Gulfsands Petroleum Regulatory News (GPX)

27 Sep 2007 07:01

Gulfsands Petroleum PLC27 September 2007 Interim Results for the Six Months Ended 30 June 2007 London, 27th September, 2007: Gulfsands Petroleum plc ("Gulfsands", the "Group"or the "Company" - AIM: GPX), the oil and gas production, exploration anddevelopment company with activities in the U.S.A., Syria and Iraq announces itsinterim results for the six months ended 30 June 2007. These figures arepresented under IFRS for the first time. Summary • Strong overall performance for first half of 2007 • Revenue, net cash flow from operations, assets, equity up from half year 2006 • Gross profit, operating profit, and profit before tax all up from half year 2006 on a UK GAAP basis (prior to IFRS conversion) • Oil and gas discovery at Khurbet East in Block 26 Syria, followed by successful appraisal well HIGHLIGHTS Due to the conversion from UK GAAP to IFRS the re-stated first half of 2006results show a significant gain of $4.0 million resulting from oil and gashedges in place at that time. Without this adjustment and conversion to IFRS,on a UK GAAP basis the first half of 2007 would have been substantially strongerthan the first half of 2006 in terms of revenue, gross profit, operating profitand profit before tax. IFRS adjusted UK GAAP equivalent H1 2007 H1 2006 H1 2007 H1 2006 $ Million $ Million $ Million $ Million Revenue 19.3 16.2 19.2 12.1Gross profit 8.2 8.6 7.7 3.8Operating profit 4.0 6.1 3.4 0.9Profit before tax 2.3 6.3 1.7 1.5Profit for the period 1.1 4.6 0.7 0.9 (profit after tax) • Revenue for the Group increased by 19% to $19.3 million (H1 2006: $16.2 million). UK GAAP equivalent was $19.2 million (H1 2006: $12.1 million); • Gross profit for the Group was $8.2 million (H1 2006: $8.6 million). UK GAAP equivalent was $7.7 million (H1 2006: $3.8 million); • Operating profit for the Group was $4.0 million (H1 2006: $6.1 million). UK GAAP equivalent was $3.4 million (H1 2006: $0.9 million); • Profit before tax for the Group was $2.3 million (H1 2006: $6.3 million). UK GAAP equivalent was $1.7 million (H1 2006: $1.5 million); • Profit for the period (profit after tax) for the Group was $1.1 million (H1 2006: $4.6 million). UK GAAP equivalent was $0.7 million (H1 2006: $0.9 million); • Net cash inflow from operations for the Group increased by 44% to $5.2 million (H1 2006: $3.6 million); • Total assets of the Group increased by 13% to $101 million (H1 2006: $88.9 million); • Equity of the Group increased by 3% to $74.7 million (H1 2006: $72.7 million); • Average daily production for the Group increased by 24% to 2,566 working interest barrels of oil equivalent per day ("boepd") (H1 2006: 2,076 boepd); and • The Company announced a significant oil and gas discovery in Syria known as Khurbet East with potential recoverable reserves in excess of 100 million barrels of oil equivalent. This discovery was followed up with a successful appraisal well. Gulfsands' CEO, John Dorrier, said: "The figures announced today represent a solid result for the Company during thefirst half of 2007 from our US oil and gas production operation. Lookingforward, the Company's oil and gas discovery at Khurbet East could begin to makea significant financial impact as early as 2008 if we achieve our plans forearly production. We expect additional exploration successes in Block 26, Syriaand have high hopes of acquiring additional projects in Syria and Iraq tofurther enhance the Company's financial performance during the years following2008." For further information please refer to the Company's website www.gulfsands.netor contact: Gulfsands Petroleum (Houston) + 00-1-713-626-9564John Dorrier, Chief Executive OfficerDavid DeCort, Chief Financial Officer Gulfsands Petroleum (London) 020-7182-4016Kenneth Judge, Director of Corporate Development 07733-001-002 College Hill (London) 020-7457-2020Nick ElwesPaddy Blewer Landsbanki Securities (UK) Limited (London) 020-7426-9000Andrew Matharu / Tom Hulme (Corporate Finance) These interim results can also be viewed on Gulfsands' website:www.gulfsands.net CHAIRMAN'S STATEMENT In the first six months of 2007 the Group recorded solid financial results,drilled a significant oil and gas discovery in Khurbet East, Syria and commenceda full field appraisal and early development and production plan for the KhurbetEast Field. Subsequent to 30 June the Company received proceeds of £11.6million from a strategic equity private placement in the Middle East. Financial Conversion of our financial reporting from UK GAAP to IFRS has resulted in asignificant change to the Company's financial performance as compared to thefirst half of 2006. This relates primarily to oil and gas hedges that were in place in 2006 and as aresult of the conversion of the financials from UK GAAP to IFRS a one-time $4.0million financial