Global Petroleum Ltd Final Results (1727L)

TIDMGBP

RNS Number : 1727L

Global Petroleum Ltd

29 September 2016

29 September 2016

Global Petroleum Limited

("the Company" or "Global")

Final Results for the Year Ended 30 June 2016

The Directors of Global Petroleum Limited present their report together with the consolidated financial statements of the Group comprising Global Petroleum Limited and the entities it controlled at the end of, or during, the year ended 30 June 2016 ("Consolidated Entity" or "Group").

Chairman and CEO's Review

During the period covered by this report macro-economic factors have remained challenging and continue to form the context for both operational and commercial activity in the upstream energy business. The Company has made significant progress in reducing its costs in response to these factors. The Brent oil price averaged $45 per barrel in the reporting year to 30 June 2016, compared to $75 in the preceding year to end June 2015. It is instructive to note that the average oil price in the twelve months to June 2014 (just before the oil price began to fall) was $109 per barrel.

The Company's Petroleum Exploration Licence offshore Namibia was extended in December 2015 into Phase 2, which has a duration of 24 months, with a reduced Minimum Work Programme. In place of the previous well commitment in Phase 2, the Company undertook to reprocess and re-interpret previously acquired 2D seismic and to shoot 800 kilometres of new 2D. To this end the Company's technical team has evaluated reprocessed 2D seismic data from the 1990s which was purchased earlier this year, and has recently taken delivery of reprocessed speculative 2D seismic data shot over its blocks in 2011/12 by the seismic company, TGS. The evaluation of this reprocessed data has proven to be very encouraging with regard to the hydrocarbon potential in Global's blocks. Notably the work has increased confidence in a syn-rift oil play in the outboard or deep water region offshore Namibia, and the likely presence of both reservoir and source within the Company's blocks. Combined with the existing prospect portfolio within the blocks, this has improved Global's view on the overall prospectivity of the acreage. Planning for the acquisition of infill 2D seismic survey data - likely to be shot in 2017- is also in progress in liaison with the Namibian Ministry of Mines and Energy.

The Company's four exploration applications offshore Italy are progressing and we are currently awaiting an Environmental Decree from the Italian Ministry of the Environment.

Financial

During the year ended 30 June 2016, the Group recorded a loss after tax of US$2,336,513 (2015: loss US$4,469,837). Cash balances at 30 June 2016 amounted to US$10,172,598 (2015: US$12,707,727). The Group has no debt.

Board

In January 2016 Mr Peter Dighton resigned from the Board to devote more time to his other business interests, and we thank Peter for his valuable contribution over the years he was a Non-Executive Director.

On 10 June 2016 we welcomed Mr Andrew Draffin to the Board as a Non-Executive Director. Andrew is a Melbourne based Chartered Accountant with a strong focus on corporate, treasury and financial services, provided to both listed and private companies covering a broad range of industries, including the energy and mining sectors.

Strategy and Outlook

The Company has continued to seek opportunities which would balance its existing higher risk/reward portfolio in Namibia and Italy (once awarded), prioritising investment in discovered contingent resources and/or exploration in proven hydrocarbon provinces.

Accordingly, over the past 12 months we have continued to engage with counterparties holding appropriate assets. We have found that a common feature of such assets is the presence of heavy work commitments, undertaken in a better macro-economic environment. This factor, combined with structural issues regarding availability of finance, continues to be a major hindrance for us in concluding transactions.

We would note, by way of contrast, that over the equivalent period Global Petroleum has not taken on acreage with short-term well commitments. Still less have we utilised our funds to drill high-risk frontier exploration wells.

Your Company is therefore well placed in comparison to many of its peers. We retain a strong cash position and remain confident of making a key investment in due course.

