Circle Oil PLC Preliminary results for the year ended 31 December (0985K)

TIDMCOP

RNS Number : 0985K

Circle Oil PLC

20 June 2014

20 June 2014

Circle Oil Plc

(The "Company") and its Subsidiaries ("Circle" or the "Group")

Preliminary results for the year ended 31 December 2013

Circle Oil Plc (AIM: COP), the international oil and gas exploration, development and production company, is pleased to announce its results for the year ended 31 December 2013.

Financial Highlights

 
                                   2013      2012      % 
                                    US$000    US$000    Increase 
 Group revenue                     93,343    73,270    27 
 Group operating profit            32,348    28,189    15 
 EBITDA                            51,274    39,254    31 
 Cash generated from operations    53,365    39,275    36 
 Available cash                    26,155    18,841    39 
 
   --     Record revenues and production in both Egypt and Morocco 
   --     Cash receipts from EGPC increased through 2013 compared to 2012 
   --     Signed Reserve Based Lending facility with IFC for up to US$100MM 

Operational Highlights

-- Commenced sale of gas and associated liquids in Egypt (through connection of a new 12" gas line), in addition to existing oil revenues

-- 100% success with the production and injector wells drilled in Egypt comprising six producers and one injector

   --     Successful bid and award of the Grombalia permit in Tunisia December 2013 

-- Signed farm-in to the Beni Khaled production licence in Tunisia with an initial 30% stake in summer 2013

   --     Completed processing and interpretation of onshore 2D data on Block 49 Oman 

-- Acquired a 300 sq km 3D seismic survey over the northern part of the Mahdia Block, offshore Tunisia

Current Trading

   --     Commenced drilling operations on third drilling campaign in Morocco on 12 May 2014 

-- Commenced drilling operations on the EMD-1 offshore well Mahdia Permit, Tunisia on 8 June 2014

   --     Completed the 2D marine seismic acquisition programme on Block 52 Oman in May 2014 
   --     Completed the initial development programme for the Egyptian Al Amir SE and Geyad fields 

-- Gross production from Morocco at the end of May 2014 was approximately 7 MMscf/d (5.25 MMscf/d net to Circle)

-- Gross production from Egypt at the end of May 2014 was 12,432 boepd (4,973 boepd net to Circle)

Stephen Jenkins, Chairman, said:

"Circle has a significant portfolio of assets with considerable potential to create value for shareholders. As Chairman I am keen to see the inherent value of the portfolio unlocked and to identify additional assets to further grow shareholder value."

For further information contact:

Circle Oil Plc ([phone])

Professor Chris Green, CEO

Brendan McMorrow, CFO

Investec ([phone])

Chris Sim

George Price

James Rudd

Liberum Capital Limited ([phone])

Clayton Bush

Tim Graham

Citigate Dewe Rogerson ([phone])

Martin Jackson

Shabnam Bashir

Murray Consultants ([phone])

Joe Murray

Joe Heron

Chairman's Statement

Dear Shareholder,

I am delighted to have been appointed as the new Chairman of Circle.

Progress has been made in all our operating countries throughout 2013 and we are looking forward to announcing progress of our busy operational schedule in 2014. Circle has continued to produce gas in Morocco for supply to local industry, as well as to produce oil, gas and associated liquids in Egypt. Our production levels are at an all-time high and as a result we are seeing a resulting increase in profitability.

In Morocco, a new 8 inch pipeline connection was installed to link the Ksiri/Gaddari area wells in Sebou to the main gas station, enabling a higher flow rate from these wells. Sebou gas production has averaged over 6 MMscf/d throughout 2013, and is now approximately 7 MMscf/d with a total annual production last year of 2.27 bcf (gross).

Circle's 2014 drilling campaign in Morocco, on both the Sebou and Lalla Mimouna Nord Blocks, is essential in order for Circle to enlarge the reserve base which will be converted into further production growth. The 12 well drilling campaign commenced in May 2014.

In Egypt, gross oil production through 2013 averaged 10,443 bopd and with the 12" gas line completed, the gas and associated liquids added a further 2,134 boepd, totaling 12,577 boepd (5,031 boepd to Circle). With the completion of the initial development programme in early 2014, capital expenditure should decrease significantly.

Forthcoming exploration wells on our acreage in Tunisia and Oman in 2014 will reveal the potential of these licences and we await the results with cautious optimism.

