TIDMCOP
RNS Number : 4764A
Circle Oil PLC
29 September 2015
29 September 2015
CIRCLE OIL PLC
("Circle or the "Company" or "Group")
2015 INTERIM RESULTS
Circle Oil Plc (AIM: COP), the international oil and gas
exploration, development and production company, is pleased to
announce its results for the six month period ended 30 June
2015.
Financial Highlights
-- Circle returns to profit for H1 2015 with operating profit of
US$5.5 million
-- Revenues for the 6 months to 30 June of US$22.3 million (H1
2014 US$47.8 million)
-- Aggressive cost management strategy helps negate the impact
of lower oil prices and reduced Egypt production
-- Successful renegotiation of supply contracts in Morocco
resulting in a drop in operating costs from US$0.8 million in H1
2014 to US$0.5 million in H1 2015
-- Gross profit as a percentage of revenue increased to 43.4% in
the six months ended 30 June 2015 from 34.3% in H1 2014, reflecting
management's successful focus on reducing operating costs
particularly in Morocco
-- Trade and Other Receivables of US$25.3 million at 30 June
2015, a reduction from US$48.1 million at 30 June 2014, reflecting
the lower oil price environment and the substantial payments
received from EGPC
-- Cash and cash equivalents at 30 June 2015 were US$17.1
million
-- Repaid US$6.0 million of the US$30.0 million Convertible Loan
and extended term of the loan from July 2015 to July 2017. A
further US$4.0 million was repaid in July 2015
-- The Group drew down a further US$12.5 million on the Reserve
Based Lending facility (RBL)
-- Post period end the Group has reached agreement in principle
to extend the RBL facility with IFC by one year to June 2019
-- As at 30 June 2015, net debt was US$64.4 million
Operational Highlights
-- New executive management team in place
-- Board strengthened with the appointment of experienced non-executive directors
-- Improved operational efficiency in Morocco evidenced by
shorter drilling times and well costs reduced by over US$1.0
million per well
-- Gas production in Morocco benefiting from fixed price (i.e.
independent of oil price) gas contracts at US$8.66/Mcf
-- Ongoing successful appraisal / development drilling programme
in Sebou Permit in Morocco with the hook-up of two newly completed
wells including one new discovery
-- Exploration of new permit - Lalla Mimouna in Morocco. Gas
discovery in first exploration well in Lalla Mimouna Permit.
-- Egypt unit production operating cash costs of US$4.34/bbl,
rank amongst the lowest in the world
-- Continued prudent field management through water injection
programme, and implementation of workover
programme in NW Gemsa field in Egypt
-- Mahdia farm-out in Tunisia underway following grant of licence extension
-- Decision to exit Oman to concentrate on numerous
opportunities currently available in Egypt, Morocco and Tunisia
Stephen Jenkins, Chairman, commented:
"Both of Circle's producing assets continue to generate good
cashflow and are profitable even in today's low oil price
environment. However, management efforts remain strongly focused on
delivering further cost and operational efficiency improvements,
particularly with our operated Morocco assets. The low operating
cost bases of these assets demonstrates their underlying strength.
The Company has an established presence in three territories which
have the benefit of low operating price regimes. The Company
believes there will be further opportunities to capitalise on this
operational platform especially in the current oil price
environment.
However, as a consequence of the significant costs incurred
during exploration drilling in Tunisia and Oman, the cash resources
of the Company were materially impacted. The cost overruns of these
wells were exacerbated by both wells being sole risk. The Group
continues to build an overall internal control framework to ensure
that the finance function is well placed to support both the
Board's and management's decision making processes going
forward.
As part of right-sizing its balance sheet, the Group has reached
an in principle agreement with IFC to extend the RBL by one year.
The Company continues to review its overall capital structure so
that it is better positioned to take advantage of the opportunities
it believes will arise in this lower oil price environment."
For further information contact:
Circle Oil Plc (+44 20 7638 9571)
Mitch Flegg, Chief Executive Officer
Investec (+44 20 7597 4000)
Chris Sim
George Price
James Rudd
Citigate Dewe Rogerson (+44 20 7638 9571)
Martin Jackson
Shabnam Bashir
Murray Consultants (+353 1 498 0300)
Joe Heron (+353 87 6909735)
Pat Walsh
In accordance with the guidelines of the AIM Market of the
London Stock Exchange the technical information contained in the
announcement has been reviewed and approved by Mitch Flegg, Chief
Executive Officer of Circle Oil Plc. Mitch Flegg, who has over 33
years of experience, is the qualified person as defined in the
London Stock Exchange's Guidance Note for Mining and Oil and Gas
companies,
Mitch Flegg holds a BSc in Physics from Birmingham University
and is a member of the Society of Petroleum Engineers (SPE) and the
Petroleum Exploration Society of Great Britain (PESGB).
