Preliminary Results for the Year Ended 31-DEC-17

RNS Number : 5878P

Clontarf Energy PLC

30 May 2018

 

30^th May 2018

Clontarf Energy plc

("Clontarf" or "the Company")

Preliminary Results for the Year Ended 31 December 2017

Clontarf Energy, the oil and gas exploration company focused on Ghana, today announces its results for the year ending 31 December 2017.

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

For further information please visit http://clontarfenergy.com or contact:

Clontarf Energy plc
John Teeling, Chairman	[phone]
David Horgan, Director
Nominated Adviser and Broker
Northland Capital Partners Limited
Tom Price / Dugald Carlean (Corporate Finance)	[phone]
John Howes
Joint Broker
Novum Securities Limited
Colin Rowbury	[phone]
Public Relations
Blytheweigh	[phone]
Nick Elwes	[phone]
Camilla Horsfall	[phone]
Teneo PSG
Luke Hogg	[phone]
Alan Tyrrell	[phone]

Statement Accompanying the Final Results

Junior oil explorers remain in the doldrums.  The shares of listed oil exploration companies are generally friendless.  Their share prices have almost all fallen and remain in, many cases, more than 90% below their peak.  It is virtually impossible to raise serious money.  This in turn makes it very hard to undertake meaningful grass roots exploration.  The bear market in this sector has lasted for at least seven years, with little sign of improvement.

That's the bad news.  The good news is that oil prices are once again at levels which can provide a huge return to successful explorers.  A serious reduction in oil and gas exploration in recent years means that properties with potential become available to companies surviving in the sector.

Clontarf has taken advantage of this environment.  We were successful in acquiring ground offshore Ghana initially in 2008 with revisions in 2010.  In 2017, we obtained Block 18 offshore Equatorial Guinea. 

The Ghana block has been the subject of ongoing wrangling for over 5 years.  This is not all bad as it implies that people see value in the ground.  The current position following the most recent series of discussions is an agreement to submit the licence for approval to the cabinet in Accra.  No time scale has been finalised.  Cabinet approval would clear the way for the next step - parliamentary approval.  Given our experience no guarantees can be given.

Equatorial Guinea is an emerging oil producer in West Africa.  We applied for a particular block but were awarded in June an exclusive right to negotiate an agreement on another block - Block 18.  Negotiations on the general terms of the licence led to us signing a six month exclusive Memorandum of Understanding earlier this year which enables us to agree a Production Service Contract (PSC) on the block.  Talks on this continue though we are yet to negotiate the detailed terms of the PSC, which will be subject to final approval by the Minister and the President.

We have a long history, across numerous countries and resources, of bringing together good technical skills, seed finance and, later, partners to prospect and explore early stage prospects.  The very tough oil industry environment of recent years has seen good ground such as that in Ghana and Equatorial Guinea become available.  We did outstanding work on the Ghana ground to identify numerous drill targets.  If we can finalise the Equatorial Guinea negotiations we will do the same.  We then attempt to bring in bigger partners to do the drilling.  We did this earlier in Clontarf by bringing in Union Oil on Block 183 in Peru.  Earlier still, as Pan Andean, we had joint ventures with Reliance Industries of India, CEPSA of Spain in Peru, and BHP in Bolivia.

Companies such as Clontarf do the early prospecting work, identifying good geology, negotiating workable agreements and often doing enough work to validate the potential.  At this stage the multinationals appear.  The projects have been de-risked to a degree while the potential has been clarified to a degree.  Juniors get a return and/or a potential upside by getting a participation in a joint venture.  But the once active joint venture oil exploration market is on the floor.  The majors gorged on debt in the early part of the century to fund acquisitions.  The collapse in the oil price has seen a serious cut in discretionary expenditure as management scramble to reduce debt.  Exploration has been a major casualty.

Of course this must change as oil fields run out and supply becomes sluggish while demand continues to grow.  But, explorers such as Clontarf have to survive and hold on to their ground until the majors are ready to move.  Eighty dollar oil and a growing world economy suggest that the time is near.  But not yet.

