Half Yearly Report

RNS Number : 0226A
Sound Oil PLC
24 September 2015
 

24 September 2015

 

Sound Oil plc

("Sound Oil" or the "Company")

 

2015 Interim Results

 

Sound Oil, the Mediterranean focused upstream gas company, announces its unaudited interim results for the six months ended 30 June 2015.

 

Highlights

 

·     Entered a farm-in agreement  to acquire a 55% net working interest and operatorship of the Tendrara licence, onshore Morocco

 

·     Award of the Casa Tonetto production concession (which includes the Nervesa Discovery) following period end and the signature of a gas sales agreement with Shell Energy Italia. Commercial production expected to commence by the end of 2015

 

·     Environmental Impact Assessment ("EIA")  approval for Badile exploration well

 

·     Continued production from Rapagnano covering the majority of the Company's Italian cost base

 

·     Unaudited cash balances of £17.5 million (approximately €24.8 million) as at 30 June 2015

 

 

 

For further information please contact:

 

Vigo Communications - PR Adviser

Patrick d'Ancona

Chris McMahon

Alexandra Roper

 

Tel: +44 (0)20 7016 9573

Sound Oil

James Parsons, Chief Executive Officer

 

j.parsons@soundoil.co.uk

Smith & Williamson - Nominated Adviser

Azhic Basirov

David Jones

Ben Jeynes

 

Tel: +44 (0)20 7131 4000

Cantor Fitzgerald Europe - Broker

Sarah Wharry

David Porter

 

Tel: +44 (0)20 7894 8896

 

Chairman's Statement

 

I am pleased to report that the first half of 2015 has, once again, been a busy period for the Company.

 

Despite recent turbulence in the sector, Sound Oil is positioned with a well-balanced and recently broadened portfolio across Italy and Morocco, with existing production, a strong balance sheet, a supportive cornerstone investor and a bold growth agenda.

 

One of the key highlights of the period under review was our acquisition, subject to completion, of an operated position and up to 55% working interest in the Tendrara licence, onshore Morocco ("Tendrara"). Morocco is a stable, growing, gas-hungry country with strong gas prices and competitive fiscal terms.

 

Tendrara benefits from a compelling risk / reward balance with both a large scale gas discovery and multiple Tcf exploration potential.

 

The Company also once again demonstrated progress across its Italian portfolio, including securing the EIA approval at the transformational Badile licence and continuing to deliver strong, cost covering, production at Rapagnano.

 

Despite a disappointing second well on the Nervesa discovery over the summer, the Company is positioned for commercial production from the first well, underpinned by strong gas prices which remain resilient to the recent oil price decline, by the end of the year. The Company is also finalising preparations for our first well in Morocco.

 

Our Executive team, under the leadership of James Parsons our Chief Executive Officer, are executing a clearly defined and ambitious Mediterranean gas strategy. To better reflect our increasing gas focus, the Company's name will be changed to Sound Energy plc with effect from 1 October 2015.

 

I would like to take this opportunity to thank all our shareholders for their continued support.

 

Simon Davies

23 September 2015

 



 

Condensed Interim Consolidated Income Statement

For the six months ended 30 June 2015

 

 


 

 

 

 

 

Notes

Six months ended

30 June 2015

Unaudited

£'000s

Six months ended

30 June 2014

Unaudited

£'000s

Year ended

31 Dec 2014

Audited

£'000s

 

Revenue

Operating costs

Impairment of producing assets Exploration costs


478

(291)

-

(1)

490

(267)

-

(83)

983

(658)

(723)

(74)

Gross profit/(loss)

Administrative expenses


186

(1,490)

140

(1,378)

(472)

(2,773)

Group operating loss from continuing operations


 

(1,304)

 

(1,238)

 

(3,245)

Finance revenue

Foreign exchange gain/(loss) External interest costs


12

(2,000)

(602)

1

(330)

(480)

7

(661)

(1,022)