Financial

2013 has been another very successful year financially for Circle. Oil and gas revenue is up by 27% to US$93.3 million, operating profits up by 15% to US$32.3 million while EBITDA at US$51.3 million shows an increase of 31% on the previous year.

Cash generated by operations at US$53.4 million was up 36% on the previous year as a result of increased cash receipts from EGPC, which were up 20% compared to 2012 receipts, and the above noted increased profitability.

In November 2013, we announced the receipt of board approval from IFC (a member of the World Bank Group) to lead a four year reserve based debt facility of up to US$100 million and the loan agreement for this facility was signed in March of this year.

Full details of the above noted matters are presented in the Financial Review Report section of this announcement.

Corporate

During the year Mr Thomas Anderson stepped down as Chairman after 10 years of service to the Company from its formation to profitable position today. We now hope to build on the strong position he was instrumental in creating for the Company. We would like to thank him for his contribution and wish him well for the future.

We continue to look to strengthen our technical and corporate resources and also welcome our new country manager in Morocco.

Outlook

In early 2014, Circle and its partners completed the initial field development programme in Egypt to bring the Al Amir SE and Geyad fields into maturity, with a consequent decrease in capital expenditure. Before undertaking further drilling we will now concentrate on understanding the reservoirs behaviour with a newly developed dynamic reservoir model.

In Morocco, late spring 2014 has seen the start of a 12 well drilling campaign on the Sebou and Lalla Mimouna blocks to prove up additional gas reserves.

Further exploration activity should also see the drilling of up to two wells in Tunisia, one on the offshore Mahdia permit and the other on the onshore Ras Marmour Block in 2014.

In Oman, we have acquired additional 2D seismic over the inshore portion of Sawqirah Bay in Block 52 and we are continuing our efforts to obtain a partner to join in the drilling of a well on this permit in 2015. On Block 49 we will be drilling an exploration well to be completed in H2 of 2014. We are also awaiting the outcome of our bid to gain a new exploration block in the 2013 Oman Bid Round.

In the coming year Circle will use the proceeds from existing cash flow and senior debt facilities to grow the value of the Company. Circle's primary area of focus continues to be the MENA region and it is our intention to add additional projects in this area to increase the value of the Company. We are continuously evaluating projects and opportunities, both organic and inorganic, and continue to see great potential in the region in which we operate.

As indicated in our recent operational updates from Morocco and Tunisia, Circle is entering a period of considerable activity. This activity will cover all of our licence areas and, the next 24 months is likely to be an exciting period for the Company.

Political changes have continued in the MENA region over the past year; however Circle has remained, both operationally and financially, on track. We must sincerely thank our teams in all countries and our partners for their professionalism and valued contributions to the continuing evolution of the Company.

I again acknowledge the contributions of Circle's staff, associates and partners and would also like to thank all our shareholders, for your support during the past year.

Stephen Jenkins

Chairman

Operations Review

2013 has been another productive and profitable year for the Company and we look forward to reporting on a busy schedule in 2014.

The 2014 Competent Person's Report (CPR) has recently been completed by Bayphase, an independent consultancy specialising in petroleum and gas reservoir evaluation, resulting in 2P Gross Estimated Ultimate Recovery for the Egyptian NW Gemsa and Moroccan Sebou onshore concessions of 50.93 MMboe (22.13 MMboe net to Circle). 2P Gross Remaining Reserves, which accounts for production to the end of 2013, are estimated to be 33.98 MMboe (15.05 MMboe net to Circle).

Morocco

In Morocco, gas production averaged 6.2 MMscf/d (1,069 bopd) in 2013, supplying three companies in the Kenitra industrial zone. Preparation for a twelve well drilling campaign for the Sebou and Lalla Mimouna permits continued during 2013 and we are delighted to have commenced what is a very important drilling campaign for Circle. The wells have been planned with the specific purpose of confirming the viability of additional reserves and increasing our gas production supplies.

Production start-up from Sebou was in October 2008 and total gross production through end December 2013 was 5.56 bcf (0.96 MMboe).

The 2014 CPR estimates take into account the results of the drilling and development/production activity up to ADD-1 well drilled in 2011. The KSR-8 Main Hoot production is from only one restricted area of the seismic anomaly. More wells will be drilled to fully drain the gas accumulation indicated on the seismic anomaly and add additional reserves.

