10 Sep 2012 07:00
Embargoed for release: 0700 on 10 September 2012
Northern Petroleum Plc
("Northern", "the Group" or "the Company") Condensed Interim Results for the Six Months Ended 30 June 2012
Northern Petroleum Plc, an independent oil and gas exploration, development andproduction company announces its condensed interim results for the six monthsended 30 June 2012.There will be an analyst presentation at 1230 today following which theCompany's results presentation will be made available on its website,www.northpet.com.Financial highlights: Six months ended Six months ended 30 June 2012 30 June 2011 EUR '000 EUR '000 (Unaudited) (Unaudited) Revenue 8,737 13,046 Gross profit 5,498 2,789 EBITDA (i) 3,625 8,519 Adjusted EBITDA (ii) 4,239 8,464 Profit for the period 391 41 Basic and diluted earnings per share on profit 0.41 cents 0.04 centsfor the period Cash and cash equivalents 28,154 23,930 Other working capital 1,773 3,982 Net assets 94,576 85,801 Total distributable reserves 63,356 54,945 Capital expenditure (iii) 3,906 4,475 Production (thousand boe) 189 331 Average revenue, in currency of receipt, per EUR 45.05 EUR 39.36attributable boe: $105.28 $101.17Gas Oil Net Commercial Oil & Gas Reserve Quantities 75.36
88.69
- Proven and Probable reserves (million boe)
i. Earnings before interest (and other finance income and costs), tax,
depreciation, depletion, amortisation and write offs of oil and gas assets.
ii. In addition to the above, is calculated before share based payments and
pre-licence costs.
iii. Includes increase in investment in Northpet Investments Limited during the
period. Other financial highlights:
* Dutch gas pricesreceived have averaged €0.289per normal cubic metreduring
the period, approximately $10.07 per mscf, up 14% in Euro terms from the
comparative period average of €0.253per normal cubic metre(approximately $
9.09 per mscf); and
* The Group remains debt free and had cash on hand of approximately €28.2
million at period end, and approximately €27.6 million at the end of August
. Production:
* Production volumes for H1 were 188,900boe (approximately 1,038boepd); and
* The Group is on track to meet its 2012 production forecast of 950to 1,050
boepd. Outlook by Region:Guyane:
* first of four permitted wells currently drilling; and
* 3D seismic programme in progress.
Italy:
* 3D seismic planned in the Southern Adriatic.
Netherlands:
* Geesbrug-2 well in pre drill phase and Geesbrug-3 well in planning;
* various production enhancement activities under evaluation for 2013; and
* Ottoland evaluation post testing ongoing.
CHAIRMAN'S STATEMENT
I report attributable production during the period at an average rate of 1,019BOEPD and an average gas price of $10.07 per mscf in The Netherlands and 19BOPD in the UK at an average oil price of $105 per barrel. This resulted in areported operating profit of €2.2 million and was achieved for a period when nonew production wells were drilling to offset the natural decline in flow rates.
Work has continued to evaluate reservoir production performances and as reprocessed 3D and 2D seismic is delivered it is being interpreted to aid in the determination of the future drilling targets. We have selectively fast tracked work to design the new Geesbrug-2 well which we hope to drill this coming winter and is part of our aim to increase production in 2013 and beyond.
Cash levels have been largely maintained at €28.2 million as compared to €29.8million at the beginning of the period and €23.9 million twelve months ago. Ourbalance between holdings of Euros, US dollars and Sterling, the threecurrencies in which we conduct our business, has been very carefully managed tominimize the risks presented by an unprecedented period of currency volatilityand this has resulted in a currency gain during the period. The maintenance ofthis level of liquidity has been achieved despite outflows to financeactivities such as oil production testing at Ottoland and Markwells Wood,upgrading of gas processing facilities at Waalwijk, the purchase of long leadtime items for the second well in the Shell operated offshore Guyane prospect,intensive work to review The Netherlands production programme, andcommissioning a new management information system.Reviewing the Company's principal areas allows me to point to successfulinterventions to field operations at Waalwijk, Wijk en Aalburg and Grolloo inThe Netherlands to increase production from existing wells. Activities at theP12 gas platform offshore The Netherlands were also switched from fieldproduction to handling gas from a neighbouring field providing compensationthat will essentially maintain cash flows. The Ottoland field has been thesubject of an oil production test programme and we have designed and begunpreliminary activities for the second Geesbrug well.The first well following the world class Zaedyus discovery last year has beenspudded as the first in a multi well drilling programme to follow up on thisexciting discovery made in conjunction with our partners Total, Tullow and theoperator Shell. Keenly awaited results from this drilling in the major fansystem are expected later this year as are the results of the current