9th Aug 2010 07:00
DRAGON OIL PLC
(the "Company" or together with its subsidiaries "Dragon Oil" or the "Group")
2010 Interim Results
Dragon Oil plc (Ticker: DGO), an international oil and gas exploration and production company, today announces its interim financial results for the period ended 30 June 2010.
Financial highlights
|
|
1H 2010 |
1H 2009 |
Change |
|
|
|
|
|
|
(US$ million, unless stated otherwise) |
|
|
|
|
Revenue |
276.3 |
263.5 |
+4.9% |
|
Operating profit |
173.6 |
122.0 |
+42.3% |
|
Profit for the period |
137.6 |
105.0 |
+31.0% |
|
Capital expenditure |
173.6 |
155.1 |
+11.9% |
|
Net cash generated from operating activities |
197.0 |
118.6 |
+66.1% |
|
Cash and term deposit balance |
1,154.9 |
875.4 |
+31.9% |
Operational performance
§ Average gross production increased by 8% over the 1H 2010 period to 46,420 bopd (1H 2009: 42,808 bopd);
§ Six new development wells, three work-overs and one sidetrack completed to date this year;
§ Contract awarded for the lease and management of a new Super M2 jack-up rig to be deployed in Q4 2011;
§ Contracts awarded for the construction of two new platforms, Dzheitune (Lam) C and Dzhygalybeg (Zhdanov) A, to be completed in Q4 2011 and Q1 2012 respectively; and
§ Marketing arrangements in place for sale of significant volumes of crude oil through Baku, Azerbaijan.
Outlook for 2H 2010
§ On track to complete a total of 11 wells during 2010 with target production growth of up to 10%;
§ Target average annual production growth in the range of 10% to 15% during 2010-12;
§ 30" trunkline and Phase 2 expansion of the Central Processing Facility due to be completed during the second half of 2010; and
§ Discussions continue with the Turkmenistan Government regarding commercialisation of gas resources.
Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, commented:
"In the first half of 2010 we have continued to focus on driving production growth forward and investing in infrastructure to ensure we have the capacity to support this objective in the years ahead. We have employed a total of four rigs this year, with two of these continuing to operate on a full-time basis. In addition to the objective of completing 11 development wells by year end, we have also completed three workovers and one sidetrack to date as part of our drilling programme for 2010.
In order to further secure our future drilling capabilities, in January 2010 we awarded a contract for the lease and management of a new build Super M2 jack-up rig to be deployed in Q4 2011. In terms of the infrastructure development programme, we have awarded contracts for the construction of two new platforms, Dzheitune (Lam) C and Dzhygalybeg (Zhdanov) A, to be completed in Q4 2011 and Q1 2012 respectively which together can support a total of up to 16 new development wells. This is a significant investment in our infrastructure which, combined with the new 30" trunk line and Phase 2 upgrade to the Central Processing Facility due to be completed later this year, will ensure that we are well placed to meet our production targets in the years ahead.
Additionally we have put in place new marketing arrangements which provide us with a secure and reliable export route for our production for the year ahead. We expect to complete a further five new development wells in 2010, bringing us to a total of 11 new wells for the year and, as a result, we are targeting up to 10% production growth for 2010.
We remain confident in our outlook for the rest of the year."
Analyst meeting and conference call details:
A meeting and conference call for analysts will be held today at 9.30a.m. BST. For details, please contact George Cazenove at Citigate Dewe Rogerson on +44 (0)20 7282 2870 or at [email protected].
A replay of the call will be available from around 12.00pm today for one week on the following telephone number:
International +44 (0)20 7769 6425
The pass code is 3274879#
For further information please contact:
Media enquiries
Citigate Dewe Rogerson (+44 20 7638 9571)
Martin Jackson
George Cazenove
Investor and analyst enquiries
Dragon Oil plc
Sally Marshak (+44 20 7647 7804)
Davy (+353 1 679 6363)
John Frain
2010 Interim Results
Chief Executive Officer's Statement
OVERVIEW
Revenues in the period were 4.9% higher at US$276.3 million as compared to the same period in 2009. This is attributed to a 50% increase in average realised crude oil prices to approximately US$75/bbl (1H 2009: US$50/bbl), partly offset by a decrease in sales volumes. We maintained our debt-free position with a healthy cash balance as of 30 June 2010. This strong financial position continues to allow us to invest in driving production growth, as well as providing us with significant financial flexibility for potential acquisitions which must meet our strict evaluation criteria.
We completed four development wells and three work-overs in the Dzheitune (Lam) field during the first half of 2010. A further two development wells and one sidetrack were completed in July 2010. We are on track to complete five more wells before the end of 2010 bringing us to a total of 11 new wells for the year. In order to further strengthen our future drilling capabilities, in January 2010 we awarded a contract for the lease and management of a new build Super M2 jack-up rig which is planned to be deployed in Q4 2011.
In terms of the infrastructure development programme, we have awarded contracts for the construction of two new wellhead and production platforms, Dzheitune (Lam) C and Dzhygalybeg (Zhdanov) A to be completed in Q4 2011 and Q1 2012 respectively which together can support a total of up to 16 new development wells. In addition our two major ongoing infrastructure projects, the new 30" trunk line and Phase 2 upgrade to the Central Processing Facility, made further progress during the first half of the year and are on schedule to be completed in 2H 2010.
In June 2010 we put in place a new marketing contract with a major international oil trading company for the sale of our crude through Baku, Azerbaijan. The duration is for a period of up to 12 months. Dragon Oil plans to sell a substantial proportion of its production through this route over the contract period. This new contract ensures the safe and uninterrupted sale and delivery of our entitlement barrels to international markets at the best available market netbacks.
OPERATIONS OVERVIEW
Production
Gross field production in the first half of 2010 increased by 8% compared to the same period in 2009. The average daily production rate on a working interest basis was 46,420 bopd for 1H 2010 (1H 2009: 42,808 bopd). Production in 1H 2010 has been impacted mainly as a result of infrastructure issues. However, we expect that the 30" trunkline together with the installation of other infield pipelines and the upgrade of the onshore Central Processing Facility (all due to be completed in 2H 2010) will overcome these issues, once completed, and will provide a strong foundation for continued production growth.