Loss for period before taxation


(3,894)

(2,047)

(4,921)

Tax expense


-

-

-

Loss for period after taxation


(3,894)

(2,049)

(4,921)

Other comprehensive (loss)/income Foreign currency translation (loss)/income


 

(100)

 

(51)

 

127

Total comprehensive loss for the period


(3,994)

(2,098)

(4,794)

Loss for the period attributable to:

Equity holders of the parent


 

(3,994)

 

(2,098)

 

(4,794)

Loss per share and diluted for the period attributable to the equity holders of the parent (pence)           

4

(0.91)

(0.70)

(1.40)

 



 

Condensed Interim Consolidated Balance Sheet

At 30 June 2015

 


 

 

 

 

 

Notes

Six months ended

30 June 2015

Unaudited

£'000s

Six months ended

30 June 2014

Unaudited

£'000s

Year ended

31 Dec 2014

Audited

£'000s

 

Non-current assets


 

12,403

 

1,585

 

13,200

Property, plant and equipment

6

Intangible assets

8

13,859

19,967

8,888

Land and buildings

7

1,294

-

1,433


27,556

21,552

23,521

Current assets

 

2,434

 

1,807

 

2,173

Other receivables

Prepayments

94

140

157

Cash and short term deposits

17,489

677

12,608


20,017

2,624

14,938

Total assets

47,573

24,176

38,459

Current Liabilities

 

3,626

 

934

 

2,194

Trade and other payables

Loans repayable in under one year

-

161

131


3,626

1,095

2,325

Non-current liabilities

 

1,959

 

2,130

 

2,099

Deferred tax liabilities

Loans due in over one year

13,538

4,851

13,437

Provisions

1,082

1,176

1,164


16,579

8,157

16,700

Total liabilities

20,205

9,252

19,025

Net Assets

27,369

14,924

19,434

Capital and Reserves

 

83,086

 

64,625

 

71,298

Equity share capital

Warrant Reserve

369

-

369

Foreign currency reserve

1,288

1,210

1,388

Accumulated deficit

(57,374)

(50,911)

(53,621)

Total Equity

27,369

14,924

19,434

 



 

Condensed Interim Consolidated Statement Of Changes in Equity

For the six months ended 30 June 2015

 


Share

capital

£'000s

Share

premium

£'000s

Accumulated

Deficit

£'000s

Warrant

Reserve

£'000s

Foreign currency reserves

£'000s

Total equity

£'000s

At 1 January 2015

4,153

67,145

(53,621)

369

1,388

19,434

Total Loss for the period

-

-

(3,894)

-

-

(3,894)

Other comprehensive income

-

-

-

-

(100)

(100)

Total income and expense for the period

 

-

 

-

 

(3,894)

 

-

 

(100)

 

(3,994)

Issue of share capital

675

12,034

-

-

-

12,709

Transaction costs

-

(921)

-

-

-

(921)

Share based payments

-

-

141

-

-

141

At 30 June 2015 (unaudited)

4,828

78,258

(57,374)

369

1,288

27,369

 


Share capital

£'000s

Share premium

£'000s

Accumulated Deficit

£'000s

Warrant Reserve

£'000s

Foreign currency reserves

£'000s

Total equity

£'000s

At 1 January 2014

2,876

60,209

(49,029)

-

1,261

15,317

Total Loss for the period            -

-

-

(4,921)

-

-

(4,921)

Other comprehensive income

-

-

-

-

127

127

Total comprehensive income/(loss)

-

-

-

127

(4,794)

Issue of share capital

1,277

7,442

-

-

-

8,719

Transaction costs

-

(506)

-

-

-

(506)

Fair value of warrants

-

-

-

369

-

369

Share based payments

-

-

329

-

-

329

At 31 December 2014

4,153

67,145

(53,621)

369

1,388

19,434

 


 

Share

capital

£'000s

 

Share

premium

£'000s

 

Accumulated

Deficit

£'000s

 

