RNS Number:7685B
EnCore Oil PLC
09 August 2007
Press Release
For immediate release: 9 August 2007
EnCore Oil plc ("EnCore" or "the Company")
EnCore Announces Results for the Year Ended 30 June 2007
EnCore Oil plc (LSE: EO.) is pleased to announce its results for the year ended
30 June 2007.
Highlights
Over the past 12 months, EnCore has been active in growing its portfolio and
adding new opportunities. This has resulted in a two-year programme of
exploration and appraisal drilling covering a broad range of risk profiles.
EnCore believes this balanced portfolio positions the Company to add value in
the near term and means EnCore is ideally placed to make the most of
opportunities as they arise. Highlights of the year include:
Acquiring four UK companies: Virgo Oil & Gas plc, Virgo Energy Limited, Nido
Petroleum (UK) Limited, and Grove Energy (UK) Limited
*Adding 16 offshore licences to our portfolio, including four firm wells to be
drilled in 2007 and 2008
*Adding the potential value of gas storage in abandoned gas fields: Forbes,
Esmond, and Gordon
Forming new joint venture partnerships generating near term drilling
opportunities
*Joint venture partnerships formed with Perenco, Century Exploration, Island Oil
& Gas, Bharat Petroleum, Tata Petrodyne, Venture Production, Star Energy,
Lundin and Toreador
*Benefits of new partnerships include equity swaps for appraisal drilling
opportunities, equity swaps for drilling funding, securing expertise for
offshore gas storage evaluation, and securing expertise of regionally
established operators
Building up and delivering an active drilling programme covering a range of risk
profiles from pure exploration to appraisal
*Active drilling programme of at least 12 wells over two years including three
pure exploration wells and nine appraisal and development wells
*Drilled one exploration well in the UK Central North Sea, one exploration well
in the Southern North Sea, and two appraisal wells in the Celtic Sea. Both
Celtic Sea wells flowed at potentially commercial rates
Successfully being awarded 24th Round Licences
*24th Licensing Round Awards for seven licences covering 12 blocks and
part-blocks providing additional opportunities for exploration upside
*Contributing three contingent wells to the drilling programme
Raising #7 million through institutional placing to support drilling and
operations activity
Pursuing the unrealised potential upside of offshore Gas Storage
*Gas storage feasibility studies on decommissioned gas fields Forbes, Esmond and
Gordon
Michael Lynch, Chairman, commented:
"The last 12 months have been an exciting time at EnCore. We have made great
progress in strengthening and balancing our exploration and appraisal portfolio.
We are pleased that our drilling programme is beginning to deliver success,
supporting our strategy of drilling multiple targets with a range of risk
profiles.
Looking to the immediate future, we are participating in a number of important
exploration and appraisal wells over the coming year. We also have the added
opportunity of offshore gas storage studies, which we hope will add as yet
unrecognised value to the Company."
For further information, please contact:
EnCore Oil plc www.encoreoil.co.uk
Alan Booth, Chief Executive Officer +44 (0)20 7224 4546
Eugene Whyms, Chief Financial Officer
Aquila Financial Limited www.aquila-financial.com
Peter Reilly +44 (0)20 7202 2601
Yvonne Fraser +44 (0)20 7202 2609
Hanson Westhouse Limited
Tim Feather +44 (0)113 246 2610
KBC Peel Hunt
Jonathan Marren +44 (0)20 7418 8900
Notes to Editors:
EnCore Oil plc (LSE:EO.) is an oil and gas exploration and production (E&P)
company quoted on AIM.
EnCore does not aim to become a full cycle E&P company. The principal strategy
is to create shareholder value through the successful exploration and appraisal
of prospects and discoveries, and the development of those assets through to
commercial sanction at which point EnCore will typically seek to exit.
EnCore has an experienced and proven management team, a number of whom were
responsible for the discovery of the Buzzard field in the UK North Sea, which
currently produces 10 per cent. of the UK's total oil production.
All EnCore's commercial and material technical evaluations are undertaken
in-house by the EnCore team. This brings both continuity to the management and
development of the assets and an ownership that is vital to unearth the best and
most creative new ideas and opportunities.
