TIDMADV
RNS Number : 8399Y
Advance Energy PLC
18 January 2022
18 January 2022
Advance Energy plc
("Advance Energy" or the "Company")
Interim Results
Advance Energy ( AIM:ADV ), the energy company seeking growth
through acquisition or farm-in to non-operated interests in
discovered upstream projects, announces its half-yearly report for
the six months ended 31 October 2021.
Enquiries:
Advance Energy plc +44 (0)1624 681
Leslie Peterkin (CEO) / Stephen West (CFO) 250
Strand Hanson Limited (Financial and Nominated
Adviser) +44 (0)20 7409
Rory Murphy / James Harris / James Bellman 3494
Buchanan (Public Relations) +44 (0)20 7466
Ben Romney / Jon Krinks 5000
Tennyson Securities Limited (Joint Broker) +44 (0)20 7186
Peter Krens / Ed Haig-Thomas 9030
Optiva Securities Limited (Joint Broker) +44 (0)20 3411
Christian Dennis 1881
The Interim Report will be available from the Company's website
www.advanceplc.com
CHAIRMAN'S STATEMENT
Dear fellow shareholders,
I am delighted to present the following statement in support of
the interim results for the six months ended 30 October 2021, a
period which saw significant improvements in the industry landscape
despite the ongoing challenges presented by the Covid-19
pandemic.
Indeed, as economic activity has rebounded, we have found
ourselves in a rising commodity price environment supported by
continued global demand growth for oil and exacerbated by
under-investment across the industry in recent years. The changing
industry dynamics accelerated by the energy transition, whereby
traditional oil majors and national oil companies are seeking to
divest non-core assets from their portfolios, presents an
opportunity-rich landscape for the Company moving forward.
In this context, the Company's strategy of identifying hidden
value in discovered resources and realising that value through
innovative technical approaches and commercial solutions to deliver
robust cash flow and shareholder returns, remains appropriate and
compelling.
Following the successful completion of the farm-in to the
Buffalo field in Timor Leste in April of 2021, the focus this year
has been working with our JV partner Carnarvon Petroleum to
progress towards the drilling of the Buffalo-10 appraisal well,
which in the success case represents a major value catalyst for
Advance Energy and its shareholders.
The JV, in which Advance Energy holds a 50% working and
beneficial interest, finalised technical work to agree on the well
location and in September 2021 the formal rig contract was signed
with Valaris Limited for the VALARIS JU-107 jack-up drilling rig,
with drilling operations commencing on 31 December 2021. At the
date of this report the well operations are at a critical phase and
the market will be updated as results are determined.
The economics of the Buffalo project have continued to improve
in line with the improving commodity price environment. At the time
of the farm-in, the oil price was circa US$50/bbl Brent, and
independent competent person projections on a commercial
development showed gross free cash flow of US$276m in year one of
production. With Brent currently priced at circa US$80/bbl the
economics have only grown more compelling and demonstrate the
exceptional cash flow and rates of return that can be unleashed by
this project in the success case.
While we believe there is a strong likelihood that the
Buffalo-10 well will confirm an economic development project, with
an independently verified chance of success of 86%, we remain
cognisant of the risks associated with the well as should always be
the case in our industry. However, the project represents the
culmination of three years of work by the leadership team and is an
example of the Company's strategy in action, with non-operated
exposure to a proven asset with significant potential for material
upside and a roadmap to exceptional near-term cash flow
generation.
At the same time as working with our JV partners to bring the
Buffalo project to fruition, Advance's management team continue to
develop the Company's long-term growth ambitions. In this context,
Buffalo represents the first step on the path of sustainable growth
and value creation, with the anticipation that the project will
provide a platform to deliver material cash flow to support further
accretive growth and underpinning shareholder value.
With this in mind, business development continues in parallel
with progressing the Buffalo project with the management team
actively assessing a pipeline of compelling opportunities in line
with the Company's stated strategy.
As demonstrated by the Buffalo farm-in, the management team is
uniquely placed to capitalise on high impact, low risk
opportunities that present themselves in the market, a feature that
is highly likely to persist as the trend of divestment of non-core
assets by international oil companies and national oil companies
continues to gather pace in the face of the energy transition. The
cumulative experience, technical expertise, and industry and
government networks possessed by the management team, gives the
Company a competitive advantage in accessing and assessing these
opportunities. This credibility as a counterparty combined with our
agile and innovative strategy means there is real scope for further
growth in the coming years, and the Company looks forward to
providing further updates on business development activities in the
second half of the year.
Cost discipline and further development of the Company's ESG
Policy have continued to be the focus from a corporate perspective.
