27th Sep 2005 07:03
JKX Oil & Gas PLC27 September 2005 6 Cavendish Square, London W1G 0PD, England, UK Tel: +44 (0)20 7323 4464 Fax: +44 (0)20 7323 5258 Web site: http://www.jkx.co.uk FOR IMMEDIATE RELEASE 27 SEPTEMBER 2005 JKX Oil & Gas plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Financial Highlights 2005 2004 % Increase Turnover $23.8m $19.8m 20% Operating profit $14.1m $8.3m 70% Cash generated from operations $20.2m $9.7m 109% Earnings per share (basic) 7.5cents 5.4cents 39% Interim dividend 0.5p per share 0.25p 100% Strategic Highlights - Average realisations for oil increased 41% to $41.97/bbl ($29.75/bbl)- Average realisations for gas increased 11 % to $1.75/Mcf ($1.57/Mcf)- Continued development of Poltava production licenses- Further development of Turkish and Bulgarian facilities- One hundred per cent increase in half year dividend JKX Chief Executive, Dr Paul Davies, said: "JKX's strong performance is a reflection of the Group's continuing developmentof its operations coupled with a strong oil price. We have continued to buildupon our strategic achievements and are pleased with the significant progressthat we have delivered in this half year. We will continue to build upon oursuccess in Ukraine and explore other exciting opportunities in the region. "We expect the Company's performance in the second half to be in line with theBoard's expectations." ENDFor further information please contact: Dr Paul Davies/ Bruce Burrows JKX Oil & Gas 020 7323 4464Anthony Cardew/Sofia Rehman Cardew Group 020 7930 0777 CHAIRMAN'S STATEMENT I am pleased to report that JKX has had a successful first six months of theyear with the Company benefiting from the success of its development drilling inUkraine, the increased level of international oil prices and improvedrealisations for gas sold in Ukraine. Major highlights for the period include: €20% increase in revenue to $23.8m ($19.8m) €70% improvement in operating profit to $14.1m ($8.3m) €109% increase in cash generated from operations to $20.2m ($9.7m) €39% increase in earnings per share to 7.5 cents (5.4 cents) €100% increase in interim dividend to 0.5p per share (0.25p per share) Production and RealisationsAverage production in the first half of the year was 7,521 boepd (8,022 boepd).However, successful drilling during the period lifted end of period productionto more than 8,300 boepd. Current production is in excess of 12,000 boepd ofwhich more than 50% is oil and condensate. •Average realisations for oil rose by 41% to $41.97/bbl ($29.75/bbl), reflecting the strong growth in international oil prices. Oil exports from Ukraine were effectively curtailed in April by the introduction of a quota system by the Ukrainian government, and the Company has been selling its liquids production to domestic Ukrainian buyers since that time. The effective discounts to Brent dated prices have remained broadly in line with those achieved for export in the first quarter of the year. It is anticipated that the quota system will be removed in the fourth quarter. •Average realisations for gas rose by 11% to $1.75/Mcf ($1.57/Mcf). All gas was sold into the domestic market. The upward trend in domestic gas prices in Ukraine is continuing in the third quarter. Operational HighlightsUkraineDevelopment of our production licenses at Poltava has continued apace during thereporting period with the following milestones being achieved: • Well M152 was drilled in the northern part of the Molchanovskoye Field and brought on-stream at the end of the period at a rate of 2.950 bopd of oil and 2.4 MMcfd of gas. • A successful re-entry and 450m sidetrack was completed of Well R12 which was drilled in the Rudenkovskoye Field by the State in the 1970's. The well is currently undergoing extended production testing to provide data for field development. • The first new well on the Novo-Nikolaevskoye Field, Well N70, was drilled in the period. Three separate intervals have been tested to date, but only one interval produced hydrocarbons, albeit at a sub-commercial rate. There remains one further interval to be tested later in the year. • Upgrade and expansion of the field facilities continued at Poltava with