29 Sep 2017 07:00
29 Sept 2017
Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 / Sector: Oil and Gas
Mayan Energy Ltd ("Mayan" or "the Company")
Interim Results
Mayan (AIM: MYN) is pleased to announce its unaudited interim financial results for the six months ended 30 June 2017.
Period Highlights
• Raised £1,185,000 before share issue costs in two stages (March 2017 and June 2017), with the issue of £180,000 of shares to creditors and advisors as part of the June 2017 raise.
• Concluded a 400:1 Share Consolidation, with consolidated shares retaining same rights as previously;
• Invested £300,000 into Block Energy plc ("Block"), a NEX listed oil and gas company with interests primarily in Georgia. Investment structured as follows:
o £90,000 equity investment via a placing of new shares at £0.0085 per Block share, which resulted in Mayan acquiring a 2.47% equity interest in Block;
o £210,000 via a Secured Convertible Loan Note to Block, with a 10% flat coupon and option to convert into Block equity at a 10% discount to any price at which Block's shares are listed or admitted to trading on any stock exchange other than NEX.
• Announced the intention to exit from Shoats once operations there have been stabilized and value inherent in the asset maximised to the extent possible;
• Secured the remaining outstanding interest in Zink Ranch, Osage County, Oklahoma ("Zinc Ranch") in a swap deal for the Mayan's interests in its non-core Horizon leases, bringing up Mayan' holding in its Zinc Ranch leases to 100%;
• Rationalised Mayan's non-core asset portfolio by disposing of its Libby and Tinker Oklahoma leases, the latter transactions generated US$ 90,000-net in cash;
• Increased Mayan's Net Assets by approximately US$1,625,000 since 1 Jan 2017, as a result of Share issues, settlements with creditors at a discount or in equity, and the release of long and short term decommissioning provisions held in respect of assets disposed of during the period;
• Reduced like for like current liabilities by approximately US$ 750,000 since 31 December 2016;
• Reported a profit of US$ 109,000, a turnaround of approximately US$ 1,388,000 on a like for like basis. The turnaround is influenced by operational profits, and reduced administrative expenses (the later influenced by the release of decommissioning provisions associated with assets disposed of during the period, plus other provisions settled at discounts during the period. Earnings per share (as restated to account for the 400:1 Share Consolidation of improved to US$ cents 0.15 (2016: US$ cents loss per share of 6.146);
• Further reduced like for like underlying Administrative costs by approximately US$ 300,000. Eddie Gonzalez, Mayan CEO has elected for the time being to suspend payment of fee's to himself, until the Company is operationally Cashflow positive;
• Ross Warner Non-Executive Chairman stepped down and replaced by Charlie Wood, who has taken on the role as an Executive Chairman.
Post period-end highlights
• Raised approximately £ 899,000 before share issue costs (August 2017 and subsequent supplementary placings on the same terms), with the issue of approximately £ 215,000 of shares to creditors and advisors as part of the raise. Subscription underpinned by two shareholders: AIM traded MX Oil plc who subscribed to £ 300,000 (100,000,000 Ordinary Shares) and David Kahn, a financial investor and key operational partner for Mayan who subscribed £ 250,000 (83,333,333 Ordinary Shares). The August 2017 raise was supported by Eddie Gonzalez, Mayan's CEO, who was issued 23,333,333 Ordinary Shares, in settlement of £ 70,000 accrued salary owed to him.
• Concluded a Farm-out of 50% of the Company's 100% interest in Zink Ranch Field in with the initiation of operations (two new wells on each of its Zinc Ranch and Matthis lease and 5 work overs of wells on the Zinc Ranch lease) planned for coming months;
• Acquired a 70% interest in the Forest Hill Field, Wood County, Texas ("Forest Hill Field"), through a US$173,000 farm in deal announced in August 2017;
• Acquired a 60% working interest in the 105 gross acre Stockdale Oil Field lease, Wilson County, Texas ("Stockdale Field") in August 2017. This acquisition was conclude by way of a US$ 60,000 cash payment and Mayan's agreement to carry the seller on certain development expenses up to a net total of US$ 200,000 within 180 days. The investment includes an interest in a well producing approximately 50 barrels of oil per day ("bopd") from the Anacacho formation (located at a depth of approximately 3,600 foot);
• Concluded an agreement with PyroPhase, Inc ("PyroPhase") a company specializing in state-of-the-art reservoir stimulation technologies, including "in situ" electromagnetic heating simulation studies and production analysis. Using its own technology and at its own cost, PyroPhase will finance the work over of two wells located in Forest Hill. It is anticipated that the PyroPhase technology will bring on Mayan production at substantially reduced cost, with the two wells being tested forming part of the six well Phase 1 work over program planned for this asset;
• Announced work plans to initiate production testing at the Stockdale Oil Field lease. The intention is to target further opportunities in the Anacacho formation by recompletions of existing wells which were originally drilled to the deeper Austin Chalk formation;
• Restarted production at Shoats Creek with a 24-hour test yielding 123 barrels of oil from the Lutcher Moore ("LM") #20. Intermittent production from LM 14 announced (as and when downhole pressure permits) as well as limited production from the LM 13 new well sands tested in first half of the 2017. Flooding associated with inclement weather-Hurricane Harvey and other storms- has necessitated ceasing operations at Shoats Creek until weather conditions improve;
• On 25 September 2017, Block Energy plc announced that having now acquired 100% in the producing Norio field in the Republic of Georgia, it has suspended its securities on the NEX Exchange, in preparation of dual listing on AIM, a market operated by the London Stock Exchange.
