28th Apr 2015 07:00
28 April 2015
Sound Oil plc
("Sound Oil" or the "Company")
Preliminary Results for the year ended 31 December 2014
Sound Oil (SOU.LN), the European / Mediterranean focused upstream oil and gas company, is pleased to announce its unaudited preliminary results for the year ended 31 December 2014.
Production Highlights
• First full calendar year of production from Rapagnano with volumes ahead of Company expectations at 3.82 MMScm (135 MMScf)
• First gas production from Casa Tiberi on 28 July 2014 with production of 0.62 MMScm (21.9 MMScf)
• Total revenues in the year largely covering the Italian cost base
Exploration Highlights
• Badile Environmental Impact Assessment approved in March 2015 marking a significant milestone towards drilling of the exploration well with mid-case prospective resource of 178Bscf and NPV10 of €486m
• Ongoing negotiations to farmout the Badile permit
Appraisal and Development Highlights
• Spudding of second Nervesa well to address the southern limb of the field on 23 April 2015 and test results expected early June 2015
• Final approval of the Environmental Impact Assessment for the Nervesa gas discovery production concession. The award of the Nervesa field production concession from the Italian Ministry of Economic Development is expected to follow shortly. First commercial gas expected in 2015
• Permit for the Laura gas discovery received and ongoing negotiations to farmout the permit
Financial Highlights
· Unaudited cash balance of £12.6 million as at 31 December 2014
Strategy and Outlook
The Company's ambition is to build a mid cap Mediterranean oil and gas business The Company's initial strategic focus has been our onshore gas portfolio in Italy, which is a healthy blend of high upside exploration, low risk appraisal / development assets and some solid, cost covering, production.
The Company is currently working on various transformational transactions, including:
· Advanced discussions on a strategic partnership with a major oil and gas company to fund and technically de-risk a selection of Sound Oil's assets
· Farming in to a Southern Mediterranean onshore gas discovery with very significant estimated reserves and exploration upside
· Consolidation in Italy, including the acquisition of various onshore exploration, development and production assets
For further information please contact:
Vigo Communications - PR Adviser Patrick d'Ancona Chris McMahon
| Tel: +44 (0)20 7016 9573 |
Sound Oil James Parsons, Chief Executive Officer
|
|
Smith & Williamson - Nominated Adviser Azhic Basirov David Jones Ben Jeynes
| Tel: +44 (0)20 7131 4000 |
Peel Hunt - Broker Richard Crichton Charles Batten
| Tel: +44 (0)20 7418 8900 |
NPV10 refers to a net present value at a discount rate of 10%; MMScm means million standard cubic metres of gas; MMScf means million standard cubic feet of gas; and. Bscf means billion standard cubic feet of gas.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2014
31-Dec-14 Unaudited | 31-Dec-13 Audited | ||
Notes | £'000 | £'000 | |
Revenue | 2 | 983 | 482 |
Operating costs | (658) | (265) | |
Impairment of Producing Assets | (723) | - | |
Exploration costs | (74) | (4,038) | |
Gross profit/(loss) | (472) | (3,821) | |
Administrative expenses | (2,773) | (2,616) | |
Group operating loss from continuing operations | (3,245) | (6,437) | |
Finance revenue | 7 | 9 | |
Foreign exchange gain/(loss) | (661) | (304) | |
External interest costs | (1,022) | (132) | |
Loss for period before and after taxation | (4,921) | (6,864) | |
Other comprehensive income(loss) | |||
Foreign currency translation income/(loss) | 127 | 557 | |
Total comprehensive loss for the period | 2 | (4,794) | (6,309) |
Loss for the period attributable to: | |||
Owners of the company | (4,921) | (6,864) | |
Non-controlling interests | - | - | |
2014 Pence | 2013 Pence | ||
Loss per share and diluted for the period | (1.40) | (2.40) | |
Attributable to the equity holders of the parent (pence) | (1.40) | (2.40) |
Consolidated Balance Sheet
as at 31 December 2014
31-Dec-14 Unaudited | 31-Dec-13 Audited | ||
Notes | £'000 | £'000 | |
Non-current assets | |||
Property, plant and equipment | 13,200 | 1,476 | |
Land and buildings | 1,433 | - | |
Intangible assets | 8,888 | 19,500 | |
23,521 | 20,976 | ||
Current assets | |||
Other debtors | 3 | 2,173 | 1,978 |
Prepayments | 157 | 185 | |
Cash and short term deposits | 4 | 12,608 | 543 |
14,938 | 2,705 | ||
Total assets | 38,459 | 23,681 | |
Current Liabilities | |||
Trade and other payables | 2,194 | 2,797 | |
Loans repayable in under one year | 6 | 131 | 229 |
2,325 | 3,026 | ||
Non-current liabilities | |||
Deferred tax liabilities | 2,099 | 2,165 | |
Loans due in over one year | 6 | 13,437 | 1,947 |
Provisions | 1,164 | 1,226 | |
16,700 | 5,338 | ||
Total liabilities | 19,025 | 8,364 | |
Net Assets | 19,434 | 15,317 | |
Capital and Reserves | |||
Equity share capital | 71,298 | 63,085 | |
