24th Sep 2009 07:00
Thursday 24 September 2009
MERIDIAN PETROLEUM plc
("Meridian" or "the Company")
Interim Results for the six months to 30 June 2009
Continued operational cash-flow supports new exploration activity
Meridian Petroleum (AIM : MRP), the oil and gas exploration and production company with producing assets in the USA and exploration licences in Australia, announces interim results for the six months ended 30 June 2009.
Highlights
Development
3D seismic survey on PEL 82 licence in South Australia confirms prospective resources1 of 430 million bbls of oil or 630 bcf of natural gas, significantly greater than expected
Acquisition strategy to be more broadly based - larger deals and new geographic target areas
Financial
Revenue of US$3.1 million (2008 H1 : US$8.7 million)
Investment of US$3 million in exploration activity (2008 H1 : US$1.7 million)
Cash generated from operations of US$1.6 million (2008 H1 : US$1.8 million)
Operating profit before depreciation of US$0.5 million (2008 H1 : US$2.7 million)
Adjusted EBITDA2 of US$1.75 million (2008 H1 : US$3.2 million)
Operational
Average net production of 430 barrels of oil equivalent per day (boepd) (2008 H1 : 660 boepd)
Disposal of Orion interest for US$0.2 million
Stephen Gutteridge, Chairman of Meridian Petroleum, said:
"In comparison to 2008, we experienced a much more challenging environment, with lower energy prices, particularly for US natural gas, and lower production levels with the expected decline in Orion output. However, with strong gains on our hedging contracts and tight control of costs, our operations continued to be cash generative and we have invested strongly in the business. In Australia that investment has confirmed potentially transformational prospectivity and our focus is now on the next steps to firm up this potential. In the US we will continue to invest in sustaining and improving production at the East Lake Verret field. Adding further high-quality assets remains a priority and we are continuing to pursue attractive opportunities across a broad range of size and geography."
For further information contact:
|
Meridian Petroleum |
+44 (0) 207 811 0140 |
||
|
Stephen Gutteridge, Chairman |
|||
|
Evolution Securities |
+44 (0) 207 071 4300 |
||
|
Robert Collins, Adam James, Tim Redfern |
|||
|
Financial Dynamics |
+44 (0) 207 831 3113 |
||
|
Ben Brewerton/Ed Westropp |
|||
Note 1: Prospective resources are quantities of hydrocarbons estimated to be potentially recoverable from undiscovered accumulations. As a general statement, prospective resources can only become reserves as a result of successful drilling.
Note 2: Adjusted EBITDA: EBITDA is adjusted to exclude IFRS charges for share options and include US$1.23 million of hedging gains realised in the six months ending 30 June 2009 (2008 H1 : Nil)
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.
The following financial statements are extracted from the Company's unaudited interim financial statements for the six months ending 30 June 2009. These statements will be posted before the end of September to shareholders on the register and will be made available on the Company's website www.meridianpetroleum.com at the same time.
Chairman's Statement
During the first half of 2009, Meridian Petroleum continued its three-pronged strategy to develop the business - investment in exploration in Australia; sustaining production and undertaking development drilling in the USA; and the pursuit of acquisition opportunities in North America and Europe.
Expenditure on exploration activity, funded from the Company's cash reserves, was US$3 million, a significant increase on previous years. The majority of this was invested in the 3D seismic survey covering 88 square kms of the PEL 82 licence in South Australia. The results of that survey confirmed significant prospectivity of around 430 million bbls of oil or 630 bcf of natural gas. Prospectivity on this scale represents a transformational opportunity and we have now moved on to the next stage of development, planning a two well drilling programme.
Operating performance in the first half of 2009 was good, with consistent production from the East Lake Verret field in Louisiana, minimal downtime with no significant environmental or safety issues, and positive cash-flow. This was achieved against the background of very challenging overall market conditions, with average US natural gas prices under US$5 per mcf, around 40% of the prices seen in the first half of 2008.
Average daily production in the first half was 430 barrels of oil equivalent per day (boepd), down from 660 boepd in the same period last year. This was entirely due to the expected decline in production at the Orion field in Michigan, USA, and in June 2009, we sold our interest in that field. In contrast, the East Lake Verret field, which we acquired with effect from March 2008, maintained better than expected levels of output throughout the first half, producing an average of 219 boepd, virtually unchanged from a year ago.
