TIDMRRE
RNS Number : 3734N
RockRose Energy plc
24 September 2019
24 September 2019
INTERIM RESULTS AND DECLARATION OF DIVID
INTERIM RESULTS FOR
THE SIX MONTHSED 30 JUNE 2019 AND DECLARATION OF INTERIM
DIVID
Highlights for the six months ending 30 June 2019
RockRose Energy met its operational targets for the first half
of 2019, achieving significant production growth and completing the
Marathon Acquisition. Significant financial resources are now
available to take advantage of current market conditions and
continue to grow our portfolio of development and production
assets. We are pleased to announce an interim dividend of 60 pence
per share and currently anticipate paying a further final dividend
of 25 pence per share (the timetable for which will be announced in
conjunction with the release of final results for the current
financial year).
The record date for the interim dividend of 60p per ordinary
share in respect of the year to 31 December 2019 is 4 October 2019
and is payable on 24 October 2019 to shareholders on the register
at close of business on 4 October 2019 (the ex-dividend date is 3
October 2019).
Financial
-- Production pro forma basis: 22.1 kboepd(1)
-- 2P + 2C reserves as at 31 March 2019: 87.6 MMboe
-- Total cash2 as at 31 August 2019: $367.9 million which
includes $86.4 million of restricted cash
-- Adjusted EBITDA3 for the first six months: $51.6 million (2018: $27.6 million)
-- Capital expenditure during the first six months: $25.6 million (2018: nil)
-- Interim dividend: 60p per share (anticipated final dividend of 25p per share)
"I am delighted to be able to report another good set of
financial results. The Marathon Acquisition completed on 1 July
2019 and I am pleased to announce the successful integration of the
business into RockRose. We continue to expand our pipeline of
development projects, including the drilling of additional wells at
West Brae and Blake. The development of Arran and progress on Tain
are on budget and on schedule.
On behalf of our shareholders, we continue to build a
first-class business in the North Sea. The Board is pleased to
announce our first regular dividend."
Andrew Austin
Executive Chairman
IFRS reporting metrics
2019 $'m 2018 $'m Change %
--------------------------------------------- -------- -------- --------
Revenue 93.7 66.7 40
--------------------------------------------- -------- -------- --------
Profit before tax 27.8 5.1 449
--------------------------------------------- -------- -------- --------
Basic earnings per share (cents) 124.0 34.0 265
--------------------------------------------- -------- -------- --------
Net cash generated from operating activities 51.9 9.8 430
--------------------------------------------- -------- -------- --------
Net assets 90.4 73.5 23
--------------------------------------------- -------- -------- --------
1 Pro forma information in respect of the enlarged Group,
includes the results of the Group and those of the Brae Complex and
Foinaven assets (acquired as part of the Marathon Acquisition on 1
July 2019) for the six months ending June 2019
2 Non-IFRS measures. Refer to the alternative performance
measures definition within the glossary to the half-year financial
report
3 Adjusted EBITDA is calculated on a business performance basis.
Refer to the alternative performance measures definition within the
glossary to the half-year financial report
Outlook
-- Production capacity remains at 22 to 24 kboepd. However, as a
result of planned extended maintenance shutdowns, which we
anticipate will increase uptime over the coming years, full year
production is expected to be around 20 kboepd
-- The Tain development and Blake life extension projects are on
budget and schedule. The Arran development is on time and below
budget thanks to reductions in well and pipeline costs
-- Preparatory work continues ahead of the planned drilling of
two West Brae subsea development wells. The first of these is
planned to spud in the fourth quarter of 2019
-- Capital expenditure guidance for the full year is $107-115 million
-- Abandonment expenditure guidance for the full year is $13-15 million
Enquiries:
RockRose Energy plc +44 (0)20 3826 4800
Financial Advisor:
Hannam & Partners (Advisory) LLP
Giles Fitzpatrick / Andrew Chubb +44 (0)20 7907 8500
Joint Brokers:
Whitman Howard
Hugh Rich / Nick Lovering +44 (0)20 7659 1261 / 1224
Cantor Fitzgerald
David Porter +44 (0)20 7894 7000
Financial PR:
Celicourt
Mark Antelme / Philip Dennis / Ollie Mills +44 (0)20 8434 2643
For further information, please visit the Company's website at
www.rockroseenergy.com.
Financial Review
For the six months ended 30 June 2019
Unaudited results for six months ending 30 June
2019 2018 Change
---------------------------------- ------ ------ ------ ------
Production boepd 11,105 5,149 115%
---------------------------------- ------ ------ ------ ------
Revenue $'000 93,736 66,661 40%
---------------------------------- ------ ------ ------ ------
Unit opex1 $/boe 22.1 34.8 (37%)
---------------------------------- ------ ------ ------ ------
Adjusted EBITDA2 $'000 51,583 27,567 87%
---------------------------------- ------ ------ ------ ------
Profit for the period $'000 16,316 5,063 222%
---------------------------------- ------ ------ ------ ------
Earnings per share (basic) cents 124 34 265%
---------------------------------- ------ ------ ------ ------
Net cash generated from operating
activities $'000 51,876 9,797 430%
---------------------------------- ------ ------ ------ ------
Average realised oil price3 $bbl 68.3 72.9 (6%)
---------------------------------- ------ ------ ------ ------
Average realised gas price3 $boe 31.7 44.6 (29%)
---------------------------------- ------ ------ ------ ------
Capital expenditure $'000 25,559 -
---------------------------------- ------ ------ ------ ------
Abandonment expenditure $'000 712 491
---------------------------------- ------ ------ ------ ------
Pro forma information in respect of the enlarged Group
Production4 boepd 22,138
----------------- ------ -------
Revenue4 $'000 232,515
----------------- ------ -------
Unit opex4 $/boe 28.0
----------------- ------ -------
Adjusted EBITDA4 $'000 115,560
----------------- ------ -------
Total cash(5) $'000 371,816
----------------- ------ -------
Note The financial results are prepared in accordance with IFRS,
unless otherwise noted below:
1 Non-IFRS measures. Refer to the alternative performance
measures definition within the glossary to the half-year financial
report
2 Adjusted EBITDA is calculated on a business performance basis.
Refer to the alternative performance measures definition within the
glossary to the half-year financial report
3 Excludes the impact of realised and unrealised gain on commodity hedges
4 Pro forma information in respect of the enlarged Group,
includes the results of the Group and those of the Brae Complex and
Foinaven assets (acquired as part of the Marathon Acquisition on 1
July 2019) for the six months ending June 2019
5 At financial close, post Marathon Acquisition, including $91 million of restricted cash
Production and revenue
Production on a working interest basis increased by 115% to
11,105 boepd in the first half of 2019, compared to 5,149 boepd in
the same period of 2018. This increase primarily reflects the
acquisition of Dyas B.V. on 1 October 2018.
