TIDMCOP
RNS Number : 6991I
Circle Oil PLC
20 June 2011
20 June 2011
Circle Oil Plc
(The "Company") and its Subsidiaries ("Circle" or the
"Group")
Preliminary results for the year ended 31 December 2010
Circle Oil Plc (AIM: COP), the international oil and gas
exploration, development and production company, is pleased to
announce its results for the year ended 31 December 2010.
-- Circle records first full year Operating Profit of US$12.58
million (2009 Operating Loss: US$0.34 million)
-- Net Profit of US$10.36 million (2009 Loss: US$13.51
million)
-- Revenue from oil and gas sales of US$44.39 million, an
increase of 194% on 2009 (2009: US$15.09 million)
-- Successful placing to raise US$66.4 million
-- 100% success in five well Egyptian drilling campaign
-- 100% success rate from tested Moroccan wells in second
exploration drilling campaign
-- Independent Resource Assessment increases Egyptian
recoverable resource estimate by 65.10%
-- Independent Resource Assessment increases Moroccan
recoverable resource estimate by 83.50%
-- New pipeline infrastructure installation currently underway
to increase Moroccan production
Thomas Anderson, Chairman of Circle, said:
"2010 was a milestone year for Circle as we moved into
profitability. We have made considerable progress in our licence
areas. Our model of moving rapidly from exploration and discovery
to early production has proved to be highly successful and is
allowing us to work with our partners to develop existing assets
and to put in place the funding for future development."
For further information contact:
Circle Oil Plc (+44 20 7638 9571)
Professor Chris Green, CEO
Brendan McMorrow, CFO
Evolution Securities (+44 20 7071 4300)
Chris Sim
Neil Elliot
Fox-Davies Capital (+44 20 3463 5010)
Daniel Fox-Davies
Philip Davies
David Porter
Citigate Dewe Rogerson (+44 20 7638 9571)
Martin Jackson
Kate Lehane
Murray Consultants (+353 1 498 0300)
Joe Murray
Joe Heron
Chairman's Statement
The Company has enjoyed another successful year. Further
progress has been made in consolidating our position as a
significant explorer and producer of oil and gas in Egypt and
Morocco. Independent assessment has shown a considerable growth in
our asset base in our Egyptian and Moroccan licences. Our producing
assets in Egypt and Morocco provide a balanced portfolio of current
revenue delivery and future opportunities for growth. Careful
resource management and improvement of facilities, which are
already being implemented, are helping us to maximise the resources
that we have already discovered. There is also significant upside
potential in our other assets, which will be instrumental in
providing further upside for Circle's shareholders into the
future.
Circle's acreage position and remarkable drilling success rate
can be considered as an industry stand-out. I believe that the
Company will continue to perform at this level throughout 2011 and
into 2012, bolstered by the strong history of its drilling results
and the experience of its management team.
The Company conducted an extensive drilling campaign in Morocco
and Egypt throughout 2010. The drilling campaign was completed in
Morocco in April 2011, whilst in the NW Gemsa Concession in Egypt,
the ongoing appraisal and development drilling programme continues
apace. To date, throughout 2010, and into early 2011 a total of
nine wells have been completed and commercial hydrocarbons have
been discovered and tested in eight of these wells, with one well
in Morocco, which intersected gas, yet to be re-drilled as a result
of encountering mechanical problems. In addition, one well in Egypt
has been drilled as a water injector.
The entire Circle team warrants recognition for their skill and
efforts in achieving this noteworthy drilling success rate.
Although this could not have been achieved without the skill and
expertise of Circle's technical team, it is the diligence and
dedication of all our staff, associates and partners that has
underpinned Circle's capacity to achieve such excellent
results.
Operations
Morocco
Despite having to cope with heavy rainfall and intermittent
flooding in Morocco, a five well campaign was finished in April
2011 with four tested commercial discoveries and well DRJ-6 from
the 2009 drilling campaign also being successfully tested. Well
KAB-1, although encountering gas shows, experienced mechanical
problems and is planned to be re-drilled during the next drilling
campaign.
