argentina
Chachahuén
Development drilling
In Chacahuen Sur, the development programme continued at a good
pace, with on average 3 rigs working in the field simultaneously
during the period. 41 new producing wells were drilled and
successfully completed during the period resulting in an increase
in oil production of approximately 1,598 bpd (319 bpd net to
Andes).
Enhanced Oil Recovery -Water Flood project
At the end of the period the project reached an average rate of
injection of approximately 12,300 bpd through a total of 56 water
injection wells.
Oil production
During the period, oil production increased by 21%, from 7,630
bpd (1,526 bpd net to Andes) to 9,228 bpd (1,845 bpd net to Andes).
With 41 new producing wells coming on stream there were a total of
196 producing wells on stream at the end of the period.
A union strike at the end of April/beginning of May adversely
impacted production resulting in a temporary reduction of
approximately 12,800 bbls during the period.
Exploratory activity
The discovery well Cerro Redondo x-1 is situated approximately
4.3 km northeast of the discovery well Chus x-2 on the Chachahuén
Sur evaluation block and is currently producing at a rate of 58
bpd.
The discovery well Cerro Morado Este x-1, located approximately
37.3 km southeast of the discovery well Chus x-2 on the Chachahuén
Sur evaluation block, is currently producing from the Centenario
formation at a rate of 32 bpd.
The discovery well Cerro Morado Este e-3, located approximately
34.9 km southeast of the discovery well Chus x-2 on the Chachahuén
Sur evaluation block, is currently producing from the Centenario
formation at a rate of 32 bpd.
A further 4 appraisal wells are planned to delineate the extent
of the Cerro Morado.
Puesto Pozo Cercado and Chañares Herrados blocks - Mendoza
Oil production decreased by 11% during the period, from 1,208
bpd (603 bpd net to Andes) to 1,107 bpd (553 bpd net to Andes)
awaiting workover activities, which are planned for the fourth
quarter onwards.
Production from wells CH 1006, CH 1012, CH 1023 and CH 1002
wells is currently suspended awaiting workover operations to
replace the electrical submersible pumps, with an adverse impact on
production of approximately 250 bpd.
Vega Grande - Mendoza
In Vega Grande, the oil production increased by 14% during the
period, from 45 bpd to 52 bpd. This increase was achieved through a
well intervention on the VGa-3 well.
An overhaul of the existing facilities was also carried out
during the period including: the installation of a storage tank in
the battery; an upgrade of the electrical system; and the repair of
the heat treater. In addition, wells AMx-1 and TEx-1 were
abandoned.
La Brea (Puesto Muñoz) - Mendoza
In La Brea (Puesto Muñoz), oil production decreased by 32%
during the period, from 58 bpd to 40 bpd due to temporary shut-in
of the well PMu-7 during the period caused by mechanical
failures.
El Manzano West (Agrio formation) - Mendoza
In El Manzano West, oil production decreased by 23% during the
period, from 24 bpd to 18 bpd as the well EMa-2 is awaiting
workover. Phoenix holds a 100% of the working interest in
production from the Agrio formation.
La Paloma & Cerro Alquitran - Mendoza
Having completed road and well site preparations a workover
programme has commenced in wells La Paloma 5 and Cerro Alquitran
101. The main target to be investigated is the horizons of the
Grupo Neuquén.
The Neuquén Group from Upper Cretaceous is found above an
erosional unconformity, which is productive in the neighboring
oilfield of Loma de la Mina. A secondary target is the Huitrín
formation.
Colombia
The Company has a 70% direct working interest in 9 licences in
Colombia (including 2 licences currently suspended and 3 licences
which Andes is in the process of relinquishing) and an indirect
interest in a further 4 licences in Colombia through its 26.01%
interest in Interoil.
Average production in the period from the licences held by
Interoil fell by 17% to 966 boepd compared to 1,159 boepd in
2016.
Financial Review
Period ended 30 June 2017 2016
------------------------------ ------ ------
US$MM US$MM
------------------------------ ------ ------
Revenue 29.9 34.2
------------------------------ ------ ------
Operating profit/(loss) 1.2 1.5
------------------------------ ------ ------
Adjusted EBITDA* (0.4) 7.7
------------------------------ ------ ------
Net operating cash generated
from operations 2.4 13.6
------------------------------ ------ ------
* Before gain of US$13.6 million recognised in other income on
the deconsolidation of the Company's interest in Interoil
Revenue has decreased by US$4.3 million to US$29.9 million for
the first 6 months. This is primarily due to a fall in production
and lower oil prices as the de-regulation of the Argentina domestic
oil price brings closer parity to international benchmarks.
The Group recorded an operating profit of US$1.2 million
compared to the H1 2016 operating profit of US$1.5 million. The
2017 operating profit includes a gain of US$13.6 million recognised
on the deconsolidation of the Group's interest in Interoil.
