20th Mar 2007 07:01
Aminex PLC20 March 2007 20 March 2007 AMINEX PLC ("Aminex" or "the Company") Preliminary results for the year ended 31 December 2006 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 2006. Highlights • Net loss reduced to US$2.86 million (2005: loss US$4.98 million) • US production ahead of previous year • Active drilling programme due to commence shortly in Tanzania, Egypt and USA • Up to date engineering evaluation shows major increase in 2P value of US properties • Two farm-out agreements concluded on Nyuni licence, Tanzania • Slow but steady progress in North Korea • Seismic completed at Nyuni and further seismic planned for Ruvuma licence this year • First year programme completed in Madagascar and new seismic planned for 2007 Brian Hall, Chief Executive of Aminex, said: "During the year, we consolidated our exploration programme in Tanzania andMadagascar and made good progress in our other areas of operation. We are nowpoised to launch the most active drilling programme in Aminex's history. Wehave managed the programme in such a way that shareholders stand to benefit fromexploration upside, without being unduly exposed to the outcome of any singlewell." Enquiries: Aminex PLC +44 (0) 20 7291 3100 Brian Hall - Chief ExecutiveSimon Butterfield - Finance Director Pelham Public Relations +44 (0) 20 7743 6679 Archie Berens OVERVIEW During 2006 the Aminex Group consolidated its exploration programme in Tanzaniaand Madagascar, finalised its exploration licence in Egypt, continued to makeprogress in North Korea under exceptionally difficult political circumstances,further developed its US oil and gas operations and positioned itself for majordrilling initiatives over a broad front in 2007. Drilling is planned during the current year at the following locations: • Nyuni (Tanzania) • West esh el Mellahah (Egypt); • Alta Loma and South Weslaco (Texas). Depending on progress, drilling may also commence in the Ruvuma Basin (Tanzania)towards the end of 2007, although this now seems more likely to start in 2008. Progress in finalising a Production Sharing Agreement in Kenya has been slow,but we have recently been assured by the Kenyan Energy Minister that we mayexpect a satisfactory conclusion shortly. A new reserves report for our US properties shows greatly enhanced value,following development drilling and a period of stronger commodity prices,underpinning our current market capitalisation. Two farm outs have now been successfully concluded on the Tanzanian Nyunilicence while our farm-in partner in the Ruvuma area, Hardman Resources Ltd. ("Hardman"), has been acquired by Tullow Oil PLC. The takeover of Hardman sloweddown the work programme over Ruvuma in late 2006, but its conclusion leaves usin a 50-50 partnership with Tullow, one of the largest and most successfulindependent oil companies operating on the African continent today. FINANCIAL REVIEW Aminex's revenue during the current year comprises sales of oil and gas in theUSA and sales of goods and services by its oilfield services and supply company.Total revenue of US$5.0 million is 67% higher than 2005 revenue of US$3.0million, mainly as a result of increased gas sales in the USA and sales ofoilfield equipment from the UK. Oil and gas revenue comprises approximately 50%of total revenue in 2006 compared with 61% in 2005. Oil production at 30,000 barrels is 10% up on 2005 whereas gas production hasmore than doubled from 59mmcf in 2005 to 129mmcf in the current year. Theaverage oil price achieved during 2006 was US$58.35 per barrel, an increase ofUS$8 per barrel over the 2005 average. Most of the oil sold was from the Group'sSomerset field, the production from which is classified as South Texas Sour thatis priced at a discount of up to US$4 per barrel against the standard West TexasIntermediate (WTI) pricing. The average gas price obtained in 2006 was US$5.91per mcf compared with an average price of US$7.81 in 2005. The increase in gasproduction in the current year is due to two new wells which came on stream atthe South Weslaco field during the last two weeks of 2005. Cost of sales at US$3.4 million is US$1.4 million higher than the previous yearwith much of the increase relating to the cost of oilfield services sales.Nevertheless, average margins of gross profit on oilfield equipment sales during2006 amounted to approximately 20% (2005: 17%). The depletion anddecommissioning charge of US$0.39 million is US$0.55 million lower than the 2005charge. Included in the 2005 charge was the cost of decommissioning the SabineLake field in the USA, whereas no fields have been decommissioned