30th Sep 2011 07:00
Embargoed for release: 0700 on 30 September 2011
Northern Petroleum Plc
("Northern", "the Group" or "the Company")
Condensed Interim Results for the Six Months Ended 30 June 2011
Northern Petroleum Plc, an independent oil and gas exploration, development and production company announces its condensed interim results for the six months ended 30 June 2011.
Richard Latham, Chairman, commenting on the results, said:
"The operating profit for the half year was €8.5million. This isbefore interest, tax and depreciation, an increase of 165% arising from higherproduction volumes and continuing good gas prices. We are on-track to achievethe annual average production rate of 1,550 -1,650 boepd forecast announced on7th June 2011."We have made significant progress since the beginning of the yearin advancing our high impact assets outside of our production base in Holland.We have been involved in discovering a new oil basin offshore Guyane; theMarkwells Wood discovery is moving to testing; in Italy we are preparing forthe drilling of the La Tosca prospect; and in the Southern Adriatic sea ourfirst seismic surveys are due to commence before the year end.
"In summary, after putting a period of delays behind us, the Company has embarked upon a period of greater activity to realise more of its considerable and forecasted upside potential."
Financial highlights: Six months ended Six months ended 30 June 2011 30 June 2010 EUR '000 EUR '000 (Unaudited) (Unaudited) Revenue 13,046 7,013Gross profit 2,789 4,735EBITDA (i) 8,519 3,208Adjusted EBITDA (ii) 8,464 3,524Profit for the period 41 885
Basic earnings per share on profit for the period 0.04 cents 1.11 centsDiluted earnings per share on profit for the period 0.04 cents
1.06 cents
Cash and cash equivalents 23,930
25,815Other working capital 4,100 434Net assets 85,801 87,287
Total distributable reserves 54,945
55,846 Capital expenditure 4,475 6,793 Production (thousand boe) 331 214 Average revenue, in currency of receipt, perattributable boe: EUR 39.36 EUR 29.57Gas $73.97 $101.17Oil
Net Commercial Oil & Gas Reserve Quantities
- Proven and Probable reserves (million boe) 88.69
102.67
(i) Earnings before interest (and other finance income and costs), tax, depreciation, depletion, amortisation and write offs of oil and gas assets.
(ii) In addition to the above, is calculated before share based payments and pre-licence costs.
Other financial highlights:
- Dutch gas prices received have averaged €0.253 per normal cubic metre during the period, approximately $9.09 per mscf, up 33% from the comparative period average of €0.19 per normal cubic metre (approximately $6.82 per mscf); and
- The Group remains debt free and had cash on hand of approximately €23.9 million at period end, an increase of €2.5 million since year end.
Production:
- Production volumes for H1 were 331,200 boe (approximately 1,830 boepd), up approximately 55% from the comparative period total of 214,000 boe;
- The Group is on track to meet its June 2011 production forecast of 1,550 to 1,650 boepd; and
- Northern is planning on providing guidance on 2012 production later in 2011 following ongoing re-mapping and forthcoming testing operations.
Outlook by Region:Guyane:
- Zaedyus-1 well continues drilling to explore deeper units in the fan system after discovery of new oil basin offshore Guyane.
Italy:
- One 2D and two 3D seismic surveys planned before the end of 2011 on Southern Adriatic permits, allowing for the progression of two large potential structures plus Rovesti and Giove discoveries; and
- Preparations underway for the drilling of the 45 Bcf La Tosca prospect in Q1 2012.
Netherlands:
- Extended production testing of the Ottoland oil field side track to shortly commence; and
- Work on oil shale potential in south west Netherlands continues - potential has been analysed as very material by Nu Tech Energy Alliance.
United Kingdom:
- Oil discovery at Markwells Wood prepared for imminent production testing.
In accordance with the AIM Rules - Guidance for Mining and Oil &Gas Companies, the information contained in this announcement has beenreviewed and signed off by the Exploration and Technical Director of Northern,Mr. Graham Heard CGeol. FGS, who has over 35 years experience as a petroleumgeologist. - Ends -
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7469 2900Chris Foss, Director of Finance, Legal &Corporate Affairs
Graham Heard, Exploration & Technical Director
Cenkos Securities (NOMAD and Joint Broker)Jon Fitzpatrick Tel: +44 (0) 20 7397 8900 Ken Fleming / Beth McKiernan Tel: +44 (0) 131 220 6939 Jefferies International (Joint Broker) Tel: +44(0) 20 7029 8000
Chris Snoxall / Marco Baruzzi
FTI Consulting Tel: +44 (0) 20 7831 3113
Billy Clegg / Edward Westropp
Bishopsgate Communications Tel: +44 (0) 20 7562 3350Nick Rome / Shabnam BashirNotes to Editors:
Comprehensive information on Northern and its oil and gas operations, including all press releases, annual reports and interim reports are available from Northern's website at www.northpet.com.
