Interim Financial Report 31 December 2012

OILEX LTD

CONDENSED CONSOLIDATED INTERIM

FINANCIAL REPORT

For the half-year ended 31 December 2012

 

 

CONTENTS

 

Directors' Report

Auditor's Independence Declaration

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows

Notes to the Condensed Consolidated Interim Financial Report

Directors' Declaration

Independent Review Report

 

 

DIRECTORS' REPORT

 

The Directors present their report together with the interim financial report of the condensed consolidated entity, being Oilex Ltd (the "Company") and its controlled entities (the "Group") for the half-year ended 31 December 2012 and the review report thereon.

 

 

 

DIRECTORS

The directors of the Company at any time during the interim period and until the date of this report are detailed below. All directors were in office for this entire period unless otherwise stated.

 

Mr Max Cozijn                   Non-Executive Chairman

Mr Sundeep Bhandari       Non-Executive Vice Chairman

Mr Ronald Miller                Acting Managing Director (Previously Non-Executive Director to 31 December 2012)

Dr Bruce McCarthy           Non-Executive Director (Previously Managing Director to 31 December 2012)

Mr Raymond Barnes         Technical Director (Resigned 14 November 2012)

Mr Ben Clube                    Finance Director and Company Secretary (Resigned 14 September 2012)

 

 

REVIEW OF OPERATIONS

Financial Performance

The Group incurred a consolidated loss after income tax of $2,486,917 for the half-year (31 December 2011: loss of $2,623,374). The loss includes $1,013,999 incurred on exploration expenditure (with $601,857 expensed in India) and $1,239,218 incurred on employee and administrative expenditure. The Company is continuing its focus on cost reduction initiatives which do not impair its technical and commercial capabilities. Cash and cash equivalents held by the Group as at 31 December 2012 totalled $6,971,177 (30 June 2012: cash and cash equivalents $4,363,383).

 

Operations

Oilex Ltd is a dual listed (ASX and AIM) oil and gas exploration and production company. The Company is continuing its transition to an early mover unconventional energy producer, with primary focus on evaluating and commercialising the extensive Eocene low permeability ("tight") reservoirs in its onshore Cambay Field located in the state of Gujarat, India, where energy market fundamentals are attractive. The Company is applying leading-edge tight reservoir evaluation, drilling and production technologies and techniques which have been developed in recent years in the rapidly expanding "tight" and shale gas industry in North America. The Company also has interests in exploration assets offshore Western Australia, the Timor Sea and onshore Sumatra, Indonesia.

The main events for the Company during the period were:

·      The successful $7.09 million (before expenses of $1,792,385) capital raising via a fully underwritten entitlement offer.

·      The incorporation of the recommendations and insights, from an independent US expert who reviewed the Cambay-76H well operations, into work programme and development planning activities while continuing to work through the approval processes for Cambay.

·      The Company is in the process of finalising well design and assessing the availability of a rig and long lead time equipment for the Cambay offset well.

·      The Company continues working with the regulatory authority and the Directorate General of Hydrocarbons to secure approval of its application to resume production from Cambay-73.  This effort includes a plan to sell small volumes of gas into a local market to minimise flaring. Potential gas buyers for Cambay-73 gas have been identified and approached as part of preparation for restarting production.

·      In JPDA 06-103 the Bazartete-1 well location has been selected as the site of the third commitment well. Please refer to the 31 December Quarterly Report to Shareholders released 29 January 2013 for further details including of the range of prospective resources.

·      The Initial Permit Period for JPDA 06-103 ended on 15 January 2013. Oilex as Operator in requested an extension to enable the Joint Venture to secure a rig to drill the Bazartete Well. The Autoridade Nacional do Petroleo of Timor Lesté on 18 January 2013 granted a conditional extension to the Joint Venture to 15 January 2014.

·      On 28 December 2013 the ANP approved two partial relinquishments of PSC JPDA 06-103, the remaining Contract Area is now 1871 km².

·      The WA-388-P offshore exploration permit term expired in August 2012 and following discussion with the National Offshore Petroleum Titles Administrator ("NOPTA"), the Operator Apache Northwest Pty Ltd advised NOPTA on 8 October 2012 that the joint venture partners had elected not to proceed with the renewal of the permit. NOPTA advised on 25 October 2012 that the permit is deemed to have expired on 27 August 2012.

