TIDMUEP TIDMNSN

RNS Number : 5522F

UMC Energy PLC

24 May 2013

UMC Energy Plc

("UMC" or the "Company")

Final Results

For the year ended 31 December 2012

The Directors present the results of UMC Energy Plc ("Company") and of the consolidated entity, being the Company and its subsidiaries ("Group") and the Group's interest in associates, for the year ended 31 December 2012.

CHAIRMAN'S STATEMENT

Papua New Guinea

In September 2011, the Group acquired one on-shore (PPL 378) and two off-shore (PPLs 374 and 375) Petroleum Prospecting Licences (PPLs) in Papua New Guinea through the acquisition of PNG Energy Limited (PNG Energy) and that company's wholly owned subsidiary Gini Energy Limited (Gini Energy). Subsequently, in May 2012, Gini Energy was granted a further on-shore licence, PPL 405, by the government of Papua New Guinea.

On 26 March 2012, the Company entered transformational agreements with CNOOC Australia Limited (CNOOC), a subsidiary of CNOOC Limited, the Chinese multi-national oil and gas company listed on the New York and Hong Kong Stock Exchanges, whereby CNOOC subscribed for a 70% equity interest in PNG Energy and UMC Energy retained a 30% equity interest.

Pursuant to the agreements, and in consideration for the share subscription, CNOOC will be responsible for funding all exploration and appraisal expenditure in respect of the PPLs up to commercial development. Such expenditure will be repaid to CNOOC out of production revenues and off take of oil and gas once the assets of Gini Energy enter production, should such production occur. If exploration and appraisal work indicates the probable existence of commercial reservoirs of oil or gas in any part of the PPLs at the end of the exploration phase, the parties must each finance their pro-rata share of all expenditure required in respect of the development plan, either themselves or by procuring sufficient finance from a third party.

In addition, the agreements entitle CNOOC to appoint two directors to the boards of each of PNG Energy and Gini Energy, with the Company entitled to appoint one director to each board. With effect from entering the agreements, the PNG Energy Ltd group became an associate of the Company, accounted for under the equity method.

2D seismic acquisition and four initial wells are planned during the first four year term of the permits, two wells on-shore and two off-shore, at an estimated cost for the work programmes of circa $450 million. It is also likely that 3D seismic will be acquired over the most prospective leads in the offshore permits prior to drilling. (Note that this anticipated expenditure is a UMC Energy management estimate which has not yet been budgeted or approved by the PNG Energy Ltd Group; the expenditure actually incurred in due course would form part of CNOOC's non-recourse loan).

The onshore PPLs are adjacent to existing oil and new gas pipeline infrastructure recently built for PNG LNG Project - a $19 billion investment to supply major LNG customers in Asia, and which is anticipated to commence production in 2014.

Since March 2012, CNOOC has been conducting various technical studies and has been mobilising to conduct on-site exploration activities, including procurement of existing data and new seismic acquisition.

Separately, UMC Energy has engaged 3D-GEO Pty Limited ("3D-GEO"), a Melbourne based firm of consulting petroleum engineers, considered to be highly experienced with regard to Papua New Guinea petroleum structural and geological interpretation, to review the available geological data, identify leads and prospects, quantify any contingent resources and prospective resources and provide technical advice in regard to the permits.

In relation to PPL 378 (west), the Paua-1 well drilled in 1996 by BP is a declared discovery with gas encountered in the Toro sands and oil recovered from a 33 metre gross oil column in the Iagifu sands.

Independent expert assessment of the well logs, seismic data and geological structural modelling has provided the following estimated Contingent Resource and Prospective Resource values, prepared in accordance with Petroleum Resources Management System (PRMS) sponsored by the Society of Petroleum Engineers.

The following table presents the recoverable Contingent Resource values for the Paua Discovery.

