27th Sep 2007 14:30
Forum Energy Plc27 September 2007 27 September 2007 Forum Energy Plc ("Forum" or the "Company") Interim Results for the six months to 30 June 2007 Forum, the AIM-listed oil, gas and coal exploration and production companyfocused in the Philippines, today announces interim results for the six monthsto 30 June 2007. HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Confirmed proven GIP at Sampaguita, GSEC101, of 3.4TCF with upside to 20TCF. • Initiated the process of conversion of GSEC101 to a service contract. • Farmed out a 30% interest in GSEC101 to Monte Oro Resources & Energy, Inc., securing past costs and Filipino Participation Incentive Allowance (FPIA). • First production from Galoc on track to commence early 2008. • Farm out of NW Palawan assets in progress. • Refocused the Company to take full advantage of GSEC101 opportunity. FINANCIAL HIGHLIGHTS • Revenues of US$0.37 million for the interim period ended 30 June 2007 (US$0.13 million - 30 June 2006). • Shareholders' equity of US$50.64 million as of 30 June 2007 (US$54.50 million - 30 June 2006). • Cash resources anticipated to be adequate for the foreseeable future. • Loss before minority interest of US$1.74 million for the interim period ended 30 June 2007 (US$0.34 million - 30 June 2006). For further information please contact: Forum Energy Plc: Russell Harvey Tel: +44 (0)1932 445344 Noble & Company Ltd Nick Naylor Tel: +44 (0)20 7763 2200Jamie Boyd Tel: +44 (0)20 7763 2200 Pelham Public Relations: Charles Vivian Tel: +44 (0)20 7743 6672 Mob: +44 (0)7977 297 903Evgeniy Chuikov Tel: +44 (0)20 7743 6672 Mob: +44 (0)7894 608 606 CHAIRMAN'S & CHIEF EXECUTIVE'S STATEMENT Dear Shareholder Forum continues to make progress, working its assets and conserving its cashwith the objective of realising shareholder value through its prime asset, theGSEC101 block containing the Sampaguita gas discovery. With production from the Galoc field and judicious farm-outs the Company ispositioned to be able to fund its work programs through 2008 and beyond andlooks to progress positively in the coming months. It remains open to, and isactively seeking, additional business opportunities to provide value but seesthese as being consummated to maximum shareholder benefit once the servicecontract on GSEC101 is awarded. With the recent farm out to Monte Oro Resources& Energy, Inc. we are optimistic that a service contract award will beforthcoming in the near future. Financial report Forum recorded a loss of US$1.74 million for the interim period ended 30 June2007 (US$0.34 million for interim period ended 30 June 2006). After deductionof minority interest, the loss attributable to shareholders of US$1.61 millioncompares to a loss of US$0.30 million for the equivalent period last year andUS$3.26 million for the full year 2006. Revenues for the period were US$0.37 million (US$0.13 million for interim periodended 30 June 2006) attributable to oil production from the Basic Petroleum &Minerals Inc. (BPMI) assets acquired in April 2006. A gross loss of US$0.16million compares to a marginal profit in the first six months of 2006 andprimarily reflects a higher rate of depletion of production assets.Administrative expenses of US$0.99 million were broadly in line with theequivalent period last year but proportionately lower than full year 2006,reflecting efforts by the new management to reduce spend rates and conserve cashresources. The increased loss from operations of US$1.57 million, compared tofirst half 2006 loss of US$0.93 million, included non-cash share-based paymentsof US$0.42 million reflecting an emphasis on incentive-driven rewards for staff.The full year 2006 loss from operations includes US$0.92 million of impairmentcharges with no similar charges appearing in the first half of 2007. Financial income of US$0.08 million was down from US$0.59 million for thecomparative period of 2006, reflecting the gradual utilisation of cash raised in2005 whilst financial expense of US$0.18 million principally comprised exchangelosses on non-current liabilities. Cash balances totalled US$3.74 million at 30 June and, allied to reduced ratesof ongoing expenditure, left the Company with sufficient resources to maintainits programmes whilst seeking to advance the value of its key assets. GSEC101 GSEC101 is an area with tremendous potential, both exploration and appraisal.The Company is progressing the conversion of the license to a service contract,which is at the Company's option, and has introduced a local partner through thefarm-out of a 30% participating equity interest. This farm-out secures theFilipino Participation Incentive Allowance (FPIA) which equates to 7.5% of grossrevenues as well as past costs. Importantly, this farm-out secures localinvolvement which is considered essential to the success of the project.Following service contract award Forum will be seeking a farm in partner onbehalf of both participants to expedite the work program. NW Palawan This is a prolific oil-producing area in which Forum has a number of interestsfollowing the purchase of the assets of BPMI. The Nido / Matinloc fieldscontinue to provide cash flow, while the Galoc field in which the Company has a2.28% carried interest is scheduled for first production in early 2008. Afarm-out has been agreed, subject to necessary approvals, on the Octon