25th Sep 2008 07:00
25th September 2008
Meridian Petroleum plc
("Meridian" or "the Company")
Interim Results for the six months to 30 June 2008
Delivers Maiden Profit
Meridian Petroleum, the oil and gas E&P company with producing assets in the US and exploration licences in Australia, announces interim results for the six months ended 30 June 2008. In a separate statement, Meridian has also announced today plans for a 1 for 6 share consolidation.
(Note - the financial results do not include the four month contribution from the acquisition of the East Lake Verret ("ELV") field, which completed on 30 June 2008, but with effect from 1 March 2008. This contribution, which amounted to $1.95 million, has been accounted for as a reduction in the consideration paid for the assets.)
Financial Highlights
Maiden Profit before tax of $1.3 million (2007 H1: $1.3 million loss)
Adjusted EBITDA* of $3.2 million (2007 H1: $1.2 million loss)
Revenue of $8.7 million (2007 H1 - Nil)
Debt facility for up to $50 million provided by Macquarie Bank
Operational Highlights
Average net production in 2008 H1 increased by 103% to 657 barrels of oil equivalent per day (boepd) compared to Q4 2007
Average net production in Q2 2008 of 735 boepd, up 27% on Q1 2008
Acquisition of ELV interests for $9.84 million
Post Period Highlights
New gross daily gas production record at Orion of over 6 mmcfd (1,000 boepd)
Operational handover and integration of ELV successfully completed
Hedging contracts covering approximately 45% of projected output contributed $118,000 in July and August
Average net production since period end, adjusted for the July shut-in period at Orion, of 725 boepd
1 for 6 share consolidation announced separately today
Stephen Gutteridge, Chairman of Meridian Petroleum, said:
"During the first half of 2008, we have delivered increased production, a substantial acquisition, financing to invest in future growth and a maiden profit.
"We now intend to build on this success by adding further US production through drilling and acquisition, and by clearly identifying and developing the value in our Australian licences."
Ed Childers, the Company's Chief Operating Officer, who meets the criteria of a qualified person under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
*Adjusted EBITDA: EBITDA is adjusted to exclude IFRS 2 charges for share options which are a non-cash charge.
For further information contact:
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Meridian Petroleum |
+44 (0) 207 811 0140 |
|
Stephen Gutteridge, Chairman |
|
|
Ambrian Partners |
+44 (0) 207 634 4711 |
|
Tim Goodman |
|
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Financial Dynamics |
+44 (0) 207 831 3113 |
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Ben Brewerton / Ed Westropp |
www.meridianpetroleum.com.
Meridian Petroleum plc
2008 Interim Results
Chairman's Statement
The first half of 2008 has been a period of significant achievement for Meridian Petroleum. We have delivered strong operational performance and cash-flow, giving us a maiden profit and strengthened balance sheet.
This improvement in our financial capability has enabled us to commit to development plans for our Australian licences and to adopt the new strategic initiative of adding assets through acquisition. We moved quickly to implement this strategy by acquiring substantial working interests in the East Lake Verret field in Louisiana, USA, for just under $10 million, and at the same time we secured major institutional support for the Company with a $50 million debt facility from Macquarie Bank.
During the period, we addressed a number of difficult legacy issues, including an AIM enquiry, which resulted in a censure and fine, and an extensive investigation to track the much reduced share-holding of the Company's former Chief Executive. The resolution of these issues has placed the Company in a stronger position to move forward.
Outlook
The second half of the year has begun well with Orion continuing to set new production records. Although energy prices have slipped from recent highs, they remain strong by historic standards.
Our plans for the next six to nine months include:
Commencing a 2-3 well drilling programme at East Lake Verret to bring further proven reserves on-stream;
Development of the 'Orion2' prospect in Michigan, which, subject to finalising leasing and commercial terms, would be drilled and produced from our existing facility, leading to a considerable saving on capital costs in respect of the Sulfatreat plant; and
A 3D seismic shoot on our South Australian PEL 82 licence now scheduled for January 2009.
We have additional opportunities for growth which we will pursue in 2009:
With the increased interest in the Australian gas market, we believe that drilling an exploration well on the Delores gas prospect in the PEL 132 licence may be beneficial. However, this would be a high-risk project, and our strong preference remains to find a farm-in partner and we are continuing our efforts to achieve this;
We are also still interested in securing a farm-in partner to drill the Calvin Deep prospect in Louisiana, although we will relinquish some non-critical acreage later this year; and
We will be actively seeking further acquisitions and the share consolidation that we have announced separately today, combined with the support of Macquarie Bank, provides us with a strong financial structure to consider and pursue a wide range of asset and corporate acquisition opportunities.