.
CHAIRMAN'S STATEMENT
The operating profit of for the half year was €8.5million. This isbefore interest, tax and depreciation, an increase of 165% arising from higherproduction volumes and continuing good gas prices. We are on-track to achievethe annual average production rate of 1,550 -1,650 boepd forecast announced on7th June 2011.
The Company is cash flow positive, continues to be debt free and has cash in hand of €23.9 million at the end of the half year, and has increased to €26.5 million at 28th September 2011.
A programme of field operations has started in all the Company'sareas of activities. In some cases, extended administrative and operationaldelays had to be overcome. Now is the point in our strategy to operationallymove on from the established and expanding production base in The Netherlandsto the greater value generating opportunities from a wider asset base.
The first is the on-going drilling of the newly discovered oil basin offshore Guyane. Although already a success, together with our joint venture partners Tullow, Shell and Total the drilling of the Zaedyus well continues to explore deeper units in the fan systems.
It is important to emphasise the presence of many other mapped fans within the basin and the licence. Our net 1.25% interest may seem small but is corporately significant considering the very considerable potential target sizes. Both exploration and eventual development costs are well within our means as a growing company of our size.
The 2010 oil discovery at Markwells Wood has been prepared for oil production testing and pumping will shortly commence.
In Italy, preparations for the drilling of the La Tosca prospect inthe onshore Po Valley Longastrino licence are underway. At its closest theprospect is less than 2 km from the large Alfonsine gas field and well definedby a recent 3D seismic survey. Orca Exploration is our farm-in partner in thewell and will be paying all costs to the budgeted level for our 25% retainedinterest in this 45 bcf prospect.Core to our Italian ventures is the high potential of the provenDurres oil and gas basin in the Southern Adriatic Sea. Our first seismicsurveys in the area are scheduled before the end of 2011. The surveys, priorto drilling, will better define not only the Rovesti and Giove oil discoveries(53 million barrels of oil probable reserves independently attributed), butalso the two larger potential structures mapped from much older surveys. Ourgeologists and geophysicists have projected and mapped the presence of fansystems within the basin which the surveys may show to be very material sizeddrilling targets. Eight prospective petroleum play types have also beenprojected.In The Netherlands, we are soon to commence the extended productiontesting of the 2007 side track of the existing well in the Ottoland oil field.This data is not only important for the development into production ofOttoland but also the other oil production and exploration activities insouthwest Netherlands such as Papekop and Vlist. The other ongoing activity isthe work on understanding our production data to date from the Brakel,Geesbrug, Grolloo and Wijk en Aalburg gas fields to make any new adjustmentsto our current production and development activities and making future firmproduction forecasts. At Wijk en Aalburg, having encountered higher thanexpected levels of water production, a preliminary remapping exercise has beenundertaken. The reprocessing and reinterpretation of the 3D seismic is stillawaited but the Company feels it to be prudent to make an adjustment to theWijk en Aalburg reserves of 2.51 Bscf that is 1.5% of the 28.5 million ofproven and probable reserves in The Netherlands, and just 0.5% of period endGroup proven and probable reserves.
We celebrated in August 2011, 10 years of accident-free operations at the Waalwijk gas field. By any standards this is an outstanding achievement.
Our work on the oil shale potential south western part of TheNetherlands continues assisted by NuTech Energy Alliance. In this area thepotential has been analysed as being very material and occurring in a richerand thicker formation than in Canada and even the U.S.A. We intend to committo a study to confirm and quantify the potential and to develop anenvironmentally satisfactory method of extraction, meeting our own very highstandards. It is anticipated that we will seek a partner already activelyutilising the new technologies demanded. This is a very exciting project.
During the period, the board has expanded and we have welcomed two new directors, non-executive Rex Gaisford, C.B.E and executive Maurice Le Gai Eaton.
In summary, after putting a period of delays behind us, the Company has embarked upon a period of greater activity to realise more of its considerable and forecasted upside potential.