instrument gain is reflected in the re-stated results for thefirst half of 2006. Additionally, an $821,000 reduction in depletion occurredas a result of the IFRS conversion. Due to these one-time gains (which were notcash items) a more valid comparison would be under UK GAAP. On a UK GAAP basis, revenue of $19,152,000 and gross profit of $7,695,000 forthe first six months of 2007 compares to revenue of $12,143,000 and gross profitof $3,781,000 for the same period of 2006. This improvement in gross profit wasachieved despite higher than expected operating costs associated with finalmaintenance and repairs due to the 2005 hurricanes and the unwinding ofdiscounts on decommissioning also related to the hurricanes of 2005. Overall profit before tax to the Group on a UK GAAP basis for the first sixmonths of 2007 was $1,727,000 and profit after tax was $699,000 as compared toprofit before tax of $1,462,000 and profit after tax of $880,000 for the sameperiod of 2006. Syria In the first half of 2007 Gulfsands made a significant oil and gas discovery onBlock 26, which has been named Khurbet East, with potential recoverable reservesin excess of 100 million barrels of oil equivalent. Since the discovery theCompany has drilled a successful appraisal well and has commenced plans for anearly production programme and full field development of the Khurbet Eastdiscovery with initial production targeted for the second half of 2008. TheCompany has been granted rights of access to local pipeline and otherinfrastructure. This includes an export oil pipeline which is located withinthe presently mapped boundaries of the Khurbet East Field. A pipeline tie-infacility may be able to be located just 2 kilometres away from the first twowells drilled in the field. Subsequent to 30 June, the Company initiated thefirst extension period of exploration on Block 26 which commenced on 23 August2007 for a further period of three years. Capital expenditures net to the Group in Block 26 were $7.0 million during thefirst six months of 2007. USA Production for the first six months of 2007 in the Gulf of Mexico and onshoreGulf Coast totaled 464,374 working interest barrels of oil equivalent (2,566barrels of oil equivalent per day) and net revenue interest barrels (workinginterest barrels less royalties) totaled 351,829. This compares to 373,700working interest barrels (2,076 barrels of oil equivalent per day) and 266,498net revenue interest barrels for the first six months of 2006. Both working interest and net revenue interest volumes for 2007 do not includeplant product volumes of 55,004 and 41,643 barrels of oil equivalentrespectively. Revenue for the half year of 2007 totaled $19,253,000 whichincludes gas sales of $10,983,000, oil sales of $6,637,000, plant product sales(ethane, propane, isobutane, normal butane and gasoline) of $1,100,000 andoperating fees of $533,000. Approximately 69% of the daily production was innatural gas at a price of approximately $7.55 per million cubic feet, and 31% inoil production priced at approximately $60.71 per barrel. Total capital expenditures, excluding plugging abandonment, in the U.S. duringthe first six months of 2007 were $1.5 million. Iraq Discussions with the Iraqi Government have continued on the Maysan Gas Projectand this has become a high priority for the Group. Additionally, the Company isin discussions with various parties in the region on numerous other projects inboth southern and northern Iraq. The Maysan Gas Project is a midstream project that expects to gather gascurrently being flared at oil fields in Southern Iraq. The project brings thegas to a central processing plant to clean it of impurities, removing the lighthydrocarbon liquid fraction (natural gas liquids), and then transmits thenatural gas for further distribution and use in Iraq. The extracted hydrocarbonliquids are then transmitted to a southern port for storage, offloading andexport. Outlook The outlook for the Group remains financially strong as a result of continuedhigh energy prices coupled with the possible commencement of first production inthe second half of 2008 from the Khurbet East Field in Syria. Following thissignificant discovery and the recent strategic private equity placement withMiddle Eastern investors of £11.6 million, the Company has become more active inthe Middle East and is moving forward with good prospects of securing one ormore projects in Syria and Iraq through the strong relationships it hasdeveloped within both countries. Andrew West Chairman of the Board 26 September 2007 CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Notes (unaudited) (unaudited) $'000 $'000 $'000Revenue 3 19,253 16,167 33,934Cost of sales - Depreciation (2,199) (1,658) (4,716) - Impairment - - (1,334) - Other cost of sales (8,811) (5,883) (14,465)Gross profit 8,243 8,626 