Final Results for the Year Ended 31 December 2013

 

 

Statement Accompanying the Final Results

 

Clontarf Energy is going through a difficult time. The market for resource shares has been very challenging for some time, we have problems with our projects and our share price has suffered. Yet in the past year we have made significant progress. We settled a contentious court case in Texas, we farmed out our Peruvian blocks for a royalty on future production and we obtained multi-million dollar insurance bonds for our Ghanaian licence.  The bad market for exploration shares has meant, however, that even small selling resulted in major share price falls. The actions by the Ghanaian Government to grant a licence to a US company over part of what we believe to be covered in our signed Petroleum Agreement, on Block Tano 2A, exacerbated the share price decline. We believe that we have substantial rights in Ghana, a belief bolstered by the decision of the High Court in Ghana granting an injunction.  Our advice is that no further lawful action can take place by any of the parties put on notice until the issue is resolved.  The Company intends to enforce its rights in relation to its Ghanaian licence. The Directors also believe there is value in Peru where our partners are intent on building power plants to supply rapidly growing demand. They need gas for the stations. We believe our block has potential. The Company's Bolivian assets remain in limbo due to the uncertainty over title due to the passing of a Nationalisation decree on May 1^st 2006.

 

Clontarf Energy was formed from some of the assets of Pan Andean Resources plc. which was sold in 2010. The buyer did not want certain assets. These were, a licence in Ghana, interests in Bolivia, as well as ongoing litigation against the Company in Texas. In the year of listing, 2011, two onshore hydrocarbon exploration blocks 183 and 188 in Peru were added.

 

The expectations of the board were that the Ghanaian licence would be ratified and exploration would begin and that partners would join us to explore the Peruvian blocks. Significant sums were spent in Ghana, US$2 million, and in Peru, US$1 million plus.

 

Unfortunately the process of obtaining ratification for the Company's Ghanaian licence has been far slower than envisaged. Exploration success in the adjacent ground attracted interest in the block, Tano 2A. It appears that the government of Ghana believed that better terms could be obtained from new investors. For the past 3 years, Clontarf and our partner, Petrel (30% interest), have met each requirement raised by the Ghanaian National Oil Corporation (GNPC). On March 26^th 2014 the Ghanaian Government, without notice, announced they had awarded a licence to a US company, part of which overlapped 529 sq km of our Tano 2A block. Despite every effort on our part, neither the GNPC nor the State would engage with Clontarf, so we were forced to obtain a High Court injunction in Accra. Despite the injunction, the agreement was ratified and announced in May 2014. Clontarf is actively pursuing court relief in Ghana.

 

The two Peruvian blocks proved difficult to farm out despite high oil prices and supposed international oil company interest in Peru. A succession of farm out discussions did not result in a farm out agreement. The Company undertook a work programme which identified good prospects, particularly on Block 183. Finally an agreement was reached with a private group interested in power generation from gas. They were particularly keen on Block 183 because of its closeness to market; adjacent discoveries, identified leads and an earlier discovery on the block. Clontarf accepted a royalty interest on both blocks subject to a maximum of $10 million payment per block. While maintaining Block 183 in good standing Pogel, the Peruvian group, sought a time extension on work commitments on Block 188. The Peruvian authorities refused the extension so the block was relinquished by Pogel.

 

Our Bolivian interests have been written down to zero value. It is impossible to prove title since a nationalisation decree was passed in 2006. We have a 30% interest in a small producing oil/gas field in Monteagudo. Two multinationals, Repsol and Petrobras, own the balance. Each of these companies have other large oil/gas interests in Bolivia which they want to maintain so they continue to invest in an environment where the State has nationalised without compensation. Likewise with our 10% interest in the El Dorado gas field. The remaining 90% was taken over by YPFB, the State oil company. They have continued to invest and cash called Clontarf. With no security of title Clontarf could not invest. Clontarf declared force majeure on the contract. For the past two years Clontarf has tried to farm out the Bolivian interests. Discussions have taken place but an agreement was never finalised. Clontarf inherited a Texan court case where the Clontarf Group was sued by Hunt Oil for payment related to removing closed down wells in the shallow waters offshore Texas. The case, which related to activities in 2007, was settled in 2013 for a nominal sum, but costs were substantial. The costs were met by Clontarf directors loaning money to the Company. These loans will be converted into shares in the near future.

 

Where does that leave Clontarf?