EnCore currently holds a balanced portfolio of interests in licences both on and
offshore, primarily focused on the UKCS. During 2007/2008 EnCore expects to
participate in the drilling of at least twelve wells.
www.encoreoil.co.uk
CHAIRMAN'S REVIEW
The last 12 months have been an exciting time at EnCore. We have made great
progress in strengthening and balancing our exploration and appraisal portfolio.
At EnCore, it is not our aim to build a full cycle E&P company. Throughout the
year, we continued to develop a portfolio of assets that will deliver
sustainable and realisable long-term value to our shareholders. Our business
model is to monetise most projects at the appropriate time in their life cycle,
taking into account remaining risk and further capital requirements especially
with respect to capital efficiency. We always remain alert to other value
creating and crystallising opportunities along the way - an approach that is a
point of great pride for me personally. It means EnCore is a company that not
only has a well-defined strategy but also one that is genuinely focussed on
delivering value to shareholders.
Creating Shareholder Value
An E&P company needs to have a dual approach to creating shareholder value.
Firstly, it is vital to have a technically and commercially successful
exploration programme. Secondly, it is crucial never to run out of money. We
have been very specific about mitigating our financial risk through the deals we
do, and by managing our cash resources sensibly. Always having funds available -
coupled with an opportunistic approach - means we are well positioned to drill
wells and actively participate in industry consolidation.
As a company, we are still in our youth, which makes our achievements to date
even more significant. After listing on AIM in March 2006, we had interests in
20 licences - 13 onshore and 7 offshore - by the end of our last financial year
in June 2006. A year on and we now have interests in 48 licences - 15 onshore
and 33 offshore. While we maintain our focus on the UKCS, we have also entered
two new countries, Ireland and The Netherlands, and have licence applications
outstanding in France.
Industry Reputation
We continue to be very involved in evaluating and negotiating deals and it is
very apparent from opportunities in the past 12 months, that the industry views
EnCore as a worthy partner. In fact, our activity this year has included four
corporate acquisitions, seven asset deals, seven licence awards through one UK
licensing round and participation in the drilling of four wells - two of which
have been deemed to be potentially commercial gas discoveries.
We believe in acting with integrity in how we run our business. As significant
shareholders ourselves, we seek to create opportunities for the Company which
will ultimately create value for all our shareholders. The benefit may not
always be seen in the short term - which is the case now with our market
capitalisation - but the basis has been created for substantial growth in
shareholder value. With any exploration comes risks but in the portfolio we have
built up over the last two years, there is the potential for a broad range of
potential rewards on offer.
The Future
Looking to the immediate future, we are participating in a number of exploration
and appraisal wells over the coming year. We also have the added opportunity of
offshore gas storage studies, which are currently ongoing and came through our
acquisition of Virgo.
None of this year's achievements would have been possible without the hard work
and dedication of the EnCore team and I would like to thank them all for their
efforts. I look forward to reporting on EnCore's progression and growth next
year.
Michael T. Lynch
Chairman
8 August 2007
CEO'S REVIEW
Last year EnCore made considerable progress despite a highly competitive
business environment in the UK E&P sector.
Firstly, we all share the sense of disappointment with our fellow shareholders
that the results of the Golden Arrow well were not as positive as hoped. We
openly recognised that the inherent risks meant that it was more likely to fail
than succeed but judged the risk worth taking, given the potential rewards. We
also recognised that a great deal of interest would be focused on this single
event and that our main task was to focus on planning for what happened after
the well.
Growing Business
Over the past 12 months we have increased our portfolio significantly, both in
the UK and overseas, through corporate acquisitions and asset acquisitions,
swaps, and a successful licensing round application. We put in place an active
drilling programme of over 12 wells which has already started to deliver
positive results, backed up by a significant portfolio of acreage that we hope
will deliver more drilling opportunities in the future.
The competition for access to exploration and appraisal opportunities remains
intense - especially in oil. Access to drilling rigs is still an issue for the
UK offshore industry as a whole, especially for semi-submersibles. We do not
believe this will cause any material delays to fulfilling our upcoming firm
drilling programme, but specific timings are always subject to operational
issues that may occur under drilling operations ahead of taking delivery of the
rig.