Marketing
The Group sold 3.7 million barrels of crude oil in 1H 2010 (1H 2009: 4.9 million barrels). The quantity of crude oil sold during the first six months of 2010 was 24% lower than the volumes sold during 1H 2009 and, consequently, the Group held a high crude oil inventory at 30 June 2010. Subsequent to the period end, this inventory was sold.
The Group's average realised crude oil price during 1H 2010 was approximately US$75/bbl (1H 2009: US$50/bbl). The realised crude oil prices achieved a discount of approximately 3% (1H 2009: 2.0%) to Brent during the first six months of the year.
In the first half of 2010, approximately 75% (1H 2009: 90%) of crude oil was exported via Neka, Iran, the "southern route", with the balance exported through Baku, Azerbaijan, the "western route". Since the commencement of its Cheleken PSA, Dragon Oil has marketed most of its barrels through a crude oil swap agreement with a subsidiary of the National Iranian Oil Company, Naftiran Company Limited ("NICO"). This swap agreement expired on 31 March 2010 and consequently in April 2010 Dragon Oil entered into a short-term swap contract with NICO on a three-month rollover basis on revised terms which expired in July 2010. All operations under the swap arrangement with NICO have now ceased.
On 16 June 2010 Dragon Oil announced a new 12 month contract with a major international oil trading company for the sale of crude oil, FOB the Aladja Jetty, through the western route, primarily using the BP-operated BTC (Baku-Tbilisi-Ceyhan) pipeline. Dragon Oil plans to sell a substantial portion of its production through this route over the contract period. It is expected that the realised net crude oil prices will be less favourable than the historic netback prices generated through the southern route. For the year to 31 December 2010, Dragon Oil expects to achieve an average realised price in the range of an 8% to 10% discount to Brent. The discount in future years may vary depending on a number of factors and the availability of alternative routes to market.
Dragon Oil is satisfied that the current marketing arrangements provide a secure and reliable export route for its entitlement production with sufficient capacity to satisfy its current anticipated needs. Nonetheless, to gain further access to international markets and maintain flexibility in operations, Dragon Oil continues to review and test alternative routes for exporting its crude oil.
Drilling
Four development wells and three workovers were completed during the first half of 2010. A further two development wells and one sidetrack were completed in July 2010. The following table summarises the results of the six development wells drilled to date this year:
|
Well |
Rig |
Completion date |
Depth (metres) |
Type of completion |
Initial tested rate (bopd) |
|
A/142 |
Iran Khazar |
March |
3,961 |
Dual |
2,103 |
|
13/143 |
Rig 40 |
March |
3,450 |
Dual |
2,168 |
|
B/141 |
Astra |
April |
4,502 |
Dual |
1,895 |
|
B/145 |
Astra |
June |
3,344 |
Single |
1,054 |
|
13/144 |
Rig 40 |
July |
3,434 |
Single |
1,809 |
|
28/146 |
NIS |
July |
3,200 |
Single |
2,311 |
In addition to the development well Dzheitune (Lam) A/142, Iran Khazar rig, as part of the workover programme for the first half of the year, completed a work-over of the Dzheitune (Lam) A/125 well, yielding an incremental production of 562 bopd, and recently completed a sidetrack of the Dzheitune (Lam) A/129 well, yielding an incremental production of 1,140 bopd. Two wells earlier planned to be sidetracked by Rig 40 on the Dzheitune (Lam) 13 platform were worked over using wireline operations yielding an incremental production of approximately 700 bopd. Production from these wells is planned to be optimised further during the remainder of the year.
Limited supply of offshore rigs is one of the constraints to the Group's field development programme. Dragon Oil constantly monitors the supply of rigs in the region and aims to secure long-term contracts on favourable commercial terms. To this end, a total of four rigs were employed this year, two of which continue to operate on a full time basis: the Iran Khazar rig which is contracted until mid 2011, and the platform-based NIS rig which has been contracted until Q4 2011. Following the completion of the sidetrack of Dzheitune (Lam) A/129, the Iran Khazar rig has now moved to the Dzheitune (Lam) B platform where it is drilling the Dzheitune (Lam) B/148 well, after first undergoing routine maintenance. The platform-based NIS rig has been mobilised to the Dzheitune (Lam) 28 platform where it is drilling a series of development wells, the first of which, Dzheitune (Lam) 28/146, was completed in July 2010. The NIS rig has now skidded to the next slot on the same platform and is drilling the Dzheitune (Lam) 28/147 well.
Following a successful six-well drilling campaign including the Dzheitune (Lam) 13/143 and Dzheitune (Lam) 13/144 wells, Rig 40 has been cold-stacked on the Dzheitune (Lam) 13 platform and may be used for some additional workovers in the future. Coinciding with the end of its short term contract in June 2010 and the completion of the Dzheitune (Lam) B/145 well, the Astra jack-up rig was demobilised. The Astra jack-up rig remains as an option for us in the future, pending favourable contractual terms and availability. We maintain our target to complete 11 new development wells before the end of the year.
In order to further secure future drilling capabilities Dragon Oil announced in January 2010 that we had awarded a contract to Yantai Raffles Offshore Ltd. for the lease and management of a new build Super M2 jack-up rig. This will be constructed as a self-elevating drilling unit in accordance with international marine construction standards. The M2 jack-up rig is expected to be constructed and mobilised to the Cheleken Contract Area in Q4 2011. Upon delivery, the lease and management contract is expected to commence for an initial duration of five years, with an option to extend it for a further period of up to two years.
Infrastructure
During the first half of 2010 we have made considerable progress with our infrastructure development programme. In May 2010, we announced further details regarding contracts awarded for the construction of two new wellhead and production platforms which can support up to a total of 16 new wells in the future. The first contract was awarded to Caspian Energy Projects LLC for the construction of the Dzhygalybeg (Zhdanov) A platform which will support both a land rig and jack-up rig. Up to 8 wells can be drilled from this platform which will be installed in the Zhdanov Field and is due to be completed in Q4 2011.
