HDY.L Regulatory News (HDY)

12 Sep 2005 07:00

Hardy Oil & Gas plc12 September 2005 Immediate Release 12 September 2005 Hardy Oil and Gas plc ("Hardy" or the "Company") Maiden Interim Results for the six months ended June 2005 Hardy Oil and Gas plc (AIM : HDY), the oil and gas exploration and productioncompany with significant interests in the India, today announces its maidenInterim Results for the six month period to 30 June 2005. Operational Highlights • Successful flotation on AIM in June 2005 at 144p per share• New licence award in NELP 5 Licensing round with Reliance Industries• Farm-in agreement signed in Nigeria for 40% working interest in Oza field• PY-3 production on target• 5 prospects on Block GS-01 identified after completion of 3D seismic re-interpretation Financial Highlights • Turnover of US$8.61m (2004: US$5.72m )• Net profit at US$3.50m (2004: US$1.58m)• Current trading and outlook in line with expectations Commenting on the results, Paul Mortimer, Chairman of Hardy said: "2005 has been a significant one in the development of Hardy. We are delightedat the successful outcome of the flotation and are pleased to be presentingresults that exceed the expectations at the time of the flotation. It representsconsiderable growth in Hardy's sales and profits. Current trading has started inline with our expectations and we remain confident about Hardy's futureprospects. Hardy has been consistently profitable for the last six years." For further information please contact: Hardy Oil and Gas plc 020 7471 9850Sastry Karra, Chief ExecutiveYogeshwar Sharma, Managing Director Buchanan Communications 020 7466 5000Mark EdwardsBen Willey Chairman's Statement The Group has remained firmly focused on its Indian operations and is committedto consolidating its market position in this area. In addition, Hardy hasrecently extended its area of operations to Nigeria where it sees significantopportunities for growth. Funds for this were included in the working capitalestimate at the flotation. During the first six months, the Group's revenues increased by 50 per cent toUS$8.61m, compared to US$5.72m during the same period in 2004. This improvementis principally due to increased oil prices in the market and increasedproduction from the redrill of the PD-3S well. The flotation of Hardy on 7 June 2005 was a landmark event in the successfulhistory of Hardy. The Board had given careful consideration to the futuredirection of the Company and concluded that Hardy's interests would be bestserved through a flotation on the London Stock Exchange. The flotation wassuccessful at the placing price of 144p per share and we now have a secure anddiversified shareholder base together with a clear funding capacity for ourexploration opportunities. On 5 August 2005, Hardy announced that it had received confirmation from theMinistry of Petroleum and Natural Gas in India that it had been awarded, alongwith Reliance Industries Ltd., India's largest private sector company, theKG-DWN-2003/1 (D3) deepwater exploration block. Hardy's interest in the block is10 per cent. In addition, we are now able to announce farm-in agreements into two blocks inNigeria. The current year has started well and very much in line with expectations. Welook to the future with confidence. Operational Review PY-3 Production from the field during the period averaged at 5,414 bopd, which is1,358 bopd lower than the previous 6 month period ending on 31 December 2004 buthigher than the corresponding period of the previous year. The lower productionis primarily due to the previously reported shut down of one of the wells torepair an umbilical line and carry out maintenance work on the productionplatform. Repairs to the umbilicals were completed and production is now back ontarget from all the three wells. Discussions are currently underway with the JV partners to enter into Phase IIIdevelopment plan for PY-3 field which will require a new 3D seismic survey andadditional infill drilling. CY-OS2 On 24 May 2005 Hardy received approval from the Government of India ("GOI") foran extension to the Phase-III development plan for an additional period of 22months. On 8 September 2005, Hardy commenced a programme of 3D seismic acquisition,which will cover over 550 km2. Hardy has a commitment to complete 3D seismic anddrill two wells for a total commitment of US$22m. Drilling in this block isexpected to begin during the second half of 2006. Hardy has a 75% interest in Block CY-OS2 in partnership with the Gas Authorityof India Limited ("GAIL"), India's largest gas distribution company who have a25% working interest. Saurashtra Block GS-O1 On Block GS-01, Hardy has completed the acquisition