Last checked at 18 Dec 2008 07:00
18th December 2008
Interim Results for the Six Months Ended 30th September 2008
Contacts:
Pan Andean
David Horgan, Managing Director +353 87 292 3500
John Teeling, Chairman +353 1 833 2833
College Hill
Paddy Blewer +44 (0)20 7457 2020
Nick Elwes
Blue Oar Securities
Nick Lovering +44 (0)20 7448 4400
Simon Moynagh
www.panandeanresources.com
Chairman's Statement
Pan Andean is a profitable oil and gas producer in the United States and Bolivia with ongoing exploration in the United States, Peru and Colombia. In the six months under review profits rose by 33 per cent to £619,000, this despite the ravages of Hurricane Ike in September. On the exploration front, gas testing is ongoing on the Vieman No 1 well at Danbury Dome, onshore Texas.
We generate our revenue from royalties in the United States and some production in Bolivia. All of our profits are generated in the United States, mainly from the Gryphon royalty from Block High Island 52 in the Gulf of Mexico. This 1.32 per cent royalty consistently nets Pan Andean over $125,000 a month. On the same block we have a 2.15 per cent royalty from a small gas operation, about 5 million cubic feet of gas a day. The platform for this producer suffered damage from Hurricane Ike and is under repair. Operations are due to restart shortly.
We produce up to 75 barrels of oil per day from Block High Island 30 (Pan Andean 62.91 per cent), where our partner Hunt Oil operates the platform. In Bolivia, we produce oil from the Monteagudo field where we are a 30 per cent partner with Repsol (50 per cent partner and operator) and Petrobras (20 per cent partner). Export demand for Bolivian gas and oil is very strong but necessary investments require improved fiscal terms and greater certainty. Uncertainties over the future Bolivian fiscal and legal regime means that no profits can be reported.
We have been and continue to be an active explorer; drilling in the US, undertaking seismic work in Colombia and geological & geophysical studies in Peru. Pan Andean is now a large acreage holder in Peru, where it has attracted CEPSA as a partner on Blocks 114 and 131 and brought Reliance Industries of India into Block 141. During the recent Peruvian round Pan Andean won Block 161, close to our existing Ucayali interests in the central Peruvian jungle.
The Vieman No 1 well in Danbury Dome, onshore Texas spudded in September 2008 and was expected to take 45 days to reach the target depth of 13,500 feet. Over 90 days later the rig is still on site. Technical difficulties have delayed operations, particularly below 13,000 feet, where water and gas surges damaged the well and made it impossible to reach target depth. A side track option remains under consideration, while three levels of the well are being tested. Results from the deeper sections are unsatisfactory while testing is ongoing on the 'S' Sands at 12,950 feet.
Should commercial quantities of gas be discovered, a tie-in to existing pipelines will take 45 days. The well is being drilled on a turnkey basis. Pan Andean got a 20 per cent free carry and bought a further 15 per cent interest for $450,000. Should the well be commercial, there will be a further small cost for completion and tie-in.
In Colombia, we completed a programme of seismic gathering and interpretation on our 100 per cent owned Antorcha Block in the Magdalena Valley. This is a heavy oil play with modelled unrisked resource estimates of 100 to 300 million barrels. Following expressions of interest from a number of potential joint venture partners, we opened a data room in Bogota. Specific indications of interest have been received and early stage discussions commenced. A well must be drilled in 2009.
In Peru, we are one of the largest exploration ground holders with three current blocks, 114, 131 and 141 and an award in July of Block 161. Peru is an attractive investment location geographically, politically and fiscally. The targets are large and exploration costly, so we have partnered Blocks 114 and 131 with CEPSA of Spain and Block 141 with Reliance Industries of India. The agreements are on good terms. We are reviewing Block 161 and in early 2009 will make a decision on how to proceed.
Bolivia, where Pan Andean has operated since 1988, is problematic. With massive gas reserves and large adjacent markets, there should be rapid development but political and fiscal policies stymie efforts. Pan Andean may dispose of its interest in the gas producing levels of the Monteagudo field while keeping its interest in the deep gas exploration plays. Our big El Dorado (Pan Andean 10 per cent, BP 90 per cent) gas discovery is very well positioned and should see early development.
Future
It may surprise many to learn that in these difficult times, I see a bright future for Pan Andean. In a world in crisis opportunities appear. Our Board of Directors contains people with decades of high level oil experience in South America and our on the ground management in the United States, Peru and Colombia is highly skilled and experienced. With cash, profits, management and technical skills, we are very well positioned to take advantage of emerging opportunities.
