TIDMPET
RNS Number : 0646J
Petrel Resources PLC
26 June 2017
26(th) June 2017
Petrel Resources plc
("Petrel" or "the Company")
Preliminary Results for the Year Ended 31 December 2016
Petrel Resources announces its results for the year ended 31
December 2016.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
S
For further information please visit
http://www.petrelresources.com/ or contact:
Petrel Resources
John Teeling, Chairman +353 (0) 1 833 2833
David Horgan, Director
Nominated Adviser and Broker
Northland Capital Partners Limited
Edward Hutton / Gerry Beaney (Corporate Finance) +44 (0) 20 3861 6625
John Howes (Broking)
Public Relations
Blytheweigh +44 (0) 207 138 3204
Nick Elwes +44 (0) 783 185 1855
Camilla Horsfall +44 (0) 787 184 1793
Teneo PSG
Ciaran Flynn +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
Statement Accompanying the Preliminary Results
Petrel is an oil explorer focused on offshore Ireland and
offshore Ghana with legacy interests in Iraq.
After a fallow period there is renewed interest and activity in
the Irish Atlantic - particularly the Porcupine Basin. For the
first time in recent years a well will be drilled. It is scheduled
for July 2017. The past year has seen a number of 3D seismic
acquisition programmes including one by our joint venture partner,
Woodside Energy of Australia.
The Irish Government in 2015 ran a very successful bid round for
new licences. Some 46 were applied for by 17 companies. Petrel was
awarded two licences covering 924 km(2) in the Porcupine Basin.
Why has this happened at a time of relatively low oil prices?
The boom preceding the crash of 2008 had resulted in massive cost
increases in offshore exploration. Wells were costing up to $200
million each. Rig rates were millions of dollars a day. The
economic crash and subsequent financial crisis in many
overleveraged oil companies led to a shuddering halt. Atlantic
Ireland is frontier exploration. Deep water, harsh conditions, few
wells drilled with no commercial oil discovered. The subsequent two
thirds oil price collapse exacerbated the gloom.
What has changed? World oil demand has continued to creep up.
The oil price has recovered somewhat. Exploration costs have fallen
dramatically as rig supply and services supply are greater than
current demand. Technology, particularly seismic and its
interpretation continues to improve. Boards of directors looking to
a future ten to twenty years out, see the potential of elephant
discoveries in the Atlantic. The risk return equation has moved and
the Irish Atlantic is once more attractive to some - not many, but
some. But note, only one well is being drilled this year and there
are only vague plans for wells next year. If the Druid well is
successful this year in 2,200 metres of water it will provide a
huge boost to the industry. If it fails, and it is a wildcat, then
the risk reward equation will be looked at again.
Petrel first had an interest in Irish offshore exploration in
1982. That failed. A watching brief was maintained until the
restructured company applied for acreage in 2011. The company was
awarded two blocks in the Atlantic. These were farmed out to
Woodside Energy in 2013 and converted into two Frontier Exploration
Licences FEL3/14 and FEL 4/14 in January 2014. Petrel maintained a
15% interest in each licence and was carried through initial work,
seismic and one well.
Woodside has conducted 3D seismic over FEL 3/14 and results are
awaited.
Following an analysis of data relating to FEL 4/14 Woodside
decided to drop this licence without completing a seismic
programme. Petrel believed this to be a breach of an agreement to
conduct 900 km(2) of seismic over the area. Both sides have been
unable to reach agreement over the seismic issue. Arbitration is
underway in London. At the same time Woodside announced they were
not proceeding with FEL 4/14, they offered Petrel a carry on new
ground obtained by Woodside in the 2015 licencing round. Petrel
believe they had an agreement but Woodside felt unable to complete.
This too will be part of the arbitration proceedings.
We hope for a favourable outcome of arbitration. Woodside are a
good partner with excellent technical skills but the board of
Petrel have a responsibility to almost 2,000 shareholders.
LO 16/24 and LO 16/25
In June 2016 Petrel was successful in obtaining two Porcupine
Basin Licencing blocks over 924 km(2) . These are prospective
blocks. Work is underway on seismic and well data using Petrel's
database. We are acquiring additional relevant seismic. The focus
of the work is on LO 16/24 particularly the area covering block
35/1. There is known source rock and good reservoir sands. The main
risk is seal. Our personnel have evaluated available data on LO
16/25. The main target identified so far is on Block 45/27 within
the licence option.
Ghana
Petrel in joint venture with Clontarf Energy (60%) and local
interest (10%) holds the 30% balance in a signed Petroleum
Agreement covering 1,532 km(2) offshore and shallow offshore in the
Tano Basin area of Ghana. The licence was first agreed in 2008,
clarified in 2010, and subject to a successful court case in
2014.
