Circle Oil Plc Regulatory News (COP)

30 Sep 2005 06:00

Embargoed: 0700hrs 30 September 2005 CIRCLE OIL PLC ("Circle" or the "Company") Interim Results for the Six Months to 30 June 2005 Highlights * Significant additions to licence portfolio in Oman and Panama * Former Shell Principal Geophysicist appointed to Board * ¢â€š¬14.4million (GBP‚£10m) institutional placing completed * Ongoing working capital requirements adequately funded * Substantial positions now held in Namibia, Oman and Panama Chairman's StatementINTRODUCTIONI am pleased to report that Circle has been very actively progressing farmoutdeals as well as increasing the number of exploration licences in its portfolioboth during and subsequent to the period under review. The geographic spread ofits holdings has also expanded with, most significantly, new licences beingadded in Oman both onshore and offshore in addition to a large block in thePanamanian waters of the Western Caribbean which was awarded recently.With the much larger spread of our prospects we have scaled up our technicaloffice in Houston Texas where our COO Jack Keyes is based. He is now backed upby a very experienced geologist, Kevin Lant, who is the Company's ExplorationManager and Jon Dombrowski another experienced geologist who is heading up thedevelopment of our new Caribbean licence prospect.In March 2005 the Company appointed Collins Stewart as its stockbroker andnominated advisor. In August the Company completed a substantial institutionalplacing of its ordinary shares raising ¢â€š¬14.4million gross (GBP‚£10m) and addinga number of large institutional investors to its shareholder base.OPERATIONSFollowing the signing in November 2004 of a memorandum of understanding betweenCircle Oil and China Shine HF, a Chinese corporation based in Beijing, afarmout agreement was signed on 22 January 2005 whereby China Shine will earn a72% interest in the Company's Namibian licence. Circle will retain an 18%interest in the licence with NAMCOR, the National Petroleum Corporation ofNamibia, holding the remaining 10% interest.Under the terms of this agreement all of Circle's future costs both forexploration and development on this licence will be funded by China Shine. Anumber of meetings have taken place in London, Houston and Beijing betweenCircle and China Shine during the past months and China Shine is currentlycompleting its due diligence and finalising its team and programme to beginwork on the licence.In February 2005 following a meeting in Ireland between Circle and officials ofthe Omani Oil and Gas Ministry, Circle was awarded Block 49 which covers anarea of 15,500 sq.kms. in western Oman. The Exploration and Production SharingAgreement (EPSA) on this block was signed by the Omani Oil Minister and CircleExecutives in June 2005 in Muscat. At this time Circle also applied for asubstantial licence offshore Oman in the Arabian Sea. This licence, Block 52,covers an area of almost 100,000sq.kms. and having been offered to the Company,the EPSA was signed on 6 September.Circle is currently firming up a cost effective work programme on both Omanilicences. The initial plan is to fly an aerogravity survey on the onshore blockand shoot a seismic programme on the offshore block.Circle is now one of the largest holders of licences by area in Oman, a stableMiddle Eastern country producing over 700,000 barrels of oil per day as well assubstantial amounts of gas. Our Dubai-based Middle East Business DevelopmentManager, Shamil Daoud is in the process of making a number of additionalapplications in other countries in this area.Circle, through its wholly owned subsidiary Circle Oil Panama SA, has had anapplication for a licence with the Panamanian authorities for quite some time.I am pleased to report that the Company has been awarded this licence in thepast few weeks. This is an exciting new area which we believe may have thepotential to host a number of undrilled structures and basins. There aresignificant occurrences of seabed gas hydrates and evidence of hydrocarbonsources within the area to give to the Company sufficient encouragement tocarry out a regional seismic programme in the area.FINANCIAL RESULTSThe financial results show a loss for the period of ¢â€š¬577,591. The loss is inline with expectations and reflects the increased activity of the