RNS Number:2725R
MedOil PLC
15 February 2007
15 FEBRUARY 2007
medOil plc
("medOil" or "the Company")
Final Results for the Period Ended 30 September 2006
medOil plc, the oil and gas exploration company geographically focused on
southern Europe and North Africa, announces final results for the period ended
30 September 2006.
FINANCIAL HIGHLIGHTS
*Loss for the year of #507,421 (2005: #226,525 as restated) representing
further investment in existing interests and new investment in additional
opportunities;
*Placing in March 2006 to raise #3.25 million at 18p per share; and
*Cash balances at 30 September 2006 were #1,252,486 (2005: #930,000) after
paying share of 3D cost.
BUSINESS HIGHLIGHTS
*Application submitted for three adjacent permits offshore Spain;
*Application submitted for two adjacent permits offshore Sicily - award
anticipated imminently;
*Award of exploration license offshore Albania;
*Completion of the 3-D seismic acquisition offshore Tunisia in October;
and
*New venture activity continues.
Dave Thomas, Chief Executive Officer commented: "I am very pleased with the
progress medOil has made over the past year. The Company has actively pursued
new permits and continues to investigate promising prospects. In addition, we
should soon see the results of the 3D seismic survey undertaken at the Louza
permit and we look forward to updating the market at the appropriate time."
---ENDS---
ENQUIRIES:
medOil plc Tel: 0207 921 0001
David Thomas, Chief Executive Officer
Bishopsgate Communications Limited Tel: 020 7562 3350
Maxine Barnes
Nick Rome
CHAIRMAN'S STATEMENT
In our first full financial year as a publicly quoted company on the AIM market
of the London Stock Exchange, I am pleased to report that medOil plc has made
good progress. In the year to 30 September 2006, the Company raised new equity
funds to pursue its strategy for growth, including increasing and diversifying
its exploration portfolio with applications for new licences offshore Albania,
Italy and Spain and with the potential to enhance the value of its existing
prospects in Tunisia through the successful acquisition of a high quality 3-D
seismic data set.
Strategy
medOil continues to focus on building an exploration, and in due course
production, portfolio in the greater Mediterranean area. There were a number of
reasons behind this original focus which the Board believes are still relevant
today - two years on from our founding. Firstly, the area hosts a number of
proven producing provinces but had long been ignored by the majors and larger
independents. Its relatively benign physical and fiscal operating environments,
together with the region's proximity to energy markets, means that cycle times
can be shorter - allowing faster monetisation of exploration assets. Finally,
there is generally good availability of seismic and well databases for many
prospective provinces.
Our executive management team provides additional advantage. They have long
experience and very good contacts, principally gained with much larger
companies, in the region's territories. More importantly perhaps, the team
brings an approach to risk management which seeks to minimise downside exposure
through the structure of exploration concessions while maintaining access to
'company maker' potential if successful. Activity during the year under review
illustrates well our operating philosophy.
Results
The loss for the year was #507,421 (2005: #226,525 (as adjusted)) which
represents further investment in existing interests, new investment in
additional opportunities and the maintenance of a small office in south London.
Cash balances at 30 September 2006 were #1,252,486 (2005: #930,000), reflecting
the placing in March 2006 of 18 million new ordinary shares at 18p per share to
raise #3.25 million. This funding has enabled us to accelerate the exploration
of our Tunisian acreage and seek new opportunities from other governments thanks
to a stronger balance sheet. As last year, at this stage of the Company's
development, no dividend has been declared or recommended for the period.
Operations
In Tunisia the report from independent consultants Merlin Energy Resources Ltd,
received in November 2005, confirmed our very positive view of our offshore
Louza permit. The report also recommended that we should conduct a 3D seismic
survey to better delineate a number of exploration targets. The acquisition of
the data took place towards the end of, and just after, the financial year and
we are currently processing the data ready for interpretation which will
commence towards the back-end of the first quarter 2007 and I look forward to
updating shareholders at the AGM.
In Malta, we have been disappointed by the government's insistence that we
commit to an exploration well on our acreage in this early stage of our
exploration programme. As the Maltese government continues to insist on such a
course of action, we cannot in the interests we believe of our shareholders
renew our two permits on the government's terms. As a matter of financial
prudence we have written off our #144,000 investment in the accounts. We will
however maintain a dialogue with the Maltese authorities in the hope that we can
persuade them to change their stance on the matter of the future work programme.
