TIDMAEX
RNS Number : 8752J
Aminex PLC
15 September 2016
2016 HALF-YEARLY REPORT
Aminex PLC ("Aminex" or "the Group" or "the Company"), the
producing and development company with assets in East Africa,
announces its half-yearly report for the six months ended 30 June
2016.
FINANCIAL HIGHLIGHTS
-- Negotiations with major new strategic investor led to a $23.8
million capital raise after period end
-- Final repayment date of corporate loan facility extended by 18 months to 31 January 2018
-- Focus on maintaining strict expenditure controls while expanding technical capability
-- First invoiced revenues from Kiliwani North gas
-- Loss for period $2.45 million (30 June 2015: $0.6 million)
OPERATING HIGHLIGHTS
-- Gas Sales Agreement with the Tanzania Petroleum Development
Corporation ("TPDC") signed in January allowing the Group to become
an African producer for the first time
-- Kiliwani North produced first gas in April, the well is
currently producing in line with management expectations and into
the new Songo Songo Island Gas Processing plant
-- Ruvuma Production Sharing Agreement terms extended by one
year with work programme changed to allow the Company to focus on
appraisal and development
-- Ruvuma appraisal drilling programme is expected to commence in 4Q 2016
POST PERIOD
-- The Company received first payment from TPDC for gas at a set
price of $3.00 per mmBTU. The price for gas is set by the US
Consumer Price Index and is not linked to any commodity price so
importantly is unaffected by current commodity market
conditions
-- Cash flow from Kiliwani North-1 will allow the Company to
support operations and further strengthen the balance sheet
Aminex CEO Jay Bhattacherjee commented:
"The period saw the transition of the Company from developer to
producer in East Africa and moves us into a position of cash
generation and towards a period of sustainable growth. Kiliwani
North not only ensures a consistent revenue stream that strengthens
the balance sheet but also means we can now focus on our exciting
drilling programme in the Ruvuma Basin.
We are now in a much stronger position than we were at the
beginning of the year and I am pleased we now have a new major and
supportive shareholder. The Board and management are very excited
about what lies ahead for the Company and look forward to updating
shareholders in the second half of the year."
For further information:
Aminex PLC +44 20 3198 8415
Jay Bhattacherjee, Chief
Executive Officer
Max Williams, Chief
Financial Officer
Corporate Brokers
Shore Capital Stockbrokers-Jerry
Keen +44 20 7408 4090
Davy -Brian Garrahy +35 3 1679 7788
Camarco (Financial PR) +44 020 3757 4980
Billy Clegg/Gordon Poole
Glossary of terms used
PSA Production Sharing Agreement
BCF Billions of cubic feet
of natural gas
TCF Trillions of cubic feet
of natural gas
MMcfd Millions of cubic feet
per day of natural gas
Km Kilometres
TPDC Tanzania Petroleum Development
Corporation
GSA Gas Sales Agreement
------ -------------------------------
Chief Executive's Review
Aminex PLC's Interim Results for the six months ended 30 June
2016 are set out below.
In April, the Group became an African producer for the first
time. Following the signing of a Gas Sales Agreement ('GSA') in
January with the Tanzania Petroleum Development Corporation
('TPDC'), first gas flowed into the newly constructed pipeline
system on 4 April 2016. The well is currently producing at 15 to 25
mmcfpd with approximately 150 bblsd of condensate. No significant
pressure decline has been observed in the reservoir and the well
remains fully capable of production rates up to 30 MMcfd. The gas
is sold and paid for in US Dollars and the initial gas price is
$3.00 per mmBTU (approximately $3.07 per mcf), annually adjustable
by reference to a US consumer price index and not affected by
movements in global markets for oil and natural gas. First payment
for gas sales has now been received from the TPDC.
The loss for the period was $2.45 million compared with $0.61
million for the six-month period ended 30 June 2015. A commentary
on the results is provided in the Financial Review section
below.
During the period the Company commenced negotiations with ARA
Petroleum Limited, a division of the Oman-based Zubair Corporation,
which had indicated its intention to invest in gas projects in East
Africa. As a consequence of these negotiations, since the end of
the reporting period the Company launched a placing of new ordinary
shares together with an open offer to existing shareholders to
subscribe for new shares on the basis of purchasing one new share
for every ten held. This transaction was successfully completed and
approved by shareholders in early August, raising GBP18.3 million
net of expenses (approximately $23.8 million). ARA Petroleum,
through Eclipse Investments LLC, subscribed to this placing and now
owns just under 30% of the Company's share capital. Mr Ola Fjeld,
an executive of ARA Petroleum was co-opted to the Board on 23
August.
The ARA Petroleum division of Zubair is managed by
highly-experienced international oil industry professionals and the
Company welcomes not only their financial input but also their
technical and operational contribution. The Zubair Corporation is
family-owned and one of the most important companies in the
Sultanate of Oman, with interests across many sectors and areas of
the world.
The successful capital raise will enable appraisal drilling at
Ruvuma to proceed rapidly, following up on the success of the
Company's Ntorya-1 discovery which flowed gas at 20 mmcfd with 139
bbls of associated condensate, with a view to commercialising the
Ruvuma area at the earliest possible opportunity and building on
the existing production basis now established at Kiliwani North.
The original Ruvuma PSA is close to expiry but, thanks to the
cooperation of the Tanzania Ministry of Energy and Mines, the
Company has been granted a one-year extension without penalties
which will enable appraisal wells to be drilled. If these are
successful, an application will be made to convert part of the PSA
to a 25-year development licence.
Aminex now has a strong financial and technical base to enable
it to build on previous drilling successes in Tanzania. First
priority will be to drill and commercialise its position in the
onshore Ruvuma Basin and then develop other opportunities in the
region. With sound finances and strong shareholders, the Company
can look to the future with greatly increased confidence.
OPERATIONS REPORT
TANZANIA - KILIWANI NORTH & GAS COMMERCIALISATION
The Kiliwani North-1 gas well ("KN-1") commenced production,
Aminex's first production in Tanzania, on 4 April 2016. Production
rates for the period to 30 June 2016 were determined by the plant
operator and in line with normal requirements for testing and
commissioning procedures. Since early July, the well has been
producing at commercial rates but still under commissioning
conditions. The well, which originally tested at 40 MMcfd, has been
produced at rates in excess of 30 MMcfd for short periods but
mainly between 15 and 25 MMcfd with up to 150 barrels of
condensate. Average production during the third quarter to date has
been in excess of 15 MMcfd, restricted by an extended plant and
pipeline commissioning phase and plant downtime. A previously
planned full well test post-commissioning is now considered
unnecessary as the sustained period of production has provided
pressure data showing no significant pressure decline and the
reservoir remains capable of production rates up to 30 MMcfd.
Commercial gas from Kiliwani North is sold at wellhead and is being
delivered into the National Gas Gathering System.
A resource report by LR Senergy completed in May 2015 attributed
approximately 28 BCF gross best estimate Contingent Resource to the
Kiliwani North field. A reserves report will be prepared as at 31
December 2016 utilising the 2016 production data.
First revenues were received during August 2016 and the Tanzania
Petroleum Development Corporation ("TPDC") has advised that it is
currently arranging the Letter of Credit required for commercial
operations under the Kiliwani North Gas Sales Agreement ("GSA")
signed at the start of the year. The GSA guarantees pricing at
$3.00 per mmbtu (approximately $3.07 per mcf) with yearly
adjustment for US CPI.
Participants in the Kiliwani North Development Licence are:
Ndovu Resources Ltd (Aminex) 54.575% (operator), RAK Gas LLC
23.75%, Bounty Oil & Gas NL 9.5%. Solo Oil plc 7.175% and the
TPDC 5%.
