Information  X 
Enter a valid email address

Trap Oil Group plc (TRAP)

  Print          Annual reports

Thursday 24 April, 2014

Trap Oil Group plc

Final Results

RNS Number : 3744F
Trap Oil Group plc
24 April 2014
 



 

Trap Oil Group plc

("Trapoil" or the "Company" and, together with its subsidiaries, the "Group")

 

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013

Trapoil (AIM: TRAP), the independent oil and gas exploration, appraisal and production company focused on the UK Continental Shelf ("UKCS") region of the North Sea, is pleased to announce its audited results for the year ended 31 December 2013.

Highlights:

·    Completed disposal of interests in Knockinnon, Lybster and certain other assets to Caithness Oil Limited for consideration of US$7.5m shares in IGas Energy plc, as part of the disposal of Caithness by its parent company to IGas.

·    Entered into a Farm-out agreement relating to Valleys (Licence P2032, Blocks 21/8c, 21/10c, 21/14a & 21/15b) with Total E&P UK Limited (Total) whereby they acquired 30.625 per cent. of Trapoil's 50 per cent. equity interest by funding 43.75 per cent. of certain costs up to and including the drilling of an exploration well. Trapoil's new equity interest in the licence is 19.4 per cent. fully funded by Total and Noreco.

·    The Group now holds a 100 per cent. working interest in the Surprise and Nutmeg oil discoveries (Licence P1267, Blocks 12/25a & 13/21b) following the transfer from Dana Petroleum (E&P) Limited and First Oil Exploration of their working interests. Trapoil will continue to seek partners for this potentially commercial discovery such that a well and development plan can be executed in the next twelve months.

·    In aggregate costs for the 2012/13 drilling campaign have been only £2m for an average 12 per cent. equity position, compared to what would have been a real cost of £14m. This reflects the value of Trapoil's carried interest model and careful risk management policy.

·    Positive cash flow delivered from investing activities (including the receipt of £4.2m further to completion price adjustment for the Group's equity interest in Athena) after accounting for capital expenditure.

·    Strong revenue stream from Athena which helped the Group's cash reserves (including restricted cash) increase to £16.4m at year end, with net positive cash flow for the year of £6.8m.

·    Loss (before and after tax) for the year of £10.3m, of which £9.4m related to the disposal of assets to Caithness.

 

Outlook:

·    Seeking to carefully manage and maximise the Group's current and expected future cash reserves in order to secure and execute on a future drilling programme that will afford shareholders exposure to an asset base with significant potential to unlock shareholder value.

·    Further development of the Group's unconventional oil play with partners being sought to drill a proof of concept well, to unlock the potential value in this innovative oil play developed to date by the Group.

·    As part of the Valleys farm-out transaction to Total, the Group negotiated the right to potentially take up a 35 per cent. equity interest in its Alfa prospect which remains under evaluation. The Group believes that its potential involvement in the drilling of the Alfa well will assist with unlocking the potential of the Romeo asset. 

·    The Group's capital expenditure commitments remain low, with only the Niobe prospect having a firm well commitment obligation to the Department of Energy and Climate Change ("DECC"), with the well to be drilled in 2015 at an estimated cost of £2m net to the Group due to a partially carried interest.

·    Management will continue to monitor and if necessary curtail expenditure. To recognise increased costs in the running of the business, in 2014, management have taken a 20 per cent. pay cut and staff levels have been trimmed as has administrative expenditure.

 

Mark Groves Gidney, Chief Executive Officer of Trapoil, commented:

"In what has continued to be a challenging industry and market environment, we were able to generate positive cash flows in 2013, primarily through our equity interest in Athena.

 

Our goal remains to carefully manage and maximise the Group's cash reserves in order to establish a drilling programme that will afford shareholders exposure to an asset base that is capable of delivering increased value.

 

With our existing cash reserves and the in-house technical and operational ability to manage risks and secure carried interest positions, we will aim to deliver this strategy and hope to enhance the Group's position with value driven new ventures."

 

Enquiries:

Trap Oil Group plc

 

Mark Groves Gidney, CEO

 

Tel:  020 3170 5586

www.trapoil.com

 

Strand Hanson Limited

James Harris

Matthew Chandler

James Spinney

 

Tel:  020 7409 3494

Mirabaud Securities LLP

Peter Krens

 

Tel:  020 7321 2508

FirstEnergy Capital LLP

Hugh Sanderson

David van Erp

 

Tel:  020 7448 0200

 

Cardew Group

Shan Shan Willenbrock

Lauren Foster

 

Tel:  020 7930 0777

[email protected]


Chief Executive OFFICER's Report

 

Introduction

 

I am pleased to report on the Group's final results for the year ended 31 December 2013. The year has again been challenging for North Sea oil and gas exploration and production companies but in the last quarter of 2013 we began to detect some signs of recovery. Whilst activity levels remain low in Q1 2014, we are seeing several large companies, such as our partner Taqa Bratani UK Limited ("Taqa"), increase their strategic investment in the North Sea, particularly in fields close to existing infrastructure.

