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Lansdowne Oil & Gas (LOGP)

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Thursday 24 September, 2015

Lansdowne Oil & Gas

Half Yearly Report

RNS Number : 0165A
Lansdowne Oil & Gas plc
24 September 2015
 

24 September 2015

 

Lansdowne Oil & Gas plc

Interim results for the six months ended 30 June 2015

 

Lansdowne Oil & Gas plc ("Lansdowne" or "the Company") is pleased to announce its interim results for the six months ended 30 June 2015. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs. The Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.

 

First half highlights

 

·     In the first quarter of 2015, the Company secured an additional £2.9 million of funding by way of a placing and loan note.

·     In April 2015, the Company launched a strategic review to ensure that all opportunities for maximising value for shareholders are considered.

·     Throughout the first half of the year, Providence Resources continued farm-out negotiations on behalf of the Barryroe partnership (Lansdowne 20%).

·     Cash balances at 30 June 2015 of £0.55 million (31 December 2014:£0.28 million).

·     Loss for the period after tax £0.55 million (2014: loss £0.76 million).

·     Loss per share 0.4 pence (2014: loss 0.5 pence).

 

Subsequent Events

 

·     The Midleton exploration well, located on Standard Exploration Licence (SEL) 4/07 in which the Company holds a 20% interest, spudded in July and completed in August. The well targeted gas in the shallow Lower Cretaceous Greensand and Upper Wealden reservoirs. Through a farm-out arrangement, it was funded 100% by PSE Kinsale Energy Limited (KEL), which operated the well. Gas was discovered in the Greensand but the volumes were considered sub-commercial and the well was plugged and abandoned.

·     A 50% relinquishment of the areas held in SEL 5/07 (Rosscarbery) and SEL 5/08 (Amergin) was made on 31 July 2015. The main prospects were retained and efforts continue to farm-out for drilling.

 

 

For further information please contact:

 

Lansdowne Oil & Gas plc

Steve Boldy

Richard Slape

+353 1 495 9259

 

Cantor Fitzgerald

Sarah Wharry

David Porter

 

+44 (0) 20 7894 7000

 

 

Chairman's Statement

 

The collapse of the oil price in the fourth quarter of 2014 and its continued weakness has had a dramatic impact on the fortunes of small oil and gas exploration and production companies such as Lansdowne.

 

Our strategy has been to acquire exploration and appraisal properties, add value through additional technical work including the acquisition of 3D seismic data, and then to farm-out for a carry through the drilling phase. Unfortunately, the final part of this process has become extremely challenging as larger companies have reacted to the deterioration in the external environment by cutting their discretionary spending across the board.

 

Nevertheless, towards the end of last year we successfully negotiated the farm-out of SEL 4/07 to PSE Kinsale Energy Limited (KEL), which acquired an 80% interest in the Licence in return for agreeing to pay the cost of an exploration well. Designated 49/11-3, this was drilled on the Midleton gas prospect and was completed in August of this year.

 

Good quality reservoirs were found in the Greensand and Upper Wealden formations of the Lower Cretaceous and gas was present in the former. Unfortunately, the volumes were not considered commercial and the well was plugged and abandoned, which was very disappointing. Post well evaluation studies are continuing and the results will be integrated to assess the impact on the other gas prospects in the portfolio.

 

Regarding Barryroe, Providence Resources is continuing the farm-out process on behalf of the partnership. Lansdowne has a 20% stake in this oilfield that has the potential to be a truly significant asset. Indeed, its gross 2C resources have been independently estimated at 339 MMBOE. 

 

Barryroe lies only some 70km offshore, in shallow water (c.100m) and the reservoir is at relatively shallow depth (c.2,300m), resulting in projected low operational costs. This combined with the attractive fiscal regime, results in robust economics, even at the current depressed oil price. An independent assessment of the field undertaken in 2013, when rig rates and other costs were much higher than is the case currently, estimated combined capital and operating costs of a little over US$30/bbl.

 

The Amergin oil prospect is located in SEL 5/08, where Lansdowne holds a 100% interest. It contains multiple reservoir targets, some of which have been found to be oil bearing in the nearby Barryroe field. If successful, we believe Amergin also would be a commercially attractive project at the current oil price and there is the potential for considerable synergy with activity at Barryroe.

 

In terms of financing, in March we secured access to £2.9 million of additional funding in order to satisfy our share of the settlement of the costs associated with the litigation with Transocean and to provide ongoing working capital requirements. Of this, £1.04 million came from a placing of new shares, while £1.86 million came from issuing a senior secured loan note to our largest shareholder, LC Capital Master Fund.

 

In April we announced a decision to launch a strategic review, to ensure that we explore all avenues for maximising value for shareholders. This process is continuing.

 

Financial results

 

The Group recorded a loss after tax of £0.55 million for the first six months of 2015 compared to a loss of £0.76 million for the first six months of 2014.

 

Group operating expenses for the first half of 2014 were £0.51 million compared to operating expenses of £0.75 million for the first six months of 2014.

