TIDMVOG
RNS Number : 3410C
Victoria Oil & Gas PLC
28 September 2018
28 September 2018
Victoria Oil & Gas Plc
("VOG", "Group" or the "Company")
INTERIM FINANCIAL REPORT FOR THE SIX MONTHSED 30 JUNE 2018
Victoria Oil & Gas Plc, the integrated natural gas producing
utility, today announces its unaudited interim results for the six
months ended 30 June 2018.
Operational Highlights
-- Average daily Logbaba field gross production rate fell to
3.40mmscf/d (six months to 30 June 2017: 14.6mmscf/d). 650mmscf of
gross gas sold from Logbaba (six months to 30 June 2017:
2,345mmscf), reflecting the non-renewal of the grid power gas sales
agreement
-- Gaz du Cameroun S.A. ("GDC") added three new thermal and
industrial power generation customers to the pipeline network in
the six months to 30 June 2018
-- CNG agreement to partner with Naturelgaz Sanayi ve Ticaret
A.S. announced on 26 June 2018 provides GDC with opportunities to
reach customers beyond the current pipeline infrastructure
-- GDC remains confident that a resolution with ENEO Cameroon SA
("ENEO") with regards to the grid power supply issue will be agreed
in the near term
Logbaba Subsurface Highlights
-- Subsurface reinterpretation complete and new subsurface model
developed integrating re-processed seismic and new well data with
historic field mapping
-- Proved reserves (1P) defined by connected volumes to all the
wells drilled into Logbaba increased 73% to 69bcf (internal
estimates)
-- Field remaining 2P reserves revised to 309bcf, an increase of
106bcf (52%) (internal estimates)
-- Reserves / production ratio (2P) increased to 10yrs at
90mmscfd which supports growth in the Douala market and is expected
to underpin new long-term gas contracts
Financial Highlights
-- $5.0 million Revenue (six months to 30 June 2017: $15.4 million)
-- $0.03 million EBITDA (six months to 30 June 2017: $4.4 million)
-- $18.6 million Net Debt position (at 31 December 2017: $13.1 million)
-- BGFI Bank debt successfully restructured with 12 months interest only payments
Sam Metcalfe, the Company's Subsurface Manager has reviewed and
approved the technical information contained in this announcement,
in his capacity as a qualified person under the AIM Rules. Mr.
Metcalfe is a graduate in BA Geology, BSc Civil Engineering, and
MSc Petroleum Engineering.
This announcement contains inside information.
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Kevin Foo / Ahmet Dik Tel: +44 (0) 20 7921 8820
Strand Hanson Limited (Nominated and Financial Adviser)
Rory Murphy / Stuart Faulkner / Ritchie Balmer Tel: +44 (0) 20
7409 3494
Shore Capital Stockbrokers Limited (Joint Broker)
Mark Percy / Toby Gibbs (corporate finance) Tel: +44 (0) 207 408
4090
Jerry Keen (corporate broking)
FirstEnergy Capital LLP (Joint Broker)
Jonathan Wright/David van Erp Tel: +44 (0) 207 448 0200
Camarco (Financial PR)
Billy Clegg Tel: +44 (0) 203 757 4983
Nick Hennis Tel: +44 (0) 203 781 8330
Victoria Oil & Gas Plc
Unaudited Interim Condensed Consolidated Financial
Statements
For the six months to 30 June 2018
CHAIRMAN'S LETTER
Dear Shareholder,
On behalf of the Board, I set out below our unaudited interim
results for the six months to 30 June 2018 ("H1 18", "reporting
period") and update you on the Company's progress.
Victoria Oil & Gas Plc ("VOG", the "Company" or the "Group")
currently generates revenue through its 57% participating interest
in the Logbaba Project in Douala, Cameroon, which is held by its
100% owned subsidiary Gaz du Cameroun S.A. ("GDC").
Overview
Having completed close to three years of continuous gas supply
to the two ENEO Cameroon S.A ("ENEO") owned power stations, Logbaba
and Bassa, it was a setback when ENEO elected not to renew the gas
sales agreement at the start of the year when the agreement
extension expired on 31 December 2017. The Government of Cameroon,
ENEO, Altaaqa Global ("Altaaqa"), the gas genset providers, and GDC
continue to seek a resolution.
The non-renewal of the ENEO gas sales agreement, especially
during the peak dry season has had a significant impact on the
revenues and results of the Company during the reporting period.
The shortfalls in power supply in Cameroon continue, with
hydroelectric schemes not meeting the current demand. I believe the
current difficulties are a temporary headache and anticipate
returning to a more structured and investor-friendly development
landscape in the near term.
Due to the current power shortages in Douala, several existing
and new customers have expressed interest in the industrial power
generation solutions which GDC is offering. We currently have three
industrial power generating customers and expect to have several
more signed up by year end ready for consumption of gas for power
generation. GDC is expediting its support to manufacturers and
producers in Douala by providing bespoke gas fired power generation
for individual customers or groups of customers. As most of these
proposed power customers are already connected to the gas pipeline
network, adding a gas to power generation solution would increase
gas consumption with minimal capital costs for GDC.
The power shortages in Douala highlight the long-term need and
viability of grid power systems in Cameroon, and Africa in general.
This is a fundamental issue that requires a sustainable solution.
My own view is that grid power in Africa has a place but is not the
ultimate answer. I believe that alternative local solutions are key
to solving this problem and the use of Compressed Natural Gas
("CNG") as a virtual pipeline to local renewable power schemes, be
they solar, wind or mini-hydro, supported by modern battery
technology, deserves serious attention. We shall inform
shareholders of developments in this area when appropriate.
The Company is actively developing "non-grid" energy solutions
and on 26 June 2018 the Company announced an agreement to partner
with Naturelgaz Sanayi ve Ticaret A.S. ("Naturelgaz") on CNG
projects. Naturelgaz is Europe's largest CNG supplier and
distributor and brings valuable expertise within this field to
support GDC. The project will afford GDC the opportunity to reach
larger customers beyond the pipeline infrastructure and aims to
replace relatively expensive diesel and heavy fuel oils in a
variety of applications. As part of a customer diversification
strategy, active discussions are underway with several such
potential customers. GDC and Naturelgaz have completed a
feasibility study and a third party has completed a market review
in Cameroon with pleasing results.
