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Ophir Energy plc (Ophir) is the UK incorporated holding company of a group of companies (the Group) with oil and gas exploration assets in a number of African locations. The Group's headquarters are located in London (England), with operational offices in Perth (Australia), Malabo (Equatorial Guinea) and Dar es Salaam/Mtwara (Tanzania).

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RNS Release - Interim Results

31st Aug 2011, 7:00 am
RNS Number : 2801N
Ophir Energy PLC
31 August 2011
 



Ophir Energy plc

 

Interim Results for the six months ended 30 June 2011

 

London, 31 August 2011:  Ophir Energy plc ("Ophir"or  the "Group") announces Interim Results for the six months ended 30 June 2011.

 

Financial and corporate highlights:

·     On 13 July 2011, the Group completed a successful listing on the Main Board of the London Stock Exchange, raising US$383.9m (post greenshoe)

·     Period end cash balance of US$650m, 31 August 2011 cash balance ca.US$410m

·     Appointment of Nick Cooper as Managing Director and  Yvonne Holm as CFO

·     Appointment of three new Independent Non‑Executive Directors: Ronald Blakely; John Morgan; and Patrick Spink

 

Operational highlights:

 

Tanzania:

·     Completion of three-well operated drilling campaign in Tanzania in April 2011 resulting in three significant gas discoveries: Pweza-1 and Chewa-1 in Block 4 and Chaza-1 in Block 1

·     5,000km2 of new 3D seismic was acquired on Blocks 1, 3 and 4

·     Second multi-well drilling campaign will commence under the Operatorship of BG in the fourth quarter of 2011

·     Farm in agreement to acquire a 70% operated interest in the coastal East Pande Block situated to the east of Blocks 3 and 4 in Tanzania

 

Gabon:

·     Farm out with Petrobras in Mbeli and Ntsina Blocks

 

AGC:

·     Farm out of 8.8% equity to FAR Limited and subsequent farm out of a further 30% equity to Noble Energy Inc.

·     Kora-1 playfinder exploration well completed post balance sheet was plugged and abandoned as an unsuccessful exploration well

 

Ophir's Managing Director, Dr Nick Cooper commented: 

 

"The first half of 2011 has been a significant period of activity for the Company, with considerable exploration success in Tanzania and progress in capturing new acreage and farming down to high quality partners.Post period end the Company successfully completed the IPO of the business as the largest upstream listing in Europe.

 

"Ophir is well funded to progress and grow its portfolio and to shortly commence a high impact drilling campaign across what we believe to be a high quality, diversified prospect inventory. The second half of 2011 and 2012 are expected to be an exciting period for the Group."

 

Enquiries

Ophir Energy plc

Nick Cooper, Managing Director

+44 (0)20 7290 5800

Financial Dynamics

Billy Clegg/Edward Westropp

+44 (0)20 7269 7157

 



Further information

 

Ophir (OPHR.LN) is an Africa-focussed upstream company that listed on the London Main Board in July 2011.  The Company is one of the top five deepwater acreage holders in Africa, with a portfolio of 17 assets in eight African jurisdictions.  RPS Energy have assessed that the Company has 189MMboe of net contingent resources and 3.9Bnboe of net unrisked prospective resources.

 

For further information visit:  www.ophir-energy.com 

 



Managing Director's Review

 

The six months to 30 June 2011 have been a transformation period for Ophir.  Operationally, the Group completed its initial three‑well Tanzanian drilling campaign in April 2011 and announced the third consecutive substantial gas discovery.  Commercially, the portfolio evolved in the period with a series of farm outs and new block entries in Gabon, AGC (Senegal/Guinea Bissau) and Tanzania.

 

On 13 July 2011 the Group completed a successful listing on the Main Board of the London Stock Exchange, raising US$383.9 million (post greenshoe) in what was London's largest ever upstream IPO.  In preparation for, and in conjunction with the Ophir's migration to full listed status, the Group's Executive team and Board has evolved to reflect the next phase of Ophir's growth. 

 

The IPO has left the Group fully funded to pursue a comprehensive exploration and appraisal drilling campaign of at least 11 wells over the next eighteen months, targeting more than 1.5Bnboe of net unrisked resources.

 

Board Composition

 

In the first half of the year, Yvonne Holm and I joined the Group as CFO and Managing Director respectively to work alongside co-founders Alan Stein and Jon Taylor. 

 

At the time of the July 2011 IPO, the composition of the Group's Non-Executive Directors changed to bring the Group into compliance with the Combined Code.  The Executive team would like to express our appreciation for the support and efforts of the shareholder representative Directors, Messrs Arun Balakrishnan, Michael Cohen, Jaroslaw Paczek and Mikki Xayiya and their alternates who all resigned from the Board on 7 July 2011.

 

I am very pleased to welcome three new Independent Non‑Executive Directors, Messrs Ronald Blakely, John Morgan and Patrick Spink, to the Board.  Each of our new Directors bring a wealth of upstream oil and gas experience to the Board.  In addition, Mr Rajan Tandon remains on the Board as the sole shareholder representative Non-Executive Director, with Mr Jaroslaw Paczek acting as his alternate.

