Final Results
Aminex PLC
20 March 2007
20 March 2007
AMINEX PLC
("Aminex" or "the Company")
Preliminary results for the year ended 31 December 2006
Aminex, the oil and gas company listed on the London and Irish Stock Exchanges,
today announces its preliminary results for the year ended 31 December 2006.
Highlights
• Net loss reduced to US$2.86 million (2005: loss US$4.98 million)
• US production ahead of previous year
• Active drilling programme due to commence shortly in Tanzania, Egypt
and USA
• Up to date engineering evaluation shows major increase in 2P value
of US properties
• Two farm-out agreements concluded on Nyuni licence, Tanzania
• Slow but steady progress in North Korea
• Seismic completed at Nyuni and further seismic planned for Ruvuma
licence this year
• First year programme completed in Madagascar and new seismic planned
for 2007
Brian Hall, Chief Executive of Aminex, said:
"During the year, we consolidated our exploration programme in Tanzania and
Madagascar and made good progress in our other areas of operation. We are now
poised to launch the most active drilling programme in Aminex's history. We
have managed the programme in such a way that shareholders stand to benefit from
exploration upside, without being unduly exposed to the outcome of any single
well."
Enquiries:
Aminex PLC +44 (0) 20 7291 3100
Brian Hall - Chief Executive
Simon Butterfield - Finance Director
Pelham Public Relations +44 (0) 20 7743 6679
Archie Berens
OVERVIEW
During 2006 the Aminex Group consolidated its exploration programme in Tanzania
and Madagascar, finalised its exploration licence in Egypt, continued to make
progress in North Korea under exceptionally difficult political circumstances,
further developed its US oil and gas operations and positioned itself for major
drilling initiatives over a broad front in 2007.
Drilling is planned during the current year at the following locations:
• Nyuni (Tanzania)
• West esh el Mellahah (Egypt);
• Alta Loma and South Weslaco (Texas).
Depending on progress, drilling may also commence in the Ruvuma Basin (Tanzania)
towards the end of 2007, although this now seems more likely to start in 2008.
Progress in finalising a Production Sharing Agreement in Kenya has been slow,
but we have recently been assured by the Kenyan Energy Minister that we may
expect a satisfactory conclusion shortly.
A new reserves report for our US properties shows greatly enhanced value,
following development drilling and a period of stronger commodity prices,
underpinning our current market capitalisation.
Two farm outs have now been successfully concluded on the Tanzanian Nyuni
licence while our farm-in partner in the Ruvuma area, Hardman Resources Ltd. ("
Hardman"), has been acquired by Tullow Oil PLC. The takeover of Hardman slowed
down the work programme over Ruvuma in late 2006, but its conclusion leaves us
in a 50-50 partnership with Tullow, one of the largest and most successful
independent oil companies operating on the African continent today.
FINANCIAL REVIEW
Aminex's revenue during the current year comprises sales of oil and gas in the
USA and sales of goods and services by its oilfield services and supply company.
Total revenue of US$5.0 million is 67% higher than 2005 revenue of US$3.0
million, mainly as a result of increased gas sales in the USA and sales of
oilfield equipment from the UK. Oil and gas revenue comprises approximately 50%
of total revenue in 2006 compared with 61% in 2005.
Oil production at 30,000 barrels is 10% up on 2005 whereas gas production has
more than doubled from 59mmcf in 2005 to 129mmcf in the current year. The
average oil price achieved during 2006 was US$58.35 per barrel, an increase of
US$8 per barrel over the 2005 average. Most of the oil sold was from the Group's
Somerset field, the production from which is classified as South Texas Sour that
is priced at a discount of up to US$4 per barrel against the standard West Texas
Intermediate (WTI) pricing. The average gas price obtained in 2006 was US$5.91
per mcf compared with an average price of US$7.81 in 2005. The increase in gas
production in the current year is due to two new wells which came on stream at
the South Weslaco field during the last two weeks of 2005.
Cost of sales at US$3.4 million is US$1.4 million higher than the previous year
with much of the increase relating to the cost of oilfield services sales.
Nevertheless, average margins of gross profit on oilfield equipment sales during
2006 amounted to approximately 20% (2005: 17%). The depletion and
decommissioning charge of US$0.39 million is US$0.55 million lower than the 2005
charge. Included in the 2005 charge was the cost of decommissioning the Sabine
Lake field in the USA, whereas no fields have been decommissioned during 2006.
