TIDMSLE
RNS Number : 4294G
San Leon Energy PLC
29 June 2012
Friday 29 June 2012
San Leon Energy plc
Final audited results for year ended 31 December 2011
San Leon Energy plc ("San Leon", "Group" or the "Company"), the
AIM listed company focused on oil and gas exploration in Europe and
North Africa today announces its audited final results for the year
ended 31 December 2011.
2011 Highlights:
Financial:
-- Profit for the year of EUR15.64m compared to a loss in 2010
of EUR3.98m with a resulting earnings per share of 1.85 cent
compared to a loss per share of 1.02 cent in 2010
-- Group net assets increased by EUR70.69m to EUR191.92m (2010:
EUR121.23m)
-- Cash balances of EUR26.19m at 31 December 2011 (2010:
EUR67.17m)
Operational:
-- Completed 3 shale gas exploration wells in Baltic Basin,
Poland with our partners, Talisman
-- Completed Siciny-2 well on our 100% owned play in
Carboniferous Basin, Poland
-- Completed 840km(2) 3D survey over the Durresi Block, Offshore
Albania
-- Completed 280km(2) 3D survey over North Porcupine FEL 1/04
licence area, Atlantic Margin Ireland
-- Completed 2,200 km 2D seismic survey over Tarfaya and Zag
licences in Morocco
-- Assigned our working interest in Barryroe exploration licence
in exchange for a 4.5% net profit interest with no further
financial obligations to San Leon on the project
-- Acquisition of a 75% interest in three polish shale
concessions from Hutton Energy in June 2012 further expanding San
Leon's Polish unconventional gas acreage by an additional 468,512
acres
Corporate:
-- Completed acquisition of Realm Energy International
Corporation
-- Establishment of an Advisory Committee to assist in strategic
development of our asset base
Operational Outlook:
Poland - Baltic Basin
-- Vertically fracc and test existing three wells drilled with
Talisman in 2013
-- Drill 1,000m+ horizontal well with Talisman with multi-staged
fracc and testing programme in 2013
-- Acquire additional 150km 2D seismic in pending Czersk
Concession in Q4 2012/2013
-- Drillvertical well in Prabuty Poludnioweconcession in Q1/Q2
2013
Poland - South West Carboniferous Basin
-- Test Siciny-2 well including vertical fracc of multiple zones
for shale gas and tight gas potential
-- Acquire up to 1,000 km(2) 3D seismic and 500 km (2) 2D
seismic across Carboniferous basin
-- Continue drilling Carboniferous play to test the extent of
potential resources in Siciny-2 well
Poland - Permian Basin
-- Drill conventional main dolomite play in Nowa Sol for near
term oil production
Morocco
-- Finalise off-shore farm out process and plan to drill 1-2
wells with new partners
-- Finalise processing from the 2,200 km 2D seismic acquisition
completed on Zag / Tarfaya and build a prospect inventory for
future 3D seismic acquisition and drilling programmes
-- Evaluation of results on the Tarfaya Oil Shale project
Albania
-- Finalise Pre Stack Depth Migration of 2011 3D survey
-- Finalise off-shore farm out process and plan to drill 1-2
wells with new partners
Oisin Fanning, Chairman of San Leon, commented:
"This was another very significant year for San Leon. We made
our largest acquisition to date, Realm Energy, further
consolidating our position as one of Europe's leading shale players
by acreage. We have an extensive diversified high impact portfolio
across a number of regions and plays, giving us exposure to
multiple sweet spots; any one of which will add significant value
to the Company.
Our core focus remains the same, to realise the inherent value
of our asset base, as we look to move into the next exciting phase
of our development; becoming cash generative."
Enquiries to:
San Leon Energy Plc Tel: + 353 1291 6292
Oisin Fanning, Executive Chairman
John Buggenhagen, Director of
Exploration
Macquarie Capital (Europe) Limited Tel: +44 (0) 20 3037 2000
John Dwyer
Paul Connolly
Fox-Davies Capital Limited Tel: +44 (0) 203 463 5010
David Porter
Westhouse Securities Tel: +44 (0) 20 7012 2000
Nominated Adviser
Richard Johnson
College Hill Associates Tel: +44 (0) 20 7457 2020
Nick Elwes
Alexandra Roper
Qualified person
John Buggenhagen has over 15 years experience in the oil &
gas industry. He has a Ph.D. and M.Sc. in Geophysics from the
University of Wyoming and a B.Sc. in Geophysics from the University
of Arizona. He is currently the Director of Exploration for the San
Leon Energy Group and based in San Leon's Warsaw office in
Poland.