TANZANIA - RUVUMA PSA
Following the capital raise completed in August 2016, Aminex
expects to spud the Ntorya-2 well, the first of a two-well
programme, in 4Q 2016. Aminex previously contracted North Sea Well
Engineering Ltd. ("Norwell") to perform the well engineering for
Ntorya-2 and the second well, Ntorya-3. During the first six months
of the year, a tender process has been completed and service and
equipment contracts are now being finalised with well site
preparations nearing completion.
The Ntorya-2 well is located approximately 1.5 km south-west and
up-dip of Ntorya-1 and will be drilled to satisfy the appraisal
drilling obligations for the Ntorya location area. Once drilled,
Aminex intends to apply for a 25-year development licence. The
Ntorya-1 well drilled in 2012 discovered a gross sandstone interval
of 25 metres, which comprised an upper 3.5-metre gas charged
sandstone with an average porosity of 20%. A further 16.5-metre gas
charged sandstone was drilled through but this was below the
identified gas water contact on the well. The upper 3.5-metre
interval tested at 20 MMcfd with 139 barrels of associated
condensate. The Ntorya-2 appraisal well, up-dip of the Ntorya-1,
will be drilled to test the full 20-metre net sandstone section
which has been identified as above the identified gas water contact
based on the most recent seismic. A resource report by LR Senergy
completed in May 2015, attributed approximately 70 BCF gross best
estimate Contingent Resource to the Ntorya-1 gas discovery
including the upcoming Ntorya-2 appraisal well.
The second well location in the programme, Ntorya-3, has been
identified from the 2D seismic acquired in 2014 and will be drilled
in the thickest part of the main Cretaceous channel in 1H 2017. The
Ntorya-3 reservoir is further up-dip from Ntorya-1 and Ntorya-2 and
will test a further 323 BCF gross best estimate Prospective
Resource (945 BCF gross Pmean gas in-place).
Both the Ntorya-2 and Ntorya-3 wells have multi-zone potential
and are expected to test additional exploration targets in addition
to appraising the priority Cretaceous gas sand discovery.
The Ruvuma PSA provides Aminex with a combination of exploration
and appraisal activity. The key to unlocking the commercial
potential for these opportunities is the new, common-user gas
pipeline which runs from the south-east of Tanzania to Dar es
Salaam. The pipeline and associated facilities became operational
in Q3 2015 and provide a means of marketing gas discoveries at
Ruvuma through selling gas to the TDPC. In addition, Aminex is
reviewing options for an early production system in order to
commercialise discoveries with a low capital outlay, although the
long-term plan is to connect the gas field by a spur line to new
infrastructure.
As well as the proposed Ntorya-2 and Ntorya-3 wells, several
further well locations were identified from the 2014/2015 mapping,
including potential well locations at Likonde and Namisange.
Since 30 June, Aminex has received formal Ministerial approval
for the extension of the Mtwara Licence of the Ruvuma PSA. The
Licence has been extended by one year to December 2017.
Negotiations are ongoing for the extension of the Lindi Licence and
its work commitments and, at the recommendation of the Minister,
Aminex is applying for a two-year extension.
Participants in the Ruvuma PSA are: Ndovu Resources Ltd (Aminex)
75% (operator) and Solo Oil plc 25%.
TANZANIA - NYUNI AREA PSA
Aminex remains focused on the deep water sector of the Nyuni
Area PSA. As previously advised, the Company agreed variations to
the Nyuni Area work programme to enable the acquisition of deep
water 3D seismic in the outboard sector of the PSA area and the
deferral of the two exploration well drilling commitment for the
Initial Work Period into the four year First Extension Period.
Aminex has applied for the First Extension Period, together with
the statutory relinquishment proposal, and is waiting for the grant
of licence. The Company focus remains on projects which will
deliver commercial gas in the near term.
Once the First Extension Period licence has been granted, a
re-tender process is planned to select a 3D seismic contractor
capable of acquiring high resolution 3D seismic over the key Pande
West lead and to identify other potential prospects in the deep
water with a view to bringing them to drill-ready status. Pande
West is analogous to some of the recent major deep water
discoveries in the vicinity. The drilling success rate achieved by
other operators, based on 3D seismic in the main fairway east of
Nyuni Area, is over 90%. The Company is reviewing ways to enable
the potential monetisation of discoveries on the shelf and deep
water through delivery into the National Gas Gathering System.
Participants in the Nyuni Area PSA, pending the formal transfer
of a former partner's interest, are expected to be: Ndovu Resources
Ltd. (Aminex) 90% (operator) and Bounty Oil & Gas NL 10%.
FINANCIAL REVIEW
Financing and Future Operations
In April 2016, the Kiliwani North gas field started production.
While revenues for the supply of gas for testing and commissioning
purposes were low during the period to 30 June 2016, production has
increased since the period end and the Board now looks forward to a
consistent revenue stream from its interest in the field to support
operations and enable the repayment of the corporate loan. In June
2016 Aminex negotiated and agreed an eighteen-month extension to
the repayment date of the corporate loan to 31 January 2018. The
repayment of the corporate loan remains a priority for the Board
and the Board will seek to pay down the debt or re-finance the
loan.
In August 2016, Aminex completed a capital raise of
approximately $23.8 million net of expenses, assisted by the
introduction of a strategic investor, the Zubair Corporation, which
now has a 29.9% shareholding in the Company. The funds raised will
be primarily applied to drilling the Ntorya-2 appraisal well and
the Ntorya-3 exploration well. Once the Ntorya-2 appraisal well has
been drilled, Aminex plans to apply for a development licence for
Ntorya. Aminex has repaid a further $2.00 million against the
corporate loan balance.
In April 2016 Aminex entered into an asset sale agreement for
the sale of a 3.825% interest in the Kiliwani North Development
Licence to Solo Oil plc for a consideration of approximately $2.17
million. The first tranche of the sale, being $0.57 million for a
1% interest was concluded in April. Post period end, the second
tranche for a 1.25% interest did not complete within fifteen days
of receipt of first revenue payments by the Tanzania Petroleum
Development Corporation ("TDPC"), although a third instalment for a
1.575% interest remains effective.
The start of revenues from Kiliwani North, the extension of the
repayment period for the corporate loan, the recent capital raise
and the commitment of the new strategic investor provide a strong
financial base to enable Aminex to meet its work commitments over
the next twelve months and fast-track its own projects as well as
seek new development opportunities.
Revenue Producing Operations
Revenues for continuing operations amounted to $0.26 million (30
June 2015: $0.17 million). The revenues included Aminex's share of
gas production from Kiliwani North-1 produced for the testing and
commissioning gas of the newly-constructed Songo Songo Island gas
processing plant. Revenues also arose from oilfield services
comprising the provision of technical and administrative services
to joint venture operations and sales of equipment to third
parties. Cost of sales was $0.24 million (30 June 2015: $0.17
million) and depletion on Kiliwani North production amounted to
$0.02 million (30 June 2015: $nil). Accordingly, there was a gross
loss of $0.01 million for the period compared with nil gross profit
for the previous period.
Group administrative expenses, net of costs capitalised against
projects, were $1.35 million (2015: $0.76 million). The expenses
for the current period include a share-based payment charge of
$0.81 million relating to options granted in May 2016. No options
were granted in the comparative period. On a like-for-like basis,
excluding the share-based payment charge, the Group's
administrative expenses for the period under review were $0.54
million, a reduction of $0.22 million. The reduction in costs was
due primarily to reduced payroll costs as a result of fewer
employees, with the Group also benefiting from foreign exchange
movements with the strengthening of the dollar against sterling.