Administrative expenses have increased by US$5.6 million over the
expenses for the comparable period last year.
Adjusted EBITDA, before the gain of US$13.6 million recognised
on the deconsolidation of Interoil, was a negative US$0.4 million
compared to US$7.7 million for H1 2016.
The Group recorded a net loss of US$3.3 million for the period
compared to a net loss of US$9.2 million for H1 2016.
The Group's total assets have decreased by US$41 million from
US$243 million at 30 June 2016 to US$202 million as at 30 June 2017
reflecting the impact of the deconsolidation of the Group's
interest in Interoil and the devaluation of the Argentine Peso. The
further devaluation of the Argentine Peso resulted in US$6 million
of exchange losses (a non-cash item) being recognised in
comprehensive loss for the period.
At the period end the Group had cash resources of US$10.5
million compared to US$19.1 million at 30 June 2016, of which
US$5.4 million is restricted as security for stand by letters of
credit to support guarantees in Colombia.
On 29 March 2017, the Company entered into two new credit
facilities with Mercuria Energy Trading S.A.. The first, a US$20
million facility to primarily finance the drilling activities in
Chachahuén (the Company's producing field in partnership with YPF)
and other working capital requirements. The second, a US$40 million
facility to finance other drilling activities of the Company,
including activity in the Vaca Muerta, where the Company has
250,000 net acres. At the end of the period the US$20 million
facility had been fully drawn down.
Andes's borrowings fell by US$14.4 million, from US$95.9 million
to US$81.5 million, primarily as a result of the deconsolidation of
the Interoil operations offset by the impact of the draw downs by
the Group of the first of the new loan facilities referenced
above.
Events after the balance sheet date
On 28 July 2017 the Vega Grande exploitation licence was
extended for a further period of one year commencing on 28 July
2017. The licence has been renewed subject to a work programme
which includes reprocessing of 150 km of 2D seismic line,
geochemical survey of 700 samples and a workover in the VGa-6 well.
During the remainder of this year we expect to be able to reach
agreement to extend the licence for a 10 year period include the
extension of 1 year already granted.
The workover performed in the La Paloma 5 well on the La Paloma
licence was successful with the well self-flowing at more than 120
boepd from the Huitrin formation. The Company continues to evaluate
the main target, Grupo Neuquén and is in the process of installing
production on a field that previously was not producing.
On 12 July 2017 a second exploratory period of one year was
granted in Laguna El Loro with commitments to reprocess existing 3D
and 2D seismic (553 km and 185 km respectively), conduct a
geochemical survey of 4,500 samples and drill a well targeting
unconventional horizons.
On 10 August 2017 the Company announced the completion of its
combination with Trefoil Holdings, the holding company that
indirectly owns over 99.99% of PETSA, the operating company for the
oil and gas exploration and production business of Mercuria in
Argentina. The combination was effected through the acquisition of
the entire issued share capital of Trefoil Holdings in
consideration for the issue of 1,899,106,385 consideration ordinary
shares. The consideration shares issued to Upstream Capital
represented 75.38% of the enlarged share capital on completion with
existing Andes shareholders holding 24.62%. The resulting ownership
of Mercuria EG in the enlarged group on completion was
approximately 78%. A copy of the admission document can be found on
the Company's website.
The Board believes that it is in the interests of the Company's
shareholders for the Company to focus on oil and gas exploration
and production in Argentina only. Outside of Argentina, the Company
has interests in Colombia, through its interest in the Interoil
shares and interests in certain licences in the Llanos Basin and
the Valle Magdalena Medio Basin. In line with this strategy, the
Board is in the process of demerging the Interoil shares, which are
currently held by the Company's wholly-owned subsidiary, Andes
Interoil Limited ("AIL"), to be effected by way of a transfer of
shares to US shareholders and a distribution in specie to non US
shareholders on record pre- completion. Further to the announcement
of 5 September 2017, the Board intends to convene another general
meeting in due course to propose new resolutions to effect the
demerger.
On 21 August 2017 the Company announced that Chañares Herrados
S.A. ("CHSA"), the concessioner and operator of the CH and PPC
blocks, has been notified of the Province of Mendoza's acceptance
of a plan pursuant to which, CHSA and the joint venture partners
will relinquish 100% of the PPC block, which has production of
approximately gross 423 bopd (net to Andes 331 bpd) and covers
approximately 42,000 gross acres, and implement a work programme in
the CH block with a gross investment commitment of approximately
US$94 million over a 4 year period. Andes's level of participation
in the new work programme for the CH block, if any, has not yet
been agreed with the operator.
On 22 August 2017 the Company drew down US$45 million of the
remaining US$73 million of the US$160 million bridging and working
capital facility provided by Mercuria Energy Trading S.A..