Logbaba Operations Update
The sales figures from the Logbaba Project in Cameroon are as
follows:
6 months ended 6 months ended
30 June 2018 30 June 2017
------------------ ------------------
(mmscf) (mmscf)
------------------ ------------------
Gas sales - Thermal Power 619 662
------------------ ------------------
Gas sales - Industrial Power 31 27
------------------ ------------------
Gas sales - Grid Power 0 1,656
------------------ ------------------
Gas sales - Total 650 2,345
------------------ ------------------
Attributable gas sales - Total 372 1,400
------------------ ------------------
Average daily gas production (mmscf/d) 3.4 14.6
------------------ ------------------
Condensate sold (bbls) 5,807 17,963
------------------ ------------------
Attributable condensate sold (bbls) 3,311 10,727
------------------ ------------------
The table refers to gross Logbaba Project sales, unless
specified as attributable to VOG representing its 57% interest in
the project.
Gas was produced and delivered to our customers in Douala on an
uninterrupted basis during the reporting period without any
significant safety incidents, underlining our commitment to operate
in a safe and environmentally friendly manner.
Reserves Update
A material development for this reporting period was the Logbaba
Field Reserves Update, based on internal estimates, reporting a 73%
increase in the Proved Reserves (1P) to 69bcf and 52% increase in
the Field remaining 2P reserves to 309bcf, which was announced on 4
June 2018. This evaluation was based on the completion of a new
full field subsurface model incorporating interpretations from
reprocessed seismic data together with the well data from La-107
and La-108 following the completion of the drilling campaign, which
led to a material upgrade in the reserves of the Logbaba Field as
follows:
Basis Field Position at 1/1/17 Field Position at 1/1/18
Initial Cum Prod'n Remaining Initial Cum Prod'n Remaining VOG Net
Reserves reserves Reserves Reserves Reserves
---------- ----------- ---------- ---------- ----------- ---------- ----------
Proved (1P) 49 9 40 82 13 69 40
---------- ----------- ---------- ---------- ----------- ---------- ----------
Proved+ Probable
(2P) 212 9 203 322 13 309 176
---------- ----------- ---------- ---------- ----------- ---------- ----------
Proved+ Probable+
Possible
(3P) 350 9 341 548 13 535 305
---------- ----------- ---------- ---------- ----------- ---------- ----------
All volumes are bcf and do not include condensate volumes
Position at 1/1/17 based on Blackwatch report from August 2016
Position at 1/1/18 based on integrated reservoir study post La-107
and La-108 development drilling
The new proven + probable (2P) reserves will support a
production rate of 90mmscf/d for 10 years therefore supporting the
business as it looks to increase the gas market in Cameroon by
providing the reassurances required by potential large
gas-off-takers.
This evaluation supersedes the Blackwatch Report of August 2016
and is based on a new full field subsurface model incorporating
interpretations from the reprocessed seismic together with the well
data from La-107 and La-108. The work has been managed by VOG
supported by independent external consultants who have provided
subsurface expertise and modelling capability to produce the
updated development plan for the field. This work will now enable
selection of locations for future development wells, commencing
with La-109, to continue development of the Logbaba Field in line
with demand growth in Douala, Cameroon.
Financial Results
The impact of the non-renewal of the grid power gas sales
agreement has resulted in revenue for the reporting period
declining from $15.4 million in the six-month period ended 30 June
2017 to $5.0 million. Despite efforts to reduce costs in all areas,
and restricting capital expenditure to only those required to
maintain existing operations or connect new customers, the results
and cash flows from operations have deteriorated.
Cash levels are being closely monitored. In addition to negative
operating cashflows, the repayment of drilling contractors and debt
has consumed cash during the reporting period. Whilst borrowings
reduced to $21.8 million (31 December 2017: $24.5 million), net
debt increased to $18.6 million (31 December 2017: $13.1
million).
As announced on 14 June 2018, the BGFI Bank debt facility was
restructured during the period to extend the repayment term and to
provide a short-term principal repayment holiday to allow GDC to
connect new customers and increase its revenue. The Group does not
have any further credit facilities available at 30 June 2018.
The Company is pursuing a $24.5 million gross insurance claim in
relation to a well control incident which occurred during the
drilling programme on La-108. During the reporting period the
Company has completed several technical reviews to support the
technical merits of this claim. As is common in these situations,
the outcome and timing of the claim is not certain.
The Directors have given careful consideration to the
appropriateness of the going concern basis in the preparation of
the unaudited interim condensed consolidated financial statements.
Further details of our current financial position and uncertainties
which may affect the Company's ability to continue operating as a
going concern are to be found in the Financial Review and in Note 3
of the unaudited interim condensed consolidated financial
statements set out below.
Corporate
At the Board level, after two and a half years of service to the
Company, Iain Patrick resigned as an independent Non-Executive
Director on 23 April 2018. I would like to thank Iain for his sound
contribution to the Board. At that time, we reviewed our Board
Committee appointments and as a result I stood down from the
Remuneration Committee and Roger Kennedy was appointed as our
Senior Independent Non-Executive Director and Chair of the Audit
Committee. We will endeavour to appoint a suitable third
Non-Executive Director in due course.
In accordance with AIM Rule 26, the Company will be adopting the
QCA Guidelines on Corporate Governance and will update its website
accordingly.
Outlook
GDC remains confident that a resolution with ENEO will be agreed
in the near term. In the meantime, we are focused on expanding the
thermal, industrial power and CNG segments. Discussions with other
independent power producers to expand the grid power segment are
ongoing. There remains a shortfall in power supply in Cameroon,
with hydroelectric schemes not meeting current demand and GDC
remains the only domestic gas producer.
I would like to thank our shareholder base for your extreme
patience and resilience through this difficult period. I can assure
you that your Company and its management team are working
tirelessly to deliver the value that you expect.
Kevin Foo
Executive Chairman
28 September 2018
Financial Review
The interim report for the six-month period ended 30 June 2018
("reporting period" or "H1 18") is compared to the six-month period
ended 30 June 2017 ("prior period" or "H1 17") as required by
International Financial Reporting Standards ("IFRS").
The non-renewal of the grid power gas sales agreement at the end
of December 2017 has had a significant impact on the revenues and
operating results generated by the Group in H1 18. The first six
months of the calendar year is the dry season in Cameroon, during
which the requirement for gas-powered electricity generation is at
its greatest. This seasonal demand is reflected in the reporting
period gross production figures of 650mmscf compared to the prior
period's production of 2,345mmscf. GDC remains engaged with ENEO
and anticipates a return to gas consumption in the near term.
The increase in reserves at Logbaba, announced on 4 June 2018,
has enabled the Group to enter negotiations for long-term, high
volume gas supply agreements with electricity producers and other
industries within Douala, which provides potential to grow the
business and generate profits in the future.
