FOGL.L Regulatory News (FOGL)

24 Sep 2007 07:01

Falkland Oil and Gas Limited24 September 2007 Falkland Oil and Gas Interim results for the six months ended 30 June 2007 Highlights - Controlled source electromagnetic survey completed - results to date are encouraging- 2D infill seismic survey completed, 9,950 km of data acquired - initial indications show that the data is very good quality- Results of both surveys expected to be announced later this year- Cash balance of £7.9 million as at 30 June 2007 Post balance sheet events - Discussions continue with a major company in connection with a potential farm-in to the company's assets- Stake in 2002 licences increased to 100% Continued progress with strategy - Aggressive exploration programme has continued to define and de-risk prospects ready for drilling- Continuing to investigate rig options Richard Liddell,Chairman commented: " FOGL has made significant progress over the last six months both operationallyand strategically. Operationally we have completed two major offshore data acquisition programmes,delivered on our key commitments and are on target with our strategic goal ofidentifying the best prospects for drilling. The Company has also progressed its key objectives. We are optimistic that ourrecent exploration programme has gone a long way to de-risking our prospects andwe are now also in advanced discussions with a potential farm-in partner. This is an exciting period for FOGL and its shareholders; one which brings uscloser to realising the potential of the region." 24 September 2007 Enquiries: FOGLTim Bushell, Chief Executive Officer 020 7563 1260Richard Liddell, Chairman College HillNick Elwes / Paddy Blewer 020 7457 2020 KBC Peel Hunt - Nominated AdvisorJonathan Marren / Matt Goode 020 7418 8900 Introduction The last six months have seen significant progress as the Company has carriedout its exploration programme designed specifically to de-risk the prospects onits acreage and produce a prioritised list of drilling prospects. The ControlledSource Electro-Magnetic survey ("CSEM"), as well as the infill 2D seismic surveyhave been completed Initial indications have been encouraging and we expect toannounce the results of these surveys later in the year. Operations CSEM survey This survey commenced in February and involved the acquisition of seven lines intwo phases by Offshore Hydrocarbon Mapping plc. The second phase which involvedthree lines over six prospects was completed in late August. Processing of thesedata is expected to take six to eight weeks. Initial results from both phasesof the survey are very encouraging with positive CSEM anomalies being recognisedover a number of the Company's best prospects. 2D Seismic survey FOGL commenced its most recent 2D seismic survey in December 2006 and this wascarried out by Wavefield InSeis AS. The survey which was completed in May 2007has led to the acquisition of a further 9,950 km of seismic data. Processing ofthese data has already commenced, but it will take several months to complete;early indications are that the data that has been gained in this survey willprovide much higher definition of the Company's high-graded prospects. TheCompany now has a total of 32,500 km of 2D over its acreage. Sea Bottom Coring Sea Bottom Coring is planned to take place in the 4th Quarter of 2007. The forward plan is to integrate the results of these surveys with the Company'sexisting data in order to produce a prioritised list of the best prospects fordrilling. Financials During the half year, exploration expenditure amounted to £8.4 million and totalcash outflow during the period was £11.3 million. Cash balances at 30 June 2007amounted to £7.9 million (31 December 2006: £14.9 million). The expenditure wasfunded by the reduction in the company's cash balances and by further draw downstotalling £4 million from RAB Special Situations (Master) Fund Limited ("RABSSMF") under the £8 million Convertible Loan Note Agreement announced last year.The last remaining tranche of £2million due under the Agreement will be drawndown in September 2007. Post Balance sheet events On 23 July we announced that we were in advanced discussion with a major companywith a view to them gaining an interest in the Company's assets. Thesediscussions are still progressing and we hope to be able to provide an update indue course. FOGL is also pleased to announce that it now holds a 100% stake in the Falklandlicences granted in 2002 which now amount to 14,500 sq km, after Tullow Oil plcrelinquished its 22.5% stake which it gained through its acquisition of HardmanResources in 2006. Under the terms of the Joint Operating Agreement thisinterest reverts to FOGL without any payment. The increased stake provides uswith further flexibility in dealing with our licences in which we will have anundivided 100% interest. Summary A significant amount of progress has been made by FOGL both operationally andstrategically in the last six months and we are now entering an exciting stagein our development with the results from the recent exploration programmeexpected to further confirm the potential of this huge unexplored area. With the strategic developments also advancing the Board believes that theCompany will continue to make substantial progress over the next period anddeliver further value for shareholders. Richard LiddellChairman24 September 2007 Income statement for the six months ended 30 June 2007 6 months ended 6 months ended 9 months ended 30 June 30 September 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Unaudited) Note £ £ £ Administrative expenses (670,569) (875,314) (1,458,285) Loss from operations (670,569) (875,314) (1,458,285) Finance income 282,108 281,648 433,265Finance costs (185,056) - (4,240) Loss before tax (573,517) (593,666) (1,029,260) Income tax expense (58,028) (81,494) (84,703) Loss for the financial period (631,545) (675,160) (1,113,963) Attributable to:Equity shareholders (631,545) (675,160) (1,113,963) Loss per shareBasic and diluted loss per share on loss 2 (0.69p) (0.73p) (1.21p)for the period All amounts included above relate to continued operations Balance sheet at 30 June 2007 At 30 June At 30 September At 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Unaudited) £ £ £Non-current assetsProperty, plant and equipment 82,549 108,230 100,111Deferred exploration expenditure 19,745,443 9,078,269 11,326,049 Current assetsTrade and other receivables 595,262 321,374 2,717,477Cash and cash equivalents 7,939,949 12,643,836 14,924,915 Total Assets 28,363,203 22,151,709 29,068,552 Non-current liabilitiesConvertible Loan Notes (4,211,436) - (1,295,688) Current liabilitiesTrade and other payables (1,385,572) (412,955) (5,581,780)Corporation tax liability (156,649) (81,494) (282,260) Total Liabilities (5,753,657) (494,449) (7,159,728) Net assets 22,609,546 21,657,260 21,908,824 Capital and reservesCalled up share capital 1,839 1,839 1,839Share premium account 23,481,391 22,481,391 23,481,391Other reserves 1,916,755 - 649,602Retained earnings (2,790,439) (1,825,970) (2,224,008) Equity attributable to shareholders 22,609,546 20,657,260 21,908,824 Cash flow statement for the six months ended 30 June 2007 6 months ended 6 months ended 9 months ended 30 June 30 September 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Unaudited) £ £ £ Cash flows from operating activitiesLoss from operations (670,569) (875,314) (1,462,525)Adjustments for:Depreciation 18,792 18,401 27,840Share-based payments 65,114 80,468 121,233Cash flow from operating activities before (586,663) (776,445) (1,313,452)changes in working capital Decrease in trade and other receivables 2,091,241 673,464 277,888Decrease in trade and other payables (5,497,330) (778,200) (161,640)Cash generated from operations (3,992,752) (107,736) (1,197,204) Income taxes paid (183,638) - (186) Net cash outflow from operating activities (4,176,390) (881,181) (1,197,390) Cash flows from investing activitiesInterest income 282,108 281,648 412,294Purchase of property, plant and equipment (1,230) (5,216) (6,536)Deferred exploration expenditure (7,087,299) (726,690) (199,778)Net cash (outflow) / inflow used in (6,806,421) (450,258) 205,980investing activities Cash flows from financing activitiesProceeds from issue of convertible loan 3,997,845 - 1,941,050notes (net of finance costs)Net cash inflow from financing activities 3,997,845 - 1,941,050 Net (decrease)/increase in cash and cash (6,984,966) (1,331,439) (949,640)equivalentsCash and cash equivalents at start of period 14,924,915 13,975,275 13,975,275Cash and cash equivalents at end of period 7,939,949 12,643,836 14,924,915 Statement of recognised income and expense for the six months ended 30 June 2007 6 months ended 6 months ended 9 months ended 30 June 30 September 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Unaudited) £ £ £ Loss for the financial period (631,545) (675,160) (1,113,963)Fair value of share based payments 65,114 80,468 121,233 Total recognised income and expense for (566,431) (594,692) (992,730)the financial period Attributable to:Equity shareholders (566,431) (594,692) (992,730) Statement of changes in equity for the six months ended 30 June 2007 6 months ended 6 months ended 9 months ended 30 June 30 September 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Unaudited) £ £ £ Opening balance 21,908,824 22,251,952 22,251,952 Total recognised losses for the (631,545) (675,160) (1,113,963)periodFair value of share based payments 65,114 80,468 121,233credited to P&L reserveIssue of convertible loan notes 1,267,153 - 649,602 Closing balance 22,609,546 21,657,260 21,908,824 Notes forming part of the interim report for the six months ended 30 June 2007 1. Accounting policies Accounting policies adopted under IFRS These interim financial statements have been prepared in accordance withInternational Financial Reporting Standards as adopted by the European Union ("IFRS"). The basis of preparation and accounting policies used in preparing the interimaccounts for the six months ended 30 June 2007 are set out below. The basis ofpreparation describes how IFRS has been applied under IFRS 1, the assumptionsmade by FOGL about the Standards and Interpretations expected to be effective,and the policies expected to be adopted, when the FOGL issues its first completeset of IFRS financial statements for the year ending 31 December 2007. Basis of preparation The financial information for the six months ended 30 June 2007, six monthsended 30 September 2006 and the 9 months ended 31 December 2006 is unaudited andsuch accounts do not constitute full statutory accounts of the Company. The accounting policies which follow set out those policies which are expectedto apply in preparing the financial statements for the year ended 31 December2007. These policies have been followed in producing these interim statements. The financial statements are presented in Great British Pounds ('GBP') and allvalues are rounded to the nearest pound (£) except when otherwise indicated. The financial statements have been prepared under the historical costconvention, except for financial assets, which are carried at fair value. The comparative figures for the 9 months ended 31 December 2006 are not thestatutory financial statements of FOGL for that financial period. Thosefinancial statements, which were prepared under UK Generally Accepted AccountingPrinciples, have been reported on by the Company's previous auditors anddelivered to the registrar of companies. The report of the auditors wasunqualified and did not