We are close to making three additions to the exploration portfolio. We are
currently awaiting ratification from the ministries in question for three
contiguous permits offshore Spain in the Gulf of Valencia, and for a Petroleum
Sharing Contract for a permit offshore southern Albania. In addition, our
application for two contiguous permits offshore Sicily in the Sicily Channel was
confirmed on 13 December 2006 and we expect imminent award of the interests
subject to Ministerial consent. More detail on the year's exploration activity
is contained in the Review of Operations which follows my Statement.
Outlook
We set out in 2004 to create a risk diversified exploration business focused on
the greater Mediterranean region that we would manage carefully to achieve
relatively early revenue without missing out on the potential of our licences.
In the year under review, this vision started to become reality. In the current
year, we will progress exploration activity as soon as the new licences are
ratified and continue to search for new, high potential additions to our acreage
portfolio. I look forward to updating shareholders on activity in the current
financial year at the time of the Annual General Meeting on 19 April 2007.
John Lander
Chairman
REVIEW OF OPERATIONS
Probably the most significant factor affecting medOil's strategy in the greater
Mediterranean in 2006 took place beyond our region of focus. The Russian
government's apparent desire to take more control of its oil and gas industry
dramatically increases the risk to supplies from Russia to Europe and decreases
the exploration and production opportunities for foreign companies in Russia.
Because Europe imports a third of its natural gas requirements from Russia, we
believe that one consequence will be increased efforts to replace these volumes
with more stable supplies, including some from the greater Mediterranean region.
The well established oil and gas provinces of North Africa will continue to
attract our attention. However, we believe that other producing countries in the
region - overlooked in recent years - will now become targets for oil and gas
activities by major oil companies. In addition to our existing main project in
Tunisia, we have been actively pursuing other opportunities throughout the
greater Mediterranean area ahead of this possible growth in attention to the
region.
Tunisia
After the Louza permit award in September 2005, Merlin Energy Resources Ltd.
completed a Competent Person's Report (CPR) on the acreage. Their brief was to
analyse the M'Sela oil discovery on the permit, in terms of possible recoverable
oil volumes, and to review the integrity of four nearby un-drilled targets. This
was completed in the fourth quarter of 2005 with encouraging results. The main
recommendation was to complete a 3-D seismic programme across the M'Sela oil
discovery and the adjacent un-drilled structures.
At the end of the third quarter of calendar 2006 we completed an in-depth
geological and geophysical analysis of the permit using additional 2-D seismic
and well data we received from Tunisia earlier that year. The evaluation results
are encouraging and we have internally up-graded the petroleum prospectivity of
the southern portion of the permit, especially the stratigraphic potential of
the Isis Formation reservoir. These results will be incorporated into the 3-D
interpretation.
Due to heavy industry competition for seismic acquisition vessels we encountered
a severe time-to-start delay. medOil and its joint venture partner TGS-NOPEC
subsequently commissioned a Scan Geophysical SA seismic acquisition vessel for
the 600 sq km 3-D shoot. The 3-D acquisition programme got underway in August
and ended in October 2006. We are now in the processing and interpretation
stage. The processing stage has taken longer than anticipated due to the heavy
work load at the processing centre, and an update on the interpretation will be
presented at the Company's AGM in April 2007.
Malta / Sicily
Malta has been a disappointment. During the one year Exploration Study Agreement
(ESA) which expired in May 2006, we completed a thorough review of the available
data and our technical conclusion vindicated the decision to select the two
permits. We believe that the area has exploration merit, but an orderly
technical work programme including some modern seismic acquisition is required
to substantiate our new petroleum play ideas and to attract a farm-in partner.
However, in the face of the Maltese Government's insistence on an immediate
commitment to an exploration well as a prerequisite to an extension of the ESA,
we do not plan to renew the permits, and we have written off our investment of
#144,000.
The positive results of our recent technical analysis offshore Malta coupled
with our general petroleum geology understanding of offshore Sicily directed us
to apply for two contiguous permits in the Sicily channel area, offshore Italy.
As there was no counter application post gazetting of these permits, we expect
award of these permits in the near future. We will have a 100% interest in the
licences.