Chairman and Chief Executive's Statement
It's been just over a year since my appointment as Chief Executive Officer to Mayan and as shareholders know, it's not been without its challenges. Mea Culpa: as I said in my report accompanying the financial statements for the year ended 31 December 2016, which were released at the end of June 2017; with the benefit of hindsight, we were too aggressive in defining a 120 day plan that in retrospect was not achievable, as the breadth and scope of issues to be addressed was considerably more than expected.
However, I am now firmly convinced that the position of the Company has markedly improved and is now on an upwards track. This has of course been not without a cost, as we recognise that in order to keep going forwards during the last year, it has been at a considerable dilutory expense to shareholders. However, I would like to say that the capital we have raised has gone directly into building value in the business. Thus for example, during the last six months the Board, has significantly cut its cash compensation draw, although we continue to accrue our full fees. Indeed, shareholders may not be aware that for the last nine months, I myself have not taken any money out of the Company at all, and it is a measure of my commitment to the rebuilding of the Mayan and my conviction in the direction we are now taking, that I recently converted an element of the fee's owed to me, into equity.
From the outset the plan we adopted was simple. The first step was to reduce the Company's cost structure. The next step was to seek to achieve an increase in revenue from our principle main asset at Shoats Creek, and at the same time reduce our exposure to financing the development of this asset- which we achieved by concluding a deal with Gulf Coast and Western ("GCW"). Concurrent with cost cutting and operational initiatives, we also focussed on bringing our balance sheet back into line, and have been successful in negotiating settlements with a number of material creditors at satisfactory discounts to book value.
Having focussed on Shoats Creek, which at the time was our principle asset, we then reviewed our remaining portfolio of assets and rapidly came to the view that salvaging anything from the past efforts in Mexico would be unlikely to be successful, as well as more expensive than starting afresh.
Coming back to Shoats Creek, despite the steps taken, it has unfortunately not been what we hoped for: we have suffered repeatedly at the hands of mother nature (atypically inclement weather, and frequent inundations) as well as legacy problems associated in dealing with difficult drilling conditions and poor geological records acquired from Aminex, which have proven to be less accurate than was expected. Nonetheless, I believe we are now close to resolving the issues we face at Shoats, though as a result of a strategic review of our business we now recognise that whilst undoubtedly it is an attractive investment, it requires more capital to develop and maintain than can be justified by a company of Mayan's size. Because of this and the change in strategic refocus of our business towards opportunities elsewhere in Oklahoma and Texas, we no longer see Shoats Creek as a key to our future, and while we will continue to seek to add value to Shoats, as and where possible, we will only do so with our exit from this asset in mind.
It was against the above backdrop, and with the intention of de-risking the Company's reliance on Shoats, that in June 2017 Mayan raised capital to make an initial investment in Block Energy plc ("Block"), an exciting new exploration and production company focused on the acquisition of discovered oil fields in and around the Caucuses region, current primary focus being in the Republic of Georgia, and quoted on the NEX Growth Market. The recent announcement of the impending publication of a Competent Person Report and progression to dual-listing on AIM signals the next step in Block's development phase and the opportunity for further accretion of value for Mayan as a Block shareholder.
At the same time, I am pleased to report that by way of skilful management on our side, the story of our other "non-core" assets has in fact proven to be far more rewarding expected. Thus in the first half year of 2017 we concluded three deals: the first two disposed of our interests in the Libby and Tinker fields. We were able to do this by restoring the Libby and Tinker fields to production (at a very modest investment cost) and on that basis, we then were able to sell them, generating US$ 90,000 net cash, while at the same time eliminating US$ 350,000 of decommissioning liabilities associated with them.
