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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Argos Resources Limited | LSE:ARG | London | Ordinary Share | FK0114538241 | ORD 2P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.35 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMARG
RNS Number : 5365A
Argos Resources Ltd
27 March 2017
27 March 2017
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
2016 Financial Results
Highlights
Argos Resources Ltd (AIM: ARG.L), the Falkland Islands based exploration company focused on the North Falkland Basin, announces its financial results for the year ended 31 December 2016.
Hot Features
Premium
* US$16 thousand loss.
* US$701 thousand cash reserves at 31 December 2016
* Participation Agreement replaced the Farmout
Agreement of Licence PL001 in the year
* The Company retains an Overriding Royalty Interest
(the "ORRI") of 5% of all oil and gas produced over
the life of the licence from all hydrocarbon
discoveries developed within the Licence area
* All future expenditures incurred on Licence PL001
will be at no cost to the Company
* The Company will receive future cash payments of
$370,000 per annum from Noble Energy Falklands
Limited ("Noble") and Edison International S.p.A
("Edison") which will be sufficient to meet its
ongoing running costs until first oil production
* A three year extension of Licence PL001 was approved
which extends the current Second Phase of the Licence
to November 2019
Mr. Ian Thomson, Chairman of Argos Resources, said:
"It was very disappointing to have been so close to drilling commencing on our Licence, only to suffer the delay which ensued from the cancellation of the rig contract. However, a new Participation Agreement was completed promptly and in a very co-operative way between the Parties ensuring that our Overriding Royalty Interest in the Licence continues into the future and our ongoing running costs are covered, so we remain well positioned. The Company continue to be very positive about the exploration potential of the Licence Area."
The full Annual Report and Consolidated Financial Statements can be read and downloaded from the Company
website: http://www.argosresources.com/news.php?page=regulatory-news
Argos Resources Limited (+500 22685)
www.argosresources.com
Ian Thomson, Chairman
John Hogan, Managing Director
Cenkos Securities plc (Nomad & Broker)
Derrick Lee (+44 131 220 9100)
Neil McDonald (+44 131 220 6939)
Combined Chairman's statement and Managing Director's review
2016 was another challenging year for the oil industry. The average Brent oil price for the year was $44 per barrel, the lowest for twelve years, although oil prices have since risen by some $10 per barrel. This low oil price continued to suppress oil industry activity worldwide.
In response to this sustained low oil price environment in 2016 a number of OPEC and non-OPEC producers have promised production cuts. This expectation has contributed to the rise in oil prices since year-end, but it will require collective discipline to maintain these cuts in order to reduce historically high oil inventory levels and support higher oil prices. A failure to do so will continue to pose some downside risk to oil prices.
Under a Farmout Agreement entered into in 2015 with Noble Energy Falklands Limited and Edison International S.p.A, Noble and Edison undertook to drill an exploration well on Licence PL001 to test the Rhea prospect at no cost to the Company. It had been intended that the Rhea exploration well would be drilled as part of a drilling campaign that was underway during 2015/2016 using the Eirik Raude deep-water rig. However, on 12 February 2016 Noble advised the Company that due to operational issues with the rig, Noble had cancelled the Rig Contract, and, as a result, it was exercising its rights under the terms of the Farmout Agreement to declare Force Majeure.
A Participation Agreement between the Parties to reflect the various changes created as a consequence of Force Majeure has replaced the Farmout Agreement.
The Participation Agreement confirms the Company's entitlement to a 5 percent Overriding Royalty Interest in the Licence. This royalty interest entitles the Company to 5 percent of all oil and gas produced over the life of the licence, free and clear of all costs. Noble also agreed that quarterly cash payments to the Company totalling GBP300,000 per annum will be made. This is lower than the $800,000 annual payment originally agreed, to reflect the longer period over which future payment may now be made. These payments have been received on a timely basis throughout 2016 and the Company has implemented cost reductions to ensure that these amounts should be sufficient to meet its ongoing running costs.
Drilling the Rhea well would have fulfilled the work obligation on the Second Exploration Phase of the Licence, which required a well to be drilled by 25 November 2016. Following the cancellation of the rig contract, there was insufficient time to secure a replacement rig to commence drilling operations by that date and, in recognition of this, Noble undertook to apply for an extension to the Licence from the Falkland Islands government. The Company was pleased to announce in August that a three-year extension to Licence PL001 had been approved by the Executive Council of the Falkland Islands Government and by the UK Secretary of State for Foreign and Commonwealth Affairs. This approval extends the current Second Phase of the Licence to November 2019, after which a Third Licence Phase of 10 years is available to the Licensees.
The Company cannot yet forecast when drilling operations might commence on the Licence. While this unexpected delay to drilling is very disappointing, the Overriding Royalty Interest in the Licence continues into the Licence extension period and any further phases beyond, and the Company's future running costs are covered, so we remain well positioned. The Company continues to be positive about the exploration potential of the Licence Area.
Results and dividend
The results for the year and the Group's financial position as at the year-end are shown in the attached financial statements. The directors have not recommended a dividend for the year (2015: $nil).
Business review
The Group has incurred a loss for the year ended 31 December 2016 of $16 thousand (2015: $1.2 million) which equates to a loss per share of 0.007 cents (2015: 0.53 cents). The difference in relation to the previous year was due to management efforts to cut costs and the receipt of income under the participation agreement.
