Cabot Energy Regulatory News (CAB)

Embargoed for release: 24 September 2013 at 07.00 Northern Petroleum Plc ("Northern", "the Group" or "the Company") Interim Results for the six months ended 30 June 2013 Northern Petroleum Plc (AIM: NOP) announces its unaudited interimresults for the six months ended 30 June 2013. Following an analystpresentation at 09.30 today, an updated corporate presentation will be madeavailable on the Company's website, www.northpet.com. HIGHLIGHTS Operational - Average production was 872 barrels of oil equivalent per day for the six months to the end of June (2012: 886 boe/d), including deemed production from P12 - Installation of electric compression on the Brakel gas field in The Netherlands was completed in April and the field was brought back into production with an initial increase in production of approximately 25 per cent - The GM-ES-3 well offshore French Guiana was completed in April and GM-ES-4 was spudded shortly thereafter in May - In March Northern acquired the rights to 9,300 acres onshore Canada in a new oil redevelopment production play containing 19 well re-entry candidates and multiple new drill opportunities - At the end of May the Company succeeded in a bid for a 1.4 million acre licence in the Otway Basin in South Australia containing an untested shale oil play Corporate - The Company announced that it had entered into discussions concerning the sale of the Company's Netherlands subsidiary - The first of five recent board changes was made during the period - A review and reduction of operational cost base commenced and is ongoing Financial - Total revenue and other operating income (P12 compensation) for the six months to June 2013 was €6.9 million (June 2012: €7.7 million, as restated) - A net loss of €0.9 million was recorded for the period (June 2012: €0.2 million, as restated) - Cash and cash equivalents as at 30 June 2013 were €17.4 million (31 December 2012: €22.5 million) and the loans and borrowing balance was a seismic loan from the Italian government of €1.6 million Keith Bush, Chief Executive Officer of Northern, commented: "During the first half of this year a programme of change wasinitiated with respect to asset focus and board composition. This programmehas continued during the second half of 2013 and we hope that upon completionof the key objectives, value in the Group's assets will be more clearlydemonstrated to the market and the business will be better positioned for thefuture." For further information please contact: Northern Petroleum Plc Tel: +44 (0)20 7469 2900Keith Bush, Chief Executive OfficerNick Morgan, Finance DirectorGraham Heard, Exploration and Technical Director Westhouse Securities (Nomad and Broker) Tel: +44 (0)20 7601 6100Richard Baty - Corporate FinanceIan Napier - Corporate Broking FTI Consulting Tel: +44 (0)20 7831 3113Billy Clegg, Edward Westropp Bishopsgate Communications Tel: +44 (0)20 7562 3350Nick Rome, Anna Michniewicz INTERIM MANAGEMENT REPORT There has been a lack of progress in some of the key areas of focusfor the Company in recent years, and therefore a change in approach has beennecessary in order to move the business forward. During the first half of thisyear, the process to effect this change was initiated. This has included thedecision to enter into discussions concerning the sale of the Group'sNetherlands subsidiary, the entry into an oil redevelopment play in Canada andthe start of a change in board composition. The process has continued into thesecond half of the year with three key objectives identified as the focus forthe business for the remainder of the year: the sale of the Netherlandssubsidiary; progress on the assets in the Southern Adriatic; and undertakingthe testing phase of the oil redevelopment play in Canada. Further to theseoperational goals, Keith Bush was appointed as Chief Executive Officer in Julyand the appointment of a new chairman is well progressed. Alongside these strategic moves, the operations and financialperformance of the business during the first half of the year have been inline with expectations. Production, including deemed production from P12,averaged 872 barrels of oil equivalent per day, as forecast and marginallydown on the average throughout 2012 of 886 barrels. The installation ofelectric compression on the Brakel gas field in The Netherlands was completedduring April and the post-compression production showed approximately a 25 percent increase in volume. These