Subsequent to the court agreement the various parties agreed on
revised co-ordinates and an expedited ratification process.
Ratification has not taken place.
A change of government in early 2017 brought fresh faces and new
thinking to the table. There is now clear leadership on the
government side. With goodwill outstanding issues will be clarified
and solved. Despite the fall in oil prices we believe that the
targets we have identified on the block are attractive.
Iraq
Petrel has been in Iraq since 1997. By 2003 we had negotiated an
agreement with the federal authorities over a 10,000 km(2) block in
the Western Desert of Iraq - an area now controlled by militants.
It is not possible to work there. Iraq is so prospective that we
were very reluctant to walk away so in 2013 we negotiated a 5%
carry through to production on exploration work to be undertaken by
Oryx, then a Canadian controlled company, now a Kurdish controlled
venture, in the Wasit province of Iraq - a relatively stable Shia
controlled province. The expectation was that the Iraqi provinces
would proceed to develop their own oil/gas resources as has
Kurdistan. To date this has not happened.
Future
Petrel as an exploration venture has been around for 35 years,
starting in the Atlantic, lying dormant for years, being revived to
obtain interests in Uganda and offshore Namibia, deposing of these
to enter Iraq in 1997. We were successful in Iraq obtaining ground
conducting details studies on potential oil field and obtaining a
$200 million E&P contract in 2005 in Subba and Luhais. The
chaos that followed the US invasion of 2003 made it impossible to
continue to work. We sold out of the Subba and Luhais project in
2007. We reinvented ourselves once again in 2008 in Ghana and went
back to the future in 2011 by obtaining licences in the Irish
Atlantic. We took an interest in Iraq once again in 2013.
What does the above demonstrate - resilience, adaptability and
persistence. Petrel has seen highs and lows with a market cap
ranging from under GBP1 million to over GBP100 million. Our
projects are risky and fail but over decades we have persisted
through wars, political disruptions, legal challenges and
geological failures.
So it is with our present projects. Some have problems but all
have great potential. We are very hopeful that the revived interest
in offshore Ireland will be rewarded with a successful discovery.
The money we received from selling our Iraqi interest has sustained
Petrel in recent years. Shareholders have not had to provide fresh
capital. We have sufficient funds for the near future.
John Teeling
Chairman
23(rd) June 2017
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 31 DECEMBER 2016
2016 2015
EUR EUR
CONTINUING OPERATIONS
Administrative expenses (257,675) (228,393)
OPERATING LOSS (257,675) (228,393)
Investment revenue 1,170 1,159
LOSS BEFORE TAXATION (256,505) (227,234)
Income tax expense - -
LOSS FOR THE FINANCIAL YEAR: all attributable
to equity holders of the parent (256,505) (227,234)
Other comprehensive (expense) Income - -
Items that are or may be reclassified
subsequently to profit or loss - -
Exchange differences 66,830 305,752
TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL YEAR (189,675)
78,518
Loss per share - basic and diluted (0.26c) (0.23c)
PETREL RESOURCES PLC
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2016
2016 2015
EUR EUR
Assets
Fixed Assets
Intangible assets 2,138,159 1,871,288
Financial Asset 4,211,123 4,211,123
6,349,282 6,082,411
Current Assets
Trade and other receivables 23,003 19,203
Cash and cash equivalents 745,195 1,111,257
768,198 1,130,460
Total Assets 7,117,480 7,212,871
Current Liabilities
Trade and other payables (409,894) (315,610)
Net Current Assets 358,304 814,850
NET ASSETS 6,707,586 6,897,261
Equity
Called-up share capital 1,246,025 1,246,025
Capital conversion reserve fund 7,694 7,694
Share premium 21,416,085 21,416,085
Share based payment reserve 26,871 26,871
Translation reserve 721,319 654,489
Retained deficit (16,710,408) (16,453,903)
TOTAL EQUITY 6,707,586 6,897,261
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 31 DECEMBER 2016
Capital Share
Conversion Based
Share Share Reserve Payment Translation Retained
Capital Premium fund Reserve Reserve Deficit Total
EUR EUR EUR EUR EUR EUR EUR
At 1 January 2015 1,246,025 21,416,085 7,694 26,871 348,737 (16,226,669) 6,818,743
Total comprehensive income
for the financial year - - - - 305,752 (227,234) 78,518
At 31 December 2015 1,246,025 21,416,085 7,694 26,871 654,489 (16,453,903) 6,897,261
Total comprehensive income
for the financial year - - - - 66,830 (256,505) (189,675)
At 31 December 2016 1,246,025 21,416,085 7,694 26,871 721,319 (16,710,408) 6,707,586
========== =========== ============ ========= ============ ============= ==========
Share premium
Share premium comprises of the excess of monies received in
respect of the issue of share capital over the nominal value of
shares issued.