The fall in the gas price in 2007 and the greater availability of drilling
equipment has left us better placed to capture and progress opportunities in the
Southern Gas Basin. We are pleased that the UKCS 25th Round may be delayed until
2008. This would be a positive development, allowing companies to manage
existing portfolios more effectively in a resource constrained environment, as
well as placing the award of new licences into a more appropriate timescale for
the industry's normal budget cycle.
Our Team
Access to talented and experienced people is a continuing issue for the
worldwide oil and gas industry. It is something that has been recognised for
many years, but in an industry well known for often setting its horizon as much
as one or sometimes two quarters ahead, it is not surprising that we are now
paying the price for our failure to attract younger geoscientists and engineers
to our industry. The available talent pool is not large given current demands,
with the inevitable upward pressure on costs. We are therefore especially
pleased to have established and expanded our close knit team, which is still,
and will remain, small by comparison with some of our peers.
We always aim to spend our resources on those aspects of our business where we
can make a difference. All our commercial and material technical evaluations are
undertaken in house by our own team. This brings both continuity to the
management and development of the assets and an ownership that is vital to
unearth the best and most creative new ideas and opportunities.
The EnCore team are equally importantly also shareholders in our business. In
addition to the Directors, who own 34.8 million shares, the other team members
own 4.9 million shares through the investment of their own money in the Company.
Well Results to Date
Since the agreement to acquire Oil Quest Resources plc through a reverse
takeover in late 2005 we have drilled a total of six wells. The results from the
first two wells, Kirkleatham and Westerdale, both gas discoveries, have been
discussed previously.
Since then we have drilled an additional 4 offshore wells: 18/5-2 (Golden
Arrow), 48/22-5 (Cirrus), 49/23-2 (Old Head of Kinsale) and 57/2-3 (Schull).
The results of these are:
Golden Arrow: Dry hole, plugged and abandoned
Cirrus: Gas discovery, plugged and abandoned
Old Head of Kinsale: Gas discovery, flowed 18.5mmcfd
Schull: Gas discovery, flowed 21mmcfd
Our drilling record to date has therefore been five gas discoveries and one dry
hole. While the acid test is commerciality, we are pleased that we have
demonstrated our ability to find hydrocarbon accumulations.
Outlook
The next 12 months or so will provide further business development opportunities
as well as the continuation of the drilling programme. We are particularly
looking forward to drilling the Breagh, Catcher and Cobra wells, the success of
any of which should add material value.
We are keen to see the results of our gas storage feasibility study with Star
Energy in the fourth quarter of this year and are looking carefully at how we
might most effectively distribute any value to our shareholders if the project
is commercially viable.
2008 will hopefully bring with it our maiden production from Kirkleatham and
also confirmation of commerciality at the Amstel Oil field in the Netherlands.
We will continue to manage our portfolio aggressively and seek opportunities to
grow and upgrade our opportunity set.
Much has been said about 'consolidation' within the E&P sector and we have had a
number of discussions in this regard. However informal discussions to date with
a number of interesting parties lead us to believe there is still reluctance
among those companies with a suitable asset base to sanction a combination.
However I firmly believe consolidation in the sector is inevitable, even if the
timing is not yet clear.
Summary
We achieved many of our objectives during the year, but that does not make us
complacent. We recognise there is still much to be done to deliver true value to
our shareholders in a highly competitive industry. However, we believe that our
measured and opportunistic approach to business puts us in a very strong
position to make the most of our opportunities, which should yield substantial
rewards for our shareholders.
Alan Booth
Chief Executive Officer
8 August 2007
FINANCIAL REVIEW
Acquisition of Four Oil and Gas companies
On 25 October 2006 EnCore announced a proposal to acquire four oil and gas
exploration companies: privately held Virgo Oil & Gas plc and Virgo Energy
Limited, Nido Petroleum (UK) Limited, a UK subsidiary of Australian listed Nido
Petroleum Limited, and Grove Energy (UK) Limited, a UK subsidiary of Toronto and
AIM quoted Grove Energy Limited. The transaction completed on 16 January 2007.
The consideration for the acquisitions was the issue of 37,000,000 new ordinary
shares in EnCore at a price of 22.75 pence. The total consideration was #8.9
million, including expenses of #0.4 million.
