TIDMSOU
RNS Number : 3861N
Sound Oil PLC
28 September 2012
28 September 2012
Sound Oil plc
("Sound Oil" or "the Company")
Interim results for the six months ended 30 June 2012
Sound Oil (AIM:SOU), the upstream oil and gas company with
assets in Italy and Indonesia, announces its unaudited interim
results for the six months ended 30 June 2012.
Highlights
-- Following the submission of an application to drill Nervesa
(Italy), significant progress towards drilling in December has been
made, including long lead items delivered, land secured, rig
identified and service contracts awarded
-- Application to drill the Strombone (Italy) discovery submitted
-- Drilling of the development wells at Kerendan (Indonesia) is progressing well
-- Cash at 30 June 2012 stood at GBP5.1 million with no debt
-- GBP1.0 million raised (before costs) post period-end in first
two tranches of placement (at monthly VWAPs of 0.5615 pence and
0.4417 pence per share)
Gerry Orbell, Sound Oil's Chairman and Chief Executive,
commented:
"The Company is part way through the busiest period in its
existence. In the current half year we shall see the drilling of a
number of development, appraisal and exploratory wells."
For further information please contact:
Sound Oil Tel: +44(0)1372 365745
Gerry Orbell, Chairman & Chief Executive
James Parsons, Chief Financial Officer
Smith & Williamson - Nominated Adviser Tel: +44 (0)20 7131 4000
Azhic Basirov
David Jones
Westhouse Securities - Broker Tel: +44 (0)20 7601 6100
Antonio Bossi
Jonathan Haines
Buchanan Tel: +44 (0)20 7466 5000
Tim Thompson
Ben Romney
Helen Chan
Chairman's Statement
In Italy during the first half of 2012 we submitted applications
to drill appraisal wells on the Nervesa and Strombone discoveries
and to produce at the Rapagnano and Casa Tiberi gas fields. We
anticipate that these applications will be approved shortly.
Preparations for the Nervesa well are already well advanced and we
are planning that this well will be drilled late in 2012. At
Rapagnano we have formed an alliance with the Italian engineering
group CSTI which will fund approximately 50% of the development
costs and undertake the facilities engineering works. We are
looking to build on this relationship in other areas of our
portfolio.
We have been drilling at both of our Indonesian Production
Sharing Contracts (PSC's) after a gap of several years. At the
Citarum PSC where we have a 20% position, the Operator, Pan Orient,
moved the rig to the Jatayu wellsite in March after abandoning the
earlier Cataka - 1 well above the reservoir target due to
continuous drilling problems. The Jatayu - 1 well encountered gas
bearing and overpressured sandstones below 5,700 feet which
ultimately required using a high density mud weight for safe
drilling. When the well was deepened to below 6,000 feet, mud was
lost into the formation. This indicates either that naturally
occurring porous rocks had then been encountered, or that
mechanical fracturing of the formation had occurred as a result of
previous exposure to high-density drilling mud. These conditions
caused drilling problems resulting in three sidetracks. Finally the
Operator ran a 4 1/2" liner to 6,636 feet and the well was
suspended in September pending the arrival of a slim-hole drilling
rig on site. Pan Orient intends to use this rig to drill to the
target horizon at approximately 7,500 feet. Meanwhile Pan Orient
will move the conventional rig to the Geulis wellsite.
Elsewhere in Indonesia, at the Bangkanai PSC, the Kerendan Gas
Field development drilling campaign commenced in August with the
first of four deviated production wells which Salamander, the
Operator, intends to drill from a common wellsite. Under the terms
of the ratified Gas Sales and Supply Agreement, the Indonesian
electricity utility PLN is required to purchase the supply of
Kerendan gas starting in the second half of 2013. Following the
Kerendan drilling, the Operator will move the rig to drill the deep
West Kerendan - 1 well. This will be the first of two high impact
exploratory wells at the PSC. Sound Oil has a 5% carried interest
in this permit whereby Salamander bears all the Company's share of
the cost of drilling the Kerendan production wells, the cost of all
development and production facilities and the cost of two
exploratory wells, up to the point when gas is first produced.