For the 2014 CPR by Bayphase, in the Sebou concession, the 2P value of Gross Estimated Ultimate Recovery of Gas Reserves is 30.15 bcf (5.2 MMboe) of which 22.33 bcf (3.84 MMboe) is net to Circle. Following production of 5.56 bcf (0.96MMboe) through to end 2013, the 2P Gross Remaining Reserves are estimated to be 24.59 bcf (4.23 MMboe) of which 17.27 bcf (2.98 MMboe) is net to Circle. In the same report the 3P Gross Remaining Reserves are estimated at 37.37 bcf (6.44 MMboe) of which 27.38 bcf (4.72 MMboe) is net to Circle. In 2014, the Gross Contingent Resources are estimated at 2C 2.56 bcf and 3C 7.69 bcf.

In the Sebou concession, Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share. In the Oulad N'zala concession, Circle has a 60% share and ONHYM has a 40% share. Both concessions include the right of conversion to a production licence of 25 years, plus extensions in the event of commercial discoveries.

Egypt

The NW Gemsa concession contains the Al Amir SE (AASE) and Geyad fields, where production averaged 10,443 bopd and 11.4 MMscf/d in 2013. Development drilling continued throughout the period with six producers and one injector in AASE, plus one exploration well Shehab-2X. The completion of a new gas export line in Egypt from the Al Amir facilities to the SUCO terminal at Zeit Bay is facilitating the export of current production. In addition, the extraction and sale of condensate and LPG is providing further income. On the NW Gemsa Permit in Egypt, appraisal, production and water injection at the Al Amir SE (AASE) and Geyad fields has continued.

Infill production wells AASE-14X, AASE-18, AASE-15, AASE-19 and AASE-21 were successfully drilled and completed during this reporting period, as well as the AASE-16 water injection well, to complete the initial development plan for the field.

The Shehab-2 exploration well was drilled in 2013, to test an updip closure from the Shehab-1 well. The target Kareem sands were found to be water bearing. However, this well encountered a potential gas-bearing interval in the Upper Rudeis limestones but a hydraulic fracturation proved to be unsuccessful with no flow to surface and the well has now been temporarily abandoned whilst alternative stimulation options are considered.

Gas production through the 12 inch pipeline from the Al Amir facilities to the SUCO terminal started up on 12 February 2013. The gas is rich in extractable liquids that add to the income stream for Circle. Gas processing is providing an additional 2 tonnes per MMscf of LPG and 9 barrels of condensate per MMscf. Gross production from start up in February 2009 through end December 2013 was 13.94 MMbo and 3.68 MMscf of gas.

The 2014 CPR reserve estimates take account of the results of the drilling and development activity up to the end of 2013. For the 2014 CPR by Bayphase, the NW Gemsa Concession 2P Gross Estimated Ultimate Recovery is estimated to be 45.73 MMboe of oil and raw gas (18.29 MMboe net to Circle).

Following production of 15.98 MMboe through to the end of 2013, the 2P Gross Remaining Reserves are estimated to be 29.75 MMboe of oil, gas and recoverable liquids of which 11.90 MMboe is net to Circle. In the same report the Gross 3P Remaining Reserves were estimated at 49.33 MMboe gross of which 19.73 MMboe is net to Circle. The 2014 Gross Contingent Resources are estimated at 2C 1.1 MMboe and 3C 2.58 MMboe.

The minor change in Initial Oil Reserves on 2013 figures (Gross 0.68 MMboe increase) is due to additional infill well data and to the re-mapping of the re-processed 3D seismic that resulted in a small change of the field areal closure.

Tunisia

Circle has significantly increased its Tunisian asset base in 2013. As well as participation in the Ras Marmour block, Circle has obtained a 100% share and operatorship of the Mahdia Block and has farmed into the Beni Khaled Block to earn an initial 30% interest. The Company has also been awarded the Grombalia Permit (to be renamed the Takelsa Permit) as operator with 100% interest. Activity this year has involved seismic survey planning, acquisition and interpretation, plus well location and rig planning.