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Consolidated Income Statement |
||||
|
30 June |
30 June |
31 Dec |
||
|
2008 |
2007 |
2007 |
||
|
(Unaudited) |
(Unaudited) |
Audited |
||
|
US$000 |
US$000 |
US$000 |
||
|
Revenue |
8,747 |
2 |
2,441 |
|
|
Cost of sales (note 3) |
(5,494) |
(19) |
(1,618) |
|
|
Gross profit/(loss) |
3,253 |
(17) |
823 |
|
|
Administrative expenses (note 4) |
(1,935) |
(1,340) |
(2,727) |
|
|
Other operating income |
- |
- |
363 |
|
|
1,318 |
(1,357) |
(1,541) |
||
|
Impairment charge |
- |
- |
(1,999) |
|
|
Operating profit/(loss) |
1,318 |
(1,357) |
(3,540) |
|
|
Investment Income - interest on bank deposits |
2 |
19 |
42 |
|
|
Profit/(loss) on ordinary activities before taxation |
1,320 |
(1,338) |
(3,498) |
|
|
Taxation |
(310) |
- |
- |
|
|
Profit/(loss) on ordinary activities after taxation |
1,010 |
(1,338) |
(3,498) |
|
|
Profit/(loss) per share (US cents) (note 5) |
||||
|
Undiluted |
1.0 |
(1.7) |
(3.9) |
|
|
Diluted |
1.0 |
(1.7) |
(3.9) |
|
|
Consolidated Statement of Total Recognised Income and Expenditure |
||||
|
Profit/(loss) for the financial period |
1,010 |
(1,338) |
(3,498) |
|
|
Currency differences on foreign currency net investments |
152 |
(196) |
48 |
|
|
Total gains and losses recognised since last financial statements |
1,162 |
(1,534) |
(3,450) |
|
|
Consolidated Balance Sheet |
||||
|
30 June |
30 June |
31 Dec |
||
|
2008 |
2007 |
2007 |
||
|
(Unaudited) |
(Unaudited) |
Audited |
||
|
US$000 |
US$000 |
US$000 |
||
|
Non-current assets (Note 6) |
||||
|
Intangible assets |
3,457 |
1,005 |
1,720 |
|
|
Property, plant and equipment |
9,006 |
3,934 |
3,332 |
|
|
12,463 |
4,939 |
5,052 |
||
|
Current assets |
||||
|
Trade and other receivables |
2,872 |
376 |
541 |
|
|
Cash and cash equivalents |
1,889 |
2,622 |
295 |
|
|
4,761 |
2,998 |
836 |
||
|
Total assets |
17,224 |
7,937 |
5,888 |
|
|
Current liabilities |
||||
|
Trade and other payables |
(1,299) |
(857) |
(503) |
|
|
Taxation |
(190) |
- |
- |
|
|
(1,489) |
(857) |
(503) |
||
|
Non-current liabilities |
||||
|
Loan (Note 7) |
(7,634) |
- |
- |
|
|
Provisions |
(316) |
- |
(95) |
|
|
(7,950) |
- |
(95) |
||
|
Total liabilities |
(9,439) |
(857) |
(598) |
|
|
Net assets |
7,785 |
7,080 |
5,290 |
|
|
Equity |
||||
|
Called up share capital |
9,026 |
9,013 |
9,026 |
|
|
Share premium |
8,372 |
8,359 |
8,372 |
|
|
Retained earnings |
(11,645) |
(10,495) |
(12,655) |
|
|
Translation reserve |
312 |
(84) |
160 |
|
|
Other reserves - share based payments |
1,720 |
287 |
387 |
|
|
Total equity attributable to the equity holders |
7,785 |
7,080 |
5,290 |
|
|
Consolidated Cash Flow Statement |
||||
|
30 June |
30 June |
31 Dec |
||
|
2008 |
2007 |
2007 |
||
|
(Unaudited) |
(Unaudited) |
Audited |
||
|
US$000 |
US$000 |
US$000 |
||
|
Cash flows from operating activities - (note 8) |
||||
|
Cash generated/(consumed) by operations |
1,783 |
(1,013) |
(1,329) |
|
|
Interest received |
2 |
19 |
42 |
|
|
Taxation Paid |
(120) |
- |
- |
|
|
1,665 |
(994) |
(1,287) |
||
|
Cash flows from investing activities |
||||
|
Expenditure on exploration and evaluation assets |
(1,737) |
(359) |
(711) |
|
|
Expenditure on development and production assets |
(6,829) |
(1,914) |
(3,721) |
|
|
(8,566) |
(2,273) |
(4,432) |
||
|
Cash flows from financing activities |
||||
|
Proceeds from issue of shares |
- |
3,445 |
3,471 |
|
|
Loan |
8,458 |
- |
- |
|
|
8,458 |
3,445 |
3,471 |
||
|
Net increase/(decrease) in cash and cash equivalents |
1,557 |
178 |
(2,248) |
|
|
Opening cash and cash equivalents at beginning of year |
295 |
2,332 |
2,332 |
|
|
Exchange gains on cash and cash equivalents |
37 |
112 |
211 |
|
|
Closing cash and cash equivalents |
1,889 |
2,622 |
295 |
|
Notes
1. Basis of preparation and accounting policies
The interim financial statements for the six months to 30 June 2008 have been prepared on the basis of the accounting policies set out in the Company's financial statements for the year ended 31 December 2007. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
The financial information for the six months ended 30 June 2008 and 30 June 2007 was neither audited nor reviewed by the auditors and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for the year to 31 December 2007 has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985.