The assets and liabilities of the acquired companies have been consolidated in
the Group's financial statements with effect from 16 January 2007. The book
value of the acquired net assets at that date was #0.7 million.
A preliminary fair value exercise has been undertaken to determine the values
attributable to the acquired assets and liabilities within the Group's balance
sheet as at 30 June 2007. The total fair value attributable to the acquired
assets and liabilities is #11.3 million, comprising #8.9 million of
consideration and associated costs and an additional #2.4 million of deferred
tax uplift provided in accordance with the provisions of IAS 12. Based upon this
preliminary exercise, EnCore has allocated #11.3 million to intangible
exploration and evaluation assets reflecting a number of UK North Sea licence
interests. Due to the timing of the transaction and the wide range of oil and
gas assets acquired the fair value allocated at 30 June 2007 is preliminary in
nature and will be reviewed during 2007 and 2008 in accordance with the
provisions of IFRS 3 relating to Business Combinations.
Exploration and Evaluation Asset Accounting Policy
During the year EnCore reviewed the accounting policy for exploration and
evaluation assets. As a consequence of this review the accounting policy has
been changed from the full cost method to successful efforts accounting. This
results in no change to previously disclosed results of the Group but may result
in an acceleration of the write-off of exploration and evaluation assets in
future periods. For further information see the Accounting Policies section of
the Annual Report and Accounts.
Loss for the Year
The net loss for the year ended 30 June 2007 is #1.7 million (period to 30 June
2006 #1.0 million). The operating loss is #2.8 million (2006 #1.3 million)
comprising administrative expenses of #1.7 million (2006 #1.3 million) and
exploration costs of #1.1 million (2006 Nil). The operating loss has been partly
offset by financial income of #0.9 million (2006 #0.3 million) and gains on the
sale of fixed asset investments of #0.3 million. Finance expenses and foreign
currency losses were #0.1 million in the period.
The gross administrative costs can be further analysed as follows:
2007 2006
# million # million
Staff costs 1.5 0.9
Legal and professional 0.4 0.4
Office costs 0.1 0.1
Other 0.1 0.1
-------- --------
2.1 1.5
Gross administrative expenses were #2.1 million (2006 #1.5 million) of which
#0.4 million (2006 #0.2 million) was capitalised as it reflected direct work to
enhance the value of EnCore's licence interests, giving net administration costs
in the income statement of #1.7 million (2006 #1.3 million).
Staff costs reflect a full year charge for appointments made during the period
ended 30 June 2006. The gross overhead monthly run rate, including IFRS 2 stock
option charges, is #0.2 million.
Exploration costs principally comprised costs associated with UK North Sea
licences where the licence has or will be relinquished. One licence has a
decommissioning obligation of approximately #0.7 million. Exploration costs
written off on completion of the exploration well on licence P1352 were
immaterial as EnCore had its costs carried through the exploration phase.
Balance Sheet
At 30 June 2007 the Group had net assets of #39.7 million (30 June 2006 #26.2
million). The most significant balances are intangible exploration and
evaluation assets of #24.2 million (2006 #8.9 million) and cash of #18.0 million
(2006 #18.0 million).
The exploration and evaluation assets can be further analysed as follows:
2007 2006
# million # million
UK onshore licences 7.1 7.1
UK offshore licences 12.9 1.7
Other 4.2 0.1
-------- --------
24.2 8.9
The significant increase in the value of UK offshore licences reflects the
acquisition of over 16 offshore licensed blocks and part blocks in the North,
Central and Southern areas of the North Sea owned by the Virgo group of
companies discussed above.
Other exploration and evaluation assets include interests in Ireland, France and
Western Sahara. The increase during the period reflects the costs of drilling
the Old Head of Kinsale discovery well offshore Southern Ireland.
The net movement in total exploration and evaluation assets of #15.3 million
comprises #11.3 million arising from the acquisition of the Virgo companies;
#6.4 million of additions of which the Irish Old Head discovery is #4.0 million
and the decommissioning provision noted above is #0.7 million; exploration write
off is #1.1 million; disposal proceeds are approximately #1.0 million and
foreign exchange losses on assets held in a US dollar denominated subsidiary are
#0.3 million.
