TIDMEO.
RNS Number : 5783C
EnCore Oil PLC
09 March 2011
Press Release
For immediate release: 9 March 2011
EnCore Oil plc ('EnCore' or 'the Company')
Interim Results to 31 December 2010
EnCore Oil plc (LSE: EO.) announces its interim results for the
six months ended 31 December 2010.
Highlights:
-- One appraisal of Catcher and two appraisals of Cladhan during
the period, all of which discovered further hydrocarbons
-- Oil discovery at Varadero and post period end, oil and gas
discovery at Catcher North
-- GBP31 million cash and debt free
-- Award of two new licences in the UKCS 26(th) Seaward
Licensing Round
-- Licence extensions granted for Tudor Rose, Merrow and
Spaniards
-- Two wells currently drilling; an exploration well at Burgman
and an appraisal well at Cladhan
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
Yvonne Fraser, Investor Relations Manager +44 (0)7957 241 408
Westhouse Securities Limited
Tim Feather +44 (0) 20 7601 6100
Matthew Johnson
Chief Executive's Review
The six months to 31 December 2010 and the subsequent period to
date have been dominated by our two key assets; Catcher and
Cladhan. During the six months under review, we drilled three
side-track appraisal wells (one at Catcher SW and two on the
Cladhan discovery), and commenced one exploration well which
resulted in an oil discovery post period end at Varadero. Activity
since the period end includes one completed appraisal well at
Catcher North, the spud of an exploration well at Burgman and the
spud of an appraisal well at Cladhan.
Portfolio Activity
UKCS Block 28/9 - Catcher / Varadero / Burgman; EnCore equity:
15 per cent., Operator
The financial period began with a successful side-track
appraisal to the South West of Catcher (Well 28/9-1Y) which was
described in our 2010 Annual Report.
In late September 2010, a contract was signed for the Transocean
Galaxy II heavy duty jack-up rig to return to the Catcher area to
drill up to four exploration and appraisal wells. After an extended
period of waiting on weather in Dundee harbour, drilling commenced
in mid-December 2010 with the spud of the Varadero exploration
well. The Varadero well 28/9-2 was drilled to a total depth of
5,205 feet Measured Depth (M.D.), discovering a calculated net pay
of 106 feet of 26 degree API oil over a gross hydrocarbon bearing
interval of 400 feet. Well logs indicated average porosity of
approximately 33 per cent. This result at Varadero further
confirmed our view of the existence of high quality, injectite
reservoirs within the Tay Formation which could be directly mapped
from the seismic data and which, to date, have been hydrocarbon
bearing.
Since the period end, the Catcher North appraisal well 28/9-3
has been completed. The main objective of the well was to appraise
the Tay and Cromarty reservoirs and improve our understanding of
the area to the north of Catcher. The well discovered 34 feet of
net hydrocarbon pay with average porosities of 31 per cent.; 14
feet of 29.8 degree API oil within the Cromarty interval and 20
feet of gas within the Tay section. The results extended the gross
hydrocarbon column for the Catcher area to 410 feet, comprising a
gas column of 75 feet and an oil column of 335 feet. The Gas Oil
Contact (GOC) was a little deeper than anticipated and
unfortunately, the sands were less well developed than were
predicted. However, the data from Catcher North added further
information to confirm our previously held view that Catcher,
Catcher East and Catcher North are a single accumulation.
The Burgman exploration well, located in Block 28/9 was spudded
on 1 March 2011. The main objective of the well is to establish if
hydrocarbons are present in the Tay and Cromarty sands. The well
will also drill a deeper, high risk, Jurassic aged Fulmar sand
target below the main Burgman prospect. If Burgman encounters well
developed reservoirs at either or both the Tay and Cromarty levels,
with good quality hydrocarbons, we anticipate electing to drill an
additional well to test the Carnaby prospect due west of
Burgman.
At the conclusion of this drilling campaign the group will
integrate all the information from these and the previous wells
with a newly reprocessed 3D seismic data set. This work will give
us a better understanding of the likely areal distribution,
quantities and qualities of oil and gas in place, together with
associated recoverable reserves potential together with greater
clarity on the potential volumes for the undrilled prospects in the
area. We will then be in a position to proceed with the design of a
suitable development programme for the area.
UKCS Blocks 210/29a & 210/30a - Cladhan; EnCore equity: 16.6
per cent.
