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Interim Results
Northcote (LSE:NCT) is has announced its interim results for the six months ended 30 June 2015.
Highlights:
· Excellent progress made in building an energy company with significant exposure across the global oil and gas value chain
· On course to build an EBITDA profitable company in 2016 irrespective of the oil price environment
· Successfully repositioned US onshore portfolio to reflect low oil price environment: Acquisition of NAP USA, Inc. doubled Northcote’s interest at core low cost Shoats Creek property to 70% from 35% for a total of 1,266,074,005 consideration shares alongside ongoing divestment of non-core assets
· Raised £4.2million in new equity capital to pursue the Group’s US and Mexican strategy and to fully pay down the Darwin Convertible loan note
· Entered into a Joint venture with Gaia to pursue new business opportunities within the oil field services sector in Mexico
· Earned a participation right over 12.5% of any concessions or other oil and gas transactions that CEB Resources Plc enters into in Indonesia for a period of 5 years
Post period end:
· Excellent results from first Shoats Creek well underpins management’s belief that this project is capable of delivering substantial value and cash flow for shareholders in the very near term
· Expanding presence in Mexico to capitalise on opportunities arising from energy reforms:
o Establishment of Mayan Drilling Fluids, a partnership with Gaia Ecologica, to develop a scalable remediation facility in Tabasco state – revenues already being generated ahead of commissioning in Q1 2016
o Granted access to the data room being administered by the National Hydrocarbons Commission (‘CNH’) in line with strategy to gain upstream exposure
· Continuation of strategy to evaluate opportunities in Mexico and internationally
Northcote Managing Director Randall Connally said: “Successful companies look for and take advantage of opportunities in the face of adversity and we reacted quickly to position Northcote to thrive in the current oil price environment. As a result of a change in our strategic direction, one which involves adding midstream and downstream activities to our traditional upstream focus, we are now in a fantastic position to take advantage of the enormous opportunities we are seeing across the oil & gas value chain going into 2016 and beyond, and in the process generate significant value for our shareholders regardless of the prevailing oil price.
“Thanks to the steps we have taken so far this year, which includes acquiring NAP USA Inc., recapitalising the Group making our first investment in Mexico where we have also entered the latest onshore bid round, and hitting a home run at Shoats Creek with our LM#20 well, we now have what in the very near term will be a highly cash generative platform from which to invest in the multiple value creating opportunities we have identified. In the coming months we are highly confident that many of our projects will start to deliver value: increased cash flow generated from oil production at Shoats creek; our exposure to the onshore bid round in Mexico; the potential vesting of our 30,000,000 2p warrants in MX Oil; our Mayan Drilling Fluids joint venture becoming operational; and our option to participate in world class assets in Indonesia alongside CEB Resources. This is an exciting period for the group, one which will not be short of high impact news flow as we look to transform Northcote in 2016.”