during 2006.After taking these charges into account, the resulting gross profit for theGroup in 2006 amounted to US$1.23 million, an increase of US$1.21 million overthe 2005 gross profit. As a consequence of continuing cost reductions, mainly in the USA, Groupadministrative expenses at US$3.97 million are approximately 20% lower than the2005 charge, which included US$583,000 relating to the settlement and associatedlegal costs of litigation. The operating loss for the year was US$2.79 million,a decrease of US$2.14 million from the 2005 operating loss of US$4.93 million. After charging net financing costs of US$75,000 (2005: US$49,000), the net lossfor the twelve months ended 31 December 2006 has been sharply reduced to US$2.86million (2005: loss US$4.98 million). Balance sheet exploration and evaluation expenditures during the current periodamount to US$1.42 million and comprise mainly seismic work carried out on theNyuni and Ruvuma licences in Tanzania as well as a gravity survey over the ManjaBlock 3108 acreage in Madagascar. Expenditures of US$1.1 million (which isstated net of a depletion charge of US$0.39 million) on property, plant andequipment relate to the Group's producing assets in the USA. Included in thisexpenditure is the Group's participation in drilling a third well at the SouthWeslaco gas field (two wells were drilled during 2005) as well as further fieldrehabilitation work at the Shoats Creek field. The cash flow statement shows net cash inflows from financing activitiesamounting to US$5.44 million, primarily from an equity fundraising in June 2006.During the year, US$52,000 was raised and US$42,000 was repaid on vehicleequipment loans in the USA. At 31 December 2006, the Group's cash balanceamounted to US$3.65 million, offset by a minor amount of vehicle equipment debtof US$145,000. OPERATIONS REVIEW Tanzania - Nyuni We anticipate signing a contract imminently for use of the Caroil-6 rig to drillat Nyuni this year. This rig has recently drilled Maurel & Prom's gas discoverywell at the nearby Mkuranga licence in Tanzania and will drill a developmentwell in the Songo Songo gas field before delivery to Aminex and partners,anticipated for May. Aminex plans two wells at Nyuni, the first of which willbe directionally drilled from the small Kilwani island, which lies one kilometreto the SW of Songo Songo Island. The drilling objective is a prospect known asSongo Songo South. The second well location has yet to be finalised. During the last three months Aminex has conducted an extremely complex "transition zone" seismic programme over the numerous reefs and islands whichoverlie the licence's leads and prospects. In 2005 a relatively simple marineseismic survey was carried out in navigable waters and the seismic lines in thetransition zones, now tied in to the marine lines, provide a far morecomprehensive result than has previously been achieved. The Company's partnersare Bounty Oil (6%), East Africa Exploration (10%) and Key Petroleum (20%).Discussions continue with Pan African Tanzania (a subsidiary of OrcaExploration, formerly known as East Coast Energy) to participate in thislicence. Tanzania - Ruvuma Further onshore seismic is planned for Spring 2007 and preparations are wellunder way, the results of which will determine drilling locations. Our initialassessment of Ruvuma concludes that this licence area contains several sizeableoil and gas prospects. In the Mozambique part of the Ruvuma Basin the licensinground completed last year has brought in a number of well-known oil companies,including ENI, Anadarko, Norsk-Hydro, Petrobras and others, which have madematerial financial commitments to exploration of the basin. Exploration acreageon the Tanzanian side of the basin is exclusively in our hands. Partners areAminex (50%) and Tullow (50%). Madagascar Aminex and its 50-50 partner Mocoh Ltd., operating through a joint company knownas Amicoh Resources Ltd., completed a gravity survey over the 10,750 squarekilometre onshore Manja concession, Block 3108, earlier in the year and havesubsequently reprocessed approximately 2,000 line kilometres of 2D seismicacquired by previous licensees Chevron and Amoco some years ago. The first yearwork programme has been completed on schedule and a new 500 kilometre 2D seismicsurvey is scheduled to commence in the third quarter. Since we applied forManja in early 2005, onshore Madagascar has become a focus of industry interestand Aminex is therefore pleased to have acquired an excellent licence onfavourable terms prior to a surge of exploration activity. U.S.A. Aminex USA, Inc., a wholly-owned