The Group's average realised oil price excluding the gains from
hedging was $68.3/bbl for the six months ended 30 June 2019. This
was 6% lower than the same period in 2018 ($72.9/bbl). Revenue from
crude oil sales, for the six months ending 30 June 2019 totalled
$57.2 million, 9% lower than the comparative period in 2018 ($63.1
million). As well as lower prices, the decrease in revenue
reflected the timing of the lifting of June 2019 production.
Revenue from the sale of gas in the period was $34.6 million
(2018: $3.6 million) reflecting the higher production following the
acquisition of Dyas B.V. partially offset by lower wholesale gas
prices.
The Group's commodity price hedges and other oil derivatives
generated $0.2 million of realised gains (2018: realised loss of
$1.5 million).
Unit opex (/boe)
Unit opex was $22.1/boe for the six months ended 30 June 2019,
37% lower than the comparative period in 2018 ($34.8/boe). This
reduction was driven by the acquisition of Dyas B.V., where
predominantly gas producing assets have a unit opex of
$12.7/boe.
Adjusted EBITDA
Adjusted EBITDA for the first six months of 2019 has increased
significantly compared to the same period in 2018. This was due to
the acquisition of Dyas B.V. which contributed $25.6 million in
2019 (2018: nil).
Six months Six months
ended ended
30 June 2019 30 June 2018
$'000 $'000
-------------------------------------------------- ------------- -------------
Adjusted EBITDA 51,583 27,567
-------------------------------------------------- ------------- -------------
Depreciation and amortisation expense (19,565) (11,377)
-------------------------------------------------- ------------- -------------
Unrealised financial instrument gains/(losses) 6,105 (6,385)
-------------------------------------------------- ------------- -------------
Decrease/(increase) in decommissioning estimates (118) -
-------------------------------------------------- ------------- -------------
Acquisition related expenditure (3,233) -
-------------------------------------------------- ------------- -------------
Share options and rights granted to directors and
employees (108) -
-------------------------------------------------- ------------- -------------
Operating profit 34,664 9,805
-------------------------------------------------- ------------- -------------
Income tax expense
Income tax expense is recognised based on management's estimate
of the weighted average effective annual income tax rate expected
for the full financial year. The estimated average annual tax rate
used for the six months to 30 June 2019 is 41%, compared to 0% for
the six months ended 30 June 2018. The difference arises mainly
because the Group did not recognise any deferred tax previously.
However, based on current projections, some of the Group's
subsidiaries are expected to generate sufficient profits to utilise
all of their losses carried forward and other temporary
differences. In addition, the Group is currently paying corporation
tax in the Netherlands.
Capital and abandonment expenditure
Capital expenditure for the first six months of 2019 was $25.6
million (2018: nil). Abandonment expenditure for the first six
months of 2019 was $0.7 million (2018: $0.5 million). Forecast
capital and abandonment expenditure for the year ending 31 December
2019 is $107-115 million and $13-15 million respectively.
Cash flow
Six months Six months
ended ended
30 June 2019 30 June 2018
$'000 $'000
----------------------------------------------------- ------------- -------------
Cash and cash equivalents at 1 January 67,944 64,955
----------------------------------------------------- ------------- -------------
Net cash generated from operating activities 51,876 9,797
----------------------------------------------------- ------------- -------------
Net cash used in investing activities (35,716) (12,860)
----------------------------------------------------- ------------- -------------
Net cash used in financing activities (455) (31,816)
----------------------------------------------------- ------------- -------------
Net increase/(decrease) in cash and cash equivalents 15,705 (34,879)
----------------------------------------------------- ------------- -------------
Exchange (losses)/gains (695) 20
----------------------------------------------------- ------------- -------------
Cash and cash equivalents at 30 June 82,954 30,096
----------------------------------------------------- ------------- -------------
The Group reported net cash generated from operating activities
of $51.9 million or $25.8 per boe in the six months to 30 June 2019
compared with $9.8 million or $10.52 per boe a year earlier. Higher
production, as a result of the Dyas B.V. acquisition, was the main
driver of the improvement. This led to a net increase in cash and
cash equivalents of $15.7 million in the period (2018: net decrease
of $34.9 million). The increase in investing activities was driven
by capital expenditure incurred on the Arran development and Blake
life extension project and the payment of a $10.0 million deposit
in respect of the Marathon Acquisition.
Going concern
When assessing the going concern status of the Group, the
Directors have considered, in particular, its financial position,
including its significant balance of cash and cash equivalents. The
Directors have also considered the Group's oil and gas price
forecasts, expected production, operating cost profile, capital
expenditure, abandonment spend, and financing plans. The Directors
have taken into consideration the key risks which could impact the
prospects of the Group, with the most relevant risk being the oil
and gas price outlook. Robust down-side sensitivity analyses have
been performed, assessing the impact of a significant deterioration
in the oil and gas price outlook. These stress-tests all indicated
results which could be managed in the normal course of business.
Based on their assessment of the Group's prospects and viability,
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for at
least 12 months from the date of approval of the condensed
consolidated interim financial statements. Having reassessed the
principal risks, the Directors considered it appropriate to adopt
the going concern basis of accounting in preparing its condensed
consolidated interim financial statements.
Review of Operations
Summary of operational results (including the results of the
Brae Complex and Foinaven assets which were acquired on 1 July
2019).
