27th Sep 2006 07:01
Rift Oil PLC27 September 2006 For Immediate Release 27 September 2006 Rift Oil PLC ("Rift" or the "Company") Preliminary Results for the Year ended 31 March 2006 Rift Oil PLC (AIM : RIFT), the oil and gas exploration company with assets inPapua New Guinea, is pleased to announce its preliminary results for the yearended 31 March 2006. Summary of key points: • Admission to AIM in April 2006 • Purchase of 65% of Coral Sea Rig • Drilled Douglas 1 well to 1,978 metres • Discovery of potentially large reserves of gas • Became operator of PPL 235 Licence in August 2006 • Completed 54km of seismic survey on PPL 235 Ian Gowrie-Smith, Chairman, commented: "The last year has been extremely active for Rift and the high level of activityhas continued since our flotation on AIM in April 2006. Our primary mission wasthe acquisition of a suitable rig which we were able to acquire and place insitu to begin drilling on PPL 235 in April. We have successfully drilled toapproximately 2,000 metres and were pleased to announce the discovery ofpotentially significant reserves of gas. "We expect this rapid pace to continue and in the short-term we are developingthe best way to commercialise this discovery, negotiating the deployment of ourdrilling rig and are working hard to increase our acreage in PNG so that we cancontinue to explore this area in a rational and effective manner." For further information please contact: Rift Oil PLC 020 73409970David Lees, Finance Director Buchanan Communications 020 7466 5000Tim AndersonIsabel Podda Chairman's Statement We have had an extremely active year; the financial reports for the year to 31March 2006 reflect the accounting consequences of many of the milestones thathave been achieved. We started the current financial year with admission of the Company to tradingon AIM on 19 April 2006. We have raised £7.3 million in total sinceincorporation which has resulted in a current capitalisation of approximately£15 million. Due to the worldwide shortage of rigs for hire we were forced to consider theacquisition of a rig. Our Management located a suitable rig in America and actedpromptly and professionally in beating all the competition to this purchase. Wepurchased 65% of the rig with Austral Pacific, our partners in PPL 235, owningthe balance. It was then refitted, tested and shipped to Port Moresby, barged upthe river to our staging post on the Strickland River some 25 kms from thedrilling site and transported by helicopter the remainder of the way. No meanfeat. The drilling of the Douglas 1 well commenced in April 2006 and on 25 May 2006 weannounced that we had reached the target depth of 1,978 metres afterencountering the minimum of delays and difficulties usually experienced whenconducting operations in such a remote location. On 1 June 2006, we announced that we had discovered potentially significantreserves of gas in a large structure with a maximum area of over 40 square kms.We have excellent electric log data which shows that the gas discovered is sweetgas in two zones with good deliverability and likely moderate condensatecontent. We therefore took the decision not to conduct any more tests on theDouglas 1 well at this time, but to use our funds to locate appraisal wells andfirm up other targets by acquiring seismic data. As to the future, we expect the rapid pace to continue. We agreed with AustralPacific (our 35% joint venture partners) to take over the role of operator ofthe joint venture in relation to all activities on PPL 235, and this took effecton 28 August 2006. As operator, we set out three key tasks that we felt needed to be carried out assoon as possible. The first task for Rift was the suspension of the Douglas 1well so we can re-enter it at a later date for production work and to enable usto move the rig off-site for other work. I can now report that the Douglas 1well is safely secured so that we can return at any future time for production/testing work. The second task was the acquisition of seismic in the permit. We havesuccessfully completed the acquisition of a seismic survey covering 54kms. Thishas involved our contractors and around 200 local villagers cutting linesthrough the jungle, bridging streams, laying cable, detonating explosives andrecording the data. This will assist us to identify appraisal well targets onthe Douglas structure and tighten up our target location on Puk Puk, theprospect to the northwest of Douglas, which appears to be a separate structure. The third task is to commission a study to define the strategy forcommercialisation of the discovery. Although the Douglas 1 well did notencounter oil we have however found a potentially large reserve of gas, withsome