seismicsurvey to delineate further fan systems within the licence.In Italy, efforts are mainly directed towards realising the high potential ofour position in the Southern Adriatic Sea where a 2D seismic survey of verygood quality was recorded in late 2011. Now that the data has been processedand interpreted, it provides a clearer definition of the Cygnus prospect with484 million barrels mean prospective resource estimate. A 3D seismic survey hasbeen planned for some time to cover an additional exploration prospect Corvusand Rovesti discovery but still awaits certain Italian approvals. In themeantime a farmed out well was drilled at La Tosca in our non-core area onshorelicences in the Po delta area, without success but at only minor cost to theCompany. We have now relinquished the other licences held in the Po ValleyBasin. Concerning the six licences west of Sicily, after the Shell decisionnot to exercise their option to drill under the terms of the farmout agreement,the licences have been allowed to lapse at their full term and requests for aconsideration for extensions withdrawn as any interests from any new potentialpartners would not meet the time constraints of the licences. I am hopeful thatoperations will be increased when further licences are awarded in the SouthernAdriatic Sea now that there are signs of a renewed Italian government interestin the benefits that oil exploration expenditure could bring to their economy.The Board believes that is has ensured that the Company has all the essentialsfor justified confidence in the future at a time when other small oil companiesare experiencing difficulties in a world still struggling with a globaleconomic crisis. Northern has a good cash balance for funding its forthcomingactivities, expects to increase production from its core area in theNetherlands and has two other high value areas, offshore of Italy and Guyane,to provide exciting world class exploration potential in which the first offour wells is currently being drilled with major oil industry partners.R H R LathamChairman7 September 2012
Consolidated Income StatementFor the six months ended 30 June 2012
6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) Notes EUR '000 EUR '000 EUR '000 Revenue 2 8,737 13,046 24,531 Production costs (2,016) (2,749) (5,298) Depletion and amortisation - (1,223) (7,508) (7,116)property, plant & equipment Cost of sales (3,239) (10,257) (12,414) Gross profit 5,498 2,789 12,117 Pre-licence costs (780) (87) (521) Administrative expenses - other (2,637) (1,833)
(3,876)
Administrative expenses - share 166 142
136incentives Administrative expenses - total (2,471) (1,691)
(3,740)
(Loss) / profit on disposal of (18) - 3,108assets Profit from operations 2,229 1,011 10,964 Finance charges 3 (221) (339) (1,033) Finance income 375 22 579
Share of operating loss of joint (11) (5)
(23)ventures & associates Profit before tax 2,372 689 10,487 Tax expense (1,981) (648) (4,256) Profit for the period 391 41 6,231 Basic earnings per share on profit 4 0.41 cents 0.04 cents 6.7 centsfor the period Diluted earnings per share on 4 0.41 cents 0.04 cents 6.5 centsprofit for the period
All results are from continuing activities and are attributable to equity shareholders of the parent.
Notes 1 to 8 form an integral part of this report.
Consolidated Statement of Comprehensive IncomeFor the six months ended 30 June2012 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Profit for the period 391 41 6,231
Exchange differences on translation 590 (470)
527of foreign operations
Other comprehensive income / (loss) 590 (470)
527
for the period, net of income tax Total comprehensive income / (loss) 981 (429) 6,758for the period
Consolidated Statement of Financial Positionas at 30 June 2012
At 30 June At 30 June At 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) Notes EUR '000 EUR '000 EUR '000 Assets Non-current assets Intangible assets 5 35,414 32,746 34,694 Property, plant and 6 48,686 52,520 47,513equipment Investments in joint 4,686 1,699 3,568ventures Investments in associates 15 15 15 Loans and other - 118 -receivables 88,801 87,098 85,790 Current assets Inventories 66 111 70 Trade and other 9,772 8,548 10,608receivables Cash and cash equivalents 28,154 23,930 29,794 37,992 32,589 40,472 Total assets 126,793 119,687 126,262 Liabilities Current liabilities Trade and other payables 3,348 4,559 6,278 Corporation tax liability 4,717 118 2,891 8,065 4,677 9,169 Non-current liabilities Trade and other payables 22 27 24 Provisions 9,622 16,587 9,437 Deferred tax liabilities 14,508 12,595 14,352 24,152 29,209 23,813 Total liabilities 32,217 33,886 32,982 Net assets 94,576 85,801 93,280 Capital and reserves Share capital 5,964 5,830 5,855 Share premium 12,553 12,153 12,366 Merger reserve 10,289 10,289 10,289 Special reserves - 28,583 28,428 28,583distributable Special reserves - - 155 -undistributable Share incentive plan 1,642 3,244 3,020reserve Foreign currency 772 (815) 182translation reserve Retained earnings 34,773 26,517 32,985 Total equity 94,576 85,801 93,280
All amounts are attributable to equity shareholders of the parent.
Notes 1 to 8 form an integral part of this report.