 

Operations

 

The Group's three-well operated drilling campaign in Tanzania was completed in early April 2011.  Pweza-1 and Chewa-1 were drilled in Block 4 in the Mafia Basin,  while Chaza-1 was drilled in Block 1 in the Ruvuma basin. All three resulted in significant gas discoveries.  This initial campaign proves working hydrocarbon systems in each of the Blocks 1,3 and 4 that are held by Ophir and its 60% joint venture partner BG and significantly de-risks the project.  A further 5,000km2 of new 3D seismic was acquired on these blocks during the period and a second multi-well drilling campaign will commence under the Operatorship of BG in the fourth quarter of 2011.  Separately, the Group has increased its acreage in Tanzania by entering a farm in agreement to acquire a 70% operated interest in the coastal East Pande Block that is situated to the east of Blocks 3 and 4. 

 

In Equatorial Guinea promising progress has been made on commercialising the 2008 Fortuna and Lykos gas discoveries and the Group hopes shortly to be in a position to announce a further drilling campaign in Block R later in 2011.

 

The Kora-1 playfinder exploration well in the AGC was completed on 27 July 2011 and plugged and abandoned as an unsuccessful exploration well.  The failure to find viable reservoir facies was disappointing, however the well was the first exploration test of the deepwater Senegal-Guinea Bissau portion of the MSGBC Basin and it will provide valuable data with which to calibrate the stratigraphy of this extensive basin. 

 

2011 Outlook

 

In Tanzania, the interpretation of the recently acquired 3D seismic in Blocks 1, 3 and 4 has commenced and is expected to further increase the prospect inventory.  Simultaneously, planning is underway for a seven‑well drilling campaign that will commence in the fourth quarter of 2011.  The upcoming campaign will be managed by our joint venture partner BG, who assumed Operatorship of the project on 1 July 2011.

 

In addition, the Company intends to acquire 1,000km2 of 3D seismic in the inboard, Ophir operated, East Pande Block in the fourth quarter of 2011.  The permit is believed to be prospective for both gas and oil.

 

Following the successful farm out of the Mbeli and Ntsina permits in Gabon to Petrobras, planning is well advanced for a 2,500km2 3D seismic to be acquired in the fourth quarter.  The 3D programme will be designed to target the pre-salt structures previously identified on 2D and gravimetry data.  The Group expects that drilling for pre-salt targets will commence in the second half of 2012.

 

In Equatorial Guinea, the Group is considering a two‑well exploration drilling campaign in the fourth quarter 2011.  We are also considering options to accelerate and broaden this drilling campaign. 

 

In summary, Ophir is well funded to progress and grow its portfolio and to shortly commence a high‑impact drilling campaign across what we believe to be a high‑quality, diversified prospect inventory.  Despite the current difficult economic environment and troubled capital markets, the second half of 2011 and 2012 are expected to be an exciting period for the Group.

 

 

 

 

Dr Nick Cooper

Managing Director

30 August 2011

 



Chief Operating Officer's Review

 

Tanzania

 

The third well in the initial Tanzanian drilling campaign, Chaza-1 (Block 1) was spudded on 3 December 2010 in 982m of water.  The well took longer than originally anticipated due to drilling problems.  Drilling continued to a total depth (TD) of 4,933m and the well was plugged and abandoned as the third successful gas discovery.  The rig was released on 4 April 2011.  There were no LTIs ("Lost Time Incidents") during drilling.  The well encountered gas as predicted in a 27m (gross) sandstone within a Miocene channel system.  RPS Energy, an independent expert, have assigned 92Bcf (gross) of contingent resources and 382Bcf (gross) of risked prospective resources to the well, which also de-risks several nearby structures. 

 

Seismic acquisition commenced on 17 January 2011 on the Mafia East survey (Blocks 3 and 4) utilising the Fugro "GeoCaspian".  This survey was completed on 4 March with 3,250km2 acquired and the "GeoCaspian" then moved to Block 1 where it acquired a further 1,900km2 of data on the Kusini survey.  Preliminary data has been loaded and is currently being interpreted.

 

Transfer of Operatorship of Blocks 1, 3 and 4 to BG commenced during the first half of 2011, and the formal Operatorship Transfer Agreement was signed on 2 June 2011, with BG taking over Operatorship from 1 July 2011.  BG now also operate the Mtwara Port facility on behalf of the other participating Operators (Ophir, Petrobras and Statoil).  The dynamically positioned semisubmersible rig "Metro-1" has been contracted by BG on behalf of the Joint Venture and is anticipated to arrive in Tanzania during Q4 2011 to commence the second drilling campaign.  Contracting for the associated services is ongoing. 

 

Equatorial Guinea

 

Discussions continued with the Government of Equatorial Guinea (GEG) regarding commercialisation of the Fortuna and Lykos discoveries.  The GEG have established a Project Delivery Team which includes representatives from the relevant bodies with the objective of facilitating a second LNG train within EG.  A Memorandum of Understanding (MoU) was signed on 31 March 2011 with the other in-country stakeholders committing to support this outcome.  A further MoU between Ministry of Mines, Industry and Energy (MMIE) and Ophir, which agrees modified gas‑specific fiscal terms was signed on 3 May 2011.  Planning is under way for a drilling campaign during Q4 2011.  Consideration is also being given to acquiring additional Controlled Source Electromagnetic (CSEM) data in Block R as a means to de-risk a number of exploration prospects given the positive correlation between the anomaly identified on existing data and the Fortuna Field. 

