1st Sep 2005 07:01
Global Energy Development PLC01 September 2005 Immediate Release 1 September 2005 GLOBAL ENERGY DEVELOPMENT PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Global Energy Development PLC ("Global" or the "Company"), the Latin Americafocused petroleum exploration and production company (LSE-AIM: "GED"), ispleased to announce its interim results for the six months ended 30 June 2005. Highlights: • Revenues up 64.8% at $9,103,000 against the comparable period last year (2004: $5,524,000); • Gross profit up 69.4% at $4,997,000 (2004: $2,949,000); • Profit before tax up 38.3% at $3,138,000 (2004: $2,269,000) and greater than the full year ended 31 December 2004; • Net income up 42.6% at $2,797,000 (2004: $1,961,000) and greater than the full year ended 31 December 2004; • Capital expenditure up 158.3% at $6,361,000 (2004: $2,463,000) with capital expenditure for the year ended 31 December 2005 anticipated at approximately $16 million; • No debt as at 30 June 2005; • Escalation of production underway for the second half of 2005; • Rapid progression towards exploratory drilling on several existing contracts; and • Additional acreage anticipated to be secured during the remainder of 2005 and into 2006. Commenting on the outlook for the Company, Mikel Faulkner, Chairman, said: "For the remainder of 2005, Global intends to grow production, to add to thehigh potential acreage already under the Company's control and progress rapidlyto exploratory drilling on several of its newer acreage positions which themanagement of Global believe offer significant scope for substantial finds basedon historic data and recently completed third-party reports. Global looksforward to the remainder of 2005 and beyond with confidence." For further information: Global Energy Development PLCCatherine Miles, director of Investor Relations +44 (0) 20 7763 7177www.globalenergyplc.com +44 (0) 7909918034-------------------------- Notes to Editors: Global currently holds approximately 5.1 million acres through six contracts inColombia and Peru, an exclusive Technical Evaluation Agreement ("TEA") inColombia and a concluded exclusive TEA in Panama which is in the process ofbeing converted into an exclusive contract. As at 31 December 2004, Global hadindependently reported proved and probable reserves totalling 16.5 million BOE. Chairman and Managing Director's Statement Financials Revenues for the six months ended 30 June 2005 were $9,103,000, a 64.8% increaseagainst the comparable period last year (2004: $5,524,000). Gross profitincreased by 69.4% to $4,997,000 (2004: $2,949,000). General and administrativecosts rose to $1,859,000 (2004: $691,000) reflecting the increased number ofemployees and consultants working on a portfolio much enlarged from 2004 andactively sourcing and progressing new contracts and Technical EvaluationAgreements ("TEAs"). Notwithstanding the increase in general and administrativecosts, profit before tax for the six months ended 30 June 2005 increased by38.3% to $3,138,000 (2004: $2,269,000), with this being greater than the profitbefore tax for the full year ended 31 December 2004 of $3,127,000. Likewise, netincome, up 42.6% at $2,797,000 (2004: $1,961,000), also exceeded the net incomefor the full year ended 31 December 2004 of $2,566,000. This financialperformance was influenced by historically high oil prices as well as the newcrude oil sales contract Global entered into with Petrobras, the state oilcompany of Brazil, effective 1 May 2005 offering improved financial terms forGlobal. As at 30 June 2005, Global had no debt. Net production for the period was 233,119 barrels of oil (2004: 199,669 netbarrels of oil) with the mostly second-half weighted 2005 workover and drillingprogramme expected to culminate in full year production being materially aheadof last year which totalled 365,527 net barrels of oil for the year ended 31December 2004. The Company has had a finding and development cost of approximately $4.01 perproved and probable barrel in the period from April 2002, the year of theCompany's flotation on the AIM Market of the London Stock Exchange ("AIM"), to30 June 2005. During the six months ended 30 June 2005, the Company averaged acash netback