 

Against a difficult backdrop, the Group navigated its way through various partner drag issues, which served to delay our plans as well as giving rise to certain impairments. These issues were resolved and we replaced our old partners and attracted new financially strong international partners: Taqa, Cieco Exploration and Production UK Limited and Japan Petroleum Exploration Co., Limited who are all active participants in the North Sea. We also negotiated compensation for the loss of planned wells including the receipt of US$7.5m in the form of shares in IGas Energy plc ("IGas"), as detailed further below. 

 

In our view, it will take some time yet, and most likely require new government initiatives post Sir Ian Wood's recently published review of UK offshore oil and gas recovery and its regulation, to stimulate increased risk capital investment into the North Sea region. Trapoil remains well funded, with an established revenue stream from its interest in the producing Athena Oil Field (Licence P1293, Block 14/18b) ("Athena") which serves to support its current medium term strategy with one well committed in 2015, together with the benefit of carries and strong partners. 

 

Financial Results

 

Our results for the year show revenue of £30.3m (2012: £1.7m) reflecting the contribution from our interests in producing UKCS assets. The Group generated a loss before tax of £10.3m (2012: loss £10.9m) largely as a result of the previously announced £9.4m loss on the disposal of certain assets to Caithness Oil Limited ("Caithness") which in turn was sold by its parent company to IGas. 

 

As at 31 December 2013, total cash reserves (including restricted cash) were approximately £16.4m, which was in line with our expectations and we remain well funded to deliver on our strategic goals. In addition, we continue to hold as an investment around 4.1m shares in IGas which had a market value of approximately £4.4m as at the year end.

 

Production and Cash Generation

 

Trapoil continues to benefit from ongoing production at Athena, which has enabled cash reserves to grow despite the operational issues encountered throughout the year. These issues principally involved the failure of two pumps on the P4 production well, which resulted in a lower overall gross production rate for the field of approximately 7,000 barrels of oil per day ("bopd"), (1,050 bopd net to Trapoil), rather than the planned rate of c.11,000 bopd prior to the failure. The P4 well continues to produce a few hundred barrels per day without assistance but may need to be worked over or re-drilled in order for production to return to higher levels. As the P4 well is no longer flowing at its full potential this has meant that the water cut has reduced to minimal levels. We expect to receive additional information on depletion rates in Q2 2014 (and associated water cut) and which parts of the field have been poorly swept thereby enabling planned remedial work in 2014 to be more accurately focused. Ithaca Energy (UK) Limited, the operator of Athena, currently expects to secure a rig for a minimum one slot campaign to take place in the middle of 2014, following which we look forward to production returning to higher levels. In addition, bad weather experienced at the beginning of 2014 was unsuitable for any floating production system leading to temporary suspensions in production and therefore, delayed income and cash flows.

 

Production from Athena through the year resulted in the Group's total cash reserves (including restricted cash) increasing by just over £7m to approximately £16.4m at the year end. At the current estimated reduced production rate, we expect to continue to generate just under £1m per month from our 15 per cent. equity interest in Athena at oil prices of approximately US$105/barrel after absorbing field operating costs.

 

Compensation on Loss of Planned Wells and Impairments

 

2013 was disappointing in terms of the lack of certain anticipated drilling activity combined with impairment costs, of which a significant amount was due to the joint interests held alongside Caithness. We were also adversely impacted by our partner Norwegian Energy Company UK Limited's ("Noreco") financial problems, which led to severe partner drag. Both partners left us with potential commitments to DECC that required intensive and careful management. Following long and detailed negotiations with Caithness, its parent company Caithness Petroleum Limited and IGas, we secured shares in IGas valued at more than £4m as compensation, which provides us with exposure to potential future upside from onshore UK shale gas. As a consequence of the settlement we were forced to lose the Knockinnon asset. In this situation, decisions had to be taken to ensure that Trapoil maximised its compensation package and that shareholder value was protected as far as possible.

 

Noreco's default on the Crazy Horse well (Licence P1650, Block 14/13), originally due to be drilled in 2012 (on which we were also partly carried), deprived us of a drilling opportunity in 2013. However, Noreco ultimately assumed overall responsibility to DECC and we were compensated by Noreco by way of receiving increased equity in the Romeo discovery (Licence P1666, Block 30/11), which was drilled in 2012, together with a full carried interest on our seismic programme on the Homer asset (Licence P1989, Blocks 14/11, 12 & 16) acquired in DECC's 27th Seaward Licensing Round valued at approximately £1.5m. We also secured a 10 per cent. carried interest on any well ultimately drilled on the Homer licence, which is currently expected in the mid to long term. The equity transfer arrangement with Noreco was completed in April 2014 and awaits approval by DECC. 