Management has continued to maintain strict expenditure controls
and, where possible, to reduce overhead costs. The partial disposal
of the Group's interest in the Kiliwani North Development Licence
gave rise to a gain of $0.34 million (30 June 2015: gain $1.77
million). Following a review of the carrying value of assets, an
impairment provision of $1.50 million has been made against the
production payment receivable of $4.50 million due from the US to
recognise the continuing effect of lower oil prices on the equity
market and non-payment of amounts due by Mayan Energy Limited
(formerly Northcote Energy Limited): this has given rise to a
reduction of $0.56 million in the fair value of the production
payments, disclosed under current and non-current trade and other
receivables. A further impairment provision of $0.01 million was
made against available for sale assets. Impairment provisions and
losses in the comparative period amounted to $0.83 million. The
Group's resulting net loss from operating activities was $1.59
million (30 June 2015: profit of $0.18 million).
Finance costs reflect an interest charge of $0.86 million (30
June 2015: $0.79 million). Of this, a charge of $0.84 million (30
June 2015: $0.78 million) relates to the corporate loan, while the
unwinding of the discount on the decommissioning provision was
$0.02 million (30 June 2015: $0.01 million).
The Group's net loss for the period amounted to $2.45 million
(30 June 2015: $0.61 million).
Balance Sheet
The Group's investment in exploration and evaluation assets
increased from $79.86 million at 31 December 2015 to $80.51 million
at 30 June 2016. The increase reflected well planning for two
Ntorya wells, as well as licence expenses for the Ruvuma PSA and
the Nyuni Area PSA. After review, the Directors have concluded that
there is no impairment to these assets, which include the cost of
the Ntorya-1 gas discovery. The carrying value of property, plant
and equipment has increased from $12.42 million at 31 December 2015
to $12.43 million at 30 June 2016. The net increase of $0.01
million reflected the additions of $0.16 million offset by the
amount of $0.13 million released on a disposal of a 1% interest in
the field in April 2016 and depletion of $0.02 million. Non-current
trade and other receivables relate to the fair value of production
payments due from the US and has decreased by $0.57 million to
$1.38 million mainly due to the partial impairment of the amount
due. Current assets comprise trade and other receivables of $1.21
million and cash and cash equivalents of $1.33 million.
Under current liabilities, loans and borrowings of $9.02 million
relate to the corporate loan (see commentary under Going Concern
below) which had increased from $8.56 million at the 31 December
2015. The outstanding loan amount has been reduced since the period
end (see Note 13). Trade payables amounted to $3.93 million. The
non-current decommissioning provision increased from $0.45 million
at 31 December 2015 to $0.46 million, the net increase arising on
the release of $14,000 on the partial disposal of the interest in
Kiliwani North offsetting the unwind discount charge of $21,000 for
the period. Total equity has decreased by $1.40 million between 31
December 2015 and 30 June 2016 to $83.47 million. The movement
comprises the net decrease in retained earnings of $1.85 million
and the net loss of $0.15 million in the foreign currency
translation reserve for the period under review offset by a net
increase of $0.21 million in the share option reserve and an
increase of $0.38 million in the share warrant reserve.
Cash Flows
The net decrease in cash and cash equivalents for the six months
ended 30 June 2016 was $0.79 million compared with an increase of
$1.74 million for the comparative period. During the period, the
Group also received $0.57 million net consideration for the
disposal of 1% of the Kiliwani North Development Licence. Net cash
outflows from operating activities amounted to $0.78 million (2015:
$1.77 million). Expenditure on exploration and evaluation assets in
the current period amounted to $0.51 million, relating to Ntorya-2
well planning due to be drilled on the Ruvuma PSA acreage in Q4
2016, together with continuing licence costs. Expenditure on
property, plant and equipment was $0.07 million for pre-production
expenditure and ongoing licence costs on the Kiliwani North
licence. The cash balance at 30 June 2016 was $1.33 million (31
December 2015: $2.12 million).
Related Party Transactions
There were no related party transactions during the six-month
period to 30 June 2016 that have materially affected the financial
position or performance of the Group. In addition, there were no
changes in the related parties set out in Note 31 to the Financial
Statements contained in the 2015 Annual Report that could have had
a material effect on the financial position or performance of the
Group during the six-month period.
Going Concern
The Directors have given careful consideration to the Group's
ability to continue as a going concern. The Directors have
concluded that, following the commencement of production from the
Kiliwani North field coupled with the receipt of payments by the
Tanzanian Petroleum Development Corporation, the extension of the
repayment date for the corporate loan to 31 January 2018 and the
capital raise in August 2016 which raised approximately $23.8
million net of transaction costs, the Group has sufficient ongoing
operating cash flows to continue as a going concern. The Group's
ability to continue to make planned capital expenditure, in
particular in its main licence interests in Tanzania, can be
assisted if necessary by the successful sale of assets, deferral of
planned expenditure or an alternative method of raising capital.
The Directors have a reasonable expectation that the Group will be
able to implement this strategy.
The Directors draw attention to certain risks which may affect
the Group. The corporate loan repayment date has been extended to
31 January 2018 and, based on current cash flow projections and
reflecting a repayment of $2 million made after the period end, the
Group expects to be in a position to repay the estimated loan
balance of $9.2 million in full as it falls due. The cash flows
assume the continuing production from Kiliwani North-1 which
started production during the year, together with payments being
made by the Tanzania Petroleum Development Corporation in
accordance with the Gas Sales Agreement. In addition to the
corporate loan, the Group is waiting for the final approval of a
number of matters concerning extension to and variations of licence
terms in Tanzania. While the Directors have a reasonable
expectation that these matters will be satisfactorily resolved,
there can be currently no guarantee and therefore unplanned
liabilities may arise.
These factors give rise to a material uncertainty that may cast
significant doubt on the Group's ability to continue as a going
concern and, therefore, it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Nevertheless, after making enquiries and having considered the
potential uncertainties described above and the options available
to the Group, the Directors have a reasonable expectation that the
Group either would be able to extend the repayment period, to repay
or re-finance the corporate loan and will have sufficient funds
available to it to meet other planned expenditures when they fall
due for the foreseeable future or defer or amend work
commitments.
Principal Risks and Uncertainties
The Group's strategic objectives for its principal activities,
being the production and development of and the exploration for oil
and gas reserves, are only achievable if certain risks are managed
effectively. The Board has overall accountability for determining
the type and level of risk it is prepared to take. The Board is
assisted by the Risk Committee which seeks to identify risks for
Board consideration and which monitors other risks, the
responsibility for those risks and how they are managed. The
following are considered to be the key risks that may affect the
Group's business, although there are other risks which are not
currently known to the Directors or which they currently deem to be
less material that may impact the Group's performance.
Strategic risks
Development of assets to production - The Group may fail to
expand through the exploration and development of its licences for
which it acts as operator with joint venture partners. The failure
of joint venture partners to pay their working interests may impact
on Aminex's strategy.
Mitigation - Aminex manages its assets to enable the growth of
cash generative business streams with the strategy of generating
cash flow to meet its commitments with internal funds. The Board
considers that the focus of Aminex's activities on development
projects, with exploration potential, will provide value creation
for shareholders rather than an exploration-led strategy. The Group
identifies joint venture partners who are capable of contributing
to operations but Aminex maintains a majority interest in each of
its licences which offers greater upside potential to shareholders
or the possibility of further farmout opportunities to assist with
funding.
Global market conditions and impact of low oil price - Difficult
global market conditions and the decrease in oil prices may from
time to time impact the Group's operations and in particular the
ability to raise equity or debt finance or to allow the Group to
enter into transactions on its assets.
Mitigation - The Group reviews global conditions and manages its
exposure to risk through minimising capital expenditure on high
risk assets and developing fixed price gas projects. Revenues from
producing assets will be used to minimise exposure to global
capital markets with the intention of generating cash flow to meet
capital and debt commitments. Aminex monitors costs closely and
will seek to take advantage of the low cost environment for capital
commitments where possible.
