4th Dec 2006 07:01
Rockhopper Exploration plc04 December 2006 Press Release For immediate release: December 4, 2006 Rockhopper Exploration plc Interim Results Interim Results for the six months ended 30 September 2006 Rockhopper Exploration plc (RKH), the AIM-listed oil and gas exploration companybased in the United Kingdom, today announces its interim results for the sixmonths ended 30 September 2006. Highlights: •Processing and interpretation of CSEM data completed •Positive results on both CSEM surveys •Acreage significantly de-risked •Processing new 2D data completed €3D programme commenced two months ahead of schedule Chairman Pierre Jungels commented "We have seen the most significant stepforward in our exploration effort to date, it has been a period of realtechnical progress." "During the six months leading to September 2006 our exploration effort focusedentirely on licences PL023 and PL024, with hugely encouraging results," SamMoody, Managing Director added. "During 2007 our plan is to develop an inventoryof drillable prospects so that we are in a position to participate in anyFalkland Islands drilling campaign." For further information, please contact: Rockhopper ExplorationSam Moody, Managing Director 01722 414 419www.rockhopperexploration.co.uk Aquila Financial LimitedPeter Reilly 020 7202 2601www.aquila-financial.com Notes to editors The Rockhopper Group started trading in February 2004 to invest in and carry outan offshore oil exploration programme to the north of the Falkland Islands. TheGroup, which floated on AIM in August 2005, is currently the largest licenceholder in the North Falkland Basin and owns a 100 per cent interest in fouroffshore production licences which cover approximately 5,800 sq. km. Theselicences have been granted by the Falkland Islands Government. Chairman's Statement The six months ending 30 September 2006, covers a period of real technicalprogress in our exploration effort. As expected, the Group incurred a loss forthe period. The six months to the end of September 2006 have seen the most significant stepforward in our exploration effort to date. Processing the new 920km of 2D seismic data is complete and interpretation is now well advanced. Processing andinterpretation of our newly acquired Controlled Source Electromagnetic (CSEM) Surveys is also complete and we have commenced our 3D seismic acquisition programme with CGG Marine some two months ahead of schedule. We acquired 920km of new 2D seismic data in licences PL023 and PL024 on anexclusive basis with GSI in early 2006. The processed seismic data is of highquality and covers a number of leads in the south of the acreage, including leadK, as well as a closer grid over target J1, which we now know as prospect Ernest. The CSEM data acquired by OHM over Ernest and K contains what we believe to bestrong signs of the presence of Hydrocarbons within the structures. This is a hugely significant development for the group. We now believe that Ernest is drillable subject to all relevant regulatory requirements and have upgraded thistarget as a result. Moving forwards, our 3D will help us to further define a number of targetsalready mapped in the northern licences PL032 and PL033. Once that data has beenmapped and interpreted, we will be in a position to rank our prospect inventory and begin making decisions on potential drilling targets. Starting the 3D programme two months early has allowed us to accelerate this process. Dr Pierre JungelsChairman Managing Director's Review During the six months to the end of September, our exploration effort focusedentirely on licences PL023 and PL024, with hugely encouraging results. We have completed processing of the 920km of 2D seismic acquired in early 2006 and made good progress in interpreting and mapping that data. We have also completedprocessing and interpreting the two CSEM surveys acquired at the same time. Ourcommitments in relation to Phase 1 of licences PL023 and PL024 have now beencompleted. Maps of Ernest made using the new seismic data indicated that the structure isboth larger and more robust than when mapped on the pre-existing seismic. A clear independent four way closure can easily be mapped, with a larger potentialclosure possible against a large fault located to the east of the prospect. The areal extent of this four way closure is approximately 2,600 acres. Using a conservative calculation that translates into possible oil in place of over 300 million barrels, or around 100 million barrels of recoverable oil. In addition to the robust nature of the prospect, we have observed an AVOresponse on its flank along with possible gas chimneys and flat spots within thearea of closure, all of which are potential indicators of the presence of hydrocarbons. The new seismic also contains strong indications of the presence of reservoir units in the area. Turning to the CSEM data over Ernest, a resistor can be seen easily