Anuj Sharma
Chief Executive Officer
29 September 2017
Unaudited Group income statement for the period ended 30 June
2017
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Revenue 29,934 34,195 67,768
Production cost (26,023) (26,008) (50,945)
Gross profit 3,911 8,187 16,823
Exploration cost (1,034) - (2,317)
Other operating income 13,738 347 1,491
Impairment charge (2,591) - (7,065)
Distribution costs (1,499) (1,310) (3,471)
Administrative expenses (11,333) (5,770) (12,961)
---------- ---------- -----------
Operating profit/(loss) 1,192 1,454 (7,500)
Finance income 5,479 *2,496 6,887
Finance costs (10,883) *(13,486) (27,803)
---------- ---------- -----------
Loss before taxation (4,212) (9,536) (28,416)
Taxation 927 331 2,140
---------- ---------- -----------
Loss for the year (3,285) (9,205) (26,276)
---------- ---------- -----------
Loss attributable to:
Equity holders of the
parent (1,435) (8,878) (22,766)
Non-controlling interests (1,850) (327) (3,510)
(3,285) (9,205) (26,276)
========== ========== ===========
Loss per ordinary share Cents Cents Cents
Basic and diluted loss
per share (0.24) (1.47) (3.76)
*After reclassification of exchange gains/losses
The accompanying notes are an integral part of these financial
statements.
Unaudited consolidated statement of comprehensive income for the
period ended 30 June 2017
30-Jun-17 30-Jun-16 31-Dec-16
US$'000 US$'000 US$'000
Loss for the year (3,285) (9,205) (26,276)
Translation differences (6,122) (10,570) (12,567)
Total comprehensive loss
for the year (9,407) (19,775) (38,843)
---------- ---------- ----------
Total comprehensive loss
attributable to:
Equity holders of the
parent (7,557) (19,448) (35,333)
Non-controlling interests (1,850) (327) (3,510)
(9,407) (19,775) (38,843)
========== ========== ==========
The loss on exchange results primarily from the revaluation of
intangible assets and property, plant and equipment that are
carried in Argentine pesos. This resulted in a drop in the carrying
value of these intangible assets and property, plant and equipment
but is not indicative of an impairment in value.
The accompanying notes are an integral part of these financial
statements.
Unaudited consolidated statement of financial position as at 30
June 2017
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Non-current assets
Intangible assets 91,831 96,112 94,829
Property, plant and equipment 49,956 92,595 82,474
Available for sale financial
assets 5,614 5,604 5,655
Trade and other receivables 14,542 9,828 8,945
Deferred income tax assets 4,099 1,111 3,072
Total non-current assets 166,042 205,250 194,975
---------- ---------- -----------
Current assets
Inventories 405 1,113 945
Investments in associates 12,672 - -
Available for sale financial
assets 2,619 1,223 2,316
Trade and other receivables 10,095 16,583 16,837
Restricted cash 5,442 9,087 9,070
Cash and cash equivalents 5,090 10,030 12,630
Total current assets 36,323 38,036 41,798
---------- ---------- -----------
Current liabilities
Trade and other payables 45,288 30,990 37,757
Financial liabilities 38,199 18,373 27,157
Provisions 409 691 409
Total current liabilities 83,896 50,054 65,323
---------- ---------- -----------
Non-current liabilities
Trade and other payables 11,968 17,123 16,092
Financial liabilities 43,322 77,534 78,840
Deferred income tax liabilities 22,512 31,099 27,782
Provisions 2,555 3,888 4,076
Total non-current liabilities 80,357 129,644 126,790
---------- ---------- -----------
Net assets 38,112 63,588 44,660
---------- ---------- -----------
Capital and reserves
Called up share capital 98,421 98,414 98,414
Share premium account 52,478 52,467 52,467
Other reserves (110,714) (102,595) (104,592)
Retained earnings (2,073) 12,962 (786)
----------
Equity attributable to
equity holders of the parent 38,112 61,248 45,503
Non-controlling interests - 2,340 (843)
---------- ---------- -----------
Total equity 38,112 63,588 44,660
---------- ---------- -----------
Non current available for sale financial assets include time
deposits of US$5.6 million that are charged as security for stand
by letters of credit relating to licences held by the Company in
Colombia.
The accompanying notes are an integral part of these financial
statements.
