3 Sep 2009 07:00
| For Immediate Release | 3 September 2009 |
GLOBAL ENERGY DEVELOPMENT PLC
(the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
Global Energy Development PLC, the Latin America focused petroleum exploration and production company (LSE-AIM: "GED"), announces its interim results for the six months ended 30 June 2009 (the "Period").
HIGHLIGHTS:
Revenues down 49.6% at US$9.0 million reflecting the decline in the oil price (first half of 2008: US$17.9 million);
Costs of Sales and Administrative Expenses reduced by 14.7% and 16.1% respectively during the Period through dedicated cost-cutting efforts;
Profit from Operations of US$0.3 million (first half of 2008: Profit from Operations of US$7.7 million);
Loss before Taxation of US$0.4 million (first half of 2008: Profit before Taxation of US$7.1 million);
Net production moderately higher in the Period, and previously uneconomic wells put back on production in May and June due to higher oil prices; and
Seismic acquisition underway at the Colombian Rio Verde contract with drilling scheduled to commence during first quarter of 2010.
FOR FURTHER INFORMATION:
Global Energy Development PLC
| Catherine Miles, Company Secretary | +44 (0)20 7228 4266 |
| www.globalenergyplc.com | +44 (0)7909918034 |
Matrix Corporate Capital LLP
| Alastair Stratton | +44 (0)20 3206 7204 |
| Tim Graham | +44 (0)20 3206 7206 |
NOTES TO EDITORS:
The Company's shares have been traded on AIM, a market operated by the London Stock Exchange, since March 2002 (LSE-AIM: "GED"). The Company's balanced portfolio covers the countries of Colombia, Peru and Panama and comprises a base of production, developmental drilling and workover opportunities and several high-potential exploration projects. The Company currently holds seven contracts: five in Colombia; one in Peru; and one in Panama. As at 31 December 2008, Ralph E. Davis Associates, Inc. ("Ralph E. Davis"), independent petroleum engineers, reported that proved plus probable ("2P") reserves net to the Company totalled 131.0 million barrels of oil equivalent ("BOE").
The information contained within this announcement has been reviewed by Mr. Stephen Voss, a Director of the Company, for the purpose of the 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 26 years.
CHAIRMAN'S STATEMENT & REVIEW OF OPERATIONS
Whilst 2008 saw the Company report record annual financial results, the swift decline in the oil price through the second half of 2008 continued into 2009. The resultant average West Texas Intermediate ("WTI") crude oil price in the first half of 2009 was US$51.57 per barrel, a 53.6% decline against the first half of 2008 (first half of 2008: average WTI: US$111.14).
The decline in the oil price was reflected in the Company's Revenues, down 49.6% to US$9.0 million (first half of 2008: US$17.9 million), with net production (after all royalty payments) for the first half of 2009 moderately higher at 199,403 barrels of oil ("bbls") (first half of 2008: 181,790 bbls).
The Company took efforts to cut costs against the depressed oil price. Cost of Sales was reduced by 14.7% to US$6.4 million (first half of 2008: US$7.5 million) and Administrative Expenses were cut by 16.1% to US$2.4 million, mainly due to a reduction in the number of employees and consultants (first half of 2008: US$2.8 million). Despite this, Profit from Operations was US$0.3 million against US$7.7 million for the first half of 2008 and the Company recorded a Loss before Taxation of US$0.4 million for the first half of 2009 (first half of 2008: Profit before Taxation US$7.1 million). The Company had no bank debt during the Period and continues to have no bank debt to service.
Activity levels during the first half of 2009 were hampered due to the aforementioned oil price and the ensuing reduced cash flow from operations. Capital expenditure was confined to production-lifting cost reduction and environmental protection projects.
The oil price recovered slightly towards the end of the Period and three of the four wells previously shut-in for uneconomic reasons were put back on production during May and June 2009 and are now averaging approximately 325 barrels of oil per day ("bopd") gross.
