Information  X 
Enter a valid email address

Fastnet Equity PLC (FAST)

  Print   

Friday 04 September, 2015

Fastnet Equity PLC

Final Results

RNS Number : 0564Y
Fastnet Equity PLC
04 September 2015
 

04 September 2015

 

Fastnet Equity plc

("Fastnet" or the "Company")

Final Results for the year ended 31 March 2015

 

Fastnet (AIM: FAST, ESM: FOI), is pleased to present the financial statement of the Company covering the year ended 31 March 2015.

 

Highlights:

·     Detailed asset review of the Company's oil and gas portfolio undertaken in light of the rapidly changing economic conditions in the oil and gas sector during the last year

·     Review concluded that economic conditions in the oil and gas sector fostered an environment which, despite the Company's comprehensive efforts in conducting detailed due diligence on a broad range of merger and acquisition opportunities in the oil and gas industry and implementing an extensive marketing process around its Celtic Sea and Moroccan assets, made it not possible for Fastnet to find partners to carry some or all of the Company's exploration costs on its oil and gas assets going forward under acceptable terms and conditions

·     With regards to the Company's existing assets, the Board has decided to:

Withdraw from its partnership and surrender its 12.5 percent paying interest in the Foum Assaka Licence, Offshore Morocco

Incur no further substantial expenditure on the Company's Celtic Sea portfolio of licensing options and the Board will continue to examine all options to secure value for shareholders. Options under consideration include spinning the Celtic Sea Assets into a stand-alone entity. This would enable any value creating opportunities from the Celtic Sea Assets to benefit existing shareholders who would become shareholders of the new entity

·     Transition from an Oil & Gas business to an investment vehicle with the adoption of an Investing Policy to acquire companies or businesses in the healthcare sector approved by shareholders on 28 August 2015

·     Cash reserves of US$15.9m at 31 July 2015

·     G&A costs down by over 40% since December 2014 to US$1.9 million on an annualised basis, targeting below US$0.6 million per annum.

Cathal Friel, Non-executive Chairman commented

"The Board believes that the healthcare industry, particularly the biopharma sector, is experiencing strong momentum and there exist significant M&A and value creation opportunities for both small cap and large cap companies. Furthermore, the Board believes that it has access to an international pipeline of such opportunities that could lead to value creation for Fastnet's shareholders.

 

Our near-term focus includes a comprehensive search process to identify and secure Board members with both the appropriate knowledge and expertise base to assess and make investments in the healthcare sector and value accretive deals. We look forward to updating shareholders in due course."

 

 

For further information please contact:

Fastnet Oil & Gas plc

+353 (1) 644 0007

Cathal Friel, Non-Executive Chairman

 

 

 

Shore Capital

+44 (0) 20 7408 4090

Nomad

 

Bidhi Bhoma, Edward Mansfield

 

 

 

Corporate Broking

 

Jerry Keen

 

 

 

Davy

+353 (1) 679 6363

(ESM Adviser & Joint Broker)

 

John Frain, Anthony Farrell

 

 

 

Camarco

+44 (0) 20 3757 4980

Billy Clegg, Georgia Mann

 

 

 

 

Chairman's Statement

 

Introduction

I am pleased to present the financial statement of Fastnet Equity covering the year ended 31 March 2015.

 

Fundamental change of business and adoption of Investing Policy

The Board undertook a detailed asset review of its oil and gas exploration portfolio in Q4 2014 in light of the rapidly changing economic conditions in the oil and gas sector. This continued into 2015 with the Company conducting detailed due diligence on a broad range of merger and acquisition opportunities in the oil and gas sector. The purpose of these actions were to ensure that Fastnet's corporate strategy to create shareholder value by growing the Company's business and monetise its assets remained on track.

However, the underlying economic conditions in the oil and gas sector over the past 24 months has created an environment in which it was not possible for Fastnet to find partners to carry, with acceptable terms and conditions, some or all of the Company's exploration costs on its oil and gas exploration assets. During the review period the Board also received certain unsolicited approaches with respect to opportunities outside the oil and gas sector.  These included opportunities in the healthcare sector, which were not pursued at the time.

In light of the current economic climate within the oil and gas sector the Board determined that it was not in the best interests of shareholders to either pursue M&A opportunities within the oil and gas sector or to expend further resources on the Company's existing oil and gas assets. Consequently on 11 August 2015, Fastnet announced its intention to undertake a fundamental change in its business.  At a General Meeting of the Company held on 28 August 2015, Fastnet shareholders voted to adopt an investing policy focussed on acquiring companies or businesses in the healthcare sector particularly those in the biopharma sector. On the same date the company name was changed from Fastnet Oil & Gas plc to Fastnet Equity plc.

