Half Yearly Report

RNS Number : 2866N

Independent Resources PLC

09 June 2010

 



Independent Resources plc

('Independent Resources' or 'the Company')

Interim results for the six months ended 31 March 2010

Highlights

Rivara - project approval expected within months

Fiume Bruna - appraisal testing underway; initial results due shortly

Ksar Hadada - drilling of two exploration wells expected to start within a month

·      Net cash at 31 March 2010: £3.3 million

·      Committed 3rd-party funding at subsidiaries as at 31 March 2009: £5.6 million

·      Interim loss before taxation: £85,476 (2009: £127,836)

·      Loss per share for the interim period:0.2 p (2008: 0.3p)

Chairman's Statement

I am pleased to report on six months of tangible progress for Independent Resources that have cleared the way for a rewarding 2010. Our potential for significant returns remains as strong as ever as we head into one of the most interesting periods in the Company's history.

During the period, we significantly stepped up our efforts to secure both the administrative and political sanctions required for our underground gas storage ("UGS") facility at Rivara in the Po Valley. Fortunately we appear to be approaching the conclusion of the long environmental assessment process, which, we hope and expect, will lead later this year to an approval to proceed towards appraisal and development of this important asset.

The appraisal campaign designed to demonstrate commercially-viable natural gas flow from the Fiume Bruna coal seam, located near Grosseto, Italy, continues apace. The Fiume Bruna 2 ('FB2') well was selected for hydraulic fracturing and operations there went smoothly, within budget, and without incident. The natural gas quality is better than expected and the quantity of water extracted from the well-bore is less than expected, but whether the selected parameters for hydraulic fracturing will turn out to be the most effective way of stimulating the flow of gas from the coal and shale seams will only be known after the well has been on production test for several weeks.

On our Ksar Hadada block in Tunisia, a 12 week, two-well drilling and testing programme is expected to commence in late June or early July 2010. The Company's share of costs for this exploration programme is fully funded by the farm-out we announced last year.

Rivara

Last year we highlighted Ministerial and regulatory authority statements that left little doubt that, once all the necessary stakeholder issues have properly been taken into account, the Rivara UGS facility should become a crucial element in Italy's future gas planning. As recently as 23 February, Prime Minister Berlusconi wrote to his undersecretary urging priority for the project, so the political support now reaches the highest levels. Notwithstanding these positive endorsements, the justifiably-rigorous Italian environmental permitting process has been long, tortuous and oftentimes frustrating. It remains to be concluded, and this is where our efforts have been and remain concentrated. The Company has solicited the assistance and opinions of renowned experts (both nationally and regionally) in their respective fields, to provide authoritative comfort to all stakeholders, including the Company itself, that the project is useful, beneficial, and absolutely safe. Alongside the ongoing permitting effort, the Company has invested in an office and "info-point" to better explain and illustrate the plans for Rivara and how it works. All of these efforts have been applauded for their quality and rigor. The Company is pleased to report that these efforts are bearing fruit.

At an estimated 3.2 billion cubic metres (110 bcf), Rivara's effective working capacity will expand Italy's current total gas storage capacity by over 20%. More importantly, the performance characteristics of fractured limestone storage facilities like Rivara mean that, despite a relatively small number of wells, it is expected to have a daily delivery capability of over 1.1bcfd, equivalent to a 13% uplift in Italy's current total - at the beginning of the heating season. Towards the end of the heating season, Rivara could dramatically add over 20% to peak deliverability - when price volatility is highest, as is the value of storage. Rivara is expected to have amongst the most attractive capital and unit costs in the sector and this provides great comfort in a competitive landscape. When coupled with a near-ideal physical location at a point of transnational pipeline convergence, Rivara stands out as a very favourable solution to the many structural challenges that confront Italy's gas system.

When ERG bought into Rivara in June 2008, the Company's remaining 85% stake in the project was effectively valued at EUR 53.8 Million (equivalent to approximately 108p/share today). As a result of the Company's efforts over many months, we believe the Rivara permitting process should soon be completed, enabling the project to move forward to appraisal and development, which will allow us to unlock further considerable value for shareholders from this important asset.

Fiume Bruna

The Company's wholly-owned subsidiary Independent Energy Solutions ("IES") began drilling, stimulation, and testing operations at the Fiume Bruna 2 well site in March this year.

Approximately 66 km of 2D seismic data have been acquired to date over a representative portion of the coal basin to determine the geometry of the coal seam away from the former mining area. This includes the portion shot prior to drilling last year which has since been reprocessed.

A regional depositional model has been constructed from the reinterpretation of the stratigraphy of a large number of vintage boreholes, leading to the discovery of a variably thick gas-bearing carbonaceous shale sequence consistently located immediately above and below the coal seam.