The second half of 2009 looks brighter with a continued concentration on reducing costs and higher oil prices (averaging approximately US$66 per barrel of WTI to date). In tandem, operating activity levels have increased with, notably, the acquisition of 3D and 2D seismic underway at the Colombian Rio Verde contract in preparation for planned drilling in the first quarter of 2010. This seismic acquisition represents the vast majority of the Company's contractually required spend for the next six months and therefore the Company is confident that it can remain compliant with all its contracts.
During July 2009, the Company requested that Phase 3 of the Peruvian Block 95 contract be suspended due to delays in receiving certain environmental and community sub-permits necessary to initiate the Company's exploratory programme. Confirmation of the suspension has since been received from Perupetro S. A., the Peruvian State Oil Company. Phase 3 will recommence once the sub-permits are received and will be extended by the length of the suspension. Phase 3 requires a US$2.0 million seismic acquisition programme or the drilling of a well within the Bretana field.
The Company believes that the industry will continue to strengthen and that it will have increased available cash flow. In preparation for this the Company is assessing, along with its independent reserve engineers, projects within the Company's portfolio that would result in the quickest return on investment and have a positive impact on production volumes and reserves.
The Company continues to be well placed despite the recent industry downturn and is confident of being able to resume growth in the near future.
Mikel Faulkner
Executive Chairman
Stephen Voss
Vice Chairman & Operations Director
3 September 2009
INDEPENDENT REVIEW REPORT TO GLOBAL ENERGY DEVELOPMENT PLC
Introduction
We have been engaged by the Company to review the condensed set of financial information in the half-yearly financial report for the six months ended 30 June 2009 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and related explanatory notes 1 to 6.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the Directors. The Directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial information in the half-yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial information in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London W1U 7EU
UK
3 September 2009
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
| For the period ended 30 June 2009 | ||||
| Note | Six Months ended 30 June 2009 $'000 (Unaudited) | Six Months ended 30 June 2008 $'000 (Unaudited) | Twelve Months ended 31 December 2008 $'000 (Audited) | |
| Revenue | 9,003 | 17,873 | 32,800 | |
| Cost of sales | (6,361) | (7,458) | (15,461) | |
| Gross Profit | 2,642 | 10,415 | 17,339 | |
| Other income | 54 | 104 | 122 | |
| Administrative expenses | (2,363) | (2,818) | (6,304) | |
| Profit from Operations | 333 | 7,701 | 11,157 | |
| Finance income | 15 | 80 | 183 | |
| Finance expense | (705) | (666) | (1,417) | |
| (Loss)/Profit before taxation | (357) | 7,115 | 9,923 | |
| Tax expense | (464) | (3,172) | (2,627) | |
| (Loss)/Profit from continuing operations | (821) | 3,943 | 7,296 | |
| Total Comprehensive (loss)/income attributable to the equity holders of the parent | (821) | 3,943 | 7,296 | |
| (Loss)/Earnings Per Share | ||||
| - Basic | 4 | $ (0.02) | $ 0.11 | $ 0.21 |
| - Diluted | 4 | $ (0.02) | $ 0.10 | $ 0.20 |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||
| As at 30 June 2009 | ||||||
| 30 June 2009 $'000 (Unaudited) | 30 June 2008 $'000 (Unaudited) | 31 December 2008 $'000 (Audited) | ||||
| Assets | ||||||
| Non-current assets | ||||||
| Intangible assets | 5,598 | 4,792 | 5,358 | |||
| Property, plant and equipment | 95,928 | 92,691 | 98,294 | |||
| Deferred tax assets | 1,809 | 335 | 1,214 | |||
| 103,335 | 97, 818 | 104,866 | ||||
| Current assets | ||||||
| Inventories | 1,265 | 1,029 | 1,290 | |||
| Trade and other receivables | 7,662 | 9,285 | 5,245 | |||
| Short term investments | 1,444 | 1,812 | 1,508 | |||
| Cash & cash equivalents | 995 | 5,976 | 3,722 | |||