Revenue and Results
30 June 2018 30 June 2017
For the six-month period ended $000 $000
-------------------------------------------------- ------------ ----------------
Performance
Revenue 5,014 15,420
Operating loss (2,746) (4,446)
Depreciation 2,773 8,866
EBITDA 27 4,420
-------------------------------------------------- ------------ ----------------
Loss per share - basic and diluted (cents) (2.28) (4.11)
Operational - Logbaba production
Gas sales (mmscf) - gross 650 2,345
- attributable 372 1,400
Condensate sales (bbls) - gross 5,807 17,963
- attributable 3,311 10,727
30 June 2018 31 December 2017
As at $000 $000
-------------------------------------------------- ------------ ----------------
Financial Position
Net debt position (18,604) (13,061)
-------------------------------------------------- ------------ ----------------
Performance
The Group's revenue for the reporting period was $5.0 million,
approximately $10.4 million lower than the prior period (H1 17:
$15.4 million). Revenue is derived entirely from the Logbaba
Project in Cameroon. Gas is sold to customers for thermal energy
production and electricity generation, with revenue also generated
from the sale of condensate, a by-product from gas production and
processing.
In addition to efforts to add thermal and industrial power
generation customers, the Group has also partnered with Naturelgaz
to implement a CNG strategy to provide gas powered energy solutions
to customers beyond the existing pipeline network. Whilst these
solutions take time to implement, the margins on these lines of
business are better than the margins for traditional grid power
solutions and would therefore improve the Group's
profitability.
Cost of sales of $6.0 million (H1 17: $12.4 million) included
$0.8 million (H1 17: $2.3 million) of production royalties, $2.6
million of depreciation linked to revenue generating assets (H1 17:
$8.9 million) and $2.6 million of other production related
expenditure (H1 17: $1.2 million). Production royalties are a
variable cost associated with GDC's share of revenue relating to
the attributable volumes of gas produced during the period. The
reduction in royalties is directly linked to the reduction in
attributable hydrocarbon revenues. Depreciation is a variable cost
associated with the gross volumes of gas produced during the
period.
EBITDA, a non-IFRS measure which excludes depreciation from
operating profit prior to financing charges and tax, reflects
earnings of $0.03 million (H1 17: $4.4 million). The loss after
taxation of the Group for the six months to 30 June 2018 amounted
to $3.3 million (H1 17: $4.5 million). Loss per share for the
reporting period was 2.28 cents (H1 17: 4.11 cents).
Financial Position
Intangible Assets
The increase in intangible assets during the period of $2.5
million, of which $2.0 million represents GDC's additional drilling
costs, related to wells La-107 and La-108.
Property, plant and equipment
Additions during the period were predominantly pipeline related
and amounted to $0.5 million (H1 17: $0.3 million).
Oil and gas assets, which include the Logbaba wells and the
pipeline assets, are depreciated on a 'unit of production' basis.
The decreased gross production during the reporting period resulted
in a unit of production depreciation charge of $2.3 million (H1 17:
$8.5 million).
Trade and other receivables
Trade receivables have decreased $3.1 million from 31 December
2017 due to ENEO settling most of their outstanding receivables a,
with a net amount of $0.8 million outstanding at the date of
reporting, and a reduction in amounts due from JV partners of $2.0
million.
Cash and cash equivalents
Available cash at 30 June 2018 was $3.2 million (31 December
2017: $11.5 million).
Trade and other payables
Trade and other payables have decreased by $4.7 million from 31
December 2017 to $9.6 million as drilling contractors were paid. As
announced on 5 July 2018, a further $1.8 million was settled after
the reporting period date via an issuance of new ordinary shares in
the Company. The Company has negotiated extended payment terms with
the remaining significant suppliers.
Borrowings
Total borrowings of $21.8 million compares to $24.5 million at
31 December 2017.
The Company successfully achieved a restructuring of the BGFI
facility (see Note 11). The terms of the restructuring allow the
Company to extend the tenor of the existing capital balance for a
period of five years from July 2018 to June 2023. The restructured
agreement contains a principal repayment holiday for the first 12
months from July 2018 to June 2019. All other terms of the loan
agreement remain unaffected, with the exception of additional
pledges of security to replace the existing pledge over ENEO
receivables, and recourse to related gas production volumes in the
event of default.
Net Debt
The Group was in a net debt position of $18.6 million at 30 June
2018 (31 December 2017: $13.1 million). The increased net debt
position is a result of the repayment of accounts payable and the
funding of operational activities.
Statement of Changes in Equity
The condensed consolidated statement of changes in equity
reflects the capital reorganisation programme approved and
implemented in the second half of 2017.
Cash Flow
Operating activities
The Group utilised cash for operating activities of $1.3 million
during the period (prior period: generated cash of $5.5 million).
Working capital increased by $2.1 million (prior period: $16.0
million), mainly due to the reduction of trade payables, resulting
in net cash utilised in operating activities of $3.3 million (prior
period: $10.4 million).
Investing activities
Drilling and pipeline activities resulted in capital cash costs
of $2.4 million during the period (prior period: $15.2
million).
Financing activities
$3.1 million was paid in interest and capital repayments (H1 17:
$4.9 million). $22.2 million was drawn down against the BGFIBank
facility during the prior period. The Group does not have any
further available credit facilities.
Commitments
The Logbaba Concession does not contain any work programme
obligations.
The Group awaits the Presidential Decree to formalise its
assignment of a 75% participation in the Matanda Block. The block
has two two-year exploration periods (total of 4 years) of which
GDC's share of the Matanda work programme, commencing from the date
of the Presidential Decree, is anticipated to be $11.25
million.
Subsequent Events
On 10 July 2018, the company issued 4,814,815 new ordinary
shares to a supplier in lieu of a cash payment.
Going Concern
The Directors have given careful consideration to the
appropriateness of the going concern basis in the preparation of
the interim financial statements. There are a number of
uncertainties which may affect the Company's ability to continue
operating as a going concern, these are disclosed in Note 3 of the
unaudited interim condensed consolidated financial statements.
The non-renewal of the grid power contract and the outstanding
liabilities associated with the drilling programme that overran its
budget have stretched the Company's available resources.
Having restructured the BGFI loan and taken further measures to
preserve available cash resources and being reasonably assured of
the ability to raising additional funding when required, the
Directors are of the opinion that the Company will be able to
continue operating for a period of at least 12 months after the
date of reporting.
Looking Ahead
Company is focused on securing thermal and industrial power
customers to increase gas sales. There remains a shortfall in power
supply in Cameroon, with hydroelectric schemes not meeting current
demand and GDC remains the only domestic gas producer to supply
natural gas to grid power producers. Advanced discussions with a
number of customers is expected to lead to signing of industrial
power gas sales agreements in the near future.
Maintaining sufficient liquidity and meeting the Group's
obligations as they fall due will enable the Group to remain in
position to benefit from the considerable upside potential which
exists in the Cameroonian energy market.