 

Corporate and Financial

Strong financial stewardship and capital maintenance is a key consideration for the Company. Since December 2014, the Company has undergone a comprehensive review of general and administrative costs, which have been reduced in the period from December 2014 to March 2015 by more than 40% to US$1.9 million per year on an annualised basis. These costs have been reduced further in recent weeks and following the approval of the investing policy the Company intends to make further reductions to such costs to reduce them to below US$0.6 million per annum on an annualised basis.

 

As at 31 March 2015, the Company had US$16.7m cash reserves and going forward the Company will continue to keep costs down while it seeks to identify a suitable use of the Company's available cash reserves to drive shareholder value creation.

 

During the current financial year Paul Griffiths and Will Holland left the Board and subsequent to year end Carol Law resigned from the Board following the change of focus of the Company from the oil and gas sector to the healthcare sector. It is expected that further changes will be made to the Board with the appointment of parties with the appropriate knowledge and expertise base to make investments in the healthcare sector.

 

Outlook

The Board believes that the healthcare industry, particularly the biopharma sector, is experiencing strong momentum and there exist significant M&A and value creation opportunities for both small cap and large cap companies. Furthermore the Board believes that it has access to an international pipeline of such opportunities that could lead to value creation for shareholders. The sector is experiencing high activity levels in the UK and also in Ireland, a country where the Company has an existing operating base, with the required management, commercial, fiscal, operational and technical expertise all located in the Irish market.

 

 

Cathal Friel

Non-executive Chairman

 

3 September 2015

 

 

Strategic Report: Investing Policy

 

On 11 August 2015 Fastnet announced its intention to undertake a fundamental change in its business.  At a general meeting of the Company held on 28 August 2015, Fastnet shareholders voted to adopt the Investing Policy set out below and to change the company name from Fastnet Oil & Gas plc to Fastnet Equity plc. 

 

Investing Policy

The Company's investing policy is to acquire companies or businesses in the healthcare sector, particularly those in the biopharma sector. The businesses will typically have attributed to them some or all of the following characteristics:

·     Strong management team with attractive track records;

·     An established entity with existing intellectual property;

·     Markets and products / services with significant commercial opportunities; and

·     Revenue generating or near to medium term revenue generation capabilities.

 

The Company will initially focus on opportunities located in Europe but will also consider businesses in other geographical regions. The Directors believe that they have a broad collective range of sources of potential opportunities but also intend to appoint one or more additional directors with the relevant industry experience. The Directors will identify and assess potential investment targets and, where they believe further investigation is required, intend to appoint appropriately qualified external professionals to assist. The initial objective of the Directors is to create incremental capital appreciation and any revenue generated by the Company will be applied to further the Investing Policy or will be used in the day to day management of the Company. Dividends may be declared at some future date depending on the financial position of the Company and the availability of distributable accounting profits.

 

The Directors intend that the Company takes an equity interest in a proposed investment which is likely to be a majority position up to 100% ownership. The Company's financial resources are likely to be invested in potentially one or more investments in a single transaction which will be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules and ESM Rules, in which case the approval of the shareholders will be required. Proposed investments may be made in quoted or unquoted securities in companies or partnerships at any stage of development.

 

The Company will be required to make an acquisition or acquisitions which will constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the general meeting which was held on 28 August 2015, failing which, the Company's ordinary shares would then be suspended from trading on AIM and ESM. If the Investing Policy has not been implemented within 18 months of the general meeting, the admission to trading on AIM and ESM of the ordinary shares would be cancelled and the Directors will convene a general meeting of the shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to shareholders.

 

Risks and Uncertainties

In the current reporting period the Group was subject to various business risks derived from oil and gas exploration which is inherently costly and risky. The success of the Group in that industry was dependent on its ability to engage in appropriate exploration projects and to attract sufficient funding and/or farm-outs to successfully develop the projects. Following the approval of the Investing Policy the Company is subject to additional risk factors relating to the business and operations of the Company.

 

These risk factors include:

·     Implementation risk - the success of the Investment Policy is dependent on the ability of the Company to identify and acquire suitable acquisitions. These opportunities may not always be readily available additionally cash resources may be expended on examining acquisition opportunities that are then not completed.

·     Financial risk - the identification of suitable acquisitions may lead to the need for the Company to raise additional finance to facilitate the acquisition and subsequent development of the acquisition. There is no guarantee that the Company will be able to raise additional capital.