Consolidated Cash Flow Statementfor the six months ended 30 June 2012
6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000
Cash flows from operating activities
Profit before tax 2,372 689 10,487 Depletion and amortisation 1,223 7,508 7,116
Depreciation - non oil and gas 184 112
194
property, plant & equipment and
intangibles Profit / (loss) on disposal of 18 4
(3,108)
property, plant and equipment Foreign exchange (gain) / loss (313) 32 (244) Finance income (62) (22) (335) Finance charges 221 307 1,033 Share based payments 19 145 199
Expenses settled by issue of shares - 29
29
Share of operating loss of joint 11 5
23ventures & associates Net cash inflow before movements in 3,673 8,809 15,394working capital Decrease in inventories 5 11 56 (Increase) / decrease in trade and (106) 56 (2,427)other receivables
(Decrease) / increase in trade and (2,892) (2,524)
36other payables Exchange movement (12) - - Net cash (outflow) / inflow from (3,005) (2,457) (2,335)changes in working capital Taxes refunded - - 1,913 Net cash inflow from operating 668 6,352 14,972activities
Cash flows from investing activities
Interest received 62 22 335 Interest paid (38) (4) (312) Purchase of property, plant and (2,319) (2,185) (3,579)equipment Expenditure on exploration and (400) (593) (2,191)evaluation assets Purchase of other intangible assets (250) (572)
(1,184)
Investment in joint venture company (937) (1,125)
(3,012)
Sale of property, plant and equipment 949 -
2,154
Net cash (outflow) from investing (2,933) (4,457) (7,789)activities
Cash flows from financing activities Proceeds from the exercise of warrants 296 685
923
Net cash inflow from financing 296 685
923activities Net increase in cash and cash (1,969) 2,580 8,106equivalents Cash and cash equivalents at start of 29,794 21,430 21,430period
Effect of exchange rate movements 329 (80)
258
Cash and cash equivalents at end of 28,154 23,930
29,794
period Consolidated Statement of Changes in Equityfor the six months ended 30 June2012 Share Share Merger Special Share Foreign Retained Total capital premium reserve reserves incentive currency earnings Account plan translation reserve reserve EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
EUR'000 EUR'000
At 1 January 5,768 11,501 10,289 28,583 3,964 (345) 25,611 85,3712011(audited) Total - - - - - (470) 41 (429)comprehensive income for the period Issue of 62 652 - - - - - 714shares during the period - warrants and staff bonus Equity share - - - - (865) - 865 -warrants exercised Share based - - - - 145 - - 145payments At 30 June 5,830 12,153 10,289 28,583 3,244 (815) 26,517 85,8012011 (unaudited) Total - - - - - 997 6,190 7,187comprehensive income for the period Issue of 25 213 - - - - - 238shares during the period - warrants and staff bonus Equity share - - - - (278) - 278 -warrants exercised Share based - - - - 54 - - 54payments At 31 5,855 12,366 10,289 28,583 3,020 182 32,985 93,280December 2011 (audited) Total - - - - - 590 391 981comprehensive income for the period Issue of 109 187 - - - - - 296shares during the period - warrants and staff bonus Equity share - - - - (1,397) - 1,397 -warrants exercised Share based - - - - 19 - - 19payments At 30 June 5,964 12,553 10,289 28,583 1,642 772 34,773 94,5762012 (unaudited)
All amounts are attributable to equity shareholders of the parent.
Notes to the Interim Financial Information
for the six months ended 30 June 2012
1. BASIS OF PREPARATION
This unaudited condensed consolidated interim financial information has beenprepared using the recognition and measurement principles of InternationalAccounting Standards, International Financial Reporting Standards andInterpretations adopted for use in the European Union (collectively EU IFRSs).The principal accounting policies used in preparing the interim results areunchanged from those disclosed in the Group's Annual Report for the year ended31 December 2011. These statutory accounts are available on the Company'swebsite (www.northpet.com) or by application to the Company's registeredoffice.The financial information for the six months ended 30 June 2012 and 30 June2011 is unaudited and does not constitute statutory financial statements ofNorthern Petroleum Plc and its subsidiaries. The comparative financialinformation for the full year ended 31 December 2011 has, however, been derivedfrom the statutory financial statements for that period. A copy of thosestatutory financial statements has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified, did notinclude references to any matters to which the auditors drew attention by wayof emphasis without qualifying their report and did not contain a statementunder section 498(2)-(3) of the Companies Act 2006.
Changes to Accounting policies
a. In the current period, the following new and revised standards and
interpretations are effective and have been adopted but have had no effect
on the amounts reported in these financial statements.