On the production front, ONZ-4 and ONZ-6 continued in production
in 2010. Wells KSR-8 and KSR-9 were also put into intermittent
production for long-term testing and to supply local energy
requirements with the combined rate of flow from both wells varying
between 1.5 to 2.5 MMscfd. Negotiations are close to finalisation
with additional gas users in the area and we expect to increase our
customer base as soon as the new gas pipeline is completed in 2H
2011. This should see gas off-take increasing from today's levels
up to 7 to 8 MMscfd in the latter part of 2011. The addition of a
small diameter link from the existing infrastructure to a new
client is also close to completion and this will see an immediate
uplift in production of another 1MMscfd in the next few weeks.
An updated resource report was compiled by RPS Energy at the
start of this month and the new estimate of most likely (P50) URR
of gas is 30.6 bcf. This, together with our own internal estimate
of gas production and resources remaining to be produced, in areas
not included in the report, of 1.5 bcf, gives a total of 32.1 bcf
URR for the Sebou Block. This represents an increase of gas
resources of 83.5% over the 2010 figure of 17.5 bcf URR.
We are presently acquiring more 3D seismic over our Moroccan
acreage and plan to start our next Rharb drilling campaign in early
2012.
Egypt
In Egypt, we have continued with successful appraisal and
development wells on the NW Gemsa block. Three oil producers and
one water injection well were drilled in 2010 and further
development drilling is ongoing for 2011. New facilities, including
gas production and water injection, are being progressed to
maximise production and recovery efficiency and these should be
completed by the end of 2011. The successful implementation of
these measures should see significant increases in production
levels in 2012. Daily production currently between 7,000 and 8,000
bopd is being managed in accordance with good oil field practice
and through to the end of December 2010, total gross production was
4.1 MMBO.
The recent political unrest in Egypt had little impact on the
Company's operational activities. Production continued as normal
and suffered no delay while drilling was suspended for a couple of
days due to a delay in getting necessary supplies from Cairo.
The situation in Egypt has, however, resulted in delays in
receiving payment for our oil sales to EGPC (Egyptian General
Petroleum Company). At year-end the amount past due was US$10.78
million and since year-end this has increased further. We are
currently in discussions with EGPC with a view to resolving this
matter and reducing these receivables to more normalised
levels.
The updated resource report compiled by RPS Energy took into
account the results of the drilling and development activity up to,
but not including Geyad-3. The report estimates total most likely
(P50) URR at 33.2 MMBO and 38.1 bcf of gas, which together equates
to 39.8 MMBOE URR. This constitutes a 65.1% increase over the 2010
figure of 24.1 MMBOE URR.
We are delighted with the success on our NW Gemsa block as
drilling progresses and new facilities are installed to maximise
both reserves and the long-term uplifted production capability of
the field.
Tunisia
In Tunisia, we have been conducting work in planning for
exploration wells on the onshore Grombalia and Ras Marmour permits.
This drilling activity is likely to be conducted in 2H 2011. In
addition, legacy 2D seismic data has been obtained on the offshore
Mahdia permit and incorporated into our prospect evaluation.
Drilling plans are in progress with mobilisation costs likely to be
shared with another area operator for 2012.
Oman
In Oman, we commenced a 900 sq km 3D seismic campaign over the
southern portion of our Block 49 onshore. This has been processed
and is currently undergoing interpretation as further work is
completed to improve our evaluation of prospectivity and reduce the
risk for potential drilling locations.
In Block 52 offshore, we started a 2D marine seismic survey in
December 2010 which acquired some 5,000 additional kms of 2D. The
survey was completed in early 2011 and submitted for processing.
Work in 2011 will concentrate on interpretation of the survey
together with legacy data, to refine the leads into drillable
prospects and then completing a farm-out proposal on the
acreage.
Corporate
In March 2011, in accordance with EU regulations relating to
events in Libya, the Company froze the shareholding of Libya Oil
Holdings (17.75% holding) until further notice. As of the date of
this report the shareholding remains frozen.
Outlook
In 2011 and into 2012, Circle intends to further its exploration
and production programmes with continued drilling in Egypt through
additional appraisal wells and injector support drilling.