the installation of more than 15km of new intra-field flowlines and the expansion of our oil rail loading terminal, including the fabrication and installation of two new 8,000 barrel oil storage tanks. In addition, two new gas compressors have been manufactured in Canada for delivery in the second half of the year. Since the end of the reporting period, Well M151 has been drilled as a follow-upwell to Well M152 and brought on-stream in early September at 3,000 bopd and 2.0MMcfd. The Skytop Brewster rig has moved to the north of the Rudenkovskoye Fieldwhere it is scheduled to spud Well R101 at the end of September. This well isplanned as a 4,700m vertical well and will be the first new well drilled by theCompany in the field. Negotiations are underway to contract a second rig from Poland to accelerate theparallel development of our four production licenses and to commence activity onour two exploration licenses. We are hoping to mobilise the rig into Ukraineduring the last quarter of the year. GeorgiaThe level of exploration activity continues to increase in the eastern sectionof the Black Sea. Following the farm-in early in the year by BP and TPOC to the8,900 sq.km exploration license offshore Georgia (JKX: 4% net profit interest),Unocal joined the Anadarko-led consortium in the mid-year. The drillship GlobalSanta Fe Explorer, has been mobilised into the Black Sea by BP and TPAO, and thefirst deep water well in the area was spudded on their adjacent license block inthe Turkish Black Sea in July. We anticipate that completion of this Turkishwell will lead to the scheduling of the first exploration well on our Georgianlicense. ItalyThe Company is undertaking an independent review of the reservoir evaluationperformed by ENI on the Civita gas discovery (JKX: 100%), in parallel with itsassessment of development options. It is hoped that the conclusion of this workwill lead to an application for a production license from the Italianauthorities at year end. ENI has elected to remain as operator for the remainingexploration portion of the Civita permit (JKX: 30%) and it is anticipated that aplan for further exploration of the permit will be tabled in the fourth quarterof the year. A 32 km 2D seismic programme is planned to delineate the three leads identifiedon the Fiume Arrone permit (JKX: 30%). We are currently awaiting a proposal fromthe operator. The Italian authorities have approved the environmental study on the Montalbanoblock (JKX: 40%) and we understand from our Italian partners that permit awardis imminent. The Italian authorities have accepted our application for the Corropoli block,and we are now proceeding with preparation of the required environmental survey. BulgariaIn March, the Company farmed into two onshore exploration permits, B Golitza andB1 Golitza (JKX: 25%), covering a total of 4,800 sq km in eastern Bulgaria. The200km 2D seismic programme is currently underway and is scheduled for completionin mid-October. It is anticipated that the subsequent processing andinterpretation work will be completed in the fourth quarter, allowing preferreddrilling locations to be identified in the New Year. TurkeyIn May, the Company farmed into the three Karakilise onshore explorationlicenses, covering a total of 1,230 sq km in south-eastern Turkey. The licensescontain one oil discovery (Karakilise 1) and a number of leads. In the thirdquarter, the appraisal well Karakilise 2 was drilled to 2,500m in the cretaceousMardin formation and found hydrocarbons. The well is currently under test butinitial indications are disappointing. Further study work will now be requiredbefore other leads are considered for drilling. USAThe Company holds a 34.4% working interest in the 11,290 acre Center DeepFederal Unit in Shelby County, east Texas. The first well on the Unit wasdrilled in 2001and made a commercial gas discovery. Two further appraisal wellswere drilled in the fourth quarter of 2004 and have produced modest amounts ofgas (100 Mcfd) under long term test conditions throughout the reporting period.Operating costs are continuing to be met by sale of the produced gas. CorporateDuring the period, a total of 8,401,826 ordinary shares in