·      Negotiations are continuing as Oilex attempts to achieve a commercial resolution to the West Kampar Joint Venture dispute.

 

Further details are contained within releases made by the Company over this period.

Significant Events After Balance Date

The Cambay Joint Venture Operating Committee in January 2013 approved the work programme and budget for the offset well which has subsequently been submitted to the Management Committee for approval.

 

The Autoridade Nacional do Petroleo ("ANP") advised on 15 January 2013 that it had granted the JPDA 06-103 Joint Venture a conditional extension to test the Bazartete prospect by 15 January 2014 on the condition that the Joint Venture secures a letter of intent or a contract for a drilling rig by 15 June 2013.

 

On 29 January 2013 Oilex announced the proposed issue of 2 million unlisted options exercisable at 15 cents with a 3 year term, to Mr R Miller as part of the remuneration package in his capacity as Acting Managing Director, subject to shareholder approval.

 

On 30 January 2013 Oilex announced the appointment of Mr R Ierace as Chief Financial Officer and Company Secretary. Mr Ierace's remuneration package includes the granting of 1 million unlisted options exercisable at 15 cents expiring 30 January 2016 vesting on date of grant and 1 million unlisted options exercisable at 25 cents, expiring 30 January 2017 vesting after twelve months service.

 

There are no other significant subsequent events occurring after balance date.

 

CORPORATE MATTERS

Capital Structure

 

At 31 December 2012, Oilex Ltd retained cash of $6,971,177.

As at 31 December 2012 the company had total issued capital of 354,679,408 ordinary shares.

During the half-year ended 31 December 2012, Oilex successfully completed a fully underwritten entitlement offer. On 2 August 2012 Oilex announced a fully underwritten renounceable entitlement offer of 101,329,954 new shares on the basis of 2 new shares for every 5 shares held, at an issue price of $0.07 per new share with 1 attaching new option exercisable at $0.15 per share on or before 7 September 2015 for every 2 new shares subscribed for, raising $7,093,097 before expenses.

The issue of the new shares and options on 7 September 2012 increased the number of shares on issue from 253,324,885 to 354,654,839 and the number of listed options to 50,665,017.

Shareholders at a General Meeting on 7 September 2012 approved the allotment of 101,329,954 underwriter options at an exercise price of $0.15 expiring 7 September 2015, increasing the total number of listed options issued from 50,665,017 to 151,994,971.

During the half-year ended 31 December 2012, 2,569 listed $0.15 options were exercised and 18,687,500 unlisted options expired unexercised. Oilex also issued 6 million unlisted options during the period to Mr M Maloney following his appointment as Chief Operating Officer responsible for the development of the Cambay tight oil and gas project. Mr Maloney has over 30 years experience in the oil and gas industry.

The 6 million unlisted options granted to Mr Maloney were comprised of 3 million unlisted options exercisable at 15 cents expiring 17 December 2015 vesting after twelve months service and 3 million unlisted options exercisable at 25 cents, expiring 17 December 2016 vesting after two years service.

 

As at 31 December 2012 there were 151,992,402 listed options exercisable at $0.15 and a total of 19,037,500 unlisted options exercisable at prices of between $0.15 and $0.63, full details are shown below.

 

Expiry Date	Exercise Price	Number of Options	Expiry Date	Exercise Price	Number of Options
Unlisted			Listed
1 August 2013	$0.50	75,000	7 September  2015	$0.15	151,992,402
1 July 2014	$0.30	4,150,000
10 November 2014	$0.37	8,737,500
1 August 2015	$0.63	75,000
17 December 2015	$.015	3,000,000
17 December 2016	$0.25	3,000,000
Total		19,037,500	Total		151,992,402

 

LEAD AUDITOR'S INDEPENDENCE DECLARATION

 

The lead auditor's independence declaration is set out on page 4 and forms part of the Directors' Report for the half-year ended

31 December 2012.

 

Signed in accordance with a resolution of the Board of Directors.

 

Mr R Miller                                                                              Mr M Cozijn

Acting Managing Director                                                         Chairman

 

Leederville

Western Australia

 

15 February 2013

 

 

KPMG

Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of Oilex Ltd

I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2012there have been:

(i)             no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

(ii)            no contraventions of any applicable code of professional conduct in relation to the review.