Warrant Reserve | 369 | - | |
Foreign currency reserve | 1,388 | 1,261 | |
Accumulated deficit | (53,621) | (49,029) | |
Total Equity | 19,434 | 15,317 |
Condensed Consolidated Statement of Changes in Equity
for the year ended 31 December 2014
Share capital | Share premium | Accumulated Deficit | Warrant Reserve | Foreign currency reserves | Total equity |
| |||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
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At 1 January 2014 | 2,876 | 60,209 | (49,029) | - | 1,261 | 15,317 |
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Total Loss for the period | - | - | (4,921) | - | - | (4,921) |
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Other comprehensive income | - | - | - | - | 127 | 127 |
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Total comprehensive income/(loss) | - | - | (4,921) | - | 127 | (4,794) |
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Issue of share capital | 1,277 | 7,442 | - | - | - | 8,719 |
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Fair value of warrants | - | - | - | 369 | - | 369 |
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Transaction costs | - | (506) | - | - | - | (506) |
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Share based payments | - | - | 329 | - | - | 329 |
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at 31 December 2014 | 4,153 | 67,145 | (53,621) | 369 | 1,388 | 19,434 |
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Share capital | Share premium | Accumulated Deficit | Foreign currency reserves | Total equity |
| ||||||||
£'000 | £'000 | £'000 | £'000 | £'000 |
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At 1 January 2013 | 2,870 | 60,213 | (42,273) | 704 | 21,514 |
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Total Loss for the period | - | - | (6,864) | - | (6,864) |
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Other comprehensive income | - | - | - | 557 | 557 |
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Total comprehensive income/(loss) | - | - | (6,864) | 557 | (6,307) |
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Issue of share capital | 6 | 43 | - | - | 49 |
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Transaction costs | - | (47) | - | - | (47) |
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Share based payments | - | - | 108 | - | 108 |
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at 31 December 2013 | 2,876 | 60,209 | (49,029) | 1,261 | 15,317 |
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Consolidated Cash Flow Statement
for the year ended 31 December 2014
Year ended | Year ended | |
31-Dec-2014 | 31-Dec-2013 | |
Unaudited | Audited | |
£'000 | £'000 | |
Cash flow from operating activities | ||
Cash flow from operations | (3,327) | (2,645) |
Interest received | 7 | 9 |
Net cash flow from operating activities | (3,320) | (2,636) |
Cash flow from investing activities | ||
Capital expenditure and disposals | (2,258) | (706) |
Exploration and development expenditure | (1,089) | (6,482) |
Net cash inflow on disposal of subsidiary | - | - |
Net cash flow from investing activities | (3,347) | (7,188) |
Proceeds from CSTI funding contract | (242) | 1,664 |
Net proceeds from debt | 11,398 | - |
Net Proceeds from equity issue | 8,213 | 1,576 |
Interest payments | (280) | - |
Net cash flow from financing activities | 19,089 | 3,240 |
Net increase/(decrease) in cash and cash equivalents | 12,420 | (6,584) |
Net foreign exchange difference | (355) | 218 |
Cash and cash equivalents at the beginning of the period | 543 | 6,909 |
Cash and cash equivalents at the end of the period | 12,608 | 543 |
Notes to the Financial Statements
1. Accounting policies
Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.
Sound Oil plc is a public limited company registered and domiciled in England and Wales under the Companies Act 2006.
The financial statements of the Group and its parent are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (IFRSs, as adopted by the European Union), IFRIC Interpretations; and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Full details of the Company's accounting policies will be included in its annual report and accounts for the year ended 31 December 2014.
2. Segment Information
The Group categorises its operations into three business segments based on corporate, exploration and appraisal and development and production.
In the year ended 31 December 2014 the Group's exploration and appraisal activities were carried out solely in Italy The Group's reportable segments are based on internal reports about components of the Group which are regularly reviewed and used by the board of directors, being the Chief Operating Decision Maker ("CODM"), for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance.
Details regarding each of the operations of each reportable segment is included in the following tables.