the Company wereissued to Benam Holdings Limited ("Benam") to redeem the entire £9,200,000one-year floating rate unsecured Convertible Loan Notes issued to Benam on 7thJuly, 2004. The conversion price was 109.5 pence per ordinary share. Current and Future ActivityDevelopment activity in Ukraine is expected to accelerate with the arrival of asecond drilling rig in Poltava. In addition to Well R101, which is scheduled tobe spudded in the north of the Rudenkovskoye Field at the end of September, itis anticipated that the ongoing programme at Poltava will further include:additional horizontal oil wells in the prolific northern part of theMolchanovskoye Field; a vertical oil well on the Ignatovskoye Field and,depending on the results of Well R101, further gas wells on the RudenkovskoyeField. The evaluation of the available data on the Elizavetovskoye Field isscheduled in October with a view to identifying a preferred location for thefirst new well by year end. The Company is continuing to identify suitable projects in and around our corearea of the states of the former Soviet Union. The acquisition of additionallicenses in Ukraine continues to be our first priority, followed by producingand development assets onshore Russia. DividendIn recognition of the continuing growth in profitability, the Board is pleasedto announce an interim dividend of 0.5p per share (0.25p per share), which willbe paid on 4 November to shareholders who are on the Company's Register ofMembers at the close of business on 28 October. OutlookThe successes of our two recent oil wells in the Molchanovskoye Field areexpected to boost oil revenues and cash flow in the second half of the year.Increase in gas production will be dependent on the drilling results of our deepwell on the Rudenkovskoye field. I anticipate the Company's overall performance to be in line with the Board'sexpectations. Financial review Production summary 1H 2005 2H 2004 1H 2004----------------------------- --------- -------- --------ProductionOil (Mbbl) 361 401 328Gas (Bcf) 6.0 6.4 6.8----------------------------- --------- -------- --------Oil equivalent (Mboe) 1,361 1,469 1,460----------------------------- --------- -------- --------Daily productionOil (bopd) 1,993 2,216 1,804Gas (MMcfd) 33 35 37----------------------------- --------- -------- --------Oil equivalent (boepd) 7,521 7,985 8,022----------------------------- --------- -------- -------- ----------------------------- --------- -------- --------Operating results 1H 2005 2H 2004 1H 2004 $ million $ million $ million----------------------------- --------- -------- --------RevenueOil 13.3 15.0 8.1Gas 10.2 10.4 10.3Other 0.3 1.4 1.4----------------------------- --------- -------- -------- 23.8 26.8 19.8Cost of salesOperating costs (4.2) (5.1) (5.1)Depreciation, depletion and amortisation (2.7) (2.5) (2.6)Production based taxes (0.4) (1.5) (1.7)----------------------------- --------- -------- -------- (7.3) (9.1) (9.4)----------------------------- --------- -------- ------------------------------------- --------- -------- -------- 16.5 17.7 10.4Operating expensesGeneral and administration expenses (2.4) (2.6) (2.1)----------------------------- --------- -------- -------- Operating profit 14.1 15.1 8.3----------------------------- --------- -------- -------- 1H 2005 2H 2004 1H 2004Earnings ----------------------------- --------- -------- --------Net profit ($m) 10.9 11.7 7.5Basic weighted average number of shares in issue(m) 145 140 138Earnings per share (cents) 7.52 8.31 5.42Earnings before interest, tax, depreciation andamortisation ($m) 17.1 18.0 11.1----------------------------- --------- -------- -------- Realisations 1H 2005 2H 2004 1H 2004----------------------------- --------- -------- --------Oil (per bbl) *$41.97 *$33.33 *$29.75Gas (per Mcf) $1.75 $1.61 $1.57----------------------------- --------- -------- --------*Oil prices are net of all transportation, shrinkage and brokerage charges. Cost of production ($/boe) 1H 2005 2H 2004 1H 2004----------------------------- --------- -------- --------Production costs *$2.64 *$2.44 *$2.69Depreciation, depletion and amortisation $1.96 $1.74 $1.76Production based taxes $0.32 $1.04 $1.14----------------------------- --------- -------- --------*Production costs relate to the operating costs attributable to oil and gasturnover. Cash flow 1H 2005 2H 2004 1H 2004------------------------------ ------- --------- --------Cash generated from operations ($m) 20.2 20.1 9.7Operating cash flow per share (cents) 13.9 14.1 7.0 Balance sheet 1H 2005 2H 2004 1H 2004----------------------------- --------- -------- --------Net cash ($m) 36.6 21.5 20.5Net cash to equity (%) 29.0 21.4 23.1Return on average capital employed (%) 20.0 26.0 18.4Capital expenditure ($m) 16.2 19.2 8.6----------------------------- --------- -------- -------- Group income statement-------------------------- ----- --------- --------- ------- Note Six months to Six months to Year 30 June 30 June to 2005 2004 31 Dec (un-audited) (un-audited) 2004 $'000 $'000 $'000-------------------------- ----- --------- --------- -------Revenue 2 23,756 19,773 46,594-------------------------- ----- --------- --------- -------Cost of 3 (7,269) (9,403) (18,541)sales-------------------------- ----- --------- --------- -------Gross profit 16,487 10,370 28,053General andadministrativeexpenses (2,399) (2,086) (4,672)-------------------------- ----- --------- --------- -------Operatingprofit 14,088 8,284 23,381-------------------------- ----- --------- --------- -------Financerevenue 814 117 564Finance cost (411) (32) (546)-------------------------- ----- --------- --------- -------Profit beforetax 14,491 8,369 23,399Taxation 5 (3,687) (927) (4,120)-------------------------- ----- --------- --------- -------Profit for theperiod 10,804 7,442 19,279(Profit)/lossattributableto minorityinterest 93 15 (53)-------------------------- ----- --------- --------- -------Profitattributableto equityshareholders 10,897 7,457 19,226-------------------------- ----- --------- --------- ------- -------------------------- ----- --------- --------- -------Dividends 6 (825) (664) (1,302)Earningsper - basic earnings per 10p 7 7.52 5.42 13.73share ordinary share (in cents) - diluted earnings per 7 7.10 5.24 13.07 10p ordinary share (in cents)-------------------------- ----- --------- --------- ------- Statement of recognised income and expense----------------------------- -------- -------- ------- Six months to Six months to Year 30 June 30 June to 2005 2004 31 Dec (un-audited) (un-audited) 2004 $'000 $'000 $'000----------------------------- -------- -------- -------Equity - foreign currency translation (296) (26) 200----------------------------- -------- -------- -------Net income/(expense) recogniseddirectly (296) (26) 200in equity ----------------------------- -------- -------- ------------------------------------ -------- -------- -------Profit for the period 10,804 7,442 19,279----------------------------- -------- -------- ------------------------------------ -------- -------- -------Total recognised income and expense forperiod 10,508 7,416 19,479----------------------------- -------- -------- ------------------------------------ -------- -------- -------Attributable to----------------------------- -------- -------- -------Minority interest (93) (15) 53----------------------------- -------- -------- -------JKX Shareholders 10,601 7,431 19,426----------------------------- -------- -------- ------- 10,508 7,416 19,479----------------------------- -------- -------- ------- Group balance sheet------------------------- ------- -------- -------- ------- Notes As at As at As at 30 June 30 June 31 Dec 2005 2004 2004 (un-audited) (un-audited) $'000 $'000 $'000------------------------- ------- -------- -------- -------AssetsNon-current assetsIntangible assets 16,778 11,610 14,927Property, plant and equipment 76,438 52,123 65,353Other non-current assets 2,566 - 3,090------------------------- ------- -------- -------- ------- 95,782 63,733 83,370------------------------- ------- -------- -------- -------Current assetsInventories 528 290 194Trade and other receivables 3,827 11,982 11,923Cash and cash equivalents 36,640 23,173 39,134------------------------- ------- -------- -------- ------- 40,995 35,445 51,251------------------------- ------- -------- -------- -------Liabilities------------------------- ------- -------- -------- -------Current