21st Aug 2007 07:00
Matra Petroleum PLC21 August 2007 PRESS RELEASEFor immediate release: 21st August 2007 Matra Petroleum plc ("Matra" or the "Company") Interim results for six months ended 30th June 2007 Matra Petroleum, the AIM-listed oil and gas exploration company focused onHungary and European Russia today announces its interim results for the sixmonths ended 30th June 2007. Matra's Managing Director, Peter Hind said:"We are now well into the 2007 exploration programme in both Hungary and Russia. In the period to 30th June we were very active: negotiating the acquisition ofthe Arkhangelovskoe licence in Russia, agreeing the farm out of the InkeConcession in Hungary, raising funds through the placement of new shares withDelek and spudding our first 2007 exploration well, in Hungary. Since the period end we have announced discoveries on both Hungary wells andspudded our first Russia well. We are currently planning further exploration drilling at the end of 2007 orearly in 2008. In parallel, we will be reviewing the data obtained from thecurrent drilling programme to define the optimum scheme for commercialising thediscoveries." For further information, please contact: Matra Petroleum www.matrapetroleum.comPeter Hind, Managing Director +44 (0) 7990 807 855 Aquila Financial Limited www.aquila-financial.comPeter Reilly +44 (0) 20 7202 2601Yvonne Fraser +44 (0) 20 7202 2603 Matra's nominated Advisor is RFC Corporate Finance Ltd -Contact: Steve Allen +61894802500 Managing Director's Letter I am pleased to present you the Interim Report of Matra Petroleum plc for theperiod ending 30th June 2007. Our 2007 plans were outlined in the 2006 Annual Report and we are now well intothe 2007 exploration programme in both Hungary and Russia. In the period to 30th June we were very active: negotiating the acquisition ofthe Arkhangelovskoe licence in Russia, agreeing the farm out of the InkeConcession in Hungary, raising funds through the placement of new shares withDelek and spudding our first 2007 exploration well, in Hungary. Since the period end we have announced discoveries on both Hungary wells andspudded our first Russia well. Most recently we have identified gas in the primary target of Marcali-1,initially from gas shows and subsequently confirmed by logging. Testing of thiswell will be undertaken using a workover rig in conjunction with the furthertesting of Horvatkut-1. It is very gratifying to have such success with the first two wells of our 2007exploration campaign. The application of the latest technology to the existing3D seismic allowed us to better understand the geological setting of the licenceand to define the prospects. At the same time using updated drilling techniqueshas avoided the formation damage seen in previous wells. The Marcali-1 well location was defined by a DHI (Direct Hydrocarbon Indicator)seen from the seismic modelling. A 3D seismic acquisition programme is currentlyunderway in the area of the new play fairway where a number of prospects wereseen in the 2006 technical review of the license. The application of DHImodelling to the data acquired over these new prospects should significantlyreduce the drilling risk. Our strategy of applying the latest technology inestablished oil and gas provinces is clearly working. We are currently planning further exploration drilling at the end of 2007 orearly in 2008. In parallel, we will be reviewing the data obtained from thecurrent drilling programme to define the optimum scheme for commercialising thediscoveries. In Russia our first well, Arkhangelovskoe-12, is well underway. Technical workis continuing to define the order in which we will drill the next prospects onthe license. Our current programme is to commence drilling a further two wellsin 2007 and in order to achieve that we will need to contract a second rig. We continue to evaluate new opportunities in Orenburg and nearby Oblasts andalso in Hungary. There are a number of opportunities in these areas but ofcourse they require careful consideration to ensure that they have the potentialto add value for shareholders by having the right balance of risk and reward.Whilst we are well financed and have the cash resources to achieve our currentobjectives and to expand the portfolio I am keen to ensure that shareholdersmaintain the leverage to success offered by the current programme. I continue to be surprised by