NAUT.L Regulatory News (NAUT)

Immediate Release 28 March 2014

GLOBAL ENERGY DEVELOPMENT PLC

(the "Company" or "Global")

AUDITED FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013

Global Energy Development PLC, the Latin America focused petroleum exploration, development and production company (AIM: GED) with operations in Colombia, is pleased to announce its audited final results for the year ended 31 December 2013.

2013 Highlights

§ Increased operating profit from continuing operations of $6.1 million (2012: $3.2 million).

§ Increased cash flow from operations of $11 million (2012: $9.3 million).

§ Net profit of $0.4 million (2012: net loss of $2.1 million).

§ Overall reduction in aggregate debt balance of 25 per cent during 2013.

§ Turnover decreased to $33.6 million (2012: $44.0 million) due to overall lower oil pricing and decreased production volumes.

§ Oil prices decreased 8 per cent averaging $90 per barrel ("bbl") (2012: $98 per bbl).

§ Gross oil production decreased 17 per cent to 407,000 bbls (2012: 492,000 bbls) due primarily to normal declining production of the Llanos Basin properties along with certain down time from the Tilodiran 2 well for pump replacement interventions.

§ General and administrative costs decreased to $4.9 million (2012: $7.9 million) based upon the reduction in non-cash share-based expense, decrease in foreign currency exchange costs, decreased personnel costs and other streamlining efforts.

Stephen Voss, Global's Managing Director, indicated "2014 is beginning with an exciting new phase for the Company. While we ended 2013 with increased cash flow from operations and increased operating profits from our Llanos Basin properties, the recently announced Bolivar farm-out agreement allows the Company to move ahead in the second quarter of 2014 with the first Bolivar project in a two-year work program, the re-entry of the Catalina 1 well, with costs fully funded by our partner. Developing and producing the oil reserves in the Bolivar Contract, located in the Middle Magdalena Valley of Colombia, South America, through our strategic farm-out partnership, remains the Company's principal goal in 2014."

For further information please contact

Global Energy Development PLC

Lauren Kettle

Notes to Editors:

The Company's shares have been traded on AIM, a market operated by the London Stock Exchange, since March 2002 (AIM: GED). The Company's balanced portfolio includes the country of Colombia and comprises a base of production, developmental drilling and recompletion opportunities. The Company currently holds five operated contracts in Colombia.

Proven and probable oil and gas reserves are estimated quantities of commercially producible hydrocarbons which the existing geological, geophysical and engineering data show to be recoverable in future years from known reservoirs. The proved reserves reported by Ralph E. Davis, Inc., ("RED"), an independent petroleum engineering firm, conform to the definition approved by the Society of Petroleum Engineers ("SPE") and the World Petroleum Council ("WPC"). The probable and possible reserves reported by RED conform to definitions of probable and possible reserves approved by the SPE/WPC using the deterministic methodology. The information contained within this announcement has been reviewed by RED. In addition, the information contained within this announcement has been reviewed by Mr. Stephen Voss, a Director of the Company, 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 outlines standards of disclosure for natural resource projects. Mr. Voss is a Registered Professional Engineer in Texas and has been a Member of SPE for 44 years.

Forward-looking statements

This release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward-looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, currency fluctuations (including the US dollar), the Group's ability to recover its reserves or develop new reserves, changes in its business strategy, political and economic uncertainty. Save as required by law, the Company is under no obligation to update the information contained in this release.

Past performance cannot be relied on as a guide to future performance.

Chairman's Statement

The Company is entering a new phase in 2014 with the recent Bolivar farm-out agreement. 2014 brings in a year of change for the Company. During March 2014, the Company signed a farm-out agreement (the "Agreement") with Everest Hill Energy Group Ltd. ("Everest") with respect to its Bolivar contract in the Middle Magdalena Basin. During 2013, the Company, with its financial adviser, undertook a process of identifying and meeting with potential farmout partners for the Company's Bolivar contract. The Agreement marks the successful conclusion of this extensive marketing process. Under the terms of the Agreement, Everest will acquire, subject to Ecopetrol approvals, a 50 per cent interest in the Bolivar contract area in exchange for a cash payment of $5 million (upon signing) and payment of the work commitments stipulated in the Agreement. Under the Agreement, Everest commits to fund the work program which consists of all future costs and expenses incurred with respect to the proposed operations:

· Within one year of completion of the Bolivar Agreement, to re-enter two existing wells in the Bolivar contract area; and

· Within two years of completion of the Bolivar Agreement, to drill and complete one new exploitation well in the Bolivar contract area.

