TIDMSRSP
RNS Number : 0440O
Sirius Petroleum PLC
15 May 2018
15 May 2018
Sirius Petroleum Plc
("Sirius" or "the Company")
Final Results
For the year ended 31 December 2017
Sirius Petroleum (AIM: SRSP), the Nigeria focused oil and gas
exploration and development company, announces audited Final
results for the twelve-month period ended 31 December 2017.
Highlights
-- Sirius entered into a Joint Operation Agreement ('JOA') on
the Ororo Field enabling the Company to transition from an
investing company into an operating company
o New equity issued by the Company totaling 723,700,000 new
Ordinary Shares raising gross proceeds of approximately US$9.5
million at a price of 1 pence per share - finally ratified by
shareholders in December 2017.
o In addition, a Convertible Loan Facility of US$12 million was
entered into carrying a coupon of LIBOR plus 6.5 per cent. and
partially convertible at a 50 per cent premium to the Issue Price
of the Placing.
o The combined proceeds of the new capital and the commitments
of the Company's commercial partners under previously announced
Commercial Agreements provide the combined resources to the Company
to drill the Ororo-2 well and bring it into production in
accordance with the Ororo JOA.
-- In Q4 the Company commenced discussions and due diligence
with REYL & Co (UK) LLP, part of the Swiss banking group REYL
et Cie, which has CHF 13bn AUM, to structure a contingent liquidity
facility of up to US$100 million which would be backed by the
securitisation of receipts under the BP Prepayment and Offtake
Agreement.
-- Sirius confirmed that as part of its strategy and on
confirmation that the Ororo-2 well production rates of the
hydrocarbon reservoirs are in line with those estimated in the
Competent Persons Report ("CPR") on the asset, and conditional on
the Company securing further financing, by way of the non-dilutive
REYL facility, the Company will undertake a multi well campaign to
fully develop the Ororo Field, involving the drilling of up to four
further wells and the installation of permanent production,
processing and pipeline facilities at the Field.
-- Sirius entered into a Prepayment and Offtake Agreement with BP in July 2017:
o BP will provide a prepayment facility for a fixed volume of
Escravos Blend crude deliveries by prepaying an amount of up to
US$10 million per cargo to Sirius.
o The availability of the prepayment facility is conditional
upon, among other things, the Ororo Field achieving certain daily
production levels.
The Annual General Meeting will be held at 10.00 am on Thursday,
14 June 2018 at the offices of Fladgate LLP, 16 Great Queen Street,
London, WC2B 5DG. A Notice convening the meeting along with the
2017 Annual Report will be sent to shareholders shortly and will
also be available for download from the Company's website:
www.siriuspetroleum.com
Bobo Kuti, CEO of Sirius, said: "The end of 2017 marked a
milestone for the Company including the financial resources to
commence the development phase of the Ororo Field, the Company's
first offshore marginal field oil and gas asset and as a
consequence, since the 2017 year end, the Group has undergone both
a financial and operational transformation.
"The prevailing oil price has also resulted in a substantial
uplift in the underlying value of the Ororo Field and according to
the Ororo CPR produced by Rockflow and set out in the Company's
Admission Document, it is estimated that the Ororo-2 well will
initially produce approximately 2,700bopd of light oil and 6mmcfd
of gas. Rockflow estimates that the Ororo asset has a Mid Case Net
Present Value to Sirius (NPV10) of $96.1m, based on a $65 per
barrel flat real oil price for the life of the field.
"During 2018 the Group commenced a range of work streams with
its operational partners: Add Energy, Schlumberger and COSL which
included additional technical work such as the developing the
Mechanical Earth Model with the team at Schlumberger in order to
optimize the drilling program on Ororo-2 and Ororo-3. The rig
identification has been made in preparation for final mobilization
and continued equipment requisitions such as the Compact Well Head
Systems for Ororo-2 and Ororo-3 and more recently for Ororo-4 and
Ororo-5."
Enquiries:
Sirius Petroleum +44 20 3740 7640
Bobo Kuti, Chief Executive
Mark Henderson, Chief Financial Officer
Cantor Fitzgerald Europe +44 20 7894 7000
David Porter/Nick Tulloch
Gable Communications +44 20 7193 7463
John Bick srsp@gablecommunications.com
Chairman and CEO Statement
The Group achieved the major milestone during the Summer of 2017
by announcing that it had entered into the Joint Operating
Agreement in respect of the Ororo Field, offshore Nigeria, and
subsequent to that event it had successfully raised new equity
funding and debt facilities to support the next stage of the
Group's development into an oil and gas exploration and development
company, which was ratified by shareholders in December of
2017.