Interpretation of the 3D seismic survey of 300 sq km (acquired March to mid May 2013) and existing 2D seismic data over the Mahdia permit (3,780 sq km) was conducted in late 2013. The El Mediouni prospect was fully delineated as the drilling target and rig was contracted to be able to drill the commitment well in Q2 2014. The block is now owned 100% by Circle Oil Tunisia and is located in the Gulf of Hammamet with numerous fields (Tazerka, Birsa, Oudna, Halk El Menzel and Isis) and discoveries (the Mahdia-2 well tested 2,700 bopd from the Serj) in proximity. A one year extension to the permit term to 19 July 2014 was ratified in 2013 by Tunisian authorities and a further 6 month extension has been applied for to complete our understanding of the well results.

The Ras Marmour permit in the south-east of Tunisia covers 1,564 sq km and is located in an area with several onshore oil fields. Circle holds a 23% interest and the operator is Exxoil. A well is planned to be drilled in 2014 on the Sedouikech prospect, similar to the nearby Robbana field on the Isle of Djerba. The Ras Marmour partners are still awaiting the final drilling permit and it is hoped that site visits by the relevant authorities and continuing follow up will assist in progressing matters; however at the time of writing the situation remains unchanged.

The award of the Grombalia permit, covering an area of 2,792 sq km, was notified by the Tunisian authorities in 2013. Circle will be the 100% working interest holder and operator. This is regarded as a key award towards increasing the value of the Company. The licence area includes existing oil and gas field concessions and other discoveries within or close to the block. Planning for the first exploration phase of three years of work commitments is in progress. These commitments include the acquisition of 80 sq km 3D seismic, 250 sq km of 2D seismic, followed by the drilling of four exploration wells.

Circle also conducted a farm-in to the Beni Khaled production lease in 2013 that lies within the Takelsa permit, centred in the Cap Bon peninsula. Under the terms of the agreement Circle will acquire an initial 30% interest in the licence in return for funding a 50 sq km 3D seismic programme and one well, which is expected to cost US$5 million. The farm-in agreement further allows Circle to increase its share in the licence to 50% in two equal stages by funding one well in each stage. The farm-in is to be funded from Circle's existing cash flow and facilities. Exxoil will remain as operator. The Beni Khaled field licence presently produces approximately 80-100 bopd of light oil (50 API) from one well, EBK-1, and contains additional possible fault bounded extensions to the Beni Khaled oilfield itself. To date the well has produced some 1.2 MMbo and Circle estimates indicate the field now has 0.25-0.5 MMbo remaining to be produced. The Beni Khaled production licence has a remaining term of 19 years.

The Beni Khaled licence also contains well BDR-1, the undeveloped Bir Drassen discovery, which under test, in the early 90's, flowed at a rate of 23.5 MMscf/d of gas and 28 bocd and also indicates the potential for an unappraised oil rim. Initial operator estimates of most likely recoverable resources from the Bir Drassen discovery indicate 47-50 bcf of gas with the possibility of an additional 6 MMbo in the oil rim. In addition, two further undrilled leads have been identified within the production licence to be confirmed by the 3D seismic survey.

Oman

Circle acquired an additional 2,306 line kilometres of closely spaced 2D seismic survey in 2012 in the south-eastern part of the Block 49 permit, north-east of, and adjacent to, the 3D survey which had been completed in 2010. Interpretation of the processed data was completed in 2013 and integrated with the 3D interpretation in order to define a drillable prospect. This has been completed and a drilling location has been selected within the 3D area to test a stratigraphic pinch-out defined by an amplitude anomaly. Planning is underway in order to drill an exploration well on this prospect in H2 2014.

An infill 2D seismic survey of 850 line kilometres was designed for offshore Block 52, to firm up the nearshore Sawqirah Bay leads into drillable prospects. This survey was completed in May 2014 and the results will now be processed and interpreted. The farm-out process for the block is continuing with the objective of obtaining a partner to drill an exploration well.

Summary

In 2013, Circle has continued the successful appraisal and development of the NW Gemsa fields in Egypt and the 8 inch gas export line in Morocco continues to supply the gas output to industries in Kenitra. In addition, the installation of a new 12 inch gas export in Egypt from the Al Amir facility to the SUCO terminal was completed and gas and associated liquids production was established on 12 February 2013. As demonstrated by our results for 2013, this has aided profitability.

We have completed the 2014 CPR, which shows little change from the 2013 values for Morocco as no new wells have been drilled. The Egypt Estimated Ultimate Recoverable Resources show a slight increase due to a small deepening of the AASE oil-water contact from additional well data. In Morocco, more wells are being drilled to grow our reserves base by adding additional gas discoveries through our third drilling campaign in 2014 and beyond.