Six months ending Six months ending
30 June 2019 30 June 2018
----------------- ------------------- --------------------
Production (net) kboe boepd kboe boepd
----------------- -------- --------- -------- ----------
Blake & Ross 518 2,862 508 2,807
----------------- -------- --------- -------- ----------
Nelson & Howe 185 1,025 226 1,249
----------------- -------- --------- -------- ----------
B Block 142 784 148 818
----------------- -------- --------- -------- ----------
Brae Complex1 1,233 6,812
----------------- -------- --------- -------- ----------
Foinaven1 764 4,221
----------------- -------- --------- -------- ----------
Other UK 102 565 50 276
----------------- -------- --------- -------- ----------
A/B Blocks2 573 3,165
----------------- -------- --------- -------- ----------
K4/K52 244 1,348
----------------- -------- --------- -------- ----------
P15/18 & Rijn2 25 138
----------------- -------- --------- -------- ----------
Other NL2 221 1,218
----------------- -------- --------- -------- ----------
Total(3) 4,007 22,138 932 5,150
----------------- -------- --------- -------- ----------
1 The Brae Complex and Foinaven were acquired as part of the
Marathon Acquisition on 1 July 2019, the information has been
provided to illustrate the key operational metrics of the enlarged
Group for the six months ending 30 June 2019 on a pro forma
basis
2 The Acquisition of Dyas B.V. completed on 1 October 2018 and
as such no comparative information for the first six months of 2018
is disclosed
3 Total for the enlarged Group for the six months ending 30 June 2019 on a pro forma basis
UK producing assets
Blake & Ross (Operator - Repsol-Sinopec)
The Bleo Holm FPSO performed well in the first six months of
2019. Total net production of 2,862 boepd exceeded the first six
months of 2018 (2,807 boepd) despite the Ross wells being shut in
for part of this period.
The Blake life extension project is progressing well and first
oil from the planned infill drilling campaign remains on schedule
for the first half of 2021.
Nelson & Howe (Operator - Shell)
The Nelson field performed well in the first six months of 2019
but production from Howe was reduced in order to maintain reservoir
pressure prior to a well intervention planned for 2020. This
resulted in lower net production in the first six months of 2019
(1,025 boepd) versus 2018 (1,249 boepd).
B Block (Operator - Premier/Repsol-Sinopec)
Production from the B Block fields including Balmoral, Stirling,
Beauly and Burghley, was stable in the first six months of 2019,
with total net production of 784 boepd similar to that of the same
period in 2018 (818 boepd). Premier Oil, the B Block operator,
recently announced that it anticipates cessation of production from
B Block no earlier than 2021.
Brae Complex (Operator - RockRose)
Oil and gas output was relatively stable across the Brae fields
for the first six months of 2019, with average net production
available for sale of 6,812 boepd. Preparatory work continued on
two West Brae subsea development wells, the first of which is
planned to spud in the fourth quarter of 2019. During the period,
work was carried out on the Brae infrastructure to disconnect the
Brae Bravo platform from the remaining operating facilities. Brae
Bravo was subsequently disembarked in July 2019 and platform
removal is scheduled for 2021.
The partners in East Brae and Braemar are evaluating the
potential to extend the life of these fields by at least two
years.
Foinaven area (Operator - BP)
Production from the Foinaven area for the first six months of
2019 was adversely impacted by a compressor outage, pipework, and
topside integrity issues. Average net production was 4,221 boepd.
An extended maintenance shutdown from July to September is expected
to improve operating efficiency.
Other UK
Increased production in the first six months due primarily to
improved uptimes, in particular on the Tors asset.
UK development projects
Arran (Operator - Shell)
The Arran development project is progressing well and is on time
and below budget for first gas in the first quarter of 2021. Total
spend for 2019 will be lower than budget due to timing of contract
awards. In addition, total development costs have been reduced due
to lower well and subsea costs. The operator, Shell, continues to
work on reducing costs further.
Tain (Operator - Repsol-Sinopec)
The Repsol-Sinopec operated Tain project is progressing well and
is on time and budget for first oil in the first half of 2022. The
field will be tied back to the Bleo Holm FPSO and a final
development decision is anticipated in mid-2020.
Netherlands
A/B Block (Operator - Petrogas)
The A/B Block saw a strong first half with throughput remaining
at facility capacity following a successful infill drilling
campaign at the end of 2018. Net production averaged 3,165 boepd
and the partners also successfully appraised the A15 and B10
discoveries during the period. In both cases, reservoir thickness
and properties were in line with or better than prognosed and a
decision to develop the two fields is now targeted for
mid-2020.
K4/K5 (Operator - Total E&P)
A strong first half for the K4/K5 group of assets, with net
production of 1,348 boepd, was helped by the tubing change out at
year end on the K5-B3 well. The operator is continuing to look at
further optimisation and infill opportunities within the K4/K5
group of assets.
P15/18 & Rijn (Operator - TAQA)
The P15/18 & Rijn assets suffered an extended unplanned
shutdown of four months during the first half of the year, which
was primarily driven by corrosion under the high-pressure system
insulation. During the shutdown, two Electrical Submersible Pumps
(ESPs) were replaced on the Rijn oil field, allowing for higher
production rates post-restart. A further shutdown for scheduled
maintenance is under way. We continue to work with the operator and
joint venture to mitigate further unplanned shutdowns.
Other NL
The Hanze oil field saw strong flush production following the
change out of two ESPs on wells A02 and A04 during Q1 2019.
Production from the Wintershall operated P/Q area has remained
steady.
The Total operated J3C unit showed steady production in the
first six months of 2019. Markham, operated by Spirit, which J3C is
tied back to, has continued to produce, although production is
expected to cease in late 2019. The Markham facility is a key hub
for third party users.
Principal Risks and Uncertainties
The Directors do not consider that the principal risks and
uncertainties have changed since the publication of the Annual
Report for the year ended 31 December 2018. There are a number of
potential risks and uncertainties which could have a material
impact on the Group's performance over the remaining six months of
the financial year and could cause actual results to differ
materially from expected and historical results. A detailed
explanation of the risks summarised below can be found in the
Strategic Report section of that annual report, which is available
at www.rockroseenergy.com. Key headline risks relate to the
following:
-- Reserves discovery, development and project delivery
-- Operational performance
-- Commodity prices
-- Decommissioning cost estimates and timing
-- Fluctuations in exchange rates
-- Credit
Cautionary statement about forward-looking statements
This half-year results announcement contains certain
forward-looking statements. All statements other than historical
facts are forward-looking statements. Examples of forward-looking
statements include those regarding the Group's strategy, plans,
objectives or future operating or financial performance, reserve
and resource estimates, commodity demand and trends in commodity
prices, growth opportunities, and any assumptions underlying or
relating to any of the foregoing. Words such as "intend", "aim",
"project", "anticipate", "estimate", "plan", "believe", "expect",
"may", "should", "will", "continue" and similar expressions
identify forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties, assumptions and
other factors that are beyond the Group's control. Given these
risks, uncertainties and assumptions, actual results could differ
materially from any future results expressed or implied by these
forward-looking statements, which speak only as at the date of this
report. Important factors that could cause actual results to differ
from those in the forward-looking statements include: global
economic conditions, demand, supply and prices for oil, gas and
other long-term commodity price assumptions (as they materially
affect the timing and feasibility of future projects and
developments), trends in the oil and gas sector and conditions of
the international markets, the effect of currency exchange rates on
commodity prices and operating costs, the availability and costs
associated with production inputs and labour, operating or
technical difficulties in connection with production or development
activities, employee relations, litigation, and actions and
activities of governmental authorities, including changes in laws,
regulations or taxation. Except as required by applicable law, rule
or regulation, the Group does not undertake any obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Past
performance cannot be relied on as a guide to future
performance.
