TIDMUEP
RNS Number : 1305A
UMC Energy Corporation
24 September 2015
UMC ENERGY CORPORATION
Condensed consolidated interim financial statements
for the half-year ended 30 June 2015
REPORT OF THE DIRECTORS
FOR THE PERIOD ENDED 30 JUNE 2015
The Directors present their report together with the
consolidated financial statements for the six months ended 30 June
2015.
The financial report has been presented in United States dollars
which is the Group's functional currency.
Principal activities and review of business
The principal activity of the Group is investment directly and
indirectly in, and operation of, resource exploration and
development projects.
During the half-year the Group's main undertaking was the
development of the Papua New Guinea petroleum project, in which the
Group holds a 30% interest.
Review of operations and state of affairs
Papua New Guinea
In September 2011, the Group acquired one on-shore (PPL 378) and
two off-shore (PPLs 374 and 375) Petroleum Prospecting Licences
(PPLs) in Papua New Guinea through the acquisition of PNG Energy
Limited (PNG Energy) and that company's wholly owned subsidiary
Gini Energy Limited (Gini Energy). Subsequently, in May 2012, Gini
Energy was awarded an additional on-shore licence, PPL 405, by the
Government of Papua New Guinea.
On 26 March 2012, the Group entered agreements with a subsidiary
of CNOOC Limited (CNOOC), the Chinese multi-national oil and gas
company, listed on the New York, Toronto and Hong Kong Stock
Exchanges, whereby CNOOC subscribed for a 70% equity interest in
PNG Energy and UMC Energy retained a 30% equity interest.
Pursuant to the agreements, and in consideration for the share
subscription, CNOOC is responsible for funding all exploration and
appraisal expenditure in respect of the four PNG PPLs, up to the
decision to move to commercial development and production.
To June 2015, approximately PGK42 million (US$16 million) in
costs incurred by PNG Energy in relation to the four PNG permits
has been met by CNOOC. Such expenditure will be repaid to CNOOC out
of production revenues and off-take of oil and gas once the assets
of Gini Energy enter production, should such production occur. If
exploration and appraisal work indicates the probable existence of
commercial reservoirs of oil or gas in any part of the PPLs at the
end of the exploration phase, the parties must each finance their
pro-rata share of all expenditure required in respect of the
development plan to bring such field(s) into production, either
themselves or by procuring sufficient finance from a third
party.
PPL 378 onshore
The two blocks (western and eastern) of PPL 378 are located in
the Central Highlands of the Papua Fold Belt. The Western Block is
situated close to existing producing and processing facilities of
the Moran and Agogo oil and gas fields. The main gas pipeline
connecting Hides to ExxonMobil's newly operational LNG plant at
Port Moresby transects the block.
The western block contains the Paua-1X oil discovery drilled by
BP in 1996. Oil was recovered from RFT wireline tests from two
sandstone reservoir sequences in the Iagifu Formation. Some 37
metres of net oil pay is interpreted in 5 layers in separate Upper
and Lower Iagifu reservoirs.
Contingent oil and gas resources in the Iagifu assessed by
3D-GEO Pty Limited (3D-GEO), and reported in their Competent
Person's Report (CPR) on 5 August 2013 in accordance with the
definitions and guidelines set out in the Petroleum Resources
Management System (PRMS) are as follows:
All values GROSS CONTINGENT RESOURCES NET ATTRIBUTABLE CONTINGENT Chance
in MMbbls* WITHIN PPL378 West: Paua RESOURCES TO UMC ENERGY: of Success
or Bcf* Iagifu Sands Paua Iagifu Sands (%)
-------------- ------------------------------------------- ------------------------------------------- ------------
PPL 378 W Low Estimate Best High Low Estimate Best High
Operator: 1C Estimate Estimate 1C Estimate Estimate
CNOOC 2C 3C 2C 3C
-------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------
Oil
Contingent
Resource 7.6 25 73 2.3 7.4 39 55
-------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------
Gas
Contingent
Resource 264 130 56 79 39 17 55
-------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------
*Note: MMbbls = million barrels of recoverable oil, Bcf =
billion standard cubic feet of recoverable gas
The overlying Digimu and Toro sandstones were water-wet at
Paua-1X (wireline log evaluation suggests the presence of residual
hydrocarbon saturation at the well). Significant additional
potential for oil and gas is present on the back-limb of the Paua
Anticline within structural closure, up-dip from the well to the
north-east, as previously reported in the CPR.
To date, CNOOC as the Operator of the permit has undertaken
significant technical work to better define the Paua structure.