·     Technical and due diligence risk - during the screening of potential investments the Company will be required to undertake technical, legal, financial and commercial due diligence. Any due diligence process may involve subjective analysis and there can be no assurance that all material circumstances will be identified.

 

To mitigate these risks the Company has identified four key characteristics of acquisition targets, set our above, as part of its Investing Policy. The Company is also initially focussing on targets based in Europe were there are stable jurisdictions with established healthcare legislation and government regulation. It is expected that further changes will be made to the Board of Directors in the coming months, with the appointment of parties with the appropriate knowledge and expertise base to make investments in the healthcare sector.

 

Operational - Celtic Sea

Licence Name

Region

Area

Partner

Operator

Expiry

Mizzen Basin

Celtic Sea

787km2

100%

N/a

Fastnet

31 May 2015

Mizzen East

Celtic Sea

1,155km2

100%

N/a

Fastnet

31 April 2016

Deep Kinsale

Celtic Sea

285km2

60%A

Petronas

Fastnet

31 December 2015

Shanagarry

Celtic Sea

881km2

82.35%

Adriatic Oil, Carob, Petro Celtex

Fastnet

30 November 2015

Molly Malone

Celtic Sea

647km2

100%

N/a

Fastnet

31 May 2015

Block 49/13

Celtic Sea

272km2

85%

Carob, Petro Celtex

Fastnet

14 November 2015

Ventry

Celtic Sea

996km2

100%

N/a

Fastnet

31 August 2016

Total Area

 

5,023km2

 

 

 

A Fastnet has an exclusive option to farm-in, exercisable before 31 December 2015, by commencing a well on or before 31 December 2016 to test the Purbecko-Wealden reservoirs. Upon completion and, if warranted, testing of the well, Fastnet will earn a 60% working interest in the Deep Kinsale Prospect by funding 100% of all drilling and testing costs.

 

In April 2014, Fastnet hosted a one-day workshop on the Celtic Sea highlighting the hydrocarbon potential and the favourable business, infrastructure and regulatory environment for the oil and gas industry in Ireland. The workshop was very well attended by over twenty of the world's largest oil and gas companies who heard presentations on, amongst other things, the licensing and fiscal regime in the Celtic Sea, exploration and production-history, planned exploration and appraisal opportunities, regional infrastructure and shore based facilities. The workshop generated significant interest at the time and Fastnet began a two-stage farm-out process that was planned to conclude over the course of 2014.

 

In August 2014 the Company secured improved commercial terms on Deep Kinsale designed to enhance the prospects of securing a partner on the project. In addition, the Company continued with focussed technical work (US$902,000 of expenditure during the year) to enhance the opportunity of concluding a farm-out of the Celtic Sea assets.

 

However, as the year progressed it became clear that the overall worldwide decline in oil prices, which commenced in Q3 2014, has had a materially adverse impact on economic conditions within the oil and gas sector. In particular, it has resulted in a strategic shift in the forward planning of many large oil and gas companies which, the Company believes, has resulted in the delay of decisions and/or changes in strategy regarding farm-in opportunities for exploration assets. As a consequence of the decline in oil prices and despite implementing an extensive marketing process, the Company was unable to successfully conclude a farm-out of its Celtic Sea Assets.

 

On 31 May 2015, Fastnet's licensing options in the Celtic Sea relating to the Molly Malone and Mizzen licences expired. In June 2015, Fastnet applied, as part of an open tender process, for licensing options over portions of the original licensing option areas. The award of these licence options remains subject to grant by Minister of State at the Department of Communications, Energy and Natural Resources and it is at the Company's sole discretion to accept the award of these options within 28 days of the award notification.  Fastnet will seek to secure a possible disposal or similar transaction for the Group's remaining Celtic Sea assets, however no further substantial expenditure will be incurred on the assets in the meantime.

 

Operational - Morocco

Region

Area

Gross Interest

Net Interest

Partner

Operator

Expiry

Foum Assaka

Offshore Morocco

6,478km2

12.5%

9.375%

Kosmos, BP, SK, ONHYM

Kosmos

Current phase 30 June 2016

Total Area

 

6,478km2

 

 

 

 

 

A Fastnet's option agreement with OGIF expired on 31 December 2014.