Notes to Editors
Circle Oil plc (AIM: COP) is an international oil & gas
exploration, development and production company holding a portfolio
of assets in Morocco, Tunisia, and Egypt with a combination of
low-risk, near-term production, and significant upside exploration
potential. The Company listed on AIM in October 2004.
Internationally, the Company has assets in the Rharb Basin,
Morocco; the Ras Marmour Permit in southern Tunisia; the Beni
Khalled permit in northern Tunisia, the Mahdia Permit offshore
Tunisia and the NW Gemsa permit in Zeit Bay area of Egypt.
Circle Oil's strategy is to locate and secure additional
licences in prospective hydrocarbon provinces and, through targeted
investment programmes, monetise the value in those assets for the
benefit of shareholders. This could be achieved through farm-outs
to selected partners who would then invest in and continue the
development of the asset into production, or Circle Oil may opt to
use its own expertise to appraise reserves and bring assets into
production, generating sustained cash flow for further
investment.
Further information on Circle Oil is available on its website
atwww.circleoil.net.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Over the course of the year there has been a strong focus on
costs, operational efficiencies and ensuring that Circle is able to
maximise the potential of its low cost assets. Against the current
commodity price backdrop the Group's asset base has continued to
generate profits and forms a strong platform for growth.
OPERATIONS
Morocco
Operationally, the Group has made a number of efficiency
improvements in-country. Led by a newly appointed country manager
the focus has been on business continuity, decreasing costs and
improving overall operational and drilling efficiency. A number of
local supply contracts have been re-negotiated and the supply chain
restructured. As a result, Circle has benefited both from reduced
operating costs and reduced rig down-time, resulting in a fall in
well costs by over US$1.0 million per well.
The Group also continues to benefit from the use of its own
pipeline which has additional capacity for new gas supply. As a
result of the existing infrastructure the threshold for
commerciality for any new discoveries is relatively low and the
Group continues to look to add reserves both through its drilling
programme and any other opportunities that might arise. The
cumulative production from Circle's wells in the Sebou Permit
through to the end of June 2015 was 8.59 Bcf.
Sebou average daily gas production was 6.2 MMcf/d during the
first half of 2015 and negotiations are under way for further
off-take to increase the supplies to and revenue from both existing
customers and new industrial partners moving into the Kenitra
region. Demand in-country remains buoyant and whilst Circle has
been somewhat shielded from falling commodity prices due to
attractive fiscal terms and fixed price gas contracts (average
price realised during the period of US$8.66/Mcf). There is
potential for a further improvement on current pricing levels as
new contracts are negotiated.
Drilling operations in the onshore Sebou and Lalla Mimouna
blocks have continued throughout the first half of 2015. In Sebou,
the notable success was the SAH-W1 well which encountered gas shows
at different levels within the target Guebbas sands. Circle will
produce from the lowermost Guebbas zone where 3.6 metres of net pay
was discovered and flowed at a sustained rate of 4.94 MMcf/d on a
24/64" choke during a test period of 5 hours. This well was tied-in
to existing production facilities in July 2015. The KAB-1bis
exploration well, also in the Sebou permit, was drilled in February
2015 and encountered very limited gas shows and as a result, was
plugged and abandoned. The KSR-12 discovery well, drilled in the
Sebou permit in late 2014, has also been connected for production
and was successfully brought on line during May 2015. The well is
producing at rates of up to 2 MMcf/d.
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:02 ET (06:02 GMT)
Results in Lalla Mimouna to date have been mixed, with the first
well LAM-1 targeting Miocene gas-bearing sands similar to the Sebou
Permit. LAM-1was tested and the primary target flowed gas at a
stabilised rate of 1.9 MMcf/d on a 16/64" choke and the secondary
target was perforated and flowed at a stabilised rate of 1.1 MMcf/d
on a 16/64" choke. Post period, ANS-2 and NFA-1 wells were drilled
and although both encountered gas shows at the targeted depth, the
interpretation of wire line logs indicated that the reservoir
quality encountered in the wells did not meet the Group's pre-drill
estimates. Circle is continuing to review the data gathered and in
partnership with ONHYM will prioritise the next prospects to
drill.