The third deal followed on from the recognition that in Zinc Ranch we had a potentially a great asset: with over 600,000 barrels of cumulative historical production in shallow, in low cost formations with fewer surface and other operational challenges than at Shoats Creek. The issue we had to overcome was dealing with the incumbent operator Glenn Supply Company ("Glenn Supply"), which by way of a tight operator agreement effectively controlled the economics of the field, at considerable disadvantage to Mayan.
Following on from lengthy negotiations with Glenn Supply I am pleased to report however, that just before the end of June 2017 we concluded our third deal. The agreement reached with Glenn Supply, was for an exchange of interests in assets. Thus for a cash settlement and the assignment to them of our stake in our loss making Horizon assets (also operated by Glenn Supply) they agreed to assign their interests in the Zink Ranch to us. This third deal not only gave us operational control of Zink Ranch, as well as a 100% working interest (81% net revenue interest) in the asset, but also settled approximately US$240,000 net debt due Glenn Supply.
Our third deal then paved the way for us to conclude a forth deal, being the Farm out of 50% of the Company's newly acquired 100% interest in Zinc ranch. This forth deal, and the plan to initiate two new wells on each of our Zinc Ranch and Matthis leases and 5 work overs of wells on the Zinc Ranch lease was announced in July 2017.
What also came out of the Zinc Ranch deals was the development of what I see as important for the future - as we established and built up relationships with Messrs Johnson and Kahn, the former a specialist in remediation and recompletion of oil and gas wells in mature fields, while the latter is a financial investor and specialist in oil field stimulation measures. Both Gordon Johnson and David Kahn have now joined Mayan as advisers and in my view are going to be key to the rollout of our newly developed strategy for the future of the Company, which is to acquire underperforming assets in Texas and Oklahoma, and then revitalise their production by applying the skills of our new team and the specialised technology we now have at our command.
It is in pursuit of this new strategy and the three deals which we have recently concluded, that I am most excited about. Thus in the last few months we have:
· acquired a 70% interest in Forest Hill Field, through a US$173,000 farm-in, and
· acquired a 60% working interest in the 105 gross acre Stockdale Oil Field which investment includes an interest in a well producing approximately 50 barrels of oil per day ("bopd") from the Anacacho formation (located at a depth of approximately 3,600 foot), and
· concluded an agreement with PyroPhase, who will finance the work over of two wells located in Forest Hill. It is anticipated that the PyroPhase technology will bring on Mayan production at substantially reduced cost, with the two wells being tested forming part of the six well Phase 1 work over program planned for this asset.
Finally, and as a measure of Eddie Gonzalez's personal commitment to the revitalisation of Mayan, it is noted that in August 2017 Eddie Gonzalez elected to convert approximately £ 70,000 of unpaid fee's into equity, and for the time being intends to suspend payment of fee's to himself, until the Company is operationally cash flow positive.
Financial Review
During the period we raised £1,185,000 before share issue costs in two stages (March 2017 and June 2017), with the issue of £180,000 of shares to creditors and advisors as part of the June 2017 raise. We also concluded a 400:1 Share Consolidation, with consolidated shares retaining same rights as previously. Of the money raised £300,000 was invested into Block Energy plc, a NEX listed oil and gas company with interests primarily in Georgia, with the remainder retained for the development of existing operations and for working capital purposes.
During the period Mayan generated a profit of US$ 109,000, a turnaround of approximately US$ 1,388,000 compared with the corresponding period in 2016. The turnaround is influenced by reduced administrative expenses (the later heavily influenced by the US$ 834,000 release of decommissioning provisions associated with assets disposed of during the period, as well as discounts realised in settling certain large payables during the period. Cost cutting measures also contributed to the turnaround, with like for like underlying administrative costs reduced by approximately US$ 300,000. Earnings per share (as restated to account for the 400:1 Share Consolidation of improved to US$ cents 13.1 (2016: US$ cents loss per share of 6.146).
As to our Balance Sheet, we believe that we have made progress in rationalising it, having (as already mentioned) disposed of our non-core assets at premiums over book value, also and consistent with a new business focus, are now reporting Shoats Creek as an "available for sale" current asset. Progress has also been made on the liability side, although we recognise that at first glance this not so clear. This is because our current liabilities include approximately US$ 750,000 of liabilities which post period end were settled or have been dealt with; - for example US$ 390,000 payable to Block Energy was settled from the proceeds of the June 2017 raise, which monies were not received until the beginning of July. Also some US$ 100,000 of unpaid fees to the Directors has since been converted to equity. Taken in the round, we estimate that on a like for like basis we have reduced our liability position by approximately US$ 750,000 since 31 December 2016, with scope for further reductions going forwards.