The combination of lower production from Orion and lower natural gas prices reduced revenues from US$8.7 million in the first half of 2008 to US$3.1 million in 2009. However, US$1.2 million of cash gains from hedging contracts, combined with tight cost control, enabled the Company to continue to generate cash from operations.
In terms of drilling activity, the Pontiac well in Michigan, a 50/50 prospect targeted at further sour gas potential was, disappointingly, a dry-hole. Subsequent to the half-year period, we drilled and suspended the McKerall 3 well in East Lake Verret. We are currently reviewing this well with a view to planning for re-entry when US natural gas prices improve.
Acquisition activity has continued to focus on adding proved reserves and incremental production and a number of opportunities to acquire either assets or companies remain under discussion.
Chairman's Statement
Outlook
There has been further development in all three aspects of our strategy in the second half of 2009 and this will continue into 2010.
On the exploration front, the PEL 82 licence has been renewed for a further five year period. Our next objective is to firm up drilling plans and finances as quickly as possible and we are currently in discussion with a number of potential farm-in partners. With 100% of the licence we have ample scope for an attractive farm-out deal but we would also not rule out alternative funding options which would enable us to retain all of the prospectivity. In addition we are reviewing our work programme on the PEL 132 licence, also in South Australia.
There will be further developments at East Lake Verret as we take steps to sustain production at existing wells and add new production at low cost. We are already implementing plans to work-over the Kafoury 2 and McKerall 1 wells. We also anticipate bringing in new partners to exploit deeper zone opportunities in the field. These are potentially sizeable but, in-line with our low-risk approach, we will look to these partners to provide the funding for drilling.
The addition of further good quality assets remains high on our agenda. Despite the seven year low in US natural gas prices, attractive deal opportunities have been scarce with most prospects on offer being high-risk plays with little commercial viability at today's prices. As a result we have now broadened our targets to include much larger deal opportunities in a wider spread of geography. Our increasing profile in Australia has begun to open up possibilities both there and in South-east Asia. We expect the business environment to remain challenging, and we will therefore remain prudent on valuations, but we have funding available and we remain confident that attractive deals can be delivered.
.
Consolidated Statement of Comprehensive Income
|
6 months |
6 months |
Year to |
||||||
|
to 30 June |
to 30 June |
31 December |
||||||
|
2009 |
2008 |
2008 |
||||||
|
(Unaudited) |
(Unaudited) |
(Audited) |
||||||
|
Note |
US$000 |
US$000 |
US$000 |
|||||
|
Continuing Operations |
||||||||
|
Revenue |
3,058 |
8,747 |
18,066 |
|||||
|
Cost of sales |
3 |
(3,396) |
(5,494) |
(13,364) |
||||
|
Gross (loss)/profit |
(338) |
3,253 |
4,702 |
|||||
|
Administrative expenses |
4 |
(931) |
(1,935) |
(2,797) |
||||
|
|
|
|
||||||
|
Operating (loss)/profit before impairment charge |
(1,269) |
1,318 |
1,905 |
|||||
|
Impairment charge |
(546) |
- |
(1,131) |
|||||
|
Loss on sale of non-current assets |
(131) |
- |
- |
|||||
|
Operating (loss)/profit |
(1,946) |
1,318 |
774 |
|||||
|
Investment income - |
||||||||
|
Gain on derivative financial |
||||||||
|
instruments |
365 |
- |
652 |
|||||
|
Fair value through |
||||||||
|
profit and loss |
122 |
- |
1,771 |
|||||
|
Interest on bank deposits |
15 |
2 |
36 |
|||||
|
Finance costs |
(393) |
