Interim Statement for period ended 30 June 2013

 

27 September 2013

 

Clontarf Energy plc

("Clontarf" or "the Company")

 

Interim Statement for the period ended 30 June 2013

 

Clontarf Energy, the AIM listed Oil Explorer, announces its interim results for the six months ending 30 June 2013.

 

Highlights:

 

Ghana

·     The board is pursuing parliamentary ratification of its agreement with the Ghana National Petroleum Corporation on Block Tano 2A.

Peru

·     Operations in Peru  on Blocks 183 and 188 were farmed out to private company POGEL in return for a 3 per cent revenue royalty subject to a maximum of US$10 million on each block.

Bolivia

·     Clontarf is actively negotiating the disposal of Petrolex and all related assets and liabilities to a Latin American group in return for a revenue royalty.

USA

·     US legacy court case settled whereby Clontarf paid certain legal fees.

 

 

CHAIRMAN'S STATEMENT

 

Ghana

The board is pursuing cabinet and parliamentary ratification of a signed Petroleum Agreement between the Ghana National Petroleum Corporation (GNPC) and Pan Andean Resources Ltd, a 60 per cent owned subsidiary of Clontarf (Petrel Resources 30 per cent, local interests 10 per cent).

 

Clontarf has held the interest in Ghana for four years.  In that time Ghana has become an oil province producing circa 100,000 barrels a day with significant upward potential.  The terms negotiated by Clontarf were viewed to be tough but fair for an unproven oil frontier.  The authorities have sought to change the terms of the agreement, particularly relating to bonds.  There is no bonding requirement in our signed agreement.  Clontarf has co-operated with the authorities putting up a US$12.5 million offer of insurance cover. Clontarf has also completed all work possible prior to moving onto the ground.

 

Peru

 

In early 2013 Clontarf farmed out our interests in Peru to a private company (POGEL).  The agreement is a 3 per cent royalty on production up to a maximum of US$5.0 million from each of two discoveries on each of the two Blocks 183 and 188; the maximum payment is US$10.0 million per block.

 

Subsequent to the agreement it has been reported that Rurelec Plc, an AIM listed South American focused power generation company, had an agreement with POGEL to provide gas for a power station in an energy short area close to Block 183.  The Company believes that this enhances the likelihood of both early drilling and, if successful, early production from Block 183. 

 

Bolivia

 

Clontarf was formed from certain assets of Pan Andean Resources Plc - sold in 2009.  These assets included operations in Bolivia and the United States.  Located in the Southern Cone of fast growing South America, Bolivia has extensive reserves of gas.  The Clontarf subsidiary, Petrolex, holds interests in the producing Monteagudo oil and gas field and in the El Dorado gas / condensate field.  However, with the nationalisation of the oil and gas industry in May 2008 the legal position of these assets is now uncertain. Taxes were raised, charging a 50% effective tax on the export price of oil with a far lower local price being paid for the oil. 

 

The state oil company, YPFB, took over the El Dorado gas/condensate field in which Clontarf claims a 10 per cent interest.  Clontarf declared force majeure on drilling commitments as we could not confirm our title.  In Monteagudo, where we hold a 30 per cent interest with Repsol holding an effective 50 per cent operating interest and Petrobras 20 per cent, production continues at a reduced level due to the absence of legislation on marginal fields.  Clontarf is actively negotiating the disposal of Petrolex and all related assets and liabilities to a local company in return for a revenue royalty.  Given the political, legal and economic uncertainties deals are difficult to conclude.

 

United States 

 

At the time of the Company's admission to AIM the directors believed that the producing assets of Endeavour were more than adequate to pay for any liability arising from an ongoing 2007 court case between Endeavour and Hunt Oil.  The case related to costs incurred by Hunt while operating Endeavour's platform on Block High Island 30L in the shallow Gulf of Mexico.  By late 2011, the price of gas had fallen so that the capital value of the gas producing assets of Endeavour were not sufficient to cover a judgement given against the company.  In spring 2013, all parties agreed to a settlement whereby Clontarf contributed towards the legal fees incurred to date.  The Bolivian and US interests are carried at nil value in the Clontarf accounts.

 

Outlook

 

Clontarf is back on an even keel and the directors are looking forward with confidence.  We believe the Tano 2A block in Ghana has significant value and we will continue to press for ratification. 