Following the Lalla Mimouna wells the rig has now returned to
the Sebou permit in the Rharb Basin, the location of the Group's
existing production wells.
Egypt
The partners continue to carefully manage output at the Egyptian
licence with costs of US$4.34/bbl, amongst the lowest globally. As
a result, even in the current oil price environment, the field
remains profitable and cash generative.
At the end of June 2015, fourteen wells in the Al Amir SE field
(AASE) and five wells in the Geyad field were on production, with a
combined average gross production rate of 9,648 boepd for the
period. Water injection through four wells in AASE and one well in
the Geyad field is providing continuing pressure support to
maximise recovery efficiency and optimise production levels.
The export gas line to the SUCO facility at Zeit Bay is
currently flowing at approximately 7 MMcf/d with a total delivered
to the terminal of 8.8 Bcf at the end of June 2015. Valuable
condensate and natural gas liquids are stripped out of the gas and
sold to EGPC with gross average daily rates of about 65 bbls of
condensate and 15 tonnes of LPG. The Group is in the final stages
of documenting the commercial agreements, but has historically
accrued for its share of the gas and condensate revenues from the
field.
The AASE-21 well was shut in during April due to a high water
cut. The AASE-18 well was recompleted and brought on line during
May at an initial rate of 650 bopd (gross). This will help during
the remainder of 2015 to partially compensate for the loss of
AASE-21.
Given Circle's material ownership stake in the block, over the
course of the year to date Circle has taken a much more active role
with the operator. The process of good field management will be
continued into 2016 through implementation of the dynamic reservoir
model of the AASE field.
Circle continues to benefit from the historic capex spend on the
fields and is working closely with the operator to prudently manage
the field and arrest the decline in production through workover and
drilling activity. During the second half of the year a programme
to perform workovers on up to eight wells commenced. The results of
this workover programme will be used to influence the design of the
next planned drilling programme of two or three production
wells.
Tunisia
During the first half of the year Circle continued to work with
the Tunisian Consultative Committee on Hydrocarbons and post period
end, the Group was pleased to announce the renewal of its Mahdia
permit. The permit has been extended for three years until 19
January 2018. The extension carries with it a commitment of one
exploration well, one appraisal well and a requirement to acquire
300km(2) of 3D seismic. Circle currently has a 100% interest in the
permit. Following the permit extension, a farm-out process has now
commenced. The farm-out strategy will minimise Circle's financial
commitment, reduce risk, and still allow the Group to benefit from
the potential of the discovery. This approach is fully consistent
with Circle's strategy to grow the Group in a sustainable manner
and deliver value to shareholders in a low oil-price
environment.
The offshore Mahdia permit covers an area of 3,024km(2) , and
contains the El Mediouni structure which was tested by Circle's
EMD-1 well in August 2014 and is a potentially large discovery. The
well encountered a 133 metre column of light oil in the Ketatna
(Oligo-Miocene) carbonates. While mud losses prevented log data
acquisition, Circle estimates an un-risked prospective recoverable
resource in excess of 70MMbo from the structure. The El Mediouni
structure is located in a water depth of approximately 230 metres
in benign Mediterranean conditions. The permit also contains a
number of similar prospects which have been significantly derisked
by the EMD-1 well..
At Ras Marmour and Beni Khalled, the Group continues to evaluate
its commitments in the current commodity price environment. Circle
awaits final confirmation of all approvals to drill the onshore Ras
Marmour well which is targeting a productive sand in the Early
Cretaceous Meloussi formation, which is the proven reservoir in the
adjacent Robbana field. At Beni Khalled tenders are currently being
reviewed in respect of the 3D seismic with a view to future
appraisal of the existing discovery.
Oman
In Oman the onshore exploration well, Shisr-1, drilled in Q1
2015 in the south-west area of Block 49, was plugged and abandoned
due to drilling difficulties. In light of this and coupled with
insufficient interest in the farm-in on Block 52 and Circle's
unwillingness to sole-risk shallow water wells, it is relinquishing
both blocks and is no longer bidding for new acreage in the country
as Circle is exiting Oman.
FINANCIAL REVIEW
Revenue for the 6 months to 30 June 2015 was US$22.3 million
compared to US$47.8 million for the first half of 2014. The
reduction primarily reflected the fall in oil prices and lower
production volumes in Egypt. As noted above a workover campaign to
improve production levels has commenced. There was also a small
reduction in Morocco gas sales due to the cessation of one customer
contract.