- |
(449) |
|||||
|
(Loss)/profit before tax |
(1,837) |
1,320 |
2,784 |
|||||
|
Income tax credit/(expense) |
117 |
(310) |
(385) |
|||||
|
|
|
|
||||||
|
(Loss)/profit for the period from continuing operations |
(1,720) |
1,010 |
2,399 |
|||||
|
Other comprehensive income |
||||||||
|
Exchange differences on translating |
||||||||
|
foreign currency |
345 |
152 |
35 |
|||||
|
Total comprehensive income for the period |
||||||||
|
attributable to the equity holders of the parent |
(1,375) |
1,162 |
2,434 |
|||||
|
(Loss)/profit per share |
5 |
US cents |
US cents |
US cents |
||||
|
Basic earnings per share |
||||||||
|
from continuing operations |
(10.7) |
6.3 |
14.9 |
|||||
|
Diluted earnings per share |
||||||||
|
from continuing operations |
(10.7) |
5.9 |
13.1 |
|||||
Consolidated Statement of Financial Position
|
30 June |
30 June |
31 December |
||||||
|
2009 |
2008 |
2008 |
||||||
|
(Unaudited) |
(Unaudited) |
(Audited) |
||||||
|
US$000 |
US$000 |
US$000 |
||||||
|
Note |
||||||||
|
ASSETS |
||||||||
|
Non-current assets |
||||||||
|
Intangible assets |
6 |
5,046 |
3,457 |
2,593 |
||||
|
Property, plant and equipment |
6 |
4,141 |
9,006 |
6,229 |
||||
|
9,187 |
12,463 |
8,822 |
||||||
|
Deferred tax assets |
512 |
- |
114 |
|||||
|
Other non-current assets |
319 |
- |
549 |
|||||
|
10,018 |
12,463 |
9,485 |
||||||
|
Current assets |
||||||||
|
Trade and other receivables |
3,835 |
2,872 |
4,790 |
|||||
|
Cash and cash equivalents |
1,272 |
1,889 |
3,875 |
|||||
|
5,107 |
4,761 |
8,665 |
||||||
|
Total assets |
15,125 |
17,224 |
18,150 |
|||||
|
LIABILITIES |
||||||||
|
Current liabilities |
||||||||
|
Trade and other payables |
(1,678) |
(1,299) |
(2,246) |
|||||
|
Current portion of long-term borrowings |
(1,539) |
- |
(2,320) |
|||||
|
Current tax payable |
- |
(190) |
- |
|||||
|
(3,217) |
(1,489) |
(4,566) |
||||||
|
Non-current liabilities |
||||||||
|
Long-term borrowings |
(3,885) |
(7,634) |
(4,175) |
|||||
|
Long-term provisions |
(266) |
(316) |
(316) |
|||||
|
(4,151) |
(7,950) |
(4,491) |
||||||
|
Total liabilities |
(7,368) |
(9,439) |
(9,057) |
|||||
|
NET ASSETS |
7,757 |
7,785 |
9,093 |
|||||
|
EQUITY |
||||||||
|
Share capital |
9,026 |
9,026 |
9,026 |
|||||
|
Share premium |
8,372 |
8,372 |
8,372 |
|||||
|
Translation reserve |
540 |
312 |
195 |
|||||
|
Profit and loss account |
(11,976) |
(11,645) |
(10,256) |
|||||
|
Other reserves - share based payments |
1,795 |
1,720 |
1,756 |
|||||
|
Total equity attributable to the equity holders |
7,757 |
7,785 |
9,093 |
|||||
Consolidated Statement of Changes in Equity
|
Share capital |
Share premium |
Translation reserve |
Profit and loss account |
Other reserves |
Total |
||||||
|
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
||||||
|
Balance at 1 January 2008 |
9,026 |
8,372 |
160 |
(12,655) |
387 |
5,290 |
|||||
|
Total comprehensive income |
- |
- |
- |
1,162 |
- |
1,162 |
|||||
|
Exchange differences on translating foreign |
|||||||||||
|
currency |
- |
- |
152 |
(152) |
- |
- |
|||||
|
Share based payments |
- |
- |
- |
- |
1,333 |
1,333 |
|||||
|
|
|
|
|
|
|
||||||
|
Balance at 30 June 2008 |
9,026 |
8,372 |
312 |
(11,645) |
1,720 |
7,785 |
|||||
|
Total comprehensive income |
- |
- |
- |
1,272 |
- |
1,272 |
|||||
|
Exchange differences on translating foreign |
|||||||||||
|
currency |
- |
- |
(117) |
117 |
- |
- |
|||||
|
Share based payments |
- |
- |
- |
- |
36 |
36 |
|||||
|
|
|
|
|
|
|
||||||
|
Balance at 31 December 2008 |
9,026 |
8,372 |
195 |
(10,256) |
1,756 |
9,093 |
|||||
|
Total comprehensive income |
- |
- |
- |
(1,375) |
- |
(1,375) |
|||||
|
Exchange differences on translating foreign |
|||||||||||
|
currency |
- |
- |
345 |
(345) |
- |
- |
|||||
|
Share based payments |
- |
- |
- |
- |
39 |
39 |
|||||
|
Balance at 30 June 2009 |
9,026 |