 
 John van der Welle   Peter Hill 
 Chairman             Chief Executive Officer 
 

Operating and Financial Review

Namibian Project

The Namibian Project consists of an 85% participating interest in Petroleum Exploration Licence Number 29 ("Licence") covering Offshore Blocks 1910B and 2010A in the Republic of Namibia. The Licence, issued on 3 December 2010, originally covered 11,730 square kilometres and is located offshore Namibia in water depths ranging from 1,300 metres to 3,000 metres (Refer Figure 1). The Initial Exploration Period of the Licence expired in December 2014, and Global fulfilled its corresponding work obligations approximately halfway through the initial four year term. The Company agreed with the Namibian Ministry of Mines and Energy ("MME") a 12 month extension of the Initial Exploration Period to December 2015, on the basis of an agreed work programme which entailed further interpretation work on existing seismic data.

In December 2015, the Company entered into the First Renewal Exploration Period (Phase 2) of the Licence, making a mandatory relinquishment of 50% of the Licence Area. Phase 2 is for a duration of 24 months with a reduced Minimum Work Programme which does not now contain a well commitment. Instead, the Company has undertaken to reprocess and re-interpret previously acquired 2D seismic and to shoot 800 kilometres of new 2D. To this end the Company's technical team has evaluated reprocessed 2D seismic data from the 1990s which was purchased earlier this year, and has recently taken delivery of reprocessed speculative 2D seismic data shot over its blocks in 2011/12 by the seismic company, TGS. Work on the seismic continues to be very encouraging with regard to the hydrocarbon potential in Global's blocks. Notably the work has increased confidence in a syn-rift oil play in the outboard or deep water region offshore Namibia and the likely presence of both reservoir and source within the Company's blocks. Combined with the existing prospect portfolio within the blocks, this has improved Global's view on the overall prospectivity of the acreage. Planning for the acquisition of infill 2D seismic survey data - likely to be shot in 2017- is also in progress in liaison with the Namibian Ministry of Mines and Energy.

The Company's wholly owned subsidiary, Jupiter Petroleum (Namibia) Limited, remains operator with an 85% interest in the two blocks, with partners NAMCOR and Bronze Investments Pty Ltd (Bronze) holding 10% and 5% respectively, both as carried interests.

Permit Applications in the Southern Adriatic, Offshore Italy

In August 2013, the Company submitted an application and proposed work programme and budget to the Italian Ministry of Economic Development for four exploration areas offshore Italy (the "Permit Applications").

The overall political context in Italy over the period since the submission of the Permit Applications has complicated the process. Notwithstanding, we believe that the Permit Applications are progressing satisfactorily. The Italian authorities have now confirmed that the requirements relating to financial and technical capacity have been met by Global, and we are currently awaiting an Environmental Decree from the Italian Ministry of the Environment, which is the last stage before final award of the Permits.

In the meantime, the Company has been working closely with the Italian Ministry of Economic Development to clarify and refine the proposed work programme on all applications.

Concurrently, the Company has been carrying out a review of available well and seismic data and previous studies to assess the prospectivity of the licences. The review demonstrates that the licences are favourably positioned within, or at the edge of, the proven Southern Adriatic basin in which the currently producing 'Aquila' field is located. Multiple prospects and leads can be defined of which the most significant is the 'Daunio' lead, which as currently mapped has a large areal extent of close to 100 sq km.

Currently available seismic data are sparse and once the licences are finally awarded, acquisition of new 2D seismic data will be carried out, which will allow the prospects to be defined in more detail.

The Southern Adriatic and adjacent areas continue to be the focus of industry activity. Within the Italian Southern Adriatic for example, seismic acquisition companies are planning to run large multi-client 2D acquisition programmes. Recent licensing rounds in neighbouring countries have attracted the interest of large companies.

In Montenegro, offshore concessions have very recently been awarded to Marathon, OMV and Eni, with these companies also having been awarded offshore licences in Croatia. In Albania, an onshore licensing round has concluded, with several applicants. Shell have operated with some success in Albania exploring and developing fields with similar geological characteristics to those encountered offshore in the Southern Adriatic. There has also been significant corporate activity in Albania with a Chinese company purchasing the interests of Bankers Petroleum.