 

Morocco Offshore

Fastnet concluded the farm-out of half of our interest in Foum Assaka to Korean-listed SK Innovation in April 2014. As part of the agreement with SK Innovation the Company received a two-well carry comprising of a carry in the first exploration well (FA-1) and first appraisal well or, at SK Innovation's sole discretion, a carry in a second exploration well. The carry for each well is capped at US$100 million gross. In addition, SK Innovation reimbursed back costs to Fastnet of US$20.4 million which the Company received during April 2014. As a result the total cost to Fastnet from acquisition of the Foum Assaka Licence to completion of the FA-1 exploration well, in April 2014, was restricted to US$2.75 million. The FA-1 exploration well drilled was not a commercial success and, accordingly, a subsequent appraisal well was not warranted.  Therefore the future carry for Fastnet on the Foum Assaka licence is subject to SK Innovation's election to participate in a second exploration well, which the Board considers is unlikely.

 

Subsequent to year end, following the approval of the Investing Policy, the Company intends to notify the participants in the Foum Assaka partnership of its decision to withdraw from the partnership and surrender its 12.5% paying interest.

 

Morocco Onshore, Tendrara Lakbir option agreement

In July 2014 Fastnet secured improved commercial terms from those previously announced during May 2013.  The Tendrara Lakbir option agreement was extended to 31 December 2014 and Fastnet's net equity interest increased from 37.5% to 50%. In addition the drilling commitment was reduced from carrying OGIF for three wells to carrying them for two wells, the second of which was to be at Fastnet's election. The deadline to drill the first well was also extended to 21 April 2015. These revised terms significantly reduced Fastnet's financial exposure and provided improved project economics. Despite the improved terms and an extensive marketing process that began in the middle of 2014, the Company was unable to successfully conclude a farm-out of the Tendrara Lakbir licence onshore Morocco, prior to the expiry of the option on 31 December 2014.

 

Impairment of Exploration and Evaluation Assets

In the current reporting year an impairment charge of US$36.6 million has been made in relation to the Company's exploration and evaluation assets. The Company believes that sufficient information was available at the reporting date (low oil prices, inability to farm out assets, significantly depressed share price below cash value, expiring or expired licensing options, disappointing exploration results in the Company's areas of interest) which suggested that the recovery of expenditure on the Moroccan and Celtic Sea areas of interest was unlikely, therefore the amounts which were capitalised in respect of these assets were written off to the statement of comprehensive income.

 

The Strategic Report was approved by the board on 3 September 2015 and signed on its behalf by:

 

______________________

Cathal Friel

Director

 

 

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2015

 

For the year ended

31 March 2015

For the year ended

31 March 2014

 

US$'000

US$'000

Continuing operations

 

 

Revenue

-

-

Operational costs

-

-

Gross loss

-

-

General and administrative costs

(3,196)

(2,469)

Impairment of exploration and evaluation assets

(36,593)

-

Other operating expenses

(12)

-

Share based payments

(129)

(464)

Operating loss

(39,930)

(2,933)

Finance income

185

201

Net foreign exchange gain

4

175

Loss on ordinary activities before taxation

(39,741)

(2,557)

Tax on loss on ordinary activities

-

-

Loss and total comprehensive loss for the year attributable to the equity holders of the parent

(39,741)

(2,557)

 

 

 

Loss per share

 

 

Loss per share - basic and diluted, attributable to ordinary equity holders of the parent (cent)

(11.51)

(0.87)

 

 

Consolidated Statement of Financial Position

As at 31 March 2015

 

31 March 2015

31 March 2014

 

US$'000

US$'000

Assets

 

 

Non-current assets

 

 

Property, plant and equipment

8

14

Exploration and evaluation assets

-

51,644

Total non-current assets

8

51,658

 

 

 

Current assets

 

 

Trade and other receivables

173

76

Cash and cash equivalents

16,790

17,428

Total current assets

16,963

17,504

Total assets

16,971

69,162

 

 

 

Equity and liabilities

 

 

Equity attributable to owners of the parent

 

 

Share capital

20,261

20,261

Share premium

38,918

38,918

Other reserves

2,080

1,815

Retained deficit

(44,792)

(5,051)

Total equity

16,467

55,943

 

 

 

Non-current liabilities

 

 

Liability for share based payments

-

79

Total non-current liabilities

-

79

 

 

 

Current liabilities

 

 

Trade and other payables

504

13,140

Total current liabilities

504

13,140

Total liabilities

504

13,219

Total equity and liabilities

16,971

69,162

 

 

 

 

Consolidated Statement of Cash Flows

For the year ended 31 March 2015

 

31 March 2015

31 March 2014

 

US$'000

US$'000

Cash flows from operating activities

 

 