Political uncertainty and changing policies continue to bedevil exploration.  Governments frequently set unrealistic fiscal and permitting terms which mean that great ground can be left fallow.  That has happened to our ground in Peru where our partner, Union Oil, returned Block 183 to the State after failing for three years to obtain necessary permits.  Earlier, we had a long and successful period of investment in Peru selling most of our assets in 2009.  The decision by Union means that Clontarf now has no assets in Peru so we have written off our residual investment of just over £2.5 million. This accounts for most of the loss reported in the accounts.  It does not have any impact on our cash.

Bolivia nationalised natural resource assets without compensation in 2006.  Since then almost no junior company exploration capital has been invested in Bolivia.  We continue to have ongoing contact with parties in the country but there is nothing to report.  Ghana, with good ground and good fiscal terms, has had inordinate delays in finalising contracts - years.  Obstacles are raised which companies find difficult to overcome.

The directors are aware of the need to give hope to investors.  Almost ten years after negotiating an agreement in Ghana it has not been ratified and we do not know when it will be.  The Equatorial Guinea block award is a positive development but it too has complications.  We like our strategy of selecting good geology with politics being a secondary concern but we are considering other directions.

John Teeling

Chairman

29^th May 2018

__________________________________________________________________________________

 

CLONTARF ENERGY PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2017

		2017	2016
CONTINUING OPERATIONS		£	£
REVENUE		-	-
Cost of sales		-	-
GROSS PROFIT		-	-
Administrative expenses		(226,410)	(199,628)
Impairment of exploration and evaluation assets		(2,551,985)	-
LOSS BEFORE TAXATION		(2,778,395)	(199,628)
Income tax expense		-	-
LOSS FOR THE YEAR AND TOTAL
COMPREHENSIVE INCOME		(2,778,395)	(199,628)
LOSS PER SHARE - Basic and diluted		(0.48p)	(0.04p)

 

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2017

	2017	2016
	£	£
ASSETS:
NON CURRENT ASSETS
Intangible assets	703,023	3,131,779
	703,023	3,131,779
CURRENT ASSETS
Other receivables	3,809	5,273
Cash and cash equivalents	433,680	677,198
	437,489	682,471
TOTAL ASSETS	1,140,512	3,814,250
LIABILITIES:
CURRENT LIABILITIES
Trade payables	(67,759)	(53,102)
Other payables	(980,567)	(890,567)
	(1,048,326)	(943,669)
TOTAL LIABILITIES	(1,048,326)	(943,669)
NET ASSETS	92,186	2,870,581
EQUITY
Called-up share capital	1,454,612	1,454,612
Share premium	10,773,211	10,773,211
Retained deficit	(12,327,283)	(9,548,888)
Share based payment reserve	191,646	191,646
TOTAL EQUITY	92,186	2,870,581

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2017

	Called-up		Share Based
	Share	Share	Payment	Retained
	Capital	Premium	Reserve	Deficit	Total
	£	£	£	£	£
At 1 December 2016	1,135,564	10,493,259	191,646	(9,349,260)	2,471,209
Issue of shares	319,048	330,952	-	-	650,000
Share issue expenses	-	(51,000)	-	-	(51,000)
Loss for the year	-	-	-	(199,628)	(199,628)
At 31 December 2016	1,454,612	10,773,211	191,646	(9,548,888)	2,870,581
Loss for the year	-	-	-	(2,778,395)	(2,778,395)
At 31 December 2017	1,454,612	10,773,211	191,646	(12,327,283)	92,186

Share premium

The share premium reserve comprises of a premium arising on the issue of shares.

Share based payment reserve

The share based payment reserve arises on the grant of share options under the share option plan.

Retained deficit

Retained deficit comprises of losses incurred in 2017 and prior years.

