29th Sep 2006 07:01
Petroceltic International PLC29 September 2006 Petroceltic International plc Interim Results for the Period Ended 30th June 2006 Petroceltic International plc ("Petroceltic" or "the Company") is delighted toreport its half year results for the period ended 30th June 2006. HIGHLIGHTS • First Algerian well, ISAS-1, flows gas from three separate geological horizons. • Application lodged for the Carboniferous gas zone in ISAS-1 to be declared a new discovery. • Second Algerian well Hassi Tab Tab (HTT)-2 to commence in October 2006. • Tendering process for large 2D and 3D seismic for Algeria successfully completed - letter of intent with contractor signed, survey to commence in 2006. • Successful farm-out concluded in Tunisia Ksar Hadada block • New permit applications underway in Italy • $40 million of new equity brings cash resources to $55 million as at 30 June 2006. John Craven, Chief Executive of Petroceltic International plc said: "Petroceltic has made significant progress over the last 6 months. Our firstoperated well in Algeria has found gas in three separate geological horizons andwe now look forward to drilling HTT-2 next month. The considerable interest frommajor oil and gas companies in our Isarene block re-inforces my belief in itspotential. "In Italy we have received further data on our offshore block which enhances theprospectivity of the Elsa 1 discovery area. "Also the additional $40 million of new equity raised in April provides a soundfinancial platform for Petroceltic's planned exploration programme. "We can all look forward to an exciting future." For further information, call: John Craven, Petroceltic International plc+353 14959285 Billy Clegg/Edward Westropp, Financial Dynamics+44 20 7831 3113 Ronnie Simpson, Simpson FTPR+353 1 2605300 The above information has been reviewed and verified by Mr. John Craven,Director and Chief Executive Officer of Petroceltic, for the purposes of theGuidance Note for Mining, Oil and Gas Companies issued by the London StockExchange in March 2006. Mr. Craven holds a B.Sc in Geology and a Masters Degreein Petroleum Geology from Imperial College of Science and Technology in London,and is a member of the Petroleum Exploration Society of Great Britain. CHAIRMANS STATEMENT Much of your company's impetus and energy over the last six months has focussedon Algeria where the drilling and testing of our first well on the Isarene blockhas just ended. This well, ISAS-1, successfully flowed gas from three differentgeological horizons and confirms our view of the multi zone prospectivity of ourlarge Isarene permit. I am pleased to confirm that we have submitted adeclaration of a gas discovery for the Carboniferous "Visean B" horizon which webelieve has potential for a major shallow gas play over much of the block. Inow look forward to the drilling campaign at Hassi Tab Tab. Similarly, this wellhas multi target objectives. I am also pleased to report that in April this year your company raisedapproximately $40 million in new equity mainly from institutional investors.This provides the necessary financial resources to enable Petroceltic toundertake its planned 2006 programme of exploration and appraisal in Algeria andItaly. ALGERIA Isarene Production Sharing Contract (Petroceltic share: 75%) In the past few months we have carried out extensive technical studies, securedcontractors for drilling and seismic operations and completed and tested ourfirst and successful well on the Isarene block "ISAS-1". ISAS-1 was drilled to a total depth of 2,350 meters. Gas shows while drillingwere recorded in three separate geological horizons: the Carboniferous "Visean B", the Devonian "F2" and the Ordovician. Subsequent wireline logging and flowtesting confirmed each horizon to be gas bearing. The play uncovered in the Carboniferous "Visean B" is a new one for the area andthe gas flow from ISAS-1 demonstrates the productivity of this horizon. Adiscovery declaration has been submitted to the Algerian authorities. Hydraulicfracturing should significantly increase the already established productivity ofthis horizon. We believe this horizon exists in many different locationsthroughout the Isarene block. Prior to drilling reprocessed seismic data indicated that the gas bearing F2level in ISAS-1 is within the same geological structure that encloses thepreviously drilled GTT-1, TMZ-1 and INE-1 wells located 10, 8 and 4 kmsrespectively north of ISAS-1 which flow tested gas and oil. All these wells arelocated in the Isarene block and Petroceltic has rights to hydrocarbons thesewells found subject to the granting of an enclosing exploitation licence. Therecent drilling results of ISAS-1 confirmed this seismic interpretation. The Carboniferous and Devonian gas horizons on the ISAS structure are less than900 meters in depth. Drilling and development costs to this depth aresignificantly less than is typical for Algeria, with development wells expectedat less than 10% of typical exploration well costs. This is significant forpotential commercial exploitation. Over 280 meters of Ordovician section were penetrated in ISAS-1. Within thisinterval approximately 95 meters of tight but gas bearing sand was encountered.A previously drilled well INW 1 located 10 kms NW also produced gas from theOrdovician horizon. The key technical issue for the Ordovician is locating fractured reservoirs tofacilitate commercial flow rates. This has been proven in other wells in theIllizi Basin and elsewhere in the region, in Algeria as well as Tunisia andLibya. Petroceltic intends to acquire extensive 3D seismic