In the first half of 2015, management worked hard to implement a
number of initiatives to reduce operating costs, particularly with
our Moroccan operated assets. The benefit of these initiatives has
resulted in an appreciable improvement in gross margin, which for
the period was 43.4% of revenues for the period (US$9.7 million)
compared to 34.4% of revenues in the first half of 2014 (US$16.4
million).
Profit before taxation was US$2.8 million compared to US$9.4
million in the first half of 2014.
Working capital, trade and other receivables fell to US$25.3
million on 30 June 2015 from US$48.1 million on 30 June 2014. This
primarily reflects the lower oil price environment and substantial
cash receipts from EGPC, with the receivable days now at levels not
seen since before the Arab Spring.
Trade and other payables was reduced to US$17.4 million at 30
June 2015 from US$36.3 million at 30 June 2014 (and US$47.7 million
at year-end), as the Group paid numerous substantial obligations
relating to the EMD-1 well in the Mahdia permit and the final
commitment well drilled in Oman (Block 49).
As agreed with the lender and approved by shareholders, US$6.0
million of the Convertible Loan was repaid in the first half of
2015 with a further repayment of US$4.0 million in July 2015,
reducing the principle to US$20.0 million. As part of right-sizing
its balance sheet, the Group has reached an in principle agreement
with IFC to extend the RBL by one year. The Company continues to
review its overall capital structure so that it is better
positioned to take advantage of the opportunities it believes will
arise in this lower oil price environment. During the period, the
Group drew further on the RBL facility with the balance drawn down
at 30 June 2015 increasing to US$57.5 million. Net debt was US$64.4
million as at 30 June 2015 compared to US$23.3 million at 30 June
2014. Net debt as at August 2015 was US$65.7 million.
Net cashflow from operations was US$17.8 million for the 6
months ended 30 June 2015 compared to US$25.1 million for the same
period last year reflecting the reduced operating profit for the
period which was in part mitigated by increased EGPC payments. Cash
and cash equivalents at 30 June 2015 was US$17.1 million. This
includes substantial cash balances in Morocco, a portion of which
the Group is currently repatriating.
The Group continues to build an overall internal control
framework to ensure that the finance function is well placed to
support both the Board's and management's decision making processes
going forward.
Like many E&P companies, the Group's overall financial
position continues to be challenging. As stated in the 2014 Annual
Report, in light of both the unanticipated capital expenditure
overspend, primarily in the Mahdia Permit, and the lower oil price
environment, the Group continues to manage its cash balances,
review its operational commitments and evaluate its capital
structure to ensure it is appropriate for the Group's operational
objectives. This may still result in the Group exploring potential
funding options, including but not limited to financing
opportunities or farm-outs. These actions are directed at ensuring
that the Group is able to remain profitable in a sustained lower
oil price environment and better positioned to selectively pursue
opportunities in its areas of focus.
Mitch Flegg
Chief Executive Officer
29 September 2015
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:02 ET (06:02 GMT)
Glossary
bbls Barrels
bo Barrels of oil
bopd Barrels of oil per day
boepd Barrels of oil equivalent per day
Bcf Billions of cubic feet of gas
E&P Exploration & production
EBITDA Earnings before interest, tax, depreciation
and amortisation
EGPC Egyptian General Petroleum Company
IFC International Finance Corporation
LPG Liquified Petroleum Gas
MD Measured depth
Mcf Thousands of cubic feet
MMcf Millions of cubic feet
MMbo Millions of barrels of oil
Mboe Millions of barrels of oil equivalent
MMbw Millions of barrels of water
MMcf/d Millions of cubic feet of gas per day
ONHYM Office National des Hydrocarbures et des Mines
RBL Reserve based lending
sq km Square kilometres
TD Total depth
3D Three dimensional
circle Oil PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2015 - UNAUDITED
Notes 6 months 6 months Year ended
to to 31 December
30 June 30 June 2014
2015 2014
US$000 US$000 US$000
Revenue 3 22,290 47,785 84,624
Cost of sales (12,608) (31,370) (53,764)
Gross profit 9,682 16,415 30,860
Administrative expenses (3,106) (2,956) (5,866)
Share option expense (706) (863) (975)
Exploration costs written-off (271) - (57,396)
