United Energy PLC - Interim Results
30 Septembre 1997 - 9:32AM
UK Regulatory
RNS No 5093p
UNITED ENERGY PLC
30th September 1997
UNITED ENERGY plc
Interim Results for the Six Months Ended 30 June 1997
HIGHLIGHTS
- Compared to First Half 1996:
- Profits improved by 77% to #465,000.
- Production increased by 21% to 1,610 boepd.
- Turnover up by 19% at #3 million.
- Operating cashflows up by 18% at #1.6 million.
- Compared to 31 December 1996:
- Evaluated net assets increased from 28p to 29p per share.
- Oil and gas reserves increased by 9% to 3.2 million boe.
- Borrowing base availability increased by 18% to #1.3 Million.
- Shares are trading at a substantial discount to the net evaluated assets
per share and on a cash flow multiple of less than 2.5.
John F Billington, Chairman of United Energy plc said:
"I am pleased to report that the Group made further progress in achieving its
strategic objectives during the six months to 30 June 1997...The two deep Ann
Mag wells which are currently drilling may materially impact the Group's
performance during the second half of the year, and we await the outcome with
considerable interest."
Contact: Nick Tamblyn Chief Executive 01242 253773
Derek Howard-Orchard Group Technical Director 01242 253773
Chairman's Statement
I am pleased to report that the Group made further progress in achieving its
strategic objectives during the six months to 30 June 1997.
Group Results
The Group's results for the period showed strong growth with profit after
taxation of #465,000, 77% ahead of the same period last year on turnover up
19% to #3 million. These improvements were directly attributable to record
production levels and reduced operating costs per barrel of oil equivalent
("boe"). Prices received were similar to the first six months of 1996 with
average oil prices slightly higher at US$19.70/bbl and average gas prices
slightly lower at US$2.47/mcf. Although gas prices remain strong, oil prices
have weakened. We expect these to be approximately 10% lower for the second
half of the year.
Production and Reserves
Production for the half year averaged 1,610 boe per day, an increase of 21%
over the same period last year. Proved reserve volumes increased by 9% to 3.2
million boe with Evaluated Net Assets per share showing a more modest
improvement to 29 pence per share as compared to 28 pence at 31 December 1996.
Finance
Net operating cashflows improved 18% to #1,625,000, representing 4.3p per
share. Despite these strong cashflows, gearing rose to 60% as a direct result
of the drilling program and acquisitions. Readily available bank facilities
increased by approximately 18% to #1.3 million from #1.1 million at the last
year end.
Drilling Program
Five wells were drilled during the first half, all of which are productive. I
was particularly pleased by the success of the Sullivan Deep A well drilled in
the Ann Mag Field as this is producing around 100 boepd to our interest from
only one of three zones which display similar characteristics. We expect to
have the remaining two zones on production by year end. The success of this
well has supported 2 further deep wells which are currently drilling.
A further 4 wells have been drilled since 30 June 1997, of which 1 is
productive and 3 are dry holes. One of the dry holes cut the edge of the
targeted channel sand and we expect to side-track this well to intersect the
full sand package later this year.
The strong performance from the 1996 drilling program and the early successes
from the 1997 program supports the decision taken last year to initiate the
development drilling program, despite the 3 recent dry holes. The results
from the deep well program are very important to the overall outcome of the
1997 program given that the total investment in the three deep wells,
including the well already on production, will amount to approximately US$1.5
million.
Acquisitions
During the first half we purchased a 100% working interest in the Pardue
Field, Fisher County, Texas for US$1.1 million and a majority working
interest in West Fuller Field, Fremont County, Wyoming for US$114,000. The
Pardue Field is currently producing 100 boepd to our interest and we
have recently completed upgrading the water injection system allowing
greater volumes of water to be injected into the Canyon Sands to
improve production and recoveries. In West Fuller we are in the process
of recompleting selected wells and identifying infill drilling opportunities
for 1998.
Agrigen
Progress continues to be made towards financial close on Agrigen's Nunn Mills
Poultry Litter Power Station and, in particular, negotiations with our
preferred turnkey construction contractor, Kvaerner Pulping Oy, have reached
an advanced stage. The overall financial attractiveness of the project has
been helped by the recent award of a Thermie Grant from the EEC, which should
amount to approximately 2.38 million ECUS (#1.75 million). In addition,
the award of this grant will result in the Nunn Mills Power Station becoming
an EEC reference plant. Both the planning permission and the
Integrated Pollution Control Authorisation are in the process of being
updated.
Outlook
Production since 30 June has fallen, as a result of an unexpected decline from
several zones in our Rupp 7 and 8 wells. Although other zones exist in these
wells, which will help to offset the lost production, they are unlikely to be
recompleted until later in the year or early in 1998. The two deep Ann Mag
wells which are currently drilling may materially impact the Group's
performance during the second half of the year, and we await the outcome with
considerable interest.
John Billington
Chairman
30 September 1997
UNAUDITED GROUP RESULTS
For the Six Months Ended 30 June 1997
Six months Six months Year ended
ended ended 31 December
30 June 30 June 1996
1997 1996
#'000 #'000 #'000
Turnover 2,971 2,487 5,384
_________________________________
Cost of sales:
Production costs (948) (912) (1,664)
Depletion of oil and gas interests
and abandonment (909) (731) (1,620)
_________________________________
(1,857) (1,643) (3,284)
_________________________________
Gross profit 1,114 844 2,100
Administrative expenses (446) (386) (958)
_________________________________
Operating profit 668 458 1,142
Loss from interests in associated
undertaking - - (5)
Provision against investment - (40) (40)
Interest receivable 9 4 20
Interest payable (177) (160) (327)
_________________________________
Profit on ordinary activities
before taxation 500 262 790
Taxation (35) - -
_________________________________
Profit on ordinary activities
after taxation 465 262 790
_________________________________
Earnings per share 1.2p 0.7p 2.0
_________________________________
Unaudited Group Balance Sheet as at 30 June 1997
30 June 1997 31 December
1996
#'000 #'000
Fixed assets
Intangible exploration assets 128 363
Oil and gas interests 8,967 7,608
Other tangible assets 104 104
Investments 371 255
_______________________
9,570 8,330
_______________________
Current assets
Debtors 1,025 1,186
Cash at bank 288 705
_______________________
1,313 1,891
Creditors: amounts falling due
within one year (951) (1,446)
_______________________
Net current assets 362 445
_______________________
Total assets less current liabilities 9,932 8,775
Creditors: amounts falling due after
more than one year (3,880) (3,365)
Provisions for liabilities and
charges (20) (21)
_______________________
6,032 5,389
_______________________
Capital and reserves
Called up share capital 3,889 3,879
Share premium account 272 270
Other reserves: capital reserve 729 729
Profit and loss account 1,142 511
_______________________
Shareholders' funds-equity 6,032 5,389
_______________________
Notes
1. The figures above do not constitute statutory accounts within the meaning
of Section 240 of the Companies Act 1985. The comparative figures for the
year ended 31 December 1996 have been extracted from the statutory
accounts for that year, on which the auditors reported without
qualification, and which have been filed with the Registrar of Companies.
2. The interim results for the six months ended 30 June 1997 are unaudited
and have been prepared in accordance with the accounting policies adopted
in the statutory accounts for the year ended 31 December 1996.
3. The directors do not propose to recommend the payment of an interim
dividend (1996: nil).
4. These interim results are being circulated to shareholders and are
available upon request from the Company's Head Office at 51 The Promenade,
Cheltenham, Gloucestershire GL50 1PJ (Tel: 01242 253773).
END
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