the amount we have achieved in such a short timeand with a small team. The joint efforts of Neil Hodgson on the technical sideand John Wood (our Manager for Hungary) on the operational side have deliveredsuccess in Hungary and I congratulate them and also thank all our staff andconsultants in the UK, Hungary and Russia who have made such a big contribution. I look forward to announcing further news of our progress throughout 2007. On behalf of the Board Peter HindManaging Director INDEPENDENT REVIEW REPORTFOR THE SIX MONTHS ENDED 30th JUNE 2007 IntroductionWe have been instructed by the Company to review the financial information forthe six months ended 30th June 2007 set out on pages 5 to 15 and we have readthe other information contained in the Interim Report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. Our responsibilities do not extend to any otherinformation. Directors' responsibilitiesThe Interim Report including the financial information contained therein is theresponsibility of, and has been approved by, the directors. The directors areresponsible for preparing the Interim Report in accordance with the AIM Ruleswhich require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual accounts except where any changes, and the reasons for them,are disclosed. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists primarily of making enquiriesof management and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as test of controlsand verification of assets, liabilities and transactions. It is substantiallyless in scope than an audit performed in accordance with Auditing Standards andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. EK & Co 2003 LtdChartered Certified Accountants12B Talisman Business CentreBicesterOxonOX26 6HR INTERIM REPORT FOR THE SIX MONTHS ENDED 30th JUNE 2007CONSOLIDATED INCOME STATEMENT 30th June 30th June 31st December 2007 2006 2006 unaudited unaudited audited Notes • • • --------- --------- ----------Continuing operationsRevenue - - 1,753Cost of sales - - - --------- --------- ----------Gross profit - - 1,753 Administration expenses (974,385) (574,931) (1,426,639) Impairment of exploration expenditure and goodwill (272,444) - - --------- --------- ----------Operating loss (1,246,829) (574,931) (1,424,886) Finance income 246,474 84,823 266,248Finance costs (1,879) - (7,159) --------- --------- ----------Profit on ordinaryactivities before taxation (1,002,234) (490,108) (1,165,797) Taxation - - - --------- --------- ----------Profit on ordinaryactivities after taxation (1,002,234) (490,108) (1,165,797) Discontinued operationsProfit/(loss) for the yearfrom discontinued operations 758,519 (177,010) (4,057,493) --------- --------- ----------Loss for the year (243,715) (667,118) (5,223,290) Loss attributable to - - -minority interests --------- --------- ----------Loss attributable to equityshareholders (243,715) (667,118) (5,223,290) ========= ========= ========== Earnings per shareBasic 2 (0.00078) (0.00456) (0.02560)Diluted 2 (0.00074) (0.00408) (0.02414) Earnings per share from continuing operationsBasic 2 (0.00319) (0.00277) (0.00571)Diluted 2 (0.00305) (0.00248) (0.00539) INTERIM REPORT FOR THE SIX MONTHS ENDED 30th JUNE 2007CONSOLIDATED BALANCE SHEETAS AT 30th JUNE 2007 30th June 30th June 31st December 2007 2006 2006 unaudited unaudited audited Notes • • • --------- --------- ----------Assets Non-current assets Property, plant and equipment 91,528 61,121 56,230 Intangible exploration assets 1,029,033 3,449,877 375,000 Other intangible assets 3,883,945 3,085,263 2,534,469 Share of net assets in associate (814,457) - - --------- --------- ---------- 4,190,049 6,596,261 2,965,699 Current assets Inventories 354 - 150,048 Trade and other receivables 3,679,380 412,953 71,945 Cash and cash equivalents 16,841,184 9,166,242 8,250,886 --------- --------- ---------- 20,520,918 9,579,195 8,472,879 --------- --------- ---------- Total assets 24,710,967 16,175,456 11,438,578 ========= ========= ========== Equity and liabilities Capital and reserves attributable to equity holders of the Company Ordinary shares 6 672,214 384,151 389,122 Share premium 27,922,903 15,434,067 15,877,510 Foreign currency translation reserve (157,768) - (158,239) Other reserves 721,495 149,673 532,934 Retained earnings (5,600,189) (800,302) (5,356,474) --------- --------- ---------- Total equity 23,558,655 15,167,589 