Foreign currency

reserves

£'000s

 

Total

equity

£'000s


At 1 January 2014

2,876

60,209

(49,029)

1,261

15,514

Total Loss for the period

-

-

(2,047)

-

(2,047)

Other comprehensive income

-

-

-

(51)

(51)

Total comprehensive income/(loss)

-

-

(2,047)

(51)

(2,098)

Issue of share capital

402

1,317

-

-

1,719

Transaction costs

-

(179)

-

-

(179)

Share based payments

-

-

165

-

165

At 30 June 2014 (unaudited)

3,278

61,347

(50,911)

1,210

14,924

 



 

Condensed Interim Consolidated Cash Flow

For the six months ended 30 June 2015

 


Six months ended

30 June 2015

Unaudited

£'000s

Six months ended

30 June 2014

Unaudited

£'000s

Year ended

31 Dec 2014

Audited

£'000s

 

Cash flow from operating activities

 

(1,593)

 

(1,134)

 

(3,327)

Cash flow from operations

Interest received

12

1

7

Net cash flow from operating activities

(1,581)

(1,133)

(3,320)

Cash flow from investing activities

 

(292)

 

(3)

 

(2,258)

Capital expenditure and disposals

Exploration and development expenditure

(3,156)

(2,151)

(1,089)

Net cash flow from investing activities

(3,448)

(2,154)

(3,347)

CSTI Funding contract

(115)

-

(242)

Net proceeds from debt

-

2,250

11,398

Net Proceeds from equity issue

11,163

1,138

8,213

Interest payments

(382)

(45)

(280)

Net cash flow from financing activities

10,666

3,343

19,089

Net increase/(decrease) in cash and cash equivalents

5,637

56

12.420

Net foreign exchange difference

(756)

78

(355)

Cash and cash equivalents at the beginning of the period

12,608

543

543

Cash and cash equivalents at the end of the period

17,489

677

12,608

 

 

Notes to cash flow

 


Six months ended

30 June 2015

Unaudited

£'000s

Six months ended

30 June 2014

Unaudited

£'000s

Year ended

31 Dec 2014

Audited

£'000s

 

Cash flow from operations reconciliation

Loss before tax

Finance revenue

Payroll bonuses paid in shares

Exploration expenditure written off and impairment of assets

Increase/(decrease) in accruals and short term payables

Depreciation

Share based payments charge

Decrease in long term provisions

Finance costs and exchange differences

Decrease/(increase) in short term receivables

 

(3,894)

(12)

-

-

 

(329)

 

98

141

-

2,602

(199)

 

(2,047)

(1)

48

83

 

(466)

 

121

165

(61)

480

544

 

(4,921)

(7)

60

797

 

(603)

 

225

329

(62)

1,022

(167)

Cash flow from operations

(1,593)

(1,134)

(3,327)

 



 

Notes to the Condensed Interim Consolidated

Financial Statements

 

1.  Basis of preparation

 

The condensed interim consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2006. The comparative financial information is based on the statutory accounts for the year ended 31 December 2014. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

 

The condensed interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2014 statutory accounts in accordance with IAS 34 Interim Financial Reporting.

 

The seasonality or cyclicality of operations does not impact on the interim financial statements.

 

2.  Segment information

 

The Group categorises its operations into two business segments based on exploration & appraisal and development & production. The Group's exploration & appraisal activities are carried out in Italy under various licences and permits. The Group's reportable segments are based on internal reports about components of the Group which are regularly reviewed and used by the Board of Directors, being the Chief Operating Decision Maker ("CODM"), for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance. In 2013, the Group recognised its first revenue from the Rapagnano licence. All sales and operating costs relate to production from that licence. Details regarding each of the operations of each reportable segment is included in the following tables:

 

Segment results for the period ended 30 June 2015

 


Corporate

£'000s

Development

&Production

£'000s

 

Exploration

& Appraisal

£'000s


Total

£'000s

 

