23 Sep 2008 07:00
23 September 2008
Falkland Oil and Gas Limited
("FOGL" or "the Company")
Interim Results for the six months ended 30 June 2008
FOGL, the oil and gas exploration company focused on its extensive licence areas to the South and East of the Falkland Islands, announces Interim Results for the six months ended 30 June 2008.
Highlights
Drilling preparatory work is continuing
Site surveys expected to commence in November 2008
Environmental impact assessment underway
Determining the initial prospects in readiness for drilling
Cash balance of £11.3m as at 30 June 2008
Richard Liddell, Chairman of FOGL, said:
"All the work streams required ahead of drilling are now in progress. We are working closely with our partner, BHP Billiton, to identify the prospects that will be drilled in the forthcoming drilling programme, which is planned to commence in second half 2009."
Enquiries:
| Falkland Oil and Gas | +44 (0) 207 563 1260 |
| Tim Bushell, Chief Executive | |
| Oriel (Nominated Advisor) | +44 (0) 207 710 7600 |
| Richard Crawley / David Arch | |
| Financial Dynamics | +44 (0) 207 831 3113 |
| Ben Brewerton / Ed Westropp | |
Chairman's Statement
During the first six months of this year FOGL and its partner BHP Billiton, has been focused on the preparatory work for the forthcoming drilling programme. An environmental impact assessment has been initiated and a site survey programme is planned to commence in November 2008. These are important steps in providing greater detail on the key areas of the licences and will feed into the final drilling programme.
One of the most important decisions in the near future will be the selection, and order, of the prospects to be drilled. Whilst no final decisions have been made regarding this selection, it is likely that Loligo will be one of the prospects tested in the initial drilling programme. Loligo is one of a number of prospects within the Tertiary channel play system, it has been well defined by seismic surveys and it has exhibited a positive CSEM anomaly. It is also of considerable size: FOGL estimates most likely un-risked reserves of 3.5 billion barrels of oil*, and clearly, a successful result with Loligo would have a significant impact on FOGL.
Efforts to secure a suitable rig are in progress and it is currently expected that a drilling programme will commence in the second half of 2009. The rewards for success could be substantial, given the large resource volumes of the prospects being targeted.
Financials
FOGL started the period with £12.5 million in cash, of which £0.67 million was invested in the exploration programme and £0.75 million was used to cover operating costs. The loss before tax for the six month period was £1.1m. At the end of the period the cash balance was £11.3 million of which £8.7 million are held as US dollars.
Outlook
BHP Billiton is currently reviewing a number of potential rig options and an announcement will be made as soon as a rig is secured.
Notes
* The results of the Company's technical evaluation have been reviewed, verified and compiled by the Company's geological staff, which includes a qualified person, Colin More BSc., MSc. (Exploration Manager), who has over 25 years of experience in petroleum exploration, for the purpose of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in respect of AIM companies, which outline standards of disclosure for mineral projects
Consolidated Condensed Income Statement
for the six months ended 30 June 2008
| 6 months ended 30 June 2008 | 6 months ended 30 June 2007 | year ended 31 December 2007 | ||
| (Unaudited) | (Unaudited) | (Audited) | ||
| Note | £ | £ | £ | |
| Administrative expenses | (849,508) | (670,569) | (1,768,316) | |
| Loss from operations | (849,508) | (670,569) | (1,768,316) | |
| Finance income | 192,669 | 282,108 | 456,871 | |
| Finance costs | (460,908) | (185,056) | (571,326) | |
| Loss before tax | (1,117,747) | (573,517) | (1,882,771) | |
| Income tax expense | - | (58,028) | (70,946) | |
| Loss for the financial period | (1,117,747) | (631,545) | (1,953,717) | |
| Attributable to: | ||||
| Equity shareholders | (1,117,747) | (631,545) | (1,953,717) | |
| Loss per share | ||||
| Basic and diluted loss per share on loss for the period | 2 | (1.21p) | (0.69p) | (2.12p) |
All amounts included above relate to continued operations
Consolidated Condensed Balance sheet
at 30 June 2008
| At 30 June 2008 | At 30 June 2007 | At 31 December 2007 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| £ | £ | £ | |
| Non-current assets | |||
| Property, plant and equipment | 54,080 | 82,549 | 74,393 |
| Deferred exploration expenditure | 16,588,150 | 19,745,443 | 15,914,105 |
| Current assets | |||
| Trade and other receivables | 95,680 | 595,262 | 193,712 |
| Cash and cash equivalents | 11,331,919 | 7,939,949 | 12,461,430 |
| Total Assets | 28,069,829 | 28,363,203 | 28,643,640 |
| Non-current liabilities | |||
| Convertible Loan Notes | (6,474,394) | (4,211,436) | (6,013,486) |
| Current liabilities | |||
| Trade and other payables | (455,289) | (1,385,572) | (453,049) |
| Corporation tax liability | (83,189) | (156,649) | (83,189) |
| Total Liabilities | (7,012,872) | (5,753,657) | (6,549,724) |
| Net assets | 21,056,957 | 22,609,546 | 22,083,916 |
| Capital and reserves | |||
| Called up share capital | 1,846 | 1,839 | 1,846 |
| Share premium account | 23,631,383 | 23,481,391 | 23,631,383 |
| Other reserves | 2,500,975 | 1,916,755 | 2,500,975 |
