RNS Number:6537J
Wham Energy plc
29 September 2006
Interim Results for the six months ended 30 June 2006
Operating Highlights
*3D seismic survey on blocks 48/3 and 48/4 completed during September,
under budget
*22nd round licence farmout negotiations nearing completion
*23rd round licence yields two quality prospects
*24th round licence awards due shortly
*New Competent Person's Report due in October 2006 highlighting the
quality and breadth of our portfolio, and WHAM's progress since AIM
admission
*Producing or near-producing asset acquisition opportunities being
evaluated
Financial Highlights
*Interim loss before taxation was #141,920 (2005: #115,324)
*Loss per share for the interim period was 0.45p (2005: 0.69p)
*Liquid resources at 30 June 2006 amounted to #8.7million, or 27.4p/share
Date: 29 September 2006
For further information contact:
Wham Energy plc cityPROFILE
Tom Windle, Chief Executive Simon Courtenay
Tel: 020-7924-4644; Mob: 07968162630 Tel: 020-7448-3244
Alan Thomas, Finance Director
Mob: 07739800093
WHAM Energy plc is an AIM listed company. Further details about the company and
downloadable copies of this announcement are available on the Company's website:
www.whamenergy.com
Interim Results for the six months ended 30 June 2006
REVIEW OF OPERATIONS
Business environment
The oil and gas exploration business environment has changed dramatically over
the past eighteen months. On the positive side for the industry, oil and gas
prices have been very robust and there is a high demand which, we believe will
continue for the foreseeable future. However concomitant with the high commodity
prices there has been a dramatic increase in exploration costs. For example rig
rates have doubled. The rig hire rate when the Prometheus well was drilled in
October 2005 was approximately #55,000 per day; today the rate for new contracts
is of the order of #105,000 to #130,000 per day. In addition last year the
availability of rigs was reasonable whereas today the majority of the rigs have
been contracted, leaving relatively few drilling slots available. The increased
industry competitiveness, high costs, and relative scarcity of rigs have
adversely impacted our original plans to drill exploration prospects in 2006. We
believe that this set back is temporary and by no means diminishes the quality
of our portfolio or long term potential.
Seismic activity
Seismic activity has been confined to the two key licences outlined below. All
of the remaining licences are largely covered by quality 3D seismic and as such
only subject to internal mapping and seismic attribute analysis to further
define and generate new prospects.
Blocks 48/3 & 48/4
During September 2006, we conducted a 3D survey over our blocks 48/3 and 48/4.
This state of the art 3D programme has ensured that the whole licence is now
covered by high quality 3D seismic data, thus ensuring that any exploration well
drilled can be placed at the optimum location. The incremental benefits of this
survey are enormous; it will not only assist in refining our existing prospects
but should also help in identifying new prospects. In addition, in the event of
drilling success it will allow the group to fast track any development. The
gross acquisition cost of the survey was budgeted at #3 million but was executed
for a total cost of #2.58 million, with a net cost of #1.03 million to WHAM.
Block 47/12
As announced previously, WHAM planned to shoot a dense 2D seismic programme on
47/12 in June of this year to firm up a potentially attractive gas lead in the
northern part of the block. Our plans have been delayed to accommodate
environmental and local fishery concerns and it is now anticipated that the
survey will commence in February of 2007, subject to final planning consents.
Farm-out progress
22nd Round Blocks
Our exploration team has undertaken a thorough evaluation of all our 22nd Round
blocks which has given us a much better understanding of the prospects and
risks. We recognise that this has taken more time than originally anticipated
but we believe the effort has yielded a more robust portfolio.
At present we are in advanced negotiations with potential farminees for the
blocks 48/3 and 48/4 that contain the Morpheus and Nyx prospects and a number of
other very attractive prospects and leads. The farm-out will include a
commitment to drill a well at the earliest opportunity but probably no earlier
than mid 2007. WHAM's cost exposure and equity position are yet to be
determined.
Southern North Sea N.W. Core blocks 42/25b, 43/16 & 43/25b
These blocks have yielded a number of potentially very commercial gas prospects
made even more attractive by the fact that the prospects are close to a new
development, the Garrow field. WHAM has recently completed a farm-out campaign.
We are currently awaiting expressions of interest and offers and believe that we
will be in a position to make a firm decision on how best to proceed by mid
October.
Southern North Sea S.E. Core blocks 49/29c, 50/26c, 53/3e & 53/4c
Three of these blocks (49/29c, 50/26c, & 53/4c) have yielded small but
potentially very commercial prospects, close to existing infrastructure. WHAM is
working closely with Ithaca Energy to investigate how a multi-well drilling
programme might be put together to explore the best structures in a cost
effective manner. As the target reservoir is very well known and the drilling
depths are relatively shallow we believe that there is a reasonable chance that
the group will be able to continue the licences and put together an exploration
programme to exploit these relatively low risk prospects in conjunction with
farminees.