Cash Flow
The Group ended the year with #18.0 million of cash and cash equivalents (2006
#18.0 million) and a further #1.6 million of cash held in escrow. The Group
remains debt free.
On 18 December 2006 EnCore announced the placing of 29,166,666 ordinary 5 pence
shares at 24 pence raising approximately #6.7 million net of expenses. In
addition EnCore raised a further #0.7 million through the sale of non-core fixed
asset investments.
The Group spent #1.4 million (2006 #0.9 million) during the year funding
operations, principally staff costs. #4.7 million (2006 #2.1 million) was spent
on intangible oil and gas assets, of which #4.0 million related to Old Head of
Kinsale in Ireland. #1.6 million was paid into an escrow account ahead of the
drilling of the appraisal well on UK North Sea block 42/13 operated by Sterling
Resources. Cash outflow in respect of the acquisition of the Virgo group of
companies was #0.4 million and net bank interest income was #0.9 million (2006
#0.3 million).
All the Group's cash is held on deposit with an AA rated bank and attracts
floating rate interest. Some use has been made of very short term deposits to
enhance interest income. To date the duration of these deposits has not exceeded
one month. At 30 June 2007 #3.9 million of cash was held in US dollars. The
Group is therefore exposed to the risk that movements in the exchange rate
between the USD and GBP will impact the value of this holding.
Consolidated Income Statement for the year ended 30 June 2007
2007 2006
# #
Impairment write down - exploration costs (1,126,307) -
Administrative expenses (1,719,179) (1,283,052)
---------- ---------
Operating Loss (2,845,486) (1,283,052)
Gain on sale of fixed asset investments 287,980 -
Finance income 926,076 339,869
Finance costs (2,714) (2,006)
Other gains and losses - foreign currency losses (50,882) (2,564)
---------- ---------
Loss from continuing activities before taxation (1,685,026) (947,753)
Taxation 4,154 (18,276)
---------- ---------
Net loss from continuing activities (1,680,872) (966,029)
---------- ---------
Loss per Ordinary Share (pence)
- Basic (0.7) (1.0)
- Diluted (0.7) (1.0)
Consolidated Balance Sheet as at 30 June 2007
2007 2006
# #
ASSETS
Non-current assets
Intangible exploration and evaluation assets 24,191,869 8,906,391
Property, plant and equipment 25,925 38,993
Investments 50,000 425,125
----------- ----------
24,267,794 9,370,509
Current assets
Other receivables 1,319,706 335,440
Cash held in escrow 1,630,361 -
Cash and cash equivalents 17,967,096 18,035,020
----------- ----------
20,917,163 18,370,460
----------- ----------
TOTAL ASSETS 45,184,957 27,740,969
LIABILITIES
Current liabilities
Trade and other payables 1,186,607 406,183
Non-current liabilities
Provisions 736,275 -
Deferred taxation 3,590,472 1,148,868
----------- ----------
4,326,747 1,148,868
----------- ----------
TOTAL LIABILITIES 5,513,354 1,555,051
----------- ----------
NET ASSETS 39,671,603 26,185,918
----------- ----------
EQUITY
Equity attributable to equity holders of the parent
Called up share capital 14,632,742 11,319,409
Share premium 27,215,923 15,417,355
Other reserves (60,699) 291,581
Retained earnings (2,116,363) (842,427)
----------- ----------
TOTAL EQUITY 39,671,603 26,185,918
----------- ----------
Consolidated Statement of Cash Flows for the Year Ended 30 June 2007
2007 2006
# #
Cash Flows from Operating Activities
Loss before taxation (1,685,026) (947,753)
Depreciation 16,657 7,956
Share based remuneration charges 406,936 123,602
Exploration write off 1,126,307 -
Items shown as financing and investing activities (1,211,342) (305,004)
----------- -------------
Operating Cash Flow Prior to Working Capital (1,346,468) (1,121,199)
Corporation tax payments (18,033) -
Working capital adjustments (48,573) 256,083
----------- -------------
Cash used in Operations (1,413,074) (865,116)
Cash Flows from Investing Activities
Purchase of intangible exploration and evaluation
activities (4,718,329) (2,091,010)
Expenses of acquisition (433,769) -
Cash held in escrow (1,630,361) -
Purchase of property, plant and equipment (3,587) (46,949)
Interest received 907,359 309,574