ESG considerations have only grown in importance for investors and
broader stakeholders in recent years and the Company is committed
to having a positive influence on the operating stewardship of the
assets it is associated with, while playing its part in delivering
positive socio-economic benefits to the countries and communities
in which it is present.
Advance Energy also incorporates ESG considerations into its
business development and opportunity screening process as it seeks
to partner with high-quality operators who share our commitment to
best practices and operational excellence.
In conclusion, the first six months of the fiscal year have seen
exciting developments for Advance Energy, as we have delivered on
our stated objectives for the calendar year and moved closer to the
outcome of a major value catalyst for the Company. The market
drivers that have supported our strategy remain in place, and with
positive results expected from the Buffalo-10 well amidst an
improving price and operating environment, we look forward with
confidence to a transformational second half of the year for the
Company and its shareholders.
It only remains for me to thank our shareholders for their
ongoing support for the Company, management team and our strategy.
We look forward to providing updates on our progress as we move
through the rest of the year.
Mark Rollins
Non-Executive Chairman
18 January 2022
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
Six months Six months
ended Audited ended
31 Oct Year ended 31 Oct
2021 30 Apr 2021 2020
Notes $'000 $'000 $'000
------------------------------------ ------ ------------ ------------- ------------------
Asset evaluation and operating
expenses 4 (50) (47) -
Other administrative expenses 4 (2,258) (2,539) (643)
Foreign exchange profit/(loss) (49) (256) 12
Net loss before Finance Costs
and Taxation (2,357) (2,842) (631)
Share of net losses of associate
accounted for using the equity
method 7 (149) (12) -
Loss before tax (2,506) (2,854) (631)
------------------------------------ ------ ------------ ------------- ------------------
Tax expense - - -
------------------------------------ ------ ------------ ------------- ------------------
Loss after tax attributable to
owners of the parent (2,506) (2,854) (631)
------------------------------------ ------ ------------ ------------- ------------------
Total comprehensive loss for
the year attributable to owners
of the parent (2,506) (2,854) (631)
------------------------------------ ------ ------------ ------------- ------------------
Basic and diluted loss per share
attributable to owners of the
parent during the year
(expressed in US cents per share) 6 (0.24) (1.51) (0.04)
------------------------------------ ------ ------------ ------------- ------------------
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited Unaudited
31 Oct 30 Apr 31 Oct
2021 2021 2020
Notes $'000 $'000 $'000
--------------------------------- ------ ---------- --------- ----------
Non-current assets
Property, plant & equipment 3 - -
Other investments 7 20,113 20,262 -
20,116 20,262 -
--------------------------------- ------ ---------- --------- ----------
Current assets
Other receivables 153 203 14
Cash and cash equivalents 5,861 8,103 261
6,014 8,306 275
--------------------------------- ------ ---------- --------- ----------
Total assets 26,130 28,568 275
--------------------------------- ------ ---------- --------- ----------
Current liabilities
Trade and other payables 8 (418) (1,138) (592)
--------------------------------- ------ ---------- --------- ----------
Total liabilities (418) (1,138) (592)
--------------------------------- ------ ---------- --------- ----------
Net assets 25,712 27,430 (317)
--------------------------------- ------ ---------- --------- ----------
Equity attributable to equity holders
of the company
Share premium 47,656 47,656 18,665
Share reserve 1,827 1,039 -
Accumulated deficit (23,771) (21,265) (18,982)
--------------------------------- ------ ---------- --------- ----------
Total shareholder funds 25,712 27,430 (317)
--------------------------------- ------ ---------- --------- ----------
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share premium Share Accumulated Total
reserve deficit equity
$'000s $'000 $'000s $'000s
Balance at 1 May 2020 18,665 - (18,411) 254
Loss for the period to 31 October
2020 (unaudited) - - (631) (631)
---------------------------------------- --------------- --------- ------------ --------
Total comprehensive loss - - (631) (631)
Transactions with equity shareholders
of the parent:
Share based payments - - 60 60
Balance at 31 October 2020 (unaudited) 18,665 - (18,982) (317)
Loss for the period to 30 April
2021 - - (2,283) (2,283)
---------------------------------------- --------------- --------- ------------ --------
Total comprehensive loss - - (2,283) (2,283)
Transactions with equity shareholders
of the parent:
Proceeds from shares issued 31,589 - - 31,589
Cost of share issues (2,598) - - (2,598)
Share based payments - 1,039 - 1,039
Balance at 30 April 2021 (audited) 47,656 1,039 (21,265) 27,430
---------------------------------------- --------------- --------- ------------ --------
Loss for the period to 31 October
2021 (unaudited) - - (2,506) (2,506)
---------------------------------------- --------------- --------- ------------ --------
Total comprehensive loss - - (2,506) (2,506)
Transactions with equity shareholders
of the parent:
Share based payments - 788 - 788
Balance at 31 October 2021 (unaudited) 47,656 1,827 (23,771) 25,712