Principal Risks and Uncertainties
The Board determines the key risks for the Group and monitors
mitigation plans and performance on a monthly basis. The principal
risks the Group has identified for the next six months are
summarised as follows:
-- Operational risk: Inability to sign grid power gas sales
agreement with ENEO or other power generating companies
-- Other operational risks: HSE and security incidents, title and licence risks, well/process plant/pipeline integrity risks, reliance on key customer risk
-- Financial risk: Ability to fund the Company with available
funds, debt, operational cash flows and other sources
-- External risks: Capital constraints, global economic
volatility, commodity price risk, legal compliance regulatory or
litigation risk, adverse market sentiment, political and country
risk
-- Strategic risks: Investment decisions, inadequate resources and reliance on key personnel
-- Other financial risks: Funding risk, counterparty credit
risk, management of costs and capital spending, tax risk
A more detailed listing of risks and uncertainties facing the
Group's business is listed on page 24 of the Report & Accounts
to 31 December 2017, which is available on the Victoria Oil &
Gas Plc website: www.victoriaoilandgas.com.
Directors' Responsibility Statement
The Directors confirm that to the best of their knowledge that
the unaudited interim condensed consolidated financial statements
have been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
Movement in Directors during the period is discussed in the
Corporate section of the Chairman's letter. A list of the current
Directors is available on the Company's website:
www.victoriaoilandgas.com.
Andrew Diamond
Finance Director
28 September 2018
Condensed Consolidated Income Statement
For the six-month period ended 30 June 2018 30 June
2017
Unaudited Unaudited
Note $000 $000
----------------------------------- ---- ------------ ---------
Continuing operations
Revenue 5,014 15,420
Cost of sales (5,990) (12,374)
------------ ---------
Production royalties (773) (2,313)
Other cost of sales (5,217) (10,061)
------------ ---------
Gross (loss)/profit (976) 3,046
Sales and marketing expenses - (39)
Administrative expenses (3,164) (6,834)
Other gains/(losses) 1,135 (1,150)
Share of profit of associate 259 531
Operating loss (2,746) (4,446)
Finance costs (1,082) (124)
----------------------------------- ---- ------------ ---------
Loss before tax (3,828) (4,570)
Tax 531 69
----------------------------------- ---- ------------ ---------
Loss for the period - attributable
to shareholders of the parent (3,297) (4,501)
----------------------------------- ---- ------------ ---------
Cents Cents
----------------------------------- ---- ------------ ---------
Loss per share - basic & diluted 5 (2.28) (4.11)
----------------------------------- ---- ------------ ---------
Condensed Consolidated Statement of Comprehensive Income
For the six-month period ended 30 June 2018 30 June 2017
Unaudited Unaudited
$000 $000
--------------------------------------- ------------ ------------
Loss for the period (3,297) (4,501)
Exchange differences on translation
of foreign operations 40 (25)
---------------------------------------- ------------ ------------
Total comprehensive loss for the
period - attributable to shareholders
of the parent (3,257) (4,526)
---------------------------------------- ------------ ------------
Condensed Consolidated Statement of Financial Position
As at 30 June 2018 31 December 2017
Unaudited Audited
Notes $000 $000
------------------------------ ----- ------------ ----------------
Assets:
Non-current assets
Intangible assets 6 56,763 54,223
Property, plant and equipment 7 68,686 70,911
Investment in associate 5,445 5,429
130,894 130,563
------------------------------ ----- ------------ ----------------
Current assets
Inventories 26 24
Trade and other receivables 8 10,479 13,545
Cash and cash equivalents 12 3,231 11,476
Deferred tax assets 916 916
------------------------------ ----- ------------ ----------------
14,652 25,961
------------------------------ ----- ------------ ----------------
Total assets 145,546 156,524
------------------------------ ----- ------------ ----------------
Liabilities:
Current liabilities
Trade and other payables 9 9,628 14,330
Provisions 10 1,855 1,855
Borrowings 11,12 2,224 3,174
------------------------------ ----- ------------ ----------------
13,707 19,359
------------------------------ ----- ------------ ----------------
Net current assets 945 6,602
------------------------------ ----- ------------ ----------------
Non-current liabilities
Borrowings 11,12 19,611 21,363
Deferred tax liabilities 2,259 2,846
Provisions 10 3,287 3,106
25,157 27,315
------------------------------ ----- ------------ ----------------
Net assets 106,682 109,850
------------------------------ ----- ------------ ----------------
Equity:
Called-up share capital 1,095 1,095
Share premium 24,218 24,218
ESOP Trust reserve (4) (4)
Translation reserve (17,672) (17,712)
Other reserve 316 248
Retained earnings 98,729 102,005
------------------------------ ----- ------------ ----------------
Total equity 106,682 109,850
------------------------------ ----- ------------ ----------------
Condensed Consolidated Statement of Changes in Equity
Retained
Share Share ESOP Trust Translation Other earnings/
capital premium reserve reserve reserves (deficit) Total
$000 $000 $000 $000 $000 $000 $000
------------------------------ ------- ------- ---------- ----------- -------- --------- --------
For the six months ended
30 June 2017 (Unaudited)
At 31 December 2016 34,251 230,436 (843) (17,685) 66 (151,258) 94,967
Shares issued 2 199 - - - - 201
Shares granted to ESOP
members - - 2 - - 251 253
Effects of movement in
foreign exchange - - (32) - - - (32)
Transfer to retained earnings - - - - (56) 56 -
Total comprehensive loss
for the period - - - (25) - (4,501) (4,526)
------------------------------ ------- ------- ---------- ----------- -------- --------- --------
At 30 June 2017 34,253 230,635 (873) (17,710) 10 (155,452) 90,863
------------------------------ ------- ------- ---------- ----------- -------- --------- --------
For the six months ended
30 June 2018 (Unaudited)
At 31 December 2017 1,095 24,218 (4) (17,712) 248 102,005 109,850
Share-based payments - - - - 89 - 89
Warrants expired - - - - (21) 21 -
Total comprehensive loss
for the period - - - 40 - (3,297) (3,257)
------------------------------ ------- ------- ---------- ----------- -------- --------- --------
At 30 June 2018 1,095 24,218 (4) (17,672) 316 98,729 106,682
------------------------------ ------- ------- ---------- ----------- -------- --------- --------
Condensed Consolidated Cash Flow Statement
For the six-month period ended 30 June 2018 30 June 2017
Unaudited Unaudited
$000 $000
--------------------------------------------------- ------------ ------------
Cash flows from operating activities
Loss for the period (3,297) (4,501)
Adjustments for non-cash and other items:
Tax (531) (69)
Share of profit in associate (259) (531)
Finance costs 1,082 124
Depreciation and amortisation 2,773 8,866
Other (gains)/losses (1,135) 1,206
Share-based payments 89 453
--------------------------------------------------- ------------ ------------
(1,278) 5,548
Movements in working capital
Decrease/(increase) in trade and other receivables 2,898 (13,111)
Increase in inventories (2) (25)
Decrease in trade and other payables and
provisions (4,953) (2,824)
--------------------------------------------------- ------------ ------------
Net movements in working capital (2,057) (15,960)
Net cash used in operating activities (3,335) (10,412)
Cash flows from investing activities
Payments for intangible assets (1,893) (14,844)
Payments for property, plant and equipment (529) (346)
Proceeds from disposal of property, plant
and equipment 16 -
Loan repayments received - 50
Dividends received from associate 243 531