 

Gabon

 

In Mbeli and Ntsina, variations were agreed to the PSCs during April such that the current term will end during 2014 allowing sufficient time to acquire the 2,000km2 of new 3D seismic, which forms part of the new commitment work programme.  In parallel with this, discussions continued with Petrobras regarding their farm in to the two Blocks and the agreement was finally executed on 16 June.  Planning of the 3D seismic is under way and initial approaches have been made to a number of contractors.  At this stage it is anticipated that the data will be acquired during Q4 2011.  A small office was opened in Port Gentil as required under the PSC terms which will support the renewed activity and a local General Manager will be installed.

 

In Manga an 18 month extension was agreed to the PSC which will allow for the acquisition of a small (160km2) swathe 3D seismic programme which will allow a better understanding of potential play systems on the flanks of the Loiret Dome.  This survey, together with the small 3D survey which is planned over the Pachg Liba prospect, will be acquired at the same time as the Mbeli/Ntsina 3D to increase efficiency.  Data will be available in early 2012 and a farminee will be pursued with the intention of providing a carry, should Ophir elect to enter the next term in either block, each of which carry a well commitment.

 

AGC

 

Operational planning accelerated early in 2011 for the spud of Kora-1 using the "Maersk Deliverer".  The farm out of 8.8% equity to FAR Limited (FAR), was finalised on 17 March 2011 and a further farm out of 30% equity to Noble Energy Inc. (Noble) was completed during June 2011.

               

The rig was released to Ophir in mid-June 2011 and was mobilised to spud on 28 June 2011 in 2,600m of water.  The well was drilled to a total depth of 4,480mRT on 27 July 2011 with no LTIs.  The primary (Albian) and secondary (Coniacian and Barremian) reservoir intervals were penetrated close to their anticipated depths, but the well encountered a predominantly claystone and thinly‑bedded limestone sequence, rather than the prognosed sandstone reservoir facies.  In the absence of reservoir facies it is difficult to immediately assess the potential presence of hydrocarbons on the available Formation Evaluation While Drilling (FEWD) logging data.  A 12 month extension will now be requested to the PSC term and the technical team will carry out a full assessment of the well implications for the Block and also the wider Senegal-Guinea Bissau portion of the MSGBC Basin where Ophir has an option to farm in to FAR's three Senegal Blocks.

 

Madagascar

 

The airborne gravimetry data, which had been acquired in October 2010, was processed and interpreted during the first half of 2011.  At the time of writing the technical assessment is close to completion and a recommendation will be made to the Board prior to a decision to enter the next period which is due on 9 September 2011. 

 

Somaliland, Congo (Brazzaville), JDZ

 

A technical assessment of the Berbera Block (Somaliland) was completed during the first half of 2011 and has concluded that prospectivity is limited and requires further seismic data to mature a drilling prospect.  In parallel with this, negotiations have been ongoing with the Government of Somaliland (GoS) to revise the terms of the Production Sharing Agreement (PSA) and append some additional open acreage (SL9).  These negotiations are ongoing at the time of writing. 

 

Premier, the former Operator of the Marine IX Block in Congo (Brazzaville), notified the JV of their decision to withdraw from the permit in October 2010.  During the first half of 2011 the process of transferring Operatorship to Ophir was ongoing and Ophir have assumed the role from 1 May 2011, with Premier's equity being assigned pro rata between Ophir and Kufpec.  A 12 month extension to the current PSC term has been requested from the Government in order to carry out a full prospectivity assessment of the block ahead of a decision to enter the next term, which carries a commitment well.

 

Ophir elected to withdraw from the JDZ PSC in March 2011.

 

New Ventures

 

Ophir signed a farm in agreement to the Tanzanian East Pande Block, to the east of Blocks 3 and 4, on 29 March 2011.  At the time of writing the Conditions Precedent to the agreement (which require variations to the work programme commitments and/or the duration of the periods) were being finalised and Ophir is preparing to acquire new 3D seismic data in Q4 2011. 

 

 

 

 

Dr Mike Fischer

Chief Operating Officer

30 August 2011



Chief Financial Officer's Review

 

Result for the Period

 

The Group recorded a profit of US$6.1 million for the half year ended 30 June 2011 (1H June 2010:  US$0.4 million loss/Year ended 31 December 2010:  US$19.3 million loss).  No dividends were paid or declared by the Group during the period. 

 

The profit for the period, which includes exploration expenditure expensed of US$1.1 million, general and administrative costs of US$6.1 million, finance costs of US$0.2 million and other costs of US$0.4 million, was significantly impacted by a farm out gain of US$13.8 million. 

 

Farm Out Gain

 

The gain on farm out relates to the partial farm out of the Group's AGC Profond interests to Noble prior to spudding of the Kora-1 well in late June 2011.  Cash proceeds of US$20 million received from Noble were applied against the Group's carrying value of the AGC project, reducing its book value to nil at 30 June 2011, with surplus proceeds being booked to profit.  The Kora-1 well, completed in early August, was an unsuccessful well.  In accordance with the Group's accounting policy, the Group's share of well costs which were incurred subsequent to 30 June 2011, of approximately US$15 million, were written off subsequent to 30 June 2011. 

