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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Dominion Pet | LSE:DPL | London | Ordinary Share | BMG2897M1064 | COM SHS USD0.00004 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 7.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
TIDMDPL
RNS Number : 0513J
Dominion Petroleum Limited
24 June 2011
24 JUNE 2011
Dominion Petroleum Limited
("Dominion" or "the Company")
AUDITED Results for year ended 31 December 2010
Dominion Petroleum is an independent oil and gas exploration company focusing primarily in East Africa, with a portfolio of assets in Tanzania, Uganda, the Democratic Republic of Congo and Kenya. Dominion is seeking new funding which will enable the company to focus on opportunities within its existing acreage in deepwater East Africa, whilst also exploring prospects in newly acquired areas. The new ventures in Kenya and Malta offer additional opportunities for growth.
KEY POINTS
* New Funding
- In March 2010, Dominion raised GBP32.7m (US$ 46.8m) through a placing of new ordinary shares.
- The Group's cash position at 31 December 2010 was US$ 15.8 million (31 December 2009: US$ 4.7 million).
- On 24 June, 2011, Dominion announced its intention to raise US$ 55 million (approximately GBP 34.4 million) by way of a placing undertaken by Merrill Lynch and RBC, subject to Shareholder approval which will be sought at a Special General Meeting of the Company which will be held in July 2011.
* Acquisition of 3D seismic offshore Tanzania
- Operational activity during 2010 was focused on preparing for and executing the programme to acquire 3D seismic.
- A 1 year extension to the initial exploration period has been granted by the United Republic of Tanzania's Ministry of Energy and Minerals, providing more time to fully evaluate the acreage.
* PSC in Kenya
- In May 2011, Dominion announced that it had entered into a PSC for offshore Block L9 in Kenya.
- The Directors believe that L9 represents an ideal opportunity for organic expansion in this increasingly attractive area.
- The initial exploration period of the PSC lasts for two years and will require the reprocessing of 2,500 line km of 2D seismic, block wide geological and geophysical studies and the acquisition of 500 km2 of 3D seismic data.
* Progress in Uganda
- The Ngaji-1 well in EA4B was drilled in July 2010, on time and under budget.
- Dominion has now met all of its contractual obligations for the current period of its PSA with the Government of Uganda.
- In April 2011, Dominion submitted an application to the Government of Uganda seeking an extension of the EA4B licence into the Third Exploration Period.
* PSC for Block V, DRC
- In June 2010, the PSC for Block V was ratified by Presidential Decree, although certain environmental matters are awaiting resolution.
- During the initial five-year exploration period, the Block V partnership has committed to acquiring at least 300 km of 2D seismic data and the drilling of two exploration wells.
* Malta
- In June 2011, Dominion entered into an execution agreement to acquire a 75% operated working interest in the PSC for blocks 4, 5, 6 & 7 of Area 4 Offshore Malta.
- This area contains a number of prospects including the Tarxien prospect, estimated by a Competent Persons Report to have a gross recoverable un-risked P50 prospective oil resource of 115mmbbl with an 18% chance of success.
Andrew Cochran, Chief Executive of Dominion Petroleum, commented:
"The proposed fundraising announced today is a huge accomplishment in the corporate restructuring we embarked upon over the past year. The Company will have a greatly improved capital structure going forward and sufficient working capital to meet the needs of the expanding portfolio.
Offshore Tanzania and Kenya are coming along nicely. Our internal work on Block 7 3D and existing 2D in L9 will support a new CPR over the summer. The new prospects mean that we can now establish our partnering strategy for deepwater East Africa.
The expansion into offshore Malta represents a material operated position in another emerging deepwater basin under reasonable terms and commitments. The Mediterranean basin represents a potentially new 'core' area for Dominion; we'll kick-off 3D in Malta as soon as we can."
ENQUIRIES:
Dominion Petroleum Limited Andrew Cochran, Chief Executive Officer +44 (0) 20 7349 5900 Rob Shepherd, Finance Director Pelham Bell Pottinger Limited +44 (0)20 7861 3112 / Archie Berens +44 (0)7802 442 486 RBC Capital Markets, NOMAD and Joint Broker +44 (0)20 7653 4000 Jeremy Low Martin Eales Paul Stricker Bank of America Merrill Lynch International, Joint Broker +44 (0)20 7996 1000 Andrew Osborne Paul Frankfurt
Dominion Petroleum Limited
CHAiRMAN'S AND CHIEF EXECUTIVE's STATEMENT
for the year ended 31 december 2010
Introduction
Dominion was extremely active during 2010, raising new equity funds to progress the next phase of exploration activity, specifically the drilling of the first exploration well in the Lake Edward basin, Uganda as well as the acquisition of 3D seismic offshore Tanzania.