oilaccumulation leaving the Company with a 1.67% carried interest and discussionsare ongoing on farm out of the proven West Linepacan oil accumulation. TheCompany has determined, following technical review, that this area will be usedto generate the cash flow necessary to sustain it, and to take advantage of thegreater prize of GSEC101. SC40 The Company has completed its review of the offshore portion of the licence andidentified a number of prospects. The offshore area will be the subject of afarm-out campaign while the onshore area is under review following the re-entryof the Maya well with inconclusive results. The Libertad gas development remainsin abeyance pending clarification of commercial terms. Coal Contracts The prime activity in the coal contracts has been the extension of explorationactivities following some unexpected core results, which required confirmationof the geological model prior to further investment in order to secure thenecessary returns. This has now been completed to satisfaction. However, withthe positive results on GSEC101 and the determination to conserve capital totake advantage of a variable timeline in the award of the service contract, theCompany is in the process of marketing the proven coal assets to more quicklycapitalise on the resource and is in discussion with a number of interestedparties. In conclusion your Company remains confident that, given its prudent approachand strong relationships within the Philippines, the business will prosper tothe benefit of shareholders for the remainder of 2007 and beyond. Yours sincerely Alan Henderson Russell HarveyChairman Chief Executive 26 September 2007 Independent review report to Forum Energy Plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007. 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 Alternative Investment Market,and for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of, andfor the purpose of, our terms of engagement, or has been expressly authorised todo so by our prior written consent. Save as above, we do not acceptresponsibility for this report to any other person or for any other purpose andwe hereby expressly disclaim 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 Directorsare responsible for preparing the Interim Report in accordance with the rules ofthe London Stock Exchange for companies trading securities on the AlternativeInvestment Market, which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the Company'sannual accounts, having regard to the accounting standards applicable to suchannual accounts. 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 International Standards on Auditing and therefore provides alower level of assurance than an audit. Accordingly we do not express an auditopinion on 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 2007. BDO STOY HAYWARD LLPChartered Accountants8 Baker StreetLondon W1U 3LL 26 September 2007 CONSOLIDATED INCOME STATEMENTFor the period 1 January 2007 to 30 June 2007 Six months Six months ended ended Year ended 30 June 2007 30 June 2006 31 December 2006 US$000's US$000's US$000's Unaudited Unaudited Audited Revenues 370 132 544 Cost of sales (527) (107) (340) Gross (loss)/profit (157) 25 204 Other administrative expenses (993) (918) (2,925) Permanent impairment of deferred charges andabortive project costs - - (922) Share-based payments (416) (38) (789) Total administrative expenses (1,409) (956) (4,636) Loss from operations (1,566) (931) (4,432) Financial income 81 593 1,066 Financial expense (182) (1) (2) Share of operating loss of associates net of taxation (42) - (68) Loss before taxation (1,709) (339) (3,436) Taxation (30) - (7) Loss after taxation (1,739) (339) (3,443) Attributable to: Equity holders of the parent (1,607) (300) (3,258)Minority interest (132) (39) (185) (1,739) (339) (3,443) Loss per ordinary share (US$)Basic and diluted (0.056) (0.011) (0.115) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the period 1 January 2007 to 30 June 2007 Total attributable Foreign to equity Share Share exchange Other Retained holders of Minority capital premium reserve reserves losses parent interest Total US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 Balance as at 1 January 2006 4,932 46,714 (499) 51 (867) 50,331 2,057 52,388 Loss for the period - - - - (300) (300) 85 (215) Unrealised foreign exchangemovements - - 162 - - 162 - 162 Total recognised income andexpense for the period - - 162 - (300) (138) 85 (53) Share-based payments - - - 38 - 38 - 38 Issue of shares 234 1,889 - - - 2,123 - 2,123 Balance as at 30 June 2006 5,166 48,603 (337) 89 (1,167) 52,354 2,142 54,496 Loss for the period - - - - (2,958) (2,958) (270) (3,228) Unrealised foreign exchangemovements - - 337 - (499) (162) - (162) Total recognised income andexpense for the period - - 337 - (3,457) (3,120) (270) (3,390) Share-based payments - - - 751 - 751 - 751 Issue of shares - (6) - - - (6) - (6) Shares issued under LTIP 16 - - - (16) - - - Balance as at 31 December 2006 5,182 48,597 - 840 (4,640) 49,979 1,872 51,851 Loss for the period - - - - (1,607) (1,607) (132) (1,739) Total recognised income andexpense for the period - - - - (1,607) (1,607) (132) (1,739) Share-based payments - - - 416 - 416 - 416 Issue of shares 15 99 - - - 114 - 114 Balance as at 30 June 2007 5,197 48,696 - 1,256 (6,247) 48,902 1,740 