After taking these charges into account, the resulting gross profit for the
Group in 2006 amounted to US$1.23 million, an increase of US$1.21 million over
the 2005 gross profit.
As a consequence of continuing cost reductions, mainly in the USA, Group
administrative expenses at US$3.97 million are approximately 20% lower than the
2005 charge, which included US$583,000 relating to the settlement and associated
legal costs of litigation. The operating loss for the year was US$2.79 million,
a decrease of US$2.14 million from the 2005 operating loss of US$4.93 million.
After charging net financing costs of US$75,000 (2005: US$49,000), the net loss
for the twelve months ended 31 December 2006 has been sharply reduced to US$2.86
million (2005: loss US$4.98 million).
Balance sheet exploration and evaluation expenditures during the current period
amount to US$1.42 million and comprise mainly seismic work carried out on the
Nyuni and Ruvuma licences in Tanzania as well as a gravity survey over the Manja
Block 3108 acreage in Madagascar. Expenditures of US$1.1 million (which is
stated net of a depletion charge of US$0.39 million) on property, plant and
equipment relate to the Group's producing assets in the USA. Included in this
expenditure is the Group's participation in drilling a third well at the South
Weslaco gas field (two wells were drilled during 2005) as well as further field
rehabilitation work at the Shoats Creek field.
The cash flow statement shows net cash inflows from financing activities
amounting to US$5.44 million, primarily from an equity fundraising in June 2006.
During the year, US$52,000 was raised and US$42,000 was repaid on vehicle
equipment loans in the USA. At 31 December 2006, the Group's cash balance
amounted to US$3.65 million, offset by a minor amount of vehicle equipment debt
of US$145,000.
OPERATIONS REVIEW
Tanzania - Nyuni
We anticipate signing a contract imminently for use of the Caroil-6 rig to drill
at Nyuni this year. This rig has recently drilled Maurel & Prom's gas discovery
well at the nearby Mkuranga licence in Tanzania and will drill a development
well in the Songo Songo gas field before delivery to Aminex and partners,
anticipated for May. Aminex plans two wells at Nyuni, the first of which will
be directionally drilled from the small Kilwani island, which lies one kilometre
to the SW of Songo Songo Island. The drilling objective is a prospect known as
Songo Songo South. The second well location has yet to be finalised.
During the last three months Aminex has conducted an extremely complex "
transition zone" seismic programme over the numerous reefs and islands which
overlie the licence's leads and prospects. In 2005 a relatively simple marine
seismic survey was carried out in navigable waters and the seismic lines in the
transition zones, now tied in to the marine lines, provide a far more
comprehensive result than has previously been achieved. The Company's partners
are Bounty Oil (6%), East Africa Exploration (10%) and Key Petroleum (20%).
Discussions continue with Pan African Tanzania (a subsidiary of Orca
Exploration, formerly known as East Coast Energy) to participate in this
licence.
Tanzania - Ruvuma
Further onshore seismic is planned for Spring 2007 and preparations are well
under way, the results of which will determine drilling locations. Our initial
assessment of Ruvuma concludes that this licence area contains several sizeable
oil and gas prospects. In the Mozambique part of the Ruvuma Basin the licensing
round completed last year has brought in a number of well-known oil companies,
including ENI, Anadarko, Norsk-Hydro, Petrobras and others, which have made
material financial commitments to exploration of the basin. Exploration acreage
on the Tanzanian side of the basin is exclusively in our hands. Partners are
Aminex (50%) and Tullow (50%).
Madagascar
Aminex and its 50-50 partner Mocoh Ltd., operating through a joint company known
as Amicoh Resources Ltd., completed a gravity survey over the 10,750 square
kilometre onshore Manja concession, Block 3108, earlier in the year and have
subsequently reprocessed approximately 2,000 line kilometres of 2D seismic
acquired by previous licensees Chevron and Amoco some years ago. The first year
work programme has been completed on schedule and a new 500 kilometre 2D seismic
survey is scheduled to commence in the third quarter. Since we applied for
Manja in early 2005, onshore Madagascar has become a focus of industry interest
and Aminex is therefore pleased to have acquired an excellent licence on
favourable terms prior to a surge of exploration activity.
U.S.A.
Aminex USA, Inc., a wholly-owned subsidiary, has interests in four principal
producing locations, being Alta Loma, Shoats Creek, South Weslaco and Somerset.