Operational risks
Exploration risk - Exploration and development activities may be
delayed or adversely affected by factors including in particular:
climatic and oceanographic conditions; equipment failure;
performance of suppliers and exposure to rapid cost increases;
unknown geological conditions resulting in dry or uneconomic wells
or risk of blowout; remoteness of location.
Mitigation - Aminex mitigates exploration risk by reducing the
risk of drilling failure by conducting appropriate studies
including the acquisition, processing and interpretation of
seismic. For drilling operations, the group contracts with
international and local service providers with substantial industry
experience and safety producers according to Aminex's own high
standards.
Production risks - Operational activities may be delayed or
adversely affected by factors including: blowouts; unusual or
unexpected geological conditions; performance of joint venture
partners on non-operated and operated properties; seepages or leaks
resulting in substantial environmental pollution; increased
operational costs; uncertainty of oil and gas resource estimates;
production, marketing and transportation conditions; actions of
host governments or other regulatory authorities.
Mitigation - Aminex develops, implements and maintains
procedures in order to limit the risk of operational failures on
production assets. Through gas sales agreements, Aminex has an
agreed mechanism to enable reservoirs to be produced optimally
while seeking to meet the requirements of the purchaser and thereby
maximising resources. The Group sells gas at the wellhead which
minimises additional costs by avoiding transportation and marketing
expenses.
Maintaining licence interests - The Group may be unable to meet
or agree amendments to its work programme commitments which may
give rise either to minimum work obligations needing to be paid or
the implementation of default procedures against the Group as
operator which may lead to a licence being rescinded. In the case
of the Ruvuma PSA, the TPDC holds security over up to 15% of the
Kiliwani North Development Licence in the event that part or all of
the work commitments under the terms of the Ruvuma PSA are not
fulfilled.
Mitigation - Aminex is committed to fulfilling its commitments
and seeks deferrals of or amendments to production sharing terms
through negotiation with the TPDC in order to ensure that
commitments are met even if not in the original timeframe
expected.
Compliance risks
Political risks - Aminex may be subject to political, economic,
regulatory, legal, and other uncertainties (including but not
limited to terrorism, military repression, war or other unrest). As
Aminex's principal activities are in a developing nation, there are
risks of nationalisation or expropriation of property, changes in
and interpretation of national laws and energy policies.
Mitigation - Aminex monitors international and national
political risk in relation to its interests, liaising with
governmental and other key stakeholders in its countries of
operations. From time to time Aminex seeks to spread asset and
regional risk in order to reduce exposure to one business or
region.
Health and safety - The main health and safety risks for the
Group occur during drilling operations and from production
operations.
Mitigation - The Group develops, implements and maintains
effective health and safety procedures, including environmental
issues and security, to ensure robust safeguards for well control
and drilling operations are in place.
Legal compliance - The Group could suffer penalties or damage to
reputation through failure to comply with legislation or other
regulations, in particular those over bribery and corruption, and
these risks may be increased when operating in certain regions of
the world.
Mitigation - Aminex manages risk of legal compliance failure
through the implementation and monitoring of high standards to
minimise the risk of corrupt or anti-competitive behaviour. All
employees and consultants are required to confirm their
understanding of the Group's anti-bribery policy.
Financial risks
Currency risk - Although the reporting currency is the US
dollar, which is the currency most commonly used in the pricing of
petroleum commodities and for significant exploration and
production costs, a significant proportion of the Group's other
expenditure (in particular central administrative costs) is made in
local currencies (as are the Company's equity fundings), and
fluctuations in exchange rates may significantly impact the results
of the Group and the results between periods, thus creating
currency exposure.
Mitigation - The Group has a policy of minimising exposure to
foreign currency rates by holding the majority of the Group's funds
in US dollars.
A more detailed listing of risks and uncertainties facing the
Group's business is set out on pages 21 and 22 of the 2015 Aminex
PLC Annual Report and Accounts (available on the Aminex website
www.aminex-plc.com).
Forward Looking Statements
Certain statements made in this half-yearly financial report are
forward-looking statements. Such statements are based on current
expectations and are subject to a number of risks and uncertainties
that could cause actual events or results to differ materially from
the expected future events or results referred to in these
forward-looking statements.
Statement of the Directors in respect of the Half-Yearly
Financial Report
Each of the directors who held office at the date of this
report, confirm their responsibility for preparing the half-yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007, the Transparency Rules of the
Central Bank of Ireland and the Disclosure and Transparency Rules
of the UK Financial Conduct Authority and with IAS 34 Interim
Financial Reporting, as adopted by the EU and to the best of each
person's knowledge and belief:
-- the condensed consolidated interim financial statements
comprising the condensed consolidated interim income statement, the
condensed consolidated interim statement of comprehensive income,
the condensed consolidated interim balance sheet, the condensed
consolidated interim statement of changes in equity, the condensed
consolidated interim statement of cashflows and the related
explanatory notes have been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU.
-- the interim management report includes a fair review of the information required by:
(a) Regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) Regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during that period; and any changes in the related
party transactions described in the last annual report that could
do so.
On behalf of the Board
J.C. BHATTACHERJEE M.V. WILLIAMS
Chief Executive Officer/Director Chief Financial Officer/Director/Company Secretary
15 September 2016
Independent Review Report to Aminex PLC
Introduction
We have been engaged by the Company to review the condensed set
of consolidated financial statements in the half-yearly financial
report for the six months ended 30 June 2016 which comprises the
condensed consolidated interim income statement, condensed
consolidated interim statement of comprehensive income, condensed
consolidated interim balance sheet, condensed consolidated interim
statement of changes in equity, condensed consolidated interim
statement of cashflows and the related explanatory notes. The
financial reporting framework that has been applied in their
preparation is International Financial Reporting Standards as
adopted by the EU ("IFRSs"). Our review was conducted in accordance
with the Financial Reporting Council's ("FRC's") International
Standard on Review Engagements ("ISRE") (UK and Ireland) 2410,
'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity.'
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated
financial statements in the half-yearly report for the six months
ended 30 June 2016 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU, the TD Regulations and
the Transparency Rules of the Central Bank of Ireland and the
Disclosure and Transparency Rules of the UK's Financial Conduct
Authority ("FCA").
Going concern
In forming our review conclusion, we have considered the
adequacy of the disclosures made in Note 1 to the condensed
consolidated financial statements concerning the Group's ability to
continue as a going concern having regard to its debt repayment
obligations and ongoing capital commitments which are significant.
Our conclusion is not qualified in respect of these matters.
Basis of our report, responsibilities and restrictions on
use
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the TD Regulations, the Transparency Rules of the Central Bank of
Ireland and the Disclosure and Transparency Rules of the UK
FCA.
As disclosed in Note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the EU.
The Directors are responsible for ensuring that the condensed set
of financial statements included in this half-yearly financial
report has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU. Our responsibility is to
express to the Company a conclusion on the condensed set of
consolidated financial statements in the half-yearly financial
report based on our review.
