27th Jun 2008 07:00
TomCo Energy Plc
('TomCo' or 'the Company')
Results for the 6 months ended 31 March 2008
Highlights
Acquisition of 50% interest in the Heletz-Kokhav-Bur License and 25% in the Iris License, two petroleum licenses onshore Israel
Raised £1.2 million in new equity and €1.0 million in convertible debt
Increase in net assets in period from £6.0million to £6.8 million
Stephen Komlósy, Chairman of TomCo Energy Plc, said:
"During this period we have moved forward with our stated plans to build an effective oil production platform with our acquisition of the interests in the Heletz oil fields in Israel. Production has started well and we look forward to an exciting future. With respect to our oil shale assets in the Green River Basin, we are encouraged by the comments made by President Bush on 18 June 2008 in his statement on energy, which specifically encouraged the development of oil shale resources in the area."
Enquiries:
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Chairman's Statement
I am pleased to announce the results for TomCo Energy Plc ("TomCo" or "the Company") for the six months ended 31 March 2008. These financial results reflect the fundamental change by the Company into an active oil production and exploration company and the build up to our first major acquisition of interests in the Heletz-Kokhav-Brur and Iris License in Israel ("Heletz Fields").
The £56,000 income shown in the accounts arises from our wells in the USA, averaging a net 12 barrels per day in the period, prior to the Heletz Field acquisition. The loss before tax of £668,000 includes provision of £200,000 for the amortisation of the costs of our existing wells in the USA and £84,000 in regard to oil lease impairments, again for our wells in the USA.
Acquisition of a 50% interest in the Heletz-Kokhav-Brur License and a 25% interest in the Iris License, Israel
On 2nd April 2008 TomCo announced that, with its wholly owned Israeli subsidiary, Luton-Kennedy Ltd ("LKL"), it had completed the acquisition ("Acquisition") of interests in two petroleum licenses, onshore Israel from Avenue Group Inc (AVNU.OB), a New York based USA listed Oil & Gas Company, ("Avenue"). The interests acquired are a 50% interest in the Heletz-Kokhav-Brur License and a 25% interest in the Iris License (the "Licenses"), which include the original Heletz-Kokhav-Brur oilfield opened in 1955 by BP ("Heletz"). The concessions, covering over 68,000 gross acres, were recently awarded to Avenue by the Israel Petroleum Commission and are extendable 3-year production and development licenses which can be extended to 30-year production leases once production from the fields has increased from the recent 60 to an estimated 300 barrels of oil per day ("bpd").
The Heletz Fields, located 55km south of Tel Aviv and 12km east of the Mediterranean coast, are Israel's only onshore producing oil fields. The fields have produced in excess of 17 million barrels of oil to date from Cretaceous sands, with peak production of 3,000 to 4,200 bpd between 1959 and 1967. The original oil-in-place ("OOIP") for the fields is estimated to be 50.7 million barrels; the Israeli Government estimates that there are 2 million barrels of primary recoverable oil remaining, and studies suggest over 5 million bbls of secondary recovery potential may exist. A number of undrilled, deeper exploration prospects on the licenses have estimated potential in excess of 100 million barrels.
Avenue and the Company with LKL, are commissioning an independent determination of remaining reserves for the Heletz Fields, as one of the first steps in an active technical programme designed to identify well re-completion and infill well drilling targets, and to examine secondary recovery options. Production from the fields had declined to around 60bpd by 2007, although TomCo expects that the implementation of modern production and recovery methods and selected infill drilling will significantly increase production over the next two years, resulting in the granting of a 30-year production lease.
The completion terms of the Acquisition:
At completion TomCo paid a US$1 million fee to Avenue Group Inc ("Avenue") in respect to the transfer of the 50% and 25% interests in the Heletz oil fields from Avenue to LKL. Avenue and TomCo will now seek approval from the Israeli authorities of this transfer to LKL with a formula to provide TomCo with the effective benefit of the transfer in the event that no such approval is forthcoming.
TomCo has issued to Avenue 12,618,615 ordinary shares of 0.5 pence each in the Company ("TomCo Shares") valued at approximately US$500,000 at 2p per share with a one year sale restriction.
TomCo has paid US$107,000 to Avenue in respect to 50% of costs incurred to date in relation to the Licenses.
Over the three year Phase 1 period of the Licenses, TomCo and LKL will pay up to a maximum of US$4.5 million of oil field development costs.
TomCo will pay a further US$1.5 million fee to Avenue at the time at which a 30 years production lease is issued, which is expected to be at the time production at the fields reaches 300 bpd..
TomCo will pay a further US$5 million fee to Avenue in the event that gross recoverable reserves on the Licenses are declared by an independent, qualified assessor to be more than 10 million barrels.
To finance the Acquisition, TomCo placed 80,799,999 shares at 1.5p per share raising a total of £1.2m before expenses; 67,066,666 shares were admitted to AIM on 27 March 2008 and the remaining 13,333,333 shares on 3 April 2008. Each two shares placed has an attached warrant to subscribe for one new ordinary TomCo share at a strike price of 2.5p per share with a 13 months term and a further Warrant for one share at a strike price of 5p exercisable within 13 months of the date of exercise of the first warrant.