This work has included additional reprocessing of the 2D seismic
lines across the structure tying into wells on the adjacent Moran
Oil Field. Remapping of the data indicates the presence of
significant structural closure up-dip from Paua-1X to the
north-east. The structural high is co-incident with the surface
anticline defined by surface geology and topography. This mapping
supports volumetric oil and gas estimates made by 3D-GEO in the CPR
and suggests that Paua is a robust structure of a sufficient size
and commercial potential to warrant appraisal drilling. CNOOC's
internal technical team continue their well planning for Paua-2X,
and subject to final approval of the location and drilling
contractor, drilling is presently expected to commence in early
2017.
PPL 405 onshore
PPL 405 is also located in the Central Highlands region of PNG
east of PPL 378. Technical evaluation of the licence was completed
in the first half of 2014. The initial technical study indicated
low potential and high exploration risk across most of the licence.
Significant potential was identified in some leads within the
permit, however these structures are presently defined by single 2D
seismic lines and will require acquisition of additional seismic
data and interpretation in order to elevate the leads to prospect
status prior to any consideration for exploration drilling.
CNOOC and UMC are assessing the economics and prospectivity of
this permit.
PPL 374 and PPL 375 offshore
PPLs 374 and 375 are contiguous licences located offshore in
deep water in the Gulf of Papua. To date, CNOOC has acquired 3,015
line kilometres of 2D seismic data and has undertaken data
processing and interpretation activities, as well as a series of
geophysical studies, including basin, source rock and reservoir
modelling to help confirm the prospectivity of the permits. These
studies indicate a high risk for both reservoir and trap formation,
along with marginal generation and expulsion values. The high costs
for drilling in the deeper waters of these permits requires robust
economic thresholds to be met to justify exploration drilling.
CNOOC and UMC continue to assess the economics and prospectivity
of these offshore permits.
The directors have resolved that it is not appropriate to
capitalise any further exploration expenditure in relation to PPLs
374, 375 and 405. In addition they have, in the current period,
resolved to impair exploration expenditure incurred to date in
respect of these permit areas, totalling $11 million, of which the
Company's share is $3.3 million.
Madagascar
Madagascar has experienced an extended period of political
upheaval and uncertainty. As a result the Company has not conducted
any exploration activities during the current financial period. The
Company continues to monitor the situation. Given these
circumstances, the Directors have resolved to fully impair the
carrying value of this intangible asset.
Financing
The Company remains dependent on loan funds being made available
to it by Natasa Mining Ltd to meet its working capital and other
requirements.
Given challenging equity market conditions, and in particular,
the weak outlook for the oil and gas sector, the Directors continue
to focus on the ongoing costs of the business, and areas in which
cost savings may be achieved by the Company.
C Kyriakou
Chairman
24 September 2015
UMC ENERGY CORPORATION
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
For the six months period ended 30 June 2015
6 months
6 months period ended
period ended 30 June
30 June 2015 2014
(Unaudited) (Unaudited)
Note $ $
Administrative expenses (215,018) (377,721)
Impairment of investment in
associated undertaking (3,320,430) -
Share of results of associates (37,350) (7,589)
--------------------------------------- ----- -------------- --------------
Loss from operations (3,572,798) (385,310)
Finance costs (977,947) (875,812)
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 08:30 ET (12:30 GMT)
Loss before taxation (4,550,745) (1,261,122)
Income tax expense 5 - -
Loss for the period (4,550,745) (1,261,122)
--------------------------------------- ----- -------------- --------------
Attributable to:
Equity holders of the parent (4,550,745) (1,261,122)
Non-controlling interest - -
--------------------------------------- ----- -------------- --------------
(4,550,745) (1,261,122)
Loss per share in cents - including
share of associates' results
Basic 6 (0.94) (0.26)
Loss per share in cents - excluding
share of associates' results
Basic 6 (0.25) (0.26)
The Group has no recognised gains or losses other than the
results for the period as set out above
UMC ENERGY CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
For the six months period ended 30 June 2015
6 months period 6 months period
ended 30 June ended 30 June
2015 2014
(Unaudited) (Unaudited)
$ $
Loss for the period (4,550,745) (1,261,122)
Other comprehensive expense
for the period - -
------------------------------ --- ---------------- ----------------
Total comprehensive expense
for the period (4,550,745) (1,261,122)
----------------------------------- ---------------- ----------------
Attributable to:
Equity holders of the parent (4,550,745) (1,261,122)
Non-controlling interest - -
------------------------------ --- ---------------- ----------------
Total comprehensive expense
for the period (4,550,745) (1,261,122)
UMC ENERGY CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL
POSITION
As at 30 June 2015
As at As at As at