August 2010 saw a successful side-track appraisal of the 2008
Cladhan oil discovery in UKCS Block 210/29a. Well 210/29a-4Z
targeted the southerly extension up dip of the original Cladhan
discovery and discovered a gross hydrocarbon column of 159 feet
with 102 feet of net hydrocarbon pay. Tests confirmed that the
discovery was light oil with an API of approximately 34 degrees and
a Gas Oil Ratio of 245 scf/bbl. Reservoir porosity was 21 per cent.
and average oil saturation was 86 per cent. The well tested with a
restricted flow rate of 5,900 bopd for over 13 hours through a
28/64 inch choke with a final wellhead pressure of 1,874 psi. This
was followed by a second Cladhan side-track (210/29a-4Y) with the
results announced in early October 2010. This side-track targeted a
down dip location to the south east of the original Cladhan
discovery and discovered a 258 feet gross hydrocarbon bearing
reservoir interval (169 feet vertical thickness) with 108 feet net
pay (71 feet vertical thickness). The three wells drilled on
Cladhan to date have discovered oil down to 9,650 feet, a total oil
column of over 425 feet and no Oil Water Contact has yet been
established.
A Competent Person's Report commissioned by Sterling Resources,
the Operator of Cladhan, gave a range of oil in place estimates,
but it is our opinion that although it is currently very likely a
commercial accumulation, until further appraisal drilling is done,
an Oil Water Contact is established, and connectivity to other
areas of the broader Cladhan structure is confirmed, the potential
size of the overall Cladhan discovery remains uncertain. Since the
period end, Sterling Resources signed a rig contract which will see
one appraisal well and up to two side-tracks be drilled by the
Transocean Prospect semi-submersible rig, the first of which
commenced drilling last week.
Other Portfolio Activity
In October 2010, we were provisionally awarded two licences in
the UKCS 26(th) Seaward Licensing Round containing six Blocks or
part-Blocks and were formally awarded the licences in January 2011.
The licences comprise traditional licences for UKCS Central North
Sea Blocks 14/29e, 20/4c (part) and 20/5f (part) together with
28/5, 28/10a and 29/1d (split).
Blocks 14/29e, 20/4c (part) and 20/5f (part) lie to the south
west of the Tudor Rose heavy oil discovery in EnCore's existing
Block 14/30a. These Blocks contain the 1998 Hoylake discovery.
EnCore is Operator with a 50 per cent. equity and has agreed to
reprocess existing 3D seismic data with a drill or drop option on
these Blocks. Blocks 28/5, 28/10a and 29/1d (split) lie east and
north east of the Catcher oil discovery in EnCore's existing Blocks
28/9 and 28/10c; EnCore is Operator with 100 per cent. equity and
there is a drill or drop option on these Blocks. Further
reprocessing of the seismic and information from the results at
Catcher are being incorporated into our ongoing evaluation of these
Blocks.
A number of 26(th) Round applications remain outstanding pending
further environmental assessment by the Department of Energy and
Climate Change (DECC). It is expected that the results of these
applications will not be known before the summer of 2011.
Since the period end, DECC has granted an extension to licence
P.1463 which contains the Tudor Rose and Buffalo discoveries on
Block 14/30a (EnCore equity: 40 per cent., Operator). We intend to
drill a well on this licence within the extension period in order
to establish the gravity and viscosity of the oil in place at Tudor
Rose. A site survey was shot over the prospect during the period
and we are currently investigating rig availability.
An extension to licence P.1475 containing the Merrow prospect in
Blocks 113/29c & 113/30 (EnCore equity: 50 per cent.) has also
been granted. An onshore drilling site has been secured, planning
permission has been submitted and a well is being planned for later
this year.
Additionally, Licence P.1655, Block 15/21g (split), (EnCore
equity: 40 per cent., Operator), containing part of the Spaniards
prospect, has been granted an extension by DECC. This extension has
been granted with a view to an early conclusion of ongoing
discussions with the holders of the neighbouring licence, and
committing to drill a shared well to test the Spaniards prospect
which spans the two licences, at a mutually agreed time and
location.
Under the licence terms agreed with DECC on award, our interests
in licence P.1689 which contains Blocks 14/30c (split) and 14/29d
(split), and licence P.1674 which contains Block 48/1d (split) have
now lapsed and the Blocks have been relinquished. Additionally, we
have elected to relinquish licence P.1687 containing Block
9/27c.