Our exploration efforts in Tunisia have continued throughout 2013 with the interpretation of the Mahdia 3D seismic and the well proposal for the offshore El Mediouni prospect which has recently spudded. This is a large prospect with game-changing potential from multiple target levels. Planning of a new 3D acquisition over the newly farmed in Beni Khaled block is advancing.

In Oman, we are planning to drill our commitment well on onshore Block 49 in 2014 and await the outcome of the application for a new exploration opportunity onshore Oman. On the offshore Block 52, three sizeable leads were identified in the shallow water area on the existing seismic, which have been the subject of an infill 2D seismic programme completed in May 2014. A re-invigorated farm-out process has been started on Block 52 with the objective of securing a partner in 2014.

We thank Nick Clayton who assumed the role of interim Chairman while the Board selected a new Chairman. At the beginning of the New Year, January 2014, we were delighted when Steve Jenkins accepted the position and joined us as Chairman. Steve's credentials speak for themselves and we welcome him to Circle as we enter this exciting period in the company's development.

I wish to thank all our staff in the UK, Ireland, Morocco, Tunisia, Egypt and Oman for their enthusiasm and hard work. I also wish to thank our partner oil companies and our State Country Oil and Gas partners for their input and support throughout our exploration and production operations. We have had another year in which we have grown as a successful and profitable operator, improving the value of the Company, despite some frustrating delays. We now aim to seek out additional projects for the Company base to further grow and guarantee your Company's future.

Professor C. Green

Chief Executive Officer

Financial Review

Highlights

   --     Group revenue of US$93.3 million - up by 27% on 2012 
   --     Operating profit of US$32.3 million - up by 15% on 2012 
   --     EBITDA of US$51.3 million - up by 31% on 2012 
   --     Cash generated from operations of US$53.4 million - up by 36% on 2012 
   --     Available cash at year-end of US$26.2 million - up by 39% on 2012 
   --     Approval and signing of Senior Debt Facility of up to US$100 million with IFC 

Results for the year

2013 has been another very successful year for Circle on the financial front as a result of increased production and revenue from oil, gas and associated liquids sales in Egypt and gas sales in Morocco together with increased operating and net profitability.

Oil and gas revenues increased to US$93.3 million in 2013 from US$73.3 million in 2012, an increase of 27%. This positive result was due primarily to an increase in the volume of both oil and gas sold together with increased prices achieved for gas sales in Morocco.

The average oil price achieved in Egypt for 2013 was US$104.40 per barrel of oil versus US$107.37 in 2012, while the average gas price achieved in Morocco was US$10.34 per Mscf as against US$9.40 in 2012. Circle's share of volume of oil sold from the NW Gemsa permit in Egypt was 1.52 MMbo (2012: 1.26 MMbo) while the volume of gas sold from the Sebou permit in Morocco was 1.7 bcf, a 51% increase over the 1.1 bcf sold in 2012.

Gross profit achieved for the year was US$36.9 million against US$31.8 million for 2012, an increase of 16% year on year.

Total operating costs amounted to US$4.7 million and are up by US$1.1 million on the previous year due mainly to costs associated with the implementation of banking facilities.

Operating profit for the year amounted to US$32.3 million, an increase of over 15% on the previous year.

After net finance costs for the year amounting to US$3.5 million comprising mainly US$1.8 million relating to interest paid on the convertible loan, US$0.4 million interest paid on the working capital facility and US$1.3 million of non-cash costs the Group recorded a net profit of US$28.8 million for 2013 (2012: US$25.3 million) a 14% increase on the previous year.

EBITDA for the Group for 2013 amounted to US$51.3 million (2012: US$39.3 million) and increase of 31% for the year.

Cash flow

Net cash generated from operations for 2013 amounted to US$53.4 million (2012: US$39.3 million) an increase of US$14.1 million over the previous year. This increase was due to significantly improved cash receipts from EGPC during 2013 as against 2012, together with an increased operating profit for 2013.

In relation to EGPC receivables, regular payments were received throughout 2013 along with a part cargo and a one-off payment also received which together resulted in an increase in cash receipts of 20% over the previous year. Additionally, total receivables from EGPC at year end decreased by 11% compared to 2012, despite a 16% increase in oil sales for 2013.

