TIDMJPRL
RNS Number : 4485Z
Jupiter Energy Ltd
16 March 2012
16 March 2012
Jupiter Energy Limited ("Jupiter" or the "Company")
Half Year Financial Report - period ending 31 December 2011
Jupiter Energy Limited ("Jupiter" or the "Company") is pleased
to announce its interim results for the period ending 31 December
2011 the full text of which is reproduced below.
CORPORATE DIRECTORY
Directors and Officers
Geoff Gander
Executive Chairman/CEO
Alastair Beardsall
Non-Executive Director
Baltabek Kuandykov
Non-Executive Director
Scott Mison
Executive Director/Company Secretary
Principal and Registered Office
Level 2, 28 Kings Park Road PO Box 1282
West Perth West Perth
Western Australia 6005 Western Australia 6872
Telephone +61 8 9322 8222
Facsimile +61 8 9322 8244
Email info@jupiterenergy.com.au
Website www.jupiterenergy.com.au
Auditors
Ernst & Young
11 Mounts Bay Road
Perth, Western Australia 6000
Telephone +61 8 9429 2222
Facsimile +61 8 9429 2436
Bankers
National Australia Bank Limited Perth Central Business Banking
Centre UB13.03, 100 St Georges Terrace Perth WA 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 2, 45 St George's Terrace
Perth, Western Australia 6000
Telephone 1300 557 010 (within Australia)
+61 3 9415 4000 (outside Australia)
Facsimile +61 8 9323 2033
Website www.computershare.com
ASX Code
Jupiter Energy Limited shares are listed on the Australian
Securities Exchange under the code JPR and on the Alternative
Investment Market under the code JPRL.
DIRECTORS' REPORT
Your directors submit the financial report of the consolidated
entity for the half-year ended 31 December 2011.
Directors
The names of directors who held office during or since the end
of the half-year:
Name Date of Appointment/Retirement
Mr Geoff Gander Appointed Director 27 January 2005
Mr Alastair Beardsall Appointed Director 5 October 2010
Mr Baltabek Kuandykov Appointed Director 5 October 2010
Mr Scott Mison Appointed Director 31 January 2011
The directors have been in office since the beginning of the
period unless otherwise stated.
Operating Results
This review covers the 6 months from 1 July 2011 to 31 December
2011 and includes any significant events that have occurred between
1 January 2012 and the release date of this report.
Total production for the period was 11,739 barrels with
production largely being in November and December 2011.
The consolidated loss for the period after income tax was
$2,024,051 (2010:$ 3,248,349).
At the end of December 2011, cash levels were $4,597,275 (2010:
$8,972,820). Assets increased to $45,042,499(2010: $34,412,938) and
equity increased to $40,554,781 (2010: $33,083,486).
Review of Operations
This financial year continues to see good progress being made by
Jupiter Energy Limited (JPR and/or the Company) as we continued to
make the transition from pure oil explorer to that of explorer and
producer (E&P).
During the second half of calendar 2011 the Company drilled its
2011 commitment well: J-51. This was the third of the commitment
wells on Block 31 and like the 2009 and 2010 commitment wells
before it (J-50 and J-52), J-51 was a commercial discovery.
In November 2011, the Company spudded the first of its two 2012
commitment wells (J-53) and results released during the first
quarter of 2012 confirmed that this well was also a commercial
discovery meaning that all four exploration wells drilled on Block
31 since 2009 have been discoveries.
This success demonstrates that the Company continues to make
solid progress. In-order to achieve such progress we have
established a significant presence in country with 33 full time
members of staff based in Aktau, all of whom are Kazakh nationals.
We are delighted with this achievement and believe it demonstrates
the strong commitment that Jupiter Energy has to the Kazakh oil
& gas industry.
This commitment was, in part, acknowledged when the Ministry of
Oil & Gas approved the extension of Block 31 in July 2011
thereby increasing the permit size from 63km(2) to 123km(2) and
providing the Company with a range of potential new exploration
leads. As part of the extension process, the Company committed to
acquire 3D seismic over this new acreage before the end of 2012.
This work was in fact commenced soon after the extension was
granted and was completed by December 2011, a year in advance of
the commitment date. The new data has now been processed and
interpreted and several new prospects identified.
The 1(st) well to be drilled on this new area will be the final
commitment well (J-55) and this will spud during 2012.