on theinterpreted data. When this CSEM data is co-rendered with the new 2D seismic, itbecomes clear that the resistor is coincident with the extent of the four way closure as described above. The fact that this resistor appears to be contained within the Ernest structure leads us to believe that it is indicating the presence of Hydrocarbons trapped within the structure. This has significantlyreduced the exploration risk associated with the prospect with the biggest remaining risk is associated with reservoir. Whilst indications of the presence of reservoir are present in the seismic data, we can make no meaningful assessment of the quality of that reservoir until we drill the target. Assuming a recoverable reserve of 100 million barrels, the discovered value of Ernest alone could be in the region of $1,000 million at an oil price of $50 per barrelaccording to a model built by Scott Pickford at the time of our admission to AIM. Prospect Ernest is located in approximately 160m water depth and only 100kmfrom the Islands. The CSEM result over K is also extremely encouraging, with a resistor observedwhich appears to be coincident with a structural closure. This resistor is not present in the original target of the K survey, but in a flanking structure to the north east. More seismic is required over K in order to further define the extent of that closure and to determine any possible well locations. While K andsome of the other leads described below are relatively shallow, that does notmean they cannot become productive fields, as elsewhere in the world shalloweroil fields are successfully in production, for example, in the UK's Morecambe Bay area where the structure is remarkably similar to that observed in licences PL023 and PL024. Finally, the new seismic has allowed us to further develop our existinginventory of leads in wider PL023 and PL024 area. Work on the development of these leads is now continuing. These leads include some highly attractive rollovers, some of which are associated with strong amplitude anomalies. We have also become increasingly confident of the presence of a mature source rock in the southern most areas of our licences PL023 and PL024, which is good news in terms of the risk associated with the leads in the area. Our next step is to begin active exploration of licences PL032 and PL033. Thegeology of these areas is different to that seen in PL023 and PL024 and makes the use of the CSEM technique more problematic. As a result, we are currently collecting a minimum of 685km2 of 3D seismic data with CGG Marine and we were pleased to be in a position to begin that campaign some two months ahead of schedule. Processing and interpretation of that new data will carry us to the second half of 2007 and allow us to further refine and develop our prospectinventory. Our plan is to develop an inventory of drillable prospects during 2007 so that we are in a position to participate in any drilling campaign takingplace in the Islands. Samuel MoodyManaging Director Group profit and loss account (unaudited) 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated* Notes £000 £000 £000 Turnover 0 0 0Cost of sales 0 0 0 Gross profit 0 0 0Administrative expenses (394) (466) (822)Charge for share based payment 2 (121) 0 (349)Foreign exchange movement (122) 0 56 Operating loss (637) (466) (1,115)Interest receivable 273 88 412 Loss on ordinary activities before taxation (364) (378) (703) Taxation 3 0 0 0 Loss on ordinary activities after taxation (364) (378) (703) Basic and diluted loss pershare: pence 4 (0.50p) (0.84p) (1.20p) \* The restatement of comparatives applies solely to the charge for share basedpayment that is required by FRS20 (see note 2). Group balance sheet (unaudited)as at 30 September 2006 As at As at As at 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated* Notes £000 £000 £000 Fixed assetsIntangible assets 2,817 259 2,500Tangible assets 13 8 14 2,830 267 2,514 Current assetsDebtors 5 128 10Cash at bank 11,939 14,908 12,455 11,944 15,036 12,465 Creditors: amounts due within one year (67) (407) (59) Net current assets 11,877 14,629 12,406 Total assets less current liabilities 14,707 14,896 14,920 Capital & reservesCalled up share capital 5 721 718 718Share premium account 5 14,946 14,919 14,919Merger reserve (140) (140) (140)Share based payment reserve 2 470 0 349Profit & loss account (1,290) (601) (926) Equity shareholders' funds 14,707 14,896 14,920 \* The restatement of comparatives applies solely to the charge for share basedpayment that is required by FRS20 (see note 2). Group Cashflow Statement (Unaudited)for the six months ended 30 September 2006 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated* £000 £000 £000Net cash outflow from operating activities (499) (557) (782) Returns on investment and servicing of financeInterest received 273 88 412 Capital expenditure and financial investmentPurchase of intangible