 

During the year, we chose not to proceed with the planned acquisition of a working interest in the Trent East Terrace Area ("TET") (Licence P685, Block 43/24a) and to surrender our 30 per cent. interest in the Conrad prospect (Licence P1923, Block43/20c), as one of the proposed partners in TET, Holywell Resources Limited ("Holywell") was unable to meet certain financing pre-requisites. Accordingly, we decided that the risk of proceeding with the proposed transaction was unacceptable and no longer in shareholders' best interests. The loss of this potential opportunity, and the export option it offered for any gas in the area, meant that proceeding with Centrica Resources Limited and Holywell on the surrounding acreage, including our delayed 27th Seaward Licensing Round award on the Opal asset, no longer made commercial sense.

 

2013 Drilling - Magnolia and Scotney

 

The start of the year saw the Group drill two successive dry holes: Magnolia (Licence P1610, Block 13/23a) and Scotney (Licence P1658, Block 20/5b). Whilst disappointing, our exploration activities will only increase shareholder value by drilling wells, and it is our carried interest model that enables us to manage those risks and where possible protect shareholders' funds. The combined cost of the 2012-2013 drilling campaign was only £2m for an average 12 per cent. equity position against a real cost of £14m. We did not have to meet any of the drilling costs for Magnolia or Scotney and these wells are discussed in greater detail below.

 

The Magnolia well was drilled close to the Captain field but ultimately failed due to the lack of a required stratigraphic trapping mechanism, but the nearby Liberator well, drilled by the same operator Dana Petroleum (E&P) Limited ("Dana") at the end of 2013, was a success and confirmed the merits of the play concept. Seismic information suggested the Liberator accumulation extended into the Magnolia licence. However, further drilling on our acreage will be required and we look forward to the appraisal of the Liberator find working further with Dana.

 

Scotney was disappointing as the Group had a significant carried interest and the prospect was of a good size, with estimated net reserves of approximately 7 million barrels of oil equivalent ("mmboe"). The best in class seismic data used to evaluate the opportunity had reflectors that were interpreted to be sand based on the geological model. However, the drill bit ultimately proved these reflectors to be limestone stringers and non reservoir bearing.

 

Despite the disappointing drilling results in 2013, our business model is such that Trapoil is able to provide drilling opportunities to our shareholders with managed reduced costs and associated risks.

 

Portfolio Management

 

Since the end of 2013, we are beginning to see some evidence of 'green shoots' of an improving climate for active portfolio management. During the last 18 months the challenging macroeconomic environment and lack of risk appetite has led to the loss of promising assets such as Inverewe, Lytham and Sienna, all of which were returned to DECC as we were unable to progress such assets with our then partners. However, it is encouraging that we are now presenting several of our existing portfolio assets to a number of interested parties and we are optimistic about potentially sharing equity in return for carried interest positions, albeit such discussions are still at an early stage.

 

Our Bordeaux-Brule asset (Licence P1768, Blocks 14/14b, 18c & 19c) is currently being reviewed by several parties either owning infrastructure in the area, or who are keen to develop a multi-asset sour oil play for which the Bordeaux discovery is a potentially valuable addition to their portfolio. The Brule discovery offers immediate value potential via a short tie back to existing infrastructure and additional value upside could be harnessed from nearby exploration plays. One such exploration play, secured before the year end, was the Valleys acreage, situated immediately west of the giant Forties field. Trapoil's operating subsidiary secured Valleys in the 27th Seaward Licensing Round with a 44 per cent. paying interest and a 6.25 per cent. carried interest from Noreco. We subsequently exchanged our paying interest with Total in return for a 13.12 per cent. carried interest giving us an aggregate 19.37 per cent. carried interest position. In summary, the licence commitment to fund over £1m of seismic work is being met by our partners who will also cover the drilling of the first well if an election to drill is made. We negotiated a break fee should a well on Valleys not be drilled, as well as the ability to transfer equity in Valleys for equity in Block 29/15, adjacent to our Romeo discovery; an opportunity which is discussed further below.

 

Portfolio management is important to a group of Trapoil's size and over the last six months, as the market has appeared to be improving, we have focused our efforts on cultivating strong partnerships with the aim of avoiding future partner drag. We have also managed to significantly reduce our committed expenditure from £12m to just £2m.

 

Accretion of Shareholder Value

 

At Board level there has been much debate about how best, within the North Sea environment, to create value for the Company's shareholders from the free cash reserves that we currently have available and are likely to generate from Athena over the course of the next 18 months. We have formulated a strategy for 2014 and beyond that focuses on allocating those cash reserves over the better opportunities within our existing portfolio. There may well be some modest additions to the portfolio such as those stemming from the 28th Seaward Licensing Round assuming that we are able to identify opportunities of interest for ourselves and our partners.