Shortly after the end of the reporting period the Company
announced a private placement of shares, thereby further securing
the Company's funding position despite continued cost overruns in
drilling the Citarum well. The placement involved issuing
774,341,464 new ordinary shares in exchange for 7,143,300
subscription notes which are redeemed equally over each of the next
seven months at an average monthly share price.
The seven month period is designed to cover the period when
first revenue from Rapagnano is expected and the material Nervesa
appraisal well is drilled. An open offer for shareholders to
subscribe to new shares was also announced, scheduled for the end
of the placement period.
At the end of June, the Company's cash position was GBP5.1
million with no debt. The loss after tax for the first six months
of 2012 was GBP2.1 million, which includes GBP1.4 million in
administrative expenses and a GBP0.6 million foreign currency
translation loss.
The Company is part way through the busiest period in its
existence and in the next half year we shall see the drilling of
development, appraisal and exploratory wells on our properties. The
Company conducted a review of its operations in the middle of the
year and is taking steps to streamline the business involving both
capital costs and business overheads.
Finally I would like to thank my colleagues within Sound Oil and
on the Board for their contributions on behalf of the Company.
Gerry Orbell
Chairman
27 September 2012
Condensed Interim Consolidated Income Statement
for the six months ended 30 June 2012
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2012 2011 2011
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Exploration costs (49) (580) (2,405)
-------------------------------------- ----- ------------- ------------- -----------
Gross loss (49) (580) (2,405)
Administrative expenses (1,398) (1,345) (2,948)
-------------------------------------- ----- ------------- ------------- -----------
Group operating loss from continuing
operations (1,447) (1,925) (5,353)
Finance revenue 8 21 44
Foreign exchange gain/(loss) (112) (604) (439)
Expense incurred in acquiring
subsidiaries - (522) (516)
-------------------------------------- ----- ------------- ------------- -----------
Loss for the period before and
after taxation (1,551) (3,030) (6,264)
-------------------------------------- ----- ------------- ------------- -----------
Other comprehensive income/(loss):
Foreign currency translation
income/(loss) (579) (777) 27
-------------------------------------- ----- ------------- ------------- -----------
Total comprehensive loss for
the period (2,130) (3,807) (6,237)
-------------------------------------- ----- ------------- ------------- -----------
Loss for the period attributable
to:
Owners of the Company (1,551) (3,025) (6,259)
Non-controlling interests - (5) (5)
-------------------------------------- ----- ------------- ------------- -----------
(1,551) (3,030) (6,264)
-------------------------------------- ----- ------------- ------------- -----------
Total comprehensive loss attributable
to:
Owners of the Company (2,130) (3,802) (6,232)
Non-controlling interests - (5) (5)
-------------------------------------- ----- ------------- ------------- -----------
(2,130) (3,807) (6,237)
-------------------------------------- ----- ------------- ------------- -----------
Loss per share basic and diluted
for the period attributable to
the equity holders of the parent
(pence) 4 (0.08) (0.19) (0.39)
-------------------------------------- ----- ------------- ------------- -----------
Condensed Interim Consolidated Balance Sheet
at 30 June 2012
31 December
30 June 2012 30 June 2011 2011
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------------ ----- ------------ ------------ -----------
Non-current assets
Property, plant and equipment 1,125 80 1,278
Intangible assets 3,508 2,131 3,577
Exploration and evaluation
assets 6 25,649 15,934 22,725
Other debtors 742 662 668
------------------------------ ----- ------------ ------------ -----------
31,024 18,807 28,248
------------------------------ ----- ------------ ------------ -----------
Current assets
Other debtors 1,436 341 1,388
Prepayments 24 56 119
Cash and short term deposits 5,149 11,429 6,286
------------------------------ ----- ------------ ------------ -----------
6,609 11,826 7,793
------------------------------ ----- ------------ ------------ -----------
Total assets 37,633 30,633 36,041