A recent reserves report concluded by Oilfield Production Consultants Ltd.
attributes a 2P (proved and probable) valuation to all Aminex's properties in
the USA of US$84.5 million.
Alta Loma produces from a single gas well which was intermittently shut-in for
some time as a result of the major fire and explosion at BP's Texas City
Refinery, the sole customer for its production. However production has now
resumed at Alta Loma and the drilling of a second well is provisionally planned
for 2007. Aminex and its partners drilled a third well at South Weslaco during
the year, in addition to two gas wells drilled in 2005 which are now on
production. The third well was designed to test a deeper Lower Frio sand. So
far it has not been possible to flow gas from the deeper formation despite
repeated efforts and the well may now be plugged off at the deeper zone and
completed for production higher up the formation.
Initial well workovers have been carried out at Shoats Creek, Louisiana, and
facilities reconstructed and upgraded. The Shoats Creek field has long been
considered very promising but the surface terrain is difficult and the
underlying geology highly complex. The field lends itself to 3D seismic but
this would be a very costly undertaking for a relatively small area. Therefore
we can be very encouraged that Forest Oil is conducting extensive 3D seismic
over a large area including our properties. In consideration for allowing
Forest access to our acreage Forest will make the results of its survey
available to us. Thus, after several years of work, we shall finally have a
clearer picture of this promising field which will enable us to drill with
greater confidence.
Kenya
Aminex and partners Upstream Petroleum Services Ltd. and SomKen concluded a
seismic survey and seabed coring exercise over the near shore areas of Kenya
offshore blocks L9 and L10 in the first half of 2006 under the terms of an
informal Technical Evaluation Agreement. These areas have now been redesignated
as blocks L17 and L18. Extended negotiations have been taking place to convert
this acreage to full Production Sharing Agreement ("PSA") status. Aminex has
now been assured by the Kenyan Energy Minister that a satisfactory conclusion
will be reached in the near future.
North Korea
In North Korea (the Democratic Peoples Republic of Korea or "DPRK"), progress
has been slower than anticipated, mainly on account of a series of bureaucratic
delays and a very difficult climate for working. Aminex's area of concentration
is the East Sea where a data gathering exercise is under way. It is likely that
a new and more comprehensive agreement will be signed with the North Korean
authorities which facilitate the introduction of new industry partners and the
commencement of a major work programme, but the timing has yet to be determined.
This will facilitate accelerated operations and Aminex has been assured that
the timetable for the 2005 PSA will be extended to enable commitments to be met
in an orderly manner. Aminex considers the oil and gas potential of the DPRK to
be very high, even though operations require both patience and perseverance.
Egypt
On 17th September 2006, as announced to shareholders, a licence for Block 2 in
the onshore West Esh el Mellahah area ("WEEM") was finalised in Cairo with the
Minister of Petroleum at a formal ceremony. This marked the end of lengthy
negotiations and the beginning of a first three year work period, in which three
wells are planned commencing in summer 2007. Plans for this programme are well
advanced. The main prospects in Block 2 are already covered by 3D seismic data
which means that it will be possible to move straight into the drilling phase.
Aminex has an interest of 10% in WEEM and its share of exploration costs will be
carried through to first commercial production by partners. WEEM is in a proven
oil and gas area and close to major existing production in neighbouring WEEM
Block 1. Aminex is reviewing further exploration opportunities in Egypt.
STRATEGY & PROSPECTS
Aminex is about to embark on an ambitious drilling programme, in East Africa and
the USA. The Company has a well diversified spread of risk and a balanced
portfolio ranging from proved reserves in Texas, upcoming drilling close to
established production at Nyuni and in Egypt, two major and prospective licences
in industry "hot spots" at Ruvuma and in Madagascar and, at the far end of the
spectrum, exclusive rights to all the potentially petroleum-bearing basins of
North Korea. Recent highly encouraging political developments in North Korea
may serve Aminex's interests well, while the Company's early entry into the East
Africa region positions it strategically as a pioneer in an exciting new region.