In Morocco, we will complete the recently started 3D survey,
prepare to commence a further drilling campaign and also enjoy the
value added to our country operations due to our new pipeline,
which is being laid initially between our Sebou permit and
Kenitra.
The coming year will see more operational activity in Tunisia
with the drilling of two commitment wells in our land permits in
Grombalia and Ras Marmour and we also look forward to more
operational progress in Oman .
The Company continues to seek out new projects to increase its
exploration and production base by acquiring development,
redevelopment projects or producing assets or fiscally and
regionally attractive exploration assets. This is a difficult task
but we are determined to uphold our stringent technical and
commercial requirements, which we believe have evidenced themselves
throughout our present portfolio.
I reiterate my confidence and enthusiasm that we remain on track
to repeat our success going forward and in doing so praise our
teams in all countries for their professionalism and valued
contributions to the continuing evolution of the Company.
I am delighted once again, to thank you our shareholders, for
your support and to sincerely thank all our staff, associates and
partners for their continuing good work and commitment during the
past year.
Thomas Anderson
Chairman
Financial Review
Results for the year
Revenues for 2010 from oil and gas sales were significantly up
at US$44.39 million, an increase of over 194% from 2009 revenues.
This increase in sales revenue was due to both an increase in
volume of oil sales (up by 221% compared to the previous year) and
gas sales (up by 37% compared to the previous year) and an increase
in both the oil and gas price achieved over 2009. The average oil
price achieved for 2010 was US$75.74 per BO versus US$65.90 per BO
in 2009 while the average gas price achieved was US$7.43 per Mscf
as against US$7.19 per Mscf in 2009.
Gross profit for the year was US$16.90 million as against
US$7.37 million for 2009, an increase of 129%.
Operating costs, including exploration expenditure written-off,
amounted to US$4.32 million and was down by US$3.40 million on the
previous year which resulted in an operating profit for 2010 of
US$12.58 million (2009: operating loss of US$0.34 million).
After net finance costs for the year amounting to US$2.18
million (2009: US$13.13 million) the Group recorded a net profit
before tax of US$10.40 million for 2010 (2009: net loss of US$13.48
million).
Fundraising
Circle announced on 3 August 2010 that it had successfully
raised gross proceeds of US$66.40 million (GBP42.50 million)
through a placing of 141,666,667 new ordinary shares with both
existing and new institutional investors. The proceeds raised were
targeted to accelerate the Groups exploration activities, fund
capital expenditure in both Morocco and Egypt and fund new
ventures. Evolution Securities acted as sole book-runner while Fox
Davies Capital acted as co-lead manager.
Cash flow
Net cash inflow from operating activities for 2010 amounted to
US$8.98 million (2009: US$1.38 million).
Net cash used in investing activities relating to oil and gas
assets amounted to US$49.01 million (2009: US$37.57 million) and
comprised mainly of US$19.31 million invested in exploration and
evaluation assets in Morocco and Oman while US$29.70 million was
invested in production and development assets in Morocco and
Egypt.
Net cash generated from financing activities totalled US$64.84
million (2009: US$24.42 million) and comprised mainly US$66.40
million from the share placing noted above, US$3.67 million from
the exercise of share options less share issue costs of US$3.43
million and interest paid of US$1.8 million.
Group cash balances at year-end amounted to US$47.11 million
(2009: US$22.33 million) of which US$ 2.25 million was in
restricted accounts leaving US$44.86 million available for use.
Current cash balances amount to US$28.60 million of which US$27.35
million is available for use.
Consolidated statement of financial position
Total assets for the Group at 31 December 2010 amounted to
US$203.87 million (2009: US$130.04 million) and comprised mainly
oil and gas assets of US$137.12 million, cash at bank of US$47.11
million and US$19.35 million of trade and other receivables.
Net assets amounted to US$158.87 million at year end (2009:
US$80.95 million) while working capital was US$59.11 million (2009:
US$21.40 million).
The significant strengthening in the Groups statement of
financial position was due mainly to the August 2010 capital
raising and net profits generated for the year.