condensate, at a time when gas deposits, even those located in more remotelocations relative to market access, have become valuable assets. It will be achallenge to commercialise but the PNG forelands area, where Douglas is located,is near a navigable river and also a route to the coast would be over reasonablyflat terrain. Obviously the main challenge is to achieve cash flow from the gasasset and we are focussed on prioritising this. THE COMPANY HAS OTHER VALUABLE ASSETS: We have a further 12 identified structures in PPL 235, and we are expecting tobe awarded PPL 261 which will provide us with a further approx 4,000 sq km in ahighly prospective zone. This area is immediately to the north of PPL 235, tothe north, and will result in a consolidated block of prospective acreage ofapproximately 7,000 sq km for us to explore and develop. Once awarded, theownership of PPL 261 will be in the name of Foreland Oil Limited (for and onbehalf of Rift) as to 50% and Trans-Orient Petroleum (PNG) Limited (for and onbehalf of Austral) as to 50%. We have lodged another separate application, APPL 289, for acreage adjacent andto the east of PPL 235 in the expectation that we may continue to explore thisarea in a rational and effective manner. This will be owned 100% by Rift. Lastly, the Coral Sea-1 drilling rig has performed admirably in the drilling ofDouglas. Negotiations are underway as to its future deployment. Ideally, wewould like to lease it to parties where we earn an interest in other areas, andhave it available to return to PPL 235 when we are ready to drill again. I would like to extend my personal thanks to our investors whose financialsupport was critical to the creation of the Company and the subsequent drillingof Douglas 1. Our judgement in taking on this opportunity back in 2004 hasproven to be correct with the discovery of the large deposits of gas on thefirst exploration well. All the above milestones could not have been reached without the dedication ofthe management team lead by Managing Director, Jenni Lean and the support ofyou, the shareholders. The Board of Directors wish to extend their gratitude inthe expectation of another momentous year. Ian Gowrie-SmithChairman26 September 2006 Consolidated Profit and Loss AccountFor the year ended 31 March 2006 2006 2005 Note £'000 £'000 Turnover 1 - -Administrative expenses (261) (124) Operating loss (261) (124) Bank interest receivable 59 13 Loss on ordinary activities before 1 (202) (111)taxation Tax on loss on ordinary activities 3 (83) - Loss on ordinary activities after 12,13 (285) (111)taxation Loss per share 5 (0.095)p (0.037)p All operations are continuing. There were no recognised gains or losses other than the loss for the financialyear. Balance SheetAt 31 March 2006 Group Group Company Company 2006 2005 2006 2005 Note £'000 £'000 £'000 £'000 Fixed assetsIntangible assets 6 7,133 7,704 - -Tangible assets 7 1,318 - - -Investments 8 - - 4,505 4,505 8,451 7,704 4,505 4,505 Current assetsDebtors: due within one year 9 4 111 4 111Debtors: due after one year 9 - - 4,457 3,321Cash at bank and in hand 852 1,057 852 1,057 856 1,168 5,313 4,489 Creditors: amounts falling due 10 (188) (41) (188) (41)within one year Net current assets 668 1,127 5,125 4,448 Total assets less current 9,119 8,831 9,630 8,953liabilities Capital and reservesCalled up share capital 11 360 360 360 360Shares to be issued 11 573 - 573 -Share premium account 12 8,582 8,582 8,582 8,582Profit and loss account 12 (396) (111) 115 11 Shareholders' funds 13 9,119 8,831 9,630 8,953 The financial statements were approved by the Board of Directors on 26 September2006. The accompanying accounting policies and notes form an integral part of thesefinancial statements. D J LeesDirector Consolidated Cash Flow StatementFor the year ended 31 March 2006 2006 2006 2005 2005 Note £'000 £'000 £'000 £'000 Net cash outflow from operating 14 (87) (194)activities Returns on investments and servicingof financeInterest received 59 13 Taxation (3) - Capital expenditurePurchase of intangible fixed assets (747) (3,199) Net cash outflow before financing (778) (3,380) FinancingIssue of ordinary share capital - 4,505Expenses paid in connection with - (68)share issuesReceived for shares to be issued 573 -Net cash inflow from financing 573 4,437 (Decrease)/increase in cash 15 (205) 1,057 Notes to the Financial Statements For the year ended 31 March 2006 1 TURNOVER AND LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION There were no sales during the year. An analysis of loss on ordinary activities by geographical market is givenbelow: Operating loss Operating Loss 2006 2005 £'000 £'000 United Kingdom (186) (25)Rest of the world (16) (86) (202) (111) No segmental analysis of net assets has been provided, as the assets andliabilities attributable to overseas operations are not separately identified. The loss on ordinary activities before taxation is stated after charging: 2006 2005 £'000 £'000 Auditors' remuneration- audit services 20 15- non audit services 4 3 In addition, an amount of £19,000 was paid to the auditors in respect ofnon-audit services for work as reporting accountants during the year. In 2005 anamount of £15,000 paid to the auditors in respect of non-audit services for workas reporting accountants was charged to share premium account. 