As previously announced, Global will re-enter the Catalina 1 well to test the Simiti conventional oil formation in the second quarter of 2014. The Simiti formation is located between the Salada and Rosa Blanca formations, from which the Company has previously produced approximately 1,250,000 cumulative barrels of oil from its Catalina 1 and nearby Olivo 1 wells. The Company is now in the final stages of planning a Simiti test behind the existing casing in the Catalina 1 well. Existing data indicates the Simiti formation contains suitable natural fracture frequency and oil content to justify testing. Global intends to perforate and then employ conventional hydraulic fracture stimulation techniques which are expected to enhance the existing natural fracture network and to result in oil production.

Entering into the Bolivar Agreement in early 2014 is a significant step forward towards the Company's goal to realise value for its shareholders by developing its highest proved and probable reserve asset, the Bolivar Contract area. The Company´s highest priority is bringing on production from Bolivar and enhancing future strategic alternatives for the Company and its shareholders.

Mikel Faulkner

Chairman

27 March 2014

Managing Director's Review of Operations

Operations

Llanos Basin Production:

The Llanos properties historically provide consistent cash flow from operations for the Company. However, certain of the Company's larger producing wells in the Llanos Basin demonstrated downtime and required well intervention work in 2013.  Production from the Company's Llanos Basin properties was stable through the first half of 2013, but a reduction in oil volumes was experienced in both of the largest producing wells, the Tilodiran 2 and Tilodiran 3, during the latter half of the year. Specifically, the Tilodiran 2 well required two pump replacements during the year, and the costs associated with unsuccessful intervention work totalled approximately $1.8 million in 2013. The most significant well intervention work on Tilodiran 2 occurred in late 2013 when the well was off production for approximately 45 days for an additional pump replacement. The work was successfully completed and the well was placed back online in December 2013. Overall, gross oil production decreased by 17 per cent to 407,298 barrels ("bbl") in 2013 (2012: 491,786bbls).

While cost of sales decreased 28 per cent to $22.7 million (2012: $31.5 million) during 2013 due to lower diesel fuel costs, equipment rentals and water transportation expenses, lower production volumes and lower oil pricing led to a decrease in overall gross profit compared to the prior year. During the past two years, the Company completed key operational cost-saving projects such as the recompletion of the Rio Verde 2 well into a water injection well to reduce water disposal costs. Other projects included the electrification of surface facilities to reduce diesel fuel costs and the purchase of certain equipment to save monthly rental costs. Even with these cost-saving projects, gross profit from the Llanos properties declined in 2013 primarily due to declining production volumes and mechanical problems with the Tilodiran 2 well. The first quarter of 2014 has, however, featured stable production rates.

Middle Magdalena Properties:

During 2013, the Company was able to incorporate information on the Simiti formation from a proven production test in a nearby field. Previously, the Simiti formation was an unevaluated horizon within the Bolivar Contract area. The Company was able to incorporate this data and subsequently revised its plan for reserve development within the area to incorporate vertical wells in lieu of horizontal wells based upon the multi-zone findings of the formations within the area. These formations include the La Luna, Salada, Rosa Blanca, Tablazo and the Simiti formations. All five zones are located in a continuous vertical section of over 2,000 feet in the Company's Bolivar Contract area. Utilising vertical wells will allow the Company to complete, hydraulically fracture and produce from all five within the same wellbore instead of drilling horizontal wells into each of the formations. The Company's independent reserve engineers were able to also incorporate and utilise this information, along with additional findings on the Tablazo formation, to further define the oil reserves in the Bolivar Contract area.

The Company is now planning to test the Simiti formation within the area through the re-entry of the existing Catalina 1 well. The Company previously completed the analysis of openhole well logs including formation imaging measurements and whole core data taken from the Simiti oil shale located within the existing Catalina 1 well, originally drilled in 1998. The data indicates the Simiti formation contains suitable natural fracture frequency and oil content to justify testing. Rig mobilisation is expected to commence in second quarter 2014 once all necessary service equipment has been received at the well location.

With regard to the Company's Bocachico Contract area, the Company performed a successful well intervention during 2013 of its existing Torcaz 2 well. The Company plans to proceed with the implementation of the modified-sand-control completion technique, known as "CHOPs", on its existing Torcaz 3 vertical well in the second half of 2014.

Financials

During 2013, the Company recorded decreased turnover of $33.6 million, 24 per cent lower than the prior year (2012: $44.0 million) due to lower Llanos production volumes and lower realised average oil pricing of $90 per bbl during the year (2012: $98 per bbl). Net sales volumes declined with 373,466 bbls sold in 2013 (2012: 454,943 bbls) due to periodic downtime from the Tilodiran 2 and 3 wells during the year.

Cost of sales decreased by 28 per cent to $22.7 million during the year (2012: $31.5 million) due to lower water transportation and disposal costs. Significant efforts were undertaken during the year on operational cost saving projects targeting high diesel fuel and equipment rental costs for the Llanos Basin properties. The Company recognised unsuccessful well intervention costs of $1.8 million during the year primarily related to the Tilodiran 2 well (2012: $2.9 million).

