31 October 2014
Nordic Energy Plc
("Nordic" or the "Company")
Final Results for the Year to 31 May 2014
The Directors of Nordic Energy, the oil and gas E&P company focused on Denmark,
Norway and the North Sea sectors of the Netherlands and the UK (Nordic area),
are pleased to present the Company's preliminary results for the full year
ended 31 May 2014.
Operational Highlights:
* Successful acquisition of Licence 1/13("Licence"); the largest exploration
and production licence in the Danish North Sea
* Application made for a further licence of eight offshore blocks in the
Danish Sea, adjacent to Licence 01/13
* Appointment to the Board of two non-executive Directors, Ian Donald and Ken
Seymour
* Technical update published by the Company in February 2014 identified 20
prospects and leads on the Licence area and one gas discovery
Financial Highlights
* In April 2014, the Company successfully raised £189,000 through a private
placing
* Loss before taxation for the year is £184,552 (2013 - £172,253), reflecting
the low cost nature of the early stage development of the Company
Post-year end
* Competent Person's Report ("CPR") released in June 2014 recognising the
Maja Miocene gas discovery with Contingent Net Recoverable Resources of 69
Bcf gas
* It also stated Best Estimate Prospective Recoverable Resources of 1.8bn bbl
oil and 1.9 Tcf gas in the portfolio of 20 prospects and leads
* Migration and Maturation study released in October 2014 further supported
the Company's view that hydrocarbons have migrated from the Central Graben
to the area of the Licence
* Appointment of Don Nicolson as non-executive Chairman and Jeremy Kane as
non-executive Director
* Proposed move to AIM
* New research note published by Allenby Capital
Rudolf Kleiber, CEO, commented: "This has been a pivotal year in the Company's
development starting with the acquisition of Licence 1/13 and subsequent
progress made with the technical analysis of the area. Our work has further
supported our belief that this is a highly prospective area and we feel
confident in our position going forward.
"We are continuing with our plans to move to AIM which we hope will provide us
with the funds to accelerate the development of the Company."
Extract from the Strategic Report
The following is an extract from the Strategic Report, full details of which
can be found in the annual report.
Objectives
The Company's objective is to create significant shareholder value from the
exploration, appraisal and development of oil and gas projects.
The Company has a number of secondary objectives, including promoting the
highest level of health and safety standards, developing our staff to their
highest potential and being a good corporate citizen in our chosen countries of
operation.
Strategy
The Company's long-term strategy is to build an attractive portfolio of oil and
gas exploration and production assets predominantly in the North Sea and
northern Europe, where the board has significant and relevant experience.
In the short term the Company will seek to maximise the exploration and
appraisal potential within the existing Licence 1/13held in the Danish North
Sea.
Business model
The Company seeks to increase shareholder value by acquiring low cost oil and
gas exploration and production assets with highly prospective characteristics,
reduced geographical and political risk, and the potential for rapid
advancement. This focus is demonstrated by the acquisition and development
activities that have already taken place on Licence 1/13 in Denmark and is
supported by a current application to the Danish Energy Agency for additional
blocks. Management focus is on value creation through cost effective
acquisitions and judicious expenditure focussed on exploration and development.
The Company has identified a number of approaches which may be employed to
create value, including: the acquisition of further licence areas, strategic
joint ventures, including farm-in agreements, disposals, and the development of
projects to production by the Company itself or spin-offs to new entities.
Review of the Company's business using key performance indicators
The Company's shares were admitted to trading on the Plus Markets (now ISDX
Growth Market) in October, 2012, when the company raised £444,000 by way of an
equity placing.
In September, 2013 the Company acquired operatorship and an 80% working
interest of Danish Hydrocarbons Exploration and production Licence 1/13in the
Danish North Sea from Nikoil Limited (an entity controlled by a director of the
Company) via the establishment of its wholly owned subsidiary ESP Oil & Gas
ApS.
Since this time the Company has undertaken extensive geological structural
interpretation and mapping work using existing 2D-seismic data aided by a
volume of Pseudo 3D-seismic data. The Company now holds a sizeable licence
area, a library of seismic information, data logs, structural interpretations
and mapping, creating a large Hydrocarbon Prospect Portfolio.
The work has been funded in part by the original equity investment and in part
from a further equity raise for gross proceeds of £189,000 completed in April,
2014. The Company commissioned a Competent Persons Report which was completed
in June, 2014 providing an independent evaluation of the recoverable
hydrocarbons expected for the asset Licence 1/13.