11,284,853 Attributable to equity holders 23,558,655 15,167,589 11,284,853 Minority interest - - - --------- --------- ---------- 23,558,655 15,167,589 11,284,853 Current liabilities Trade and other payables 1,152,312 1,007,867 149,850 Current income tax liabilities - - 3,875 --------- --------- ---------- Total liabilities 1,152,312 1,007,867 153,725 --------- --------- ---------- Total equity and liabilities 24,710,967 16,175,456 11,438,578 ========= ========= ========== INTERIM REPORT FOR THE SIX MONTHS ENDED 30th JUNE 2007CONSOLIDATED CASH FLOW STATEMENT 30th June 30th June 31st December 2007 2006 2006 unaudited unaudited audited Notes • • • --------- --------- ---------- Cash flows from operatingactivities 7 1,614,864 (1,011,447) (882,731) Cash flows from investing activitiesAcquisition of OOO Arkhangelovskoe Ltd net of cash acquired 4 2,877 - -Acquisition of Inke PetroleumPty Ltd net of cash acquired - 343,257 693,434Disposal of Gemstone Properties (379,977) - -Limited net of cash disposedPurchase of property, plantand equipment (72,678) (18,590) (74,634)Expenditure on oil and gas assets (1,874,557) (1,908,338) (3,748,247)Finance income 243,486 84,975 255,785 Cash flows from financing activitiesNet proceeds from issue of shares1 9,056,283 10,570,526 10,901,420 --------- --------- ----------Net increase in cash and cashequivalents 8,590,298 8,060,383 7,145,027 Cash and cash equivalents atbeginning of period 8,250,886 1,105,859 1,105,859 --------- --------- ----------Cash and cash equivalents atend of period 16,841,184 9,166,242 8,250,886 ========= ========= ========== 1 Net proceeds from issue of shares excludes €3,272,202 in respect of 55,000,000ordinary shares issued to the shareholders of OOO Arkhangelovskoe INTERIM REPORT FOR THE SIX MONTHS ENDED 30th JUNE 2007CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Share Share Foreign Share Retained Total capital premium currency based earnings translation payments reserve reserve 2007 2007 2007 2007 2007 2007 ------- -------- -------- -------- -------- -------- Balance at1st January 2007 389,122 15,877,510 (158,239) 532,934 (5,356,474) 11,284,853New sharesissued 283,092 12,045,393 - - - 12,328,485Cost of share issue - - - - - -Equity settledshare based payments - - - 188,561 - 188,561Foreigncurrencytranslations - - 471 - - 471Net loss forperiod - - - - (243,715) (243,715) ------- --------- -------- -------- -------- ---------Balance at30th June 2007 672,214 27,922,903 (157,768) 721,495 (5,600,189) 23,558,655 INTERIM REPORT FOR THE SIX MONTHS ENDED 30th JUNE 2007NOTES TO THE FINANCIAL STATEMENTS 1. Accounting policiesBasis of preparationThe interim financial information for the six months ended 30th June 2007 isunaudited and does not constitute statutory accounts as defined in section 240of the Companies Act 1985. The financial statements have been prepared on the historical cost basis inaccordance with International Financial Reporting Standards (IFRS) and theprovisions of the SORP "Accounting for Oil and Gas Exploration, Development,Production and Decommissioning Activities". The interim financial information for the six months ended 30th June 2007 hasbeen prepared pursuant to AIM rule 18 and represents the half-yearly report forthe six months then ended. AIM rule 18 states; "An AIM company must prepare ahalf yearly report in respect of the six month period from the end of thefinancial period for which financial information has been disclosed in itsadmission document and at least every subsequent six months thereafter (apartfrom the final period of six months preceding its accounting reference date forits auditing accounts.)". Basis of consolidationThe consolidated financial statements incorporate the financial statements ofentities controlled by the Group. Control is achieved where the Group has thepower to govern the financial and operating policies of an entity (asubsidiary). Intercompany transactions, balances and unrealised gains ontransactions between group companies are eliminated on consolidation. Unrealisedlosses are also eliminated but considered an impairment indicator of the assettransferred. Accounting policies of subsidiaries are consistent with thoseadopted by the Group. Investments in subsidiaries in the Company's balance sheetare accounted at cost less provision for impairment. Foreign currency translationFunctional currency is the currency of the