We conducted our review in accordance with the Financial
Reporting Council's International Standard on Review Engagements
(UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We read the other information contained in the half-yearly
financial report to identify material inconsistencies with the
information in the condensed set of consolidated financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If
we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the Transparency (Directive 2004/109/EC)
Regulations 2007 as amended ("the TD Regulations"), the
Transparency Rules of the Central Bank of Ireland and the
Disclosure and Transparency Rules of the UK Financial Conduct
Authority ("the UK FCA"). Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Eamonn Russell
For and behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
15 September 2016
1 Stokes Place, St. Stephen's Green, Dublin 2
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
for the six months ended 30 June 2016
Notes Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 US$'000
US$'000 US$'000
Continuing operations
Revenue 2 255 166 350
Cost of sales (241) (166) (341)
Depletion and decommissioning
of gas interests (20) - -
Gross (loss)/profit (6) - 9
Administrative expenses 3 (1,353) (756) (1,615)
Depreciation of
other assets (5) (7) (15)
---------- ---------- -------------
Total administrative
expenses (1,358) (763) (1,630)
---------- ---------- -------------
Loss from operating
activities before
other items (1,364) (763) (1,621)
Gain on part disposal
of development asset 4 344 1,772 1,772
Reduction in fair
value of other receivables (556) (379) (968)
Impairment provision
against exploration
and evaluation assets - - (353)
Impairment provision
against assets held
for sale - (425) (850)
Impairment loss
on available for
sale assets 11 (14) (25) (68)
Loss on disposal
of available for
sale assets - - (7)
(Loss)/profit from
operating activities (1,590) 180 (2,095)
Finance income 5 - 1 3
Finance costs 6 (862) (787) (1,686)
---------- ---------- -------------
Loss before income
tax (2,452) (606) (3,778)
Income tax expense 7 - - -
Loss for the period
attributable to
equity holders of
the Company 2 (2,452) (606) (3,778)
---------- ---------- -------------
Basic and diluted
loss per share (cents) 8 (0.12) (0.03) (0.20)
---------- ---------- -------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
for the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 US$'000
US$'000 US$'000
Loss for the period (2,452) (606) (3,778)
Other comprehensive
income
Items that are or maybe
reclassified to profit
or loss:
Currency translation
differences (148) (456) (293)
Total comprehensive
expense for the period
attributable to the
equity holders of the
Company (2,600) (1,062) (4,071)
---------- ---------- -------------
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
At 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
Notes US$'000 US$'000 US$'000
ASSETS
Exploration and
evaluation assets 9 80,508 79,261 79,864
Property, plant
and equipment 10 12,432 12,275 12,416
Available for sale
assets 11 8 82 22
Trade and other
receivables 1,378 2,544 1,950
Total non-current
assets 94,326 94,162 94,252
Current assets
Assets held for
sale - 425 -
Trade and other
receivables 1,213 966 606
Cash and cash equivalents 12 1,334 3,506 2,128
--------- ------------- ------------
Total current assets 2,547 4,897 2,734
--------- ------------- ------------
Total assets 96,873 99,059 96,986
--------- ------------- ------------
LIABILITIES
Current liabilities
Loans and borrowings 13 (9,017) (7,698) (8,559)
Trade and other
payables (3,929) (3,067) (3,103)
Total current liabilities (12,946) (10,765) (11,662)
--------- ------------- ------------
Non-current liabilities
Decommissioning
provision (455) (416) (448)
Total non-current
liabilities (455) (416) (448)
--------- ------------- ------------
Total liabilities (13,401) (11,181) (12,110)
--------- ------------- ------------
NET ASSETS 83,472 87,878 84,876
--------- ------------- ------------
EQUITY
Issued capital 67,192 67,192 67,192
Share premium 96,036 96,036 96,036
Other undenominated
capital 234 234 234
Share option reserve 3,894 3,891 3,683
Share warrant reserve 15 3,436 3,047 3,054
Foreign currency
translation reserve (1,607) (1,622) (1,459)
Retained earnings (85,713) (80,900) (83,864)
--------- ------------- ------------
TOTAL EQUITY 83,472 87,878 84,876
--------- ------------- ------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
for the six months ended 30 June 2016
Attributable to equity shareholders of the Company
Foreign
currency
Other Share Share translation
Share Share undenominated option warrant reserve Retained Total
capital premium capital reserve reserve fund earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at
1 January 2015 67,094 93,505 234 3,891 3,031 (1,166) (80,112) 86,477
Comprehensive
income
Loss for the
period - - - - - - (606) (606)
Currency
translation
differences - - - - - (456) - (456)
Transactions
with
shareholders
of the Company
recognised
directly in
equity
Shares issued 98 2,531 - - - - (182) 2,447
Share warrants
granted - - - - 16 - - 16
Balance at
1 July 2015 67,192 96,036 234 3,891 3,047 (1,622) (80,900) 87,878
Comprehensive
income
Loss for the
period - - - - - - (3,172) (3,172)
Currency
translation
differences - - - - - 163 - 163
Transactions
with
shareholders
of the Company
recognised
directly in
equity
Share warrants
granted - - - - 7 - - 7
Shares option
reserve
adjustment - - - (208) - - 208 -
Balance at
1 January 2016 67,192 96,036 234 3,683 3,054 (1,459) (83,864) 84,876
Comprehensive
income
Loss for the
period - - - - - - (2,452) (2,452)
Currency
translation
differences - - - - - (148) - (148)
Transactions
with
shareholders
of the Company
recognised
directly in
equity
Share based
payment charge - - - 814 - - - 814
Share options
reserve
adjustment (603) - - 603 -
Share warrants
granted - - - - 382 - - 382
---------- --------- --------------- --------- --------- ------------- ----------- ---------
Balance at
30 June 2016
(unaudited) 67,192 96,036 234 3,894 3,436 (1,607) (85,713) 83,472
---------- --------- --------------- --------- --------- ------------- ----------- ---------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASHFLOWS
for the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 US$'000
US$'000 US$'000
Operating activities
Loss for the financial
period (2,452) (606) (3,778)
Depletion, depreciation
and decommissioning 25 7 15
Impairment provision against
assets held for sale - 425 850
Impairment provision against
exploration and evaluation
assets - - 353
Finance income - (1) (3)
Finance costs 862 787 1,686
Gain on disposal of interest
in jointly controlled operations (344) (1,772) (1,772)
Loss on disposal of available
for sale assets - - 7
Reduction in fair value
of trade receivables 556 379 968
Impairment of available
for sale assets 14 25 68
Equity-settled share-based-payment
expenses 814 - -
(Increase)/decrease in
trade and other receivables (590) 126 493
Decrease in trade and other
payables 337 423 177
--------- --------- ------------
Net cash used in operations (778) (207) (936)
Interest paid - (1,563) (1,563)
--------- --------- ------------
Net cash outflows from
operating activities (778) (1,770) (2,499)
--------- --------- ------------
Investing activities
Proceeds from sale of property,
plant and equipment 567 3,325 3,325
Proceeds from disposal
of available for sale assets - - 10
Acquisition of property,
plant and equipment (69) (126) (204)
Expenditure on exploration
and evaluation assets (514) (418) (1,001)
Interest received - 1 3
--------- --------- ------------
Net cash (used in)/from
investing activities (16) 2,782 2,133
--------- --------- ------------
Financing activities
Proceeds from the issue
of share capital - 2,644 2,629
Payment of transaction
costs on issue of capital - (197) (182)
Loans repaid - (1,718) (1,718)
Net cash from financing
activities - 729 729
--------- --------- ------------
Net (decrease)/increase
in cash and cash equivalents (794) 1,741 363
Cash and cash equivalents
at 1 January 2,128 1,765 1,765
--------- --------- ------------
Cash and cash equivalents
at end of the financial
period 1,334 3,506 2,128
--------- --------- ------------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
1. Basis of preparation
The condensed consolidated interim financial statements for the
six months ended 30 June 2016 are unaudited but have been reviewed
by the auditor. The financial information presented herein does not
amount to statutory financial statements that are required by Part
6 of Chapter 4 of the Companies Act 2014 to be annexed to the
annual return of the Company. The statutory financial statements
for the financial year ended 31 December 2015 were annexed to the
annual return and filed with the Registrar of Companies. The audit
report on those statutory financial statements was unqualified. The
auditor drew attention to the Group's disclosures made in the Basis
of Preparation paragraph in the Statement of Accounting Policies
included in the 2015 Annual Report concerning the Group's ability
to continue as a going concern but the auditor's opinion was not
modified in this respect.
The condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU.
The financial information contained in the condensed interim
financial statements has been prepared in accordance with the
accounting policies set out in the 2015 Annual Report except as
outlined below.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 15 September 2016.
