14th Oct 2005 14:33
Cambrian Oil & Gas PLC14 October 2005 14 October 2005 TIDM: COIL CAMBRIAN OIL & GAS PLC ("Cambrian Oil & Gas" or "the Company") Preliminary Results for the period from 2nd March 2004 to 30th June 2005 The Directors of Cambrian Oil & Gas Plc are pleased to present the accounts forthe Company's initial reporting period ended 30th June 2005. Highlights • Cambrian Oil & Gas Plc's admission to AIM on 1st March 2005 raising £2.25 million (before expenses) following the Company's acquisition of Zhibek Resources Plc, which holds oil and gas exploration and production assets in the Kyrgyz Republic• Advancement of the Beshkent-Togap water injection project and its Tash Kumyr exploration program• Loss for the period £0.317 million• Cash of £2.4 million as at 30th June 2005 Post Year End Highlights • Acquisition of the Toktogul exploration licence in a central area of the Kyrgyz Republic, to the north of the Company's Tash Kumyr licence• Completion of a Gore Survey(TM) in the Tash Kumyr licence area and identification of positive geochemical anomalies• Commencement of a 100 km 2D seismic program in the Tash Kumyr licence area to better define structural control over several of the prospects highlighted by geochemical results• Beshkent-Togap water injection project became operational, with incremental oil production expected early 2006• Acquisition of shares in Elko Energy Inc., which is pursuing a number of offshore exploration opportunities in Europe. John Byrne, Chairman of Cambrian Oil & Gas, commented: "Cambrian Oil & Gas hasadvanced its main projects and recently achieved a number of milestones in itsplan to build an initial asset base for future growth. I remain enthusiasticabout our future prospects, am pleased by our progress to date and thankshareholders for their support." For further information, please contact: Cambrian Oil & Gas plc Parkgreen CommunicationsNeale Taylor, Chief Executive Victoria ThomasTel: +44 (0) 20 7493 7671 Tel: +44 (0) 20 7493 3713 (TM) - Trademark of W.L. Gore & Associates, Inc. USA Chairman's Statement Dear Shareholder Your Board set out in March 2005 to progress our first 2 Kyrgyz projects. TheBeshkent-Togap water injection project will provide early cash flow and our TashKumyr exploration program will provide early drilling targets with an upsidepotential that can have a material impact on the Company's near-term value. In addition, the Company has been seeking new projects that fit our dualproduction and exploration goals. Your Company has screened a number ofopportunities while maintaining its focus on the Company's niche position in theKyrgyz Republic. In the current high oil price environment, attractively pricedacquisition opportunities are proving very challenging to find since we will notassume excessive price risk in making such purchases. Since re-admission to AIM as Cambrian Oil & Gas, I can report the followingprogress has been made: • The Beshkent-Togap water injection pilot project is operational and incremental oil recovery is expected in 3-4 months; incremental oil is expected to create a steady revenue stream for the Company; • A completed geochemical survey in the Tash Kumyr exploration licence suggests a number of geochemical features that conform to previous structural interpretations at the primary Paleogene target depths; • A 100km 2D seismic survey has commenced in the Tash Kumyr licence with the aim of identifying drillable targets; drilling is expected next summer; • A new exploration licence was acquired over a large anticlinal structure with a clear surface expression near Lake Toktogul; and • The Company took an equity interest in Elko Energy Inc., which is pursuing offshore exploration in Europe. The Company's financial position remains in line with its expectations at thetime of re-admission. Current funds are adequate to advance its projects andthe Company will keep this position under review as new projects and interestsare added to its portfolio. Your Board and management continue to seek new opportunities to build a strongasset base for future growth. I remain enthusiastic about our future prospects,am pleased by our progress to date and am also encouraged by the support of ourshareholders. John Byrne Chairman CORPORATE HIGHLIGHTS Admission to AIM of Cambrian Oil & Gas Plc Cambrian Oil and Gas Plc commenced trading on AIM on 1st March 2005, raising£2.25 million (before expenses) at that time, adding to existing funds ofapproximately £0.6 million. Available funds are being used to fund our Kyrgyzprojects and identify new opportunities. Cambrian Mining Plc is a major shareholder in the Company and holds about 27% ofthe issued share capital of the Company. Cambrian Mining has entered anagreement with the Company whereby the Company has a right to acquire allpetroleum projects pursued by Cambrian Mining; the 2 companies recentlyco-invested in Elko Energy Inc. OPERATIONAL HIGHLIGHTS Beshkent-Togap Water Injection Project - for increased oil recovery The Company has invested circa US$0.35 million in