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RNS Number:5353P
Ramco Energy PLC
09 September 2003
9 September 2003
RAMCO ENERGY plc
("Ramco" or "the Company")
Interim results for the six months ended 30 June 2003
Ramco, the Aberdeen based oil and gas exploration and production company,
announces its interim results for the six months ended 30 June 2003.
SUMMARY
Operations:
Ireland
Development of Seven Heads and acquisition of additional acreage as part of the
strategy to build a significant gas production business in Ireland.
Seven Heads
Successful completion of 6 well drilling programme.
First production scheduled for early in the fourth quarter of 2003 at an initial
field production rate of 60 million standard cubic ft of gas per day.
Proven and probable reserves upgraded by 28% from 304 bcf to 390 bcf (Ramco
share: 337 bcf/ 59m BOE).
Montenegro
Good progress with new partner Hellenic.
Successful capital raising of #3.8 million to fund accelerated programme.
Possible well to be drilled in H2 2004.
Financial Results:
Loss after tax: #1.4 million, (H1 2002: #2.8 million)
Turnover: #6 million (H1 2002: #9.1 million)
Cash at 30 June 2003: #13.3 million
Steve Remp, Executive Chairman of Ramco, commented:
"The first half of 2003 has been an excellent period for Ramco. Our drilling
programme for Seven Heads was highly successful enabling us to significantly
increase proven and probable reserves. In addition, we have worked quickly to
complete the necessary field infrastructure and are on track to commence
production early in the fourth quarter of this year. While the real financial
benefits of the project will not fully impact until next year, the commencement
of production will have a positive effect on the full year results."
"Bringing Seven Heads on stream will continue to be our focus during the
remainder of the year. However, we will also be seeking to build on the
platform that Seven Heads provides us to add to production and create a
substantial gas business in Ireland. In addition, we will continue to progress
with our exploration programme in Montenegro."
ENQUIRIES:
Ramco 01224 352 200
Steven Bertram, Group Financial Director
College Hill 020 7457 2020
James Henderson
Phil Wilson-Brown
RAMCO ENERGY plc
("Ramco" or "the Company")
Interim results for the six months ended 30 June 2003
The first six months of 2003 have seen a tremendous amount of activity, focussed
on the Company's Seven Heads offshore gas development in Ireland. The catalyst
for this activity was the approval, in March, by the Irish authorities of the
field's Plan of Development. Following excellent progress against a challenging
schedule, Ramco now expects to be producing gas early in the fourth quarter.
Financial Results
In the first half of 2003 the Group recorded an after tax loss of #1.4 million
compared with a loss of #2.8 million in the first half of 2002.
Group turnover for the first half of 2003 was #6.0 million compared to #9.1
million in the first half of last year, reflecting an anticipated reduction in
activity levels experienced by the tubular service business. This reduced
tubular activity was partially offset by greater throughput and profitability
from the pipeline coating joint venture. Overall the Oil Services division
recorded a profit of #0.8 million compared to #1.1 million in the same period of
2002.
The Oil and Gas division reported a reduced loss of #1.5 million, compared with
#3.2 million in the first half of 2002, reflecting a greater emphasis on
development activity over exploration following the strategic review completed
last year.
Administrative expenses for the first half were #0.8 million up from #0.7
million in the first half of 2002. Interest income fell to #0.4 million (2002:
#1.2 million) due to a reduction in cash balances following the significant
expenditure in connection with the Seven Heads development. The project loan,
arranged with the Bank of Scotland, was drawn for the first time during April.
At June 30 a total of #39 million of the #60 million facility had been drawn.
The Company raised #3.8 million in June through a placing of new shares and at
June 30 Group cash balances were #13.3 million.
The Board is not recommending payment of an interim dividend.
Oil and Gas
Since receiving approval for the Seven Heads development in March, the Company
has made rapid progress towards bringing the field into production. In
particular, it has successfully completed the drilling of five wells and the
re-completion of the 2001 appraisal well.
The encouraging gas flows from the wells tested this year have allowed the Seven
Heads partners to nominate an initial production rate for the field of 60
million standard cubic feet of gas per day under their gas sales agreements.
Well performance will be monitored closely once production commences and, if
well deliverability allows, this rate could be increased during 2004.
The results of this summer's drilling programme have been reviewed by
Exploration Consultants Limited (ECL) and their independent reserves report has
just been completed. ECL estimates the field's proven and probable reserves have
increased significantly, rising by 28% from 304 bcf in 2001 to 390 bcf now.