 

Exploration Expenditure

 

Exploration expenditure comprises pre‑licence exploration costs of US$0.5 million charged directly to the Income Statement, as well as unsuccessful exploration expenditure of US$0.6 million written off in accordance with the Group's accounting policy. 

 

General & Administrative Expenses

 

General & Administrative expenses, which cover personnel costs including share-based payments charges, administration costs, professional and corporate costs (audit, legal and other professional advisors' costs, Directors' fees) totalled US$6.1 million (1H 2010:  US$2.6 million).  The result was impacted by 2010 bonuses accrued and payable in 2011 and by additional personnel and administration costs associated with expansion of the Groups operations and planning for the IPO. 

 

Finance Costs

 

Finance costs for the period of US$0.2 million (1H 2010:  US$0.1 million gain) relate to foreign exchange losses arising on the fluctuation of the Group's functional currency, the US Dollar, against other currencies. 

 

Other Expenses

 

Other expenses of US$0.4 million (1H 2010:  US$0.4 million) primarily consist of depreciation and amortisation and relate to the write down of the Group's furniture and equipment and geological databases over their estimated useful lives.

 

Cash Flow

 

Overall, the Group expended US$18.8 million (1H 2010:  US$14.6 million) in investing activities including US$38.6 million on exploration (1H 2010:  US$25.0 million).  This was offset by a cash inflow on farm out of the Group's AGC interests to Noble of US$22.0 million (1H 2010:  US$25.1 million outflow net of farm out proceeds of US$11.8 million).

 

Operating activities consumed cash of US$2.2 million (1H 2010:  US$5.9 million) and a further US$3.5 million (1H 2010:  Nil) was spent on activities associated with the Group's IPO, which completed in July 2011. 

 

The net cash outflow of the Group for the half year was US$24.5 million (1H 2010:  US$20.4 million), leaving cash and cash equivalents held by the Group at period end totalling US$65.3 million.

 

IPO & Future Developments

 

On 13 July 2011 the Group completed a capital raising and its shares were admitted to the Main Board of the London Stock Exchange.  The Group issued 94,135,334 new shares raising a total US$375 million (£235 million).  An over-allotment of 2,216,546 shares were issued on 8 August 2011 raising approximately a further US$8.9 million (£5.5 million).  As the majority of the Group's expenditure is incurred in US Dollars, the bulk of the proceeds of the capital raising were immediately converted to US Dollar on receipt of IPO capital raising proceeds. 

 

The share issues mean the Group is now fully funded and well placed to pursue an active and aggressive exploration and appraisal drilling campaign over the next twelve to eighteen months. 

 

Going Concern

 

The financial position of the Group, its cash flows, liquidity position and borrowing facilities, and its business activities, together with the factors likely to affect its future development, performance and position are set out in this Business Review and in the Group's 2010 Annual Report  on pages 4 to 24. In addition, note 26 to the 2010 Financial Statements includes the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

 

The Company has considerable financial resources. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully.

 

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

 

Commitments and Contingent Liabilities

 

In acquiring its oil and gas interests, the Group has pledged that various work programmes will be undertaken on each permit/interest.  The exploration commitments are tabulated in note 10 to the Financial Statements on page 21 and are an estimate of the minimum expected cost of performing these work programmes. 

 

As at 30 June 2011 the Group did not have any contingent liabilities.

 

Risk Management

 

The Executive Directors continually monitor the Group's risk exposures and report to the Audit Committee and Board of Directors on a six monthly basis or more frequently as required.

 

The principal risks of the Group remain as detailed on pages 22 to 23 of the 2010 Annual Report and are summarised as follows: 

 

Government Stability:         Political risks in the jurisdictions within which the Group operates

Operational Risks:              Discovery risk, no current production, oil and gas price risk, drilling risks, unexpected events

Strategic Risks:                    Capital intensive business, competition for acreage, reliance on key personnel

 

Specific financial risks are managed as follows: 

 

Strategy and Objectives

 

The Group's financial instruments comprise cash and short-term deposits and various items, such as trade debtors and trade creditors that arise directly from its operations.  The main purpose of these financial instruments is to provide finance for the Group's operations.  The Group does not generally enter into derivative transactions.

 

The main risks arising from the Group's financial instruments are foreign currency, credit and interest rate risks.

 

Credit risk

 

Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the Group.  The Group does not require collateral where credit is extended to third parties.  The Group measures credit risk on a fair value basis.  The Group's maximum exposure to credit risk of third parties is the aggregate of the carrying value of its cash and short-term deposits and other receivables.

 

Interest rate risk

 

Cash at bank is held in call accounts at floating interest rates based on the relevant inter-bank rates.  Cash held on deposit earns interest at rates set in advance for periods ranging from one to six months.  The average rate of interest of deposits for the Group at 30 June 2011 was 0.47% (30 June 2010:  0.70 %). 

 

No other financial assets or liabilities of the Group are interest-bearing.