Little work was carried out during the period on our Irish
licences (PEL 4/05 and PEL 5/05) as we await a decision regarding
the lease undertakings application by the Operator, San Leon Energy
from the Petroleum Affairs Division (PAD) in Ireland.
Our interest in Egdon Resources plc (LSE: EDR) has performed
well over the period with the divestment of our onshore assets and
interest in the Ceres field completing in July 2010. Since
completion, Egdon has announced: the sale of Egdon Resources (New
Ventures) which is a French subsidiary targeting unconventional
hydrocarbons; an oil discovery at Markwells Wood-1; and the
acquisition of a number of additional onshore licences.
Finally, the marketing process for our Esmond offshore gas
storage project in UKCS Block 43/13a is still ongoing. There have
been no formal offers received to date.
Financial Position
We remain debt free (30 June 2010: debt free) and ended the
period with a cash balance of GBP31.0 million (30 June 2010:
GBP41.9 million), the majority of which is held in GBP sterling. We
made a loss for the period of GBP3.8 million (31 December 2009:
profit of GBP17.4 million and 30 June 2010: profit of GBP11.4
million). We remain fully funded for the remainder of the current
Catcher exploration and appraisal drilling campaign and for the
forthcoming Cladhan appraisal drilling campaign.
Outlook
The Board has given significant consideration to how we can move
our broader asset base forward whilst at the same time continuing
to build on the significant value created to date for shareholders
at Catcher and Cladhan. While the ongoing appraisal plans for the
Catcher Block and Cladhan are sufficiently funded, it has become
increasingly clear to the Board that we need to consider how best
to fund our ongoing and expanding exploration portfolio.
In order to maximise the potential value of our exploration
portfolio and to avoid undue further dilution of shareholders'
interests by raising additional funds for an extended exploration
programme with the associated risks, the Board is currently
examining the option of floating a newly formed company containing
our exploration assets on AIM, with EnCore retaining a significant
shareholding. The new company would raise the necessary capital to
progress a high impact exploration drilling programme. It would be
expected that exploration of these assets would be at higher
working equity levels than EnCore would have retained, and it is
expected that this would also allow the retention of operatorship
control which would likely have been lost via individual farm-outs.
EnCore would remain exposed to any success through our significant
shareholding in the new company.
EnCore's assets would then comprise:
-- Two significant appraisal / development assets, Catcher and
Cladhan;
-- A potential gas development at Cobra;
-- Two undeveloped gas discoveries in Ireland;
-- A potential gas storage project at Esmond; and
-- Two significant shareholdings; one in onshore-focused Egdon
Resources plc and one in a newly formed company focused on
exploration offshore UKCS.
I believe that this would re-position EnCore primarily as an
asset development company with significant exposure to exploration
upside, but with the ability to commit all of our current capital
towards the development assets. EnCore would then be well placed to
focus on moving our key assets, the Catcher and Cladhan projects,
through to Field Development Plan (FDP) stage and possibly beyond,
ensuring that our capital is directed towards that goal.
Alan Booth
Chief Executive Officer
8 March 2011
INDEPENDENT REVIEW REPORT TO ENCORE OIL PLC
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2010 which comprises the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and related notes.
We have read the other information contained in the half-yearly
financial 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 Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM Rules for Companies of the London Stock Exchange
As disclosed in note 1, the annual financial statements of
Encore Oil plc are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared
using accounting policies consistent with those applied for the
year ended 30 June 2010 and to be adopted for the financial year
ending 30 June 2011.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial 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 financial report for the six months ended 31
December 2010 is not prepared, in all material respects, in
accordance with the AIM Rules for Companies of the London Stock
Exchange.