Outlook
Going forward, we are going to focus on the two Texas properties and our Oklahoma properties (the "Core Assets") where we believe we can drive towards increasing production, revenues, and sustainable cash flow, which should see share price appreciation. Our vision is to reach a position of 3-500 bopd of stable production within the coming twelve months, and with an exit from Shoats Creek within the same period, this will finally place Mayan on a firm footing to develop further. At the same time, we will continue to reduce our cost base, and work further on reducing our residual legacy liabilities.
In summary, in my view we are now well into a new chapter in Mayan's history, with news expected imminently on production from our Core- Assets. We believe the future is looking much brighter for the Company."
Charlie Wood | Eddie Gonzalez
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Non-Executive Chairman | Chief Executive Officer |
29 September 2017 | 29 September 2017 |
Special note concerning the Market Abuse Regulation
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ("MAR").
**ENDS**
A copy of this announcement and the Interim Results will be available on the Company's web site. For further information visit www.Mayanenergy.com or contact the following:
Eddie Gonzalez | Mayan Energy Ltd | + 1 469 394 2008 |
Charlie Wood | Mayan Energy Ltd | +44 7971 444 326 |
Roland Cornish | Beaumont Cornish Ltd | +44 20 7628 3396 |
James Biddle | Beaumont Cornish Ltd | +44 20 7628 3396 |
Nick Bealer | Cornhill Capital Limited | +44 20 7710 9612 |
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Notes:
Mayan Energy Limited is an AIM listed (London Stock Exchange) oil and gas energy Company; focussed on the redevelopment and enhancement of its upstream oil and gas interests in Oklahoma, Louisiana and Texas.
MAYAN ENERGY LIMITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Mayan Energy Limited Consolidated Statement of Comprehensive Income
for the Interim six months period ended 30 June 2017
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| Six Months to | Six Months to | Year Ended |
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| 30 June | 30 June | 31-Dec |
| Note | 2017 | 2016 | 2016 |
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| (Unaudited) | (Unaudited) | (Audited) |
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| US$ 000's | US$ 000's | US$ 000's |
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Continuing operations |
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Revenue |
| 53 | 50 | 270 |
Cost of Sales |
| (87) | (241) | (786) |
Gross profit/ (Loss) |
| (34) | (191) | (516) |
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Administrative expenses |
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Impairment of intangible assets |
| - | - | - |
Impairment of property, plant and equipment |
| - | - | (4,721) |
Profit on disposal of interests and settlement of liabilities at a discount | 834 | - | - | |
Other administrative expenses |
| (701) | (1,064) | (1,777) |
Total administrative expenses |
| 133 | (1,064) | (6,498) |
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Operating Profit/ (loss) |
| 99 | (1,255) | (7,014) |
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Finance income |
| 2 | - | 2 |
Finance costs |
| (6) | (24) | (137) |
Profit/ (loss) before income tax |
| 95 | (1,279) | (7,149) |
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Income tax expense |
| - | - | - |
Profit/ (loss) for the period from continuing operations |
| 95 | (1,279) | (7,149) |
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Other comprehensive income: |
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Items that may be reclassified subsequently to profit or loss: |
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Currency translation differences |
| 14 | - | 86 |
Total comprehensive income/ (loss) |
| 109 | (1,279) | (7,063) |
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Owners of the parent |
| 105 | (1,279) | (7,147) |
Non-controlling interest |
| 4 | - | (2) |
Profit/ (loss) for the period from continuing operations |
| 109 | (1,279) | (7,149) |
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There are no discontinued activities |
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Profit/(Loss) per share from continuing and discontinued operations |
| US cents per share | US cents per share | US cents per share |
attributable to the owners of the parent during the period |
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- Basic (prior periods restated on 400:1 basis) | 3 | 0.15 | (6.146) | (24.266) |
-Diluted - for current period materially as per Basic |
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Mayan Energy Limited Consolidated Statement of Financial Position
As at 30 June 2017
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| Six Months to | Six Months to | Year to |
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| 30 June | 30 June | 31 Dec |
| Note | 2017 | 2016 | 2016 |
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| (Unaudited) | (Unaudited) | Audited |
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| US$ 000's | US$ 000's | US$ 000's |
ASSETS |
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Non-current assets |
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Intangible assets |
| - | - | - |
Property, plant and equipment |
| 884 | 6,141 | 2,563 |
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Total non-current assets |
| 884 | 6,141 | 2,563 |
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Current assets |
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Inventories |
| 48 | 18 | 31 |
Trade and other receivables |