| 11,366 | 18,102 | 11,765 | ||||
| Total assets | 114,701 | 115,920 | 116,631 | |||
| Liabilities | ||||||
| Non-current liabilities | ||||||
| Convertible loan notes | (16,388) | (16,003) | (16,197) | |||
| Deferred tax liabilities | (12,068) | (12,265) | (11,768) | |||
| Long term provisions | (839) | (698) | (1,001) | |||
| (29,295) | (28,966) | (28,966) | ||||
| Current liabilities | ||||||
| Trade and other payables | (5,418) | (9,765) | (7,099) | |||
| Total liabilities | (34,713) | (38,731) | (36,065) | |||
| Net assets | 79,988 | 77,189 | 80,566 | |||
| Equity | ||||||
| Called up share capital | 540 | 539 | 539 | |||
| Share premium account | 26,543 | 26,439 | 26,439 | |||
| Other reserve | 1,826 | 1,826 | 1,826 | |||
| Capital reserve | 210,844 | 210,844 | 210,844 | |||
| Retained earnings | (159,765) | (162,459) | (159,082) | |||
| Total equity | 79,988 | 77,189 | 80,566 | |||
The financial information on pages 7 to 12 were approved and authorised for issue by the Board of Directors on 3 September 2009 and were signed on its behalf by:
| Mikel Faulkner Executive Chairman | Stephen Voss Vice Chairman & Operations Director | ||||||||
| 3 September 2009 | 3 September 2009 | ||||||||
| CONSOLIDATED CASH FLOW STATEMENT | |||||||||
| For the period ended 30 June 2009 | |||||||||
| Six months ended 30 June 2009 $'000 (Unaudited) | Six months ended 30 June 2008 $'000 (Unaudited) | Twelve months ended 31 December 2008 $'000 (Audited) | |||||||
| Cash flows from operating activities | |||||||||
| Operating Profit before interest and taxation | 333 | 7,701 | 11,157 | ||||||
| Depreciation, depletion and amortization | 2,910 | 3,238 | 6,356 | ||||||
| (Increase)/decrease in trade and other receivables | (2,136) | (718) | 3,321 | ||||||
| Decrease/(increase) in inventories | 23 | (145) | (406) | ||||||
| (Decrease)/increase in trade and other payables | (2,567) | (778) | 2,412 | ||||||
| Increase in long-term provisions | 162 | 24 | 127 | ||||||
| Accretion expense on convertible loans | 191 | 193 | 387 | ||||||
| Provision against unitization receivable | - | 800 | 800 | ||||||
| Loss on disposal of assets | 55 | - | 25 | ||||||
| Other non-cash items | (56) | - | 46 | ||||||
| Share-based payments | 243 | 141 | 165 | ||||||
| Cash (used in)/generated from operations | (842) | 10,456 | 24,390 | ||||||
| Income taxes paid | (651) | (988) | (2,178) | ||||||
| Net cash flows from operating activities | (1,493) | 9,468 | 22,212 | ||||||
| Investing activities | |||||||||
| Capital expenditure and financial investment | |||||||||
| - Expenditure on tangible fixed assets | (584) | (7,293) | (21,810) | ||||||
| - Expenditure on intangible fixed assets | (253) | (373) | (939) | ||||||
| Disposal of Property, plant and equipment | - | 27 | 46 | ||||||
| Interest received | 15 | 80 | 183 | ||||||
| Increase in short-term investments | 64 | 19 | 323 | ||||||
| Net cash flows from investing activities | (758) | (7,540) | (22,197) | ||||||
| Financing activities | |||||||||
| Interest paid | (476) | (554) | (895) | ||||||
| Net cash flows from financing activities | (476) | (554) | (895) | ||||||
| (Decrease)/increase in cash and cash equivalents | (2,727) | 1,374 | (880) | ||||||
| Cash and cash equivalents at beginning of period | 3,722 | 4,602 | 4,602 | ||||||
| Cash and cash equivalents at end of period | 995 | 5,976 | 3,722 | ||||||
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2009 | ||||||
| Share Capital $'000 | Capital Reserve $'000 | Share Premium $'000 | Retained Earnings $'000 | Other Reserves $'000 | Total $'000 | |
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| At 1 January 2008 (Audited) | 539 | 210,844 | 26,439 | (166,543) | 1,826 | 73,105 |
| Total comprehensive income for the period | - | - | - | 3,943 | - | 3,943 |
| Share-based payments | - | - | - | 141 | - | 141 |
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| At 30 June 2008 (Unaudited) | 539 | 210,844 | 26,439 | (162,459) | 1,826 | 77,189 |
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| Total comprehensive income for the period | - | - | - | 3,353 | - | 3,353 |