--------------------------------------------------- ------------ ------------
Net cash used in investing activities (2,163) (14,609)
Cash flows from financing activities
Proceeds from borrowings - 22,222
Repayments of borrowings (2,233) (4,213)
Finance costs paid (846) (639)
--------------------------------------------------- ------------ ------------
Net cash (used)/generated from financing
activities (3,079) 17,370
--------------------------------------------------- ------------ ------------
Net decrease in cash and cash equivalents (8,577) (7,651)
--------------------------------------------------- ------------ ------------
Cash and cash equivalents - beginning of
period 11,476 16,261
Effects of exchange rate changes on the
balance of cash held in foreign currencies 332 20
--------------------------------------------------- ------------ ------------
Cash and cash equivalents - end of period 3,231 8,630
--------------------------------------------------- ------------ ------------
Notes to the Unaudited Interim Condensed Consolidated Financial
Statements
1. GENERAL INFORMATION AND BASIS OF PREPARATION
The unaudited interim condensed consolidated financial
statements of Victoria Oil & Gas Plc and its subsidiaries ("the
Group") for the six months ended 30 June 2018 have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and in accordance with International Accounting Standard
("IAS") 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's consolidated financial statements for the twelve-month
period ended 31 December 2017. The Group's presentation currency is
the US Dollar and amounts are rounded to the nearest thousand
dollars ($000) except as otherwise indicated.
The unaudited interim condensed consolidated financial
statements have been prepared on a going concern basis, under the
historical cost convention, except for the revaluation of certain
financial instruments.
2. ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2017 except as
set out below.
New amended standards adopted by the group
IFRS 15 Revenue from Contracts with Customers became applicable
in the current reporting period. The adoption of this standard did
not require any restatement of prior year comparatives as the
application of these standards did not have a material impact on
the financial report.
Disclosure of disaggregated revenue information consistent with
the requirement included in IFRS 15 is presented in note 4.
Critical Accounting Judgements
In the process of applying the Group's accounting policies,
management has made the following judgements that have the most
significant effect on the amounts recognised in the financial
statements.
Going concern
The assessment of the Group's ability to execute its strategy by
funding future working capital requirements involves judgement.
The Directors monitor future cash requirements and are confident
that the Group is able to continue as a going concern and no
adjustment is required to the financial statements. Further
information regarding going concern is outlined in Note 3.
As part of the assessment, management reviewed budgets and cash
flow forecasts and compared the requirements to available
resources, existing funding facilities and potential sources of
additional funds.
Unit-of-production depreciation method
The Group's policy is to use the unit-of-production method of
depreciation based on proved developed reserves for depreciation
and amortisation of its oil and gas assets. These calculations
require the use of estimates and assumptions and significant
judgement is required in assessing the amount of estimated
reserves. Estimates of oil and gas reserves are inherently
imprecise, require the application of judgement and are subject to
future revision. Changes in proved developed reserves will
prospectively affect the unit-of-production depreciation charges to
the Income Statement. Proved developed reserves used in the
calculation of unit-of-production depreciation were 21.1 billion
cubic feet ("bcf") (prior period: 24.6bcf) in the Logbaba Field.
This applies only to well La-105 which was the only well used in
production during the period. Well La-106 was transferred from
intangible assets to oil and gas assets at the end of the period
and the unit-of production depreciation will be revised to the
updated reserves published by the Group on 4 June 2018. The
unit-of-production depreciation charged to the Income Statement,
which was calculated, based on these reserves, was $2.3 million
(prior period: $8.5 million). If the reserves were to vary by plus
10%, the unit-of-production depreciation for the reporting period
would have decreased by $0.3 million and if they were to vary by
minus 10% the unit-of-production depreciation for the reporting
period would have increased by $0.3 million.
Accounting for joint operations
During the prior period, Société Nationale des Hydrocarbures
("SNH") exercised its right to participate in the Logbaba Project,
namely 5% of the Upstream operations of the Logbaba Project. This
participation is retrospective and therefore they are deemed to
have participated since first production. The net share of this
venture that has been included in these financial statements is 57%
of the upstream operations and 60% of the downstream
operations.
The unaudited interim condensed consolidated financial
statements are prepared on the basis that downstream operations
charge cost plus 15% to the upstream operations as a fee for
marketing the gas. Shared services have been allocated between
upstream and downstream operations based on the activity during the
period.
Deferred tax assets
The assessment of availability of future taxable profits
involves judgement. A deferred tax asset is recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences and the carry
forward of unused tax credits and unused tax losses can be
utilised. A deferred tax asset of $0.9 million has been recognised
in the reporting period (prior period: $0.9 million) in relation to
the Group's operations in Cameroon as it is considered likely that
the operations will generate future taxable profit against which
the unused tax losses will be able to be applied. No deferred tax
asset has been recognised in the reporting period in relation to
the Group's other operations due to the unpredictability of future
profit streams in the companies that have unutilised tax
losses.
Key Sources of Estimation Uncertainty
The preparation of unaudited interim condensed consolidated
financial statements requires management to make estimates and
assumptions that affect the amounts reported for assets and
liabilities as at the Balance Sheet date and the amounts reported
for revenues and expenses during the period. The nature of
estimation means that actual outcomes could differ from those
estimates. The key sources of estimation uncertainty that have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities within the next financial period
are consistent with those disclosed in the Group's consolidated
financial statements for the year ended 31 December 2017, namely
the potential effects of the risks associated with operating in
Cameroon, Russia and Kazakhstan; the uncertainties surrounding the
determination of various provisions; and considerations regarding
the impairment of the Group's assets.
3. GOING CONCERN
The Directors are required to give careful consideration to the
appropriateness of the going concern basis in the preparation of
the unaudited interim condensed consolidated financial
statements.
Revenue in the reporting period was $5.0 million (prior period:
$15.4 million). The decrease relates to the impact of ENEO Cameroon
S.A. ("ENEO") ceasing to consume gas effective 1 January 2018
(discussed below). Underlying EBITDA for the period of $0.03
million (prior period: $4.4 million) reflecting the reduced
revenues. The Group consumed cash of $8.6 million during the period
(prior period: $7.7 million).