Administration expenses were $0.4 million in 2016 compared to $1.1 million in 2015.
Shareholders' equity has decreased marginally from $29.33 million to $29.32 million in the year since 31 December 2015, as receipts under the participation agreement offset the administration cost leaving a small loss for the year. Cash in the year increased from $0.5 million to $0.7 million which reflects the disposal of assets and the fact that the Noble receipts are received in advance of costs incurred.
Outlook for the next financial year
The Participation Agreement with Noble Energy Falklands Ltd and Edison International S.p.A means that the Group will continue to receive quarterly cash payments totalling $370,000 per annum which covers the Company's ongoing costs. There is a risk that Noble and Edison withdraw from the agreement. In such circumstances the Licence would revert back to Argos, subject to government approval. Given that Noble and Edison have recently applied for and been granted an extension to the Licence, which now runs until November 2019, withdrawal is considered unlikely. The Group is therefore fully funded for the foreseeable future.
Ian Thomson John Hogan
Chairman Managing Director
Consolidated statement of comprehensive income
Year ended 31 December 2016
Year Year
ended ended
31 December 31 December
2016 2015
$'000 $'000
Other income 505 -
Administrative expenses (427) (1,115)
Finance income 1 2
Foreign exchange losses (95) (41)
------------------------------------------- -------------- --------------
Loss for the year attributable
to owners of the parent (16) (1,154)
------------------------------------------- -------------- --------------
Total comprehensive
income for the period
attributable to owners
of the parent (16) (1,154)
Basic and diluted loss
per share (cents) (0.007) (0.53)
------------------------------------------- -------------- --------------
Consolidated statement of financial position
As at 31 December 2016
2016 2015
$'000 $'000
Assets
Non-current assets
Royalty interests and
exploration intangible
assets 28,749 28,921
Plant and equipment - 3
----------------------------- -------- --------
28,749 28,924
Current assets
Other receivables 15 52
Cash and cash equivalents 701 451
----------------------------- -------- --------
Total current assets 716 503
----------------------------- -------- --------
Total assets 29,465 29,427
Liabilities
Current liabilities
Trade and other payables 148 94
Total liabilities 148 94
Total net assets 29,317 29,333
----------------------------- -------- --------
Capital and reserves
attributable to
equity holders of the
Company
Share capital 6,669 6,669
Share premium 30,071 30,071
Retained losses (7,423) (7,407)
Total shareholders'
equity 29,317 29,333
----------------------------- -------- --------
Consolidated statement of cash flows
Year ended 31 December 2016
Year Year
ended ended
31 December 31 December
2016 2015
$'000 $'000
Cash flows from operating
activities
Loss for period before
taxation (16) (1,154)
Adjustments for:
Finance income (1) (2)
Foreign exchange 92 -
Depreciation 3 13
Net cash outflow from operating
activities
before changes in working
capital 78 (1,143)
--------------------------------------- -------------- --------------
Decrease in other receivables 37 16
Increase/(decrease) in
other payables 54 46
--------------------------------------- -------------- --------------
Net cash outflow from operating
activities 169 (1,081)
--------------------------------------- -------------- --------------
Investing activities
Interest received 1 3
Exploration and development
expenditure - (22)
Proceeds from the farmout
transaction - 2,750
Proceeds on the sale of
assets 172 -
Costs directly attributable
to farmout transaction - (2,543)
--------------------------------------- -------------- --------------
Net cash used in investment
activities 173 188
--------------------------------------- -------------- --------------
Financing activities
Issue of ordinary shares
(share options exercised) - 26
Net cash from financing
activities - 26
--------------------------------------- -------------- --------------
Net decrease in cash and
cash equivalents 342 (867)
Cash and cash equivalents
at beginning of period 451 1,363
Exchange losses on cash
and cash equivalents (92) (45)
--------------------------------------- -------------- --------------
Cash and cash equivalents
at end of the year 701 451
--------------------------------------- -------------- --------------
Consolidated statement of changes in equity
Year ended 31 December 2016
Share Share Retained Total
capital premium losses equity
$'000 $'000 $'000 $'000
At 1 January 2015 6,643 30,071 (6,253) 30,461
Total comprehensive
income for the
year - - (1,154) (1,154)
Shares issued (share
options exercised) 26 - - 26
At 31 December
2015
And 1 January 2016 6,669 30,071 (7,407) 29,333
----------------------- --------- --------- --------- --------
Total comprehensive
income for the
year - - (16) (16)
At 31 December
2016 6,669 30,071 (7,423) 29,317
----------------------- --------- --------- --------- --------
In preparing the financial information in this statement the Group, which consists of the Company Argos Resources Ltd, and its wholly owned subsidiary Argos Exploration Ltd, has applied policies in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The financial information has been prepared under the historical cost convention.
The financial information set out above does not constitute the company's statutory accounts for 2015 or 2016. Statutory accounts for 2015 and 2016 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2015 and 2016 were unqualified and did not draw attention to any matters by way of emphasis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UVANRBVAOUAR
(END) Dow Jones Newswires
March 27, 2017 02:00 ET (06:00 GMT)
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