Unaudited consolidated statement of changes in equity for the
period ended 30 June 2017
Equity Share *Share Retained Other Attributable Non Total
to equity
capital premium earnings reserves holders controlling
of the
parent interests
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January
2016 98,414 52,467 21,685 (92,025) 80,541 2,667 83,208
-------- -------- --------- ------------ ------------- -------------- ----------
Loss for the
period - - (8,878) - (8,878) (327) (9,205)
Translation differences - - - (10,570) (10,570) - (10,570)
Total comprehensive
loss for the
period - - (8,878) (10,570) (19,448) (327) (19,775)
-------- -------- --------- ------------ ------------- -------------- ----------
Fair value of
share based payments - - 155 - 155 - 155
At 30 June 2016 98,414 52,467 12,962 (102,595) 61,248 2,340 63,588
-------- -------- --------- ------------ ------------- -------------- ----------
Loss for the
period - - (13,888) - (13,888) (3,183) (17,071)
Translation differences - - - (1,997) (1,997) - (1,997)
Total comprehensive
loss for the
period - - (13,888) (1,997) (15,885) (3,183) (19,068)
-------- -------- --------- ------------ ------------- -------------- ----------
Fair value of
share based payments - - 140 - 140 - 140
At 31 December
2016 98,414 52,467 (786) (104,592) 45,503 (843) 44,660
-------- -------- --------- ------------ ------------- -------------- ----------
Loss for the
period - - (1,435) - (1,435) (1,850) (3,285)
Translation differences - - - (6,122) (6,122) - (6,122)
Total comprehensive
loss for the
period - - (1,435) (6,122) (7,557) (1,850) (9,407)
-------- -------- --------- ------------ ------------- -------------- ----------
Issue of ordinary
shares 7 11 - - 18 - 18
Fair value of
share based payments - - 148 - 148 - 148
Deconsolidation
of subsidiary - - - - - 2,693 2,693
At 30 June 2017 98,421 52,478 (2,073) (110,714) 38,112 - 38,112
-------- -------- --------- ------------ ------------- -------------- ----------
Other reserves *Merger Warrant Reverse Translation Deferred Total
reserve reserve acquisition reserve consideration other
reserve reserve reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January
2016 89,885 2,105 - (190,041) 6,026 (92,025)
-------- --------- ------------ ------------- -------------- ----------
Translation differences - - - (10,570) - (10,570)
Total comprehensive
loss for the
period - - - (10,570) - (10,570)
-------- --------- ------------ ------------- -------------- ----------
At 30 June 2016 89,885 2,105 - (200,611) 6,026 (102,595)
-------- --------- ------------ ------------- -------------- ----------
Translation differences - - - (1,997) - (1,997)
Total comprehensive
loss for the
period - - - (1,997) - (1,997)
-------- --------- ------------ ------------- -------------- ----------
At 31 December
2016 89,885 2,105 - (202,608) 6,026 (104,592)
-------- --------- ------------ ------------- -------------- ----------
Translation differences - - - (6,122) - (6,122)
Total comprehensive
loss for the
period - - - (6,122) - (6,122)
-------- --------- ------------ ------------- -------------- ----------
At 30 June 2017 89,885 2,105 - (208,730) 6,026 (110,714)
-------- --------- ------------ ------------- -------------- ----------
* After restatement
The accompanying notes are an integral part of these financial
statements.
Unaudited consolidated cash flow statement for the period ended
30 June 2017
30-Jun-17 30-Jun-16 30-Dec-16
US$'000 US$'000 US$'000
Cash generated from operations
(see note 14) 2,427 13,941 25,761
Tax paid - (380) (705)
Net cash flows generated
from operating activities 2,427 13,561 25,056
---------- ---------- ----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (see note 9) (13,547) (11,852) (20,374)
Proceeds from sale of property,
plant and equipment - 6 -
Purchase of exploration assets
(see note 8) (1,880) (846) (7,739)
Purchase of financial assets (615) (738) (1,178)
Net cash used in investing
activities (16,042) (13,430) (29,291)
---------- ---------- ----------
Cash flows from financing
activities
Repayments of borrowings (8,897) (14,250) (18,967)
Funds from borrowings 19,509 7,588 21,013
Interest paid (624) (872) (1,673)
Interest received 44 1 204
Proceeds from issue of shares 18 - -
----------
Net cash generated from/(used
in) financing activities 10,050 (7,533) 577
---------- ---------- ----------
Exchange gains/(losses) on
cash and cash equivalents 558 (777) (1,937)
Net decrease in cash and
cash equivalents (3,007) (8,179) (5,595)
Deconsolidation of subsidiary (8,161) - -
Cash and cash equivalents
at the beginning of the period 21,700 27,296 27,295
Cash and cash equivalents
at the end of the period 10,532 19,117 21,700
---------- ---------- ----------
The accompanying notes are an integral part of these financial
statements.
Notes
1. Basis of preparation
The Group consolidates the financial statements of the Company
and its subsidiary undertakings. The consolidated interim financial
information for the 6 months ended 30 June 2017 has been prepared
in accordance with IAS 34, "Interim financial reporting" as adopted
by the European Union. The financial information has been prepared
under the historical cost convention in accordance with
International Financial Reporting Standards (IFRSs).