In Greece, there has been a major offshore licensing round off the west coast of the country, and also to the south of Crete. This has followed a major multi-client seismic survey in the area. The offshore Katakolon field, which has similar geology to the Southern Adriatic area, has had a field development plan prepared by the operator, Energean, with the aim of development drilling starting in the next 18 months.

Ratification of many of these licence awards has only recently taken place, so very little firm activity in terms of drilling and seismic is currently scheduled. This may also be a reflection of the low oil price environment. Nevertheless, the activity in terms of licensing and the size of companies involved underscores the interest in the Adriatic area and is viewed very positively by the Company as an endorsement of its Mediterranean focus.

Business Development

Global remains in a strong financial position from which to fund work activity on its Namibian acreage, its Italian application interests (subject to award), and to implement a change of focus through acquisition. Accordingly, we have continued over the past 12 months to engage with counterparties holding appropriate assets. However, the ability to raise the finance necessary for funding asset development following an acquisition remains challenging in the context of the relative slump in the commodity price. A consistent feature in many potential opportunities which we have reviewed is the onerous work commitments which were undertaken by potential counterparties in a better macro-economic environment.

We would note, by way of contrast, that over the equivalent period Global Petroleum has not taken on acreage with short-term well commitments. Still less have we utilised our funds to drill high-risk frontier exploration wells.

Your Company is therefore well placed in comparison to many of its peers. We retain a strong cash position and remain confident of making a key investment in due course.

Results of Operations

 
                                                  2016          2015 
                                                   US$           US$ 
----------------------------------------  ------------  ------------ 
 Loss from continuing operations before 
  tax                                      (2,336,513)   (4,469,837) 
----------------------------------------  ------------  ------------ 
 Income tax benefit (expense)                        -             - 
----------------------------------------  ------------  ------------ 
 Net profit (loss)                         (2,336,513)   (4,469,837) 
========================================  ============  ============ 
 

The results of the Consolidated Entity include revenue from interest income of US$43,942 (2015: US$72,880).

Presentation currency

The financial information in this annual report is presented in United States dollars (US$).

Review of financial condition

As at 30 June 2016, the Group had cash of US$10,172,598 (2015: US$12,707,727) and has no debt.

Dividends

No Dividends were paid during the financial year ended 30 June 2016 (2015: Nil).

Events Subsequent to Reporting Date

The Company decided on 19 July 2016, following 12 months of operation of the discretionary share scheme for directors previously approved by shareholders, and following a substantial reduction achieved in the Company's costs and a significant improvement in the Company's trading position and market conditions generally, to discontinue the discretionary share scheme immediately following the grant and allotment of a final tranche of such shares in August 2016. In addition, with effect 1 August 2016, Directors' fees and salary would revert to the pre 1 August 2015 levels.

As at the date of this report, there are no other matters or circumstances which have arisen since 30 June 2016 that have significantly affected or may significantly affect:

- the operations, in financial years subsequent to 30 June 2016, of the Consolidated Entity;

- the results of those operations, in financial years subsequent to 30 June 2016, of the Consolidated Entity; or

- the state of affairs, in financial years subsequent to 30 June 2016, of the Consolidated Entity.

Likely Developments

It is the Board's current intention that the Consolidated Entity will focus on maximising the value of its oil and gas exploration assets in Africa and continue to examine new opportunities in the oil and gas sector.

