Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
28 September
2016
Magnolia Petroleum Plc (‘Magnolia’
or ‘the Company’)
Half-yearly Results
Magnolia Petroleum Plc, the AIM quoted US focused oil and gas
exploration and production company, announces its half-yearly
results for the six month period ended 30
June 2016.
Operational Overview
- 151 producing wells (H1 2015: 195) in proven US onshore
formations
- Active management of portfolio during H1 2016 saw:
- Divestment of 67 producing wells with little or no economic
value
- 13 new wells commence production
- Elected to participate in three new wells – 14 wells currently
at various stages of development
- Total net proved and developed producing reserves (‘PDP’) of
133.31 Mbbl of oil and condensate and 580.67 MMcf gas as at
1 July 2016 (1
Jan 2016: 138.63 Mbbl and 352.38 MMcf)
- Value of net PDP as at 1 July
2016 increased to US$3,445,180
(1 Jan 2016: US$2,917,390) - provides significant asset
backing to current market valuation
- 31% reduction in corporate overheads and operating costs
achieved as part of management's focus on realigning the business
to the lower oil price environment
Financial Overview
- H1 2016 revenues of US$633,585
(H1 2015: US$1,083,998)
- Half year EBITDA (after removing gain on foreign
exchange) of US$59,416 compared
to US$(560,919) during six months to
30 June 2015 (after removing loss on
foreign exchange)
- Tangible assets of US$7,217,415
during six months to 30 June
2016
- Borrowing base limit of US$6
million Credit Facility adjusted up to US$1,894,849 from US$1,604,565 to reflect positive effect of
slightly higher oil prices on the value of Magnolia’s net PDP
reserves
- US$400,000 repayment and
agreement to make amortised payments over a 5 year period on the
outstanding amount which, based on 1 July
2016 reserve estimates, stands at US$840,764
- £250,000 raised via a placing to fund drilling commitments
- Appointment of Leonard Wallace,
a highly experienced oil and gas engineer, as a non-executive
director
Magnolia CEO, Steven Snead said,
“Against such a challenging market backdrop, to have generated
underlying earnings of US$59,416 for
the first half having reported a loss of US$560,919 in H1 2015, is testament to the
excellent progress we have made in realigning the business to the
current low oil price environment. This has seen a 31%
reduction in our cost base; the divestment of interests in 67
non-economic wells; the repayment of a large portion of our
reserves based lending facility; and our focus on participating in
only those wells which have attractive economics at today’s oil and
gas prices.
“Combined with proven developed reserves of 133.31 Mbbl of oil
and condensate and 580.67 MMcf gas as at 1
July 2016, which have been assigned a value of US$3,445,180, Magnolia is an asset backed, low
cost cash flow generative business with a diversified portfolio of
151 producing wells. As a result we are confident that
when a sustainable recovery in the oil price takes hold, we are
well placed to take advantage of opportunities which may present
themselves and in the process kick-start our strategy to build a
leading US onshore focused oil and gas company.”
Chief Executive’s Statement
November 2016 will mark the fifth
anniversary of Magnolia Petroleum’s Admission to London’s AIM
market. In 2011 we came to AIM with a strategy to acquire
leases in proven US onshore formations and participate in drilling
new wells alongside established operators, such as Chesapeake
Energy, Continental Resources, Marathon, and Statoil. Our
objective was, and continues to be, to prove up the reserves on our
acreage and in the process generate value for shareholders.
At the time of our IPO our portfolio of 64 producing wells
produced seven barrels of oil equivalent per day and had combined
Proved Developed Producing (‘PDP’) reserves of 24.2 Mbbl Oil &
Condensate and 146.5MMcf of Natural Gas. Five years on and
our portfolio of wells has grown to 151 with PDP reserves of 133.31
Mbbl of oil and condensate and 580.67 MMcf gas as at 1 July 2016.
The fivefold increase in Magnolia’s PDPs since November 2011 does not tell the whole
story. Having traded around the US$100 per barrel level during our first three
years on AIM, WTI has since fallen to less than half this
level. Such a sharp retrenchment in the oil price was always
going to leave its mark on our top line performance. Lower
oil prices have both a direct and an indirect effect on our
revenues: direct in terms of Magnolia receiving a reduced price for
its product; and indirect as a result of operators in the US
onshore space either shutting in uneconomic wells or drastically
curtailing drilling activity to rein in capital spending and
preserve cash. While larger companies might consider taking
out expensive hedging contracts, there is little a company of
Magnolia’s size can do to cushion the hit to revenues caused by
lower oil prices. On the positive side, as Magnolia does not
have the sizeable overheads and financial commitments many of its
peers are saddled with, we are able to take steps to minimise the
impact lower revenues have on our bottom line. This is what
we have done.
