NAUT.L Regulatory News (NAUT)

11 Sep 2006 07:02

Global Energy Development PLC11 September 2006 For Immediate Release 11 September 2006 GLOBAL ENERGY DEVELOPMENT PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 Global Energy Development PLC ("Global" or the "Company"), the Latin Americafocused petroleum exploration and production company (LSE-AIM: "GED"), announcesits interim results for the six months ended 30 June 2006. Highlights: • Revenues for the six months ended 30 June 2006 of $9,006,000 (six months ended 30 June 2005: $9,103,000); • Gross profit of $4,667,000 (six months ended 30 June 2005: $4,997,000); • Administration expenses significantly increased at $2,658,000 (six months ended June 2005: $1,859,000) due in part to much expanded operations warranting an enlarged organisational team; • Net cash inflow from operating activities totalling $5,688,000 (six months ended 30 June 2005: outflow of $220,000) enabled through prevailing high oil prices; • Average cash netback per barrel of oil of $37.41 (six months ended 30 June 2005: $27.26); • Capital expenditure, funded out of cash flow from production and cash available, of $10,261,000 (six months ended 30 June 2005: $6,361,000); • Capital expenditure of approximately $20,000,000 anticipated for the whole of 2006; • Commencement of active drilling programme with seven new wells to be drilled or spudded between now and first half of 2007; and • Additional seismic acquisition and new contracts anticipated in the short term. Commenting, Mikel Faulkner, Executive Chairman, said: "We have done much to add key personnel over the last few months to reflect ourexpanded operations and this combined with the Company's independently auditedhigh potential exploration projects, anticipated new contracts and escalatingproduction volumes predicted for the short-term though an active drillingprogramme, leaves us optimistic for the future." For further information: Global Energy Development PLCCatherine Miles, director of Investor Relations +44 (0) 20 7763 7177 www.globalenergyplc.com +44 (0) 79 0991 8034 Notes to Editors: Global's shares have been traded on AIM, a market operated by the London StockExchange, since March 2002 (LSE-AIM: "GED"). The Company currently holds inexcess of 5.2 million acres through nine contracts in Colombia and Peru, anexclusive Technical Evaluation Agreement ("TEA") in Colombia and a concludedexclusive TEA in Panama. Global's portfolio comprises a base of production,developmental drilling and workover opportunities and several high-potentialexploration projects. Ryder Scott Company, LP ("Ryder Scott"), the Company's independent petroleumconsultants, reported that as at 31 December 2005, proved plus probable reserves("2P reserves") net to Global totalled 17.5 million barrels of oil and provedplus probable plus possible reserves ("3P reserves") net to Global totalled 67.5million barrels of oil. Based upon an approximate Brent Price of $58 perbarrel, this being the closing price as at 31 December 2005, Future Net Revenues("FNR") for the 2P reserves net to Global totalled $621 million and FNR for the3P reserves net to Global totalled approximately $2.8 billion. Proven and probable oil and gas reserves are estimated quantities ofcommercially producible hydrocarbons which the existing geological, geophysicaland engineering data show to be recoverable in future years from knownreservoirs. The proved reserves reported by Ryder Scott conform to thedefinition approved by the Society of Petroleum Engineers ("SPE") and the WorldPetroleum Congress ("WPC"). The probable and possible reserves reported byRyder Scott conform to definitions of probable and possible reserves approved bythe SPE/WPC using the deterministic methodology. This information has been reviewed by Ryder Scott. CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT Financials Revenues for the six months ended 30 June 2006 totalled $9,006,000 (six monthsended 30 June 2005: $9,103,000) with gross profit for the period of $4,667,000(six months ended 30 June 2005: $4,997,000). Administration expenses rosesignificantly to $2,658,000 (six months ended 30 June 2005: $1,859,000) due inpart to the full-time employee headcount having risen from 13 as at 30 June 2005to 22 as at 30 June 2006. This reflects the much expanded Company operationswarranting an enlarged organisational team. As a consequence profit before taxfor the six months ended 30 June 2006 was $2,148,000 (six months ended 30 June2005: $3,138,000). Net cash flow from operating activities for the six months ended 30 June 2006totalled $5,688,000 (six months ended 30 June 2005: ($220,000)), enabled throughprevailing high oil prices during the period. The Company averaged a cashnetback per barrel of oil of $37.41 for the six months ended 30 June 2006 (sixmonths ended 30 June 2005: $27.26). Capital expenditure for the six monthsended 30 June 2006, funded out of cash flow from production and cash available,was $10,261,000 (six months ended 30 June 2005: $6,361,000). This isapproximately half of the $20 million anticipated for the whole of 2006, againpredicted to be funded out of cash flow from production and cash available. Operations The Company currently holds in excess of 5.2 million acres through ninecontracts