 

Whilst actively pursuing the advancement of our existing assets, described further below, we will search for new ventures that create production (and therefore cash flow) or provide clear added value within the next few years.

 

Looking at our existing portfolio we are pleased to have secured the support of DECC in retaining our Surprise (Licence P1267, Blocks 12/25a & 13/21b) development opportunity for a further year with no additional or further commitment. Trapoil now operates this asset following Dana's withdrawal from the licence. Surprise (with Nutmeg) is a potentially 14 mmbbls development opportunity, supported by three existing historic wells, with the only unknown factors being the oil quality and flow rate from the nearby Nutmeg discovery, which forms an integral part of the development. We continue with our search for partners to drill the first development well on Nutmeg and, if successful, will then proceed to agree a field development plan with DECC. Our aim, subject to securing suitable partners and rig availability, would be to drill a Nutmeg development well later this year.

 

In the short term we would like to move Brule into production. It is a small accumulation (approximately 5 mmbbls) that could readily be tied into nearby infrastructure thereby requiring close collaboration with one of the existing operators. We are looking to drill Brule later in 2014 or in 2015 and there is a significant amount of additional exploration potential in the licence area although our focus is currently on the discovered oil resource.

 

The 2012 Romeo discovery is important to us given its potentially large size. Suncor Energy UK Limited ("Suncor") is the operator and Total control the adjacent block to the west that contains approximately 20 per cent. of Romeo and is a lookalike structure named Alfa or Scaranish. In Q4 2013 Trapoil farmed out its Valleys asset near the Forties field to Total and in return negotiated the right to take up to a 35 per cent. equity interest in Alfa. Trapoil believes that it should be involved in the Alfa well in order to help unlock the potential of Romeo. 

 

Alfa will be drilled in 2015 as a commitment to DECC. Trapoil will focus on the Alfa/Romeo assets in 2014/15 together with its partners to ensure that new wells unlock the full potential of these assets.

 

Within our exploration portfolio we have three assets with carried interest positions, namely Niobe, Valleys and Homer. Niobe will be drilled in 2015 by Suncor who are the operator, and we have a 28 per cent. interest of which 8 per cent. is carried. For Valleys we have a 19.37 per cent. carried interest and our seismic costs are carried and once this work is completed in H1 2014 there will be a decision as to whether or not to drill a well provisionally scheduled for 2015. Trapoil will be carried in this well and we believe that it could represent a value of £23.5m on success. Homer is an immature prospect close to Athena and new seismic data will be acquired in H1 2014 and Trapoil are fully carried by Noreco. Should a well ultimately be drilled on Homer, we would benefit from a 10 per cent. carried interest as well as a 40 per cent. paying interest.

 

There are also a number of other assets within our portfolio that we will be working hard to monetise, but as we do not currently have carried positions in them they will not be drilled unless there is an acceptable change in our equity interest. These assets include Orchid and our non conventional oil play in the northern North Sea in Quad 16 near the Brae field. We have a 60 per cent. paying interest in Orchid and although we operate this asset we have partners who are not yet aligned to drill an appraisal well following the 2012 untested discovery. We currently have a 100 per cent. equity interest in our non conventional oil play and in 2013 we completed our desk top studies and presented the results to DECC who remain supportive of the technical work performed. We are marketing this opportunity to major oil companies in 2014 and targeting drilling in 2015 if we are able to secure a carried position and funding for a proof of concept well to test that commercial flow rates can be obtained from tight sands and silts.

 

Our goal is therefore, to carefully manage and maximise the Group's available and anticipated cash reserves in order to establish a drilling programme that will afford shareholders exposure to an asset base that is capable of delivering increased value. With our existing cash reserves and ability to manage risks and secure carried interest positions, we will aim to deliver this strategy over the next three years and hope to enhance the Group's position with value driven new ventures.

 

Outlook

 

We will proceed to execute our planned drilling programme following partner and rig availability confirmation, thereby seeking to maximise the potential value of our carried interests. Preserving our cash reserves for existing assets is a priority as is the focus on any new venture to drill or add clear value in the short term. To this end, management will continue to monitor and if necessary curtail expenditure. To recognise increased costs in the running of the business, in 2014, management have taken a 20 per cent. pay cut and staff levels have been trimmed, as has administrative expenditure.

 

 

Mark Groves Gidney

Chief Executive Officer

 

22 April 2014

 



 

Finance Director's Report

Cash Resources and Short-Term Investments

 

We ended 2013 in a strong financial position even though the year presented us with many challenges. As at 31 December 2013 we were well funded holding over £16m of cash in the bank as well as short-term investments by way of shares in IGas valued at over £4m. Importantly, the Group now has a clear and focused strategy as to how it aims to deploy its resources over the short- to medium-term in order to maximise shareholder returns.