IES selected the FB2 site for its rich coal sequence and suitability for well stimulation operations (hydraulic fracturing with sand used as proppant). The well commenced dewatering on 17th April and is currently on a long duration production test. The main purpose of the operation is to evaluate the best means to stimulate the interval of interest so as to optimize gas flow rates from the gas saturated coal and shale in place, whilst minimising any water flow rate.

The Company collected new samples of coal and shale and these were de-gassed in specially-designed canisters so as to measure gas saturation and desorption rates from cuttings, to be compared with similar data previously acquired on cores sampled in the interval of interest. Given that it is rare for cores and cuttings from borehole enlargement to be available from the same interval, the Company believes that such a data set will be useful in the future to economically yet accurately evaluate gas content in other parts of the license.

The Company expects to announce the results from the FB2 well operations only after the well has been on production test for several weeks, to allow for sufficient de-watering and a reliable database.

Fiume Bruna has thrown up a few challenges in the past, not least the discovery in August last year of a thick evaporitic sequence in the deeper part of the basin. But we now look forward to producing gas and proving this large resource. In addition, our discovery of gas shale in this basin, whose extent we hope to confirm soon, is something we look forward to testing during this exploration and appraisal phase of the block.

Pursuant to the strategy we have adopted, the likely evolution of the project in the medium term would involve a coal-bed methane partner with specific operational expertise and a desire to co-fund the full development of the Fiume Bruna coal basin and its extension to the south on the Company owned-Casoni block.

Ksar Hadada

Ksar Hadada, in which the Company holds a 18.97% interest (0.0% Paying Interest during the 2010 work programme), is becoming a more visible source of potentially significant shareholder value. The Company announced that the joint venture acquired over 100km of new 2D seismic in Q4 2009, with processing and interpretation completed in January 2010. Well locations for two Ordovician prospects were selected and approved by the partners in early February 2010. Drilling is expected to commence in late June or early July 2010 and operations are expected to continue for an estimated 12 weeks and we look forward to appraising the attractive potential on this block over this summer.

The block's Operator, Petroceltic Ksar Hadada Limited, has been notified by Compagnie Tunisienne de Forage ("CTF"), the drilling company contracted to execute these operations, that the planned CTF Rig 06 will begin mobilizing towards mid-June. The joint venture expects operations to begin in late June or early July.

The anticipated start of the new drilling programme, at no cost to Independent Resources, remains excellent news.  The technical team has refined the immediate drilling targets to capture the prominent Oryx structure and the NW compartment currently interpreted on the Sidi Toui structure.

Independent assessments of gross prospective contingent resources and chances of success for the 2010 drilling targets on Ksar Hadada have been carried out by Blackwatch Petroleum Services Ltd on behalf of PetroAsian Energy Holdings Ltd. If successful, these wells could have a profound impact on the company's valuation.

Ksar Hadada Licence Gross Prospective Recoverable Resource Estimates (MMbbls), pre 2010 Drilling Programme

Prospect	Oil			Chance of success
	Low (P90)	Medium (Pmean)	High (P10)
Sidi Toui	24	161	409	40%
Oryx	6	47	105	34%
Initial targets total	30	208	514

Outlook

Our cash position amply covers our commitments and our callable funding positions at both Rivara and Ksar Hadada remain strong. We are well positioned to demonstrate significant gains for our shareholders in the short term.

As we have informed shareholders previously, we continue to focus primarily on our gas-related operations in Italy - particularly the Rivara Underground Gas Storage Project - but at the same time we regard Ksar Hadada's oil-prone reservoirs as a promising short-term source of significant shareholder value.

We continue to focus on our long-term objectives and I believe that our efforts will be rewarded this year. We remain committed, as we have been for many years, to the success of Independent Resources. I would like to thank our shareholders for their continued commitment, and look forward to what I believe will turn out to be a transformational year for the Company.

For further information contact:

Grayson Nash, Executive Chairman

Independent Resources plc:               [phone]                  

Allan Piper

Tavistock Communications Ltd:         [phone]   

Jonathan Wright / Stewart Dickson       

Seymour Pierce:                                 [phone]        

Independent Resources PLC
Group statement of comprehensive income
Six months ended 31 March 2010
						Unaudited		Unaudited
						1 October 2009 to		1 October 2008 to
						31 March 2010		31 March 2009
Continuing operations						£		£
Revenue						-		16,408
Cost of sales						-		-
Gross profit						-		16,408
Administrative expenses						(583,148)		(614,951)
Operating loss						(583,148)		(598,543)
Net financial income						419,278		464,944
Loss on ordinary activities before taxation						(163,870)		(133,599)
Taxation						65,000		-
Loss for the period						(98,870)		(133,599)
Other comprehensive income:
Exchange differences on translating foreign operations						(298,292)		1,232,369
Other comprehensive income for the period						(298,292)		1,232,369
Total comprehensive income for the period						(397,162)		1,098,770
Loss attributable to:
Owners of the parent						(85,476)		(127,836)
Non-controlling interests						(13,394)		(5,763)
						(98,870)		(133,599)
Total comprehensive income attributable to:
Owners of the parent						(383,768)		1,104,533
Non-controlling interests						(13,394)		(5,763)
						(397,162)		1,098,770
(Loss)/earnings per share (pence)
From continuing operations
Basic						(0.2)		(0.3)
Diluted						(0.2)		(0.3)