Chairman's review
2011 was another significant year for San Leon Energy. We have
continued to add value to our existing diversified and high impact
portfolio of assets. We have advanced our scientific knowledge by
shooting and interpreting seismic and in the case of Poland,
drilling vertical wells. We have also completed our largest
acquisition to date, Realm Energy.
The acquisition of Realm Energy provided San Leon Energy with a
unique opportunity to increase the Company's exposure to the
prospective upside that the Baltic Basin offers. The acquisition
provided the Company with a further 500,000 acres in Poland (in the
Baltic and Podlase basins), as well as applications in Spain for
over two million acres, which have now been awarded to the Company,
and in the case of France it has provided 2.35 million acres over
which we remain cautiously optimistic. We also expect this deal to
bring significant cost and operational synergies across the
upcoming drilling programme whilst further enhancing the technical
expertise in the Company.
The acquisition also:
-- strengthens San Leon Energy's focus and position as one of
the leading shale players in Poland;
-- materially increases San Leon Energy's acreage in Poland's
Baltic Basin;
-- leverages San Leon Energy's in-country technical team to add
material value to Realm's assets;
-- has the potential to add further shale acreage to the
portfolio through any successful licence applications that Realm
has made in Spain and France; and
-- provides cost and operational synergies for upcoming seismic
and drilling programmes.
In June 2012, San Leon Energy also strengthened its overall
position further in the Baltic and Carboniferous basins in Poland
through our partnership with Hutton Energy. San Leon Energy
acquired a 75% working interest in certain Polish assets for US$15
million, providing 468,512 net acres to the Company in two
prospective basins.
Poland
We have now drilled three wells with our partners Talisman
Energy.
In the northern Baltic Basin the Lewino-1G-2 well was drilled to
3,600 metres into the Upper Cambrian including 310 metres of core.
The well encountered continuous gas shows through the
Silurian-Ordovician shales and into the Upper Cambrian. The
Rogity-1 well was drilled to 2,788 metres including 340 metres of
core. The well encountered continuous, liquid rich gas shows
throughout the Silurian-Ordovician shales and into the Upper
Cambrian. We are currently drilling and nearing total depth in the
Szymkowo-1 well in the southern Baltic Basin. So far the well has
encountered continuous gas shows in the Silurian shales. An
estimated 300 metres of core is planned in the well. Ongoing
detailed analysis of the core and well data is being performed in
preparation for a future testing programme in Q1/Q2 2013 including
potential vertical fraccing, horizontal drilling followed by
multistage fraccing and flow-testing
As mentioned, San Leon Energy has also recently announced that
it has purchased a 75% working interest in certain Polish assets
held by Hutton Energy for US$15 million with a view to jointly
developing these assets. Hutton Energy will be carried through all
the seismic work and associated G&A which will be performed by
NovaSeis. The Company sees this partnership with Hutton Energy as
very positive bringing significant North American unconventional
gas expertise to the venture.
The acquisition further expands San Leon Energy's unconventional
gas acreage by an additional 468,512 net acres in two highly
prospective basins - the Baltic Basin and the Carboniferous Basin -
whilst also giving the Company an unprecedented acreage position in
Poland. We look forward to working with the Hutton Energy team in
developing these assets.
Morocco
The Company acquired a total of 608km of 2D seismic on our
Tarfaya licence and 1,674km of 2D seismic on the Zag licence.
Processing and interpretation of this seismic is nearing
completion. This work was carried out by NovaSeis, our wireless
seismic company.
On the Tarfaya Oil Shale project, good progress has been made
advancing the project. Two wells were drilled 10 metres apart
confirming the presence of 30 metres or prospective oil at a depth
of 195 metres. A third well was drilled which failed to establish
connectivity between the wells, however a comprehensive
hydrogeological and geochemical review is being planned to identify
alternative locations in deeper zones.
On the Sidi Moussa and the Foum Draa licences San Leon Energy
and its partners have completed the work programme for both
licences. A data room has been opened on both licences to attract
industry partners, with a view to receiving final bids by 15 June
2012.
Ireland
Barryroe proved to be a highly successful well for our previous
partners, Providence and Lansdowne. We were very pleased to see the
result not least because we had opted for a 4.5% net profit
interest which will give us very good cash flow, but without the
inherent costs of this well or development costs in the future. As
at the time of our fundraising, none of the partners had
anticipated drilling this well, we therefore had not allocated any
of that funding towards this well and so this deal was mutually
beneficial.
During the year the Company completed a 250 km(2) 3D seismic
survey on the North Porcupine Licence (FEL1/04). We also opened a
data room with a view to gaining farm-in partners for the Slyne
licence towards the end of last year. Several companies have
reviewed the data in the data rooms. We also opened a data room on
the North Porcupine licence in Q2 2012 and again several companies
have shown interest. We will update the market on both these data
rooms as appropriate.