In anticipation of a substantially lower revenue profile, we
swiftly realigned both our costs and our assets to match the scaled
back level of activity seen across the US onshore sector. A
reduction in all outgoings was targeted and subsequently achieved:
at the time of our full year results in June
2016 we reported a 31% reduction in operating costs compared
to those incurred in the previous year; our policy to only
participate in drilling those wells which offer attractive returns
has substantially reduced our capital commitments; while a
US$400,000 repayment of our credit
facility during the period has resulted in the Company’s financing
costs being reduced.
While our short term focus has been to ensure our cost base
matches activity on the ground, our objective to build a portfolio
of proven reserves and generate value for shareholders has not been
cast aside. It is with this overriding objective very much in
mind that the first half divestment of 67 non-commercial wells with
little or no economic value ought to be seen. It not only
leaves us with a portfolio of 151 producing wells, but it also
creates administrative capacity to replace uneconomic wells with
more productive ones, such as the 13 which commenced production
during the first half. These include two Chesapeake Energy
operated wells, Gray 7-27-12 1H and
Gray 7-27-12 2H, which are producing
from the Mississippi Lime formation in Oklahoma. As
Magnolia’s average interest in each of the 67 divested wells was
below the portfolio average, there has been no material effect on
the Company’s overall production and financial performance during
the half year period.
It is not just the quality of our portfolio of wells and leases
that we have been upgrading over the course of the first half of
2016. With the appointment of Leonard
Wallace as a non-executive director we have also upgraded
our Board. Leonard’s appointment has added the expertise and
experience of a specialist drilling engineer, well and rig operator
to our existing Board’s collective skillset. We are confident
that following Leonard’s appointment we now have a Board in place
with the right mix of industry experience to take Magnolia
forward.
Financial Review
During the six months to 30 June
2016, net production generated revenues of US$633,585, compared to US$1,083,998 the previous year. The sharp
fall in the price of oil is responsible for the drop in revenues,
both directly by lowering sale prices achieved and indirectly
through operators shutting in wells to curtail production. The
Company has taken steps to reduce overheads to help accommodate the
revenue decline: administrative costs totalled US$374,371 as at 30 June
2016 compared to US$518,425
for the six months to 30 June 2015. EBITDA (after removing
gain on foreign exchange) totalled US59,416 compared to
US$(560,919) in H1 2015 (after
removing loss on foreign exchange).
Tangible assets as at end June
2016 stood at US$7,217,415,
while intangible assets (new leases and wells that are drilling but
not yet completed) stood at US$1,675,999.
Operating Expenses during the period totalled US$613,915, US$490,257 of this total is a non-cash item
covering depreciation costs. A further US$317,026 was due to Lease Operating Expenses
with US$(278,772) being reduced on
two wells that were previously included but removed from Magnolia’s
portfolio. A further US$85,404
was due to other operating expenses.
During the period under review, £250,000 was raised via a
placing to fund existing drilling commitments alongside a number of
leading operators including Chesapeake Energy, Continental
Resources and BP America. As a result, 250,000,000 new
ordinary shares in the Company were issued.
Outlook
The focus of the Board and management team during the period has
been to ensure Magnolia navigates the lower oil price environment
from a position of strength. However we have also been
working hard to ensure that when oil prices recover and sentiment
returns, we are able to hit the ground running. We have
disposed of uneconomic wells; high graded our leasehold position;
and further bolstered our Board with the appointment of a highly
experienced oil and gas engineer. Despite challenging
markets, I am confident that Magnolia’s future on AIM will see
another step-up in our production and proven reserves, as we
deliver on our vision to build a leading US onshore focused oil and
gas company and in the process generate value for our
shareholders.
Finally, I would like to thank the Board, management team and
all our advisers for their hard work over the last six months and
also to our shareholders for their continued support.