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2017

	2017	2016
	£	£
CASH FLOW FROM OPERATING ACTIVITIES
Loss for financial year	(2,778,395)	(199,628)
Impairment of exploration and evaluation assets	2,551,985	-
Finance costs recognised in loss	-	529
Exchange movement	3,493	468
	(222,917)	(198,631)
MOVEMENTS IN WORKING CAPITAL
Increase in payables	74,657	54,848
Decrease/(Increase) in trade and other receivables	1,464	(75)
CASH USED BY OPERATIONS	(146,796)	(143,858)
Finance costs	-	(529)
NET CASH USED IN OPERATING ACTIVITIES	(146,796)	(144,387)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets	(93,229)	(2,863)
NET CASH USED IN INVESTING ACTIVITIES	(93,229)	(2,863)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares	-	650,000
Share issue expenses	-	(51,000)
NET CASH GENERATED BY FINANCING ACTIVITIES	-	599,000
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS	(240,025)	451,750
Cash and cash equivalents at beginning of the financial year	677,198	225,916
Effect of exchange rate changes on cash held in
foreign currencies	(3,493)	(468)
Cash and cash equivalents at end of the financial year	433,680	677,198

 

Notes:

1.    ACCOUNTING POLICIES

There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2016. The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRSs as adopted by the European Union and in accordance with the Companies Act 2006.

2.    LOSS PER SHARE

Basic loss per share is computed by dividing the loss after taxation for the year available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year.  Diluted earnings per share is computed by dividing the loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

The following table sets out the computation for basic and diluted earnings per share (EPS):

	2017	2016
	£	£
Numerator
For basic and diluted EPS	(2,778,395)	(199,628)
Denominator
For basic and diluted EPS	581,844,829	489,628,260
Basic EPS	(0.48p)	(0.04p)
Diluted EPS	(0.48p)	(0.04p)

Basic and diluted loss per share is the same as the effect of the outstanding share options is anti-dilutive and is therefore excluded.

3.    GOING CONCERN

The Group incurred a loss for the year of £2,778,395 (2016: £199,628) and had net current liabilities of £610,837 (2016: £261,198) at the balance sheet date. These conditions represent a material uncertainty that may cast doubt on the group's ability to continue as a going concern. 

Included in current liabilities is an amount of £980,567 (2016: £890,567) owed to directors in respect of directors' remuneration due at the balance sheet date. The directors have confirmed that they will not seek settlement of these amounts in cash for a period of at least one year after the date of approval of the financial statements or until the group has generated sufficient funds from its operations after paying its third party creditors.

The Group had a cash balance of £433,680 at the balance sheet date. Cashflow projections prepared by the directors indicate that the funds available are sufficient to meet the obligations of the Group for a period of at least twelve months from the date of approval of these financial statements.

As in previous years the Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements and believe the going concern basis is appropriate for these financial statements. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.

4.    INTANGIBLE ASSETS

	2017	2016
	Group	Group
	£	£
Exploration and evaluation assets:
Cost:
At 1 January	8,178,324	8,145,461
Additions during the year	123,229	32,863
At 31 December	8,301,553	8,178,324
Impairment:
At 1 January	5,046,545	5,046,545
Impairment during the year	2,551,985	-
At 31 December	7,598,530	5,046,545
Carrying Value:
At 1 January	3,131,779	3,098,916
At 31 December	703,023	3,131,779
Segmental analysis	2017	2016
	Group	Group
	£	£
Peru	-	2,473,538
Ghana	703,023	658,241
	703,023	3,131,779

Exploration and evaluation assets relates to expenditure incurred in prospecting and exploration for oil and gas in Peru, Ghana and Equatorial Guinea. The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. 

On 26 September 2017 the board of Clontarf Energy had been informed that Union Oil (the 80% owner of the concession held in Peru) had returned to the Peruvian Authorities the licence held on Block 183.  They gave as their reason an inability over a 3 year period to obtain the permits, particularly environmental permits, necessary to explore.

