16 Sep 2010 07:00
| Immediate Release | 16 September 2009 |
GLOBAL ENERGY DEVELOPMENT PLC
("Global" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010
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 2010.
HIGHLIGHTS:
§ Revenue increased by 25% to $11.3m (first half of 2009: $9.0 million) largely as a direct consequence of a recovery in the oil price;
§ Production in line with expectations as the Company's base of production continued to show moderate decline rates;
§ Increased production in the country of Colombia caused capacity issues during the period leaving the Company with production inventory at 30 June 2010;
§ Gross Profit increased 63% to $4.3 million (first half of 2009: $2.6 million);
§ Profit from Operations recorded at $0.2 million due to inclusion of a charge of $1.2 million relating to relinquishment of a non-core contract;
§ The Company's excess inventory held at period end now largely sold; and
§ Activity in second half of 2010 focused on Colombian Rio Verde contract as Company proceeds with its Three Year Plan.
For further information:
Global Energy Development PLC
| Catherine Miles, Company Secretary | +44 (0)20 3178 5156 |
| www.globalenergyplc.com | +44 (0)7909918034 |
Matrix Corporate Capital LLP
| Louis Castro | +44 (0)20 3206 7000 |
| Tim Graham |
|
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 and Peru, and comprises a base of production, workover opportunities and high potential developmental drilling. The Company currently holds six contracts: five in Colombia and one in Peru.
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 Associates, Inc. ("RED"), independent petroleum engineers, 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 previously 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 27 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 & REVIEW OF OPERATIONS
Revenue for the six months ended 30 June 2010 (the "Period") increased by 25% to $11.3 million when compared to the same period in the prior year (2009: $9.0 million). This uplift was largely a direct consequence of a recovery in the oil price, with West Texas Intermediate ("WTI") averaging $78 during the Period against $51 in the same period in the prior year.
Production during the Period was 183,660 barrels of oil ("bbls") (net to the Company) against 199,403 bbls for the first half of 2009, which was in line with expectations since the Company's base of production continued to show moderate decline rates and no new production was added during the Period. Compared with the second half of 2009, the decline rate for the period was 7.9%.
During the Period, the country of Colombia experienced a significant increase in the daily production of hydrocarbons that in turn led to pipeline and port capacity issues. As a result, hydrocarbon producers, including the Company, experienced unforeseen delays between production and delivery / sales in the Period, whereas in 2009 sales were realised on a more timely basis. Approximately 20,000 bbls produced by the Company during the Period were not sold prior to the Period end and remained in inventory at the Period end. The Company's excess inventory is currently almost eliminated having been sold, and efforts are underway throughout Colombia to improve the capacity issues.
Cost of Sales was relatively stable at $7.0 million (2009: $6.4 million) as the increase in the unit price of fuel and lubricants and crude transportation costs (again due to increased production and capacity issues) was offset by net gains related to the variation of crude inventories. Gross Profit was up by 63% at $4.3 million compared to the first half of 2009. As expected, Administrative Expenses were higher at $2.9 million due to the Company supplementing the organisation to support the Three Year Plan (the "Plan") which was announced and commenced during the Period, and involves much increased future drilling activity when compared to historic levels.
There was a charge of $1.2 million during the Period relating to the relinquishment of the Panamanian Garachine contract, details of which have been previously announced and are given below. Were it not for this charge, Profit from Operations would have been $1.4 million instead of $0.2 million, against $0.3 million for the same period in the prior year. The Company recorded a Loss before Taxation of $0.6 million compared to a loss before taxation of $0.4 million in the same period in the prior year.
The Company announced its updated independently audited Reserve Report at the beginning of 2010, which detailed proved plus probable reserves ("2P Reserves") of 147.1 million barrels of oil equivalent ("BOE") and proved plus probable plus possible reserves ("3P Reserves") of 272.9 million BOE, both net to the Company as at 31 December 2009. The Company subsequently outlined the Plan, with its purpose being to increase production volumes whilst developing the reserve base through much increased drilling activity when compared to historic levels. Unfortunately the first well of the Plan, the Rio Verde 2 exploratory well, was non-productive. This well was contractually required to be drilled during the Period and was drilled on the last remaining untested fault block in the Colombian Rio Verde contract. It accounted for the vast majority of the $8.7 million capital expenditure during the Period, with this being funded from cash flow from operations and cash in hand.
