17th Aug 2009 07:00
For Immediate Release 17 August 2009
Hardy Oil and Gas plc
("Hardy", "the Company" or "the Group")
Interim Results for the Six Months Ended 30 June 2009
Hardy Oil and Gas plc (LSE: HDY), the oil and gas exploration and production company with interests predominantly in India, is pleased to report its Interim Results for the six months ended 30 June 2009.
All financial amounts are stated in US dollars unless otherwise indicated.
Operational Highlights
Financial Highlights
Outlook
Chairman's Comment
"The successful placing in the first half of 2009 highlighted the continued support of our shareholders. Our focus through the remainder of 2009, and into 2010, will be to progress our exploration programmes on the D9 and D3 blocks in the prolific Krishna Godavari Basin in India."
For further information please contact:
|
Hardy Oil and Gas plc |
020 7471 9850 |
|
Sastry Karra, Chief Executive Yogeshwar Sharma, Chief Operating Officer Dinesh Dattani, Finance Director |
|
|
Arden Partners plc |
020 7398 1632 |
|
Richard Day Matthew Armitt |
|
|
Buchanan Communications |
020 7466 5000 |
|
Mark Edwards Ben Willey |
CHAIRMAN'S STATEMENT
Overview
With the backdrop of adverse market conditions during the past year, the Company's successful equity placement of new shares raising $15.2 million was a significant undertaking and is a positive indicator of our shareholders' support of the Company's business, assets and strategy. We are committed to realising substantial growth in shareholder value through focused exploration efforts on our India assets. The publication of Gaffney Cline & Associates Ltd's technical evaluation report on the Prospective Resource potential of our D9 and D3 blocks supports our view of the substantial prospectivity of our Krishna Godavari Basin assets.
Financial
Revenue for the six months ended 30 June 2009 amounted to $5.8 million compared with $9.9 million for the same period in 2008 principally resulting from a decline in the crude oil price by 52%. Oil sales of 116,977 stb was realised for the six months ended 30 June 2009 (H1 2008: 126,343 stb); the average price realised was $48.44 per stb (H1 2008: $100.97 per stb)
The Company recorded a net loss of $4.3 million compared to a net profit of $6.2 million in 2008. The Company's fully diluted loss per share was $0.06 in 2009 compared to earnings per share of $0.09 reported for the same period in 2008. Results for 2008 included a pre-tax gain from the sale of investments of $9.0 million.
Cash flow from operating activities (before changes in non-cash working capital) amounted to a deficit of $2.6 million in 2009 compared to a surplus of $2.0 million for the same period in 2008.
Total capital expenditures amounted to $7.0 million, principally on the drilling of the PY3-PD4 lateral well, the acquisition of 3D and 2D seismic data and pre-drilling of one well on the D3 exploration block.
During the period, Hardy issued 6,208,997 Ordinary Shares at 174 pence each for net proceeds of $15.2 million. As a result, Hardy's cash resources increased by $2.6 million to $32.7 million at 30 June 2009; the Company has no long-term debt.
Outlook
Exploration: The Company expects to drill its first well, on the highly prospective D9 exploration block, in the second half of 2009. Further drilling on the D3 exploration block is also expected to commence in the second half of 2009. As Hardy is not the operator of either of these exploration blocks, the exact timing of commencement of drilling remains difficult to predict.
Appraisal: The GS-01 joint venture continued to undertake geological and geophysical studies to appraise the GS01-B1 gas discovery. A decision to undertake further appraisal drilling is expected by the end of 2009.
We expect to continue dialogue with the Ministry of Petroleum and Natural Gas of the Government of India and the Directorate General of Hydrocarbons with regard to an extension to the appraisal period of the CY-OS/2 Ganesha gas discovery.
Development: The Company has made progress with the development of the Oza oil field, Nigeria. Several key milestones should be reached by the end of 2009 and field operations are expected to commence in the first quarter of 2010. Planning is ongoing with respect to the long-term development of the Hardy Operated PY-3 field.
Production: Production from the PY-3 field was shutdown, on 5 July 2009, due to unscheduled repairs and maintenance of the offshore mooring facility. We expect the PY-3 production to re-commence in September 2009. Our current forecast for average daily production for 2009 is 2,400 stbd and our end exit production is anticipated to be 3,100 stbd.
With over $30 million of cash and short term investments, the Company's financial position is adequate to meet near term capital requirements.
E P Mortimer
Chairman
14 August 2009
REVIEW OF OPERATIONS
The Company's operations in India are conducted through its wholly owned subsidiary Hardy Exploration & Production (India) Inc (HEPI). The Company's operations in Nigeria are conducted through its wholly owned subsidiary Hardy Oil Nigeria Limited (HON).