13,419 Administrative expenses before exceptional items (3,394) (2,266) (4,455)Share based payments (328) (294) (851)Hurricane repairs (517) - (2,573)Total administrative expenses (4,239) (2,560) (7,879) Operating profit 4,004 6,066 5,540 Unwinding of discount on decommissioning (2,153) (341) (2,223)Interest income 432 582 1,193 Profit before taxation 2,283 6,307 4,510 Taxation (1,219) (1,695) (2,433) PROFIT FOR THE PERIOD 3 1,064 4,612 2,077 Attributable to:Equity holders of the Company 1,064 4,606 2,077Minority interests - 6 -PROFIT FOR THE PERIOD 1,064 4,612 2,077 Earnings per share (cents):Basic 4 1.03 4.94 2.17Diluted 1.02 4.90 2.15 The results shown above relate entirely to continuing operations. CONSOLIDATED BALANCE SHEET AT 30 JUNE 2007 30 June 2007 30 June 2006 31 December 2006 Notes (unaudited) (unaudited) $'000 $'000 $'000ASSETSNon current assets Property, plant & equipment 5 45,583 40,181 46,247 Intangible assets 6 22,108 7,637 15,097 Deferred tax asset - 530 176 67,691 48,348 61,520 Current assets Trade and other receivables 7 11,861 10,053 9,629 Cash and cash equivalents 21,101 30,457 26,724 32,962 40,510 36,353Total assets 100,653 88,858 97,873 LIABILITIESCurrent liabilities Trade and other payables 8 (16,160) (8,679) (16,036) Fair value derivatives - (261) (101) (16,160) (8,940) (16,137) Non-current liabilities Deferred tax liability (838) - - Provision for liabilities and charges 9 (8,947) (7,218) (8,420) (9,785) (7,218) (8,420)Total liabilities (25,945) (16,158) (24,557)NET ASSETS 74,708 72,700 73,316 EQUITYCapital and reserves attributable to equityholders Share capital 10 11,047 10,019 11,047 Share premium account 56,506 54,680 56,506 Other reserves 12,888 12,003 12,560 Profit and loss account (5,733) (4,268) (6,797) 74,708 72,434 73,316Minority Interests - 266 -TOTAL EQUITY and RESERVES 74,708 72,700 73,316 CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) Notes $'000 $'000 $'000Net cash inflow from operations 11 5,191 3,584 15,999 Interest received 432 582 1,193Taxation paid (860) - (1,111)Net cash (outflow)/inflow from operating (428) 582 82activities Investing activities (10,386) (11,346) (29,849) Financing activitiesCash proceeds from issue of shares - 1,076 3,931Net cash inflow from financing activities - 1,076 3,931 Net decrease in cash and cash equivalents (5,623) (6,104) (9,837) Cash and cash equivalents at beginning of period 26,724 36,561 36,561Cash and cash equivalents at end of period 21,101 30,457 26,724 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2007 Share Profit Share premium Other and loss capital account reserves account Total $'000 $'000 $'000 $'000 $'000Six months ended 30 June 2007At 1 January 2007 11,047 56,506 12,560 (6,797) 73,316Share based payment charge - - 328 - 328Retained profit for the period - - - 1,064 1,064At 30 June 2007 11,047 56,506 12,888 (5,733) 74,708 Six months ended 30 June 2006At 1 January 2006 9,971 53,651 11,709 (8,873) 66,458Share based payment charge - - 294 - 294Share issues less costs 48 1,029 - 1,077 -Retained profit for the period - - - 4,606 4,606At 30 June 2006 10,019 54,680 12,003 (4,268) 72,434 NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 1. Basis of preparation On 1 January 2007, in accordance with the AIM Market of the London StockExchange ("AIM") and endorsed for use by the European Union, the Group adoptedInternational Financial Reporting Standards ("IFRS"). This interim report forthe six months ended 30 June 2007 and the comparative restated financialinformation for the year ended 31 December 2006 and the interim results for 2006have been prepared in accordance with all applicable International AccountingStandards ("IAS"), International Financial Reporting Standards ("IFRS") andInternational Financial Reporting Interpretations Committee ("IFRIC")interpretations issued by the International Accounting Standards Board ("IASB")and with those parts of the Companies Act 1985 applicable to companies reportingunder IFRS and expected to be in effect for the year ending 31 December 2007.The financial information is prepared under the historical cost basis, exceptthat oil and gas price derivative contracts are recognised at their fair values. The next financial statements of the Group will be prepared in accordance withthose International Reporting Financial Standards adopted by the European Union,and it is the expectation of the directors that the accounting policies appliedin this interim report will be applied in those annual financial statements. The interim financial information for the six months ended 30 June 2006 and 30June 2007 is unaudited and does not constitute statutory accounts as defined insection 240 of the Companies Act 1985. The financial statements for the yearended 31 December 2006 have been delivered to the Registrar of Companies and theauditors' report