These conditions indicate the existence of a material
uncertainty. In their consideration of the appropriateness of
applying the going concern assumption the Directors have considered
the following factors, estimates and assumptions which are
considered to be relevant. Future outcomes may differ from these
estimates.
Grid power gas sales agreement
The ENEO contract extension expired on 31 December 2017 and
consumption of gas has not been renewed to date.
The Government of Cameroon, ENEO, Altaaqa Global ("Altaaqa"),
the genset providers to ENEO which consume GDC's gas, and GDC
continue to seek a resolution to the suspension of electricity
generation at the ENEO owned Logbaba and Bassa power stations in
Douala. The shortfalls in power supply in Cameroon continue, with
hydroelectric schemes not meeting the current demand. As a
consequence, GDC remains confident that a solution will be found as
all parties are actively engaged in the various steps involved that
will result in ENEO resuming the consumption of Logbaba gas.
The ongoing power shortage in Cameroon continues to provide
opportunities in the grid power sector.
The GDC sales team is also aggressively seeking to expand gas
sales in Cameroon in the thermal, industrial power generation and
CNG sectors. Industrial power generation, in particular, offers
significant opportunity as customers look for energy security. With
two gensets in commissioning and a number of further prospective
customers, GDC believes this is a sector which could generate
significant cash for the Group. For customers beyond the reach of
the pipeline network, GDC is exploring CNG solutions, and the Group
announced on 26 June 2018 that GDC had entered a partnership with
Naturelgaz Sanayi ve Ticaret A.S. (Europe's largest CNG supplier
and distributor) to further this development.
Debt
The Group ended the period with cash and cash equivalents of
$3.2 million (prior period: $8.6 million) and in a net debt
position of $18.6 million (prior period: $25.2 million). The Group
had borrowings of $21.8 million (prior period: $33.8 million). The
Group has no available headroom on any of its current credit
facilities.
The Company has successfully achieved a restructuring of the
BGFI facility (see note 11). The terms of the restructuring allow
the Company to extend the tenor of the existing principal balance
for a period of five years from July 2018 to June 2023. The
restructured agreement contains a principal repayment holiday for
the first twelve months from July 2018 to June 2019. All other
terms of the loan agreement remain unaffected, with the exception
of additional pledges of security to replace the existing pledge of
ENEO receivables, and recourse to related gas production volumes in
the event of default.
The potential for industrial power generation for individual
customers is being actively pursued. The Company has made
application to several credit providers for funding to be made
available for asset backed finance arrangements with qualifying
customers who have signed suitable Gas Sales Agreements (GSAs) with
take-or-pay type arrangements to secure the funding. The Directors
conclude that this is an acceptable form of financing to generate
additional revenues from new and existing customer bases.
Drilling programme
The successful completion of wells La-107 and La-108 in December
2017 significantly reduces the sustainability risk under which the
Group had previously operated owing to the Douala operations being
dependent on a single producing well (La-105). In addition, the
increase in reserves resulting from La-107, and La-108, once the
perforating gun is removed, and that the Upper Logbaba Sands have
been perforated and tested, have enabled the Group to enter
negotiations for a number of long-term, high volume gas supply
agreements with electricity producers and other industries within
Douala.
The final cost of the drilling programme, excluding capitalised
interest costs, was $87.0 million (gross). At 30 June 2018, the
outstanding attributable accounts payable and accruals relating to
the drilling programme was $5.6 million (net), with $1.8 million
(net) settled shortly after the reporting period via an issuance of
new ordinary shares in the Company. The Company has negotiated
extended payment terms with the remaining suppliers.
Aside from minor costs spent on the wells and flowlines during
2018, there are no further significant capital costs anticipated or
committed on wells La-107 and La-108 during 2018. Should the
Company sign GSAs requiring gas in volumes exceeding the production
capabilities of La-105 and La-107, then remediation work on La-108
would be considered.
Cost reductions, limited capex
With the reduction of revenue in 2018 resulting from grid power
consumption having ceased, the Company has implemented cost
reduction measures, including headcount reductions and the removal
of non-essential capital spend. Operating and capital costs are
being monitored very closely in order to maximize cash
preservation.
New funding potential
The Company has lodged an insurance claim with the Company's
insurers to cover the substantial and material costs associated
with a well control incident on well La-108 and the consequential
schedule and cost overruns. The gross amount of the claim submitted
is $24.5 million. As is common in these situations, the outcome of
our claim is not certain. The claim has been disclosed as a
contingent asset in Note 15.
The Company raised $23.7 million in net proceeds via an equity
placement in November 2017. The Directors are exploring various
alternatives to raising additional funds for ongoing operations of
the business. The Directors believe that the Company will be able
to raise sufficient capital to continue in operation.
Conclusion
The Directors have reviewed operating and cash forecasts in
respect of the operating activities and planned work programmes of
the Group's assets. In the case that either the consumption of gas
pursuant to a grid power GSA does not resume or a settlement of the
insurance claim is not completed, additional finance will be
required and, in this event, the Directors believe that they will
be able to access additional financing in order to continue to meet
obligations and develop operations for a period of at least twelve
months from the date of approval of these unaudited interim
condensed consolidated financial statements.
On this basis the Directors have concluded that it is
appropriate to prepare the financial statements on a going concern
basis. Accordingly, these financial statements do not include any
adjustments to the carrying amount and classification of assets and
liabilities that may arise if the Group was unable to continue as a
going concern.
4. SEGMENTAL ANALYSIS
IFRS 8 Operating Segments requires operating segments to be
identified on the basis of internal reports about the Group that
are regularly reviewed by the chief operating decision maker. The
Board is deemed the chief operating decision maker within the
Group. The Group has one class of business: oil and gas
exploration, development and production and the sale of
hydrocarbons and related activities. This is analysed on a location
basis. Only the Cameroon segment is generating revenue, which is
from the sale of hydrocarbons. For the purposes of segmental
reporting, the Russia and Kazakhstan segments have been combined as
the assets of these segments have both been fully impaired. The
accounting policies of the reportable segments are the same as the
Group's accounting policies.