subsidiary, has interests in four principalproducing locations, being Alta Loma, Shoats Creek, South Weslaco and Somerset.A recent reserves report concluded by Oilfield Production Consultants Ltd.attributes a 2P (proved and probable) valuation to all Aminex's properties inthe USA of US$84.5 million. Alta Loma produces from a single gas well which was intermittently shut-in forsome time as a result of the major fire and explosion at BP's Texas CityRefinery, the sole customer for its production. However production has nowresumed at Alta Loma and the drilling of a second well is provisionally plannedfor 2007. Aminex and its partners drilled a third well at South Weslaco duringthe year, in addition to two gas wells drilled in 2005 which are now onproduction. The third well was designed to test a deeper Lower Frio sand. Sofar it has not been possible to flow gas from the deeper formation despiterepeated efforts and the well may now be plugged off at the deeper zone andcompleted for production higher up the formation. Initial well workovers have been carried out at Shoats Creek, Louisiana, andfacilities reconstructed and upgraded. The Shoats Creek field has long beenconsidered very promising but the surface terrain is difficult and theunderlying geology highly complex. The field lends itself to 3D seismic butthis would be a very costly undertaking for a relatively small area. Thereforewe can be very encouraged that Forest Oil is conducting extensive 3D seismicover a large area including our properties. In consideration for allowingForest access to our acreage Forest will make the results of its surveyavailable to us. Thus, after several years of work, we shall finally have aclearer picture of this promising field which will enable us to drill withgreater confidence. Kenya Aminex and partners Upstream Petroleum Services Ltd. and SomKen concluded aseismic survey and seabed coring exercise over the near shore areas of Kenyaoffshore blocks L9 and L10 in the first half of 2006 under the terms of aninformal Technical Evaluation Agreement. These areas have now been redesignatedas blocks L17 and L18. Extended negotiations have been taking place to convertthis acreage to full Production Sharing Agreement ("PSA") status. Aminex hasnow been assured by the Kenyan Energy Minister that a satisfactory conclusionwill be reached in the near future. North Korea In North Korea (the Democratic Peoples Republic of Korea or "DPRK"), progresshas been slower than anticipated, mainly on account of a series of bureaucraticdelays and a very difficult climate for working. Aminex's area of concentrationis the East Sea where a data gathering exercise is under way. It is likely thata new and more comprehensive agreement will be signed with the North Koreanauthorities which facilitate the introduction of new industry partners and thecommencement of a major work programme, but the timing has yet to be determined.This will facilitate accelerated operations and Aminex has been assured thatthe timetable for the 2005 PSA will be extended to enable commitments to be metin an orderly manner. Aminex considers the oil and gas potential of the DPRK tobe very high, even though operations require both patience and perseverance. Egypt On 17th September 2006, as announced to shareholders, a licence for Block 2 inthe onshore West Esh el Mellahah area ("WEEM") was finalised in Cairo with theMinister of Petroleum at a formal ceremony. This marked the end of lengthynegotiations and the beginning of a first three year work period, in which threewells are planned commencing in summer 2007. Plans for this programme are welladvanced. The main prospects in Block 2 are already covered by 3D seismic datawhich means that it will be possible to move straight into the drilling phase.Aminex has an interest of 10% in WEEM and its share of exploration costs will becarried through to first commercial production by partners. WEEM is in a provenoil and gas area and close to major existing production in neighbouring WEEMBlock 1. Aminex is reviewing further exploration opportunities in Egypt. STRATEGY & PROSPECTS Aminex is about to embark on an ambitious drilling programme, in East Africa andthe USA. The Company has a well diversified spread of risk and a balancedportfolio ranging from proved reserves in Texas, upcoming drilling close toestablished production at Nyuni and in Egypt, two major and prospective licencesin industry "hot spots" at Ruvuma and in Madagascar and, at the far end of thespectrum, exclusive rights to all the potentially petroleum-bearing basins ofNorth Korea. Recent highly encouraging political developments in North Koreamay serve Aminex's interests well, while the Company's early entry into the EastAfrica region positions it strategically as a pioneer in an exciting new region. 