KRISHNA GODAVARI BASIN - Eastern India
Block KG-DWN-2003/1 (D3): Exploration
(Hardy 10% interest)
Operations
The joint venture acquired 1,150 km2 of 3D seismic data during the first half of 2009. With the completion of this programme, the joint venture has acquired 3D seismic data covering the entire block. Additional interpretation and processing was completed on previously acquired data, including PSTM and AVO studies.
On 16 April 2009, the Company announced the commencement of drilling of the third exploration well KDV-D3-G1. Drilling was subsequently suspended after setting of 20" casing at 1,625 m TVD. The joint venture intends to re-enter the well at a later date to test prospective geological horizons.
An appraisal programme for the gas discoveries Dhirubhai 39 and 41 was approved by the joint venture operating committee and has been reviewed by the management committee which includes the DGH and MOPNG. The appraisal period extends up to 11 February 2011 and constitutes an area of 750 km2 of the block.
On 27 May 2009, the Company published a technical evaluation report undertaken by GCA which provides the Prospective Resource potential of the block and the geological chance of success of various prospects. GCA employed a play-based exploration methodology on the D3 block to address both the current prospect inventory and the "yet to find" resource potential. Using the play based exploration methodology, the potential gross risked Best Estimate Resources for the D3 block is estimated, by GCA, at 9.5 TCF. This includes identified prospects and leads and a number of postulated prospects based on the play area and field size distribution. A summary report can be found on the Company's website www.hardyoil.com.
The joint venture's operating committee recently proposed the next location to be KDV-D3-W1, targeting several high amplitude anomalies in the Pliocene and Miocene geological horizons, located approximately 20 km southeast of the Dhirubhai 39 and 41 discoveries. The timing of commencement of drilling will remain dependent on the drilling schedule of the operator (Reliance), however, drilling is currently expected to commence in the second half of 2009.
Background
Situated in the emerging world class petroleum system of the Krishna Godavari Basin in India, the D3 exploration licence encompasses an area of 3,288 km2, in water depths of 400 m to 2,200 m, and is located approximately 45 km offshore. The block is operated by Reliance. The minimum work programme for phase one of the licence requires the drilling of six exploration wells. To date, two exploration wells have been drilled and one well has been pre-drilled. GCA noted, in its evaluation report, that the presence of an unconventional biogenic gas petroleum system in deepwater offshore India is proven on the D3 block.
KRISHNA GODAVARI BASIN - Eastern India
Block KG-DWN-2001/1 (D9): Exploration
(Hardy 10% interest)
Operations
The joint venture has approved a budget for the fiscal year ended 31 March 2010, and management believe that one exploration well will be drilled in the 2009 calendar year. The Company also received an AFE for the drilling of an exploration well which prescribes the use of the "Deepwater Expedition" drilling rig, currently operating on the adjacent D6 block. The timing of commencement of drilling will remain dependent on the drilling schedule of the operator (Reliance).
The D9 joint venture is awaiting the ratification of a proposed drilling moratorium by the Government of India. The proposed drilling moratorium provides for the licencees of various deepwater exploration licences to be granted a three year extension to the term of the PSC in response to the global shortage of deepwater drilling ships.
On 27 May 2009, the Company published a technical evaluation report undertaken by GCA which provides the Prospective Resource potential of the block and the geological chance of success of various prospects. GCA estimates the gross risked Best Estimate Prospective Resources in the exploration block D9, comprising the joint venture's identified prospects / leads, is estimated, at 10.8 TCF and 143 MMBbl. A summary report can be found on the Company's website www.hardyoil.com.
Background
Situated in the emerging world class petroleum system of the Krishna Godavari Basin in India, the licence encompasses 11,605 km2 in the Bay of Bengal where water depths vary from 2,300 m to 3,100 m. The joint venture has acquired over 4,188 km2 of 3D seismic including infill, and subsequently leads at Upper Miocene, Middle Miocene, Oligocene and Cretaceous have been identified. Initial exploration will be focused upon amplitude anomalies within structural closure in the Miocene and Pliocene. There are many seismic anomalies within the block and, given its proximity to D6, exploration potential of this large block is regarded with considerable optimism.
ASSAM ARAKAN BASIN - North Eastern India
Block AS-ONN-2000/1: Exploration
(Hardy 10% interest)
Operations
In the first half of 2009, the Assam joint venture completed the acquisition of 390 lkm of 2D seismic data. Processing and interpretation of the 2D data is expected to continue throughout the remainder of 2009. Further field operations will be based on the results and interpretation of the 2D data and other ongoing geological studies. The majority of the exploration block's phase I minimum work programme has now been completed.