At completion of the Acquisition the Company issued a 24 month 8% Convertible Loan Note to Trafalgar Capital Specialized Investment Fund (Trafalgar) for €1.0 million with a minimum convertibility at 2p per share and repayments commencing in October at £50,000 per month. The Company has also issued to Trafalgar 7,000,000 warrants with a three year term and an exercise price of 1.63p. Additionally, TomCo paid a fee of €25,000 to Trafalgar which was satisfied by the issue of 1,179,562 ordinary shares of the Company at a price of 1.66p per share.
Following the issue of all these shares the Company's issued share capital now consists of 538,049,151 ordinary shares with voting rights.
Investments
During the period under review the Company maintained its interests in production wells in the USA comprising two separate wells, "Flusche" and "Rock Crossing", and a 50% holding in the Mark III leases, "Saratoga and Abel" in Lubbock County, Texas, which have 8 producing wells and preliminary estimated Reserves of 28,960 barrels. In March 2008 the Flusche well ceased to produce and was plugged, but in Scurry County, Texas, Boone #2, a new well, started drilling and has encouraging oil shows.
Strategy
The Company's strategy remains the same going forward, firstly, to hold the oil shale assets in reserve until such time as their exploitation becomes commercially and economically practical. In this regard, we believe that meaningful production from oil shale in the USA will start within a 6 year time frame (as a result of the huge strategic and commercial pressures, together with present supply anxiety and exacerbated by the current increase in oil prices); indeed there has been a flurry of Oil Shale deals done this year in the USA, including an acquisition by IDT Energy Corporation and apparent oil shale land purchases by Shell Oil.
Secondly, the Company is utilizing the expertise of Howard Crosby, our CEO, and John Ryan, our Commercial Director, in the search for further investment in oil wells and proven undeveloped acreage located in the USA and in special situations like the Heletz Licenses in Israel. This strategy is being implemented with caution and expert examination of suggested acquisitions with the intention to create a productive and potential investment portfolio of conventional American and Israeli based mostly shallow producing oil wells and proven undeveloped drilling locations and create a meaningful oil reserve. Meanwhile the Board in general continues to actively seek further investments, acquisitions and oil business associations.
Future Investment
Your Board is now also reviewing certain other investments where a clear advantage can be shown to exist to assist in improving the value of our shares.
Web Site
Shareholders can find detailed information on the Company's web site; www.tomcoenergy.com which, in accordance with AIM Rule 26, contains a summary of our current strategy, detailed information about USA oil shale and oil shale related links to USA Government sites, the Company's share price, documents, announcements, press releases and articles.
S A Komlósy
Chairman
27 June 2008
Consolidated income statement
For the six months ended 31 March 2008
|
Unaudited |
Unaudited |
Audited |
||||
|
Six months ended 31 March 2008 |
Six months ended 31 March 2007 |
Year ended 30 September 2007 |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Revenue |
56 |
- |
68 |
|||
|
Cost of sales |
(31) |
- |
(36) |
|||
|
Gross profit |
25 |
- |
32 |
|||
|
Administrative expenses |
(693) |
(204) |
(1,274) |
|||
|
Operating loss |
(668) |
(204) |
(1,242) |
|||
|
Financial income |
- |
5 |
30 |
|||
|
Loss before taxation |
(668) |
(199) |
(1,212) |
|||
|
Taxation |
- |
- |
- |
|||
|
Loss for the year attributable to equity shareholders |
(668) |
(199) |
(1,212) |
|||
|
Unaudited |
Unaudited |
Audited |
||||
|
Earnings per share |
Six months ended 31 March 2008 |
Six months ended 31 March 2007 |
Year ended 30 September 2007 |
|||
|
Pence per share |
Pence per share |
Pence per share |
||||
|
Loss per share |
(0.15) |
(0.07) |
(0.34) |
|||
|
Fully diluted loss per share |
(0.15) |
(0.07) |
(0.34) |
|||
All amounts derive wholly from continuing activities. The financial information above may not be representative of future results
Consolidated Balance sheet
As at 31 March 2008
|
Unaudited 31 March 2008 |
Unaudited 31 March 2007 |
Audited 30 September 2007 |
||
|
£'000 |
£'000 |
£'000 |
||
|
ASSETS |
||||
|
Non current assets |
||||
|
Property, plant and equipment |
5 |
2 |
6 |
|
|
Oil properties |
6,682 |
5,181 |
5,892 |
|
|
Available for sale financial assets |
50 |
94 |
49 |
|
|
6,737 |
5,277 |
5,947 |
||
|
Current assets |
||||
|
Trade and other receivables |
60 |
54 |
54 |
|
|
