13 Apr 2012 07:00
13th April 2012
Falkland Oil and Gas Limited
("FOGL" or "the Company")
Final Results for the year ended 31 December 2011
FOGL, the oil and gas exploration company focused on its extensive licence areas to the South and East of the Falkland Islands, announces its Final Results for the year ended 31 December 2011.
Highlights
·; A significant year of activity in preparation for FOGL's 2012 exploration drilling programme
·; Loligo, the first well of a contracted two well programme, is expected to be spudded in June 2012
·; Operatorship and remaining 51% equity in Northern Licence Area assigned back to FOGL by BHP Billiton, together with a significant cash settlement
·; Completed five site surveys and a focused 2D seismic programme
·; Experienced drilling management team established
·; Equity placings during and post-period end have raised US$127.4 million (before expenses) to support funding of the optimal drilling programme
• April 2011 placing raised US$51.8 million before expenses
• January 2012 placing raised US$75.6 million before expenses
• Current available funds approximately US $184 million
·; 25% Farmout Option Agreement signed post-period end, potentially reducing FOGL's funding requirement by around US$95 million and adding to the Company's financial flexibility
Richard Liddell, Chairman of FOGL, said:
"We are looking forward to the 2012 exploration drilling programme. The Loligo well, with prospective resources of 4.7 billion barrels, will be one of the highest impact exploration wells to be drilled by an independent E&P company this year. Either of the likely second well targets have a resource potential of over 1 billion barrels. Any degree of success on these wells will be a transforming event for FOGL."
Enquiries:
Falkland Oil and Gas | +44 (0) 207 563 1260 |
Tim Bushell, Chief Executive
| |
Oriel (Nominated Advisor and Joint Broker ) | +44 (0) 207 710 7600 |
David Arch / Gareth Price / Ashton Clanfield
| |
Jefferies Hoare Govett (Joint Broker) Alex Grant / Chris Zeal / Graham Hertrich | +44 (0) 207 029 8000 |
FTI Consulting | +44 (0) 207 831 3113 |
Ben Brewerton / Ed Westropp |
Chairman's Statement
We are delighted with our progress during 2011, which saw FOGL take major strides forward with its exploration programme. We re-gained control and operatorship of our licences, contracted a drilling rig which will start work for us midway through 2012, completed a comprehensive site survey programme to afford maximum flexibility of drilling locations and established a highly experienced well engineering team to manage the drilling programme. Our fund raisings last year, and more recently in January 2012, have given us a strong balance sheet to execute the optimal drilling programme for FOGL.
The withdrawal of BHP Billiton (BHPB) from the licences was formally approved by the Falkland Islands Government in September 2011. The agreement we made with BHPB has re-gained, for FOGL, full control and operatorship of its licences (they now have no rights or options to re-enter the licences) and a contribution of US$40 million to the Loligo well.
The Leiv Eiriksson drilling rig was secured in May 2011 through a Joint Agreement with Borders & Southern Petroleum plc (B&S) and Ocean Rig 1 Inc. This is a fifth generation, harsh environment, dynamically positioned, semi-submersible rig, which is ideally suited to drilling our wells.
During the year we completed a comprehensive site survey programme and a focused 2D seismic survey. A total of five site surveys were completed and these will provide the flexibility to determine the optimum drilling location on Loligo and also on the second well.
The other area where we have made significant progress, is in establishing the FOGL drilling management team which will combine its strength with AGR Peak Well Management Ltd (AGR) to perform well engineering, procurement, well services contracting and well operations supervision for the drilling programme.
The expected total cost of the drilling programme of some US$180 million has been funded by two institutional share placings which were well supported by existing and new shareholders as well as by the contribution from BHPB. In April 2011 US$51.8 million gross were raised and a further US$75.6 million gross were raised after the year end in January 2012. Our balance sheet remains very strong.
We also progressed our search for a farm-in partner and in March 2012 we announced that we had granted an option to an industry counterparty to farm-out a maximum of 25% of our licences. This farm-out will, if completed, bring to FOGL a pro-rata share of the drilling costs of the two wells, a contribution towards certain past costs and an additional cash contribution of US$43 million. This would provide us with a substantial buffer against unforeseen cost escalation and provide funds for further exploration.