Group operating loss for the year

(39,930)

(2,933)

Depreciation

6

6

Share based payment expense

129

464

Impairment of exploration and evaluation assets

36,593

-

Movement in working capital:

 

 

(Increase)/decrease in trade and other receivables

(97)

36

(Decrease)/increase in trade and other payables

(496)

359

Net cash flow (used in)/from operating activities

(3,795)

(2,068)

 

 

 

Cash flow from investing activities

 

 

Payments for property, plant and equipment

-

(7)

Expenditure on exploration and evaluation assets

(17,442)

(27,382)

Farm-in proceeds

20,410

-

Bank interest received

185

201

Net cash flow from/(used in) investing activities

3,153

(27,188)

 

 

 

Cash flow from financing activities

 

 

Net proceeds from issue of equity instruments

-

14,971

Net cash flow from financing activities

-

14,971

Exchange and other movements

4

175

 

 

 

Net change in cash and cash equivalents

(638)

(14,110)

Cash and cash equivalents at beginning of year

17,428

31,538

Cash and cash equivalents at end of year

16,790

17,428

 

 

 

 

 

Statement of Changes in Equity

For the year ended 31 March 2015

 

 

 

 

 

Share

capital

 

 

 

Share premium

Share based payment reserve

Merger reserve

Reverse asset acquisition reserve

Capital reserve

 

 

 

Retained deficit

 

 

 

 

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Balance at 1 April 2013

15,832

28,595

695

11,478

(11,256)

9

(2,494)

42,859

Loss and total comprehensive loss for the year

-

-

-

-

-

-

(2,557)

(2,557)

Share based payments

-

-

889

-

-

-

-

889

Issue of share capital

4,429

10,323

-

-

-

-

-

14,752

Balance at 31 March 2014

20,261

38,918

1,584

11,478

(11,256)

9

(5,051)

55,943

 

 

 

 

 

 

 

 

 

Balance at 1 April 2014

20,261

38,918

1,584

11,478

(11,256)

9

(5,051)

55,943

Loss and total comprehensive loss for the year

-

-

-

-

-

-

(39,741)

(39,741)

Share based payments

-

-

265

-

-

-

-

265

Balance at 31 March 2015

20,261

38,918

1,849

11,478

(11,256)

9

(44,792)

16,467


 

 

Notes

1a General information

Fastnet Equity plc (formerly Fastnet Oil & Gas plc) ("Fastnet" or the "Company") is a company incorporated in England and Wales. The Company's offices are in Dublin and London. The Company is listed on the AIM market of the London Stock Exchange (ticker: FAST.L) and the Enterprise Securities Market of the Irish Stock Exchange (ticker: FOI). The principal activity of the Company during the year was oil and gas exploration. At a general meeting of the Company on 28 August 2015, a fundamental change of business and Investing Policy was approved by the shareholders of the Company. The investing policy is to acquire companies or businesses in the healthcare sector particularly those in the biopharma sector.

 

1b Basis of preparation

The Group's financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations, issued by the International Accounting Standards Board ("IASB") as endorsed for use in the EU and those parts of the Companies Act 2006 that are applicable to companies that prepare their financial statements under IFRS.

 

The financial information for the years ended 31 March 2015 and 31 March 2014 does not constitute statutory accounts as defined by section 435 of the Companies Act 2006 but is extracted from the audited accounts for those years. The 31 March 2014 accounts have been delivered to the Registrar of Companies. The 31 March 2015 accounts will be delivered to Companies House within the statutory filing deadline. The auditors have reported on those accounts. Their report was unqualified and did not contain statements under Section 498 (2) of (3) of the Companies Act 2006.

 

2 Segmental information

In the opinion of the Directors the Group had one class of business during the year, being oil and gas exploration.

 

The Group's primary reporting format is determined by the geographical segment according to the location of the exploration asset. The two geographic reporting segments are: UK & Ireland, and Morocco. The geographical segment UK & Ireland includes the costs of the Company head office.