GCA's technical evaluation report noted that they consider "the Assam opportunity as a challenging, potentially attractive play extension and possible new play(s) opportunity with oil discoveries in the neighbouring sub-regional context".
Background
On 2 April 2008, Hardy announced the award of a 10% interest in the exploration licence AS-ONN-2000/1. This is the Company's first onshore block and fourth licence in partnership with Reliance. The AS-ONN-2000/1 exploration licence is located in the north eastern state of Assam, India, and north of Brahmaputra River. The exploration licence covers an area of 5,754 km2 in the districts of Darrang and Sonitpur. The block is in phase I of the three-phase exploration licence. Phase I is over three years and will expire in January 2011. The topography of the area is primarily a plain of low relief and there is a reasonably established road network across the block.
CAUVERY BASIN - Eastern India
Block CY-OS 90/1 (PY-3): Producing Oil Field
(Hardy 18% interest - Operator)
Production
Gross average daily production for the six months ended 30 June 2009 was 3,016 stbd (2008: 2,808 stbd). The marginal increase in production is the result of better than expected performance of the single producing well.
As announced on 20 July 2009 the PY-3 field was shut-in on 5 July 2009 due to unscheduled repair and maintenance of the offshore mooring facility. Adverse marine conditions have frustrated efforts of the contractor to assess and undertake necessary repairs to commence production. We expect production to commence in September 2009
As a result of the unplanned shut-in of the field the average gross production forecast for 2009 has been revised downwards to 2,400 stbd, reflecting the anticipated shut-in period.
Operations
As announced on 17 February 2009, the Company completed the re-entry and drilling of the PY3-PD4RL well. The PY3-PD4RL vertical well was re-entered and side-tracked from 2,916 m MD (2,890 m TVDSS) and drilled down to 4,375 m MD (3,525 m TVDSS). With the assistance of nitrogen lift, the well flowed at 700 stbd of oil with 30% water-cut, however, the well was unable to be reactivated as a self flowing well. The well has been completed as a producer with a gas lift valve to allow for future production when gas lift compression facilities are installed on the FPU. Hardy is currently updating its geological model to incorporate new data gathered from the well.
The PY-3 management committee is reviewing an extension to the field's production facilities contract through to July 2010. The new contract proposal provides for a reduction of approximately 40% from the previous contracted rate. In light of the PY3-PD4RL results, longer term production facility arrangements will follow once the PY-3 joint venture has agreed to a modified phase III development plan.
Background
The PY-3 field is located off the east coast of India, 80 km south of Pondicherry in water depths of between 40 m and 450 m. The licence is operated by HEPI, covers 81 km2, and produces oil of high quality light crude (49° API). The field was developed using floating production facilities and subsea wellheads, a first for an offshore field in India. The facility at PY-3 consists of the floating production unit, 'Tahara', and a 65,000 DWT tanker, 'Endeavor', which acts as a floating storage and offloading unit. There are four sub-sea wells tied back to Tahara.
CAUVERY BASIN - Eastern India
Block CY-OS/2: Exploration
(Hardy 75% interest - Operator)
Operations
The joint venture has applied for an extension of the appraisal period to January 2012 as per the PSC, to the MOPNG to establish commerciality of the Ganesha gas discovery.
On 20 February 2009, HEPI received a communication from DGH to establish commerciality within 15 days or relinquish the block. As Ganesha is a non-associated gas discovery, the CY-OS/2 PSC provides for an appraisal programme to January 2012 to establish commerciality. The Company has subsequently obtained two independent technical and two legal opinions confirming Ganesha as a non-associated gas discovery. Hardy continues to work with the MOPNG to confirm the extension of the appraisal period to January 2012.
Background
The CY-OS/2 block is located in the northern part of the Cauvery Basin immediately offshore from Pondicherry and covers approximately 859 km2. HEPI is the operator of this block. The CY-OS/2 licence comprises two retained areas. The northern area includes the Ganesha (Fan-A1) non-associated gas discovery. The southern area lies immediately adjacent to the HEPI-operated PY-3 field. The PY-1 gas field lies within the southern part of the acreage and is expected to begin production by the first quarter of 2010. The PY-3 oil field and PY-1 gas field are both contained within the CY-OS/2 licence but have been ring-fenced, each with a separate PSC.
GUJARAT-SAURASHTRA BASIN - Western India
Block GS-OSN-2000/1 (GS-01): Exploration
(Hardy 10% interest)
Operations
The GS-01 joint venture continued various geological and geophysical studies in relation to the appraisal of the Dhirubhai 33 gas discovery. A decision on the drilling of an appraisal well is expected to be made prior to the end of 2009. It is currently considered that an appraisal well will be required to establish commerciality of the Dhirubhai 33 discovery.