liabilitiesConvertible loan note - - (17,662)Current tax liabilities (444) (596) (1,696)Loan capital - (2,660) -Trade and other payables (8,150) (4,920) (12,944)------------------------- ------- -------- -------- -------Net current assets/ 32,401 27,269 18,949(liabilities) ------- -------- -------- --------------------------------Non-current liabilitiesProvisions (604) (325) (475)Deferred tax liability (1,377) (1,830) (1,518)------------------------- ------- -------- -------- ------- (1,981) (2,155) (1,993)------------------------- ------- -------- -------- -------Net assets 126,202 88,847 100,326------------------------- ------- -------- -------- -------EquityShare capital 11 23,292 21,579 21,582Share premium 11 36,846 22,113 22,127Merger reserve 11 30,680 30,680 30,680Other reservesCapital redemption reserve 11 587 587 587Equity - share options 11 281 84 171Equity - foreign currency 11 203 273 499translationRetained earnings 11 34,313 13,456 24,587------------------------- ------- -------- -------- -------Total shareholders' equity 126,202 88,772 100,233------------------------- ------- -------- -------- -------Minority interests - equity - 75 93------------------------- ------- -------- -------- -------Total equity 126,202 88,847 100,326------------------------- ------- -------- -------- ------- Group cash flow statement-------------------------- ----- --------- --------- ------ Note Six months to Six months to Year 30 June 30 June to 2005 2004 31 Dec (un-audited) (un-audited) 2004 $'000 $'000 $'000-------------------------- ----- --------- --------- ------Cash flows from operatingactivities 8Cash generated from operations 20,175 9,668 29,810Finance revenue 713 125 571Finance cost (862) (1) (498)Income tax paid (4,379) (737) (3,040)-------------------------- ----- --------- --------- ------Net cash from operatingactivities 15,647 9,055 26,843-------------------------- ----- --------- --------- ------Cash flows from investingactivitiesProceeds from sale of property,plant and equipment 12 15 17Proceeds from sale of US assets 855 - 233Purchase of property, plant andequipment and intangible assets (18,446) (8,619) (25,044)-------------------------- ----- --------- --------- ------Net cash used in investingactivities (17,579) (8,604) (24,794)-------------------------- ----- --------- --------- -------Cash flows from financingactivitiesProceeds from issue of ordinaryshare capital 263 8,049 8,049Convertible loan note - - 17,662Short term borrowings - - 2,482Repayment of borrowings - (4,334) (9,476)Dividends paid to shareholders (825) (664) (1,303)-------------------------- ----- --------- --------- -------Net cash (used)/from infinancing activities (562) 3,051 17,414-------------------------- ----- --------- --------- -------Net (decrease)/increase in cashin the period (2,494) 3,502 19,463-------------------------- ----- --------- --------- ------- Cash and cash equivalents at 1January 39,134 19,671 19,671-------------------------- ----- --------- --------- -------Cash and cash equivalents atend of period 9 36,640 23,173 39,134-------------------------- ----- --------- --------- ------- Notes to the accounts 1. Accounting PoliciesBasis of PreparationThis Interim Report has been prepared on a basis consistent with the Group'santicipated 2005 IFRS accounting policies. Comparative information has also beenrestated under IFRS. Change of accounting policies On 1 January 2005 it became mandatory for the Group to comply with InternationalFinancial Reporting Standards. The Interim Results for the six months to 30 June2005 have been prepared on the basis of all IFRS and interpretations issued bythe International Accounting Standards Board ("IASB") effective for the Group'sreporting year ending 31 December 2005 (as disclosed in the IFRS restatementannouncement), on the assumption that they will be fully endorsed by theEuropean Union ("EU"). Should the EU fail to endorse some of these standards andinterpretations in full this could result in the need to change the basis ofaccounting or presentation of certain financial information in the 2005 AnnualReport and Accounts. Ukrainian business