 

Foreign currency risk

 

The Group operates in the UK and the Group, through its principal subsidiaries, Ophir Services Pty Ltd (Ophir Services) and Ophir Holdings Limited, operates in both Australia and Africa.  The US Dollar has been adopted as the functional currency of the Group and its subsidiaries (with the exception of Ophir Services which uses the Australian Dollar).  As the majority of the Group's expenditure is incurred in US Dollars, the use of the US Dollar as the functional currency acts as a natural hedge on the majority of the Group's expenditure.  As at 30 June 2011, the Group did not have any hedging mechanisms in place for its commitments in Pounds Sterling or the Australian Dollar; however the Group held funds in Pounds Sterling and Australian Dollars to meet its short-term needs. 

 

Rates of exchange used at 30 June 2011 to translate assets and liabilities denominated in Pounds Sterling and Australian Dollars into US Dollars were £1.00 = US$1.6018 and A$1.00 = US$1.0597.

 

Financial Liabilities

 

Other than short-term creditors, the Group do not have any financial liabilities.

 

Off Balance Sheet Arrangements

 

The Group has not entered into and is not a party to any Off Balance Sheet arrangements.

 

 

 

B Yvonne Holm

Chief Financial Officer

30 August 2011


Responsibility Statement

 

The Directors confirm that to the best of their knowledge the:

 

a              condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

 

b              interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);

 

c              interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein);

 

d              Directors believe the Group is a going concern as required by C1:3 of the UK Corporate Governance Code; and

 

e              condensed financial statements are prepared in accordance with IFRS and give a true and fair view of assets, liabilities and profit and loss of the issuer or the undertakings included in the consolidation as a whole.

 

The Directors of Ophir Energy plc are as listed in the Corporate Directory at the back of this report.  A list of the current Directors is also maintained on the Ophir Energy plc website:  www.ophirenergy.com

 

By order of the Board

 

 

 

 

Dr Nick Cooper                                          0;                                       Ms B Yvonne Holm

Managing Director                                         &# 160;                                    Chief Financial Officer

30 August 2011                                                                                     30  August 2011

 

Disclaimer

This statement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business.  Whilst the Group believes the expectations reflected herein to be reasonable in light of the information available to them at this time, the actual outcome may be materially different owing to factors beyond the Group's control or within the Group's control where, for example, the Group decides on a change of plan or strategy.  Accordingly, no reliance may be placed on the figures contained in such forward-looking statements.,


Independent Auditor's Review Report

 

Introduction

 

We have been engaged by Ophir Energy plc ("The Group") to review the condensed set of consolidated financial statements in the half-yearly report for the six months ended 30 June 2011 which comprises the condensed interim consolidated balance sheet, the condensed interim consolidated income statement, condensed interim consolidated cash flow statement, condensed interim consolidated statement of comprehensive income, condensed interim consolidated statement of changes in equity and related notes 1 to 11.  We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the Group in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

 

The half-yearly report is the responsibility of, and has been approved by, the Directors.  The Directors are responsible for preparing the half-yearly report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As noted in note 2, the annual financial statements of the Group are prepared in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union.  The condensed set of financial statements included in this half-yearly report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our Responsibility

 

Our responsibility is to express to the Group a conclusion on the condensed set of financial statements in the half-yearly report based on our review.  

 

Scope of Review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

 

 

Ernst & Young LLP

London

30 August 2011

 

The maintenance and integrity of the Ophir Energy plc web site is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the web site.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


Income Statement and Statement of Comprehensive Income
for the half year ended 30 June 2011

 


Notes


6 Months Ended

30 June 2011

(Unaudited)

US$'000


6 Months ended

30 June 2010

(Unaudited)

US$'000


Year ended

31 December 2010

US$'000

Group Statement of Consolidated Income

Continuing Operations








Interest income



135


257


533

 

Revenue



135


257


 

533









Gains/(expenditure) on exploration activity

3(a)


12,714


2,176


(11,344)

Finance expenses

3(b)


(233)


132


(429)

Administration expenses

3(c)


(6,070)


(2,638)


(7,272)

Other expenses

3(d)


(433)


(366)


(766)









Profit/(Loss) from continuing operations before taxation



6,113


(439)


 

(19,278)

Taxation



-


-


-

Profit/(loss) from continuing operations for the period attributable to equity holders of the parent



6,113


(439)


 

 

(19,278)

 

Profit/(loss) per share for loss from continuing operations attributable to equity holders of the parent








EPS on profit/(loss) for the period (cents per share) Basic

Diluted



2.71c

2.51c


 (0.20)c

n/a


 

(8.56)c

n/a









Group Statement of Comprehensive Income








Profit/(loss) from continuing operations for the period attributable to equity holders of the parent



6,113


(439)


 

(19,278)

 

Other comprehensive income








Foreign currency translation



229


(233)


602









Other comprehensive income for the period, net of tax



229


(233)


 

602









Total comprehensive profit/(loss) for the period, net of tax attributable to equity holders of the parent



6,342


(672)


 

 

(18,676)

 

 


Statement of Changes in Equity

 


Called up Share Capital
US$'000

Share Premium
US$'000

Options Premium Reserve
US$'000

Special Reserve
US$'000

Cons Reserve
US$'000

Equity Component on Convertible Bond
US$'000

Foreign Currency Translation Reserve
US$'000

Accumulated Losses
US$'000

Total Equity
US$'000

 

At 1 January 2010

1,041

417,048

23,028

156,435

(500)