 

Capital Expenditure and Acquisitions

 

Three wells were completed during the year: Romeo (Licence P1666, Block 30/11c), Scotney (Licence P1658, Block 20/5n) and Magnolia (Licence P1610, Block 13/23a). The Group was fully carried on these wells and accordingly did not incur any material capital expenditure. As a result of these carries, the Group spent a little under £2m in total on capital expenditure in 2013. Around £0.5m was spent on remedial intervention work on our producing field Athena, which required a small amount of work midway through the year, with the balance being spent across our other portfolio assets, licence fees, seismic interpretation and other operator related costs together with the capitalisation of some technical costs.

 

We also completed two acquisitions during the year, the first was an additional 45 per cent. interest in the Orchid oil discovery (Licence P1556, Block 29/1c) which we acquired from Summit Petroleum Limited for £1.5m and the second was our acquisition of 85 per cent. of the Surprise & Nutmeg oil discoveries (Licence P1267, Blocks 12/25a & 13/21b) from Dana Petroleum Limited for no consideration.

 

Statement of Comprehensive Loss

 

2013 saw a significant increase in our revenues as we experienced our first full year of production from the Athena oil field (Licence P1293, Block 14/18b) which produced over 3 mmboe earning us £30m of revenue and generating approximately £13m of cash flow in the year. The Group, however, reported a loss after tax of approximately £10.3m for the year. Our Cost of Sales, which includes amortisation, was a little under £26m, some £14m of this related to our share of the operating and production costs of the Athena oil field. A large contributing factor towards our results was a loss on disposal of £9.4m (note 10) in addition to impairment costs in respect of our other assets during the year. The loss on disposal related to wells we had hoped would be drilled by Caithness who were unable to honour their commitments to us. We did, however, receive a degree of compensation for this, amounting to US$7.5m, but unfortunately this was insufficient to avoid impairing the remaining carrying value, which was substantially higher than the sum received as a result of our acquisition of Reach Exploration Limited in 2011. We also depreciated our producing assets in line with production by some £8.5m during the year. The balance represents costs incurred in supporting our assets and amortisation of the CGG Services (UK) Limited data licence.

 

Financing

 

Tied to our production we also finalised a US$20m senior secured debt facility in January 2013 with G E Capital, importantly at the year end it remained undrawn but finance charges in the year increased as a result of the costs associated with setting up and running this facility. The facility provided us with useful access to potential additional capital should it have been required during the year. The Group also maintained its swap position taken out with Britannic Trading Limited, a subsidiary of BP International Limited, a requirement of the G E Capital facility, where we have entered into certain oil price swap arrangements for a significant proportion of our production from January 2013 through to January 2016.

 

Administrative Expenses

 

We have kept a tight rein on costs, reducing expenditure where possible and increasing costs only where absolutely necessary, such as our move in 2013 towards Operatorship, which required us to meet certain regulatory obligations and maintain particular capabilities in-house. We successfully managed to reduce some of our historic overhead costs in the year to mitigate some of the increases experienced elsewhere. Importantly, going forward we have made further significant cuts to our overall budget for 2014 where we are aiming for a reduction of over £1m before exceptional items.

 

Assets

 

Our asset portfolio has been actively managed during the year resulting in a portfolio that has the potential to deliver significant future upside for shareholders.

 

We believe that we have a broad and balanced mix of assets including:

 

·      Licence P1938, Blocks 3/2c, 4c, 7d, 9c, 13b, 14h, 14j, 16/12b, 17c, 211/22b, 27d, 28b & 29b, which we farmed into last year from Extract Petroleum Limited, which is an exciting but early stage Unconventional Offshore concept play

·      Lower risk appraisal assets such as Brule (Licence P1768, Blocks 14/14b, 18c & 19c), Surprise and Romeo

·      Higher risk, but therefore commensurately higher return, assets such as Niobe (Licence P1889, Blocks 12/26b & 27) and Valleys (Licence P2032, Blocks 21/8c, 9b, 10c, 14a & 15b)

 

It remains the Group's focus to achieve significant carried interest positions where possible in order to mitigate its exposure and the capital requirements traditionally associated with exploration.