In December 2006, some 22nd Round licences with the least attractive prospects
will be relinquished.
23rd Round licences
Blocks 43/11 and 43/12
This 100% WHAM licence has yielded two well defined prospects at the prospective
Carboniferous level directly on trend to the Cavendish field. Currently WHAM is
determining the resource potential of the prospects and undertaking further
mapping to assess any additional prospectivity on the blocks.
24th Licence Round
WHAM participated in the 24th licence round that closed in early June. At
present we are awaiting the results which are due to be announced very shortly.
In the event of success, WHAM will have additional licences that will
strengthen, broaden and add value to our portfolio. Time permitting, for the
preparation of a farm-out package WHAM would consider placing any 24th round
awards in the industry's Prospect Fair this December.
Competent Persons Report (CPR)
At the time of our admission to the market we told investors that in addition to
the verified prospects we had a number of leads that, when fully evaluated, we
would submit for a Competent Persons Report update. These unverified prospects
were documented in our 2005 annual report. Thanks to the intensive efforts of
our geo-technical team, many of these and several additional prospects have been
developed sufficiently to warrant independent verification. WHAM has contracted
TRACS International to conduct this verification and the results will be
available in mid October. WHAM is confident that this CPR will convincingly
demonstrate the breadth and depth of our portfolio, show the considerable value
we have added to our asset base over the last year and provide valuable
information to investors. In addition we have requested TRACS to provide a
continuing service of verification such that we will be able to update
shareholders and potential investors on a regular basis in future.
Future opportunities
Annually the industry holds a Prospect Fair in early December. WHAM has secured
a booth at the fair and intends to market blocks 43/11, 43/12 and 47/12 for
farm-out. We anticipate there will be significant interest in the blocks and the
early marketing coupled with high working interests should allow us to obtain
favourable farm-out terms.
Whilst still focussing our efforts on exploration opportunities, we are also
evaluating the acquisition of near development and producing assets. Should we
identify an appropriate asset it would be our intention to make an acquisition
to provide the company with early cash-flow to support our operations and
enhance our asset base. Industry observers will have seen that recent
acquisitions and divestments have achieved record prices, making such
acquisitions difficult to achieve. However, we believe that under the right
circumstances value-adding asset purchases can still be made which would
compliment our existing portfolio.
In summary, we now have a well developed exploration prospect inventory and are
in the process of negotiating farm-out terms on several prospects. The inventory
is shortly to be independently verified, a regulatory process that will allow us
to demonstrate to shareholders and investors the value addition achieved through
our exploration work during the past year. We will continue to pursue
exploration opportunities but at the same time evaluate near developments and
producing assets with the potential to provide cash-flow and value addition to
the company. We will also evaluate selective international opportunities where
the cost base and potential meet our criteria. Licences that we deem to have
very low chances of commercial success will not be retained.
Tom Windle
Chief Executive Officer
29 September 2006
PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2006
6 Months 6 Months Year
Ended Ended Ended
30-Jun-06 30-Jun-05 31-Dec-05
Unaudited Unaudited Audited
# # #
Turnover - 23,598 23,598
Cost of sales - - -
--------------------------------------------------------------------------------
Gross profit - 23,598 23,598
Administrative expenses (335,816) (141,239) (395,086)
--------------------------------------------------------------------------------
(Loss) on ordinary activities before
interest (335,816) (117,641) (371,488)
Interest receivable 193,896 2,317 113,313
--------------------------------------------------------------------------------
(Loss) on ordinary activities before
taxation (141,920) (115,324) (258,175)
Tax on (loss) on ordinary activities - 12,981 41,446
--------------------------------------------------------------------------------
(Loss) for the period after taxation (141,920) (102,343) (216,729)
Retained (loss)/ profit brought
forward at 1 January 2006 (115,400) 101,329 101,329
--------------------------------------------------------------------------------
Retained (loss) carried forward at
30 June 2006 (257,320) (1,014) (115,400)
================================================================================
Basic and diluted (loss) per share
(see note 4) (0.45)p (0.69)p (1.05)p
Notes:
1. All of the Company's activities are classed as continuing.
2. There are no recognised gains or losses in either year other than the amounts
shown in the profit and loss account.
3. Basis of presentation:
These interim financial statements have been prepared on the basis of the
accounting policies adopted in the statutory accounts for the year ended 31st
December 2005. They were approved by the Directors on 27 September 2006, are
unaudited and have not been subject to independent review, as defined in the
Auditing Practices Board bulletin 1999/4, and do not constitute full statutory
accounts as defined in section 240 of the Companies Act.