The second contract was awarded to ILK Insaat Taah, San. Ve.tic Ltd for the construction of the Dzheitune (Lam) C platform which will support a jack-up rig. Up to 8 wells can be drilled from this platform which will be installed in the Dzheitune (Lam) Field and is due to be completed in Q1 2012.
In addition, our two major ongoing infrastructure projects, the 30" trunk line and Phase 2 upgrade to the Central Processing Facility, made further progress during the first half of the year and are scheduled for completion in 2H 2010. The Central Processing Facility Phase 2 is currently at an advanced stage of construction while the key activity of offshore pipe-laying is in progress for the 30" trunk line project.
Gas Monetisation
Dragon Oil continues to put in place the infrastructure necessary to monetise our 3.1 tcf 2C of gas contingent resources, including our 30" trunk line and the Phase 2 upgrade to the Central Processing Facility. In addition, our contractors, Saipem, are expected to deliver the final Front End Engineering Design (FEED) study for a potential onshore gas treatment plant by Q3 2010. Discussions continue with the Turkmenistan Government regarding the commercialisation of our gas resources.
Potential Acquisitions
During the first half of the year Dragon Oil has continued to progress our diversification strategy, in line with our investment criteria. Our New Ventures Team continues to evaluate late stage exploration and development opportunities in our core focus areas of the Caspian Sea region, the Middle East and Africa.
Principal risks and uncertainties
In accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, a description of the principal risks and uncertainties facing the Group in the six months to 31 December 2010 is set out below:
§ Oil prices
The Group's only business is the production of hydrocarbons from the Cheleken Contract Area in the Caspian Sea, Turkmenistan. The financial performance of the Group and its ability to fund development plans may, therefore, be negatively affected by adverse movements in the price of oil. The Group actively monitors its exposure to oil prices and retains flexibility in sizing its development programme.
§ Export routes
Opportunities exist to sell crude oil from the Caspian Sea region to international markets via Azerbaijan, Russia and Iran. Despite the expiry of the swap agreement with Iran, the Group has put in place alternative marketing arrangements, the success of which will need to continue to be evaluated over the longer term.
§ Other
Other principal risks and uncertainties facing the Group are disclosed in the 2009 Annual Report, available on Dragon Oil's website at www.dragonoil.com. These include, among other risks and uncertainties, the following: a single-asset portfolio risk; uncertainty of estimates of reserves, resources and future net revenues; infrastructure adequacy; the ability to secure qualified personnel and maintain proper internal controls; insurance cover; licences; exchange rates; and political and financial risks.
FINANCIAL OVERVIEW
|
US$ million (unless stated) |
1H 2010 |
1H 2009 |
Change |
|
Revenue |
276.3 |
263.5 |
+4.9% |
|
Cost of Sales |
89.1 |
129.6 |
-31.3% |
|
Gross Profit |
187.2 |
133.9 |
+39.8% |
|
Operating profit |
173.6 |
122.0 |
+42.3% |
|
Profit for the year |
137.6 |
105.0 |
+31.0% |
|
Earnings per share, basic (US cents) |
26.71 |
20.39 |
+31.0% |
|
Earnings per share, diluted (US cents) |
26.62 |
20.36 |
+30.7% |
|
Capital employed |
1,842.4 |
1,548.0 |
+19.0% |
|
Net cash from operating activities |
197.0 |
118.6 |
+66.1% |
|
Net cash used in investing activities |
350.8 |
411.8 |
-14.8% |
|
Debt |
0.0 |
0.0 |
nil |
Income Statement
Revenue
The Group produced 8.4 million barrels of crude oil as compared to 7.7 million barrels produced in the comparative period in 2009. The entitlement production for 1H 2010 was approximately 55% of the gross production compared to approximately 65% for the comparable period in 2009. Entitlement barrels are dependent, amongst other factors, on operating and development expenditure in the period and realised crude oil prices. Notably in 1H 2010, higher crude oil prices than in 1H 2009 resulted in lower entitlement barrels.
In the first half of 2010, the Group's revenue was US$276.3 million compared to US$263.5 million in the same period in 2009. The 4.9% increase was attributable to a 50% increase in average realised crude oil prices, partly offset by a decrease in sales volumes. The Group's realised crude oil prices achieved a discount of approximately 3% (1H 2009: 2%) to Brent during the first six months of the year.
Operating profit
The Group generated an operating profit of US$173.6 million in 1H 2010 (1H 2009: US$122.0 million).
The cost of sales decreased by US$40.5 million to US$89.1 million (1H 2009: US$129.6 million). The cost of sales includes operating and production costs and depletion. The depletion charge of US$91.3 million (1H 2009: US$99.7 million) was lower by 8.4% than the charge in the corresponding period in 2009 mainly due to decrease in entitlement barrels during the period. The decrease in the operating and production costs during the period in comparison with the corresponding period last year was primarily due to inventory movement, partly offset by a change in lifting position.
The PSA includes provisions such that parties to the agreement may not lift their respective crude oil entitlements in full, and as such, underlifts or overlifts of crude oil may occur at period-ends. At the end of 1H 2010, the Group was in an overlift position of 0.6 million barrels of crude oil which were unsold and measured at market value less cost to sell. The overlift volumes were sold subsequent to the period end.
Administrative expenses (net of other income) at US$13.7 million (1H 2009: US$11.9 million) were higher by 15%, primarily due to one-off corporate costs. Operating profit was up 42.3% at US$173.6 million (1H 2009: US$122.0 million) primarily as a result of lower cost of sales and higher revenue.
Profit for the period
The profit for the first six months of 2010, at US$137.6 million (1H 2009: US$105.0 million), includes finance income of US$13.2 million (1H 2009: US$17.4 million) offset by a higher taxation charge of US$49.2 million (1H 2009: US$34.4 million). Finance income was down due to lower interest rate environment despite higher cash and cash equivalents and term deposits maintained during the first six months of the year.
