14th Mar 2008 07:00
Global Petroleum Ltd14 March 2008 14 March 2008 Global Petroleum LtdINTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 The directors of Global Petroleum Limited ("the Company" or "Global") presenttheir report together with the consolidated financial report for the half-yearended 31 December 2007 and the review report thereon. DIRECTORS The directors of the Company at any time during or since the end of thehalf-year are: Mr Mark SavageMr Peter BlakeyMr Peter TaylorMr Peter Dighton (resigned 31 January 2008)Mr Ian Middlemas REVIEW OF OPERATIONS Operating results During the six months ended 31 December 2007, the consolidated group recorded aloss of A$6,569,197 (six months ended 31 December 2006: A$9,355,031). The lossincludes a write-down in relation to the Kenya project of A$7,911,138 and a gainof A$2,188,606 in relation to the sale of a parcel of Falkland Oil and Gasshares (see below). Principal activities Kenya (Global 20%) The L5 and L7 Joint Venture comprises: Woodside Energy (Kenya) Pty Ltd 30% (and operator)Dana Petroleum (E&P) Ltd 30%Repsol Exploracion S.A. 20%Global Petroleum 20% Under a Farm-in Agreement dated 28 June 2006, Woodside Energy (Kenya) Pty Ltdagreed to drill one well in each of the Kenyan blocks L-5 and L-7, and to fullycarry Global's interest (20%) in those wells. In January 2007 the first well,Pomboo, was drilled. The second well is due to be drilled by July 2008 to complywith the L-7 licence work obligations. However current indications are that itis unlikely that Woodside will drill that well by the due date. Global haswritten to Woodside advising that if the well is not drilled, Woodside will bein breach of its obligations under the Farm-in Agreement. Global is takingfurther legal advice on this issue. Malta Exploration Study Agreement Area 3 - Blocks 4 & 5 (Global 80%) RWE Dea AG ("RWE"), which has farmed into Global's interest in the ExplorationStudy Agreement ("ESA") covering Blocks 4 & 5, has the right to earn up to atotal 70% interest if the parties enter into a PSC with the Malta Government andRWE commits to the drilling of a well. The ESA has been extended by the MaltaGovernment until 30 June 2008 and RWE is currently in initial discussions withpotential additional farm in partners for the project. Should a well be drilled, Global's 30% share (including 3% on behalf of a UKmarketing agency that assisted Global in the farm-in process) of the costs ofsuch a well would be fully carried by RWE. Falkland Oil and Gas Limited ("FOGL") During the half-year FOGL announced it had entered into a farm-out agreementwith a subsidiary of BHP Billiton over FOGL's 2002 and 2004 licences to theSouth and East of the Falkland Islands. Under the agreement, BHP Billiton willacquire a 51% interest, and will take over the operatorship of the licences. Aminimum of two exploration wells will be drilled in the next 3 years and BHPBilliton pays FOGL US$12.75 million in reimbursement of certain historicalcosts. Global Petroleum sold a parcel of its FOGL shares during the period. As at 31December 2007, the Company held approximately 13.1% of the issued shares ofFOGL. SUBSEQUENT EVENTS There were no significant events occurring after the balance sheet daterequiring disclosure. CONSOLIDATED INTERIM INCOME STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2007 Note 31 Dec 2007 31 Dec 2006 A$ A$ Other Income 3 - 30,000 Administration costs (502,986) (576,283)Business development costs (123,283) -Exploration and evaluation expenditure written off 6 (8,310,549) (9,004,862)Results from operating activities (8,936,818) (9,551,145) Net financial income 3 2,367,621 196,114 Loss before income tax (6,569,197) (9,355,031) Income tax expense - -Loss for the period attributable to equity holders of the parent (6,569,197) (9,355,031) Cents CentsBasic loss per share (3.77) (5.41)Diluted loss per share (3.77) (5.41) CONSOLIDATED INTERIM BALANCE SHEETAS AT 31 DECEMBER 2007 Note 31 Dec 2007 30 June 2007 A$ A$ Current assetsCash and cash equivalents 7,974,548 6,324,089Trade and other receivables 26,689 8,228Other financial assets 600 600Total current assets 8,001,837 6,332,917 Non-current assetsInvestments 5 36,255,947 24,275,749Exploration and evaluation expenditure 6 1,071,063 9,247,206Total non-current assets 37,327,010 33,522,955TOTAL ASSETS 45,328,847 39,855,872 Current liabilitiesTrade and other payables 198,880 250,680Total current liabilities 198,880 250,680TOTAL LIABILITIES 198,880 250,680NET ASSETS 45,129,967 39,605,192 EquityIssued capital 4 35,590,053 35,590,053Reserves 34,660,509 22,566,537Accumulated losses (25,120,595) (18,551,398)TOTAL EQUITY 45,129,967 39,605,192 CONSOLIDATED