Results
As a pure exploration Group, Dominion did not receive any revenues in the year ended 31 December 2010 (2009: US$ nil), although US$ 0.06 million ("mln") was earned in interest from cash on deposit (2009: US$ 0.04 mln). The loss before tax was US$ 38.5 mln (2009: US$ 10.5 mln). The loss per share was US Cents 2.68 (2009: US Cents 1.77).
The Group's cash position at 31 December 2010 was US$ 15.8 mln (31 December 2009: US$ 4.7 mln).
Review of operations
Tanzania Deep Water Block 7 (Dominion Tanzania Ltd 100%, Operator)
On 28 June 2010, Dominion announced the results of a competent person's report ("CPR") concluded by Energy Resource Consultants Ltd ("ERC") on the first prospect in Block 7, offshore deep-water Tanzania.
Based on the CPR, the "Alpha" prospect has a mean prospective resource of 1.104Bbbl of oil or 7.069Tcf of gas. ERC have risked the prospect with a Chance of Success ("CoS") ranging from 9%-15% for the different objectives within Alpha; net risked mean resource: 134 MMbbl of oil or 865 Bcf of gas. Alpha is in water depths of approximately 1,500 metres and represents multiple drilling objectives.
The Alpha prospect was identified by the existing 4,350 square kilometres ("sq km") of 2D seismic coverage and is supported by amplitude variations with offset ("AVO") studies performed this year.
This is only the first prospect in the block and the CPR work undertaken on Alpha was intended to assist in planning the 3D seismic survey.
Operational activity during 2010 was focused on preparing for and executing the programme to acquire 3D seismic covering a number of prospects previously identified following an earlier 2D seismic programme. The survey was completed by the Fugro Geoteam seismic vessel, the GeoBarents in November 2010 over a total area of 1,235 sq km, covering the Alpha, Beta and three other prospects.
The data, which is currently being processed by CGG Veritas, is anticipated to be completed in June 2011. The long offset, 7km streamer data acquisition was designed to support AVO studies. These studies on the existing 2D data have already helped de-risk Alpha and Beta prospects. The final results of the 3D data and subsequent analyses will help the Company re-assess volumes and improve chances of success not only for the Alpha prospect but for all prospects mapped within, and immediately adjacent to, the survey area.
Uganda Exploration Area 4B (Dominion Uganda Limited 100%, Operator)
Exploration Area 4B ("EA4B") in Uganda, which is held 100% under a Production Sharing Agreement ("PSA") by Dominion Uganda Limited (Dominion interest 95%), is located in south-western Uganda in the Lake Edward and Lake George segment of the Albertine Graben. To the north, the Lake Albert basins, (Southern, Northern Lake Albert, and Pakwach), have been the sites of several major oil discoveries in the last three years, including those in the Kingfisher, Warthog and Buffalo-Giraffe prospects.
Operational focus during 2010 was on drilling the Ngaji (Silverback Gorilla) prospect in EA4B, Dominion's first exploration well in Uganda.
Ngaji is a tilted-fault block structural closure chosen as the best location to test the geology of the Ugandan side of the Lake Edward Basin.
The well was spudded on 21 June 2010, targeting a depth of 2,000 metres.
On 21 July 2010, Dominion announced that the Ngaji-1 well was drilled to total depth ("TD") at 1765m; the results were inconclusive as it did not identify any significant hydrocarbons. The well was plugged and abandoned as a dry hole with gas shows.
Democratic Republic of Congo ("DRC"), Block V (Dominion Petroleum Congo 46.75%)
On 28 June 2010, Dominion announced that the Production Sharing Contract ("PSC") for Block V had been ratified by Presidential Decree. Certain environmental matters remain to be resolved.
The block, operated by SOCO International plc, is located at the southern end of the Albertine Rift system and includes the DRC's portion of Lake Edward. During the initial five-year exploration period, the Block V partnership has committed to acquiring at least 300 km of 2D seismic data and the drilling of two exploration wells.
Tanzania Onshore
On 15 February 2010, Dominion announced that agreement had been signed with Les Etablissements Maurel & Prom ("M & P") to farm in to the Mandawa and Kisangire PSAs subject to the execution of final agreements, which were signed at the start of July 2010.
