VOG.L Regulatory News (VOG)

18 Mar 2005 07:00

Victoria Oil & Gas PLC18 March 2005 18 March 2005 The following are the Interim Results to 30 November 2004 of Victoria Oil & Gasplc which will be posted to shareholders shortly: Victoria Oil & Gas Plc Interim Results TO 30 November 2004 CHAIRMAN'S STATEMENT Dear Shareholders, On behalf of my fellow directors, I am pleased to report very satisfactoryprogress since we were admitted to London's Alternative Investment Market ("AIM"). I would also like to review your company's development, assess progress onour objectives and to tell you of our future plans. The highlights of ourdevelopment are: • Acquisition of the West Medvezhye gas and gas condensate project in the Yamal-Nenets region of Russia. Sub-surface interpretation is continuing and drilling is scheduled to commence in June this year • Acquisition (on 21st February, 2005) of the Kemerkol oil project in Kazakhstan. This has recoverable reserves of 16.4 million barrels of oil with current shut-in production of up to 200 barrels per day and a targeted production capacity of 4,400 barrels per day. We plan to reach production of 1,000 barrels per day by the end of this year • A recent fundraising of £5.6 million through the placing of 10,132,969 shares Our Key Objectives and Results When we joined AIM in July 2004, our objectives were to acquire projects in theoil and gas sector in the Former Soviet Union (FSU), utilising our contacts,experience and expertise to exploit such opportunities and add value for ourshareholders. Since then, I am pleased to say that we have met our initialobjectives and made significant progress towards our goal of creating asuccessful oil and gas company. We focus on the FSU because it is one of the most rapidly growing and excitingoil and gas regions in the world and because it hosts very large deposits thatcan be acquired quickly and economically. It is one of the few regions in theworld where a new company such as Victoria can grow rapidly into a significantproducer with world-class assets utilising very modest capital outlay. In August, 2004 we acquired the 1,224 square kilometres West Medvezhye projectin one of the world's richest gas-producing regions, the Yamal Peninsula, forUS$11 million. This project has prospective resources of 4.8 trillion cubic feetof gas and 201 million barrels of gas condensate. In February, 2005 we announced the acquisition of the Kemerkol oil project inKazakhstan and a placing of a further 10,132,969 shares at 55p to providefinance for that acquisition and the development of the field. Kemerkol marksthe transition of Victoria into an oil producer and possesses estimatedrecoverable reserves of 16.4 million barrels of oil. Future Plans We have laid a solid foundation and we now look towards the next stages ofVictoria's development: • The development of the Kemerkol field. We plan to commence production later this year and to increase output to around 1,000 barrels per day by year-end • To begin drilling at the first of our three primary locations at the West Medvezhye project and release further information on the field potential based on detailed seismic analysis by June this year • Maintaining our active business development efforts in the FSU that aim to add significant proven, producing reserves to Victoria and provide sound investment opportunies to the company Finally, I believe that Victoria is poised to grow very significantly in thenext 12 months because we have an outstanding deal making team, an excellentoperating group, we are working in one of the most exciting and most prospectiveoil and gas regions in the world and we are hungry for success. I would like to thank my fellow directors and all employees for their tirelesswork so far. Kevin FooChairman CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE PERIOD ENDED 30 NOVEMBER 2004 Notes $000 Administrative expenses (403) Operating loss (403) Exchange gains 333 Interest receivable 105 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 35 Taxation 1 (10) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 25 All income and expenditure arises from continuing operations Cents Profit per share 2 0.04 CONSOLIDATED BALANCE SHEETAS AT 30 NOVEMBER 2004 Notes $000FIXED ASSETSIntangible assets 3 18,996Tangible assets 4 149 19,145 CURRENT ASSETSStock 327Debtors 1,574Cash at bank and in hand 5,553 7,454 Creditors: (amounts falling due within one year) (5,328)Net current assets/(liabilities) 2,126 Net Assets 21,271 Financed by: CAPITAL AND RESERVESCalled up share capital - equity 597Share premium - equity 20,649Profit and loss account - equity 25 21,271 CONSOLIDATED CASHFLOW STATEMENTFOR THE YEAR PERIOD 30 NOVEMBER 2004 Notes $000NET CASH INFLOW FROM OPERATING ACTIVITIES A (3,093) RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 105 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible fixed assets (66)Payments to acquire intangible fixed assets (1,667)Purchase of subsidiary undertakings B (7,246) NET CASH (OUTFLOW) FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (8,979) NET CASH (OUTFLOW) BEFORE FINANCING (11,967) FINANCING Issue of ordinary share capital 17,874Costs associated with shares issued during the year (377) NET CASH INFLOW FROM FINANCING 17,497 INCREASE IN CASH 5,530 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFOR THE PERIOD ENDED 30 NOVEMBER 2004 A. Reconciliation of operating loss to net cash inflow from operating activities $000 Operating loss (403) (Increase) in debtors (590)Reduction in creditors (2,433)Exchange gains 333 (3,093) b. Acquisition of subsidiaries The fair value of the assets and liabilities on acquisition were: SGI Celtic Petroleum & Fair value Total subsidiaries adjustment $000 $000 $000 $000 Tangible assets 20 63 83Development properties 2,810 3,245 11,274 17,329Stocks 320 7 327Debtors 975 9 984Cash 21 2 23Borrowings (1,271) - (1,271)Creditors (2,849) (81) (2,930) Net assets 26 3,245 11,274 14,545 Goodwill 10,836 438 (11,274) - Consideration 10,862 3,683 - 14,545 Issue of ordinary shares 3,749Creditors 3,550Cash 7,246 14,545 STATEMENT OF ACCOUNTING POLICIESFOR THE PERIOD ENDED 