Interim Results

29 Sep 2005 07:01

Providence Resources PLC29 September 2005 PROVIDENCE RESOURCES P.l.c. INTERIM REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Highlights •Turnover up 23% at €629,000 (2004 €510,000) •Operating Profit up 135% to €265,000* •Net profit €41,000 (2004 €12,000) •At 30 June, Cash of €4.55 million; No debt •Additional €3 million raised through exercise of warrants in July 05 •Post period end, 4 wells have commenced drilling (Aje, Nigeria; West Lennox, Offshore UK; 2 at Singleton, Onshore UK) •Successful listing on AIM •Appointment of Tony O'Reilly Jnr as Chief Executive * pre AIM admission costs of €280,000Commenting on today's results, Mr. Tony O'Reilly Jnr., Chief Executive ofProvidence said: "This has been an exceptionally busy and progressive period for Providence. Ourstrategy of ensuring a well-balanced portfolio of exploration, development andproduction is beginning to deliver. Providence is currently directly involved in the drilling of 3 wells plus alsoan indirect interest in the appraisal drilling of the Dragon Field. The drillingon AJE in Nigeria offers Providence shareholders a unique exposure to asignificant world class hydrocarbon play, whilst the recent acquisition of aninterest in West Lennox accords with our strategy of increasing our daily oilproduction. Importantly, the current environment means that many of Providence's projectshave now been upgraded to potential development status and these projects,together with our currently active drilling operations, means that we lookforward to the second half of the year with confidence". CONTACTSProvidence Resources P.l.c.Tony O'Reilly Jnr., Chief Executive Tel: +353 (1) 667 5740Powerscourt MediaVictoria Brough Tel: +44 (0)207 236 5622Murray ConsultantsPauline McAlester Tel: +353 (1) 498 0300 FINANCIALTurnover for the six month period to 30 June 2005 of €629,000 (H1 2004:€510,000) was generated from the Group's 20% interest in the producing onshoreUK Singleton oil field. Gross profit increased to €493,000 (H1 2004: €377,000).The Company's share of production in the first half of 2005 averaged 89 barrelsof oil per day (BOPD) at an average oil price of $49.58 per barrel (H1 2004: 102BOPD at an average oil price of $33.70 per barrel). The Company has recorded an operating profit before an exceptional item of€265,000 (H1 2004: €113,000) and a profit on ordinary activities after taxationof €41,000 (H1 2004: €12,000) after including costs of €280,000 associated withthe Company's admission to the AIM Market on the London Stock Exchange, whichbecame effective on 24 June 2005. At June 30, the Company had cash resources of €4.55 million and no debt.Subsequently, in July 2005, the Company received a further €3 million from theexercise of previously granted warrants. OPERATIONSNIGERIAAJE, OML 113 (6.3% Interest)Providence holds a net 6.3% interest in the Aje Field in OML113 offshoreNigeria. An appraisal well (Aje #3) was spudded on 21 August targetingCretaceous aged oil and gas reservoirs which had been previously encountered inthe Aje #1 and #2 wells. The well has been specifically designed to delineatethe south-western flank of the field and to provide key information on reservoirquality, fluid types and structural disposition. In addition, the well willprobe a deeper Albian reservoir sequence, which is known to be productive in thearea. Drilling is currently ongoing. IRELANDSt. George's Channel (80% interest)Providence has been awarded further acreage in the St George's Channel Basin,which comprises the Apollo prospect. This area has been targeted as a result ofongoing work by the Company on its existing Pegasus and Dionysus prospects.In addition, current drilling activity on the Dragon field (owned and operatedby Marathon Oil U.K.) has further enhanced the prospectivity of this area. Partof the Dragon field extends across the UK/Ireland median line into Providenceoperated block IRL51/1. In the event of a successful appraisal well on the fieldproviding additional reserves, the Dragon Field is expected to undergo afast-track plan of development. If no additional reserves are discovered, theexisting reserves in Dragon could then be supplemental to Providence's plans forDionysus and Pegasus. Porcupine Basin (80% Interest)Providence