IFRS 7 - Financial Instruments: Disclosures
This standard was amended to require additional disclosures about the transferof financial assets to enable users to understand the possible effects of anyrisks that may remain with the transferor.
b. At the date of approval of this interim report, the following Standards and
Interpretations which have not been applied in this interim report were in
issue but not yet effective and not yet adopted by the EU:
IAS 1 - Presentation of Financial Statements
The amendments require that an entity presents separately the items of OtherComprehensive Income that may be reclassified to profit or loss in the futurefrom those that would never be reclassified to profit or loss. They alsopreserve the existing option to present the profit or loss and othercomprehensive income in two statements.
The Directors do not expect that the adoption of these Standards or Interpretations in future periods will have a material impact on the financial statements of the Group.
2. REVENUERevenue includes compensation due to Northern Petroleum Nederland B.V. ("NPN")under the terms of a draft Transportation Agreement in respect of the P12facility that was shut in by Wintershall Noordzee B.V. on 30 April 2012 withoutNPN's approval in order to accommodate the processing of gas production fromthe nearby Medway Group of gas fields. NPN has yet to accept the terms of, andtherefore sign, this agreement.3. FINANCE CHARGES 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Foreign exchange losses - 32 - Other interest payable 38 - 300 Bank interest payable - 4 12 Unwinding of discount on 183 303 721decommissioning provisions 221 339 1,0334. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing profit or loss for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing profit for theperiod attributable to ordinary equity holders of the parent by the weightedaverage number of ordinary shares outstanding during the year, plus theweighted average number of shares that would be issued on the conversion ofdilutive potential ordinary shares into ordinary shares. The calculation of thedilutive potential ordinary shares related to employee and director shareoption plans includes only those warrants with exercise prices below theaverage share trading price for each period. 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Net profit attributable to equity holders 391 41 6,231used in basic calculation Net profit attributable to equity holders 391 41
6,231
used in dilutive calculation Basic weighted average number of 94,247 92,570 93,013shares
Dilutive potential of ordinary
shares: Warrants exercisable under 183 2,781 2,227Company schemes Diluted weighted average number 94,430 95,351
95,240
of shares
The calculation of the diluted EPS assumes all criteria giving rise to the dilution of the EPS are achieved and all outstanding share options that are in money at period end are exercised.
5. INTANGIBLE ASSETS 30 June 30 June 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) EUR'000 EUR '000 EUR '000 Exploration and evaluation assets 33,103 31,175 32,511 IT systems 2,311 1,571 2,183 35,414 32,746 34,694
6. PROPERTY, PLANT AND EQUIPMENT
30 June 30 June 31 December 2012 2011 2011 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Oil and gas assets 48,263 52,244 47,206
Computer and office equipment and 423 276
307leasehold improvements 48,686 52,520 47,5137. APPROVAL BY DIRECTORS
The interim results for the six months to 30 June 2012 were approved by the Directors on 7 September 2012.
8. AVAILABILITY OF INTERIM REPORT
The interim report will be made available in electronic format on the Company'swebsite, www.northpet.com, and will be posted to registered shareholders.Further copies will be available on request by application to the CompanySecretary at the Company's registered office being Martin House, 5 Martin Lane,London, EC4R 0DP.In accordance with the AIM Rules - Guidance for Mining and Oil & Gas Companies,the information contained in this announcement has been reviewed and signed offby the Exploration and Technical Director of Northern, Mr. Graham Heard CGeol.FGS, who has over 35 years experience as a petroleum geologist. He hascompiled, read and approved the technical disclosure in this regulatoryannouncement. The technical disclosure in this announcement complies with theSPE/WPC standard. The prospective resource estimate for Cygnus is based oninternal volumetric and related assessments. The definitions for oil and gasreserves are in accordance with the AIM Note for Mining and Oil & Gas Companies(June 2009) an in accordance with the guidelines of the Society of PetroleumEngineers ("SPE"). The SPE Reserve definitions can be found on the SPE websiteat www.spe.org. - Ends -
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7469 2900 Chris Foss, Director of Finance, Legal &
Corporate Affairs
Graham Heard, Exploration & Technical Director Cenkos Securities (NOMAD and Joint Broker)
Jon Fitzpatrick Tel: +44 (0) 20 7397 8900 Ken Fleming / Beth McKiernan Tel: +44 (0) 131 220 6939
Westhouse Securities(Joint Broker) Tel: +44(0) 20 7029 8000 Richard Baty/Petre Norton - Corporate Finance
FTI Consulting Tel: +44 (0) 20 7831 3113 Billy Clegg / Edward Westropp Bishopsgate Communications Tel: +44 (0) 20 7562 3350 Nick Rome Notes to Editors:Northern is a full cycle oil and gas company currently holding over 40 licencesin a number of low risk areas and is continuing with its strategy of adding andsecuring value for shareholders as it engages with projects at all stages ofthe E&P value chain.
Comprehensive information on Northern and its oil and gas operations, including all press releases, annual reports and interim reports are available from Northern's website at www.northpet.com
.
XLON