 
  All values                        GROSS                                 NET ATTRIBUTABLE TO UMC               RISK 
   in MMbbls*                                                                      ENERGY                       FACTOR 
   or BCF* 
-------------  ---------------------------------------------  ---------------------------------------------  --------- 
  PPL 378           Low         Best                               Low         Best 
   Operator:     Estimate      Estimate       High Estimate     Estimate      Estimate       High Estimate 
   CNOOC            1C            2C                               1C            2C 
-------------  -----------  -----------  -------------------  -----------  -----------  -------------------  --------- 
                                            3C(a)     3C(b)                                3C(a)     3C(b) 
-------------  -----------  -----------  ---------  --------  -----------  -----------  ---------  --------  --------- 
  Oil 
   Contingent 
   Resource        0.44         11.28       67.96       6         0.13         3.38        20.4       1.8        .5 
-------------  -----------  -----------  ---------  --------  -----------  -----------  ---------  --------  --------- 
  Total for 
   Oil             0.44         11.28       67.96       6         0.13         3.38        20.4       1.8 
-------------  -----------  -----------  ---------  --------  -----------  -----------  ---------  --------  --------- 
  Gas 
   Contingent 
   Resource         20           5.6        336.8     793.6         6           1.7         101       238        .5 
-------------  -----------  -----------  ---------  --------  -----------  -----------  ---------  --------  --------- 
  Total for 
   Gas              20           5.6        336.8     793.6         6           1.7         101       238 
-------------  -----------  -----------  ---------  --------  -----------  -----------  ---------  --------  --------- 
 

*Note: MMbbls = million barrels of recoverable oil, BCF = billion standard cubic feet of recoverable gas

The 1C and 2C cases only consider hydrocarbon resources in the forelimb of the structure. It would be unusual for only the forelimb to be charged as depicted, but as the Paua-1 well only intersected this part of the Paua structure accordingly the estimates are based on this actual intersection data. The 3C cases consider charge in the backlimb of the structure, either gas or oil.

The prospectivity review of PPL378 (west) also identified Poro, an untested structure. Probabilistic volumes of potential resources calculated by Monte Carlo simulations have provided the following values within the permit:

 
  PPL378 (west)       Recoverable Oil (MMbbls)        Recoverable Gas (Bcf) 
   Poro Lead 
----------------  ------------------------------  --------------------------- 
  Reservoir           P90       P50        P10       P90      P50       P10 
----------------  ---------  --------  ---------  -------  --------  -------- 
  Toro & Iagifu       14        127       1150      31.7     238.5     1796.8 
----------------  ---------  --------  ---------  -------  --------  -------- 
 

The prospectivity review of PPL378 (east) identified two untested structures, Lead A and Lead B. Probabilistic volumes of potential resources calculated by Monte Carlo simulations have provided the following values within the permit:

 
  PPL378 (east)       Recoverable Oil (MMbbls)        Recoverable Gas (Bcf) 
   Lead A 
----------------  ------------------------------  --------------------------- 
  Reservoir          P90        P50        P10       P90       P50      P10 
----------------  --------  ---------  ---------  --------  -------  -------- 
  Toro & Iagifu      69.9      320.0     1465.3     131.4     484.4    1819.8 
----------------  --------  ---------  ---------  --------  -------  -------- 
  PPL378 (east)       Recoverable Oil (MMbbls)        Recoverable Gas (Bcf) 
   Lead B 
----------------  ------------------------------  --------------------------- 
  Reservoir          P90        P50        P10       P90       P50      P10 
----------------  --------  ---------  ---------  --------  -------  -------- 
  Toro & Iagifu      29.9      139.5      655.7      60.9     218.5    797.4 
----------------  --------  ---------  ---------  --------  -------  -------- 
 

In relation to PPL 405, the Wasuma-1 well drilled in 2010 by Oil Search Ltd encountered a 4.7 metre oil column in the Iagifu B sands within the Wasuma structure. Independent analysis of the well log and seismic data combined with geological modelling suggests the well may have been drilled in a poor location and the structure has an estimated potential for a significant recoverable oil Prospective Resource ranging from 7 MMbbls (P90) to 190 MMbbls (P10), with 30% attributable to UMC as detailed below. The Wasuma structure is located within the PPL405 permit held by Gini.