(i) Going concern
The Directors have given careful consideration to the Group's
ability to continue as a going concern. The Directors have
concluded that, following the commencement of production from the
Kiliwani North field coupled with the receipt of payments by the
Tanzanian Petroleum Development Corporation, the extension of the
repayment date for the corporate loan to 31 January 2018 and the
capital raise in August 2016 which raised approximately $23.8
million net of transaction costs, the Group has sufficient ongoing
operating cash flows to continue as a going concern. The Group's
ability to continue to make planned capital expenditure, in
particular in its main licence interests in Tanzania, can be
assisted if necessary by the successful sale of assets, deferral of
planned expenditure or an alternative method of raising capital.
The Directors have a reasonable expectation that the Group will be
able to implement this strategy.
The Directors draw attention to certain risks which may affect
the Group. The corporate loan repayment date has been extended to
31 January 2018 and, based on current cash flow projections and
reflecting a repayment of $2 million made after the period end, the
Group expects to be in a position to repay the estimated loan
balance of $9.2 million in full as it falls due. The cash flows
assume the continuing production from Kiliwani North-1 which
started production during the year, together with payments being
made by the Tanzania Petroleum Development Corporation in
accordance with the Gas Sales Agreement. In addition to the
corporate loan, the Group is waiting for the final approval of a
number of matters concerning extension to and variations of licence
terms in Tanzania. While the Directors have a reasonable
expectation that these matters will be satisfactorily resolved,
there can be currently no guarantee and therefore unplanned
liabilities may arise.
These factors give rise to a material uncertainty that may cast
significant doubt on the Group's ability to continue as a going
concern and, therefore, it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Nevertheless, after making enquiries and having considered the
potential uncertainties described above and the options available
to the Group, the Directors have a reasonable expectation that the
Group either would be able to extend the repayment period, to repay
or re-finance the corporate loan and will have sufficient funds
available to it to meet other planned expenditures when they fall
due for the foreseeable future or defer or amend work
commitments.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
1. Basis of preparation (continued)
(ii) Use of judgments and estimates
The preparation of the interim financial statements requires
management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
The Directors believe that the Group's critical judgments, which
are those that require management's most subjective and complex
judgments, are those described below. These critical accounting
judgments and other uncertainties affecting application of the
Group's accounting policies and the sensitivity of reported results
to changes in conditions and assumptions, are factors to be
considered in reviewing the interim financial statements.
The Directors consider the critical judgments in applying
accounting policies to be related to the ability of the Group to
continue as a going concern, valuation of exploration and
evaluation assets and the depletion and decommissioning costs of
property, plant and equipment. The Directors are required to
estimate the expected remaining useful life of the oil and gas
producing assets, the future capital expenditure required to
recover oil and gas reserves and the future prices of oil and gas
in assessing these balances. Future revisions to these estimates
and their underlying assumptions could arise from results of
drilling activity, movements in oil and gas prices and cost
inflation in the industry. Further details are set out in Notes 9
and 10 to these financial statements. The Directors are required to
consider the Group's ability to continue as a going concern.
Further details are set out in the going concern paragraph
above.
Measurement of fair values
Management use the fair value hierarchy, levels 1, 2 and 3 (as
set out on page 53 of the 2015 Annual Report), for determining and
disclosing the fair values of financial instruments by valuation
technique. Assets and liabilities for assets held for sale, and
production payments receivable are carried at fair value and
management has determined this to be a Level 3 fair value while the
fair value of available for sale assets has been determined to be a
Level 1 fair value given the assets are quoted on an active stock
market. The carrying value of the Group's remaining financial
instruments are considered by management to reflect fair value
given the short term nature of these.
(ii) New accounting standards and interpretations adopted
Below is a list of standards and interpretations that were
required to be applied in the period ended 30 June 2016. There was
no material impact to the financial statements in the period from
the application of these.
(i) New standards required to be applied to an entity with
financial reporting period beginning on 1 January 2016
Description EU effective
date (periods
beginning)
Amendments to IAS 19 Defined Benefit 1 February
Plans: Employee Contributions 2015
Annual improvements to IFRSs 2010-2012 1 February
Cycle 2015
Amendments to IFRS 11: Accounting for 1 January
acquisitions of interests in Joint Operations 2016
Amendments to IAS 16 and IAS 38: Clarification 1 January
of acceptable methods of depreciation 2016
and amortisation
Amendments to IAS 16 Property, Plant 1 January
and Equipment and IAS 41 Bearer Plants 2016
Amendments to IAS 27 Equity method in 1 January
Separate Financial Statements 2016
Amendments to IAS 1: Disclosure Initiative 1 January
2016
Annual Improvements to IFRSs 2012-2014 1 January
Cycle 2016
(ii) New standards not yet endorsed by the EU but available for early adoption
Amendments to IFRS 10, IFRS 12 and IAS
28: Investment Entities: Applying the
consolidation exception
IFRS 14: Regulatory Deferral Accounts
Amendments to IAS 7: Disclosure Initiative
Amendments to IAS 12: Recognition of
deferred tax assets for unrealised losses
IFRS 15: Revenue from contracts with
customers (May 2014) including amendments
to IFRS 15: Effective date of IFRS 15
IFRS 9 Financial Instruments
Clarifications to IFRS 15: Revenue from
Contracts with Customers (12 April 2016)
Amendments to IFRS 2: Classification
and measurement of share-based payment
transactions (20 June 2016)
IFRS 16: Leases (13 January 2016)
Amendments to IFRS 10 and IAS 28: Sale
or contribution of assets between an
investor and its associate or joint venture
(September 2014)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
2. Segmental disclosure - continuing operations
The Group considers that its continuing operating segments
consist of (i) Producing Assets, (ii) Exploration Assets and (iii)
Oilfield Services and Group Costs. These segments are those that
are reviewed regularly by the Chief Executive Officer (Chief
Operating Decision Maker) to make decisions about resources to be
allocated to the segment and assess its performance and for which
discrete financial information is available. However it further
analyses these by region for information purposes. Segment results
include items directly attributable to the segment as well as those
that can be allocated on a reasonable basis. Unallocated items
comprise mainly of head office expenses, cash balances, borrowings
and certain other items.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
US$'000 US$'000 US$'000
Segmental revenue
Producing assets 76 - -
Provision of oilfield
services 179 166 350
Total revenue 255 166 350
---------- ---------- -------------
Country of destination
- All revenues
Africa 255 166 350
Total revenue 255 166 350
---------- ---------- -------------
Segmental (loss)/
profit for the financial
period
Africa - exploration
assets 12 1,629 1,192
Africa - producing 57 - -
assets
Europe - oilfield
services/Group costs
(1) (2,521) (2,235) (4,970)
Group loss for the
period (2,452) (606) (3,778)
---------- ---------- -------------
Segmental assets
Europe - producing - 425 -
assets held for sale
Africa - producing
assets 12,422 12,258 12,405
Africa - exploration
assets 82,793 80,831 81,918
Europe - oilfield
services/Group costs
(2) 1,658 5,545 2,663
Total assets 96,873 99,059 96,986
---------- ---------- -------------
Segmental liabilities
Africa - exploration
assets (3,065) (2,882) (3,118)
Africa - producing (566) - -
assets
Europe - oilfield
services/Group liabilities
(3) (9,770) (8,299) (8,992)
Total liabilities (13,401) (11,181) (12,110)
---------- ---------- -------------
(1) Group costs primarily comprise
impairment provisions, interest expense
on financial liabilities and salary
and related costs.
(2) Group assets primarily comprise
cash and working capital.