Financial Summmary
The loss after tax was $2,269,000 in 2017 from $2,172,000 in
2016, with administrative expenses of $1,741,000. Total assets were
$18,594,000 in 2017 (2016: $5,658,000), with liabilities of
$6,573,000 (2016: $5,547,000) and total equity was $12,021,000.
During the first half of the year the Group raised a further
GBP2 million ($2.5 million) by way of a placing at 0.75p per share
and a further GBP70,000 ($88,000) in loans, which were converted
into shares at 0.5p.
Group Strategy and the Ororo Field Development
The Board continues to seek to farm into or acquire high quality
assets located in major producing complexes and during the period
and into the current year has continued with a range of discussions
to farm into a number of opportunities, leveraging on the Group's
operational status and the commercial arrangements with its range
of partners.
The development of the Ororo Field is entirely in line with the
Group's strategy to target proven opportunities and maximize
hydrocarbon production and recovery through the acquisition of
discovered assets in Nigeria, with a particular focus on shallow
water offshore areas and realise upside potential through appraisal
activities.
The Ororo Field is located within OML 95 in the Niger Delta,
offshore Nigeria, in the western part of the prolific Niger Delta
petroleum system. It lies in shallow waters offshore Ondo State in
water depths ranging between 23ft and 27ft. The field is adjacent
to the Mina, West Isan, Ewan, Eko and Parabe fields, all of which
are operated by Chevron.
The Ororo Field was discovered in OML 95 by Gulf Oil Company of
Nigeria (Chevron) and NNPC in 1986 with the drilling of Ororo1.
Hydrocarbons were discovered in seven sandstone reservoirs (D1 to
D5, F and G) in Ororo1. Four of the reservoirs were tested, two
produced oil (D3 and G) and two produced gas condensate (D4 and
D5).
The Ororo Field was not developed by Chevron and was designated
a marginal field by the DPR on 27 August 2001. Under the 2003
Marginal Fields Allocation Round, the Ororo Field was awarded to
Guarantee (55 per cent. interest) and Owena (45 per cent.
interest). Under the marginal field terms, the marginal field
remains part of OML 95, but is contractually ringfenced under the
Farmout Agreement to Guarantee and Owena, who are then entitled to
perform petroleum operations as the farmee. NNPC and Chevron as
holders of the licence to OML 95 entered into the Farmout Agreement
with Guarantee and Owena in March 2004, which transferred
production rights to Guarantee and Owena, as the farmee, in
consideration of the grant of an overriding royalty from production
from the Ororo Field.
The Farmout Agreement was initially entered into for a term of
60 months. The DPR, however, has extended the Ororo Field licence
beyond its original term, and the licence is now due to expire on 1
May 2019 if the field has not been developed by that date. The term
of the Farmout Agreement was, accordingly, also extended.
During 2018, the Group's aim is to commence an initial programme
of two wells, Ororo-2 and Ororo-3, drilled back-to-back and access
the contingent oil and gas resources in the Ororo field. The
programme envisages deploying an early production scheme via
extended well test and it is estimated that Ororo-2 will deliver
initial production of approximately 2,700bopd.
Development of the Ororo Field
During the year the Group undertook a Seabed Survey around the
Ororo field licence area. This activity is a geophysical and
geotechnical marine survey, ahead of the rig mobilisation, which
will provide data and analysis for the rig positioning prior to
drilling and assess any marine geohazards to ensure safe operations
and transportation of equipment
Ororo-2 Well
The Ororo-2 well is planned to penetrate all of the D sands with
the top three sands (D1, D2 and D3) being sampled and pressure
tested. The objectives of the tests are to determine GOCs, the
pressure regimes, fluid compositions, and insitu gasoil ratios to
gain confidence for the full field development.
In its CPR, Rockflow Resources Limited ("Rockflow")`x` has
estimated that the Ororo-2 well will target a total Stocktank Oil
Initially in Place (STOIIP) of 2.98 mmbbls in the G sands within
the Ororo Field (at a midcase scenario). Drilling of the Ororo-2
well is expected to take approximately 45 days from mobilisation of
the drilling rig to the Ororo-2 site.
During the Extended Well Testing ("EWT") phase, the Ororo-2 well
is expected to initially produce into a temporary well test
production facility mounted on a barge. Hydrocarbon production is
expected to be treated (degassing and dehydration) to standard
specifications for shuttle tanker transportation via the production
facility and barge. Separate oil storage capacity is expected to be
provided on the barge to store up to 10 days' production
(approximately 50,000 bbls).