Proceeds from sale of investments 663,105 -
----------- -------------
Net Cash used in Investing Activities (5,215,582) (1,828,385)
Cash Flows from Financing Activities
Shares issued for cash 6,694,401 20,074,117
Net cash acquired - 658,974
Interest paid and bank charges (2,714) (4,570)
----------- -------------
Net Cash generated by Financing Activities 6,691,687 20,728,521
----------- -------------
Net increase in cash and cash equivalents 63,031 18,035,020
Cash and cash equivalents at start of year 18,035,020 -
Foreign currency translation difference (130,955) -
----------- -------------
Cash and cash equivalents at end of year 17,967,096 18,035,020
----------- -------------
Consolidated Statement of Changes in Equity for the Year Ended 30 June 2007
Attributable to parent company equity holders
Equity share Share Other Foreign Retained Total
capital premium reserve currency earnings equity
translation
reserve
# # # # # #
Period to 30
June 2006
Loss for the
period - - - - (966,029) (966,029)
Currency
translation - - - 24,673 - 24,673
-------------- ------ ------ ----- ----- ----- -----
Total income
and expenses
for the period - - - 24,673 (966,029) (941,356)
Equity
balances of
EnCore prior
to reverse
acquisition 3,291,900 - 266,908 - - 3,558,808
Cost of
acquisition 2,422,509 4,504,852 - - - 6,927,361
Shares issued
for cash 5,605,000 11,910,625 - - - 17,515,625
Expense of
issue - (998,122) - - - (998,122)
Share option
exercise - - - - 123,602 123,602
------------ ----- ----- ----- ----- ----- -----
Total as at 30
June 2006 11,319,409 15,417,355 266,908 24,673 (842,427) 26,185,918
Year to 30
June 2007
Loss for the
period - - - - (1,680,872) (1,680,872)
Currency
translation - - - (352,280) - (352,280)
---------- ----- ----- ----- ----- ----- ------
Total income
and expenses
for the period - - - (352,280)(1,680,872) (2,033,152)
Shares issued
to acquire
Virgo 1,850,000 6,567,500 - - - 8,417,500
Shares issued
for cash 1,458,333 5,541,667 - - - 7,000,000
Expenses of
issue - (310,599) - - - (310,599)
New share
issued in
respect of
employee share
options 5,000 - - - - 5,000
Share option
expense - - - - 406,936 406,936
---------- ----- ----- ----- ----- ----- ------
Total as at
30 June 2007 14,632,742 27,215,923 266,908 (327,607)(2,116,363) 39,671,603
---------- ------ ------ ------ ------ ------ -------
The foreign currency translation reserve is used to record exchange differences
arising from the translation of the financial statements of a USD denominated
subsidiary.
NOTES
1. Basis of Accounting and Presentation of Financial Information
Whilst the financial information included in this announcement has been prepared
in accordance with International Financial Reporting Standards (IFRS), this
announcement does not contain sufficient information to comply with IFRS. The
Company will publish full financial statements that comply with IFRS in August
2007.
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 30 June 2007 or the period to 30
June 2006. The financial information for the year ended 30 June 2007 and the
period ended 30 June 2006 are extracted from the statutory accounts of EnCore
Oil plc. The auditors, PKF (UK) LLP, reported on those accounts; their report
was unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985. The Annual Report for the year ended 30 June 2007,
including the auditors' report, will be posted to shareholders during the week
commencing 3 September 2007 and will be available from the same date both to be
downloaded from the Company's website at www.encoreoil.co.uk and in hard copy
from EnCore Oil plc, 5th floor, 62-64 Baker Street, London W1U 7DF.
The 2007 accounts have been prepared on a basis consistent with the accounting
policies set out in the 2006 accounts with the exception of the Intangible
exploration and evaluation accounting policy which has been changed from the
full cost method to successful efforts. This did not result in any changes to
the
This announcement was approved by the board on 8 August 2007.
2. Loss per ordinary share
Basic loss per share amounts are calculated by dividing net loss for the period
by the weighted average number of ordinary shares outstanding during the period.