company.Following the appointment of Collins Stewart as its broker, in June Circlecommenced a fundraising to secure the costs of carrying out the work programmesboth on the licences in its portfolio and those under application. The Board ofthe Company decided that the most appropriate way forward on this issue was tocarry out an institutional funding which would also broaden the Company'sshareholder base. In August 2005, the Company successfully raised ¢â€š¬14.4 milliongross (GBP‚£10 million gross). This together with cash balances on hand at June30 leave the company with total net cash of ¢â€š¬18.6m (GBP‚£12.9m). This providesthe Company with sufficient working capital for the foreseeable future at thecurrent level of operations.BOARD CHANGESFollowing the AGM the Board appointed Professor Chris Green as Non ExecutiveDirector. Professor Green has over 30 years of oil industry experienceincluding 24 years at Shell where he was a Principal Geophysicist and a GlobalShell Group Advisor. He also worked at Racal Electronics and ThalesGeosolutions and during the period 1996 to 2004 was Professor of Geophysics atthe University of St. Andrews in Scotland. He brings a wealth of experience andexpertise to the Board and has a number of very interesting ideas as to howCircle should expand its portfolio of interests.Both Dan Idzal and John McDonnell opted, for personal business reasons, not toseek re-election at the AGM and this has allowed for the appointment ofProfessor Green to the Board. Other appointments will be made shortly. I wouldlike to thank Dan and John for their involvement in Circle and wish them everysuccess in their other ventures.CONCLUSIONThe Company has achieved remarkable progress since it came to the market justunder one year ago.Other than Oil Majors, Circle now has one of the biggest footprints in theMiddle East as well as a significant licensed area in the Caribbean. These,together with our very large 200,000 sq.km. holding in Namibia puts Circle in aunique position and demonstrates the effectiveness of our business model.I would like to thank all our stakeholders and fellow Directors for theircontributions over this period and I look forward confidently to working withthem to enhance the value of the Company in the future.Thomas AndersonChairman of the Board29 September 2005Circle Oil PLCUNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE PERIOD ENDED 30 JUNE 2005 Notes For the six For the nine months ended 30 months ended 31 June 2005 December 2004 Euro ¢â€š¬ Euro ¢â€š¬ TURNOVER - - ADMINISTRATION EXPENSES (630,552) (927,920) EXCEPTIONAL ITEM 2 - (313,685) OPERATING LOSS (630,552) (1,241,605) Interest receivable and similar 52,961 30,625income LOSS BEFORE TAXATION (577,591) (1,210,980) Taxation 3 - (27,178) LOSS FOR THE 4 (577,591) (1,238,158) FINANCIAL PERIOD Basic loss per share 5 (0.46c) (2.4c) Diluted loss per share 5 (0.43c) (2.3c)CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE PERIOD ENDED 30 JUNE 2005 For the six For the nine months ended 30 months ended 31 June 2005 December 2004 Euro ¢â€š¬ Euro ¢â€š¬ Loss for the financial Period 4 (577,591) (1,238,158) Exchange translations movement (31,636) 21,297 Total recognised loss for the period (609,227) (1,216,861) Circle Oil PLCUNAUDITED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2005 Notes 30 June 31 December 2005 2004 Euro ¢â€š¬ Euro ¢â€š¬ Fixed Assets Oil & Gas Interests 6 1,373,568 637,245 Tangible Assets 25,390 8,648 1,398,958 645,893 Current Assets Debtors 208,808 84,804 Cash at Bank 4,222,914 5,383,697 4,431,722 5,468,501 Creditors (Amounts falling due 760,479 434,966 within one year) Net Current Assets 3,671,243 5,033,535 Total Assets Less Current Liabilities 5,070,201 5,679,428 Net Assets 5,070,201 5,679,428 Capital And Reserves Called Up Share Capital 1,268,639 1,268,639 Share Premium 5,627,556 5,627,556 Profit And Loss Account 4 (1,825,994) (1,216,767) Shareholders' Funds - All Equity 5,070,201 5,679,428 Circle Oil PLCUNAUDITED CONSOLIDATED cash flow statementsAS AT 30 JUNE 2005 Notes 30 June 31 December 2005 2004 Euro ¢â€š¬ Euro ¢â€š¬ NET CASH OUTFLOW 8 (458,480) (984,983) FROM OPERATING ACTIVITIES RETURN ON INVESTMENTS AND SERVICING OF FINANCE Interest received 52,961 30,625 NET CASH OUTFLOW FROM RETURNS ON (405,519) (954,358)INVESTMENTS AND SERVICING OF FINANCE TAXATION