The licence is currently active under an adopted appraisal programme for the GS01-B1 gas and condensate discovery (Dhirubhai - 33). The appraisal area comprises 5,890 km2 with a term through to May 2010.
Background
The GS-01 exploration licence is located in the Gujarat-Saurashtra offshore basin, off the west coast of India, directly adjacent to the prolific Bombay High oil field. The original licence encompasses 8,841 km2, and water depths vary between 80 m and 150 m. The joint venture has previously acquired 1,711 km2 of 3D seismic data. In May 2007, the Company announced a discovery from the GS01-B1 exploration well. The well flow-tested at a rate of 18.6 MMscfd gas with 415 stbd of condensate through a 56/64" choke at flowing tubing head pressure of 1,346 psi.
NIGER DELTA BASIN - Nigeria
Block Oza (OML 11): Development
(Hardy 20% interest)
Operations
The Oza Joint venture has made progress in the first half of 2009. The joint venture received delivery of over 34 km of pipe which includes the construction of a multiphase fluid pipeline from Oza to the SPDC operated Isimiri flow station. The operator is in advance stages of completing the final FEED study and other regulatory and community approvals. Field operations are expected to commence in the first quarter of 2010.
Background
The Oza Field is located on-land in the north western part of OML 11, near Port Harcourt. The concession area is 20 km2. The Oza field is subject to a farm-out agreement between NNPC, SPDC and Elf Petroleum Nigeria. The field has cumulatively produced approximately 1.0 MMstb from three zones in three wells. At present, Oza has three suspended wells in the field. In 2008 Hardy farmed out a 20% working interest in the Oza field. Under the terms of the agreement as consideration for the interest Emerald assumed the Company's obligation to fund the initial work programme of the Oza field
NIGER DELTA BASIN - Nigeria
Block Atala (OML 46): Development
(Hardy 20% interest)
Operations
The original Marginal Field award is subject to review in November 2009. Extension of the Atala licence is contingent on the Nigerian authorities believing that sufficient progress has been made over the initial term to merit an extension. As such, the operator along with a consortium of other Niger delta marginal field operators' have requested extensions due to equipment constraints over the initial term.
Background
Atala is located within OML 46, which is located in a mangrove swamp on the Dodo River, a coastal area of Bayelsa State. The concession area is 34 km2. Bayelsa Oil Company Limited is the operator with HON as technical partner. The Atala field was discovered in 1982 with the drilling of the Atala-1 well to a total depth of 4,058 m. Hydrocarbons were encountered and the well was cased but not tested or completed.
BUSINESS DEVELOPMENT
The Company intends to review the blocks on offer under the Government of India's NELP VIII process and any other upstream opportunities that meet with our stated geographical focus.
FINANCIAL REVIEW
The Company's principal source of revenue is from the sale of crude oil production from the PY-3 field.
Key Performance Indicators
|
Six months ended 30 June |
||
|
2009 |
2008 |
|
|
Production (stock tank barrels of oil per day - net entitlement basis) |
543 |
337 |
|
Average realised price per stb ($) |
48.44 |
100.97 |
|
Revenue ($ 000's) |
5,800 |
9,898 |
|
Net (loss) / profit ($ 000's) |
(4,309) |
6,177 |
|
Cash flow (deficiency) from operations* ($ 000's) |
(2,580) |
1,970 |
|
Diluted (loss) / earnings per share ($) |
(0.06) |
0.09 |
|
Wells drilled** |
1 |
2 |
* Before changes in non-cash working capital
**In 2009, comprises of one well that has been pre- drilled
As a result of expenditures incurred on the PY-3 field in the fourth quarter of 2008 and first quarter of 2009, no profit oil was payable for the six months ended June 30, 2009, resulting in higher net entitlement for Hardy.
Operating Results
|
Six months ended 30 June |
||
|
2009 |
2008 |
|
|
Production (stbd) |
||
|
Gross |
3,016 |
2,808 |
|
Participating interest |
543 |
505 |
|
Net entitlement interest |
543 |
337 |
|
Sales (stbd) |
||
|
Gross |
3,590 |
3,857 |
|
Participating interest |
646 |
694 |
|
Average realised price ($ per stb) |
48.44 |
100.97 |
Revenue for the six months ended 30 June 2009 decreased by 41.4% to $5.8 million. The average price realised per stb decreased by 52% to $48.44 during the six months ended 30 June 2009. Reduced revenue in 2009 resulted from lower realised oil prices offset in part by lower sales volumes despite the absence of profit oil during 2009.