Sales and other operating revenues

-

478

-

478

Operating costs

-

(291)

-

(291)

Exploration costs

-

-

(1)

(1)

Administration expenses

(1,490)

-

-

(1,490)

Operating loss segment result

(1,490)

187

(1)

(1,304)

Interest receivable

12

-

-

12

Finance costs

(2,602)

-

-

(2,602)

Loss for the period before taxation

(4,080)

187

(1)

(3,894)

 

The segments assets and liabilities at 30 June 2015 are as follows:

 


Corporate

£'000s

Development

& Production

£'000s

Exploration

& Appraisal

£'000s

Total

£'000s

Capital expenditure

67

12,336

15,153

27,556

Other assets

20,017

-

-

20,017

Total liabilities

(1,959)

(6,669)

(11,577)

(20,205)

 



 

Segment results for the period ended 30 June 2014

 


Corporate

£'000s

Development

& Production

£'000s

Exploration

& Appraisal

£'000s

Total

£'000s

Sales and other operating revenues

-

490

-

490

Operating costs

-

(267)

-

(267)

Exploration costs

-

-

(83)

(83)

Administration expenses

(1,378)

-

-

(1,378)

Operating loss segment result

(1,378)

223

(83)

(1,238)

Interest receivable

1

-

-

1

Finance costs

(810)

-

-

(810)

Loss for the period before taxation

(2,167)

223

(83)

(2,047)

 

The segments assets and liabilities at 30 June 2014 were as follows:

 


Corporate

£'000s

Development

& Production

£'000s

Exploration

& Appraisal

£'000s

Total

£'000s

Capital expenditure

70

1,515

19,967

21,552

Other assets

2,625

-

-

2,625

Total liabilities

(9,253)

-

-

(9,253)

 

Segment results for the year ended 31 December 2014

 


Corporate

£'000s

Development

& Production

£'000s

Exploration

& Appraisal

£'000s

Total

£'000s

Sales and other operating revenues

-

983

-

983

Operating costs

-

(658)

-

(658)

Exploration costs

-

-

(74)

(74)

Impairment of producing assets

-

(723)

-

(723)

Administration expenses

(2,773)

-

-

(2,773)

Operating loss segment result

(2,773)

(398)

(74)

(3,245)

Interest receivable

7

-

-

7

Finance costs

(1,552)

(131)

-

(1,683)

Loss for the period before taxation

(4,318)

(529)

(74)

(4,921)

 

The segments assets and liabilities at 31 December 2014 were as follows:

 


Corporate

£'000s

Development

& Production

£'000s

Exploration

& Appraisal

£'000s

Total

£'000s

Capital expenditure

-

13,112

10,409

23,521

Other assets

14,938

-

-

14,938

Total liabilities

(2,099)

(1,557)

(15,369)

(19,025)

 

 

3.  Share based payments

 

No new options were awarded to the Executive Team during the first half of 2015. The charge of £141,000 recognises the amortisation of share options awarded in prior years.

 

4.  Related party transactions

 

There were no sales or purchases to or from related parties. In 2014, the Company finalised a loan arrangement from the Company's Chairman, Simon Davies. The loan carries an annual coupon of 10% and an amount of £1m was drawn in 2014.

 

No guarantees were provided or received for any related party receivables or payables and there were no further other transactions with related parties, directors' loans and other directors' interests.