30 June 30 June 31 December
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
ASSETS Note $ $ $
Non Current Assets
Intangible assets 7 - - -
Investment in associated
undertaking 8 22,809,342 26,290,068 26,167,122
------------------------------ ----- ------------- ------------- -------------
Total non current assets 22,809,342 26,290,068 26,167,122
Current Assets
Cash and cash equivalents 19,474 130,543 83,487
------------------------------ ----- ------------- ------------- -------------
Total current assets 19,474 130,543 83,487
------------------------------ ----- ------------- ------------- -------------
Total Assets 22,828,816 26,420,611 26,250,609
EQUITY AND LIABILITIES
Current Liabilities
Trade and other payables 302,524 84,367 276,295
Loans 15,549,232 13,162,107 14,446,509
------------------------------ ----- ------------- ------------- -------------
Total current liabilities 15,851,756 13,246,474 14,722,804
Total Liabilities 15,851,756 13,246,474 14,722,804
------------------------------ ----- ------------- ------------- -------------
Equity and Reserves
Share capital 17,242,518 17,242,518 17,242,518
Share based payments
reserve 1,449,557 1,449,557 1,449,557
Accumulated loss (11,434,529) (5,282,043) (6,883,784)
------------------------------ ----- ------------- ------------- -------------
Equity attributable
to equity holders of
the parent 7,257,546 13,410,032 11,808,291
Non-controlling interest (280,486) (235,895) (280,486)
------------------------------ ----- ------------- ------------- -------------
Total Equity 6,977,060 13,174,137 11,527,805
------------------------------ ----- ------------- ------------- -------------
Total equity and liabilities 22,828,816 26,420,611 26,250,609
------------------------------ ----- ------------- ------------- -------------
These interim results were approved by the Board on 24 September
2015 and signed on their behalf by:
C Kyriakou, Chairman
UMC ENERGY CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
for the six months period 30 June 2015
Share
Based
Share Payments Accumulated Non-controlling
Capital Reserve loss interest Total
$ $ $ $ $
Balance at 1
January 2014 17,242,518 1,482,165 (4,053,529) (235,895) 14,435,259
------------------------------- ----------- ---------- -------------- ---------------- ------------
Total comprehensive
expense for the
period
Loss - - (1,261,122) - (1,261,122)
Total other comprehensive
expense - - - - -
Total comprehensive
expense for the
period - - (1,261,122) - (1,261,122)
------------------------------- ----------- ---------- -------------- ---------------- ------------
Share options
lapsed in period - (32,608) 32,608 - -
------------------------------- ----------- ---------- -------------- ---------------- ------------
Balance at 30
June 2014 17,242,518 1,449,557 (5,282,043) (235,895) 13,174,137
------------------------------- ----------- ---------- -------------- ---------------- ------------
Share
Based
Share Payments Accumulated Non- controlling
Capital Reserve loss interest Total
$ $ $ $ $
Balance at 1
January 2015 17,242,518 1,449,557 (6,883,784) (280,486) 11,527,805
---------------------------- ----------- ---------- -------------- ----------------- ------------
Total comprehensive
expense for the
period
Loss - - (4,550,745) - (4,550,745)
Total other comprehensive
expense - - - - -
Total comprehensive
expense for the
period - - (4,550,745) - (4,550,745)
---------------------------- ----------- ---------- -------------- ----------------- ------------
Balance at 30
June 2015 17,242,518 1,449,557 (11,434,529) (280,486) 6,977,060
---------------------------- ----------- ---------- -------------- ----------------- ------------
UMC ENERGY CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
for the six months period 30 June 2015
6 months period 6 months period
ended ended
30 June 2015 30 June 2014
(Unaudited) (Unaudited)
$ $
Cash flows from operating activities
Net loss from operations (3,572,798) (385,310)
Adjustments for :
Impairment of investment in
associated undertaking 3,320,430
Share of associate undertaking's
losses 37,350 7,589
Depreciation - 199
Operating cash flows before
movements in working capital (215,018) (377,522)
Increase in trade and other
payables 26,229 11,707
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 08:30 ET (12:30 GMT)
Net cash flow from operating
activities (188,789) (365,815)
-------------------------------------- ---------------- ----------------
CASH FLOW STATEMENT
Net cash flows from operating
activities (188,789) (365,815)
Investing Activities
Investment in associate undertaking
additions - -
- -
-------------------------------------- ---------------- ----------------
Net cash flow from investing
activities - -
Financing activities
Loans 1,102,723 1,160,487
Loan interest and charges (977,947) (875,812)
Net cash flow from financing
activities 124,776 284,675
Decrease in cash & cash equivalents (64,013) (81,140)
Cash and cash equivalents brought
forward 83,487 211,683
Cash and cash equivalents carried
forward 19,474 130,543
UMC ENERGY CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
for the six months period 30 June 2015
1. General information
UMC Energy Corporation is a company incorporated in the Cayman
Islands. The condensed consolidated interim financial statements of
the Company as at and for the six months ended 30 June 2015
comprises the Company and its subsidiaries (together referred to as
the "Group") and the Group's interest in associates.