Financial Statements
Condensed Consolidated Interim Statement of Comprehensive
Income
Six months Six months
ended ended
30 June 2019 30 June 2018
Unaudited Unaudited
Note $'000 $'000
------------------------------------------------- ---- ------------- -------------
Revenue 2(a) 93,736 66,661
Cost of sales (56,935) (45,327)
------------------------------------------------- ---- ------------- -------------
Gross profit 36,801 21,334
Change in estimate of decommissioning provisions (118) -
Administrative expenses (5,135) (3,694)
Acquisition related expenditure 3(a) (3,233) -
Gains/(losses) on derivatives 6,349 (7,835)
------------------------------------------------- ---- ------------- -------------
Operating profit 34,664 9,805
Finance income 33 41
Finance costs 6 (7,808) (4,957)
Foreign exchange gains 922 174
------------------------------------------------- ---- ------------- -------------
Profit before income tax 27,811 5,063
Income tax (expense) 3(b) (11,495) -
------------------------------------------------- ---- ------------- -------------
Profit for the period 16,316 5,063
------------------------------------------------- ---- ------------- -------------
Comprehensive income to be reclassified to profit or loss in subsequent
years when specific conditions are met:
-------------------------------------------------------------------------------------
Exchange differences on translation of foreign
operations (724) -
------------------------------------------------- ---- ------------- -------------
Total comprehensive income for the period 15,592 5,063
------------------------------------------------- ---- ------------- -------------
Earnings per share for the total comprehensive income attributable to
the ordinary equity holders of the Company:
-------------------------------------------------------------------------------------
Basic earnings per share - cents 124 34
------------------------------------------------- ---- ------------- -------------
Diluted earnings per share - cents 119 32
------------------------------------------------- ---- ------------- -------------
The above condensed consolidated interim statement of
comprehensive income should be read in conjunction with the
accompanying notes on pages 10 to 17.
Condensed Consolidated Interim Statement of Financial
Position
At 30 June At 31 December
2019 2018
Unaudited Audited
Note $'000 $'000
--------------------------------------------- ---- ---------- --------------
Assets
Intangible assets 5 48,642 32,287
Property, plant and equipment 4 343,264 359,293
--------------------------------------------- ---- ---------- --------------
Total non-current assets 391,906 391,580
Inventories 8,116 5,090
Trade and other receivables 23,828 27,943
Financial assets (FVPL) 11 7,537 204
Cash and cash equivalents 82,954 67,944
Restricted cash 39,766 53,347
--------------------------------------------- ---- ---------- --------------
Total current assets 162,201 154,528
--------------------------------------------- ---- ---------- --------------
Total assets 554,107 546,108
--------------------------------------------- ---- ---------- --------------
Equity
Share capital 3,668 3,549
Share premium 1,205 129
Other reserves 11,156 11,772
Retained earnings 74,323 58,007
--------------------------------------------- ---- ---------- --------------
Total equity 90,352 73,457
--------------------------------------------- ---- ---------- --------------
Liabilities
Deferred tax liabilities 3(b) 24,972 22,788
Provisions for liabilities and other charges 6,7 364,872 364,717
--------------------------------------------- ---- ---------- --------------
Total non-current liabilities 389,844 387,505
--------------------------------------------- ---- ---------- --------------
Trade and other payables 7 35,562 56,291
Financial liabilities (FVPL) 11 1,642 724
Tax payable 7 30,544 23,012
Provisions for liabilities and other charges 6,7 6,163 5,119
--------------------------------------------- ---- ---------- --------------
Total current liabilities 73,911 85,146
--------------------------------------------- ---- ---------- --------------
Total liabilities 463,755 472,651
--------------------------------------------- ---- ---------- --------------
Total equity and liabilities 554,107 546,108
--------------------------------------------- ---- ---------- --------------
Condensed Consolidated Interim Statement of Changes in
Equity
Retained
Share capital Share premium Other reserves earnings Total
$'000 $'000 $'000 $'000 $'000
--------------------------- ------------- ------------- -------------- --------- --------
Balance as at 1 January
2019 3,549 129 11,772 58,007 73,457
Total comprehensive income
for the year - - (724) 16,316 15,592
Employee Share Incentive
Plan - - 108 - 108
Issue of share capital 119 1,076 - - 1,195
--------------------------- ------------- ------------- -------------- --------- --------
Balance as at 30 June
2019 (unaudited) 3,668 1,205 11,156 74,323 90,352
--------------------------- ------------- ------------- -------------- --------- --------
Balance as at 1 January
2018 4,269 9,902 (75) 71,228 85,234
Issue of share capital 3 38 - - 41
Total comprehensive income
for the year - - - 5,063 5,063
Transfer of reserves - (9,902) 31,743 (53,328) (31,487)
--------------------------- ------------- ------------- -------------- --------- --------
Balance as at 30 June
2018 (unaudited) 4,272 38 31,668 22,964 58,942
--------------------------- ------------- ------------- -------------- --------- --------
Condensed Consolidated Interim Statement of Cash Flows
Six months
ended Six months
30 June ended
2019 30 June 2018
Unaudited Unaudited
Note $'000 $'000
----------------------------------------------------- ---- ---------- -------------
Cash flows from operating activities
Net cash generated from operating activities 14 51,876 9,797
----------------------------------------------------- ---- ---------- -------------
Net cash generated from operating activities 51,876 9,797
Cash flows from investing activities
Payments for property, plant and equipment (8,649) 140
Payments for intangible assets (16,355) -
Payments for decommissioning liabilities (712) -
Payments for Marathon Acquisition - deposit (10,000) (13,000)
----------------------------------------------------- ---- ---------- -------------
Net cash used in investing activities (35,716) (12,860)
Cash flows from financing activities
Proceeds from issues of shares - 40
Principal elements of lease payments (96) -
Return to shareholders - (31,825)
Interest received 33 (41)
Interest paid (392) 10
----------------------------------------------------- ---- ---------- -------------
Net cash used in financing activities (455) (31,816)
----------------------------------------------------- ---- ---------- -------------
Net (decrease)/increase in cash and cash equivalents 15,705 (34,879)
Cash and cash equivalents at 1 January 67,944 64,955
Exchange (losses)/gains (695) 20
----------------------------------------------------- ---- ---------- -------------
Cash and cash equivalents at 30 June 82,954 30,096
----------------------------------------------------- ---- ---------- -------------
Notes to the Condensed Consolidated Interim Financial
Statements
1. Significant changes in current reporting period
The financial position and performance of the Group was
particularly affected by the following events and transactions
during the six months to 30 June 2019:
-- The acquisition of the Dyas B.V. group on 1 October 2018,
which resulted in a material change in the financial position and
performance of the Group for the six months to 30 June 2019 versus
the six months to 30 June 2018.