The overall loss for the year was US$6.6 million (2010:US$3.7 million), including administrative expenses of US$3.0 million (2010:US$2.6 million), finance and exchange costs of US$3.3million (2010:US$1.9 million) and a non-recurring write-off on conversion of the loan notes into Ordinary Shares of US$1.6million (2010: nil). Interest received on deposits was US$1.2 million (2010:US$0.7 million).
FOGL started the year with US$69.8 million in cash, of which US$24.8 million were spent in the exploration programme and US$2.3 million (2010: US$2.5 million) were used to cover administration costs.
On 19 April 2011, 45.7 million new shares were placed at 70p per share to raise US$51.8 million before expenses, and an additional 15.1 million shares were issued on 18 May 2011, upon conversion in full of the RAB loan notes and accrued interest.
At the end of 2011, FOGL had drawn down US$14.5 million of the agreed US$40 million BHPB settlement. The remaining US$25.5 million were drawn down by the end of March 2012.
At the end of the year, the cash balance was US$107.9 million of which US$26.5 million is restricted cash.
Subsequent to the year end, on 13 January 2012, FOGL announced that it had placed 112.7 million new shares at a price of 43p per share to raise $75.6 million before expenses.
FOGL's cash position at the end of March 2012, was approximately US$184 million. Forecast expenditure for 2012 is approximately US$140 million on the assumption that two exploration wells will be drilled, the first on Loligo and the second on Scotia. This cash position does not take into account the farm-in option which, if exercised, would add materially to FOGL's financial flexibility.
Plans for the 2012 drilling operation are on track and we are looking forward to the start of the first well. The Loligo well will be one of the highest impact exploration wells to be drilled by an independent E&P company in 2012. The Pmean prospective resources of Loligo are 4.7 billion barrels. Likewise, the second well may target the Nimrod or Scotia prospects, either of which have a resource potential of over 1 billion barrels. Any degree of success on these wells will be a transforming event for FOGL, and we are already preparing a follow-up programme for the second half of 2012, depending upon the results from the drilling programme.
Falkland Oil and Gas Limited
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2011
2011 $ | 2010 $ | ||
Administrative expenses | (2,265,187) | (2,311,745) | |
Charge for Share based payments | (695,581) | (269,590) | |
Total administration expenses and losses from operations | (2,960,768) | (2,581,335) | |
Finance income | 1,155,133 | 711,096 | |
Foreign exchange gains | - | 38,223 | |
Total finance income | 1,155,133 | 749,319 | |
Finance costs | (2,187,542) | (1,910,500) | |
Loss on loan note conversion to equity | (1,569,290) | - | |
Foreign exchange loss | (1,074,233) | - | |
Total finance expense | (4,831,065) | (1,910,500) | |
Loss for the year before taxation | (6,636,700) | (3,742,516) | |
Taxation | - | - | |
Loss for the year attributable to owners of the parent | (6,636,700) | (3,742,516) | |
Total comprehensive expense for the year attributable to | (6,636,700) | (3,742,516) | |
owners of the parent | |||
Loss for the year per ordinary share | |||
- Basic and diluted | (3.62c) | (2.56c) | |
The loss for the year arose from continuing operations | |||
Falkland Oil and Gas Limited
Audited Consolidated Statement of Financial Position
at 31 December 2011
2011 $ | 2010 $ | ||
Non-current assets | |||
Intangible assets | 78,481,018 | 69,415,150 | |
Property, plant and equipment | 68,688 | 62,508 | |
78,549,706 | 69,477,658 | ||
Current assets | |||
Trade and other receivables | 2,203,238 | 668,089 | |