Under the final agreements, M & P acquired:
-- A 40% interest in the Mandawa PSA onshore Tanzania, resulting in M & P owning 90% of the Mandawa licence and Dominion's interest being reduced to 10%; and
-- An option over a 35% interest in the Kisangire PSA onshore Tanzania (operated by Heritage Oil Tanzania Ltd., ("Heritage") who have a 55% interest), reducing Dominion's interest to 10%.
In return, Dominion's funding requirement in respect of the Kianika-1 well on the Mandawa licence reduced from 100% to 20% of the drilling costs and to 10% of associated expenses.
The Kianika-1 well spudded on 27 June 2010, targeting a 77 MMbbl oil or 264Bcf gas prospect at a depth of approximately 2,700 metres.
On 3 December, 2010, Dominion announced that it was advised by Maurel & Prom, operator of the Mandawa PSA in Tanzania (Dominion 10% working interest) that the Kianika-1 well had reached the planned depth of 3,040 metres. The targeted carbonates of Mid Jurassic Mtumbei formation were found with good reservoir characteristics, which confirmed the rationale for investigating this play.
No hydrocarbon shows being encountered (possibly due to lack of effective lateral seal), the well was
plugged and abandoned.
The Kianika-1 well was the second and last commitment well of the Initial Exploration Phase.
On 17 December, 2010, Heritage advised the Tanzania Petroleum Development Corporation ("TPDC") that the partners wished to allow the Kisangire / Lukuliro licences to expire on 31 December 2010 upon completion of the first exploration period.
Other
On 1 March 2010, Dominion announced that it had raised GBP32.7 mln (US$ 46.8 mln) through a placing of new ordinary shares, which was approved at a Special General Meeting on 25 March 2010, with a broad range of established institutional investors (the "Placing").
As a result of the Placing, 654,880,000 new ordinary shares were issued to new and existing shareholders at a price of 5p per share.
Current trading and outlook
Tanzania Deep Water Block 7 (Dominion Tanzania Ltd 100%, Operator)
Dominion was granted a one year extension to the initial exploration period for Block 7 (100% Dominion) by the United Republic of Tanzania's Ministry of Energy and Minerals, by a notice dated 28 March 2011. The extension to the current period removes any obligation for the Company to relinquish any portion of Block 7 until May 2012, providing Dominion with more time to more fully evaluate the acreage before the mandatory 50% relinquishment.
As previously indicated, the 3D seismic survey acquired at the end of 2010 is presently being processed in full whilst a Fast Track volume is being interpreted.
The final results of the 3D seismic survey and subsequent analyses will help the Company re-assess volumes and potentially improve chances of success, not only for the Alpha prospect but for all prospects mapped within, and immediately adjacent to, the survey area.
The Fast Track 3D has highlighted the presence of new opportunities not apparent on the original 2D dataset. Examples of the new Tertiary prospects and leads include:
1. a Paleocene fan prospect (Bravo);
2. an Eocene fan prospect (E1); and
3. a Miocene/Pliocene channel prospect (M1).
Management estimate that these three currently mapped prospects alone add cumulatively between 1.3 Tcf and 6.5 Tcf (P90 to P10 range) of prospective resources to Block 7. Further work on other potential prospects and leads is continuing.
Work on the Alpha prospect also continues with the Final 3D Volume required to analyse the deeper Cretaceous targets. The Directors anticipate that the geological chance of success will improve on the Alpha prospect as a consequence of the improved 3D data quality. Successful drilling offshore Tanzania and Mozambique by other operators in the region may also de-risk the prospect further.
Additionally, interpretation of the Fast Track 3D has led to a better understanding of the whole of Block 7. This understanding has provided the Directors with increased confidence that the deepwater Lambda and Mu leads may offer substantial additional prospectivity. To this end, additional 2D is intended to be acquired as "in fill" to the deeper water portion of Block 7, to improve the Company's understanding of both the Lambda and Mu prospects, as well as the larger Cretaceous structural features beneath.
The Final 3D Volume will be completed in June 2011 and the Company will initiate a full CPR in summer 2011. This CPR will focus on all the prospects so far identified from the Pliocene to the Lower Cretaceous targets. Dominion's intention is to seek farm-in partners for Block 7, prior to commencing drilling operations in the first half of 2012.
Uganda Exploration Area 4B (Dominion Uganda Limited 100%, Operator), Democratic Republic of Congo, Block V (Dominion DRC 46.75%)
EA4B and Block V are contiguous across the Lake Edward basin, which straddles the borders of both countries. Both blocks are part of the Albertine Rift system of sedimentary basins where numerous commercial oil discoveries have been made since 2006. Although the Ngaji-1 well on EA4B, drilled in June/July 2010, did not identify any significant hydrocarbons, the well results did confirm the presence of good quality reservoir sands, seals and possible Pliocene source.