Net cash used in investing activities relating to oil and gas assets amounted to US$45.9 million (2012: US$34.4 million) and comprised mainly of US$17.8 million invested in exploration and evaluation assets in Morocco, Tunisia and Oman while US$28.2 million was invested in production and development assets in Egypt and Morocco.

Net cash generated from financing activities totalled US$10.3 million (2012: US$1.8 million used) and related to a net drawdown of US$12.5 million under the working capital facility less interest paid on this facility and the convertible loan.

Group cash balances at year-end increased by 86% to US$37.9 million (2012: US$20.4 million) of which US$11.7 million was in restricted accounts leaving US$26.2 million available for corporate use.

Statement of financial position

The Group's balance sheet has further strengthened in 2013, as a result of the net profit recorded for the year.

Total assets for the Group at 31 December 2013 amounted to US$307.9 million (2012: US$260.9 million) and comprised mainly oil and gas assets of US$227.5 million, US$42.3 million of trade and other receivables and cash at bank of US$37.9 million.

Net assets amounted to US$244.8 million at year end (2012: US$216.0 million) an increase of US$28.8 million and representing an increase of 13% year on year.

Working capital for the Group amounted to US$47.2 million (2012: US$43.9 million) an increase of US$3.3 million over the previous year's figure

On 20 December 2012 the Company announced the signing of a two year working capital facility with Ahli United Bank Egypt (AUBE) and throughout 2013 utilised this facility. On 12 November 2013 the Company announced receipt of approval from IFC (a member of the World Bank Group) to lead a four year reserve based lending facility of up to US$100 million. The facility agreement was signed in March 2014. IFC will hold US$50 million of the facility while the remainder is subject to syndication. At the date of this report US$20 million has been syndicated. US$25 million has been drawndown out of which the AUBE facility of US$12.5 million was repaid in full.

Net financial gearing at end December 2013 amounted to less than 1% (2012: 2%).

Brendan McMorrow

Chief Financial Officer

Circle Oil PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2013

 
                               Notes         2013       2012 
                                           US$000     US$000 
 Revenue                                   93,343     73,270 
 
 Cost of sales                           (56,394)   (41,482) 
 
 Gross profit                              36,949     31,788 
 
 Administrative expenses                  (4,719)    (3,610) 
 
 Foreign exchange gain                        118         11 
 
 Operating profit                          32,348     28,189 
 
 Finance revenue                              720      2,312 
 
 Finance costs                            (4,211)    (5,249) 
 
 Profit before taxation                    28,857     25,252 
 
 Taxation                                    (34)        (9) 
 
 Profit for the year                       28,823     25,243 
 
 Basic earnings per share        1          5.12c      4.48c 
                                      ===========  ========= 
 
 Diluted earnings per share      1          4.66c      4.17c 
                                      ===========  ========= 
 

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

 
                                                     2013       2012 
                                                   US$000     US$000 
 Profit for the year                               28,823     25,243 
 
 Total income and expense recognised in other           -          - 
  comprehensive income 
 
 Total comprehensive income for the year - 
  entirely attributable to equity holders          28,823     25,243 
                                                =========  ========= 
 

Circle Oil PLC

CONSOLIDATED statement of financial position AT 31 DECEMBER 2013

 
                                      Notes      2013      2012 
                                               US$000    US$000 
 Assets 
 Non-current assets 
 Exploration and evaluation assets             81,353    64,817 
 Production and development assets            146,188   135,530 
 Property, plant and equipment                    133       108 
 Deferred transaction costs                         -       279 
                                             --------  -------- 
                                              227,674   200,734 
                                             --------  -------- 
 Current assets 
 Inventories                                       23        19 
 Trade and other receivables                   42,260    39,769 
 Cash and cash equivalents              2      37,938    20,391 
                                               80,221    60,179 
                                             --------  -------- 
 
 Total assets                                 307,895   260,913 
                                             ========  ======== 
 
 Equity and liabilities 
 Capital and reserves 
 Share capital                                  8,084     8,084 
 Share premium                                167,083   167,083 
 Other reserves                                11,260    12,917 
 Retained earnings                             58,371    27,891 
 
 Total equity                                 244,798   215,975 
                                             --------  -------- 
 
 Non-current liabilities 
  Trade and other payables                      2,064     3,554 
 Convertible loan - debt portion               26,763    24,501 
 Derivative financial instruments                 134       284 
 Decommissioning provision                      1,159       291 
 