environment Ukraine continues to display emerging market characteristics, and itslegislation and business practices regarding banking operations, foreigncurrency transactions and taxation is constantly evolving as the governmentattempts to manage the economy. Risks inherent in conducting business in anemerging market economy include, but are not limited to, volatility in thefinancial markets and the general economy. Uncertainties over the development ofthe tax and legal environment, as well as difficulties associated with theconsistent application of current laws and regulations have continued. Ukrainianassets represent approximately 81% of the Group's oil and gas assets. The Group's operations and financial position may be affected by theseuncertainties. The Group's financial statements as at 30 June 2005 and for theperiod then ended do not include any adjustments to reflect the possible futureeffects on the recoverability and classification of assets or the amounts orclassifications of liabilities that may result from these uncertainties. IAS 32 and IAS 39 adoption With the adoption of IAS 32 and IAS 39 under the new accounting policies theGroup has to recognise a liability and an equity component for convertible loannotes which are regarded as compound instruments. At the date of issue, the fairvalue of the liability component is estimated using the prevailing marketinterest rate for similar non-convertible debt. The difference between the netproceeds of issue of the convertible loan notes andthe fair value assigned to the liability component, representing the embeddedoption to convert the liability into equity of the Group, is included in equity(capital reserves). The Group has restated it's 1 January 2005 balance sheetfollowing adoption of IAS 32 and IAS 39 in note 13. 2. RevenueRevenue represents amounts invoiced net of value added and similar taxes for theGroup's share of oil and gas sales and related management services. 3. Cost of sales --- ----------------------------- -------- -------- -------- 30 June 30 June 31 Dec 2005 2004 2004 $000 $000 $000 --- ----------------------------- -------- -------- -------- Operating costs 4,387 5,312 10,515 --- ----------------------------- -------- -------- -------- Depreciation, depletion and amortisation 2,670 2,566 5,128 --- ----------------------------- -------- -------- -------- Production based taxes 436 1,667 3,193 --- ----------------------------- -------- -------- -------- Release of doubtful debt provision (224) (142) (295) --- ----------------------------- -------- -------- -------- 7,269 9,403 18,541 ----------------------------- -------- -------- -------- 4. Segmental analysis 1H 2005 UK Ukraine Georgia USA Rest Elims Total of $000's $000's $000's $000's World $000's 1H 2005 $000's $000'sExternalrevenue Oil 10,022 3,250 - - - - 13,272 Gas - 10,131 - 25 - - 10,156 Other 150 178 - - - - 328 10,172 13,559 - 25 - - 23,756 Inter segmentrevenue Oil - 10,977 - - - (10,977) - Gas - - - - - - - Other 12,710 505 - - - (13,215) - 12,710 11,482 - - - (24,192) - Total Oil 10,022 14,227 - - - (10,977) 13,272revenue Gas - 10,131 - 25 - - 10,156 Other 12,860 683 - - - (13,215) 328 22,882 25,041 - 25 - (24,192) 23,756 Operatingprofit/(loss) 352 14,176 (52) (242) (146) - 14,088Financerevenue 814Finance (411)costProfit beforetax 14,491 Segment 79,339 82,403 5,678 9,218 3,696 (43,557) 136,777assetsSegmentliabilities (17,152) (9,230) (6,649) (12,676) (8,425) 43,557 (10,575)Non cashexpenditures(other thandepreciation) 89 - - - 48 - 137Capitalexpenditure 1,006 14,599 131 145 304 - 16,185Depreciation,depletion &amortisation 34 2,929 1 - - - 2,964 1H 2004 UK Ukraine Georgia USA Rest Elims Total of $000's $000's $000's $000's World $000's 1H 2004 $000's $000'sExternalrevenue Oil 7,467 567 - - - - 8,034 Gas - 10,305 - 19 - - 10,324 Other 1,415 - - - - - 1,415 8,882 10,872 - 19 - - 19,773 Inter segmentrevenue Oil - 5,737 - - - (5,737) - Gas - - - - - - - Other 11,549 295 - - - (11,844) - 11,549 6,032 - - - (17,581) - Total Oil 7,467 6,304 - - - (5,737) 8,034revenue Gas - 10,305 - 19 - - 10,324 Other 12,964 295 - - - (11,844) 1,415 20,431 16,904 - 19 - (17,581) 19,773 Operatingprofit/(loss) 