Impairment - - (13,936)
Foreign exchange loss (149) (339) (706)
Operating profit 5,450 12,257 (48,019)
Finance revenue 6 603 129 358
Finance costs 7 (3,267) (3,004) (6,254)
Profit/(loss) before taxation 2,786 9,382 (53,915)
Taxation - - (6)
Profit/(loss) for the financial
period 2,786 9,382 (53,921)
Basic earnings per share 2 0.49c 1.67c (9.56)c
========= ===================== =============
Diluted earnings per share 2 0.31c 1.62c (9.56)c
========= ===================== =============
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2015 - UNAUDITED
6 months 6 months Year ended
to to 31 December
30 June 30 June 2014
2015 2014
US$000 US$000 US$000
Profit/(loss) for the financial
period 2,786 9,382 (53,921)
Total income and expense recognised
in other comprehensive income - - -
Total comprehensive income/(loss)
for the period - entirely
attributable to equity holders 2,786 9,382 (53,921)
=========================== ================== =============
Circle Oil PLC
CONDENSED CONSOLIDATED statement of financial position
AT 30 JUNE 2015 - UNAUDITED
Notes 30 June 30 June 31 December
2015 2014 2014
US$000 US$000 US$000
Assets
Non-current assets
Exploration and evaluation
assets 4 100,895 111,997 97,411
Production and development
assets 5 150,115 151,800 148,647
Property, plant and equipment 214 276 270
Deferred transaction costs - 1,666 -
-------- --------- ------------
251,224 265,739 246,328
-------- --------- ------------
Current assets
Inventories 30 115 408
Trade and other receivables 25,334 48,117 31,164
Cash and cash equivalents 8 17,145 31,654 36,308
-------- --------- ------------
42,509 79,886 67,880
-------- --------- ------------
Total assets 293,733 345,625 314,208
======== ========= ============
Equity and liabilities
Capital and reserves
Share capital 8,125 8,084 8,125
Share premium 167,953 167,083 167,953
Other reserves 2,498 11,928 8,051
Retained earnings 17,679 67,949 8,634
Total equity 196,255 255,044 192,763
-------- --------- ------------
Non-current liabilities
Trade and other payables 670 1,575 1,062
Reserves based loan facility 55,251 - 43,427
Convertible loan - debt
portion 16,946 27,885 -
Derivative financial instruments 2,610 134 -
Decommissioning provision 1,211 1,176 1,193
Total non-current liabilities 76,688 30,770 45,682
-------- --------- ------------
Current liabilities
Trade and other payables 16,783 34,774 46,714
Reserves based loan facility 9 - 25,000 -
Convertible loan - debt
portion 4,000 - 29,025
Derivative financial instruments - - 10
Current tax 7 37 14
Total current liabilities 20,790 59,811 75,763
-------- --------- ------------
Total liabilities 97,478 90,581 121,445
-------- --------- ------------
Total equity and liabilities 293,733 345,625 314,208
======== ========= ============
Circle Oil PLC
CONDENSED CONSOLIDATED cash flow statement
FOR THE SIX MONTHS ENDED 30 JUNE 2015 - UNAUDITED
Notes 6 months 6 months Year ended
to to 31 December
30 June 30 June 2014
2015 2014
US$000 US$000 US$000
Operating activities
Net cash generated from operations 10 17,789 26,403 54,706
Taxes paid - - (25)
Net cash inflow from operating activities 17,789 26,403 54,681
--------- ----------------- -------------
Cash flows from investing activities
Investments in exploration and evaluation
assets (15,959) (26,526) (60,737)
Investments in production and development
assets (24,258) (15,955) (25,703)
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:02 ET (06:02 GMT)
Payments to acquire property, plant
and equipment (10) (184) (260)
Interest received 1 5 9
Net cash used in investing activities (40,226) (42,660) (86,691)
--------- ----------------- -------------
Cash flows from financing activities
Issue of share capital - - 911
Working capital facility - amounts
repaid - (12,499) (12,499)
Convertible loan repayment (6,000) - -
Reserve based lending facility - amounts
drawn down 12,500 25,000 45,000
Loan transaction costs paid (960) (1,262) (2,539)
Interest paid (2,261) (1,222) (2,349)
Net cash from financing activities 3,279 10,017 28,524
--------- ----------------- -------------
Decrease in cash and cash equivalents (19,158) (6,240) (1,858)
Cash and cash equivalents at beginning
of period 36,308 37,938 37,938
Effect of foreign exchange rate changes (5) (44) 228
Cash and cash equivalents at end of
period 17,145 31,654 36,308
========= ================= =============
To ensure consistency with the current period, loan transaction
costs paid in H1 2014 and share capital issued in 2014 were
reclassified in the table above. This is for presentational
purposes only and makes no change to the amounts of cash and cash
equivalents reported.
