United Energy PLC - Final Results, etc
20 Avril 1998 - 9:32AM
UK Regulatory
RNS No 1448b
UNITED ENERGY PLC
20th April 1998
UNITED ENERGY plc
PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 1997
A YEAR OF GROWTH AND ACHIEVEMENT
HIGHLIGHTS
1997 achievements include:
- Pre-tax profits increase to #828,000 from #790,000 despite
weaker oil prices
- Earnings per share increase to 2.1p per share
- Average production of 1,536 boe per day up 11% on 1996
- Proved reserves up 43% to 4.2 million boe
- Evaluated Net Assets per Share up 21% to 34p per
share despite lower average product prices
- Operating cashflows of #2,851,000 representing
7.3p per share
Subsequent to year end:
- Two acquisitions add 690,000 boe to reserves, representing
more than 120% of last years production
- Significant drilling success adds to 1997 reserve base
- Group production reaches record levels of over 2,000 boe
per day ahead of new wells being placed on production
John F Billington, Chairman of United Energy plc said:
"1997 has been a year of growth and achievement and we are positive about the
prospects ahead."
Contact: Nick Tamblyn, Chief Executive - 01242 253773
Derek Howard-Orchard, Group Technical Director - 01242 253773
CHAIRMANS STATEMENT
1997 has been a year of growth and achievement. The success of the 1997
drilling program and a persistent, value driven, acquisition program
contributed to a 43% increase in the reserve base to 4.2 million boe, the
benefits of which should start to be realised during the first half of 1998.
We would have seen further improvement had performance not been adversely
affected by production problems with the Rupp wells, weakening oil prices and
a planning setback with the Agrigen project.
Despite these adverse impacts, we achieved a marginally increased profit after
tax of #803,000, on turnover up 2% at #5.51 million. I am particularly
pleased by the 21% increase in Evaluated Net Assets per Share to 34p. This
increase continues the trend with Evaluated Net Assets per Share having risen
from 13.9p at 31 December 1994 to the current level, an improvement of nearly
250% in three years. During the same period, operating cash flows have more
than trebled and the Group has seen losses per share of 1.1p replaced by
record earnings per share of 2.1p.
US OIL AND GAS OPERATIONS
Last year, we set a goal of increasing our reserves to over 4 million boe and
the production base by 25%. The former we comfortably achieved, however,
average production only increased by 11% to 1,536 boepd, having been affected
by the loss of 220 boepd associated with the Rupp wells.
The 1997 Drilling Program was characterised by a strong start and finish, with
some disappointments around the middle of the year. Two important wells on
separate structures, the Sullivan Deep and the Perez Deep set up offset
development wells which have been drilled early in 1998 and are in the process
of being brought onto production. Production from the Perez Deep well was
limited by pipeline capacity restrictions which have recently been resolved.
The upgraded pipeline will handle production from the further development
drilling on both the Perez Deep and Sullivan Deep structures planned for later
in 1998.
The acquisition and disposal market in 1997 was the most aggressive we have
seen to date. Successful bidders were acquiring properties on oil prices of
$22/bbl which looks expensive against current pricing of around $14/bbl.
Nevertheless, we reviewed some 55 acquisition opportunities which led to 3
successful acquisitions, adding proved reserve volumes similar to those
achieved through the drilling program.
1998 has started well with two further negotiated acquisitions at a combined
cost of US$2.74 million. This together with the drilling success during the
first quarter has resulted in significant reserve growth already this year.
UK POWER GENERATION
During 1997, progress was made with Agrigens Nunn Mills Biomass Power Station
project. The Turnkey Contract negotiations were essentially completed and the
project was given additional impetus by the award of a prestigious 2.38
million ECU (#1.6 million) Thermie Grant from the European Union, which will
result in the Power Station becoming a European reference plant. The year
ended with an unexpected setback when Northampton Borough Council rejected our
revised planning application after having passed a resolution to grant
planning permission for a similar scheme in 1992. We have lodged an appeal
which will be heard during the second half of this year.
OUTLOOK
Despite the current weak oil price, we are positive about the prospects ahead
in 1998. Production has already increased above 2,000 boepd and as the new
wells are brought on production this should rise to over 2,300 boepd. We
believe a continuation of the low oil prices is likely to produce acquisition
opportunities, following the record acquisition activity in 1997 during a
period of higher oil prices. In the UK, we are looking to secure planning
permission for the Nunn Mills Biomass Power Station and bring the project to
financial close.
The improvements in Cashflow per share, Earnings per share and Net Evaluated
Assets per share together with strong reserve growth during the year to-date,
should contribute to improvement in the share price. Management will continue
to look at ways to raise the profile of the Company during the year ahead with
institutions specialising in smaller companies and retail brokers.