 

 

 

 

Scott Richardson Brown

Finance Director

 

22 April 2014



 

GROUP INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2013

 

 

 





2013


2012





£


£








 







Revenue




30,309,304


1,674,698








Cost of sales




(25,688,613)


(9,812,361)








GROSS PROFIT/(LOSS)




4,620,691


(8,137,663)








Other operating income




75,120


172,245

Exceptional item




(9,367,378)


-

Administrative expenses




(4,520,274)


(3,002,611)








OPERATING LOSS




(9,191,841)


(10,968,029)








Finance costs




(1,100,664)


(68,495)








Finance income




31,667


174,707








LOSS FOR THE YEAR BEFORE TAX




(10,260,838)


(10,861,817)








Tax




-


-








LOSS FOR THE YEAR




(10,260,838)


(10,861,817)








OTHER COMPREHENSIVE LOSS







Change in value of available for sale financial assets




(279,597)


-








TOTAL COMPREHENSIVE LOSS FOR THE YEAR




(10,540,435)


(10,861,817)








Total comprehensive loss for the year attributable to:







Owners of the parent




(10,540,435)


(10,861,817)















Loss per share expressed in pence per share:







Basic and diluted




(4.65)


(5.00)















 



 

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2013

 

 

 





2013


2012

 




£


£








NON-CURRENT ASSETS







Intangible assets - Exploration costs




12,256,350


25,193,180

Intangible assets - Data licence costs




1,333,332


1,833,332

Property, plant and equipment




14,295,852


28,093,548












27,885,534


55,120,060








CURRENT ASSETS







Available for sale investment




4,410,934



Inventories




1,249,599


-

Trade and other receivables




5,456,723


1,625,311

Cash and cash equivalents (including restricted cash)




16,438,908


9,275,542

 







 




27,556,164


10,900,853

 






 

TOTAL ASSETS




55,441,698


66,020,913

 






 

 






 

EQUITY






 

SHAREHOLDERS' EQUITY






 

Called up share capital




2,271,693


2,259,104

Share premium account




68,321,083


68,101,922

Share options reserve




2,575,472


2,341,644

Accumulated losses




(27,107,644)


(16,985,796)

Reorganisation reserve




(382,543)


(382,543)

Available for sale investment reserve




(279,597)


-

 






 

TOTAL EQUITY




45,398,464


55,334,331

 






 

LIABILITIES






 

NON-CURRENT LIABILITIES






 

Trade and other payables




1,676,078


2,645,228

Provisions for liabilities and charges




4,662,912


5,176,396

 






 

 




6,338,990


7,821,624

 






 

CURRENT LIABILITIES






 

Trade and other payables




3,704,244


2,864,958

 






 

 




3,704,244


2,864,958

 






 

TOTAL LIABILITIES




10,043,234


10,686,582

 






 

TOTAL EQUITY AND LIABILITIES




55,441,698


66,020,913

 






 

 



 

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

 

 

 

 

Called up

 

Share

 

Share

 

 

 

 

 

Available

 

 

 

share

 

premium

 

options

 

Accumulated

 

Reorganisation

 

for sale

 

Total

 

capital

 

account

 

reserve

 

losses

 

reserve

 

reserve

 

equity

 

£

 

£

 

£

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2012

2,053,731


64,222,583


1,774,310


(6,123,979)


(382,543)


-


61,544,102

 














Loss and total comprehensive loss for the year

-


-


-


(10,861,817)


-


-


(10,861,817)

 














Issue of share capital

205,373


4,107,460


-


-


-


-


4,312,833

 














Cost of issue of share capital

-


(228,121)


-


-


-


-


(228,121)

 














Transactions with owners - share based payments 

-


-


567,334


-


-


-


567,334

 














 














At 31 December 2012

2,259,104


68,101,922


2,341,644


(16,985,796)


(382,543)


-


55,334,331

 














 














Loss for the year

-


-


-


(10,260,838)


-


-


(10,260,838)

 














Other comprehensive loss for the year

-


-


-


-


-


(279,597)


(279,597)

 














Total comprehensive loss for the year

-


-


-


(10,260,838)


-


(279,597)


(10,540,435)

 














Issue of share capital

12,589


219,161


(219,161)


-


-


-


12,589

 














Lapsed share options

-


-


(138,990)


138,990


-


-


-

 














Transactions with owners - share based payments

-


-


591,979


-


-


-


591,979

 














 














At 31 December 2013

2,271,693


68,321,083


2,575,472


(27,107,644)


(382,543)


(279,597)


45,398,464

 

 

 



 

GROUP STATEMENT OF CASHFLOWS

FOR THE YEAR ENDED 31 DECEMBER 2013

 

 

 





2013


2012

 




£


£

Cash flows from operating activities







Cash generated from/(used) in operations




8,604,958


(1,082,496)

Interest paid




(62,404)


-








Net cash generated from/(used) in operating activities




8,542,554


(1,082,496)















Cash flows from investing activities







Purchase of intangible assets




(4,189,222)


(5,141,129)

Purchase of property, plant and equipment




(302,783)


(23,062,638)

Refund on purchase of Production interest




4,214,508


                       -

Athena insurance refund




441,081


-

Sale proceeds of intangible assets




-


2,584,152

Interest received




31,667


174,707








Net cash generated from/(used) in investing activities




195,251


(25,444,908)