(3) Group liabilities primarily comprise
loans and borrowings and trade payables
and related costs.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
2. Segmental disclosure (continued)
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
US$'000 US$'000 US$'000
Capital expenditure
Africa - exploration
assets 644 527 1,483
Africa - producing assets 163 122 269
Europe - oilfield services/Group
costs 5 2 4
Total capital expenditure 812 651 1,756
---------- ---------- -------------
Non-cash items
Europe: depreciation
- Group assets 5 7 15
Africa: depreciation
- Producing assets 20 - -
Reduction in fair value
of other receivables 556 379 968
Impairment provision
against available for
sale assets 14 25 68
Impairment provision
against assets held
for sale - 425 850
Interest expense on
financial liabilities
measured at amortised
cost 841 776 1,643
Equity-settled share-based-payment
expenses 814 - -
3. Share based payments
The following expenses have been recognised in the income
statement arising on share based payments and included within
administrative expenses:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
US$'000 US$'000 US$'000
Share based payment
charge on vesting of
options 841 - -
The fair values of options granted in the period in accordance
with the terms of the Aminex PLC Executive Share Option Scheme were
calculated using the following inputs into the binomial
option-pricing model:
Date of grant 9 May 2016
Contractual life 3 years
Exercise price Stg 1.34
pence
Market price Stg 1.34
pence
Number of options granted (immediate
vesting) 139,500,000
Expected volatility 45%
Vesting conditions Immediate
Fair value per option Stg 0.41
pence
Expected dividend yield -
Risk-free rate 0.001%
------------
The binomial option-pricing model is used to estimate the fair
value of the Company's share options because it better reflects the
possibility of exercise before the end of the options' life. The
binomial option-pricing model also integrates possible variations
in model inputs such as risk-free interest rates and other inputs,
which may change over the life of the options.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
4. Part disposal of property, plant and equipment
On 4 April 2016, the Company completed the disposal of 1% of its
interest in the Kiliwani North Development Licence to Solo Oil plc
for a consideration of US$0.57 million giving rise to a profit on
disposal of US$0.34 million as follows:
Unaudited
6 months
ended
30 June
2016
US$'000
Consideration received 567
Disposal of property, plant and equipment (126)
Finance costs - reversal of decommissioning
provision 14
Costs of disposal (6)
Gain on disposal 449
Capital gains tax arising on disposal (105)
Net gain on disposal after tax 344
----------
5. Finance income
Audited
Unaudited Unaudited year ended
6 months 6 months 31 December
ended ended 2015
30 June 30 June US$'000
2016 2015
US$'000 US$'000
Deposit interest income - 1 3
-------------- ------------ -------------
6. Finance costs
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 US$'000
US$'000 US$'000
Decommissioning provision
interest charge 21 11 43
Interest expense on
financial liabilities
measured at amortised
cost 841 776 1,643
862 787 1,686
---------- ---------- -------------
Included in finance costs for the period is an interest charge
of US$841,000 in respect of the US$8 million corporate loan, which
has been calculated using the effective interest rate method.
7. Tax
The Group has not provided any tax charge for the six month
periods ended 30 June 2016 and 30 June 2015 or for the year ended
31 December 2015. The Group's operating divisions have accumulated
losses which are expected to exceed profits earned by operating
entities for the foreseeable future.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
8. Loss per share
The basic loss per Ordinary Share is calculated using a
numerator of the loss for the financial period and a denominator of
the weighted average number of Ordinary Shares in issue for the
financial period. The diluted loss per Ordinary Share is calculated
using a numerator of the loss for the financial period and a
denominator of the weighted average number of Ordinary Shares
outstanding and adjusted for the effect of all potentially dilutive
shares, including the share options and share warrants, assuming
that they have been converted.
The calculations for the basic and diluted loss per share of the
financial periods ended 30 June 2016, 30 June 2015 and the year
ended 31 December 2015 are as follows:
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
Numerator for basic
and diluted loss per
share:
Loss for the financial
period (US$'000) (2,452) (606) (3,778)
---------- ---------- -------------
Weighted average number
of shares:
Weighted average number
of ordinary shares ('000) 1,976,205 1,889,652 1,934,014
---------- ---------- -------------
Basic and diluted loss
per share (US cents) (0.12) (0.03) (0.20)
---------- ---------- -------------
There is no difference between the basic loss per Ordinary Share
and the diluted loss per Ordinary Share for the financial periods
ended 30 June 2016, 30 June 2015 and the year ended 31 December
2015 as all potentially dilutive Ordinary Shares outstanding are
anti-dilutive. There were 156,675,000 anti-dilutive share options
(30 June 2015: 21,115,000 and 31 December 2015: 19,315,000) and
167,560,031 anti-dilutive share warrants in issue as at 30 June
2016 (30 June 2015: 92,576,455 and 31 December 2015:
92,576,455).
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
9. Exploration and evaluation assets
Cost US$'000
At 1 January 2016 84,945
Additions 644
---------
At 30 June 2016 85,589
---------
Provisions for impairment
At 31 December 2015 and
30 June 2016 5,081
Net book value
At 30 June 2016 80,508
---------
At 31 December 2015 79,864
---------
The Group does not hold any property, plant and equipment within
exploration and evaluation assets.
The Directors have considered the licence, exploration and
appraisal costs incurred in respect of its exploration and
evaluation assets. These assets are carried at historical cost
except for provisions against the Nyuni-1 well, the cost of seismic
acquired over relinquished blocks and obsolete stock. These assets
have been assessed for impairment and in particular with regard to
remaining licence terms, likelihood of renewal, likelihood of
further expenditures and ongoing acquired data for each area, as
more fully described in the Operations Report. During the prior
year the Tanzanian authorities agreed to the deferral of a two-well
commitment on the Nyuni Area PSA, which was due to be completed by
the end of October 2015, into the four-year first extension period
which expires in October 2019. The Directors have taken into
account ongoing negotiations with the Tanzanian authorities over
the amendment to existing well commitments under the Ruvuma PSA due
for completion by the end of 2016. The Directors are satisfied that
there are no further indicators of impairment but recognise that
future realisation of these oil and gas assets is dependent on
further successful exploration and appraisal activities and the
subsequent economic production of hydrocarbon reserves.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
10. Property, plant and equipment
Development
property Other
- Tanzania assets Total
US$'000 US$'000 US$'000
Cost
At 1 January 2016 12,405 450 12,855
Additions in the
period 163 5 168
Disposals in the
period (126) - (126)
Exchange rate adjustment - (15) (15)
At 30 June 2016 12,442 440 12,882
------------ --------- --------
Depreciation and
depletion
At 1 January 2016 - 439 439
Charge for the period 20 5 25
Exchange rate adjustment - (14) (14)
At 30 June 2016 20 430 450
------------ --------- --------
Net book value
At 30 June 2016 12,422 10 12,432
------------ --------- --------
At 31 December 2015 12,405 11 12,416
------------ --------- --------
During the period, the Company disposed of 1% of its 55.575%
interest in the Kiliwani North Development Licence (see Note
4).
Following the award of the Kiliwani North Development Licence by
the Tanzanian Government in April 2011, the carrying cost relating
to the development licence was reclassified as a development asset
under property, plant and equipment, in line with accounting
standards and the Group's accounting policies. Depletion is being
charged on a unit of production basis from the date the field
commenced production. The Directors have reviewed the carrying
value of the asset at 30 June 2016 based on estimated discounted
future cashflows and are satisfied that no impairment has
occurred.
11. Available for sale assets
As part of the disposal proceeds in a prior year for the
Company's wholly-owned subsidiary Aminex USA, Inc. the Company was
granted shares with a fair market value of US$350,000 in Mayan
Energy Limited (formerly Northcote Energy Limited), an AIM listed
oil and gas company. The fair value of the remaining shares has
decreased and this decrease in value is considered by the Directors
to constitute an impairment of the assets at 30 June 2016.