20 March 2007 Group Income Statementfor the year ended 31 December 2006 Notes 2006 2005 US$'000 US$'000 Revenue - continuing operations 2 5,019 3,000Cost of sales (3,401) (2,038)Depletion, depreciation and decommissioning (386) (941) Gross profit 1,232 21Administrative expenses (3,974) (4,895)Depreciation (45) (56) Loss on operations (2,787) (4,930)Financing income 3 165 123Financing costs 4 (240) (172) Loss before tax (2,862) (4,979)Income tax expense - - Net loss for the financial year - continuing operations 2 (2,862) (4,979)Basic and diluted loss per Ordinary Share (in US cents) 5 (1.74) (3.85) Group Statement of Recognised Income and Expensefor the year ended 31 December 2006 2006 2005 US$'000 US$'000 Currency translation differences 14 (18) Net gain/(loss) recognised directly in equity 14 (18)Loss for the financial year (2,862) (4,979) Total recognised income and expense for the year (2,848) (4,997) Attributable to the equity holders of theParent Company (2,848) (4,997) Group Balance Sheetat 31 December 2006 2006 2005 US$'000 US$'000 Exploration and evaluation assets 6 17,065 15,649Property, plant and equipment 9,424 8,368Other investments 418 418Total non current assets 26,907 24,435 Trade and other receivables 1,532 1,179Cash and cash equivalents 3,648 3,884Total current assets 5,180 5,063Total assets 32,087 29,498 Liabilities Current liabilitiesInterest bearing loans and borrowings (43) (42)Trade and other payables (1,116) (1,946)Decommissioning provision (194) (201)Total non current liabilities (1,353) (2,189) Non current liabilitiesInterest bearing loans and borrowings (102) (93)Decommissioning provision (2,183) (2,127) Total non current liabilities (2,285) (2,220) Total liabilities (3,638) (4,409) Net assets 28,449 25,089 Equity Issued capital 7 11,916 11,057Share premium 7 44,010 40,102Capital conversion reserve fund 234 234Share option reserve 729 187Share warrant reserve 899 -Foreign currency reserve (61) (75)Retained earnings (29,278) (26,416) Total equity 28,449 25,089 Group Statement of Cashflowsfor the year ended 31 December 2006 2006 2005 US$'000 US$'000Operating activitiesLoss for the financial year (2,862) (4,979)Depletion, depreciation and decommissioning 431 997Foreign exchange gains/(losses) 20 (9)Financing income (165) (123)Financing costs 240 172(Gain)/loss on sale of plant and equipment (11) 15Equity-settled share-based payment charge 542 26Decrease in trade and other receivables 2 4,923Decrease in trade and other payables (398) (3,149) Net cash absorbed by operations (2,201) (2,127)Cost of decommissioning (165) (62)Interest paid (12) (15)Tax paid - - Net cash outflows from operating activities (2,378) (2,204) Investing activities Acquisition of property, plant and equipment (1,986) (1,317)Expenditure on exploration and evaluation assets (1,548) (1,429)Acquisition of investment assets - (44)Proceeds from sale of property, plant and equipment 45 37Interest received 192 90 Net cash outflows from investing activities (3,297) (2,663) Financing activitiesProceeds from the issue of share capital 5,708 8,698Payment of transaction costs (279) (751)Loans repaid (42) (82)Loans received 52 119 Net cash inflows from financing activities 5,439 7,984 Net (decrease)/increase in cash and cash equivalents (236) 3,117Cash and cash equivalents at 1 January 3,884 767 Cash and cash equivalents at 31 December 3,648 3,884 Notes to the Financial Informationfor the year ended 31 December 2006 1 Statement of Accounting Polices The financial information has been prepared in accordance with the recognitionand measurement principles of all International Financial Reporting Standards(IFRS), including Interpretations issued by the International AccountingStandards Board ("IASB") and its committees and endorsed or expected to beendorsed by the European Commission. The accounting policies used are consistent with those set out in the auditedAnnual Report for the year ended 31 December 2005, which is available on theCompany's website, www.aminex-plc.com. 2 Segmental Information The Group's primary reporting format is geographical segments, being theAmerica, Africa, Asia and Europe. The Group's other operations by geographicalsegment do not currently represent 10% or more of the Group's revenue or assetsand have therefore not been separately disclosed. The Group's secondaryreporting format is by business segment, being (a) exploration and evaluation,(b) producing