20 March 2007
Group Income Statement
for the year ended 31 December 2006
Notes 2006 2005
US$'000 US$'000
Revenue - continuing operations 2 5,019 3,000
Cost of sales (3,401) (2,038)
Depletion, depreciation and decommissioning (386) (941)
Gross profit 1,232 21
Administrative expenses (3,974) (4,895)
Depreciation (45) (56)
Loss on operations (2,787) (4,930)
Financing income 3 165 123
Financing costs 4 (240) (172)
Loss before tax (2,862) (4,979)
Income tax expense - -
Net loss for the financial year -
continuing operations 2 (2,862) (4,979)
Basic and diluted loss per Ordinary Share
(in US cents) 5 (1.74) (3.85)
Group Statement of Recognised Income and Expense
for the year ended 31 December 2006
2006 2005
US$'000 US$'000
Currency translation differences 14 (18)
Net gain/(loss) recognised directly in equity 14 (18)
Loss for the financial year (2,862) (4,979)
Total recognised income and expense for the
year (2,848) (4,997)
Attributable to the equity holders of the
Parent Company (2,848) (4,997)
Group Balance Sheet
at 31 December 2006
2006 2005
US$'000 US$'000
Exploration and evaluation assets 6 17,065 15,649
Property, plant and equipment 9,424 8,368
Other investments 418 418
Total non current assets
26,907 24,435
Trade and other receivables 1,532 1,179
Cash and cash equivalents 3,648 3,884
Total current assets
5,180 5,063
Total assets
32,087 29,498
Liabilities
Current liabilities
Interest bearing loans and borrowings (43) (42)
Trade and other payables (1,116) (1,946)
Decommissioning provision (194) (201)
Total non current liabilities
(1,353) (2,189)
Non current liabilities
Interest bearing loans and borrowings (102) (93)
Decommissioning provision (2,183) (2,127)
Total non current liabilities
(2,285) (2,220)
Total liabilities (3,638) (4,409)
Net assets 28,449 25,089
Equity
Issued capital 7 11,916 11,057
Share premium 7 44,010 40,102
Capital conversion reserve fund 234 234
Share option reserve 729 187
Share warrant reserve 899 -
Foreign currency reserve (61) (75)
Retained earnings (29,278) (26,416)
Total equity 28,449 25,089
Group Statement of Cashflows
for the year ended 31 December 2006
2006 2005
US$'000 US$'000
Operating activities
Loss for the financial year (2,862) (4,979)
Depletion, depreciation and decommissioning 431 997
Foreign exchange gains/(losses) 20 (9)
Financing income (165) (123)
Financing costs 240 172
(Gain)/loss on sale of plant and equipment (11) 15
Equity-settled share-based payment charge 542 26
Decrease in trade and other receivables 2 4,923
Decrease in trade and other payables (398) (3,149)
Net cash absorbed by operations (2,201) (2,127)
Cost of decommissioning (165) (62)
Interest paid (12) (15)
Tax paid - -
Net cash outflows from operating activities (2,378) (2,204)
Investing activities
Acquisition of property, plant and equipment (1,986) (1,317)
Expenditure on exploration and evaluation assets (1,548) (1,429)
Acquisition of investment assets - (44)
Proceeds from sale of property, plant and equipment 45 37
Interest received 192 90
Net cash outflows from investing activities (3,297) (2,663)
Financing activities
Proceeds from the issue of share capital 5,708 8,698
Payment of transaction costs (279) (751)
Loans repaid (42) (82)
Loans received 52 119
Net cash inflows from financing activities 5,439 7,984
Net (decrease)/increase in cash and cash equivalents (236) 3,117
Cash and cash equivalents at 1 January 3,884 767
Cash and cash equivalents at 31 December 3,648 3,884
Notes to the Financial Information
for the year ended 31 December 2006
1 Statement of Accounting Polices
The financial information has been prepared in accordance with the recognition
and measurement principles of all International Financial Reporting Standards
(IFRS), including Interpretations issued by the International Accounting
Standards Board ("IASB") and its committees and endorsed or expected to be
endorsed by the European Commission.
The accounting policies used are consistent with those set out in the audited
Annual Report for the year ended 31 December 2005, which is available on the
Company's website, www.aminex-plc.com.
2 Segmental Information
The Group's primary reporting format is geographical segments, being the
America, Africa, Asia and Europe. The Group's other operations by geographical
segment do not currently represent 10% or more of the Group's revenue or assets
and have therefore not been separately disclosed. The Group's secondary
reporting format is by business segment, being (a) exploration and evaluation,
(b) producing oil and gas properties and (c) the provision of oilfield goods and
services.