volumes, combined with a strong sales gas pricein The Netherlands, kept revenues ahead of budget. The third well offshore of French Guiana was spudded and completedwithin the period, encountering the target formation but with no indicationsof hydrocarbons. The drilling programme continued with the fourth well, whichwas completed in July, and the fifth and final well of this current programmeis in progress. The investment in Northpet Investment Limited, the jointventure vehicle by which the Group holds its interest in the French Guianalicence, continues to account for one of the more material movements in theGroup's cash balance. Alongside the investment in French Guiana, the payment of taxesowed to the government in The Netherlands of approximately €4.7 million duringthe period accounted for another significant change in cash reserves. Cash asat 30th June 2013 was €17.4 million. The Group continues to monitor cash flowsand forecast cash requirements and during the period implemented a materialreduction in ongoing general and administrative costs which will benefit thebusiness into 2014. The Company also took advantage of a government scheme inItaly, which has now been discontinued, whereby the Group was refunded aportion of historic seismic costs expended in the country. Half of the refundwas paid as a grant, which has been used to offset the Italy intangible costpool, and half as a low interest loan, repayable over five years. This loan issplit on the balance sheet between current and non-current liabilities. The reduction in both trade receivables and payables was primarilydue to the conclusion of negotiations around the transportation agreementacross the P12 platform with the owners of the Medway gas field, resulting inthe payment of accrued income and operational expenses, previously outstandingat the year end. The short term focus of the business is on achieving the three keyobjectives set out above. It is expected that each of these actions will helpdemonstrate clear value to the market with the associated benefits inshareholder value. The completion of these objectives will also position thebusiness well for future growth in the medium and longer term. Condensed Consolidated Statement of Profit or LossFor the six months ended 30 June 2013 6 months 6 months ended ended 30 June 30 June 2013 2012 (Unaudited) (Unaudited) Notes EUR'000 EUR'000 (Restated*)Revenue 6,072 7,512 Production costs (2,115) (2,099)Depletion and amortisation - property, plant & equipment (1,464) (1,223)Cost of sales (3,579) (3,322) Gross profit 2,493 4,190 Pre-licence costs (248) (490)Administrative expenses (2,252) (2,475)Profit / (loss) on disposal of assets 4 (18)Other operating income 3 853 154Other operating expenses (473) (286) Profit from operations 377 1,075 Finance charges 4 (225) (221)Finance income 72 375Share of operating loss of joint ventures & associates (13) (11)Profit before tax 211 1,218Tax expense (1,102) (1,404)Loss for the period (891) (186) Basic earnings per share on loss for the period (cents) 5 (0.9) (0.2) Diluted earnings per share on loss for the period (cents) 5 (0.9) (0.2)* See Note 2. All results are from continuing activities and are attributable to equityshareholders of the parent. Notes 1 to 10 form an integral part of this report. Condensed Consolidated Statement of Profit or Loss and Other ComprehensiveIncomeFor the six months ended 30 June 2013 6 months 6 months ended ended 30 June 30 June 2013 2012 (Unaudited) (Unaudited) EUR'000 EUR'000 (Restated*) Loss for the period (891) (186) Other comprehensive income: Items that may be reclassified subsequentlyto profit or loss: Exchange differences on translation of foreignoperations (561) 590 Other comprehensive (loss) / income for theperiod, net of income tax (561) 590 Total comprehensive (loss) / income for the period (1,452) 404 * See Note 2. Condensed Consolidated Statement ofFinancial Position At 30 June At 31 December as at 30 June 2013 2013 2012 (Unaudited) (Audited) Notes EUR'000 EUR'000AssetsNon-current assetsIntangible assets 6 37,513 36,962Property, plant and equipment 7 47,169 47,527Investments in joint ventures 10,325 6,621Investments in associates and others 119 90 95,126 91,200Current assetsInventories 99 99Trade and other receivables 6,497 9,870Cash and cash equivalents 17,352 22,473 23,948 32,442Total assets 119,074 123,642 LiabilitiesCurrent liabilitiesTrade and other payables 2,752 4,172Loans and borrowings 119 -Corporation tax liability 