 

Segment information of the business is presented below:

 

12 months to 31 March 2015

12 months to 31 March 2014

 

 

UK & Ireland

Morocco

Total

UK & Ireland

Morocco

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Income Statement

 

 

 

 

 

 

Revenue

-

-

-

-

-

-

General and administrative costs

(2,747)

(449)

(3,196)

(2,145)

(324)

(2,469)

Impairment charges

(31,041)

(5,552)

(36,593)

-

-

-

Other operating expenses

(11)

(1)

(12)

-

-

-

Share based payments

(129)

-

(129)

(464)

-

(464)

Operating loss

(33,928)

(6,002)

(39,930)

(2,609)

(324)

(2,933)

Finance revenue

185

-

185

201

-

201

Net foreign exchange gain

4

-

4

176

(1)

175

Loss before taxation

(33,739)

(6,002)

(39,741)

(2,232)

(325)

(2,557)

 

 

 

 

 

 

 

Assets and Liabilities

 

 

 

 

 

 

Current assets

16,915

48

16,963

17,188

316

17,504

Non-current assets

8

-

8

21,865

29,793

51,658

Total Segment Assets

16,923

48

16,971

39,053

30,109

69,162

Current liabilities

(358)

(146)

(504)

(745)

(12,395)

(13,140)

Non-current liabilities

-

-

-

(79)

-

(7 9)

Total Segment Liabilities

(358)

(146)

(504)

(824)

(12,395)

(13,219)

 

16,565

(98)

16,467

47,684

8,259

55,943

                 

 

3 Loss per share - basic and diluted

The Group presents basic and diluted loss per share ("LPS") data for its Ordinary Shares. Basic LPS is calculated by dividing the loss attributable to Ordinary Shareholders of the Company by the weighted average number of Ordinary Shares outstanding during the year. Diluted LPS is determined by adjusting the loss attributable to Ordinary Shareholders and the weighted average number of Ordinary Shares outstanding for the effects of all dilutive potential Ordinary Shares, which comprise warrants and share options granted by the Company.

 

The calculation of loss per share is based on the following:

 

31 March 2015

31 March 2014

Loss after tax attributable to equity holders of the parent (US$'000)

(39,741)

(2,557)

Weighted average number of Ordinary Shares in issue

345,369,071

294,292,745

Fully diluted average number of Ordinary Shares in issue

345,369,071

294,292,745

Basic and diluted loss per share (cent)

(11.51)

(0.87)

 

Where a loss has occurred, basic and diluted LPS are the same because the outstanding share options and warrants are anti-dilutive. Accordingly, diluted LPS equals the basic LPS. The share options and warrants outstanding as at 31 March 2015 totalled 20,397,423 (31 March 2014: 17,647,423) and are potentially dilutive.

 

4 Exploration and evaluation assets

 

Offshore Morocco

Onshore Morocco

Offshore Ireland

 

Total

 

US$'000

US$'000

US$'000

US$'000

Cost

 

 

 

 

At 1 April 2013

9,496

-

2,545

12,041

Additions

19,319

978

19,306

39,603

At 31 March 2014

28,815

978

21,851

51,644

At 1 April 2014

28,815

978

21,851

51,644

Additions

3,471

986

902

5,359

Farm-in proceeds

(20,410)

-

-

(20,410)

At 31 March 2015

11,876

1,964

22,753

36,593

Impairment

 

 

 

 

At 1 April 2013

-

-

-

-

At 31 March 2014

-

-

-

-

At 1 April 2014

-

-

-

-

Impairment charge

(11,876)

(1,964)

(22,753)

(36,593)

At 31 March 2015

(11,876)

(1,964)

(22,753)

(36,593)

 

 

 

 

 

Carrying value

 

 

 

 

At 31 March 2013

9,496

-

2,545

12,041

At 31 March 2014

28,815

978

21,851

51,644

At 31 March 2015

-

-

-

-

 

Completion of farm-out to SK Innovation Co. Ltd.

On 18 December 2013 Fastnet entered into a farm-out agreement with SK Innovation Co. Ltd. ("SK"). Under the terms of the agreement, Fastnet received up to a two well carry comprised of a carry in one exploration well and first appraisal well (capped at US$100 million per well) or at SK's sole discretion a carry in a second exploration well (capped at US$100 million) for a 9.375% participating interest (12.5% paying interest) in the Foum Assaka Licence Area. All completion conditions in relation to the farm-out were finalised in April 2014 with Fastnet receiving US$20.4 million in back costs from SK on completion.

 

Annual Impairment Review

As part of the annual impairment review of asset carrying values an impairment charge of US$36,593,000 has been made in relation to the Company's exploration and evaluation assets. The Group's policy in relation to exploration and evaluation expenditure is to capitalise the expenditure when the rights to an area of interest are current, the expenditures are expected to be recouped through successful development and exploitation activities, the Company is forecasting future substantive spend on the assets and have not reached such a stage that a reasonable assessment of recoverable reserves indicates that a potential commercial development of the assets is unlikely. The Company believes that sufficient information was available at the reporting date (low oil prices, inability to farm out assets, significantly depressed share price below cash value, expiring or expired licensing options, disappointing exploration results in the Company's areas of interest) which suggested that the recovery of expenditure on the Moroccan and Celtic Sea areas of interest was unlikely, therefore the amounts which were capitalised in respect of these assets were written off to the statement of comprehensive income.