During 2008, the tax rate applicable to the Group's operations in Turkmenistan was increased by 5% to 25% by the Hydrocarbon Resources Law of 2008. Though tax payments resulting from the increase in rates have not been made, the Group has continued to apply this rate in determining its tax liabilities as at 30 June 2010. The Group remains in discussions with the authorities in Turkmenistan about the applicability of this rate to prior periods, but it does not believe that prior periods are affected by the new rate. A provision has been made in respect of the additional tax that could become payable if the increased tax rate were applied to prior periods based on the expected value (weighted average probability) approach.
Basic earnings per share ("EPS") of 26.71 US cents in the first half of this year were 31% higher than the EPS in the same period last year (1H 2009: 20.39 US cents).
Balance Sheet
Investments in oil and gas interests increased by US$18.5 million due to capital expenditure of US$173.6 million incurred (1H 2009: US$155.1 million) offset by the depletion and depreciation charge during the period. Of the total capital expenditure, approximately US$112 million (1H 2009: US$73 million) was attributable to drilling with the balance spent on infrastructure. The infrastructure spend during the first six months of the year included the 30" 40 km trunkline and Phase 2 expansion of the Central Processing Facility.
Current Assets and Liabilities
Current assets increased by US$54.1 million, primarily due to higher crude oil inventory held at period end, compared to 2009 year-end. The cash and cash equivalents and term deposits as at 30 June 2010 were US$1,154.9 million (31 December 2009: US$1,137.6 million), including US$155.1 million (31 December 2009: US$126.4 million) set aside for abandonment and decommissioning activities.
Current liabilities fell by US$11.9 million due to a reduction of US$38.7 million in current income tax liability, partly offset by a US$26.8 million increase in trade and other payables.
Cash flows
Net cash generated from operating activities in 1H 2010 of US$197 million was 66% higher than net cash generated in the same period last year (1H 2009: US$118.6 million), with the increase primarily attributed to movement in working capital and lower tax paid on account of lower profits in 2009.
Net cash used in investing activities in 1H 2010 of US$350.8 million was down by 15% (1H 2009: US$411.8 million) primarily due to movements in the amounts placed on term deposits, offset by increased capital expenditure.
Cash flows from financing activities is higher by US$0.6 million due to the issue of share capital following the exercise of share options.
Corporate restructuring
On 7 April 2010, the Board of Dragon Oil announced that it had decided not to proceed with a proposed corporate restructuring of the Company which had been announced by the Company in 2009. This announcement was made following an extensive review of the options for, and implications of, a corporate restructuring together with a period of shareholder consultation. Dragon Oil currently has a primary listing on the Irish Stock Exchange and since 6 April 2010, in accordance with recent changes to the UK listing Regime, a premium listing on the London Stock Exchange.
OUTLOOK
Our drilling programme is based on a total of four rigs this year, two of which will continue to operate on a full time basis. The Iran Khazar rig is contracted until mid 2011 and the platform-based NIS rig has been contracted to operate until Q4 2011.
Following a successful six-well drilling campaign including the recent completion of the Dzheitune (Lam) 13/144 well, Rig 40 has been be cold-stacked on the Dzheitune (Lam) 13 platform pending further use. The Iran Khazar rig has completed the sidetrack of the Dzheitune (Lam) A/129 well and is currently drilling the Dzheitune (Lam) B/148 well. The NIS rig is currently drilling the Dzheitune (Lam) 28/147 well which is the second in a series of wells planned for this platform.
Dragon Oil is working towards completing 11 new development wells in 2010 as part of a total of up to 40 new wells, including two appraisal wells, planned for the period 2010-12. The Group expects to be able to achieve an average production growth in the range of 10 to15% per annum over the three year period of 2010-12.
Our two major ongoing infrastructure projects, the 30" trunk line and Phase 2 upgrade to the Central Processing Facility, will be completed in 2H 2010. In total capital expenditure for oil infrastructure over the period 2010-12 is estimated at US$600-700 million, including US$250 million allocated for 2010 projects.
Discussions with the Turkmenistan Government continue regarding the commercialisation of our gas resources. Also, in line with our diversification strategy, we continue to evaluate potential investment opportunities in our core focus areas of the Caspian Sea region, the Middle East and Africa.
Dr Abdul Jaleel Al Khalifa
Chief Executive Officer
Dragon Oil plc
- end -
About Dragon Oil
Dragon Oil plc is an innovative international oil and gas development and production company, quoted on the London and Irish Stock exchanges (Ticker symbol: DGO). Its principal producing asset is in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan.
Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oil plc, holds 100% interest in and is the operator of the Production Sharing Agreement for the Cheleken Contract Area. The operational focus is on the re-development of two oil producing fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).
www.dragonoil.com
Note
This news release may contain forward-looking statements concerning the financial condition and results of operations of Dragon Oil. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. No assurances can be given as to future results, levels of activity and achievements and actual results, levels of activity and achievements may differ materially from those expressed or implied by any forward-looking statements contained in this report. Dragon Oil does not undertake any obligation to update publicly or revise any forward-looking statement as a result of new information, future events or other information.