The comparative financial information for the year ended 31st December 2005 set
out in this announcement, which does not constitute the statutory accounts of
the Company, is extracted from the Company's audited statutory accounts for the
year ended 31st December 2005. The auditors have reported on those accounts and
their report was unqualified.
4. Basic and diluted (loss) per share:
The basic loss per share has been calculated on the loss on ordinary activities
after taxation of #141,920 (6 months to 30 June 2005: #102,343, year to 31
December 2005: #216,729) divided by the weighted average number of ordinary
shares in issue during the period of 31,695,611 (6 months to 30 June 2005:
14,873,264, year to 31 December 2005: 20,720,816). As the Company reported a
loss for the year then, in accordance with Financial Reporting Standard Number
22, the warrants and options in issue are not considered dilutive.
BALANCE SHEET
As at 30 June 2006
30-Jun-06 30-Jun-05 31-Dec-05
Unaudited Unaudited Audited
# # #
Fixed assets
Intangible assets 671,441 197,471 518,901
Tangible fixed assets 20,446 6,535 20,344
--------------------------------------------------------------------------------
691,887 204,006 539,245
--------------------------------------------------------------------------------
Current assets
Debtors 166,578 115,157 178,766
Investments (see note) 8,562,495 - 9,130,277
Cash at bank and in hand 127,364 454,690 122,736
--------------------------------------------------------------------------------
8,856,437 569,847 9,431,779
--------------------------------------------------------------------------------
Creditors
Amounts falling due within one year (147,211) (168,214) (427,991)
--------------------------------------------------------------------------------
Net current assets 8,709,226 401,633 9,003,788
--------------------------------------------------------------------------------
Total assets less current liabilities 9,401,113 605,639 9,543,033
Provision for liabilities - (12,058) -
--------------------------------------------------------------------------------
NET ASSETS 9,401,113 593,581 9,543,033
================================================================================
Capital and reserves
Called-up share capital 31,696 20,564 31,696
Share premium account 9,568,287 515,581 9,568,287
Other reserves 58,450 58,450 58,450
Profit and loss account (257,320) (1,014) (115,400)
--------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' FUNDS 9,401,113 593,581 9,543,033
================================================================================
Note:
Investments consisted of money market deposits which earn interest at rates set
in advance for periods of 1-2 months by reference to Sterling LIBOR.
Cash Flow Statement
For the six months ended 30 June 2006
6 Months 6 Months Year
Ended Ended Ended
30-Jun-06 30-Jun-05 31-Dec-05
Unaudited Unaudited Audited
# # #
Net cash inflow/ (outflow) from
operating activities (see note) (630,523) (22,930) 9,806
Returns on investment and servicing of finance
Bank and investment interest
receipts 215,209 2,317 76,322
Taxation
Taxation (paid)/ recovered 9,138 - (35,000)
Capital expenditure and financial investment
--------------------------------------------------------------------------------
Payments to acquire tangible
fixed assets (4,438) (2,753) (18,558)
Payments to acquire intangible
fixed assets (152,540) (182,279) (503,709)
--------------------------------------------------------------------------------
(156,978) (185,032) (522,267)
--------------------------------------------------------------------------------
Net cash flow before use of
liquid resources and financing (563,154) (205,645) (471,139)
Management of liquid resources
Decrease/(Increase) in short
term deposits 567,782 - (9,130,277)
Financing
--------------------------------------------------------------------------------
Proceeds from issue of ordinary
shares - 602,820 10,602,820
Costs associated with share issue - (9,884) (946,067)
--------------------------------------------------------------------------------
- 592,936 9,656,753
--------------------------------------------------------------------------------
Increase in cash 4,628 387,291 55,337
================================================================================
Reconciliation of net cash flow to movement in net funds
Increase in cash in the year 4,628 387,291 55,337
Decrease in short term deposits (567,782) - 9,130,277
--------------------------------------------------------------------------------
Change in net funds (563,154) 387,291 9,185,614
Net funds at 1 January 2006 9,253,013 67,399 67,399
--------------------------------------------------------------------------------
Net funds at 30 June 2006 8,689,859 454,690 9,253,013
--------------------------------------------------------------------------------
Note:
Reconciliation of operating result to net cash flow from operating activities
Operating (loss)/ profit for
the year (335,816) (117,641) (371,488)
Depreciation 4,336 1,147 3,142
(Increase) in debtors (18,263) (29,108) (35,686)
Increase/ (decrease) in creditors (280,780) 122,672 413,838
--------------------------------------------------------------------------------
Net cash inflow/ (outflow)
from operating activities (630,523) (22,930) 9,806
--------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
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