Independent Resources PLC
Group statement of financial position
As at 31 March 2010
						Unaudited	Audited	Unaudited
						31 March	30 September	31 March
						2010	2009	2009
						£	£	£
Non-current assets
Property, plant and equipment						92,582	92,168	68,513
Goodwill						5,253,670	5,253,670	4,604,965
Other intangible assets						7,844,545	7,010,660	5,007,197
						13,190,797	12,356,498	9,680,675
Current assets
Other receivables						5,951,988	5,752,935	6,031,247
Cash and cash equivalents						3,310,929	5,337,403	7,000,148
						9,262,917	11,090,338	13,031,395
Current liabilities
Trade and other payables						(546,653)	(1,023,614)	(380,510)
Current taxation liabilities						(73,500)	(153,896)	(63,446)
						(620,153)	(1,177,510)	(443,956)
Net current assets						8,642,764	9,912,828	12,587,439
Net assets						21,833,561	22,269,326	22,268,114
Equity attributable to equity holders of the parent
Share capital						415,739	415,739	415,739
Share premium account						12,881,702	12,881,702	13,036,564
Shares to be issued						4,802,904	4,802,904	4,002,420
Share option reserve						284,478	389,844	389,844
Foreign currency translation reserve						1,139,116	1,437,408	1,522,965
Retained earnings						914,338	894,448	1,419,782
Total equity						20,438,277	20,822,045	20,787,314
Minority interests						1,395,284	1,447,281	1,480,800
						21,833,561	22,269,326	22,268,114

Independent Resources PLC
Group statement of changes in equity
Six months ended 31 March 2010
										Foreign	Total due
								Shares	Share	currency	to equity
					Retained	Share	Share	to be	option	translation	shareholders	Minority
					earnings	capital	premium	issued	reserve	reserve	of parent	interest
					£	£	£	£	£	£	£	£
1 October 2008					1,547,618	407,115	12,444,974	4,602,634	368,185	290,596	19,661,122	1,269,349
Loss for the period					(127,836)	-	-	-	-	-	(127,836)	(5,763)
New shares issued					-	8,624	591,590	(600,214)	-	-	-	-
Share-based payments					-	-	-	-	21,659	-	21,659	-
Exchange differences on
translating foreign operations					-	-	-	-	-	1,232,369	1,232,369	217,214
31 March 2009					1,419,782	415,739	13,036,564	4,002,420	389,844	1,522,965	20,787,314	1,480,800
1 October 2009					894,448	415,739	12,881,702	4,802,904	389,844	1,437,408	20,822,045	1,447,281
Loss for the period					(85,476)	-	-	-	-	-	(85,476)	(13,394)
Share options lapsed
in the period					105,366	-	-	-	(105,366)	-	-	-
Exchange differences on
translating foreign operations					-	-	-	-	-	(298,292)	(298,292)	(38,603)
31 March 2010					914,338	415,739	12,881,702	4,802,904	284,478	1,139,116	20,438,277	1,395,284

Independent Resources PLC
Group statement of cash flows
Six months ended 31 March 2010
								Unaudited		Unaudited
								1 October 2009 to		1 October 2008 to
								31 March 2010		31 March 2009
								£		£
Cash flows from operating activities
Loss before taxation								(163,870)		(133,599)
Adjustments for:
	Depreciation of property, plant and equipment							15,487		11,689
	Loss on disposal of property, plant and equipment							29,517		-
	Financial income							(419,278)		(464,944)
								(538,144)		(586,854)
Increase in trade and other receivables								(134,053)		(835,122)
Decrease in trade and other payables								(168,357)		(333,171)
Share based payment								-		21,659
Exchange rate differences								(174,602)		941,298
Net cash used in operating activities								(1,015,156)		(792,190)
Cash flows used in investing activities
Interest received								30,278		137,944
Purchase of intangible assets								(993,762)		(792,430)
Sale of property, plant and equipment								-		-
Purchase of property, plant and equipment								(47,834)		(8,380)
Net cash used in investing activities								(1,011,318)		(662,866)
Net (decrease) in cash and cash equivalents								(2,026,474)		(1,455,056)
Cash and cash equivalents at beginning of the period								5,337,403		8,455,204
Cash and cash equivalents at end of the period								3,310,929		7,000,148