1,360 4,582 4,231 8,754Non-current liabilitiesTrade and other payables 16 19Loans and borrowings 1,455 -Provisions 9,670 9,434Deferred tax liabilities 13,391 13,718 24,532 23,171Total liabilities 28,763 31,925 Net assets 90,311 91,717 Capital and reservesShare capital 5,964 5,964Share premium 12,553 12,553Merger reserve 10,289 10,289Special reserves - distributable 28,583 28,583Share incentive plan reserve 1,053 1,364Foreign currency translation reserve (696) (135)Retained earnings 32,565 33,099Total equity 90,311 91,717 All amounts are attributable to equity shareholders of the parent. Notes 1 to 10 form an integral part of this report. Condensed Consolidated Cash FlowStatement 6 months ended 6 months ended for the six months ended 30 June 2013 30 June 30 June 2013 2012 (Unaudited) (Unaudited) EUR'000 EUR'000 (Restated*)Cash flows from operating activitiesProfit before tax 211 1,218Depletion and amortisation 1,464 1,223Depreciation - non oil and gas property, plant & equipment and intangibles 440 184(Profit) / loss on disposal of property, plant and equipment (4) 18Foreign exchange gain (50) (313)Finance income (22) (62)Finance charges 225 221Share based payments 46 19Share of operating loss of joint ventures & associates 13 11Net cash inflow before movements in working capital 2,323 2,519 Decrease in inventories - 5Decrease in trade and other receivables 3,317 744Decrease in trade and other payables (1,533) (2,588)Exchange movement - (12)Net cash inflow / (outflow) from changes in working capital 1,784 (1,851) Taxes paid (4,673) - Net cash (outflow) / inflow from operating activities (566) 668 Cash flows from investing activitiesInterest received 22 62Interest paid (14) (38)Purchase of property, plant and equipment (1,423) (2,319)Expenditure on exploration and evaluation assets (2,536) (400)Purchase of other intangible assets - (250)Proceeds from award of government grants 1,574 -Investment in joint venture company (3,746) (937)Sale of property, plant and equipment 8 949Acquisition costs of Canadian subsidiary net of cash andcash equivalents acquired (note 8) (125) -Net cash outflow from investing activities (6,240) (2,933) Cash flows from financing activitiesProceeds from the exercise of warrants - 296Proceeds from award of government loans 1,574 -Net cash inflow from financing activities 1,574 296 Net decrease in cash and cash equivalents (5,232) (1,969)Cash and cash equivalents at start of period 22,473 29,794Effect of exchange rate movements 111 329Cash and cash equivalents at end of period 17,352 28,154* See Note 2 Condensed Consolidated Statement of Changes in Equityfor the six months ended 30 June 2013 Share Foreign Share incentive currency Share premium Merger Special plan translation Retained capital account reserve reserves reserve reserve earnings Total EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 At 1 January 2012 (audited) 5,855 12,366 10,289 28,583 3,020 182 32,985 93,280Restated totalcomprehensive income/(loss) for the period - - - - - 590 (186) 404Transactions with owners of the Company,recognised directly in equityIssue of shares during theperiod - warrants and staffbonus 109 187 - - - - - 296Equity share warrantsexercised or lapsed - - - - (1,397) - 1,397 -Share based payments - - - - 19 - - 19Total transactions withowners of the Company 109 187 - - (1,378) - 1,397 315 Restated balance at 30June 2012 (unaudited)* 5,964 12,553 10,289 28,583 1,642 772 34,196 93,999 Share Foreign Share incentive currency Share premium Merger Special plan translation Retained capital account reserve reserves reserve reserve earnings Total EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 At 1 January 2013 (audited) 5,964 12,553 10,289 28,583 1,364 (135) 33,099 91,717Total comprehensive lossfor the period - - - - - (561) (891) (1,452)Transactions with owners of theCompany, recognised directly in equityEquity share warrantsexercised or lapsed - - - - (357) - 357 -Share based payments - - - - 46 - - 46Total transactions withowners of the Company - - - - (311) - 357 46At 30 June 2013 (unaudited) 5,964 12,553 10,289 28,583 1,053 (696) 32,565 90,311 All amounts are attributable to equity shareholders of the parent.