28th Apr 2005 07:01
Aminex PLC28 April 2005 AMINEX PLC("Aminex" or "the Company") Preliminary Results for the year ending 31 December 2004 Aminex, the oil and gas company listed on the London and Irish Stock Exchanges,today announces its preliminary results for the year ended 31 December 2004. Highlights • Petroleum Agreement signed with North Korea. Specific exploration licences and work programmes at advanced planning stage • Nyuni-1 offshore Tanzania completed and second licence period commenced • Agreement with Liquefied Natural Gas Ltd. of Australia to source gas for low cost LNG system • Further bidding areas being identified through Red Sea Petroleum Ltd • Disposal of non-core assets in Russia and the United States to concentrate on high impact exploration • Loss before tax for period of $4.4 million (2003: loss $4.1 million) Peter Elwes, Chairman of Aminex, said: "Following the disposal of our principal Russian assets in 2001 we have placedmajor emphasis on exploration. Assets not expected to contribute to growth havebeen disposed of. Aminex Group activities have now an increasingly strong biastowards high impact exploration in frontier areas where the search forhydrocarbons is still at an early stage. The Board believes that Aminex is strategically well placed as it embarks on itsmost ambitious exploration programme to date". 28 April 2005 Overview During the year under review Aminex completed drilling operations on the Nyuni-1well offshore Tanzania, finalised a Petroleum Agreement with the North Koreanauthorities and formalised an agreement with Liquefied Natural Gas Ltd. ofAustralia for pursuing gas development opportunities. In addition, Aminexparticipated in a bidding group for new onshore and offshore exploration inEgypt in partnership with First Energy Ltd. of Dubai and local Egyptian partnersthrough the formation of Red Sea Petroleum Ltd. Aminex is the designatedoperator of the Egyptian applications. At the beginning of the year, thecompany disposed of its remaining interests in Russia, OAO Ideloil, for US$2million and towards the end of the year sold the Vinton Dome production inLouisiana to Orion Oil & Gas LLC for $5 million. Nyuni-1 is the most significant well ever drilled by the company and a majorpioneering step for the whole East African coastal margin, being the first newoffshore well there for many years. Despite numerous shows of both oil and gas,with only limited testing facilities available, Nyuni-1 failed to flowcommercial hydrocarbons and has been suspended with a wellhead in place.However, it represents a landmark for a region which is now beginning to attracta high level of interest from the international oil industry. To add to thechallenges of drilling this frontier well, the company was involved for manymonths in a financial dispute with its principal joint venture partner whichcreated difficulties. This dispute has now been satisfactorily resolved asannounced to shareholders on 21 February 2005. Financial Review Turnover in 2004 comprises revenues from the sale of oil and gas in the USA andsales of goods and services by the oilfield service and supply companies. Groupturnover has declined from US$7.76 million in 2003 to US$5.38 million for thecurrent year. Much of the decrease is a consequence of lower gas production inthe USA, which fell from 350,000mcf in 2003 to 102,000mcf in 2004. Oilproduction in the USA has also declined by 27% from the prior year. Oil and gasprices remained buoyant throughout the year, with an average oil price achievedof US$40.57 per barrel and an average gas price of US$6.09 per mcf. As aconsequence of lower revenues, cost of sales for the Group in 2004 is US$1.2million lower than 2003. After taking into account a lower depreciation chargein 2004 of US$777,000, the resulting gross profit amounts to US$1.43 millionwhich compares with US$2.4 million for 2003. Administrative costs at US$5.1 million are US$512,000 higher than 2003. However,included in the current year's charge is US$390,000 for legal costs associatedwith the Petrom dispute, US$287,000 for staff redundancies following the sale ofthe Vinton Dome field and US$263,000 for foreign exchange losses, being aconsequence of a weaker dollar on translation of the sterling denominated headoffice expenditure. A charge of US$532,000 has been set up that adjusts for theshare of field profit due to the purchaser of Vinton Dome for the period fromthe date of sale of 30 June to the date of sale completion of 10 December 2004.An exceptional charge of US$184,000 reflects the loss on disposal of the Group'sinvestment in Bounty Oil & Gas NL. After taking into account net interest income of US$30,000 the net loss aftertax for the twelve months ended 31 December 2004 amounts to US$4.4 million whichcompares with a net loss after tax of US$4.13 million for 2003. The Balance Sheet at 31 December 2004 shows a net decrease from 2003 of US$2.1million on cost of fixed assets, reflecting the disposal of Vinton Dome and thedisposal of the investment in Bounty Oil & Gas NL but offset by explorationexpenditures during the year on the Nyuni licence. Figures