-- The gain on the Group's oil swap derivative instruments as a
result of the reduction in the average realised oil price from 72.9
$/boe to 68.3 $/boe.
-- The adoption of the new leasing standard IFRS 16 Leases (refer to note 13).
Since the end of the period, the Group acquired the entire
membership in Marathon Oil UK LLC ("MOUK") and entire issued share
capital of Marathon Oil West of Shetlands Ltd ("MOWOS"). For a
detailed discussion about the Group's performance and financial
position please refer to our review of operations on pages 06 to
07.
2. Segment and revenue information
2(a) Description of segments
IAS 34 requires operating segments to be identified on the basis
of internal reports that are regularly reviewed by the chief
operating decision maker ("Executive Committee"). The Executive
Committee considers and reviews the operating segments by reference
to geographic location.
The Group derives revenue from within the United Kingdom and the
Netherlands from the transfer of products to external customers
which is recognised at a point in time. The Group's product lines
are as follows:
United Kingdom Netherlands Total
$'000 $'000 $'000
--------------------- ------------------------------ -------------- ----------- ------
Six months ended 30
June 2019
Revenue by product Sale of crude oil 49,787 7,427 57,214
Sale of gas 5,006 29,624 34,630
Gas storage income - 1,374 1,374
Transportation and processing
services - 518 518
Revenue 54,793 38,943 93,736
----------------------------------------------------- -------------- ----------- ------
Adjusted EBITDA (see
note 2(b)) 25,977 25,606 51,583
----------------------------------------------------- -------------- ----------- ------
Six months ended 30
June 2018
Revenue by product Sale of crude oil 63,095 - 63,095
Sale of gas 3,566 - 3,566
Revenue 66,661 - 66,661
----------------------------------------------------- -------------- ----------- ------
Adjusted EBITDA (see
note 2(b)) 27,567 - 27,567
----------------------------------------------------- -------------- ----------- ------
2(b) Adjusted EBITDA
Six months
ended Six months
30 June ended
2019 30 June 2018
Unaudited Unaudited
$'000 $'000
-------------------------------------------------- ---------- -------------
Adjusted EBITDA 51,583 27,567
Depreciation and amortisation expense (19,565) (11,377)
Unrealised financial instrument gains/(losses) 6,105 (6,385)
Decrease/(increase) in decommissioning estimates (118) -
Acquisition related expenditure (3,233) -
Share options and rights granted to directors and
employees (108) -
-------------------------------------------------- ---------- -------------
Operating profit 34,664 9,805
-------------------------------------------------- ---------- -------------
The Executive Committee uses Adjusted EBITDA as a measure to
assess the performance of the Group's segments. This measure
excludes the effects of significant items of income and expenditure
which may have an impact on the quality of earnings such as
reversal of provisions and impairments when the impairment is the
result of an isolated non-recurring event. It also excludes the
effects of equity-settled share-based payments and unrealised
gains/losses on financial instruments. Interest income and
expenditure are not allocated to segments, as this type of activity
is driven by the central treasury function, which manages the cash
position of the Group.
Sales between and within segments are carried out at arm's
length and are eliminated on consolidation. The amounts provided to
the Executive Committee with respect to segment revenue and segment
assets are measured in a manner consistent with that of the
financial statements. Segment assets are allocated based on the
physical location of the asset.
3. Profit and loss information
3(a) Acquisition related expenditure
Expenditure in respect of the Marathon Acquisition and
subsequent relisting of the Company on 24 July 2019.
3(b) Income and deferred tax
Income tax expense is recognised based on management's estimate
of the weighted average effective annual income tax rate expected
for the full financial year. The estimated average annual tax rate
used for the year to 30 June 2019 is 41%, compared to 0% for the
six months ended 30 June 2018. The main difference arises because
previously the Group was not recognising any deferred tax. However,
based on future projections, the Group's subsidiary, RockRose UKCS4
Limited is expected to generate sufficient profits to utilise all
its losses carried forward and other temporary differences.
Furthermore, the Group acquired several Dutch entities during the
second half of 2018, these companies currently expect to utilise
all their deductible temporary differences and also currently pay
corporation tax in the Netherlands.
The net deferred tax liability of $25.0 million (2018: $22.8
million) comprised of UK deferred tax assets of $58.7 million
(2018: $67.5 million) and Dutch deferred tax liabilities of $83.7
million (2018: $90.3 million).
4. Property, plant and equipment
Oil and gas Administrative Right-of-use
assets assets assets Total
Note $'000 $'000 $'000 $'000
------------------------------- ---- ----------- -------------- ------------ --------
Cost
At 1 January 2019 394,543 641 - 395,184
Changes in accounting policies 13 - - 694 694
Additions 8,336 313 - 8,649
Exchange differences (5,807) - - (5,807)
------------------------------- ---- ----------- -------------- ------------ --------
At 30 June 2019 397,072 954 694 398,720
------------------------------- ---- ----------- -------------- ------------ --------
Accumulated depreciation and
impairment
At 1 January 2019 (35,568) (323) (35,891)
Charge for the year (19,371) (80) (114) (19,565)
------------------------------- ---- ----------- -------------- ------------ --------
At 30 June 2019 (54,939) (403) (114) (55,456)
------------------------------- ---- ----------- -------------- ------------ --------
Net book value
------------------------------- ---- ----------- -------------- ------------ --------
At 30 June 2019 342,133 551 580 343,264
------------------------------- ---- ----------- -------------- ------------ --------
At 31 December 2018 358,975 318 - 359,293
------------------------------- ---- ----------- -------------- ------------ --------
The oil and gas assets consist of producing and development
assets and decommissioning assets in accordance with IAS 16
"Property, Plant and Equipment".
