21 Jun 2010 07:00
Circle Oil Plc
(The "Company") and its Subsidiaries ("Circle" or the "Group")
Preliminary results for the year ended 31 December 2009
Circle Oil plc (AIM: COP), the international oil and gas exploration, development and production company, is pleased to announce its results for the year ended 31 December 2009.
Highlights
- Circle has further delivered on its promise as both an explorer and producer of oil and gas with oil production commencing and increasing though the year in Egypt and gas production continuing in Morocco.
- Four appraisal wells have been completed in Egypt and three exploration wells have been completed in Morocco. All wells have intersected hydrocarbons of which seven have already proved commercial with the eighth in Morocco remaining to be tested.
- Excellent drilling results bear continuing testimony to the skill and efforts of our technical team.
- 3D seismic acquisition survey underway in Oman Block 49.
- 2D seismic acquisition programme was completed in the offshore Tunisia, Mahdia licence and also in the onshore Tunisia, Ras Mamour licence.
- New onshore licences were acquired in Morocco in early 2010.
- First revenues from oil and gas production in Egypt and Morocco
- Total current assets of US$36.2 million: Total assets of the Group in excess of US$132 million
Thomas Anderson, Chairman of Circle, said:
"In 2010 Circle is continuing with its exploration and production programmes with further drilling in Egypt through additional appraisal wells and the likely commencement of injector support drilling. In Morocco, we will commence another drilling programme and proceed to install a new trunk line to permit increased production. As our oil production increases we are considering how best to lock in the prevailing high price of oil in light of current world economic indicators.
I said in last year's annual report that I was looking to the future with confidence and enthusiasm and am even more convinced today that Circle can deliver on its promise of accelerated growth."
For further information contact:
Circle Oil Plc (+44 20 7638 9571)
Thomas Anderson, Chairman
Professor Chris Green, Interim CEO
Evolution Securities (+44 20 7071 4300)
Rob Collins
Chris Sim
Neil Elliot
Fox-Davies Capital (+44 20 7936 5230)
Daniel Fox-Davies
Citigate Dewe Rogerson (+44 20 7638 9571)
Martin Jackson / George Cazenove
Murray Consultants (+353 1 498 0300)
Joe Murray / Joe Heron
Notes to Editors
Circle Oil Plc
Circle Oil Plc (AIM: COP) is an international oil & gas exploration, development and production Company with an expanding portfolio of assets in Morocco, Tunisia, Oman, Egypt and Namibia with a combination of low-risk near-term production and significant exploration upside potential. The Company listed on AIM in October 2004.
Internationally, the Company has continued to expand its portfolio over the past 2 years and now has assets in the Rharb Basin, Morocco; the Ras Marmour Permit in southern Tunisia; the Mahdia Permit offshore Tunisia; the Grombalia Permit in northern Tunisia; the Zeit Bay area of Egypt and the Owambo Basin, Namibia. Circle also has the largest licence holding of any Company in Oman. In addition to its highly prospective Block 52 offshore, the Company also has an ongoing exploration program in Block 49 onshore.
The Company's strategy is to locate and secure additional licenses in prospective hydrocarbon provinces and through targeted investment programmes, monetise the value in those assets for the benefit of shareholders. This could be achieved through farm-outs to selected partners who would then invest in and continue the development of the asset into production, or Circle may itself opt to use its own expertise to appraise reserves and bring assets into production, generating sustained cash flow for further investment.
Further information on Circle is available on its website at www.circleoil.net.
In accordance with the guidelines of the AIM Market of the London Stock Exchange, Professor Chris Green, Chief Operating Officer of Circle Oil plc, an explorationist and geophysicist with over thirty years oil & gas industry experience, is the qualified person, as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies, who has reviewed and approved the technical information contained in this announcement.
Glossary of terms
41o API Oil Gravity of 41 degrees on the American Petroleum Institute scale
bcf Billion cubic feet
BO Barrel of oil
bopd Barrels of oil per day
kms kilometres
MENA Middle-East/North Africa
MMbo Millions of barrels of oil
Mscf Thousand cubic feet
MMscfd Million cubic feet per day
Sq km Square kilometres
2D Two dimensional
3D Three dimensional
Chairman's Statement
The Company has again enjoyed significant success in the year ended 31 December 2009 and has continued its development from being an explorer into being both an explorer and producer of oil and gas. The balanced portfolio focusing on low risk producing assets in Morocco and Egypt with the additional upside potential in all the remaining assets will provide a growing revenue stream for Circle in the coming years and a solid base for further development. The choice of acreage and continuing success with the drill bit over the last twelve months speaks for itself and I am confident that this success can continue in 2010.