 

A summary of the key factors which were considered by the Directors as part of the year end annual impairment review are set out below:

·     Overall worldwide decline in oil prices, which commenced in Q3 2014, has had a materially adverse impact on economic conditions within the oil and gas sector.

·     A strategic shift in the forward planning of many large oil and gas companies (including the Group's partners on the Foum Assaka asset) which has resulted in the delay/or changes in strategy regarding farm-in opportunities for exploration assets.

·     Unsuccessful farm out campaigns in relation to the Companies exploration assets despite implementing extensive marketing processes.

·     Exploration activities from operators in the last 24 months including the post year end announcement that the Pura Vida Energy MZ-1 exploration well offshore Morocco and Lansdowne Oil & Gas plc Middleton exploration well in the Celtic Sea were considered to be unsuccessful

·     The Tendrara Lakbir licence option expired on the 31 December 2014 therefore the Company's rights to that area of interest are no longer current.

·     Expired (Molly Malone and Mizzen on 31 May 2015) or expiring licensing options (Shanagarry expires on 30 November 2015, Block 49/13 expires on 14 November 2015 and Deep Kinsale Option expires on 31 December 2015).

·     The Group's determination that no significant spend on the assets would be committed to in such uncertain market conditions.

 

As a result of the above the Directors determined that there were facts and circumstances which indicated at year end that the Group's assets were impaired and accordingly the assets were written off.

 

Subsequent to the year end and as a consequence of the uncertainty in the oil and gas sector the Directors concluded their review of the future strategy of the Group and recommended to the shareholders that the Company exit from the oil and gas sector completely and adopt a new Investing Policy. On the 28 August 2015, following the approval of the Investing Policy, the Group has publically stated that it now intends to terminate all future expenditure Offshore Ireland. In addition, pending formal notification by the Company to the partners on the Foum Assaka licence, the Company intends to withdraw from the partnership and relinquish the Company's 12.5% paying interest. Therefore confirming the Group will not commit to future substantive expenditure on the assets and relinquish its interest in the asset.

 

The actions undertaken by the Company since the year end reflect the resulting impact of the issues (summarised above) which had begun to affect the Group prior to the year end.

 

5 Share capital - Company

Details of ordinary shares of £0.038 each issued are in the table below:

 

 

 

 

 

 

Date

 

Number of shares

Issue Price £

At 31 March 2013

 

273,940,493

 

27 November 2013

Share placing - £10,000,000

71,428,578

 0.14

At 31 March 2014 & 31 March 2015

 

345,369,071

 

               

 

6 Share-based payments

The Company has issued share options as an incentive to certain senior management and staff. In addition the Company has issued warrants to key consultants, advisers and suppliers in payment or part payment for services or supplies provided to the Group. Apart from the Share Appreciation Rights described below, each share option and warrant converts into one Ordinary Share of Fastnet Equity plc on exercise and are accounted for as equity-settled share-based payments. No amounts are paid or payable by the recipient and the options and warrants may be exercised at any time from the date of vesting to the date of their expiry. The equity instruments granted carry neither rights to dividends nor voting rights.

 

Share options and warrants in issue:

 

Share Options

Warrants

 

Units

Weighted average exercise price

Units

Weighted average exercise price

Balance at 1 April 2013

10,355,327

17.6p

4,990,301

16.4p

Granted during the year

-

-

2,301,795

14.0p

Balance at 31 March 2014

10,355,327

17.6p

7,292,096

15.6p

Exercisable at 31 March 2014

5,855,327

 11.2p

7,292,096

15.6p

Balance at 1 April 2014

10,355,327

17.6p

7,292,096

15.6p

Granted during the year

7,750,000

9.0p

-

-

Lapsed during the year

5,000,000

14.0p

-

-

Balance at 31 March 2015

13,105,327

15.1p

7,292,096

15.6p

Exercisable at 31 March 2015

8,605,327

 9.5p

7,292,096

15.6p

 

The fair value is estimated at the date of grant using the Black-Scholes pricing model, taking into account the terms and conditions attached to the grant. The following are the inputs to the model for the equity instruments granted during the current and previous year:

 

 

2015 Options

 Ranges

2014 Warrants

 Ranges

Expected life in days

1,461-1,825

1,095

Volatility

49%-56%

51%

Risk free interest rate

1.80%-1.84%

1.59%

Share price at grant

5.7p-10.75p

15.02p

 

During the year a total of 7,750,000 share options exercisable at a weighted average price of £0.09 were granted. The fair value of share options granted during the year was US$103,000. The share options outstanding as at 31 March 2015 have a weighted remaining contractual life of 1.7 years with exercise prices ranging from £0.038 to £0.26.