fixed assets (317) (23) (2,264)Purchase of tangible fixed assets (3) (8) (15) Net cash outflow before financing (546) (500) (2,649) FinancingIssue of share capital 30 15,000 15,000Share issue costs 0 (782) (1,086) Movement in net cash (516) 13,718 11,265 Reconciliation of operating loss to net cashoutflow from operating activities Operating loss (637) (466) (1,115)Decrease/(increase) in debtors 5 (90) 28Increase/(decrease) in creditors 8 (3) (47)Depreciation 4 2 0Shares issued in lieu of fees 0 0 3Charge for share based payment 121 0 349Net cash outflow from operating activities (499) (557) (782) \* The restatement of comparatives applies solely to the charge for share basedpayment that is required by FRS20 (see note 2). Group statement of changes in share capital and reserves (unaudited)for the six months ended 30 September 2006 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated* £000 £000 £000Share capitalOpening balance 718 361 361New shares issued 3 357 357Closing balance 721 718 718 Share premium accountOpening balance 14,919 1,362 1,362Premium on new shares issued 27 14,643 14,643Share issue costs 0 (1,086) (1,086)Closing balance 14,946 14,919 14,919 Merger reserveOpening and closing balance (140) (140) (140) Share based payment reserveOpening balance 349 0 0Share based expense payment for the period 121 0 349Closing balance 470 0 349 Profit & loss accountOpening balance (926) (223) (223)Loss for the period (364) (378) (703)Closing balance (1,290) (601) (926) Equity shareholders' funds 14,707 14,896 14,920 \* The restatement of comparatives applies solely to the charge for share basedpayment that is required by FRS20 (see note 2). Notes to the interim statements 1 Basis of preparation This report was approved by the directors on 29 November 2006. The interimfinancial statements have been prepared using accounting policies and practicesconsistent with those adopted in the accounts for the year ended 31 March 2006with the exception of the application of FRS 20 (see below) and are alsoconsistent with those that will be adopted in the March 2007 accounts. The interim financial statements are unaudited but have been reviewed by the auditor. The financial information does not constitute statutory accounts as defined bysection 240 of the Companies Act 1985. Comparative figures for the period ended 31 March 2006 are extracted from thestatutory accounts which have been filed with the Registrar of Companies buthave been restated for the impact of FRS 20. Those accounts, upon which theauditor issued an unqualified opinion, did not include a statement undersections 237(2) or 237(3) of the Companies Act 1985. 2 Adoption of new accounting policy The adoption of FRS 20: Share based payments, which is effective for accountingperiods beginning on or after 1 January 2006, requires a prior period adjustmentto be made. This has created a share based payment reserve at 30 September 2006of £470 thousand and increased retained losses by the same amount. Of thisamount, £349 thousand is attributable to the year ended 31 March 2006. 3 Taxation The effective rate of taxation is based on the estimated charge for the fullyear at a rate of 0% (2005: 0%). 4 Basic and diluted loss per share 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2006 2005 2006 Audited as restated Loss for the period: £000 (364) (378) (703)Weighted average shares 71,800,154 45,087,007 58,467,365Basic and diluted loss per share: pence (0.50p) (0.84p) (1.20p) The basic loss per share amount is calculated by dividing the net profit for theperiod attributable to ordinary shareholders of the group by the weightedaverage number of ordinary shares outstanding at the period end. As the group isdeclaring a loss for all periods the exercise of either warrants or optionswould have the effect of reducing the loss per ordinary share and is therefore not considered dilutive. 5 Movements on share capital During August 2006 share options were exercised over a total of 300,000 ordinary1p shares, raising £30,000. 6 Post balance sheet events During October 2006 the group created a cash backed letter of credit facility infavour of CGG Marine in respect of the 3D programme discussed in the Chairman'sstatement and Managing Director's review. The agreement signed in October andwork commenced in November and is ongoing at the time of signing this report.Whilst the final cost will not be known until the work is completed it isanticipated that it will be in excess of $10 million. 7 Copies of the interim report Copies of the interim report will be dispatched to shareholders and will beavailable to the public at the registered office: Hilltop Park, Devizes Road,Salisbury, SP3 4UF, along with copies of the audited accounts for the year ended31 March 2006 and interim accounts for the six months ended 30 September 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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