2 DIRECTORS AND EMPLOYEES Staff costs Staff costs during the year (including directors' emoluments) for the Group andCompany were as follows: 2006 2005 £'000 £'000 Wages and salaries 73 11Social security costs 4 1Pension costs 5 - 82 12 The average number of employees of the Company, who were all directors, duringthe year was four. 3 TAX ON LOSS ON ORDINARY ACTIVITIES Tax charge for the period 2006 2005 £'000 £'000 UK corporation tax at 30% 78 -Under provision for tax in prior period 5 - Current period tax 83 - An explanation of the tax position compared to the Group reported results is setout below: 2006 2005 £'000 £'000 Loss on ordinary activities before taxation (202) (111)Loss on ordinary activities before taxation multiplied by (61) (21)standard corporation tax rate of 30% Effect of:Expenses not deductible 22 17Overseas tax losses not available to carry forward 117 4Adjustment in respect of prior periods 5 - Current tax charge for the year 83 - 4 LOSS FOR THE FINANCIAL YEAR The Company has taken advantage of section 230 of the Companies Act 1985 and hasnot included its own profit and loss account in these financial statements. Theparent company's profit after tax for the year was £104,000 (2005: £11,000). 5 LOSS PER SHARE The calculation for the basic loss per share is based upon the loss attributableto ordinary shareholders divided by the weighted average number of shares inissue during the year. Reconciliation of the loss and the weighted average number of shares used incalculation are set out below: Basic loss per share 2006 2005 Loss on ordinary activities after tax (£000's) (285) (111)Weighted average number of shares (000's) 299,132 299,132Amount of loss per share (0.095)p (0.037)p The weighted average number of shares has been adjusted for the bonus issuesubsequent to the year end. The options are anti-dilutive so there is no dilutedloss per share. 6 INTANGIBLE FIXED ASSETS Oil and gas exploration and appraisal assets Oil and gas prospecting licence costsGroup £'000 Cost and net book valueAt 1 April 2005 7,704Additions 747Transfer to tangible assets (1,318) At 31 March 2006 7,133 The Company acquired and refurbished an oil drilling rig in the year usingamounts allocated to the oil and gas prospecting licence costs. 7 TANGIBLE FIXED ASSETS Oil drilling rig costsGroup £'000 CostAt 1 April 2005 -Transfers from intangible assets 1,318 At 31 March 2006 1,318 DepreciationAt 1 April 2005 -Charge for the year - At 31 March 2006 - Net book amount at 31 March 2006 1,318 Net book amount at 31 March 2005 - 8 INVESTMENTS Investments in subsidiary undertakingsCompany £'000 Cost and net book valueAt 1 April 2005 and 31 March 2006 4,505 At 31 March 2006, the subsidiary undertakings were: Investments in subsidiary undertakings £'000Subsidiary undertaking Country of Class of share held Proportion incorporation held Foreland Oil Limited British Virgin Ordinary 100% IslandsCoral Sea Drilling British Virgin Ordinary 100%(PNG) Ltd IslandsPPL 261 Limited British Virgin Ordinary 100% IslandsCoral Sea Drilling Ltd Papua New Guinea Ordinary 100% Foreland Oil Limited is engaged in oil and gas exploration. All othersubsidiaries are dormant. 9 DEBTORS 2006 2005Group £'000 £'000Due within one year:VAT recoverable 3 14Other debtors 1 97 4 111 10 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2006 2005Group and Company £'000 £'000 Trade creditors 7 4Corporation tax 80 -Social security and other taxes 3 2Other creditors - 9Accruals and deferred income 98 26 188 41 11 SHARE CAPITAL 2006 2005 £'000 £'000Authorised100,000,000 ordinary shares of 1p each 1,000 1,000 Allotted, called up and fully paid36,040,000 ordinary shares of 1p each 360 360 Shares to be issued The Group received £573,000 prior to the year end for shares which were issuedin April 2006. The balance has been carried forward and will be transferred toshare capital and share premium in April 2006. 