Diluted loss per share amounts are calculated by dividing the net loss for the
period by the weighted average number of ordinary shares outstanding during the
period plus the weighted average number of ordinary shares that would be issued
on the conversion of all the dilutive potential ordinary shares into ordinary
shares.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
2007 2006
# #
Loss for the period 1,680,872 966,029
---------- ---------
2007 2006
Basic weighted average number of shares 237,041,815 96,822,666
Dilutive potential ordinary shares:
Share options and warrants 12,120,219 4,413,571
----------- ---------
Diluted weighted average number of shares 249,162,034 101,236,237
----------- ---------
3. Business combinations
On 16 January 2007, EnCore Oil acquired 100 per cent. of the issued share
capital of four oil and gas companies: privately held Virgo Oil & Gas plc and
Virgo Energy Limited, Nido Petroleum (UK) Limited, a UK subsidiary of Australian
Stock Exchange listed Nido Petroleum Limited, and Grove Energy (UK) Limited, a
UK subsidiary of Toronto and AIM quoted Grove Energy Limited - the ("Virgo
Group"). Total consideration was #8.9 million comprised of 37,000,000 EnCore Oil
plc ordinary 5 pence shares issued at 22.75 pence per share and #0.4 million of
expenses.
The fair value allocation to the acquired assets is preliminary in nature and
will be reviewed in accordance with the provisions of IFRS 3 - Business
Combinations. Due to the inherently uncertain nature of the oil and gas industry
and intangible exploration evaluation assets in particular, the assumptions
underlying the preliminary assigned values are highly judgmental in nature. The
purchase consideration equals the aggregate of the fair value of the
identifiable assets and liabilities of the acquired companies, and therefore no
goodwill has been recorded on the acquisition. Deferred tax has been recognised
in respect of the fair value adjustments as applicable.
The effect of the acquisition on the net assets of the Group was as follows:
Book value Provisional
fair value
(#'000) (#'000)
Net assets acquired
Oil and gas intangible assets 685.2 11,265.5
Debtors 64.9 64.9
Short term liabilities (37.5) (37.5)
Deferred tax liabilities - (2,441.6)
------------- -----------
Total net assets 712.6 8,851.3
------------- -----------
-----------
Total consideration 8,851.3
-----------
Satisfied by:
Shares issued 8,417.5
Costs associated with acquisition 433.8
-----------
8,851.3
The loss of the Virgo Group attributable to the Group post acquisition is
#10,857.
4. Equity structure
No. #
Authorised 500,000,000 25,000,000
Ordinary shares
Allotted, called up and fully paid 271,151,952 14,632,742
Equity balances of EnCore prior to reverse
acquisition - 3,291,900
Oil Quest shares in existence prior to the
acquisition 44,335,107 -
Cost of acquisition 48,450,179 2,422,509
Issued for cash 112,100,000 5,605,000
---------- ----------
At 30 June 2006 204,885,286 11,319,409
Issued for acquisition 37,000,000 1,850,000
Issued for cash 29,166,666 1,458,333
Issued on exercise of share options 100,000 5,000
----------- ----------
At 30 June 2007 271,151,952 14,632,742
----------- ----------
On 15 March 2007 100,000 ordinary 5 pence shares were issued at 5 pence per
share as a result of the exercise of options by a former director of the
Company.
On 16 January 2007 37,000,000 ordinary 5 pence shares were issued at 22.75 pence
per share in exchange for 100 per cent of the issued share capital of four oil
and gas companies: privately held Virgo Oil & Gas plc and Virgo Energy Limited,
Nido Petroleum (UK) Limited, a UK subsidiary of Australian Stock Exchange listed
Nido Petroleum Limited, and Grove Energy (UK) Limited, a UK subsidiary of
Toronto and AIM quoted Grove Energy Limited.
On 18 December 2006 29,166,666 ordinary 5 pence shares were issued at a price of
24 pence per share by way of a placing. The Placing raised approximately #7
million (before expenses).
5. Annual General Meeting
The Annual General Meeting is due to be held at IoD Hub, New Broad Street House,
35 New Broad Street, London, EC2M 1NH on 21 November at 10.00 a.m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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