Sound Energy Regulatory News (SOU)

28 Sep 2009 07:00



28 September 2009

Sound Oil plc

("Sound Oil" or the "Company")

Interim results for the six months ended 30 June 2009

Sound Oil, the upstream oil and gas company with assets in Indonesia, announces its unaudited interim results for the six months ended 30 June 2009.

Key features

Commenting, Gerry Orbell, Chairman of Sound Oil, said:

"Looking forward, the Board considers that the cash balance at end June is sufficient to cover our exploration commitments for the twelve months from today's date.  The Company continues to review new production and development opportunities for potential acquisition and strengthening of our asset portfolio."

Further information on the Company can be found at www.soundoil.co.uk.

For further information please contact:

  Chairman's Statement

Considerable progress has been made towards completion of the outstanding work commitments on the Citarum Production Sharing Contract (PSC), onshore Java, Indonesia. Over 40% of the initial 750 km 2D seismic program has been acquired, covering the Subang-Purwakarta areas, approximately 100 km southeast of Jakarta in the central part of the block. These data are currently being processed and recorded and the quality is superior to that acquired in the adjacent areas by previous operators. On preliminary results the Operator has identified a number of interesting leads in the depth range 1700-2000 m which it is hoped to mature into prospects for drilling. Completion of the remainder of the data in the eastern part of the block is expected near the end of 2009 to early 2010. Drilling of the three exploration wells is scheduled to commence in the second half of 2010.

On Bangkanai PSC, onshore Kalimantan, Indonesia, we are continuing with our efforts to attract new investors into the licence with a view to re-starting the stalled exploration activity on the block. Development of the Kerendan gas field and implementation of the gas to power project retains a high priority with the Indonesian Government and negotiations are currently in progress to agree a gas price and conclude a gas sales agreement with the state electricity company PLN. First gas is anticipated in 2011.

The Company continues to review new production and development opportunities for potential acquisition and strengthening of our asset portfolio in the area. To this end our technical teams in UK and Indonesia are actively pursuing a number of opportunities through various Government and private offerings.

In the first six months of 2009 the Group incurred a net loss of £1,861,000 compared with £726,000 in the same period last year. We reduced operating costs in the period and the majority of the net loss was due to an unrealised foreign exchange loss and reduced interest received. In more detail, exploration expenditure in the Income Statement was £244,000 compared with the first half of 2008, £293,000, and administration costs were £610,000 compared with £668,000 in the equivalent period in 2008. Bank deposit interest received was £6,000 (2008 £221,000) and the unrealised currency loss was £1,028,000 on our US$ holdings due to the recent weakening in that currency (2008 gain £14,000).

As the Group's exploration activity is in Indonesia and is accounted for in US$, there has also been a reduction in the six month period in the sterling value of assets, liabilities and cash in the Balance Sheet and the foreign currency reserve reduced to £2.2 million from £5.3 million at end 2008. Capital investment in the Indonesian exploration licences before currency translation movement was £569,000 in the period (2008 £883,000). Cash balances in sterling terms were £11.8 million at end June 2009 compared with £14.6 million at the end of 2008.

Looking forward, our financial situation remains very similar to that reported three months ago in our 2008 Annual Report. Based on the budget estimates of the operator of the Citarum PSC and on our own experience of the lead times for exploration activity at Bangkanai, the Board considers that the cash balance at end June is sufficient to cover our exploration commitments for the twelve months from today's date. Further funding and licence extensions will be needed to complete the full licence commitments.

Gerry Orbell

Chairman

25 September 2009

  Interim Consolidated Income Statement

for the six months ended 30 June 2009

*Diluted profit per share at 31 December 2008 was 0.1 pence. Diluted loss per share for June 2008 and June 2009 has not been disclosed as inclusion of unexercised options would be anti-dilutive.

  Interim Consolidated Balance Sheet

at 30 June 2009

  Interim Consolidated Statement of Changes in Equity

for the six months ended 30 June 2009

Interim Consolidated Cash Flow Statement

for the six months ended 30 June 2009

Notes to cash flow

  Notes to the Interim Consolidated Financial Statements

1 Basis of preparation

The interim consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2006. The comparative financial information is based on the statutory accounts for the year ended 31 December 2008. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 235 of the Companies Act of 1985.

The interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2008 statutory accounts and in accordance with IAS 34 Interim Financial Reporting.

The seasonality or cyclicality of operations does not impact on the interim financial statements.

2  Segment information

The Group has adopted IFRS 8, Operating Segments which requires information on the separate segments of a business.

The Group's activity is exploration for oil and gas in Indonesia under two Production Sharing Contracts (PSC's), Bangkanai and Citarum. To date there has been no development activity, production or turnover. The exploration expenditure written off to the Income Statement is not allocated to operating segments. Capitalised exploration expenditure in the Balance Sheet is comprised of £3.8 million for the Bangkanai PSC, £1.7 million for the Citarum PSC and £15.4 million for the fair value uplift which arose on acquisition of the company which owned the PSC's, (at end 2008 £4.2 million, £1.5 million and £17.6 million respectively). The decreases were due to the effect of the weakness of sterling in translation from US$.

3 Share-based payments

No share options were granted in the period.

4  Related party transactions

There were no sales or purchases to or from related parties, no guarantees provided or received for any related party receivables or payables and no other transactions with related parties, directors' loans and other directors' interests.

5   Profit/(loss) per share

The calculation of basic profit/(loss) per ordinary share is based on the profit/(loss) after tax and on the weighted average number of Ordinary Shares in issue during the period. Basic profit/(loss) per share is calculated as follows:

Diluted profit per share at 31 December 2008 was 0.01 pence. This includes the potential Ordinary Shares which would result from the exercise of the share options and is calculated on the profit of the year of £45,000 divided by 699 million dilutive potential Ordinary Shares.

Diluted loss per share has not been disclosed for June 2008 and June 2009 as inclusion of unexercised options would be anti-dilutive.

7 Interim Report

Copies of the Company's interim report will be sent to shareholders shortly and will also be available on the Company's website: www.soundoil.co.uk.