Ramco, with an 86.5% interest in Seven Heads, therefore has proven and probable
reserves of 337 bcf, or the equivalent of 59 million barrels of oil. The field's
proven reserves have increased by 96% from 87 bcf to 171 bcf. These increased
reserves figures recognise the greater structure volume, and the higher
percentage of sand present confirmed by this year's drilling.
Progress on development of the infrastructure necessary to produce the field has
also been very rapid, with the 25.5 kilometres of eight inch pipeline connecting
the wells to a central manifold having been laid. The manifold has also been
installed as has the 35 kilometres of 18 inch pipeline connecting the manifold
to Marathon's Kinsale "A" platform.
The sub-sea work necessary to connect this infrastructure is scheduled for
completion in the next few weeks, leaving modifications to the topsides of
Marathon's platform as the remaining infrastructure requirement prior to first
gas production.
Following the Company's strategic review during 2002, Ramco disposed of a number
of peripheral exploration assets leaving it with a greater focus. Since
announcing changes to its partnership with Hellenic Petroleum in Montenegro in
May, the Company has continued to make preparations for the acquisition of 3D
seismic over a shallow water prospect of high potential thought to be gas
bearing. Ramco intends to drill its first well on the acreage in the second half
of 2004.
Elsewhere, the Company has continued with technical evaluation of its
exploration blocks in Poland, held with RWE of Germany, and in Bulgaria, held
with Anschutz of the US.
Since the end of the first half, Ramco has announced it has reached a settlement
and ended the arbitration that had been ongoing in the Czech Republic since
2000. Under the terms of the settlement Ramco received $2 million in July 2003
and terminated its involvement in the licences in the Czech Republic. Ramco had
already written off its interests in these licences and has been expensing the
legal costs associated with the dispute as they arose.
As previously reported, Ramco was named in an action against a group of
defendants including Halliburton, raised by the Anglo Dutch Petroleum companies,
controlled by Houston resident Scott van Dyke and his mother Theresa van Dyke.
The trial, in the Texas State Court in Houston, commenced in August but before
the trial began, the judge issued a summary judgement dismissing all the
plaintiffs' claims against Ramco except a claim based on breach of contract
arising out of a confidentiality agreement and letter of intent. Ramco refutes
this claim in its entirety and is vigorously defending the action. The trial is
expected to last until mid-October.
Oil Services
As forecast last year, the demand for new tubulars fell sharply and this,
combined with the high inventory levels held by major North Sea operators,
resulted in a reduced demand for specialist tubular cleaning services. This
reduced activity was partially offset by an increase in pipeline coating
activity at the joint venture, British Steel Ramco. There are signs of tubular
cleaning activity levels increasing particularly in Japan but overall the second
half of the year is expected to be similar to the first half.
Outlook
Whilst the first half of the year was notable for excellent drilling results and
rapid development of the infrastructure for the Seven Heads project, the second
half of the year will see the Company focussed on bringing the field into
production.
Ramco's increasing knowledge of the Celtic Sea basin and specifically the area
around Seven Heads and Kinsale has encouraged the Company to acquire additional
acreage in the belief that even modest gas deposits can be developed profitably
given their proximity to existing infrastructure.
The Company believes that there is an opportunity to build a strong gas
production business in Ireland at a time when Ireland is importing around 80% of
its gas needs from the UK and there is the prospect of the UK itself becoming a
net gas importer within the next few years. This problem is well recognized by
the Irish government and there is substantial support and encouragement for
increasing indigenous production. In fact, 2003 is emerging as the busiest
drilling season offshore Ireland in over 20 years with, in addition to the Seven
Heads drilling programme, wells being drilled by Marathon, Statoil and Shell.
Ramco Energy plc
Consolidated Profit and Loss Account
6 months 6 months Year to
to 30/06/03 to 30/06/02 31/12/02
unaudited unaudited audited
Note #'000 #'000 #'000
--------------------------------------------------------------------------------
Turnover - Group and share of joint
venture and associates 8,076 9,852 18,773
Less share of joint venture (2,030) (742) (1,964)
--------------------------------------------------------------------------------
Group turnover 2 6,046 9,110 16,809
Cost of sales (7,059) (11,161) (23,560)
--------------------------------------------------------------------------------
Gross loss (1,013) (2,051) (6,751)
Administrative expenses (828) (747) (1,430)
Loss on exchange (64) (1,025) (2,750)
--------------------------------------------------------------------------------
Group operating loss (1,905) (3,823) (10,931)
Share of operating profit/(loss) in joint 248 (8) (34)
venture and associates
--------------------------------------------------------------------------------
Loss before interest and taxation (1,657) (3,831) (10,965)
Net interest receivable 405 1,152 1,765
--------------------------------------------------------------------------------
Loss on ordinary activities before
taxation 3 (1,252) (2,679) (9,200)
Tax on loss on ordinary activities (138) (95) (142)
--------------------------------------------------------------------------------
Retained loss for the financial 8 (1,390) (2,774) (9,342)
period
--------------------------------------------------------------------------------
Loss per ordinary share - basic and fully diluted
On loss for the financial period 3 (5.3)p (10.7)p (35.9)p
The results relate to continuing operations.