 

KPMG

 

Graham Hogg
Partner

Perth, Western Australia
15 February 2013

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

 Liability limited by a scheme approved under Professional Standards Legislation.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

 

	Note	31 December 2012 $	31 December 2011 $
Revenue	6(a)	91,475	147,315
Cost of sales	6(b)	(198,753)	(233,241)
Gross profit/(loss)		(107,278)	(85,926)
Exploration expenditure		(1,013,999)	(1,747,024)
Administration expense	6(c)	(1,239,218)	(1,047,060)
Share-based payments		(121,969)	(63,237)
Other expenses	6(d)	(67,873)	(130,117)
Results from operating activities		(2,550,337)	(3,073,364)
Finance income		41,346	130,329
Finance costs		(161)	(25)
Foreign exchange gain/(loss)	6(e)	22,235	319,686
Net finance income/(loss)		63,420	449,990
Loss before income tax		(2,486,917)	(2,623,374)
Income tax expense		-	-
Loss for the period		(2,486,917)	(2,623,374)
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference		(330,958)	1,326,880
Other comprehensive (loss)/income for the period, net of income tax		(330,958)	1,326,880
Total comprehensive loss for the period		(2,817,875)	(1,296,494)
Earnings per share
Basic loss per share (cents per share)		0.78	1.04
Diluted loss per share (cents per share)		0.78	1.04

 

The above Consolidated Statement of Comprehensive Income is to be read in conjunction with the accompanying notes.

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2012

 

	Note	31 December 2012 $	30 June 2012 $
Assets
Cash and cash equivalents		6,971,177	4,363,383
Trade and other receivables		2,394,210	3,477,289
Prepayments		124,956	215,239
Inventories		1,412,163	1,420,873
Total current assets		10,902,506	9,476,784
Exploration and evaluation	7	23,663,571	23,808,708
Property, plant and equipment		297,461	318,215
Total non-current assets		23,961,032	24,126,923
Total assets		34,863,538	33,603,707
Liabilities
Trade and other payables		3,730,400	5,937,684
Employee benefits		194,665	206,864
Total current liabilities		3,925,065	6,144,548
Provisions		2,774,560	2,810,758
Total non-current liabilities		2,774,560	2,810,758
Total liabilities		6,699,625	8,955,306
Net assets		28,163,913	24,648,401
Equity
Issued capital		135,356,755	130,057,307
Reserves		3,600,407	5,031,392
Accumulated losses		(110,793,249)	(110,440,298)
Total equity		28,163,913	24,648,401

 

 

The above Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

 

	Attributable to Equity Holders of the Company
	Issued  Capital	Option Reserve	Foreign Currency Translation Reserve	Accumulated Losses	Total Equity
	$	$	$	$	$
Balance at 1 July 2011	130,043,957	8,373,339	(949,080)	(101,312,478)	36,155,738
Total Comprehensive (loss)/income for the period
Loss	-	-	-	(2,623,374)	(2,623,374)
Other comprehensive income
Foreign currency translation differences	-	-	1,326,880	-	1,326,880
Total other comprehensive income	-	-	1,326,880	-	1,326,880
Total comprehensive (loss)/ income for the period	-	-	1,326,880	(2,623,374)	(1,296,494)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Shares issued	15,000	-	-	-	15,000
Capital raising costs	(1,650)	-	-	-	(1,650)
Transfer on exercise of options or performance rights	-	(5,573)	-	5,573	-
Transfers on forfeited options	-	(3,352,017)	-	3,352,017	-
Share-based payment transactions	-	63,237	-	-	63,237
Total transactions with owners	13,350	(3,294,353)	-	3,357,590	76,587
Balance at 31 December 2011	130,057,307	5,078,986	377,800	(100,578,262)	34,935,831
Balance at 1 July 2012	130,057,307	4,519,584	511,808	(110,440,298)	24,648,401
Total Comprehensive (loss)/income for the period
Loss	-	-	-	(2,486,917)	(2,486,917)
Other comprehensive income
Foreign currency translation differences	-	-	(330,958)	-	(330,958)
Total other comprehensive income	-	-	(330,958)	-	(330,958)
Total comprehensive (loss)/ income for the period	-	-	(330,958)	(2,486,917)	(2,817,875)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Shares issued	7,093,482	-	-	-	7,093,482
Capital raising costs(1)	(1,794,034)	911,970	-	-	(882,064)
Transfer on exercise of options or performance rights	-	(17,380)	-	17,380	-
Transfers on forfeited options	-	(2,116,586)	-	2,116,586	-
Share-based payment transactions	-	121,969	-	-	121,969
Total transactions with owners	5,299,448	(1,100,027)	-	2,133,966	6,333,387
Balance at 31 December 2012	135,356,755	3,419,557	180,850	(110,793,249)	28,163,913

 

(1) Capital raising costs include the fair value of listed options granted to the underwriter and sub-underwriter following shareholder approval.