The Group's revenues and profits arise from oil and gas production in the USA
and the provision of oilfield equipment and services in Europe.
Segment results, assets and liabilities include items directly attributable to
each segment as well as items that can be allocated on a reasonable basis.
Inter-segment revenue is not material and has therefore not been disclosed
separately below. Net assets before borrowings have been adjusted to eliminate
the impact of intercompany financing.
Segment capital expenditure is the total amount of expenditure incurred during
the period to acquire segment assets that are expected to be used for more than
one period.
Segmental revenue
Continuing operations
Producing Provision of Total
Oil and gas Oilfield
properties goods of
and services
2006 2005 2006 2005 2006 2005
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Country of destination
America 2,512 1,833 159 122 2,671 1,955
Africa - - 268 108 268 108
Asia - - 509 557 509 557
Europe - - 1,571 380 1,571 380
Revenue 2,512 1,833 2,507 1,167 5,019 3,000
No revenues arose from exploration activities.
2 Segmental Information (continued)
2006 2005
US$'000 US$'000
Segment net profit/(loss) for the year
US producing assets 144 (1,454)
Exploration assets (419) (564)
Oilfield services and supplies assets 169 (79)
Group costs (2,756) (2,882)
Total Group net loss for the year (2,862) (4,979)
Segment assets
US producing assets 9,445 8,652
Exploration assets 17,478 16,082
Oilfield services and supplies assets 289 299
Group assets 4,875 4,465
Total assets 32,087 29,498
Segment liabilities
US producing assets (2,979) (3,627)
Exploration assets (84) (38)
Oilfield services and supplies (163) (305)
Group activities (412) (439)
Total liabilities (3,638) (4,409)
Capital expenditure
US producing assets 1,295 1,722
Exploration assets 1,416 1,326
Group assets 228 41
Total capital expenditure 2,939 3,089
US depletion and decommissioning charge 386 941
Depreciation - Group assets 45 56
3 Financing income
2006 2005
US$'000 US$'000
Deposit interest income 165 123
4 Financing costs
2006 2005
US$'000 US$'000
Bank loans and overdraft interest 1 11
Other finance charges 11 4
Other finance costs - unwinding of discount rate on decommissioning
provision 228 157
240 172
5 Loss per Ordinary Share
The basic net loss per Ordinary Share is calculated using a numerator of the net
loss for the financial year and a denominator of the weighted average number of
Ordinary Shares in issue for the financial year. The diluted net loss per
Ordinary Share is calculated using a numerator of the net loss for the financial
year and a denominator of the weighted average number of Ordinary Shares
outstanding and adjusting for the effect of all potentially dilutive shares,
including share options, assuming that they had been converted.
The calculations for the basic net loss per share for the years ended 31
December 2006 and 2005 are as follows:
2004 2005
Net loss for the financial year (US$'000) (2,862) (4,979)
Weighted average number of Ordinary Shares ('000) 164,289 129,434
Basic loss per Ordinary Share (US cents) (1.74) (3.85)
There is no difference between the net loss per Ordinary Share and the diluted
net loss per Ordinary Share for the years 31 December 2006 and 2005 as all
potentially dilutive Ordinary Shares outstanding are anti-dilutive. There were
7,591,000 anti-dilutive share options and 4,886,384 anti-dilutive share warrants
in issue as at 31 December 2006.
6 Exploration and evaluation assets
Tanzania Other Total
US$'000 US$'000 US$'000
Cost and net book value
At 1 January 2006 15,258 391 15,649
Additions 821 191 1,012
Employment costs capitalised 249 155 404
At 31 December 2006 16,328 737 17,065
7 Issued capital and share premium
Issued Share
Capital Premium
US$'000 US$'000
At 1 January 2006 11,057 40,102
Exercise of options 83 234
Issue of shares in part settlement of commercial transactions 35 199
Proceeds from placing net of issue costs 741 3,475
At 31 December 2006 11,916 44,010
8 Comparative figures
Comparative figures have been restated where necessary to reflect the current
period's presentation.
9 2006 Reports and Accounts
The 2006 Report and Accounts will be posted to shareholders shortly.
10 Statutory information
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2006 within the meaning of the
Companies (Amendment) Act, 1986. The statutory accounts will be finalised on
the basis of the financial information presented by the Directors in the
preliminary announcement and together with the independent auditor's report
thereon will be delivered to the Registrar of Companies following the Company's
Annual General Meeting.
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