 Total non-current liabilities                 30,120    28,630 
                                             --------  -------- 
 
 Current liabilities 
 Trade and other payables                      20,442    16,281 
 Bank borrowings                               12,499         - 
 Current tax                                       36        27 
 
 Total current liabilities                     32,977    16,308 
                                             --------  -------- 
 
 Total liabilities                             63,097    44,938 
                                             --------  -------- 
 
 Total equity and liabilities                 307,895   260,913 
                                             ========  ======== 
 
 

Circle Oil PLC

CONSOLIDATED cash flow statement

FOR THE YEAR ENDED 31 DECEMBER 2013

 
                                                   Notes       2013                   2012 
                                                             US$000                 US$000 
 Operating activities 
 Net cash generated from operations                          53,365                 39,275 
 Deferred income                                                  -                  2,990 
 Taxes paid                                                    (27)                   (24) 
 
 Net cash inflow from operating activities                   53,338                 42,241 
                                                          ---------  --------------------- 
 
 Cash flows from investing activities 
 Payments to acquire exploration and 
  evaluation assets                                        (17,780)               (11,903) 
 Payments to acquire production and development 
  assets                                                   (28,152)               (22,502) 
 Payments to acquire property, plant 
  and equipment                                                (99)                   (57) 
 Interest received                                               18                     53 
 
 Net cash used in investing activities                     (46,013)               (34,409) 
                                                          ---------  --------------------- 
 
 Cash flows from financing activities 
 Working capital facility - amounts drawndown                23,161                      - 
 Working capital facility - amounts repaid                 (10,662)                      - 
 Interest paid                                              (2,203)                (1,800) 
 
 Net cash from financing activities                          10,296                (1,800) 
                                                          ---------  --------------------- 
 
 Increase in cash and cash equivalents                       17,621                  6,032 
 
 Cash and cash equivalents at beginning 
  of year                                                    20,391                 14,383 
 
 Effect of foreign exchange rate changes                       (74)                   (24) 
 
 Cash and cash equivalents at end of 
  year                                               2       37,938                 20,391 
                                                          =========  ===================== 
 

Reconciliation to net cash generated by operations

 
                                               2013            2012 
                                             US$000          US$000 
 Profit before taxation                      28,857          25,252 
 Finance revenue                              (720)         (2,312) 
 Finance costs                                4,211           5,249 
 Increase/(decrease) in trade and other 
  payables                                    3,834         (1,026) 
 (Increase)/decrease in trade and other 
  receivables                               (1,819)           1,013 
 (Increase)/decrease in inventory               (2)              17 
 Foreign exchange loss                           74              24 
 Depreciation                                18,930          11,058 
 
   Net cash generated by operations          53,365          39,275 
                                          =========  ============== 
 

Circle Oil PLC

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

 
 Consolidated 
 
                                              Share-based                                      Retained 
                                    Share         payment     Convertible     Translation     earnings/ 
                        Share     premium         reserve          loan -         reserve     (deficit)        Total 
                      capital      US$000          US$000          equity          US$000        US$000       equity 
                       US$000                                     portion                                     US$000 
                                                                   US$000 
 
 At 1 January 
  2012                  8,084     167,083           6,661               -             (3)         2,648      184,473 
 
 Convertible 
  loan                      -           -               -           6,259                                      6,259 
 
 Net profit 
  for the year              -           -               -               -               -        25,243       25,243 
 
 At 31 December 
  2012                  8,084     167,083           6,661           6,259             (3)        27,891      215,975 
                    =========   =========   =============   =============   =============   ===========   ========== 
 
 
 Reserve transfer           -           -         (1,657)               -               -         1,657            - 
 
 Net profit 
  for the year              -           -               -               -               -        28,823       28,823 
 
 At 31 December 
  2013                  8,084     167,083           5,004           6,259             (3)        58,371      244,798 
                    =========   =========   =============   =============   =============   ===========   ========== 
 
 
 

NOTES TO THE FINANCIAL STATEMENTS

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC). They have also been prepared in accordance with the Companies Acts, 1963 to 2013 and are compliant with the rules of the Alternative Investment Market (AIM) of the London Stock Exchange.

The financial statements have been prepared on the historical cost basis.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all of its subsidiaries made up to the end of the financial year. Subsidiaries are consolidated in the Group financial statements from the dates on which control over financial and operating policies and decisions is obtained. All intercompany transactions, balances, income and expenses have been eliminated in full on consolidation.