in Colombia and Peru, an exclusive Technical Evaluation Agreement ("TEA") in Colombia and a concluded exclusive TEA in Panama. This portfoliocomprises a base of production, developmental drilling and workoveropportunities and several newer high-potential exploration projects. Thecurrent base of production enables the Company to pursue and fund explorationprojects. The recently announced results of the Company's Exploration PotentialResources study prepared by the petroleum consultants Ryder Scott Company, LP ("Ryder Scott") independently validates the scope of the Company's currentexploration projects. Given the exploration status of the properties includedwithin the study there is substantial risk associated with these projects. Assuch the total risked, most likely case recoverable barrels of gross resourceswas 218.6 million barrels of oil equivalent ("boe"). The Company currently owns 100% of all its contracts and royalties payableaverage 12.5% across the portfolio allowing the Company to retain approximately87.5% of gross production. Gross production for the six months ended 30 June2006 was 197,960 barrels of oil ("bbls"), with production net to Global of171,444 bbls (six months ended 30 June 2005: 233,119 bbls). All of thisproduction was from legacy assets as no new wells were placed on to productionduring the period due to the 2006 drilling programme being second half weighted. The reduction in production between the two six month periods was principallydue to the loss of two wells through mechanical failure in the second half of2005 which subsequently did not contribute to production in the first half of2006. The two wells were existing wells located on the Colombian Rio Verdecontract which the Company recompleted and brought on to production in December2004 and January 2005. They are not expected to contribute to futureproduction. Nevertheless, the Company has had a successful start to its 2006 drillingprogramme with the first well, Tilodiran 2 on the Colombian Rio Verde contract,being successfully placed on continuous production at the end of July 2006.This well has since produced in line with the Company's expectations, averaging624 barrels of oil per day ("bopd") since that time and currently producing at760 bopd at approximately 90% of the maximum possible pump speed. As aconsequence, production, net to Global, has risen from an average of 947 bopdfor the six months ended 30 June 2006 to approximately 1,440 bopd to date. The Company expects to see daily production volumes continue to escalate in theshort-term through an active drilling programme. Between now and the end of thefirst half of 2007 the Company anticipates drilling or spudding seven new wells,working over an existing well on the Colombian Alcaravan contract and commencinga new hydraulic fracturing project on the Colombian Bolivar contract. A rig has been secured for the drilling of five delineation wells in thePrimavera field located within the Colombian Luna Llena contract. These wellsare quick and cheap to drill with the first of these wells expected to begincontributing to production in December 2006, subject to weather conditions. Allfive wells are expected to be placed on continuous production during the firsthalf of 2007. The management team have a high confidence level for these wellswhich are each estimated to initially produce a few hundred barrels of oil perday. Due to the success of the Tilodiran 2 well, the Company is focusing in theshort-term on the Colombian Rio Verde and adjoined Los Sauces contracts. Thefirst well on the Los Sauces contract, Los Sauces 1, should be spudded andcompleted during the first quarter of 2007 with the same rig being used to thenspud the Tilodiran 3 well during the first quarter of 2007. The Tilodiran 3well is considered to form part of the Tilodiran field while the Los Sauces 1well is part of separate fault structure on trend with the Tilodiran field.Both wells should therefore be analogous to the successful Tilodiran 2 well withsimilar daily production volumes from the same target formations of the Gacheta,Ubaque and Mirador. The Company anticipates drilling these wells to a finaldepth of 13,000 feet with an estimated drilling and completion time per well of75 days. Near to medium-term seismic plans include the acquisition of 50 kms of 2Dseismic on the Los Sauces contract, preceding the drilling of the Los Sauces 1well, and up to 90 kms of 2D seismic on the Luna Llena contract following theinitial five well Primavera delineation drilling program. At the Peruvian Block95 contract, the Company is seeking environmental permits for the acquisition of2D seismic and anticipates receiving permit approval in the near future. TheCompany expects to commence a pressure pulse test by mid September 2006 of itsCajaro 1 and Los Hatos 1 wells within the adjoined Colombian Alcaravan and LosHatos contracts respectively for purposes of determining their hydraulicconnectivity. This is being done in relation to pending unitization and theinformation collected will be used, together with previously obtained seismicand well log information, to determine the oil production drainage patternexisting between the two wells and ultimately the appropriate ownershipallocation of the oil being produced between