Brendan McMorrow
Chief Financial Officer
Circle Oil PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
US$000 US$000
Revenue 44,391 15,093
Cost of sales (27,490) (7,721)
Gross profit 16,901 7,372
Administrative expenses (3,093) (2,315)
Share option expense (576) (1,496)
Pre-licence costs (300) -
Exploration costs written-off (281) (4,932)
Foreign exchange (loss)/gain (68) 1,027
Operating profit/(loss) 12,583 (344)
Finance revenue 2,328 134
Finance costs (4,512) (13,265)
Profit/(loss) before taxation 10,399 (13,475)
Taxation (37) (34)
Profit/(loss) for the year 10,362 (13,509)
Basic earnings/(loss) per share 2.19c (3.66c)
========= =========
Diluted earnings/(loss) per share 2.18c (3.66c)
========= =========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
US$000 US$000
Profit/(loss) for the year 10,362 (13,509)
Total income and expense recognised in other
comprehensive income - -
Total comprehensive income for the year -
entirely attributable to equity holders 10,362 (13,509)
============== =========
Circle Oil PLC
CONSOLIDATED statement of financial position AT 31 DECEMBER
2010
2010 2009
US$000 US$000
Assets
Non-current assets
Exploration and evaluation assets 39,733 20,965
Production and development assets 97,384 74,767
Property, plant and equipment 140 210
--------- ---------
137,257 95,942
--------- ---------
Current assets
Inventories 145 91
Trade and other receivables 19,350 11,675
Cash and cash equivalents 47,114 22,334
66,609 34,100
--------- ---------
Total assets 203,866 130,042
========= =========
Equity and liabilities
Capital and reserves
Share capital 8,084 5,730
Share premium 167,083 103,336
Other reserves 6,658 5,999
Retained deficit (22,958) (34,118)
Total equity 158,867 80,947
--------- ---------
Non-current liabilities
Convertible loan - debt portion 24,374 21,562
Derivative financial instruments 12,246 14,403
Decommissioning provision 879 446
Total non-current liabilities 37,499 36,411
--------- ---------
Current liabilities
Trade and other payables 7,463 12,650
Current tax 37 34
Total current liabilities 7,500 12,684
--------- ---------
Total liabilities 44,999 49,095
--------- ---------
Total equity and liabilities 203,866 130,042
========= =========
Circle Oil PLC
CONSOLIDATED cash flow statement
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
US$000 US$000
Operating activities
Net cash generated by operations 8,979 1,377
Taxes paid (40) (21)
Net cash inflow from operating activities 8,939 1,356
--------- ---------
Cash flows from investing activities
Payments to acquire exploration and
evaluation assets (19,307) (12,372)
Payments to acquire production and development
assets (29,703) (25,202)
Payments to acquire property, plant
and equipment (84) (51)
Interest received 165 480
Net cash used in investing activities (48,929) (37,145)
--------- ---------
Cash flows from financing activities
Issue of ordinary share capital 70,070 28,177
Share issue costs (3,432) (1,958)
Interest paid (1,800) (1,800)
Net cash from financing activities 64,838 24,419
--------- ---------
Increase/(decrease) in cash and cash
equivalents 24,848 (11,370)
Cash and cash equivalents at beginning
of year 22,334 32,670
Effect of foreign exchange rate changes (68) 1,034
Cash and cash equivalents at end of
year 47,114 22,334
========= =========
Circle Oil PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
Share-based
Share Share payment Translation Retained Total
capital premium reserve reserve deficit equity
Consolidated US$000 US$000 US$000 US$000 US$000 US$000
At 1 January
2009 4,799 78,393 3,186 (3) (20,621) 65,754
Issue of
share
capital 931 24,943 - - - 25,874
Share-based
payment - - 2,828 - - 2,828
Reserve
transfer - - (12) - 12 -
Net loss for
the year - - - - (13,509) (13,509)
At 31
December
2009 5,730 103,336 6,002 (3) (34,118) 80,947
======== ======== ============ ============ ========= =========
Issue of
share
capital 2,354 63,747 - - - 66,101
Share-based
payment - - 1,457 - - 1,457
Reserve
transfer - - (798) - 798 -
Net profit
for the
year - - - - 10,362 10,362
At 31
December
2010 8,084 167,083 6,661 (3) (22,958) 158,867
======== ======== ============ ============ ========= =========
NOTES TO THE FINANCIAL STATEMENTS
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and
International Financial Reporting Interpretations Committee
(IFRIC). They have also been prepared in accordance with the
Companies Acts, 1963 to 2009 and are compliant with the rules of
the Alternative Investment Market (AIM) of the London Stock
Exchange.