4.            INTANGIBLE ASSETS (CONTINUED)

Clontarf held a 3% royalty on revenue arising from future operations on the Block.  Clontarf did not incur any liabilities as a result of Union Oil's decision but has written off the carrying value of the asset. Accordingly an impairment charge of £2,473,538 in respect of the full carrying value of the Group' Peruvian assets has been recorded by the Group in the current year.

During the year the Group incurred expenditure of £78,447 on evaluating licences in Equatorial Guinea. An impairment charge of £78,447 has been recorded by the Group in the current year.

In 2014, the Group reached an agreement with the Ghanaian authorities on the specific revised coordinates of the signed petroleum agreement on a licence block in the Tano area of Ghana. Clontarf Energy PLC await ratification of the amended Petroleum Agreement by Cabinet and Parliament.

The realisation of these intangible assets is dependent on the discovery and successful development of economic oil and gas reserves the ongoing title to the license, the ability of the company to finance the development of the asset and on the future profitable production or process from the asset which is affected by the uncertainties outlined above and risks outlined below:

·        licence obligations

·        requirement for further funding

·        geological and development risks

·        title to assets

·        political risk

Should this prove unsuccessful the value included in the balance sheet would be written off to the statement of comprehensive income.

5.    TRADE PAYABLES

	2017	2016
	Group	Group
	£	£
Trade payables	51,759	37,102
Other accruals	16,000	16,000
Due to group undertakings	-	-
	67,759	53,102

It is the company's normal practice to agree terms of transactions, including payment terms, with suppliers and provided suppliers perform in accordance with the agreed terms, payment is made accordingly. In the absence of agreed terms it is the company's policy that payment is made between 30 - 40 days. The carrying amount of trade and other payables approximates to their fair value.

6.    OTHER PAYABLES

	2017	2016	2017	2016
	Group	Group	Company	Company
	£	£	£	£
Amounts due to directors	980,567	890,567	531,527	471,527
	980,567	890,567	531,527	471,527

Other payables relate to amounts due to directors' remuneration of £980,567 (2016: £890,567) accrued but not paid at year end.    

7.    CALLED-UP SHARE CAPITAL

               Allotted, called-up and fully paid:

	Number	Share Capital	Share Premium
		£	£
At 1 January 2016	454,225,781	1,135,564	10,493,259
Issued during the year	127,619,048	319,048	330,952
Share issue expenses	-	-	(51,000)
At 31 December 2016	581,844,829	1,454,612	10,773,211
Issued during the year	-	-	-
At 31 December 2017	581,844,829	1,454,612	10,773,211

Movements in issued share capital

On 20 September 2016 a total of 80,000,000 shares were placed at a price of 0.50 pence per share. Proceeds were used to provide additional working capital and fund development costs.

On 22 September 2016 a total of 47,619,048 shares were placed at a price of 0.525 pence per share. Proceeds were used to provide additional working capital and fund development costs.

.

Share Options

A total of 8,900,000 share options were in issue at 31 December 2017 (2016: 8,900,000).  These options are exercisable, at prices ranging between 0.725p and 4.6p, up to seven years from the date of granting of the options unless otherwise determined by the board.

8.    ANNUAL GENERAL MEETING

The Company's Annual General Meeting will be held on Friday 29^th June 2018 at Hilton Paddington Hotel, 146 Praed Street, London, W2 1EE at 10:30 am.

 

9.    GENERAL INFORMATION

The financial information set out above does not constitute the Company's audited financial statements for the year ended 31 December 2017 or the year ended 31 December 2016. The financial information for 2016 is derived from the financial statements for 2016 which have been delivered to the Registrar of Companies. The auditors had reported on the 2016 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial statements for 2017 will be delivered to the Registrar of Companies.

A copy of the Company's Annual Report and Accounts for 2017 will be mailed shortly only to those shareholders who have elected to receive it. Otherwise, shareholders will be notified that the Annual Report will be available on the website www.clontarfenergy.com . Copies of the Annual Report will also be available for collection from the Company's registered office, Suite 1, 3^rd Floor, 11-12 St. James's Square, London, SW1Y 4LB.

 

END

 

 

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