| Share-based payments | - | - | - | 24 | - | 24 |
| At 31 December 2008 (Audited) | 539 | 210,844 | 26,439 | (159,082) | 1,826 | 80,566 |
| Total comprehensive loss for the period | - | - | - | (821) | - | (821) |
| Share-based payments | 1 | - | 104 | 138 | - | 243 |
| At 30 June 2009 (Unaudited) | 540 | 210,844 | 26,543 | (159,765) | 1,826 | 79,988 |
UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
For the six months ended 30 June 2009
1. Accounting Policies
Basis of Preparation
The condensed interim financial information has been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. The condensed interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial information for the year ended 31 December 2009.
This results in the adoption of the revision to IAS 1; this revision prohibits the presentation of items of income and expenses (that is, "non-owner changes in equity") in the statement of changes in equity, requiring "non-owner changes in equity" to be presented separately from owner changes in equity. All non-owner changes in equity
will be required to be shown in a performance statement. This revision has been applied throughout these interim financial information. In addition IFRS 8 "Segmental reporting" will affect the disclosure notes of the financial statements for the full year.
2. Financial reporting period
The condensed interim financial information for the period 1 January 2009 to 30 June 2009 is unaudited. In the opinion of the Directors the condensed interim financial information for the period presents fairly the financial position, and results from operations and cash flows for the period in conformity with the generally accepted accounting principles consistently applied. The condensed interim financial information incorporates comparative figures for the interim period 1 January 2008 to 30 June 2008 and the audited financial year to 31 December 2008.
The financial information contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006.
The comparatives for the full year ended 31 December 2008 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include 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.
3. Revenue
Revenue is attributable to one continuing activity, which is oil production from Harken de Colombia, Ltd., a wholly-owned subsidiary of the Group, located in Colombia, South America.
4. Loss per share
Basic earnings per share amounts are calculated by dividing profit/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding for the period.
Diluted earnings per share amounts are calculated by dividing the profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary share outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted earnings per share calculations:
| Six months ended 30 June 2009 $'000 | Six months ended 30 June 2008 $'000 | Twelve months ended 31 December 2008 $'000 | |
| Net (loss)/profit attributable to equity holders used in basic calculation | (821) | 3,943 | 7,296 |
| Add back interest and accretion charge in respect of convertible loan notes | 667 | 582 | 1,281 |
| Net (loss)/profit attributable to equity holders used in dilutive calculation | (154) | 4,525 | 8,577 |
| Basic weighted average number of shares | 35,333,927 | 35,328,428 | 35,328,428 |
| Dilutive potential ordinary shares | |||
| Shares related to convertible notes | 4,565,027 | 4,565,027 | 4,565,027 |
| Employee and Director share option plans | 2,945,196 | 3,795,196 | 3,145,196 |
| Diluted weighted average number of shares | 42,844,150 | 43,688,651 | 43,038,651 |
The calculation of the diluted EPS assumes all criteria giving rise to the dilution of the EPS are achieved and all outstanding share options are exercised.
During the period ended 30 June 2009 the Group reported a loss, therefore, because the effect of the dilutive shares related to convertible loan notes and outstanding share options are anti-dilutive, the diluted loss per share equals the basic loss per share for this period.
5. Interim dividends
No interim dividend has been declared.
6. Subsequent events
There were no material subsequent events between 30 June 2009 and the date of this document.