INTERIM STATEMENT OF CASH FLOWSFOR THE SIX MONTHS ENDED 31 DECEMBER 2007 31 Dec 2007 31 Dec 2006 A$ A$Cash flows from operating activitiesCash paid to suppliers and employees (700,192) (664,967)Interest received 216,094 205,116GST and VAT refunds received 6,284 -Management fees received - 25,000Net cash used in operating activities (477,814) (434,851) Cash flows from investing activitiesAcquisition of property, plant and equipment - (1,825)Proceeds from sale of listed shares 2,287,959 -Exploration expenditure, including overheads capitalized (159,512) (220,961)Net cash from/(used in) investing activities 2,128,447 (222,786) Cash flows from financing activitiesProceeds from the issue of share capital - 537,500Share issue expenses - (4,131)Net cash from financing activities - 533,369 Net increase/(decrease) in cash and cash equivalents 1,650,633 (124,268)Cash and cash equivalents at 1 July 6,324,089 6,991,006Effect of exchange rate changes on cash and cash equivalents (174) -Cash and cash equivalents at 31 December 7,974,548 6,866,738 CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 31 DECEMBER 2007 Foreign currencySix months ended Share Fair value translation Accumulated Total31 December 2007 capital reserve reserve losses equity A$ A$ A$ A$ A$ Balance at 1 July 2007 35,590,053 22,513,778 52,759 (18,551,398) 39,605,192Foreign exchange translation - - 14,422 - 14,422differencesChange in fair value - - 14,268,156 - - 14,268,156available-for-sale investmentsChange in fair value transferred - (2,188,606) - - (2,188,606)to profit and loss -available-for-sale investmentsIncome and expense recognised - 12,079,550 14,422 - 12,093,972directly in equityLoss for the period - - - (6,569,197) (6,569,197)Total recognised income and - 12,079,550 14,422 (6,569,197) 5,524,775expense for the periodBalance at 31 December 2007 35,590,053 34,593,328 67,181 (25,120,595) 45,129,967 Six months ended31 December 2006 Balance at 1 July 2006 35,056,684 33,411,563 47,154 (8,668,309) 59,847,092Change in fair value -available-for-sale investments - (2,179,860) - - (2,179,860)Income and expense recogniseddirectly in equity - (2,179,860) - - (2,179,860)Loss for the period - - - (9,355,031) (9,355,031)Total recognised income andexpense for the period - (2,179,860) - (9,355,031) (11,534,891)Exercise of options 537,500 - - - 537,500Share issue expenses (4,131) - - - (4,131)Balance at 31 December 2006 35,590,053 31,231,703 47,154 (18,023,340) 48,845,570 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This general purpose financial report for the interim half-year reporting periodended 31 December 2007 has been prepared in accordance with Accounting StandardAASB 134 Interim Financial Reporting and the Corporations Act 2001. This interim financial report does not include all the notes of the typenormally included in an annual financial report. Accordingly, this report is tobe read in conjunction with the annual report of Global Petroleum Limited forthe year ended 30 June 2007 and any public announcements made by GlobalPetroleum Limited and its controlled entities during the interim reportingperiod in accordance with the continuous disclosure requirements of theCorporations Act 2001. (a) Basis of preparation of half-year financial report The interim financial report has been prepared on the basis of historical cost,except for the revaluation of available-for-sale investments. Cost is based onthe fair values of the consideration given in exchange for assets. All amountsare presented in Australian dollars. The accounting policies and methods of computation adopted in the preparation ofthe half-year financial report are consistent with those adopted and disclosedin the company's 2007 annual financial report for the year ended 30 June 2007,other than as detailed below. In the current year, the Group has adopted all of the new and revised Standardsand Interpretations issued by the Australian Accounting Standards Board (theAASB) that are relevant to its operations and effective for annual reportingperiods beginning on or after 1 July 2007. The adoption of these new andrevised standards has not resulted in any significant changes to the Group'saccounting policies or to the amounts reported for the current or prior periods. (b) Estimates The preparation of the interim financial report requires management to makejudgements, estimates and assumptions that affect the application of accountingpolicies and the reported amounts of assets and liabilities, income and expense.Actual results may differ from these estimates. Except as described below, in preparing this consolidated interim financialreport, the significant judgements made by management in applying