12 SHARE PREMIUM ACCOUNT AND RESERVES Group and Group and Company Company Share Group Company Shares to Premium Profit and Profit and be issued account loss loss account accountGroup and company £'000 £'000 £'000 £'000 At 1 April 2005 - 8,582 (111) 11Received in the year (note 11) 573 - - -Retained loss for the year - - (285) 104 At 31 March 2006 573 8,582 (396) 115 13 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2006 2005Group £'000 £'000 Loss for the financial year (285) (111)Issue of shares - 9,010Issue costs written off to share premium account - (68)Shares to be issued 573 - Net increase in shareholders' funds 288 8,831Shareholders' funds at 1 April 2005 8,831 - Shareholders' funds at 31 March 2006 9,119 8,831 14 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2006 2005 £'000 £'000 Operating loss (261) (124)Decrease/(increase) in debtors 107 (111)Increase in creditors 67 41 Net cash outflow from operating activities (87) (194) 15 RECONCILIATION NET CASH FLOW TO MOVEMENTS IN NET FUNDS 2006 2005 £'000 £'000 (Decrease)/increase in cash in the year (205) 1,057Net funds at 1 April 1,057 - Net funds at 31 March 852 1,057 16 FINANCIAL INSTRUMENTS The Group uses financial instruments comprising only cash balances that arisefrom its operations. The main purpose of these financial instruments is to raisefinance for the Group's operations and new acquisitions. Short-term debtors and creditors Short-term debtors and creditors have been excluded from all the followingdisclosures, other than the currency risk disclosure. Currency risk The Group operates within the UK and Papua New Guinea (PNG) and all transactionsare denominated in sterling, PNG kinas and US dollars. As such the Company isexposed to transaction foreign exchange risk. The mix of currencies and terms oftrade is such that the directors believe that the Company's exposure is minimaland consequently they do not specifically seek to hedge that exposure. At 31March 2006, the Company had cash balances of £21,000 (2004: £10,000) in USdollars and £125,000 (2004:nil) in PNG kinas. Most of the Group's funds are insterling with only sufficient funds held overseas to meet local costs. Funds areperiodically transferred overseas to meet local costs when required. Fair values The fair values of the Group's instruments are considered equal to the bookvalue. Liquidity risk Liquidity risk is the risk that the Group will have insufficient funds to meetits liabilities as they fall due. The directors monitor cash flow on a dailybasis and at monthly Board meetings in the context of their expectations for thebusiness to ensure sufficient liquidity is available to meet foreseeable needs. Interest rate risk The directors do not consider that the business is exposed to material interestrate risk. The Group finances its operations through cash reserves. The cashreserves held by the Group during the year have negated the need to use anyinterest bearing short-term borrowings. 17 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES Neither the Company nor the Group had any capital commitments or contingentliabilities at 31 March 2006. 18 POST BALANCE SHEET EVENTS On 10 April 2006, the Company made a bonus issue of a total of 263,091,999 newordinary shares of 1p each to the holders of the then issued ordinary shares onthe basis of 7.3 ordinary shares for each ordinary share then held. These newOrdinary Shares were paid up by applying a total of £2,630,920 standing to thecredit of the Company's share premium account. As part of this reorganisation inaccordance with the terms of the Warrant Instrument, each Warrant holderreceived 7.3 new Warrants for every Warrant owned and the exercise price for theWarrants was reduced from £0.75 to £0.09. On 10 April 2006, immediately after the bonus issue referred to above, theCompany issued a further 24,080,000 ordinary shares as part of the PrivatePlacing to various subscribers at an issue price of 5p per ordinary shareraising an aggregate of £1.2m. The Company issued a further 22,600,000 ordinaryshares at 5p each on 19 April 2006, the same day it was admitted to the AIMMarket of the London Stock Exchange PLC. 19 STATUS OF ACCOUNTS The financial information set out above does not constitute the Group'sstatutory accounts for the years ended 31 March 2006 or 31 March 2005 but isderived from those accounts. Statutory accounts for the year ended 31 March 2005have been delivered to the Registrar of Companies, and those for the year ended31 March 2006 will be delivered following the Company's Annual General Meeting.The auditors have reported on those accounts; their reports were unqualified anddid not contain statements under Section 237(2) or (3) of the Companies Act1985. The statutory accounts for the year ended 31 March 2006 will be posted toshareholders shortly. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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