25th Apr 2006 07:00
For immediate release: 07:00hrs Tuesday 25th April 2006 Europa Oil & Gas (Holdings) plc (`Europa') Growth in Profit and on Track to Meet Production Targets Interim results for the six months ended 31 January 2006Europa Oil & Gas (Holdings) plc, (AIM:EOG), the independent oil & gasexploration and production group with assets in the UK, Romania, Ukraine,Poland and Western Sahara today announces its interim results for the sixmonths ended 31 January 2006.Financial * Profit after tax of ‚£0.419m, up 159% (6 months to 31 January 2005 ‚£0.162m) * Earnings per share of 0.69p, up 109% (0.33p at 31 January 2005) * Turnover of ‚£1.477m, up 25% (6 months to 31 January 2005 ‚£1.178m) * Operating profit of ‚£0.511m, up 23% (6 months to 31 January 2005 ‚£0.415m) * Cash of ‚£1.03 million (‚£3.35m at 31 January 2005) * Net assets of ‚£9.03 million (‚£8.09m at 31 January 2005) Operational * Production from the UK and Ukraine during the period averaged 266 barrels of oil equivalent per day (boepd). UK * Approved as a UK Offshore Operator and secured 2 year extension of Southern North Sea licence P1131 UKCS, Blocks 41/24 & 41/24 (Quad 41) * Farmed out an interest in the UK onshore Doddington (Whisby) Exploration Area (licence PEDL150) * Reached payback of Whsiby-4 well costs Romania * Costisa-1, located in Block EPI-3 Romania, drilled and suspended for future testing * Secured development approval for Bilca Gas Development * Award of contract and start of construction of Bilca Gas Development Recent EventsUK * Quad 41 appraisal well planning underway with Peak Group * Reprocessing of Doddington Exploration Area seismic data nearing completion Romania * Production set to rise significantly in 2006 when the Bilca Gas Development comes onstream * Acquisition of 300 km of seismic across three licences in Romania which commenced at the beginning of March 2006 * Planning for Costisa-1 well re-entry and testing of gas shows encountered in the sandstones between 1,034 and 1,059 metres Ukraine * Increasing gas prices in the Ukraine New Ventures * Recent award of two very large, high quality blocks in Western Sahara Further information:Paul BarrettManaging Director, Europa Oil & Gas (Holdings) plc +33 5 63 33 18 97Jonathan Wright / Parimal KumarSeymour Pierce Limited +44 20 7107 8000Jade Mamarbachi / Toby Hallgth media relations +44 20 7153 8035/8039Chairman's StatementThe six months to 31 January 2006 have seen significant progress on a number ofprojects. Continued high oil prices have helped increase operating profits fromEuropa's UK onshore operations, whilst work has continued on increasing the netproduction stream by the end of 2006.Europa stands out from many in its peer group of AIM-listed junior E&Pcompanies by virtue of its healthy production revenues resulting from asuccessful drilling programme over the last few years. This, combined withEuropa's rigorous policy of overhead cost containment has ensured financialgrowth and positive operational cash flow. At the same time, Europa has fundeda substantial capital expenditure programme and new venture activities.Compared with the same period last year, Operating Profit and Turnover hasincreased by a strong 23% and 25%, respectively and Post-Tax Profit by animpressive 159%. The resulting earnings per share have risen to 0.69p - anotable increase of over 100%.In addition to the current production, Europa will see a substantial increasein production during 2006 year when the Bilca Gas Development comes on stream.Europa is looking for further increases in production, most significantly onits Southern North Sea Quad 41 gas condensate project, where it plans to drillan appraisal well in 2007.Europa is a true E&P company and balances its production with development,appraisal and exploration. Europa recognises the need for high reward prospectsbut also the necessity for a solid production platform. Europa's approach is toincrease near term production through appraisal and low risk explorationdrilling whilst incorporating high impact exploration into its portfolio.Europa has an 86% success rate in finding commercial hydrocarbons and holds anexcellent portfolio in proven hydrocarbon basins. I believe this combinationwill continue to deliver strong financial growth.Operations ReviewUKProduction from the Group's two UK onshore oilfields in the East Midlands hasaveraged 106 net barrels of oil per day (bopd) from the Whisby-4 oil well and119 bopd from the West Firsby Oilfield. Payback