Cost of Sales
Production cost of sales increased 12% in 2009 to $4.7 million principally reflecting substantially lower per barrel inventory cost at the end of 2007. Actual production cost amounted to $39.28 per barrel in the first half of 2009. The PY-3 management committee is reviewing an extension to the field's production facilities contract through to July 2010
Gross Loss
As a result, the Company had a gross profit of nil in the first half of 2009 compared with a gross profit of $5.3 million in 2008.
Administrative Expenses
Administrative expenses increased by 5% to $5.5 million for the six months ended 30 June 2009. The increase principally results from providing for costs associated with the drilling of the PY3-PD4RL well and offset in part by exchange gains. Non-recurring listing expenses of $0.7 million were incurred during 2008.
Operating Loss
As a result, the Company is reporting an operating loss of $5.5 million for the six months ending 30 June 2009 compared with a break even position reported for the same period in 2008.
Interest and Investment Income
Investment and other income declined from $0.7 million for the six-month period ended 30 June 2008 to $0.1 million in 2009. The reduction results principally from lower interest rates realised in 2009.
Taxation
Deferred tax relief of $1.1 million has been recorded against a pre-tax loss of $5.4 million in the first half of 2009. No current taxes are payable for the period under review.
Net Loss After Taxation
As a result, the Company recorded a net loss of $4.3 million in the period ending 30 June 2009 compared to a net profit of $6.2 million reported for the same period in 2008. Results for the first half of 2008 reflect a pretax gain on sale of investment of $9.0 million.
Cash Flow from Operating Activities
Cash flow deficiency from operating activities, before changes in non-cash working capital, amounted to $2.6 million in the first half of 2009 compared with a surplus of $2.0 million for the same period in 2008. This results from reduced revenue, higher operating costs and an increase in general and administrative expenses.
Capital Expenditures
The Group's capital expenditures amounted to $7.0 million during the six months ended 30 June 2009, compared to $15.0 million incurred for the same period in 2008.
Approximately $3.0 million was capitalised with respect to the PY3-PD4RL re-entry. Capital expenditures amounting to $2.0 million were incurred on the D3 block with the acquisition of 3D seismic and pre drilling of a well to 1,675 m in April 2009. Approximately $1.1 million was incurred with respect to seismic acquisition on the Assam block. Minimal expenditures were incurred on the remaining blocks in India and no expenditures were incurred in Nigeria.
Investment and Other Income
During the six months ended 30 June 2009, the Company earned $0.1 million of interest and other income on its surplus cash balances compared with $0.8 million report for the same period in 2008, principally reflecting substantially lower interest rates.
Equity Financing
In April 2009, Hardy raised $15.2 million (after expenses) by way of a placing of 6,208,997 new ordinary shares in the capital of the Company with institutional and other investors at a price of 174 pence per share. Net proceeds from the placing were added to the Company's cash resources, which are available to meet ongoing expenditures.
Cash and Short Term Investments
Total cash and short term investments increased by $2.6 million, to $32.7 million at 30 June 2009. Net proceeds from the financing were more than sufficient to fund capital expenditures and cash deficiency from operating activities.
Summary Balance Sheets
Hardy's non-current assets increased from $135.8 million at 31 December 2008 to $141.8 million at 30 June 2009. This resulted principally from the capital expenditure programme on PY3, D3 and Assam blocks.
Current assets represent the Group's cash resources, together with trade and other receivables and inventory. At 30 June 2009, of the $40.0 million of current assets, $32.7 million was represented by cash and short term investments.
Current liabilities are principally trade and other accounts payable. The level of current liabilities fluctuates significantly depending upon the timing of capital programmes. At 30 June 2009, the Company was not drilling any wells, resulting in a decline in trade and other payables.
During the six months ended 30 June 2009, the Company has grown its net asset base from $144.2 million at the end of 2008 to $156.7 million at 30 June 2009 reflecting the equity financing undertaken in April 2009.
Liquidity and Capital Resources
At 30 June 2009, the Company had liquid resources of approximately $32.7 million, in the form of cash and short term investments, which were available to meet ongoing expenditures. At the present time, the Company does not have any short-term or long-term debt. The Company has adequate funds to meet its ongoing expenditures.
Principal Risks and Uncertainties
The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 22 and 23 of the 2008 Annual report, a copy of which is available on the Company's website at www.hardyoil.com. The Chairman's Statement and Review of Operations in this interim report include comments on the outlook for the Group for the remaining six months of the financial year.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
On behalf of the Board
Dinesh Dattani FCA
Finance Director
14 August 2009
INDEPENDENT REVIEW REPORT TO HARDY OIL and GAS plc
Introduction
We have been engaged by the company to review the interim consolidated financial statements in the half yearly management report for the six months ended 30 June 2009 which comprises the consolidated income statement, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half yearly management report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim consolidated financial statements.