The financial statements have been prepared on the historical
cost basis.
The 2010 Annual Report will be available on the Company's
website (www.circleoil.net) on 21 June 2011 and will then be posted
to shareholders.
Basis of consolidation
The consolidated financial statements include the financial
statements of the Company and all of its subsidiaries made up to
the end of the financial year. Subsidiaries are consolidated in the
Group financial statements from the dates on which control over
financial and operating policies and decisions is obtained. All
intercompany transactions, balances, income and expenses have been
eliminated in full on consolidation.
Basic and diluted earnings/(loss) per share
The calculation of the basic earnings/(loss) per share
attributable to the ordinary equity holders of the parent is based
on the following data:
2010 2009
US$000 US$000
Earnings
Profit/(loss) for the year attributable
to equity holders of the parent 10,362 (13,509)
======== =========
Number of shares '000 '000
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 473,689 368,825
======== =========
Diluted earnings/(loss) per share is calculated using the
weighted average number of ordinary shares assuming the conversion
of its potential dilutive equity derivatives outstanding. All of
the Group's potential ordinary shares were dilutive for the year
ended 31 December 2010, which resulted in a decrease in earnings
per share. The Group had total potential ordinary shares
outstanding of 104,714,949 at 31 December 2010 (2009:
122,770,279).
Regrouping of comparatives
Certain comparative figures stated in this report have been
regrouped to reflect current year figures.
In accordance with the guidelines of the AIM Market of the
London Stock Exchange, Professor Chris Green, Chief Executive
Officer of Circle Oil plc, an explorationist and geophysicist with
over thirty years oil & gas industry experience, is the
qualified person, as defined in the London Stock Exchange's
Guidance Note for Mining and Oil and Gas companies, who has
reviewed and approved the technical information contained in this
announcement.
Glossary of terms
bcf Billion cubic feet
BO Barrels of oil
bopd Barrels of oil per day
kms Kilometres
MMBO Millions of barrels of oil
MMBOE Millions of barrels of oil equivalent
Mscf Thousand standard cubic feet
of gas
MMscfd Million standard cubic feet of
gas per day
Sq km Square kilometres
URR Ultimate Recoverable Resources
2D Two dimensional
3D Three dimensional
Notes to Editors
Circle Oil Plc (AIM: COP) is an international oil & gas
exploration, development and production Company with an expanding
portfolio of assets in Morocco, Tunisia, Oman and Egypt with a
combination of low-risk near-term production and significant
exploration upside potential. The Company listed on AIM in October
2004.
Internationally, the Company has continued to expand its
portfolio over the past 2 years and now has assets in the Rharb
Basin, Morocco; the Ras Marmour Permit in southern Tunisia; the
Mahdia Permit offshore Tunisia; the Grombalia Permit in northern
Tunisia and the Zeit Bay area of Egypt. Circle also has the largest
licence holding of any company in Oman. In addition to its
prospective Block 52 offshore, Circle also has an ongoing
exploration program in Block 49 onshore.
Circle's strategy is to locate and secure additional licenses in
prospective hydrocarbon provinces and through targeted investment
programmes, monetise the value in those assets for the benefit of
shareholders. This could be achieved through farm-outs to selected
partners who would then invest in and continue the development of
the asset into production, or Circle may itself opt to use its own
expertise to appraise reserves and bring assets into production,
generating sustained cash flow for further investment.
Further information on Circle is available on its website at
www.circleoil.net.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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