 
  All values                       GROSS                                NET ATTRIBUTABLE TO                RISK FACTOR 
   in MMbbls*                                                                UMC ENERGY 
--------------  -----------------------------------------  --------------------------------------------  ------------- 
  PPL 405             Low           Best          High           Low           Best            High 
   Operator:       Estimate       Estimate      Estimate      Estimate       Estimate        Estimate 
   CNOOC              1C             2C            3C            1C             2C              3C 
--------------  -------------  ------------  ------------  -------------  -------------  --------------  ------------- 
  Oil 
   Prospective 
   Resource          7.21          37.34         193.28         2.16           11.20          57.98            .25 
--------------  -------------  ------------  ------------  -------------  -------------  --------------  ------------- 
  Total for 
   Oil               7.21          37.34         193.28         2.16           11.20          57.98 
--------------  -------------  ------------  ------------  -------------  -------------  --------------  ------------- 
 

The prospectivity review of PPL405 has also identified three untested structures, Lead C, Warra Deep and Lead D. Probabilistic volumes of potential resources calculated by Monte Carlo simulations have provided the following values of these three untested leads within the permit:

 
  PPL405              Recoverable Oil (MMbbls)        Recoverable Gas (Bcf) 
   Lead C 
----------------  ------------------------------  --------------------------- 
  Reservoir          P90        P50        P10       P90      P50       P10 
----------------  --------  ---------  ---------  -------  --------  -------- 
  Toro & Iagifu      17.1      108.9      777.4     57.0     331.5     2189.3 
----------------  --------  ---------  ---------  -------  --------  -------- 
 
 
  PPL405              Recoverable Oil (MMbbls)        Recoverable Gas (Bcf) 
   Warra Deep 
   Lead 
----------------  ------------------------------  --------------------------- 
  Reservoir          P90       P50        P10        P90      P50       P10 
----------------  --------  --------  ----------  -------  --------  -------- 
  Toro & Iagifu      9.1       54.1      331.5      27.5     140.6     747.4 
----------------  --------  --------  ----------  -------  --------  -------- 
 
 
  PPL405              Recoverable Oil (MMbbls)        Recoverable Gas (Bcf) 
   Lead D 
----------------  ------------------------------  --------------------------- 
  Reservoir          P90       P50        P10        P90      P50       P10 
----------------  --------  --------  ----------  -------  --------  -------- 
  Toro & Iagifu      5.5       44.8      383.1      21.7     160.3     1237.2 
----------------  --------  --------  ----------  -------  --------  -------- 
 

Additional subsurface activities are presently being planned by the joint venture parties to further reduce uncertainties and develop the identified leads into drillable prospects. This includes selective reprocessing of existing 2D seismic data, new 2D seismic acquisition, detailed reviews of structural modelling and full reservoir engineering reviews for each lead.

3D-GEO was engaged to conduct a review of the offshore permits, including interpretation of the 2D data, regional reservoir and source rock studies, source generation timing and hydrocarbon migration studies utilizing proprietary Genesis and Trinity software packages to model the probability of hydrocarbon charge within trap timing, and the development of a leads inventory.

Lead mapping of the offshore permits has identified a number of potentially large structures, including Lead H in PPL375, where a phase reversal (or soft kick) was observed in the 2D seismic data in the interpreted Cretaceous reservoir horizon. This observation is often regarded as a direct

hydrocarbon indicator, or DHI, which may be indicative of a gas cap. Lead H is a fault block closure with up to 135 km(2) of closure.

A number of leads have been identified across the two permits, many with closure at both Cretaceous and Miocene reservoir horizons. The seismic grid is presently too sparse across the offshore permits to have sufficient confidence in the structural mapping to elevate any of the leads to prospect status at this time. However, several large structures have been mapped with recoverable gas volumes within the permits estimated in the multi Tcf range (a mean of over 10Tcf for the five largest leads). Un-risked, probabilistic volume calculations of the potential resources have provided the following recoverable gas values of these five highest ranked untested leads within the permit:

 
  LEAD                          P90      P50      Mean      P10 
--------------------------  -------  -------  --------  ------- 
                                   (Recoverable Gas: Bcf) 
--------------------------  ----------------------------------- 
  Lead H Structure in PPL 
   375 Totals                   375    1,490     1,825    3,690 
--------------------------  -------  -------  --------  ------- 
  Lead A Structure Totals       570    1,920     2,215    4,235 
--------------------------  -------  -------  --------  ------- 
  Lead B Structure Totals     1,050    3,750     4,425    8,640 
--------------------------  -------  -------  --------  ------- 
  Lead G Structure Totals       520    1,680     1,970    3,785 
--------------------------  -------  -------  --------  ------- 
  Lead C Structure Totals       105      370       440      850 
--------------------------  -------  -------  --------  ------- 
  Total                                         10,875 
--------------------------  -------  -------  --------  ------- 
 

De-risking of these leads will require acquisition of new seismic data and further interpretation and mapping. The development of the leads inventory was required so that the 2D seismic survey planned for 2013 can be optimally designed.

Madagascar Madagascar continues to experience a period of political upheaval and uncertainty. Despite the fact that the Company has not, in any way, been negatively affected by these events, it has resolved to take a cautious approach to exploration and accordingly has not conducted exploration activities during the 2012 financial year. The Company continues to monitor the situation. Given these circumstances, the Directors have resolved that it is appropriate to recognise an impairment adjustment of GBP1,925,000 (31 December 2011: GBPnil) against the carrying value of the intangible asset.

Financing The Company remains dependent on loan funds being made available to it by Natasa Mining Ltd to meet its working capital and other requirements.

C Kyriakou

Chairman

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2012

 
                                                                                Year                Year 
                                                                               Ended               Ended 
                                                                    31 December 2012    31 December 2011 
                                                                                 GBP                 GBP 
 
  Administrative expenses                                                (1,610,425)           (569,850) 
 
    Impairment charge                                                    (1,925,000)                   - 
 
  Gain on dilution of subsidiary                                              93,178                   - 
 
  Share of net result of associates                                          (8,307)                   - 
                                                                           _________            ________ 
  Loss from operations                                                   (3,450,554)           (569,850) 
 
  Finance costs                                                            (646,165)           (191,312) 
                                                                 _________                      ________ 
  Loss before taxation                                                   (4,096,719)           (761,162) 
 
  Income tax expense                                                               -                   - 
 
  Loss for the year                                                      (4,096,719)           (761,162) 
 
  Attributable to: 
  Equity holders of the parent                                           (3,918,188)           (542,635) 
  Non-controlling interest                                                 (178,531)           (218,527) 
                                                                           _________            ________ 
                                                                         (4,096,719)           (761,162) 
 
  Loss per share in pence - 
   including 
   share of associate's results 
 
  Basic                                                                       (0.81)              (0.22) 
 
 
  Loss per share in pence - 
   excluding 
   share of associate's results 
 
  Basic                             (0.81)    (0.22) 
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2012

 
                                                  Year                Year 
                                                 Ended               Ended 
                                      31 December 2012    31 December 2011 
                                                   GBP                 GBP 
 
  Loss for the year                        (4,096,719)           (761,162) 
 
  Foreign currency translation 
   differences 
  for foreign operations                         1,623               4,781 
                                                 _____               _____ 
  Other comprehensive income for 
   the year                                      1,623               4,781 
                                              ________            ________ 
  Total comprehensive expense for 
   the year                                (4,095,096)           (756,381) 
 
  Attributable to: 
  Equity holders of the parent             (3,715,096)           (540,234) 
  Non-controlling interest                   (380,000)           (216,147) 
                                              ________            ________ 
  Total comprehensive expense for 
   the year                                (4,095,096)           (756,381) 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2012

 
                                      31 December 2012    31 December 2011 
  ASSETS                                           GBP                 GBP 
  Non-current assets 
  Intangible assets                                  -          15,314,346 
  Property, plant and equipment                    626               1,156 
  Investment in group undertaking           16,342,975                   - 
                                             _________           _________ 
  Total non-current assets                  16,343,601          15,315,502 
 