PKF (UK) LLP
London, UK
8 March 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 31 December 2010
6 months 6 months Year
ended 31 ended 31 ended 30
Dec 2010 Dec 2009 June 2010
Unaudited Unaudited Audited
GBP GBP GBP
----------------------------------- ------------ ------------ -------------
Continuing operations
----------------------------------- ------------ ------------ -------------
Impairment write down -
exploration costs (note 9) (105,851) (7,304,499) (12,364,888)
----------------------------------- ------------ ------------ -------------
Administrative expenses (3,529,162) (918,011) (2,756,601)
----------------------------------- ------------ ------------ -------------
Operating loss (3,635,013) (8,222,510) (15,121,489)
----------------------------------- ------------ ------------ -------------
(Loss)/gain on sale of subsidiary
(note 4) (26,749) 21,215,199 21,215,199
----------------------------------- ------------ ------------ -------------
Gain on sale of intangible
exploration and appraisal assets
(note 5) - 1,703,456 1,703,456
----------------------------------- ------------ ------------ -------------
Finance income 187,562 94,179 288,942
----------------------------------- ------------ ------------ -------------
Finance costs (2,010) (5,246) (10,947)
----------------------------------- ------------ ------------ -------------
Other gains and losses (note 6) (350,548) 763,255 1,476,017
----------------------------------- ------------ ------------ -------------
(Loss)/profit before taxation (3,826,758) 15,548,333 9,551,178
----------------------------------- ------------ ------------ -------------
Taxation (note 7) - 1,888,670 1,888,670
----------------------------------- ------------ ------------ -------------
(Loss)/profit and total
comprehensive income for the
period attributable to equity
holders of the parent (3,826,758) 17,437,003 11,439,848
----------------------------------- ------------ ------------ -------------
(Loss)/profit for the period per
ordinary share (pence) (note 8)
----------------------------------- ------------ ------------ -------------
- Basic (1.3) 5.8 3.9
----------------------------------- ------------ ------------ -------------
- Diluted (1.3) 5.7 3.8
----------------------------------- ------------ ------------ -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2010
31 Dec 2010 31Dec 2009 30 June 2010
Unaudited Unaudited Audited
GBP GBP GBP
----------------------------------- ------------ ------------ -------------
ASSETS
----------------------------------- ------------ ------------ -------------
Non-current assets
----------------------------------- ------------ ------------ -------------
Intangible exploration and
appraisal assets (note 9) 22,321,234 20,396,982 15,023,405
----------------------------------- ------------ ------------ -------------
Field under development - 5,198,522 -
----------------------------------- ------------ ------------ -------------
Property, plant and equipment 80,064 16,251 22,906
----------------------------------- ------------ ------------ -------------
Investment in associate 6,351,365 - -
----------------------------------- ------------ ------------ -------------
Investments 50,000 50,000 50,000
----------------------------------- ------------ ------------ -------------
28,802,663 25,661,755 15,096,311
----------------------------------- ------------ ------------ -------------
Current Assets
----------------------------------- ------------ ------------ -------------
Other receivables 1,865,792 308,772 639,495
----------------------------------- ------------ ------------ -------------
Restricted cash (note 11) 923,172 8,902,414 10,684,802
----------------------------------- ------------ ------------ -------------
Cash and cash equivalents 30,057,492 34,110,269 31,183,559
----------------------------------- ------------ ------------ -------------
32,846,456 43,321,455 42,507,856
----------------------------------- ------------ ------------ -------------
Assets held for sale (note 10) - - 6,669,264
----------------------------------- ------------ ------------ -------------
32,846,456 43,321,455 49,177,120
----------------------------------- ------------ ------------ -------------
LIABILITIES
----------------------------------- ------------ ------------ -------------
Current liabilities
----------------------------------- ------------ ------------ -------------
Trade and other payables (4,685,980) (1,840,613) (3,016,345)
----------------------------------- ------------ ------------ -------------
(4,685,980) (1,840,613) (3,016,345)
----------------------------------- ------------ ------------ -------------
Liabilities directly associated
with assets classified as held
for sale (note 10) - - (190,775)
----------------------------------- ------------ ------------ -------------
(4,685,980) (1,840,613) (3,207,120)
----------------------------------- ------------ ------------ -------------
Net current assets 28,160,476 41,480,842 45,970,000