on those financial statements was unqualified and did notcontain a statement made under Section 237(2) or Section 237(3) of the CompaniesAct 1985. Details of the Group's conversion to IFRS and the impact on 2006 and prior UKGAAP results are presented in the IFRS First Time Adoption Statement (the "IFRSStatement") which is available on the Group's website (www.gulfsands.net). Thecomparative figures for the year ended 31 December 2006 and period ended 30 June2006 which are presented in these interim results are based on the IFRSStatement. The IFRS Statement includes a summary of the Group's significantaccounting policies under IFRS and those policies have been applied to theinterim results for the six months ended 30 June 2007. NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 1. Basis of preparation (continued) The table below summarises the IFRS changes for the six months ended 30 June2006 and the year ended 31 December 2006: 6 months ended Year ended 30 June 2006 31 December 2006 $'000 $'000Profit before tax under UK GAAP 1,462 2,101 IAS 39: Financial Under UK GAAP, oil and gas price derivative 4,024 4,184Instruments contracts did not impact the profit and loss account until the period in which the settlement occurred. Under IFRS, such contracts are shown in the balance sheet at fair value and period to period movements reflected in the income statement IAS 16: Property, Under UK GAAP Development & Production assets 821 (441)Plant and Equipment within Property, Plant and Equipment were depreciated using a unit of production method with net book values grouped into geographic cost pools. Under IFRS, these assets are still depreciated using a unit of production method but the cost pools are now broken down into cash generating units. IFRS 6: Exploration Under UK GAAP, impairment testing was done on a - (1,334)and Evaluation of geographic cost pool basis, under IFRS 6, theMineral Resources & cost pool size has been narrowed to individualAccounting policy cash generating units.changeProfit before tax under IFRS 6,307 4,510 The interim report was approved by the Board of Directors on 25 September 2007. NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 2. Significant accounting policies The significant accounting policies shown below are extracts from the fullpolicies as detailed in the IFRS Statement released on 26 September 2007. 2.1 Oil and gas assets There are two categories of oil and gas assets, Exploration and Evaluationassets which are included in Intangible assets and Development and Productionassets that are included in Property, Plant and Equipment. Exploration and evaluation assets Recognition and measurement: Exploration and evaluation assets ("E&E") consists of costs of licenseacquisition, exploration, evaluation, appraisal and development activities forand evaluating oil and gas properties. Costs incurred prior to having obtainedthe legal rights to explore an area ('pre-license costs') are expensed directlyto the income statement as they are incurred and are not included in E&E assets. E&E costs are accumulated and capitalized into cost pools and added toIntangible Assets pending determination of commercial reserves. The Group currently has only one intangible E&E cost pool, being Block 26 inSyria. E&E assets relating to each exploration license/prospect are notdepreciated, but are carried forward until the existence or otherwise ofcommercial reserves has been determined. If commercial reserves have beendiscovered, the related E&E assets are assessed for impairment on a cashgenerating unit basis as set out below and any impairment loss is recognised inthe income statement. The carrying value of the E&E assets, after anyimpairment loss, is then reclassified as development and production assets inProperty, Plant and Equipment. Impairment: E&E assets are assessed for impairment when facts and circumstances suggest thatthe carrying amount may exceed its recoverable amount. Such indicators includethe point at which a determination is made as to whether commercial reservesexist. Where the E&E assets concerned fall within the scope of a cash generating unit,the E&E assets are tested for impairment together with all development andproduction assets associated within the cash generating unit. The aggregatecarrying value is compared against the expected recoverable amount of the pool,generally by reference to the present value of the future net cash flowsexpected to be derived from production of commercial reserves. Where the E& Eassets to be tested fall outside the scope of a cash generating unit, there willgenerally be no commercial reserves and the E&E assets concerned will generallybe written off in full. Any impairment loss is recognized in the income statement as additionaldepreciation, and separately disclosed. On the balance sheet it