8,372 |
540 |
(11,976) |
1,795 |
7,757 |
Consolidated Statement of Cash Flows
|
6 months |
6 months |
Year to 31 |
||||
|
to 30 June |
to 30 June |
December |
||||
|
(Unaudited) |
(Unaudited) |
Audited |
||||
|
US$000 |
US$000 |
US$000 |
||||
|
Cash flows from operating activities - (Note 7) |
||||||
|
Cash generated by operations |
1,628 |
1,783 |
7,225 |
|||
|
Interest received |
15 |
2 |
36 |
|||
|
Taxation paid |
(161) |
(120) |
(1,261) |
|||
|
1,482 |
1,665 |
6,000 |
||||
|
Cash flows from investing activities |
||||||
|
Expenditure on exploration and evaluation assets |
(2,999) |
(1,737) |
(2,004) |
|||
|
Expenditure on development and production assets |
- |
(6,829) |
(7,067) |
|||
|
Deposits with state authorities |
- |
- |
(161) |
|||
|
(2,999) |
(8,566) |
(9,232) |
||||
|
Cash flows from financing activities |
||||||
|
Proceeds from sale of non-current assets |
207 |
- |
- |
|||
|
Drawdown of bank loan |
- |
8,458 |
8,750 |
|||
|
Repayment of bank loan |
(1,464) |
- |
(1,648) |
|||
|
Debt arrangement fees |
- |
- |
(232) |
|||
|
(1,257) |
8,458 |
6,870 |
||||
|
Net (decrease)/increase in cash and cash equivalents |
(2,774) |
1,557 |
3,638 |
|||
|
Opening cash and cash equivalents at beginning of year |
3,875 |
295 |
295 |
|||
|
Exchange gains on cash and cash equivalents |
171 |
37 |
(58) |
|||
|
Closing cash and cash equivalents |
1,272 |
1,889 |
3,875 |
Notes to the Consolidated Accounts
1. Nature of operations and general information
Meridian Petroleum plc and subsidiaries' (together 'the Group') principal activities are the exploration for and the evaluation and production of oil and gas.
Meridian Petroleum plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The Group has oil and gas production and reserves in the USA. The Group also has exploration assets in Australia. The address of Meridian Petroleum plc's registered office is 13 Regent Street, London, United Kingdom. Meridian Petroleum plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.
Meridian Petroleum plc's consolidated interim financial statements are presented in US Dollars as the Group's primary transactions originate in US Dollars, these being amongst other items gas sales and procurement of plant and drilling services. The Parent Company's functional and presentation currency is UK sterling.
These consolidated condensed interim financial statements have been approved for issue by the Board of Directors on 23 September 2009.
The financial information for the year ended 31 December 2008 set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the six months ended 30 June 2009 and 30 June 2008 was neither audited nor reviewed by the auditors and does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2008 have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified.
2. Basis of preparation
These interim condensed consolidated financial statements are for the six months ended 30 June 2009. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2008.
These financial statements have been prepared under the historical cost convention, except for derivative financial instruments which have been measured at fair value. These condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2008 except for the adoption of IAS 1 Presentation of Financial Statements (Revised 2007).
The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a Statement Of Comprehensive Income. In accordance with the new standard the entity does not present a Statement Of Recognised Income and Expenses (SORIE), as was presented in the 2008 consolidated financial statements. Furthermore, a Statement Of Changes In Equity is presented. The accounting policies have been applied consistently throughout
the Group for the purposes of preparation of these condensed consolidated interim financial statements.