In an uncertain place but not without hope. There is near term potential in Peru and we hope to get a deal on our Bolivian interests. The strategy on the Ghanaian interests is simple: pursue the Government of Ghana and the companies signing the licence over what we believe is part of our concession. This is not ideal and something we avoided for four years. But the die is now cast and we will be resolute. It is always better to talk than to litigate so we actively seek to engage with the various parties. Some discussions have taken place in this regard.

 

While following our existing interests we are active in seeking new ventures, new management and new directors. We have examined and discarded a number of options but a couple of proposals remain live. Manouchehr Takin has resigned from the board. We wish him well. He has been a great help in the last three years.  David Horgan has agreed to step aside for the time being to focus on bringing the Ghanaian dispute to a successful resolution, but he will remain a director.  John Teeling, Executive Chairman, will manage the day to day operations.

 

Sourcing additional capital remains a key focus for Clontarf Energy. The Company relies on the support of the Directors and its lenders to continue as a going concern. As previously mentioned the directors will convert all sums due to them into equity in the near future. It is also expected that the South American holders of US$968,000 in loans to the Company will also convert these loans into equity in Clontarf in due course. This would leave the company with a stronger balance sheet. The Directors are confident that new funds will be found to maintain the company in good standing.

 

Investing in junior natural resource companies is high risk even in good times. The very poor market of the past four years has contributed to the difficulties for Clontarf but cannot be blamed for the problems in Bolivia, Peru and Ghana. We, as directors, must take whatever actions are necessary to protect your investment, to secure your assets and to put the company back on a growth trajectory.

 

John Teeling

Chairman

 

28 May 2014

 

__________________________________________________________________________________

 

 

 

CLONTARF ENERGY PLC

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

 

 

 

	2013	2012
CONTINUING OPERATIONS	£	£
REVENUE	-	-
Cost of sales	-	-
GROSS PROFIT	-	-
Administrative expenses	(667,370)	(458,501)
Impairment of evaluation and exploration assets	(2,473,538)	(844,782)
OPERATING LOSS	(3,140,908)	(1,303,283)
Finance revenue	93	450
Finance costs	(36,462)	(1,759)
LOSS BEFORE TAXATION	(3,177,277)	(1,304,592)
Income tax expense	-	-
LOSS FOR THE YEAR AND TOTAL
COMPREHENSIVE INCOME	(3,177,277)	(1,304,592)
LOSS PER SHARE - Basic and diluted	(1.59p)	(0.65p)

 

 

 

 

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2013

 

 

 

	2013	2012
	£	£
ASSETS:
NON CURRENT ASSETS
Intangible assets	2,963,916	5,214,930
	2,963,916	5,214,930
CURRENT ASSETS
Other receivables	5,094	10,416
Cash and cash equivalents	29,330	98,880
	34,424	109,296
TOTAL ASSETS	2,998,340	5,324,226
LIABILITIES:
CURRENT LIABILITIES
Trade payables	(190,429)	(455,366)
Other payables	(1,162,717)	(622,717)
	(1,353,146)	(1,078,083)
NON CURRENT LIABILITIES
Loans	(576,328)	-
	(576,328)	-
TOTAL LIABILITIES	(1,929,474)	(1,078,083)
NET ASSETS	1,068,866	4,246,143
EQUITY
Called-up share capital	500,461	500,461
Share premium	9,248,336	9,248,336
Retained earnings - (deficit)	(9,010,518)	(5,833,241)
Share based payment reserve	330,587	330,587
TOTAL EQUITY	1,068,866	4,246,143

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

 

 

 

	Called-up		Share Based
	Share	Share	Payment	Retained
	Capital	Premium	Reserve	Deficit	Total
	£	£	£	£	£
At 1 January 2012	500,461	9,248,336	330,587	(4,528,649)	5,550,735
Loss for the year	-	-	-	(1,304,592)	(1,304,592)
At 31 December 2012	500,461	9,248,336	330,587	(5,833,241)	4,246,143
Loss for the year	-	-	-	(3,177,277)	(3,177,277)
At 31 December 2013	500,461	9,248,336	330,587	(9,010,518)	1,068,866

                                                                                                                             

Share premium

 

The share premium reserve comprises of a premium arising on the issue of shares.

 

Share based payment reserve

 

The share based payment reserve arises on the grant of share options under the share option plan.

 

Retained deficit

 

Retained deficit comprises of losses incurred in 2013 and prior years.