for both debtors andcreditors at 31 December 2004 are unusually high in comparison with the level ofturnover and cost of sales for 2004, as amounts owed by Petrom SA to the Nyunijoint venture are included in debtors and Petrom's share of Nyuni's liabilitiesis included in the figure for creditors. The Cash Flow includes payment for additions to intangible fixed assets(virtually all for Aminex's share of Nyuni drilling costs) of US$5.5 million aswell as receipt of proceeds on disposal of tangible fixed assets of US$5.3million, most of which relates to the Vinton Dome disposal. Also included isUS$2.7 million representing proceeds on disposal of Aminex's investments inBounty Oil & Gas NL and OAO Ideloil. During 2004, approximately US$1.2 millionwas raised as new equity and US$282,000 of bank debt was repaid. United States Although the Group has benefited from higher oil and gas prices throughout theperiod, oil production and in particular gas production, has declined. TheSabine Lake gas well provided intermittent production at low levels during thesecond half of 2004 but is currently shut-in pending repairs. The Alta Loma gaswell has also been shut-in since September 2004. An unsuccessful recompletionwas carried out on the well by the operator at the beginning of 2005 and furtherengineering studies are currently being carried out to evaluate otherpotentially productive zones. A further recompletion is anticipated shortly. In December 2004, the sale of the Group's interests in the Vinton Dome field wascompleted, providing proceeds of US$5 million. Engineering plans have now been drawn up for the first in a series ofdevelopment wells in the gas producing South Weslaco field. The well isscheduled to be drilled during the course of the next two weeks. Aminex has a25% working interest in the leases which are to be drilled in this field.Depending on the result of the first development well, the rig will moveimmediately on to a second location. Tanzania Nyuni-1, a frontier exploration well, was drilled deeper, took longer and costmore than forecast and the result was inconclusive. The well did not flowhydrocarbons under limited test but a thick potential reservoir section ofNeocomian sand produced several strong indications of gas and, at depth, tracesof live crude oil from a widespread regional Jurassic source. This will lead tothe whole region being re-evaluated. Since the well result was announced in Maylast year Aminex has intensively analysed the results of this geologicallycomplex well with increasing optimism for the commercial potential of the Nyunistructure, for both oil and gas. Following a "stand-still" period generously offered by the Tanzanian authoritiesfor well evaluation, Aminex has now elected to commit to a second Nyuni licenceperiod of three years ending in November 2007. This will involve shooting newseismic over the Nyuni prospect as well as over other prospects identified andareas adjacent to the now-producing Songo-Songo gas field. The work commitmentis two exploration wells, for which the Company is currently seeking drillingpartners. Under the terms of the Production Sharing Agreement, 50% of theoriginal licence area has now been relinquished. Elsewhere in Tanzania, the Company is negotiating the conversion of itsTechnical Evaluation Licence for the onshore Ruvuma area to a full ProductionSharing Agreement and has been advised that this will be finalised by mid-year.Ruvuma is a 12,000 square kilometre block on the north side of the RuvumaRiver, the boundary between Tanzania and its southern neighbour Mozambique. Onthe Mozambique side there is current exploration activity and there have beenseveral promising gas discoveries. To the east the Ruvuma licence area abutsthe inshore Mnazi Bay gas field currently being developed for commercialproduction. Tanzania is the core of the East African margin which has many similarities withthe prolific West African margin but remains a frontier area and isunder-explored. However this is now changing. Woodside Petroleum is planning adeepwater well off the coast of neighbouring Kenya while Exxon has recentlyfarmed into a large offshore licence north-west of Madagascar. In Tanzaniaitself, Shell and Petrobras have negotiated deep water blocks while explorationwork by other companies is scheduled to commence on several shallow water andcoastal onshore blocks. Good new areas are increasingly being signed up andfurther ones are hard to find but Aminex believes that Nyuni represents primeacreage in a potentially first class oil play fairway. Liquefied Natural Gas Aminex is now working with Liquefied Natural Gas Ltd. of Australia ("LNGL"), anAustralian quoted company which has a proprietary low-volume, low-cost LNGsystem. This enables gas to be liquefied and transported to power generators involumes of around 10,000 tonnes per shipment, far smaller than the massiveprojects operated by the major oil companies, and having favourable economicsgiven the right mix of operating parameters. Aminex is working on securingsuitable natural gas reserves as the upstream component of LNGL's operations.Gas