is recordedagainst the carrying value of the related E&E asset. NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 2. Significant accounting policies (continued) Development & production Tangible oil and gas assets are grouped into a cash generating unit or groups ofunits for purposes of impairment testing and for depreciating the Developmentand Production assets. A cash generating unit is a well, field, area, block,region, or other defined area that is considered interrelated in producingrevenue. Interrelationships can be measured by oil and gas productionagreements, reserve reports, or other documentation showing such relationships.The only limitation in the size of a cash generating unit is that it cannot belarger than a reporting segment of the Group. Recognition and measurement: Development and production assets are accumulated on a cash generating unitbasis and represent the cost of developing the commercial reserves discoveredand bringing them into production, together with the E&E expenditures incurredin finding commercial reserves transferred from intangible E&E assets. The cost of development and production assets also includes the cost ofacquisitions and purchases of such assets, directly attributable overheads, andthe cost of recognizing provisions for future restoration and decommissioning. Depreciation of producing assets: Net book values carried within each cash generating pool are depreciated by aunit of production method using the ratio of oil and gas production in the yearcompared to the estimated quantity of commercial reserves at the beginning ofthe year. Changes in estimates of commercial reserves or future developmentcosts are dealt with prospectively. Impairment: An impairment test is performed whenever events and circumstances arising duringthe development or production phase indicate that the carrying value of adevelopment or production asset may exceed its recoverable amount. Theaggregate carrying value is compared against the recoverable amount of the cashgenerating unit, generally by reference to the present value of the future netcash flows expected to be derived from production of commercial reserves. Acquisitions, asset purchases and disposals Acquisitions of oil and gas properties are accounted for under the purchasemethod where the transaction meets the definition of a business combination. Transactions involving the purchases of an individual field interest or a groupof field interests, that do not qualify as a business combination, are treatedas asset purchases and the consideration is allocated to the assets andliabilities purchased on an appropriate basis. Proceeds on disposal are applied first to the carrying amount of the specificdevelopment/ production asset disposed of and any surplus is applied against thecarrying amount of any unsuccessful E&E assets included in a cost pool. Anyremaining excess is recorded as a gain on disposal in the income statement. NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 3. Segmental information The Group operates a single class of business being oil and gas exploration andproduction. All revenue relates to income from the Group's oil and gas assets,and arose in USA. The Group profit for the period is analysed by geographical area as follows: Six Months ended 30 June Year ended 31 December 2007 2006 2006 $'000 $'000 $'000USA 6,096 7,572 8,525Syria (332) (267) (643)Iraq (313) (218) (497)Colombia (10) (7) (15)Common costs (1,437) (1,014) (1,830)Group's profit before interest 4,004 6,066 5,540Net finance costs (1,721) 241 (1,030)Taxation (1,219) (1,695) (2,433)Profit for the period 1,064 4,612 2,077 NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 4. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing: Six months ended 30 June Year ended 31 December 2007 2006 2006 $'000 $'000 $'000 except per except per except per share amounts share amounts share amountsProfit attributable to equity holders 1,064 4,606 2,077Basic earnings (cents per share) 1.03 4.94 2.17Diluted earnings (cents per share) 1.02 4.90 2.15 2007 2006 2006 Weighted average number of shares: Number Number Number For basic earnings per share 103,018,750 93,168,063 95,565,086 Options outstanding 1,120,712 908,064 930,600 For diluted earnings per share 104,139,462 94,076,127 96,495,686 The calculation of basic earnings per share is based on the profit attributableto equity shareholders and the weighted average number of ordinary shares inissue during the year. Diluted earnings per share is calculated using theweighted average number of ordinary shares in issue on the assumption ofconversion of all dilutive potential ordinary shares. NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 5. Property, plant and equipment Oil and gas Other plant & Total properties - USA equipment $'000 $'000 $'000Cost:At 31 December 