New World Oil And Gas Regulatory News (NEW)

New World Oil and Gas Plc / Index: AIM / Epic: NEW / Sector: Oil & Gas

31 March 2016

New World Oil and Gas Plc ('New World' or the 'Company')

Final Results

New World Oil and Gas Plc, announces its final audited results for the year ended 31 December 2015. The audited accounts are available on the Company's website: www.nwoilgas.com, and extracts are set out below.

Chairman's Statement

Sustained volatility in global oil and gas markets dominated the year under review. Prices have since fallen to levels not seen for the best part of a decade. Low prices are clearly not good news for the oil and gas industry, particularly for those companies looking to raise funds for exploration or development. I am pleased to report that thanks to the steps we have taken during the period, New World stands out from the crowd, for the right reasons: we have a strong balance sheet a healthy cash balance and no licence commitments. As a result, the Company is well placed to review a number of opportunities to secure its long-term future.

We recognised early on that oil prices were set to stay 'lower for longer'. We therefore took the decision to conserve the Company's cash balances to ensure we are able to move quickly on opportunities that meet our investment criteria from a position of strength. As a result, cash conservation has been the focus of the year. This goes beyond merely maintaining a strict control on costs. We have also undertaken a rationalisation of our portfolio of projects to ensure that there are no licence commitments that would act as a draw on our cash balances in the short term. We took the decision to relinquish the Danica Jutland 1/09 and 2/09 and Danica Resources 1/08 licences onshore Denmark in September 2015. New World had progressed these licences to the point where, despite identifying good resource potential, we were only prepared to invest in further exploration alongside a partner. It became increasingly clear that, with markets where they were and continue to be today, the appetite among suitable partners has diminished.

Following our exit from Denmark, New World's licence in Belize remains in force, unless extended, until 31 October 2016 and we continue actively to manage our interests and obligations and to seek partners whilst incurring only minimal administrative expenses. However we consider it prudent to make a full provision in the accounts against the carrying value of this asset as the outcome cannot be determined with certainty.

In tandem with managing our cash balance, we have also been working hard to pursue monies owed to New World. We have commenced the legal process to recover the outstanding loans in respect of the Al Maraam transaction. In addition, we were pleased to announce in December 2015 that the loans made to director Georges Sztyk and former director Peter Sztyk through Dynamic Investments Limited have now been re-paid in full including interest charged at 3% per annum. The loan to William Kelleher, the former CEO and Chairman of New World, remains outstanding and we continue to review options on how to recover monies due.

At the strategic level, the volatile market conditions triggered a debate over the future direction of the Company and prompted a number of changes to the Board. Nicholas Lee and Adam Reynolds, two highly experienced executives with proven track records in successfully developing and implementing new strategies for a wide range of companies, were appointed directors. Nicholas and Adam replace Fred Hodder, who stood down as a non-executive Director at the Company's AGM, and Peter Sztyk, who chose to not to be re-elected to the Board following his retirement by rotation. Peter and Fred were instrumental in ensuring New World remained financially sound during these uncertain times and I would like to thank them both for the important contribution they made to the Company.

Financial Review

For the period under review, due to the explorative nature of the Company combined with depressed global oil prices and the prudent approach adopted to the carrying value of its intangible assets, the Company is reporting a loss of US$4.2 million (vs loss of US$11.7 million in 2014). This loss has been arrived at after charging impairment provisions of intangible assets of US$2.2 million, administrative expenses of US$1.5 million and legal and professional costs of US$0.5 million. Included in the 2015 results are US$0.1 million of expenses related to the unsuccessful placing proposed in May 2015 and US$0.1 million of legal and professional fees for dealing with shareholder groups.

With the successful completion of a Placing and Open Offer in Q3 2015, the Company raised US$5.4 million through the issue of 3.9 billion shares. Net of fundraising expenses of US$1.2 million, the Company recognised net proceeds of US$4.3 million. The current cash position of the Company excluding any funds owed to the Company pursuant to the Al Maraam SPA and the outstanding Director loan, stands at approximately US$3.2 million.

Corporate Review

Along with the previously mentioned changes to the Board, the Directors have continued and intensified cost controls through salary reductions and limiting third party expenditure. Cornhill Capital Limited was appointed Broker to the Company, and conducted a successful Open Offer and Placing. As a result, the Company now has sufficient funding to take advantage of potential market opportunities.