------------------------------ ----- ------------ ------------ -----------
Current liabilities
Trade and other payables 2,039 1,107 2,233
------------------------------ ----- ------------ ------------ -----------
2,039 1,107 2,233
------------------------------ ----- ------------ ------------ -----------
Non-current liabilities
Deferred tax liabilities 3,507 2,131 3,576
Provisions 356 108 366
------------------------------ ----- ------------ ------------ -----------
3,863 2,239 3,942
------------------------------ ----- ------------ ------------ -----------
Total liabilities 5,902 3,346 6,175
------------------------------ ----- ------------ ------------ -----------
Net assets 31,731 27,287 29,866
------------------------------ ----- ------------ ------------ -----------
Capital and reserves
Equity share capital 58,676 49,825 54,704
Non controlling interests - 44 -
Foreign currency reserve 3,189 2,964 3,768
Accumulated deficit (30,134) (25,546) (28,606)
------------------------------ ----- ------------ ------------ -----------
Total equity 31,731 27,287 29,866
------------------------------ ----- ------------ ------------ -----------
Condensed Interim Consolidated Cash Flow Statement
for the six months ended 30 June 2012
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2012 2011 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Cash flow from operations (1,715) (1,109) (3,009)
Interest received 8 21 44
------------------------------------ ------------- ------------- -----------
Net cash flow from operating
activities (1,707) (1,088) (2,965)
------------------------------------ ------------- ------------- -----------
Cash flow from investing activities
Capital expenditure and disposals (10) (69) (31)
Exploration expenditure (3,344) (897) (3,809)
Expense in acquiring subsidiaries - (522) (366)
Acquisition of subsidiaries - (1,436) (4,712)
Payment in escrow - acquisitions
of subsidiaries - - 2,413
------------------------------------ ------------- ------------- -----------
Net cash flow from investing
activities (3,354) (2,924) (6,505)
------------------------------------ ------------- ------------- -----------
Proceeds from equity issue 3,972 10,791 12,108
------------------------------------ ------------- ------------- -----------
Net cash flow from financing
activities 3,972 10,791 12,108
------------------------------------ ------------- ------------- -----------
Net increase/(decrease) in cash
and cash equivalents (1,089) 6,779 2,638
Net foreign exchange difference (48) 166 (836)
Cash and cash equivalents at
the beginning of the period 6,286 4,484 4,484
------------------------------------ ------------- ------------- -----------
Cash and cash equivalents at
the end of the period 5,149 11,429 6,286
------------------------------------ ------------- ------------- -----------
Notes to cash flow
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2012 2011 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------- -----------
Cash flow from operations reconciliation
Loss before tax (1,551) (3,030) (6,264)
Expense in acquiring subsidiaries - 522 516
Payroll bonuses settled in shares - - 98
Share options granted and taken
up immediately - - 36
Finance revenue (8) (21) (44)
Exploration expenditure written
off 49 (9) 1,236
Cash taken over on acquisition
of subsidiaries - - 170
Increase/(decrease) in accruals
and short term creditors (152) 610 1,668
Depreciation 5 6 11
Share based payments charge 23 12 260
Increase in long term provisions (1) - 261
Decrease/(increase) in long term
debtors (81) (32) (12)
Decrease/(increase) in short
term debtors 1 833 (945)
----------------------------------------- ------------- ------------- -----------
Cash flow from operations (1,715) (1,109) (3,009)
----------------------------------------- ------------- ------------- -----------
Notes to the Condensed Interim Consolidated Financial
Statements
1. Basis of preparation
The condensed interim consolidated financial statements were
approved for issue by the directors on 27 September 2012. They do
not represent statutory accounts within the meaning of section 435
of the Companies Act 2006. The comparative financial information is
based on the statutory accounts for the year ended 31 December
2011. Those accounts, upon which the auditors issued an unqualified
opinion, have been delivered to the Registrar of Companies and did
not contain statements under section 498(2) or (3) of the Companies
Act of 2006.