of 1,216 km2 3D seismic dataand interpretation. Five prospects have been mapped, with two of the prospectsfinalized for exploration drilling. Drilling is delayed pending final approval from the Ministry of Environment andis now expected to be in the first half of 2006. Block D9 During the period, Hardy completed the acquisition of 3,440 km2 of 3D seismic.The data is presently being processed by M/s Western Geco at Mumbai. Drilling isexpected to commence in the second half of 2006. Nigeria Hardy Oil Nigeria has signed a Farm-In-Technical Services and a Joint OperationsAgreement with the Nigerian company, Millenium Oil and Gas to acquire a 40%interest in the marginal Oza field. Application for the transfer of the interest has commenced with the Governmentof Nigeria. This onshore field is within a 23 km2 block that contains three oilwells which have been suspended for over twenty years. Hardy and Millenium willattempt to revive production first from the three wells, and later increaseproduction through workovers, side-tracking and drilling of new wells. AnExtended Well Test (EWT) program will commence in November 2005 to establish thewell productivity of the existing wells. Hardy's net expenditure for the EWT program will be approximately US$1.0m for2005/2006. Oil-in-place on the Oza field is estimated to be about 33mmboe withundeveloped recoverable reserves of about 7mmboe. Hardy has also signed a farm-in agreement with Bayelsa Oil Company, for a 20%interest in the Atala field. This sub-block is within Block OML 46, in waterdepths of approximately 8ft. The discovery well, Atala # 1 was logged and casedbut not completed and tested. Hardy and Bayelsa will re-enter this well and testand complete two zones by December 2005. Volumetric estimates of oil and gas inplace are 80mmboe and 300Bcf respectively. Hardy's net costs for 2005/2006 areestimated to be US$4.0m, inclusive of acquisition costs. Hardy Oil Nigeria is a wholly owned subsidiary of Hardy Oil Africa which is inturn a wholly owned subsidiary of Hardy Oil and Gas plc. HOEC Investments Hardy continues to maintain its 8.5% strategic interest in Hindustan OilExploration Company Limited ("HOEC") and is valued at US$20m at current marketprice (5 September 2005). HOEC is listed on the National Stock Exchange of Indiaand the Bombay Stock Exchange. HOEC's operations are predominantly in theCauvery Basin in the Bay of Bengal. Financial Review The financial results for the interim six months period were significantlystrengthened due to higher oil prices. The volume weighted average priceachieved for our crude sales for this period was US$47.88 compared to a price ofUS$33.78 for the same period in 2004. The Group recorded a profit after tax of US$3.50m on a turnover of US$8.61mcompared to a profit after tax of US$1.58m on a turnover of US$5.72m, for thesame period last year. The turnover figures are shown as net of profit oil paidto the government. The profit oil paid to the GOI was 10% until 31 March 2005and 25% thereafter of total revenue, after full cost recovery. As of 30 June 2005 the Group had no long term external borrowing except for abank loan of US$1.0 million due to mature in December 2005. The Group has made a tax provision of US$1.13m as of 30 June 2005 which includesa deferred tax provision of US$773,000 from the previous year.Current Trading and Outlook The directors are moving forward as quickly as possible with the Company'sbusiness plan in its operated assets to complete 3D seismic in Block CYOS2 andplanning for drilling two new wells in the same block in mid 2006. In its otheroperated asset of PY-3 the Company is working with its JV partners to implementa Phase III program which calls for additional 3D seismic and two new wells. In its non operated assets the Company is working closely with its partnerReliance to complete the exploration work program. As announced on the 16 August 2005, production from the PY-3 field wastemporarily suspended for two weeks. However, this will not affect full yearproduction targets, and maintenance on the well head confirmed that the wellremains fully pressured when production recommenced. The Company's financial strength remains robust, with continuing strong oilprices and production in line with expectations. E. Paul MortimerChairman Hardy Oil and Gas plcConsolidated profit and loss account for the six months ended 30 June 2005 Six months to Six months to Year ended 30 June 30 June 31 December 2005 2004 2004 (Unaudited) (Unaudited) (Audited) Note US$ US$ US$ Turnover 2 8,611,199 5,722,890 13,719,650Cost of salesProduction costs (1,457,543) (1,258,764) (3,002,584)Increase / (decrease) in stock (283,452) (40,948) 250,915Depletion (622,282) (590,080) (1,464,637)Decommissioning charge (3,526) (3,297) (7,770)--------------------------------------------------------------------------------Gross Profit 6,244,396 3,829,801 9,495,574 Administrative expenses (1,488,532) (972,901) (2,419,096)--------------------------------------------------------------------------------Operating Profit 4,755,864 2,856,900 7,076,478 Other operating income - - 108,502Interest receivable andsimilar income 47,022 8,521 122,931Interest payable and similarcharges (172,747) (183,422) (275,374)--------------------------------------------------------------------------------Profit on ordinary activitiesbefore taxation 4,630,139 2,681,999 7,032,537 Tax on profit on ordinaryactivities-current 3 (354,562) - (275,706)-deferred 3 (773,000) (1,101,000) (3,298,000)-------------------------------------------------------------------------------- (1,127,562) (1,101,000) (3,573,706) Profit for the period 3,502,577 1,580,999 3,458,831-------------------------------------------------------------------------------- Earning per share- basic 4 $0.23 $4.52 $9.89Earning per share- Diluted 4 $0.20 $3.92 $8.57-------------------------------------------------------------------------------- Hardy Oil and Gas plcConsolidated balance sheet at 30 June 2005 30 June 30 June 31 December 2005 2004 2004 (Unaudited) (Unaudited) (Audited) US$ US$ US$Fixed assetsIntangible assets 9,841,949 10,955,855 8,719,525Tangible assets 4,139,711 6,967,223 6,179,126Investments 2,218,122 2,218,122 2,218,122-------------------------------------------------------------------------------- 16,199,782 20,141,200 17,116,773--------------------------------------------------------------------------------Current assetsStocks 362,817 293,410 646,269Deferred tax asset - 2,970,000 773,000Debtors 2,555,081 1,751,968 2,740,896Cash at bank and in hand 34,884,210 4,078,147 9,082,162 37,802,108 9,093,525 13,242,327 Creditors: amounts falling duewithin one year (4,777,409) (5,673,697) (5,585,081)--------------------------------------------------------------------------------Net current assets 33,024,699 3,419,828 7,657,246-------------------------------------------------------------------------------- Total assets less currentliabilities 49,224,481 23,561,028 24,774,019Creditors:amounts falling due after more thanone year - (2,411,251) -Provisions for liabilities andcharges (1,296,000) (1,296,000) (1,296,000)--------------------------------------------------------------------------------Net assets 47,928,481 19,853,777 23,478,019-------------------------------------------------------------------------------- Capital and reservesCalled-up share capital 520,467 3,459 4,111Share premium account 28,683,148 6,505,861 8,251,619Profit and loss account 18,724,866 13,344,457 15,222,289--------------------------------------------------------------------------------Equity shareholders' funds 47,928,481 19,853,777 23,478,019-------------------------------------------------------------------------------- Hardy Oil and Gas plcConsolidated statement of cash flows for the six months ended at 30 June 2005 Six months to Six months to Year ended 30 June 30 June 31 December 2005 2004 2004 (Unaudited) (Unaudited) (Audited) Note US$ US$ US$ Net cash inflow from operatingactivities 5,930,052 5,086,267 6,723,755-------------------------------------------------------------------------------- Returns on investments and servicing of financeIncome from investments - - 108,502Interest received 47,022 8,521 122,931Interest paid (172,747) (183,422) (348,478)--------------------------------------------------------------------------------Net cash outflow from return of investments ------------------------------------and servicing of finance (125,725) (174,901) (117,045) Taxation (354,562) - (1,706) Capital expenditure and financial investmentExpenditure on exploration assets (1,122,424) (2,446,807) (1,401,134)Expenditure ondevelopment/producing assets 5 1,604,458 (2,992,900) (2,930,605)Purchase of other fixed assets (216,358) (14,189) (55,787)Proceeds from disposal of interestsin development assets - - 280,000Proceeds from disposal of subsidiaryundertakings - - 767,597--------------------------------------------------------------------------------Net cash outflow from capital expenditureand financial investment 265,676 (5,453,896) (3,339,929) Net cash inflow beforefinancing 5,715,441 (542,530) 3,265,075 FinancingIssue of shares 20,947,885 42,000 1,788,410Repayment of bank loan (861,278) (441,484) (441,484)Repayment of unsecured loan - (450,000) (1,000,000)-------------------------------------------------------------------------------- 20,086,607 (849,484) 