Capital conversion reserve fund
The ordinary shares of the company were renominalised from
EUR0.0126774 each to EUR0.0125 each in 2001 and the amount by which
the issued share capital of the company was reduced was transferred
to the capital conversion reserve fund.
Share based payment reserve
The share based payment reserve represents share options granted
which are not yet exercised and issued as shares.
Translation Reserve
The translation reserve comprises of foreign exchange movement
on translation from US Dollars (functional currency) to Euro
(presentation currency).
Retained deficit
Retained deficit comprises accumulated losses in the current and
prior financial years.
PETREL RESOURCES PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEARED 31 DECEMBER 2016
2016 2015
EUR EUR
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the financial year (256,505) (227,234)
Investment revenue recognised in loss (1,170) (1,159)
OPERATING CASHFLOW BEFORE
MOVEMENTS IN WORKING CAPITAL (257,675) (228,393)
Movements in working capital:
Increase/(Decrease) in trade and other payables 49,285
(36,221)
(Increase)/Decrease in trade and other receivables (3,800)
25,205
CASH USED IN OPERATIONS (212,190) (239,409)
Investment revenue 1,170 1,159
NET CASH USED IN OPERATING ACTIVITIES (211,020) (238,250)
INVESTING ACTIVITIES
Payments for exploration and evaluation assets (160,699)
(110,837)
NET CASH USED IN INVESTING ACTIVITIES (160,699) (110,837)
NET DECREASE IN CASH AND CASH EQUIVALENTS (371,719)
(349,087)
Cash and cash equivalents at beginning of financial year 1,111,257
1,330,766
Effect of exchange rate changes on cash held in
foreign currencies 5,657 129,578
Cash and cash equivalents at end of financial year 745,195
1,111,257
NOTES:
1. ACCOUNTING POLICIES
There were no changes in accounting policies from those used to
prepare the Group's Annual Report for financial year ended 31
December 2015. The financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
2. LOSS PER SHARE
2016 2015
EUR EUR
Loss per share - basic and diluted (0.26c) (0.23c)
Basic loss per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic loss per share are as follows:
2016 2015
EUR EUR
Loss for the year attributable to equity holders (256,505) (227,234)
2016 2015
Number Number
Weighted average number of ordinary shares for the
purpose of basic earnings per share 99,681,992 99,681,992
Basic and diluted loss per share are the same as the effect of
the outstanding share options is anti-dilutive.
3. FINANCIAL ASSET
Investment
2016 2015
EUR EUR
At the beginning of the year 4,211,123 4,211,123
Additions - -
At the end of the year 4,211,123 4,211,123
The Company's investment in financial assets, through its wholly
owned subsidiary Petrel Resources (TCI) Limited, consists of a 20
per cent shareholding in Amira Hydrocarbons Wasit B.V.("Amira")
which was acquired from Amira Petroleum N.V. on 14 August 2013.
Amira is a special purpose vehicle which holds a 25 per cent
carried to production interest in an early stage oil opportunity in
the large, underexplored and underdeveloped province of Wasit.
Although the company owns 20 per cent of Amira, it does not have
significant influence over Amira. Petrel does not have any
representation on the Board of Amira. It does not have the right to
participate in any financial or operating policy decisions. As a
result Amira does not meet the definition of an associate and is
treated as an investment.
The consideration for the Acquisition comprised an up-front cash
payment of US$500,000 and the issue of 18,947,368 shares in Petrel
("Initial Consideration Shares"), representing 19.82 per cent of
the enlarged issued share capital of Petrel. The Initial
Consideration Shares are locked-in until the spudding of the first
conventional oil well in respect of Amira's interest in the Wasit
province. If the Spudding Date has not occurred by 19 August 2018,
Petrel may, amongst other things, elect to re-acquire the Initial
Consideration Shares for a nominal amount.
Following completion of the Acquisition, a further 21,052,632
shares in Petrel may be issued in two tranches upon the Following
completion of the Acquisition, a further 21,052,632 shares in
Petrel may be issued in two tranches upon the occurrence of certain
events ("Deferred Consideration Shares"). The first tranche of
10,526,316 Deferred Consideration Shares is to be issued upon the
Spudding of the first conventional oil well. The second tranche of
10,526,316 Deferred Consideration Shares is to be issued upon
notification of a discovery in respect of Amira's interest in the
Wasit Province.
As part of the Acquisition, Arman Kayablian, COO of Amira
Industries, joined the board of Petrel as a non-executive director
with effect from 19 August 2013.
Under the terms of the Acquisition agreement, Petrel is also
given a right of first refusal to participate or acquire an
operated interest in any future exploration and production licences
that Amira Industries secures in the Iraqi provinces of Muthanna,
Karbala, Babil and Najaf, which are currently being pursued by
Amira Industries. The terms of Petrel's participation in such
licence are subject to agreement between the parties but are likely
to be similar to Amira Industries' arrangement with Oryx Petroleum
("Oryx") in respect of the Wasit licences.