2. Segmental reporting
In the opinion of the Directors the operations of the Group comprise one class of business, oil and gas exploration, development and production and the sale of hydrocarbons and related activities. The Group currently operates in one geographical market, the USA, and has a head office and associated corporate expenses in the UK.
3. Cost of Sales
|
30 June |
30 June |
31 Dec |
||
|
2008 |
2007 |
2007 |
||
|
(Unaudited) |
(Unaudited) |
Audited |
||
|
US$000 |
US$000 |
US$000 |
||
|
Royalties, overrides and other interests |
3,077 |
- |
755 |
|
|
Depreciation |
1,377 |
- |
456 |
|
|
Well operating costs |
1,040 |
19 |
407 |
|
|
5,494 |
19 |
1,618 |
||
4. Administrative expenses
|
IFRS 2 charge in respect of share options |
509 |
148 |
248 |
|
|
Other |
1,426 |
1,192 |
2,479 |
|
|
1,935 |
1,340 |
2,727 |
||
5. Profit/(loss) per share
|
30 June |
30 June |
31 Dec |
||
|
2008 |
2007 |
2007 |
||
|
(Unaudited) |
(Unaudited) |
Audited |
||
|
US$000 |
US$000 |
US$000 |
||
|
Net profit/(loss) for the period attributable to the equity holders of the parent company |
1,010 |
(1,338) |
(3,498) |
|
|
Number |
Number |
Number |
||
|
'000 |
'000 |
'000 |
||
|
Weighted average number of shares in issue |
96,561 |
80,860 |
89,380 |
|
|
Dilutive effect of share options |
5,761 |
- |
- |
|
|
Dilutive effect of share warrants |
444 |
- |
- |
|
|
Diluted weighted average number of ordinary shares |
102,766 |
80,860 |
89,380 |
|
|
Profit/(loss) per share |
US cents |
US cents |
US cents |
|
|
Undiluted |
1.0 |
(1.7) |
(3.9) |
|
|
Diluted |
1.0 |
(1.7) |
(3.9) |
|
6. Non-current assets
|
Intangible |
Property Plant and Equipment |
Total |
||
|
US$000 |
US$000 |
US$000 |
||
|
COST |
||||
|
At 1 January 2008 |
1,720 |
10,046 |
11,766 |
|
|
ELV assets acquired |
1,737 |
6,665 |
8,402 |
|
|
Other additions |
- |
386 |
386 |
|
|
At 30 June 2008 |
3,457 |
17,097 |
20,554 |
|
|
DEPRECIATION |
||||
|
At 1 January 2008 |
- |
6,714 |
6,714 |
|
|
Charge for the period |
- |
1,377 |
1,377 |
|
|
At 30 June 2008 |
- |
8,091 |
8,091 |
|
|
NET BOOK VALUE |
||||
|
At 30 June 2008 |
3,457 |
9,006 |
12,463 |
|
7. Loan
|
30 June |
||
|
2008 |
||
|
(Unaudited) |
||
|
US$000 |
||
|
Loan finance provided by Macquarie to acquire ELV assets |
8,750 |
|
|
IFRS 2 charge in respect of grant of warrants |
824 |
|
|
Other costs connected with loan |
292 |
|
|
1,116 |
||
|
Net loan |
7,634 |
On 30 June 2008 the Group drew down a loan from Macquarie bank to finance the acquisition of East Lake Verret ("ELV") assets. The loan has been recognised net of loan issue costs and the fair value of warrants issued to Macquarie as part of the financing arrangement.
8. Reconciliation of operating profit/(loss) to net cash outflow from operating activities
|
30 June |
30 June |
31 Dec |
||
|
2008 |
2007 |
2007 |
||
|
(Unaudited) |
(Unaudited) |
Audited |
||
|
US$000 |
US$000 |
US$000 |
||
|
Profit/(loss) from operations |
1,318 |
(1,357) |
(3,540) |
|
|
Adjustments for : |
||||
|
Depreciation and impairment of property, plant and equipment |
1,377 |
- |
2,454 |
|
|
Other operating income |
- |
- |
(363) |
|
|
Share based payments |
509 |
148 |
248 |
|
|
Foreign exchange difference |
101 |
(310) |
(156) |
|
|
Operating cash flows before movements in working capital |
3,305 |
(1,519) |
(1,357) |
|
|
Increase in debtors |
(2,316) |
(138) |
(293) |
|
|
Increase in creditors |
794 |
644 |
321 |
|
|
Net cash generated by/(consumed by) operating activities |
1,783 |
(1,013) |
(1,329) |
9. Reserves
|
Share Capital |
Share Premium |
Retained Earnings |
Foreign Currency Reserve |
Other Reserves |
Total |
||
|
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
||
|
Balance 1 January 2008 |
9,026 |
8,372 |
(12,655) |
160 |
387 |
5,290 |
|
|
Total recognised |
|||||||
|
income and expense |
1,010 |
152 |
1,162 |
||||
|
Share based payments |
1,333 |
1,333 |
|||||
|
Balance 30 June 2008 |
9,026 |
8,372 |
(11,645) |
312 |
1,720 |
7,785 |
- End -
Related Shares:
PPC.L