Notes to the Consolidated Accounts
|
6 months |
6 months |
Year to 31 |
|||||
|
to 30 June |
to 30 June |
December |
|||||
|
2009 |
2008 |
2008 |
|||||
|
(Unaudited) |
(Unaudited) |
Audited |
|||||
|
US$000 |
US$000 |
US$000 |
|||||
|
3. Cost of sales |
|||||||
|
Royalties, overrides and other interests |
850 |
3,077 |
6,604 |
||||
|
Depreciation |
1,750 |
1,377 |
4,074 |
||||
|
Well operating costs |
796 |
1,040 |
2,686 |
||||
|
3,396 |
5,494 |
13,364 |
|||||
|
4. Administrative expenses |
|||||||
|
Share incentive costs |
39 |
509 |
545 |
||||
|
Other |
892 |
1,426 |
2,252 |
||||
|
931 |
1,935 |
2,797 |
|||||
|
5. (Loss)/profit per share |
|||||||
|
(Loss)/profit for the period |
|||||||
|
from continuing operations |
(1,720) |
1,010 |
2,399 |
||||
|
Number |
Number |
Number |
|||||
|
'000 |
'000 |
'000 |
|||||
|
Weighted average number |
|||||||
|
of shares in issue |
16,094 |
16,094 |
16,093 |
||||
|
Dilutive effect of share |
- |
960 |
1,359 |
||||
|
options |
|||||||
|
Dilutive effect of share |
- |
74 |
830 |
||||
|
warrants |
|||||||
|
16,094 |
17,128 |
18,282 |
|||||
|
(Loss)/profit per share |
US cents |
US cents |
US cents |
||||
|
Basic |
(10.7) |
6.3 |
|
14.9 |
|||
|
Diluted |
(10.7) |
5.9 |
|
13.1 |
|||
Notes to the Consolidated Accounts
|
6. Non-current assets |
|||||||
|
Property |
|||||||
|
Intangible |
Plant and |
Total |
|||||
|
Equipment |
|||||||
|
US$000 |
US$000 |
US$000 |
|||||
|
Cost |
|||||||
|
At 1 January 2008 |
1,720 |
10,046 |
11,766 |
||||
|
Additions |
1,737 |
7,051 |
8,788 |
||||
|
At 30 June 2008 |
3,457 |
17,097 |
20,554 |
||||
|
Additions |
267 |
16 |
283 |
||||
|
At 31 December 2008 |
3,724 |
17,113 |
20,837 |
||||
|
Additions |
2,999 |
- |
2,999 |
||||
|
Disposals |
- |
(4,064) |
(4,064) |
||||
|
At 30 June 2009 |
6,723 |
13,049 |
19,772 |
||||
|
Depreciation/Impairment |
|||||||
|
At 1 January 2008 |
- |
6,714 |
6,714 |
||||
|
Charge for the period |
|
1,377 |
1,377 |
||||
|
At 30 June 2008 |
- |
8,091 |
8,091 |
||||
|
Charge for the period |
1,131 |
2,793 |
3,924 |
||||
|
At 31 December 2008 |
1,131 |
10,884 |
12,015 |
||||
|
Charge for the period |
546 |
1,750 |
2,296 |
||||
|
Disposals |
- |
(3,726) |
(3,726) |
||||
|
At 30 June 2009 |
1,677 |
8,908 |
10,585 |
||||
|
Net Book value 30 June 2009 |
5,046 |
4,141 |
9,187 |
||||
|
Net Book value 30 June 2008 |
3,457 |
9,006 |
12,463 |
||||
|
Net Book value 31 December 2008 |
2,593 |
6,229 |
8,822 |
||||
Notes to the Consolidated Accounts
|
7. Reconciliation of operating profit to net cash outflow from |
|||||||
|
operating activities |
|||||||
|
6 months |
6 months |
Year to |
|||||
|
to 30 June |
to 30 June |
31 December |
|||||
|
2009 |
2008 |
2008 |
|||||
|
(Unaudited) |
(Unaudited) |
Audited |
|||||
|
US$000 |
US$000 |
US$000 |
|||||
|
(Loss)/profit from |
|||||||
|
operations before taxation |
(1,837) |
1,320 |
2,784 |
||||
|
Finance costs |
378 |
(2) |
413 |
||||
|
Depreciation and impairment of property, |
|||||||
|
plant and equipment |
1,750 |
1,377 |
4,170 |
||||
|
Amortisation of intangible assets |
546 |
- |
1,131 |
||||
|
Loss on sale of non-current assets |
131 |
- |
- |
||||
|
Provision for decommissioning |
(50) |
- |
221 |
||||
|
Share based payments |
39 |
509 |
545 |
||||
|
Fair value through profit and loss on derivative financial instruments |
(122) |
- |
(1,771) |
||||
|
Foreign exchange difference |
246 |
101 |
85 |
||||
|
|
|
|
|||||
|
Operating cash flows before movements |
|||||||
|
in working capital |
1,081 |
3,305 |
7,578 |
||||
|
Decrease/(increase) in receivables |
1,099 |
(2,316) |
(2,130) |
||||
|
(Decrease)/increase in payables |
(552) |
794 |
1,777 |
||||
|
|
|
|
|||||
|
Net cash generated by |
|||||||
|
operating activities |
1,628 |
1,783 |
7,225 |
||||
Related Shares:
PPC.L