The above Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

	31 December 2012 $	31 December 2011 $
Cash flows from operating activities
Cash receipts from customers	80,196	145,772
Payments to suppliers and employees	(1,311,865)	(1,152,919)
Cash outflows from operations	(1,231,669)	(1,007,147)
Payments for exploration and evaluation expenses	(568,771)	(1,459,714)
Interest received	39,744	144,885
Interest paid	(160)	-
Net cash used in operating activities	(1,760,856)	(2,321,976)
Cash flows from investing activities
Advances (to)/from joint ventures	(22,127)	185
Payments for capitalised exploration and evaluation	(1,847,498)	(6,591,361)
Acquisition of property, plant and equipment	(48,905)	(28,736)
Net cash used in investing activities	(1,918,530)	(6,619,912)
Cash flows from financing activities
Proceeds from issue of share capital	7,093,482	15,000
Payment for share issue costs	(825,976)	(1,650)
Net cash from financing activities	6,267,506	13,350
Net increase/(decrease) in cash held	2,588,120	(8,928,538)
Cash and cash equivalents at 1 July	4,363,383	19,070,262
Effect of exchange rate fluctuations on cash held	19,674	317,659
Cash and cash equivalents at 31 December	6,971,177	10,459,383

 

The above Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

 

1.   REPORTING ENTITY

Oilex Ltd (the "Company") is a company domiciled in Australia. The condensed consolidated interim financial report of the Company as at and for the half-year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the "Group" and individually as "Group Entities") and the Group's interest in associates and jointly controlled entities. Oilex Ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange ("ASX") and on the AIM Market of the London Stock Exchange. The Group is a for-profit entity and is primarily involved in the exploration, evaluation, development and production of hydrocarbons.

 

The consolidated annual financial report of the Group as at and for the year ended 30 June 2012 is available upon request from the Company's registered office at Level One, 660 Newcastle Street, Leederville, Western Australia 6007 or at www.oilex.com.au.

 

2.   BASIS OF PREPARATION

(a)  Statement of Compliance

The condensed consolidated interim financial report is a general purpose condensed financial report which has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. The condensed consolidated interim financial report does not include all of the notes and information included in an annual financial report and accordingly this report should be read in conjunction with the consolidated annual financial report of the Group as at and for the year ended 30 June 2012 and any public announcements made by Oilex Ltd during the period ended 31 December 2012.

 

This condensed consolidated interim financial report was authorised for issue by the Board of Directors on 15 February 2013.

 

(b)  Going Concern

The financial report has been prepared on the going concern basis which contemplates realisation of assets and settlement of liabilities in the normal course of business. The Group has incurred a loss of $2,486,917 during the half year and as at 31 December 2012, the Group's current assets exceeded current liabilities by $6,977,441. The Group will continue to manage its expenditure to ensure that it has sufficient cash reserves for the next twelve months. The Group will require funds within the next twelve months in order to meet planned joint venture arrangements for its projects, noting that the timing and amount of these expenditures may be able to be varied as economic circumstances allow although some commitments exist in the medium term.

 

Given the current macro-economic environment, the Directors note that uncertainty exists in the Group's ability to access funds to meet these arrangements and therefore realise the value of the assets. Possible funding options available to the Group may include the sale of interests in the Group's assets, farm out opportunities or a future capital raising.

 

Notwithstanding these uncertainties, the Directors believe it is appropriate to prepare the consolidated financial statements on a going concern basis as, and in the opinion of the Directors, the Company has adequate plans in place to meet its minimum administrative, evaluation and development expenditures for at least twelve months from the date of this report.

 

3.   SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by Oilex in this condensed consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2012.

 

4.   ESTIMATES

The preparation of an interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

 

In preparing this condensed consolidated interim financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 30 June 2012.