During the reporting period, the Company also completed its
listing on the London Alternative Investment Market (AIM) in
November 2011 and whilst liquidity in shares remains low on this
exchange, there is no doubt that the AIM listing and the time put
into presentations and meetings with potential investors (both
retail and institutional) has helped lift the profile of the
Company in the London capital markets. This work should ensure the
Company has a sound platform on which to build investor interest in
2012 and beyond.
Cornerstone Investors:
The Waterford Group (Waterford) and Soyuzneftegas Capital (SNG)
continued to show strong support for the Company during the period,
building their respective holdings to 30% and 10% with SNG also
providing a $US3.45m Convertible Note in September 2011. These
funds were required to meet the 12 month working capital commitment
requirements for the AIM listing and it is expected that SNG will
convert this note to equity sometime in 2012.
In total the two companies have now invested some $A20 million
in Jupiter Energy and continue to support the Company at both Board
and Operational levels.
Board and Management Structure:
The Board of the Company remains in place with Chairman/CEO
Geoff Gander now based in London and Executive Director/CFO Scott
Mison based in Perth. Alastair Beardsall and Baltabek Kuandykov
remain as Non-Executive Directors, with both of them providing
additional support and assistance as required.
Within Kazakhstan, the Company appointed Gamal Kulumbetov as
Managing Director in August 2011. Gamal's responsibility is the
overall management of the Block 31 operations and as well as the
ongoing development of open communication with the key regional and
state bodies that regulate the oil and gas industry in Kazakhstan
to ensure these parties are aware of the Company's commitment to
its Kazakh focussed venture.
The Aktau based management team put in place in late 2010/early
2011 reports into Gamal and is made up of the Finance Director, the
Legal Director, the Technical Director and the Chief Geologist.
This group and the members of staff reporting through to them is
now 100% Kazakh and has grown into an accomplished team with an
excellent track record in terms of drilling success, financial
management, legal compliance and the compilation of robust
geological data.
Operations:
J-51 Well:
The J-51 well was the Company's 2011 Commitment Well. The
surface location for J-51 was 2 km southwest from J-50 and 1.7 km
northwest from J-52 and the location was designed to evaluate the
prospectivity of the primary Triassic and secondary Jurassic
targets within the structure now known as Akkar East.
On 1 August 2011 the Company announced the spudding of the J-51
exploration well and on 22 September 2011 confirmed that target
depth had been reached and open hole logging completed. Analysis of
these open hole logs, carried out by independent consulting firm
Reservoir Evaluation Services LLC (RES), confirmed that the
thickness of the mid Triassic primary objective was 123m of gross
and 83m of net oil pay. The net/gross analysis was based on
cut-offs of 3.8% for porosity and 50% for oil saturation. These
results were consistent with the Company's well prognosis.
Production casing was run and a more cost-effective service rig
used to perforate and stimulate the well in preparation for up to a
maximum of 3 months of flow testing. As with all the exploration
wells, oil produced during this period was sold into the domestic
market. Pricing for domestic oil is currently approximately $US42
per barrel at the well head with all transport and logistics costs
being borne by the buyer.
The J-51 well produced on a 9mm choke at a stabilised rate of
over 600 bopd. A range of data was collected over the production
testing period and will be used to prepare an updated reserve
estimate for the Akkar East field. The well was shut in on 4
February 2012 and an application will be submitted to the relevant
regulatory authorities for the well to be granted a Trial
Production Licence. This application will be lodged after the
gathering of results from the J-53 exploration well. The J-53
results will also be gathered during its production testing
phase.
J-53 Well:
J-53 is the Company's fourth exploration well and the first of
its two 2012 commitment wells on Block 31. The well is located 2.8
km southeast of the J-52 well and increases the known areal extent
of the Akkar East field.
The J-53 well was planned as a vertical well to intersect a
secondary Jurassic clastic reservoir target and a primary
Mid-Triassic carbonate reservoir target before drilling to a
planned total depth of approximately 3,200m true vertical depth.
The Company acquired core samples in the primary and secondary
reservoir targets while drilling the well.
Local Kazakh drilling contractor FracJet was again engaged to
drill the well and used the same ZJ-40 rig as used previously for
the J-51 and J-52 wells.
The well spudded on 25 November 2011 and on 25 January 2012 the
Company announced that the J-53 well had taken a total of 58 days
to drill and reached a total depth of 3,113m. Open hole logs were
run and production casing and cement completed. Operational
progress and geological results were consistent with the Company's
expectations.
Hydrocarbon shows while drilling, including a core in the
reservoir zone, and subsequent open hole wireline logs all
indicated hydrocarbons in the Triassic reservoir. The open hole
logs indicate good levels of oil saturation and porosity, similar
to the proved producing zones in J-50, J-51 and J-52.