30 NOVEMBER 2004 1. Accounting policies Basis of Accounting The Consolidated Financial Statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs) standards. The Financial Statements are stated in thousands of US Dollars, which is thereporting currency of the Group. The Financial Statements have been prepared on the historical cost basis. Theprincipal accounting policies adopted are set out below Basis of Group Consolidation The Consolidated Financial Statements include the Financial Statements of theCompany and entities controlled by it (its subsidiaries) made up to 30 November.Control is achieved where the company has the power to govern the financial andoperating policies of an entity so as to benefit from its activities. On acquisition, the assets, liabilities and contingent liabilities of asubsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill and any deficiency credited to profitand loss in the period of acquisition. The interest of minority shareholders isstated at the minority's proportion of the fair values of the assets andliabilities recognised. Subsequently any losses applicable to the minorityinterest in excess of the minority interest are allocated against the interestsof the parent. The results of subsidiaries acquired or disposed of during the period areincluded in the consolidated income statement from the effective date ofacquisition or to the effective date of disposal. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring the accounting policies used into line with those used bythe group. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Intangible Assets All costs related to the exploration for and development of oil and gasreserves, whether productive or non-productive, are capitalised. These costs aredeferred until such time as production commences. They are amortised using theunit-of-production method. Tangible Assets Tangible assets are recorded at cost less accumulated depreciation. Depreciation is charged on the following basis: Plant and equipment - 10% straight lineFixtures and fittings - 15% straight line Foreign Currencies Transactions in currencies other than US Dollars are recorded at the rates ofexchange prevailing on the dates of the transactions. At each balance sheetdate, monetary assets and liabilities that are denominated in foreign currenciesare retranslated at the rates prevailing on the balance sheet date. Nonmonetary assets and liabilities carried at fair value that are denominated inforeign currencies are translated at the rates prevailing at the date when thefair value was determined. Gains and losses arising on retranslation areincluded in net profit or loss for the period, except for exchange differencesarising on non-monetary assets and liabilities where the changes in fair valueare recognised directly in equity. On consolidation, the assets and liabilities of the Group's overseas operationsare translated at exchange rates prevailing on the balance sheet date. Incomeand expense items are translated at the average exchange rates for the periodunless exchange rates fluctuate significantly. Exchange differences arising, ifany, are classified as equity and transferred to the Group's translationreserve. Such translation differences are recognised as income or as expensesin the period in which the operation is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreignentity are treated as assets and liabilities of the foreign entity andtranslated at the closing rate. Profit from operations Profit from operations is stated after charging restructuring costs and afterthe share of results of associates but before investment income and financecosts. Taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the period. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases in used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax is calculated at the tax rates that are expected to apply in the period whenthe liability is settled or the asset is realised. Stocks Stocks are stated at the lower of cost and net realisable value. Cost comprisesdirect materials and, where applicable, direct labour costs and those overheadsthat have been incurred in bringing the inventories to their present locationand condition. Cost is calculated using the weighted average method. Netrealisable value represents the estimated selling price less all estimated costsof completion and costs to be incurred in marketing, selling and distribution. Financial instruments Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Notes to the Financial Statements FOR THE PERIOD ENDED 30 NOVEMBER 2004 1. Taxation The tax charge for the period is standard UK Corporation Tax of 30% on Groupprofits. 2. Profit per share The calculation of the profit per share is based upon the profit attributable toOrdinary shareholders and the 65,695,500 ordinary shares in issue. 3. Intangible Assets -Total Deferred Development Costs $000 CostSubsidiaries acquired 17,329Additions 1,667 At 30 November 2004 18,996 The Group's activities include exploration for and development of oil and gasassets in Russia, Kazakhstan and other Central Asian Countries and are subjectto a number of significant potential risks including: Price fluctuations Uncertainties over development and operational costs Operational and environmental risks Political and legal risks, including arrangements with the governments for licenses, profit sharing and taxation Funding developments. The value of the Group's investments in these assets is dependent on thedevelopment of the reserves, which is affected by these and other risks. Shouldthe development prove unsuccessful, the value included in the balance sheetwould be written off. 4. Tangible Assets Plant & Equipment $000 CostSubsidiaries acquired 83Additions 71 At 30 November 2004 154 DepreciationCharge for period 5 At 30 November 2004 5 Net book value 149 Copies of these Interim Results will be available to the public for at least onemonth, free of charge, from Victoria Oil & Gas plc, Hatfield House, 1st Floor,52/54 Stamford Street, London SE1 9LX. This information is provided by RNS The company news service from the London Stock Exchange