There is no material difference between the loss on ordinary activities before
taxation and the retained loss for the year stated above, and their historical
cost equivalents.
Consolidated Statement of Total Recognised Gains and Losses
6 months
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
#'000 #'000 #'000
-------------------------------------------------------------------------------
Loss for the financial period (1,390) (2,774) (9,342)
Unrealised translation differences on foreign
currency net investments (40) 73 83
-------------------------------------------------------------------------------
Total recognised losses relating to the
period (1,430) (2,701) (9,259)
-------------------------------------------------------------------------------
Consolidated Group Balance Sheet
As at As at As at
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
Note #'000 #'000 #'000
------------------------------------------------------------------------------
Fixed assets
Intangible assets 4 3,507 18,652 2,895
Development assets 5 120,889 - 40,980
Other fixed assets 11,995 12,682 12,343
Investments
------------------------------------------------------------------------------
Share of joint venture's gross assets 3,018 2,912 2,785
Share of joint venture's gross (1,784) (1,929) (1,784)
liabilities
------------------------------------------------------------------------------
Share of joint venture's net assets 1,234 983 1,001
In associated undertakings 9 15 9
Other fixed asset investments 111 210 111
------------------------------------------------------------------------------
Total investments 1,354 1,208 1,121
------------------------------------------------------------------------------
137,745 32,542 57,339
------------------------------------------------------------------------------
Current Assets
Stocks 385 428 442
Debtors : amounts falling due
after one year 6 5,667 3,929 3,836
Debtors : amounts falling due within one
year 21,540 23,998 23,540
Cash at bank and in hand 13,320 49,081 24,009
------------------------------------------------------------------------------
40,912 77,436 51,827
Creditors : amounts falling due within
one year (69,054) (31,749) (33,974)
------------------------------------------------------------------------------
Net current (liabilities) / assets (28,142) 45,687 17,853
------------------------------------------------------------------------------
Total assets less current liabilities 109,603 78,229 75,192
Creditors : due after more than
one year 7 (32,055) - -
Provisions for liabilities and charges (3,147) (630) (3,147)
------------------------------------------------------------------------------
Net assets 74,401 77,599 72,045
------------------------------------------------------------------------------
Capital and reserves
Called up share capital 2,752 2,589 2,620
Share premium account 60,073 55,428 56,410
Revaluation reserve 778 796 787
Other reserves (42) (12) (2)
Profit and loss account 8 10,840 18,798 12,230
------------------------------------------------------------------------------
Equity shareholders' funds 9 74,401 77,599 72,045
------------------------------------------------------------------------------
Consolidated Cash Flow Statement
6 months 6 months Year to
to 30/06/03 to 30/06/02 31/12/02
unaudited unaudited audited
Note #'000 #'000 #'000
--------------------------------------------------------------------------------
Net cash (outflow) / inflow from
continuing operating activities 10(a) (2,665) 42,217 39,150
--------------------------------------------------------------------------------
Returns on investments and servicing of finance
Interest received 432 978 1,384
--------------------------------------------------------------------------------
Net cash inflow from returns on investments
and servicing of finance 432 978 1,384
--------------------------------------------------------------------------------
Taxation
Overseas tax paid (152) (159) (402)
--------------------------------------------------------------------------------
Taxation paid (152) (159) (402)
--------------------------------------------------------------------------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (79) (603) (753)
Sale of tangible fixed assets - - 16
Oil & gas expenditure - intangible assets (612) (5,576) (25,623)
Oil & gas expenditure - development assets (50,463) - -
--------------------------------------------------------------------------------
Net cash outflow for capital expenditure and
financial investment (51,154) (6,179) (26,360)
--------------------------------------------------------------------------------
Acquisitions and disposals
Purchase of subsidiary undertakings - - (2,000)
--------------------------------------------------------------------------------
Net cash outflow from acquisitions and
disposals - - (2,000)
--------------------------------------------------------------------------------
Cash inflow before management of liquid
resources and financing (53,539) 36,857 11,772
Management of liquid resources
Net transfer from / (to) term deposits 14,184 (25,628) (14,159)
--------------------------------------------------------------------------------
Net cash (outflow) / inflow before
financing (39,355) 11,229 (2,387)
Financing
Increase in debt 39,055 - -
Issue of share capital 3,795 8 21
--------------------------------------------------------------------------------
Net cash inflow from financing 42,850 8 21
--------------------------------------------------------------------------------
Increase / (decrease) in cash 10(b) 3,495 11,237 (2,366)
--------------------------------------------------------------------------------
Notes to the Financial Statements
1. Basis of presentation
The interim financial information for the six months ended 30 June 2002 and 30
June 2003 is unaudited, but has been prepared on the basis of accounting
policies expected to be adopted in the financial statements for the year ended
31 December 2003. The accounting policies are consistent with those set out in
the audited accounts for the year ended 31 December 2002.