Fair value information for the investment in Amira has not been
disclosed as its fair value cannot be reliably measured. As a
result the investment is carried at amortised cost. Fair value
cannot be reliably measured as the investment is held in a private
company. The company's equity instruments do not have a quoted
price is an active market.
The recoverability of the group's financial asset is dependent
on the discovery and successful development of the economic
reserves which is subject to a number of risks as outlined
below:
-- Licence obligations;
-- Funding requirements;
-- Political and legal risks, including title to licence, profit sharing and taxation;
-- Geological and development risks;
-- Exchange rate risk;
-- Political risk; and
-- Financial risk management.
4. INTANGIBLE ASSETS
2015 2015
EUR EUR
Exploration and evaluation assets:
Cost:
Opening balance 1,871,288 1,539,277
Additions 205,699 155,837
Exchange translation adjustment 61,172 176,174
Closing balance 2,138,159 1,871,288
Segmental Analysis 2016 2015
EUR EUR
Ghana 962,377 911,425
Ireland 1,175,782 959,863
2,138,159 1,871,288
Exploration and evaluation assets at 31 December 2016 represent
exploration and related expenditure in respect of projects in
Ireland, Iraq and Ghana. The directors are aware that by its nature
there is an inherent uncertainty in relation to the recoverability
of amounts capitalised on the exploration projects. In addition,
the current economic and political situation in Iraq is
uncertain.
On March 4(th) 2014, the company announced that it had finalised
an 85% farm-out agreement with Woodside, Australia on its offshore
Ireland acreage. The agreement covers all of Petrel's participating
interest in licencing option 11/6 (comprising offshore Blocks 45/6,
45/11 and 45/16) and licencing option 11/4 (comprising offshore
Blocks 35/23, 35/24 and western half of 35/25). Woodside will be
operator of the licencing blocks. Petrel Resources received
USD$1,300,000 (EUR945,214) from Woodside for the 85% farm-out.
Relating to the remaining exploration and evaluation assets at
the financial year end, the directors believe there were no facts
or circumstances indicating that the carrying value of the
intangible assets may exceed their recoverable amount and thus no
impairment review was deemed necessary by the directors. The
realisation of these intangible assets is dependent on the
successful discovery and development of economic reserves and is
subject to a number of significant potential risks, as set out
below.
The Group's exploration activities are subject to a number of
significant and potential risks including:
-- Licence obligations;
-- Funding requirements;
-- Political and legal risks, including title to licence, profit sharing and taxation;
-- Geological and development risks;
-- Exchange rate risk;
-- Political risk; and
-- Financial risk management.
Directors' remuneration of EUR30,000 (2015: EUR30,000) and
salaries of EUR15,000 (2015: EUR15,000) were capitalised as
exploration and evaluation expenditure during the financial
year.
5. SHARE CAPITAL
2016 2015
EUR EUR
Authorised:
200,000,000 ordinary shares of EUR0.0125 2,500,000 2,500,000
Allotted, called-up and fully paid:
Number Share Capital Premium
EUR EUR
At 1 January 2015 99,681,992 1,246,025 21,416,085
Issued during the financial year - - -
At 31 December 2015 99,681,992 1,246,025 21,416,085
At 1 January 2016 99,681,992 1,246,025 21,416,085
Issued during the financial year - - -
At 31 December 2016 99,681,992 1,246,025 21,416,085
Movements in share capital
There was no movement in share capital in the current year.
6. POST BALANCE SHEET EVENTS
There were no material post balance sheet events affecting the
company or group.
7. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on 24(th) July
2017 in the Shelbourne Hotel, St. Stephen's Green, Dublin at 11:00
am.
8. GENERAL INFORMATION
The financial information set out above does not constitute the
Company's financial statements for the year ended 31 December 2016.
The financial information for 2015 is derived from the financial
statements for 2015 which have been delivered to the Companies
Registration Office. The auditors have reported on 2015 statements;
their report was unqualified with an emphasis of matter in respect
of considering the adequacy of the disclosures made in the
financial statements concerning the valuation of intangible assets,
investment in subsidiaries and amounts due by group undertakings.
The financial statements for 2016 will be delivered to the
Companies Registration Office.
A copy of the Company's Annual Report and Accounts for 2016 will
be mailed shortly only to those shareholders who have elected to
receive it. Otherwise shareholders will be notified that the Annual
Report will be available on the website at www.petrelresources.com.
Copies of the Annual Report will also be available for collection
from the Company's registered office, 162 Clontarf Road, Dublin 3,
Ireland.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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