Analysis by independent consulting firm RES confirmed
approximately 87m of gross and 56m of net pay at the Middle
Triassic carbonate reservoir unit, the primary reservoir objective
in the well . The cut-offs used were again 3.8% for porosity and
50% for oil saturation. The reservoir appears to be oil on rock and
well above the already identified Akkar East oil water contact.
Results from the slightly shallower Jurassic Z-Sand indicated
three oil saturated sands which also looked encouraging. Further
analysis of this zone will be carried out with testing considered
at a later date.
The Company has demobilised the drilling rig and mobilised a
smaller and more cost-effective service rig to complete and test
the well. The forward plan for J-53 is to stimulate and flow test
the well for up to a maximum of ninety days during which time flow
rates and reservoir pressures will be measured for various choke
sizes and fluid samples collected for analysis. The commencement of
this completion work is running approximately three weeks behind
schedule with weather conditions delaying the arrival of the
contractor to site due to an overrun in their previous assignment.
Flow testing results are expected during April 2012.
Once the 90 day production testing period is completed, the well
will be shut in and an application will be submitted to the
relevant regulatory authorities for a Trial Production Licence.
J-50 and J-52 Wells:
The Company announced on 3 October 2011 that the Kazakh Central
Development Committee (CDC) had approved applications for Trial
Production Licences for both the J-50 and J-52 exploration wells.
The Trial Production Licences are issued for a maximum three (3)
year duration once production has commenced and allow the Company
to concurrently produce oil from the J-50 and J-52 wells while
completing the planning and implementation of the necessary surface
infrastructure required to develop the discoveries for long term
production.
Whilst the CDC approval is a major milestone in the process, a
number of regulatory steps still needed to be completed before both
wells could be brought onto production. These included emission
permits for the wells and the approval process for these was
lengthier than expected.
On 16 February 2012, the Company received written confirmation
that the gas utilisation permit had been approved by the Ministry
for J-50 and J-52. The final paperwork is expected to be completed
during March and TPL production from both J-50 and J-52 should
commence during April 2012.
These wells should have combined production of approximately 600
bopd and provide monthly sales revenue of $US750,000 based on
current domestic oil prices and this revenue will be increased by
sales from the J-53 well which are also expected to commence in
April 2012.
Exploration and New Ventures
The 3D seismic acquired over the additional acreage in the south
of the extended Block 31 boundary has been interpreted and several
of the prospects identified are being matured to drill-ready
status; it is anticipated that the second of the 2012 commitment
wells will be drilled on this area.
The Company continues to review new opportunities for growth and
believes further extension of the Block 31 territory is possible as
some of the surrounding land remains un-licenced. Other new
opportunities being evaluated can be characterised as Block 31
look-a-likes, namely early-stage exploration acreage with
reasonable work commitments.
Independent Reserves Update:
2P reserves after the drilling of J-50 and J-52 wells were
independently estimated at 24.2 million barrels of oil (mmbbls) and
a new independent reserves report will be prepared to include the
results of all four wells drilled on Block 31: J-50, J-52, J-51 and
J-53. The results from the next independent reserves report should
be published during the second quarter of 2012.
Block 31 Work Commitments:
The Company is current with its drilling obligations under the
Block 31 contract; the J-51 well completed the obligations for 2011
and the Company has now completed J-53 the first of its two
commitment wells for 2012. The second 2012 commitment well, J-55,
will be completed during 2012. After J-55 is drilled there are no
further work obligations due under Block 31's current 6 year
exploration licence which runs through to December 2012.
Going forward, the Company will shortly lodge an application for
a prolongation of the Block 31 Exploration Licence from December
2012 to December 2014. This will be the first of the two
prolongations the Company is allowed to make under the contract,
with the second extension being for the period December 2014 to
December 2016.
On granting of the prolongation, further exploration and
development wells are expected to be drilled on Block 31 and the
type, quantum, timing and location of these wells will be
determined by the Company. There are likely to be several more
exploration wells targeting more oil reserves in the new acreage to
the south, but there will also be a continued focus on growing the
existing Akkar East production profile through the drilling of
several appraisal/development wells on that field.
The Company will advise shareholders on the future drilling
programme at the appropriate time.
Further Block 31 Area Extension:
The Company intends lodging an application for to extend Block
31. It is expected that as part of this application the Company
will need to make a commitment to acquire 3D seismic over this new
area and, potentially, to drill further exploration wells. The
Company will provide updates on the progress being made with this
application as appropriate.