of costs associated withdrilling the Whisby-4 well was reached during this period. Both oilfields havea low oil production decline rate and ensure that production volumes shouldremain high for the foreseeable future. Oil revenue during this period was 25%higher when compared to the previous six- month period and provided the Companywith an increasing revenue stream.The UK Department of Trade and Industry approved Europa as a North Sea OffshoreExploration Operator and the Quad 41 Southern Gas Basin licence has beenextended for a further two years. The licence includes the 41/24 and 41/25discoveries, which flowed on test at rates between 2,500 and 6,500 boepd fromthe fractured Zechstein. A similar reservoir has been successfully developed inthe Hewett Field in the Southern North Sea. A number of engineering studieswere completed on the project during the period and have enhanced the viabilityof the project. Europa is committed to drilling an appraisal well, 41/24-D, onthe project within the current two year licence extension.In October 2005, Europa entered into a farm-in agreement with Valhalla Oil &Gas Ltd. covering the Doddington (Whisby) Exploration Area (PEDL150). Valhallaagreed to reprocess the existing seismic dataset and acquire a further 40 km ofnew 2D seismic to earn a 25% interest in the block. Valhalla, then, has theoption to earn a further 25% by funding 75% of the cost of an exploration well.I am pleased to say that the reprocessing of the existing seismic began duringthe period and the results show a major improvement. This will lead to a betterdefinition of the prospects on the licence.On the PEDL143 licence, which contains the Holmwood prospect, work iscontinuing to secure planning permission.RomaniaDevelopment consent was granted on the Bilca Gas Project in August 2005. Thiswas closely followed by the award of the construction contract in October 2005.Construction of the gas processing facilities and export pipeline route to theexisting gas pipeline began soon after. Following completion of the facilities,the three wells drilled in late 2004 and early 2005, Bilca-1, Bilca-2 andFratauti-1 (which flowed at rates over 2,000 boepd), will be placed onstream bysummer 2006.The Costisa-1 well reached its final total depth of 4,350 metres in December2005. Whilst the primary sub-thrust target was absent, a significant sandstoneunit between 1,034 and 1,059 metres depth gave very strong gas shows duringdrilling and appears to be gas-saturated. Due to the length of time thesandstone was exposed to drilling fluids, the damaged borehole provided poorwireline log data and prevented drill stem testing. Although the quality of thedata was poor, there are positive hydrocarbon indications. Thus, the well wassuspended for further re-entry to test this sandstone. Europa and JV partnerMND have requested an extension to the licence to undertake this work, alongwith further exploration activity on the block.There are indications of at least two further anomalies on trend with Costisa-1and will become very attractive drilling targets should the test be successful.Potential for early development exists as the Romanian national gas gridpipeline is less than 1km from the well site.Recent Events and Current OutlookUKPlanning is underway for the Southern North Sea Quad 41 appraisal well. TheCompany is working on the design of the 41/24-D well with the Peak Group, acompany that is a global provider of well construction services and hasrecently completed drilling wells for Century and DNO in the North Sea and isplanning a further five North Sea wells.In the UK, the reprocessing of the existing seismic database over theDoddington Exploration Area is nearing completion and the quality of thereprocessed seismic is far superior and will result in a significantly improvedunderstanding of the petroleum system. The Doddington Area lies adjacent to theWhisby Oilfield and has several strong geochemical anomalies on the acreage,identified as a result of a 2005 survey. The Company is currently interpretingthe reprocessed seismic, focussing on the areas with geochemical anomalies,with the aim to define a drillable prospect location.RomaniaIn Romania, Europa has interests in 4 blocks in under-explored areas of theCarpathian Oil & Gas Province, a province that has produced 5 billion barrelsof oil and 2 trillion cubic feet of gas to date. The licences lie near to or ontrend to giant oil and gas fields, e.g. the giant Roman Gasfield which