 

5.  Profit/(loss) per share

 

The calculation of basic profit/(loss) per Ordinary Share is based on the profit/(loss) after tax and on the weighted average number of Ordinary Shares in issue during the period. Basic profit/(loss) per share is calculated as follows:

 


Loss after tax from continuing operations

Weighted average shares in issue

Loss per share (basic) from continuing operations


June

2015

£'000s

June

2014

£'000s

December

2014

£'000s

June

2015

million

June

2014

million

December

2014

million

June

2015

pence

June

2014

pence

December

2014

pence

Basic

(3,894)

(2,047)

(4,921)

430

291

360

(0.91)

(0.70)

(1.40)

 

6.  Property, plant and equipment

 


Six months ended

30 June 2015

Unaudited

£'000s

Six months ended

30 June 2014

Unaudited

£'000s

Year ended

31 Dec 2014

Audited

£'000s

 

Development and production assets

 

 

15,566

 

 

2,947

 

 

2,947

Cost

At start of period

Exchange adjustments

(1,229)

(40)

(548)

Additions

511

269

1,612

Transfers

-

-

11,555

At end of period

14,848

3,176

15,566

Depreciation

 

2,454

 

1,559

 

1,559

At start of period

Transfers

-

-

-

Charge for period

58

-

102

183

Impairment of assets

-

712

At end of period

2,512

1,661

2,454

Net book amount

12,336

1,515

13,112

Fixtures, fittings and office equipment

 

 

273

 

 

231

 

 

231

Cost

At start of period

Exchange adjustments

-

(2)

(4)

Additions

-

3

46

At end of period

273

232

273

Depreciation

 

185

 

143

 

143

At start of period

Charge for period

21

19

42

At end of period

206

162

185

Net book amount

67

70

88

Total net book amount

12,403

1,585

13,200

 

7.  Land and Buildings

 


Six months ended

30 June 2015

Unaudited

£'000s

Six months ended

30 June 2014

Unaudited

£'000s

Year ended

31 Dec 2014

Audited

£'000s

 

Cost

1,443

 

-

 

-

At start of period

-

Additions

-

-

1,433

Exchange adjustments

(149)

-

-

At end of period

1,294

-

1,433

Depreciation

 

-

 

-

 

-

At start of period

Additions

-

-

-

At end of period

-

-

-

Net book amount

1,294

-

1,433

 

8.  Intangibles

 


Six months ended

30 June 2015

Unaudited

£'000s

Six months ended

30 June 2014

Unaudited

£'000s

Year ended

31 Dec 2014

Audited

£'000s

 

Cost

 

13,948

 

24,560

 

24,560

At start of period

Additions

5,497

863

1,089

Transfers

-

-

(11,555)

Exchange adjustments

(454)

(396)

(146)

At end of period

18,991

25,027

13,948

Impairment and Depreciation

-

-

-

At start of period

5,060

5,060

5,060

Exchange adjustments

-

-

-

Charge for period

72

-

-

At end of period

5,132

5,060

5,060

Net book amount

13,859

19,967

8,888

 

 

9.  Share Issues

 

On 22 January 2015, Sound Oil announced that it had issued 3,906,250 ordinary shares to Greenberry S.A. relating to the introductory fee payable for the reserve based lending facility announced on 13 November 2014.

 

On 20 May 2015, Sound Oil announced that it had issued 48,000,000 ordinary shares as part of the first tranche of the equity placing announced on 28 April 2015.

 

At the same time the Company also issued 48,000,000 warrants valid for five years from 22 May 2015 with an exercise price of 24 pence per ordinary share.

 

On 24 June 2015, the Company announced the result of its Open Offer first announced on 18 May 2015. The Company issued 15,599,752 new ordinary shares and 15,599,752 warrants with identical terms to those announced on 20 May 2015, consequently, at 30 June 2015, the Company had 482,806,817 ordinary shares in issue.

 

10.  Notes to the Cash Flow Statement

Additions to exploration and development assets during the period and unpaid at the period end were £1,760,000.

 

During the period fees of £625,000 relating to the reserve based lending facility completed in November 2014 were settled in exchange for 3,906,250 new ordinary shares.

 

11.  Post Balance Sheet events

 

On 3 July 2015, the Company confirmed the completion of the placing first announced on 28 April 2015.

 

Following receipt of subscriptions and £2.88m of cash, the Company issued 15,157,895 new ordinary shares and 15,157,895 warrants at a price of 24p for a period of five years from 22 May 2015.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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