  Current assets 
  Taxation receivable                            2,406                 897 
  Trade and other receivables                  336,069              31,035 
  Cash and cash equivalents                     77,708             130,909 
  Total current assets                         416,183             162,841 
                                             _________           _________ 
  TOTAL ASSETS                              16,759,784          15,478,343 
 
  EQUITY AND LIABILITIES 
  Current liabilities 
  Loans                                      6,219,105           1,715,124 
  Trade and other payables                      62,410              80,874 
  Total current liabilities                  6,281,515           1,795,998 
 
                                              ________            ________ 
  Total liabilities                          6,281,515           1,795,998 
 
 
  Equity 
  Share capital                       2,422,224      2,422,224 
  Share premium account              17,044,183     17,044,183 
  Share based payments reserve          901,999         10,979 
  Foreign currency translation 
   reserve                              144,477        157,532 
  Accumulated loss                  (9,654,614)    (5,736,426) 
  Equity attributable to equity 
   holders of the parent             10,858,269     13,898,492 
  Non-controlling Interest            (380,000)      (216,147) 
  Total equity                       10,478,269     13,682,345 
                                      _________      _________ 
  TOTAL EQUITY AND LIABILITIES       16,759,784     15,478,343 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

 
                                                            Share          Foreign 
                                                            Based         Currency                                           Non- 
                             Share           Share        Payment      Translation                     Accumulated    Controlling 
                           Capital         Premium        Reserve          Reserve                            Loss       Interest          Total 
                               GBP             GBP            GBP              GBP                             GBP            GBP            GBP 
 
    1 January 
    2012                 2,422,224      17,044,183         10,979          157,532                     (5,736,426)      (216,147)     13,682,345 
 
  Total 
  comprehensive 
  expense for 
  the year: 
 
    Loss                         -               -              -                -                     (3,918,188)      (178,531)    (4,096,719) 
  Total other 
   comprehensive 
   income / 
   (expense)                     -               -              -         (13,055)                               -         14,678          1,623 
 
    Total 
    comprehensive 
    expense for 
    the year                     -               -              -         (13,055)                     (3,918,188)      (163,853)    (4,095,096) 
 
    Share options 
    granted in 
    year                         -               -        891,020                -                               -              -        891,020 
 
                          ________         _______         ______          _______                       _________       ________       ________ 
  31 December 
   2012                  2,422,224      17,044,183        901,999          144,477                     (9,654,614)      (380,000)     10,478,269 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

 
                                                              Share           Foreign 
                                                              Based          Currency                             Non- 
                             Share           Share          Payment       Translation     Accumulated      Controlling 
                           Capital         Premium          Reserve           Reserve            Loss         Interest             Total 
                               GBP             GBP              GBP               GBP             GBP              GBP               GBP 
 
    1 January 
    2011                 1,222,223       4,756,183          104,028           155,131     (5,286,840)                -           950,725 
 
  Total 
  comprehensive 
  expense for 
  the year: 
 
    Loss                         -               -                -                 -       (542,635)        (218,527)         (761,162) 
  Total other 
   comprehensive 
   income / 
   (expense)                     -               -                -                 -               -            2,380             4,781 
 
    Total 
    comprehensive 
    income/ 
    (expense) 
    for the year                 -               -                -             2,401       (542,635)        (216,147)         (756,381) 
 
    Share issue 
    on 
    acquisition 
    of investment        1,200,001      12,288,000                -                 -               -                -        13,488,001 
 
    Total shares 
    issued on 
    acquisition          1,200,001      12,288,000                -                 -               -                -        13,488,001 
 
    Reserve 
    transfer                     -               -         (93,049)                 -          93,049                -                 - 
 
                          ________         _______           ______           _______       _________         ________          ________ 
  31 December 
   2011                  2,422,224      17,044,183           10,979           157,532     (5,736,426)        (216,147)        13,682,345 
 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2012

 
                                                     Year                Year 
                                                    Ended               Ended 
                                              31 December 
                                                     2012    31 December 2011 
                                                      GBP                 GBP 
 
  Net cash outflow from operating 
   activities                                 (1,154,126)           (540,453) 
 