per barrel of $27.26 (2004: $21.78) with cash netbacks in the monthof June 2005 averaging $38.96 per barrel. These netback figures were againinfluenced by historically high oil prices and the new sales contract withPetrobras. Netback figures are derived after deducting all productions costs,including general and administrative costs, from net wellhead prices. Operations Global remains committed to Latin America, particularly Colombia, Peru andPanama, in order to continue capitalising on the Company's extensive operatinghistory in the region. For the remainder of 2005, Global intends to grow production, to add to the highpotential acreage already under the Company's control and progress rapidly toexploratory drilling on several of its newer acreage positions which themanagement of Global believe offer significant scope for substantial finds basedon historic data and recently completed third-party reports. Capital expenditure for the full year 2005 is anticipated to total approximately$16 million and be fully funded from cashflow from the enlarged production andcash available. This marks a significant transition from the $2,825,000 spent in2002, the year of the Company's flotation on AIM, and is almost double the 2004capital expenditure of $8.7 million. Of the $16 million 2005 capital expenditure budget, only approximately $4million is required under the terms of the existing contracts and agreementswith the remainder at the Company's discretion and being utilised to acceleratethe Company's current operations, specifically advancing the explorationoperations and supporting this with the increasing production from the workoverand drilling programme. Global is actively working on obtaining several more contracts and TEAs inColombia and Peru, all currently at various stages of progression, with hopesthat one or more will be signed during the remainder of 2005 with others fallinginto early 2006. In addition, the exclusive contract for the Garachine Blockarea in Panama is scheduled to be signed in the fourth quarter of 2005 or early2006 with the Panamanian Government recently publicly announcing its commitment. The first exploratory wells on the Valle Lunar TEA area in Colombia and theBlock 95 contract area in Peru are currently scheduled to be drilled in thesecond half of 2006, reflecting the Company's efforts in accelerating itsexploratory drilling programme, and any securing of additional new contracts orTEAs during the remainder of 2005 may result in more exploratory drilling aroundthis time. However, the exact timing of drilling may be influenced by rigavailability. As previously indicated, a much larger proportion of capital expenditure will bedirected towards exploration activities going forward and 2006 should reflectthis with approximately 50% of expenditure planned to be directed towardsexploration against the less than 10% expected in 2005. This change isreflective of the Company's enlarged exploration opportunities which have beenamassed during 2004 and so far in 2005 to supplement its productive assets. TheCompany, along with an independent report, identified approximately $200 millionof developmental and exploratory drilling in total within the portfolio as at 31December 2004, with this figure not taking into account the Valle Lunar TEAacreage as it was signed in 2005 nor the Garachine Block area as it was deemedpurely exploratory at that time. The Company's other contracts, namely the three Association contracts and twoexclusive Concession contracts in Colombia, offer the expected near-termcontinued uplift in production as well as exploratory operations. Theanticipated uplift in production for 2005 is expected to be predominantly due toworkovers and drilling within the Alcaravan Association contract plus the newerRio Verde and Los Hatos Concession contracts. Within the Rio Verde contract, theCompany is looking to exit 2005 with three wells producing as the exploratorywell Tilodiran 2 is scheduled to be drilled later this year. The Rio Verdecontract only had two weeks contribution to production from one well in 2004.The Los Hatos Concession contract is also expected to contribute to productionin 2005 as the first well, the exploratory well Los Hatos 1, is