Capital Management:
Further injection of capital will be required before the
development of Block 31 will reach self-funding.
It was anticipated that a capital raising would have been
carried out at the time of the AIM listing in the fourth quarter of
2011, but the fragility of global capital markets led to the
deferment of this plan. The equity capital markets remain quiet and
the current market capitalisation of Jupiter Energy makes a major
fund raising unattractive to our existing shareholders.
The Company is planning a capital raise in mid-2012 of
sufficient size to achieve the following objectives of (i) putting
the J51 and J53 wells on Trial Production (ii) drilling of the J-55
well, and, assuming it is a discovery, completion, testing and
applying for a Trial Production Licence. Given the state of the
capital markets, and current market capitalisation of Jupiter, the
new funds are likely to be raised by means of a rights issue; a
further announcement on future funding will be made at the
appropriate time.
Following the mid-year capital raise and completion of the
objectives set out above, the directors will consider all available
options for financing the further development of the East Akkar
field to the stage where export oil sales are being achieved and
the permit is self-funding; these options may include the further
issue of new equity, reserve based debt, convertible debt or a
combination of these various instruments.
Summary:
The changes made at both the Board and Operations level in late
2010 have proved to be extremely beneficial by increasing the
efficiency and effectiveness of our in-country operations. The
drilling results continue to confirm the prospectivity of the Block
31 permit and whilst the delays in the granting of the requisite
approvals to commence production have been frustrating, the goal of
developing Jupiter Energy into a full cycle E&P company with a
meaningful production profile and sizeable 2P reserves base remains
on track.
Competent Persons Statements:
General
In accordance with the guidelines of the AIM Market of the
London Stock Exchange, Keith Martens, BSc Geology and Geophysics,
with over 35 years' oil & gas industry experience, is the
qualified person as defined in the London Stock Exchange's Guidance
Note for Mining and Oil and Gas companies, who has reviewed and
approved the technical information contained in this
announcement.
Independent Reserves
The information in this report which relates to independent
Triassic oil reserves (1P, 2P, 3P) and prospective resource (P90,
P50, P10) is based on information compiled by Senergy Limited, an
international oil & gas consulting company that specialises in
oil & gas reserve estimations. Senergy Limited has sufficient
experience which is relevant to reserve estimations and to the
specific exploration permit in Kazakhstan to qualify as competent
to verify information pertaining to the Triassic oil reserves (1P,
2P, 3P) and prospective resource (P90, P50, P10). Senergy Limited
has given and not withdrawn its written consent to the inclusion of
its name and the Triassic 1P, 2P, 3P reserves and prospective
resource (P90, P50, P10) figures in the form and context in which
they appear in this report. Senergy Limited has no material
interest in the Company.
The information in this report which relates to Triassic
prospective resources (P50) and open hole logging interpretation is
based on information compiled by Reservoir Evaluation Services LLP
(RES), a Kazakh based oil & gas consulting company that
specialises in oil & gas reserve estimations. RES has
sufficient experience which is relevant to oil & gas reserve
estimation and open hole logging analysis and to the specific
permit in Kazakhstan to qualify as competent to verify the
information pertaining to the Triassic prospective resource (P50)
and open hole logging analysis. RES has given and not withdrawn its
written consent to the inclusion of the Triassic prospective
resource (P50) figure or open hole logging analysis in the form and
context in which they appear in this report. RES has no material
interest in the Company.
Auditor's Independence Declaration
In accordance with section 307C of the Corporations Act 2001,
the Directors have obtained a declaration of independence from
Ernst & Young, the consolidated entity's auditors. The
independence declaration is included at page 7 of the financial
report.
Dated at West Perth on 15 March 2012.
This report is signed in accordance with a resolution of the
Board of Directors.
G A Gander
Executive Chairman/CEO
DIRECTORS' DECLARATION
In accordance with a resolution of the Directors of Jupiter
Energy Limited, I state that:
In the opinion of the Directors:
a. The financial statements and notes of the consolidated entity
are in accordance with the Corporations Act 2001, including:
I. giving a true and fair view of the financial position of the
consolidated entity as at 31 December 2011 and the performance for
the half-year ended on that date, and
II. complying with Accounting Standard AASB 134 "Interim
Financial Reporting" and the Corporations Regulations 2001; and
b. Subject to the matters disclosed at note 2, there are
reasonable grounds to believe that the company will be able to pay
its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the
Board of Directors.