In assessing whether any impairment is required to the carrying
value of assets, their carrying value is compared with their
recoverable amount. The cash generating unit ("CGU") assessed for
impairment is generally the field, or group of fields where these
are economically dependent. The recoverable amount is the higher of
the asset's fair value less costs to sell or value in use. No
indicators of impairment were identified for the Group's oil and
gas assets as at 30 June 2019.
The administrative assets consist of freehold property, fixtures
and fittings, computer equipment and leasehold improvements.
Administrative assets increased by $0.7 million on 1 January 2019
following the adoption of IFRS 16, refer to note 13 for
details.
5. Intangible assets
Appraisal
and development
assets
$'000
------------------------ ----------------
Cost and net book value
At 1 January 2019 32,287
Additions 16,910
Exchange differences (555)
------------------------- ----------------
At 30 June 2019 48,642
------------------------- ----------------
The amounts for intangible appraisal and development assets
represent active development project expenditure. These expenditure
amounts are capitalised on the balance sheet unless an impairment
has arisen under IFRS 6 when expenditure is recognised in the
statement of comprehensive income. The outcome of ongoing
development, and therefore whether the carrying value of appraisal
and development assets will ultimately be recovered, is inherently
uncertain.
6. Provisions for liabilities and other charges
Decommissioning Other Lease
provisions provisions liabilities Total
$'000 $'000 $'000 $'000
--------------------- --------------- ----------- ------------ -------
At 1 January 2019 369,782 54 - 369,836
--------------------- --------------- ----------- ------------ -------
Additions - - 694 694
Change in estimate 303 - - 303
Utilisation (712) - (121) (833)
Finance charge(1) 7,406 - 10 7,416
Exchange differences (6,381) - - (6,381)
--------------------- --------------- ----------- ------------ -------
At 30 June 2019 370,398 54 583 371,035
--------------------- --------------- ----------- ------------ -------
1 Relates to the unwinding of the discounted estimated cost of
decommissioning. Presented within finance costs of $7.8 million
within the income statement.
The estimated cost of decommissioning at the end of the
producing lives of the fields is reviewed annually and engineering
estimates and reports are updated periodically. Provisions are made
for the estimated cost of decommissioning at the statement of
financial position date for the Group's share of the overall costs.
Cost estimates have been discounted at an average real discount
rate of between 1% and 2% (2018: between 1% and 2%) for the six
months to 30 June 2019. The total provision for decommissioning
includes $5.9 million (2018: $5.1 million) which relates to
short-term decommissioning provisions and as such is included in
current liabilities, and $79.5 million (2018: $69.0 million) which
is included within non-current liabilities but falls due within
five years.
7. Non-derivative financial liabilities
As at 30 June 2019, the contractual maturities of the Group's
non-derivative financial liabilities were as follows:
Between Between Total Carrying
Less than 1 and 2 and contractual amount
Contractual maturities of financial 6 months 6-12 months 2 years 5 years cash flows liabilities
liabilities $'000 $'000 $'000 $'000 $'000 $'000
------------------------------------ --------- ----------- -------- -------- ------------ ------------
As at 30 June 2019
------------------------------------ --------- ----------- -------- -------- ------------ ------------
Trade payables 35,562 - - - 35,562 35,562
Lease liabilities 96 192 192 - 480 455
------------------------------------ --------- ----------- -------- -------- ------------ ------------
Total non-derivatives 35,658 192 192 - 36,042 36,017
------------------------------------ --------- ----------- -------- -------- ------------ ------------
As at 31 December 2018
------------------------------------ --------- ----------- -------- -------- ------------ ------------
Trade payables 56,291 - - - 56,291 56,291
------------------------------------ --------- ----------- -------- -------- ------------ ------------
Total non-derivatives 56,291 - - - 56,291 56,291
------------------------------------ --------- ----------- -------- -------- ------------ ------------
The carrying value of the trade and other payables as stated
above is considered to be a reasonable approximation of the fair
value. All trade and other payables are settled within three months
of the invoice date.
8. Equity securities issued
2019 2018 2019 2018
Number of Number of
shares shares $'000 $'000
----------------------------------- ---------- ---------- ------ ------
Issue of ordinary shares during
the six months
----------------------------------- ---------- ---------- ------ ------
Exercise of options under RockRose
Energy PLC
- Employee Share Option Plan 489,080 - 1,142 -
----------------------------------- ---------- ---------- ------ ------
Employee Share Incentive Plan 9,669 22,746 59 41
----------------------------------- ---------- ---------- ------ ------
Net Movement 498,749 22,746 1,201 41
----------------------------------- ---------- ---------- ------ ------
9. Events occurring after the reporting period
The Marathon Acquisition
On 25 February 2019, the Company entered into a sale and
purchase agreement with Marathon Oil Holdings UK Ltd ("MOHL") to
acquire the entire membership in MOUK and entire issued share
capital of MOWOS (together the "Marathon Acquisition"). The total
consideration payable under the Marathon Acquisition was cash of
US$95.4 million. The Marathon Acquisition completed on 1 July
2019.
The allocation of the fair values of the individual assets and
liabilities will be completed within 12 months of the acquisition
date.
If the acquisition had occurred on 1 January 2019, consolidated
pro forma revenue, Adjusted EBITDA and profit for the period ended
30 June 2019 would have been $232.5 million, $115.6 million and
$52.3 million respectively. These amounts have been calculated
using the MOUK's and MOWOS's results and adjusting them for:
-- differences in the accounting policies between the Group and that of MOUK and MOWOS; and
-- the additional depreciation and amortisation that would have
been charged assuming the fair value adjustments to property, plant
and equipment and intangible assets had applied from 1 January
2019, together with the consequential tax effects.
10. Related party transactions
On 25 June 2019 a total of 107,817 options were exercised by
Richard Benmore, Non-Executive Director.
Following the approval by the Remuneration Committee on 25 June
2019, Andrew Austin was awarded 73,620 options under the Company's
unapproved share option plan with exercise price of 815p. No
performance conditions were attached to these awards.
Under the plan, the options outstanding to Directors are as
follows:
Earliest
Date of Basis of Exercise Waived/ vesting Lapse Performance
grant Granted grant Face value price Exercised lapsed date date criteria
---------- --------- ------- ----------- ---------- -------- --------- ------- -------- -------- -----------
Andrew Acquisition Time
Austin 25/06/19 73,620 of Marathon GBP600,000 815p Nil Nil 25/06/20 25/06/29 vesting
---------- --------- ------- ----------- ---------- -------- --------- ------- -------- -------- -----------
11. Fair value measurement of financial instruments
This note provides an update on the judgements and estimates
made by the Group in determining the fair values of the financial
instruments since the last Annual Report.