currently beingspudded and if successful is expected to be brought onto production in October2005. Conclusion Global should begin 2006 with a portfolio further enlarged from the existingapproximate 5.1 million acres and offering additional high potential explorationprojects and drilling opportunities, all intended to be rapidly progressedagainst a backdrop of continued growing production. This production shouldprovide the cashflow to direct towards a capital expenditure budget which shouldbe a significant enlargement compared to 2005. Global owns a 100% of all itscontracts in order to maintain maximum capital expenditure flexibility and toquickly capture new opportunities as they arise. In addition, Global willcontinue monitoring any opportunities to supplement its operations. Global looks forward to the remainder of 2005 and beyond with confidence. 1 September 2005 Mikel FaulknerExecutive Chairman Stephen VossManaging Director UNAUDITED FINANCIAL HIGHLIGHTS (1)for the six months ended 30 June 2005 (Figures in thousands except for per share information) Six Months Six Months Twelve Months Ending Ending Ending 30 June 2005 30 June 2004 31 December 2004 $000 $000 $000 TURNOVER 9,103 5,524 10,974Earnings per share 0.10 0.07 0.09Expenditures on capital assets 6,361 2,463 8,700Net current assets 5,967 4,112 228Capital and Reserves 68,364 57,481 58,091Common shares outstandingEnd of period 34,965,047 27,971,832 28,060,349 RESERVE INFORMATION - UK GAAP BASIS AS OF 1 JANUARY 2005 (2) Quantity Future NPV (Bbls) Net Revenue At 10% Thousands $000 $000 Proved 4,200 120,079 79,857Probable 12,252 328,223 201,123Total 16,452 448,302 280,980 Note (1): Global Energy Development PLC has no debt as of the reporting dates statedabove. Note (2): The reserve information for Global Energy Development PLC has been certificatedby a third-party firm at 31 December 2004. Independent Review Report to Global Energy Development PLC Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2005. We have read the other information containedin the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the AIM Market of the London StockExchange ("AIM"). No person is entitled to rely on this report unless such aperson is a person entitled to rely upon this report by virtue of and for thepurpose of our terms of engagement or has been expressly authorised to do so byour prior written consent. Save as above, we do not accept responsibility forthis report to any other person or for any other purpose and we hereby expresslydisclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on AIM which require thatthe accounting policies and presentation applied to the interim figures shouldbe consistent with those applied in preparing the preceding annual accountsexcept where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of management and applying analyticalprocedures to the financial information and underlying financial data and basedthereon, assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with United Kingdom Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. Review conclusion On 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 2005. BDO Stoy Hayward LLPLondon 1 September 2005 UNAUDITED SUMMARISED PROFIT AND LOSS ACCOUNTfor the six months ended 30 June 2005 Six Months Six Months Twelve Months Ending Ending Ending 30 June 30 June 31 December 2005 2004 2004 $000 $000 $000 TURNOVER 9,103 5,524 10,974Cost of Sales (4,106) (2,575) (5,625) GROSS PROFIT 4,997 2,949 5,349Administration Expenses (1,859) (691) (2,241)Other income 18 22 42 PROFIT ON ORDINARY ACTIVITIES 3,156 2,280 3,150Net interest(payable)/receivable (18) (11) (23) PROFIT ON ORDINARYACTIVITIES BEFORE TAXATION 3,138 2,269 3,127Tax (charge)/credit on profitfor the financial period (341) (308) (561) PROFIT ON ORDINARY ACTIVITIESAFTERTAXATION AND TRANSFER TORESERVES 2,797 1,961 2,566 EARNINGS PER ORDINARY SHARE- Basic $ 0.10 $ 0.07 $ 0.09- Diluted $ 0.09 $ 0.06 $ 0.09 UNAUDITED SUMMARISED BALANCE SHEETas at 30 June 2005 30 June 30 June 31 December 2005 2004 2004 $000 $000 $000 FIXED ASSETSIntangible Assets 1,494 1,186 1,222Tangible Assets 61,433 52,660 57,170 62,927 53,846 58,392 CURRENT ASSETSStocks 448 484 473Debtors and prepayments 5,447 2,300 