R H R LathamChairman29 September 2011
Consolidated Income Statement For the six months ended 30 June 2011
6 months 6 months Year ended ended ended 30 June 30 June 31 December 2011 2010 2010 (Unaudited) (Unaudited) (Audited) Notes EUR '000 EUR '000 EUR '000Revenue 13,046 7,013 14,968
Production costs (2,749) (1,924) (4,884)Depletion and amortisation - property, plant & equipment
(7,508) (354) (3,387)Cost of sales (10,257) (2,278) (8,271) Gross profit 2,789 4,735 6,697 Pre-licence costs (87) (165) (593)
Administrative expenses - other (1,833) (1,565) (4,246)Administrative expenses - share incentives 142 (151) (359)Administrative expenses - total
(1,691) (1,716) (4,605) Profit from operations 1,011 2,854 1,499 Finance charges 2 (339) (599) (1,524)Finance income 22 49 17
Share of operating loss of joint ventures & associates
(5) (18) (8)Profit / (loss) before tax 689 2,286 (16)Tax expense (648) (1,401) (1,139)
Profit / (loss) for the period 41 885 (1,155) Basic earnings per share on profit / (loss) for the period 3
0.04 cents 1.1 cents (1.3) cents
Diluted earnings per share on profit / (loss) for the period 3
0.04 cents 1.1 cents (1.3) cents
All results are from continuing activities and are attributable to equity shareholders of the parent.
Notes 1 to 7 form an integral part of this report.
Consolidated Statement of Comprehensive Income For the six months ended 30 June 2011 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2011 2010 2010 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000
Profit / (loss) for the period 41 885 (1,155) Exchange differences on translation of foreign operations (470) 539 164 Other comprehensive (loss) / income for the period, net of incometax (470) 539 164 Total comprehensive (loss) / income for the period
(429) 1,424 (991)
Consolidated Statement of Financial Position at 30 June 2011
At 30 June At 30 June At 31 December 2011 2010 2010 (Unaudited) (Unaudited) (Audited) Notes EUR '000 EUR '000 EUR '000AssetsNon-current assetsIntangible assets 5 32,746 29,989 31,810Property, plant and 4 52,520 50,623 58,123equipmentInvestments in joint 1,699 263 579venturesInvestments in associates 15 15 15Loans and other receivables 118 388 129 87,098 81,278 90,656Current assetsInventories 111 90 124Trade and other receivables 8,548 8,319 8,668Cash and cash equivalents 23,930 25,815 21,430 32,589 34,224 30,222Total assets 119,687 115,502 120,878 LiabilitiesCurrent liabilitiesTrade and other payables 4,559 7,975 6,326Corporation tax liability 118 - - 4,677 7,975 6,326Non-current liabilitiesTrade and other payables 27 32 30Provisions 16,587 9,662 16,286Deferred tax liabilities 12,595 10,546 12,865 29,209 20,240 29,181Total liabilities 33,886 28,215 35,507 Net assets 85,801 87,287 85,371 Capital and reservesShare capital 5,830 5,791 5,768Share premium 12,153 11,393 11,501Merger reserve 10,289 10,289 10,289Special reserves - 28,428 28,415 28,428distributableSpecial reserves - 155 168 155undistributableShare incentive plan 3,244 3,770 3,964reserveForeign currency (815) 30 (345)translation reserveRetained earnings 26,517 27,431 25,611Total equity 85,801 87,287 85,371
All amounts are attributable to equity shareholders of the parent.
Notes 1 to 7 form an integral part of this report.