Glossary of terms:
bopd barrels of oil per day
US cents United States cents
US$ United States dollars
Group balance sheet
|
|
|
Unaudited |
Audited |
|
|
Note |
30 June 2010 |
31 December 2009 |
|
|
|
US$'000 |
US$'000 |
|
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
6 |
987,432 |
908,310 |
|
Intangible asset |
|
1,054 |
1,054 |
|
|
|
------------------------ |
------------------------ |
|
|
|
988,486 |
909,364 |
|
|
|
------------------------ |
------------------------ |
|
|
|
|
|
|
Current assets |
|
|
|
|
Inventories |
7 |
99,784 |
43,379 |
|
Trade and other receivables |
8 |
37,609 |
57,264 |
|
Term deposits |
|
1,040,906 |
870,468 |
|
Cash and cash equivalents |
9 |
114,017 |
267,110 |
|
|
|
------------------------ |
------------------------ |
|
|
|
1,292,316 |
1,238,221 |
|
|
|
------------------------ |
------------------------ |
|
Total assets |
|
2,280,802 |
2,147,585 |
|
|
|
========== |
========== |
|
EQUITY Capital and reserves attributable to equity shareholders |
|
|
|
|
Share capital |
10 |
80,720 |
80,687 |
|
Share premium |
10 |
229,413 |
228,809 |
|
Capital redemption reserve |
|
77,150 |
77,150 |
|
Other reserve |
|
3,549 |
3,138 |
|
Retained earnings |
|
1,451,582 |
1,313,439 |
|
|
|
------------------------ |
------------------------ |
|
Total equity |
|
1,842,414 |
1,703,223 |
|
|
|
------------------------ |
------------------------ |
|
LIABILITIES |
|
|
|
|
Non-current liabilities |
|
|
|
|
Deferred income tax liabilities |
|
79,437 |
68,905 |
|
Trade and other payables |
11 |
15,552 |
20,158 |
|
|
|
------------------------ |
------------------------ |
|
|
|
94,989 |
89,063 |
|
|
|
------------------------ |
------------------------ |
|
Current liabilities |
|
|
|
|
Trade and other payables |
11 |
276,844 |
250,033 |
|
Current income tax liability |
|
66,555 |
105,266 |
|
|
|
------------------------ |
------------------------ |
|
|
|
343,399 |
355,299 |
|
|
|
------------------------ |
------------------------ |
|
Total liabilities |
|
438,388 |
444,362 |
|
|
|
------------------------ |
------------------------ |
|
Total equity and liabilities |
|
2,280,802 |
2,147,585 |
|
|
|
========== |
========== |
Group income statement
|
|
|
Unaudited |
Unaudited |
|
|
Note |
6 months ended 30 June 2010 |
6 months ended 30 June 2009 |
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
Revenue |
12 |
276,330 |
263,484 |
|
|
|
|
|
|
Cost of sales |
13 |
(89,094) |
(129,593) |
|
|
|
------------------- |
------------------- |
|
Gross profit |
|
187,236 |
133,891 |
|
|
|
|
|
|
Administrative expenses |
|
(13,757) |
(12,041) |
|
Other income |
|
95 |
146 |
|
|
|
------------------- |
------------------- |
|
Operating profit |
|
173,574 |
121,996 |
|
|
|
|
|
|
Finance income |
|
13,194 |
17,425 |
|
|
|
------------------- |
------------------- |
|
Profit before income tax |
|
186,768 |
139,421 |
|
|
|
|
|
|
Income tax expense |
17 |
(49,199) |
(34,436) |
|
|
|
------------------- |
------------------- |
|
Profit attributable to equity holders of the Company |
|
137,569 |
104,985 |
|
|
|
======== |
======== |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
US Cents per share |
US Cents per share |
|
Basic |
15 |
26.71c |
20.39c |
|
Diluted |
15 |
26.62c |
20.36c |
|
|
|
======== |
======== |
Group statement of comprehensive income
|
|
|
Unaudited |
Unaudited |
|
|
|
6 months ended 30 June 2010 |
6 months ended 30 June 2009 |
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
Profit attributable to equity holders of the Company |
|
137,569 |
104,985 |
|
|
|
------------------- |
------------------- |
|
Total comprehensive income for the period |
|
137,569 |
104,985 |
|
|
|
======== |
======== |
Group statement of changes in equity (unaudited)
|
|
Share capital |
Share premium |
Capital redemption reserve |
Other reserve |
Retained earnings |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
|
| At 1 January 2009 |
80,685 |
228,764 |
77,150 |
1,689 |
1,054,060 |
1,442,348 |
|
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
| Total comprehensive income for the period |
- |
- |
- |
- |
104,985 |
104,985 |
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
| Shares issued during the period |
2 |
45 |
- |
- |
- |
47 |
| Employee share option scheme: |
|
|
|
|
|
|
| -value of services provided |
- |
- |
- |
612 |
- |
612 |
|
Transfer on exercise of share options |
- |
- |
- |
(56) |
56 |
- |
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
|
Total transactions with owners |
2 |
45 |
- |
556 |
56 |
659 |
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
| At 30 June 2009 |
80,687 |
228,809 |
77,150 |
2,245 |
1,159,101 |
1,547,992 |
|
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
| Total comprehensive income for the period |
- |
- |
- |
- |
154,042 |
154,042 |
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
| Shares issued during the period |
- |
- |
- |
- |
- |
- |
| Employee share option scheme: |
|
|
|
|
|
|
| -value of services provided |
- |
- |
- |
1,189 |
- |
1,189 |
|
Transfer on exercise of share options |
- |
- |
- |
(296) |
296 |
- |
|
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
Total transactions with owners |
- |
- |
- |
893 |
296 |
1,189 |
|
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
At 31 December 2009 |
80,687 |
228,809 |
77,150 |
3,138 |
1,313,439 |
1,703,223 |
|
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
| Total comprehensive income for the period |
- |
- |
- |
- |
137,569 |
137,569 |
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
| Shares issued during the period |
33 |
604 |
- |
- |
- |
637 |
| Employee share option scheme: |
|
|
|
|
|
|
| -value of services provided |
- |
- |
- |
985 |
- |
985 |
|
Transfer on exercise of share options |
- |
- |
- |
(574) |
574 |
- |
|
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
Total transactions with owners |
33 |
604 |
- |
411 |
574 |
1,622 |
|
----------------- |
------------------- |
----------------- |
--------------- |
---------------------- |
---------------------- |
|
| At 30 June 2010 |
80,720 |
229,413 |
77,150 |
3,549 |
1,451,582 |
1,842,414 |
|
|
======= |
======== |
======= |
====== |
========== |
========== |
|
|
|
|
|
|
|
|
All amounts are attributable to equity holders of the Company.