primary economic environment in whichthe company operates and is normally the currency in which the company primarilygenerates and expends cash. In individual companies, transactions in foreign currencies are initiallyrecorded in the functional currency by applying the rate of exchange ruling atthe date of the transaction. Monetary assets and liabilities denominated inforeign currencies are translated into the functional currency at the rate ofexchange ruling at the balance sheet date. Any resulting exchange differencesare included in the income statement. In the consolidated financial statements, the assets and liabilities of non Eurofunctional currency subsidiaries are translated into Euros at the rate ofexchange ruling at the balance sheet date. The results and cashflow of non Eurofunctional currency subsidiaries are translated into Euros using average ratesof exchange. Exchange adjustments arising when the opening net assets andprofits are translated from the functional currency to Euro is taken to aseparate component of equity. Tangible non-current assetsTangible non-current assets are stated at cost less depreciation. Depreciationis provided at rates calculated to write off the cost of assets, less theirestimated residual value, over their expected useful economic lives on thefollowing basis: Property, plant and equipment 25% - 33% per annum straight line Intangible non-current exploration assetsThe Group applies the successful efforts method of accounting for explorationand appraisal costs. Under the successful efforts method of accounting, alllicence acquisition, exploration and appraisal costs are initially capitalisedin well, field or specific exploration well cost centres as appropriate, pendingdetermination. Expenditure incurred during the various exploration and appraisalphases is then written off unless commercial reserves have been established orthe determination process has been completed. Pre-licence costs: costs incurred prior to having obtained the legal rights toexplore an area are expensed directly to the profit and loss account as they areincurred. Licence acquisition costs: costs which have not been allocated should aredepreciated over the maximum period of the licence. Exploration and appraisal costs are initially capitalised as an intangibleasset. Intangible assets are not amortised prior to the conclusion of appraisalactivities and determination of commercial reserves. Goodwill and intangible non-current assetsGoodwill arising on the acquisition of subsidiary undertakings, representing anyexcess of the fair value of the consideration given over the fair value of theidentifiable assets and liabilities acquired is capitalised and written off on astraight line basis over its useful life. Provision is made for any impairment.The goodwill in respect of the acquisition of the Matra group is being amortisedover its estimated useful economic life of five years InvestmentsInvestments are stated at cost less provision for any diminution in value. InventoriesInventories are valued at the lower of cost and net realisable value. Trade and other receivablesTrade and other receivables are stated at their cost less impairment losses. Cash and cash equivalentsThe Company considers all highly liquid investments, with a maturity of 90 daysor less, to be cash equivalents. They are stated at the lower of cost or marketvalue. Trade and other payablesLiabilities are recognised for amounts to be paid in the future for goods andservices received, whether or not billed to the Company. TaxationCurrent tax, including UK corporation tax and foreign tax, is provided atamounts expected to be paid (or recovered) using the tax rates and laws thathave been enacted or substantially enacted by the balance sheet date. Contributed equityIssued and paid up share capital is recognised at the fair value of theconsideration received by the Company. Any transaction costs arising on theissue of ordinary shares are recognised directly in equity as a reduction of theshare proceeds received. Share based paymentsWhere the Company engages in equity-settled share based payments the treatmentdepends upon the service provided. In respect of employees, the fair value ismeasured by reference to the fair value of the share options granted on the dateof the grant. The cost of the employee services received in respect of the shareoptions is recognised in the income statement. In respect of other servicesprovided, the share options are measured by reference to the fair value of theservices provided. RevenueRevenue is recognised to the extent that it is probable that the economicbenefits will flow to the entity and the revenue can be reliably measured. 