hasproduced over 850 bcf (c. 140 mmboe).The near term exploration programme comprises the acquisition of 300 Km of 2Dseismic on the Brodina, Cuejdui and Bacau Blocks. In the Brodina Block, whichcontains the Bilca Gas Development, the seismic programme is targeting theadditional potential between the Bilca development and the Todiresti Gasfield,in an area currently lacking any seismic data. Any discoveries could be tied into the nearby pipeline system. The smaller Cuejdui and Bacau seismic programmeshave been designed to mature previously identified leads, primarily in the sameBilca play, to drillable status. The seismic acquisition is scheduled forcompletion in May 2006 and we are confident that robust prospects suitable fordrilling will be identified.UkraineThe Company continues to produce and sell gas in the Ukraine and averaged 41boepd over the interim period. Domestic gas prices in the Ukraine have risensharply in recent months and the realised sales price is now 89% higher than inthe interim period.New VenturesIn March 2006, the Company was awarded two very large blocks in Western Sahara,West Africa, totalling over 80,000 sq km, equivalent to roughly half thelicensed areas of the UK Central and Northern North Sea. The two blocks are ingeologically contrasting areas but both have thick sedimentary sequences withsimilarities to world class, proven basins in Northern Africa. The acreage hasseen very little exploration and, due to clear analogues with producing basinsin Algeria and Mauritania, we believe that company-making prospects will emergeon these blocks.ConclusionThe Company now holds interests in 13 projects in five countries throughoutEurope and North Africa. The balanced portfolio includes production,development, appraisal and exploration. The Company has shown throughout itslife as a public company steady financial growth and continued acquisition ofquality exploration acreage. The directors are very pleased with the financialresults and are confident that shareholder value will continue to grow.Sir Michael OliverChairmanCONSOLIDATED PROFIT AND LOSS ACCOUNTFor the six month period ended 31 January 2006 6 6 12 Months Months Months Ended 31 Ended 31 Ended 31 January January July 2006 2005 2005 ‚£ ‚£ ‚£ Turnover 1,447,086 1,177,682 2,399,014 Cost of sales * Operating costs (348,878) (249,580) (504,908) * Depletion and amortisation (417,033) (323,778) (754,441) (765,911) (573,358) (1,259,349) Gross profit 681,175 604,324 1,139,665 Administrative expenses (170,598) (189,278) (297,337) Operating profit 510,577 415,046 842,328 Interest receivable and similar income 33,131 120,742 179,809 Interest payable and similar charges (124,770) (372,375) (666,011) Profit on ordinary activities before 418,938 163,413 356,126 taxation Tax on profit on ordinary activities - (1,416) (2,226) Retained profit for the financial 418,938 161,997 353,900 period/year Basic Earnings per share 0.69p 0.33p 0.64p Diluted Earnings per share 0.69p 0.33p 0.64p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the six month period ended 31 January 2006 6 6 12 Months Ended Months Months 31 January Ended 31 Ended 31 January July 2006 2005 2005 ‚£ ‚£ ‚£ Profit on ordinary activities after 418,938 161,997 353,900 taxation Currency translation difference on foreign - 8,005 18,233 currency net investment Total recognised gains and losses relating 418,938 170,002 372,133 to the period/year CONSOLIDATED BALANCE SHEET as at 31 January 2006 6 6 12 Months Ended Months Ended Months 31 January 31 January Ended 31 July 2006 2005 2005 ‚£ ‚£ ‚£ Fixed assets Intangible assets 4,249,761 3,329,177 4,478,852 Tangible assets 4,829,551 2,823,699 3,256,512 9,079,312 6,152,876 7,735,364 Current assets Stock 38,654 33,542 51,431 Debtors 485,016 313,933 528,787 Cash at bank and in hand 1,034,063 3,347,651 1,977,117 1,557,733 3,695,126 2,557,335 Creditors: amounts falling due within one (448,568) (287,736) (525,037) year Net current assets/(liabilities) 1,109,165 3,407,390 2.032,298 Total assets less current liabilities 10,188,477 9,560,266 9,767,662 Creditors: amounts falling due after more (879,337) (1,203,513) (883,906) than one year Provision for liabilities and charges (275,876) (263,286) (269,430) Net assets 9,033,264 8,093,467 8,614,326 Capital and reserves Called up share capital 610,650 600,000 610,650 Share premium 4,406,560 4,098,482 4,406,560 Merger reserve 2,868,033 2,868,033 2,868,033 Profit and loss account 1,148,021 526,952 729,083 Shareholders' funds 