| Retained earnings | (5,077,247) | (2,790,439) | (4,040,288) |
| Equity attributable to shareholders | 21,056,957 | 22,609,546 | 22,083,916 |
Consolidated Condensed Cash flow statement
for the six months ended 30 June 2008
| 6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |
| 2008 | 2007 | 2007 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| £ | £ | £ | |
| Operating Activities | |||
| Loss for year before taxation | (1,117,747) | (573,517) | (1,882,771) |
| Finance income | (192,669) | (282,108) | (456,871) |
| Finance expense | 460,908 | 185,056 | 571,326 |
| Cash flows from operating activities | |||
| Loss from operations | (849,508) | (670,569) | (1,768,316) |
| Adjustments for: | |||
| Depreciation | 20,480 | 18,792 | 38,082 |
| Foreign exchange differences | - | (4,707) | 42,116 |
| Share-based payments | 80,788 | 65,114 | 137,437 |
| Cash flow from operating activities before changes in working capital | (748,240) | (591,370) | (1,550,681) |
| Decrease in trade and other receivables | 98,032 | 2,091,241 | 2,523,765 |
| Decrease in trade and other payables | 2,241 | (5,497,330) | (5,128,733) |
| Cash generated from operations | (647,967) | (3,997,459) | (4,155,649) |
| Income taxes paid | - | (183,638) | (270,016) |
| Net cash outflow from operating activities | (647,967) | (4,181,097) | (4,425,665) |
| Cash flows used in investing activities | |||
| Interest income | 192,669 | 282,108 | 456,871 |
| Purchase of property, plant and equipment | (168) | (1,230) | (12,364) |
| Deferred exploration expenditure | (674,045) | (7,087,299) | (10,971,657) |
| Reimbursement of past costs | - | - | 6,383,601 |
| Net cash used in investing activities | (481,544) | (6,806,421) | (4,143,549) |
| Cash flows from financing activities | |||
| Proceeds from issue of convertible loan notes | - | 4,000,000 | 6,000,000 |
| Issue costs of convertible loan notes | - | (2,155) | (2,155) |
| Issue of ordinary share capital | 150,000 | ||
| Net cash inflow from financing activities | - | 3,997,845 | 6,147,845 |
| Net decrease in cash and cash equivalents | (1,129,511) | (6,989,673) | (2,421,369) |
| Cash and cash equivalents at start of period | 12,461,430 | 14,924,915 | 14,924,915 |
| Effect of exchange rate changes on cash and equivalents | 4,707 | (42,116) | |
| Cash and cash equivalents at end of period | 11,331,919 | 7,939,949 | 12,461,430 |
Statement of changes in equity
for the six months ended 30 June 2008
| 6 months ended 30 June | 6 months ended 30 June | year ended 31 December | |
| 2008 | 2007 | 2007 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| £ | £ | £ | |
| Opening balance | 22,093,916 | 21,908,824 | 21,908,824 |
| Total recognised losses for the period | (1,117,747) | (631,545) | (1,953,717) |
| Fair value of share based payments | 80,788 | 65,114 | 137,437 |
| Share options taken up | - | - | 150,000 |
| Issue of convertible loan notes | - | 1,267,153 | 1,851,372 |
| Closing balance | 21,056,957 | 22,609,546 | 22,093,916 |
Notes forming part of the interim report for the six months ended 30 June 2008
1. Accounting policies
The consolidated unaudited interim financial information set out in this report is based on the consolidated financial statements of Falkland Oil and Gas Limited ("FOGL") and its subsidiary company (together referred to as the 'Group'). The accounts of the Group for the 6 months ended 30 June 2008 were approved and authorised for issue by the Board on 17 September 2008. These accounts have been prepared in accordance with the accounting policies that are expected to be applied in the Report and Accounts of FOGL for the year ending 31 December 2008 and are consistent with International Financial Reporting Standards adopted for use in the European Union.
Basis of preparation
The accounts have been consolidated in order to incorporate FOGL Finance Limited, a wholly owned subsidiary.
The financial information for the six months ended 30 June 2008 and 30 June 2007 is unreviewed and unaudited and does not constitute the Group's statutory financial statements for those periods. The comparative financial information for the full year ended 31 December 2007 has, however, been derived from the statutory financial statement for that period. The statutory accounts for the year ended the 31 December 2007 have been filed with the registrar of Companies. The auditors' report on those accounts was unqualified, did not include any references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 237(2)-(3) of the Companies Act 1985.
The financial statements are presented in Pounds Sterling and all values are rounded to the nearest pound (£) except when otherwise indicated.
The financial statements have been prepared under the historical cost convention, except for financial assets, which are carried at fair value.
The Company has certain contractual agreements with other participants to engage in joint activities that do not create an entity carrying on a trade or business of its own. The Company includes its share of assets, liabilities and cash flows in joint arrangements, measured in accordance with the terms of each arrangement.
2. (Loss) per share
The basic loss per share is calculated on a loss of £1,117,747 (2007, loss of £631,545) and on 92,325,706 (2007, 91,950,706) ordinary shares, being the weighted average number of ordinary shares in issue during the period. There is no difference between diluted loss per share and the basic loss per share as the Group reported a loss for the period.