Consolidated Cash Flow Statement for the six months ended 30 June 2011
6 months ended 6 months ended Year ended 30 June 30 June 31 December 2011 2010 2010 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000Cash flows from operating activitiesProfit / (loss) before tax 689 2,286 (16)Depletion and amortisation 7,508 354 3,387Depreciation - non oil and gas property, plant & equipment 112 104 205Loss on disposal of property, plant and equipment 4 - -Foreign exchange loss / (gain)
32 (42) 348Finance income (22) (7) (17)Finance charges 307 599 1,176Share based payments 145 386 799
Expenses settled by issue of shares 29 - 65Share of operating loss of joint ventures & associates 5 18 8Net cash inflow before movements in working capital 8,809 3,698 5,955 Decrease / (increase) in inventories 11 11 (26)Decrease in trade and other receivables 56 6,079 8,247(Decrease) / increase in trade and other payables (2,524) (710) (2,539)Net cash (outflow) / inflow from changes in working capital (2,457) 5,380 5,682 Taxes paid - (2,895) (2,857)
Net cash inflow from operating activities 6,352 6,183 8,780 Cash flows from investing activitiesInterest received 22 7 17Interest paid (4) (147) (6)Purchase of property, plant and equipment (2,185) (5,132) (9,526)Expenditure on exploration and evaluation assets (593) (1,661) (2,835)Purchase of other intangible assets (572) - (999)Investment in joint venture company (1,125) - (328)Loan to joint venture company - (212) -Net cash (outflow) from investing activities (4,457) (7,145) (13,677) Cash flows from financing activitiesIssue of ordinary shares - 11,552 11,464Proceeds from the exercise of warrants 685 161 270Net cash inflow from financing activities 685 11,713 11,734 Net increase in cash and cash equivalents 2,580 10,751 6,837Cash and cash equivalents at start of period 21,430 15,002 15,002Effect of exchange rate movements (80) 62 (409)Cash and cash equivalents at end of period 23,930 25,815 21,430Consolidated Statement of Changes in Equity for the six months ended 30 June 2011 Share Foreign Share incentive currency Share premium Merger Special plan translation Retained capital Account reserve reserves reserve
reserve earnings Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
EUR'000 EUR'000 EUR'000
At 1 January 2010(audited) 4,983 194 10,289 28,583 3,865 (509) 26,359 73,764Total comprehensiveincome for theperiod - - - - - 539 885 1,424Issue of sharesduring the period -warrants and staffbonus 65 390 - - (294) - - 161Issue of sharesduring the period -placing 743 11,482 - - - - - 12,225Costs and feesassociated withplacing - (673) - - - - - (673)Equity sharewarrants exercised - - - - (187) - 187 -Share based payments - - - - 386 - - 386At 30 June 2010(unaudited) 5,791 11,393 10,289 28,583 3,770 30 27,431 87,287Total comprehensiveincome for theperiod - - - - - (375) (2,040) (2,415)Issue of sharesduring the period -placing (28) (45) - - - - - (73)Costs and feesassociated withplacing - (15) (15)Issue of sharesduring the period -warrants and staffbonus 5 168 - - - - - 173Equity sharewarrants exercised - - - - (220) - 220 -Share based payments - - - - 414 - - 414 At 31 December 2010(audited) 5,768 11,501 10,289 28,583 3,964 (345) 25,611 85,371 Total comprehensiveincome for theperiod - - - - - (470) 41 (429) Issue of sharesduring the period -warrants and staffbonus 62 652 - - - - - 714Equity sharewarrants exercised - - - - (865) - 865 -Share based payments - - - - 145 - - 145At 30 June 2011(unaudited) 5,830 12,153 10,289 28,583 3,244 (815) 26,517 85,801
All amounts are attributable to equity shareholders of the parent.
Notes to the interim Financial Information for the six months ended 30 June 2011
1. BASIS OF PREPARATION
This unaudited condensed consolidated interim financial informationhas been prepared using the recognition and measurement principles ofInternational Accounting Standards, International Financial ReportingStandards and Interpretations adopted for use in the European Union(collectively EU IFRSs). The principal accounting policies used in preparingthe interim results are unchanged from those disclosed in the Group's AnnualReport for the year ended 31 December 2010. These statutory accounts areavailable on the Company's website (www.northpet.com) or by application to theCompany's registered office.The financial information for the six months ended 30 June 2011 and30 June 2010 is unaudited and does not constitute statutory financialstatements of Northern Petroleum Plc and its subsidiaries. The comparativefinancial information for the full year ended 31 December 2010 has, however,been derived from the statutory financial statements for that period. A copyof those statutory financial statements has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified, did notinclude references to any matters to which the auditors drew attention by wayof emphasis without qualifying their report and did not contain a statementunder section 498(2)-(3) of the Companies Act 2006.
Changes to Accounting policies
a) In the current period, the following new and revised standards and interpretations are effective and have been adopted but have had no effect on the amounts reported in these financial statements.