Cash and cash equivalents | 81,416,409 | 69,819,625 | |
Restricted cash | 26,525,326 | - | |
110,144,973 | 70,487,714 | ||
Total assets | 188,694,679 | 139,965,372 | |
Current liabilities | |||
Trade and other payables | (1,520,729) | (983,522) | |
Loans and borrowing | - | (14,288,089) | |
Total liabilities | (1,520,729) | (15,271,611) | |
Net current assets | 108,624,244 | 55,216,103 | |
Net assets | 187,173,950 | 124,693,761 | |
Capital and reserves | |||
attributable to equity shareholders | |||
of the Company | |||
Share capital | 7,424 | 5,458 | |
Share premium | 204,054,163 | 137,204,111 | |
Other reserve | - | 4,985,693 | |
Retained earnings | (16,887,637) | (17,501,501) | |
Total equity | 187,173,950 | 124,693,761 | |
Falkland Oil and Gas Limited
Audited Consolidated Statement of Cash Flows
for the year ended 31 December 2011
2011 $ | 2010 $ | ||
Operating activities | |||
Loss for the year | (6,636,700) | (3,742,516) | |
Finance income | (1,155,133) | (711,096) | |
Finance expense | 3,756,832 | 1,910,500 | |
(4,035,001) | (2,543,112) | ||
Depreciation | 23,795 | 17,689 | |
Share based payment expense | 695,581 | 269,590 | |
Net cash flow from operating activities | |||
before changes in working capital | (3,315,625) | (2,255,833) | |
(Increase)/decrease in trade and other receivables | (1,535,149) | (76,855) | |
(Decrease)/increase in trade and other payables | 537,207 | (169,625) | |
Cash used in operations | (4,313,567) | (2,502,313) | |
Taxation received/(paid) | - | 269,576 | |
Net cash flow from operating activities | (4,313,567) | (2,232,737) | |
Investing activities | |||
Interest received | 1,155,133 | 711,096 | |
Purchases of property, plant and equipment | (29,975) | (63,287) | |
BHP settlement funds | 15,735,099 | - | |
Expenditure in respect of intangible assets | (24,800,967) | (21,891,341) | |
Cash used in investing activities | (7,940,710) | (21,243,532) | |
Financing activities | |||
Issue of ordinary share capital (net of issue costs) | 49,736,794 | 126,876 | |
Net cash from financing activities | 49,736,794 | 126,876 | |
Net (decrease)/ increase in cash and cash | |||
equivalents in the year | 37,482,517 | (23,349,393) | |
Cash and cash equivalents at start of year | 69,819,625 | 93,535,653 | |
Effect of foreign exchange rate changes | |||
on cash and cash equivalents | 639,593 | (366,635) | |
Cash and cash equivalents at end of year | 107,941,735 | 69,819,625 | |
FALKLAND OIL AND GAS LIMITED
Audited Consolidated Statement of Changes in Equity
for the year ended 31 December 2011
Share capital | Share premium | Retained deficit | Other Reserve | Total Equity | |
$ | $ | $ | $ | $ | |
Balance as at 1 January 2010 | 5,452 | 137,077,241 | (14,028,575) | 4,985,693 | 128,039,811 |
Loss for the year | -
| - | (3,742,516) | - | (3,742,516) |
Shares issued | 6 | 126,870 | - | - | 126,876 |
Share based payments
|
-
| - | 269,590 | - | 269,590 |
Balance as at 31 December 2010 | 5,458 | 137,204,111 | (17,501,501) | 4,985,693 | 124,693,761 |
Loss for the year | - | - | (6,636,700) | - | (6,636,700) |
Share based payments | - | - | 695,581 | - | 695,581 |
Shares issued |
1,966 |
68,826,245 | - | - |
68,828,211 |
Cost of issue | - | (1,976,193) | - | - |
(1,976,193) |
Loss on loan note conversion to equity
| - | - | 1,569,290 | - | 1,569,290 |
Transfer to retained deficit on conversion of debt
| - | - | 4,985,693 | (4,985,693) | - |
Balance as at 31 December 2011 | 7,424 | 204,054,163 | (16,887,637) | - | 187,173,950 |
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2011 or 2010, but is derived from those accounts. Statutory accounts for 2011 will be available at the end of April 2012. The auditors have reported on those accounts: their report was unqualified and did not draw attention to any matters by way of emphasis.