holds two Frontier Exploration Licences in the Porcupine Basin offthe west coast of Ireland. The Spanish Point field, which is located in thenorthern part of the basin, has recently been upgraded by further detailed dataanalysis. At present, Providence considers the field to contain unriskedpotential recoverable reserves of up to 1.85 TSCF and 288MMBO. Given the recentresource upgrade, in combination with higher commodity pricing, Spanish Point isnow being actively reviewed for early development options. Adjacent to Spanish Point is the Burren Oil discovery, which is being re-mappedusing new seismic inversion technology. To the south, the super-giant Dunquin prospect continues to attract significantindustry interest and farm-out discussions are advancing. As a result ofregional work carried out in association with the existing licences, Providencehas also recently applied to the Irish Government for further acreage in thePorcupine Basin. Celtic Sea (80% interest)As is the case of Spanish Point, the higher oil and gas price environment,combined with enhanced geological and engineering work, has allowed Providenceto upgrade the economic feasibility of a number of its prospects in the CelticSea. The Celtic Sea portfolio consists of Hook Head, Ardmore, Helvick, Glandore,Block 50/6-7 and Blackrock. Accordingly, various development options are nowbeing considered and Providence also separately continues active discussionswith third parties. Multi Well ProgrammeProvidence is currently endeavouring to finalise a multi-well programme for nextyear. Details of this multi-well programme are still being worked on and it ishoped to be able to announce further details later this year. UNITED KINGDOMSingleton (20% interest)Singleton development well X-8x was spudded on 16 August 2005 and reached targetdepth on 30 August 2005. This sidetrack well is targeting reserves in northwestpart of the field and a -2000' horizontal section was drilled within the MiddleJurassic carbonate reservoir sequence. A production liner and completion havebeen run and the well is due to be tested following completion of the SingletonX-9 well. Singleton well X-9 spudded on 16 September 2005. This well, is being drilled inthe southern flank of the producing Singleton oil field. By accessing this area,Providence and its partners not only potentially benefit from increased dailyoil production (estimated and still subject to testing) at up to 50%, but alsothe installation of this horizontal well will give future opportunities for thedrilling of laterals from the horizontal well in order to further increaseproduction throughout the South Western part of the field. West Lennox/ Crosby (10% interest)On 19 September 2005, Providence announced the acquisition of a 10% shareholdingin the West Lennox field, offshore UK in the Liverpool Bay area. Thisinvestment, with an international consortium, has been planned to allowProvidence to increase its daily oil production. The appraisal/pre-development well spudded on 18 September 2005 and, on success,the proposed development schedule calls for first oil production by the end ofthe third quarter 2006. As part of this deal, Providence has also acquired a 10%shareholding on the adjacent Crosby Prospect which contains a potentialrecoverable reserve of 15 MMBOE and which is closely aligned to the companiesoverall exploration strategy in the Irish Sea Basins. North Sea Assets (25% interest)On 8 September 2005, Providence announced that it had been awarded (under the UK23rd Seaward Round) a 25% interest in Block 210/19(p), which is contiguous withProvidence's other two licence interests in Quad 210 in the North Sea. Block 210/19(p) is near the Shell operated Tern Field. In addition, Providence also holdsa 25% interest in Block 9/9d. Providence, and its partners, Midmar (Operator)and Sosina, continue with third party farm-out discussions on all theseinterests. OUTLOOKThis has been an exceptionally busy period for Providence. The Company hasfocused on its strategy of increasing its daily oil production, progressing theexciting development and exploration opportunities in its portfolio and ensuringthat costs are controlled. We believe that this strategy, coupled with a working philosophy of maintaininga