 

 

 

John Teeling

Chairman

 

27 September 2013

 

For further information please visit http://clontarfenergy.com or contact:

 

 

Clontarf Energy plc

John Teeling, Chairman                                                                                        +353 (0) 1 833 2833

David Horgan, Managing Director

James Finn, Finance Director

 

Nominated Adviser and Joint Broker

Shore Capital

Pascal Keane/Toby Gibbs, Corporate Finance                                            +44 (0)20 7408 4090

Jerry Keen, Corporate Broking

 

 

Joint Broker

Optiva Securities Limited

Jeremy King                                                                                                              +44(0)20 3137 1904

 

 

Public Relations

Blythe Weigh Communications                                                                        +44 (0)20 7138 3204

Tim Blythe                                                                                                                 +44 (0) 7816 924626

Eleanor Parry                                                                                                            +44 (0) 7551 29 3620

Halimah Hussain                                                                                                     +44 (0) 7725 978 141

 

 

Pembroke Communications

David O'Síocháin                                                                                                     +353 (0) 1 649 6486

 

 

 

 

Clontarf Energy plc
Financial Information (Unaudited)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
					Six Months Ended				Year Ended
					30 June 13		30 June 12		31 Dec 12
					Unaudited		unaudited		audited
					£'000		£'000		£'000
REVENUE					-		-		-
Cost of sales					-		-		-
GROSS PROFIT					-		-		-
Administrative expenses					( 598 )		( 246 )		( 459 )
Impairment of exploration and evaluation assets					-		-		( 845 )
OPERATING LOSS					(598 )		( 246 )		( 1,304 )
Finance revenue					1		1		1
Finance costs					( 14 )		( 1 )		( 2 )
LOSS BEFORE TAXATION					( 611 )		( 246 )		( 1,305 )
Income Tax					-		-		-
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD					( 611 )		( 246 )		( 1,305 )
LOSS PER SHARE - basic and diluted					(.30c)		(.12c)		(0.65p)
CONDENSED CONSOLIDATED BALANCE SHEET					30 June 13		30 June 12		31 Dec 12
					unaudited		unaudited		audited
					£'000		£'000		£'000
ASSETS:
NON-CURRENT ASSETS
Intangible assets					5,372		5,788		5,215
					5,372		5,788		5,215
CURRENT ASSETS
Trade and other receivables					23		24		10
Cash and cash equivalents					59		121		99
					82		145		109
TOTAL ASSETS					5,454		5,933		5,324
LIABILITIES:
CURRENT LIABILITIES
Trade payables					(1,076 )		( 194 )		( 455 )
Other payables					( 743 )		( 434 )		( 623 )
TOTAL LIABILITIES					( 1,819 )		( 628 )		( 1,078 )
NET ASSETS					3,635		5,305		4,246
EQUITY
Share capital					500		500		500
Share premium					9,249		9,249		9,249
Reserves					( 6,114)		( 4,444 )		( 5,503 )
TOTAL EQUITY					3,635		5,305		4,246
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
					Share based
	Share		Share		Payment		Retained		Total
	Capital		Premium		Reserves		Losses		Equity
	£'000		£'000		£'000		£'000		£'000
As at 1 January 2012	500		9,249		330		( 4,528 )		5,551
Total comprehensive loss							( 246 )		( 246 )
As at 30 June 2012	500		9,249		330		( 4,774 )		5,305
Total comprehensive loss					-		( 1,059 )		( 1,059 )
As at 31 December 2012	500		9,249		330		( 5,833 )		4,246
Total comprehensive loss					-		( 611 )		(611 )
As at 30 June 2013	500		9,249		330		( 6,444 )		3,635
CONDENSED CONSOLIDATED CASH FLOW					Six Months Ended				Year Ended
					30 June 13		30 June 12		31 Dec 12
					unaudited		unaudited		audited
					£'000		£'000		£'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period					( 611 )		( 246 )		( 1,305 )
Finance costs recognised in loss					14		1		2
Finance revenue recognised in loss					( 1 )		( 1 )		( 1 )
Exchange movements					3		11		13
Impairment of exploration and evaluation assets					-		-		845
					( 595 )		( 235 )		( 446 )
Movements in Working Capital					728		415		879
CASH USED IN OPERATIONS					133		180		433
Finance costs					( 14 )		( 1 )		( 2 )
Finance revenue					1		1		1
NET CASH USED IN OPERATING ACTIVITIES					120		180		432
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intangible assets					( 157 )		( 540 )		( 812 )
NET CASH USED IN INVESTING ACTIVITIES					( 157 )		( 540 )		( 812 )
NET DECREASE IN CASH AND CASH EQUIVALENTS					( 37 )		( 360 )		( 380 )
Cash and cash equivalents at beginning of the period					99		492		492
Effect of exchange rate changes on cash held					( 3 )		( 11 )		( 13 )
CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD					59		121		99

 

 

 

 

Notes:

 

1.     INFORMATION

The financial information for the six months ended June 30^th, 2013 and the comparative amounts for the six months ended June 30^th, 2012 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006.