IAS 24 - Related Party Disclosures
The changes introduced by IAS 24 made an amendment to the definition of a related party.
b) At the date of approval of this interim report, the following Standards and Interpretations which have not been applied in this interim report were in issue but not yet effective and in some cases not yet adopted by the EU:
IFRS 3 - Business Combinations
In May 2010 further amendments were made to IFRS 3 as follows:
- to limit the accounting policy choice to measure Non-ControllingInterests (NCI) upon initial recognition either at fair value or at the NCI'sproportionate share of the acquiree's identifiable net assets to instrumentsthat give rise to a present ownership interest and entitle the holder to ashare of net assets in the event of liquidation; and- to extend the scope of the guidance on how to apportion themarket-based measure of an acquirer's share-based payment awards that areissued in exchange for acquiree awards between consideration transferred andpost-combination cost when an acquirer is obliged to replace the acquiree'sexisting awards. IFRS 3 is amended so that the guidance for such awards alsoapplies to voluntarily replaced acquiree awards, and introduces attributionguidance for acquiree awards that are not replaced.
IFRS 7 - Financial Instruments: Disclosures
This standard was amended to:
- include a statement detailing that the interaction between qualitative and quantitative disclosures, better enables users to evaluate an entity's exposure to risks arising from financial statements; and
- require additional disclosures about the transfer of financial assets to enable users to understand the possible effects of any risks that may remain with the transferor.
IAS 1 - Presentation of Financial Statements
In May 2010 an amendment was made to IAS 1 "Presentation ofFinancial Statements" which stated that for each component of equity areconciliation from opening to closing balances is required to be presented inthe statement of changes in equity. That reconciliation is required to showseparately changes arising from items recognised in profit or loss, in othercomprehensive income, and from transactions with owners acting in theircapacity as owners.
IFRS 9 - Financial Instruments
This standard will replace IAS 39 - Financial Instruments: Recognition and Measurement.
The Directors do not expect that the adoption of these Standards orInterpretations in future periods will have a material impact on the financialstatements of the Group.2. FINANCE CHARGES 6 months ended 6 months ended Year ended 30 June 30 June 31 December 2011 2010 2010 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000Foreign exchange losses 32 - 348Other interest payable - 503 673Bank interest payable 4 - 6
Unwinding of discount on decommissioning provisions
303 96 497 339 599 1,524 3. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing profit or loss for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividingprofit for the period attributable to ordinary equity holders of the parent bythe weighted average number of ordinary shares outstanding during the year,plus the weighted average number of shares that would be issued on theconversion of dilutive potential ordinary shares into ordinary shares. Thecalculation of the dilutive potential ordinary shares related to employee anddirector share option plans includes only those warrants with exercise pricesbelow the average share trading price for each period. 6 months ended 6 months ended Year ended 30 June 30 June 31 December 2011 2010 2010 EUR '000 EUR '000 EUR '000 (Unaudited) (Unaudited) (Audited)
Net profit / (loss) attributable to equity holders used in basic calculation
41 885 (1,155)
Net profit / (loss) attributable to equity holders used in dilutive calculation
41 885 (1,155) Basic weighted average number of shares
92,570 80,059 86,094
Dilutive potential of ordinary shares:Warrants exercisable under Company schemes 2,781 3,415 -Diluted weighted average number of shares 95,351 83,474 86,094The calculation of the diluted EPS assumes all criteria giving riseto the dilution of the EPS are achieved and all outstanding share options thatare in money at period end are exercised.
4. PROPERTY, PLANT AND EQUIPMENT
30 June 30 June 31 December 2011 2010 2010 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000Oil and gas assets 52,244 49,801 57,777
Computer and office equipment and leasehold improvements 276 822 346
52,520 50,623 58,123
Following the decision to revise the Wijk en Aalburg field reservesdown by a further 2.51 Bscf, the carrying value of oil and gas assets aboveincludes additional non cash depletion and impairment charges of approximately€4.9 million.5. INTANGIBLE ASSETS 30 June 30 June 31 December 2011 2010 2010 (Unaudited) (Unaudited) (Audited) EUR'000 EUR '000 EUR '000
Exploration and evaluation assets 31,175 29,989 30,811IT systems 1,571 - 999 32,746 29,989 31,810
6. APPROVAL BY DIRECTORS
The interim results for the six months to 30 June 2011 were approved by the Directors on 29 September 2011.
7. AVAILABILITY OF INTERIM REPORT
The interim report will be made available in electronic format on the Company's website, www.northpet.com, and will be posted to registered shareholders. Further copies will be available on request by application to the Company Secretary at the Company's registered office being Martin House, 5 Martin Lane, London, EC4R 0DP.
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