Circle Oil PLC
consolidated STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2015 - UNAUDITED
Share-based
payment Convertible Retained
Share Share reserves loan - Translation earnings/
capital premium US$000 equity reserve (deficit) Total
US$000 US$000 portion US$000 US$000 US$000
US$000
At 1
January
2014 8,084 167,083 5,004 6,259 (3) 58,371 244,798
Issue of - - - - - - -
share
capital
Share - - - - - - -
options
exercised
Share
option
expense - - 863 - - - 863
Reserve
transfer - - (196) - - 196 -
Net profit
for period - - - - - 9,382 9,382
At 30 June
2014 8,084 167,083 5,671 6,259 (3) 67,949 255,043
------------ ----------- ------------- ------------- ------------- ----------- ---------
Share
options
exercised 41 870 - - - - 911
Share
option
expense - - 112 - - - 112
Reserve
transfer - - (3,988) - - 3,988 -
Net loss
for period - - - - - (63,303) (63,303)
At 31
December
2014 8,125 167,953 1,795 6,259 (3) 8,634 192,763
------------ ----------- ------------- ------------- ------------- ----------- ---------
Issue of - - - - - - -
share
capital
Share
option
expense - - 706 - - - 706
Reserve
transfer - - - (6,259) - 6,259 -
Net profit
for period - - - - - 2,786 2,786
At 30 June
2015 8,125 167,953 2,501 - (3) 17,769 196,255
============ =========== ============= ============= ============= =========== =========
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
1. Basis of preparation
The condensed consolidated financial statements have been
prepared using accounting policies consistent with International
Financial Reporting Standards (IFRS) and in accordance with
International Accounting Standard (IAS) 34 Interim Financial
Reporting.
The Directors recognise the continued volatility in the
commodity price environment in recent months and its significant
impact on the upstream sector in general and Circle in particular.
The Directors recognise the Group requires the ongoing support of
its key stakeholders, particularly its lenders, and careful
management of its commitments in order to meet its obligations as
they fall due. As the management team continues to right-size the
business such that the Group will continue to be a going concern in
a sustained low oil price environment, the Directors believe it
continues to be appropriate to adopt the going concern basis in
preparing the financial statements.
The accounting policies and methods of computation used in these
interim financial statements are consistent with those used in the
most recent annual audited financial statements and those envisaged
for the year ended 31 December 2015 financial statements.
Adoption of new and revised Standards
No new standards or interpretations have been issued that would
have a material financial impact on adoption on the condensed
consolidated financial statements for the six months ended 30 June
2015.
2. Basic and diluted earnings per share
Basic earnings per share and diluted earnings per share at the
end of the period were as follows:
30 June 30 June 31 December
2015 2014 2014
US$000 US$000 US$000
Basic earnings per share 0.49c 1.67c (9.56)c
======== ======== ============
Diluted earnings per share 0.31c 1.62c (9.56)c
======== ======== ============
The calculation of basic earnings per share attributable to the
ordinary equity holders is based on the following data:
30 June 30 June 31 December
2015 2014 2014
US$000 US$000 US$000
Profit/(loss) for period
attributable
to equity holders of the parent 2,786 9,382 (53,921)
============================= ===================== ======================
'000 '000 '000
Weighted average number of
ordinary shares for the purposes
of basic earnings per share 565,847 563,353 564,112
============================= ===================== ======================
Diluted earnings per share is calculated using the weighted
average number of ordinary shares assuming the conversion of its
potential dilutive ordinary shares outstanding which relate to the
convertible loan and employee share options. All of the Group's
potential ordinary shares were dilutive for the period ended 30
June 2015 which resulted in a decrease in earnings per share. The
Group had total potential ordinary shares outstanding of
147,608,751 at 30 June 2015 (2014: 124,887,935).
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:02 ET (06:02 GMT)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
3. Segmental reporting
Six months to 30 June Africa Middle-East Corporate Total
2015
US$000 US$000 US$000 US$000
Revenue 22,290 - - 22,290
Cost of sales (5,172) - - (5,172)
Depreciation (7,436) - - (7,436)
Gross profit 9,682 - - 9,682
Administration expenses (1,015) (637) (1,454) (3,106)
8,667 (637) (1,454) 6,576
Share option expense - - (706) (706)
Exploration costs written-off - (271) - (271)
Finance costs (1,292) (6) (1,969) (3,267)
Finance revenue 62 - 541 603
Foreign exchange (loss)/gain (238) - 89 (149)
----------- ------------ ---------- --------------
Profit/(loss) before taxation 7,199 (914) (3,499) 2,786
Taxation - - - -
Profit/(loss) for the
period 7,199 (914) (3,499) 2,786
=========== ============ ========== ==============
Total assets 290,687 76 2,970 293,733
=========== ============ ========== ==============
Total liabilities 70,517 1,412 25,549 97,478
=========== ============ ========== ==============
Sales revenue in Africa of US$22.29 million (H1 2014: US$47.79
million) consists of US$14.22 million in oil sales and US$0.77
million in gas and associated liquid sales in Egypt together with
US$7.3 million in gas sales in Morocco. Corporate comprises mainly
of corporate expenses, cash and other assets and liabilities not
directly attributable to an operating segment.