The EWT flow rate is anticipated to be a maximum of 10,000 bopd
oil and up to 15 MMscfd of associated gas. The separators and the
heater are expected to be sized to handle 15,000 bopd of gross
liquids and 25 MMscfd gas. Gas from the Ororo-2 well fluids is
expected to be separated and treated in a purpose built gas
processing train to meet export specifications. It is proposed to
install the oil and gas processing as well as oil storage
facilities on a host facility installed on a barge. Oil is then
expected to be transferred to a shuttle tanker for onward transport
and offloading at the Chevron operated Escravos Terminal as per the
BP Prepayment and Offtake Agreement. It is planned to install an 8
inch diameter x 5 km pipeline for export of 6.0 MMscfd gas to the
Parabe field, with flaring as a fall back option.
Proposed Ororo-3 well and EWT
As already stated in the Admission document sent to shareholders
in November 2017, following completion of the Ororo-2 well and
conditional on further funding being obtained, the Ororo-2 drilling
rig is intended to proceed to drill the Ororo-3 well, which is
proposed to target the D sand reservoir sequence.
The D sands were flow tested by Chevron in the 1986 Ororo-1 well
and the results of Ororo-1 DST (Drill Stem Test) program recovered
36deg API oil at a rate of 624 bopd from the D3 sands. The CPR
estimates that the highest oil production rates could be achieved
from the D1 sands which could deliver an initial combined rate from
a two bore multilateral well of 4,781 bopd. Therefore, the D1 may
be considered as a target for Ororo-3 if oil is recovered from this
reservoir in Ororo-2. Currently, however, the Ororo-3 well is
planned to target the D3 sands which holds a P50 STOIIP of 10.18
mmbbls as it was proven to flow oil on test.
Drilling of the Ororo-3 well is expected to take approximately
30-45 days following completion of the Ororo-2 well, the well is
proposed to be put on early production via an EWT along with
hydrocarbons produced from the Ororo-2 well.
If the fluid results in the above wells for the D1 and D2 sands
are positive, two further wells, Ororo-4 and Ororo-5, targeting
these sands may be drilled as the second phase of the EWT. If such
further wells are drilled, their planning and design will require
geophysical and geological analysis of new data gathered from the
Ororo-2 and Ororo-3 wells.
Corporate and Social Responsibility Statement
Sirius Petroleum aims to have a positive relationship with the
host communities and stakeholders within our areas of operations
and the society at large. We are committed to ensure that we
minimise the impact our operations have on the environment and
strictly adhere to industry best practices.
Our Corporate Social Responsibility (CSR) focus areas are Health
and Safety (Environment) and Community Development (Education,
Welfare and Empowerment); we are presently working on the best
strategies to implement these and ensure optimum reach.
Board and Management Team
Sirius was delighted to welcome three new Board Directors
following the General Meeting held on 18 December with S Hawkins
and T Hayward joining the Board as Non-Executive Directors and M
Henderson as Chief Financial Officer.
In October 2017 it was with great sadness that Sirius announced
that Peter Gregory, Chief Operating Officer had died suddenly.
Peter was appointed Chief Operating Officer of the Group on 12
April 2017, and whilst he was not a member of the main Board he was
a much valued and admired member of the Sirius team and he was
instrumental in creating the operational foundations for the Ororo
drilling programme.
In December 2017 Sirius announced the appointment of Dermot
O'Keeffe as Interim COO, with primary responsibility for all
operational areas of the Ororo field development, a role which he
had fulfilled on an acting basis.
Annual General Meeting
The Annual General Meeting will be held at 10.00 am on Thursday,
14 June 2018 at the offices of Fladgate LLP, 16 Great Queen Street,
London, WC2B 5DG. A Notice convening the meeting along with the
2017 Annual report will be sent to shareholders shortly and will
also be available for download from the Company's website:
www.siriuspetroleum.com
Current trading and outlook
Clearly since the 2017 year end the Group has undergone both a
financial and operational transformation, with the completion of
the successful fund raising, a range of shore-based work streams
have been commenced in association with the Group's operational
partners in Schlumberger, Add Energy and COSL.
The prevailing oil price has also resulted in a substantial
uplift in the underlying value of the Ororo Field and according to
the Ororo CPR produced by Rockflow and set out in the Company's
admission document, it is estimated that the Ororo-2 well will
initially produce approximately 2,700bopd of light oil and 6mmcfd
of gas. Rockflow estimates that the Ororo asset has a Mid Case Net
Present Value to Sirius (NPV10) of $96.1m, based on a $65 per
barrel flat real oil price for the life of the field.
During 2018 the Group commenced a range of work streams with its
operational partners: Add Energy, Schlumberger and COSL which
included additional technical work such as the developing the
Mechanical Earth Model with the team at Schlumberger in order to
optimize the drilling program on Ororo-2 and Ororo-3. The rig
identification has been made in preparation for final mobilization
and continued equipment requisitions such as the Compact Well Head
Systems for Ororo-2 and Ororo-3 and more recently for Ororo-4 and
Ororo-5.