----------------------------------- ------------ ------------ -------------
Non-current liabilities
----------------------------------- ------------ ------------ -------------
Provisions - (1,162,034) (975,000)
----------------------------------- ------------ ------------ -------------
Deferred taxation (1,702,841) (1,702,841) (1,702,841)
----------------------------------- ------------ ------------ -------------
(1,702,841) (2,864,875) (2,677,841)
----------------------------------- ------------ ------------ -------------
NET ASSETS 55,260,298 64,277,722 58,388,470
----------------------------------- ------------ ------------ -------------
EQUITY
----------------------------------- ------------ ------------ -------------
Equity attributable to equity
holders of the parent
----------------------------------- ------------ ------------ -------------
Ordinary shares (note 12) 15,687,396 15,586,987 15,586,987
----------------------------------- ------------ ------------ -------------
Capital Redemption Reserve (note
12) 856,199 856,199 856,199
----------------------------------- ------------ ------------ -------------
Share premium 38,331,637 37,798,714 37,798,714
----------------------------------- ------------ ------------ -------------
Other Reserve 266,908 266,908 266,908
----------------------------------- ------------ ------------ -------------
Foreign Currency Translation
Reserve (316,893) (316,893) (316,893)
----------------------------------- ------------ ------------ -------------
Retained earnings 435,051 10,085,807 4,196,555
----------------------------------- ------------ ------------ -------------
TOTAL EQUITY 55,260,298 64,277,722 58,388,470
----------------------------------- ------------ ------------ -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 31 December 2010
Attributable to parent company equity holders
============== ==================================================================================
Foreign
Equity Capital Currency
share Redemption Share Other translation Retained
GBP capital Reserve premium reserve reserve earnings Total
============== ========== ========== ========== ======= =========== =========== ===========
At 1 July 2009 16,443,186 - 37,798,714 266,908 (316,893) (5,015,962) 49,175,953
============== ========== ========== ========== ======= =========== =========== ===========
Gain for the
period 17,437,003 17,437,003
-------------- ---------- ---------- ---------- ------- ----------- ----------- -----------
Total
comprehensive
income for
the period - - - - - 17,437,003 17,437,003
============== ========== ========== ========== ======= =========== =========== ===========
Share option
expense - - - - - 167,612 167,612
============== ========== ========== ========== ======= =========== =========== ===========
Own shares
bought back (856,199) 856,199 - - - (2,502,846) (2,502,846)
============== ========== ========== ========== ======= =========== =========== ===========
At 31 December
2009 15,586,987 856,199 37,798,714 266,908 (316,893) 10,085,807 64,277,722
-------------- ---------- ---------- ---------- ------- ----------- ----------- -----------
Loss for the
period - - - - - (5,997,155) (5,997,155)
-------------- ---------- ---------- ---------- ------- ----------- ----------- -----------
Total
comprehensive
income for
the period - - - - - (5,997,155) (5,997,155)
============== ========== ========== ========== ======= =========== =========== ===========
Share option
expense - - - - - 107,903 107,903
============== ========== ========== ========== ======= =========== =========== ===========
At 30 June
2010 15,586,987 856,199 37,798,714 266,908 (316,893) 4,196,555 58,388,470
-------------- ---------- ---------- ---------- ------- ----------- ----------- -----------
Loss for the
period - - - - - (3,826,758) (3,826,758)
-------------- ---------- ---------- ---------- ------- ----------- ----------- -----------
Total
comprehensive
income for
the period - - - - - (3,826,758) (3,826,758)
============== ========== ========== ========== ======= =========== =========== ===========
Share option
expense - - - - - 65,254 65,254
============== ========== ========== ========== ======= =========== =========== ===========
Shares issued
for cash 100,409 - 532,923 - - - 633,332
============== ========== ========== ========== ======= =========== =========== ===========
At 31 December
2010 15,687,396 856,199 38,331,637 266,908 (316,893) 435,051 55,260,298
-------------- ---------- ---------- ---------- ------- ----------- ----------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 31 December 2010
6 months 6 months Year
ended ended ended
31 Dec 2010 31 Dec 2009 30 June 2010
Unaudited Unaudited Audited
GBP GBP GBP
-------------------------------- ------------- ------------- --------------
Cash flows from operating
activities
-------------------------------- ------------- ------------- --------------
(Loss)/Profit before taxation (3,826,758) 15,548,333 9,551,178