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
3. Segmental reporting (continued)
Six months to 30 June Africa Middle-East Corporate Total
2014
US$000 US$000 US$000 US$000
Revenue 47,785 - - 47,785
Cost of sales (21,034) - - (21,034)
Depreciation (10,336) - - (10,336)
Gross profit 16,415 - - 16,415
Administration expenses (1,696) (168) (1,092) (2,956)
14,719 (168) (1,092) 13,459
Share option expense - - (863) (863)
Finance costs (1,217) - (1,787) (3,004)
Finance revenue 125 - 4 129
Foreign exchange loss (302) - (37) (339)
-------------- ---------------- ------------------ ---------------
Profit/(loss) before
taxation 13,325 (168) (3,775) 9,382
Taxation - - - -
Profit/(loss) for the
period 13,325 (168) (3,775) 9,382
============== ================ ================== ===============
Total assets 290,682 40,140 14,803 345,625
============== ================ ================== ===============
Total liabilities (57,766) (1,085) (31,730) (90,581)
============== ================ ================== ===============
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
3. Segmental reporting (continued)
Twelve months to 31 December Africa Middle-East Corporate Total
2014
US$000 US$000 US$000 US$000
Revenue 84,624 - - 84,624
Cost of sales (34,684) - - (34,864)
Depreciation (19,080) - - (19,080)
Gross profit 30,860 - - 30,860
Administration expenses (3,357) (432) (2,077) (5,866)
27,503 (432) (2,077) 24,994
Share option expense - - (975) (975)
Exploration costs written-off (6,557) (50,839) - (57,396)
Impairment (13,936) - - (13,936)
Finance costs (2,963) - (3,291) (6,254)
Finance revenue 226 - 132 358
Foreign exchange gain/(loss) (721) - 15 (706)
Profit/(loss) before taxation 3,552 (51,271) (6,196) 53,915
Taxation - - (6) (6)
Profit/(loss) for the year 3,552 (51,271) (6,202) (53,921)
========= ============ ========== ==========
Total assets 309,994 74 4,140 314,208
========= ============ ========== ==========
Total liabilities (81,427) (8,337) (31,681) (121,445)
========= ============ ========== ==========
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
4. Exploration and evaluation assets
The movement on exploration and evaluation assets which relate
to oil and gas interests during the period was:
Six months to 30 June 2015 Exploration
Opening costs written-off Closing
balance Additions US$000 balance
US$000 US$000 US$000
Africa 97,411 3,484 - 100,895
Middle-East - 271 (271) -
30 June 2015 97,411 3,755 (271) 100,895
=============== =============== =================== ================
Six months to 30 June 2014 Exploration
Opening costs written-off Closing
balance Additions US$000 balance
US$000 US$000 US$000
Africa 45,668 26,366 - 72,034
Middle-East 35,685 4,278 - 39,963
30 June 2014 81,353 30,644 - 111,997
============== ============== ====================== ===============
Twelve months to 31 December Exploration
2014 Opening costs written-off Closing
balance Additions US$000 balance
US$000 US$000 US$000
Africa 45,668 58,300 (6,557) 97,411
Middle-East 35,685 15,154 (50,839) -
31 December 2014 81,353 73,454 (57,396) 97,411
============== ============== =================== =================
Oil and gas interests at 30 June 2015 represent exploration and
related expenditure on the Group's licences & permits in the
geographical areas noted above. The realisation of these intangible
assets by the Group is dependent on the development of economic
reserves and the ability of the Group to raise sufficient funds to
develop these interests. Should the development of economic
reserves prove unsuccessful, the carrying value in the statement of
financial position will be written off.
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:02 ET (06:02 GMT)
The Directors have considered whether facts or circumstances
exist that indicate that exploration and evaluation assets are
impaired and consider that no impairment loss is required to be
recognised as at 30 June 2015. Exploration and evaluation assets
have been assessed for impairment having regard to the likelihood
of further expenditures and ongoing appraisal for each geographical
area.