J Pryde
Chairman
14 May 2018
STRATEGIC REPORT
For the Year ended 31 December 2017
Business review
The results of the Group are shown below. The Directors do not
recommend the payment of a dividend.
The results represent the costs of developing our strategy and
reviewing interests in both potential oil and gas blocks and
individual marginal field opportunities. Total comprehensive loss
for the year amounted to $2,305,000 (2016: $2,135,000). Finance
costs in 2017 were: $122,000 (2016: $794,000).
Sirius has not issued any new ordinary shares since the year end
and has 3,555,965,801 shares in issue. Sirius does not hold any
shares in treasury and, hence, the total number of voting rights in
the Company is 3,555,965,801. This figure may be used by
shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, the Company under the Financial
Conduct Authority's Disclosure and Transparency Rules.
Aims and objectives
The Group's core corporate strategy is to work alongside
financial and technical industry partners on a joint farm-in basis
to exploit larger oil blocks (typically, marginal fields that have
flowed oil in the past) in Nigeria, and our objective for 2018 is
to commence the drilling programme on the Group's first marginal
field, the Ororo Field, located in OML95.
Key Performance Indicators
At this stage in the Group's development, the key performance
indicator is the loss after tax. As the Group has not undertaken
any trade in the year it has no other key financial or
non-financial performance indicators. This will be reviewed in the
forthcoming year.
Principal risks and uncertainties
The Group's overall approach to risk management is to employ
suitably skilled personnel and implement appropriate policies and
procedures. The risks we face have evolved over the course of the
year as the business has developed and external factors have
impacted the environment in which we operate.
Responsibility for reviewing the system of Risk Management rests
with the Audit Committee of the Board, which has reviewed and
approved the measures that are being taken to mitigate the most
significant risks.
The principal risks faced by Sirius during 2017 relate to
political risks in respect of the situation in Nigeria and
strategic risks associated with the growth of the organisation and
the economic climate.
Exploration Risk
Exploration activities can be capital intensive and may involve
a high degree of risk. Thus, budgets are produced by experienced
individuals and reviewed to ensure best practice exists.
Exploration programmes are approved by the Board.
Oil Price Risk
The oil price is subject to market conditions which are outside
of the Group's control. The decision to invest in any oil drilling
will be made based on the latest and forecasted oil prices and
approved by the Board.
Nigeria country risks
President Buhari's administration initiated many structural
reforms within the NNPC and the MPR to provide clarity,
transparency, and accountability within the Nigerian oil and gas
Industry. These reforms continue to support indigenous projects.
The Group hopes that its existing relationship with Owena, the
energy arm of the Ondo State Government, will enhance its access to
proven oil discoveries located within Ondo State.
Health, Safety, Security and Environment
Sirius is fully committed to ensuring the health, safety and
security of all personnel who are directly involved in, or affected
by, the Group's operations and full compliance with environmental
legislation and standards. As part of this commitment, the Group
reviews the HSS&E policies and procedures on a regular basis,
integrated with the Group Safety Management System (SMS) to ensure
full compliance with industry 'best practice', and international
and local rules and regulations.
Environmental compliance and management is a priority and the
Group is committed to ensuring that all the appropriate steps are
taken to ensure any environmental impacts resulting from the
Group's operations are kept to a minimum. Consistent with
international and local requirements, Sirius conducts Environmental
and Social Impact Assessments ('ESIAs') and ensures that
environmental approvals from the relevant authorities are in place
prior to embarking on any new projects.
Loss of key employees
Loss of knowledge and skills to the Group in particular
countries of operation is a key risk. In response to this risk,
remuneration policies are designed to incentivise, motivate and
retain key employees.
Taxation and other legislation changes
Operating in developing countries has the additional risk of
significant changes in taxation legislation on oil field profits or
other legislation. Maintenance of good open working relationships
with local authorities in the countries of operation is therefore
critical.
Going concern
The Directors have prepared cash flow projections for the period
up to 30 June 2019. The cash flow assumes full development of the
Ororo field and forecast revenue streams based upon the Competent
Person's Report produced. The cash flow shows a requirement for
short term borrowings of $32 million, and the Group has put in
place borrowing facilities to cover this amount. The projections
demonstrate that the Group will have sufficient cash resources to
meet its liabilities as they fall due for a period of at least 12
months from the date that the financial statements are signed.
Consequently, the financial statements have been prepared on a
going concern basis.
Fundraising
The Group has the financial resources in place to bring the
Ororo Field into production. Following completion of the Ororo-2
well and conditional on further funding being obtained, Sirius
intends to proceed to drill the Ororo-3 well, which is proposed to
target the D sand reservoir sequence.