  Investing activities 
  Tangible fixed assets additions                 (1,002)                   - 
  Investments in group undertaking            (2,863,284)                   - 
  Cash acquired on acquisition of 
   subsidiary                                           -              89,903 
                                                _________             _______ 
  Net cash outflow from investing 
   activities                                 (2,864,286)              89,903 
 
  Financing activities 
  Loans                                         4,611,376             749,399 
  Loan interest & charges                       (646,165)           (191,312) 
                                                  _______             _______ 
  Net cash inflow from financing 
   activities                                   3,965,211             558,087 
 
  Net cash increase in cash and cash 
   equivalents                                   (53,201)             107,537 
 
  Cash and cash equivalents at beginning 
   of year                                        130,909              23,372 
 
  Cash and cash equivalents at end 
   of year                                         77,708             130,909 
 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2012

   1.    General information 

UMC Energy Plc is a company incorporated in England and Wales. The Company's registered office is First Floor, 10 Dover Street, London, W1S 4LQ. The registration number of the Company is 05331770.

The principal activity of the Group is the investment in, and exploration and development of natural resources projects, specifically in a petroleum exploration project in Papua New Guinea and a uranium exploration project in Madagascar.

The Group's principal activity is carried out in US dollars. The financial statements are presented in pounds sterling as this is the currency of the country (the UK) where the Company is incorporated and its ordinary shares admitted for trading.

   2.    Loss per share 

Including share of associate's results

Loss per share has been calculated by dividing the loss for the year after taxation, including share of associate's results attributable to the equity holders of the parent company of GBP3,918,188 (31 December 2011: GBP542,635) by the weighted average number of shares in issue at the year end of 484,444,763 (31 December 2011: 245,759,831).

Excluding share of associate's results

Loss per share has been calculated by dividing the loss for the year after taxation, excluding share of associate's results including share of associate's results, attributable to the equity holders of the parent company of GBP3,909,881 (31 December 2011: GBP542,635) by the weighted average number of shares in issue at the year end of 484,444,763 (31 December 2011: 245,759,831).

   3.    Intangible assets - Group 
 
                              31 December 2012    31 December 2011 
  Development expenditure                  GBP                 GBP 
  Cost 
  Balance brought forward            1,596,346           1,596,346 
  Additions                                  -                   - 
  Translation reserve                        -                   - 
  Balance carried forward            1,596,346           1,596,346 
 
 
  Exploration licences 
  Balance brought forward                 17,501,372            4,112,026 
  Additions at cost                                -           13,389,346 
  Transfer of assets on dilution        (13,389,346)                    - 
   of subsidiary 
 
  Balance carried forward                  4,112,026           17,501,372 
 
  Impairment 
  Balance brought forward                  3,783,372            3,783,372 
  Charge in year                           1,925,000                    - 
  Translation reserve                              -                    - 
  Balance carried forward                  5,708,372            3,783,372 
                                           _________            _________ 
  Total                                            -           15,314,346 
 

The development expenditure relates to development of the uranium exploration project in the Morondava basin of Madagascar.

The licences relate to uranium exploration licences in the Morondava basin and the petroleum exploration project in Papua New Guinea.

The Morondava uranium project has yet to reach a stage of development where a determination of the technical feasibility or commercial viability can be assessed. In addition, as Madagascar is presently experiencing a period of political upheaval and uncertainty, the Company has resolved to take a cautious approach to exploration and accordingly has not conducted exploration activities during the current financial year and does not expect to undertake any material exploration activities in Madagascar whilst this period of uncertainty prevails. In these circumstances, whether there is any indication that the asset has been impaired is a matter of judgement, as is the determination of the quantum of any required impairment adjustment. The directors have resolved that it is not appropriate to capitalise any further expenditure on the intangible asset until circumstances change. The Directors have used their experience to conclude that an impairment adjustment of GBP1,925,000 is required in the current year (31 December 2011: GBP nil).

In March 2012, the PNG Energy Group ceased to be controlled by the company and therefore, the exploration licences were transferred on dilution of the subsidiary. See note 11 for further information.