2. Loss per shareBasic loss per share of €0.00078 is calculated by dividing the loss for theperiod by the weighted average number of ordinary shares in issue during theperiod of 314,099,448. Diluted loss per share of €0.00074 is calculated by dividing the loss for theperiod by the diluted weighted average number of ordinary shares of 328,215,057,being the number of ordinary shares in issue and allowing for the exercise ofoptions, warrants and convertible shares outstanding. 3. Segmental informationThe primary segmental reporting is determined to be geographical segmentaccording to the location of the assets. The Directors do not believe that thereis a secondary segment that could be reported. There are three geographicalsegments. Geographical segment (Group) as at 30th June 2007 Continuing Continuing Continuing Discontinued 30th June 2007 operations operations operations operations United Russia Total Hungary Total Kingdom • • • • • --------- --------- --------- ---------- -------- Revenue - - - 20,004 20,004Cost of sales - - - - -Administrationexpenses (911,897) (62,488) (974,385) (320,505) (1,294,890)Impairment ofexplorationexpenditureand goodwill - (272,444) (272,444) (488,091) (760,535)Profit ondisposal ofsubsidiary - - - 1,548,220 1,548,220Finance revenue 246,460 14 246,474 236 246,710Financing costs (1,879) - (1,879) (1,345) (3,224) --------- --------- --------- ---------- -------- (667,316) (334,918) (1,002,234) 758,519 (243,715) Non currentassets 92,087 4,097,961 4,190,048 - -Inventories - 354 354 - -Trade andotherreceivables 3,114,169 565,211 3,679,380 - -Cash and cashequivalents 15,511,049 1,330,135 16,841,184 - -Trade andother payables (155,386) (996,925) (1,152,311) - - --------- --------- --------- ---------- -------- 18,561,919 4,996,736 23,558,655 - - Geographical segment(Group) as at 30th June 2006 Continuing Continuing Continuing Discontinued 30th June operations operations operations operations 2006 United Russia Total Hungary Total Kingdom • • • • • -------- -------- -------- --------- --------Revenue - - - 15,730 15,730Cost of sales - - - - -Administrationexpenses (574,931) - (574,931) (192,892) (767,823)Impairment of explorationexpenditureand goodwill - - - - -Profit / (loss) ondisposal ofsubsidiary - - - - -Finance revenue 84,823 - 84,823 152 84,975Financing costs - - - - - -------- -------- -------- --------- -------- (490,108) - (490,108) (177,010) (667,118) Non currentassets 25,393 - 25,393 6,570,868 6,596,261Inventories - - - - -Trade andotherreceivables 71,886 - 71,886 341,067 412,953Cash and cashequivalents 8,921,588 - 8,921,588 244,654 9,166,242Trade andother payables (176,946) - (176,946) (830,921) (1,007,867) -------- -------- -------- --------- -------- 8,841,921 - 8,841,921 6,325,668 15,167,589 Geographical segment(Group) as at 31st December 2006 Continuing Continuing Continuing Discontinued 31st December operations operations operations operations 2006 United Russia Total Hungary Total Kingdom • • • • • -------- -------- -------- --------- --------- Revenue 1,753 - 1,753 17,598 19,351Cost of sales - - - - -Administrationexpenses (1,426,639) - (1,426,639) (64,923) (1,491,562)Impairment ofexplorationexpenditureand goodwill - - - (4,006,864) (4,006,864)Profit / (loss) ondisposal ofsubsidiary - - - - -Finance revenue 266,248 - 266,248 1,694 267,942Financing costs (7,159) - (7,159) (4,998) (12,157) -------- -------- -------- --------- --------- (1,165,797) - (1,165,797) (4,057,493) (5,223,290) Non currentassets 22,786 - 22,786 2,942,913 2,965,699Inventories - - - 150,048 150,048Trade andotherreceivables 15,626 - 15,626 56,319 71,945Cash and cashequivalents 8,116,097 - 8,116,097 134,789 8,250,886Trade andother payables (118,481) - (118,481) (35,244) (153,725) -------- -------- -------- --------- --------- 8,036,028 - 8,036,028 3,248,825 11,284,853 4. Acquisitions and disposals On 23rd April 2007 Matra Petroleum plc acquired 100% of the Russian company OOOArkhangelovskoe in exchange for 55,000,000 ordinary shares, the fair value ofthe purchase price was €3,272,202. The book value of the identifiable