11(a) Fair value hierarchy
To provide an indication about the reliability of the inputs
used in determining fair value, the Group classifies its financial
instruments into the three levels prescribed under the accounting
standards. An explanation of each level follows underneath the
table.
The following table presents the Group's financial assets and
financial liabilities measured and recognised at fair value through
the profit and loss ("FVPL") at 30 June 2019 and 31 December 2018
on a recurring basis:
Level 1 Level 2 Total
$'000 $'000 $'000
-------------------------------- ------- ------- ------
30 June 2019
Financial assets
Hedging derivatives - oil swap - 6,105 6,105
Underlift 1,432 - 1,432
-------------------------------- ------- ------- ------
Total financial assets 1,432 6,105 7,537
-------------------------------- ------- ------- ------
Financial liabilities
Overlift 1,642 - 1,642
-------------------------------- ------- ------- ------
Total financial liabilities 1,642 - 1,642
-------------------------------- ------- ------- ------
31 December 2018
Financial assets
Hedging derivatives - oil swaps - - -
Underlift 204 - 204
-------------------------------- ------- ------- ------
Total financial assets 204 - 204
-------------------------------- ------- ------- ------
Financial liabilities
Overlift 724 - 724
-------------------------------- ------- ------- ------
Total financial liabilities 724 - 724
-------------------------------- ------- ------- ------
The Group's policy is to recognise transfers into and transfers
out of fair value hierarchy levels as at the end of the reporting
period.
The Group did not measure any financial assets or financial
liabilities at fair value on a non-recurring basis as at 30 June
2019.
There were no transfers between levels of the fair value
hierarchy.
Level 1: The fair value of financial instruments traded in
active markets (such as publicly traded derivatives and equity
securities) is based on quoted market prices at the end of the
reporting period. The quoted marked price used for financial assets
held by the Group is the current bid price. These instruments are
included in Level 1.
Level 2: The fair value of financial instruments that are not
traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques which
maximise the use of observable market data and rely as little as
possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument
is included in Level 2.
Level 3: If one or more of the significant inputs is not based
on observable market data, the instrument is included in Level 3.
The Company had no Level 3 financial instruments as at 30 June 2019
or 31 December 2018.
11(b) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial
instruments include:
-- the use of quoted market prices or dealer quotes for similar instruments.
12. Basis of preparation of half-year report
This condensed consolidated interim financial report for the
half-year reporting period ended 30 June 2019 has been prepared in
accordance with the Disclosure Guidance and Transparency rules of
the Financial Conduct Authority and Accounting Standard IAS 34
"Interim Financial Reporting" as adopted by the EU.
The Interim Report does not include all the notes of the type
normally included in an Annual Report. Accordingly, this report is
to be read in conjunction with the Annual Report for the year ended
31 December 2018 which has been prepared in accordance with IFRS
adopted by the EU and any public announcements made by RockRose
Energy PLC during the interim reporting period.
The information for the year ended 31 December 2018 does not
constitute the Group's statutory accounts as defined in section 434
of the Companies Act 2006 (the "Act") but is derived from those
accounts. The statutory accounts for the year ended 31 December
2018 have been approved by the Board and have been delivered to the
Registrar of Companies. The auditor has reported on those accounts
and their report was unqualified, with no matters by way of
emphasis, and did not contain statements under section 498(2) of
the Act (regarding adequacy of accounting records and returns) or
under section 498(3) (regarding provision of necessary information
and explanations).
The accounting policies adopted and critical estimates and
judgements applied are consistent with those of the previous
financial year and corresponding interim reporting period, except
for the estimation of income tax (see note 3(b)) and the adoption
of new and amended standards as set out below.
When assessing the going concern status of the Group the
Directors have considered in particular its financial position,
including its significant balance of cash, cash equivalents and
liquid investments. When assessing the prospects of the Group, the
Directors have considered the Group's oil and gas price forecasts,
the Group's expected production levels, operating cost profile,
capital expenditure, abandonment spend, and financing plans. The
Directors have taken into consideration the Group's key risks which
could impact the prospects of the Group, with the most relevant to
this assessment considered to be risks to the oil and gas price
outlook. Robust down-side sensitivity analyses have been performed,
assessing the impact of a significant deterioration in the oil and
gas price outlook. These stress-tests all indicated results which
could be managed in the normal course of business. Based on their
assessment of the Group's prospects, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for at least 12 months from the
date of approval of the condensed consolidated interim financial
statements. Having reassessed the principal risks, the Directors
considered it appropriate to adopt the going concern basis of
accounting in preparing its condensed consolidated interim
financial statements.
12(a) New and amended standards adopted by the Group
A number of new or amended standards became applicable for the
current reporting period, and the Group had to change its
accounting policies and make retrospective adjustments as a result
of adopting IFRS 16 "Leases".
The impact of the adoption of the leasing standard and the new
accounting policies are disclosed in note 13 below. The other
standards did not have any impact on the Group's accounting
policies and did not require retrospective adjustments.
13. Changes in accounting policies
This note explains the impact of the adoption of IFRS 16
"Leases" on the Group's financial statements and discloses the new
accounting policies that have been applied from 1 January 2019 in
note 13(b) below.
The Group has adopted IFRS 16 retrospectively from 1 January
2019 but has not restated comparatives for the 2018 reporting
period, as permitted under the specific transitional provisions in
the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in the opening
balance sheet on 1 January 2019.
13(a) Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
"operating leases" under the principles of IAS 17 "Leases". These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 January 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
January 2019 was 3%.
For leases previously classified as finance leases the entity
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right-of-use asset and the lease liability at the date of
initial application. The measurement principles of IFRS 16 are only
applied after that date. The remeasurements to the lease
liabilities were recognised as adjustments to the related
right-of-use assets immediately after the date of initial
application.
30 June 2019
$'000
-------------------------------------------------------- --- ------------
Operating lease commitments disclosed as at 31 December
2018
Discounted using the lessee's incremental borrowing
rate at the date of initial application 564
Add: adjustments as a result of a different treatment
of extension and termination options 130
------------------------------------------------------------- ------------
Lease liability recognised as at 1 January 2019 694
Of which are:
Current lease liabilities 238
Non-current lease liabilities 456
------------------------------------------------------------- ------------
The associated right-of-use assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid
or accrued lease payments relating to that lease recognised in the
balance sheet as at 31 December 2018. There were no onerous lease
contracts that would have required an adjustment to the
right-of-use assets at the date of initial application.
