Lfeaccetfusd Regulatory News (FEP)

26 Sep 2006 07:03

Forum Energy Plc26 September 2006 26 September 2006 Forum Energy plc ("Forum" or "the Company") Interim Results for the six months to 30 June 2006 Forum, the oil and gas company with coal production and oil and gas assets inthe Philippines which was founded in April 2005 and listed on AIM in August2005, announces interim results. Highlights of the period include: • Revenues of US$132,000 for the six months to 30 June 2006; • Loss on ordinary activities before taxation of US$339,000; • Commencement of coal production from the Company's Naga coal mine operations in Central Cebu in July 2006; • Operation expanded to target peak production of 300,000 tonnes per year by late 2008 from Naga mine alone; • Once Naga is fully underway the Company will commence the development of leases in Southern Cebu; • Results from the interpretation of the 3D seismic programme at the Sampaguita gas discovery show in place gas reserves of 3.4 trillion cubic feet (tcf) with upside reserves of approximately 10 tcf; and • Acquisition of Basic Petroleum & Minerals, Inc. ("Basic"). Commenting, Alan Henderson, Chairman of Forum, said: "Forum has made good progress in the first half of the year with the help of itsstrengthened management team; with the commencement of oil and coal productionas well as very encouraging results from our 3D survey on our Sampaguita gasdiscovery. The outlook for shareholders is much stronger with the potential to benefit froma world class gas discovery coming on-stream in the medium term." For further information please contact: Alan Henderson, Forum Energy Plc: +44 (0) 19 3244 5344Mark Froggatt, Noble & Company Limited: +44 (0) 20 7763 2200James Henderson, Pelham Public Relations: +44 (0) 20 7743 6673 +44 (0) 77 7444 4163Charles Vivian, Pelham Public Relations: +44 (0) 20 7743 6672 +44 (0) 79 7729 7903 Or visit the Company's website: www.forumenergyplc.com Chairman and CEO's Statement Financial Report Forum recorded a loss of US$339,000 (US$1,069,000 for April 1, 2005 to December31 2005) for the interim period ended June 30, 2006. This loss was primarilyattributed to administrative overheads which were in part offset by exchangegains due to a stronger UK Sterling. Revenues for the period were US$132,000 attributable to oil production fromBasic acquired in April 2006. Forum's working capital position as of June 30, 2006, was US$9.8 million(US$14.0 million for the period April 1 2005 to December 31, 2005). General Survey and Exploration Contract 101 (GSEC101) In August 2005, Forum completed a key 3D seismic survey across the SampaguitaGas Field within block GSEC101, offshore the Philippines. The seismic wasinterpreted in the UK, with encouraging results received. In place gas reserveswere confirmed at 3.4 TCF with upside reserves of approximately 10 TCF in thetested horizons alone. Additional untested, but gas bearing sands have thepotential to double this upside figure. The block also contains eight leadswhich have the potential to add substantially to the reserves. This licence will now be converted to a service contract and the Company will beactively seeking a partner to progress this discovery to commerciality throughthe drilling of a number of wells. Given the potential size of the accumulationthe Company views the Sampaguita Gas Field as a possible candidate for LiquefiedNatural Gas ("LNG") production, subject to reaching the necessary reservethreshold with further drilling. Forum holds 100% of GSEC101, which covers 10,630 square kilometres in waterdepths of between 8 and 80 metres and lies 250 kilometres south-west of theMalampaya Gas Field, where Shell, the operator, has installed extensiveproduction facilities and pipeline infrastructure that supplies gas to threePhilippine power plants. BPMI During the first half of 2006 the acquisition of BPMI was completed. Thisbrought an interest in several North-West Palawan fields, a small amount ofcurrent production and more importantly a seat at the table to capitalise on anyupside in the area. A number of studies were commissioned by PGS ReservoirConsultants (UK) Limited ("PGS") to quantify this potential and we are stillconsidering the options open to Forum. The acquisition also gave a number ofcarried interests, one of which, the Galoc field, is forecast to providerevenues in 2008. Similar developments are under discussion for two otherdiscoveries within the portfolio. Service Contract 40 (SC40) Progress was also made on the evaluation of SC40 and the seismic acquired in2005. Structures have been identified within the area covered by this survey,the final results of which are expected in the fourth quarter of 2006 and theCompany has already been approached by a number of potential farm-in partners tohelp fund the exploration. Upon review of the data the Directors will determinethe appropriate course of action to maximise the return. Development of the Libertad Gas Field has been deferred to 2007 in order tosatisfy the Government of the Philippines Department of Energy ("DOE")prescribed commercial requirements regarding gas pricing and to help ensure anadequate return. First gas production from this project is now forecast for 2008/09. The Workover of the Forum 2X well at Maya was also deferred to allow the