Segment results for the period ended 31 December 2014
Corporate | Development & Production | Exploration & Appraisal | Total | |
£'000 | £'000 | £'000 | £'000 | |
Sales and other operating revenues | - | 983 | - | 983 |
Operating costs | - | (656) | - | (656) |
Impairment of production assets | - | (723) | - | (723) |
Exploration costs | - | - | (74) | (74) |
Administration expenses | (2,773) | - | - | (2,773) |
Operating loss segment result | (2,773) | (398) | (74) | (3,245) |
Interest receivable | 7 | - | - | 7 |
Finance costs | (1,552) | (131) | - | (1,683) |
Loss for the period before taxation | (4,288) | (529) | (74) | (4,921) |
The segments assets and liabilities at 31 December 2014 are as follows:
Corporate | Development & Production | Exploration & Appraisal | Total | |
£'000 | £'000 | £'000 | £'000 | |
Capital expenditure | - | 13,112 | 10,409 | 23,521 |
Other assets | 14,938 | - | - | 14,938 |
Total liabilities | (2,099) | (1,557) | (15,369) | (19,025) |
The geographical split of non-current assets is as follows:
UK | Italy | ||
£'000s | £'000s | ||
Development and production assets | - | 13,112 | |
Fixtures, fittings and office equipment | 42 | 46 | |
Land and buildings | - | 1,433 | |
Goodwill | - | 2,099 | |
Exploration and evaluation assets | - | 6,789 | |
42 | 23,479 |
Segment results for the period ended 31 December 2013
Corporate 2013 | Development & Production 2013 | Exploration & Appraisal 2013 | Total 2013 | |
£'000 | £'000 | £'000 | £'000 | |
Sales and other operating revenues | - | 482 | - | 482 |
Operating costs | - | (265) | - | (265) |
Impairment of exploration and evaluation assets | - | - | (4,038) | (4,038) |
Administration expenses | (2,616) | - | - | (2,616) |
Operating loss segment result | (2,616) | 217 | (4,038) | (6,437) |
Interest receivable | 9 | - | - | 9 |
Finance costs | (436) | - | - | (436) |
Loss for the period before taxation | (3,043) | 217 | (4,038) | (6,864) |
The segments assets and liabilities at 31 December 2013 were as follows:
Corporate 2013 | Development & Production 2013 | Exploration & Appraisal 2013 | Total 2013 | |
£'000 | £'000 | £'000 | £'000 | |
Capital expenditure | 88 | 1,388 | 19,500 | 20,976 |
Other assets | 2,705 | - | - | 2,705 |
Total liabilities | (2,165) | (578) | (5,621) | (8,364) |
The geographical split of non-current assets were as follows:
UK 2013 | Italy 2013 | ||
£'000s | £'000s | ||
Development and production assets | - | 482 | |
Fixtures, fittings and office equipment | 6 | 82 | |
Goodwill | - | 2,167 | |
Exploration and evaluation assets | - | 17,333 | |
6 | 20,970 |
3. Other Debtors
2014 | 2013 | ||||
£'000 | £'000 | ||||
Italian VAT | 1,975 | 1,923 | |||
UK VAT | 24 | 10 | |||
Other receivables | 174 | 45 | |||
2,173 | 1,978 | ||||
Currency Analysis
| 2014 £'000 | 2013 £'000 | |||
US Dollar | - | 11 | |||
Euro | 2,117 | 1,955 | |||
GBP Sterling | 56 | 12 | |||
2,173 | 1,978 | ||||
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4. Cash and Cash Equivalents
2014 £'000 | 2013 £'000 | |||
Cash at bank and in hand | 1,558 | 211 | ||
Cash equivalents: | ||||
Short term deposits | 11,051 | 332 | ||
Carrying amount 31 December | 12,608 | 543 | ||
being | ||||
in US Dollar | 1 | 23 | ||
In Euros | 11,205 | 187 | ||
In Sterling | 1,402 | 333 | ||
12,608 | 543 | |||
5. Trade & Other Payables
2014 £'000 | 2013 £'000 | ||||
Trade Payable | 1,016 | 2,317 | |||
Payroll taxes and social security | 88 | 79 | |||
Accruals | 1,090 | 401 | |||
2,194 | 2,797 | ||||
Currency Analysis | 2014 | 2013 | |||
£'000 | £'000 | ||||
Euro | 747 | 2,397 | |||
Sterling | 1,447 | 400 | |||
Total | 2,194 | 2,797 | |||
6. Loans and Borrowings
2014 £'000 | 2013 £'000 | ||||
Current Liabilities | |||||
Other loans | 131 | 229 | |||
Non-current liabilities Other loans | 13,437 | 1,947 |
7. Financial Information
The financial information set out above does not constitute the Company's financial statements for the years ended 31 December 2013 or 31 December 2014. The financial information for 2013 is derived from the financial statements for 2013 which have been delivered to the Registrar of Companies. The auditors have reported on the 2013 statements; their report was unqualified.
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