While the Rio Verde 2 well was not successful it nevertheless provided the Company with valuable data for future drilling purposes on the contract area, and the Company has done further interpretation of the 3D seismic acquired over the area in 2009. In light of the Rio Verde 2 well, the originally announced Plan was slightly modified and the next three wells to be drilled within the Plan are now situated in the Tilodiran field of the Rio Verde contract. This field already accounts for over half of the Company's current daily production volumes.
Activity in the second half of 2010 will therefore be predominately focused on the Rio Verde contract as the Company prepares for the drilling of its second well within the Plan, the Tilodiran 4 development well, and in addition performs a workover on the Boral 1 well also on the same contract area.
The Tilodiran 4 development well is classified as a proved undeveloped location and is a contractually required well under the terms of the contract, with total depth required to be reached by mid December 2010. It is currently intended to be drilled directionally from an existing Tilodiran well platform which will reduce civil works costs, simplify property right issues and involve slightly higher drilling costs. The well now has a proposed total depth of approximately 13,800 feet and will target the Gacheta formation (currently producing in the Tilodiran 2 and 3 wells) and the Ubaque formation (currently producing in the Tilodiran 3 well). The Tilodiran 4 well is not expected to contribute to production in 2010. The Company is currently in discussions with several rig providers to determine the best option available for the drilling of the Tilodiran 4 well.
New production is anticipated from the Boral 1 well in the second half of 2010. The Boral 1 well within the Boral field had initial production rates of approximately 600 barrels of oil per day ("bopd") from the Ubaque formation when it was first put on production in June 2008. However, after several months the tubing became badly corroded and the well was shut-in in December 2009 and it did not contribute to production in the Period. The workover in the second half of 2010, which is supplemental to the Plan, will replace the current tubing with chrome alloy tubing. The well will also be added to the electrical power grid following the workover to improve efficiency and reduce costs. The Company is also planning to further improve operating efficiencies through installing replacement generators at the Palo Blanco field within the Colombian Alcaravan contract to reduce downtime.
The Peruvian Block 95 contract continues to be in force majeure and, therefore, temporarily suspended at the Company's request. This is due to delays in the Company receiving sub-permits requested from the Peruvian government and which are necessary in order for the Company to initiate Phase III. This Phase involves the drilling of the Bretaña 2 exploratory well. The Bretaña 2 well is scheduled in the Plan for 2011 but its exact timing is dependent on the receipt of the now one outstanding sub-permit. Once this remaining sub-permit is received the Company will have, at the very least, six months to drill the Bretaña 2 well. Logistical planning for the well is advanced.
The Plan details the drilling of seven wells plus one re-entry on the Colombian Bolivar and Bocachico contracts in 2012, with these two contracts accounting for 115.7 million BOE of 2P reserves between them. In addition, the Company is also evaluating ways of accelerating the full development of these contracts post completion of, or in tandem with, the Plan.
Post the Period end, the Panama Garachine contract was relinquished by mutual consent with the Panamanian government, with this decision taken as the contract was purely of an exploratory nature and deemed non-core to the Company's future plans which consist of developmental drilling. The contract did not account for any of the Company's reserves. The relinquishment of this contract will allow expenditures to be focused on other contracts which form part of the Plan. Also since the Period end, the Company agreed a line of credit for US$3.3 million with the Colombian arm of an international bank in July 2010 and a separate US$5.0 million loan agreement with HKN, Inc. in September 2010.
In conclusion, while the result of the first well in the Plan was disappointing it was just one small constituent part of it and has no effect on the future success of the remaining wells. The Company is committed to unlocking the tremendous value within the Company's reserve base.