Business performance overview
During the early part of the year under review Nordic through its wholly-owned
Danish subsidiary, ESP Oil & Gas ApS, acquired the Exploration and Production
Licence 1/13covering an area of 3633km2 in the Danish North Sea. Following this
award Nordic has commenced activities in meeting work programme commitments
over the licence area and has acquired well and seismic data both 2D and Pseudo
3D and has carried out structural interpretation and mapping work that has led
to the identification of a gas discovery and 20 oil and gas prospects across a
number of geological play types and varying depth as follows:
Play type Target depth Likely resource
Miocene 1,100ft Shallow Gas
Upper Cretaceous 6,725ft Oil
Rotliegendes 8,200ft Oil
Carboniferous (Pre-Permian) 9,800ft Gas
This work has resulted in the commissioning of an independent Competent Persons
report ("CPR") that was completed in June, 2014.
In addition as a result of the potential identified through the initial
interpretation and mapping work the Company through its subsidiary, ESP Oil &
Gas ApS made an application for a further licence area of a total of 8 blocks
covering an area of 1,750km2 adjacent to existing Licence 01/13.
Work programme
Following the year-end Nordic completed further technical work principally a
maturation and migration study and plans to complete a seismic attribute study,
together with the balance of the interpretation work over a remaining volume of
2D-seismic.This will allow for a further maturing of the assets in the
portfolio and the commissioning of an updated CPR.
Set out below are the Company's Reserves and Resources as provided in the
Independent Competent Persons Report provided by Xodus Group Limited in their
report dated 6 June 2014.
Contract Area Prospect Gross Nordic Net Interest
MM Boe MM Boe %
01/13 Contingent Resource (best) 14.4 11.5 80
Prospective Resource (best) 2,590.0 2,072.0 80
Key objectives
In the 2013 annual report we set ourselves the principal objective of
progressing the low cost development programme to further define the
prospectivity of the licence. This resulted in an upgraded resource portfolio
including a mapped gas discovery and supported by an Independent Competent
Persons Report. We are also progressing the objective of adding further
exploration assets to the Companys portfolio through the Application for 8
additional blocks in the Danish North Sea.
For the coming year we will continue to develop and mature Licence 1/13
supported by the completed maturation and migration study modelling, seismic
attribute work and further mapping of prospects and structural interpretation
through the acquisition of additional 2D, working toward the planning and
acquisition of a 3D seismic programme as well as carrying out work to optimise
a development concept for the Maja gas discovery and its surrounding
accumulations.
Consolidated statement of comprehensive income
for the year ended 31 May 2014
2014 2013
Restated
£ £
Continuing operations
Administrative expenses 174,307 170,719
Exchange losses 10,722 1,919
_________ _________
Operating loss (185,029) (172,638)
Finance income 477 385
_________ _________
Loss before tax (184,552) (172,253)
Income tax expense - -
_________ _________
Loss for the year attributable to equity holders (184,552) (172,253)
of the parent
_________ _________
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translating foreign (2,120) -
operations
_________ _________
Other comprehensive income for the year (net of (2,120)
tax)
Total comprehensive loss for the year (186,672) (172,253)
attributable to equity holders of the parent
_________ _________
Loss per share
Basic and diluted loss per share 0.2p 0.2p
_________ _________
Statements of financial position
at 31 May 2014
Group Company Group &
Company
Company number 08068442 2014 2014 2013
Restated
£ £ £
Assets
Intangible assets 315,337 - 11,472
Investments - 332,303 -
_________ _________ _________
Total non-current assets 315,377 332,303 11,472
_________ _________ _________
Trade and other receivables 27,304 17,417 16,371
Cash and cash equivalents 278,644 278,644 370,084
_________ _________ _________
Total current assets 305,948 296,601 386,455
_________ _________ _________
Total assets 621,325 628,364 397,927
_________ _________ _________
Equity attributable to the equity
holders of the parent
Issued capital 100,732 100,732 94,880
Share premium 622,042 622,042 405,120
Shares to be issued 76,000 76,000 -
Warrants reserve 71,430 71,430 61,702
Translation reserve (2,120) - -
Accumulated losses (356,804) (351,885) (172,253)
_________ _________ _________
Total equity 511,281 518,320 389,449
_________ _________ _________
Liabilities
Trade and other payables 110,044 110,044 8,378
_________ _________ _________
Total current liabilities 110,044 110,044 8,378
_________ _________ _________
Total liabilities 110,044 110,044 8,378
_________ _________ _________
Total equity and liabilities 621,325 628,364 397,827
_________ _________ _________
Statement of cashflows
for the year ended 31 May 2014
Group Company Group &
Company
2014 2014 2013
Restated
£ £ £
Cash flows from operating activities
Operating loss (185,029) (180,109) (172,638)
Foreign exchange differences 8,785 10,905 1,919
Share-based payments 9,729 9,729 61,702
Shares issued in lieu of services 5,774 5,774 -
(Increase) in receivables (11,033) (1,146) (16,271)
Increase in payables 101,666 101,666 8,378