669

5,134

(228,759)

374,096

Loss for the period, net of tax

-

-

-

-

-

-

-

(439)

(439)

Translation loss

-

-

-

-

-

-

(233)

-

(233)

Total comprehensive income, net of tax

-

-

-

-

-

-

(233)

(439)

(672)

Exercise of options

1

-

-

-

-

-

-

-

1

Share-based payments

-

-

410

-

-

-

-

-

410

 

At 30 June 2010 (Unaudited)

1,042

417,048

23,438

156,435

(500)

669

4,901

(229,198)

373,835

Loss for the period, net of tax

-

-

-

-

-

-

-

(18,839)

(18,839)

Translation gain

-

-

-

-

-

-

835

-

835

Total comprehensive income, net of tax

-

-

-

-

-

-

835

(18,839)

(18,004)

Exercise of options

-

-

-

-

-

-

-

-

-

Share-based payments

-

-

414

-

-

-

-

-

414

 

At 1 January 2011

1,042

417,048

23,852

156,435

(500)

669

5,736

(248,037)

356,245

Loss for the period, net of tax

-

-

-

-

-

-

-

6,113

6,113

Translation gain

-

-

-

-

-

-

229

-

229

Total comprehensive income, net of tax

-

-

-

-

-

-

229

6,113

6,342

Share-based payments

-

-

628

-

-

-

-

-

628

At 30 June 2011 (Unaudited)

 

1,042

 

417,048

 

24,480

 

156,435

 

(500)

 

669

 

5,965

 

(241,924)

 

363,215


Balance Sheet
as at 30 June 2011

 

 

 

Notes


As at

30 June 2011

(Unaudited)

US$'000


As at

30 June 2010

(unaudited)

US$'000


As at

31 December 2010

US$'000









Non-current assets








Exploration and evaluation assets

4


            297,843


249,688


270,043

Property, plant and equipment



                1,703


1,408


1,743

Other financial assets



                   671


656


700




            300,217


251,752


272,486

Current assets








Inventory

5


                6,865


8,162


9,058

Trade and other receivables

6


              13,800


11,120


45,295

Other current assets

7


              11,019


-


130

Cash & Short Term Deposits



              65,290


114,696


89,925




              96,974


133,978


144,408

Total assets



 

            397,191


385,730


416,894









Current liabilities








Trade and other payables

8


(32,801)


(11,152)


(59,727)

Provisions



(810)


(505)


(611)




(33,611)


(11,657)


(60,338)

Non-current liabilities








Provisions



(365)


(238)


(310)




(365)


(238)


(310)

Total liabilities



 

(33,976)


(11,895)


(60,648)

Net assets



 

363,215


373,835


356,246









Capital and reserves








Called up share capital

9


1,042


1,042


1,042

Share premium account



417,048


417,048


417,048

Other reserves



(54,875)


(44,255)


(61,844)

Total equity



 

363,215


373,835


356,246

 

Approved by the Board on 30 August 2011

 

 

Ms B Yvonne Holm

Chief Financial Officer


Statement of Cash Flows
for the half year ended 30 June 2011

 


Notes


6 Months Ended

30 June 2011

(unaudited)

US$'000



Year ended

30 December 2010

US$'000









Operating activities







Operating profit/(loss) before taxation



6,113



(19,278)

Non-cash adjustments to reconcile operating profit/(loss) before tax to net cash flows from operating activities







Depreciation of property, plant and equipment



434



735

Amortisation of geological databases



-



17

Provision for employee entitlements



253



147

Foreign currency exchange losses/(gains)



320



234

Share-based payments



628



825

(Gain)/Loss on disposal of assets



(1)



14

Gain on farm out



(13,844)



(4,009)

Exploration write offs



626



13,308








Working capital adjustments







Increase in trade and other payables



4,451



(12)

Increase in trade and other receivables



(1,192)


(5,095)


(449)

Cash utilised in operations



(2,212)


(5,862)


(8,468)

Income taxes paid



-


-


-

Net cash flow used in operating activities



 

(2,212)


(5,862)


 

(8,468)









Investing activities








Purchases of property, plant and equipment



(340)



(904)

Purchases of inventory



(2,923)



(4,286)

Exploration expenditure



(38,563)



(44,595)

Funds from disposal of inventory



1,078



1,365

Funds on farm out of joint venture



21,960



11,268

Funds placed on deposit



-



(967)

Funds returned from deposit



-



1,200

Net cash flow used in investing activities



 

(18,788)


(14,535)


 

(36,919)


Statement of Cash Flow
for the half year ended 30 June 2011

 


Notes


6 MONTHS ENDED

30 June 2011

(Unaudited)

US$'000


6 MONTHS ENDED

30 June 2010

(Unaudited)

US$'000


year Ended

30 December 2010

US$'000









Financing activities








Prepaid capital raising costs



(3,519)


-


-

Issue of ordinary shares



-


1


1

Net cash flow from financing activities



 

(3,519)


1


 

1









(Decrease)/Increase in cash and cash equivalents for the period



(24,519)


(20,396)


 

(45,386)

Effect of exchange rates on cash and cash equivalents



(116)


15


 

234

Cash and cash equivalents at the beginning of the period



89,925


135,077


 

135,077

Cash and cash equivalents at the end of the period



65,290


114,696


 

89,925

 

Notes to the Financial Statements



1

General information




Ophir Energy plc is a public limited company incorporated in England and its registered offices are situated at 55 Grosvenor Street, London W1K 3HY.