Outlook

Whilst oil prices appear to be bottoming out, we do not see the oil and gas industry recovering sufficiently in the near future to generate enthusiasm in capital markets to fund new ventures. We intend to maintain a tight control on costs and manage overheads to a minimum whilst exploring all options available to the Company. We believe that we will be able to secure an attractive value accretive option to deliver shareholder value and a long-term future for New World and we plan to provide further updates in due course.

Christopher Einchcomb

Acting Non-executive Chairman

31 March 2016

Operations Report

The Blue Creek PSA termination date was successfully extended to 31 October 2016. The Group is actively looking for a farm-in partner for the Blue Creek PSA to reduce future costs and help de-risk the project. Discussions with potential interested parties continue.

During the past year, the Danish licences were relinquished as the Company was unable to locate a farm-in partner to assume financial responsibility for a possible drilling programme. All contract obligations have been fulfilled and as such we have received formal notification from the Danish Energy Agency that no outstanding obligations remain. The Company will finalise its relationships with its partner, the North Sea Fund, in due course.

Georges Sztyk

Executive Director

31 March 2016

Definitions

FINANCIAL STATEMENTS

Group Statement of Comprehensive Income for the year ended 31 December 2015

Group Statement of Financial Position as at 31 December 2015

The financial statements were approved by the board of directors and authorised for issue on 31 March 2016. They were signed on its behalf by

Georges Sztyk Adam Reynolds

Director Director

Company Statement of Financial Position as at 31 December 2015

The financial statements were approved by the board of directors and authorised for issue on 31 March 2016. They were signed on its behalf by

Georges Sztyk Adam Reynolds

Director Director

Group Statement of Cash Flows for the year ended 31 December 2015

Company Statement of Cash Flows for the year ended 31 December 2015

Group Statement of Changes in Equity for the year ended 31 December 2015

Company Statement of Changes in Equity for the year ended 31 December 2015

Notes to the financial statements for the year ended 31 December 2015

1 Summary of significant accounting policies

General information and authorisation of financial statements

New World Oil & Gas Plc is a public limited company incorporated in Jersey. The address of its registered office is Ogier House. The Company's ordinary shares are traded on the AIM Market operating by the London Stock Exchange. The Group financial statements of New World Oil and Gas Plc for the year ended 31 December 2015 were authorised for issue by the Board on 31 March 2016 and the statements of financial position signed on the Board's behalf by Georges Sztyk and Adam Reynolds.

Statement of compliance with IFRS

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies (Jersey) Law 1991. The principal accounting policies adopted by the Group and Company are set out below.

Financial risk management

The Group's principal activity of oil and gas exploration is by nature unpredictable with inherent risk exposure. In terms of general risk management the Board of Directors determine, as required, the degree to which it is appropriate to use financial instruments to mitigate risk. Currently the Company's principal financial instruments comprise cash and equity capital.

The Company does not enter into complex derivatives to manage risk, however it entered into an equity swap arrangement in 2013. The equity swap was settled in 2014 and a loss of $171,000 was recognized. The Company had no financial instrument loss in 2015.

Foreign currency risk

Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not US Dollars. The Group's net assets are exposed to currency risk giving rise to gains or losses on retranslation into US Dollars.

Liquidity risk

The Company's policy throughout the year has been to ensure that it has adequate liquidity by careful management of its working capital.

Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The most critical estimations involve the impairment or otherwise of carrying values related to Exploration and Project Development expenses, which are performed for both the interim and annual financial statements.

New standards, amendments and interpretations adopted by the Company

No new and/or revised Standards and Interpretations have been required to be adopted, and/or are applicable in the current year by/to the Company, as standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2015 are not material to the Company.

New standards, amendments and interpretations not yet adopted by the Company

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements, were in issue but not yet effective for the year presented:

IFRS 9 in respect of Financial Instruments which will be effective for the accounting periods beginning on or after 1 January 2018.

IFRS 14 in respect of Regulatory Deferral Accounts which will be effective for accounting periods beginning on or after 1 January 2016.

IFRS 15 in respect of Revenue from Contracts with Customers which will be effective for accounting periods beginning on or after 1 January 2017.

Amendments to IFRS 10, IFRS 12 and IAS 28 in respect of the application of the consolidation exemption to investment entities which will be effective for accounting periods beginning on or after 1 January 2016.

Amendments to IFRS 10 and IAS 28 in respect of the treatment of a Sale or Contribution of Assets between an Investor and its Associate or Joint Venture which will be effective for accounting periods beginning on or after 1 January 2016.

Amendments to IFRS 11 in respect of Accounting for Acquisitions of Interest in Joint Operations which will be effective for accounting periods beginning on or after 1 January 2016.