 

The Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The accounting policies and methods of computation used in the preparation of the Interim Financial Report are consistent with those used in the Group 2012 Annual Report, which is available at www.clontarfenergy.com

 

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

 

2.     No dividend is proposed in respect of the period.

 

3.     LOSS PER SHARE

Basic loss per share is computed by dividing the loss after taxation for the year available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted earnings per share is computed by dividing the loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

 

The following table sets out the computation for basic and diluted earnings per share (EPS):

 

 

	Six months Ended				Year Ended
	30 June 13		30 June 12		31 Dec 12
	£		£		£
Numerator
For basic and diluted EPS retained loss	(611,146)		(246,261)		(1,304,592)
Denominator Weighted average number of ordinary shares	200,184,469		200,184,469		200,184,469
Basic EPS	(0.30p)		(0.12p)		(0.65p)
Diluted EPS	(0.30p)		(0.12p)		(0.65p)

 

Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive and is therefore excluded.

 

4.    INTANGIBLE ASSETS

 

Exploration and evaluation assets:					30 June 13		30 June 12		31 Dec 12
					£'000		£'000		£'000
Cost:
At 1 January					7,788		6,976		6,976
Additions					157		540		812
Closing Balance					7,945		7,516		7,788
Impairment:
At 1 January					2,573		1,728		1,728
Provision for impairment					-		-		845
Closing Balance					2,573		1,728		2,573
Carrying value:
At 1 January					5,215		5,248		5,248
At period end					5,372		5,788		5,215

 

Regional Analysis		30 Jun 13 £'000		30 Jun 12 £'000		31 Dec 12 £'000
Peru		4,897		4,598		4,750
Ghana		475		463		465
Bolivia		-		727		-
		5,372		5,788		5,215

 

Exploration and evaluation assets relates to expenditure incurred in prospecting and exploration for oil and gas in Peru and Ghana. The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. 

 

On 15 May 2013, the company signed an agreement with Peruvian Oil and Gas Exploration Limited (POGEL). Under the agreement POGEL, an energy investment company, undertook to put up performance bonds and to conduct exploration work on the Peruvian Blocks. Clontarf Energy converted its interest to an overriding royalty of 3% on production from any commercial discovery. The royalty payment is capped at US$10 million per block and US$20 million in total.

 

The Group's projects in Bolivia continue to encounter a number of prolonged legal disputes. Due to the political and legal uncertainty the directors have decided to provide in full against the carrying value of the Bolivian assets. Accordingly an impairment provision of £844,782 in respect of the full carrying value of the Group's Bolivian assets had been recorded by the Group in the year to 31 December 2012.

 

The realisation of these intangible assets is dependent on the discovery and successful development of economic oil and gas reserves which is affected by the risks outlined below.  Should this prove unsuccessful the value included in the balance sheet would be written off to the statement of comprehensive income.

 

               The group's activities are subject to a number of significant potential risks including:

                - licence obligations

                - requirement for further funding

                - geological and development risks

                - title to assets

- political risks

               

Having reviewed the deferred exploration and evaluation development expenditure at 30 June 2013, the directors are satisfied that the value of the intangible asset is not less than carrying net book value.

 

 

5.    TRADE PAYABLES

 

					30 June 13		30 June 12		31 Dec 12
					£'000		£'000		£'000
Trade payables					439		182		414
Other accruals					637		12		41
					1,076		194		455

 

Included in other accruals is a provision of £600,000 being the total cost to the group, including legal fees, of the settlement with Hunt Oil.

 

 

6.    OTHER PAYABLES

 

					30 June 13		30 June 12		31 Dec 12
					£'000		£'000		£'000
Amounts due to directors					743		434		623
					743		434		623

 

Other payables relate to amounts due to directors' accrued but not paid at period end.

 

7.    The Interim Report for the six months to June 30^th, 2013 was approved by the Directors on 26 September 2013.

 

 

8.   On 24 July 2013, the company announced that legal proceedings in Texas against subsidiaries of the company and against certain directors of the company had been settled at a total cost, including legal fees, to the group of £600,000. The directors of Clontarf Energy, John Teeling and James Finn agreed to lend the company £300,000. In addition the group borrowed £300,000 from Finanzas & Legal Corporativos PFI.

 

 

9.    The Company had cash balances of £59,000 as at 30 June 2013. The Directors consider that Clontarf is able to continue to operate within its current levels of funding in the immediate term although cash resources are limited. The Board is currently actively considering the best manner in which to address the future financing of the Company.

 

 

10. Copies of the interim report will be mailed shortly only to those shareholders who have elected to receive it. Otherwise, shareholders will be notified that the Interim Report will be available on the website at www.clontarfenergy.com. Copies of the Interim Report will also be available for collection at the Company's Registered Office at 20-22 Bedford Row, London WC1R 4JS.