18th December 2008
| Financial Information (Unaudited) | |||||||||||
| Six Months Ended | Year Ended | ||||||||||
| Condensed Consolidated Income Statement | 30 Sep 08 | 30 Sep 07 | 31 March 08 | ||||||||
| unaudited | unaudited | audited | |||||||||
| £'000 | £'000 | £'000 | |||||||||
| Revenue | 1,145 | 882 | 1,670 | ||||||||
| Cost of Sales | (219) | (155) | (337) | ||||||||
| Gross Profit | 926 | 727 | 1,333 | ||||||||
| Administrative Costs | (307) | (261) | (400) | ||||||||
| Operating Profit | 619 | 466 | 933 | ||||||||
| Interest Receivable | 13 | 26 | 323 | ||||||||
| Interest Payable | (14) | (41) | (53) | ||||||||
| Profit on ordinary activities before taxation | 618 | 451 | 1,203 | ||||||||
| Taxation | (185) | (135) | (736) | ||||||||
| Profit for the period | 433 | 316 | 467 | ||||||||
| Profit per share | .36p | .26p | .39p | ||||||||
| Condensed Consolidated Balance Sheet | 30 Sep 08 | 30 Sep 07 | 31 March 08 | ||||||||
| unaudited | unaudited | audited | |||||||||
| £'000 | £'000 | £'000 | |||||||||
| Assets | |||||||||||
| Investments | 3 | 2 | 2 | ||||||||
| Intangible Assets | 6,525 | 4,585 | 5,848 | ||||||||
| Property, Plant & Equipment | 15,019 | 11,197 | 13,708 | ||||||||
| 21,547 | 15,784 | 19,558 | |||||||||
| Current Assets | |||||||||||
| Receivables and prepayments | 1,528 | 1,033 | 1,371 | ||||||||
| Cash and cash equivalents | 3,047 | 2,162 | 1,880 | ||||||||
| Total Current Assets | 4,575 | 3,195 | 3,251 | ||||||||
| Total Assets | 26,122 | 18,979 | 22,809 | ||||||||
| Liabilities | |||||||||||
| Current Liabilities | |||||||||||
| Trade and other payables | (5,574) | (2,021) | (5,137) | ||||||||
| Net Current (Liabilities)/Assets | (999) | (1,174) | (1,886) | ||||||||
| Non-Current Liabilities | |||||||||||
| Provisions and deferred liabilities | (2,170) | (1,730) | (2,113) | ||||||||
| Net Assets | 18,378 | 15,228 | 15,559 | ||||||||
| Equity | |||||||||||
| Share Capital and Reserves | 18,378 | 15,228 | 15,559 | ||||||||
| Total Equity | 18,378 | 15,228 | 15,559 | ||||||||
| Condensed Consolidated Statement of Changes in Shareholders Equity | |||||||||||
| Share based | |||||||||||
| Share | Share | Payment | Translation | Retained | Total | ||||||
| Capital | Premium | Reserves | Reserves | Losses | Equity | ||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
| As at 1 April 2007 | 1,192 | 20,230 | 26 | (1,466) | (4,470) | 15,512 | |||||
| Currency translation adjustments | (600) | (600) | |||||||||
| Shares issued | 0 | ||||||||||
| Share issue expenses | 0 | ||||||||||
| Profit for the period | 316 | 316 | |||||||||
| As at 30 September 2007 | 1,192 | 20,230 | 26 | (2,066) | (4,154) | 15,228 | |||||
| Currency translation adjustments | 179 | 179 | |||||||||
| Shares issued | 0 | ||||||||||
| Share issue expenses | 0 | ||||||||||
| Profit for the period | 152 | 152 | |||||||||
| As at 31 March 2008 | 1,192 | 20,230 | 26 | (1,887) | (4,002) | 15,559 | |||||
| Currency translation adjustments | 2,386 | 2,386 | |||||||||
| Shares issued | 0 | ||||||||||
| Share premium on shares issued | 0 | ||||||||||
| Profit for the period | 433 | 433 | |||||||||
| As at 30 September 2008 | 1,192 | 20,230 | 26 | 499 | (3,569) | 18,378 | |||||
| Six Months Ended | Year Ended | ||||||||||
| Condensed Consolidated Cash Flow | 30 Sep 08 | 30 Sep 07 | 31 March 08 | ||||||||
| unaudited | unaudited | audited | |||||||||
| £'000 | £'000 | £'000 | |||||||||
| Cash flows from operating activities | |||||||||||
| Operating Profit | 619 | 466 | 933 | ||||||||
| Depreciation | 132 | 45 | 85 | ||||||||
| Movements in Working Capital | 150 | (546) | 2,670 | ||||||||
| Exchange Movements | 616 | (326) | (355) | ||||||||
| Net Cash Inflow from Operating Activities | 1,517 | (361) | 3,333 | ||||||||
| Cash Flow from Investing Activities | |||||||||||
| Returns on Investments and Servicing of Finance | (1) | (15) | 270 | ||||||||
| Capital Expenditure | (497) | (1,145) | (5,526) | ||||||||
| Net Cash used in Investing Activities | (498) | (1,160) | (5,256) | ||||||||
| Cash Flow from Financing Activities | |||||||||||
| Issue of Ordinary Share Capital | 0 | 0 | 0 | ||||||||
| Net Increase/(Decrease) in Cash and Cash Equivalents | 1,019 | (1,521) | (1,923) | ||||||||
| Cash and Cash Equivalents at beginning of the period | 1,880 | 3,779 | 3,779 | ||||||||
| Effect of foreign rate changes on cash held | 148 | (96) | 24 | ||||||||
| Cash and Cash Equivalents at end of the period | 3,047 | 2,162 | 1,880 | ||||||||
Notes:
1. Information
The financial information for the six months ended September 30th, 2008 and September 30th, 2007 is unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 240 of the Companies Act 1985.