The Company announced in the autumn of 2008 an extensive drilling campaign in Morocco and Egypt. The drilling campaign was completed in Morocco in mid 2009 and in the NW Gemsa Concession in Egypt, the ongoing exploration and appraisal drilling programme continues. To date a total of 16 wells have been completed and commercial hydrocarbons have been discovered and tested in 12 of these wells with one well in Morocco, which intersected gas, yet to be tested.
This represents a success rate of over 75%, a testament to the skill and efforts of our technical team who continue to deliver excellent results.
Operations
Morocco
In Morocco, the six well campaign was finished in mid 2009 with the drilling resulting in five tested commercial discoveries and a sixth well, DRJ-6, with a four metre gas sand that will be flow tested during the 2010 drilling campaign.
On the production front, ONZ-4 continued in production throughout 2009 and was joined by well ONZ-6 which is also now in production. Produced gas is currently being sold to the CMCP paper mill in Kenitra. Negotiations are close to finalisation with a second large gas user in the area and we expect to be selling gas to other users as soon as the new trunkline is commissioned at year end or early 2011. This should see gas supply increasing from today's levels of 1.5-2 MMscf/d to 7-8 MMscf/d in 2011 and then upwards to the anticipated 16-17 MMscf/d.
Despite inclement weather, we managed to continue production with only a few days lost and also completed the hook up of wells KSR-8 and KSR-9. With four wells connected and wells CDG-9 and CGD-10 remaining to be connected, plus well DRJ-6, subject to successful testing later in the year, we are in a position to further increase our Moroccan gas production.
A recent independent third party report estimated ultimate recoverable resources of 16.24 bcf, an estimate which excludes the resources from the ONZ production and untested well DRJ-6. The inclusion of the ONZ-4 and ONZ-6 wells raises our Moroccan ultimate recoverable resources to 17.5bcf.
So far we have only drilled six out of a large number of identified targets and believe we have the potential for recovering over 200 billion cubic feet of gas in Morocco.
Tunisia
In Tunisia, following on from the Serdouk well in the Grombalia permit we have, in 2009, completed a 2D land seismic programme in the Ras Marmour permit as well as completing the required commitment 2D seismic programme in our offshore Mahdia permit. In all three permits the year was spent processing, reprocessing and interpreting data sets with a view to increasing our understanding prior to any future drilling. The Mahdia data has been successfully processed and prospects are being firmed up and are in line with our expectations. The Ras Marmour 2D has allowed us to more fully understand a number of prospects and these are also being firmed up as a precursor to planned onshore drilling in Tunisia during 2011.
Egypt
In Egypt, we have continued to enjoy tremendous success on the NW Gemsa Concession since we first farmed-in in January 2008 and made our first discovery in October 2008 of the Al Amir SE-1 ST well. Since then we have drilled a total of eight wells in Egypt, seven of which have proved to be commercial.
The concession is currently producing close to 10,000 barrels of oil per day in Egypt and has operator calculated potential total recoverable gross oil of 43 million barrels.
Oman
In Oman, following the tender, we awarded our 3D seismic campaign over the southern portion of our Block 49 to Sinopec and this survey is ongoing at the time of writing. The rest of the year will be spent processing and interpreting this large 900 sq km survey. It is currently anticipated that tenders for drilling in Block 49 will be issued later in the year.
In Block 52, we have tendered the forthcoming 2D marine seismic survey which is intended to acquire some 5,000 additional kms of 2D. The tender is presently being evaluated and we expect to shoot this in the early autumn although the ultimate timing will be linked and subject to a seismic vessel being available or passing through this concession area.
Namibia
In Namibia, we continued to await the completion of the agreed farm-in by Petroholland. As previously indicated in a news release the finalisation of this agreement has been the subject of a protracted delay and whilst we continue to receive assurances that the agreement will be completed in the near future we note the time elapsed without the agreement being finalised.
Financials
2009 was another year of excellent progress on the financial front. The Group recorded first revenues from its oil and gas operations in Egypt and Morocco respectively amounting to US$15.1 million and achieved an average oil price of US$65.90 per BO and gas price of US$7.20 per Mscf. As a result the Group recorded its first gross profit of US$7.37 million. The net loss for the year resulted mainly from a non-cash charge relating to accounting for the fair value of the convertible loan in accordance with International Financial Reporting Standards.
During the year under review the Company raised £16.5 million (US$26.94 million) through a share placement which further strengthened the Group's financial position and enabled its exploration and development programme continue apace.
At year-end total current assets were US$36.2 million (2008: US$33.6 million) while total assets of the Group were in excess of US$132 million (2008: US$99.7 million).
Outlook
In 2010 Circle intends to continue with its exploration and production programmes with continued drilling in Egypt through additional appraisal wells and the commencement of injector support drilling. In Morocco, we will commence another six well programme (five plus DRJ-6 testing) and lay a new trunk line to Kenitra to permit increased production. The Company continues to seek out new projects to increase its production base by acquiring development, redevelopment projects or producing assets. We continue to look for projects which we believe to be acceptable on the basis of technical, reserve base, commercial and acceptable pay back criteria. This is a difficult task but we are determined to maintain our strict requirements and to this end our team has during 2009 and early 2010 reviewed data rooms and completed studies on over 60 potential projects in the greater MENA area.