oil and gas properties and (c) the provision of oilfield goods andservices. The Group's revenues and profits arise from oil and gas production in the USAand the provision of oilfield equipment and services in Europe. Segment results, assets and liabilities include items directly attributable toeach segment as well as items that can be allocated on a reasonable basis.Inter-segment revenue is not material and has therefore not been disclosedseparately below. Net assets before borrowings have been adjusted to eliminatethe impact of intercompany financing. Segment capital expenditure is the total amount of expenditure incurred duringthe period to acquire segment assets that are expected to be used for more thanone period. Segmental revenue Continuing operations Producing Provision of Total Oil and gas Oilfield properties goods of and services 2006 2005 2006 2005 2006 2005 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Country of destinationAmerica 2,512 1,833 159 122 2,671 1,955Africa - - 268 108 268 108Asia - - 509 557 509 557Europe - - 1,571 380 1,571 380 Revenue 2,512 1,833 2,507 1,167 5,019 3,000 No revenues arose from exploration activities. 2 Segmental Information (continued) 2006 2005 US$'000 US$'000Segment net profit/(loss) for the yearUS producing assets 144 (1,454)Exploration assets (419) (564)Oilfield services and supplies assets 169 (79)Group costs (2,756) (2,882) Total Group net loss for the year (2,862) (4,979) Segment assetsUS producing assets 9,445 8,652Exploration assets 17,478 16,082Oilfield services and supplies assets 289 299Group assets 4,875 4,465 Total assets 32,087 29,498 Segment liabilitiesUS producing assets (2,979) (3,627)Exploration assets (84) (38)Oilfield services and supplies (163) (305)Group activities (412) (439) Total liabilities (3,638) (4,409) Capital expenditureUS producing assets 1,295 1,722Exploration assets 1,416 1,326Group assets 228 41 Total capital expenditure 2,939 3,089 US depletion and decommissioning charge 386 941 Depreciation - Group assets 45 56 3 Financing income 2006 2005 US$'000 US$'000 Deposit interest income 165 123 4 Financing costs 2006 2005 US$'000 US$'000 Bank loans and overdraft interest 1 11Other finance charges 11 4Other finance costs - unwinding of discount rate on decommissioning provision 228 157 240 172 5 Loss per Ordinary Share The basic net loss per Ordinary Share is calculated using a numerator of the netloss for the financial year and a denominator of the weighted average number ofOrdinary Shares in issue for the financial year. The diluted net loss perOrdinary Share is calculated using a numerator of the net loss for the financialyear and a denominator of the weighted average number of Ordinary Sharesoutstanding and adjusting for the effect of all potentially dilutive shares,including share options, assuming that they had been converted. The calculations for the basic net loss per share for the years ended 31December 2006 and 2005 are as follows: 2004 2005 Net loss for the financial year (US$'000) (2,862) (4,979) Weighted average number of Ordinary Shares ('000) 164,289 129,434 Basic loss per Ordinary Share (US cents) (1.74) (3.85) There is no difference between the net loss per Ordinary Share and the dilutednet loss per Ordinary Share for the years 31 December 2006 and 2005 as allpotentially dilutive Ordinary Shares outstanding are anti-dilutive. There were7,591,000 anti-dilutive share options and 4,886,384 anti-dilutive share warrantsin issue as at 31 December 2006. 6 Exploration and evaluation assets Tanzania Other Total US$'000 US$'000 US$'000 Cost and net book valueAt 1 January 2006 15,258 391 15,649Additions 821 191 1,012Employment costs capitalised 249 155 404 At 31 December 2006 16,328 737 17,065 7 Issued capital and share premium Issued Share Capital Premium US$'000 US$'000 At 1 January 2006 11,057 40,102Exercise of options 83 234Issue of shares in part settlement of commercial transactions 35 199Proceeds from placing net of issue costs 741 3,475 At 31 December 2006 11,916 44,010 8 Comparative figures Comparative figures have been restated where necessary to reflect the currentperiod's presentation. 9 2006 Reports and Accounts The 2006 Report and Accounts will be posted to shareholders shortly. 10 Statutory information The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2006 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 independent auditor's reportthereon will be delivered to the Registrar of Companies following the Company'sAnnual General Meeting. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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