Albania
Last year we completed 840km(2) of 3D seismic over the Durresi
block offshore Albania, less than a year after we were awarded the
block in February 2011. The new 3D seismic has identified numerous
prospects and leads across the licence with un-risked prospective
recoverable resources of more than one billion barrels of oil
equivalent across the proven petroleum systems.
The Company has also recently signed confidentiality agreements
with several large exploration and production companies regarding
farm-in into the licence; and continues to receive unsolicited
interest from other large exploration and production companies. As
a result of which, San Leon Energy opened a data room early to
select companies. There has been huge interest in our data room,
which is now closed; and we will see letters of intent during June
with an announcement expected to the market late July/early
August.
We are very excited about the potential of the Durresi Block and
believe that it does have huge upside potential.
NovaSeis
NovaSeis, our wireless seismic company, has also been upgraded
to allow us to shoot 3D. The team spent eight months in Morocco
shooting seismic - across both the Tarfaya and Zag basins - which
we are now in the process of interpreting. The equipment has now
moved back to Poland where we have completed three new surveys
covering the terrain twice as fast and more cost effectively than
any campaign in Poland to date.
Advisory Committee
The Company has created an Advisory Committee which will work
alongside the management team when considering macro-issues
associated with the industry. This Committee will be made up of a
number of experienced industry professionals who have a wealth of
experience in the energy industry. It is expected that the Advisory
Committee will help San Leon Energy build on the success that the
Company has already achieved; and provide senior guidance and
invaluable strategic and industry insight, as the Company looks to
continue to develop its portfolio of assets. The Advisory Committee
is initially made up of Gerard Medaisko, Robert Price and Nick
Butler, who also serves as the Advisory Committee's Chairman.
New website
Over the last months we have also developed our new website.
This is aimed at providing our investors and those interested in
the Company with much more in-depth information and regular
updates. We will also be engaging with our stakeholders via social
media in conversations around oil and gas, the unconventional gas
industry, as well as San Leon Energy and its strategy, developments
and its operations.
Financial
2011 was another pivotal year for San Leon Energy with a profit
of EUR15.6 million against a loss of EUR3.98 million in 2010.
Outlook
The focus of the Company is to continue to prove-up our
extensive shale gas acreage in Poland. Our strategy of adding as
much prospective acreage as we can across different basins, but
with different parameters such as depth and maturity, is we
believe, the right one as it will give us exposure to at least one
if not multiple sweet spots, any one of which could add significant
value to your Company.
We are also working diligently towards being cash generative
through the drilling of a number of oil wells in July, having
already spoken to refineries in both Poland and Germany and are
confident that we would be able to monetise any success within 90
days. We will be looking to test flow our carboniferous well
Siciny-2 later this year and we are confident that we can monetise
any success there in the first half of next year given the pipeline
is just 500 metres away from the well.
Our strategy of diversified plays across not only the portfolio,
but also within Poland, will allow San Leon Energy to recover much
of the ground lost to the market due to its perceived
disappointment in the very initial horizontal fracc in Poland. This
speaks more to the market's lack of understanding as to how these
shale plays are developed than the reality on the ground. Every
well drilled in Poland so far has encountered gas and every player
in Poland believes that the 3Legs fracc were a technical
success.
PGNIG, who have also drilled a well just north of our
Lewino-1G/2 well, are now organising themselves for pad-drilling
with a view to being the first in Poland to produce commercial
shale gas by late this year or early next year. The Baltic Basin is
still at the early stages of its development; but we are, with our
partners and other operators in the region, confident that it will
become a significant resource for Poland and the rest of
Europe.