The interim financial report has been prepared in accordance with IAS 34 Interim Financial Reporting and the accounting policies and methods of computation used in the interim financial statements are consistent with those used in the Group 2008 Annual Report, which is available at www.panandeanresources.com.
The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.
2. No dividend is proposed in respect of the period.
3. Earnings per share
Basic earnings per share is computed by dividing the profit or loss after taxation for the year available to ordinary shareholders by the sum of the weighted average number of ordinary shares in issue and ranking for dividend during the year.
Diluted earnings per share is computed by dividing the profit or loss after taxation for the year by the weighted average number of ordinary shares is issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.
The following table sets forth the computation for basic and diluted earnings per share (EPS):
| 30 Sep 08 | 30 Sep 07 | 31 Mar 08 | |
| £ | £ | £ | |
| Numerator | |||
| For basic and diluted EPS retained profit | 432,732 | 315,826 | 467,644 |
|
|
|
| |
| Denominator | |||
| For basic EPS | 119,227,733 | 119,227,733 | 119,227,733 |
| For diluted EPS | 128,241,733 | 128,241,733 | 128,241,733 |
|
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|
| |
| Basic EPS Diluted EPS | 0.36p 0.34p | 0.26p 0.24p | 0.39p 0.36p |
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4. Property, Plant & Equipment
| Plant & Equipment | Oil & Gas Interest | Total | |
| £'000 | £'000 | £'000 | |
| Cost | |||
| At 1 April 2007 | 28 | 14,325 | 14,353 |
| Exchange adjustments | - | 239 | 239 |
| Additions | - | 787 | 787 |
| _________ | _________ | _________ | |
| At 30 September 2007 | 28 | 15,351 | 15,379 |
| Exchange adjustments | - | (322) | (322) |
| Additions | 4 | 3,695 | 3,699 |
| Disposals | - | (778) | (778) |
| _________ | _________ | _________ | |
| At 31 March 2008 | 32 | 17,946 | 17,978 |
| Exchange adjustments | 1 | 1,161 | 1,162 |
| Additions | - | 497 | 497 |
| _________ | _________ | _________ | |
| At 30 September 2008 | 33 | 19,604 | 19,637 |
| _________ | _________ | _________ | |
| Depreciation | |||
| At 1 April 2007 | 15 | 4,192 | 4,207 |
| Exchange adjustments | (70) | (70) | |
| Additions | - | 45 | 45 |
| _________ | _________ | _________ | |
| At 30 September 2007 | 15 | 4,167 | 4,182 |
| Exchange adjustments | 2 | 46 | 48 |
| Additions | - | 40 | 40 |
| _________ | _________ | _________ | |
| At 31 March 2008 | 17 | 4,253 | 4,270 |
| Exchange adjustments | - | 216 | 216 |
| Additions | - | 132 | 132 |
| _________ | _________ | _________ | |
| At 30 September 2008 | 17 | 4,601 | 4,618 |
| _________ | _________ | _________ | |
| Net Book Value | |||
| At 30 September 2008 | 16 | 15,003 | 15,019 |
|
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| |
5. Intangible Assets
| 30 Sep 08 | 30 Sep 07 | 31 Mar 08 | |
| Exploration and evaluation assets: | £'000 | £'000 | £'000 |
| Cost | |||
| Opening balance | 5,848 | 4,844 | 4,844 |
| Exchange adjustments | 677 | (617) | (36) |
| Additions | - | 358 | 1,040 |
| _________ | _________ | _________ | |
| Closing balance | 6,525 | 4,585 | 5,848 |
|
|
|
|
The realisation of this intangible asset is dependent on the successful discovery and development of economic
reserves which is affected by these risks. Should this prove unsuccessful the value included in the balance sheet would
be written off to the income statement.
6. The Interim Report for the six months to September 30th, 2008 was approved by the Directors on 18th December 2008.
7. Copies of this announcement will be sent to shareholders and will be available for inspection at the Companies Registered Office at 20-22 Bedford Row, London WC1R 4JS. The Interim Report may also be viewed at Pan Andean Resources plc's website at www.panandeanresources.com.