Directors' Responsibilities
The half yearly management report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half yearly management report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual consolidated financial statements are prepared in accordance with IFRS as adopted by the European Union. The interim consolidated financial statements included in this half yearly management report have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the interim consolidated financial statements in the half yearly management report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim consolidated financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim consolidated financial statements in the half yearly management report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
HORWATH CLARK WHITEHILL LLP
London
14 August 2009
HARDY OIL AND GAS plc
Consolidated Income Statement
|
Six months ended 30 June 2009 (Unaudited) US$ |
Six months ended 30 June 2008 (Unaudited) US$ |
Year ended 31 December 2008 (Audited) US$ |
|
|
Revenue |
5,799,789 |
9,898,129 |
17,306,042 |
|
Revenue |
|||
|
Cost of sales |
|||
|
Production costs |
(4,677,125) |
(4,160,338) |
(7,523,972) |
|
Depletion |
(1,016,009) |
(394,888) |
(1,521,919) |
|
Decommissioning charge |
(102,190) |
(63,771) |
(151,174) |
|
Gross profit |
4,465 |
5,279,132 |
8,108,977 |
|
Administrative expenses |
(5,455,885) |
(5,206,256) |
(9,847,526) |
|
Operating (loss) / profit |
(5,451,420) |
72,876 |
(1,738,549) |
|
Gain on sale of investment |
- |
9,032,672 |
12,953,064 |
|
Interest and investment income |
91,839 |
683,803 |
1,320,189 |
|
Finance costs |
(33,257) |
(62,810) |
(91,204) |
|
|
|
||
|
(Loss) profit on ordinary activities before taxation |
(5,392,838) |
9,726,541 |
12,443,500 |
|
Tax on (loss) / profit on ordinary activities |
1,083,508 |
(3,549,726) |
(4,971,144) |
|
Loss / (profit) attributable to the equity shareholders of the parent company |
(4,309,330) |
6,176,815 |
7,472,356 |
|
(Loss) earnings per share |
|||
|
Basic |
(0.07) |
0.10 |
0.12 |
|
Diluted |
(0.06) |
0.09 |
0.11 |
HARDY OIL AND GAS plc
Consolidated Statement of Changes in Equity
|
Six months ended 30 June 2009 (Unaudited) US$ |
Six months ended 30 June 2008 (Unaudited) US$ |
Year ended 31 December 2008 (Audited) US$ |
|
|
Opening equity |
144,231,873 |
143,995,825 |
143,995,825 |
|
Total (loss) / gain recognized for the period |
(4,309,330) |
6,176,815 |
7,472,356 |
|
Available for sale investments: |
|||
|
Realized gain on sale of investment transferred to income statement |
- |
(9,032,672) |
- |
|
Unrealized valuation gain/(loss) on investment |
(119,438) |
||
|
Transferred to profit on sale from other reserves |
- |
- |
(12,354,477) |
|
Deferred tax asset / (liability) on unrealized valuation gain or loss |
- |
2,583,722 |
3,441,945 |
|
Total recognised (losses) New shares issued Share based payments |
(4,309,330) 15,186,076 1,639,103 |
(391,573) 161,588 1,282,672 |
(1,440,176) 250,944 1,425,280 |
|
Closing equity |
156,747,722 |
145,048,512 |
144,231,873 |
HARDY OIL AND GAS plc
Consolidated Balance Sheet
As at 30 June 2009
|
30 June 2009 (Unaudited) |
30 June 2008 (Unaudited) |
31 December 2008 (Audited) |
|
|
US$ |
US$ |
US$ |
|
|
Assets |
|||
|
Non-current assets |
|||
|
Intangible assets - exploration |
128,026,323 |
114,237,507 |
124,013,261 |
|
Intangible assets - others |
71,332 |
170,415 |
111,640 |
|
Property, plant and equipment |
10,279,579 |
2,932,756 |
8,477,099 |
|
Investments |
- |
9,159,896 |
- |
|
Site restoration deposit |
3,451,332 |
3,368,189 |
3,211,830 |
|
141,828,566 |
129,868,763 |
135,813,830 |
|
|
Current assets |
|||
|
Inventory |
3,470,843 |
2,666,602 |
3,736,437 |
|
Trade and other receivables |
3,692,002 |
1,857,561 |
4,087,719 |
|
Short term investments |
12,864,667 |
- |
22,010,291 |
|
Cash and cash equivalents |
19,873,428 |
40,276,235 |
8,139,314 |
|
39,900,940 |
44,800,398 |
37,973,761 |
|
|
Total assets |
181,729,506 |