Cash flows from financing activities







CGG Services (UK) Limited repaid




(1,118,000)


(700,000)

G E Capital finance charges




(819,028)



Proceeds from share issue




12,589


4,084,712

 







Net cash (used in)/generated from financing activities




(1,924,439)


3,384,712

 







 







Increase/(Decrease) in cash and cash equivalents




6,813,366


(23,142,692)

 







Cash and cash equivalents at beginning of year




9,275,542


32,418,234

 







Cash and cash equivalents at end of year




16,088,908


9,275,542

 







 

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

RECONCILIATION OF LOSS BEFORE TAX TO CASH GENERATED/(USED IN) OPERATIONS

 

2013

 

2012

 

£

 

£

(Loss) for the year before tax

 

 

 

Adjusted for:

(10,260,838)

 

(10,861,817)

Amortisation, impairments, depletion and depreciation

21,571,555

 

972,257

Profit on disposal of Intangible Assets

-

 

7,304,031

Share based payments (net)

591,979

 

(172,245)

Finance costs

1,067,948

 

567,334

Finance income

(31,667)

 

68,495

Other payables

-

 

(174,707)

 

 

 

 


12,938,977

 

(2,296,652)

Increase in inventories

(1,249,598)

 

-

Increase in trade and other receivables

(4,181,412)

 

(523,212)

Increase in trade and other payables

1,096,991

 

1,737,368


 

 

 

Cash generated/(used in) operations

8,604,958

 

(1,082,496)


 

 

 

 

 



 

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2013

 

 

1.   The consolidated financial information set out above does not constitute the Group's statutory financial statements for the year ended 31 December 2013 or the period ended 31 December 2012. The consolidated financial information for the period ended 31 December 2012 is derived from the statutory financial statements for that year that have been approved by the Board of Directors. The consolidated financial information for the year ended 31 December 2013 is derived from the financial statements for 2013 prepared using the historical cost convention, on a going concern basis and in accordance with IFRS as adopted by the European Union. The auditors have reported on the 2013 financial statements and their report was unqualified. The financial statements are yet to be delivered to the Registrar of Companies but will be delivered to the Registrar of Companies and filed at Companies House following the Company's forthcoming annual general meeting. The principal accounting policies used in preparing the final results announcement are those that the Company has applied in its financial statements for the year ended 31 December 2013 and are unchanged from those disclosed in the Company's Annual Report and Financial Statements for the period ended 31 December 2012.

 

2.   Trap Oil Group plc (the 'Company') and its subsidiaries (together, the 'Group') are involved in the exploration, development and production of oil and gas reserves from the UK Continental Shelf. The Company is a public limited company which is listed on AIM, a market operated by the London Stock Exchange, and incorporated and domiciled in the United Kingdom. The address of its registered office is 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE.

 

3.   At 31 December 2013, 227,169,331 (2012: 225,910,417) ordinary shares of 1p each were issued and fully paid. Each ordinary share carries 1 vote. During the year, 1,258,914 ordinary shares were issued which raised £12,589 (gross and net proceeds) in additional capital, following the exercise of share options.

 

4.   An impairment charge of £3,190,671 is included in Cost of sales in the Group income statement as an impairment trigger was identified requiring a full impairment review to be carried out in accordance with IAS 36 'Impairment of assets'. An economic assessment of all assets was carried out as at 31 December 2013, using economic value models (EMV). The impairment charge relates to the relinquishment of the Forse, Whitbeck, Forties, Crazy Horse, Scotney, Sienna, Lytham, EMMM, Conrad and Lybster licences and the unsuccessful Magnolia exploration well.

 

5.   No dividend is proposed.

 

6.   Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

 

Diluted loss per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. As a loss was recorded for the current year and prior period the issue of potential ordinary shares would have been anti-dilutive in both periods.



 

 

 

 

Loss attributable to ordinary shareholders

£

 

Weighted average number of shares

 

Per share amount pence

Year ended 31 December 2013

 

 

 

 

 

Basic and Diluted

 

 

 

 

 

Loss attributable to ordinary shareholders

(10,540,435)

 

226,629,262

 

(4.65)

 

 

 

 

 

 

Period ended 31 December 2012

 

 

 

 

 

Basic and Diluted

 

 

 

 

 

Loss attributable to ordinary shareholders

(10,861,817)

 

217,020,291

 

(5.00)

 

7.   The net cash proceeds due from the disposal of interests included in Exploration costs is as follows:

 


2013


2012


£


£

P1181 Lacewing

-


1,000,000

 

P1864 Inverewe

-


1,584,152

 


-


2,584,152

 

 

 

8.   Provisions for liabilities and charges represents decommissioning and site restoration provisions in relation to production interests. The provisions are based on the discounted net present value of the assessment of the obligation to decommission assets in place at the reporting date. The provision will increase as additional infrastructure is installed, as needed, and will be settled on the actual decommissioning of fields. The closing provision relates to the Athena producing asset. It is expected that the decommissioning work will start after production has ceased. Production is expected to cease within five years.