Based on the decrease in turnover, gross profit was $10.9 million, a decrease of $1.7 million over the prior year. Administrative and other costs (including share-based expense and exchange rate costs) decreased to $4.9 million during 2013 against $7.9 million in the prior year due primarily to a reduction in personnel costs, the non-cash decrease in share-based expense, and lower foreign exchange expense. Consequently, the operating profit margin from continuing operations increased in 2013 to 18.2 per cent from 7.4 per cent in 2012.

The Company generated increased cash flow from operations of $11. million (2012: $9.3 million) and expended $10.1 million on capital projects primarily related to the completion of the Tilodrian 1 well, the successful intervention on the Torcaz 2 well and improvements to surface facilities at the Company's Tilodiran, Torcaz and Paloblanco fields during the year. Final net proceeds of $3.3 million, from the 2012 sale of the Company's remaining working interest in the Peruvian Block 95 Contract, were received during the year following the completion of the assignment from Perupetro, Peru's national agency for hydrocarbons. The Company also repaid $5 million in principal payments of its Notes Payable during the year, reducing the overall principal balance by 30 per cent. Continued strong cash flow from operations, reduced overall debt and new partnering financing of the two-year Bolivar work program establishes a strong financial foundation for the company for 2014.

Stephen Voss

Managing Director

27 March 2014

Oil Reserves Information (unaudited)As at 31 December 2013

The reserve estimates shown in this report were developed by Ralph E. Davis Associates, Inc., an independent petroleum engineering firm, and are based on the joint reserve and resource definitions of the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers consistent with UK reporting purposes. Proved and probable reserve estimates are based on a number of underlying assumptions including oil prices, future costs, oil in place and reservoir performance, which are inherently uncertain. Management uses established industry techniques to generate its estimates and regularly references its estimates against those of joint venture partners or external consultants. However, the amount of reserves that will ultimately be recovered from any field cannot be known with certainty until the end of the field's life.

All reserves are in the Colombia, South America production and development area.

Estimated net proved and probable reserves of crude oil

1 The revisions in previous estimates are due primarily to the end of contract life effects. Further delays in the development activities within the Bolivar and Bocachico Contracts areas will result in future losses of 2P reserves due to end of contract life effects.

2 The reserve additions are from the inclusion of two previously unevaluated proved horizons within the Bolivar Contract area, namely the Simiti and Tablazo formations, through incorporating information from recent Simiti production tests in a nearby field and from Tablazo production tests.

PRIMARY FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Incomefor the year ended 31 December 2013

Consolidated Statement of Changes in Equity

Consolidated Statement of Financial Positionas at 31 December 2013

Consolidated Statement of Cash Flowsfor the year ended 31 December 2013

ABRIDGED NOTES TO THE PRIMARY FINANCIAL STATEMENTS

For the twelve months ended 31 December 2013

1. Accounting Policies

Basis of preparation

The financial statements of the Group for the twelve months ended 31 December 2013 have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by European Union.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2013 or 2012 as defined by section 435 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the registrar of companies, and those for 2013 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, and (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts.

2. Earnings per share (EPS)

Basic earnings per share amounts are calculated by dividing the profit/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share are calculated by dividing the profit/ (loss) for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding at the end of the year, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares. The calculation of the dilutive potential ordinary shares related to employee and Director share option plans includes only those options with exercise prices below the average share trading price for each period.

The calculation of the diluted EPS assumes all criteria giving rise to the dilution of the EPS are achieved and all outstanding share options with exercise prices lower than the average period share price are exercised. During the period ended 31 December 2012, the Group reported a loss. Therefore, because the effect of the potentially dilutive shares related to outstanding share options would be anti-dilutive, a separate diluted loss per share has not been reported because it is deemed to equal the basic loss per share.

3. Income tax

The Group is subject to UK and Colombian taxation.

UK taxation

The Group does not expect to be liable for UK corporation tax in the foreseeable future because, as of the date of the last UK tax return, the Group had trading losses carried forward of $32.5 million as at 31 December 2013 and $31.1 million as at 31 December 2012 and these are expected to increase in the future.

Colombian taxation

The Group pays taxes in Colombia through the branch office of its wholly owned subsidiary, CEDCo. The Colombian corporation tax was calculated in 2012 and in prior periods as the higher of net income tax or presumptive income tax.

Beginning in 2013, as determined by the new Colombian Tax Law 1607, the corporate income tax rate applicable to Colombian entities and branches of non-Colombian companies was reduced from 34 per cent to 25 per cent. However this rate reduction was effectively offset by a new income tax, known as "CREE tax".

