AOGL.L Regulatory News (AOGL)

Attis Oil & Gas Ltd / Index: AIM / Epic: AOGL/ ISIN: VGG6622A1057 / Sector: Oil and Gas

27 September 2019

Attis Oil & Gas ("Attis" or "the Company")

Interim Results

Attis (AIM: AOGL) is pleased to announce its unaudited interim financial results for the six months ended 30 June 2019.

Chairman and Chief Executive's Statement

Following a committed period of assessment of the corporate structure of the business, its operational practices, and its existing oil and gas assets during the fourth quarter of 2018, we emerged with a strategy centred on allocating our limited financial resources in a disciplined manner to the projects that had the best potential to maximize the Company's returns. We acted swiftly on the results of this review and began the process of working over our seven Austin Field wells covering 1,368 acres in Texas and resolving our dispute with our then operator of Zink Ranch in Oklahoma in order to regain control of our assets. The workover programme and stimulus initiatives proved successful and post period end we were pleased to report an average daily production rate of 110 barrels of oil equivalent per day ("boepd").

Based on our observation of the strong operational capabilities of our contract operator, Attis Oil and Gas Ltd ('Attis') during that same period, their onshore assets and field services division, we approached their management and agreed to a consolidation. This transaction (the 'Acquisition'), enhanced our operating capabilities, added a new revenue stream in the form of an established oil services division and brought on Thom Board as Chief Operating Officer and his US operational team as well as Russell Lamming as a Non- Executive Director.

Acquiring Attis was undoubtedly a pivotal moment for the Company, not only in the period under review, but in its lifetime. The Acquisition increased the Company's production base and its total acreage to 8,841 acres. In the period, and post period end, we have been leveraging off Attis' growing reputation as a value add third party oilfield service provider and have subsequently won several key contracts bringing the total number of wells covered by the services division to c.1,800 in a relatively short period of time. This has provided a valuable, additional source of revenue for the Company that is insulated from fluctuations in the oil and natural gas price, as well as providing exposure to a wide range of assets that may be of potential interest to the Company as acquisition targets.

Regarding our existing interests, in February, the Company increased its Net Revenue Interest at Austin Field by transferring Smart Bit's interest to an overriding royalty. We took control of operatorship in Zink Ranch in April and began the formal process with the Osage Nation at the same time. We expect formal transfer to occur by the end of 2019. These moves have proven to be commercially sound considering the recent operational performance of the assets. Our Borger office, near Amarillo, Texas has proven to be extremely capable and efficient at optimising the performance of our existing oil and gas assets, but the distances between our fields creates challenges that can stretch our resources and we continue to assess field and company optimisation strategies. The Reserve Reports that we commissioned are nearing completion which will allow us to effectively plan how best to attain future value, be it to sell, farmout, or obtain reserve lending. Our growing regional reputation in the Texas Panhandle as well as Thom and his team's deep understanding of the local area and its geology provides us with opportunities not readily available to other players and we are appraising new acreage for production development, engaging in joint venture possibilities, and progressing the operatorship division.

We have maintained our interest in TSX listed Petroteq Energy, Inc. that consists of 1,035,233 shares with an associated 1,035,233 3-year warrants at USD $0.90. Petroteq is a fully integrated oil and gas company focused on expanding production capacity at its Asphalt Ridge heavy oil extraction and processing facility in Utah. Petroteq has continued to make excellent progress in the period including increasing its acreage by 8,480 gross acres through the acquisition of 50% of the operating rights and interests relating to oil sands previously held under U.S. federal oil and gas leases in Utah. The completion of the first maintenance turnaround at Petroteq's oil sands processing facility resulted in the recommencement of oil production.

We have been delighted to welcome Russell Lamming and Thom Board to the Board of Directors and I believe that the Company has already benefited from their public company and capital markets experience and extensive technical expertise. The Board's mandate is straightforward - to ensure effective operations and provide strategic direction to create value for the Company's shareholders. This remains a responsibility that we take seriously, and we are encouraged by the notably improved revenue performance and reduced debt position recorded during the six months, particularly when set against the backdrop of relatively weak oil and gas prices seen in the period, and slower ramp up in oil production than initially anticipated. The direction of travel is clear.

We are executing on the strategy we laid out last year and are demonstrating that our new team and focused execution provide the platform that will generate significant growth. In less than a year, we refocused the Company, settled legacy portfolio issues, increased production from our existing assets and opened up additional revenue streams, in particular through the establishment of the services division which today has a well count of c.1,800. The oilfield services division moved quickly to positive cashflow with September turnover at c. $20,000. We expect to double monthly turnover utilising the same resources in H1 2020 as the testing regime ramps up across the well portfolio. We will continue to grow the business through further well compliance contracts and expanding testing & diagnostic services.