Steven Snead
Chief Executive Officer
Chief Operations Officer’s Report
The Bakken / Three Forks Sanish
Formations, North Dakota
Magnolia holds interests in 41 wells which are producing from
the Bakken and Three Forks Sanish (‘TFS’) formations in
North Dakota. The Bakken is
a reservoir which is estimated to hold 3.65 billion barrels of
undiscovered, technically recoverable oil (2013 US Geological
Survey). The TFS is a separate reservoir lying directly below
the Bakken, with an estimated 3.73 billion barrels of recoverable
oil (2013 US Geological Survey).
As at 1 July 2016, Moyes & Co.
(‘Moyes’) estimated Magnolia’s Bakken Proven Developed Reserves
(‘PDP’) at 44,970 barrels of oil and condensate and 22.81 MMcf of
natural gas to which Moyes assigned a value of US$813,050. Meanwhile, Magnolia’s PDP
(“proved”) reserves in the TFS formation were estimated at 13,550
barrels of oil and condensate and 7.96MMcf of natural gas which
Moyes has assigned a value of US$256,920.
Mississippi Lime Formation,
Oklahoma
The Mississippi Lime is an historic oil and gas system that has
been producing at depths ranging from 4,500 to 7,000 feet from
several thousand vertical wells for over 50 years. In the
first half of 2016, the following six wells in which Magnolia holds
interests in commenced production from the Mississippi:
- Gray 7-27-12 1H (1.86%): 439.83boepd
- Gray 7-27-12 2H (1.86%): 903 boepd
|
|
- Wilber (1.22%): 960.83 boepd
- Maxine (0.40%): 1030 boepd
- Billy Rae 1 (0.54%): 365.5 boepd
- Double R 9 (0.44%): 216.33 boepd
|
|
|
|
Magnolia holds interests in 41 wells which are producing from
the Mississippi Lime. In the updated Reserves Report dated
1 July 2016, Moyes estimated the
Group’s Mississippi Lime PDP reserves at 57,170 barrels of oil and
condensate and 169.36 MMcf of natural gas with a value of
US$1,411,410.
Woodford Formation, Oklahoma
The Woodford lies below and is
the source rock to the Mississippi Lime formation in
Oklahoma. As a result much of Magnolia’s leases in
Oklahoma are prospective for both
the Woodford and the Mississippi
Lime. Like the Bakken, the Woodford formation in Oklahoma is an established reservoir that has
been reopened following the introduction of horizontal drilling and
stimulation technology.
In the first half of 2016, the following seven wells in which
Magnolia holds interests in commenced production from the
Woodford:
- Billy Rae 2 (0.54%): 73.33 boepd
- Moore (0.22%): 902.83 boepd
- Baxendale 3H-1X (0.03%): 1217.83 boepd
- Baxendale 2H-1X (0.03%): 1327.83 boepd
- Baxendale 4H-1X (0.03%): 1448.50 boepd
- Baxendale 5H-1X (0.03%): 2493.66 boepd
- Baxendale 6H-1X (0.03%): 2099.66 boepd
|
|
Magnolia holds interests in 51 wells which are producing from
the Woodford formation in
Oklahoma. In the updated Reserves Report dated 1 July 2016, Moyes estimated the Group’s Woodford
PDP reserves at 13,170 barrels of oil and condensate and 367.36
MMcf of natural gas with a value of US$876,800.
Other Formations in Oklahoma
Magnolia holds interests in 18 wells which are producing from
other formations in Oklahoma,
including the Hunton, Cleveland,
Wilcox, Wayside, Simpson Dolomite, Springer and Viola
reservoirs.
In the updated Reserves Report dated 1
July 2016, Moyes estimated the Group’s PDP reserves in these
other formations in Oklahoma at
4,450 barrels of oil and condensate and 13.18 MMcf of natural gas
with a value of US$87,000.
Summary
During the period, 13 new wells in proven US onshore formations
in which Magnolia has an interest commenced production.
Together with the divestment of 67 uneconomic wells the total
number of producing wells within our portfolio currently stands at
151. Revenues generated from these wells are reinvested into
acquiring leases and drilling new wells to increase the Company’s
production and reserves profile. I look forward to providing
further updates on our progress over the course of the second half
of the year.
Rita Whittington
Chief Operations Officer
Glossary
‘boe’ means barrels of oil equivalent: a unit of energy based on
the approximate energy released by burning one barrel (42 US
gallons or 158.9873 litres) of crude oil.