Future prospects
The Board is pleased with the progress made during 2017, and
anticipates being in a position to commence the extraction of
hydrocarbons from the Ororo Field in the current year.
The Board also continues to review additional asset
opportunities, as well as distressed producing opportunities, that
require funding.
The Chairman and CEO statement is an integral part of the
strategic report.
O Kuti
Chief Executive Officer
14 May 2018
SIRIUS PETROLEUM PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ending 31 December 2017
Basis of Preparation
The Consolidated financial statements have been prepared under
the historical cost convention and in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRS). The Company's shares are listed on the AIM market of the
London Stock Exchange. Separate financial statements of Sirius
Petroleum plc (the Company) have been prepared.
The principal accounting policies of the Group are set out
below.
GOING CONCERN
The Directors have prepared cash flow projections for the period
up to 30 June 2019. The cash flow assumes full development of the
Ororo field and forecast revenue streams based upon the Competent
Person's Report produced. The cash flow shows a requirement for
short term borrowings of $32 million, and the Group has put in
place borrowing facilities to cover this amount. The projections
demonstrate that the Group will have sufficient cash resources to
meet its liabilities as they fall due for a period of at least 12
months from the date that the financial statements are signed.
Consequently, the financial statements have been prepared on a
going concern basis.
SEGMENTAL REPORTING
An operating segment is a distinguishable component of the Group
that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group's chief operating decision maker to make decisions
about the allocation of resources and assessment of performance and
about which discrete financial information is available.
The chief operating decision maker has defined that the Group's
only reportable operating segment during the year is oil extraction
and related activities. The Group has not traded and has not
generated any revenue from external customers during the
period.
SIRIUS PETROLEUM PLC
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2017
Year ended Year ended
Notes 2017 2016
$'000 $'000
Other income 59 69
Share based payments (465) -
Other administrative expenses 1 (1,741) (1,447)
----------- -----------
Total administrative expenses (2,206) (1,447)
Loss from operations (2,147) (1,378)
Finance cost (122) (794)
Loss before and after taxation,
and loss attributable to the
equity holders of the Company 3 (2,269) (2,172)
Other comprehensive loss
Items that are or may be reclassified
subsequently to profit and loss
Exchange differences on translating
foreign operations (36) 37
----------- -----------
Other comprehensive loss for
the period, net of tax (36) 37
----------- -----------
Total comprehensive loss for
the year, attributable to owners
of the company (2,305) (2,135)
=========== ===========
Total loss per ordinary share
Basic and diluted loss per share
(cents) 3 (0.09) (0.11)
=========== ===========
All of the activities of the Group are classed as continuing
SIRIUS PETROLEUM PLC
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2017
Share Share Share Other Exchange Retained Total
capital premium based reserves reserve earnings equity
payment
reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1
January 2016 7,144 25,252 7,225 - (266) (39,400) (45)
--------- ----------- --------- ------------- --------- ---------- ----------
Share issue 1,783 648 - - - - 2,431
Share issue costs - (151) - - - - (151)
Transfer on lapse
of share options/warrants - - (4,629) - - 4,629 -
Issue of loan
fees equity instruments
(note 5) - - - 11 - - 11
Transactions
with owners 1,783 497 (4,629) 11 - 4,629 2,291
--------- ----------- --------- ------------- --------- ---------- ----------
Exchange difference
on translating
foreign operations - - - - 37 - 37
Loss for the
year - - - - - (2,172) (2,172)
Total comprehensive
loss for the
year - - - - 37 (2,172) (2,135)
--------- ----------- --------- ------------- --------- ---------- ----------
Balance at 31
December 2016 8,927 25,749 2,596 11 (229) (36,943) 111
========= =========== ========= ============= ========= ========== ==========
Share based payments - - 465 - - - 465
Share issue 4,283 10,075 - - - - 14,358
Share issue costs - (608) - - - - (608)
Transfer on lapse
of share options/warrants - - (339) - - 339 -
Transfer on repayment
of loan fees
equity instruments
(note 5) - - - (11) - 11 -
Transactions
with owners 4,283 9,467 126 (11) - 350 14,215
--------- ----------- --------- ------------- --------- ---------- ----------
Exchange difference
on translating
foreign operations - - - - (36) - (36)
Loss for the
year - - - - - (2,269) (2,269)
--------- ---------- ----------
Total comprehensive
loss for the
year - - - - (36) (2,269) (2,305)
--------- ----------- --------- ------------- --------- ---------- ----------
Balance at 31
December 2017 13,210 35,216 2,722 - (265) (38,862) 12,021
========= =========== ========= ============= ========= ========== ==========
SIRIUS PETROLEUM PLC
STATEMENT OF FINANCIAL POSITION
Aa at 31 December 2017
31 December 31 December
2017 2016
ASSETS Notes $'000 $'000
Non-current assets
Intangible exploration and evaluation
assets 4 10,554 4,643
Property, plant and equipment 13 20
1 10,567 4,663
--------------------------- ------------------------------
Current assets
Cash and cash equivalents 4,014 830
Trade and other receivables 4,013 165
Total current assets 8,027 995
Total assets 18,594 5,658
--------------------------- ------------------------------
LIABILITIES
Current liabilities
Trade and other payables 6,236 4,440
Loans payable 5 337 1,107
Total liabilities 6,573 5,547
--------------------------- ------------------------------
EQUITY
Share capital 6 13,210 8,927
Share premium 35,216 25,749
Share-based payment reserve 2,722 2,596
Other reserves - 11
Exchange reserve (265) (229)
Retained earnings (38,862) (36,943)
Equity attributable
to equity holders of the Company 12,021 111
Total equity and liabilities 18,594 5,658
=========================== ==============================
The consolidated financial statements were approved by the Board
and authorised for issue on 14 May 2018. The Company only's loss
for the year was $8,364,000 (year ended 31 December 2016:
$2,644,000).