* See Note 2 Notes to the Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2013 1. BASIS OF PREPARATION This unaudited condensed consolidated interim financial informationhas been prepared using the recognition and measurement principles ofInternational Accounting Standards, International Financial ReportingStandards and Interpretations adopted for use in the European Union(collectively EU IFRSs). The principal accounting policies used in preparingthe interim results are unchanged from those disclosed in the Group's AnnualReport for the year ended 31 December 2012, apart from a new policy on thetreatment of government grants as set out below. These statutory accounts areavailable on the Company's website (www.northpet.com) or by application to theCompany's registered office. The financial information for the six months ended 30 June 2013 and30 June 2012 is unaudited and does not constitute statutory financialstatements of Northern Petroleum Plc and its subsidiaries. The comparativefinancial information for the full year ended 31 December 2012 has, however,been derived from the statutory financial statements for that period. A copyof those statutory financial statements has been delivered to the Registrar ofCompanies. The auditor's 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. New accounting policies Government Grants and Disclosure of Government Assistance A government grant is recognised only when there is reasonableassurance that (a) the entity will comply with any conditions attached to thegrant and (b) the grant will be received. Government grants relating tointangibles and property, plant and equipment are offset against the costs ofthe related assets. Changes to Accounting policies a) In the current period, the following new and revised standards andinterpretations are effective and have been adopted but have had no effect onthe amounts reported in these financial statements. IAS 1 - Presentation of Financial Statements Amendments were made that require an entity to present separatelythe items of other comprehensive income that may be reclassified to profit orloss in the future, from those that would never be reclassified to profit orloss. They also preserve the existing option to present the profit or loss andother comprehensive income in two statements. b) At the date of approval of this interim report, the followingStandards and Interpretations which have not been applied in this interimreport were in issue and effective but not yet adopted by the EU: IFRS 10 - Consolidated Financial Statements This standard will replace the existing accounting for subsidiariesand joint ventures, and make limited amendments in relation to associates.IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements. IFRS 11 - Joint Arrangements This standard will replace the existing accounting for subsidiariesand joint ventures, and make limited amendments in relation to associates. Allparties to a joint arrangement are within the scope of IFRS 11. IFRS 12 - Disclosure of Interests in Other Entities This standard will replace the existing accounting for subsidiariesand joint ventures, and will make limited amendments in relation toassociates. IFRS 13 - Fair Value Measurement This is a new standard that will replace the existing guidance onfair value measurement in different IFRSs with a single definition of fairvalue, a framework for measuring fair values and disclosures about fair valuemeasurements. IAS 27 - Separate Financial Statements - IAS 27 (2011) carries forward the existing accounting anddisclosure requirements of IAS 27 for separate financial statements, with someminor clarifications. IAS 28 - Investments in Associates and Joint Ventures This standard was amended in 2011 and replaces IAS 28 (2008). Theamendments were as follows: - Associates and joint ventures held for sale - IFRS 5 applies toan investment, or a portion of an investment, in an associate or a jointventure that meets the criteria to be classified as held for sale. For anyretained portion of the investment not classified as held for sale, the equitymethod is applied until disposal of the portion held for sale. After disposal,any retained interest is accounted for using the equity method if the retainedinterest continues to be an associate or a joint venture. - Changes in interests held in associates and joint ventures - IAS28 (2011) does not require re-measurement of the retained interest in theinvestment upon cessation of significant influence or joint control.Previously, IAS 28 (2008) and IAS 31 would have required re-measurement of anyretained interest in all cases, even if significant influence was succeeded byjoint control. The Directors do not expect that the adoption of these Standards orInterpretations in future periods will have a material impact on the financialstatements of the Group. 