TIDMOEX
RNS Number : 8580D
Oilex Ltd
02 November 2020
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Contents
Chairman's
Review.....................................................................................................................................................................
2
Business
Review.........................................................................................................................................................................
4
Permit
Schedule.......................................................................................................................................................................
11
Directors'
Report......................................................................................................................................................................
13
Remuneration Report -
Audited...............................................................................................................................................
22
Lead Auditor's Independence Declaration
...............................................................................................................................
30
Consolidated Statement of Profit or Loss and Other Comprehensive
Income..........................................................................
31
Consolidated Statement of Financial
Position...........................................................................................................................
32
Consolidated Statement of Changes in
Equity..........................................................................................................................
33
Consolidated Statement of Cash
Flows....................................................................................................................................
34
Notes to the Consolidated Financial
Statements......................................................................................................................
35
Directors'
Declaration...............................................................................................................................................................
75
Independent Audit
Report........................................................................................................................................................
76
Shareholder
Information...........................................................................................................................................................
81
Definitions.................................................................................................................................................................................
83
Corporate
Information..............................................................................................................................................................
84
Dear Shareholder,
The 2020 financial year produced two remarkable global events.
The first of these was the effect of COVID-19 and the fundamental
change it brought to the daily and working lives of all of us. The
other key event was the global oil and gas price reduction, the
third time this occurred within a 12 year period. Virtually every
community in our modern world and every industry has been affected
in some way by one or both of these events. Certainly, it has
brought about further changes and downward pressure on an already
embattled oil and gas industry. Our industry has seen an increase
in the number of project delays and project re-assessments along
with several corporate collapses, related to combinations of
reduced commodity prices, scarcity of risk capital and
significantly altered working environments. Oilex's experiences
were in line with this and included the non-completion of the
initial proposal for the Cooper-Eromanga basin package spin-out and
additional and significant delays to our Cambay project in
India.
This unusual period has also produced positive occurrences with
new projects becoming available as beleaguered corporations seek
funding solutions for their projects and as some governments seek
to stimulate industry activity in response to declining domestic
oil and gas production.
As a result, this has been a period of consolidation for the
Company. Management's focus has been to:
i) capitalise on held projects, determining the best value realisation for each one,
ii) continue to press forward with the existing projects in the Oilex portfolio,
iii) resolve long running problematic historical issues, and
iv) reduce the company's cost base in both India and Australia.
Despite the very challenging climate, Oilex remains focused on
returning value to shareholders with the short to medium focus of
restoring value to the share price through sound management
practices.
To that end, during the reporting period, Oilex successfully
acquired a new package of highly prospective acreage in the
Cooper-Eromanga Basins in Australia, it worked with the Indian
government to define a solution for the dispute with the joint
venture partner on the Cambay project, it continued to work to
restore ownership of the West Kampar project in Indonesia, it
acquired acreage in the East Irish Sea in the United Kingdom , and
it worked with joint venture partners to resolve a long running
dispute in East Timor. At the same time funding was secured while
our cost base was dramatically reduced. Our cornerstone
shareholders, Singapore based Republic Investment Management and
the Malta based Lombard Group deserve particular mention, as they
have continued to provide strong support for which the board and
management expresses its sincere thanks. Similarly, the company has
many long-suffering shareholders who continue to hold the stock in
the shared belief in the intrinsic value proposition offered by the
company and its assets.
The Company's resolve in India is based on the significant
undeveloped multi TCF gas resource within the Cambay PSC - the
Cambay Tight Gas Project. This requires further investment and
appraisal work to ultimately demonstrate the project's
commerciality and Oilex retains the support of the Indian
government to re-commence an appraisal/development effort for this
project. The solution lies with the exit of GSPC through a sales
process supported by the Indian National Government, the Gujarat
State Government and GSPC's own board of directors. But for COVID,
we believe that an outcome would have been reached in the first
part of the 2020 calendar year. The effect of COVID on India has
been particularly severe resulting in the unavoidable continued
delay in reaching a solution. It has also changed the investment
capability of companies which bid in the GSPC sale, and this has
been an additional complicating factor. We do believe that a
solution will occur, however in the current circumstance, it is
difficult to provide accurate timing estimates. In the absence of
senior management travel to India, our enormously dedicated Indian
staff continue to successfully drive our business forward. An
eventual conclusion will allow the Company to return to the
planning and field work needed for the actual appraisal drilling,
completion and stimulation program identified by the technical
studies undertaken with Schlumberger, Baker Hughes GE and Oilfield
Data Services Inc. which outlined the next stage of work program to
prove the commerciality of the Cambay Tight Gas Project.