50,642 CONSOLIDATED BALANCE SHEET As at 30 June 2007 As at As at As at 30 June 2007 30 June 2006 31 December 2006 US$000 US$000 US$000 Unaudited Unaudited Audited Non-current assetsIntangible assets 43,845 47,452 43,264Property, plant and equipment 2,322 578 2,675Financial assets 25 - 40Investments in associated companies 1,039 - 1,081Advances to associated companies 3,512 - 3,159 Total non-current assets 50,743 48,030 50,219 Current assetsInventories 71 101 154Trade and other receivables 315 386 276Advances - 657 -Other financial assets - 663 -Cash and cash equivalents 3,740 9,501 5,739 Total current assets 4,126 11,308 6,169 Total assets 54,869 59,338 56,388 Liabilities:Current liabilitiesTrade payables 515 1,548 1,036 Non-current liabilitiesOther payables 3,712 3,294 3,501 Total liabilities (4,227) (4,842) (4,537) Total net assets 50,642 54,496 51,851 Capital and reserves attributable to equity holders of the CompanyCalled up share capital 5,197 5,166 5,182Share premium account 48,696 48,603 48,597Other reserves 1,256 89 840Foreign exchange reserves - (337) -Retained losses (6,247) (1,167) (4,640) 48,902 52,354 49,979 Minority interest 1,740 2,142 1,872 Total equity 50,642 54,496 51,851 CONSOLIDATED CASH FLOW STATEMENT For the period 1 January 2007 to 30 June 2007 Six months Six months ended ended Year ended 30 June 2007 30 June 2006 31 December 2006 US$000 US$000's US$000's Unaudited Unaudited Audited Operating activitiesNet loss from ordinary activities (1,739) (339) (3,443)Adjustments for:Depreciation 364 28 129Share-based payments 416 38 789Exchange loss/(gain) 182 (355) (736)Interest expense 1 1 2Interest income (81) (238) (330)Share of operating loss of associate 42 - 68 924 (526) (78) Operating loss before changes in working (815) (865) (3,521)capital (Increase)/decrease in trade and other (39) 450 1,495receivablesDecrease/(increase) in inventories 83 4 (49)(Decrease)/increase in trade and other (521) 1,112 2,839payables (477) 1,566 4,285 Cash outflows from operating activities (1,292)) 701 764 Investing activitiesInterest income 81 238 330Acquisition of subsidiary (net of cash - - (2,364)acquired)Purchase of property, plant and equipment (11) (2,200) (54)Purchase of intangible assets (467) (571) (2,958)Investment in associated undertakings - (1,704) (149)Purchase of available for sale financial - 63 (40)assetsAdvances to associated companies (353) - (3,159) Cash flows from investing activities (750) (4,174) (8,394) Financing activitiesInterest expense (1) 1 (2) Cash flows from financing activities (1) 1 (2) Decrease in cash (2,043) (3,472) (7,632) Cash and cash equivalents at beginning of the 5,739 12,635 12,635year Foreign exchange movements 44 338 736 Cash and cash equivalents at end of the year 3,740 9,501 5,739 UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS For the period 1 January 2007 to 30 June 2007 1. Accounting Policies Basis of preparation The interim financial information has been prepared using policies based onInternational Financial Reporting Standards (IFRS and IFRIC interpretations)issued by the International Accounting Standards Board (IASB) and with theCompanies Act 1985 applicable to companies preparing their accounts under IFRS.These accounts have not been audited but have been reviewed by the auditors ofForum Energy plc and its subsidiaries (the Group) as if they formed a singleentity. The financial information has been prepared using the accountingpolicies as applied in the Group's statutory financial statements for the yearended 31 December 2006. 2. Financial Reporting Period The financial information for the period 1 January 2007 to 30 June 2007 isunaudited. In the opinion of the Directors the financial information for theperiod presents fairly the financial position, and results from operations andcash flows for the period are in conformity with generally accepted accountingprinciples consistently applied. The accounts incorporate comparative figuresfor the interim period 1 January 2006 to 30 June 2006 and the audited financialyear to 31 December 2006. The comparatives for the full year ended 31 December 2006 are not the Company'sfull statutory accounts for that year. A copy of the statutory accounts forthat year has been delivered to the Registrar of Companies. The auditors'report on those accounts was unqualified, did not include references to anymatters to which the auditors drew attention by way of emphasis withoutqualifying their report and did not contain a statement under section 237(2)-(3)of the Companies Act 1985. 3. Loss Per Share The calculation of basic and diluted loss per share has been based on the lossfor the period of US$1,607,000 (2006: US$300,000) and the weighted averagenumber of shares being 28,695,549 ordinary shares issued for the period ended 30June 2007 (2006: 27,847,841). 4. Functional Currency All accounts have been prepared in US dollars, this being the Grouppresentational currency. 5. Additional Information Further copies of the Interim Statement are available from the CompanySecretary, Forum Energy plc, 120 Bridge Road, Chertsey, Surrey KT16 8LA, UnitedKingdom, Tel: +44 (0)1932 445 344, Fax: +44 (0)1932 445 345,[email protected], or may be downloaded from the website: www.forumenergy.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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