2. REPRESENTATION AND RESTATEMENT OF SIX MONTH PERIOD TO 30 JUNE 2012 In order to be consistent with the presentation and accountingtreatment adopted in the audited financial statements for the year ended 31December 2012 and the unaudited interim financial statements for the six monthperiod ended 30 June 2013, the results for the six month period to 30 June2012 have been re-presented and re-stated as follows: - Compensation revenue and production costs related to the P12field, previously reported under "Revenue" (€375,000) and "Production costs"(€221,000), have been reclassified as "Other operating income", see note 3below. This adjustment has no overall effect on the reported loss for the sixmonth period ended 30 June 2012. For further detail see page 22 of the AnnualReport and Accounts 2012; - New business development expenses of €286,000 previously reportedunder "Pre-licence costs" have been re-presented as "Other operatingexpenses". This adjustment has no overall effect on the reported loss for thesix month period ended 30 June 2012; and - Following discussions with Nederlandse Aardolie Maatschappij("NAM") in late 2012, the Group has assigned a portion of the income of thegas production from the Brakel field in The Netherlands to NAM in line withthe expected outcome of negotiations concerning the original sales andpurchase agreement under which five fields in The Netherlands were acquired.As a consequence of this the following amounts have been restated; Revenue hasbeen reduced by €850,000, Production costs have been increased by €304,000,and the Tax expense has been reduced by €577,000. The overall reduction in thereported profit for the six month period to 30 June 2012 is €577,000. Forfurther information see the Annual Report and Accounts 2012 Financial Reviewand Segmental information - note 2, where this was discussed. 3. OTHER OPERATING INCOME 6 months ended 6 months ended 30 June 30 June 2013 2012 (Unaudited) (Unaudited) EUR'000 EUR'000 (Restated*)P12 compensation payment 853 154* See Note 2 Production from the P12 field was shut in during April 2012 toallow the Dana Petroleum plc operated Medway gas fields to utilise the P12platform facilities as a processing and transport route. Northern is beingcompensated based on an agreed production profile for P12 per thetransportation agreement with a cash payment representing production, a tariffpayment for the use of the P12 facilities and a payment for a share of theoperating expenditure. While the agreement is effectively allowing Northern tobe paid as if it was producing gas from P12, no actual gas is being producedby Northern and since there is no current obligation to produce in the futurethis net income is recognised in Other Operating Income, except for the tariffincome which remains in Revenue. 4. FINANCE CHARGES 6 months ended 6 months ended 30 June 30 June 2013 2012 (Unaudited) (Unaudited) EUR'000 EUR'000Other interest payable 14 38Unwinding of discount on decommissioning provisions 211 183 225 221 5. EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing profitor loss for the period attributable to ordinary equity holders of the parentby the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividingprofit for the period attributable to ordinary equity holders of the parent bythe weighted average number of ordinary shares outstanding during the year,plus the weighted average number of shares that would be issued on theconversion of dilutive potential ordinary shares into ordinary shares. Thecalculation of the dilutive potential ordinary shares related to employee anddirector share option plans includes only those warrants with exercise pricesbelow the average share trading price for each period. 6 months ended 6 months ended 30 June 30 June 2013 2012 (Unaudited) (Unaudited) EUR'000 EUR'000 (Restated*) Net loss attributable to equity holders used in basic calculation 891 186 Net loss attributable to equity holders used in dilutive calculation 891 186 Basic weighted average number of shares 95,067 94,247Dilutive potential of ordinary shares:Warrants exercisable under Company schemes - -Diluted weighted average number of shares 95,067 94,247* See Note 2 The calculation of the diluted EPS assumes all criteria giving riseto the dilution of the EPS are achieved and all outstanding share options thatare in money at period end are exercised. 