9,033,264 8,093,467 8,614,326 CONSOLIDATED CASH FLOW STATEMENTFor the period ended 31 January 2006 6 6 12 Months Ended 31 Months Months July Ended 31 Ended 31 January January 2005 2006 2005 ‚£ ‚£ ‚£ Net cash inflow from operating activities 964,758 249,201 953,631 (a) Returns on investments and servicing of finance Interest received 30,157 120,743 88,003 Interest paid (103,108) (372,376) (542,077) Net cash outflow from returns on (72,951) (251,633) (454,074) investments and servicing of finance Taxation Tax paid - (2,023) (3,180) Net cash outflow from taxation - (2,023) (3,180) Capital expenditure Purchase of fixed assets (1,716,267) (469,926) (2,492,947) Net cash outflow from capital expenditure (1,716,267) (469,926) (2,492,947)and financial investment Net cash outflow before financing (824,460) (474,381) (1,996,570) Financing Loans received - 160,802 160,802 Loans redeemed (118,594) (383,762) (436,768) Issue of share capital - 4,298,483 4,503,144 Net cash (outflow)/inflow from financing (118,594) 4,075,523 4,227,178 (Decrease)/increase in cash in the period/ (943,054) 3,601,142 2,230,608 year (b) NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFor the period ended 31 January 2006(a) Reconciliation of operating profit to net cash inflow from operating activities 6 6 12 Months Months Months Ended 31 Ended 31 Ended 31 January January July 2005 2005 2005 ‚£ ‚£ ‚£ Operating 510,577 415,046 842,328 profit Depreciation 417,766 325,324 754,441 Decrease/ 51,876 (63,045) (260,446) (increase) in debtors Decrease in (15,461) (391,410) (339.833) creditors Decrease in - (36,714) (42,859) provision Net cash 964,758 249,201 953,631 inflow from operating activities (b) Analysis of changes in At 31 July Cash Non Cash At 31 net debt January 2005 Flow Movement 2006 ‚£ ‚£ ‚£ ‚£ Cash at bank and in hand 1,977,117 (943,054) - 1,034,063 Overdrafts 0 - - 0 1,977,117 (943,054) - 1,034,063 Loans due within one (238,696) 121,593 - (117,103) year Loans due after one year (883,906) 4,569 - (879,337) (1,122,602) 126,162 - (996,440) Net funds/(debt) 854,515 (816,892) - 37,623 (b) Analysis of changes in At 31 July Cash Non Cash At 31 net debt January 2004 Flow Movement 2005 ‚£ ‚£ ‚£ ‚£ Cash at bank and in hand 48,789 3,298,862 - 3.347,651 Overdrafts (302,280) 302,280 - 0 (253,491) 3,601,142 - 3,347,651 Loans due within one (2,792,383) 165,833 2,584,974 (41,576) year Loans due after one year (1,191,158) (12,355) - (1,203,513) (3,983,541) 153,478 2,584,974 (1,245,089) Net funds/(debt) (4,237,032) 3,754,620 2,584,974 2,102,,562 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFor the period ended 31 January 2006(b) Analysis of changes in At 31 July Cash Non Cash At 31 July net debt 2004 Flow Movement 2005 ‚£ ‚£ ‚£ ‚£ Cash at bank and in hand 48,789 1,928,328 - 1,977,117 Overdrafts (302,280) 302,280 - 0 (253,491) 2,230,608 - 1,977,117 Loans due within one year (2,792,383) (31,287) 2,584,974 (238,696) Loans due after one year (1,191,158) 307,252 - (883,906) (3,983,541) 275,965 2,584,974 (1,122,602) Net funds/(debt) (4,237,032) 2,506,573 2,584,974 854,515 (c) Reconciliation of net cash flow to movement in net (debt) /funds 6 6 12 Months Months Months Ended 31 Ended 31 Ended 31 January July January 2005 2005 2005 ‚£ ‚£ ‚£ (Decrease)/ increase in cash in the (943,054) 3,601,142 2,230,608 period Cash inflow from changes in debt 126,162 153,478 275,965 Change in net funds resulting from cash (816,892) 3,754,620 2,506,573 flows Non cash movement - 2,584,974 2,584,974 Net funds/ (debt) at start of period/ 854,515 (4,237,032) (4,237,032)year Net funds/ (debt) at end of period/ year 37,623 2,102,562 854,515 NOTES TO THE ACCOUNTSFor the period ended 31 January 2006 1. The results for the period are all derived from continuing operations. 2. The unaudited results have been prepared on the basis of the accounting policies adopted in the annual accounts for the 12 month period ended 31 July 2005. 3. The interim report for the six months to 31 January 2006 was approved by the Directors on the 24th April 2006. 4. The calculation of basic earnings per share is based on the weighted average shares in issue throughout the six month period. The diluted earnings per share include employee share options. 5. The interim results are unaudited and do not constitute statutory financial statements as defined in section 240 of the Companies Act 1985. Europa Oil & Gas (Holdings) plc Interim Report 2006ENDEUROPA OIL & GAS (HOLDINGS) PLCRelated Shares:
Europa Oil & Gas