Companyto concentrate on the near-term cash flow of the coal development. This workoverwill be recommenced in 2007 thus allowing more economic operation during the dryseason. Coal Operating Contracts Development of Forum's 66.7% owned coal operating contracts ("COCs") in Centraland Southern Cebu, COC 131 and COC 132 moved forward in the first half of 2006,with Central Cebu (Naga) commencing coal production in July 2006. Recognising the market's demand, and to take advantage of economies of scale,the operation was expanded to target a peak production of 300,000 tonnes peryear from the Naga mine alone which is forecast to increase revenues toUS$12,000,000 by late 2008 at the targeted price of US$40/tonne. Application hasalso been made for additional leases adjacent to the Company's Naga mine tomaintain the targeted peak production and increase the reserve base in an areathat demonstrates geological continuity, evidenced by shallow small scale miningalready in the area. Once the Company's operation in Naga is fully underway with five shafts inprogress and systems proved, the Company will commence the development of itsleases in Southern Cebu where a peak rate of 300,000 tonnes per year will alsobe targeted. Other Events In June 2005, Forum loaned $600,000 to MG Mining and Energy Corporation ("MG")in the Philippines as part of an option agreement to potentially acquire some orall of MG's coal mining assets in the country. The Company is pleased to reportthat $660,000, representing the loan amount plus interest, was received from MGin August 2006. Outlook Forum has made solid progress in the first half of 2006. The Company has movedforward and has generated first revenues from oil production in North-WestPalawan, commenced coal production with revenues forecast in the second half of2006 and has made significant progress on GSEC101 following the positive resultsof the interpretation of 3D seismic over the Sampaguita Gas Field, which theDirectors believe is potentially a world-class discovery. In the second half of 2006 the Company expects to further build and develop itsportfolio, positioning itself to exploit opportunities when they arise andintroducing partners as appropriate to help fund the program. Forum Energy PlcConsolidated Statement of Income For the 6 months For the 6 For the 9 months to months to to 30 June 2006 30 Sept 2006 31 Dec 2006 US$000's US$000's US$000's Unaudited Unaudited Audited Revenues 132 - -Less Operating Costs (107) (57) -Gross Profit 25 (57) - Administrative Expenses (956) (569) (1,315) Loss from Operations (931) (626) (1,315) Financial Income 593 125 260Financial Expense (1) (70) (14) Loss on ordinary activities before and after (339) (571) (1,069)Taxation Attributable to:Equitable holders of the Parent (300) (571) (867)Minority Interest (39) - (202) (339) (571) (1,069) Loss per Ordinary share (US$) (0.011) (0.040) (0.044)Basic and Diluted All amounts relate to continuing operations Forum Energy Plc Consolidated statement of recognised income and expense For the 6 months For the 6 For the 9 months to months to to 30 June 2006 30 Sept 2006 31 Dec 2006 US$000's US$000's US$000's Unaudited Unaudited Audited Loss for the Period (300) (571) (867) Exchange differences arising on the translation 162 - (499)of foregn subsidiaries Total Recognised expense for the period (138) (571) (1,366) Attributable to:Equitable holders of the Parent (99) - (1,164)Minority Interest (39) - (202) (138) (571) (1,366) Forum Energy Plc As at As at As atConsolidated Balance Sheet 30 June 2006 30 Sept 2005 31 Dec 2005 Unaudited Unaudited AuditedNon-current assetsIntangible Assets 47,452 32,889 39,220Tangible Assets 578 305 355Total Non-Current Assets 48,030 33,194 39,575 Current AssetsInventory 101 113 105Trade and Other Receivables 386 1,233 836Advances 657 - 720Other financial assets 663 79 215Cash and Cash Equivalents 9,501 15,360 12,635Total Current Assets 11,308 16,785 14,511Total Assets 59,338 49,979 54,086 Liabilities:Current LiabilitiesTrade Payables 1,548 373 420Other Payables - - 40Total Current Liabilities 1,548 373 460 Non-Current LiabilitiesOther Payables 3,294 17 1,238 Total Liabilities 4,842 390 1,698 Total Net Assets 54,496 49,589 52,388 Capital and reserves attributable to equity holders of the CompanyCalled up Share Capital 5,166 4,886 4,932Share Premium Account 48,603 43,871 46,714Share Option Reserves 89 - 51Foreign Exchange Reserves (337) 222 (499)Retained Losses (1,167) (571) (867) 52,354 48,408 50,331 Minority Interest 2,142 1,181 2,057 Total Equity 54,496 49,589 52,388 Forum Energy Plc Consolidated Cash Flow Statement For the 6 months For the 6 months For the 9 months to to to 30 June 2006 30 Sept 2006 31 Dec 2006 US$000's US$000's US$000's Unaudited Unaudited AuditedOperating activitiesNet Loss from Ordinary activities (339) (571) (1,069) Adjustments for:Depreciation 28 - 215Share Options Expense 38 - 51Exchange (Gains) / losses (355) - 28Financial expense 1 - 14Financial Income (238) - (260)Minority Interest (39) - (202) (565) - (154)Operating Losses before changes in working (904) (571) (1,223)capital (Increase) / Decrease in trade and other 450 - (1,997)receivablesDecrease / (Increase) in inventories 4 - (105)Increase in trade and other payables 1,112 - 1,698 1,566 - (404) Cash outflows from operating