The financial information set out in this half-yearly report
does not constitute statutory accounts as defined in Section 434 of
the Companies Act 2006. The same accounting policies, presentation
and methods of computation are followed in this unaudited interim
condensed consolidated report as were applied in the Group's annual
financial statements for the year ended 31 December 2016. The
auditors' report on those financial statements was unqualified and
did not contain any statements under section 498(2) or section
498(3) of the Companies Act 2006. The Group's annual financial
statements for the year ended 31 December 2016 have been filed at
Companies House.
2. Going concern
The directors consider that the Company and Group has sufficient
resources to continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
3. Segment reporting
2017 2018
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Argentina Colombia Unallocated Total Argentina Colombia Unallocated Total
Analysis of
revenue and
profit: Corporate Corporate
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 23,780 6,154 - 29,934 26,268 7,927 - 34,195
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Operating
profit/(loss) 8,204 (618) (6,394) 1,192 2,430 554 (1,530) 1,454
Finance income 1,396 178 3,905 5,479 2,276 - 220 2,496
Finance costs (5,579) (613) (4,691) (10,883) (4,352) (586) (8,548) (13,486)
Loss before
tax 4,021 (1,053) (7,180) (4,212) 354 (32) (9,858) (9,536)
Taxation 1,534 (607) - 927 (1,339) 1,670 - 331
Loss for the
year 5,555 (1,660) (7,180) (3,285) (985) 1,638 (9,858) (9,205)
Add: Depreciation
and amortisation 6,459 2,990 - 9,449 3,655 2,611 - 6,266
Add: Impairment
charges 2,591 - - 2,591 - - - -
Less: Finance
income (1,396) (178) (3,905) (5,479) (2,276) - (220) (2,496)
Add: Finance
costs 5,579 613 4,691 10,883 4,352 586 8,548 13,486
Add: Tax (1,534) 607 - (927) 1,339 (1,670) - (331)
EBITDA 17,254 2,372 (6,394) 13,232 6,085 3,165 (1,530) 7,720
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Non-current
assets
Intangible
assets 90,733 1,098 - 91,831 96,112 - - 96,112
Property, plant
and equipment 49,956 - - 49,956 54,795 37,800 - 92,595
Available for
sale financial
assets 5,614 - - 5,614 5,604 - - 5,604
Trade and other
receivables 14,542 - - 14,542 9,828 - - 9,828
Deferred income
tax assets 4,099 - - 4,099 831 280 - 1,111
Total non-current
assets 164,944 1,098 - 166,042 167,170 38,080 - 205,250
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Current assets
Inventories 405 - - 405 507 606 - 1,113
Investments
in associates - - 12,672 12,672 - - - -
Available for
sale financial
assets 2,513 - 106 2,619 1,129 - 94 1,223
Trade and other
receivables 2,248 305 7,542 10,095 9,107 3,657 3,819 16,583
Restricted
cash - - 5,442 5,442 - 3,628 5,459 9,087
Cash and cash
equivalents 84 60 4,946 5,090 73 9,852 105 10,030
Total current
assets 5,250 365 30,708 36,323 10,816 17,743 9,477 38,036
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Current
liabilities
Trade and other
payables (40,549) (933) (3,806) (45,288) (26,707) (2,913) (1,370) (30,990)
Financial
liabilities (12,453) - (25,746) (38,199) (2,784) (8,236) (7,353) (18,373)
Provisions (409) - - (409) - (691) - (691)
Total current
liabilities (53,411) (933) (29,552) (83,896) (29,491) (11,840) (8,723) (50,054)
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Non-current
liabilities
Trade and other
payables (10,559) - (1,409) (11,968) (15,471) (242) (1,410) (17,123)
Financial
liabilities - - (43,322) (43,322) (5,097) (33,501) (38,936) (77,534)
Deferred income
tax liabilities (22,512) - - (22,512) (27,147) (3,952) - (31,099)
Provisions (2,555) - - (2,555) (2,393) (1,495) - (3,888)
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Total non-current
liabilities (35,626) - (44,731) (80,357) (50,108) (39,190) (40,346) (129,644)
---------- --------- ------------ --------- ---------- --------- ------------ ----------
Net Assets 81,157 530 (43,575) 38,112 98,387 4,793 (39,592) 63,588
---------- --------- ------------ --------- ---------- --------- ------------ ----------
The income statement includes the results of Interoil for the
period up to 8 June 2017.