Cash and cash equivalents |
1,152 |
1,004 |
136 |
|
|
1,212 |
1,058 |
190 |
||
|
LIABILITIES |
||||
|
Current liabilities |
||||
|
Trade and other payables |
(328) |
(62) |
(93) |
|
|
(328) |
(62) |
(93) |
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|
Net current assets |
884 |
996 |
97 |
|
|
Long term liabilities |
||||
|
Convertible Loan Note |
(772) |
- |
- |
|
|
Net assets |
6,849 |
6,273 |
6,044 |
|
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SHAREHOLDERS' EQUITY |
||||
|
Share capital |
2,690 |
2,217 |
2,217 |
|
|
Share premium |
6,495 |
5,057 |
5,593 |
|
|
Warrant reserve |
360 |
- |
272 |
|
|
Retained earnings |
(2,696) |
(1,001) |
(2,038) |
|
|
Total equity |
6,849 |
6,273 |
6,044 |
|
Consolidated statement of changes in equity
For the six months ended 31 March 2008
|
Share capital £'000 |
Share premium £'000 |
Warrant reserve £'000 |
Retained earnings £'000 |
Total £'000 |
|
|
Balance at 1 October 2007 |
2,217 |
5,593 |
272 |
(2,038) |
6,044 |
|
Recognition of share-based payments |
- |
- |
88 |
- |
88 |
|
Loss for the financial period |
- |
- |
- |
(668) |
(668) |
|
Issue of share capital |
473 |
902 |
- |
- |
1,375 |
|
Exchange differences |
- |
- |
- |
10 |
10 |
|
Balance at 31 March 2008 |
2,690 |
6,495 |
360 |
(2,696) |
6,849 |
Consolidated statement of recognised income and expense
For the six months ended 31 March 2008
|
Unaudited 31 March 2008 |
Unaudited 31 March 2007 |
Audited 30 September 2007 |
|||
|
£'000 |
£'000 |
£'000 |
|||
|
Currency translation differences |
10 |
- |
(24) |
||
|
Net losses recognised directly in equity |
10 |
- |
(24) |
||
|
Loss for the financial period |
(668) |
(199) |
(1,212) |
||
|
Total recognised expense for the year |
(658) |
(199) |
(1,236) |
||
|
Attributable to the equity shareholders of the Company |
(658) |
(199) |
(1,236) |
||
Consolidated Cash Flow Statement
At 31 March 2008
|
Unaudited 31 March 2008 |
Unaudited 31 March 2007 |
Audited 30 September 2007 |
|||
|
£'000 |
£'000 |
£'000 |
|||
|
Cash flows from operating activities |
|||||
|
Cash generated from operations |
(187) |
(157) |
(540) |
||
|
Net cash used in operating activities |
(187) |
(157) |
(540) |
||
|
Cash flows from investing activities |
|||||
|
Purchase of equipment |
- |
(1) |
(5) |
||
|
Purchase of oil leases |
(769) |
(168) |
(703) |
||
|
Purchase of available for sale financial assets |
- |
- |
(49) |
||
|
Finance income |
- |
5 |
30 |
||
|
Net cash used in investing activities |
(769) |
(164) |
(727) |
||
|
Cash flows from financing activities |
|||||
|
Net proceeds from issue of share capital |
1,200 |
1,242 |
1,320 |
||
|
Issue of convertible loan note |
772 |
- |
- |
||
|
Cash raised from financing activities |
1,972 |
1,242 |
1,320 |
||
|
Net increase in cash and cash equivalents |
1,016 |
921 |
53 |
||
|
Cash and cash equivalents at beginning of financial period |
136 |
83 |
83 |
||
|
Cash and cash equivalents at end of financial period |
1,152 |
1,004 |
136 |
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1. Financial information
The interim financial information has been prepared on the basis of the accounting policies as set out in the statutory financial statements for the year ended 30 September 2007. The financial information set out herein does not constitute statutory accounts.
2. Audit review
These interim results have not been subject to a full review by our Company auditors which is in accordance with our normal interim procedures.
3. Loss before taxation
|
Unaudited 31 March 2008 |
Unaudited 31 March 2007 |
Audited 30 September 2007 |
||
|
£'000 |
£'000 |
£'000 |
||
|
The following items have been included in arriving at operating loss: |
||||
|
Depreciation of property, plant and equipment |
1 |
- |
1 |
|
|
Amortisation |
200 |
- |
40 |
|
|
Oil lease impairment |
84 |
- |
337 |
|
|
Investment impairment |
- |
- |
94 |
|
|
Directors fees |
87 |
8 |
137 |
|
|
Recognition of share based payments |
88 |
- |
176 |
|
|
Auditors' remuneration: |
||||
|
- Audit services |
10 |
- |
9 |
|
|
- Non audit services |
- |
- |
14 |
|
|
Rentals payable in respect of land and buildings |
43 |
- |
52 |
|
|
Net foreign exchange loss |
- |
- |
24 |
|
4. Earnings per share
The loss per share calculations have been arrived at by reference to the following earnings and weighted average number of shares in issue during the period.
|
Unaudited 31 March 2008 |
Unaudited 31 March 2007 |
Audited 30 September 2007 |
||
|
£'000 |
£'000 |
£'000 |
||
|
Basic EPS |
||||
|
Earnings attributable to Ordinary shareholders |
(668) |
(30) |
(1,212) |
|
|
Number |
Number |
Number |
||
|
000's |
000's |
000's |
||
|
Weighted number of shares in issue |
448,903 |
290,300 |
359,746 |
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Related Shares:
Tomco Energy