29 Sep 2009 07:00
| For immediate release | 29 September 2009 |
Desire Petroleum plc
("Desire" or "the Company")
Interim Results
Desire Petroleum plc (AIM:DES) the exploration company focusing on the North Falkland Basin, today announces its Interim Results for the six months ended 30 June 2009.
Highlights:
| Signed Letter of Intent with Diamond Offshore Drilling (UK) | ||
| Minimum four well drilling campaign in the North Falkland Basin | ||
| Options to drill up to a further four wells for itself and or its partners | ||
| First well in the campaign due to spud in February 2010 | ||
| Intention to raise additional funds to fund drilling of more wells | ||
| Senergy Ltd to undertake a full Competent Persons Report on its prospects | ||
| Loss for period was $265,000 (2008 H1: loss of $513,000) | ||
Mr Stephen Phipps (Chairman of Desire) commented:
"The past six months has seen Desire making progress towards drilling in the Falklands. We have now secured a rig and expect to commence drilling the first well of the programme in February next year. We intend to take every advantage of the rig being in Falkland waters to drill as many different play types as possible. "
For further information please contact:
| Desire Petroleum plc | |
| Stephen Phipps, Chairman | 020 7436 0423 |
| Dr Ian Duncan, Chief Executive Officer | 01684 568 993 |
| Seymour Pierce Limited Jonathan Wright Richard Redmayne | 020 7107 8000 |
| Buchanan Communications | 020 7466 5000 |
| Ben Willey Ben Romney |
Dear Shareholder,
I am pleased to report to you at a time of great excitement for Desire. As many of you will be aware, on 10 September we announced that the Company had signed a Letter of Intent with Diamond Offshore Drilling (UK) for the drilling unit the Ocean Guardian. This is for a minimum four well drilling campaign in the North Falkland Basin. Desire has also secured options to drill up to a further four wells for itself and or its partners.
The Ocean Guardian is expected to be mobilised from the North Sea shipyard, where it is currently undergoing work, in late November 2009 with the first well in the campaign due to spud in February 2010. Work on the final contract is ongoing and a further and more detailed announcement will be forthcoming in due course.
Our disappointments at not being able to secure a suitable rig since our last fundraising in 2005 have been widely chronicled in previous Annual and Interim Statements. The securing of the Ocean Guardian on competitive terms leads us to believe that we should take every advantage of the rig being in Falkland waters to drill as many different play types as possible. Fourteen different play types have been identified in the North Falkland Basin of which only three have been drilled to date. Prudent exploration dictates that as many of these plays as possible should be drilled to help unlock the potential of the basin. To this end it is also our intention to raise additional funds shortly to enable us to drill more wells and it is our intention that shareholders will have the opportunity to participate in this exercise. In anticipation of a fundraising Desire commissioned Senergy Ltd to undertake a full Competent Persons Report on its prospects, the results of which will be released soon.
The loss for the half-year ended 30 June 2009 was $265,000, compared with a loss for the corresponding period of $513,000.
Administrative expenses of $589,000 were much lower than the previous half-year, partly due to a weakening of the US dollar, and to a reduction in directors' and management fees. The majority of administrative expenses are incurred in sterling, so exchange rate movements will influence the dollar presentation. The translated sterling equivalent charge for the half-year of £391,000 compares with £445,000 in 2008.
The non-cash charge for share-based payments at $54,000 is significantly less than the equivalent period last year as the economic cost of share-based compensation plans is now largely expensed.
The exchange gain for the year of $293,000 largely arises on sterling balances held to meet administrative expenses, and follows a strengthening of the pound against the dollar since the year-end, from $1.44/£ at 31 December 2008 to $1.65/£ at 30 June 2009.
Investment revenues of $85,000 are appreciably lower than the corresponding period, with both US dollar and sterling interest rates at historically low levels.