UMC Energy Corporation was incorporated and registered under the
laws of the Cayman Islands on 10 October 2012 as an exempted
company with limited liability and limited by shares under the
Cayman Islands Companies Law with Cayman Islands company registered
number MC-272327.
The principal activity of the Group is the investment in, and
exploration and development of natural resources projects,
specifically in a petroleum exploration project in Papua New Guinea
and a uranium exploration project in Madagascar.
The Group's principal activity is carried out in US dollars. The
financial statements are presented in United States dollars which
is the Group's functional currency.
The consolidated annual financial statements of the Group as at
and for the year ended 31 December 2014 is available at
www.umc-energy.com.
2. Statement of compliance
The condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard
34 "Interim Financial Reporting", as adopted by the European
Union.
The condensed consolidated interim financial statements do not
include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated
annual financial statements of the Group as at and for the year
ended 31 December 2014.
The annual financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 24 September 2015.
3. Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated financial statements are the same as those applied by
the Group in its consolidated financial statements as at and for
the year ended 31 December 2014.
Going Concern
The interim results have been prepared on a going concern basis,
which contemplates continuity of normal business activities and the
realisation of assets and settlement of liabilities in the ordinary
course of business.
The Directors believe that it is appropriate to prepare the
financial statements on a going concern basis, principally due to
the loan facility the Company has secured from Natasa Mining Ltd
(Natasa), and the confidence of the Directors that funds will
continue to be made available to the Company under this facility.
In addition, the Directors are of the view that the Company will be
able to raise additional funds through further debt or equity
raisings when required. The Directors are of the opinion that the
Natasa loan facility, any proposed debt or equity raising measures
and the existing cash resources of the Company will provide
sufficient funds to enable the Company to continue its operations
for at least the next twelve months.
4. Segmental analysis
The Group has one reportable segment which is that of the
investment directly and indirectly in, and operation of, resource
exploration and development projects. The Group's operational
activities are wholly focused in Papua New Guinea and Madagascar.
The Board of Directors review internal management reports at least
monthly.
The Group has not yet commenced commercial resource production
and has no turnover in the period.
Information regarding the results of the reportable segments is
shown below. Performance is measured based on the segment profit
before income tax as included in the internal management reports
that are reviewed by the Board of Directors. There is no
inter-segment pricing.
Information about reportable segments:
Period ended 30 June 2015
30 June 30 June 30 June 30 June
2015 2015 2015 2015
$ $ $ $
Madagascar Papua New Not
Guinea Identified Total
External revenue - - - -
Financial income - - - -
Financial expenses - - 977,947 977,947
Depreciation - - - -
Reportable segment
loss 4,109 3,320,430 1,188,856 4,513,395
Share of associate's
loss - 37,350 - 37,350
Segmental assets - 22,809,342 19,474 22,828,816
Segmental liabilities 222,956 - 15,628,800 15,851,756
Period ended 30 June 2014
30 June 30 June 30 June 30 June
2014 2014 2014 2014
$ $ $ $
Madagascar Papua New Not
Guinea Identified Total
External revenue - - - -
Financial income - - - -
Financial expenses - - 875,812 875,812
Depreciation - - 199 199
Reportable segment
loss 21,198 - 1,232,335 1,253,533
Share of associate's
loss - 7,589 - 7,589
Segmental assets - 26,290,068 130,543 26,420,611
Segmental liabilities - - 13,246,474 13,246,474
Year ended 31 December 2014
31 December 31 December 31 December 31 December
2014 2014 2014 2014
$ $ $ $
Madagascar Papua New Not
Guinea Identified Total
Segmental assets - 26,167,122 83,487 26,250,609
Segmental liabilities (222,956) - (14,499,848) (14,722,804)
Geographical segments
In presenting information on the basis of geographical segments,
segment assets are based on the geographical location of the
assets.
Non-current assets by geographical area
30 June 30 June 31 December
2015 2014 2014
$ $ $
Madagascar - - -
Papua New Guinea 22,809,342 26,290,068 26,167,122
5. Taxation
There is no corporation tax chargeable in the Cayman
Islands.
6. Loss per share
Including share of associate's results
Loss per share has been calculated by dividing the loss for the
period after taxation, including share of associate's results,
attributable to the equity holders of the parent company of
$4,550,745 (30 June 2014: $1,261,122) by the weighted average
number of shares in issue at the period end of 484,444,763 (30 June
2014: 484,444,763).
Excluding share of associate's results
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 08:30 ET (12:30 GMT)
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