| 1,716 | 331 | 358 |
Available for sale investment |
| 1,800 | - | - |
Available for sale financial investments |
| 117 | - | - |
Cash & cash equivalents |
| 52 | 50 | 155 |
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Total current assets |
| 3,733 | 399 | 544 |
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TOTAL ASSETS |
| 4,617 | 6,540 | 3,107 |
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LIABILITIES |
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Non-Current Liabilities |
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Provisions |
| (253) | (684) | (273) |
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Total non-current liabilities |
| (253) | (684) | (273) |
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Current liabilities |
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Trade and other payables |
| (2,446) | (1,861) | (2,220) |
Provisions |
| (479) | (566) | (800) |
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Total current liabilities |
| (2,925) | (2,427) | (3,020) |
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TOTAL LIABILITIES |
| (3,178) | (3,111) | (3,293) |
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NET ASSETS |
| 1,439 | 3,429 | (186) |
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EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT |
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Share Capital | 4 | - | - | - |
Share premium |
| 34,716 | 31,800 | 33,126 |
Foreign exchange reserve |
| 225 | 314 | 415 |
Reverse acquisition reserve |
| (8,202) | (8,202) | (8,202) |
Retained earnings |
| (25,618) | (20,792) | (25,832) |
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Total Equity attributable to the equity owners of the parent |
| 1,121 | 3,120 | (493) |
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Non-controlling interest |
| 318 | 309 | 307 |
TOTAL EQUITY |
| 1,439 | 3,429 | (186) |
Mayan Energy Limited Consolidated Statement of Changes in Equity
for the six months interim period ended 30 June 2017
| Attributable to owners of the parent |
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| Share capital | Share premium | Foreign exchange reserve | Reverse Acquisition Reserve | Retained earnings | Sub Total | Non-Controlling Interests | Total equity |
| US$ 000's | US$ 000's | US$ 000's | US$ 000's | US$ 000's | US$ 000's | US$ 000's | US$ 000's |
Balance as at 1 January 2016 (audited) | - | 30,633 | 329 | (8,202) | (19,513) | 3,247 | 309 | 3,556 |
Loss for the period | - | - | (15) | - | (1,279) | (1,294) | - | (1,294) |
Total comprehensive income for the period | - | - | (15) | - | (1,279) | (1,294) | - | (1,294) |
Issue of Shares | - | 1,455 | - | - | - | 1,455 | - | 1,455 |
Share issue costs | - | (288) | - | - | - | (288) | - | (288) |
As at 30 June 2016 (unaudited) | - | 31,800 | 314 | (8,202) | (20,792) | 3,120 | 309 | 3,429 |
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Balance as at 1 January 2017 (audited) | - | 33,126 | 415 | (8,202) | (25,832) | (493) | 307 | (186) |
Loss for the period | - | - | (190) | - | 109 | (81) | 4 | (77) |
Items that may be reclassified subsequently to profit or loss |
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| - |
Currency translation differences | - | - | - | - | 105 | 105 | 7 | 112 |
Total comprehensive income for the period | - | - | (190) | - | 214 | 24 | 11 | 35 |
Issue of Shares | - | 1,729 | - | - | - | 1,729 | - | 1,729 |
Share issue costs | - | (139) | - | - | - | (139) | - | (139) |
Balance as at 30 June 2017 (unaudited) | - | 34,716 | 225 | (8,202) | (25,618) | 1,121 | 318 | 1,439 |
Mayan Energy Limited Consolidated Cash Flow Statement
for the six month interim period ended 30 June 2017
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| Six Months to | Six Months to | Year to |
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| 30 June | 30 June | 31 Dec |
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| 2017 | 2016 | 2016 |
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| (Unaudited) | (Unaudited) | Audited |
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| US$ 000's | US$ 000's | US$ 000's |
Cash flows from operating activities: |
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Profit/(Loss) for the period before taxation |
| 109 | (1,279) | (7,149) |
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Adjustments for: |
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Impairment |
| - | - | 4,721 |
Finance cost |
| 6 | 24 | 137 |
Finance income |
| - | - | (2) |
Share options |
| - | - | 200 |
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Change in working capital items: |
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(Increase)/decrease in inventories |
| (17) | 13 | - |
(Increase)/decrease in receivables |
| (1,358) | (6) | (33) |
Increase/(decrease) in trade and other payables |
| 54 | (73) | 214 |
Net cash outflow used in operating activities |
| (1,206) | (1,321) | (1,912) |
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Cash flows used in investing activities |
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Acquisition of subsidiary (net of cash) |
| - | - | - |
Investment and Loan to Block Energy plc |
| (117) | - | - |
Purchases of property, plant and equipment |
| - | - | (1,403) |
Exploration and evaluation -tangible assets |
| (121) | (43) | - |
Proceeds from farm-in/sale |
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| (100) | 720 |
Net cash used in investing activities |
| (238) | (143) | (683) |
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Cash flows from financing activities |
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Proceeds from issue of share capital |
| 1,499 | 1,539 | 3,538 |