G A Gander
Executive Chairman/CEO
Signed in West Perth 15 March 2012.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2011
Consolidated Entity
6 months 6 months
to to
31 December 31 December
2011 2010
Note $A $A
Interest revenue 20,978 35,416
Other income 4 828,303 -
Administration expenses (1,327,817) (694,202)
Consulting fees (226,907) (285,465)
Depreciation expenses (55,368) (21,422)
Employee benefits expense (922,884) (1,282,955)
Legal fees (33,881) (57,695)
Occupancy expenses (74,345) (92,570)
Loss on derivative - (57,678)
Interest expense (232,130) -
Foreign currency loss - (791,780)
Total expenses (2,873,332) (3,283,767)
Loss before tax (2,024,051) (3,248,349)
Income tax expense - -
Loss after income tax (2,024,051) (3,248,349)
Other comprehensive income
Foreign currency translation 1,442,897 (3,596,569)
Total comprehensive loss for the period (581,154) (6,844,918)
Loss per share attributable to ordinary
equity holders of the parent (cents
per share)
Basic loss per share (1.75) (0.26)
Diluted loss per share (1.75) (0.26)
The above Statement of Comprehensive Income should be read in
conjunction with the accompanying notes.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2011
Consolidated Entity
Note 31 December 2011 30 June 2011
$A $A
Current Assets
Cash and cash equivalents 5 4,597,275 13,968,248
Trade and other receivables 433,776 1,410,979
Other current assets 300,300 521,174
Total Current Assets 5,331,351 15,900,401
---------------- --------------
Non Current Assets
Trade and other receivables 2,839,325 -
Plant and equipment 890,396 398,851
Mineral exploration expenditure 6 35,715,356 25,319,806
Other financial assets 266,071 128,404
---------------- --------------
Total Non Current Assets 39,711,148 25,847,061
---------------- --------------
Total Assets 45,042,499 41,747,462
---------------- --------------
Current Liabilities
Payables 7 1,003,030 534,616
Provisions 91,729 61,918
Total Current Liabilities 1,094,759 596,534
---------------- --------------
Non -Current Liabilities
Provisions 282,534 230,552
Other financial liabilities 8 3,110,425 -
Total Non-Current Liabilities 3,392,959 230,552
---------------- --------------
Total Liabilities 4,487,718 827,086
Net Assets 40,554,781 40,920,376
---------------- --------------
Equity
Contributed equity 9 71,280,610 71,280,610
Share based payments reserve 10 4,138,012 3,922,453
Foreign currency translation reserve (4,642,071) (6,084,968)
Accumulated losses (30,221,770) (28,197,719)
---------------- --------------
Total Equity 40,554,781 40,920,376
---------------- --------------
The above Statement of Financial Position should be read in
conjunction with the accompanying notes.
STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2011
CONSOLIDATED Issued Share based Foreign Accumulated Total Equity
Capital payment currency Losses
reserve translation
reserve
$A $A $A $A $A
----------- ------------ ------------- ------------- -------------
As at 1 July 2011 71,280,610 3,922,453 (6,084,968) (28,197,719) 40,920,376
Loss for the period - - - (2,024,051) (2,024,051)
Other comprehensive
income - - 1,442,897 - 1,442,897
----------- ------------ ------------- ------------- -------------
Total comprehensive
income - - 1,442,897 (2,024,051) (581,154)
Share based payments - 215,559 - - 215,559
As at 31 December
2011 71,280,610 4,138,012 (4,642,071) (30,221,770) 40,554,781
----------- ------------ ------------- ------------- -------------
As at 1 July 2010 44,681,247 3,164,908 (1,141,302) (23,308,049) 23,396,805
Loss for the period - - - (3,248,349) (3,248,349)
Other comprehensive
income - - (3,596,569) - (3,596,569)
----------- ------------ ------------- ------------- -------------
Total comprehensive
income - - (3,596,569) (3,248,349) 16,551,887
Share based payments - 485,014 - - 485,014
Shares issued 16,682,381 - - - 16,682,381
Cost of share
issue (635,795) - - - (635,795)
As at 31 December
2010 60,727,833 3,649,922 (4,737,871) (26,556,398) 33,083,486
----------- ------------ ------------- ------------- -------------
The above Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2011
Consolidated Entity
6 months
6 months to to
31 December 31 December
2011 2010
$A $A
Cash flows from operating activities
Receipts from customers 30,864 -
Payments to suppliers and employees (2,901,540) (2,191,037)
Interest received 20,860 35,417
Net cash (used in) operating activities (2,849,816) (2,155,620)
------------- ----------------
Cash flows from investing activities
Payments for exploration expenditure (9,676,460) (5,412,758)
Payments for plant and equipment (451,233) (23,379)
Net cash (used in) investing activities (10,127,693) (5,436,137)
------------- ----------------
Cash flows from financing activities
Proceeds from convertible note 3,482,361 -
Proceeds from issue of shares - 16,672,381
Transaction costs from issue of shares - (625,795)
------------- ----------------
Net cash provided by financing activities 3,482,361 16,046,586
------------- ----------------
Net increase/(decrease) in cash held (9,495,148) 8,454,829
Cash at the beginning of the financial
period 13,968,248 1,327,806
Foreign exchange gain/(loss) 124,175 (809,815)
------------- ----------------
Cash at the end of the financial period 4,597,275 8,972,820
------------- ----------------
The above Statement of Cash Flows should be read in conjunction
with the accompanying notes.
