Adm Energy Regulatory News (ADME)

MX Oil / Ticker: MXO / Index: AIM / Sector: Oil & Gas

30 June 2016

MX Oil plc ("MX Oil" or the "Company")

Final Results for the year ended 31 December 2015 and Notice of AGM

MX Oil plc, the AIM quoted oil and gas investing company, announces its final results for the year ended 31 December 2015.

The Company will today post its Report and Accounts for the year ended 31 December 2015 to all shareholders together with a Notice of Annual General Meeting which will be held at the offices of Adams & Remers LLP, Quadrant House, 55-58 Pall Mall, London SW1Y 5JH on Monday 25 July 2016 at 10:30am.

A full copy of the Annual Report for the year ended 31 December 2015 will shortly be available from the Company's website www.mxoil.co.uk.

MX Oil's Chief Executive Officer, Stefan Olivier said, 

"The Company's Nigerian investment has progressed well during the year, with production having now commenced in May 2016 - we believe that this is a very significant achievement. Mexico has proved more difficult, however, the Company is now well placed to look at new opportunities in country as they arise. We remain well-funded and given the progress the Company has made to date, we are starting to see an increasing number of interesting opportunities that could make attractive investments for the Company. " 

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For further information, please visit www.mxoil.co.uk or contact:

Chairman's Statement

During the year, the MX Oil plc has continued to pursue its strategy as an oil and gas investment company, focusing principally on Mexico and Nigeria.

Mexico

The Company started the year focused on the Mexican energy sector and proceeded to build a technical team alongside its joint venture partner, Geo Estratos ("Geo") in order to analyse the various opportunities available. A significant amount of preparation work was then carried out in order to take part in Bid Round 1, an auction of a number of onshore licences by the Mexican government. In December 2015, the Company and Geo were successful in the auction process and were awarded four licences.

Subsequently, the Company decided that it was not appropriate to develop all of the licences that had been won and so it agreed to assign three of these to its partner whilst carrying out further technical investment appraisal work on the fourth licence. As part of the assignment process, and given the financial risk associated with signing the contracts for the four licences and providing bonding, the Company was only going to proceed with this on the basis that its partner deposited the assignment funds in escrow prior to the signature date and provided the bonding for each licence. Unfortunately, due to funding difficulties in Mexico, this did not take place and therefore the contracts for the licences could not be signed and their subsequent assignment could not take place. 

Furthermore, having carried out more detailed work on the fourth licence with a competent person, it was concluded that this licence was ultimately unlikely to generate the required return to justify the necessary financial commitment. The Company therefore decided that it would not be in the Company's or shareholders' best interests to proceed with any of these licences particularly given the inherent risks associated with their funding in general. As a result, the Company has provided fully for the costs incurred in respect of this project. However, as part of this process, the Company has learnt a significant amount about the Mexican market and still believes that Mexico remains an attractive area for the production of hydrocarbons where the appropriate return can be generated. It is therefore now well placed to look at future opportunities.

Nigeria

In July 2015, the Company indirectly invested into a non-operated 5% revenue interest in OML 113, offshore Nigeria which includes the Aje field. This is a near term production asset with an initial phase involving the drilling of two wells. The overall investment price was $4.8 million (£3.1 million), comprising cash, shares and contingent consideration.

The two wells have now been drilled and, in May 2016, oil production commenced. In February 2016, the Company agreed, prior to the commencement of production, to sell an option to acquire its investment for US$18 million (£12.4 million) to GEC Petroleum Development Company Limited. However, payments have yet to be received under this agreement and so, given that production has now commenced, the oil price has recovered and the Company has recently raised £3.4 million, it has the flexibility to retain this investment if this is in the best interests of the Company and its shareholders.

Management

Since the year end the board has been further strengthened by the appointment of Nigel McKim as Chief Operating Officer and I have become non-executive chairman.

Financing

Since the beginning of 2015, the Company has raised over £11 million, against the background of a steeply falling oil price and weakness in the market for natural resource companies. This funding has comprised a combination of equity and convertible debt. These funds have principally been used to complete the financing of the Company's share of capital expenditure to bring the Aje field into production but also to fund the work in Mexico and for general working capital purposes. This figure excludes the recent fund raise of £3.4 million, part of which has been used to repay the balance of convertible bond still outstanding.

Outlook

After a busy year, the Company has made good progress. It has an investment in an oil and gas licence which has now commenced production and the Company is, at the same time, well-funded. Given this position, the Company is regarded as an attractive partner and is therefore seeing a number of interesting investment opportunities that could create additional value for shareholders going forward.

Nicholas Lee

Non-executive Chairman

Group Income Statement

For the year ended 31 December 2015

Group and Company Statements of Financial Position

As at 31 December 2015

Group Statement of Changes in Equity

For the year ended 31 December 2015

Group and Company Statements of Cash flows

For the year ended 31 December 2015

Notes to the Financial Statements

1. General Information

The Company is a public limited company incorporated in the United Kingdom and its shares are listed on the AIM market of the London Stock Exchange.

The Company is an investment company, mainly investing in natural resources, minerals, metals, and oil and gas projects. The registered office of the Company is 17th Floor, 110 Bishopsgate, London EC2N 4AY.

The above information is an extract from the Report and Accounts, which should be read in full together with the accompanying notes.

2. Principal Accounting Policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements.

As in prior periods, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies which can be found in full in the Annual Report.

The current period covered by these financial statements is the year to 31 December 2015. The comparative figures relate to the year ended 31 December 2014.

The financial statements are presented in pounds sterling (£) which is the functional currency of the Group.

An overview of standards, amendments and interpretations to IFRSs issued but not yet effective, and which have not been adopted early by the Group are presented below under 'Statement of Compliance'.

GOING CONCERN

The Group has cash balances at the period end of £224,000 and since the year end, the Company has raised a significant amount of new funding. Furthermore, the Directors have prepared cash flow forecasts through to 30 September 2017 which demonstrate that the Group is able to meet its liabilities as they fall due. On this basis, the Directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Group's financial statements.

3. Earnings Per Share