Franchise tax - (27,178) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire oil & gas 6 (736,323) (480,337)interests Payments to acquire tangible fixed (18,941) (9,941)assets TOTAL CAPITAL EXPENDITURE AND (755,264) (490,278)FINANCIAL INVESTMENT NET CASH OUTFLOW BEFORE (1,160,783) (1,471,814) USE OF LIQUID RESOURCES AND FINANCING FINANCING Issue of ordinary share capital - 5,230,961 Share issue expenses - (322,147) NET CASH INFLOW FROM FINANCING 4,908,814 (DECREASE) / INCREASE IN CASH 7 (1,160,783) 3,437,000 Circle Oil PLCNOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 2005 1. BASIS OF PREPARATION The Interim accounts which are unaudited, have been prepared in accordance withthe historical cost convention, the relevant Statements of Recognised Practicefor the oil and gas industry, other applicable accounting standards generallyaccepted in Ireland and Irish statute comprising the Companies Acts, 1963 to2003 and the European Communities (Companies: Group Accounts) Regulations,1992. Accounting standards generally accepted in Ireland in preparing financialstatements giving a true and fair view are those published by the Institute ofChartered Accountants in Ireland and issued by the Accounting Standards Board.2. EXCEPTIONAL ITEMOn October 18th, 2004 the Company was admitted to the Alternative InvestmentMarket (AIM). The costs associated with the listing on this market amounted to¢â€š¬313,685.3. TAXATIONGroup For the six For the nine months ended 30 months ended 31 June 2005 December 2004 Euro ¢â€š¬ Euro ¢â€š¬ Arising on ordinary trading - -activities US State Franchise tax - 27,178 Total - 27,178 4. PROFIT AND LOSS ACCOUNTGROUP 30 June 31 December 2004 2005 Euro ¢â€š¬ Euro ¢â€š¬ Opening Balance (1,216,767) 94 Loss for the financial period (577,591) (1,238,158) Exchange translations adjustments (31,636) 21,297 Closing Balance (1,825,994) (1,216,767) Circle Oil PLCNOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 20055. BASIC AND DILUTED LOSS PER SHAREThe calculation of basic loss per share is based on the Group's loss of ¢â€š¬577,591 which is after taxation and on the weighted average number of equityshares in issue of 126,863,850.The effect of options granted at the time of listing on AIM on October 18th,2004 is to increase the weighted average number of shares for the calculationof the diluted earnings per share by 6,750,000 to 133,613,850.6. OIL & GAS INTERESTS Namibia Celtic Oman Other Total Sea Licences Under Review Deferred Euro ¢â€š¬ Euro ¢â€š¬ Euro ¢â€š¬ Euro ¢â€š¬ Euro ¢â€š¬development expenditure: Cost: At 31 December 612,291 24,954 - - 637,2452004 Additions 196,250 10,433 518,073 11,567 736,323 At 30 June 2005 808,541 35,387 518,073 11,567 1,373,568 Net book value: At 30 June 2005 808,541 35,387 518,073 11,567 1,373,568 Oil & Gas InterestsDeferred development expenditure at 30 June, 2005 represents exploration andrelated expenditure.The realisation of this intangible asset is dependent on the development ofeconomic reserves. The directors are aware that by its nature there is aninherent uncertainty in such expenditure as to the value of the asset.Having reviewed the deferred development expenditure at 30 June 2005, thedirectors are satisfied that the value of the intangible asset is not less thannet book value. Circle Oil PLC NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2005 7. CASH AT BANK At 31 December Cash Outflow At 30 June 2005 2004 Euro ¢â€š¬ Euro ¢â€š¬ Euro ¢â€š¬ Cash at bank 5,383,697 (1,160,783) 4,222,9148. RECONCILIATION OF OPERATING LOSS TO NET CASHOUTFLOW FROM OPERATING ACTIVITIES 30 June 31 December 2004 2005 Euro ¢â€š¬ Euro ¢â€š¬ Operating loss (630,552) (1,241,605) Increase in creditors 325,513 318,836 Increase in debtors (124,004) (84,804) Movement in Exchange translations (31,636) 21,297adjustment Depreciation 2,199 1,293 NET CASH (OUTFLOW) FROM OPERATING (458,480) (984,983)ACTIVITIES 9. INTERIM REPORT Copies of the Interim Report will be posted to shareholders shortly. Furthercopies are available from the Company Secretary, Suparule House, Lonsdale Road,National Technology Park, Limerick, Ireland or by download from the Company'sweb-site at www.circleoil.comFor Further Information please contact:David Hough, CEOTel. 353-61-354831Ben Simons/Chris RobertsHansard CommunicationsTel. 020 7245 1100ENDCIRCLE OIL PLC