small, experienced, focused team, supplemented with reliable industryoutsourcing, is delivering very exciting opportunities for Providence. Providence now offers shareholders a very attractive and balanced portfolio at avery exciting time in the oil and gas industry. In addition to progressing itscurrent operations, the Company also continues to look for future opportunitiesto enhance its portfolio. Dr. Brian HilleryChairman29 September 2005 Notes to EditorsProvidence's active oil and gas portfolio includes interests in Ireland(offshore), the UK (onshore and offshore) and West Africa (offshore Nigeria).Providence's portfolio is balanced between production, appraisal and explorationassets, as well as being diversified geographically. In addition to drilling theAJE field (offshore Nigeria), Providence is involved in drilling at West Lennox(offshore UK) and at Singleton (onshore U.K.). Comprehensive information on Providence and its oil and gas portfolio, includingthe AIM Admission document and Annual Report 2004 are all available fromProvidence's website at www.providenceresources.com Providence Resources P.l.c.Consolidated Profit and Loss Account Unaudited UnauditedFor the six months ended 30 June 2005 30 June 30 June 2005 2004 €000 €000 Turnover 629 510Cost of sales (136) (133) Gross Profit 493 377Operating expenses (228) (264) Operating Profit 265 113Exceptional item - AIM admission costs (280) - Operating (Loss)/Profit on Ordinary Activitiesbefore Taxation (15) 113 Interest receivable and similar income 57 30Interest payable and similar charges (1) (131) Profit on Ordinary Activities before Taxation 41 12Tax on ordinary activities - - Retained Profit for the Period 41 12 Profit and Loss AccountAt beginning of period (24,553) (24,718)Retained profit for the period 41 12 Profit and Loss Account, end of period (24,512) (24,706) Profit Per Ordinary Share (cent)- Basic and fully diluted 0.002c 0.0009c Providence Resources P.l.c.Consolidated Balance Sheet as at 30 June 2005 Unaudited Unaudited 30 June 30 June 2005 2004 €000 €000Fixed AssetsOil and gas interests 15,738 7,882Tangible assets 57 53 15,795 7,935 Current AssetsDebtors 442 228Cash at bank and in hand 4,555 11,103 4,997 11,331Creditors: Amounts falling due within one year (917) (822) Net Current Assets 4,080 10,509 Total Assets Less Current Liabilities 19,875 18,444Creditors: Amount falling due after more thanone (6) (9)yearProvision for Liabilities and Charges (1,592) (1,531) Net Assets 18,277 16,904 Capital and ReservesCalled up share capital 13,712 13,194Share premium 27,801 17,432Capital conversion reserve 623 623Convertible capital bonds - 9,717Profit and loss account (24,512) (24,706)Foreign currency translation reserve 653 644 Shareholders' Funds 18,277 16,904 Providence Resources P.l.c.Consolidated Cash Flow Statement Unaudited UnauditedFor the six months ended 30 June 2005 30 June 30 June 2005 2004 €000 €000Net cash inflow from operating activities 233 316Returns on investments and servicing offinanceInterest received 57 30Interest paid (1) (131) 289 215 Taxation - - Capital expenditure and financial investmentExpenditure on oil and gas interests (3,193) (393)Capitalisation of operating costs (534) (342)Purchase of tangible fixed assets (12) (5)AIM admission costs (280) - (4,019) (740) Net cash outflow before use of liquid (3,730) (525)resources and financing FinancingIssue of ordinary share capital 1,001 12,273Short term loans - (400)Secured bank loans - (428)Foreign exchange - 2 1,001 11,447 (Decrease)/Increase in cash (2,729) 10,922 Notes to the Interim Statement 1. The results for the six month periods ended 30 June 2005 and 2004 are neither audited nor reviewed. 2. The calculation of the profit per share is based on the profit for the period on ordinary activities after taxation of €41,000 divided by the weighted average number of ordinary shares in issue during the period on a basic and fully diluted basis of 2,018,726,000. 3. The Interim Statement is being sent to registered shareholders and is available on the Company's website at www.providenceresources.com. Further copies will be available from the Company's offices at 60 Merrion Road, Dublin 4. This information is provided by RNS The company news service from the London Stock Exchange