2006 61,028 273 61,301Additions 1,499 30 1,529Disposals - (8) (8)At 30 June 2007 62,527 295 62,822 Accumulated depreciation/impairment:At 31 December 2006 as previously stated (12,057) (80) (12,137)Effect of IFRS Restatement (2,917) - (2,917)Restated at 1 January 2007 (14,974) (80) (15,054)Charge for the period (2,146) (45) (2,191)Disposals - 6 6At 30 June 2007 (17,120) (119) (17,239)Net book value at 30 June 2007 45,407 176 45,583 Net book value at 31 December 2006 46,054 193 46,247 6. Intangible assets Exploration and evaluation Computer Software Total assets - Syria $'000 $'000 $'000Cost:At 31 December 2006 15,066 49 15,115Additions 7,018 - 7,018At 30 June 2007 22,084 49 22,133 Accumulated depreciation:At 31 December 2006 - (18) (18)Charge for the period - (7) (7)At 30 June 2007 - (25) (25)Net book value at 30 June 2007 22,084 24 22,108 Net book value at 31 December 2006 15,066 31 15,097 NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 7. Trade and other receivables 30 June 30 June 31 December 2007 2006 2006 $'000 $'000 $'000 Trade receivables 3,704 4,834 5,340Other receivables 3,757 1,349 243Underlift 919 919 919Corporation tax recoverable 740 - 740Prepayments and accrued income 2,741 2,951 2,387 11,861 10,053 9,629 Underlift arose as a result of the acquisition of oil and gas properties in May2004. Underlift represents a right to future economic benefit (throughentitlement to receive equivalent future production), which constitutes anasset. This amount is due after more than one year. 8. Trade and other payables 30 June 30 June 31 December 2007 2006 2006 $'000 $'000 $'000 Trade payables 8,772 4,484 10,987Other payables 4,100 - 875Provision for decommissioning (note 9) 3,089 3,352 3,319US Corporation tax payable - 503 -UK Corporation tax payable 199 340 855 16,160 8,679 16,036 NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 9. Provision for liabilities and charges The provision for decommissioning relates to the expected future costs ofplugging and abandoning the oil and gas properties held by Gulfsands PetroleumUSA, Inc and Darcy Energy LLC. At 30 June 2007 the oil and gas properties haveestimated plugging and abandonment dates between 2007 and 2032. The portion ofthe provision for decommissioning expected to be settled in 2007 totalingapproximately $3.1million is included in trade and other payables (see note 8)and the remainder totaling approximately $8.9 million is included in provisionfor liabilities and charges in the consolidated balance sheet at 30 June 2007. The provision for decommissioning is as follows: $'000At 31 December 2006 11,739Liabilities settled during the period (1,856)Unwinding of discount on decommissioning provision 2,153At 30 June 2007 12,036Less: current portion (note 8) (3,089) 8,947 NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 10. Share capital 30 June 30 June 31 December 2007 2006 2006 Number Number NumberAuthorised:Ordinary Shares (par value 5.714 pence per share) 175,000,000 175,000,000 175,000,000 175,000,000 175,000,000 175,000,000 30 June 30 June 31 December 2007 2006 2006 $'000 $'000 $'000Allotted, called up and fully paid:103,018,750 (2005 - 93,031,250) ordinary shares of 11,047 9,971 11,0475.714 pence each The movements in share capital and options are summarised below: Number of Number of ordinary shares share optionsAt 31 December 2006 103,018,750 4,733,750Share options granted - 820,000Share options exercised for cash - -Stock options expired - (50,000)At 30 June 2007 103,018,750 5,503,750 NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2007 11. Reconciliation of operating profit to net cash inflow from operations 6 months to 6 months to Year ended 30 June 30 June 31 December 2007 2006 2006 $'000 $'000 $'000Operating profit 4,004 6,066 5,540Depreciation 2,199 1,658 4,716Disposal of assets 2 - -Impairment charge - - 1,334Change in fair value of derivatives (101) (4,024) (4,184)Share based payment charge 328 294 851Decrease in debtors, excluding deferred tax assets (2,232) (5,070) (3,885)Increase in creditors, excluding provision for liabilities 991 4,660 11,627and chargesNet cash inflow from operations 5,191 3,584 15,999 12. Post balance sheet events In July 2007, the Company received £11.6 million from the private placement of 8million ordinary shares with the Al Mashreq Investment Fund and HickhamVentures, at £1.45 per new Ordinary Share. The new Ordinary Shares rank paripassu with the existing Ordinary Shares of the Company and were allotted andissued as fully paid in July 2007. Also in July, a previous employee exercised 75,000 share options. Following the issue and allotment of the new ordinary shares and the shareoptions, the issued share capital of the Company was 111,093,750 OrdinaryShares. This information is provided by RNS The company news service from the London Stock Exchange