Share issue costs |
| 27 | (288) | (417) |
Repayment of borrowings |
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| 211 | (236) |
Net finance cost |
| (4) | (24) | (135) |
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Net cash generated from financing activities |
| 1,522 | 1,438 | 2,750 |
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Net increase/(Decrease) in cash and cash equivalents |
| 78 | (26) | 155 |
Cash and cash equivalents at beginning of period |
| 155 | 91 | 91 |
Foreign exchange differences on translation |
| (181) | (15) | (91) |
Cash and cash equivalents at end of period |
| 52 | 50 | 155 |
Notes to Mayan Energy Limited Consolidated Financial Statements (unaudited)
for the six months ended 30 June 2017
1. Basis of presentation
The condensed consolidated interim financial statements has been prepared under the historical cost convention and on a going concern basis and in accordance with International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS").
The condensed consolidated interim financial statements contained in this document do not constitute statutory accounts, for the current reporting period, or for earlier periods, but are derived from those accounts where applicable. In the opinion of the directors, the condensed consolidated interim financial statements fairly presents the financial position, result of operations and cash flows for the period.
A copy of this Interim Financial Report is available on the Company's website: www.mayanenergy.co.uk and was approved by the Board of Directors on 29 September 2017.
Statement of compliance
The condensed consolidated interim financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing these interim condensed consolidated interim financial statements, which should be read in conjunction with the audited annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with IFRS as adopted by the European Union.
Accounting policies
The condensed consolidated interim financial statements for the period ended 30 June 2017 has not been audited or reviewed in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board. The figures were prepared using applicable accounting policies and practices consistent with those adopted in the audited annual financial statements for the year ended 31 December 2016.
2. Financial risk management and financial instruments
Risks and uncertainties
The Board continually assesses and monitors the key risks of the business. The key risks that could affect Mayan's medium term performance and the factors that mitigate those risks have not substantially changed from those set out in Mayan's 2016 Annual Report and Financial Statements, a copy of which is available from Mayan's website. The key financial risks are market risk (including oil price and currency risk), credit risk and liquidity.
Going concern
Mayan has plans to refocus its operations in the USA and the Board recognises that further funds will be required in order to realise them. Mayan has a track record of using a variety of mechanisms to fund its commitments, whether it is through new equity, farm-ins and disposals, debt or operational cash flow. This flexibility gives the Directors discretion around when expenditure is incurred, but it is probable that further equity finance will be required at some point during the next 12 months.
The Board is confident however, that capital will be available to allow it to realise its strategic goals and that the Mayan will have the necessary resources available to finance its future working capital and discretionary capital expenditures beyond the period of 12 months of the date of this report. Accordingly these interim financial statements have been prepared on a going concern basis.
3. Earnings per share
The calculation of earnings per share is based on the earnings attributable to equity holders divided by the weighted average number of share in issue during the period. For comparability purposes, historic comparatives have been restated to reflect the impact of the Company's 400:1 share scheme implemented on 20 April 2017.
| Six Months to | Six Months to | Year to |
| 30 June | 30 June | 31 Dec |
| 2017 | 2016 | 2016 |
| (Unaudited) | (Unaudited) | (Audited) |
| US$ 000's | US$ 000's | US$ 000's |
Net Profit (loss) after taxation | 109 | (1,279) | (7,149) |
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As previously stated |
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Weighted average number of ordinary shares used in calculating basic loss per share (millions) | N/a | 8,324,776,935 | 11,784,429,398 |
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Basic & diluted loss per share (expressed in cents) | N/a | (0.015) | (0.061) |
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Restatement to compensate for the 400:1 share consolidation of 24 April 2017 |
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Restated: Weighted average number of ordinary shares used in calculating earnings per share (millions) | 72,516,272 | 20,811,942 | 29,461,073 |
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Restated: Basic & diluted Profit/ (loss) per share -expressed in cents. | 0.15 | (6.146) | (24.266) |
As referred to in Note 6 below, the Company has issued options and warrants. However, based upon current share prices they presently have no value and accordingly they would not be exercised, hence basic and diluted profit per share are the same. Historically the Company has reported losses, in such a situation the inclusion of potential ordinary shares would have resulted in a decrease in the loss per share, and as such, their inclusion would be anti-dilutive. Accordingly, a historic diluted loss per share has not been calculated or included.