-------------------------------- ------------- ------------- --------------
Depreciation 12,836 7,434 14,781
-------------------------------- ------------- ------------- --------------
Share based remuneration
charges 65,254 167,612 275,515
-------------------------------- ------------- ------------- --------------
Exploration costs written off 105,851 7,304,499 12,364,888
-------------------------------- ------------- ------------- --------------
Items shown as financing and
investing activities 168,162 (23,766,012) (24,668,889)
-------------------------------- ------------- ------------- --------------
Operating cash outflow prior to
working capital (3,474,655) (738,134) (2,462,527)
-------------------------------- ------------- ------------- --------------
Working capital adjustments (509,623) 68,444 970,281
-------------------------------- ------------- ------------- --------------
Cash used in operations (3,984,278) (669,690) (1,492,246)
-------------------------------- ------------- ------------- --------------
Cash flows from investing
activities
-------------------------------- ------------- ------------- --------------
Purchase of intangible
exploration and evaluation
assets (7,403,680) (458,094) (1,531,158)
-------------------------------- ------------- ------------- --------------
Purchase of field under
development assets - (1,049,342) (1,133,832)
-------------------------------- ------------- ------------- --------------
(Increase)/decrease in
restricted cash 9,564,561 (8,902,414) (10,053,829)
-------------------------------- ------------- ------------- --------------
Purchase of property, plant and
equipment - (1,854) (16,590)
-------------------------------- ------------- ------------- --------------
Interest received 232,756 69,914 205,877
-------------------------------- ------------- ------------- --------------
Proceeds from sale of property,
plant and equipment - 2,914 4,891
-------------------------------- ------------- ------------- --------------
Proceeds from sale of
intangible assets - 2,665,126 2,665,126
-------------------------------- ------------- ------------- --------------
Proceeds from sale of
subsidiary - 38,793,428 38,793,428
-------------------------------- ------------- ------------- --------------
Net cash generated in investing
activities 2,393,637 31,119,678 28,933,913
-------------------------------- ------------- ------------- --------------
Cash flows from financing
activities
-------------------------------- ------------- ------------- --------------
Own shares repurchased - (2,502,846) (2,502,846)
-------------------------------- ------------- ------------- --------------
Shares issued for cash 633,332 - -
-------------------------------- ------------- ------------- --------------
Interest paid and bank charges (2,010) (1,646) (3,606)
-------------------------------- ------------- ------------- --------------
Net cash generated/(used) by
financing activities 631,322 (2,504,492) (2,506,452)
-------------------------------- ------------- ------------- --------------
Net increase/(decrease) in cash
and cash equivalents (959,319) 27,945,496 24,935,215
-------------------------------- ------------- ------------- --------------
Cash and cash equivalents at
start of period 31,183,559 5,405,072 5,405,072
-------------------------------- ------------- ------------- --------------
Translation difference (166,748) 759,701 843,272
-------------------------------- ------------- ------------- --------------
Cash and cash equivalents at
end of period 30,057,492 34,110,269 31,183,559
-------------------------------- ------------- ------------- --------------
Notes to the Interim Financial Statements
Six months ended 31 December 2010
1. Basis of Accounting and Presentation of Financial
Information
These condensed interim consolidated financial statements are
for the six months ended 31 December 2010. The interim financial
report has been prepared in accordance with the AIM Rules for
Companies and using accounting policies and methods of computation
consistent with those used in the Group's annual report for the
year ended 30 June 2010 and to be adopted for the financial year
ended 30 June 2011. The condensed interim consolidated financial
statements have been prepared in accordance with the recognition
and measurement requirements of International Financial Reporting
Standards as adopted by the European Union. The Group has not
adopted IAS 34, Interim Financial Statements.
The disclosed figures are not statutory accounts in terms of
section 434 of the Companies Act 2006. Statutory accounts for the
period ended 30 June 2010, on which the auditors gave an
unqualified report, have been filed with the Registrar of
Companies.
2. Going Concern
These condensed interim consolidated financial statements have
been prepared on a going concern basis.
3. Approval of Accounts
These interim accounts were approved by the Board of Directors
on 8 March 2011.