assets andliabilities acquired were: 2007OOO Arkhangelovskoe • ---------Intangible exploration assets 951,681Trade and other receivables 2,877Trade and other payables (951,681) ---------Fair value of assets acquired 2,877Goodwill arising on acquisition 3,269,325 --------- 3,272,202 The directors do not believe there is any significant difference between thebook value and fair value of the assets acquired. On 13th June 2007, the group sold 60% of Gemstone Properties Limited, a whollyowned subsidiary which operated the Hungarian Inke Concession for €1,657,130 incash. The assets and liabilities disposed of as part of the disposal are asfollows: 2007Gemstone Properties Limited • ---------Intangible exploration assets 1,049,242Non current assets 29,793Inventories 154,194Trade and other receivables 270,399Cash and cash equivalents 2,037,107Trade and other payables (5,576,878)Goodwill 2,217,661 ---------Net liabilitiies 181,518 5. Discontinued operations On 13th June 2007, the group sold 60% of Gemstone Properties Limited. A profitof €1,548,220 arose on the disposal of Gemstone Properties Limited, being theproceeds of disposal less the proportion of carrying value of the subsidiary'snet assets. The results of the discontinued operations which have been includedin the consolidated income statement are shown in note 3. The cashflows from discontinued Group activities were: • ---------Net cash flows from operating activities 2,748,951Net cash flows from investing activities (846,633) --------- 1,902,318 6. Called up share capital 30th June 30th June 31st December 2007 2006 2006 unaudited unaudited audited • • • --------- --------- ---------Authorised: --------- --------- ---------10,000,000,000 ordinary shares of 0.1peach 14,872,000 14,872,000 14,872,000 ========= ========= ========= Allotted: --------- --------- ---------452,000,000 ordinary shares of 0.1peach 672,214 384,151 389,122 ========= ========= ========= The following issues of new shares in the Company for shares took place in theperiod: 1. 55,000,000 shares were issued as consideration for the purchase of 100% of the ordinary issued share capital of OOO Arkhangelovskoe on 30th April 2007.2.135,000,000 shares were issued as a placement for cash to Delek-International Energy Limited on 16th May 2007 at 4.5 pence per share. The following issues of new share options took place in the period: 1. 300,000 ordinary share options were issued on 30th March 2007 with an exercise price of 4.5 pence. The options are exercisable on or after 31st March 2008 and expire on 31st March 2012. 2. 200,000 ordinary share options were issued on 30th March 2007 with an exercise price of 4.5 pence. The options are exercisable on or after 31st March 2009 and expire on 31st March 2012. 3. 24,000,000 ordinary share options were issued on 16th May 2007 with an exercise price of 8 pence. The options are exercisable from grant and expire on 15th February 2009. 4. 4,000,000 ordinary share options were issued on 16th May 2007 with an exercise price of 4.5 pence. The options are exercisable on 16th May 2007 and expire on 15th May 2012. 5. 4,000,000 ordinary share options were issued on 16th May 2007 with an exercise price of 4.5 pence. The options are exercisable on 16th May 2008 and expire on 15th May 2012. 7. Reconciliation of operating profit / (loss) to net cash inflow / (outflow)from operating activities 30th June 30th June 31st December 2007 2006 2006 unaudited unaudited audited • • • --------- --------- --------- Operating loss (487,201) (752,093) (5,479,075)Depreciation 3,966 - 18,404Amortisation of goodwill 589,253 - 633,617Amortisation of concession licensecosts 125,000 - 625,000Impairment of explorationexpenditure 46,282 - 2,748,247Profit on disposal of subsidiary (1,548,220) - -Share based payments 188,561 57,283 453,648Foreign currency translation reserve (56) 108,721 (158,239)Increase in inventories - - (150,048)(Increase) / decrease in debtors (3,878,187) 54,360 298,167Increase / (decrease) in creditors 6,575,466 (479,718) 127,548 --------- --------- ---------Cash flows from operating activities 1,614,864 (1,011,447) (882,731) 8. Publication of Non-statutory Accounts The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Theauditors' report on these financial statements was unqualified and did notcontain a statement under Section 237(2) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MTA.L