Group cash flow statement
|
|
Note |
Unaudited 6 months ended 30 June 2010 |
Unaudited 6 months ended 30 June 2009 |
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
Cash generated from operating activities |
16 |
274,429 |
209,445 |
|
|
|
|
|
|
- Income tax paid |
|
(77,378) |
(90,890) |
|
|
|
------------------ |
------------------ |
|
Net cash generated from operating activities |
|
197,051 |
118,555 |
|
|
|
------------------ |
------------------ |
|
Cash flows from investing activities |
|
|
|
|
Additions to property, plant and equipment |
|
(193,537) |
(136,302) |
|
Interest received on bank deposits |
|
13,194 |
17,425 |
|
Amounts placed on term deposits (with original maturities of |
|
|
|
|
over three months) |
|
(170,438) |
(292,906) |
|
|
|
------------------ |
------------------ |
|
Net cash used in investing activities |
|
(350,781) |
(411,783) |
|
|
|
------------------ |
------------------ |
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of share capital |
10 |
637 |
47 |
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(153,093) |
(293,181) |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
267,110 |
449,051 |
|
|
|
------------------ |
------------------ |
|
Cash and cash equivalents at the end of the period |
|
114,017 |
155,870 |
|
|
|
======== |
======== |
1 General information
Dragon Oil plc ("the Company") and its subsidiaries (collectively, "the Group") are engaged in upstream oil and gas development and production activities in Turkmenistan under the terms of the Production Sharing Agreement ("PSA") between Dragon Oil (Turkmenistan) Limited and the State Agency for Management and Use of Hydrocarbon Resources at the President of Turkmenistan, which was signed on 10 November 1999 and effective from 1 May 2000. The head office is based in Dubai, United Arab Emirates.
The Company is a public limited company, incorporated in the Republic of Ireland in September 1971. The address of its registered office is 6th Floor, South Bank House, Barrow Street, Dublin 4, Ireland. The registration number is 35228.
The Company's ordinary shares are listed on the official lists of the Irish and London Stock Exchanges.
This condensed consolidated interim financial information ("interim financial information") was approved for issue by the Board of Directors on 8 August 2010.
2 Basis of preparation of interim financial information
This interim financial information for the six months ended 30 June 2010 has been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Regulatory Authority and with International Accounting Standard 34, "Interim financial reporting" ("IAS 34") as adopted by the European Union. The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2009, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union.
The preparation of the interim financial information includes the use of estimates and assumptions that affect items reported in the Group balance sheet and Group income statement. Although these estimates are based on management's best knowledge of current circumstances and assumptions about future events and actions, actual results may differ from those estimates.
3 Accounting policies
Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2009, as described in those annual financial statements.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
(a) New standards adopted by the Group
The following standards are mandatory for the first time for the financial year beginning 1 January 2010.
·; IFRS 3 (revised), 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates', and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.
The Group will apply IFRS 3 (revised) prospectively to all business combinations from 1 January 2010. The application of the revised standard has not had any material impact on the financial information for the period.
(b) Standards and interpretations to existing standards effective in 2010 but not relevant to the Group
·; IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the Group, as it has not made any non-cash distributions;
·; IFRIC 18, 'Transfers of assets from customers', effective for transfer of assets received on or after 1 July 2009. This is not relevant to the Group, as it has not received any assets from customers;
·; 'Additional exemptions for first-time adopters' (Amendment to IFRS 1) was issued in July 2009. The amendments are required to be applied for annual periods beginning on or after 1 January 2010. This is not relevant to the Group, as it has already adopted IFRS;
·; Improvements to International Financial Reporting Standards 2009 were issued in April 2009. The effective dates vary standard by standard but most are effective 1 January 2010.
(c) The following standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2010 and have not been early adopted:
·; IFRS 9, 'Financial instruments', issued in December 2009. This addresses the classification and measurement of financial assets. The Group will apply IFRS 9 from 1 January 2013.
·; Revised IAS 24, 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. The Group will adopt the amendment from 1 January 2011.
·; Improvements to International Financial Reporting Standards 2010 were issued in May 2010. The effective dates vary standard by standard but most are effective 1 January 2010.
The Company has considered other issued standards and interpretations and is satisfied that currently these will not have any material impact on the financial information of the Company.
4 Segment information
The Group is managed as a single business unit and the financial performance is reported in the internal reporting provided to the Chief Operating Decision-maker ("CODM"). The Board of Directors ("BOD"), who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the CODM that makes strategic decisions.
The Group's development and production assets are located in Turkmenistan in the Caspian region and its head office is based in Dubai, where a significant portion of cash at bank and term deposits of the Group is held. The exploration and evaluation assets represent the Group's interest in certain exploration blocks in the Republic of Yemen.
The financial information reviewed by the CODM is based on the IFRS financial information for the Group.
5 Critical accounting estimates and assumptions
The preparation of the interim financial information in conformity with IAS 34 requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities as well as contingent assets and liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during a reporting period. The resulting accounting estimates will, by definition, seldom equal the related actual results.
The estimates and assumptions that could result in material adjustments to the income statement and the carrying amounts of assets and liabilities are discussed below:
Development and production assets - depletion
The Group's share of commercial oil reserves is computed in accordance with the PSA. In arriving at the Group's share of reserves and, consequently, the depletion charge, significant assumptions have been made. These significant assumptions include estimates of oil reserves, future oil prices, future development costs including the cost of drilling, infrastructure facilities and other capital and operating costs.
The Group's estimated long-term view of oil prices is US$70 per barrel.
If the estimate of the long-term oil price had been US$20 per barrel higher at US$90 from 1 January 2010, the reserves attributable to the Group would decrease, with a consequent increase in the depletion charge of US$6.4 million for the six months period ended 30 June 2010.
If the estimate of the long-term oil price had been US$20 per barrel lower at US$50 from 1 January 2010, the reserves attributable to the Group would increase, with a consequent decrease in the depletion charge of US$10.1 million for the six months period ended 30 June 2010.
The depletion computation assumes that the PSA, which is valid up to 2025, will be extended on similar terms up to 2035 under an exclusive right to negotiate for an extension period of not less than ten years, provided for in the PSA.