3,252 5,234 (17) (42) (143) - 8,284Financerevenue 117Finance (32)costProfit beforetax 8,369 Segment 55,561 59,343 5,360 12,815 2,699 (36,600) 99,178assetsSegmentliabilities (10,822) (7,080) (6,313) (15,689) (7,027) 36,600 (10,331)Non cashexpenditures(other thandepreciation) 7 - - - 9 - 16Capitalexpenditure 189 7,447 160 225 598 - 8,619Depreciation,depletion &amortisation 26 2,795 6 - - - 2,827 5. TaxationNo liability to UK taxation has arisen during the six months ended 30 June 2005(2004 : $nil) due to the availability of tax losses brought forward. Taxescharged on production of hydrocarbons are included in the cost of sales.Overseas tax has arisen in the Group subsidiary, Poltava Petroleum Company, inUkraine. 6. Equity dividends--------------------------------- --------- --------- 30 June 30 June 2005 2004 $000 $000--------------------------------- --------- ---------Equity dividends 825 664--------------------------------- --------- --------- 7. Earnings per shareThe calculation of earnings per ordinary share for the six months ended 30 June2005 is based on the weighted average number of shares in issue during theperiod of 144,827,846 (30 June 2004:137,527,479; 31 December 2004: 140,054,580)and the profit for the relevant period. The diluted earnings per share for the six months ended 30 June 2005 is based on157,136,020 (30 June 2004: 142,440,824; 31 December 2004: 149,776,155) ordinaryshares calculated as follows:---------------------------- --------- --------- --------- 30 June 30 June 31 Dec 2005 2004 2004---------------------------- --------- --------- ---------Basic weighted average number ofshares 144,827,846 137,527,479 140,054,580Dilutive potential ordinary shares:Convertible loan notes 6,684,326 - 4,086,134Share options 5,623,848 4,913,345 5,635,441---------------------------- --------- --------- --------- 157,136,020 142,440,824 149,776,155---------------------------- --------- --------- --------- 8. Reconciliation of operating profit to net cash inflow from operatingactivities----------------------------- --------- --------- -------- Six months to Six months to Year to 30 June 30 June 31 Dec 2005 2004 2004 $'000 $'000 $'000----------------------------- --------- --------- --------Operating profit 14,088 8,284 23,381Depreciation, depletion andamortisation 2,964 2,827 5,696Disposal of assets (7) (22) (57)Exchange differences 22 12 3Changes in working capital 3,108 (1,433) 787----------------------------- --------- --------- --------Cash generated from operations 20,175 9,668 29,810----------------------------- --------- --------- -------- 9. Analysis of net funds----------------------------- -------- --------- -------- At Net movement At 1 January $'000 30 June 2005 2005 $'000 $'000----------------------------- -------- --------- --------Cash 1,278 3,050 4,328Short term deposits 37,856 (5,544) 32,312----------------------------- -------- --------- --------Cash at bank and in hand 39,134 (2,494) 36,640Loans (17,304) 17,304 ------------------------------ -------- --------- -------- 21,830 14,810 36,640----------------------------- -------- --------- -------- 10. The interim statements have been prepared on the basis of the accountingpolicies set out in First Time Adoption and Restatement issued on 27 September2005, a copy is available on the Company's corporate website (www.jkx.co.uk) orfrom the Company's registered office. 11. Movements in the total shareholders equity during the period were asfollows:-------------- ------- ------- -------- --------- -------- ------- Share Merger Other Share Retained Total Capital Reserve Reserves Premium Earnings $000's $000's $000's $000's $000's $000's-------------- ------- ------- -------- --------- -------- -------Group:At 1 January 2005 21,582 30,680 1,961 22,127 24,241 100,591Issue of new 1,710 - - 14,015 - 15,725sharesProfitattributableto equity - - - - 10,897 10,897shareholders'Dividend - - - - (825) (825)Other movements - - (890) 704 - (186)-------------- ------- ------- -------- --------- -------- -------At 30 June 2005 23,292 30,680 1,071 36,846 34,313 126,202-------------- ------- ------- -------- --------- -------- ------- 12. The above financial information does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. The financial accountsinformation for the preceding year is based on the statutory accounts for thefinancial year ended 31 December 2004. Those, upon which the auditors issued anunqualified opinion, have been delivered to the Registrar of Companies. Thesestatements have been revised under IFRS and the IFRS Restatement document hasbeen issued to the London Stock Exchange on 27 September 2005. The auditors havecarried out a review of the first half 2005 information and their report isincluded overleaf. 