Consolidated income statement
for the year ended 31 December 2011
2011 2010
EUR EUR
Continuing operations
Revenue 1,039,654 592,047
Cost of sales (566,469) (447,750)
------------ --------------
Gross profit 473,185 144,297
Other income 25,990,204 1,501,100
Administrative expenses (7,225,224) (4,215,347)
Exploration costs written-off (2,684,290) -
------------ --------------
Profit/(loss) from operating
activities 16,553,875 (2,569,950)
Finance expense (1,258,186) (1,414,193)
Finance income 344,255 8,825
Share of loss of equity-accounted (4,715) -
investments
Profit/(loss) before income
tax 15,635,229 (3,975,318)
Income tax expense (35,344) (1,057)
------------ --------------
Profit/(loss) for the year
attributable to equity holders
of the Group 15,599,885 (3,976,375)
------------ --------------
Consolidated statement of comprehensive income
for the year ended 31 December 2011
2011 2010
EUR EUR
Profit/(loss) for the year 15,599,885 (3,976,375)
Foreign currency translation
differences 915,281 382,768
----------- -------------
Total comprehensive income/(loss)
for the year 16,515,166 (3,593,607)
----------- -------------
Earnings/(loss) per share:
Basic earnings/(loss) per 1.85 cent (1.02) cent
ordinary share
---------- ------------
Diluted earnings/(loss) per 1.77 cent (1.02) cent
ordinary share
---------- ------------
Consolidated statement of changes in equity
for the year ended 31 December 2011
Attributable
Share to equity Non-controlling
Currency based holders interest
Share Share translation payment Retained of the Total
capital premium reserve reserve earnings Group equity
2010 EUR EUR EUR EUR EUR EUR EUR EUR
Balance at
1 January
2010 16,059,196 23,976,523 - 2,321,035 (9,323,365) 33,033,389 - 33,033,389
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Total comprehensive
income for year
(Loss) for
the year - - - - (3,976,375) (3,976,375) - (3,976,375)
Other comprehensive
income
Foreign
currency
translation
differences - - 382,768 - - 382,768 - 382,768
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Total
comprehensive
income for
year - - 382,768 - (3,976,375) (3,593,607) - (3,593,607)
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Transactions with owners
recognised directly
in equity
Contributions by and distributions
to owners
Issue of
shares 19,533,715 55,313,322 - - - 74,847,037 - 74,847,037
Issue of
shares
related to
business
combinations 3,463,832 12,203,515 - - - 15,667,347 - 15,667,347
Share options
and warrants
exercised 43,037 95,855 - - - 138,892 - 138,892
Share based
payment - - - 1,133,534 - 1,133,534 - 1,133,534
Effect of
share
options
exercised - - - (37,424) 37,424 - - -
Total
transactions
with owners 23,040,584 67,612,692 - 1,096,110 37,424 91,786,810 - 91,786,810
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Balance at
31 December
2010 39,099,780 91,589,215 382,768 3,417,145 (13,262,316) 121,226,592 - 121,226,592
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
2011
Balance at
1 January
2011 39,099,780 91,589,215 382,768 3,417,145 (13,262,316) 121,226,592 - 121,226,592
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Total comprehensive
income for year
Profit for
the year - - - - 15,599,885 15,599,885 - 15,599,885
Other
comprehensive
income
Foreign
currency
translation
differences - - 915,281 - - 915,281 - 915,281
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Total
comprehensive
income for
year - - 915,281 - 15,599,885 16,515,166 - 16,515,166
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Transactions with owners
recognised directly
in equity
Contributions by and distributions
to owners
Issue of
shares
related to
business
combination 15,352,623 26,926,235 - - - 42,278,858 - 42,278,858
Issue of
shares 1,542,267 3,938,527 - - - 5,480,794 - 5,480,794
Share options
and warrants
exercised 663,921 437,243 - - - 1,101,164 - 1,101,164
Share based
payment - - - 2,792,554 - 2,792,554 - 2,792,554
Effect of
share
options
exercised - - - (748,211) 748,211 - - -
Share to be
issued on
Realm
acquisition
on conversion
of
exchangeable
shares - - - - - - 5,685,721 5,685,721
Shares issued
to Realm
shareholders - - - - - - (3,162,540) (3,162,540)
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Total
transactions
with owners 17,558,811 31,302,005 - 2,044,343 748,211 51,653,370 2,523,181 54,176,551
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Balance at
31 December
2011 56,658,591 122,891,220 1,298,049 5,461,488 3,085,780 189,395,128 2,523,181 191,918,309
------------ ------------ ------------ ----------- ---------------- ------------- ------------------ ---------------
Consolidated statement of financial position
as at 31 December 2011
2011 2010
EUR EUR
Assets
Non-current assets
Intangible assets 140,263,276 76,064,855
Equity accounted investments 3,026,864 -
Property, plant and
equipment 9,278,608 2,398,186
Other non-current assets 816,928 -
Financial assets - net
profit interest 39,197,977 -
192,583,653 78,463,041
------------ -------------
Current assets
Inventory 757,669 -
Trade and other receivables 8,064,400 1,593,592
Other financial assets 502,620 1,491,802
Cash and cash equivalents 26,197,963 67,168,659
------------ -------------
35,522,652 70,254,053
------------ -------------
Total assets 228,106,305 148,717,094
------------ -------------