It hasn't been without its challenges, but we are confident that we have turned the corner. We are optimistic that in the upcoming months we will look to continue to optimise operations across our core portfolio, leverage the strong regional reputation and capabilities of the Attis team, evaluate consolidation and growth opportunities and increase the long term value of the company. Shareholder value shall remain at the forefront of our mind, and I wish to take the opportunity to thank investors for their support as well as our staff and advisors for their continued hard work.

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.attisog.com or contact the following:

Notes:

Attis Oil & Gas Ltd is an AIM listed (London Stock Exchange) oil and gas energy Company pursuing a strategy focused on drilling, re-stimulating, and operating wells within mature producing basins in the United States that generate immediate cash flow from projects that are shallow, low risk, with low levels of capex and infrastructure already in place. Attis also provides field and well operating services to third parties through its operating entity based out of Borger, Texas.

ATTIS OIL & GAS LTD CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Attis Oil & Gas Ltd Consolidated Statement of Comprehensive Income

for the Interim six months period ended 30 June 2019

Attis Oil & Gas Ltd Consolidated Statement of Financial Position

As at 30 June 2019

Attis Oil & Gas Ltd Consolidated Statement of Changes in Equity

for the six months interim period ended 30 June 2019

Attis Oil & Gas Ltd Consolidated Cash Flow Statement

for the six month interim period ended 30 June 2019

Notes to Attis Oil & Gas Ltd Consolidated Financial Statements (unaudited)

for the six months ended 30 June 2019

1. Basis of presentation

The condensed consolidated interim financial statements have 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 present 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.attisog.com and was approved by the Board of Directors on 26 September 2019.

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 2018, 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 2019 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 2018. In addition, consideration has been given to IFRS 15 and IFRS 9 which both are effective since 1 January 2019.

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 Attis' medium term performance and the factors that mitigate those risks have not substantially changed from those set out in Attis' 2018 Annual Report and Financial Statements, a copy of which is available from Attis' website. The key financial risks are market risk (including oil price and currency risk), credit risk and liquidity.

Going concern

Attis 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 Attis 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. Significant changes

The financial position and performance of the Group was particularly affected by the acquisition of Attis UK Oil & Gas which completed during the six months to 30 June 2019.

For further discussion of the Group's performance and financial position refer to the Chairman and Chief Executive's Statement.

The Group's results are not materially impacted by seasonality.

4. Joint Ventures and Profit Sharing Agreements

The Group is party to a joint venture when there is a contractual agreement that sets out the terms of the relationship over the relevant activities of the Group and at least on other party. Management has a legal degree of control over these joint venture arrangements through Joint Operating Agreements.

The Group classifies its interests in joint ventures as joint operations: where the Group has both the rights to assets and obligations for the liabilities of the joint venture. The Group accounts for its interests in joint ventures by recognising its share of assets, liabilities, revenues and expenses in accordance with its contractually conferred rights and obligations.

The Group accounts for its own assets, liabilities and cash flows measured in accordance with the terms of the Joint Operating Agreement and the accounting treatment reflects the agreement's commercial effect. The Group's revenue and cost of sales include revenues and operating costs associated with the Group's interest.

5. 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 shares on issue during the period.

As referred to in Note 6 below, the Company has issued options. However, based upon current share prices they presently have no value and accordingly 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.

6. Share capital

The authorised share capital of the Company and the called up and fully paid amounts at 30 June 2019 were as follows:

Shares issued on 21 January 2019 were issued at a price of 0.12 pence per share, for a cash consideration of £750,000 (before share issue costs), as well as £223,069 shares issued to creditors in settlement of third party creditor services and directors fees. Shares issued on 8 February 2019 were issued at a price of 0.12 pence per share, to creditors for the settlement of £35,000 of third party creditor services. Shares issued on 30 April 2019 were issued at a price of 0.14 pence per share, for a cash consideration of £700,000 (before share issue costs, £39,560 shares issued to creditors in settlement of third party creditor services and directors fees, and £1,333,076 shares to acquire 100% of Attis Oil & Gas Limited and its subsidiaries, affiliates and related entities (collectively referred to as "Attis"), a proven US oil & gas operator which holds a 50% interest in the Fort Worth Field, Texas and operates 98 wells across 5,100 acres in the Fort Worth Basin. 

7. Share based payments

The following is a summary of the share options and warrants outstanding and exercisable as at 30 June 2019 and 31 December 2018.

The above is expressed in GB£ and not US$ cents due to the terms of the options and warrants

More details of the above events were released by RNS and are also available from the Company's website www.attisog.com