13. Restatement of 1 January 2005 Group balance sheet following adoption of IAS32 and IAS 39. IFRS IAS 32 IFRS 31/12/04 $000's 1/1/05 $000's $000'sAssetsNon-current assetsIntangible assets 14,927 - 14,927Property plant and equipment 65,353 - 65,353Other non-current assets 3,090 - 3,090 83,370 - 83,370Current assetsInventories 194 - 194Trade and other receivables 11,923 - 11,923Cash and cash equivalents 39,134 - 39,134 51,251 - 51,251LiabilitiesCurrent liabilitiesConvertible loan note (17,662) 358 (17,304)Current tax liabilities (1,696) - (1,696)Trade and other payables (12,944) - (12,944) (32,302) 358 (31,944)Net current assets/(liabilities) 18,949 358 19,307Non-current liabilitiesProvisions (475) - (475)Deferred tax liability (1,518) - (1,518) (1,993) - (1,993)Minority interests - - -Net assets 100,326 358 100,684EquityShare capital 21,582 - 21,582Share premium 22,127 - 22,127Merger reserve 30,680 - 30,680Other reserves - Capital redemption reserve 587 - 587Equity - share options 171 - 171Equity - foreign currency translation 499 - 499Equity - convertible loan notes - 704 704Retained earnings 24,587 (346) 24,241Total shareholders' equity 100,233 358 100,591Minority interests - equity 93 - 93Total equity 100,326 358 100,684 14. Copies of this interim report and the IFRS Restatement are being sent toregistered shareholders and further copies are available from the Company'sregistered office. Registered office6 Cavendish SquareLondon W1G 0PD Independent Review Report To JKX Oil & Gas plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2005 which comprises the Group Income Statement,Group Balance Sheet, Group Cash Flow Statement, Group Statement of RecognisedIncome and Expenses and the related notes 1 to 14. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 "Review of interim financial information" issued by theAuditing Practices Board. To the fullest extent permitted by the law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. 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 ListingRules of the Financial Services Authority. As disclosed in the notes, the nextannual financial statements of the Group will be prepared in accordance withthose IFRSs adopted for use by the European Union. The accounting policies areconsistent with those that the directors intend to use in the next annualfinancial statements. There is, however, a possibility that the directors maydetermine that some changes to these policies are necessary when preparing thefull annual financial statements for the first time in accordance with thoseIFRSs adopted for use by the European Union. Review work performed We 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 principally 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 tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly we do not express an audit opinion on the financialinformation. 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. Ernst & Young LLPLondon 27 September 2005 Glossary Mcf Thousand cubic feetBcf Billion cubic feetMcfd Thousand cubic feet per dayCfpd Cubic feet per dayMMcfd Million cubic feet per dayMbbl Thousands of barrelsMMbbl Millions of barrelsbopd Barrels of oil per dayboe Barrels of oil equivalentMboe Thousands of barrels of oil equivalentMMboe Millions of barrels of oil equivalentboepd Barrels of oil equivalent per daysq.km Square Kilometre$ United States DollarsLIBOR London InterBank Offered RateUS United StatesHryvna The lawful currency of Ukraine Conversion factors6,000 standard cubic feet of gas = 1 boe We welcome visits to our websitewww.jkx.co.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
JKX.L