a pilot project to increaseoil recovery by way of using water injection to repressure the Beshkent-Togapoil field and displace oil to existing oil production wells. Newly installedfacilities include pumps, pipelines, tanks and converted injection wells.Incremental oil is expected in three to four months and the Company will thenlook to expand the project across the whole field. This incremental oilproduction is expected to provide the Company's first revenue. Tash-Kumyr Exploration Program A Gore SurveyTM was completed in the first half of the year; results showed anumber of positive geochemical features that conformed to previous structuralinterpretations. A 100km 2D seismic survey is now underway to cover thesegeochemical anomalies and assist in defining a number of drillable targets. Itis planned that drilling will commence in the summer of 2006. A potential workover opportunity is being investigated for an abandoned wellthat showed indications of hydrocarbons in an area which falls within one of thegeochemical anomalies. The total cost of our Tash Kumyr exploration activities through completion ofthe current seismic program will be circa US$0.5 million. Subsequent Events In addition to the above-described recent activities at Beshkent-Togap and TashKumyr, the Company has acquired the Toktogul exploration licence, which shows asurface expression of what potentially could be a large anticlinal structure atdepth and a possible trap for hydrocarbons. The geological setting appearssimilar to that in the nearby productive Fergana Basin. The Company also acquired 2,500,000 special warrants in Elko Energy Inc at aprice of 20 Canadian cents per warrant. Cambrian Mining co-invested in a further15,000,000 special warrants. The companies expect to nominate 1 director to theBoard of Elko Energy, which is pursuing offshore exploration in Europe. Cambrian Oil & Gas Plc GROUP PROFIT AND LOSS ACCOUNT for the period from 2nd March 2004 to 30th June 2005 Note 2005 £'000 Administrative expenses (394) ______Operating loss (394) ______ Interest received 54 ______Loss on ordinary activities before taxation (340) ______Tax on loss on ordinary activities - ______Loss for the period (340) Equity minority interest 23 ______Retained loss for the period (317) ====== Loss per share (pence) - basic 0.7 Continuing operationsAll items relate to continuing operations Cambrian Oil & Gas Plc Balance Sheet as at 30th June 2005 Note Group Company 2005 2005 £'000 £'000Fixed assetsIntangible assets 1,918 -Tangible assets 114 -Investments - 2,012 ______ ______ 2,032 2,012 ______ ______Current assetsDebtors 93 161Cash at bank and in hand 2,408 2,260 ______ ______ 2,501 2,421 ______ ______Creditors: amounts falling duewithin one year (431) (86) ______ ______ Net current assets 2,070 2,335 ______ ______Net assets 4,102 4,347 ====== ======Capital and reservesCalled up share capital 1,082 1,082Share premium 1,758 1,758Merger reserve 1,602 1,602Profit and loss account (317) (95) ______ ______Equity shareholders' funds: 4,125 4,347Equity minority interests (23) - ______ ______ 4,102 4,347 ====== ====== These Financial Statements were approved by the Board of Directors on 14thOctober 2005 and were signed on its behalf by: Neale Taylor Director Paul Mc Groary Director Cambrian Oil & Gas Plc Group Cash Flow Statement for the period 2nd March 2004 to 30th June 2005 Note 2005 £'000 £'000Reconciliation of operating loss to net cash outflow from operatingactivities Operating loss (394)Increase in debtors (93)Increase in creditors 111 ______Net cash outflow from operating activities (376) ______ CASH FLOW STATEMENT Net cash outflow from operating activities (376) _______Returns on investments and servicing of financeInterest received 54 _______Capital expenditure Purchase of tangible fixed assets (114)Purchase of intangible fixed assets (202) (316) _______ _______Acquisitions Net cash acquired with subsidiary acquisition 286 _______Financing Issue of share capital 2,440Short term loans 320 2,760 _______ _______Increase in cash 2,408 ======Reconciliation of net cash flow to movement in net funds Increase in cash in the period 2,408 Increase in short term loans (320) _______Change in net funds 2,088 Net funds at 2nd March 2004 - ______Net funds at 30th June 2005 2,088 ====== Cambrian Oil & Gas Plc Notes to the Accounts for the period to 30th June 2005 1 Accounting policies The principal accounting policies are summarised below and have been appliedconsistently throughout the period. a) Accounting convention The accounts have been prepared under the historical cost convention and inaccordance with applicable U.K. Accounting Standards. b) Basis of consolidation The Group profit and loss account and balance sheet combine the accounts of theCompany, its wholly-owned subsidiary, Zhibek Resources Plc, and its 72% ownedsubsidiary CJSC KNG Hydrocarbons, together with its 85% owned subsidiary CJSCZhibek Hydrocarbons, using the acquisition method of accounting. In the Company's balance sheet the investment in Zhibek Resources Plc