Dominion's current exploration efforts in this area are focused on two prospects: Prospect "B", with 49.4 mmboe net prospective P50 resources; and the "Izzy" Prospect, with 83.7 mmboe net prospective P50 resources (management estimates). In 2011, Dominion intends to acquire 300-500 km of new 2D seismic in the Lake Edward Basin as well as carry out a surface geochemistry survey.
On 27 April, 2011, Dominion submitted an application to the Government of Uganda seeking an extension of the EA4B licence into the Third Exploration Period, commencing in July 2011 and ending in July 2013.
Given the Company has exceeded the minimum commitments for the second period and is committing to the minimum programme required for the third period, the Company fully anticipates the extension to be granted.
Tanzania Onshore
Following further evaluation of the results of the Kianika-1 well, on 23 March, 2011, Maurel et Prom advised the relevant authorities in Tanzania that the partners would be surrendering the Mandawa contract area.
New Ventures
Kenya
On 17 May 2011, Dominion entered into a PSC with the Kenyan Ministry of Energy for a 100% working interest and operatorship of the Block L9 PSC in the Lamu Basin, offshore Kenya, although it will retain a net operated working interest of 60% following transfers of interests to Flow Energy Limited and Avana Petroleum Limited with whom Dominion applied for the award of the PSC. The process by which Dominion was awarded Block L9 was highly competitive. The Board also notes that other companies that have been awarded acreage offshore Kenya include significantly larger operators such as BG Group PLC, Anadarko Petroleum Corp and Premier Oil PLC.
Block L9 was one of the last remaining opportunities for unlicensed acreage along the whole of the deepwater East African margin and the Directors believe it represents an ideal opportunity for organic expansion in this increasingly attractive area. In 1978 Total drilled a single well in Block L9 in the Lamu Basin and encountered gas shows in the tertiary and upper Cretaceous. The well may therefore have penetrated a working hydrocarbon system, making the Block highly attractive. Synthetic aperture radar has also identified possible oil seeps in offshore Kenya Blocks L6 and Block L8, which are adjacent to Dominion's Block L9. Due to the geological similarities between Block L9 and offshore Tanzania, where Dominion also operates, the Company intends to use its knowledge of the regional geology to maximise the Block's potential and to coordinate exploration activities within its expanded offshore East Africa portfolio.
The initial exploration period of the PSC lasts for two years and will require the reprocessing of 2,500 line km of 2D seismic, block wide geological and geophysical studies and the acquisition of 500 sq km of 3D seismic data. Minimum expenditure will total US$6.15 mln gross. Dominion will then either relinquish the PSC or enter into the next two year PSC period carrying a commitment to drill one exploration well.
Malta
On 24 June 2011 Dominion entered into an Execution Agreement to acquire a 75% operated working interest in the production sharing contract for Blocks 4, 5, 6 and 7 of Area 4 Offshore Malta from Phoenicia Energy Company Limited ("PEL"), a wholly owned subsidiary of Mediterranean Oil & Gas plc ("MOG"), pursuant to a draft farm-in agreement (the "Maltese Acquisition"). Closing of the Maltese Acquisition is conditional upon (i) Maltese government approvals and (ii) completion of the Placing of the Subscription Shares. Under the Execution Agreement, Dominion will pay a deposit of US$225,000, which is non-refundable in the event that the Resolutions (other than the Remuneration Resolution) are not passed at the SGM, or Dominion is otherwise unable to enter into the farm-in agreement. The deposit is refundable in the event that Maltese government approvals are not received.
The Maltese PSC covers an area of 5,715 sq km in Maltese waters to the North of Libya and provides Dominion with a material working interest in the proven Eocene carbonate play of North Africa, as well as the Cretaceous rift potential of the Melita-Median Graben. RPS Energy completed a competent person's report on Area 4 in March 2006 identifying a number of prospects in the area including the Tarxien prospect, a lower Eocene carbonate build-up which RPS, using Libyan oil field analogues, estimated to have a gross recoverable un-risked P50 prospective oil resource of 115mmbbl with an 18% chance of success.
MOG, through PEL, currently holds an operated working interest of 90% under the Maltese PSC, with the remaining 10% working interest held by Leni Gas & Oil Investments Limited. Following successful completion of the Maltese Acquisition and entry into the farm-in agreement, Dominion will have a 75% operated working interest in the Maltese PSC. Under the terms of the farm-in agreement Dominion will carry MOG for certain costs relating to its remaining 15% working interest up to a cap of US$1,260,000. Dominion will also reimburse MOG for certain historic costs, through the US$225,000 deposit referred to above plus a closing sum under the farm-in agreement of US$675,000, for a total of US$900,000.