6. INTANGIBLE ASSETS 30 June 31 December 2013 2012 (Unaudited) (Audited) EUR'000 EUR'000Exploration and evaluation assets 35,264 34,414IT systems 2,249 2,548 37,513 36,962 7. PROPERTY, PLANT AND EQUIPMENT 30 June 31 December 2013 2012 (Unaudited) (Audited) EUR'000 EUR'000Oil and gas assets 46,434 46,752Computer and office equipment and leasehold improvements 735 775 47,169 47,527 8. CANADIAN ACQUISITION On 31 January 2013 the Group acquired all of the ordinary sharecapital of Ouro Preto Resources Inc ("Ouro Preto"). The acquisition of Ouro Preto has enabled the Group to establishitself quickly in Canada and acquire Petroleum and Natural Gas Rights from theCrown with plans to commence operations later this year. Due to the inherently uncertain nature of the oil and gas industry,and exploration and evaluation assets in particular, the assumptionsunderlying the assigned values below are significantly judgemental in nature.The acquisition consideration below is considered equal to the aggregate ofthe fair values of the assets and liabilities acquired, with fair valueadjustments recorded as deemed appropriate. Effect of the acquisition: Consideration: 31 January 2013 EUR'000Cash 209 Identifiable assets acquired and liabilities assumed: 31 January 31 January 31 January 2013 2013 2013 Pre-acquisition Fair Recognised carrying value values on amount adjustments acquisition EUR'000 EUR'000 EUR'000Intangible assets 54 204 258Property, plant and equipment - oil & gas assets 27 - 27Trade and other receivables 33 - 33Cash and cash equivalents 84 - 84Trade and other payables (126) - (126)Provisions (27) - (27) 45 204 249Deferred tax liability - (40) (40) 45 164 209 The intangible assets acquired comprise Petroleum and Natural GasRights in Alberta province, Canada. The uplift on acquisition of "Intangible assets" of €204,000equates to a fair value of possible oil reserves. The Directors consider thatthis was, and remains, an appropriate valuation given the early stages ofdevelopment of the assets. The trade and other receivables comprises bond deposits fordecommissioning and Government Sales Tax ("GST" - Canadian VAT), all of whichwas expected to be collectable at the acquisition date. At 30 June GST hadbeen received and the decommissioning bond was still outstanding and isexpected to be collectable following the abandonment of the Bow Island fieldin 2018. No goodwill has been recognised as result of the acquisition and nosignificant acquisition related costs have been incurred. The revenue generated and expenses incurred by this operation sincethe date of acquisition (31 January 2013) were €Nil and €158,000 respectively.Of the €158,000 expenses, €94,000 relates to staff and office costs and€22,000 relates to legal fees. Cash outflow from the operation postacquisition was €798,000 and comprised the staff and office costs andinvestments in oil and gas assets. If the acquisition had occurred on 1January 2013, management estimates that consolidated revenue would have beenunchanged and the consolidated costs for the six month period would have been€31,000 higher. 9. APPROVAL BY DIRECTORS The interim results for the six months to 30 June 2013 wereapproved by the Directors on 23 September 2013. 10. AVAILABILITY OF INTERIM REPORT The interim report will be made available in electronic format onthe Company's website, www.northpet.com, and will be posted to registeredshareholders. Further copies will be available on request by application tothe Company Secretary at the Company's registered office being Martin House, 5Martin Lane, London, EC4R 0DP. Note to Editors: Northern is a full cycle oil and gas company currently holdingnumerous licences in a number of low risk areas and is continuing with itsstrategy of adding and securing value for shareholders as it engages withprojects at all stages of the E&P value chain. Comprehensive information on Northern and its oil and gasoperations, including press releases, annual reports and interim reports areavailable from Northern's website www.northpet.com. In accordance with AIM Rules - Guidance for Mining and Oil & GasCompanies, the information contained in this announcement has been reviewedand signed off by the Exploration and Technical Director of Northern, MrGraham Heard CGeol. FGS, who has over 35 years experience as a petroleumgeologist. He has compiled, read and approved the technical disclosure in thisregulatory announcement. The technical disclosure in this announcementcomplies with the SPE/WPC standard.