opportunities under evaluation include discoveries which have not so farbeen economic to develop, associated gas flared as a consequence of oilproduction and discovered oil and gas fields which have not been developed dueto gas flaring constraints. North Korea On 20 September 2004, Aminex announced the signing of a 20 year agreement toassist with the development of the onshore and offshore hydrocarbon potential ofNorth Korea following several years of negotiation. Aminex's current role isthe assessment of all existing data and the potential of the offshore areaswhere drilling in the past has revealed promising shows of oil. Initial workhas been focused on the West Sea Basin, a large bay at the north western end ofthe Korean peninsular, where oil was discovered by the North Koreans some yearsago but never developed. The West Sea is adjacent to the Bohai Bay, one ofChina's most important producing regions. North Korea is known as a secretivecountry and relations with the outside world have been strained recently.However, there are encouraging signs of increasing contact with South Korea andongoing diplomatic activity to resolve the nuclear issue. In return for carrying out an intensive data evaluation exercise and assistingwith the creation of a workable international petroleum industry, the PetroleumAgreement grants to Aminex, among other things, the prior right to choosespecific exploration blocks for its own use. Aminex has now submitted a modelform of Production Sharing Agreement to the government. This has been formallyapproved and the Company will lodge applications for selected areas in the nearfuture. Egyptian Bidding Group In September 2004, Aminex signed a shareholder agreement with First Energy Ltd.of Dubai, together with First Energy's local Egyptian partners, to create acompany called Red Sea Petroleum Ltd. ("Red Sea") in which Aminex initially hasa 55% interest. Although Red Sea was not awarded the two blocks it applied forin the recent round, both of which were awarded to much larger international oilcompanies, it is now working to identify further bidding areas. Prospects and Strategy Aminex's strength is its ability to negotiate licences and prospects in areasunder-explored but regarded as highly prospective for hydrocarbons and then toprogress these opportunities through painstaking geological and operationalwork. The Company achieved this in Russia, where it was one of the earlywestern independents after the fall of the Soviet Union, and in Tanzania whereit has restarted offshore drilling after a long gap and overcome huge logisticaldifficulties. It is now actively engaged in North Korea, with a strong team ofspecialists who have established good working relationships with their Koreancounterparts. Aminex's philosophy, as always, is to try to identify potential areas beforethey become popular with larger and better resourced oil companies. Both theEast African coastal margin and the Korean peninsula are high-impact explorationareas and meet this criterion well. Aminex has set itself an ambitious exploration programme over the next twoyears, primarily in North Korea and East Africa. Although its resources are atpresent limited, it is pursuing a number of prospective strategic partnershipswhilst at the same time considering alternative forms of fund raising. In aperiod of strong oil and gas prices and a burgeoning new interest in frontierexploration, Aminex is now strategically well-placed. 28 April 2005 Enquiries: Aminex PLC + 44 (0) 20 7240 1600Brian Hall - Chief ExecutiveSimon Butterfield - Finance Director College Hill + 44 (0) 20 7457 2020Jim Joseph Oriel Securities + 44 (0) 20 7710 7600Simon BraggScott Richardson Brown Davy Corporate Finance + 353 (0) 1 614 8934Hugh McCutcheon AMINEX GROUPConsolidated Profit and Loss Account for the year ended 31 December 2004 2004 2003 Note US$'000 US$'000 Group turnover 5,384 7,760 Cost of sales (3,182) (4,362)Amortisation of oil and gas properties (777) (998) Gross profit 1,425 2,400Administrative expenses (5,094) (4,582)Purchaser's share of Vinton Dome profit 1 (532) - Group operating loss before exceptional items (4,201) (2,182) Exceptional items:Loss on disposal of fixed assets 2(a) (46) -Loss on disposal of listed investment 2(b) (184) -Write down in book value of investment in associate 2(c) - (2,010)Loss on disposal of subsidiary undertaking - (8) Loss on ordinary activities before interest (4,431) (4,200) Interest receivable and other income 64 105Interest payable and similar charges (34) (38) Loss on ordinary activities before taxation (4,401) (4,133)Tax on loss on ordinary activities - - Retained loss for the financial year (4,401) (4,133) Basic and diluted loss per Ordinary Share (in UScents) 3 (4.73) (4.55) AMINEX GROUPConsolidated Balance Sheet at 31 December 2004 31 December 2004 31 December 2003 US$'000 US$'000 Fixed assetsIntangible fixed assets 14,310 11,068Tangible fixed assets 8,313 12,834Other financial assets - 868 22,623 24,770Current assets Investment held for sale - 2,003Debtors 6,102 6,102Cash at bank and in hand 767 346 6,869 8,451Creditors: amounts falling