O Kuti
Director
14 May 2018
SIRIUS PETROLEUM PLC
CASHFLOW STATEMENT
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
$'000 $'000
Cash flow from operating activities
Continuing operations
Loss after taxation (2,269) (2,172)
Depreciation 6 6
Finance cost 122 794
Decrease in trade and other
receivables (879) (183)
Equity settled share-based payments 465 -
Expenses settled in shares 680 -
Decrease in trade and other
payables (440) (8)
Net cash outflow from operating
activities from continuing operations (2,315) (1,563)
------------ ------------
Cash flows from investing activities
Investment in intangibles (3,525) (781)
Purchase of property, plant
and equipment (1) -
Net cash outflow from investing
activities (3,526) (781)
------------ ------------
Cash flows from financing activities
Proceeds from issue of share
capital 9,230 2,431
Share issue costs (608) (151)
Finance cost (48) (138)
Loans received 526 830
Loans repaid - (125)
Net cash inflow from financing
activities 9,100 2,847
------------ ------------
Net change in cash and cash
equivalents 3,259 503
Cash and cash equivalents at
beginning of period 830 45
Exchange differences on cash
and cash equivalents (75) 282
Cash and cash equivalents at
end of period 4,014 830
============ ============
SIRIUS PETROLEUM PLC
NOTES TO THE ACCOUNTS
FOR THE PERIODED 31 DECEMBER 2017
1. REVENUE, LOSS before taxation and segmental information
Loss before taxation
The loss before taxation is attributable to the principal
activities of the Group.
The loss before taxation is stated after charging:
Year ended Year ended
31 December 31 December
2017 2016
$'000 $'000
Staff costs 993 420
Depreciation of owned fixed assets 6 6
Operating lease rentals: land and
buildings 86 64
Fees payable to the Company's auditor
for the audit of the financial statements 52 39
Fees payable to the Company's auditor
and its associates for other services:
Other services relating to
reporting
accountant 139 -
Other services relating to employee
tax advice 6 -
Other services relating to taxation
compliance 4 4
============================== ===============================
Segmental information
An operating segment is a distinguishable component of the Group
that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group's chief operating decision maker to make decisions
about the allocation of resources and assessment of performance and
about which discrete financial information is available.
The chief operating decision maker has defined that the Group's
only reportable operating segment during the year is oil extraction
and related activities. The Group has not traded and has not
generated any revenue from external customers during the period. In
respect of non-current assets $Nil (2016: $Nil) arise in the UK and
$10,567,000 (2016: $4,663,000) arise in Nigeria.
2. Taxation
There is no tax charge for the year (year ended 31 December
2016: $nil).
Unrelieved tax losses of approximately $19,500,000 (2016:
$18,600,000) remain available to offset against future taxable
trading profits. The unprovided deferred tax asset at 31 December
2017 is $3,754,000 (2016: $8,018,000) which has not been provided
on the grounds that it is uncertain when or in what tax
jurisdiction taxable profits will be generated by the Group to
utilise those losses.