 

During the prior year a total of 2,301,795 warrants exercisable at a weighted average price of £0.14 were granted. The fair value of warrants granted during the prior year was US$219,000. The warrants outstanding as at 31 March 2015 have a weighted remaining contractual life of 1.2 years with exercise prices ranging from £0.11 to £0.22.

 

The value of share options and warrants charged to the Statement of Comprehensive Income during the year is as follows:

 

31 March 2015

31 March 2014

 

US$'000

US$'000

Share options

208

554

Warrants

-

-

Share appreciation rights

(79)

(90)

Total

129

464

 

In addition to the above charges, share-based payments of US$219,000, related to warrants, were charged to share premium in the prior year. A further US$57,000 (2014: US$116,000) was capitalised to intangible assets during the year.

 

Share Appreciation Rights

The Company issued Share Appreciation Rights ("SAR") to a non-executive Director that require the Company to pay the intrinsic value of the SAR to the Director at the date of exercise. To vest, the Fastnet Equity plc share price must show at least a 25% compound annual growth from the award price (£0.052) over the three years from the grant date. The SAR is accounted for as a cash-settled share based payment and the fair value is estimated by using a Monte-Carlo simulation model, which is rerun at each Statement of Financial Position date. The fair value of the SAR at 31 March 2015 is US$ nil (31 March 2014: US$149,000).

 

Inputs to the Monte-Carlo simulation are detailed below:

Expected life in days

44

Volatility

59%

Risk free interest rate

1.35%

Share price at rerun

2.05

 

7 Capital commitments and contingencies

Fastnet has obligations to carry out agreed work programmes under the terms of award on its oil and gas licensing authorisations. Commitments and contingencies on these are detailed below.

 

Offshore Ireland Assets

Following the approval of the Investing Policy on 28 August 2015, Fastnet will withdraw from the oil and gas sector and not commit further substantial expenditure on the assets in the meantime.  All costs incurred to 31 March 2015 in respect of the Company's Celtic Sea work programmes have been accrued for. Going forward the Group has other potential liabilities in respect of rental fees and work programmes in respect of certain parts of its Celtic Sea portfolio.  The Company estimates that these amounts should not exceed US$325,000 in aggregate.

 

Foum Assaka Petroleum Agreement

Fastnet's running costs in respect of its partnership share in the Foum Assaka Licence are approximately US$20,000 per month based on cash calls received post year end and forecast cash calls from the approved budget to 31 December 2015. Additionally, should the partnership proceed with drilling a further exploration well and SK Innovation elect not to participate in a second exploration well, the Company would be exposed to the cost and would be required to seek further financing or secure a partner to finance Fastnet's 12.5 per cent paying interest in the Foum Assaka Licence. Following the approval of the Investing Policy at the general meeting of the Company on 28 August 2015, the Company will formally withdraw from the partnership and surrender its 12.5% paying interest in the Foum Assaka Licence and will notify the participants in the partnership ("JOA Parties") accordingly.  In addition to its pro-rata share for the approved work program and budget items until 31 December 2015 the Company is responsible for all costs associated with respect to filing changes with the other JOA Parties and the relevant government authorities.  The Board estimates that the total liabilities in respect of all of the above should not exceed an aggregate sum of US$210,000. Other than these costs no further expenditure on the assets will be undertaken.

 

8 Events after the reporting period

On the 28 August 2015 at a general meeting of the Company, Fastnet shareholders voted to adopt the Investing Policy set out in the Strategic Report and to change the name of the Company from Fastnet Oil & Gas plc to Fastnet Equity plc.

 

9 Annual Report and Annual General Meeting ("AGM")

The Annual Report for the year ended 31 March 2015 will be posted to shareholders on 4 September 2015 and will be available to download from the Company's website at www.fastnetequity.com on 4 September 2015.

 

Notice of the AGM will be posted to shareholders on 4 September 2015. The AGM will be held at 2pm on 30 September 2015 at Conrad London St James, 22-28 Broadway, London SW1H 0BH.

 

 


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

a d v e r t i s e m e n t