Mikel Faulkner
Executive Chairman
Stephen Voss
Vice Chairman
16 September 2010
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 2010 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 7.
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 2010 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London W1U 7EU
UK
16 September 2010
| CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
| For the period ended 30 June 2010 | ||||
|
| Note | Six Months ended 30 June 2010 $'000 (Unaudited) | Six Months ended 30 June 2009 $'000 (Unaudited) | Twelve Months ended 31 December 2009 $'000 (Audited) |
| Revenue |
| 11,265 | 9,003 | 22,166 |
| Cost of sales |
| (6,957) | (6,361) | (13,843) |
| Gross profit |
| 4,308 | 2,642 | 8,323 |
|
|
|
|
|
|
| Other income |
| 5 | 54 | 219 |
| Administrative expenses |
| (2,914) | (2,363) | (4,448) |
| Unsuccessful exploration costs |
| (1,204) | - | - |
| Profit from operations |
| 195 | 333 | 4,094 |
|
|
|
|
|
|
| Finance income |
| 6 | 15 | 41 |
| Finance expense |
| (776) | (705) | (1,440) |
| (Loss)/Profit before taxation |
| (575) | (357) | 2,695 |
|
Tax expense |
| (759) | (464) | (1,997) |
| (Loss)/Profit from continuing operations |
| (1,334) | (821) | 698 |
|
|
|
|
|
|
| Total Comprehensive (loss)/income attributable to the equity holders of the parent | (1,334) | (821) | 698 | |
|
|
|
|
|
|
| (Loss)/Earnings Per Share |
|
|
|
|
| - Basic | 4 | ( $0.04) | ($0.02) | $0.02 |
| - Diluted | 4 | ( $0.04) | ($0.02) | $0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||
| As at 30 June 2010 | ||||||
|
|
| 30 June 2010 $'000 (Unaudited) |
| 30 June 2009 $'000 (Unaudited) |
| 31 December 2009 $'000 (Audited) |
| Assets |
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
| Intangible assets |
| 4,758 |
| 5,598 |
| 5,757 |
| Property, plant and equipment |
| 104,428 |
| 95,928 |
| 98,413 |
| Deferred tax assets |
| 1,239 |
| 1,809 |
| 1,358 |
| Total non-current assets |
| 110,425 |
| 103,335 |
| 105,528 |
| Current assets |
|
|
|
|
|
|
| Inventories |
| 1,948 |
| 1,265 |
| 1,148 |
| Trade and other receivables |
| 6,595 |
| 7,662 |
| 4,805 |
| Short term investments |
| 1,518 |
| 1,444 |
| 1,405 |
| Cash & cash equivalents |
| 1,043 |
| 995 |
| 3,068 |
| Total current assets |
| 11,104 |
| 11,366 |
| 10,426 |
| Total assets |
| 121,529 |
| 114,701 |
| 115,954 |
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
|
| Convertible loan notes |
| (16,773) |
| (16,388) |
| (16,582) |
| Deferred tax liabilities |
| (12,073) |
| (12,068) |
| (12,233) |
| Long term provisions |
| (923) |
| (839) |
| (1,031) |
| Total non-current liabilities |
| (29,769) |
| (29,295) |
| (29,846) |
| Current liabilities |
|
|
|
|
|
|
| Trade and other payables |
| (11,340) |
| (5,418) |
| (4,474) |
| Total liabilities |
| (41,109) |
| (34,713) |
| (34,320) |
| Net assets |
| 80,420 |
| 79,988 |
| 81,634 |
|
|
|
|
|
|
|
|
| Capital and reserves attributable to equity holders of the company |
|
|
|
| ||
| Share capital |
| 540 |
| 540 |
| 540 |
| Share premium account |
| 26,544 |
| 26,543 |
| 26,544 |
| Other reserve |
| 1,826 |
| 1,826 |
| 1,826 |
| Capital reserve |
| 210,844 |
| 210,844 |
| 210,844 |
| Retained deficit |
| (159,334) |
| (159,765) |
| (158,120) |
| Total equity |
| 80,420 |
| 79,988 |
| 81,634 |
|
|
|
|
|
|
|
|
The financial information was approved and authorised for issue by the Board of Directors on 16 September 2010 and is signed on its behalf by:
| Mikel Faulkner Executive Chairman
| Stephen Voss Vice Chairman
|
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT For the period ended 30 June 2010 | ||||||
|
|
| Six months ended 30 June 2010 $'000 (Unaudited) |
| Six months ended 30 June 2009 $'000 (Unaudited) |
| Twelve months ended 31 December 2009 $'000 (Audited) |
| Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating profit before interest and taxation |
| 195 |
| 333 |
| 4,094 |
| Depreciation, depletion and amortisation |
| 2,493 |
| 2,910 |
| 5,641 |
| (Increase) / decrease in trade and other receivables |
| (1,790) |
| (2,136) |
| 390 |
| (Increase) / decrease in inventories |
| (801) |
| 23 |
| 142 |
| Increase / (decrease) in trade and other payables |
| 6,866 |
| (2,376) |
| (2,775) |
| (Decrease) / increase in long-term provisions |
| (108) |
| 162 |
| 30 |
| Loss on disposal of assets |
| - |
| 55 |
| 143 |
| Write-off unsuccessful exploration costs (see note 7) |
| 1,204 |
| - |
| - |
| Other non-cash items |
| (40) |
| (56) |
| 58 |
| Share-based payments |
| 120 |
| 243 |
| 370 |
| Cash generated from / (used in) operations |
| 8,139 |
| (842) |
| 8,093 |
| Income taxes paid |
| (804) |
| (651) |
| (1,628) |
| Net cash flows from operating activities |
| 7,335 |
| (1,493) |
| 6,465 |
|
|
|
|
|
|
|
|
| Investing activities |
|
|
|
|
|
|
| Capital expenditure |
|
|
|
|
|
|
| - Expenditure on property, plant and equipment |
| (8,508) |
| (584) |
| (5,917) |
| - Expenditure on intangible assets |
| (204) |
| (253) |
| (457) |
| Disposal of property, plant and equipment |
| - |
| - |
| 83 |
| Interest received |
| 6 |
| 15 |
| 41 |
| (Increase) / Decrease in short-term investments |
| (113) |
| 64 |
| 103 |
| Net cash flows from investing activities |
| (8,819) |
| (758) |
| (6,147) |
|
|
|
|
|
|
|
|
| Financing activities |
|
|
|
|
|
|
| Interest paid |
| (541) |
| (476) |
| (972) |
| Net cash flows from financing activities |
| (541) |
| (476) |
| (972) |
|
|
|
|
|
|
|
|
| Decrease in cash and cash equivalents |
| (2,025) |
| (2,727) |
| (654) |
| Cash and cash equivalents at beginning of period |
| 3,068 |
| 3,722 |
| 3,722 |
| Cash and cash equivalents at end of period |
| 1,043 |
| 995 |
| 3,068 |
|
|
|
|
|
|
|
|
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2010 | ||||||
|
| Share Capital $'000 | Share Premium $'000 | Other Reserves $'000 | Capital Reserve $'000 | Retained deficit $'000 | Total $'000 |
|
|
|
|
|
|
|
|
| At 1 January 2009 (Audited) | 539 | 26,439 | 1,826 | 210,844 | (159,082) | 80,566 |
| Total comprehensive loss for the period | - | - | - | - | (821) | (821) |
| Share-based payments | 1 | 104 | - | - | 138 | 243 |
|
|
|
|
|
|
|
|
| At 30 June 2009 (Unaudited) | 540 | 26,543 | 1,826 | 210,844 | (159,765) | 79,988 |
|
|
|
|
|
|
|
|
| Total comprehensive income for the period | - | - |
| - | 1,519 | 1,519 |
| Share-based payments |
| 1 |
| - | 126 | 127 |
|
|
|
|
|
|
|
|
| At 31 December 2009 (Audited) | 540 | 26,544 | 1,826 | 210,844 | (158,120) | 81,634 |
|
|
|
|
|
|
|
|
| Total comprehensive loss for the period | - | - | - | - | (1,334) | (1,334) |
| Share-based payments | - | - | - | - | 120 | 120 |
| At 30 June 2010 (Unaudited) | 540 | 26,544 | 1,826 | 210,844 | (159,334) | 80,420 |
UNAUDITED NOTES FORMING PART OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2010
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 2010.