The tax assessed for the year differs from the standard rate of
corporation tax in the UK as follows:
2017 2017 2016 2016
$'000 % $'000 %
Loss before taxation (2,269) (2,172)
-------- --------
Loss multiplied by standard
rate (437) (19.25) (434) (20.00)
of corporation tax in the
UK
Effect of:
Expenses not deductible
for tax purposes 151 (19.25) 166 (20.00)
Overseas loss not recognised 44 (19.25) 92 (20.00)
Interest disallowed 63 (19.25) - (20.00)
Unrelieved tax losses 179 (19.25) 176 (20.00)
-------- --------
Total tax charge for year - -
======== ========
3. LOSS PER SHARE
2017 2016
$'000 $'000
Loss attributable to owners of the
Company (2,269) (2,172)
-------------------- ------------------------
2017 2016
Number Number
Weighted average number of shares
for calculating basic loss per share 2,550,274,003 1,945,424,787
-------------------- ------------------------
2017 2016
Cents Cents
Basic and diluted loss per share (0.09) (0.11)
-------------------- ------------------------
There are 463,500,000 share options and 333,000,000 warrants
outstanding as at 31 December 2017. Their effect is anti-dilutive,
but is potentially dilutive against future profits.
4. INTANGIBLE EXPLORATION AND EVALUATION ASSETS
Cost of oil and gas exploration
$'000
Cost
At 1 January 2016 3,862
Additions 781
At 31 December 2016 4,643
Additions 5,911
At 31 December 2017 10,554
---------------------------
Amortisation and impairment
At 1 January 2016, 31 December 2016 and 31 December
2017 -
---------------------------
Net book value at 31 December 2017 10,554
---------------------------
Net book value at 31 December 2016 4,643
---------------------------
Net book value at 1 January 2016 3,862
---------------------------
During the year ended 31 December 2011 Sirius Ororo OML95
Limited entered into an agreement with Guarantee Petroleum Company
Limited and Owena Oil & Gas Limited which gives it the right to
acquire a 40% interest in the Ororo Oil Field.
The consideration for the 40% interest in the field was
$1,000,000 paid on the date of the agreement with a further
$500,000 due on the commencement of the operation of the well. At
the time of signing the agreement, the Directors considered the
fair value of the liability in respect of the additional $500,000
payable. Based on an assessment of how likely it would be that this
would be paid discounted at 15%, the Directors considered the
amount to be immaterial and did not, therefore, recognise a
liability at that time.
At 31 December 2012, the Directors reassessed their estimate of
the future cash flows in accordance with the Group's accounting
policies. Following the additional work as noted below and the
completion of the feasibility report along with the ongoing funding
negotiations, the Directors were confident of commencement of the
operation of the well. As a result, this liability was now expected
to become payable. In 2016 the Directors reviewed the assumptions
made and consider that the liability should now be provided in full
as it was expected to be paid shortly, therefore, the carrying
value of the liability was assessed at $500,000 and is included in
other payables (2016: $500,000).
The Group has undertaken certain works including commissioning
the preparation of a Competent Persons Report and has conducted an
environmental impact assessment. It has also commenced planning
appropriate community projects and site surveys to finalise the
subsequent drilling programme and will also cover certain
operational costs related to the field. Under the agreement with
our partners, the Group will cover all costs of this phase of the
project. Costs plus interest of LIBOR+3% will be recoverable on the
production of oil before the profit interest split is applied;
these costs are being added to the costs of the asset.
The Directors have reviewed the investment for impairment. On 8
September 2016, the Group announced that an independent valuation
of the Ororo field prepared by Rockflow Resources Limited, gave a
mid case net present value of the asset of $49.2m based on a $50
per barrel flat real oil price for the life of the field, and a low
case net present value of $8.5m. This valuation was confirmed in
the updated CPR in our admission document dated 30 November 2017.
These valuations were recalculated at $65 per barrel and resulted
in a low case net present value of $32.9m and a mid case net
present value of $96.1m. These valuations support the value of the
investment held on the Statement of Financial Position and support
the view that no impairment triggering events have occurred.
The Group intends investing further amounts into the Ororo Oil
Field, as part of its strategic development plans. The costs of the
capital and operating costs will be covered by either separate
funding facilities or by financial and technical industry partners
on a joint farm-in basis.
5. LOANS PAYABLE
During the year the Group received loans from several
unconnected parties to fund working capital amounting to $526,000
(2016: $830,000), which incurred initial loan fees of $Nil (2016:
$83,000).
Convertible loans
None of the 2017 loans received were convertible. Of the 2016
loans 2016: $669,000 plus interest of $67,000 was convertible at
0.35p. The loans are unsecured.
Some of the loan agreements and initial loan fees represent
compound instruments. The fair value of the financial liability
component of these loans and arrangement fees was initially
recognised at $Nil (2016: $657,000). Associated finance charges of
$52,000 (2016: $23,000) have been recognised during the period
calculated in accordance with the effective interest method. During
the year $736,000 (2016: $Nil) of the debt was repaid in shares,
and $Nil (2016: $125,000) was repaid in cash. At 31 December 2017,
the carrying value of the financial liability is $337,000 (2016:
$937,000), including a $84,000 (2016: $136,000) exchange movement
and is included within loans payable.