---------------------------------------- --------------- --------- ------------ --------
INTERIM CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited Unaudited
31 Oct 30 Apr 31 Oct
2021 2021 2020
Notes $'000 $'000 $'000
--------------------------------------- -------- ---------- --------- ----------
Cash flows from operating activities:
Loss before tax (2,506) (2,854) (631)
Adjustments for:
Share of net loss of associate 149 12 -
Share-based payment 788 1,039 240
Change in working capital items:
Movement in other receivables 50 (188) 1
Movement in trade and other payables (720) 815 89
------------------------------------------------- ---------- --------- ----------
Net cash used in operations (2,239) (1,176) (301)
------------------------------------------------- ---------- --------- ----------
Cash flows from investing activities
Investment in associate - (20,274) -
Purchase of property, plant &
equipment (3) - -
Net cash flows from investing
activities (3) (20,274) -
------------------------------------------------- ---------- --------- ----------
Cash flows from financing activities
Proceeds from issue of share
capital - 31,589 -
Share issue costs - (2,598) -
Net cash flows from financing
activities - 28,991 -
--------------------------------------- -------- ---------- --------- ----------
Net increase in cash and cash
equivalents (2,242) 7,541 (301)
------------------------------------------------- ---------- --------- ----------
Effect of exchange rate changes - - -
Cash and cash equivalents at
beginning of period 8,103 562 562
------------------------------------------------- ---------- --------- ----------
Cash and cash equivalents at
end of period 5,861 8,103 261
------------------------------------------------- ---------- --------- ----------
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1 Reporting entity
Advance Energy plc (the "Company") is domiciled in the Isle of
Man. The Company's registered office is at 55 Athol Street,
Douglas, Isle of Man IM1 1LA. These consolidated financial
statements comprise the Company and its subsidiaries (together
referred to as the "Group"). The Group is primarily involved in the
E&P business, currently focussed on the Democratic Republic of
Timor-Leste. The Company is listed on AIM of the London Stock
Exchange.
2 Basis of accounting
These interim consolidated financial statements have been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting". These interim consolidated financial
statements do not include all the information and disclosures
required in the annual financial statements and should be read in
conjunction with the Group's annual financial statements for the
year ended 30 April 2021, which were prepared in accordance with
IFRSs as adopted by the European Union. However, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates. The significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those disclosed in the
Group's statutory financial statements for the year ended 30 April
2021.
The interim conciliated financial statements are presented in US
Dollars unless otherwise indicated.
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial period beginning on or after 1
May 2021 that would be expected to have a material impact on the
Group.
The consolidated financial statements of the Group as at and for
the year ended 30 April 2021 are available upon request from the
Company's registered office at 55 Athol Street, Douglas, Isle of
Man or the Company's website https://www.advanceplc.com
These interim consolidated financial statements have been
approved and authorised for issue by the Company's Board of
directors on 18 January 2022.
3 Going concern
The Directors have assessed the Company and Group's ability to
continue as a going concern and are satisfied that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. The Company, therefore,
continues to adopt the going concern basis in preparing its interim
consolidated financial statements.
4 Expenses
Administration fees and expenses consist of the following:
Unaudited Audited Unaudited
Six months Six months
ended Year ended ended
31 Oct 2021 30 Apr 2021 31 Oct 2020
$'000 $'000 $'000
-------------- -------------- --------------
Corporate overheads:
* Directors' fees 1,266 1,100 408
* Professional fees 708 1,047 174
* Audit fees 27 69 12
* Administration costs 55 104 49
* Employee costs 202 219 -
2,258 2,539 643
-------------- -------------- --------------
Asset evaluation and operating
expenses:
* Office costs 30 30 -
* Consulting and farm-in expenses - 6 -
* Travel and accommodation 20 11 -
-------------- -------------- --------------
50 47 -
-------------- -------------- --------------
Total expenses 2,308 2,586 643
-------------- -------------- --------------
5 Directors' remuneration
The remuneration of those in office during the period ended 31
October 2021 was as follows:
Unaudited Unaudited
Six months Audited Six months
ended ended
31 Oct 2021 Year ended 31 Oct 2020
$'000 30 Apr 2021 $'000
$'000
------------- -------------- -------------
Salaries paid in cash 582 409 156
Accrued entitlement to shares
and warrants 673 667 240
Directors' health insurance 11 24 12
1,266 1,100 408
------------- -------------- -------------
Mark Rollins (Chairman) and Leslie Peterkin (Chief Executive
Officer) are entitled to a fixed monthly fee of $16,000 and $31,250
respectively payable in cash. Stephen West (Chief Financial
Officer) is entitled to a fixed monthly fee of GBP16,500 payable in
cash. The Non-executive directors, Ross Warner, Stephen Whyte and
Larry Bottomley are entitled to a fixed monthly fee of $5,000 each
payable in cash.