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2013

 

 

 

	2013	2012
	£	£
CASH FLOW FROM OPERATING ACTIVITIES
Loss for financial year	(3,177,277)	(1,304,592)
Finance costs recognised in loss	36,462	1,759
Finance revenue recognised in loss	(93)	(450)
Exchange movement	(1,561)	12,806
Impairment	2,473,538	844,782
	(668,931)	(445,695)
MOVEMENTS IN WORKING CAPITAL
Increase in payables	150,063	626,886
Decrease in trade and other receivables	5,322	251,499
CASH USED BY OPERATIONS	(513,546)	432,690
Finance costs	(36,462)	(1,759)
Finance revenue	93	450
NET CASH GENERATED BY OPERATING ACTIVITIES	(549,915)	431,381
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intangible assets	(97,524)	(811,560)
NET CASH USED IN INVESTING ACTIVITIES	(97,524)	(811,560)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loans	576,328	-
NET CASH GENERATED BY FINANCING ACTIVITIES	576,328	-
NET DECREASE IN CASH AND CASH EQUIVALENTS	(71,111)	(380,179)
Cash and cash equivalents at beginning of the financial year	98,880	491,865
Effect of exchange rate changes on cash held in
foreign currencies	1,561	(12,806)
Cash and cash equivalents at end of the financial year	29,330	98,880

Notes:

 

 

1.    ACCOUNTING POLICIES

 

There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2012. The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRSs as adopted by the European Union and in accordance with the Companies Act 2006.

 

 

2.    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):

 

 

	2013	2012
	£	£
Numerator
For basic and diluted EPS	(3,177,277)	(1,304,592)
Denominator
For basic and diluted EPS	200,184,469	200,184,469
Basic EPS	(1.59p)	(0.65p)
Diluted EPS	(1.59p)	(0.65p)

 

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

 

 

3.    GOING CONCERN

The group incurred a loss for the year of £3,177,277 and had net current liabilities of £1,318,722 at the balance sheet date. These conditions represent a material uncertainty that may cast doubt on the group's ability to continue as a going concern. 

Included in current liabilities is an amount of £1,162,717 owed to directors in respect of directors' remuneration and loans due at the balance sheet date. The directors have confirmed that they will not seek payment of these amounts for a period of at least one year after the date of approval of the financial statements or until the group has generated sufficient funds from its operations after paying its third party creditors.

During the year the group received loans of £576,328 from South American lenders. The loans are for a period of two years and the lenders have indicated they will accept ordinary shares in Clontarf Energy plc in lieu of cash repayment of loans.

The directors have prepared cashflow projections and forecasts for a period of not less than 12 months from the date of this report which indicate that the group will require additional finance to fund working capital requirements and develop existing projects. The directors are examining options available to them for the raising of additional finance and expect that adequate resources will become available to meet the group's committed obligations as they fall due.

As in previous years the Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements and believe the going concern basis is appropriate for these financial statements. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.

 

4.            INTANGIBLE ASSETS

               

	2013	2012
Exploration and evaluation assets:	£	£
Cost:
At 1 January	7,787,937	6,976,377
Additions during the year	222,524	811,560
Transfer of Ghana interests	-	-
At 31 December	8,010,461	7,787,937
Impairment:
At 1 January	2,573,007	1,728,225
Provision for impairment	2,473,538	844,782
At 31 December	5,046,545	2,573,007
Carrying Value:
At 1 January	5,214,930	5,248,152
At 31 December	2,963,916	5,214,930
SEGMENTAL ANALYSIS	2013	2012
	£	£
Peru	2,473,538	4,749,552
Ghana	490,378	465,378
	_________	________
	2,963,916	5,214,930

 

On 15 May 2013, the company signed an agreement with Peru Oil and Gas Exploration Limited (POGEL). Under the agreement POGEL, an energy investment company, has undertaken responsibility to put up performance bonds and conduct contractual work on the Exploration and Development Contracts on Peruvian Blocks 183 and 188. Clontarf Energy plc converted its interest in Blocks 183 and 188 to an overriding royalty of 3% on production from any commercial discovery.

 

On 12 August 2013, Rurelec Plc, an AIM listed energy provider in South America, entered into an agreement with POGEL to purchase gas from Block 183 when and if gas is produced. Clontarf holds a 3% overriding royalty on production from any commercial discovery. The royalty payment is capped at US$5 million per structure and US$10 million in total for the block.