174,669,161 |
173,787,591 |
|
Liabilities |
|||
|
Current liabilities |
|||
|
Trade and other payables |
(10,267,673) |
(13,272,140) |
(13,758,099) |
|
Non-current liabilities |
|||
|
Provision for decommissioning |
(4,500,000) |
(4,500,000) |
(4,500,000) |
|
Provision for deferred tax |
(10,214,111) |
(11,848,509) |
(11,297,619) |
|
(14,714,111) |
(16,348,509) |
(15,797,619) |
|
|
Total liabilities |
(24,981,784) |
(29,620,649) |
(29,555,718) |
|
Net assets |
156,747,722 |
145,048,512 |
144,231,873 |
|
Equity |
|||
|
Called-up share capital |
685,300 |
622,975 |
623,210 |
|
Share premium |
108,475,924 |
93,262,817 |
93,351,938 |
|
Shares to be issued |
5,565,973 |
3,784,262 |
3,926,870 |
|
Other reserves |
- |
2,344,144 |
- |
|
Retained earnings |
42,020,525 |
45,034,314 |
46,329,855 |
|
Total equity |
156,747,722 |
145,048,512 |
144,231,873 |
HARDY OIL AND GAS plc
Consolidated Cash Flow Statement
|
Six months ended 30 June 2009 (Unaudited) US$ |
Six months ended 30 June 2008 (Unaudited) US$ |
Year ended 31 December 2008 (Audited) US$ |
|
|
Operating activities |
|||
|
Operating (loss) profit |
(5,451,420) |
72,876 |
(1,738,549) |
|
Depletion and depreciation |
1,116,745 |
550,961 |
1,805,408 |
|
Decommissioning charge |
102,190 |
63,771 |
151,174 |
|
Share based payments charges |
1,652,470 |
1,282,672 |
1,429,736 |
|
Cash flow from operations (before non cash working capital changes) |
(2,580,015) |
1,970,280 |
1,647,769 |
|
(Increase)/decrease in inventory |
265,594 |
37,313 |
(1,032,522) |
|
Decrease/(increase) in trade and other receivables |
361,826 |
72,262 |
(2,676,392) |
|
(Decrease)/ increase in trade and other payables |
(3,490,426) |
3,630,286 |
4,126,921 |
|
Cash flow from operating activities |
(5,443,021) |
5,710,141 |
2,065,776 |
|
Taxation paid |
(6,626) |
(728,270) |
(1,373,117) |
|
Net cash from operating activities |
(5,449,647) |
4,981,871 |
692,659 |
|
Investing activities |
|||
|
Expenditure on intangible assets -exploration |
(4,013,062) |
(14,952,973) |
(24,728,727) |
|
Expenditure of property, plant and equipment |
(2,981,107) |
(20,792) |
(6,802,348) |
|
Purchase of intangible fixed assets - others |
- |
(3,841) |
(3,841) |
|
Purchase of other fixed assets |
- |
(71,236) |
(117,097) |
|
Purchase of investment |
- |
(13,184,387) |
(13,184,387) |
|
Sale of investment |
- |
31,500,296 |
41,378,216 |
|
Site restoration deposit |
(239,502) |
1,631 |
157,990 |
|
Short term investments |
9,145,624 |
- |
(22,010,291) |
|
Net cash (used in) investing activities |
1,911,952 |
3,268,698 |
(25,310,485) |
|
Financing activities |
|||
|
Interest and investment income |
118,989 |
769,840 |
1,520,555 |
|
Finance costs |
(33,257) |
(62,810) |
(91,204) |
|
Issue of shares |
15,186,076 |
161,588 |
170,741 |
|
Net cash from financing activities |
15,271,808 |
868,618 |
1,600,092 |
|
Net increase in cash and cash equivalents |
11,734,114 |
9,119,187 |
(23,017,734) |
|
Cash and cash equivalents at the beginning of the period |
8,139,314 |
31,157,048 |
31,157,048 |
|
Cash and cash equivalents at the end of the period |
19,873,428 |
40,276,235 |
8,139,314 |
HARDY OIL AND GAS plc
Notes to Interim Consolidated Financial Statements (Unaudited)
Six Months Ended 30 June 2009
Basis of preparation
These interim consolidated financial statements are for the six months ended 30 June 2009 and have been prepared in accordance with International Accounting Standard 14 "Interim Financial Statements". The accounting policies applied are consistent with International Financial Reporting Standards (IFRS) adopted for use by the European Union. The accounting policies and methods of computation used in the interim consolidated financial statements are consistent with those used in the Annual Report for 2008 and are expected to be applied for the year ended 31 December 2009.
The interim results for the six months ended 30 June 2009 are not necessarily indicative of the results to be expected for the full year 2009.