This interim financial information does not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985.
The financial information for the year ended 31 December 2002 has been extracted
from the financial statements of the Company on which an unqualified report from
the auditors has been received and which have been delivered to the Registrar of
Companies.
This report relates to the six month period ending 30 June 2003 and was approved
by a duly appointed and authorised committee of the Board of Directors on 8
September 2003. It should be read in conjunction with the financial statements
for the year ended 31 December 2002.
2. Segmental Reporting
Oil & Gas Oil Services Total
6 months 6 months Year 6 months 6 months Year 6 months 6 months Year
to to to to to to to to to
30/06/03 30/06/02 31/12/02 30/06/03 30/06/02 31/12/02 30/06/03 30/06/02 31/12/02
unaudited unaudited audited unaudited unaudited audited unaudited unaudited audited
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
-------------------------------------------------------------------------------------------------------
Turnover - - - 8,076 9,852 18,773 8,076 9,852 18,773
Less joint venture
and associates - - - (2,030) (742) (1,964) (2,030) (742) (1,964)
--------------------------------------------------------------------------------------------------------
Group turnover - - - 6,046 9,110 16,809 6,046 9,110 16,809
--------------------------------------------------------------------------------------------------------
(Loss) / profit before tax and administrative
expenses :
Group (1,530) (3,154) (8,968) 517 1,103 2,217 (1,013) (2,051) (6,751)
Joint venture and
associates - - (45) 248 (8) 11 248 (8) (34)
--------------------------------------------------------------------------------------------------------
(1,530) (3,154) (9,013) 765 1,095 2,228 (765) (2,059) (6,785)
Administrative expenses (828) (747) (1,430)
Loss on exchange (64) (1,025) (2,750)
---------------------------
Loss before interest and taxation (1,657) (3,831)(10,965)
Net interest 405 1,152 1,765
---------------------------------------------------------------------------------------------------------
Loss on ordinary activities before taxation (1,252) (2,679) (9,200)
---------------------------------------------------------------------------------------------------------
3. Loss per share
Basic and fully diluted loss per share
The calculation of loss per share is based on the loss for the financial period
of #1,390,000 (6 months to 30/06/02 loss #2,774,000, year to 31/12/02 loss
#9,342,000) and 26,285,299 (30/06/02 25,883,888 and 31/12/02 26,037,656)
ordinary shares, being the weighted average number of ordinary shares in issue
during the period.
As a loss was recorded in all of the above periods the exercise of share options
would not have been dilutive and accordingly in each period the basic and fully
diluted loss are the same.
4. Intangible Fixed Assets
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
#'000 #'000 #'000
--------------------------------------------------------------------------------
Cost :
Opening balance 2,895 13,076 13,076
Additions 612 5,576 35,806
Costs written off - - (5,007)
Transfer to development assets - - (40,980)
--------------------------------------------------------------------------------
Closing balance 3,507 18,652 2,895
--------------------------------------------------------------------------------
5. Development Assets
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
Cost and net book value #'000 #'000 #'000
--------------------------------------------------------------------------------
Opening balance 40,980 - -
Additions 79,909 - -
Transfer from intangible assets - - 40,980
--------------------------------------------------------------------------------
Closing balance 120,889 - 40,980
--------------------------------------------------------------------------------
6. Debtors
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
Amounts falling due after one year : #'000 #'000 #'000
--------------------------------------------------------------------------------
Amounts owed by associated undertakings 5,667 3,929 3,836
--------------------------------------------------------------------------------
This relates to a loan due from Medusa Oil & Gas (Poland) Sp. Zo.o. It is due to
be repaid in equal annual instalments commencing on 31 December 2005. Full
repayment is due by 31 December 2010. Interest is calculated daily at a rate
equal to 12 month US Dollar LIBOR plus 3% and is payable annually, commening 31
December 2005.