346,926--------------------------------------------------------------------------------Increase / (Decrease) in cashfor the period 25,802,048 (1,392,014) 3,612,001-------------------------------------------------------------------------------- Hardy Oil and Gas plcReconciliation of operating profit to operating cash flows Six months to Six months to Year ended 30 June 30 June 31 December 2005 2004 2004 (Unaudited) (Unaudited) (Audited) US$ US$ US$ Operating Profit 4,755,864 2,856,900 7,076,478 Depletion and depreciation 647,789 624,347 1,530,334Decommissioning charge 3,526 3,297 7,770(Increase)/ decrease in debtors 185,815 (724,227) (1,713,155)Increase / (decrease) in creditors 53,606 2,296,355 145,592(Increase)/ decrease in stocks 283,452 29,595 (323,264)-------------------------------------------------------------------------------- 5,930,052 5,086,267 6,723,755-------------------------------------------------------------------------------- Hardy Oil and Gas plcReconciliation of movement in shareholders' funds Six months to Six months to Year ended 30 June 30 June 31 December 2005 2004 2004 (Unaudited) (Unaudited) (Audited) US$ US$ US$ Total recognised gains and (losses)for the period 3,502,577 1,580,999 3,458,831Issue of shares 20,947,885 42,000 1,788,410--------------------------------------------------------------------------------Net additions to shareholders' funds 24,450,462 1,622,999 5,247,241 Opening shareholders' funds 23,478,019 18,230,778 18,230,778-------------------------------------------------------------------------------- Closing shareholders' funds 47,928,481 19,853,777 23,478,019-------------------------------------------------------------------------------- Hardy Oil and Gas plcNotes forming part of the financial statements for the six months ended 30 June2005 1. Preparation of interim financial information The interim financial statements have been prepared on a basis consistent withthe accounting policies adopted for the year ended 31 December 2004. The consolidated results for the year ended 31 December 2004 have been extractedfrom the financial statements of Hardy Oil and Gas Limited for that year and donot constitute full statutory accounts within the meaning of the Isle of Man Companies Act. 2. Profit Oil Payment The turnover figures are shown as net of profit oil paid to the government. Theprofit oil paid to the Government of India was 10% up to 31 March 2005 and 25%thereafter of total revenue after full cost recovery. 3. Taxation The tax charge for the six months ended 30 June 2005 has been based on theestimated tax liability for the period ending 30th June 2005. 4. Earnings per share The basic earnings per ordinary share is calculated on a profit of US$3,502,577(H1 2004 US$1,580,999) on a weighted average of 15,112,429 (H1 2004 349,621)ordinary shares. In May 2005, there was a bonus issue to the existingshareholders in the proportion of 99 new ordinary shares for every share held. The diluted earnings per ordinary share is calculated on a profit ofUS$3,502,577 (H1 2004 US$1,580,999) on a weighted average of 17,487,295 (H1 2004403,621) ordinary shares. In May 2005, there was a bonus issue to the existingshareholders in the proportion of 99 new ordinary shares for every share held. 5. Re-drill Insurance Claim Re-drill claim of US$1,260,000 from insurance and US$344,458 towards settlementof disputed claims at a lower amount than accrued were credited to the drillingexpenses of well PD-3S development expenditure. 6. Reconciliation of net cash flow to movement in net funds Six months to Six months to Year ended 30 June 30 June 31 December 2005 2004 2004 (Unaudited) (Unaudited) (Audited) US$ US$ US$ Increase / (decrease) in cash 25,802 ,048 (1,392,014) 3,612 ,001 Cash outflow from debtfinancing 861,278 891,484 1,441,484 Changes in net funds fromNon-Cashflows (56,250) (56,250) (56,250) Net funds at the beginning ofthe period 7,277,161 2,279,926 2,279,926 Net funds at the end of theperiod 33,884,237 1,723,146 7,277,161 7. Analysis of changes in net funds At At 1 January 2005 Non Cashflow Cashflow 30 June 2005 (Audited) (Unaudited) (Unaudited) (Unaudited) US$ US$ US$ US$ Cash at bank and inhand 9,082,162 - 25,802,048 34,884,210Debt financing (1,805,001) (56,250) 861,278 (999,973)Net funds at the end of the period 7,277,161 (56,250) 26,663,326 33,884,237 8. Interim financial statements The interim statement was approved by the Board on 9th September 2005. Furthercopies of the interim statements are available from the registered office ofHardy Oil and Gas plc at 15-19 Athol Street, Douglas, Isle of Man IM1 1LB. This information is provided by RNS The company news service from the London Stock Exchange