6 Property, plant and equipment
|
|
Development and production assets |
Others |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
Cost |
|
|
|
|
At 1 January 2009 |
1,182,442 |
1,853 |
1,184,295 |
|
Additions for the period |
155,057 |
18 |
155,075 |
|
|
----------------------- |
-------------- |
----------------------- |
|
At 30 June 2009 |
1,337,499 |
1,871 |
1,339,370 |
|
Additions for the period |
162,034 |
3,207 |
165,241 |
|
|
----------------------- |
-------------- |
----------------------- |
|
At 31 December 2009 |
1,499,533 |
5,078 |
1,504,611 |
|
Additions for the period |
173,580 |
9 |
173,589 |
|
Write-off for the period |
- |
(3,088) |
(3,088) |
|
|
----------------------- |
-------------- |
----------------------- |
|
At 30 June 2010 |
1,673,113 |
1,999 |
1,675,112 |
|
|
----------------------- |
-------------- |
----------------------- |
Depletion/depreciation |
|
|
|
|
At 1 January 2009 |
406,122 |
1,621 |
407,743 |
|
Charge for the period |
99,718 |
60 |
99,778 |
|
|
----------------------- |
-------------- |
----------------------- |
|
At 30 June 2009 |
505,840 |
1,681 |
507,521 |
|
Charge for the period |
88,717 |
63 |
88,780 |
|
|
----------------------- |
-------------- |
----------------------- |
|
At 31 December 2009 |
594,557 |
1,744 |
596,301 |
|
Charge for the period |
91,320 |
59 |
91,379 |
|
|
----------------------- |
-------------- |
----------------------- |
At 30 June 2010 |
685,877 |
1,803 |
687,680 |
|
|
----------------------- |
-------------- |
----------------------- |
Net book amount |
|
|
|
|
At 30 June 2010 |
987,236 |
196 |
987,432 |
|
|
========== |
====== |
========== |
|
At 31 December 2009 |
904,976 |
3,334 |
908,310 |
|
|
========== |
====== |
========== |
7 Inventories
|
|
Unaudited 30 June 2010 |
Audited 31 December 2009 |
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Crude oil |
68,347 |
11,848 |
|
Drilling and other supplies |
32,375 |
32,475 |
|
|
----------------- |
----------------- |
|
|
100,722 |
44,323 |
|
Provision for obsolete inventories |
(938) |
(944) |
|
|
----------------- |
----------------- |
|
|
99,784 |
43,379 |
|
|
======== |
======= |
8 Trade and other receivables
|
|
|
|
|
Trade receivable |
27,159 |
40,078 |
|
Other receivables |
5,368 |
14,625 |
|
Receivable from a related party |
81 |
430 |
|
Prepayments |
5,001 |
2,131 |
|
|
----------------- |
----------------- |
|
|
37,609 |
57,264 |
|
|
======= |
======= |
9 Cash and cash equivalents
Cash and cash equivalents include term deposits of US$32.7 million (2009: US$ Nil), representing interest bearing deposits with original maturities of less than three months.
10 Share capital and premium
|
|
Number of |
Ordinary |
Share |
|
|
|
shares |
shares |
premium |
Total |
|
|
('000) |
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
At 1 January 2009 |
514,973 |
80,685 |
228,764 |
309,449 |
|
Shares issued during the year in respect of share options vested |
16 |
2 |
45 |
47 |
|
|
------------------ |
---------------- |
------------------ |
------------------ |
|
At 31 December 2009 |
514,989 |
80,687 |
228,809 |
309,496 |
|
Shares issued during the period in respect of share options vested |
240 |
33 |
604 |
637 |
|
|
------------------ |
---------------- |
------------------ |
------------------ |
|
At 30 June 2010 |
515,229 |
80,720 |
229,413 |
310,133 |
|
|
======== |
======= |
======== |
======== |
11 Trade and other payables
|
|
Unaudited 30 June 2010 |
Audited 31 December 2009 |
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Trade creditors |
54,368 |
71,652 |
|
Accruals |
33,381 |
40,161 |
|
Crude oil overlift payable |
38,729 |
16,907 |
|
Abandonment and decommissioning liability |
165,344 |
138,730 |
|
Other creditors |
574 |
2,741 |
|
|
------------------- |
------------------- |
|
|
292,396 |
270,191 |
|
Less: non current portion |
(15,552) |
(20,158) |
|
|
------------------- |
------------------- |
|
|
276,844 |
250,033 |
|
|
======== |
======== |
Trade creditors and accruals include amounts of US$49.3 million (2009: US$68.8 million) and US$21.1 million (2009: US$21.7 million) respectively, relating to additions to property, plant and equipment - development and production assets.
The abandonment and decommissioning liability represents amounts relating to the sale of crude oil set aside to cover abandonment and decommissioning liabilities under the terms of the PSA.
12 Revenue
Revenue includes an amount of US$205.9 million (1H 2009: US$231.9 million) arising from the sale of crude oil in Iran, US$70.4 million (1H 2009: US$16.7 million) arising from the sale of crude oil through Azerbaijan and US$0.03 million (1H 2009: US$0.2 million) arising from other sales. There was no underlift of entitlement to crude oil produced in 1H 2010 and consequently no revenue was recognised (1H 2009: US$14.9 million).
Revenue from the sales of crude oil through Azerbaijan were from two customers (1H 2009: one customer) and from one customer in Iran (1H 2009: one customer).
13 Cost of sales
|
|
Unaudited 6 months ended 30 June 2010 |
Unaudited 6 months ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Depletion |
91,320 |
99,718 |
|
Overlift |
21,822 |
- |
|
Crude oil inventory movement |
(56,499) |
(3,573) |
|
Other operating and production costs |
32,451 |
33,448 |
|
|
---------------- |
------------------ |
|
|
89,094 |
129,593 |
|
|
======= |
======== |
14 Dividends
The Directors do not recommend the payment of a dividend in respect of the six months ended 30 June 2010 (2009: nil).
15 Earnings per share
The calculation of basic earnings per ordinary share is based on the weighted average number of 515,127,981 ordinary shares in issue during the six months to 30 June 2010 (1H 2009: 514,975,265 ordinary shares) and on the profit for the period of US$138 million (1H 2009: US$105 million).
The calculation of diluted earnings per ordinary share is based on the diluted number of 516,833,386 ordinary shares in issue during the six months to 30 June 2010 (1H 2009: 515,562,668 ordinary shares) adjusted to assume conversion of potential dilutive options over ordinary shares.