includesthe nominal value of shares issued together with the value of the warrants. Asrequired by sections 131 and 133 of the Companies Act 1985 no premium wasrecognised on the share issue. The difference between nominal and fair value ofthe shares and warrants issued was credited to the merger reserve. c) Fixed asset investments Investments in subsidiary companies are classified as fixed assets and includedin the balance sheet of the Company at cost at the date of acquisitionirrespective of the application of merger relief under the Companies Act. d) Deferred taxation Full provision is made for deferred taxation resulting from timing differencesbetween the recognition of gains and losses in the accounts and theirrecognition for tax purposes. A deferred tax asset is only recognised when it is more likely than not that theasset will be recoverable in the foreseeable future out of suitable taxableprofits. e) Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the dateof the transaction. Monetary assets and liabilities denominated in foreigncurrencies are translated at the rate of exchange ruling at the balance sheetdate. All differences are taken to the profit and loss account. On consolidation of a foreign operation, assets and liabilities are translatedat the balance sheet rates, income and expenses are translated at rates rulingat the transaction date. Exchange differences on consolidation are taken to theforeign exchange reserve account where material. f) Exploration and development expenditure Exploration, evaluation and development expenditure incurred is accumulated inrespect of each identifiable area of interest. These costs are only carriedforward to the extent that they are expected to be recouped through thesuccessful development of the area or where activities in the area have not yetreached a stage which permits reasonable assessment of the existence ofeconomically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in fullagainst the profit in the year in which the decision to abandon the area ismade. A regular review is undertaken of each area of interest to determine theappropriateness of continuing to carry forward costs in relation to that area ofinterest. Restoration, rehabilitation and environmental costs necessitated by explorationand evaluation activities are expensed as incurred and treated as explorationand evaluation expenditure. g) Company profit and loss The Company has taken advantage of the exemption in the Companies Act 1985 fromthe requirement to publish its own Profit and Loss Account. The result for theperiod ended 30th June 2005 was a loss after taxation of £95,000. 2 Group segmental analysis Loss before Net assets/ taxation (liabilities) Period ended 30th June 2005 £'000 £'000 By geographical areaUK (200) 2,008Kyrgyz Republic (117) 2,094 _______ _______ (317) 4,102 _______ _______ 3 Operating loss 2005 £'000 This is stated after charging: Depreciation 1Auditors' remuneration Chapman Davis LLP - for audit 15 - other services 1 BDO Stoy Hayward - for audit 5 Additional fees of £28,000 were paid to BDO Stoy Hayward in respect of non-auditservices relating to the Company's AIM listing and re-admission, and additionalfees of £15,000 were paid to Chapman Davis LLP in respect of non-audit servicesrelating to the Company's re-admission and these costs have been written off toshare premium. 4 Directors and Employees A detailed analysis of Directors' remuneration is provided in the Directors'Report. A summary of the total remuneration of the Directors is comprised asfollows: 2005 £'000 Directors' fees (including subsidiary company fees) 70Ex-gratia payments 30Emoluments payable for consultancy services 73 _______ 173 ====== The average number of employees, including Directors during the period was 4,allocated as follows: Number Management and administration 4 ==== 5 Taxation 2005 £'000 Analysis of charge in period Tax on loss an ordinary activities - ====== Factors affecting tax charge for period The differences between the tax assessed for the period and the standard rate ofcorporation tax are explained as follows: 2005 £'000 Loss on ordinary activities before tax (317) Loss on ordinary activities multiplied by the standardrate of corporation tax in the UK of 30% (95) Effects of:Future tax benefit not brought to account 95 _______Current tax charge for period - ====== The Group has a potential deferred tax asset of £95,000 due to losses made inthe period. No deferred tax asset has been recognised because there is insufficient evidenceof the timing of suitable future profits against which the losses can berecovered. 6 Loss per share Basic loss per share is calculated on the loss on ordinary activities aftertaxation of £317,000 and on 48 million ordinary shares being the weightedaverage number of shares in issue during the period. No diluted loss per shareis presented as none of the outstanding options or warrants have a dilutoryeffect. 