4. Interoil
In May, the Company announced a restructure of its holding AIL,
which holds a 51% interest in Interoil. The Company has a 51%
interest in AIL and Canacol Energy Ltd "Canacol") the remaining
49%. Further to an agreement with Canacol, Canacol transferred all
its shares in AIL to the Company in exchange for the Company
transferring to Canacol 16,172,052 shares in Interoil currently
held through AIL. Following these transactions, the Company's
economic interest in Interoil will remain unchanged at 26.01% of
the total share capital and votes of Interoil held through its
wholly owned subsidiary AIL. Furthermore, on 8 June 2017 following
changes to the composition of the board and senior management of
Interoil, it has been determined that the Company will no longer be
deemed to control Interoil. Therefore, with effect from 8 June
2017, Interoil is no longer fully consolidated and with effect from
this date Andes's 26% share of the results and net assets of
Interoil is equity accounted, in the consolidated results of the
Group. The effect of this deconsolidation resulted in gain of
US$13.6 million being recognised in the income statement of the
period.
5. Finance costs
Only US$0.6 million of the finance costs were paid in cash
during the period (2016: US$0.3 million). The other finance costs
were not due to be paid and relate primarily to convertible
loans.
6. Taxation
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Current tax (1,120) (2,309) (4,548)
Deferred taxation 2,047 2,640 6,688
Tax credit 927 331 2,140
---------- ---------- -----------
Loss on ordinary activities before
tax (4,212) (9,536) (28,416)
Tax credit on loss at standard
rate of 35% 1,475 3,337 9,946
Effects of:
Expenses not deductible for tax
purposes (2,052) (1,569) (4,934)
Effect of items not taxable 4,568 27 28
Temporary differences due to the
effect of exchange rate movements (235) 2,399 3,031
Tax losses for which no deferred
tax asset is recognised (2,829) (3,863) (5,931)
Current tax credit 927 331 2,140
---------- ---------- -----------
7. Loss per share
Basic earnings/(loss) per share is calculated by dividing the
net loss for the period attributable to ordinary shareholders of
the Group by the weighted average number of ordinary shares
outstanding during the period. The basic and diluted
earnings/(loss) per share are the same as there are no instruments
that have a dilutive effect on earnings. Adjusted basic and diluted
earnings/(loss) per share are presented after adjustment of
exceptional items.
30-Jun-17 30-Jun-16 31 -Dec-16
Cents Cents Cents
Basic and diluted loss per share (0.24) (1.47) (3.76)
Adjusted basic and diluted loss
per share (0.23) (1.47) (3.76)
US$'000 US$'000 US$'000
Loss for the year attributable
to equity holders (1,435) (8,878) (22,766)
---------- ---------- -----------
No.'000 No.'000 No.'000
Weighted average number of shares 605,520 605,505 605,505
Effect of dilutive warrants 7,645 - -
Diluted weighted average number
of shares 613,615 605,505 605,505
---------- ---------- -----------
No.'000 No.'000 No.'000
Potential number of dilutive warrants 59,186 59,240 59,240
---------- ---------- -----------
8. Intangible assets
GROUP Goodwill Exploration Total
US$'000 US$'000 US$'000
Cost
At 1 January 2016 20,732 103,318 124,050
Additions - 846 846
Foreign exchange movements (2,626) (13,117) (15,743)
At 30 June 2016 18,106 91,047 109,153
Additions - 6,893 6,893
Exploration costs charged
to income statement - (1,718) (1,718)
Foreign exchange movements (1,025) (5,598) (6,623)
At 31 December 2016 17,081 90,624 107,705
Additions - 1,880 1,880
Disposals - (631) (631)
Foreign exchange movements (720) (3,895) (4,615)
At 30 June 2017 16,361 87,978 104,339
--------- ------------ ---------
Accumulated amortisation
and impairment
At 1 January 2016 - (14,792) (14,792)
Charge for the period - (129) (129)
Foreign exchange movements - 1,880 1,880
At 30 June 2016 - (13,041) (13,041)
Impairment - (578) (578)
Charge for the period - (130) (130)
Foreign exchange movements - 873 873
At 31 December 2016 - (12,876) (12,876)
Charge for the period - (239) (239)
Foreign exchange movements - 607 607
------------ ---------
At 30 June 2017 - (12,508) (12,508)
--------- ------------ ---------
Net Book Value
At 30 June 2017 16,361 75,470 91,831
--------- ------------ ---------
At 31 December 2016 17,081 77,748 94,829
--------- ------------ ---------
At 30 June 2016 18,106 78,006 96,112
--------- ------------ ---------
9. Property, plant and equipment
GROUP Buildings Machinery Oil Work in Total
progress
and land and Production and
other
equipment assets
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2016 469 2,299 198,926 980 202,674
Additions 11 92 12,005 (256) 11,852
Foreign exchange movements (60) (341) (8,216) (8) (8,625)
----------
At 30 June 2016 420 2,050 202,715 716 205,901
Transfers - - 801 (1,756) (955)
Additions 167 143 6,946 1,266 8,522
Foreign exchange movements (35) (144) (3,768) (4) (3,951)