4. Share capital
The authorised share capital of the Company and the called up and fully paid amounts at 30 June 2017 were as follows:
A) Authorised |
| US$'000s |
| US$'000s |
Unlimited Ordinary shares of no par value |
| - |
| - |
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| As previously reported (as at 31 December 2016)Audited | As Restated(post 400:1 Consolidation) | ||
B) Called up, allotted, issued and fully paid | Number of shares | Nominal value | Number of shares | Nominal value |
As at 1 January 2017 | 21,144,630,415 | - | 52,861,576 | - |
Additions: |
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29 March 2017 | 12,000,000,000 | - | 30,000,000 | - |
27 June 2017 |
| - | 255,833,333 | - |
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| - |
As at 30 June 2016 | N/A | - | 338,694,909 | - |
Shares issued on 30 March 2017 were issued at a price of 0.005 pence per share, for a cash consideration of £600,000 (before share issue costs). The purpose of the capital raise was to fund ongoing working capital and developments at Shoats Creek.
On 20 April 2017 Mayan concluded a 400:1 Share Consolidation, with shares retaining the same rights as previously.
Shares issued on 27 June 2017 were issued at a price of 0.315 pence per share, for a cash consideration of £587,500 before share issue costs, and with £180,000 shares issued to creditors and advisors at the same price, in settlement of third party creditor services. The purpose of the capital raise was to finance a £90,000 equity funding in Block and provide a £210,000 Secured Loan to Block and to fund Mayan's ongoing working capital requirements.
5. Share based payments
The following is a summary of the share options and warrants outstanding and exercisable as at 30 June 2017 and 31 December 2016 (the later restated to reflect the 400: 1 consolidation effected in April 2017.
Share based payment:-Summary of Share Options and Warrants | 6 Months to 30 June 2017(Unaudited) | Year to 31 December 2016(As restated for 400:1 Share Consolidation)(Unaudited) | Year to 31 December 2016(Audited) | |||
Number of options and warrants | Weighted Average Exercise price | Number of options and warrants | Weighted Average Exercise price | Number of options and warrants | Weighted Average Exercise price | |
(000's) | Pence | (000's) | Pence | (000's) | Pence | |
Outstanding and exercisable, beginning of year | 11,270 | 20.14 | 1,783 | 175.07 | 713,137 | 0.44 |
Granted | 25,583 | 0.30 | 9,677 | 6.58 | 3,870,904 | 0.02 |
Exercised | - | - | - | - | - | - |
Expired | (136) | 440.00 | (67) | 386.88 | (26,669) | 0.97 |
Cancelled | (750) | (6.00) | (123) | (623.57) | (49,000) | (1.56) |
Outstanding and exercisable, end of year | 35,967 | 4.73 | 11,270 | 20.14 | 4,508,372 | 0.05 |
The parameters used to ascertain the fair value of share options, are as found in the audited consolidated financial statements for the year ended 31 Dec 2016, as adjusted (where applicable) for the 400:1 share consolidation effected on 20 April 2017: existing options and warrants have been consolidated on a 400-to-1 basis, while exercise prices were uplifted by 400:1.
6. Events after the reporting date
Access to New Technology
On 11 Sept 2017 the Company announced that it had entered into an agreement with PyroPhase to test production enhancement technology owned by PyroPhase, on two wells - the Quitman 18 and the Quitman 40- located in Forest Hill Field an asset in which the Company has a 70% working interest and 52.5% net revenue interest (acquired in August 2017).
Under the terms announced, PyroPhase will install, operate, maintain and, if necessary, remove all equipment associated with the test. All work associated with the workover and installation of equipment on the first well will be paid by PyroPhase. As to the second well, Mayan will only be responsible for the cost of the workover rig associated with installation of the equipment. These two wells will account for one third of the announced Phase 1 Forest Hill Field work over programme.
Recruitment of New Team Members:
Mayan has announced that Gordon Johnson, a specialist in remediation and recompletion of oil and gas wells in mature fields, as well as David S Kahn, a financial investor and specialist in oil field stimulation measures had joined Mayan as to play significant roles its operations and development team.