activities 662 (571) (1,627) Investing ActivitiesInterest income 238 125 260Sale of tangible fixed assets - - 69Cash Portion on acquisiton of BPMI (2,200)Purchase of tangible fixed assets (571) (362) (382)Acquisition of intangible assets (1,665) (8,810) (8,720)Loan Note Received / Repaid 63 (600) -Investment in subsidiary undertakings - (80) - Cash flows from investing activities (4,135) (9,727) (8,773) Financing activitiesFinancial expense 1 - (14)Issue of ordinary share capital (net of issue - 25,595 22,823costs) Cash flows from financing activities 1 25,595 22,809 Increase / (Decrease) in cash (3,472) 15,297 12,409 Cash and equivalents at the beginning of the 12,635 - -period Foreign exchange movements 338 64 226 Cash and cash equivalents at the end of the 9,501 15,361 12,635period UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS For the period 1st January 2006 to 30th June 2006 1. Basis of Preparation The interim financial information has been prepared in accordance withInternational Financial Reporting Standards (IFRS and IFRIC interpretations)issued by the International Accounting Standards Board (IASB) and with thoseparts of the Companies Act 1985 applicable to Companies preparing their accountsunder IFRS. These accounts have not been audited but reviewed by the auditors ofForum Energy Plc and its subsidiaries (the "Group") as if they formed a singleentity. The interim financial information has been prepared using theaccounting policies as applied in the Group's statutory financial statements forthe year ended 31st December 2005. Where the Company has the power, either directly or indirectly to govern thefinancial and operating policies of another entity or business so as to obtainbenefits from its activities, it is classified as a subsidiary. Theconsolidated financial statements present the results of the Group.Intercompany transactions and balances between Group Companies are thereforeeliminated in full. On 3rd April 2006 the Company acquired Basic Petroleum and Minerals, Inc fromBasic Consolidated, Inc for a total consideration of US$5,000,000 beingcomprised of 1,333,759 shares of the Company and cash of US$2,200,000, paid ininstallments over a one year period. This was completed in the first half of2006 and has been accounted for using the acquisition method of accounting. Inthe consolidated balance sheet, the acquiree's identifiable assets andliabilities are recognised at their fair values at the acquisition date. Theresults of acquired operations are included in the consolidated income statementfrom the date on which control is obtained. 2. Financial Reporting Period The financial information for the period 1st January 2006 to 30th June 2006 isunaudited. In the opinion of the directors the financial information for theperiod presents fairly the financial position and results from operations andcash flows for the period are in conformity with generally accepted accountingprinciples consistently applied. The accounts incorporate comparative figuresfor the initial interim period 1st April 2005 to 30th September 2005 and thefirst audited financial period from 1st April 2005 to 31st December 2005. The directors approved the interim statement on 25th September 2006. Thisinterim financial statement does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The audited financialstatements for the period ended 31 December 2005 received an unqualified auditreport and have been delivered to the Registrar of Companies. 3. Consolidated Statement of Loss The Financial Income includes an amount of US$354,787 as recognised exchangegains resulting from a stronger UK Sterling. Additional unrealized exchangegains for the period amount to US$161,541 included in the Foreign ExchangeReserve of the Consolidated Balance Sheet 4. Loss Per share The calculation of basic and diluted loss per share has been based on the lossfor the period of US$300,035 (2005: US$867,261) and the weighted average numberof shares being 27,847,841 ordinary shares issued for the period ended 30th June2006 (2005: 19,890,483). In addition 1,544,000 share options are outstandingto employees, directors and key personnel and have various exercise datescommencing 1st August 2006 up to and including 1st August 2015 with exerciseprices ranging between £0.935 to £1.21 per share. These instruments couldpotentially dilute basic earnings per share but have not been included in thecalculation of diluted earnings per share because they are anti-dilutive for theperiods presented. 5. Minority Interest Recognises the Minority party interest in Forum Exploration, Inc which is only66 2/3rds owned by the Group. The Minority party share in the profits andlosses of the activities of Forum Exploration, Inc as well as their percentageinterest in the net assets. 6. Functional Currency All accounts have been prepared in US Dollars being the functional currency ofthe Group. 7. Additional Information Further copies of the interim statement are available from the CompanySecretary, Forum Energy Plc, 120 Bridge Road, Chertsey, surrey, KT16 8LA, UnitedKingdom, Tel: +44 (0)1932 445 344, Fax: +44 (0)1932 445 345,info@forumenergyplc.com or downloaded from the website: www.forumenergyplc.com. This information is provided by RNS The company news service from the London Stock Exchange