All of these activities are inherently risky and the Board is unable to provide certainty that any or all of these activities will be able to be achieved. In the opinion of the Directors, any further disclosure of information regarding likely developments in the operations of the Consolidated Entity and the expected results of these operations in subsequent financial years may prejudice the interests of the Group, and accordingly has not been disclosed.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEARED 30 JUNE 2016

 
                                              Notes         2016         2015 
                                                             US$          US$ 
--------------------------------------------  -----  -----------  ----------- 
Continuing operations 
Salaries and employee benefits expense                 (366,325)    (549,896) 
Administrative expenses                              (1,280,992)  (1,441,982) 
Other expenses                                  7      (540,856)  (1,155,434) 
Impairment of exploration asset                 9              -    (354,695) 
Foreign exchange gain (loss)                   10      (139,099)    (901,551) 
Equity based remuneration                               (53,183)    (139,159) 
Results from operating activities before 
 income tax                                          (2,380,455)  (4,542,717) 
--------------------------------------------  -----  -----------  ----------- 
Finance income                                  6         43,942       72,880 
Net finance income                                        43,942       72,880 
--------------------------------------------  -----  -----------  ----------- 
Profit (loss) from continuing operations 
 before tax                                          (2,336,513)  (4,469,837) 
Income tax benefit (expense)                   11              -            - 
--------------------------------------------  -----  -----------  ----------- 
Profit (loss) from continuing operations 
 after tax                                           (2,336,513)  (4,469,837) 
--------------------------------------------  -----  -----------  ----------- 
Profit (loss) for the year                           (2,336,513)  (4,469,837) 
--------------------------------------------  -----  -----------  ----------- 
Other comprehensive income 
Items that may be reclassified subsequently 
 to profit or loss 
Transfer from foreign exchange reserve 
 on dissolution of a controlled entity         15              -      270,384 
Other comprehensive income (loss) for 
 the year, net of tax                                (2,336,513)      270,384 
--------------------------------------------  -----  -----------  ----------- 
Total comprehensive income (loss) for 
 the year                                            (2,336,513)  (4,199,453) 
============================================  =====  ===========  =========== 
 
 

Earnings per share

 
Basic earnings (loss) per share (cents)     16  (1.167)  (2.241) 
------------------------------------------      -------  ------- 
Diluted earnings (loss) per share (cents)   16  (1.167)  (2.241) 
------------------------------------------      -------  ------- 
 

The Notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEARED 30 JUNE 2016

 
                                Notes          2016          2015 
                                                US$           US$ 
------------------------------  -----  ------------  ------------ 
Assets 
Cash and cash equivalents        13      10,172,598    12,707,727 
Trade and other receivables      12         128,710       150,386 
Prepayments                                  58,925       117,711 
Total current assets                     10,360,233    12,975,824 
------------------------------  -----  ------------  ------------ 
Plant and equipment               8          12,341        15,354 
Exploration assets                9         286,667             - 
Total non-current assets                    299,008        15,354 
------------------------------  -----  ------------  ------------ 
 
Total Assets                             10,659,241    12,991,178 
------------------------------  -----  ------------  ------------ 
Liabilities 
Trade and other payables         18         193,543       246,542 
Current tax payable              11               -             - 
Provisions                       19          98,553        94,161 
Total current liabilities                   292,096       340,703 
------------------------------  -----  ------------  ------------ 
Total non-current liabilities                     -             - 
------------------------------  -----  ------------  ------------ 
 
Total Liabilities                           292,096       340,703 
------------------------------  -----  ------------  ------------ 
 
Net Assets                               10,367,145    12,650,475 
==============================  =====  ============  ============ 
Equity 
Share capital                    15      39,198,764    39,145,581 
Reserves                         15       1,423,555     1,423,555 
Accumulated losses               15    (30,255,174)  (27,918,661) 
------------------------------  -----  ------------  ------------ 
 
Total Equity                             10,367,145    12,650,475 
==============================  =====  ============  ============ 
 

The Notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2016

 
                                        Attributable to owners of the Company 
------------------------  ----------------------------------------------------------------- 
                                                        Foreign 
                                                       Currency 
                                           Option   Translation   Accumulated 
                          Share Capital   Reserve       Reserve        Losses  Total Equity 
                                    US$       US$           US$           US$           US$ 
------------------------  -------------  --------  ------------  ------------  ------------ 
2016 
Balance at 1 July 
 2015                        39,145,581   836,728       586,827  (27,918,661)    12,650,475 
Issue options                         -         -             -             -             - 
Issue of shares                  53,183         -             -             -        53,183 
Total comprehensive 
 (loss) for the year: 
Profit (loss) for 
 the year                             -         -             -   (2,336,513)   (2,336,513) 
Other comprehensive 
 profit (loss) for                              - 
 the year:                            -                       -             -             - 
Total comprehensive 
 income (loss) for 
 the year                             -         -             -   (2,336,513)   (2,336,513) 
 Balance at 30 June 
  2016                       39,198,764   836,728       586,827  (30,255,174)    10,367,145 
========================  =============  ========  ============  ============  ============ 
2015 
Balance at 1 July 
 2014                        39,145,581   697,569       316,443  (23,448,824)    16,710,769 
Issue of options                      -   139,159             -             -       139,159 
Total comprehensive 
 profit (loss) for 
 the year: 
Profit (loss) for 
 the year                             -         -             -   (4,469,837)   (4,469,837) 
Other comprehensive 
 profit (loss) for 
 the year: 
Transfer of foreign 
 exchange 
 reserve on dissolution 
 of a controlled 
 entity                               -         -       270,384             -       270,384 
Total comprehensive 
 income (loss) for 
 the year                             -         -       270,384   (4,469,837)   (4,199,453) 
 Balance at 30 June 
  2015                       39,145,581   836,728       586,827  (27,918,661)    12,650,475 
========================  =============  ========  ============  ============  ============ 
 

Amounts are stated net of tax

The Notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2016

 
                                               Notes         2016         2015 
                                                              US$          US$ 
---------------------------------------------  -----  -----------  ----------- 
Cash flows from operating activities 
Cash paid to suppliers and employees                  (2,290,121)  (2,902,272) 
Interest received                                          43,942       72,880 
GST/VAT refunds received                                  252,410      290,302 
Tax (paid)/refund                               11              -      (3,248) 
Net cash from (used in) operating activities    14    (1,993,769)  (2,542,338) 
---------------------------------------------  -----  -----------  ----------- 
Cash flows from investing activities 
Exploration and business development 
 expenditure                                            (596,704)  (1,134,743) 
Net cash from (used in) investing activities            (596,704)  (1,134,743) 
---------------------------------------------  -----  -----------  ----------- 
Net decrease in cash and cash equivalents             (2,590,473)  (3,677,081) 
Cash and cash equivalents at 1 July                    12,707,727   16,608,591 
Effects of exchange rate fluctuations 
 on cash and cash equivalents                              55,344    (223,783) 
---------------------------------------------  -----  -----------  ----------- 
Cash and cash equivalents at 30 June            13     10,172,598   12,707,727 
=============================================  =====  ===========  =========== 
 

The Notes are an integral part of these consolidated financial statements.

The Company confirms that a copy of its latest Annual Report and Accounts will be available shortly on the Company's website (www.globalpetroleum.com.au) and full copies of the Directors' Report and 2015-2016 Financial Statements are available at:

http://www.asx.com.au/asx/research/company.do#!/GBP

The Company also confirms that the full version of the Annual Report and Accounts has today been posted to shareholders.

 
 Global Petroleum Limited 
 Peter Hill, Managing Director & CEO       [phone] 
 Damien Cronin, Company Secretary          [phone] 
 
 RFC Ambrian Limited (Nominated Adviser 
  & Joint Broker) 
 Oliver Morse                              [phone] 
 
 FirstEnergy Capital LLP (Joint Broker) 
 Hugh Sanderson                            [phone] 
 
 Tavistock (Financial PR & IR) 
 Simon Hudson / Niall Walsh                [phone] 
 

-ends-

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