   4.    Investments in associated undertaking 

On 26 March 2012, the Company entered agreements with CNOOC Australia Limited ("CNOOC"), a subsidiary of CNOOC Limited, the Chinese multi-national oil and gas company listed on the New York and Hong Kong Stock Exchanges, whereby CNOOC subscribed for a 70% equity interest in PNG Energy Limited with UMC Energy retaining a 30% equity interest.

As a result of this transaction, in March 2012 the PNG Energy group ceased to be controlled by the Company and became an equity accounted associate.

On 4 December 2012, the Company entered a deed with UMC Energy Ltd (incorporated in the British Virgin Islands (BVI)), an indirect wholly owned subsidiary of the Company, whereby it transferred its shares in PNG Energy Ltd to UMC Energy Ltd. At the same time, the company assigned the intellectual property rights pertaining to the assets owned by PNG Energy Ltd to UMC Energy Ltd.

As a result of this transaction, since December 2012 the Group has an equity holding in the following associate undertaking:

 
                         PNG Energy 
                              Group 
       Direct                     - 
       Indirect                 30% 
       Total                    30% 
 

The country of incorporation of the associate undertaking is the British Virgin Islands and the principal place of business is Papua New Guinea.

 
                                       31 December 2012      31 December 2011 
  Group                                             GBP                   GBP 
  Cost 
  Balance brought forward                             -                     - 
  Additions in the year                      16,351,282                     - 
  Share of associated undertaking's             (8,307)                     - 
   results 
  Balance carried forward                    16,342,975                     - 
 
 
  Amortisation/impairment 
  Balance brought forward                   -                   - 
  Impairment charge                         -                   - 
  Balance carried forward                   -                   - 
 
  Net Book Value                   16,342,975                   - 
 

The Papua New Guinea petroleum project has yet to reach a stage of development where a determination of the technical feasibility or commercial viability can be assessed. In these circumstances, whether there is any indication that the asset has been impaired is a matter of judgment, as is the determination of the quantum of any required impairment adjustment. The Directors have used their experience to conclude that no impairment adjustment is required in the current year.

Summarised results of the associate undertaking, PNG Energy Group, as translated into sterling are as follows:

 
                                      Year ended 31 December          Year ended 31 
                                                        2012          December 2011 
                                                         GBP                    GBP 
       Revenue                                         1,980                    949 
 
         Loss for the period                          91,771                 28,745 
 
         Total assets                                 91,504                 98,887 
 
         Total liabilities                           266,739                127,600 
 
   5.      Post balance sheet events 

Since 1 January 2013, the Company has advanced a further US$237,939 (GBP157,226) to Uramad SA, for use on uranium exploration project development activities.

Since 1 January 2013, the Company has borrowed a further A$551,121 (GBP376,177) from Natasa Mining Ltd, for working capital purposes.

   6.      Publication of non statutory accounts 

The financial information set out in this announcement does not constitute statutory accounts.

The financial information for the year ended 31 December 2012 has been extracted from the Group's statutory financial statements to that date upon which the auditors' opinion is modified on the basis of an emphasis of matter opinion on going concern and significant uncertainty.

   7.      Annual Report and Annual General Meeting 

The Annual Report for the year ended 31 December 2012 will be available from the Company's website www.umc-energy.com today.

The annual general meeting of the Company has been convened for 10.00 a.m. on 26 June 2013 at First Floor, 10 Dover Street London W1S 4LQ

Enquiries:

Chrisilios Kyriakou, Chairman

Laurence Read, Corporate Development Officer

UMC Energy Plc

   Telephone:                         +44(0) 20 7290 3102 

Angela Hallett/ James Spinney

Strand Hanson Limited

   Telephone:                         +44 (0) 20 7409 3494 

Philip Haydn-Slater/Paul Dudley

HD Capital Partners LLP

   Telephone:                         +44 (0) 20 3551 4870 

Jerry Keen / Stephane Auton / Patrick Castle

Shore Capital Stockbrokers Limited

Joint Broker

   Telephone:                         +44 (0)20 7408 4090 

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR KMGZKMDLGFZM

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