due within one year (4,832) (5,474) Net current assets 2,037 2,977 Total assets less current liabilities 24,660 27,747Creditors: amounts falling due after more than one year (51) (88) Net assets 24,609 27,659 Capital and reservesCalled up share capital 6,777 6,172Share premium account 36,061 35,258Capital conversion reserve fund 234 234Foreign currency reserve 259 316Profit and loss account (18,722) (14,321) Shareholders' funds - equity 24,609 27,659 AMINEX GROUPConsolidated Cash Flow Statement for the year ended 31 December 2004 Year ended 31 Year ended Year ended Year ended Dec 31 Dec 31 Dec 31 Dec 2004 2004 2003 2003 Note US$'000 US$'000 US$'000 US$'000 Net cash outflow from operating activities 4 (2,825) (1,814)Return on investments and servicing of financeInterest received 15 41Dividend received from associate - 39Rent received 49 9Interest paid (34) (38) Net cash inflow from returns on investments andservicing of finance 30 51 Capital expenditurePurchase of tangible fixed assets (159) (2,355)Purchase of intangible fixed assets (5,522) (3,023)Sale of tangible fixed assets 5,276 32Purchase of other investment - (868) Net cash outflow from capital expenditure (405) (6,214) Acquisitions and disposalsDisposal of subsidiary undertaking - (12)Disposal of investments 2,687 -Cash transferred on disposal of subsidiary - (10)undertaking Net cash inflow/(outflow) for acquisitions anddisposals 2,687 (22) Net cash outflow before use of liquid resources andfinancing (513) (7,999) Management of liquid resourcesCash removed from short term deposit - 7,400 Financing activitiesIssue of ordinary share capital (net) 1,231 -Net movement in bank loans (282) 107Net movement in finance leases (15) (49) Cash inflow from financing activities 934 58 Increase/(decrease) in cash 421 (541) Notes to the Financial Information 1 Purchaser's share of Vinton Dome profit On 10 December 2004, Aminex USA Inc., a wholly-owned subsidiary company,completed the disposal of its interests in the Vinton Dome Field for aconsideration of US$5 million. Under the terms of the Purchase and SaleAgreement, it was agreed that the purchaser, Orion Oil & Gas Louisiana HoldingsLLC, would receive US$100,000 for each month between 1 July 2004, the effectivedate of the transaction, and the date of completion as its share of the netincome of the Vinton Dome Field for that period. The payment amounted toUS$532,000. 2 Exceptional items (a) The Group incurred costs amounting to US$167,000 relating to legal andprofessional fees arising from the disposal of the Vinton Dome Field, againstwhich has been offset a profit of US$121,000 on the disposal of the Corsair 500workover rig, resulting in a net loss of US$46,000 on the disposal of fixedassets. (b) The Group made a loss of US$184,000 on the disposal of its holding in alisted investment, Bounty Oil & Gas NL, which was sold in October 2004. (c) In March 2004, the Group disposed of its interest in its associate OAOIdeloil for US$2.215 million before selling expenses. The disposal gave rise toa write down in book value of the investment in associate at 31 December 2003 ofUS$2.01 million. As a result the investment in associate was reclassified tocurrent assets under "Investment held for sale". No share of profits wasrecognised in the years ended 31 December 2003 and 31 December 2004. 3 Basic and diluted loss per Ordinary Share 2004 2003 Loss attributable to ordinary shareholders US$4,401,000 US$4,133,000 Weighted average number of Ordinary Shares outstanding 93,014,594 90,905,734 Loss per share US4.73 cents US4.55 cents Loss per share is calculated by dividing the weighted average number of OrdinaryShares in issue during the year into the loss after taxation for the yearattributable to the shareholders of Aminex PLC. There is no difference between the basic net loss per share and the diluted netloss per share for the years ended 31 December 2004 and 2003 as all potentiallydilutive Ordinary Shares are anti-dilutive. 4 Dividends No dividend is proposed (2003: US$nil). 5 Reconciliation of operating loss to net cash outflow from operatingactivities 2004 2003 US$'000 US$'000 Operating loss (4,431) (4,200)Depreciation charges 827 1,166Decrease in stocks - 46Increase in debtors - (3,009)Increase in creditors 707 1,905(Profit)/loss on disposal of tangible fixed assets (121) 7Loss on disposal of listed investment 184 -Loss on disposal of subsidiary undertaking - 8Write down in book value of investment in associate - 2,010Foreign exchange movement (68) 191Issue of share capital in settlement of services provided 77 62 Net cash outflow from operating activities (2,825) (1,814) 6 2004 Report and Accounts The 2004 Report and Accounts will be posted to shareholders shortly. 7 Statutory information The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2004 within the meaning of theCompanies (Amendment) Act, 1986. The statutory accounts will be finalised onthe basis of the financial information presented by the Directors in thepreliminary announcement and together with the auditors' report thereon will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Aminex