Share options and warrants with a value of $115,000 issued to
employees accrued during the 6- month period to 31 October 2021. In
the year to 30 April 2021, the warrants issued to employees and
advisors accrued with a value of $372,000.
6 Earnings per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Unaudited Audited Unaudited
Outstanding Outstanding Outstanding
at 31 Oct at 30 Apr at 31 Oct
2021 2021 2020
Loss attributable to owners
of the Group
(USD thousands) (2,506) (2,854) (631)
Weighted average number of
ordinary shares in issue (thousands) 1,027,614 188,796 1,560,637
Loss per share (US cents) (0.24) (1.51) (0.04)
In accordance with International Accounting Standard 33
'Earnings per share', no diluted earnings per share is presented as
the Group is loss making.
7 Other investments
On 19 April 2021, Advance Energy plc, via its wholly owned
subsidiary Advance Energy TL Limited, acquired a 50% equity
interest in Carnarvon Petroleum Timor Unipessoal Lda ("Carnarvon
Petroleum Timor") which in turn is the holder of a 100% working
interest in, and the contractor of, the Buffalo Production Sharing
Contract ("PSC").
Details of the purchase consideration and the net assets
acquired are as follows:
Purchase consideration 2021
US$'000
Cash paid 20,000
Purchase costs 274
--------
Total 20,274
--------
Carnarvon Petroleum Timor owns the Buffalo Oil Field
re-development project located in the Buffalo PSC Contract Area
(the "Buffalo Project") and is the Contractor and Operator of the
Buffalo PSC. The rights attached to this have been fair valued by
Advance Energy in determining the purchase price apportionment.
Equity investment in associate
Unaudited Unaudited
Six months Audited Six months ended
ended Year ended 31 Oct 2020
31 Oct 2021 30 Apr 2021 $'000
$'000 $'000
Carrying value at beginning of year 20,262 - -
Additions - 20,274 -
Share of losses post acquisition (149) (12) -
------------- -------------- -------------------
Carrying value at year end 20,113 20,262 -
------------- -------------- -------------------
8 Trade and other payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method.
Unaudited Audited Unaudited
Outstanding Outstanding Outstanding
at 31 Oct at 30 Apr at 31 Oct
2021 2021 2020
US$'000 US$'000 US$'000
Trade payables 166 517 315
Accruals and other payables 252 621 277
------------- ------------- -------------
418 1,138 592
------------- ------------- -------------
9 Shares in issue
The number of shares in issue throughout the period was
1,027,613,961. The number of options and warrants on issue at the
start of the period was 161,259,504. During the period no
additional options and warrants were issued. Warrants for 4,083,995
shares expired during the period.
Options and warrants in issue:
Outstanding Issued/(Expired) Outstanding
at 30 April during the at 31 October
2021 period 2021
------------- ----------------- ---------------
Options
* Issued Pre 1/2/2020 450,000 - 450,000
* Issued 1/2/2020 13,750,000 - 13,750,000
* Issued 8/7/2020 2,500,000 - 2,500,000
* Issued 19/4/2021* 83,710,000 - 83,710,000
100,410,000 - 100,410,000
------------- ----------------- ---------------
Warrants
* Issued pre 1/2/2020 11,390,680 (4,083,995) 7,306,685
* Issued 10/12/2020 54,545 - 54,545
* Issued during FY 2021 - employee 3,851,159 - 3,851,159
* Issued during FY 2021 - advisor 45,553,120 - 45,553,120
------------- ----------------- ---------------
60,849,504 (4,083,995) 56,765,509
------------- ----------------- ---------------
Total options and warrants 161,259,504 (4,083,995) 157,175,509
------------- ----------------- ---------------
*The options issued on 19 April 2021 vest on 1 January 2022 and
1 January 2023 in equal amounts.
The notional number of shares in issue considering the above
entitlements and assuming the warrants are exercised would be
1,184,789,470.
10 Commitments and contingencies
There were no capital commitments authorised by the Directors or
contracted other than those provided for in these financial
statements as at 31 October 2021 (30 April 2021: None).
11 Subsequent events
Cash calls from the associate company
On 15 November 2021 and 22 December 2021, the Company received
notices of cash calls amounting to $1,681,000 and $1,748,000
respectively from the associate entity Carnarvon Petroleum Timor to
provide financing to cover costs relating to the Buffalo-10 well
being drilled in the Buffalo field.
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END
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