We plan to exploit the prolific petroleum generating capabilities of the organic
rich 'Streppenosa' oil shale and the 'Noto' formation, which together are
designated world class source rock packages. We believe there is a recognisable
fairway of oil discoveries and oil fields leading from onshore Sicily into its
southern offshore waters. The Vega oil field, with an estimated resource of 1
billion barrels of oil-in-place, is immediately adjacent to our Sicilian permit
applications.
Albania
The Joni -5 Production Sharing Contract (PSC) was signed on September 4th 2006
in Tirana, and is now subject to ratification by the Council of Ministers. The
PSC is valid for seven years, and medOil is obligated to conduct a 400 sq.km.
3-D seismic survey within two years with a drill or drop decision after the
second and fifth year. medOil holds the licence 100%.
The permit encompasses approximately 2,500 sq.km. offshore southern Albania
where water depths range from the coastline up to 800 metres.
Three proven hydrocarbon plays are identified in the block, all with successful
analogues in the region:
*thrusted anticlines and sub-thrust anticlines of Mesozoic-Eocene
carbonate rocks;
*Miocene-Pliocene sand bodies in structural or stratigraphic traps; and
*erosional remnants of the Mesozoic-Eocene bank edge carbonates.
The 3-D seismic programme and modern seismic reprocessing should confirm the
potential of already identified prospects and hopefully highlight other
attractive targets.
Spain
Oil and gas deposits have been found in both onshore and offshore locations. In
terms of commercially exploitable fields, the most significant area has been the
Gulf of Valencia (or Ebro delta) basin off Spain's eastern coast in the
Mediterranean. Important gas discoveries have been made in the Cantabrian basin
off Spain's northern coast in the Bay of Biscay, and onshore in the south of the
country along the Rio Guadalquivir basin.
The Gulf of Valencia basin is located largely offshore between the eastern
Spanish coast and the Balearic Islands. It is Spain's most important oil
province and contains the Amposta, Casablanca, and Dorada fields, together with
other minor satellite oil fields. The fields are characterised by structural
traps, comprising uplifted horsts and fractured and karstified Mesozoic
carbonate reservoirs, sealed by Tertiary shales.
medOil has applied for three contiguous permits in the southern Gulf of Valencia
basin which cover an area of 2,380 sq.km. Water depths range from 50 metres to
over 2,000 metres. As there was no counter application post gazetting of these
permits, we expect award of these permits in the near future. We will have a
100% interest in the licences.
Potential hydrocarbon plays identified on the permits have successful analogues
in the northern Gulf of Valencia:
*uplifted horsts and fractured karsified Mesozoic carbonate reservoirs,
sealed by Tertiary shales.
With the addition in our area of interest:
*tilted fault-blocks with the potential of multi-layered reservoir
sequences
*we believe the 'Ascla' formation to be a potentially major source rock
unit in the petroleum geology of this southern Gulf area. This Jurassic-aged
shale and marl unit, is the same age as the prolific Kimmeridgian source
rock of the North Sea petroleum province.
Our initial work programme will be to fully evaluate the existing technical data
available in the three permits and to formulate a more extensive programme
incorporating our petroleum generation and trapping ideas so as to optimise the
next phases of exploration activity.
New Ventures
We have evaluated a number of other projects in North Africa, such as in
Morocco, Tunisia, Libya and Egypt and will continue to do so.
Italy's proved oil and gas reserves are located in the northern and central
southern part of the country, in Sicily, and along the Adriatic coast. Italy is
the world's ninth-largest consumer of natural gas and the country's consumption
of oil and gas is far greater than its production. Oil and gas deposits are
continually being discovered in the petroleum producing areas, and we are
currently reviewing a number of new venture projects.
Efforts continue to acquire acreage in Spain, in addition to the Gulf of
Valencia project, and we are currently evaluating other exploration and
producing opportunities. In the eastern Mediterranean, as well as the new
acreage in Albania, we have ongoing evaluation studies which we believe would be
potential exciting additions to medOil's list of projects.