Accordingly the impairment has been expensed in the income
statement.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
At beginning
of period 22 107 107
Disposals in
year - - (17)
Impairment
loss charged
to income statement (14) (25) (68)
At end of period 8 82 22
---------- ---------- -------------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
12. Cash and cash equivalents
Included in cash and cash equivalents is an amount of US$182,000
held on behalf of partners in joint operations.
13. Loans and borrowings
In July 2016, the Company reached an agreement with the lender,
a fund managed by Argo Capital Management (Cyprus) Ltd, for an
extension of the repayment period from 30 July 2016 to 31 January
2018. The loan facility, originally agreed in January 2013,
initially carried a 12.5% coupon for the period which increased to
15% from 1 July 2013 and a repayment premium which is 20% of the
loan. The loan is secured by fixed charges over certain of the
Group's subsidiary companies and a floating charge over the Group's
assets.
The Group did not make any repayments of interest and capital
during the period. The balance due at 30 June 2016 amounted to
US$9.2 million. As a result of the Open Offer and subsequent rump
placing, Aminex has repaid US$2.00 million against the corporate
loan balance and the balance at the date of this report is
approximately US$7.5 million.
Finance costs have been calculated using the effective interest
rate method, based on management's best estimate of expected cash
flows arising from the interest, redemption premium and principal
repayments in addition to the charge associated with the warrants.
An amount of US$0.84 million (June 2015: US$0.78 million) has been
charged to the Group Income Statement in respect of this (see Note
6).
14. Financial instruments
a. Carrying amounts and fair values
The following table shows the carrying amounts and fair values
of financial assets and financial liabilities, including their
levels in the fair value hierarchy for financial instruments
measured at fair value. It does not include fair value information
for financial assets and liabilities not measured at fair value if
the carrying amount is a reasonable approximation of fair
value.
Carrying amount Fair value
Non-current Current
trade trade
and other and other Level Level
receivables receivables Total 1 3 Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
30 June 2016
Other receivables 1,378 37 1,415 - 1,415 1,415
Available for
sale assets 8 - 8 8 - 8
1,386 37 1,423 8 1,415 1,423
------------- ------------- -------- -------- -------- --------
31 December
2015
Other receivables 1,950 21 1,971 - 1,971 1,971
Available for
sale assets 22 - 22 22 - 22
1,972 21 1,993 22 1,971 1,993
------------- ------------- -------- -------- -------- --------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
14. Financial instruments (continued)
b. Measurement of fair values
Where the market value of other investments is available, the
fair values are determined using the bid market price without
deduction of any transaction costs.
The fair value of production payments receivable from US assets
sold in 2014 and included in non-current and current trade and
other receivables is determined based on the expected future cash
flows where the significant unobservable inputs are the discount
rate of 15% and the expected timing of production. The estimated
fair value would decrease if the expected timing of production is
delayed.
Sensitivity analysis
An increase/decrease in the discount rate of 1%
decreases/increases the fair value of production payments
receivable. The resulting impact on the loss for the period is an
increase/decrease of US$60,992/US$64,481 respectively.
A delay in production of one year decreases the fair value of
production payments receivable and increases the loss for the
period by US$185,000.
15. Share warrant reserve
Since the balance sheet date, the Company has increased its
issued share capital and an additional 74,984,577 warrants have
been granted in accordance with the warrant deed to a fund managed
by Argo Capital Management (Cyprus) Limited in line with the terms
of the financing agreement. These warrants are deemed to be granted
in the current period in order to comply with the provisions of IAS
39 - Financial Instruments: Recognition and Measurement. The fair
value of the warrants granted in accordance with the provision is
US$382,000.
The fair values of the warrants deemed granted in the period
were calculated using the following inputs into the binomial
model:
Date of grant 2 August 4 August
2016 2016
Contractual life 11 months 11 months
Exercise price Stg 1.00 Stg 1.00
pence pence
Market price Stg 1.30 Stg 1.375
pence pence
Number of warrants granted 70,012,308 4,972,269
Expected volatility 45% 45%
Vesting conditions 11 months 11 months
Fair value per option Stg 0.38 Stg 0.44
pence pence
Expected dividend yield - -
Risk-free rate 0.001% 0.001%
----------- ----------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
for the six months ended 30 June 2016
16. Commitments - exploration activity
In accordance with the relevant Production Sharing Agreements
("PSA"), Aminex has a commitment to contribute its share of the
following outstanding work programmes:
(a) On the Nyuni Area PSA, Tanzania: to acquire 800 kilometres
of 2D seismic, 200 kilometres of which shall be acquired in the
transition zone and to drill two wells by the end of the initial
work period ending October 2015. 147 km of the transition
commitment was acquired in 2012. In August 2015 the Ministry of
Energy and Mines confirmed the deferral of the two well drilling
commitment into the four-year First Extension Period which will
expire in October 2019. In July 2015, Aminex applied for the First
Extension Period, together with the statutory relinquishment
proposal, and is waiting for the grant of licence prior to
continuing with the work programme.
(b) On the Ruvuma PSA, Tanzania: the PSA has entered the second
and final extension period. In January 2014, a Variation Addendum
to the PSA was signed so that the commitment to drill two
exploration wells in the previous period could be incorporated into
the current work period. Four exploration wells were required to be
drilled by December 2016. Since 30 June, Aminex has received formal
Ministerial approval for the extension of the Mtwara Licence of the
Ruvuma PSA. The Licence has been extended by one year to December
2017. Negotiations are ongoing for the extension of the Lindi
Licence and its work commitments and, at the recommendation of the
Minister, Aminex is applying for a two-year extension.
17. Related party transactions
There were no related party transactions during the six-month
period to 30 June 2016 that have materially affected the financial
position or performance of the Group.
18. Post balance sheet events
On 27 July 2016, the Tanzanian Petroleum Development Corporation
confirmed that the Ministry of Energy & Mines had extended the
Mtwara Licence under the Ruvuma PSA by one year to 8 December
2017.
At an Extraordinary General Meeting held on 2 August 2016,
shareholders approved the increase in the authorised share capital
by EUR2,000,000 to EUR64,000,000 comprising 2,000,000,000 Ordinary
Shares of EUR0.001 each. At the same meeting, the shareholders
approved a capital raise for proceeds of approximately US$23.8
million (net of transaction expenses) through the issue of
1,499,673,520 Ordinary Shares of nominal value EUR0.001 each at
Stg1.3 pence per Ordinary Share. The capital raise comprised a
placing of 1,302,071,002 Ordinary Shares and an Open Offer whereby
existing shareholders subscribed for 98,157,132 Ordinary Shares. On
4 August 2016, a rump placing of 99,445,386 Ordinary Shares was
completed at the same issue price.
On completion of the capital raise, Aminex entered into a
Shareholder and Relationship Agreement with Eclipse Investments
LLC, part of the Zubair Corporation, which holds a 29.9% interest
in the shares of the Company.
In September 2016, Aminex advised that it would maintain its
54.575% interest in Kiliwani North Development Licence. Under the
terms of a sale and purchase agreement signed in April 2016, Solo
Oil plc had agreed to take a further 1.25% interest within fifteen
days of gas revenues payment being received. The transaction was
not completed. The terms of a third and final tranche for the sale
of 1.575% remain in effect.
19. Statutory information
The interim financial information to 30 June 2016 and 30 June
2015 is unaudited and does not constitute statutory financial
information. The information given for the year ended 31 December
2015 does not constitute the statutory accounts within the meaning
of Part 6 of Chapter 4 of the Companies Act 2014. The statutory
accounts for the year ended 31 December 2015 has been filed with
the Registrar of Companies in Ireland. This announcement is being
sent to shareholders and will be made available at the Company's
registered office at 6 Northbrook Road, Dublin 6 and at the
Company's UK representative office at 60 Sloane Avenue, London SW3
3DD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFDFMLFMSEEU
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