data over prospectiveareas particularly to assist in identifying areas with fractures in theOrdovician horizon and more precisely the overall hydrocarbon potential. The technical studies undertaken by Petroceltic in the Isarene block haveinvolved the interpretation of some 8,000 kms of previously acquired 2D seismicdata and the reprocessing of over 300 kms of 2D seismic, integrating existingwell and regional data. The conclusion of these studies is that there are 4extensive project areas on which future drilling and seismic will be focussed inorder to advance commerciality decisions. These are as follows: - The HTT - ISAS Gas play - Ordovician, Devonian and CarboniferousGas objectives. The current drilling programme is focussed on this area.Potential gas resources estimated to be 0.5 to 2 trillion cubic feet in place. - The Ain Tsila Ridge in the eastern part of the block - primarilyan Ordovician Gas play but also with shallow gas potential. 5 previously drilledwells located on the ridge TXA-1, IRR-1, TSI-BIS, NCLR-1 and CLR-1 have eachflowed gas. Current plans are to drill this area after acquiring more seismic.Potential gas resources are estimated to be 2 to 6 trillion cubic feet in place. - The northern F2 Oil Play. Plans are to drill after acquiring 3Dseismic data. Potential in-place oil resources are estimated to be 35 to 95million barrels in place. A previously drilled well GTT-1 flowed approximately460 barrels/day. Plans are to drill after acquiring 3D seismic data. - Southwest Isarene Prospect - in the same geological setting as ElAdeb Larache and Asskaifaf oil fields to the east of the block. After the current drilling campaign, Petroceltic plans to conduct a 2D and 3Dseismic campaign that will form the basis for further drilling planned for 2007. ITALY Block B.R268.RG (Elsa Block - Petroceltic share: 40%) and onshore blockCivitaquana (Petroceltic share: 50%) Elsa Block Retrieval of existing technical data from AGIP, the previous operator of theblock, and the Italian Hydrocarbon Ministry is continuing. Preliminaryevaluation of this data confirms the prospectivity of the deep (>4000m) basinfloor fan oil play which is the main objective across the Elsa block. Onshore adjacent to the Elsa block, AGIP are continuing to develop theMiglianico oil field and are building storage and processing facilities. Arecently acquired top reservoir time structure map indicates that 20-30% of theMiglianico field extends on to the Elsa block, which may represent as much as 10million barrels of oil (4 million barrels net to Petroceltic). Petroceltic iscurrently examining the appropriate course of action to verify this information. Contacts with drilling contractors indicate that a Jack-up rig capable ofdrilling the Elsa structure could be available in mid 2007. Discussion with thecontractor is ongoing. In addition to the oil potential, regional evaluation suggests that a shallow (<2500m), Pliocene to Quaternary, biogenic gas play is present across our blocks.Gas production has already been established from these Pliocene reservoirs(Santo Stefano Mare Field) to the south of the Elsa Block and to the north(Squalo Field & many others). Gas was also tested from Pliocene sandstones inthe Ombrina Mare-1 well, approximately 12 kms to the southeast of the Elsa Blockboundary. Although this shallow biogenic gas play contains greater than 65% ofItaly's discovered gas reserves, we believe that considerable potential remainsin this play in the shallow water depths of the Adriatic Basin. Proximity toshore, high gas prices and a favourable fiscal regime suggest that even modestgas reserves could be commercially exploited in this offshore area. Applicationsfor a number of new licences which will complement our existing acreage in theAdriatic Basin have been filed with the Italian Ministry. Civitaquana Block Regional evaluation suggests that the Civitaquana Block is structurally complex,with the potential for development of hydrocarbon traps at a number ofstratigraphic levels. Source rock mapping indicates that this area is likely tobe charged by Late Triassic oil prone source rocks from the Emma Basin, which isthe likely source of oil in the nearby Miglianico discoveries. The licence iscontiguous to and immediately east of the recent AGIP Miglianico discoveriesthat are now in production and contain, we believe, approximately 50 millionbarrels of proven oil reserves. We understand that AGIP is planning to drillfurther wells on this licence and will also drill a prospect immediately east ofour licence where there is a drilling obligation. TUNISIA Ksar Hadada Production Sharing Contract (Petroceltic share: 60%) In October 2005, we completed a successful farm-out of 40% of our interest inthe Ksar Hadada PSC to Independent Resources plc. Ongoing work has focussed on the re-entry and testing of the Sidi Toui 3 welland finding the appropriate drilling equipment. In addition additional seismichas been obtained from the state oil company ETAP and has been vectorized forinterpretation which is ongoing. Future plans include the possible re-entry of Sidi Toui and drilling of the Oryxprospect. IRELAND The Inishbeg well offshore Donegal was drilled in late August and was abandonedas a dry hole. The results of the well are being integrated in to all thegeological and geophysical data in order to determine the future potential ofthe blocks of Frontier Licence 1/05. Due to rising gas prices, revenue from the Kinsale Gas Royalty continued toincrease in 2006. Revenue for the 6 month period was $609,577 (period ended 30June 2005: $329,000) ORGANISATION