theconsolidated entity's accounting policies and the key sources of estimationuncertainty were the same as those that applied to the consolidated financialreport as at and for the year ended 30 June 2007. During the six months ended 31 December 2007 and 2006 management reassessed itsestimates in respect of the carrying value of Kenya and Ireland explorationexpenditure based on the exploration activities during the half-year and thestatus of the projects at those dates. Expenditure written-off in 2007 relatesprimarily to the balance of the Kenya project. Expenditure written-off in 2006included a write-down in relation to the Kenya project of A$8,077,329 followingthe unsuccessful drilling of the Pomboo No. 1 well, and the write-off ofexpenditure in relation to Ireland of A$773,629 following expiry of the licenceoption. The remaining amounts written-off (A$153,904) related to otherprojects. 2. SEGMENT INFORMATION Geographical segments The consolidated entity's geographical segments are as follows: Falkland31 Dec 2007 Australia Europe Africa Islands Iraq Eliminations Consolidated A$ A$ A$ A$ A$ A$ A$Segment revenueExternal revenue - - - - - - -Total revenue - ResultSegment result 1,799,347 (36,404) (8,332,230) - - - (6,569,197)Income tax expense -Loss for the period (6,569,197) Falkland31 Dec 2006 Australia Europe Africa Islands Iraq Eliminations Consolidated A$ A$ A$ A$ A$ A$ A$Segment revenueExternal revenue - - - - - - -Total revenue - ResultSegment result (323,678) (882,677) (8,128,688) (359) (19,629) - (9,355,031)Income tax expense -Loss for the period (9,355,031) Business segments The consolidated entity operates within one business segment, being thepetroleum and mineral exploration industry. Accordingly, the consolidatedentity's total revenue and loss for the period relates to that business segment. 3. PROFIT/(LOSS) FROM OPERATIONS (a) Other Income 31 Dec 07 31 Dec 06 A$ A$Rendering of services - 30,000 - 30,000 (b) Financial income/(expenses) Interest income 216,094 204,712Gain on disposal of available-for-sale investments 2,188,606 -Net foreign exchange gain/(loss) (37,079) (8,598) 2,367,621 196,114 4. EQUITY SECURITIES ISSUED Movements in ordinary share capital during the six month periods ended 31December 2006 and 2007 were as follows:- Date Details Number of Shares Issue Price A$ A$ 1 Jul 06 Opening Balance 172,294,787 35,056,684 Allotment upon exercise of options 2,150,000 0.25 537,500 Share issue expenses (4,131)31 Dec 06 Closing Balance 174,444,787 35,590,053 1 Jul 07 Opening Balance 174,444,787 35,590,053 31 Dec 07 Closing Balance 174,444,787 35,590,053 5. INVESTMENTS 31 Dec 2007 30 June 2007 A$ A$ Listed equity securities available-for-sale - at fair value 36,255,947 24,275,749 Investments in listed equity securities available-for-sale have been recognisedat fair value (period-end market value) and represent an investment in FalklandOil and Gas Limited ("FOGL"). The consolidated entity disposed of part of its investment in FOGL during thefinancial period for net proceeds of A$2,287,959 and recorded a net gain ondisposal of A$2,188,606. 6. EXPLORATION AND EVALUATION EXPENDITURE 31 Dec 2007 31 Dec 2006 A$ A$CostBalance at 1 July 9,247,206 17,775,089Foreign currency movement (25,106) -Expenditure incurred 159,512 408,264Expenditure written-off (8,310,549) (9,004,862)Balance at 31 December 1,071,063 9,178,491 Expenditure written-off during the 2007 half-year primarily relates to thebalance of the Kenya project. Expenditure written-off during the 2006 half-year included a write-down inrelation to the Kenya project of A$8,077,329 following the unsuccessful drillingof the Pomboo No. 1 well, and the write-off of expenditure in relation toIreland of A$773,629 following expiry of the licence option. The remainingamounts written-off (A$153,904) related to other projects. The recoverability of the carrying amounts of exploration and evaluation assetsis dependent on the successful development and commercial exploitation or saleof the respective area of interest. 7. RELATED PARTIES Remuneration arrangements with related parties continue to be in place. Fordetails on these arrangements, refer to the 30 June 2007 annual financialreport. 8. CONTINGENCIES There have been no changes in contingent liabilities since 30 June 2007. 9. SUBSEQUENT EVENTS There were no significant events occurring after the balance sheet daterequiring disclosure. Enquiries Global Petroleum Limited +1 505 344 2822Mark Savage, Chairman Blue Oar Securities Plc (Nominated Adviser and Broker) 020 7418 4400Rhod CruwysTanya Israni This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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