2. Financial reporting period
The condensed interim financial information for the period 1 January 2010 to 30 June 2010 is unaudited. In the opinion of the Directors the condensed interim financial information for the period presents fairly the financial position, 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 2009 to 30 June 2009 and the audited financial year to 31 December 2009.
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 2009 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 498(2)-(3) of the Companies Act 2006.
3. Revenue
Revenue is attributable to one continuing activity, which is oil production from Colombia Energy Development Company ("CEDCo"), a wholly-owned subsidiary of the Group, located in Colombia, South America. This subsidiary's name was changed from Harken de Colombia Limited during the period.
4. Loss per share
Basic earnings per share amounts are calculated by dividing (loss)/profit 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 (loss) / 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 (loss) / profit and share data used in the basic and diluted earnings per share calculations:
|
| Six months ended 30 June 2010 $'000 (Unaudited) | Six months ended 30 June 2009 $'000 (Unaudited) | Twelve months ended 31 December 2009 $'000 Audited |
| Net (loss)/profit attributable to equity holders used in basic calculation | (1,334) | (821) | 698 |
|
Add back interest and accretion charge in respect of convertible loan notes |
722 |
667 |
1,338 |
| Net (loss)/profit attributable to equity holders used in dilutive calculation | (612) | (154) | 2,036 |
|
|
|
|
|
| Basic weighted average number of shares | 35,439,009 | 35,333,927 | 35,386,898 |
|
|
|
|
|
| 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 | 2,945,196 | 2,945,196 |
| Diluted weighted average number of shares | 42,949,232 | 42,844,150 | 42,897,121 |
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 2010 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. Cash generating units
As noted in the Chairman's Statement, the pipeline capacity issues in Colombia during the reporting period has required the Group to review the way in which its crude is sold to third parties. In accordance with the Group's year end accounting policies, the Group continues to define its cash generating units ("CGU") as being assets or groups of assets representing the smallest identifiable segments generating cash flows that are largely independent of cash flows from other assets or groups of assets. As defined, each CGU includes the relevant properties, wells, facilities, pipelines, and other key components of the included operations. Cash generating units are identified in accordance with IAS 36 'Impairment of Assets', where cash flows are largely independent of other significant assets groups and are normally, but not always, single development or production areas. When an impairment is identified, the depletion is charged through the statement of comprehensive income if the net book value of capitalised costs relating to the cash generating unit exceeds the associated estimated future discounted cash flows of the related commercial oil and gas reserves. In the current reporting period the Group's CGUs have continued to be defined in accordance with the same principles applied in the 2009 financial statements and accordingly, with the exception of the write-off of the costs related to the Garachine exploration and exploitation contract (see note 7) no further write-offs against assets are considered to be required by the Company.
7. Subsequent events
On 30 July 2010, the Company announced that it had reached agreement with the government of Panama to terminate the Garachine exploration and exploitation contract. The Company elected not to proceed beyond the initial contract phase in order to focus expenditures on other core opportunities in the Company's development portfolio. The contract accounted for none of the Company's independently audited reserves. Resulting from the contract termination, the financial statements as of 30 June 2010 include an adjustment reflecting the write-off of $1.2 million corresponding to past exploratory investment, as the termination is considered to be an adjusting post balance sheet event.
In addition, the Company agreed a line of credit for US$3.3 million with the Colombian arm of an international bank in July 2010 and a separate US$5.0 million loan agreement with HKN, Inc. in September 2010.