The recognised right-of-use assets relate to the following types
of assets:
At 30 June At 1 January
2019 2019
$'000 $'000
-------------------------- ---------- ------------
Properties 580 694
-------------------------- ---------- ------------
Total right-of-use assets 580 694
-------------------------- ---------- ------------
The change in accounting policy affected the following items in
the balance sheet on 1 January 2019:
-- Lease assets/right-of-use assets - increase by $0.7 million.
-- Lease liabilities - increase by $0.7 million.
The net impact on retained earnings on 1 January 2019 was
nil.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics;
-- reliance on previous assessments on whether leases are onerous;
-- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 January 2019 as short--term
leases;
-- the exclusion of initial direct costs for the measurement of
the right-of-use asset at the date of initial application; and
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains, a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying IAS 17 and IFRIC 4
"Determining whether an Arrangement contains a Lease".
13(b) The Group's leasing activities and how these are accounted
for
The Group leases an office in London and IT equipment. Lease
terms are negotiated on an individual basis. The lease agreements
do not impose any covenants, but leased assets may not be used as
security for borrowing purposes.
Until the 2018 financial year, leases of property, plant and
equipment were classified as operating leases. Payments made under
operating leases (net of any incentives received from the lessor)
were charged to profit or loss on a straight-line basis over the
period of the lease.
From 1 January 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less any lease incentives receivable;
-- variable lease payments that are based on an index or a rate;
-- amounts expected to be payable by the lessee under residual value guarantees;
-- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise IT
equipment.
Extension and termination options
Extension and termination options are included in property and
equipment leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts. All of
extension and termination options held are exercisable only by the
Group and not by the respective lessor.
14. Reconciliation of profit before tax to net cash inflow from
operations
Six months Six months
ended ended
30 June 2019 30 June 2018
Unaudited Unaudited
$'000 $'000
------------------------------------------------------- ------------- -------------
Cash flows from operations
Profit before tax for the period 27,811 5,063
Non-cash adjustments to reconcile profit/(loss) before
tax for the year to net cash flows:
Foreign exchange gain on operating activities (922) (174)
Finance costs 7,808 4,937
Finance income (33) 41
Change in decommissioning estimates 118 -
Gain on oil swap (6,105) -
Depreciation and amortisation 19,565 11,377
------------------------------------------------------- ------------- -------------
Operating cash flows before movements in working
capital 48,242 21,244
Increase in inventory (3,026) (2,761)
Decrease/(increase) in trade and other receivables 12,887 (12,936)
(Decrease)/increase in trade and other payables (19,808) 1,400
Decrease in restricted cash 13,581 2,850
------------------------------------------------------- ------------- -------------
Net cash generated from operating activities 51,876 9,797
------------------------------------------------------- ------------- -------------
Responsibility Statement
We confirm to the best of our knowledge:
a) the condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 "Interim Financial
Reporting";
b) the half-year financial report includes a fair review of the
information required by DTR 4.2.7R (being an indication of
important events that have occurred during the first six months of
the financial year, and their impact on the half-year financial
report and a description of the principal risks and uncertainties
for the remaining six months of the financial year); and
c) the half-year financial report includes a fair review of the
information required by DTR 4.2.8R (being disclosure of related
party transactions that have taken place in the first six months of
the financial year and that have materially affected the financial
position or the performance of the Group during that period and any
changes in the related party transactions described in the last
Annual Report that could have a material effect on the financial
position or performance of the Group in the first six months of the
current financial year).
By order of the Board
Andrew Austin
(Executive Chairman)
Glossary
Adjusted EBITDA - The Executive Committee uses Adjusted EBITDA
as a measure to assess the performance of the Group's segments.
This measure excludes the effects of significant items of income
and expenditure which may have an impact on the quality of earnings
such as reversal of provisions and impairments when the impairment
is the result of an isolated non-recurring event. It also excludes
the effects of equity-settled share-based payments and unrealised
gains/losses on financial instruments. Interest income and
expenditure are not allocated to segments, as this type of activity
is driven by the central treasury function, which manages the cash
position of the Group.
Average realised oil/gas price - calculated as revenue divided
by liftings for the period. Liftings for the period may be
different from production for the period and any variance
recognised as under or overlift in the Statement of Financial
Position.
Boe - barrels of oil equivalent.
Boepd - barrels of oil equivalent produced per day.
CGU - The cash generating unit is the smallest group of assets
that can generate a cash flow independently.
Company - RockRose Energy PLC.
Earnings per share - calculated as total comprehensive income
divided by weighted average number of shares for the period.
Enlarged Group - RockRose Energy PLC and its subsidiaries
including Marathon Acquisition.
FPSO - A floating production storage and offloading (FPSO) unit
is a floating vessel used by the offshore oil and gas industry for
the production and processing of hydrocarbons, and for the storage
of oil.
FVPL - Fair value through profit or loss accounting treatment is
used for all financial instruments that are intended to be held for
sale and not to maintain ownership.
Group - RockRose Energy PLC and its subsidiaries.
Overlift - An overlift position arises when a company lifts more
than its share of the oil and gas produced in a period. Overlift is
recognised as a liability in the Statement of Financial
Position.
TAR- A turnaround is a scheduled event to conduct planned
maintenance on process equipment for which normal routine
operations is suspended/stopped for an extended period for revamp
and/or renewal.
Total cash - total cash represents the sum of cash and cash
equivalent and restricted cash.
Underlift - An underlift position arises when a company owns a
partial interest in a production and does not take its entire share
of the oil and gas produced in a period. Underlift is recognised as
an asset in the Statement of Financial Position.
Unit opex/boe - calculated as cost of sales less depreciation
and change in inventory divided by production.
Independent Review Report to RockRose Energy plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed RockRose Energy plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the interim report of RockRose Energy plc for the 6-month period
ended 30 June 2019. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated interim statement of financial position as at 30 June 2019;
-- the condensed consolidated interim statement of comprehensive
income for the period then ended;
-- the condensed consolidated interim statement of cash flows for the period then ended;
-- the condensed consolidated interim statement of changes in
equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 12 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim report, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim report in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
23 September 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKNDDKBKBQCB
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