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The half year financial report of Jupiter Energy Limited for the
period 31 December 2011 was authorised for issue in accordance with
a resolution of the Directors on 15 March 2012.
Jupiter Energy Limited is a company limited by shares that is
incorporated and domiciled in Australia and whose shares are
publicly listed on Australian Securities Exchange and the
Alternative Investment Market.
The registered office is Level 2, 28 Kings Park Road, West
Perth, Western Australia 6005.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
(a) Basis of preparation
This condensed financial report for the half-year ended 31
December 2011 has been prepared in accordance with AASB 134 Interim
Financial Reporting and the Corporations Act 2001.
All monetary values are reported in A$ unless otherwise
stated.
The half-year financial report does not include all notes of the
type normally included within the annual financial report and
therefore cannot be expected to provide as full an understanding of
the financial performance, financial position and financing and
investing activities of the consolidated entity as the full
financial report.
It is recommended that the half-year financial report be read in
conjunction with the annual report for the year ended 30 June 2011
and considered together with any public announcements made by
Jupiter Energy Limited during the half-year ended 31 December 2011
in accordance with the continuous disclosure obligations of the ASX
listing rules.
Going Concern
The consolidated financial statements have been prepared on a
going concern basis with the Directors of the opinion that the
Group can meet its obligations as and when they fall due.
The Directors recognise that the Company will need to raise
additional equity and secure Trial Production licenses / final
approvals outstanding for the J-50 and J-52 wells in the short-term
to fund planned exploration, drilling and development activities
for Block 31.
The Directors are confident of being able to raise the required
capital and that all the required paperwork is in place to secure
the J-50 and J-52 Trial Production licenses and approvals, to allow
for oil to be sold under the licenses, but note that these have not
been secured at the date of this report.
Should the Group not achieve the matters set out above, there is
uncertainty whether the Group would continue as a going concern and
therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts
stated in the financial report. The financial report does not
include adjustments relating to the recoverability or
classification of the recorded assets amounts nor to the amounts or
classification of liabilities that might be necessary should the
Group not be able to continue as a going concern.
(b) Accounting policies
The accounting policies adopted in the preparation of the half
year financial report are consistent with those followed in the
preparation of the Group's financial statements for the year ended
30 June 2011. All new and amended accounting standards and
interpretations effective 1 July 2011 have been adopted by the
Group. The adoption of new standards and amendments from 1 July
2011 has not had a significant impact on the accounting policies of
the Group.
The Group has not elected to early adopt any new standards or amendments
that are issued by not yet effective.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
(b) Accounting policies (Continued)
New Accounting Policies
The Group has adopted the following policies during the
period:
Financial Instruments Issued by the Company
Debt and equity instruments are classified as either liabilities
or as equity in accordance with the substance of the contractual
arrangement. Transaction costs arising on the issue of equity
instruments, net of associated tax, are recognised directly in
equity as a reduction of the proceeds of the equity instrument to
which the costs relate. Transaction costs are the costs that are
incurred directly in connection with the issue of those equity
instruments andwhich would not have been incurred had those
instruments not been issued.
Convertible Note
The Convertible Note is split into two components: a debt
component and a component representing the embedded derivatives in
the Convertible Note. The debt component represents the Group's
liability for future interest coupon payments and the redemption
amount. The embedded derivatives represent the value of the option
that note holders have to convert into ordinary shares in the
Company.