7 Intangible fixed assets - Group Licences & Deferred exploration costs £'000 CostAdditions 1,918 _______At 30th June 2005 1,918 _______ Amortisation At 30th June 2005 - _______ Net book valueAt 30th June 2005 1,918 ====== As at 30th June 2005 the Directors undertook an impairment review of thelicences and deferred exploration costs, as a result of which, no provisionswere required. 8 Tangible fixed assets - Group Plant Office Total Equipment £'000 £'000 £'000 CostAdditions 113 2 115 _______ _______ _______At 30th June 2005 113 2 115 _______ _______ _______ Depreciation Charge for period 1 - 1 _______ _______ _______At 30th June 2005 1 - 1 _______ _______ _______ Net book valueAt 30th June 2005 112 2 114 ====== ====== ====== 9 Investments - Company The Company holds 20% or more of the share capital of the followingcompanies: Company Country of registration or Shares held Class incorporation % Zhibek Resources Plc England Ordinary 100 On 28th February 2005 the Company acquired 100 per cent of the issued sharecapital of Zhibek Resources Plc for total consideration of £2,002,000 being£2,000,000 in shares and £2,000 in warrants. The nominal value of the shares amounted to £400,000. The transaction wassubject to the merger relief provisions of the Companies Act 1985 andaccordingly no share premium was set up. The difference between the fair valueof the acquisition and the nominal value of the shares allotted has beencredited to a merger reserve account. £'000Fair and book value of Zhibek Resources Plc assets at 28th February 2005 Licences & Deferred exploration costs 1,716 Current assets 286 _______ Total 2,002 _______Fair value of consideration 40,000,000 ordinary shares of £0.01 per share 2,000 13,333,333 Warrants 2 _______ Total 2,002 _______ Zhibek Resources Plc made a loss after taxation of £163,000 for the period ended30 June 2005 none of which arose during the period to the date of acquisition. Zhibek Resources Plc owns 72% of CJSC KNG Hydrocarbons, a joint-stock Companyincorporated in the Kyrgyz Republic whose main activity is oil exploration. Zhibek Resources Plc owns 85% of CJSC Zhibek Hydrocarbons, a joint-stock Companyincorporated in the Kyrgyz Republic whose main activity was oil exploration butwhich is currently dormant. 10 Debtors Group Company 2005 2005 £'000 £'000 Amounts owed by subsidiary undertakings - 122Other debtors 48 28Prepayments 45 11 _______ _______ 93 161 ====== ====== Of the amounts owed by subsidiary undertakings £102,000 relates to a debt thathas no formal terms of repayment and is unlikely to be repaid within the nexttwelve months. 11 Creditors: amounts falling due within one year Group Company 2005 2005 £'000 £'000 Short-term loan from Cambrian Mining 320 -Trade Creditors 11 -Accruals and deferred income 100 86 _______ _______ 431 86 ====== ====== 12 Share capital 2005 £'000 Authorised:200,000,000 ordinary shares of £0.001 each 2,000 ===== 2005 2005 No £'000 Allotted, called up and fully paid:ordinary shares of £0.001 each 108,196,900 1,082 ========= ===== The Company was incorporated with authorised share capital of £2 million dividedinto 200 million ordinary shares of £0.01 each. On incorporation, 2 ordinaryshares of £0.01 each were issued at par. On 12th May 2004 the 2 subscriber shares were paid up and a further 9,999,998ordinary shares were issued at par for cash. On 18th May 2004 a further 13,115,000 ordinary shares were issued at a premiumof 4 pence for cash. On 28th February 2005 40,000,000 ordinary shares were issued at a value of 5p toacquire 100 per cent of the issued share capital of Zhibek Resources Plc,together with 13,333,333 warrants, each of which entitles the registered holderthereof to subscribe for one ordinary share at 7p at any time until 31stDecember 2006. Existing shareholders of Silvermines Media Plc were also issuedwith 7,705,000 similar warrants. On 1st March 2005 the Company was re-admitted to AIM and a further 45,000,000ordinary shares were placed at 5p each. In the period from 2nd March 2005 to 30 June 2005, 81,900 of the above describedwarrants were converted into fully paid ordinary shares, for cash consideration. At 30th June 2005 20,956,433 warrants were outstanding. Share options The following options have been issued by the Company and have not beenexercised at 30th June 2005: Number of ordinary shares exercise price expires 231,150 5p 15th July 2007 6,200,000 7p 1st March 2008 13 Share premium 2005 £'000 Arising on shares issued 2,330Expenses of issue - Silvermines Media Plc (118) - Re-admission (454) _______At 30th June 1,758 ====== 14 Merger reserve Group Company 2005 2005 £'000 £'000 On acquisition of subsidiary 1,602 1,602 _______ _______At 30th June 1,602 1,602 ====== ====== Upon the acquisition of the Company's wholly-owned subsidiary, a merger reservewas created to deal with the excess of the fair value of shares acquired overthe nominal value of shares allotted, in accordance with the merger reliefprovisions in the Companies Act 1985. 