1. Basic and diluted earnings per share

The calculation of the basic earnings/per share attributable to the ordinary equity holders of the parent is based on the following data:

 
                                                    2013        2012 
                                                  US$000      US$000 
 Earnings 
 Profit for the year attributable to equity 
  holders of the parent                           28,823      25,243 
                                              ==========  ========== 
 
 Number of shares                                   '000        '000 
 Weighted average number of ordinary shares 
  for the purposes of basic earnings per 
  share                                          563,353     563,353 
                                              ==========  ========== 
 
 

Diluted earnings per share are calculated using the weighted average number of ordinary shares assuming the conversion of its potential dilutive equity derivatives outstanding. All of the Group's potential ordinary shares were dilutive for the year ended 31 December 2013. The Group had total potential ordinary shares outstanding of 127,846,041 at 31 December 2012 (2012: 114,774,268).

2. Cash and cash equivalents

 
                                                2013            2012 
                                               US000          US$000 
 Cash at bank                                 24,801          18,841 
 Cash held by JV Partners                      1,354               - 
 Restricted cash relating to the working      10,983               - 
  capital facility 
 Restricted cash relating to the work 
  programmes in Morocco                          800           1,550 
 
   Total cash and cash equivalents            37,938          20,391 
                                           =========  ============== 
 

In accordance with the guidelines of the AIM Market of the London Stock Exchange, Professor Chris Green, Chief Executive Officer of Circle Oil plc, and Dr Stuart Harker both explorationists, with many years oil & gas industry experience, are the qualified persons, as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies, who has reviewed and approved the technical information contained in this announcement.

Prof Chris Green with over 40 years' experience, holds a BSc (Hons) from London University, MSc from University of Wales and PhD from University of Dundee.

Stuart Harker, VP Geology, with over 40 years' experience, holds a BSc (Hons) in Geology from the University of London (UK) and an MSc and PhD from the University of Saskatchewan, Canada. He is also a Fellow of the Geological Society of London and a Chartered Geologist.

Glossary of terms

 
 bcf       Billion cubic feet 
 bocd      Barrels of condensate per day 
 bopd      Barrels of oil per day 
 boepd     Barrels of oil equivalent per day 
 EBITDA    Earnings Before Interest, Tax, Depreciation 
            and Amortisation 
 EGPC      Egyptian General Petroleum Company 
 LPG       Liquified Petroleum Gas 
 MENA      Middle-East North Africa 
 MMbo      Millions of barrels of oil 
 MMboe     Millions of barrels of oil equivalent 
 Mscf      Thousand standard cubic feet of gas 
 MMscf     Million standard cubic feet of gas 
 MMscf/d   Million standard cubic feet of gas 
            per day 
 ONHYM     Office National des Hydrodarbures et 
            des Mines 
 Sq km     Square kilometres 
 2D        Two dimensional 
 3D        Three dimensional 
 2C        Best estimate of contingent resources 
 3C        High estimate of contingent resources 
 2P        Probability of success of 50% 
 3P        Probability of success of 10% 
 

Notes to Editors

Circle Oil Plc (AIM: COP) is an international oil & gas exploration, development and production Company with an expanding portfolio of assets in Morocco, Tunisia, Oman and Egypt with a combination of low-risk near-term production and significant exploration upside potential. The Company listed on AIM in October 2004.

Internationally, the Company has continued to expand its portfolio over the past years and now has assets in the Rharb Basin, Morocco; the Ras Marmour Permit in southern Tunisia; the Mahdia Permit offshore Tunisia; the Grombalia Permit in northern Tunisia and the Zeit Bay area of Egypt. Circle also has the largest licence holding of any company in Oman. In addition to its prospective Block 52 offshore, Circle also has an ongoing exploration program in Block 49 onshore.

Circle's strategy is to locate and secure additional licenses in prospective hydrocarbon provinces and through targeted investment programmes, monetise the value in those assets for the benefit of shareholders. This could be achieved through farm-outs to selected partners who would then invest in and continue the development of the asset into production, or Circle may itself opt to use its own expertise to appraise reserves and bring assets into production, generating sustained cash flow for further investment.

Further information on Circle is available on its website at www.circleoil.net.

This information is provided by RNS

The company news service from the London Stock Exchange

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