16 Cash generated from operating activities
|
|
|
Unaudited 6 months ended 30 June 2010 |
Unaudited 6 months ended 30 June 2009 |
|
|
Note |
US$'000 |
US$'000 |
|
|
|
|
|
|
Profit before income tax |
|
186,768 |
139,421 |
|
Adjustments for: |
|
|
|
|
- Depletion and depreciation |
6 |
91,379 |
99,778 |
|
- Crude oil underlifts |
|
- |
(14,937) |
|
- Crude oil overlifts |
|
21,822 |
- |
|
- Employee share option scheme - value of services provided |
|
985 |
612 |
|
- Interest on bank deposits |
|
(13,194) |
(17,425) |
|
- Write-off property, plant and equipment |
|
3,088 |
- |
|
|
|
------------------- |
------------------ |
|
Operating cash flow before changes in working capital |
|
290,848 |
207,449 |
|
|
|
|
|
|
Changes in working capital: |
|
|
|
|
- Inventories |
|
(56,405) |
(2,913) |
|
- Trade and other receivables |
|
19,655 |
(8,504) |
|
- Trade and other payables |
|
20,331 |
13,413 |
|
|
|
------------------- |
------------------ |
|
Cash generated from operating activities |
|
274,429 |
209,445 |
|
|
|
======== |
======== |
17 Income tax expense
Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for 2009 is 25%. This rate has been applied from 1st July 2008.
During the period,the Group recognised a current tax charge of US$38.7 million (1H 2009: US$30.1 million) and a deferred tax charge of US$10.5 million (1H 2009: US$4.3 million). The deferred tax charge is due to temporary differences between the accounting carrying values and the tax bases of assets and liabilities computed under the tax laws of Turkmenistan, which principally relate to accelerated tax depletion.
During 2008, the effective tax rate applicable to the Group's operations in Turkmenistan was increased to 25% by the Hydrocarbon Resources Law of 2008. The Group has continued to apply this rate in determining its tax liabilities as at 30 June 2010. The Group remains in discussions with the authorities in Turkmenistan about the applicability of this rate to prior periods, but it does not believe that prior periods are affected by the new rate. A provision has been made in respect of the additional tax that could become payable if the increased tax rate were applied to prior periods based on the expected value (weighted average probability) approach.
18 Related party transactions
a) Transactions and balances
The Company's largest shareholder is Emirates National Oil Company Limited (ENOC) L.L.C ("ENOC"), which owns approximately 51.48% of the Company's ordinary share capital. ENOC is ultimately a wholly owned entity of the Government of Dubai. Two members of the Board, Mr. Ahmad Sharaf (appointed 25 April 2007) and Mr. Mohammed Al Ghurair (appointed 25 April 2007) are nominees of ENOC.
|
|
Unaudited 6 months ended 30 June 2010 |
Unaudited 6 months ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Trading transactions: |
|
|
|
(i) Sale of goods & services - companies under common control |
18,251 |
245 |
|
|
----------------- |
----------------- |
|
(ii) Purchase of services - companies under common control |
994 |
427 |
|
|
----------------- |
----------------- |
|
Other transactions: |
|
|
|
(i) Finance income - companies under common control |
8,059 |
5,589 |
|
|
----------------- |
----------------- |
|
|
Unaudited 30 June 2010 |
Audited 31 December 2009 |
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Period end balances: |
|
|
|
(i) Receivables - companies under common control |
81 |
430 |
|
|
----------------- |
----------------- |
|
(ii) Term deposits - companies under common control |
549,659 |
611,427 |
|
|
----------------- |
----------------- |
|
(iii) Cash and cash equivalents - companies under common control |
50,234 |
140,948 |
|
|
----------------- |
----------------- |
|
(iv) Payables - companies under common control |
76 |
43 |
|
|
----------------- |
----------------- |
b) Key management compensation
|
|
Unaudited 6 months ended 30 June 2010 |
Unaudited 6 months ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Salaries and short-term benefits |
1,399 |
1,035 |
|
Share based payments |
430 |
460 |
|
|
-------------- |
-------------- |
|
|
1,829 |
1,495 |
|
|
====== |
====== |
19 Commitments
a) Capital commitments
Committed future expenditure for property, plant and equipment for which contracts had been placed at 30 June 2010 amounted to US$797.9 million (31 December 2009: US$372.4 million).
b) Operational commitments
Irrevocable letters of credit of US$2.3 million were in issue at 30 June 2010 towards the supply of equipment and services (31 December 2009: US$2.7 million).
20 Statutory accounts
The interim financial information presented in this report does not represent full statutory accounts. Full statutory accounts for the year ended 31 December 2009, prepared in accordance with IFRS, as adopted by the European Union, and containing an unqualified audit report, have been delivered to the Registrar of Companies.
21 Statement of directors' responsibilities
We, the Board of Directors, confirm our responsibility for the half year report and that to the best of our knowledge:
(a) the interim financial information comprising the Group balance sheet, the Group income statement, the Group statement of comprehensive income, the Group statement of changes in equity, the Group cash flow statement and related notes 1 to 20 have been prepared in accordance with IAS 34 as adopted by the European Union.
(b) the interim management report includes a fair review of the information required by:
(i) Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the interim financial information; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(ii) Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
The directors of Dragon Oil plc are listed in the Dragon Oil plc Annual Report for the year ended 31 December 2009. A list of current directors is maintained on the Dragon Oil plc website www.dragonoil.com.
The maintenance and integrity of the Dragon Oil plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site. Legislation in the Republic of Ireland governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
On behalf of the Board
Mohammed Al Ghurair
Chairman
Nigel McCue
Director
8 August 2010
Independent review report to Dragon Oil plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010, which comprises the Group balance sheet, Group income statement, Group statement of comprehensive income, Group statement of changes in equity, Group cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Irish Financial Services Regulatory Authority.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Irish Financial Services Regulatory Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom and Ireland. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Irish Financial Services Regulatory Authority.
PricewaterhouseCoopers
Chartered Accountants
Dublin, Ireland
8 August 2010
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