_________ _________ _________
Net cash utilised in operating activities (70,108) (53,181) (116,910)
_________ _________ _________
Cash flows from investing activities
Interest received 477 477 385
Advance of loan to subsidiary - (216,831) -
Acquisition of intangible assets (199,905) - (11,472)
_________ _________ _________
Net cash utilised in investing activities (199,428) (216,354) (11,087)
_________ _________ _________
Cash flows from financing activities
Proceeds from the issue of share capital 189,000 189,000 500,000
_________ _________ _________
Net cash from financing activities 189,000 189,000 500,000
_________ _________ _________
Net (decrease) in cash and cash (80,535) (80,535) 372,003
equivalents
Cash and cash equivalents at beginning of 370,084 370,084 -
year
Effect of exchange rate fluctuations on (10,905) (10,905) (1,919)
cash held
_________ _________ _________
Cash and cash equivalents at end of year 278,644 278,644 370,084
_________ _________ _________
Notes to the accounts
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below:
1 . Significant accounting policies
Basis of preparation
The consolidated financial statements and company financial statements of
Nordic Energy Plc have been prepared for the first time in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by the
European Union, and those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The disclosures required by IFRS 1 concerning
the transition from UK GAAP to IFRS are given in Note 18.
Since the transition date, being the first day of the comparative period, no
exemptions available under IFRS 1 have been taken.
The financial statements have been prepared on the historical cost basis and
are presented in GB Pounds sterling. Foreign operations are included in
accordance with the policies set out in Note 1.
Standard and Interpretations issued but not yet effective
Any Standards and Interpretations that have been issued but are not yet
effective, and that are available for early application, have not been applied
by the Company in these financial statements. Application of these Standards
and Interpretations is not expected to have a material effect on the financial
statements in the future.
Going concern
The Company is at an early stage of exploration and in common with many oil and
gas exploration companies, it raises financing for its exploration and
appraisal activities in discrete tranches. The Company had working capital of £
278,644 at 31 May 2014. In view of this, the directors consider that sufficient
funds will be available to progress the Company's planned exploration
programmes and that it has adequate working capital for at least the next
twelve months. The directors therefore consider it appropriate to prepare these
financial statements on the going concern basis.
However, the existing funds will not be sufficient to bring the projects into
development and production should it be warranted and, in due course, further
funding will be required. In the event that the Company is unable to secure
further finance it may not be able to fully develop its projects which may have
a consequential impact on the recoverability of the carrying value of the
related intangible assets. Additionally, if the Company is unable to develop
its projects then it will have a consequential impact on the recoverability of
the carrying value of investments in subsidiaries held by the parent company.
Loss of parent company
As permitted by section 408 of the Companies Act 2006, the statement of
comprehensive income of the parent company is not presented as part of these
financial statements. The parent company's loss for the financial year was £
179,633 (2013 - £172, 253).
2. Prior period adjustment
In preparing the financial statements for the year ended 31 May 2014, the
Directors identified that 39,000,000 warrants issued in the period ending 31
May 2013 had not been fair valued at their grant date in line with the
requirements of IFRS 2 "Share-based payments". The Directors have
retrospectively fair valued the warrants during the year as though the
valuation had been prepared as at the grant date. This has resulted in an
increase of £61,702 to the loss for the period ended 31 May 2013 and the
formation of a share warrants reserve for the same amount.
3. Loss per share
The calculation of basic loss per share at 31 May 2013 was based on the loss
attributable to ordinary shareholders of £184,552 (2013 - £172,253) and a
weighted average number of ordinary shares outstanding during the period ended
31 May 2014 of 95,585,439 (2013 - 78,363,178) calculated as follows:
2014 2013
Restated
£ £
Loss attributable to ordinary shareholders
Loss for the period 184,552 172,253
_________ _________
Loss attributable to ordinary shareholders 184,552 172,253
_________ _________
Weighted average number of ordinary shares Number Number
Number of shares in issue at beginning of year 94,880,000 -
Effect of shares issued during the year 705,439 78,363,178
_________ _________
Weighted average number or ordinary shares in issue 95,585,439 78,363,178
for the year
_________ _________
There is no difference between the basic and diluted loss per share.
4. Dividend
At this stage in the Company's development, the Directors will not be paying a
divided.
5. Accounts and Review
The information included in this announcement has been extracted from the
audited accounts. The final report for the year to 31 May 2014 will be sent to
all shareholders on 3 November 2014.