There are 42 gallons (approximately 159 litres) in one barrel of
oil, which will contain approximately 5.8 million British Thermal
Units (MBtus) or 1,700 kilowatt hours (kWh). The value is
necessarily approximate as various grades of oil have slightly
different heating values. BOE is used by oil and gas companies in
their financial statements as a way of combining oil and natural
gas reserves and production into a single measure.
‘boepd’ means barrels of oil equivalent per day
‘bopd’ means barrels of oil per day, Abbreviation for barrels of
oil per day, a common unit of measurement for volume of crude oil.
The volume of a barrel is equivalent to 42 US gallons
‘IPR’ means initial production rates
‘NRI’ means net revenue interest
‘WI’ means working interest
Condensed Consolidated Statement of
Comprehensive Income
6 months ended 30 June 2016
|
Note |
|
6 months to
30 June 2016
Unaudited
US $ |
6 months to
30 June 2015
Unaudited
US $ |
|
|
|
|
|
Continuing Operations |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
633,585 |
1,083,998 |
|
|
|
|
|
Operating expenses |
|
|
(613,915) |
(1,389,578) |
|
|
|
______ |
______ |
|
|
|
|
|
Gross Profit/(Loss) |
|
|
19,670 |
(305,580) |
|
|
|
|
|
Administrative expenses |
|
|
(374,371) |
(518,425) |
|
|
|
|
|
Impairment of mineral leases |
|
|
(8,334) |
(379,354) |
|
|
|
|
|
(Loss)/profit on disposal of mineral
leases |
|
|
- |
- |
|
|
|
|
|
Gain/(loss) on foreign exchange |
|
|
1,974,513 |
(144,779) |
|
|
|
______ |
______ |
|
|
|
|
|
Operating Profit/(Loss) |
|
|
1,611,478 |
(1,348,138) |
|
|
|
|
|
Finance income |
|
|
- |
139 |
Finance costs |
|
|
(67,806) |
(55,600) |
|
|
|
______ |
______ |
|
|
|
|
|
Profit/(Loss) from ordinary
activities before tax |
|
|
1,543,672 |
(1,403,599) |
|
|
|
|
|
Taxation |
|
|
-
______ |
-
______ |
Profit/(Loss) for the period
attributable to the equity holders of the Company |
|
|
1,543,672
______ |
(1,403,599)
______ |
Other comprehensive
income: |
|
|
|
|
Items that may be
reclassified subsequently to profit or loss
Currency translation differences |
|
|
(1,355,904) |
145,163 |
|
|
|
______ |
______ |
Total comprehensive income for
the period attributable to the equity holders of the
Company |
|
|
187,768
______ |
(1,258,436)
______ |
Earnings per share
attributable to the equity holders of the Company (expressed in
cents per share)
- basic
- diluted |
4 |
|
0.121
0.121 |
(0.133)
(0.133) |
Condensed Consolidated Balance
Sheet
As at 30 June
2016
ASSETS |
|
Notes |
30 June
2016
Unaudited
US $ |
31 December
2015
Audited
US $ |
|
|
|
|
|
Non-Current Assets |
|
|
|
|
Property, plant and equipment |
|
5 |
7,217,415 |
11,511,266 |
Intangible assets |
|
6 |
1,675,999 |
6,187,408 |
|
|
|
________ |
________ |
|
|
|
|
|
Total Non Current Assets |
|
|
8,893,414 |
17,698,674 |
|
|
|
|
|
Current Assets |
|
|
|
|
Trade and other receivables |
|
|
401,307 |
600,911 |
Cash and cash equivalents |
|
|
589,603 |
1,851,232 |
|
|
|
________ |
________ |
|
|
|
|
|
Total Current Assets |
|
|
990,910 |
2,452,143 |
|
|
|
________ |
________ |
|
|
|
|
|
Total Assets |
|
|
9,884,324 |
20,150,817 |
|
|
|
________ |
________ |
|
|
|
|
|
EQUITY & LIABILITIES |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Called up share capital |
|
|
2,019,699 |
1,704,763 |
Share premium account |
|
|
15,315,149 |
15,202,583 |
Warrants and options reserve |
|
|
209,042 |
209,042 |
Merger reserve |
|
|
1,975,950 |
1,975,950 |
Reverse acquisition reserve |
|
|
(2,250,672) |
(2,250,672) |
Translation reserve |
|
|
(2,318,791) |
(120,311) |
Retained losses |
|
|
(8,416,305) |
(1,570,299) |
|
|
|
________ |
________ |
|
|
|
|
|
Total Equity – Capital and
Reserves |
|
|
6,534,072 |
15,151,056 |
|
|
|
________ |
________ |
Non-current Liabilities |
|
|
|
|
Borrowings |
|
|
3,154,784 |
3,284,210 |
|
|
|
________ |
________ |
|
|
|
|
|
Total Non-current
Liabilities |
|
|
3,154,784 |
3,284,210 |
|
|
|
________ |
________ |
|
|
|