2,005Cash at bank and in hand 3,169 2,598 2,857 9,064 5,382 5,335 CREDITORS:amounts falling due withinone year (3,097) (1,270) (5,107) NET CURRENT ASSETS 5,967 4,112 228 TOTAL ASSETS LESS CURRENTLIABILITIES 68,894 57,958 58,620 Provisions for liabilitiesand charges (529) (477) (529) 68,365 57,481 58,091 CAPITAL AND RESERVESCalled up share capital 532 405 406Capital reserve 210,844 210,844 210,844Share premium account 26,091 18,736 18,740Profit and loss account (169,102) (172,504) (171,899) 68,365 57,481 58,091 UNAUDITED RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENT ON RESERVESfor the six months ended 30 June 2005 Share Share Share Profit Shareholders' Capital Reserve Premium And Loss Equity Account Account Account Account Account $000 $000 $000 $000 $000 AT 1 JANUARY 2004 405 210,844 18,736 (174,465) 55,520 Placement for new sharecapital 1 - 4 - 5Profit for the period - - - 2,566 2,566 AT 31 DECEMBER 2004 406 210,844 18,740 (171,899) 58,091 Placement for new sharecapital 126 - 7,351 - 7,477Profit for the period - - - 2,797 2,797 AT 30 JUNE 2005 532 210,844 26,091 (169,102) 68,365 UNAUDITED SUMMARISED CASH FLOW STATEMENTfor the six months ended 30 June 2005 Six Months Six Months Twelve Months Ending Ending Ending 30 June 2005 30 June 2004 31 December 2004 $000 $000 $000 NET CASH FLOW FROM OPERATINGACTIVITIES (220) 1,908 8,196 RETURNS ON INVESTMENTS ANDSERVICING OF FINANCEInterest (paid) / received (18) 7 18TAXATION PAID (341) (32) (65) (579) 1,883 8,149 CAPITAL EXPENDITURE ANDFINANCIAL INVESTMENTExpenditure on tangible fixedassets (6,361) (2,463) (8,700) NET CASH FLOW BEFOREFINANCING (6,940) (580) (551) FINANCINGIssue of share capital 7,477 - 5 DECREASE IN CASH 537 (580) (546)Cash at beginning of period 2,632 3,178 3,178 CASH AT END OF PERIOD 3,169 2,598 2,632 NOTES TO THE FINANCIAL INFORMATIONfor the six months ended 30 June 2005 1. ACCOUNTING POLICY BASIS OF PREPARATION The financial statements have been prepared under thehistorical cost convention. The financial statements for the year ended 31December 2004 and the periods ending 30 June 2005 and 2004 have been prepared inaccordance with accounting standards and the Statement of Recommended Practice"Accounting for Oil and Gas Exploration, Development and DecommissioningActivities". BASIS OF CONSOLIDATION The financial statements have been prepared using theprinciples of merger accounting. Under merger accounting, the results of theGroup are combined from the beginning of the financial period in which thecombination occurred and their assets and liabilities combined at the amounts atwhich they were previously recorded. The financial information shown in this publication is unaudited and dos notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The comparative figures for the year ended 31 December 2004 were derived fromthe statutory accounts for that year which have been delivered to the Registrarof Companies. Those accounts received an unqualified audit report, which did notcontain statements under section 237(2) or (3) of the Companies Act 1985. 2. Turnover is attributable to one continuing activity, which is oilproduction from the Harken de Colombia, Ltd. branch located in Colombia, SouthAmerica. 3. The calculation of earnings per ordinary share for the six months ended30 June 2005 is based on the weighted average number of ordinary shares. 4. No interim dividend has been declared. 5. Reconciliation of operating profit to net cash flow from operatingactivities Six Months Six Months Twelve Months Ending Ending Ending 30 June 2005 30 June 2004 31 December 2004 $000 $000 $000 OPERATING PROFIT ON ORDINARYACTIVITIES 3,156 2,280 3,150Depreciation, depletion andamortisation 1,881 1,386 3,087 Loss on sale of fixed assets - - 34 Increase in debtors andprepayments (3,442) (2,195) (2,088)Decrease/(Increase) ininventory 25 10 (26)Decrease/(Increase) increditors (1,840) 427 4,039 NET CASH INFLOW FROMOPERATING ACTIVITIES (220) 1,908 8,196 6. Analysis of net funds At 1 January Net At 30 June 2005 Cash flows 2005 $000 $000 $000 Cash at bank and in hand 2,857 312 3,169Bank overdrafts (225) 225 - 2,632 537 3,169 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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