The Company's new business development efforts bore fruit
through the establishment of the focus on "super-basin areas" in
Australia's Cooper-Eromanga Basins and the UK's Continental Shelf.
With prior knowledge and experience in both of these areas, the
company set about reviewing available opportunities, identifying
target areas within proven fairways, and target companies,
following a strict set of investment and risk exposure guidelines.
As a result, a high potential package of acreage which includes
existing discoveries was captured in Australia. Further work added
additional acreage won in a government bid round. Funding
considerations, particularly in relation to upfront costs related
to government environment and rehabilitation bonds, meant that the
best value realisation was to place the asset group into a new
entity and the various options of IPO and sales were investigated.
A favourable agreement was initially struck where the assets would
be purchased by an existing entity looking for a change of focus,
however, the advent of COVID and the reduction in funding options
meant that this did not materialize. Management responded quickly
and secured an alternative option with Armour Energy, a company
with an existing viable asset base looking for additional projects.
The move of Oilex's immediate past Chairman, Brad Lingo, to an
executive role in Armour provided continuity of focus on the asset
set and the transaction, assuming completion, provides Oilex with a
significant value position in relation to the Australian
assets.
In the UK, Oilex struck a series of deals and options with a
number of UK based entities, for both discovered and exploration
assets in the highly productive East Irish Sea basin. Through a
series of agreements, Oilex established line of sight over a number
of low entry cost, complementary projects in the East Irish Sea
immediately adjacent to large producing gas fields with refurbished
production and processing facilities and where new sources of gas
production would help to extend the productive life of the greater
projects. However, once again COVID resulted in reduced ability to
secure risk capital for these projects, and Oilex reduced its
position to a single licence containing two high potential
exploration targets, again adjacent to existing producing
fields.
In East Timor, a dispute with the government regulator
stretching back more than 5 years had moved to the stage of
arbitration in a Singapore arbitration centre. Oilex and its
partners believed that all processes had been correctly followed in
executing the historical Joint Venture work programs, and that
arbitration provided a very costly resolution process with an
uncertain outcome. As a result, a settlement was agreed with the
regulator that ceased the arbitration process. The settlement
agreement provided Oilex with a financial obligation of US$800,000
to be paid to the regulator, and with the uncertainties surrounding
the industry as a whole, Oilex set about finding a solution to
manage the exposure. This was provided by some of our existing
joint venture partners in the form of a loan facility effectively
deferring the payment schedule for several years.
In Indonesia, Oilex had continued to seek redress for a historic
dispute with an Indonesian partner and operator in relation to the
West Kampar PSC, into which Oilex had paid funds, but where it was
excluded from production income and project decision making. While
a successful arbitration ruling was gained in Singapore courts, it
proved almost impossible to enforce in Indonesia. With the eventual
demise of the partner company, Oilex continued to press it rights
with the Indonesian government, even re-bidding for the asset in a
government sponsored bid round. Oilex has an agreement with a very
reputable Indonesia entity, PT Ephindo to work together on an equal
basis for the return of the rights to the PSC with Government
support for the same.
In addition to the above efforts to create and return value,
Oilex continues to review business opportunities in high potential
areas, relying on its contact base, its demonstrated capabilities
and its belief that good projects with good management can be
funded. It remains our objective to apply our skill base to deliver
value to our shareholders through solid project and corporate
management. We seek your continued support in our efforts. On
behalf of the Board, I wish to thank our staff, contractors, local
communities, shareholders, and stakeholders for your ongoing
support.
Mr J Salomon
Interim Chairman
31 October 2020
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