Global and Ecopetrol, the stateowned Colombian oil company. The management are confident that the outcome ofthis process will be favourable. The Company expects to supplement further its portfolio of contracts over thenext few months and is actively working on signing the pending contract inPanama, which continues to be negotiated with outstanding legal issues, andsecuring new contracts in Colombia and Peru. The management team remainscompletely committed to pursuing opportunities in these three countries thatoffer, in the management's opinion, some of the most favourable contract termsin the world with improving security and continued political stability. The industry continues to be characterised by equipment and personnel shortageswhich cause ongoing delays and escalating costs. Evidence of this was theunanticipated one month delay in placing the Tilodiran 2 well on to continuousproduction caused by receiving workover rig equipment late. This well wasoriginally expected to begin contributing to production from end of June 2006 /early July 2006. Solely as a consequence of this delay, the Company feels it isprudent to edge down its production estimate for the year ended 31 December 2006from 500,000 bbls net to Global to approximately 470,000 bbls, equivalent toapproximately 537,000 bbls gross. Nevertheless, this reflects almost nocontribution from the short-term drilling programme and the Company has donemuch to add key personnel, recently appointing a director of Exploitation tooversee drilling and production operations. This combined with the Company'sindependently audited high potential exploration projects, anticipated newcontracts and escalating production volumes predicted for the short-term thoughan active drilling programme, leaves the Company optimistic for the future. Mikel FaulknerExecutive Chairman Stephen VossManaging Director 11 September 2006 UNAUDITED FINANCIAL HIGHLIGHTSfor the six months ended 30 June 2006 (Figures in thousands except for per share information) Six Months Six Months Twelve Months Ending Ending Ending 30 June 2006 30 June 2005 31 December 2005 $000 $000 $000 TURNOVER 9,006 9,103 19,045Earnings per share 0.05 0.10 0.14Expenditures on capital assets 10,261 6,361 14,597Net current assets 3,680 5,967 10,588Capital and Reserves 73,118 68,365 71,453Common shares outstanding End of period 35,328,428 34,965,047 35,235,430 RESERVE INFORMATION - UK GAAP BASIS AS OF31 December 2005 (1) Quantity Future NPV (Bbls) Net Revenue At 10% Thousands $000 $000 Proved 5,034 173,294 117,855Probable 12,440 448,171 283,341Total 17,474 621,465 401,196 Note (1): The reserve information for Global Energy Development PLC has been certificatedby a third-party firm, Ryder Scott, at 31 December 2005. INDEPENDENT REVIEW REPORT TO GLOBAL ENERGY DEVELOPMENT PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2006 on pages 8 to 13. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibilityfor this report to any other person or for any other purpose and we herebyexpressly disclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directorsare responsible for preparing the interim report in accordance with the rules ofthe London Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom by auditorsof fully listed companies. A review consists principally of making enquiries ofmanagement and applying analytical procedures to the financial information andunderlying financial data and based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with International Standards onAuditing (United Kingdom and Ireland) and therefore provides a lower level ofassurance than an audit. Accordingly we do not express an audit opinion on thefinancial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. BDO STOY HAYWARD LLPChartered AccountantsLondon UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the six months ended 30 June 2006 Un-audited Un-audited Audited Six Months Six Months Twelve Months Ending Ending Ending 30 June 2006 30 June 2005 31 December 2005 $000 $000 $000 TURNOVER 9,006 9,103 19,045Cost of Sales (4,339) (4,106) (9,755) GROSS PROFIT 4,667 4,997 9,290Administration Expenses (2,658) (1,859) (4,364)Other income 247 18 176 OPERATING PROFIT 2,256 3,156 5,102 Net interest payable (108) (18) (18) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,148 3,138 5,084Tax charge on profit for the financial period (483) (341) (715) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ANDTRANSFER TO RESERVES 1,665 2,797 4,369 EARNINGS PER ORDINARY SHARE - Basic $ 0.05 $ 0.10 $ 0.14 - Diluted $ 0.05 $ 0.09 $ 0.13 Note: - All amounts relate to continuing operations.