2. Earnings Per Share
The calculation of basic earnings (loss) per share is based on the loss of US$ 4,309,330 (June 2008: profit US$ 6,176,815) and a weighted average number of ordinary shares of 64,538,546 shares (June 2008: 62,263,771).
The calculation of diluted earnings (loss) per share is based the (loss) profit for the period for basic earnings per share. The number of shares outstanding, however, is revised to reflect the potential dilution if share options that are outstanding are converted into ordinary shares. The weighted average number of ordinary shares is increased by 4,757,101 (June 2008: 4,707,101) with respect to outstanding share options, resulting in a diluted weighted average number of shares of 69,295,647 (June 2008: 66,970,872).
3. Segment Analysis
The directors do not consider there to be more than one class of business or geographic segment for the purposes of reporting. The Group is engaged in one business activity, the production of and exploration for oil and gas. The revenue, segment result and assets of the geographic segments, other than India, are nil or less than 10% of the total for all segments. Revenue arises from sale of oil produced from the contract area CY-OS-90/1-India and the revenue by destination is not materially different from the revenue by origin.
4. Administrative Expenses
Administrative costs include $1.6 million of additional costs associated with the re-entry of PD4 well in PY3 field.
HARDY OIL AND GAS plc
Notes to Interim Consolidated Financial Statements (Unaudited)
Six Months Ended 30 June 2009
5. Intangible Assets - Exploration
Intangible assets - exploration includes US$83,549,545 incurred on the block CY-OS/2. An application has been made for an extension of the appraisal period to January 2012 to the Ministry of Petroleum and Natural Gas of the Government of India to establish commerciality of the Ganesha gas discovery on the block. On 20 February 2009 a communication was received from Directorate General of Hydrocarbons to establish commerciality within fifteen days or the block stands relinquished. As Ganesha is a non-associated gas discovery, the production sharing contract provides for an appraisal programme to January 2012 to establish commerciality. The Company has subsequently obtained two technical and two legal opinions confirming Ganesha as a non-associated gas discovery. Hardy continues to work with the Ministry of Petroleum and Natural Gas to confirm the extension of the appraisal period to January 2012.
6. Share Capital
The Company has authorised share capital of 200 million US $0.01 ordinary shares.
Changes in issued and fully paid ordinary shares during the six months ended 30 June 2009 are as follows:
|
Number of US$0.01 Ordinary Shares |
US$ |
|
|
Beginning of the period |
62,321,047 |
623,210 |
|
Shares issued during the period |
6,208,997 |
62,090 |
|
End of period |
68,530,044 |
685,300 |
7. Share Options
Changes in outstanding share options during the six months ended 30 June 2009 are summarized below:
|
Number of options |
Weighted average price £ |
|
|
Outstanding at beginning of the period |
4,707,101 |
2.94 |
|
Granted during the period |
50,000 |
1.74 |
|
Outstanding at the end of period |
4,757,101 |
2.93 |
|
Exercisable at the end of period |
2,617,099 |
2.13 |
HARDY OIL AND GAS plc
Notes to Interim Consolidated Financial Statements (Unaudited)
Six Months Ended 30 June 2009
8. Contingent Liabilities
Bank guarantees for US$ 2,764,860 have been issued to Government of India as at 30 June 2009. The guarantees were obtained by placing a fixed deposit of Rs 25,978,403 (US$ 542,687) with a bank with the interest rate of 10.50%.
9. Approval of Interim Consolidated Financial Statements
These interim consolidated financial statements have been approved by the board of directors on 14 August 2009.
DEFINITIONS & GLOSSARY OF TERMS:
NOTES TO THE EDITORS
Hardy Oil and Gas plc is an upstream international oil and gas company whose assets are principally in India. Its portfolio includes a blend of exploration, appraisal, development, and production assets. Hardy's goal is to evaluate and exploit its asset base with a view to creating significant value for its shareholders.
Hardy has existing production from an offshore field in India's Cauvery Basin. Hardy also has interests in four offshore exploration blocks in India's Krishna Godavari, Saurashtra, and Cauvery Basins and one onshore exploration block in the Assam Basin and two development licences in Nigeria.
Hardy is incorporated under the laws of the Isle of Man and headquartered in London, UK. Ordinary shares of Hardy were admitted to the Official List and the London Stock Exchange's market for listed securities effective 20 February 2008 under the symbol HDY.
The Company's Indian assets are held through the wholly owned subsidiary Hardy Exploration & Production (India) Inc, located in Chennai, India. The Company's Nigerian assets are held through wholly owned subsidiary Hardy Oil Nigeria Limited, located in Lagos, Nigeria.
For further information please refer to our website at www.hardyoil.com
Related Shares:
HDY.L