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
5. Production and development assets
The movement on production and development assets which relate
to oil and gas interests during the period was:
Cost Africa Total
US$000 US$000
At 1 January 2014 191,605 191,605
Additions 16,018 16,018
At 30 June 2014 207,623 207,623
================== ================
Additions 19,722 19,722
At 31 December 2014 227,345 227,345
================== ================
Additions 8,637 8,637
At 30 June 2015 235,982 235,982
================== ================
Accumulated depreciation Africa Total
US$000 US$000
At 1 January 2014 45,417 45,417
Charge for financial period 10,406 10,406
------------------- ----------------
At 30 June 2014 55,823 55,823
=================== ================
Charge for financial period 8,939 8,939
------------------- ----------------
At 31 December 2014 64,762 64,762
=================== ================
Charge for financial period 7,169 7,169
------------------- ----------------
At 30 June 2015 71,931 71,931
=================== ================
Impairment Africa Total
US$000 US$000
At 1 January 2014 - -
Charge for financial period - -
At 30 June 2014 - -
=================== ================
Charge for financial period 13,936 13,936
At 31 December 2014 13,936 13,936
=================== ================
Charge for financial period - -
At 30 June 2015 13,936 13,936
=================== ================
Net book value Africa Total
US$000 US$000
At 30 June 2014 151,800 151,800
=================== ================
At 31 December 2014 148,647 148,647
=================== ================
At 30 June 2015 150,115 150,115
=================== ================
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
6. Finance revenue
6 months 6 months Year ended
to to 31 December
30 June 30 June 2014
2015 2014
US$000 US$000 US$000
Interest receivable 2 5 8
Gain on fair value of conversion of 399 - -
option
Gain on fair value of term extension 140 - -
option
Gain on fair value of additional option
to subscribe for shares - - 124
Finance income - deferred revenue interest 62 124 226
603 129 358
========= ============ =============
7. Finance costs
6 months 6 months Year ended
to to 31 December
30 June 30 June 2014
2015 2014
US$000 US$000 US$000
Interest payable:
Convertible loan 927 2,015 4,062
Reserve based lending facility interest 1,346 243 2,836
Working capital facility interest - 187 187
Amortisation of working capital facility
transaction costs - 330 329
Amortisation of reserve based lending - 439 -
transaction costs
Interest expense non-cash 503 - -
Loss on fair value of additional options 606 - -
Interest payable to suppliers 24 - 153
Unwinding of discount on decommissioning
provision 18 17 34
Capitalised to exploration and evaluation
assets (157) (227) (1,347)
3,267 3,004 6,254
========== ============== ==================
8. Cash and cash equivalents
Cash balances at 30 June 2015 of US$17.1 million (H1 2014:
US$31.6 million) include restricted cash amounts of US$1.8 million
(H1 2014: US$1.8 million).
9. Loans and borrowings
During the period, an amendment and extension of the convertible
loan agreement with KGL Petroleum Company (KGL) dated 8 June 2007
(as amended and restated on 23 May 2012) was concluded. Of the
US$30.0 million loan value due for redemption 19 July 2015, US$10.0
million has been repaid of which US$6.0 million was repaid during
the period and US$4.0 million in July 2015. The repayment of the
remaining balance of US$20.0 million was extended to 19 July
2017.
During the period US$12.5 million was drawn-down of the IFC
reserve based lending facility, amounting to total draw-downs of
US$57.5 million.
Circle Oil PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
10. Reconciliation to net cash generated from operations
6 months 6 months Year ended
to to 31 December
30 June 30 June 2014
2015 2014
US$000 US$000 US$000
Profit before taxation 2,786 9,382 (53,915)
Finance revenue (603) (129) (358)
Finance costs 3,267 3,004 6,254
Exploration costs written-off 271 - 57,396
Impairment of production and
development assets - - 13,936
(Decrease)/increase in trade
and other payables (2,639) 7,977 3,834
Decrease/(increase) in trade
and other receivables 6,381 (5,024) 9,548
Decrease/(increase) in inventory 378 (92) (385)
Share option expense 706 863 975
Foreign exchange loss/(gain) 5 44 (228)
Depreciation 7,235 10,378 19,202
Net cash generated from operations 17,789 26,403 56,259
========= =============== =============
11. Share Options
In accordance with the approved Employee LTIP the Company
granted nominal cost options to employees to acquire ordinary
shares. The Employee LTIP was approved by shareholders in December
2013 and introduced in 2014.
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