|
|
Current Liabilities |
|
|
|
|
Borrowings |
|
|
- |
- |
Trade and other payables |
|
|
195,468 |
1,715,551 |
|
|
|
_________ |
_________ |
|
|
|
|
|
Total Current
Liabilities |
|
|
195,468 |
1,715,551 |
|
|
|
_________ |
_________ |
Total Equity and Liabilities |
|
|
9,884,324
_________ |
20,150,817
_________ |
Condensed Consolidated Statement of
Changes in Equity
|
Attributable to the owners of the parent |
|
Share |
Share |
Merger |
Warrants
and
Options |
Reverse
Acquisition |
Translation |
Retained |
|
|
Capital |
Premium |
Reserve |
Reserve |
Reserve |
Reserve |
Earnings |
Total |
|
US $ |
US $ |
US $ |
US $ |
US $ |
US $ |
US $ |
US $ |
|
|
|
|
|
|
|
|
|
As at 1 January 2015 |
1,481,396 |
13,954,026 |
1,975,950 |
209,042 |
(2,250,672) |
(265,472) |
(166,701) |
14,937,569 |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
- |
- |
(1,403,599) |
(1,403,599) |
|
|
|
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
differences |
- |
- |
- |
- |
- |
145,163 |
- |
145,163 |
|
________ |
________ |
________ |
______ |
________ |
_______ |
_______ |
________ |
Total comprehensive income for
the period |
- |
- |
- |
- |
- |
145,163 |
(1,403,599) |
(1,258,436) |
|
________ |
________ |
________ |
______ |
________ |
_______ |
_______ |
________ |
|
|
|
|
|
|
|
|
|
Proceeds from share issue |
223,367 |
1,340,201 |
- |
- |
- |
- |
- |
1,563,568 |
Share issue costs |
|
(91,644) |
- |
- |
- |
- |
- |
(91,644) |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
Transactions with owners of the
parent, recognised directly in equity |
223,367 |
1,248,557 |
- |
- |
- |
- |
- |
1,471,924 |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
As at 30 June 2015 |
1,704,763 |
15,202,583 |
1,975,950 |
209,042 |
(2,250,672) |
(120,309) |
(1,570,300) |
15,151,057 |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
As at 1 January 2016 |
1,704,820 |
15,200,219 |
1,975,950 |
209,042 |
(2,250,672) |
(962,887) |
(9,959,977) |
5,916,495 |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
- |
- |
- |
1,543,672 |
1,543,672 |
|
|
|
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
differences |
- |
- |
- |
- |
- |
(1,355,904) |
- |
(1,355,904) |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
Total comprehensive income for
the period |
- |
- |
- |
- |
- |
(1,355,904) |
1,543,672 |
187,768 |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
Proceeds from share issue |
314,879 |
136,807 |
- |
- |
- |
- |
- |
451,686 |
Share issue costs |
|
(21,877) |
- |
- |
- |
- |
- |
(21,877) |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
Transactions with owners of the
parent, recognised directly in equity |
314,879 |
114,930 |
- |
- |
- |
- |
- |
429,809 |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
As at 30 June 2016 |
2,019,699 |
15,315,149 |
1,975,950 |
209,042 |
(2,250,672) |
(2,318,791) |
(8,416,305) |
6,534,072 |
|
________ |
________ |
________ |
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Cash Flow Statement
6 months ended 30 June 2016
|
|
|
6 months to
30 June 2016
Unaudited |
6 months to
30 June 2015
Unaudited |
|
|
|
|
US $ |
US $ |
|
Cash flow from operating
activities |
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before tax |
|
|
1,543,672 |
(1,403,599) |
|
Finance income |
|
|
- |
(139) |
|
Loss/(profit) on disposal of mineral
leases |
|
|
- |
- |
|
Depreciation and amortisation |
|
|
490,257 |
697,901 |
|
Exchange differences |
|
|
(1,291,349) |
138,281 |
|
Impairment of mineral leases |
|
|
8,334 |
379,354 |
|
Decrease in trade and other
receivables |
|
|
40,457 |
396,754 |
|
(Decrease)/increase in trade and
other payables |
|
|
(946,020) |
181,737 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
Net cash (outflow)/inflow from
operating activities |
|
|
(154,649) |
390,289 |
|
|
|
|
_______ |
_______ |
|
Cash flows from investing
activities |
|
|
|
|
|
|
|
|
|
|
|
Purchases of intangible assets |
|
|
100 |
(82,733) |