The condensed interim financial information is unaudited and has
been prepared on the basis of the accounting policies set out in
the Group's 2011 statutory accounts and in accordance with IAS 34
Interim Financial Reporting.
The seasonality or cyclicality of operations does not impact on
the interim financial statements.
2. Share-based payments
The Group has a Long Term Incentive Plan under which share
options have been granted to the executive team.
No share options were awarded to Directors during the period
however a total of 18,550,000 share options were awarded to the
executive team.
A total expense of GBP23,000 (2011 full year of GBP260,000) has
been recognised in the consolidated income statement from equity
settled share options. Consistent with previous years, this amount
is the fair value of all the equity settled options in existence at
the end of the period, estimated at the date of the grant using a
Black Scholes model.
3. Related party transactions
There were no sales or purchases to or from related parties, no
guarantees provided or received for any related party receivables
or payables and no other transactions with related parties,
directors' loans and other directors' interests.
4. Loss per share
The calculation of basic loss per ordinary share is based on the
loss after tax and on the weighted average number of ordinary
shares in issue during the period. Basic loss per share is
calculated as follows:
Loss after Tax Weighted average number
of shares Loss per share
June June December June June December June June December
2012 2011 2011 2012 2011 2011 2012 2011 2011
GBP'000 GBP'000 GBP'000 million million million pence pence pence
------- -------- -------- --------- -------- -------- --------- ------- ------- ---------
Basic (1,551) (3,025) (6,259) 2,041 1,616 1,600 (0.08) (0.19) (0.39)
------- -------- -------- --------- -------- -------- --------- ------- ------- ---------
Diluted loss per share has not been disclosed as inclusion of
unexercised options would be anti-dilutive.
5. Segment information
The Group's categorises its operations into two business
segments based on exploration and appraisal and development and
production.
The Group's exploration and appraisal activities are carried out
in two geographic areas being:
In Indonesia under a Production Sharing Contract ("PSC"),
Citarum, and in Italy under various licences and permits. The
development and production activities are based in Indonesia under
the Bangkanai PSC.
The Group's reportable segments are based on internal reports
about components of the Group which are regularly reviewed and used
by the board of directors, being the Chief Operating Decision Maker
("CODM"), for strategic decision making and resource allocation, in
order to allocate resources to the segment and to assess its
performance.
To date the Group has no development activity which has resulted
in production and no turnover and have therefore not provided
information on revenue, products or services.