 

Net finance expense was £0.04 million for the current period against net finance expense of £0.02 million for the prior period.

 

Cash balances at 30 June 2015 were £0.55 million (31 December 2014: £0.28 million).

 

Total equity attributable to the ordinary shareholders of the Group has decreased from £25.02 million as at 30 June 2014 to £24.87 million as at 30 June 2015.

 

Outlook

 

Whilst market conditions remain extremely challenging, we have faith in our portfolio of assets in the shallow water Celtic Sea and continue to believe it can deliver good returns even in the current low oil price environment. I would like to thank all our shareholders for their continued support, but would especially like to place on record our thanks to LC Capital Master Fund.

 

We will continue with our current strategy and with our strategic review process, with a view to exploring all options for maximising value for shareholders.

 

John Greenall

Chairman

 

Condensed Consolidated Income Statement

Six months ended 30 June 2015

 


Unaudited

Unaudited

Audited


6 months

ended

6 months

ended

Year

ended


30 June 15

30 June 14

31 Dec. 14


£000s

 

£000s

£000s













Administration expenses

(514)

(746)

(1,302)


________

________

________

Operating loss

(514)

(746)

(1,302)





Finance income

-

3

3

Finance costs

(36)

(16)

(21)


______

______

______

Loss before tax

(550)

(759)

(1,320)





Income tax credit

-

-

-


______

______

______

Loss for the financial period

(550)

(759)

(1,320)


______

______

______

Loss per share (pence)




 

Basic and diluted

(0.4p)

(0.5p)

(0.9p)


______

______

______

 

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2015

 


Unaudited

Unaudited

Audited


6 months

ended

6 months

ended

Year

ended


30 June 15

30 June 14

31 Dec. 14


£000s

£000s

£000s





Loss for the Period

(550)

(759)

(1,320)





Currency translation differences

-

118

3


______

______

______

 

 

Total comprehensive loss for the period

(550)

(641)

(1,317)


______

______

______













 



Condensed Consolidated Statement of Financial Position

As at 30 June 2015

 


Unaudited

Unaudited

Audited


30 June 15

30 June 14

31 Dec. 14


£000s

£000s

£000s

Assets








Non-Current Assets




Intangible assets

27,485

27,582

27,151


_______

_______

_______


27,485

27,582

27,151


_______

_______

_______

Current Assets




Trade and other receivables

197

137

197

Cash and cash equivalents

546

1,115

276


_______

_______

_______


743

1,252

473


_______

_______

_______

Total Assets

28,228

28,834

27,624


_______

_______

_______





Equity & Liabilities

 

Shareholders' Equity




Share capital

8,065

7,027

7,027

Share premium

25,247

25,273

25,273

Currency translation reserve

59

174

59

Share-based payment reserve

923

860

894

Accumulated deficit

(9,425)

(8,317)

(8,876)


_______

_______

_______

Total Equity

24,869

25,017

24,377





Non-Current Liabilities




Deferred income tax liabilities

1,053

1,053

1,052

Provision for liabilities

227

197

217


-----------

-----------

-----------


1,280

1,250

1,269


_______

_______

_______

 

Current Liabilities




Trade and other payables

2,079

2,567

1,978


_______

_______

_______


2,079

2,567

1,978


_______

_______

_______

Total Liabilities

3,359

3,817

3,247


_______

_______

_______

 

Total Equity and Liabilities

28,228

28,834

27,624


_______

_______

_______



Condensed Consolidated Statement of Cash flows

Six months ended 30 June 2015

 


Unaudited

Unaudited

Audited


6 months

ended

6 months

ended

Year

ended


30 June 2015

30 June 2014

31 Dec. 2014


£000s

£000s

£000s





Cash flows from operating activities




Cash from operations

                     (419)

(1,014)

(2,268)

Net finance expense

11

13

(2)


_______

_______

_______

Net cash from operating activities

(408)

(1,001)

(2,270)





Cash flows from investing activities




Interest received

-

3

3

Acquisition of intangible exploration assets, net

(334)

(365)

66


_______

_______

_______

Net cash from investing activities

(742)

(1,363)

(2,201)









Cash flows from financing activities




Proceeds from issuance of ordinary shares

1,012

-

-


_______

_______

_______

Net cash generated from financing activities

1,012

-

-


-----------

-----------

-----------

 

Net increase/(decrease) in cash and cash equivalents

270

(1,363)

(2,201)

 

Cash and cash equivalents at start of period

276

2,478

2,478

 

Effect of exchange rate fluctuations on cash held

 

-

-

(1)


_______

_______

_______

Cash and cash equivalents at end of period

546

1,115

276


_______

_______

_______









Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2015








Share Capital

Share Premium

Other Reserves

Retained Losses

Total


£000s

£000s

£000s

£000s

£000s







 

Unaudited






At 1 January 2014

7,027

25,273

56

(6,753)

25,603

Loss for the period

-

-

-

(759)

(759)

Currency translation differences

-

-

118

-

118


_______

_______

_______

_______

_______

Total comprehensive income for the period

7,027

25,273

174

(7,512)