15 Profit and loss account Group Company 2005 2005 £'000 £'000 Retained loss (317) (95) _______ _______At 30th June (317) (95) ====== ====== 16 Reconciliation of movement in shareholders' funds Group Company 2005 2005 £'000 £'000 Loss for the financial period (317) (95)Shares issued 2,840 2,840Premium on issue of acquisition shares 1,602 1,602 _______ _______At 30th June 4,125 4,347 ====== ====== 17 Material non-cash transaction The acquisition of the wholly-owned subsidiary, Zhibek Resources Plc, asdescribed in note 9 constitutes a material non-cash transaction. 18 Analysis of changes in net funds At 2 March 2004 Cash flows Non-cash At 30th June 2005 changes £'000 £'000 £'000 £'000 Cash at bank and in - 2,408 - 2,408handShort term loans - (320) - (320) _______ _______ _______ _______Total - 2,088 - 2,088 _______ _______ _______ _______ 19 Contingent liabilities and commitments a) Exploration commitments Ongoing exploration expenditure is required to maintain title to the Group'smineral exploration licences and permits. No provision has been made in thefinancial statements for these amounts as the expenditure is expected to befulfilled in the normal course of the operations of the Group. The Group iscontractually obliged to make payments for exploration survey products andservices equivalent to the value of $130,000 to WL Gore & Associates, Incpursuant to an agreement dated 10th May 2004, ending on 28th March 2006, ofwhich $60,000 has been made in the period to 30th June 2005. A supplementarypayment of $130,000 will be made following any commercial discovery. b) Other commitments The Group has no material commitments under operating leases and has no capitalcommitments contracted but not provided for. 20 Financial instruments The Group uses financial instruments comprising cash, liquid resources anddebtors/creditors that arise from its operations. The Group's exposure to currency and liquidity risk is not consideredsignificant. The majority of the Group's cash balances are held in Sterling. To date the Group has relied upon equity funding and loans from Cambrian MiningPlc to finance operations. The Directors are confident that adequate cashresources exist to finance operations to commercial exploitation but controlsover expenditure are carefully managed. The net fair value of financial assets and liabilities approximates the carryingvalues disclosed in the financial statements. The currency and interest rate profile of the financial assets is as follows: Cash and short term deposits At 30th June 2005 £'000 Sterling 2,395Kyrgyz Soms 13 _______ 2,408 ====== The financial assets comprise interest earning bank deposits. The short term loans from Cambrian Mining Plc totalling £320,000 are denominatedin Sterling and are interest free. The loans were repaid in full in September2005. 21 Related parties On 28th May 2004, Zhibek Resources Plc and Action Hydrocarbons Ltd ("Action")entered into an acquisition agreement under the terms of which, Action agreed tosell and Zhibek agreed to purchase Action's 72% interest in the share capital ofCJSC KNG Hydrocarbons and 85% interest in the share capital of CJSC ZhibekHydrocarbons. It was also agreed that Action would assign its interest in theBeshkent-Togap agreement. The consideration for the acquisition was £391,370and was satisfied by the issue of 5,000,000 ordinary shares in Zhibek ResourcesPlc at 7.8p per share and 2,000,000 warrants which were issued on 14th July2004. Ian Ennis is a Director and shareholder of both Cambrian Oil & Gas Plcand Action Hydrocarbons Ltd. Cambrian Mining Plc has provided short-term loan facilities to the Group duringthe period. The amount owing at 30th June 2005, and subsequently repaid duringSeptember 2005, was £320,000. Jo Malins and John Byrne are Directors of bothCambrian Mining Plc and Cambrian Oil & Gas Plc and shareholders of CambrianMining Plc. An agreement for the provision of office space existed during the period betweenBowmaker Management Limited and the Group. Jo Malins, a Director of the Companyis the beneficial owner of 50% of the issued share capital of BowmakerManagement Limited. Payments to Bowmaker Management Limited in the period to30th June 2005 amounted to £11,000. The following Directors and shareholders of the Company have entered intoconsultancy agreements between the Group and their respective personal serviceCompanies for professional services over and above their fees as Directors:- AdditionalDirector/Shareholder Personal Professional Service Services charged Company to the Profit and Loss Account £'000 Neale Taylor Oil & Gas Worx Pty Ltd 42 Jurgen Hendrich BTN Ventures Pty Ltd 12 Ian Ennis Ian Ennis & Company Pty Ltd 19 The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The balance sheet as at 30th June 2005 and the group profit and loss account,statement of total recognised gains and losses, group cash flow statement andassociated notes for the year then ended have been extracted from the Group's2005 statutory financial statements upon which the auditor's opinion isunqualified and does not include any statement under Section 237 of theCompanies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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