contain references to any matters to which the auditorsdrew attention by way of emphasis without qualifying their report. The Company has certain contractual agreements with other participants to engagein joint activities that do not create an entity carrying on a trade or businessof its own. The Company includes its share of assets, liabilities and cash flowsin joint arrangements, measured in accordance with the terms of eacharrangement, which is usually pro rata to the Company's interest in the jointarrangement. Significant accounting policies The accounting policies adopted in the preparation of the interim financialstatements will be consistent with those that will be followed in thepreparation of the company's annual financial statements for the year ending 31December 2007, including the adoption of the following amendments mandatory forannual periods beginning on or after 1 January 2007: International Accounting Standards (IAS/IFRS) Effective date • IFRS 7 - Financial Instruments 1 January 2007• IAS 1 - Amendment - Presentation of financial statements: capital disclosures 1 January 2007 International Financial Reporting Interpretations Committee (IFRIC) Effective date • IFRIC 7 - Applying the restatement approach under 1 January 2007 IAS 29, 'Financial reporting in hyperinflationary economies' • IFRIC 8 - Scope of IFRS 2 (Share Based Payments) 1 January 2007 • IFRIC 9 - Reassessment of embedded derivatives 1 January 2007 • IFRIC 10 - Interim financial reporting and impairment 1 January 2007 The adoption of these amendments did not affect the company's results ofoperations or financial positions. The IASB and IFRIC have issued the following standards and interpretations whichare effective for reporting periods beginning after the date of these financialstatements: International Accounting Standards (IAS/IFRS) Effective date • IAS 24 - Amendment - Borrowing costs 1 January 2009 • IFRS 8 - Operating segments 1 January 2009 International Financial Reporting Interpretations Committee (IFRIC) Effective date • IFRIC 11*- (IFRS 2) Group and treasury share transactions 1 January 2008 • IFRIC 12*- Service concession arrangements 1 January 2008 * These have not been endorsed by the EU. The Company is evaluating the impactof the above pronouncements but they are not expected to be material to thecompany's earnings or to shareholders' funds. Notes forming part of the interim report for the six months ended 30 June 2007 2 (Loss) per share The basic loss per share is calculated on a (loss) attributable to shareholdersof the company and on ordinary shares being the weighted average number ofordinary shares in issue during the period. The diluted earnings per share iscalculated on (loss) attributable to equity shareholders and on the weightedaverage diluted number of ordinary shares during the period. Six months to 30 Six months to 30 9 months to 31 June September December 2007 2006 2006 (Loss) per share - basic and diluted (0.69p) (0.73p) (1.21p) £ £ £(Loss) attributable to equity shareholders (457,268) (675,160) (1,113,963) Weighted average number of ordinary shares at period 91,950,706 91,950,706 91,950,706end There were no potential dilutive shares in issue during any of the aboveperiods. 3 Transition to IFRS The financial information for the six months ended 30 September 2007 and thenine months ended 31 December 2006 and the opening balance sheet at 1 April 2006have been prepared in accordance with International Financial ReportingStandards (IFRS) for the first time. The Company's transition date to IFRS is 1 April 2006. The rules for first-timeadoption of IFRS are set out in IFRS 1 'First time adoption of internationalreporting standards'. In preparing the IFRS financial information, thesetransition rules have been applied to the amounts reported previously undergenerally accepted accounting principles in the United Kingdom ('UK GAAP').IFRS 1 generally requires full retrospective application of the Standards andInterpretations in force at the first reporting date. However, IFRS 1 allowscertain exemptions in the application of particular Standards to prior periodsin order to assist companies with the transition process. Notes forming part of the interim report for the six months ended 30 June 2007 i) Changes in presentation of financial information: • IAS 1: The form and presentation of the UK GAAP financial statements has been changed to be compliant with IAS 1. • IAS 16: 'Tangible Fixed Assets' has been renamed 'Property, Plant & Equipment' • IAS 7: Cash flows under IFRS are presented within the Cash Flow Statement under three main headings: cash flows from operating activities, from investing activities and from financing activities. This has led to some presentational changes compared to UK GAAP e.g. tax paid has been included within operating activities. There is no change to the net movement of cash and cash equivalents. • IFRS1 allows first-time adopters certain exemptions from the general requirement to apply IFRS as effective for December 2007 year ends retrospectively. It has not been necessary for the Company to take advantage of any of the exemptions. ii) Changes in accounting policies: • IAS 12: Under UK GAAP, deferred tax was recognised on the basis of timing differences (subject to certain exemptions). Under IAS 12, deferred tax is recognised on the basis of taxable temporary difference (subject to certain exceptions). Temporary differences include all timing differences and many permanent differences. iii) Reconciliation of UK GAAP to IFRS: • For the period ended 31 March 2006 there are no differences between the income statement and balance sheet amounts reported under UK GAAP and IFRS. This information is provided by RNS The company news service from the London Stock Exchange