24,962

Share based payment charge

-

-

-

55

55


_______

_______

_______

_______

_______

At 30 June 2014

7,027

25,273

174

(7,457)

25,017


_______

_______

_______

_______

_______

Audited

At 1 January 2014

7,027

25,273

56

(6,753)

25,603

Loss for the period

-

-

-

(1,320)

(1,320)

Currency translation difference

-

-

3

-

3


_______

_______

_______

_______

_______

Total comprehensive income for the period

7,027

 

25,273

 

59

(8,073)

24,286

Share based payments charge

-

-

-

91

91


_______

_______

_______

_______

_______

At 31 December 2014

7,027

25,273

59

(7,982)

24,377


_______

_______

_______

_______

_______

Unaudited






At 1 January 2015

7,027

25,273

59

(7,982)

24,377

Loss for the period

-

-

-

(550)

(550)


_______

_______

_______

_______

_______

Total comprehensive income for the period

7,027

25,273

59

(8,532)

23,827

Issue of new shares

1,038

(26)

-

-

1,012

Share based payment charge

-

-

-

30

30


_______

_______

_______

_______

_______

At 30 June 2015

8,065

25,247

59

(8,502)

24,869


_______

_______

_______

_______

_______







 

Notes to the Interim Condensed Financial Statements

 

1.   Basis of Presentation

 

Accounting Policies

 

The interim financial information for the six months ended 30 June 2015 has been prepared on the basis of the accounting policies which were adopted in the 2014 Annual Report and Accounts, and IAS 34, "Interim Financial Reporting".

 

The interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The results for the six months to 30 June 2015 and the comparative results for the six months to 30 June 2014 are unaudited. The comparative amounts for the year ended 31 December 2014 do not constitute the statutory financial statements for that year. The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2014, which have been prepared in accordance with IFRSs as adopted by the European Union. Those financial statements have been delivered to the Registrar of Companies and include the auditor's report which was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. They did, however, contain an emphasis of matter over the going concern basis of preparation for the Group.

 

Going concern 

 

The Directors have prepared the interim financial information on the going concern basis which assumes that the Group and Company and its subsidiaries will continue in operational existence for the foreseeable future. The Directors have carried out a detailed assessment of the Group's current and prospective exploration activity, its relationship with the holder of its loan note and cash flow projections and it is on this basis that the directors consider it appropriate to prepare this interim financial information on a going concern basis. This interim financial information does not include any adjustment that would result from the going concern basis of preparation being inappropriate.

 

2.   Segmental Analysis

 

The Group has only one reportable business segment, which is the exploration for oil and gas reserves in Ireland. All operations are classified as continuing.

 

3.   Loss per share

 

The loss for the period was wholly from continuing operations.

 


Unaudited

Unaudited

Audited


6 months

ended

6 months

ended

Year

ended


30 June 15

30 June 14

31 Dec. 14


£000s

£000s

£000s





Loss per share for loss from continuing operations attributable to the equity holders of the Company




- basic and diluted

(0.4p)

(0.5p)

(0.9p)

 

The calculations were based on the following information:




 

Loss attributable to equity holders of the Company

(550)

(759)

(1,320)

 

Weighted average number of ordinary shares




In issue - basic and diluted

153,582,061

140,540,159

140,540,159

 

 

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one class of dilutive potential ordinary shares - share options. As a loss was recorded for both periods the issue of new shares would have been anti-dilutive.

 

4.   Intangible Assets

 

Oil and gas project expenditures, including geological, geophysical and seismic costs are accumulated as intangible assets prior to the determination of commercial reserves. At 30 June 2015, intangible assets totalled £27.5 million (30 June 2014: £27.6 million), all of which relates to Ireland. Movements in the period relate to additional spend on the licence areas of £ 0.3 million.

 

5.   Reconciliation of loss for the period to net cash used in Operating Activities

 


Unaudited

Unaudited

Audited


6 months

ended

6 months

ended

Year

ended


30 June 15

30 June 14

31 Dec 14


£000s

£000s

£000s









Loss before tax for the period

(550)

(759)

(1,320)





Adjustments for:




Equity settled share-based payments

30

57

91

Unrealised foreign exchange losses

-

118

             5


______

______

______

Operating cash flows before movements in working capital

(520)

(584)

(1,224)


______

______

______





Change in trade and other receivables

-

(9)

(51)

Change in trade and other payables

101

(421)

(993)


______

______

______


(419)

(1,014)

(2,268)


______

______

______





 

6.   Related Party Transactions

 

On 10th March 2015, the Company issued a loan note to the value of £1,862,318 to LC Capital Master Fund Limited, a significant shareholder of the Company. There were no other related party transactions entered into by the Group during the period.

 

7.   Copies of the Interim Report

 

Copies of the interim results can be obtained from the Company Secretary, Lansdowne Oil & Gas plc, 6 Northbrook Road, Dublin 6 and from the Company's website www.lansdowneoilandgas.com.

 

 

 


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