Alf Scott joined Petroceltic as our Country Manager for Algeria in early 2006.Alf has extensive experience in drilling, testing and production operations inNorth Africa and in particular in similar geological settings in Algeria. He is now heading our Algerian Operations from Algiers, where we opened anoffice in May 2006. A team of technical and administrative staff was alsoappointed to that office to support all operational and technical functions inthe country. We are pleased to welcome Dermot Corcoran to Petroceltic as our Senior Geologist/Geophysist. Dermot has over twenty years experience in the oil and gas industryand has worked with Esso, Statoil and Petrofina in North Africa andInternationally. We also welcome Sarah Sweeney as our Financial Controller. Sarah is a charteredaccountant who trained with KPMG in Dublin and worked in an Australian publiclisted company before joining Petroceltic in June 2006. FINANCIAL The loss for the financial period was $144,353, this is significantly less thanthe loss for the period ended 30 June 2005 which was $1,158,682 when restatedfor FRS 20 'Share based payments'. This improvement is due to; an increase inrevenue from the Kinsale Gas Royalty (explained above), an increase in bankinterest received as a result of the improved bank balance, a foreign exchangegain for the period and a decrease in the cost of share awards. Net cash resources for the group at period end were $54,873,045 (31 December2005: $19,404,603). This increase is due to $40 million raised following theissue of 153,637,642 ordinary shares at Stg14p and Stg18p. The group has adopted FRS 20 'Share based payments' from 1 January 2006. Thefair value of share options granted to employees and directors is recognised inthe profit and loss account as a cost of share awards. This accounting standardreplaces UITF Abstract 17 'Employee Share Exercise'. OUTLOOK While the outlook for upstream oil and gas companies continues to appear to befavourable, recent weeks have seen a downward movement in oil prices and with ita fall in the market values of a number of our peer companies. Nevertheless oilprices are still at approximately $60 barrel and gas prices remain robust andthe environment for investment in upstream oil and gas projects remainspositive. The first six months has seen a substantial increase in the pace of developmentof our assets. I look forward to a sustained period of exploration anddevelopment. We have exciting plans for 2006 and 2007 in Algeria and Italy andhave the cash resources to finance these plans. Brian CusackChairman28th September 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the period ended 30 June 2006 Unaudited Unaudited Full year ended 6 months ended 6 months ended 31 December 30 June 2006 30 June 2005 * 2005 * US$'000 US$'000 US$'000Turnover 610 329 1,073Expenses Amortisation (25) (45) (92) Administrative (818) (591) (1,338) Foreign currency gain/(loss) 212 (35) (325) Cost of share awards (873) (1,371) (2,655) Operating loss on ordinary activities before interest (894) (1,713) (3,337)Interest receivable and similar income 750 554 912Loss on ordinary activities before taxation (144) (1,159) (2,425)Tax on loss on ordinary activities - - (10)Loss for the financial period (144) (1,159) (2,435) Loss per share in cents- basic (0.02) (0.20) (0.43)Loss per share in cents- diluted (0.02) (0.20) (0.43) * As restated for FRS 20 'Share Based Payments' CONSOLIDATED BALANCE SHEETAs at 30 June 2006 Unaudited Unaudited 31 December 30 June 2006 30 June 2005 2005 US$'000 US$'000 US$'000Fixed AssetsIntangible assets 20,196 11,814 12,377 Current AssetsDebtors 642 513 896Investments 70 57 57Cash at bank and in hand 54,873 20,674 19,476 55,585 21,244 20,429 Creditors (amounts falling due within one year) (503) (1,108) (652)Net current assets 55,082 20,136 19,777Net assets 75,278 31,950 32,154 Capital & reservesCalled up share capital 26,203 23,727 23,757Capital conversion reserve fund 51 51 51Share premium account 113,078 74,518 74,519Profit and loss account (64,054) (66,346) (66,173)Total shareholders' funds (all equity interests) 75,278 31,950 32,154 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 30 June 2006 Unaudited Unaudited Full year ended 6 months ended 6 months ended 31 December 30 June 2006 30 June 2005 2005 US$'000 US$'000 US$'000 Net cash inflow/(outflow) from operating activities 1,415 (3,877) (1,023)Returns on investments and servicing of financeInterest received 750 554 912Net cash inflow on returns on investments and servicing 750 554 912of finance Capital expenditure and financial investmentExpenditure on intangible assets (7,844) (5,343) (5,925)Net cash outflow from capital expenditure and financial (7,844) (5,343) (5,925)investmentNet cash outflow before financing activities (5,679) (8,666) (6,036) Financing activitiesIssue of shares, net of expenses 41,006 - 30Net cash inflow from financing activities 41,006 - 30Increase/(decrease) in cash 35,327 (8,666) (6,006) Reconciliation of net cash flow to movement in net debtIncrease/(decrease) in cash during the period 35,327 (8,666) (6,006)Foreign exchange movement on cash balances 212 - (3,929)Cash outflow from repayment of debt (71) - -Movement in net funds in the period 35,468 (8,666) (9,935) Net funds at the start of the period 19,405 29,340 29,340Net funds at the end of the period 54,873 20,674 19,405 Net funds is analysed as follows:Cash at bank and in hand 54,873 20,674 19,476Bank overdraft - - (71) 54,873 20,674 19,405 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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