|
Purchases of property, plant and
equipment |
|
|
(301,665) |
(913,757) |
|
Proceeds from disposal of property,
plant and equipment |
|
|
- |
- |
|
Interest received |
|
|
- |
139 |
|
|
|
|
_______ |
_______ |
|
Net cash used in investing activities |
|
|
(301,565) |
(996,351) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
|
Proceeds from issue of ordinary
shares |
|
|
451,686 |
1,563,568 |
|
Issue costs |
|
|
(21,877) |
(91,644) |
|
Proceeds from borrowings |
|
|
- |
547,936 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
Net cash from financing
activities |
|
|
429,809 |
2,019,860 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
Net (decrease)/increase in cash
and cash equivalents |
|
|
(26,405) |
1,413,798 |
|
|
|
|
|
|
|
Cash and cash equivalents at the
beginning of the period |
|
|
645,759 |
433,748 |
|
|
|
|
|
|
|
Exchange (loss)/gain on cash and
cash equivalents |
|
|
(29,751) |
3,686 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
Cash and cash equivalents at the
end of the period |
|
|
589,603 |
1,851,232 |
|
|
|
|
_______ |
_______ |
|
Comprising: |
|
|
|
|
|
Cash at bank |
|
|
589,603 |
1,851,232 |
|
|
|
|
_______ |
_______ |
|
Notes to the unaudited financial
statements
1. General
information
The principal activity of the Group is the acquisition,
exploration and development of oil and gas properties primarily
located onshore in the United
States.
The address of its registered office is Suite 321, 19-21
Crawford Street, London, W1H
1PJ.
2. Basis of
preparation
These condensed consolidated interim financial statements have
been prepared in accordance with the requirements of the AIM Rules
for Issuers. As permitted, the Company has chosen not to adopt IAS
34 “Interim Financial Statements” in preparing this interim
financial information. The condensed interim financial statements
should be read in conjunction with the annual financial statements
for the year ended 31 December 2015,
which have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union.
The interim financial information set out above does not
constitute statutory accounts within the meaning of the Companies
Act 2006. It has been prepared on a going concern basis in
accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRS) as adopted by
the European Union. Statutory financial statements for the year
ended 31 December 2015 were approved
by the Board of Directors on 24 June
2016 and delivered to the Registrar of Companies. The report
of the auditors on those financial statements was unqualified.
The preparation of consolidated interim financial statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the end of the reporting
period. Significant items subject to such estimates are set out in
the Group’s 2015 Annual Report and Financial Statements. The nature
and amounts of such estimates have not changed significantly during
the interim period.
3. Accounting
policies
The same accounting policies, presentation and methods of
computation are followed in this condensed consolidated financial
information as were applied in the preparation of the Company’s
annual audited financial statements for the year ended 31 December 2015.
The presentational currency of the Group is US dollars.
4. Earnings per share – basic
and diluted
The calculation of earnings per share is based on a profit of
$1,543,672 for the 6 months ended
30 June 2016 (6 months ended 30 June
2015: loss $1,403,599) and the
weighted average number of shares in issue in the period to
30 June 2016 of 1,276,458,563
(30 June 2015: 1,056,815,707).
The basic and diluted loss per share in the period ended
30 June 2016 is the same, as the
effect of the exercise of share options and warrants would be to
decrease the loss per share.
The basic and diluted loss per share in the period ended
30 June 2015 is the same, as the
effect of the exercise of share options and warrants would be to
decrease the loss per share.