As our oil production increases we are currently considering how best to capture future revenue reflecting the current high oil prices by way of a combination of future hedges and oil futures. I said in last year's annual report that I was looking to the future with confidence and enthusiasm and I am even more convinced today that Circle can deliver on its promise of accelerated growth.
Our technical and operations team under the leadership of Prof. Chris Green continues to deliver and Circle has changed into a fully operational oil and gas producer with the potential to grow substantially over the coming years.
I am delighted again to thank you, our shareholders, for your support and to sincerely thank all of our staff and the staff of our project partners for their continuing good work and commitment during the past year.
Finally this year's Chairman's Statement would not be complete without including our expression of sadness and condolences at the loss of our CEO David Hough who died suddenly at the end of March 2010. To his wife Frances and his three daughters as well as his immediate family and close friends we send our thoughts and best wishes as they recover from their sad loss.
All in Circle have worked hard over the last years to help the Company to succeed and grow. I believe that the team has renewed commitment to the continued growth and success of the Company as a lasting testament to David's memory.
Thomas Anderson
Chairman
18 June 2010
Circle Oil PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009
|
|
| 2009 |
| 2008 |
|
|
| US$000 |
| US$000
|
| Revenue |
| 15,093 |
| - |
|
|
|
|
|
|
| Cost of sales |
| (7,721) |
| - |
|
|
|
|
|
|
| Gross profit |
| 7,372 |
| - |
|
|
|
|
|
|
| Administrative expenses |
| (2,315) |
| (3,006) |
|
|
|
|
|
|
| Share option expense |
| (1,496) |
| (956) |
|
|
|
|
|
|
| Pre-licence costs |
| - |
| (3,479) |
|
|
|
|
|
|
| Exploration costs written-off |
| (4,932) |
| - |
|
|
|
|
|
|
| Foreign exchange gain/(loss) |
| 1,027 |
| (8,944) |
|
|
|
|
|
|
| Operating loss - continuing activities |
| (344) |
| (16,385) |
|
|
|
|
|
|
| Finance revenue |
| 134 |
| 8,497 |
|
|
|
|
|
|
| Finance costs |
| (13,265) |
| (2,795) |
|
|
|
|
|
|
| Loss before taxation |
| (13,475) |
| (10,683) |
|
|
|
|
|
|
| Taxation |
| (34) |
| (29) |
|
|
|
|
|
|
| Loss for the year |
| (13,509) |
| (10,712) |
|
|
|
|
|
|
| Basic and diluted loss per share |
| 3.66c |
| 4.60c |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
|
|
| 2009 |
| 2008 |
|
|
| US$000 |
| US$000
|
| Loss for the year |
| (13,509) |
| (10,712) |
|
|
|
|
|
|
| Total income and expense recognised in other comprehensive income |
| - |
| - |
|
|
|
|
|
|
| Total comprehensive income for the year - entirely attributable to equity holders |
|
(13,509) |
|
(10,712) |
Circle Oil PLC
CONSOLIDATED statement of financial position AT 31 DECEMBER 2009
|
| Notes | 2009 |
| 2008 |
|
|
| US$000 |
| US$000
|
| Assets |
|
|
|
|
| Non-current assets |
|
|
|
|
| Exploration and evaluation assets |
| 20,965 |
| 65,827 |
| Production and development assets |
| 74,767 |
| - |
| Property, plant and equipment |
| 210 |
| 310 |
|
|
| 95,942 |
| 66,137 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
| Inventories |
| 91 |
| - |
| Trade and other receivables |
| 13,789 |
| 921 |
| Cash and cash equivalents |
| 22,334 |
| 32,670 |
|
|
| 36,214 |
| 33,591 |
|
|
|
|
|
|
| Total assets |
| 132,156 |
| 99,728 |
|
|
|
|
|
|
| Equity and liabilities |
|
|
|
|
| Capital and reserves |
|
|
|
|
| Share capital |
| 5,730 |
| 4,799 |
| Share premium |
| 103,336 |
| 78,393 |
| Other reserves |
| 5,999 |
| 3,183 |
| Retained deficit |
| (34,118) |
| (20,621) |
|
|
|
|
|
|
| Total equity |
| 80,947 |
| 65,754 |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Convertible loan - debt portion |
| 21,562 |
| 19,261 |
| Derivative financial instruments |
| 14,403 |
| 4,078 |
| Decommissioning provision |
| 446 |
| - |
|
|
|
|
|
|
| Total non-current liabilities |
| 36,411 |
| 23,339 |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables |
| 14,798 |
| 10,635 |
|
|
|
|
|
|
| Total current liabilities |
| 14,798 |
| 10,635 |
|
|
|
|
|
|
| Total liabilities |
| 51,209 |
| 33,974 |
|
|
|
|
|
|
| Total equity and liabilities |
| 132,156 |
| 99,728 |
|
|
|
|
|
|
Circle Oil PLC
CONSOLIDATED cash flow statement
FOR THE YEAR ENDED 31 DECEMBER 2009
|