At 31 December 2016 552 2,049 206,694 222 209,517
Additions - 75 12,815 657 13,547
Impairment - - (4,556) - (4,556)
Deconsolidation of
subsidiary - - (140,178) (815) (140,993)
Foreign exchange movements (23) (104) (3,222) (2) (3,351)
At 30 June 2017 529 2,020 71,553 62 74,164
---------- ---------- ----------- --------- ----------
Accumulated depreciation
At 1 January 2016 (185) (67) (108,246) (31) (108,529)
Charge for the period (81) (51) (6,003) (2) (6,137)
Foreign exchange movements 27 56 1,274 3 1,360
At 30 June 2016 (239) (62) (112,975) (30) (113,306)
Charge for the period (40) (68) (8,497) (1) (8,606)
Impairment - - (6,487) - (6,487)
Foreign exchange movements 14 27 1,314 1 1,356
---------- ---------- ----------- --------- ----------
At 31 December 2016 (265) (103) (126,645) (30) (127,043)
Charge for the period - (331) (8,879) - (9,210)
Impairment - - 1,965 - 1,965
Deconsolidation of
subsidiary - - 108,963 - 108,963
Foreign exchange movements 11 35 1,070 1 1,117
---------- ---------- ----------- --------- ----------
At 30 June 2017 (254) (399) (23,526) (29) (24,208)
---------- ---------- ----------- --------- ----------
Net Book Value
At 30 June 2017 275 1,621 48,027 33 49,956
---------- ---------- ----------- --------- ----------
At 31 December 2016 287 1,946 80,049 192 82,474
---------- ---------- ----------- --------- ----------
At 30 June 2016 181 1,988 89,740 686 92,595
---------- ---------- ----------- --------- ----------
As a result of the relinquishment of the Puesta Pozo Cercado
licence area after the period end, management has recognised an
impairment of US$ 2.6 million, which has been charged to the income
statement
10. Financial liabilities
The Group
-----------------------------------
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Current
Bank borrowings 56 8,250 5,264
Other borrowings 35,706 9,201 20,315
Accrued financial interest 2,437 922 1,578
38,199 18,373 27,157
---------- ---------- -----------
The Group
-----------------------------------
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Non-current
Bonds - 33,501 34,719
Other borrowings 31,697 34,984 33,345
Accrued financial interest 11,625 9,049 10,776
43,322 77,534 78,840
---------- ---------- -----------
Total financial liabilities 81,521 95,907 105,997
---------- ---------- -----------
The Group
-----------------------------------
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Maturity profile
Within 1 year 38,481 18,849 27,597
Between 1 and 5 years 17,374 55,971 63,668
After 5 years 68,696 70,138 68,696
124,551 144,958 159,961
Interest payments (43,030) (49,051) (53,964)
81,521 95,907 105,997
---------- ---------- -----------
11. Deferred tax
Deferred tax asset Notional Provision Other Carry Total
income
tax charges forward
losses
US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2016 6 1,055 201 285 1,547
Charged to the income
statement (5) (320) 42 (45) (328)
Foreign exchange movement - (46) (28) (34) (108)
At 30 June 2016 1 689 215 206 1,111
Credited to the income
statement - 1,367 9 728 2,104
Foreign exchange movement (1) (66) (11) (65) (143)
At 31 December 2016 - 1,990 213 869 3,072
Credited to the income
statement - (445) 123 2,536 2,214
Deconsolidation of subsidiary - (987) - - (987)
Foreign exchange movement - (20) (15) (165) (200)
At 30 June 2017 - 538 321 3,240 4,099
--------- ---------- -------- ------------- --------
Fair
Deferred tax liability value Acquisitions Total
of PP&E
US$'000 US$'000 US$'000
At 1 January 2016 6,920 31,085 38,005
Credited to the income
statement (2,968) - (2,968)
Foreign exchange movement - (3,938) (3,938)
At 30 June 2016 3,952 27,147 31,099
Credited to the income
statement 327 (2,271) (1,944)
Foreign exchange movement - (1,373) (1,373)
At 31 December 2016 4,279 23,503 27,782
Charged to the income
statement 167 - 167
Deconsolidation of subsidiary (4,446) - (4,446)
Foreign exchange movement - (991) (991)
At 30 June 2017 - 22,512 22,512
-------- ------------- --------
12. EBITDA
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Loss for the year from continuing
operations (3,285) (9,205) (26,276)
Add: Depreciation and amortisation 9,449 6,266 15,002
Add: Impairment write downs 2,591 - 7,065
Less: Finance income (5,479) (2,496) (6,887)
Add: Finance costs 10,883 13,486 27,803
Add: Tax (927) (331) (2,140)
---------- ---------- -----------
EBITDA 13,232 7,720 14,567
---------- ---------- -----------
13. Comprehensive income
The translation loss primarily arises as a result of the
devaluation of the AR$ against the US$ during the period. The
carrying value of intangibles assets, other assets and liabilities
in Argentina are held in AR$ and on consolidation translated to
US$, the presentation currency. The resulting exchange gains and
losses are classified as equity and transferred to the Group's
translation reserve. This is not indicative of an impairment in the
carrying value of these assets.