The following tables present revenue, loss and certain asset and
liability information regarding the Group's business segments:
Russia and
Cameroon Kazakhstan Corporate Total
Six months to 30 June 2018 (Unaudited) $000 $000 $000 $000
--------------------------------------- -------- ---------- --------- --------
Revenue
Gas Sales - thermal power 4,607 - - 4,607
Gas Sales - industrial power 155 - - 155
Gas sales - grid power - - - -
--------------------------------------- -------- ---------- --------- --------
Gas Revenue 4,762 - - 4,762
Condensate sales 252 - - 252
--------------------------------------- -------- ---------- --------- --------
Total Revenue 5,014 - - 5,014
--------------------------------------- -------- ---------- --------- --------
Segment result (1,555) (238) (953) (2,746)
Finance costs (991) (21) (70) (1,082)
--------------------------------------- -------- ---------- --------- --------
Loss before tax (2,546) (259) (1,023) (3,828)
Tax (55) - 586 531
--------------------------------------- -------- ---------- --------- --------
Loss for the period (2,601) (259) (437) (3,297)
--------------------------------------- -------- ---------- --------- --------
Total assets 137,934 80 7,532 145,546
Total liabilities (36,366) (488) (2,010) (38,864)
Other segment information
Capital expenditure:
Intangible assets 2,580 - - 2,580
Property, plant and equipment 529 - - 529
Depreciation and amortisation 2,743 - 30 2,773
Russia and
Cameroon Kazakhstan Corporate Total
Six months to 30 June 2017 (Unaudited) $000 $000 $000 $000
--------------------------------------- -------- ---------- --------- --------
Revenue
Gas Sales - thermal power 5,388 - - 5,388
Gas Sales - industrial power 173 - - 173
Gas sales - grid power 9,357 - - 9,357
--------------------------------------- -------- ---------- --------- --------
Gas Revenue 14,918 - - 14,918
Condensate sales 502 - - 502
--------------------------------------- -------- ---------- --------- --------
Total Revenue 15,420 - - 15,420
--------------------------------------- -------- ---------- --------- --------
Segment result (2,222) (318) (1,906) (4,446)
Finance costs (49) (11) (64) (124)
--------------------------------------- -------- ---------- --------- --------
Loss before taxation (2,271) (329) (1,970) (4,570)
Income tax expense 69 - -- 69
--------------------------------------- -------- ---------- --------- --------
Loss for the period (2,202) (329) (1,970) (4,501)
--------------------------------------- -------- ---------- --------- --------
Total assets 129,068 78 12,858 142,004
Total liabilities (47,737) (547) (2,855) (51,139)
Other segment information
Capital expenditure:
Intangible assets 15,381 - - 15,381
Property, plant and equipment 340 - 6 346
Depreciation and amortisation 8,855 - 11 8,866
5. LOSS PER SHARE
Basic loss per share is computed by dividing the loss after tax
for the period available to ordinary shareholders by the weighted
average number of ordinary shares in issue and ranking for dividend
during the period, excluding treasury shares held by the ESOP
Trust. Diluted loss per share is computed by dividing the profit or
loss after tax for the period by the weighted average number of
ordinary shares in issue, each adjusted for the effect of all
dilutive potential ordinary shares that were outstanding during the
period. If potential ordinary shares are anti-dilutive, they are
excluded from the diluted loss per share calculation.
The following table sets forth the computation for basic and
diluted loss per share.
For the six-month period ended 30 June 2018 30 June 2017
Unaudited Unaudited
$000 $000
------------------------------------------- ------------ ------------
Loss for the period (3,297) (4,501)
------------------------------------------- ------------ ------------
Number Number
------------------------------------------- ------------ ------------
Number of shares
Weighted number of ordinary shares - basic
and diluted 144,497,228 109,596,483
------------------------------------------- ------------ ------------
Cents Cents
------------------------------------------- ------------ ------------
Loss per share -basic and diluted (2.28) (4.11)
------------------------------------------- ------------ ------------
6. INTANGIBLE ASSETS
Exploration and
evaluation assets Software Total
Six months to 30 June 2018
(Unaudited) $000 $000 $000
------------------------------- ----------------- -------- -------
Cost
Opening balance 129,412 371 129,783
Additions 2,563 17 2,580
Effects of movement in foreign
exchange (1,403) - (1,403)
------------------------------- ----------------- -------- -------
Closing balance 130,572 388 130,960
------------------------------- ----------------- -------- -------
Accumulated amortisation and
impairment
Opening balance 75,445 115 75,560
Charge for the period - 40 40
Effects of movement in foreign
exchange (1,403) - (1,403)
------------------------------- ----------------- -------- -------
Closing balance 74,042 155 74,197
------------------------------- ----------------- -------- -------
Carrying amount 30 June 2018 56,530 233 56,763
------------------------------- ----------------- -------- -------
Exploration and
evaluation assets Software Total
Twelve months to 31 December
2017 $000 $000 $000
------------------------------- ----------------- -------- -------
Cost
Opening balance 91,413 323 91,736
Additions 37,468 57 37,525
Disposal (859) (9) (868)
Effects of movement in foreign
exchange 1,390 - 1,390
------------------------------- ----------------- -------- -------
Closing balance 129,412 371 129,783
------------------------------- ----------------- -------- -------
Accumulated amortisation and
impairment
Opening balance 74,055 43 74,098
Charge for the period - 72 72
Effects of movement in foreign
exchange 1,390 - 1,390
------------------------------- ----------------- -------- -------
Closing balance 75,445 115 75,560
------------------------------- ----------------- -------- -------
Carrying amount 31 December
2017 53,967 256 54,223
------------------------------- ----------------- -------- -------
The remaining exploration and evaluation assets relate to the
Logbaba drilling programme. During the period Well La-107 was
transferred to oil and gas assets.
Recoverability of exploration and evaluation assets is dependent
on the successful development of reserves, which is subject to a
number of uncertainties including the ability of the Group to
access financial resources to develop the projects and bring the
assets to economic maturity and profitability.
7. PROPERTY, PLANT AND EQUIPMENT
Plant and Oil and gas Assets under
equipment interest construction Total
Six months to 30 June 2018 (Unaudited) $000 $000 $000 $000
--------------------------------------- --------- ----------- ------------ -------
Cost
Opening balance 40,829 72,213 6,589 119,631
Additions 511 - 18 529
Disposals (58) - - (58)
--------------------------------------- --------- ----------- ------------ -------
Closing balance 41,282 72,213 6,607 120,102
--------------------------------------- --------- ----------- ------------ -------
Depreciation
Opening balance 5,426 43,294 - 48,720
Disposals (37) - - (37)
Charge for the period 418 2,315 - 2,733
--------------------------------------- --------- ----------- ------------ -------
Closing balance 5,807 45,609 - 51,416
--------------------------------------- --------- ----------- ------------ -------
Carrying amount 30 June 2018 35,475 26,604 6,607 68,686
--------------------------------------- --------- ----------- ------------ -------
Plant and Oil and gas Assets under
equipment interest construction Total
Twelve months to 31 December
2017 $000 $000 $000 $000
----------------------------- --------- ----------- ------------ --------
Cost
Opening balance 41,180 72,725 1,796 115,701
Additions 84 67 4,883 5,034
Disposals (435) (579) (90) (1,104)
Closing balance 40,829 72,213 6,589 119,631
----------------------------- --------- ----------- ------------ --------
Depreciation
Opening balance 4,237 30,030 - 34,267
Disposals (56) (170) - (226)
Charge for the period 1,245 13,434 - 14,679
Closing balance 5,426 43,294 - 48,720
----------------------------- --------- ----------- ------------ --------
Carrying amount 31 December
2017 35,403 28,919 6,589 70,911
----------------------------- --------- ----------- ------------ --------
Production wells, which are included in oil and gas assets, are
depreciated on a unit-of-production basis.