Acquisition of New Prospects/Assets
Forest Hill Field: In August 2017, the Company announced that it had entered into an agreement to acquire a 70% working interest and 52.5% net revenue interest in two production leases in the Forest Hill Field for a total spend of US$173,000. It also announced a six well Phase 1 Forest Hill Field work over programme.
Stockdale Field: In August 2017 the Company announced that it had acquired a 60% working interest in the 105.7 gross acre Stockdale Field, which included an interest in a well producing approximately 50 gross barrels of oil per day from the Anacacho formation at approximately 3,600 foot. The Company also announced its intention to target opportunities in the Anacacho formation by recompleting well bores which were originally drilled to the deeper Austin Chalk formation, and reported that it believed there were substantial opportunities to grow acreage positions in Wilson County.
Development of Existing Assets:
Zinc Ranch and Matthis Leases: In July 2017 the Company announced that it had commenced the process of obtaining the regulatory approvals and engaged vendors necessary to implement the work program announced in conjunction with the farm out of interest in its Zink Ranch and Mathis assets in Osage County, Oklahoma, details of which had been announced in the same month.
In July 2017 the Company also announced that it had entered into a farm-out of a 50% working interest of its (then) 100% owned and operated Zink Ranch and Mathis leases. A six well development program was announced at that time, consisting of one new drill well on each of the Zink Ranch and Mathis leases; and five workover's of wells at the Zink Ranch lease;
Shoats Creek: In July 2017 the Company announced the re-start of Lutcher Moore ("LM") LM 20 operations were underway, and that the Company was to install an inter-meter on the LM14 well, to produce gas on an intermittent basis as downhole pressure permitted. At the same time the Company reported that it would be taking advantage of excess water disposal capacity at Shoats to produce oil from the various sands that had been tested in the LM13 well earlier in the year.
Investment into Block Energy: On 25 September 2017, Block Energy plc announced that having now acquired 100% in the producing Norio field in the Republic of Georgia, it has suspended it securities on the NEX Exchange in preparation of dual listing on AIM, a market operated by the London Stock Exchange. This signals the next step in Block's development phase and the opportunity for further accretion of value for Mayan as a Block shareholder. Further details on Block Energy may be found on their website: www.blockenergy.co.uk/
Capital Raises and Warrant Issued
On 18 September 2017 the Company announced that the subscription by David Kahn which was conditional on receipt of funds by the Company - now received - and which had been the subject of an earlier announcement dated 8 August 2017- had been extended to 16 October 2017 with admission to trading after that date.
On 6 September 2017, the Company announced a supplementary placing of 22,820,514 new Ordinary Shares of no par value each in the capital of the Company at a placing price of 0.3 pence per Ordinary Share. It had been originally contemplated that these shares would be included in the share placing announced earlier on 8 August 2017, but they had been delayed by documentation requirements associated with the non-UK investors participating. At the same time the Company announced that it had raised gross proceeds of £38,462 through a supplementary placing of 12,820,514 Ordinary Shares and issued 10,000,000 Ordinary Shares both issued at a price of 0.3 pence per Ordinary Share, with the later issued to meet certain adviser and Consultant fees.
On 17 August 2017 and further to earlier announcements of 27 June 2017 and 8 August 2017, the Company announced that Heriberto ('Eddie') Gonzalez Jr, Chief Executive Officer, had subscribed for a total of 23,333,334 new Ordinary Shares in the Company 0.3 pence per Ordinary Share. The shares issued were in settlement of outstanding director's fees owed to Eddie Gonzalez.
On 8 August 2017 the Company announced that it had raised gross proceeds of £861,000 (before expenses) in a conditional placing of 287,000,000 new Ordinary Shares of no par value each at a placing price of 0.3 pence per Ordinary Share; a premium of approximately 15% to the then closing mid-market price of 0.26p. This placing was anchored by two shareholders: AIM traded MX Oil plc who acquired a 14.6% stake in the Company, by subscribing to 100,000,000 Ordinary Shares and David Kahn, a financial investor and key operational partner for Mayan who will acquire a 12.1% stake in the Company, by subscribing to 83,333,333 Ordinary Shares. In addition, the Company issued 61,794,872 Ordinary Shares at the Placing Price to settle certain outstanding liabilities and accrued adviser fees. All shares were subscribed for at the placing price of 0.3 pence per Ordinary Share.
More details of the above events were released by RNS and are also available from the Company's website www.Mayan energy.com