|
| 2009 |
| 2008 |
|
|
| US$000 |
| US$000
|
| Operating activities |
|
|
|
|
| Net cash used by operations |
| (737) |
| (3,665) |
| Taxes paid |
| (21) |
| (13) |
|
|
|
|
|
|
Net cash outflow from operating activities |
| (758) |
| (3,678) |
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
| Payments to acquire exploration and evaluation assets |
| (12,372) |
| (34,906) |
| Payments to acquire production and development assets |
| (23,088) |
| - |
| Payments to acquire property, plant and equipment |
| (51) |
| (187) |
| Interest received |
| 480 |
| 690 |
|
|
|
|
|
|
| Net cash used in investing activities |
| (35,031) |
| (34,403) |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
| Issue of ordinary share capital |
| 28,177 |
| 58,077 |
| Financing costs |
| (1,958) |
| (6,261) |
| Interest paid |
| (1,800) |
| (1,805) |
|
|
|
|
|
|
| Net cash from financing activities |
| 24,419 |
| 50,011 |
|
|
|
|
|
|
| (Decrease)/increase in cash and cash equivalents |
| (11,370) |
| 11,930 |
|
|
|
|
|
|
| Cash and cash equivalents at beginning of year |
| 32,670 |
| 29,715 |
|
|
|
|
|
|
| Effect of foreign exchange rate changes |
| 1,034 |
| (8,975) |
|
|
|
|
|
|
| Cash and cash equivalents at end of year |
| 22,334 |
| 32,670 |
Circle Oil PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009
|
Consolidated |
|
Share capital US$000 |
|
Share premium US$000 |
|
Share-based payment reserve US$000 |
|
Translation reserve US$000 |
|
Retained deficit US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
| At 1 January 2008 |
| 2,147 |
| 25,708 |
| 2,052 |
| (3) |
| (10,268) |
|
|
|
|
|
|
|
|
|
|
|
|
| Issue of share capital |
| 2,652 |
| 52,685 |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based payment |
| - |
| - |
| 1,493 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| Reserve transfer |
| - |
| - |
| (359) |
| - |
| 359 |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for the year |
| - |
| - |
| - |
| - |
| (10,712) |
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 December 2008 |
| 4,799 |
| 78,393 |
| 3,186 |
| (3) |
| (20,621) |
|
|
|
|
|
|
|
|
|
|
|
|
| Issue of share capital |
| 931 |
| 24,943 |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based payment |
| - |
| - |
| 2,828 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| Reserve transfer |
|
|
|
|
| (12) |
| - |
| 12 |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for the year |
| - |
| - |
| - |
| - |
| (13,509) |
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 December 2009 |
| 5,730 |
| 103,336 |
| 6,002 |
| (3) |
| (34,118) |
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC). They have also been prepared in accordance with the Companies Acts, 1963 to 2009.
The financial statements have been prepared on the historical cost basis.
The 2009 Annual Report will be available on the Company's website (www.circleoil.net) on
22 June 2010 and will then be posted to shareholders.
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and all of its subsidiaries made up to the end of the financial year. Subsidiaries are consolidated in the Group financial statements from the dates on which control over financial and operating policies and decisions is obtained. All intercompany transactions, balances, income and expenses have been eliminated in full on consolidation.
Basic and diluted loss per share
The calculation of the basic loss per share attributable to the ordinary equity holders of the parent is based on the following data:
|
|
| 2009 |
| 2008 |
|
|
| US$000 |
| US$000
|
| Earnings |
|
|
|
|
| Loss for the year attributable to equity holders of the parent |
| (13,509) |
| (10,712) |
|
|
|
|
|
|
| Number of shares |
| '000 |
| '000 |
| Weighted average number of ordinary shares for the purposes of basic earnings per share |
|
368,825 |
|
232,772 |
|
|
|
|
|
|
Diluted loss per share is calculated using the weighted average number of ordinary shares assuming the conversion of its potential dilutive equity derivatives outstanding. All of the Group's potential ordinary shares were anti-dilutive for the years ended 31 December 2009 and 2008 respectively. The Group had total potential ordinary shares outstanding of 122,770,279 at 31 December 2009 (2008: 100,121,099).
Dividends
The Directors do not recommend the payment of a dividend in respect of the year ended
31 December 2009 (2008: €Nil).