Amendments to IAS 1 in respect of determining what information to disclose in annual financial statements which will be effective for accounting periods beginning on or after 1 January 2016.

Amendments to IAS 16 and IAS 38 in respect of Clarification of Acceptable Methods of Depreciation and Amortisation which will be effective for accounting periods beginning on or after 1 January 2016.

Amendments to IAS 16 and IAS 41 in respect of Bearer Plants which will be effective for accounting periods beginning on or after 1 January 2016.

Amendments to IAS 27 to allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates which will be effective for accounting periods beginning 1 January 2016.

Annual improvements to IFRS's which will be effective for accounting periods beginning on or after 1 January 2016 as follows:

IFRS 5 - Changes in methods of disposal

IFRS 7 - Servicing contracts

IFRS 7 - Applicability of the amendments to IFRS 7 to condensed interim financial statements

IAS 19 - Discount rate: Regional market issue

IAS 34 - Disclosure of information "elsewhere in the interim financial report"

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis and on a going concern basis.

The financial report is presented in United States Dollars ($), which is the Group's functional and reporting currency, and all values are rounded to the nearest thousand dollars ($'000) unless otherwise stated.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

Business combinations and goodwill

On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.

Revenue recognition

The Group has not yet commenced generating revenue.

Segment Reporting

Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision-maker who is responsible for allocated resources and assessing performance of the geographical segments. The chief operating decision-maker has been identified as Christopher Einchcomb, Acting Non-Executive Chairman.

Foreign Currencies

Transactions in currencies other than US Dollars are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period. On consolidation, the results of overseas operations are translated into US Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of the overseas operations are translated at the rate ruling at the balance sheet date.

Taxation

No charge to Jersey corporation tax arises on the results for the year due to the applicable zero tax rate.

The subsidiary companies have not generated any income therefore there are no tax consequences arising from Danish or Belize corporate income tax matters.

Tangible Fixed Assets

Tangible fixed assets comprise furniture and fixtures and plant and equipment and are depreciated on a straight line basis at annual rates that will reduce book values to estimated residual values over their estimated useful lines as follows:

Furniture - 25% per annum

Plant and Equipment - 20% per annum

Intangible Fixed Assets

Exploration, evaluation and development expenditures incurred, together with appropriate overhead expenses such as project management and related travel, is accumulated in respect of each identifiable area of interest.

These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves of oil and/or gas.

Accumulated costs in relation to an abandoned area are written off in full in the year in which the decision to abandon is made.

Impairment of intangible assets

At each balance sheet date the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If there is such indication then an estimate of the asset's recoverable amount is performed and compared to the carrying amount.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.

Financial instruments

Financial assets and financial liabilities are recognised on the statement of financial position when the Group has become a party to the contractual provisions of the instrument.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank and short term deposits with banks and similar financial institutions.

Inventory

Inventories, representing drilling and related consumables, are stated at the lower of cost and net realisable value, cost being determined by the first-in first-out method.

Trade and other receivables

Trade and other receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Trade and other payables

Trade and other payables are non-interest bearing and are stated at their nominal value.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Share-based payments

The Group operated a Long Term Incentive Plan to allow certain Directors (being the Directors at the time of initial AIM admission) to be granted awards in respect of Ordinary Shares in the Company. This plan lapsed in 2014 with no amount being due to any Director. The Group also operates a Discretionary Annual Bonus Plan which may be paid in Ordinary Shares; however, this plan was suspended by the Directors in 2014. As at 31 December 2015 no amounts have been provided or accrued in relation to the above schemes.

The fair value of Options granted to the Non-Executive Directors to subscribe for Ordinary Shares is recognised as an expense equal to the fair value of the services provided.

Additionally, the fair value of warrants to subscribe for Ordinary Shares as part of the fees under Placing arrangements and as part of the fees under the Re-Admission to AIM have been recognised as an expense or allocated to share issue costs as applicable.

The fair value of warrants and options granted is determined using the Black-Scholes valuation model.

Going Concern

The Group closely monitors and manages its liquidity risk, regularly preparing cash forecasts. The Directors consider that the Group has adequate liquid resources to continue in operational existence for at least the 12 month period from the date of approval of these financial statements.

2 Turnover and segmental analysis

Segment information is presented in respect of the Group's management and internal reporting structure. The Group had no revenue during the year.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Operating and Geographical segments

The Group comprises the following operating segments:

Corporate - Parent company administrative costs, general business development and AIM related costs.

Exploration & development - costs in relation to the Group's direct oil and gas exploration operations.