Details regarding each of the operations of each reportable
segment is included in the following tables:
The segment results for the period ended 30 June 2012 are as
follows:
Development Exploration
& &
Corporate production appraisal Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ---------- ------------ ------------ --------
Sales and other operating
revenues - - - -
Other income/(loss) - - - -
Exploration costs - - (49) (49)
Impairment of exploration
and
evaluation assets - - - -
Administration expenses (1,398) - - (1,398)
-------------------------------- ---------- ------------ ------------ --------
Operating loss segment
result (1,398) - (49) (1,447)
-------------------------------- ---------- ------------ ------------ --------
Interest receivable 8 - - 8
Finance costs (112) - - (112)
Cost of acquiring subsidiaries - - - -
Loss on Farmout disposals - - - -
-------------------------------- ---------- ------------ ------------ --------
Loss for the period before
taxation (1,502) - (49) (1,551)
-------------------------------- ---------- ------------ ------------ --------
The segments assets and liabilities at 30 June 2012 are as
follows:
Development Exploration
& &
Corporate production appraisal Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ------------ ------------ --------
Capital expenditure 37 1,088 29,157 30,282
Other assets 7,351 - - 7,351
Total liabilities (5,902) - - (5,902)
--------------------- ---------- ------------ ------------ --------
The segment results for the period ended 30 June 2011 are as
follows:
Exploration
Development &
Corporate & production appraisal Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ------------- ----------- --------
Sales and other operating revenues - - - -
Other income/(loss) - - - -
Exploration costs (589) - 9 (580)
Impairment of exploration and
evaluation assets - - - -
Administration expenses (1,345) - - (1,345)
----------------------------------- ----------- ------------- ----------- --------
Operating loss segment result (1,934) - 9 (1,925)
----------------------------------- ----------- ------------- ----------- --------
Interest receivable 21 - - 21
Finance costs (604) - - (604)
Cost of acquiring subsidiaries (522) - - (522)
Loss on Farmout disposals - - - -
----------------------------------- ----------- ------------- ----------- --------
Loss for the period before
taxation (3,039) - 9 (3,030)
----------------------------------- ----------- ------------- ----------- --------
The segments assets and liabilities at 30 June 2011 are as
follows:
Development & Exploration
&
Corporate production appraisal Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------- ------------- -------------- -------
Capital expenditure 80 - 18,065 18,145
Other assets 12,488 - - 12,488
Total liabilities (3,346) - - (3,346)
-------------------- ------- ------------- -------------- -------
The segment results for the period ended 31 December 2011 are as
follows:
Exploration
Development & &
Corporate production appraisal Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------------- ----------- --------
Sales and other operating - - - -
revenues
Other income/(loss) - - - -
Exploration costs (936) - (233) (1,169)
Impairment of exploration
and evaluation assets - - (1,236) (1,236)
Administration expenses (2,948) - - (2,948)
------------------------------- ------- ------------- ----------- --------
Operating loss segment result (3,884) - (1,469) (5,353)
------------------------------- ------- ------------- ----------- --------
Interest receivable 44 - - 44
Finance costs (439) - - (439)
Cost of acquiring subsidiaries (516) - - (516)
Loss on Farmout disposals - - - -
------------------------------- ------- ------------- ----------- --------
Loss for the period before
taxation (4,795) - (1,469) (6,264)
------------------------------- ------- ------------- ----------- --------
The segments assets and liabilities at 31 December 2011 are as
follows
Development & Exploration
&
Corporate production appraisal Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- ------------- ----------- -------
Capital expenditure 32 1,246 26,302 27,580
Other assets 8,461 - - 8,461
Total liabilities (6,175) - - (6,175)
-------------------- --------- ------------- ----------- -------
6. Exploration and evaluation assets
30 June 2012 30 June 2011 31 December 2011
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Costs
At start of period 26,856 12,982 12,982
Acquisitions - 5,931 11,361
Additions 3,381 897 3,809
Transfers - - (1,246)
Exchange adjustments (585) (848) (50)
----------------------- ------------ ------------ ----------------
At end of period 29,652 18,962 26,856
----------------------- ------------ ------------ ----------------
Impairment
At start of period 4,131 3,028 3,028
Additions 49 - 1,101
Exchange adjustments (177) - 2
----------------------- ------------ ------------ ----------------
At end of period 4,003 3,028 4,131
----------------------- ------------ ------------ ----------------
Net book amount at end
of period 25,649 15,934 22,725
----------------------- ------------ ------------ ----------------
7. Share Issues
On 6 February 2012, the Company placed 262,587,803 new ordinary
shares at 1.5233p per share, raising GBP4 million and issued
157,552,682 three year warrants.
8. Post balance sheet events
On 16 July 2012, the Company placed 774 million new shares in a
placement through Astin Capital Management in consideration for
GBP7.1 million redeemable subscription notes and the cancellation
of 217 million existing warrants.
The redeemable notes are redeemed in equal amounts in each of
the next seven months at the average volume weighted price for each
month.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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