During 2013, the Colombian corporation tax was calculated as the CREE tax and the higher of net income tax or presumptive income tax as follows:

· Presumptive income tax. An alternative minimum tax calculated on the prior year gross equity less liabilities at a rate of 3 per cent to determine the presumptive income. A rate of 25 per cent is applied to the presumptive income to arrive at the tax obligation; or

· Net income tax. Calculated at a rate of 25 per cent taking into account revenues minus costs, standard and special deductions.

· CREE tax. Calculated at a rate of 9 per cent from 2013 through 2015, and 8 per cent thereafter, as an income tax except for certain limitations on the ability to claim costs and expenses. Tax loss carryforwards are not eligible to offset the CREE taxable amount. Lastly, the CREE tax may not be less than three per cent of the taxpayer's net equity as of 31 December of the preceding taxable year.

Additionally, the Group pays an Equity Tax calculated using a taxable base of the Net Equity as at 1 January 2011 at a rate of 6 per cent. The payment of the tax is over four years with payments made twice per year.

The major components of income tax expense for the periods ended 31 December 2013 and 2012 are:

Consolidated statement of comprehensive income:

Taxation reconciliation

The charge for the year can be reconciled to the profit per the income statement:

4. Trade and other receivables - current

Included in the above are trade receivables from customers totalling $3. million (2012: $5.5 million) in crude sales receivables which are not considered at risk due to the short-term nature of the receivables, the positive credit rating of the customers and the historical trading relationship with the customers. All customer balances as at 31 December 2013 were due within 30 days (2012: 30 days). The Board of Directors considers that there is no significant difference between the carrying values and the fair values of all receivables. The maximum exposure of the gross carrying amount net of provisions for impairment to credit risk at the reporting date is the fair value of each class of receivable set out above.

The receivable from the sale of Peruvian Block 95 for $3.4 million was received in February 2013.

Other classes of financial assets included within trade and other receivables do not contain impaired assets.

The carrying values of the Group's trade and other receivables are denominated in the following currencies:

5. Borrowings

In 2013, the Group completed the restructuring of its previous notes payable to HKN, Inc. ("HKN") of $5 million and $12 million, respectively, which were both due and payable in 2013 into one new Amortising Note Payable (the "Amortising Note Payable") for the combined principal amount of $17 million. The Amortising Note Payable is not convertible into shares and is subject to an interest charge of 12.75 per cent per annum, payable quarterly in arrears, with the following principal repayment amount amounts and dates:

· $500,000 - paid on 31 March 2013

· $1.5 million - paid on 30 June 2013, 30 September 2013 and 31 December 2013

· $1.5 million - due quarterly through 31 March 2015

· $4.5 million - due on 15 June 2015

The Amortising Note Payable is currently unsecured, but HKN can require the Company to provide adequate collateral security in the event of a material adverse effect. The Company also paid to HKN a 2 per cent transaction fee of approximately $340,000 during 2013. As of 31 December 2013, the outstanding principal balance of the Amortising Note Payable is $12 million.

Under the terms of the Amortising Note Payable, in the possible event of a decrease in the Company's profit from operations or cash flow from operations at each interim or annual period as compared to the prior period, the interest rate shall immediately be adjusted from 12.75 per cent per annum to 13.50 per cent per annum from the date of publication of the applicable period report and through the maturity date of the Amortising Note Payable.

In the Cash Flow Statement the financing activities reflect the non-cash movement of the renegotiation of the loan with HKN described above. 

6. Trade and other payables

1 Trade payables reflect balances owed on invoices received from vendors and contractors related to active projects in progress at the end of each period. It is considered that values of trade and other payables approximate to fair value at 31 December 2013 and 2012.

7. Post reporting date events

In March 2014, the Group entered into a farm-out agreement (the "Bolivar Agreement") with Everest Hill Energy Group Ltd. ("Everest") with respect to its Bolivar Association Contract area. Under the Bolivar Agreement, Everest will acquire, subject to Ecopetrol approvals, a 50 per cent. interest in the Contract area, including any and all rights, obligations and duties in respect of the Contract area, in exchange for payment of the work commitments stipulated in the Bolivar Agreement and a cash payment of $5 million. Under the Bolivar Agreement, Everest commits to undertake the funding of a work program with respect to the proposed operations:

1. Within one year of completion of the agreement, to re-enter two existing wells within the Contract area; and

2. Within two years of completion of the agreement, to drill and complete one new exploitation well in the Contract area.

The work program shall be governed by a joint-venture agreement to be agreed between the Company and Everest. Everest is an affiliated company of the Quasha family trusts which also have an interest in Lyford Investments, Inc. Lyford Investments, Inc., HKN and its parties in concert are major shareholders of the Group.