(b) Accounting policies
The debt component of the Convertible Note is measured at
amortised cost and therefore increases as the present value of the
interest coupon payments and redemption amount increases, with a
corresponding charge to interest expense. The debt component
decreases by the cash interest coupon payments made. The embedded
derivative is measured at fair value at each balance sheet date,
and the change in the fair value is recognised in the income
statement.
3. SEGMENT REPORTING
The Consolidated Entity is exploring for oil and gas in
Kazakhstan. Each activity has been aggregated as they have similar
economic characteristics and are being conducted in one area of
interest. The operations of the Consolidated Entity therefore
present one operating segment under AASB 8 Operating Segments. The
accounting policies applied for internal reporting purposes are
consistent with those applied in the preparation of the half year
financial report.
4. OTHER INCOME
Consolidated Entity
6 months 6 months
to to
31 December 31 December
2011 2010
$A $A
Other income 21,455 -
Unrealised gain on derivative 510,925 -
Foreign currency gain 295,923 -
828,303 -
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CASH AND CASH EQUIVALENTS
Consolidated Entity
31 Dec 2011 31 Dec 2010
$A $A
For the purpose of the half year cash
flow statement, cash and cash equivalents
are comprised of the following:
Cash at bank and in hand 4,597,275 8,967,156
Short-term deposits - 5,664
4,597,275 8,972,820
------------- ------------
6. MINERAL EXPLORATION EXPENDITURE
Consolidated Entity
30 June
31 Dec 2011 2011
$A $A
Opening balance 25,319,806 22,282,954
Additions 9,676,460 7,189,909
Foreign exchange translation 719,090 (4,153,057)
------------- ----------------
Balance at the end of the half-year 35,715,356 25,319,806
------------- ----------------
7. OTHER PAYABLES
Consolidated Entity
30 June
31 Dec 2011 2011
$A $A
Trade creditors 195,987 298,307
Accrued expenses 32,100 47,401
Other payables 774,943 188,908
------------- -------------
1,003,030 534,616
------------- -------------
8. OTHER FINANCIAL LIABILITIES
Convertible note 2,548,150 -
Derivative liability 562,275
----------
3,110,425 -
----------
On 29 September 2011, the Company agreed terms on a US$3.45m
Convertible Note with major shareholder Soyuzneftegas Capital
Limited (SNG).
The key terms of the Convertible Note are:
-- Effective date: 29 September 2011
-- Coupon Rate: 15% per annum
-- Term: 24 months with interest payable quarterly in arrears
-- Conversion price: US$0.75, SNG has right to convert earlier
if there is a capital raising prior to conversion and the price of
that capital raising is less than $0.75. In this instance, the
conversion price will be reduced to be in line with the capital
raising price.
-- Number of shares to be issued if note converted at US$0.75:
4.6 million, representing approximately 4% of the issued share
capital
-- Arrangement Fee: 1%
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. OTHER FINANCIAL LIABILITIES (CONTINUED)
Valuation of Convertible Note
The Note has an embedded derivative in the form of a call option
for the holder to convert the outstanding amount on the Note at
US$0.75 per Jupiter ordinary share.
The convertible equity feature of the Note has been separated
from the liability component of the Note for financial reporting
purposes. As the call option to convert the note into shares does
not meet the definition of an equity instrument, as the exercise
price is denominated in foreign currency to the company's
functional currency, the convertible call option is classified as a
Derivative liability and measured at fair value through the profit
and loss account.
The Derivative component of the Note was valued using the Black
Scholes option valuation methodology. The Black Scholes option
valuation methodology calculates the expected benefit from
acquiring the shares outright less the present value of paying the
exercise price for the options on date of expiration.
9. CONTRIBUTED EQUITY
31 Dec 2011 30 June 2011
$A $A
Issued Capital
Ordinary shares (a) 70,986,412 70,986,412
Options (b) 294,198 294,198
71,280,610 71,280,610
--------------- ------------
(a) Movements in ordinary share capital No. $A
Balance 1 July 2010 886,220,391 44,397,049
Issue of shares - Placement 277,777,778 7,500,000
Issue of shares - Rights issue 1 for 3 339,717,817 9,172,381
Issue to Pursuit Capital 7,718,695 -
Cost of issue - (875,075)
--------------- ------------
Balance 31 December 2010 1,511,434,681 60,433,635
Issue of shares - Placement 226,500,061 11,098,591
Cost of issue - (306,533)
--------------- ------------
Balance 30 June 2011 1,737,934,742 70,986,412
1 for 15 reconstruction (1,622,072,426) -
Balance 31 December 2011 115,862,316 70,986,412
--------------- ------------
A further 266,667 shares were issued on 01 February 2012. The
issue of these shares was approved by shareholders at the Annual
General Meeting on 28 November 2011 and were issued as part of the
Retirement Deed signed with former Director Erkin Svanbayev
This brings the total number of ordinary shares on issue as at
the date of this report to 116,130,154.