Independent Resources PLC
Notes to the interim financial information
Six months ended 31 March 2010
1.	Accounting policies
	General information
	The interim financial information is for Independent Resources plc ("the company") and subsidiary undertakings (together, the "Group"). The company is registered in England and Wales and incorporated under the Companies Act 2006.
	Basis of preparation
	The interim financial information, for the period from 1 October 2009 to 31 March 2010, has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards and International Accounting Standards as adopted by the European Union, and on the going concern basis.  They are in accordance with the accounting policies set out in the statutory accounts for the year ended 30 September 2009.
	The Interim Report is unaudited and does not constitute statutory financial statements.  The financial information for the year ended 30 September 2009 does not constitute statutory accounts, as defined in section 435 of the Companies Act 2006 but is based on those statutory financial statements.  Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.
	The Interim Report for the six months ended 31 March 2010 was approved by the Directors on 8 June 2010.
	Copies of the Interim Report are available from the Company's website www.ir-plc.com.
2.	Revenue and segmental information
	The Group's operations located in the United Kingdom, Italy and Tunisia.
	The following is an analysis of the carrying amount of segment assets, liabilities and results analysed by the geographical area in which assets are located.
							United Kingdom		Italy	Tunisia	Total
							£		£	£	£
	As at 31 March 2010
	Carrying amount of segment tangible assets				-				92,582	-	92,582
	Carrying amount of segment intangible assets				-				6,776,493	1,068,052	7,844,545
	Carrying amount of liabilities						124,811		492,074	3,268	620,153
	Six months to 31 March 2010
	Additions to property, plant and equipment
	in the period						-		47,834	-	47,834
	Depreciation charges						1,726		13,761	-	15,487
	Additions to intangible assets in the period				-				951,627	42,135	993,762
	Revenue in the period						-		-	-	-
	Results for the period						(90,185)		(8,729)	44	(98,870)
	As at 30 September 2009
	Carrying amount of segment tangible assets				1,726				90,442	-	92,168
	Carrying amount of segment intangible assets				-				5,984,743	1,025,917	7,010,660
	Carrying amount of liabilities						174,453		997,347	5,710	1,177,510

	Six months to 30 September 2009
	Additions to property, plant and equipment
	in the period				-		36,267	-		36,267
	Depreciation charges				3,443		8,356	-		11,799
	Additions to intangible assets in the period				-		1,855,082	192,050		2,047,132
	Revenue in the period				-		16,665	-		16,665
	Results for the period				(172,412)		(367,745)	936		(539,221)
	As at 31 March 2009
	Carrying amount of segment tangible assets				5,169		63,344	-		68,513
	Carrying amount of segment intangible assets				-		4,173,330	833,867		5,007,197
	Carrying amount of liabilities				152,206		188,750	103,000		443,956
	Six months to 31 March 2009
	Additions to property, plant and equipment
	in the period				-		8,380	-		8,380
	Depreciation charges				3,064		8,625	-		11,689
	Additions to intangible assets in the period				-		764,089	28,341		792,430
	Revenue in the period				-		16,408	-		16,408
	Results for the six months to 31 March 2009				(241,399)		110,214	(2,414)		(133,599)
	The group considers that there is only one business segment and as such segmental analysis on this basis has not been prepared.
3.	Taxation
	The current tax credit for the period arises from the anticipated carry back of tax losses arising in the period to obtain a refund of tax previously paid in the United Kingdom.  The accounts do not include a deferred tax asset in respect of carry forward of unused tax losses as the directors are unable to assess that there will be probable future taxable profits available against which the unused tax losses can be utilised.
4.	Earnings per share
	The calculation of basic and diluted earnings per share at 31 March 2010 was based on the loss attributable to ordinary shareholders of £85,476 and a weighted average number of ordinary shares outstanding during the period ending 31 March 2010 of 41,573,867, as shown below.
						31 March 2010			31 March 2009
						£			£
	Net loss for the period					(85,476)			(127,836)
	Basic and diluted weighted average ordinary shares
	in issue during the period					41,573,867			41,237,446
	In accordance with IAS 33 and as the Group has reported a loss for the period, the share options are not dilutive.

5.	Net financial income
	Net financial income includes £389,000 (Period to 31 March 2009 - £327,000) relating to the increase in the net present value of receivables which are measured at amortised cost due to the unwinding of the effective interest implicit in the discounting calculations.
Registered office
Independent Resources plc
Tower Bridge House, St. Katharine's Way, London E1W 1DD
Email: [e-mail]
Commercial office
Piazza Mondadori 3, 20122 Milano, Italy
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
Technical office
Viale Liegi 41,  00198 Rome, Italy
Telephone: [phone]
Fax: [phone]
Email: [e-mail]

 

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