The Income Statement, Statement of Comprehensive Income, State of Changes in Equity, Balance Sheet, Statement of Cash Flows and associated Notes to the Financial Statements for the financial year ended 31 December 2010 included in the 30 June 2011 Interim report do not constitute the Group's statutory accounts, as defined under section 434 of the Companies Act 2006.  The Group's statutory financial statement for the financial year ended 31 December 2010 have been audited by the Group's external auditor and lodged with the United Kingdom Companies House.  The auditor's opinion on these accounts was unqualified with an emphasis of matter on going concern.

 


The interim financial statements of the Group for the six months ended 30 June 2011 were authorised for issue by the Board of the Directors on 30 August 2011 and the balance sheet was signed on the Board's behalf by Ms B Yvonne Holm. 



2

Basis of preparation and accounting policies




2.1           Basis of preparation




The interim financial statements for the six months ended 30 June 2011 have been prepared in accordance with IAS 34 "Interim Financial Reporting".

 

The interim financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.  The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2010.

 

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2010, except for the adopting of new standards and interpretations as of 1 January 2010.




2.2           Accounting standards




(a)           New and amended standards

 

The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2011 for the historical information presented for the six months ended 30 June 2011.

 

IAS 24 Related Party Transactions (Amendment)

IAS 32 Financial Instruments:  Presentation (Amendment)

IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment)

Improvements to IFRSs (issued May 2010)

IFRIC 19 Extinguishing financial liabilities with equity instruments

 

The new and amended standards and interpretations had no material impact on the financial information for the six months period 30 June 2011.

 


 



6 Months ended
30 June 2011

(Unaudited)
US$'000


6 Months ended

30 June 2010

(Unaudited)
US$'000


Year ended

30 December

2010

US$








3

Operating (profit)/loss before taxation







The Group operating (profit)/loss from continuing operations before taxation is stated after charging/(crediting): 







(a)       Gains/(expenditure) on exploration activity







- inventory management

-


14


14


- pre licence exploration costs

504


1,070


2,031


- gain on farm out1

(13,844)


(4,009)


(4,009)


- exploration expenditure written off

626


749


13,308


1Gain on farm out of AGC to Noble Energy Inc.  Refer to CFO Report, page 8.

 

(12,714)


(2,176)


11,344


(b)       Finance expense







Foreign exchange gains & losses

233


(132)


429



 

233


(132)


429


(c)        Administrative expenses include:







                Audit of the financial statements

400


202


385


                Other fees to auditors:







                - taxation services

-


4


14


                - other services2

3


-


19


2Excludes fees paid to auditors in respect of the Company's Initial Public Offering of US$2,708,000 included in prepayments.

 

403


206


418









Share-based compensation charge

628


410


825









(d)       Other expenses







- gain on disposal of assets

(1)


12


14


- amortisation

-


17


17


- depreciation of property plant & equipment

434


337


735



 

433


366


766













 

 




As at
30 June 2011

(Unaudited)
US$'000


As at

30 June 2010

(Unaudited)
US$'000


As at

31 December 2010
US$'000









 

4

Exploration and evaluation assets







 









 


Capitalised exploration expenditure at the beginning of the period


270,042


238,295


238,295

 


Foreign currency translation


-


2


2

 


Exploration expenditure incurred during the financial period(i)


28, 427


11,572


45,071

 


Transfer from property, plant and equipment


-


585


-

 


Exploration written off


(626)


(749)


(13,308)

 




 

297,843


249,705


270,060

 









 


Right to access geological data base


197


197


197

 


Accumulated amortisation of right to access geological data base


(197)


(180)


(180)

 


Less:  amortisation of right to access geological data base


-


(17)


(17)

 


Capitalised exploration expenditure at the end of the period


297,843


249,688


270,043

 









 


(1)Net of recovery of costs incurred on farm out of exploration interests of US$1,960,000 (31 December 2010: US$4,008,739)

 

 







 

5

Inventory







 


Drilling consumables (at cost)


6,865


8,162


9,058

 









 








 

 








 



 



As at
30 June 2011

(Unaudited)
US$'000


As at

30 June 2010

(Unaudited)
US$'000


As at

31 December 2010
US$'000








 

 

6             

Trade and other receivables







 









 


Other debtors


5,410


7,247


3,070

 


Receivable from joint venture partners

 (refer note 7)


8,390


3,873


42,225

 




 

13,800


11,120


45,295

 









 


All debtors are current.  There are no receivables that are past due or impaired. 

Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.







 









 

7

Other current assets







 









 


Prepayments


11,019


-


130

 


Prepayments include IPO related costs.  These costs will be transferred to equity upon conclusion of the IPO.







 

 

8             

 

Trade and other payables







 









 


Trade Creditors


7,311


4,240


2,121

 


Accruals


17,100


3,039


15,381

 


Payables in relation to joint venture partners1


8,390


3,873


42,225

 




 

32,801


11,152


59,727

 









 


1The Group has a liability in respect of a joint venture partner's share of liabilities arising under contracts entered into by a subsidiary.  This amount is offset by a receivable of the same amount included in note 6.