The teams on both sides of the Atlantic have worked with great application and
effect during 1997 and I am confident that their commitment and dedication
will result in continued growth during the coming year.
John F Billington
Chairman
20 April 1998
Consolidated Profit and Loss Account for the Year Ended 31 December 1997
Note 1997 1996
#'000 #'000
Turnover 5,507 5,384
Cost of sales:
Production costs (1,760) (1,664)
Depletion of oil and gas interests (1,665) (1,620)
and abandonment
(3,425) (3,284)
Gross profit 2,082 2,100
Administrative expenses (857) (958)
Operating profit 1,225 1,142
Loss from interests in associated undertaking (26) (5)
Provision against investment - (40)
Interest receivable 23 20
Interest payable and other charges (394) (327)
Profit on ordinary activities
before taxation 828 790
Taxation (25) -
Profit on ordinary activities 803 790
after taxation
Earnings per share 1 2.1p 2.0p
All items dealt with in arriving at the operating profit for 1997 and 1996
relate to continuing operations. The result as shown in the profit and loss
account is not materially different from the result on an unmodified historic
cost basis.
Note:
1. The calculation of earnings per share is based on the profit on ordinary
activities after taxation of #803,000 (1996: #790,000) and on the weighted
average number of 38,843,402 ordinary shares in issue during the year (1996:
38,592,296). Fully diluted earnings per share are not disclosed on the basis
that they are not materially different from the basic earnings per share.
Consolidated Balance Sheet at 31 December 1997
31 December 1997 31 December 1996
#'000 #'000
Fixed assets
Intangible exploration assets 188 363
Oil and gas interests 10,628 7,608
Other tangible assets 98 104
Investments 389 255
11,303 8,330
Current assets
Debtors 1,137 1,186
Cash at bank 691 705
1,828 1,891
Creditors: amounts falling due
within one year (1,008) (1,446)
Net current assets 820 445
Total assets less current liabilities 12,123 8,775
Creditors: amounts falling due
after more than one year (5,683) (3,365)
Provisions for liabilities and charges - (21)
Net assets 6,440 5,389
Capital and reserves
Called up share capital 3,889 3,879
Share premium account 272 270
Other reserves: capital reserve 717 729
Profit and loss account 1,562 511
Shareholders' funds-equity 6,440 5,389
Consolidated Cashflow Statement for the Year Ended 31 December 1997
1997 1996
#'000 #'000
Net cash flow from operating activities 2,851 2,767
Returns on investments and servicing of finance (325) (308)
Taxation (45) -
Capital expenditure and financial investment (4,630) (1,542)
Acquisitions and disposals (51) (198)
Cash (outflow)/inflow before management of
liquid resources and financing (2,200) 719
Net cash inflow/(outflow) from financing 2,186 (555)
(Decrease)/increase in cash (14) 164
Notes:
1.The financial information set out in this statement does not constitute the
Companys statutory accounts for the years ended 31 December 1996 or 1997 but
is derived from those accounts. Statutory accounts for 1996 have been
delivered to the Registrar of Companies, whereas those for 1997 will be posted
to shareholders shortly. The auditors have reported on those accounts; their
reports were unqualified and did not contain a statement under Section 237(2)
or (3) of the Companies Act 1985.
2.The Annual General Meeting will be held at the offices of Peel Hunt &
Company Limited, 62 Threadneedle Street, London EC2 on 11 June 1998 at 11.00
am.
OIL AND GAS RESERVES
The Net Proved Oil and Gas Reserves Estimation as at 31 December 1997 was
performed by The Scotia Group Inc. on all the Groups properties. Oil prices
used for the evaluation were based on a 12 month average of West Texas
Intermediate posted prices of 18.64 $/bbl adjusted by lease for gravity and
transportation fees. Similarly, gas prices were based on a 12 month average
price for Texas Gulf Onshore Spot of 2.43 $/mmbtu. Oil and gas prices,
operating costs and capital expenditure were held constant for the economic
life of the property.
The results are summarised below:-
Total Oil
Oil Gas Equivalent
(mbbl) (mmcf) (mboe)
Total Proved Reserves at 1 January 1997 1799.7 6904.5 2950.5
Changes during the year:
Production (327.9) (1,397.1) (560.8)
Disposals (1.4) (254.5) (43.8)
Revisions - Existing properties 141.5 261.5 185.1
Acquisitions 94.8 1,941.7 418.4
Acquired during the year - Drilling program 283.7 1,879.4 596.9
Acquisitions 560.3 610.7 662.1
Total Proved Reserves at 31 December 1997 2550.7 9946.2 4208.4
As at 31 December 1997, the appraised value of Net Proved Oil and Gas Reserves
which is estimated by the Group to be equal to the future net revenue
discounted at 10% per annum, was #17.4 million (1996:#13.1 million).
END
FR VKFFFVZKZBKL
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