14. Events after the balance sheet date
On 28 July 2017 the Vega Grande exploitation licence was
extended for a further period of one year commencing on the 28 July
2017. The licence has been renewed subject to a work programme,
which includes, reprocessing of 150 km of 2D seismic line,
geochemical survey of 700 samples and a workover in the VGa-6 well.
During the remainder of this year we expect to be able to reach
agreement to extend the licence for a 10 year period include the
extension of 1 year already granted.
The workover performed in the La Paloma 5 well on the La Paloma
licence was successful with the well self-flowing at more than 120
boepd from the Huitrin formation. The Company continues to evaluate
the main target, Grupo Neuquén and is in the process of installing
production on a field that previously was not producing.
On 12 July 2017 a second exploratory period in Laguna El Loro of
one year was granted with commitments to reprocess existing 3D and
2D seismic (553 km and 185 km respectively), conduct a geochemical
survey of 4,500 samples and drill a well targeting unconventional
horizons.
On 10 August 2017 the Company announced the completion of its
combination with Trefoil Holdings, the holding company that
indirectly owns over 99.99% of PETSA, the operating company for the
oil and gas exploration and production business of Mercuria EG in
Argentina. The combination was effected through the acquisition of
the entire issued share capital of Trefoil Holdings in
consideration for the issue of 1,899,106,385 consideration ordinary
shares. The consideration shares issued to Upstream Capital
represented 75.38% of the enlarged share capital on completion with
existing Andes shareholders holding 24.62%. The resulting ownership
of Mercuria EG in the enlarged group on completion was
approximately 78%. A copy of the admission document can be found on
the Company's website.
The Board believes that it is in the interests of the Company's
shareholders for the Company to focus on oil and gas exploration
and production in Argentina only. Outside of Argentina, the Company
has interests in Colombia, through its interest in the Interoil
shares and interests in certain licences in the Llanos Basin and
the Valle Magdalena Medio Basin. In line with this strategy, the
Board is in the process of demerging the Interoil shares, which are
currently held by the Company's wholly-owned subsidiary, AIL, to be
effected by way of a transfer of shares to US shareholders and a
distribution in specie to non US shareholders on record pre-
completion.
On 21 August 2017 the Company announced that subsequent to CHSA,
the concessioner and operator of the CH and PPC blocks, presenting
to the Director of Hydrocarbons a new exploitation plan for the
areas, CHSA has been notified of the Province of Mendoza's
acceptance of the plan. Pursuant to this plan CHSA and the joint
venture partners will relinquish 100% of the PPC block, which has
production of approximately gross 423 bopd (net to Andes 331 bpd)
and covers approximately 42,000 gross acres, and implement a work
programme in the CH block with a gross investment commitment of
approximately US$94 million over a 4 year period. Andes's level of
participation in the new work programme for the CH block, if any,
has not yet been agreed with the operator.
On 22 August 2017 the Company drew down US$45 million of the
remaining US$73 million of the US$160 million bridging and working
capital facility provided by Mercuria Energy Trading S.A..
14. Cash generated from operations
Group
-----------------------------------
30-Jun-17 30-Jun-16 31 -Dec-16
US$'000 US$'000 US$'000
Loss for the year before taxation (4,212) (9,536) (28,416)
Adjustments from operating activities
Depreciation and amortisation 9,449 6,266 15,002
Exchange movements 291 116 78
Revaluation of investments (13,618) - -
(Increase)/decrease in inventories (98) 773 920
Increase in trade and other receivables (4,099) (4,718) (6,121)
Increase in creditors and other
payables 6,178 10,748 15,702
Finance costs 10,883 13,486 27,803
Finance income (5,479) (2,496) (6,887)
Impairment charges 2,591 - 7,065
Movement in provisions (235) (853) (1,398)
Loss on disposal of fixed assets 628 - -
Exploration costs written off - - 1,718
Share based payments 148 155 295
Net cash generated from operating
activities 2,427 13,941 25,761
---------- ---------- -----------
15. Other
A copy of the interim report will be made available on Phoenix's
website at www.phoenixglobalresources.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUMCBUPMGBR
(END) Dow Jones Newswires
September 29, 2017 02:03 ET (06:03 GMT)
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