5. Property, plant
and equipment
|
Producing
properties
$ |
Drilling
costs and
equipment
$ |
Other
Assets
$ |
Total
$ |
Cost |
|
|
|
|
|
|
|
|
|
At 1 January 2016 |
1,349,349 |
13,316,115 |
24,729 |
14,690,193 |
|
|
|
|
|
Additions |
7 |
301,658 |
- |
301,665 |
Transferred from
intangible assets |
18,992 |
92,545 |
- |
111,537 |
|
|
|
|
|
|
|
|
|
|
At 30 June 2016 |
1,368,348 |
13,710,318 |
24,729 |
15,103,395 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
At 1 January 2016 |
1,087,007 |
6,290,454 |
18,262 |
7,395,723 |
|
|
|
|
|
Charge for the
period |
21,250 |
466,859 |
2,148 |
490,257 |
|
|
|
|
|
|
|
|
|
|
At 30 June 2016 |
1,108,257 |
6,757,313 |
20,410 |
7,885,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Amount at
31 December 2015 |
262,342 |
7,025,661 |
6,467 |
7,294,470 |
|
|
|
|
|
|
|
|
|
|
Net Book Amount at
30 June 2016 |
260,091 |
6,953,005 |
4,319 |
7,217,415 |
|
|
|
|
|
6. Intangible Assets
Cost |
Goodwill
$ |
Drilling
costs
$ |
Mineral
leases
$ |
Total
$ |
|
|
|
|
|
At 1 January 2016 |
340,253 |
81,832 |
1,408,689 |
1,830,774 |
|
|
|
|
|
Additions |
- |
- |
(100) |
(100) |
Transferred to property, plant and
equipment |
- |
(92,545) |
(18,992) |
(111,537) |
Exchange movements |
(34,804) |
- |
- |
(34,804) |
Impairment |
- |
- |
(8,334) |
(8,334) |
Disposals |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
As at 30 June 2016 |
305,449 |
(10,713) |
1,381,263 |
1,675,999 |
|
|
|
|
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
|
|
|
|
At 1 January 2016 and |
- |
- |
- |
- |
At 30 June 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Amount at 31 December
2015 |
340,253 |
81,832 |
1,408,688 |
1,830,773 |
|
|
|
|
|
|
|
|
|
|
Net Book Amount at 30 June
2016 |
305,449 |
(10,713) |
1,381,263 |
1,675,999 |
|
|
|
|
|
Impairment review
Drilling costs and mineral leases represent acquired intangible
assets with an indefinite useful life and are tested annually for
impairment. Expenditure incurred on the acquisition of mineral
leases is capitalised within intangible assets until such time as
the exploration phase is complete or commercial reserves have been
discovered. Exploration expenditure including drilling costs are
capitalised on a well by well basis if the results indicate the
existence of a commercially viable level of reserves.
The directors have undertaken a review to assess whether
circumstances exist which could indicate the existence of
impairment as follows:
- The Group no longer has title to the mineral lease.
- A decision has been taken by the Board to discontinue
exploration due to the absence of a commercial level of
reserves.
- Sufficient data exists to indicate that the costs incurred will
not be fully recovered from future development and
participation.
Following their assessment the directors recognised an
impairment charge to the cost of mineral leases of $8,334 (2015 - $379,354) in respect of expired mineral
leases.
The Directors believe that no impairment is necessary on the
carrying value of goodwill.
**ENDS**
For further information on Magnolia Petroleum Plc visit
http://www.magnoliapetroleum.com/ or contact the following:
Steven Snead |
Magnolia Petroleum Plc |
+01918449 8750 |
Rita Whittington |
Magnolia Petroleum Plc |
+01918449 8750 |
Jo Turner / James
Caithie |
Cairn Financial Advisers
LLP |
+44207 1487900 |
Colin Rowbury |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Brocklehurst |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236 1177 |
Notes
Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas
exploration and production company. Its portfolio includes
interests in 151 producing and non-producing assets, primarily
located in the highly productive Bakken/Three Forks Sanish
hydrocarbon formations in North
Dakota as well as the oil rich Mississippi Lime and the
substantial and proven Woodford
and Hunton formations in Oklahoma.
Summary of Wells
Category |
Number of wells |
Producing |
151 |
Being drilled / completed |
14 |
Elected to participate / waiting to
spud |
10 |
TOTAL |
175 |