 

9.    Borrowing Base Facility and Hedging Arrangements. On 29 January 2013, the Group entered into a three year senior secured borrowing base facility agreement of US$20m with an affiliate of GE Energy Financial Services secured by a first fixed and floating charge over all Group companies and a first equitable mortgage over the existing shares and any further shares in Predator Oil Ltd and Trap Oil Ltd and a share pledge over Trap Oil & Gas Ltd, Trap Exploration (UK) Ltd and Trap Petroleum Ltd in the event of non-payment.

 

In conjunction with, and for the term of the borrowing base facility, the Group also entered into certain oil price hedging arrangements with Britannic Trading Ltd, a subsidiary of BP International Limited. These arrangements consist of swap agreements, entered into at prices ranging from US$108.51/barrel for 2013 to US$95.50/barrel for 2015 with Britannic Trading Ltd to provide greater visibility in respect of future cash flows arising from a significant proportion of the Group's near term forecast production as it continues to build its exploration and appraisal work programmes.

 

10.  Caithness disposal

 

On 9 September 2013, the Company announced that it had entered into binding heads of agreement with Caithness Oil Limited, its parent Company, Caithness Petroleum Limited and IGas Energy plc, the effect of which was to dispose of its interests in the Knockinnon and Lybster prospects and certain other assets to Caithness Oil Limited. The legal agreements were conditional on, inter alia, IGas Energy plc completing its proposed conditional acquisition of the entire issued share capital of Caithness Oil Limited from Caithness Petroleum Limited.

 

The total consideration payable by Caithness Petroleum Limited to the Group on completion of the acquisition was US$7.5m to be satisfied via the allotment or transfer of 4,177,011 fully paid ordinary shares of 10p each in the capital of IGas Energy plc. The initial share prices was derived from the weighted average quoted price for the 30 days prior to 6 September 2013 as per the provision of the sale and purchase agreement. The shares have been treated as an Available for sale investment and have been revalued at the year end to their market price. This has resulted in an impairment charge of £279,597 which has been charged to the Available for sale investment reserve within the Statement of Changes in Equity.

 

The Group has agreed not to dispose of US$4m of the shares for a period of three months from the date of allotment or transfer and in the three month period thereafter only in accordance with the reasonable requirements of IGas Energy plc and its broker. The balance of the shares may be sold by the Group following completion in accordance with certain orderly market provisions.

 

The Group's licence interests to be sold were: 

 

·     A 70 per cent. interest in Licence P1270 Block 11/24 Knockinnon Sub Area

·     A 35 per cent. interest in Licence P1270 Block 11/24 Lybster Sub Area

·     A 35 per cent. interest in Licence PEDL 158 Blocks ND/1a, 2a, 12, 13a, 23a and 33a

 

In addition, the Group released Caithness Oil Limited from certain obligations due to Trap Oil Limited in respect of Licence P1270, Block 11/24 Forse Sub Area.

 

The gross consideration was reduced by 92,813 fully paid ordinary shares of 10p each in the capital of IGas Energy plc. to cover outstanding Lybster field costs prior to 31 July 2013 of £108,855 owed by Trap Oil Limited to Caithness. This resulted in a final consideration of 4,084,198 fully paid ordinary shares of 10p each in the capital of IGas Energy plc.

 

Financial impact

 

The carrying values of the assets relevant to this transaction included in Exploration costs are: Licence P1270 Block 11/24 Knockinnon £13.8m and Licence PEDL158, Blocks ND/1a, 2a, 12, 13a, 23a and 33a £0.1m. The carrying value of the asset relevant to this transaction included in Production interests & fields under development for Licence P1270 Block 11/24 Lybster is £0.1m.

 

The amount relevant to this transaction included in Provisions for liabilities and charges at 31 December 2013 for Licence P1270 Block 11/24 Lybster is £.01m.

 

Completion of the proposed disposal resulted in a net loss on disposal for the Group in respect of the licence interests of £9.4m, reflecting aggregate carrying value of approximately £14m less US$7.5m (approximately £4.7m) in IGas Energy plc shares (at the prevailing USD/GBP exchange rate). The loss on disposal has been disclosed as an exceptional item within the Statement of Comprehensive Loss.

 

11.  Copies of the Company's full Annual Report and Financial Statements are expected to be posted to shareholders in due course and, once posted, will also be made available to download from the Company's website at www.trapoil.com.

 

The Annual Report and Financial Statements will also be made available for inspection at the Company's Registered office during normal business hours on any weekday. Trap Oil Group plc is registered in England and Wales with registration number 7503957. The registered office is at 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE.

 

 


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

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