Yours sincerely,
Stephen L. Phipps
Chairman
Consolidated Income Statement
| For the 6 months ended 30 June 2009 | 6 months | 6 months | Year |
| ended | ended | ended | |
| 30.06.09 | 30.06.08 | 31.12.08 | |
| $000 | $000 | $000 | |
| Administrative expenses | (589) | (877) | (1,461) |
| Share-based payment expense | (54) | (251) | (498) |
| Foreign exchange gain/(loss) | 293 | (4) | (937) |
| Operating loss | (350) | (1,132) | (2,896) |
| Finance expense | - | (12) | (13) |
| Investment revenues | 85 | 631 | 1,135 |
| Loss before tax | (265) | (513) | (1,774) |
| Tax | - | (173) | 302 |
| Loss for the period | (265) | (686) | (1,472) |
| Earnings per share | |||
| Loss per share (pence): Basic | (0.16) | (0.30) | (0.61) |
| Loss per share (pence): Diluted | n/a | n/a | n/a |
Consolidated Balance Sheet
| As at 30 June 2009 | As at 30.06.09 $000 | As at 30.06.08 $000 | As at 31.12.08 $000 |
| Non-current assets | 16,490 | 15,525 | 16,668 |
| Intangible assets | 4,559 | 4,559 | 4,561 |
| Property, plant & equipment | 21,049 | 20,084 | 21,229 |
| Current assets | |||
| Trade and other receivables | 510 | 111 | 386 |
| Cash and cash equivalents | 40,688 | 42,931 | 40,690 |
| 41,198 | 43,042 | 41,076 | |
| Total assets | 62,247 | 63,126 | 62,305 |
| Current Liabilities | |||
| Trade and other payables | (201) | (180) | (444) |
| Current tax liabilities | - | (673) | - |
| Bank overdrafts | (80) | (141) | (59) |
| Total liabilities | (281) | (994) | (503) |
| Net assets | 61,966 | 62,132 | 61,802 |
| Equity | |||
| Share capital | 4,567 | 4,540 | 4,549 |
| Share premium account | 93,694 | 93,137 | 93,337 |
| Retained earnings | (36,295) | (35,545) | (36,084) |
| Total equity | 61,966 | 62,132 | 61,802 |
Consolidated Statement of Changes in Equity
| For the 6 months ended 30 June 2009 | 6 months ended 30.06.09 $000 | 6 months ended 30.06.08 $000 | Year ended 31.12.08 $000 |
| Opening balance | 61,802 | 62,186 | 62,186 |
| Loss for the financial period | (265) | (686) | (1,472) |
| Shares issued in the period | 375 | 381 | 590 |
| Share-based payment charge | 54 | 251 | 498 |
| Closing balance | 61,966 | 62,132 | 61,802 |
Consolidated Cash Flow Statement
| For the 6 months ended 30 June 2009 | 6 months ended 30.06.09 $000 | 6 months ended 30.06.08 $000 | Year ended 31.12.08 $000 |
| Net cash from operating activities | (600) | (993) | (2,065) |
| Investing activities | |||
| Interest paid | - | (12) | (13) |
| Interest received | 85 | 631 | 1,135 |
| Purchase of tangible and intangible assets | (135) | (260) | (1,040) |
| Net cash from/(invested in) investing activities | (50) | 359 | 82 |
| Financing activities | |||
| Proceeds on issue of shares | 375 | 381 | 590 |
| Net cash from financing activities | 375 | 381 | 590 |
| Net decrease in cash and cash equivalents | (275) | (253) | (1,393) |
| Cash and cash equivalents at the beginning of the period | 40,631 | 43,042 | 43,042 |
| Effect of foreign exchange rate changes | 252 | 1 | (1,018) |
| Cash and cash equivalents at the end of the period | 40,608 | 42,790 | 40,631 |
Consolidated Cash Flow Statement
| For the 6 months ended 30 June 2009 | 6 months ended 30.06.09 $000 | 6 months ended 30.06.08 $000 | Year ended 31.12.08 $000 |
| Reconciliation of operating loss to net cash from operating activities | |||
| Operating loss for the period | (350) | (1,132) | (2,896) |
| Foreign exchange | (252) | (1) | 1,018 |
| Depreciation on property, plant & equipment | 3 | 6 | 7 |
| Share-based payment charge | 54 | 251 | 498 |
| Operating cash flows before movement in working capital | (545) | (876) | (1,373) |
| (Increase)/decrease in receivables | (30) | 25 | 29 |
| Decrease in payables | (25) | (142) | (321) |
| Cash outflow from operations | (600) | (993) | (1,665) |
| Income tax paid | - | - | (400) |
| Net cash from operating activities | (600) | (993) | (2,065) |
Notes to the Interim Financial Statements
for the six months ended 30 June 2009
1 Basis of preparation and accounting policies
The results for the six months to 30 June 2009 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and International Accounting Standards Board.
The financial information does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. Full accounts of the Company for the year ended 31 December 2008, on which the Auditors gave an unqualified report, have been delivered to the Registrar of Companies.
2 Segmental information
Based on risks and returns, the Directors consider that the primary reporting format is by business segment. The Directors consider that there is only one business segment, being the exploration and production of oil and gas.
3 Loss per share
The calculation of basic earnings per share is based upon the loss for the period and the weighted-average number of shares in issue during the period.
| 6 months ended 30.06.09 thousands | 6 months ended 30.06.08 thousands | Year ended 31.12.08 thousands | |
| Weighted-average number of shares | 228,943 | 227,527 | 228,022 |
When the Group reports a loss for the period then, in accordance with International Accounting Standard 33, the share options are not considered dilutive.
4 Tax
Current tax comprises a provision for tax on the interest receivable less any allowable expenses, and any adjustment for over or under provision in prior periods.
5 Copies of report
Copies of this interim statement can be viewed on the Company's website and will be available to the public at the Registered Office, Mathon Court, Mathon, Malvern, Worcestershire WR13 5NZ.
Independent Review Report to Desire Petroleum Plc
Introduction
We have reviewed the accompanying balance sheet of Desire Petroleum Plc as of 30 June 2009 and the related statements of income, changes in equity and cash flows for the six month period then ended, and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with International Financial Reporting Standards. Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not give a true and fair view of the financial position of the entity as at 30 June 2009, and of its financial performance and its cash flows for the six month period then ended in accordance with International Financial Reporting Standards as applicable in the United Kingdom.
UHY Hacker Young Manchester LLP
Manchester
29 September 2009