In 2007, we hope to successfully conclude several of these evaluations and add
new exploration and production projects to the medOil portfolio.
medOil consolidated profit and loss account
for the year ended 30 September 2006
Continuing operations
Restated
Year Period
ended ended
30/09/06 30/09/05
Notes # #
Turnover - -
Administrative expenses (578,588) 257,699)
_______ _______
Operating loss 1 (578,588) (257,699)
Other interest receivable and
similar income 71,196 31,275
Interest payable and similar charges (29) (101)
_______ _______
Loss on ordinary
activities before taxation (507,421) (226,525)
Tax on loss on ordinary activities - -
_______ _______
Loss on ordinary
activities after taxation (507,421) (226,525)
_______ _______
Loss for the year/period (507,421) (226,525)
Accumulated (loss)/profit brought forward (226,525) -
_______ _______
Accumulated loss carried forward (733,946) (226,525)
_______ _______
Earnings per share
Loss per ordinary share 2 (1.10p) (0.63p)
______ ______
Diluted loss per ordinary share 2 (0.89p) (0.48p)
______ ______
There are no recognised gains or losses other than the profit or loss for the
above two financial years.
medOil consolidated balance sheet
as at 30 September 2006
Restated
30/09/06 30/09/05
# # # #
Fixed assets
Intangible assets 3,125,079 862,737
Tangible assets 11,962 3,602
______ _______
3,137,041 866,339
Current assets
Debtors 36,826 27,755
Cash at bank and in hand 1,252,486 929,524
_______ _______
1,289,312 957,279
Creditors: amounts falling
due within one year (96,638) (42,006)
_______ _______
Net current assets 1,192,674 915,273
_______ _______
Net assets 4,329,715 1,781,612
_______ _______
Capital and reserves
Called up share capital 540,556 360,000
Share premium account 4,523,105 1,648,137
Profit and loss account (733,946) (226,525)
_______ _______
Equity shareholders' funds 4,329,715 1,781,612
_______ _______
medOil consolidated cash flow statement
for the year ended 30 September 2006
Restated
Year Period
ended ended
30/09/06 30/09/05
# #
Reconciliation of operating loss to net
cash outflow from operating activities
Operating loss (578,588) (257,699)
Impairment 144,230 -
Depreciation 2,065 534
(Increase) in debtors (9,071) (27,755)
Increase in creditors 54,632 42,006
_______ _______
Net cash outflow from operating activities (386,732) (242,914)
_______ _______
Cash flow statement
Net cash outflow from operating activities (386,732) (242,914)
Returns on investments and servicing of finance 71,167 31,174
Capital expenditure (2,416,997) (866,873)
_______ _______
(2,732,562) (1,078,613)
Financing 3,055,524 2,008,137
_______ _______
Increase in cash in the year/period 322,962 929,524
_______ _______
Reconciliation of net cash flow to movement in net funds
Increase in cash in the year 322,962 929,524
Net funds at 1 October 2005 929,524 -
_______ _______
Net funds at 30 September 2006 1,252,486 929,524
_______ _______
Notes to accounts:
The financial information set out in this preliminary announcement is an
abridged version of the full accounts and does not constitute statutory
accounts. The financial information for the period ended 30 September 2005 is
derived from the statutory accounts for that period which have been delivered to
the Registrar of Companies. The previous auditors 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 statutory accounts for the year ended
30 September 2006 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the Group's Annual General
Meeting. The full statutory accounts for the year ended 30 September 2006 will
be posted to shareholders in March 2007.
1. Operating loss
Year Restated
ended Period
30/09/2006 ended
30/09/2005
# #
Operating loss is stated after charging:
Impairment of intangible assets 144,230 -
Depreciation and other amounts written off tangible assets 2,065 535
Auditors' remuneration:
Audit 6,000 2,000
Audit of subsidiary accounts 3,000 -
Other services - 23,370
_______ _______
and after crediting:
Net foreign exchange gain -7,653 -17
_______ _______
The impairment of intangible assets relates to the write off of costs previously
capitalised by the Group in respect of its exploration permits in Malta. In
accordance with the Group's accounting policy the costs associated with these
permits have been written off now that the project is no longer considered
viable.
2. Earnings per ordinary share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares during
the period.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares. The group has only one category of dilutive
potential ordinary shares. These are warrants which grant the holder the right
to subscribe for one ordinary share at #0.075.
3. Prior period adjustments
The prior period adjustment relates to the reclassification as intangible assets
of #701,767 of costs shown as goodwill in the prior period financial statements.
These costs related to the acquisition of permits and licences for future oil
exploration.
The effect on the profit and loss account in respect of this adjustment is to
decrease the retained loss by #29,240 which relates to the amount of goodwill
previously amortised. There is no effect on the corporation tax position of the
group in respect of this adjustment.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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