Equity and liabilities
Equity
Called up share capital 56,658,591 39,099,780
Share premium account 122,891,220 91,589,215
Share based payment
reserve 5,461,488 3,417,145
Currency translation
reserve 1,298,049 382,768
Retained profit/(loss) 3,085,780 (13,262,316)
------------ -------------
Attributable to equity
holders of the Group 189,395,128 121,226,592
Non-controlling interest 2,523,181 -
------------ -------------
Total equity 191,918,309 121,226,592
------------ -------------
Non-current liabilities
Provisions 5,345,211 5,345,211
Loans and borrowings 2,671,219 7,886,287
Deferred tax liabilities 9,329,447 -
------------ -------------
17,345,877 13,231,498
------------ -------------
Current liabilities
Trade and other payables 12,113,951 5,759,517
Loans and borrowings 5,177,144 8,499,487
Provisions 1,551,024 -
------------ -------------
18,842,119 14,259,004
------------ -------------
Total liabilities 36,187,996 27,490,502
------------ -------------
Total equity and liabilities 228,106,305 148,717,094
------------ -------------
Consolidated statement of cash flows
for the year ended 31 December 2011
2011 2010
EUR EUR
Cash flows from operating activities
Profit/(loss) before tax 15,635,229 (3,975,318)
Adjustments for:
Depletion and depreciation 522,726 55,316
Loss on disposal of property,
plant and equipment - 5,089
Finance expense 1,258,186 1,414,193
Finance income (344,255) (8,825)
Share based payments charge 866,038 428,438
Foreign exchange (1,283,211) (6,624)
Gain on assignment of Barryroe
licence (22,408,037) -
Exploration costs written-off 2,684,290 -
(Increase) in stocks (757,669) -
(Increase) in trade and other
receivables (6,030,610) (760,769)
Increase in trade and other payables 3,111,101 891,230
Share of loss of equity-accounted
investments 4,715 -
Tax paid (37,979) (2,870)
------------- -------------
Net cash (used) in operating
activities (6,779,476) (1,960,140)
------------- -------------
Cash flows from investing activities
Expenditure on exploration and
evaluation assets (39,440,563) (10,190,443)
Joint venture partner share of
exploration costs 8,999,859 2,879,848
Purchases of property, plant
and equipment (7,353,565) (2,225,931)
Interest received 318,206 8,825
Net cash acquired with subsidiary 5,216,546 244,092
Release of bank guarantees 941,883 -
------------- -------------
Net cash (used) in investing
activities (31,317,634) (9,283,609)
------------- -------------
Cash flows from financing activities
Proceeds from issue of share
capital, net of costs 6,302,541 75,140,429
Repayment of convertible loan (2,150,000) (600,000)
Proceeds from drawdown of other
loans - 2,343,321
Repayment of other loans (7,360,572) -
Interest paid (370,798) (520,566)
Net cash (used) in/generated
from financing activities (3,578,829) 76,363,184
------------- -------------
Net (decrease)/increase in cash
and cash equivalents (41,675,939) 65,119,435
Effect of foreign exchange fluctuation
on cash and cash equivalents 705,243 66,705
Cash and cash equivalents at
start of year 67,168,659 1,982,519
------------- -------------
Cash and cash equivalents at
end of year 26,197,963 67,168,659
------------- -------------
Notes to the Financial Statements
General
San Leon Energy plc ("the Company") is a company incorporated in
Ireland. The Group financial statements consolidate those of the
Company with those of its subsidiaries (together referred to as
"the Group").
The financial information presented in this report has been
prepared using accounting policies consistent with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and as set out in the Group's annual financial statements in
respect of the year ended 31 December 2011. The financial
information herein does not include all the information and
disclosures required in the annual financial statements, however
the full financial statements are included within the Annual Report
which are being distributed to shareholders and which are available
on the Company's website www.sanleonenergy.com. It will also be
filed with the Company's Annual Return in the Companies
Registration Office.
The financial information herein for the prior year ended 31
December 2010 represents an abbreviated version of the Group's
statutory financial statements and which full financial statements
have been filed with the Companies Registration Office.
The auditors' report in the Annual Report for the year ended 31
December 2011 contains the following emphasis of matter
paragraph:
Emphasis of matter - Carrying value of Intangible Assets and
Financial Assets - Net Profit Interest
In forming our opinion, which is not qualified, we have
considered the adequacy of disclosures made in Note 9 and Note 14
to the financial statements in relation to the Directors'
assessment of the carrying value of the Group's Intangible Assets
amounting to EUR140.3 million and the carrying value of the Group's
Financial Assets - Net Profit Interest amounting to EUR39.2
million. The financial statements do not include adjustments that
would result if the Group could not recover the full carrying value
of the Intangible Assets or the full carrying value of the
Financial Assets - Net Profit Interest.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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