 


 

 







 







 



 



As at
30 June 2011

(Unaudited)
US$'000


As at
30 June 2010 (Unaudited)
US$'000


As at
31 December 2010
US$'000








9

Called up share capital













               

(a)   Authorised






                       

        2,000,000,000 ordinary shares of 0.25p each

7,963


7,963


7,963









(b)   Called up, allotted and fully paid













                       

225,345,528 ordinary shares in issue at the beginning of the period of 0.25p each (30 June/31 December 2010:  225,025,528)

 

1,042


1,041


1,041


Nil ordinary shares issued 0.25p each during the period on exercise of options (30 June/31 December 2010:  320,000)

-


1


1









225,345,528 ordinary shares of 0.25p each

(30 June/31 December 2010:  225,345,528)

1,042


1,042


1,042

 


The balances classified as called up; allotted and fully paid share capital represents the nominal value of the total number of issued shares of the company of 0.25p each


.

 





 


Fully paid shares carry one vote per share and carry the right to dividends.



 








 

10

Exploration expenditure commitments







 


In acquiring its oil and gas interests, the Group has pledged that various work programmes will be undertaken on each permit/interest.  The exploration commitments are an estimate of the cost of performing these work programmes and includes any commitments under rig share agreements. 




 





 

               

Due within one (1) year


23,177


37,211

 

               

Due later than one (1) year but within two (2) years


18,491


1,138

 

               

Due later than two (2) years but within five (5) years

12,212


8,426


728

 



32,086


50,094


39,077

 

 



 

 

11

Events after the balance date









On 13 July the Group's shares were listed on the main board of the London Stock Exchange.  The Group issued 94,135,334 new shares raising a total USD 375 million (£235 million).  An over-allotment of 2,216,546 shares were issued on 8 August raising a further approximately USD 9 million (£5.5 million). 

 

On 17 June 2011 the Group announced that it has entered into an agreement with a subsidiary of Petróleo Brasileiro S.A.  (Petrobras) over the Group's interests in the Mbeli Marin and Ntsina Marin PSCs.  Petrobras will acquire 50% of Ophir's interest in each of the PSCs by contributing to certain past expenditure and making a promoted contribution towards the cost of an agreed initial work programme of at least 2,000km2 of 3D seismic data.  After completion of the initial work programme, Petrobras may elect to continue and make a promoted contribution towards the first and second exploration wells to complete its earning obligations or withdraw from the PSCs.  Petrobras has the right to elect to assume Operatorship of both PSCs.  Completion of the transaction is subject to government consent.

 

On 27 July 2011 the Group announced the completion of drilling operations on the Kora-1 well in the AGC Profond Production Sharing Contract (PSC).  Following final wireline logging the well was plugged and abandoned as an unsuccessful exploration well.  The Group's share of well costs which were incurred subsequent to 30 June 2011 of approximately US$15 million were written off subsequent to 30 June 2011. 


Corporate Directory

 

Directors

 


Chairman (Non-Executive)

 

Nicholas Smith

 

Executive Directors

 

Alan Stein - Executive Deputy Chairman & Founder

Jonathan Taylor - Executive Director & Founder

Nick Cooper - Managing Director

B.  Yvonne Holm - Chief Financial Officer

 

Independent Non-Executive Directors

 

Ron Blakely

John Lander

Dennis McShane

John Morgan

Lyndon Powell

Patrick Spink

 

Non-Executive Directors

Company Secretary

 

Rajan Tandon

Jaroslaw Paczek (Alternate to Rajan Tandon)

 

Prism Cosec

 

Registered Office

 

55 Grosvenor Street

London W1K 3HY

United Kingdom

 

 

Auditors

 

Ernst & Young LLP

1 More London Place

London SE1 2AF

United Kingdom

 

Solicitors

 

Linklaters

One Silk Street

London EC2Y 8HQ

United Kingdom

 

 

Bankers

 

England:

HSBC Bank plc

70 Pall Mall

London SW1 5EY

United Kingdom

 

 

 

England:

Standard Bank Plc

25 Dowgate Hill

London EC4R 2SB

United Kingdom

 

 

 

Australia:

HSBC Bank Australia Limited

188 - 190 St George's Terrace

Perth WA 6000

Australia







Ophir Offices






55 Grosvenor Street

London W1K 3HY

United Kingdom

 

 

 

Tel:  +44 (0)20 7290 5800

Fax:  +44 (0)20 7290 5821

464 Hay Street

Subiaco WA 6008

PO Box 463

West Perth WA 6872

Australia

 

Tel:  +61 (0)8 9212 9600

Fax:  +61 (0)8 9212 9699

Plot 1228, Block 2, Masaki Street

Msasani Peninsula

PO Box 23184

Dar es Salaam

United Republic of Tanzania

 

Tel:  +255 (0)22 221 5500

Fax:  +255 (0)22 221 5599

April 274, Ophir House

Km 5, Carretera Aeropuerto

Malabo

Equatorial Guinea

 

 

Tel:  +44 (0)20 7290 5800

Fax:  +44 (0)20 7290 5821

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR URURRAVAWOUR

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