The initial loan fees of the 2016 convertible loan may be
settled, at the Lendor's discretion, in cash or as a fixed number
of shares, to be issued at 0.35p per share. This component
represents an equity instrument and was been recognised within
other reserves in 2016 at the residual value of $12,000, being the
difference between the $669,000 cash consideration received and the
initial fair value of the financial liability component of 2016:
$657,000. There was an exchange movement of $1,000 recognised on
the reserve and the carrying value was $11,000. This amount was
transferred to retained earnings on converson of the loan in 2017
and $1,000 exchange difference was recognised.
During the year ended 31 December 2016 $124,655 of initial loans
were repaid in cash and an additional $91,718 finance charge was
paid on this loan dating back to 2012, which has been included in
finance cost in 2016. Additionally $46,000 of commissions paid on
loans received has been included in finance costs in 2016.
Non-convertible loans
During the year the Group received non-convertible loans of
$526,000 (2016: $160,000) and $22,000 of interest (2016: $16,000)
was recognised on these loans during the year. Agreements were
reached with the lendors to repay these loans in shares and
86,103,572 shares were issued in respect of a total repayment of
$743,000 including a $25,000 exchange movement (2016 minus $6,000
movement). Additionally $23,000 of commissions paid on loans
received has been included in finance costs in 2017.
The movements in the loans are summarised below:
31 December 31 December
2017 2016
Convertible loans $'000 $'000
Balance at 1 January 937 518
Loans received - 657
Interest charged 52 23
Converted (736) -
Repaid in cash - (125)
Foreign exchange 84 (136)
Balance at 31 December 337 937
============ ============
Non-convertible loans
Balance at 1 January 170 -
Loans received 526 160
Interest charged 22 16
Paid in shares (743) -
Foreign exchange 25 (6)
Balance at 31 December - 170
============ ============
6. share capital
31 December 31 December
2017 2016
$'000 $'000
Allotted, issued and fully paid
3,555,965,801 (2016: 2,258,029,523)
ordinary shares of 0.25p 13,210 8,927
=========================== ==============================
The movement in share capital is analysed as follows:
Ordinary
shares
No. $000
Allotted and issued
At 31 December 2015 1,721,362,856 7,144
Shares issued for cash 536,666,667 1,783
At 31 December 2016 2,258,029,523 8,927
Shares issued for fees due 64,323,183 214
Shares issued for cash 990,366,666 3,258
Loan repayments 243,246,429 811
At 31 December 2017 3,555,965,801 13,210
============== ===========================
On 26 January 2017, 14,000,000 ordinary shares of 0.25p were
issued at 0.5p in repayment of a loan of GBP70,000.
On 22 February 2017, 266,666,666 ordinary shares of 0.25p were
issued at 0.75p for cash raising GBP2,000,000 before costs, and
3,333,333 ordinary shares of 0.25p were issued at 0.75p in payment
of placing commission of GBP25,000.
On 5 December 2017, 394,000,000 ordinary shares of 0.25p were
issued at 1p for cash raising GBP3,297,000 before costs.
On 19 December 2017, 329,700,000 ordinary shares of 0.25p were
issued at 1p for cash raising GBP3,940,000 before costs,
188,571,429 ordinary shares of 0.25p were issued at 0.35p in
repayment of loans and interest of GBP660,000, 5,500,000 ordinary
shares of 0.25p were issued at 0.5p in repayment of loans and
interest of GBP27,500, 35,175,000 ordinary shares of 0.25p were
issued at 0.1p in repayment of loans and interest of GBP351,750,
24,977,350 ordinary shares of 0.25p were issued at 0.5p in payment
of fees of GBP124,887, 29,012,500 ordinary shares of 0.25p were
issued at 1p in payment of directors' and other fees of 290,125,
and 7,000,000 ordinary shares of 0.25p were issued at 1p in payment
of placing commission of GBP70,000.
The ordinary shares carry one vote each and on winding up of the
Company the balance of assets available for distribution will,
subject to any relevant restrictions, be divided amongst the
shareholders.
7. PUBLICATION OF STATUTORY ACCOUNTS
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006.
The consolidated statement of financial position at 31 December
2017, the consolidated statement of comprehensive income,
consolidated statement of changes in equity, consolidated statement
of cash flows and associated notes for the year then ended have
been extracted from the Group's 2017 financial statements upon
which the auditor's opinion is not modified and does not include
any statement under Section 498 of the Companies Act 2006.
The accounts for the year ended 31 December 2017 will be posted
to shareholders shortly and laid before the Company at the Annual
General Meeting. Copies will also be available on the Company's
website (www.siriuspetroleum.com) in accordance with AIM Rule
26.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFUEDLFASESI
(END) Dow Jones Newswires
May 15, 2018 02:01 ET (06:01 GMT)
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