7. Creditors
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
Amounts falling due after one year : #'000 #'000 #'000
--------------------------------------------------------------------------------
Bank loan 32,055 - -
--------------------------------------------------------------------------------
This relates to a #60,000,000 project finance facility arranged in connection
with the Seven Heads gas field development. It is due to be repaid in six
monthly instalments commencing on 30 June 2004. Full repayment is due by 31
December 2008. Interest is calculated daily, initially at a rate equal to 6
month Sterling LIBOR plus 1.75%, reducing to 6 month Sterling LIBOR plus 1.35%
following the achievement of specified field production rates. Interest is
payable 6 monthly commencing 31 January 2004.
8. Profit and Loss account
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
#'000 #'000 #'000
--------------------------------------------------------------------------------
Opening balance 12,230 21,572 21,572
Loss for the period (1,390) (2,774) (9,342)
--------------------------------------------------------------------------------
Closing balance 10,840 18,798 12,230
--------------------------------------------------------------------------------
9. Reconciliation of Movement in Shareholders' Funds
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
#'000 #'000 #'000
--------------------------------------------------------------------------------
Loss for the period (1,390) (2,774) (9,342)
Other recognised gains and losses relating to
the year (40) 73 83
Issue of ordinary share capital 3,795 8 1,021
Amortisation of deferred gain on asset sold to
joint venture (9) (9) (18)
--------------------------------------------------------------------------------
Net change in shareholders' funds 2,356 (2,702) (8,256)
Opening shareholders' funds 72,045 80,301 80,301
--------------------------------------------------------------------------------
Closing shareholders' funds 74,401 77,599 72,045
--------------------------------------------------------------------------------
10. Notes to Consolidated Cashflow Statement
(a) Reconciliation of operating loss to net cash flow from continuing operating
activities
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
#'000 #'000 #'000
----------------------------------------------------------------------------------
Operating loss (1,905) (3,823) (10,931)
Amounts written off in respect of
intangible oil and gas assets - - 5,007
Amortisation of goodwill 15 15 30
Depreciation on tangible fixed assets 407 442 940
Gain on sale of tangible fixed assets - - (15)
Amortisation of deferred gain on asset
sold to joint venture (9) (9) (18)
Decrease / (increase) in stocks 57 (20) (34)
(Increase) / decrease in debtors (451) 50,076 50,822
Decrease in creditors (753) (2,313) (4,315)
Decrease in provisions - (2,210) (2,455)
Provision against investments - - 53
Exchange difference on retranslation (26) 59 66
--------------------------------------------------------------------------------
Net cash (outflow) / inflow from continuing
operating activities (2,665) 42,217 39,150
--------------------------------------------------------------------------------
(b) Reconciliation of net cash flow to movements
in net debt
6 months 6 months Year
to to to
30/06/03 30/06/02 31/12/02
unaudited unaudited audited
#'000 #'000 #'000
--------------------------------------------------------------------------------
Increase / (decrease) in cash 3,495 11,237 (2,366)
Cash inflow from bank loan (39,055) - -
Cash (inflow) / outflow from decrease in liquid
resources (14,184) 25,628 14,159
--------------------------------------------------------------------------------
Change in net (debt) / funds resulting from cash
flows (49,744) 36,865 11,793
Net funds at start of period 24,009 12,216 12,216
--------------------------------------------------------------------------------
Net (debt) / funds at end of period (25,735) 49,081 24,009
--------------------------------------------------------------------------------
Represented by:
Cash at bank and in hand 13,320 23,428 9,825
Short term deposits - 25,653 14,184
Bank loan (39,055) - -
--------------------------------------------------------------------------------
(25,735) 49,081 24,009
--------------------------------------------------------------------------------
Liquid resources represent short term deposits not qualifying as cash.
(c) Analysis of changes in net debt
At start Cash flows At end
#'000 #'000 #'000
--------------------------------------------------------------------------------
Cash at bank 9,825 3,495 13,320
Short term deposits 14,184 (14,184) -
Bank loan - (39,055) (39,055)
--------------------------------------------------------------------------------
24,009 (49,744) (25,735)
--------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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