4. (Loss)/gain on sale of subsidiary
6 months 6 months
ended ended Year
31 Dec 2010 31 Dec 2009 30 June 2010
GBP GBP GBP
-------------------------- ------------- ------------- --------------
Sale consideration 100,000 39,239,760 39,239,760
-------------------------- ------------- ------------- --------------
Less deductions:
-------------------------- ------------- ------------- --------------
Expenses of sale - (446,332) (446,332)
-------------------------- ------------- ------------- --------------
Net proceeds 100,000 38,793,428 38,793,428
-------------------------- ------------- ------------- --------------
Less: net assets at
sale
-------------------------- ------------- ------------- --------------
Intangible oil and gas
exploration assets (126,749) (17,480,479) (17,480,479)
-------------------------- ------------- ------------- --------------
Working capital balances - (97,750) (97,750)
-------------------------- ------------- ------------- --------------
(126,749) (17,578,229) (17,578,229)
-------------------------- ------------- ------------- --------------
(Loss)/gain on sale (26,749) 21,215,199 21,215,199
-------------------------- ------------- ------------- --------------
In March 2010 the Group signed a sale and purchase agreement
with Egdon Resources plc for the sale of its wholly owned
subsidiary EnCore (E&P) Limited for a consideration of
GBP100,000. This entity held the Groups interest in two onshore
French licences. The transaction completed in August 2010.
In August 2009 the Company sold its interest in the Breagh field
offshore UK. The interest was held in two wholly owned subsidiaries
of the Company. The transaction was effected through the sale of
the wholly owned subsidiary EnCore (SNS) Limited, which contained a
14 per cent interest in the Breagh field offshore UK for a
consideration of GBP39.2 million and the sale of a 1 per cent
interest by the other subsidiary for a consideration of GBP2.7
million (see note 5 below). The purchaser of both parts was RWE Dea
UK SNS Limited. It is anticipated that no tax liability will arise
on the sale of EnCore (SNS) Limited.
5. Gain on sale of intangible exploration and appraisal
assets
6 months 6 months
ended ended Year ended
31 Dec 31 Dec 30 June
2010 2009 2010
GBP GBP GBP
----------------------- ---------- ---------- -----------
Sale consideration - 2,695,026 2,695,026
----------------------- ---------- ---------- -----------
Less deductions:
----------------------- ---------- ---------- -----------
Expenses of sale - (29,900) (29,900)
----------------------- ---------- ---------- -----------
Net proceeds - 2,665,126 2,665,126
----------------------- ---------- ---------- -----------
Less carried value of
asset - (961,670) (961,670)
----------------------- ---------- ---------- -----------
- 1,703,456 1,703,456
---------------------------------- ---------- -----------
In August 2009 the Company sold a one per cent interest in the
Breagh field offshore UK for a consideration of GBP2.7 million (see
note 4).
6. Other gains and losses
6 months 6 months Year
ended 31 ended 31 ended 30
Dec 2010 Dec 2009 June 2010
GBP GBP GBP
--------------------------------- ---------- ---------- -----------
Foreign currency (losses)/gains (353,714) 763,034 1,474,552
--------------------------------- ---------- ---------- -----------
Gain on sale of tangible
fixed assets 3,166 221 1,465
--------------------------------- ---------- ---------- -----------
(350,548) 763,255 1,476,017
--------------------------------- ---------- ---------- -----------
7. Taxation
The tax credit arising in the periods ended 31 December 2009 and
30 June 2010 reflects the reversal of deferred tax balances created
on the fair value adjustments to intangible oil and gas assets
resulting from acquisitions in the year to 30 June 2007 and the
period to 30 June 2006. These deferred tax balances reverse via the
Consolidated Statement of Comprehensive Income when the asset is
subsequently sold, as in the case with Breagh (see note 4), or the
asset is impaired, as is the case with the impairment of certain UK
Onshore licences (see note 9).
8. Earnings per Share
The calculation of basic earnings per share is based on the loss
for the period after taxation of GBP3,826,758 (31 December 2009:
gain after taxation of GBP17,437,003 and 30 June 2010: gain after
taxation GBP11,439,848) and a weighted average number of shares in
issue of 296,598,189 (31 December 2009: 301,971,760 and 30 June
2010 296,152,537).
The calculation of diluted earnings per share for the periods
ended 31 December 2009 and 30 June 2010 are based on potential
weighted average shares in issue of 305,156,840 and 299,315,316
respectively. As there was a loss for the current period there is
no difference between the basic and diluted loss per share.
9. Exploration Costs
Exploration costs of GBP105,851 impaired in the six months ended
31 December 2010 reflects accumulated costs on licences which have
been or will be relinquished.
Exploration costs impaired as at 31 December 2009 largely
reflect costs of GBP6.8 million which was written off the carried
value of certain UK onshore assets. In the year ended 30 June 2010
a further impairment charge of GBP4.9 million was realised against
the value of our Irish offshore assets. The Irish assets were
measured through value in use.