(b) Movements in options
Balance 31 December 2009 333,000,000 284,198
Expiry of listed options (300,000,000) -
------------- -------
Balance 30 June 2010 33,000,000 284,198
Issue of options - 10,000
------------- -------
Balance 31 December 2010 33,000,000 294,198
------------- -------
Balance 31 December 2011 33,000,000 294,198
------------- -------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. SHARE BASED PAYMENTS
On 12 August 2011, 2,133,334 performance rights were approved by
shareholders to directors. Subject to a minimum increase of 25%,
the Performance Rights for each holder shall vest in proportion to
the % increase in the Share price of the Company above 4.9 cents on
a pre-Consolidation basis or 73.5 cents on a post-Consolidation
basis (Vesting Condition). In respect of the Vesting Condition, the
% increase in the Share price of the Company will be calculated by
reference to the volume weighted average price of Shares in the 20
consecutive trading days immediately prior to the Vesting Date
(25(th) August 2012)
The fair value of performance rights granted to directors
is estimated as at the grant date using a hybrid model incorporates
a trinomial option valuation and a Monte Carol simulation
option pricing model taking into account the terms and conditions
upon which the instruments were granted.
The following table lists the inputs to the models for the
period ended 31 December 2011:
Performance
Rights
Grant date 26 August 2011
Number of performance rights 2,133,334
Share price 60 cents
Exercise price 0 cents
Dividend Yield 0.0%
Expected volatility 80.0%
Risk-free interest rate 4.80%
Expected life 1 year
Weighted average fair value 27 cents
Total amount $576,000
Expensed to 31 December 2011 $192,000
During the year 10,000,000 (pre consolidation) performance
rights were cancelled. $23,559 has been expensed in relation
to these rights.
11. CONTINGENT LIABILITIES
There has been no significant change in contingent liabilities
since the last annual reporting date.
12. EVENTS SUBSEQUENT TO REPORTING DATE
Except as disclosed above, there are no matters or circumstances
that have arisen since the end of the period which significantly
affected or may significantly affect the operations of the Group,
the results of those operations or the state of affairs of the
Group not otherwise disclosed in future financial years.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13. COMMITMENT FOR EXPENDITURE
Exploration Work Program Commitments
The Group has entered into a subsoil utilisation rights for
petroleum exploration and extraction in Block 31in Mangistau
Oblast in accordance with Contract No. 2275 of the 29(th)
of December 2006 with the Ministry of Energy and Mineral Resources
of the Republic of Kazakhstan (now renamed the Ministry of
Oil & Gas of the Republic of Kazakhstan.).
Exploration work program commitments contracted for (but not
capitalised in the accounts):
Consolidated Entity
31 Dec 2011 30 June
2011
$A $A
not later than one year 4,574,287 5,661,900
later than one year but not later than
five years - 10,380,150
-------------- --------------
4,574,287 16,042,050
-------------- --------------
Enquiries:
Jupiter Energy (+61 89 322 8222)
Geoff Gander (geoff@jupiterenergy.com)
Evolution Securities (+44 (0)20 7597 5970)
Chris Sim
Neil Elliot
Media enquiries:
Allerton Communications(+44 (0)20 3137 2500)
Peter Curtain (peter.curtain@allertoncomms.co.uk)
About the Company:
Jupiter Energy Limited is an oil exploration
and production company, quoted on both
the AIM and ASX markets. The Company is
focused on developing its onshore assets
in western Kazakhstan. In 2008 the Company
acquired 100 per cent of the Block 31
permit, located in the oil-rich Mangistau
Basin, close to the port city of Aktau.
Its first three exploration wells have
been discoveries and independently estimated
2P reserves, based on the first two discoveries,
currently stand at approximately 24.2
mmbbls.
Jupiter has a proven in-country management
team, led by an experienced, international
Board, together possessing the skills,
knowledge, network and attention to detail
needed to operate successfully in Kazakhstan.
The forward plan will see Jupiter develop
a group production facility on Block 31
to process, store and export oil. This
topside infrastructure is a key element
in moving to long-term production and
the achievement of self-funding for further
development of Block 31.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR JAMITMBABBBT
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