- All recognised gains and losses are included in the profit and loss account. UNAUDITED CONSOLIDATED BALANCE SHEETas at 30 June 2006 Un-audited Un-audited Audited 30 June 2006 30 June 2005 31 December 2005 $000 $000 $000 FIXED ASSETSIntangible Assets 2,414 1,494 2,049Tangible Assets 78,106 61,433 69,873 80,520 62,927 71,922 CURRENT ASSETSStocks 462 448 451Debtors and prepayments 3,538 5,447 5,697Cash 2,180 2,621 7,664Restricted funds 868 548 548 7,048 9,064 14,360 CREDITORS: amounts falling due within one year (3,368) (3,097) (3,772) NET CURRENT ASSETS 3,680 5,967 10,588 TOTAL ASSETS LESS CURRENT LIABILITIES 84,200 68,894 82,510 Convertible loan notes (10,482) - (10,482)Provisions for liabilities and charges (600) (529) (575) 73,118 68,365 71,453 CAPITAL AND RESERVESCalled up share capital 538 532 537Other reserve 1,314 - 1,314Capital reserve 210,844 210,844 210,844Share premium account 26,287 26,091 26,288Profit and loss account (165,865) (169,102) (167,530)Shareholders' funds 73,118 68,365 71,453 UNAUDITED CONSOLIDATED RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENT ONRESERVES for the six months ended 30 June 2006 Total Share Capital Share Profit Other Shareholders' Capital Reserve Premium And Loss Reserve Equity Account Account Account Account Account Account $000 $000 $000 $000 $000 $000 AT 1 JANUARY 2005 406 210,844 18,740 (171,899) - 58,091 Placement for new share 131 - 7,548 - - 7,679 capital Profit for the period - - - 4,369 - 4,369 Equity portion of - - - - 1,314 1,314 convertible loan note AT 31 DECEMBER 2005 537 210,844 26,288 (167,530) 1,314 71,453 Placement for new share 1 - (1) - - - capital Profit for the period - - - 1,665 - 1,665 AT 30 JUNE 2006 538 210,844 26,287 (165,865) 1,314 73,118 UNAUDITED CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 30 June 2006 Un-audited Un-audited Audited Six Months Six Months Twelve Months Ending Ending Ending 30 June 2006 30 June 2005 31 December 2005 $000 $000 $000 NET CASH IN / (OUT) FLOW FROM OPERATING ACTIVITIES 5,688 (220) 4,651 RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest paid (108) (18) (18)TAXATION PAID (483) (341) (715) 5,097 (579) 3,918 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTExpenditure on tangible fixed assets (10,261) (6,361) (18,515) NET CASH OUT FLOW BEFORE FINANCING (5,164) (6,940) (14,597) MANAGEMENT OF LIQUID RECOURCES Movements of restricted funds (320) (340) (340) NET CASH OUT FLOW FROM MANAGEMENT OF LIQUID (320) (340) (340)RECOURCES FINANCING Issue of share capital - 7,477 7,677Convertible loan notes issued - - 12,500(DECREASE) / INCREASE IN CASH (5,484) 197 5,240Cash at beginning of period 7,664 2,424 2,424 CASH AT END OF PERIOD 2,180 2,621 7,664 NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2006 1. ACCOUNTING POLICIES BASIS OF PREPARATION The financial statements have been prepared under thehistorical cost convention. The financial statements for the year ended 31December 2005 and the periods ending 30 June 2006 and 2005 have been prepared inaccordance with accounting standards and the Statement of Recommended Practice "Accounting for Oil and Gas Exploration, Development and DecommissioningActivities". BASIS OF CONSOLIDATION The financial statements have been prepared using theprinciples of merger accounting. Under merger accounting, the results of theGroup are combined from the beginning of the financial period in which thecombination occurred and their assets and liabilities combined at the amounts atwhich they were previously recorded. The financial information shown in this publication is unaudited and does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The comparative figures for the year ended 31 December 2005 were derived fromthe statutory accounts for that year which have been delivered to the Registrarof Companies. Those accounts received an unqualified audit report, which didnot contain statements under section 237(2) or (3) of the Companies Act 1985. During the period the company has adopted FRS 20 "Share based payments." Thedirectors consider that the impact on the interim statement is immaterial andtherefore no charge has been made to the profit and loss account in respect ofthe charge for the current and prior periods. 2. Turnover is attributable to one continuing activity, which is oil production from the Harken de Colombia, Ltd. branch located in Colombia, South America. 3. The calculation of basic earnings per ordinary share for the six months ended 30 June 2006 is based on the weighted average number of ordinary shares of 35,286,527 (six months ended 30 June 2005: 29,079,645; year ended 31 December 2005: 31,647,889 ). The calculation of diluted earnings per share for the six months ended 30 June 2006 is based on the weighted average number of ordinary shares of 41,475,589 (six months ended 30 June 2005 33,140,028; year ended 31 December 2005: 32,796,102). The profit after tax used in the calculation is $1,665,000 (six months ending 30 June 2005: $2,797,000; year ended 31 December 2005: $4,369,000). 4. No interim dividend has been declared. 5. Reconciliation of operating profit to net cash flow from operating activities Un-audited Un-audited Audited Six Months Six Months Twelve Months Ending Ending Ending 30 June 2006 30 June 2005 31 December 2005 $000 $000 $000 OPERATING PROFIT ON ORDINARY ACTIVITIES 2,256 3,156 5,102Depreciation, depletion and amortisation 1,663 1,881 4,359Decrease / (Increase) in debtors and prepayments 2,159 (3,442) (3,433)(Increase) / Decrease in inventory (10) 25 (43)(Decrease) / Increase in creditors (380) (1,840) (1,334) NET CASH IN / (OUT) FLOW FROM OPERATING ACTIVITIES 5,688 (220) 4,651 6. Analysis of net funds At 1 January Net At 30 June 2006 Cash flows 2006 $000 $000 $000 Cash 7, 664 (5,484) 2,180Restricted funds 548 320 868Total cash and restricted funds 8,212 (5,163) 3,049 This information is provided by RNS The company news service from the London Stock Exchange