Assets under construction comprise mainly of expenditure on the
uncompleted sections of the pipeline network and pipeline purchased
in advance of network development in Douala, Cameroon.
The realisation of property, plant and equipment of $68.7
million is dependent on the continued successful development of
economic reserves, which is subject to a number of uncertainties
including the Group's ability to access financial resources to
continue to successfully generate revenue from the assets.
8. TRADE AND OTHER RECEIVABLES
As at 30 June 2018 31 December
2017
Unaudited Audited
$000 $000
------------------ ------------ -----------
Trade receivables 4,303 6,197
Other receivables 6,176 7,348
------------------ ------------ -----------
10,479 13,545
------------------ ------------ -----------
Other receivables includes amounts due from joint ventures
partners (RSM and SNH) of $3.7 million (31 December 2017: $5.7
million). This relates to their funding obligation for their share
of their combined 43% participating interest in the Logbaba
Project.
The carrying value of trade and other receivables approximates
to fair value.
9. TRADE AND OTHER PAYABLES
As at 30 June 2018 31 December
2017
Unaudited Audited
$000 $000
---------------------------- ------------ -----------
Trade payables and accruals 6,491 11,114
Other payables 3,137 3,216
---------------------------- ------------ -----------
9,628 14,330
---------------------------- ------------ -----------
The carrying value of trade and other payables approximates to
fair value.
10. PROVISIONS
As at 30 June 2018 31 December 2017
Unaudited Audited
$000 $000
--------------------------- ------------ ----------------
Decommissioning provisions 2,383 2,318
Production bonus provision 778 788
Provision for litigation 1,855 1,855
Other provisions 126 -
--------------------------- ------------ ----------------
5,142 4,961
--------------------------- ------------ ----------------
The provision for litigation includes a provision of $1.5
million in relation to the land claim relating to the Logbaba
Project. This provision is disclosed as a current liability.
11. BORROWINGS
As at 30 June 2018 31 December 2017
Unaudited Audited
$000 $000
--------------------------------------- ------------------------------------- ----------------
Loans - repayable in one year 2,224 3,174
Loans - repayable in two to five years 19,611 21,363
21,835 24,537
--------------------------------------- ------------------------------------- ----------------
The outstanding balance on the BGFI loan facility at 30 June
2018 was $20.4m (31 December 2017: $22.8 million). The loan terms
were restructured in June 2018. The restructured loan has a term of
five years commencing July 2018, an unchanged interest rate of
7.15%, and an initial 12-month interest only period. The loan is
secured by a pledge over the revenue stream of certain customers, a
pledge over attributable gas production volumes equivalent to the
monthly installments and the ceding of GDC's rights to insurance
claim for the tenor of the loan.
12. NET DEBT
As at 30 June 2018 31 December 2017
Unaudited Audited
$000 $000
------------------------------------ ------------ ----------------
Cash and cash equivalents 3,231 11,476
Borrowings: Current liabilities (2,224) (3,174)
Borrowings: Non-current liabilities (19,611) (21,363)
------------------------------------ ------------ ----------------
(18,604) (13,061)
------------------------------------ ------------ ----------------
13. RELATED PARTY TRANSACTIONS
Cameroon Holdings Limited ("CHL") is held jointly by Victoria
Oil & Gas Plc (35%) and Logbaba Projects Limited (65%). HJ
Resources Limited ("HJR") has a 67% interest in Logbaba Projects
Limited. Kevin Foo (Executive Chairman) and certain members of his
family are the potential beneficiaries of a discretionary trust
that owns HJR. CHL is entitled to a production royalty based on GDC
revenue. The details of the royalty are set out in the Group's
Report and Accounts to 31 December 2017. During the period,
royalties of $0.8 million accrued to CHL by GDC. Dividends of $0.3
million were paid by CHL to Victoria Oil & Gas Plc and are
reflected as 'dividends received from associate' in the cash flow
statement.
No further related party transactions have taken place during
the six-month period ended 30 June 2018 which have materially
affected the financial position or the performance of the Group
during that period. The nature and amounts of related party
transactions in the first six months of the current financial year
are consistent with those reported in the Group's Report and
Accounts to 31 December 2017.
14. COMMITMENTS
Subject to the Groups participation in the Matanda Project being
formalized by a Presidential decree in Cameroon, GDC would have
work programme commitments for its 75% interest in the project
amounting to $11.25 million, to be spent within two years of the
date of the Presidential decree.
15. CONTINGENT ASSETS AND LIABILITIES
Contingent Liabilities
The Groups royalty obligations, and contingent obligations, are
unchanged from those disclosed in the Group's Annual Report &
Accounts to 31 December 2017.
Our JV partners in the Logbaba project, RSM and SNH, are both
conducting audits on costs relating to years prior to the balance
sheet date. At the date of signing these financial statements the
outcome of these audits is unknown, however any findings from the
audits could have an impact on the results.
Contingent Asset
During the drilling of well La-108 on Logbaba there was a well
control event which was the main cause of the delay and cost
overruns. An insurance claim has been lodged with the Company's
insurers to cover the substantial and material costs associated
with this event and the consequential schedule and cost overrun. As
is normal in these situations, the outcome of our claim is not
certain. The gross amount of the claim submitted is $24.5
million.
No asset has been recognised in the unaudited interim condensed
consolidated Statement of Financial Position as the amounts and
timing of the claim outcome are uncertain.
16. POST BALANCE SHEET EVENTS
On 10 July 2018, the Company issued 4,814,815 Ordinary shares to
a supplier in lieu of a cash payment.
17. SEASONALITY
Revenues and operating profits for all customers are evenly
spread between the two half years.
18. APPROVAL OF INTERIM FINANCIAL STATEMENTS
The unaudited interim condensed consolidated financial
statements were approved by the Board of Directors on 28 September
2018.
Copies of the Interim report are available by download from the
Company's website at: www.victoriaoilandgas.com
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 LIFSAASITFIT
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