6 months Year
Analysis of intangible ended 6 months ended ended
exploration and appraisal 31Dec 2010 31 Dec 2009 30 June 2010
assets GBP GBP GBP
------------------------------- ------------ --------------- --------------
Net book value brought forward 15,023,405 27,243,387 27,243,387
------------------------------- ------------ --------------- --------------
Additions 7,403,680 458,094 1,531,158
------------------------------- ------------ --------------- --------------
Impairment write down -
exploration costs (105,851) (7,304,499) (12,364,888)
------------------------------- ------------ --------------- --------------
Reclassified to asset held
for sale - - (1,386,252)
------------------------------- ------------ --------------- --------------
Total net book value of
intangible exploration and
appraisal assets 22,321,234 20,396,982 15,023,405
------------------------------- ------------ --------------- --------------
10. Asset held for sale
Year
ended 30 June 2010
GBP
----------------------------- --------------------
Intangible asset 1,386,252
----------------------------- ====================
Field in production - Ceres 5,283,012
----------------------------- --------------------
6,669,264
----------------------------- ====================
Provisions (190,775)
----------------------------- --------------------
6,478,489
----------------------------- --------------------
In March 2010 the Group signed sale and purchase agreements with
Egdon Resources plc for the sale of the group's onshore assets
(onshore UK and onshore France) together with its interest in the
Ceres gas field, in return for a material equity stake in Egdon
which is classified in the Group Statement of Financial Position as
an investment in associate. These assets and the related
liabilities were reclassified as held for sale pending completion
of the transaction in July and August 2010. The transaction
completed during the period and no profit or loss arose on the
transaction.
11. Restricted cash
Restricted cash at 31 December 2010 of GBP923,172 is cash held
in escrow accounts under an arrangement with a drilling contractor
relating to part of the Company's share of the Varadero well on UK
North Sea Block 28/9.
Restricted cash at 30 June 2010 included GBP8,539,528, being
part of the consideration for the sale of the Breagh field (see
note 4), which was held in an escrow account for a period of 12
months as security against any potential warranty or indemnity
claims by the purchaser. A further GBP1,656,976 was cash held in
escrow accounts under arrangements with drilling contractors
relating to part of the Company's share of the cost of drilling the
Cladhan and Catcher wells.
Restricted cash at 31 December 2009 included GBP8,080,062, being
part of the consideration for the sale of the Breagh field as noted
above. A further GBP822,352 was cash held in escrow accounts under
arrangements with drilling contractors relating to part of the
Company's share of the cost of drilling the Cladhan and Catcher
wells.
12. Own share repurchase
In the year ended 30 June 2010 the Company purchased 17,123,975
ordinary 5 pence shares in EnCore Oil plc at a total cost,
including expenses, of GBP2,502,846. The shares have been
cancelled.
In October 2010 2,008,184 shares were issued for cash following
the exercise of share options.
The total number of shares in issue at 31 December 2010 is
292,245,048.
The Capital Redemption Reserve includes an amount equal to the
nominal value of the own shares purchased. The total cash cost of
the share repurchases, including expenses, is deducted from
retained earnings.
13. Post balance sheet events
In January 2011 it was announced that the Varadero exploration
well 28/9-2 located in UK Central North Sea block 28/9 was drilled
to a Total Depth of 5,205 feet Measured Depth (M.D.) having
successfully encountered excellent quality hydrocarbon bearing
reservoir sandstones at 4,020 feet M.D. within the target Tay
Sandstone level.
In January 2011 it was also announced that the Catcher North
appraisal well 28/9-3 located in UK Central North Sea block 28/9
was drilled to a Total Depth of 5,265 feet Measured Depth (M.D.)
having successfully encountered hydrocarbons in both the Tay and
Cromarty Sandstone intervals. Pressure data suggests that Catcher
North is part of the Catcher and Catcher East accumulation.
In March 2011 it was announced that the Burgman exploration well
28/9-4 in Central North Sea Block 28/9 was spudded. The well is
expected to be completed in mid-March 2011.
In March 2011 it was announced that the Cladhan exploration well
210/29-5 in Northern North Sea Block 210/29a was spudded. The well
is expected to be completed in April 2011.
14. Dividend
The directors do not recommend the payment of a dividend.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFIAVVITIIL
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