 

Subsequently, POGEL released Block 188. Due to Block 188 being released the directors have decided to provide against the carrying value of the Peruvian assets. Accordingly an impairment provision of £2,473,538 has been recorded by the Group in the current year. This represents the total carrying value of block 188 as the recoverable amount is €Nil.

 

Due to the political and legal uncertainty in Bolivia the directors provided in full against the carrying value of the Bolivian assets. Accordingly an impairment provision of £844,782 was recorded by the Group in the prior year.

 

As outlined in Note 9, the Group is seeking clarification from the Ghanaian authorities that a petroleum agreement in the Tano Basin block ratified by the Ghanaian Parliament in March 2014 does not relate to an area covered by the license held by Clontarf Energy plc. On 8 April 2014, the High Court of Ghana granted an interlocutory injunction and an interim order protecting the Group's rights in the Tano Basin block.

 

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. 

 

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 uncertainties outlined above and risks outlined below:

 

·      licence obligations

·      requirement for further funding

·      geological and development risks

·      title to assets

·      political risk

 

Should this prove unsuccessful the value included in the balance sheet would be written off to the statement of comprehensive income.

 

 

5.            TRADE PAYABLES

               

	2013	2012
	£	£
Trade payables	170,429	414,333
Other accruals	20,000	41,033
	190,429	455,366

 

 

 

6.            OTHER PAYABLES

 

	2013	2012
	£	£
Amounts due to directors	1,162,717	622,717
	1,162,717	622,717

 

Other payables relate to amounts due to directors' accrued but not paid at year end. The amount consists of unpaid remuneration of £753,335 (2012: £513,335) and loans of £409,382 (2012: £109,382).

 

        

7.            OTHER LOANS

 

	2013	2012
	£	£
Loans repayable	576,328	-
	576,328	-

 

During the year loans were received by the company's subsidiary Hydrocarbon Exploration Limited, from South American lenders. The loans are for a period of two years and the lenders have agreed that they will accept ordinary shares in Clontarf Energy plc in lieu of cash repayment of amounts due. The loans bear interest at 10% per annum.

 

 

8.            CALLED-UP SHARE CAPITAL

 

Allotted, called-up and fully paid:
	Number	Share Capital	Share Premium
		£	£
At 1 January 2012	200,184,469	500,461	9,248,336
Issued during the year	-	-	-
At 31 December 2012	200,184,469	500,461	9,248,336
Issued during the year	-	-	-
At 31 December 2013	200,184,469	500,461	9,248,336

 

Share Options

A total of 9,940,000 share options were in issue at 31 December 2013 (2012: 9,940,000).  These options are exercisable, at prices ranging between 4.46p and 23.5p, up to seven years from the date of granting of the options unless otherwise determined by the board.

 

Warrants

A total of 649,616 warrants were in issue at 31 December 2013 (2012: 649,616).  These warrants are exercisable at a price of 6p up to three years from the date of granting of the warrants

 

 

9.            POST BALANCE SHEET EVENTS

 

On 14 January 2014 the company issued 7,231,975 ordinary shares at a price of 1.3p in settlement of outstanding professional fees.

 

On 25 March 2014 the company noted press reports and speculation regarding the ratification by the Ghanaian Parliament of a petroleum agreement in the Tano Basin block. The company holds a 60 per cent interest on the Ghana Tano 2A Block. The company is seeking clarification from the Ghanaian authorities that the ratification does not relate to an area covered by the Tano 2A Block. As a precautionary measure the company applied for injunctive relief to prevent the award of any part of the Tano 2A Block to a third party.

 

On 8 April 2014 the High Court of Ghana granted an interlocutory injunction and also an interim order for the protection of the company's rights in the Tano 2A block.

 

 

10.         ANNUAL GENERAL MEETING

 

The Company's Annual General Meeting will be held on Monday 30 June 2014 at the Hilton London Paddington Hotel, 146 Praed Street, London W2 1EE at 11am.

 

 

11.         GENERAL INFORMATION

 

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2013 or the year ended 31 December 2012. The financial information for 2012 is derived from the financial statements for 2012 which have been delivered to the Registrar of Companies. The auditors had reported on 2012 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial statements for 2013 will be delivered to the Registrar of Companies.

 

A copy of the Company's Annual Report and Accounts for 2013 will be mailed shortly only to those shareholders who have elected to receive it. Otherwise, shareholders will be notified that the Annual Report will be available on the website www.clontarfenergy.com . Copies of the Annual Report will also be available for collection from the Company's registered office, 20-22 Bedford Row, London WC1R 4JS.