The work obligations under the current period of the Maltese PSC comprise the acquisition of 1,000 sq km long-offset 3D seismic data and the drilling of one exploration well. Prior to any drilling decision, Dominion will process and evaluate the results of the seismic survey, so as to allow the Company to better define the Tarxien prospect and to mature other leads and prospects already identified in Area 4. Furthermore, the long-offset 3D will better image the pre-tertiary rift-fill below the Eocene carbonates and potentially support seismic attribute analyses for new Cretaceous targets.
The first exploration period runs until January 2013 and there is a minimum spend requirement of US$5 mln. The Company anticipates that the 3D seismic survey will cost between approximately US$8 mln and US$10 mln gross to undertake, which will satisfy the minimum spend requirement.
Other
On 24 June, 2011, Dominion announced its intention to raise approximately US$ 55 mln (approximately GBP 34.4 mln) by way of the issue and sale of new and existing Consolidated Shares (the "Placing Shares") in the Company (the "Placing"), with both new and existing institutional investors.
Immediately prior to the issue and sale of the Placing Shares, it is proposed that the issued and unissued US$0.00004 common shares of the Company be consolidated on a 20 for 1 basis into common shares of a nominal value of US$0.0008. The shares to be issued and sold pursuant to the Placing will therefore be Consolidated Shares.
The Placing is being conducted, subject to the satisfaction of certain conditions, including shareholder approval through an accelerated book-building process to be carried out by RBC Capital Markets ("RBC") and Merrill Lynch International ("Merrill Lynch"), who are acting as joint bookrunners.
Approximately US$ 18 of the proceeds of the Placing will be used to repurchase at a discount and then cancel approximately US$ 24 mln in face value of senior secured convertible notes (the "Notes") held by certain noteholders and to repay any additional amounts owed to them under the note purchase agreement that constitutes the Notes.
Whilst the relinquishment of certain assets onshore Tanzania has led to a material impairment charge for 2010, the initiatives recently announced in respect of offshore Block 7; the new ventures in Kenya and Malta; the Company's position in the Lake Edward Basin; and, completion of the pending placing and associated notes repurchase should give investors confidence in a bright future for Dominion.
Roger Cagle Andrew Cochran
Chairman Chief Executive
24 June 2011 24 June 2011
Dominion Petroleum Limited
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
Hot Features
Premium
Notes 2010 2009
$'000 $'000
Administrative expenses
------------------------------------------------ ------ --------- ---------
Share-based payments (597) (2,122)
Impairment charge (33,526) -
Other administrative expenses (5,488) (8,180)
------------------------------------------------ ------ --------- ---------
Total administrative expenses (39,611) (10,302)
--------- ---------
LOSS FROM OPERATIONS (39,611) (10,302)
--------- ---------
Finance costs (63) (193)
Finance income 1,204 40
--------- ---------
LOSS BEFORE TAXATION (38,470) (10,455)
Income tax expense (53) (51)
--------- ---------
LOSS FOR THE YEAR (38,523) (10,506)
--------- ---------
OTHER COMPREHENSIVE INCOME:
Foreign exchange gain / (loss) on retranslation
of foreign operations 68 (41)
--------- ---------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (38,455) (10,547)
--------- ---------
LOSS FOR THE YEAR ATTRIBUTABLE TO:
(38,506) (10,446)
Owners of the parent (17) (60)
--------- ---------
Non-controlling interest
--------- ---------
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE
TO:
(38,438) (10,487)
Owners of the parent (17) (60)
--------- ---------
Non-controlling interest
--------- ---------
LOSS PER SHARE
Basic and diluted (US Cent) 3 (2.68) (1.77)
All amounts relate to continuing activities.
Dominion Petroleum Limited
Consolidated STATEMENT of financial position
At 31 December 2010
ASSETS Notes $'000 $'000
NON-CURRENT ASSETS
Property, plant and equipment 402 474
Oil and gas exploration expenditure 4 69,429 65,839
--------- ---------
69,831 66,313
--------- ---------
CURRENT ASSETS
Trade and other receivables 1,753 971
Inventory 385 255
Cash and cash equivalents 15,847 4,706
--------- ---------
17,985 5,932
--------- ---------
TOTAL ASSETS 87,816 72,245
--------- ---------
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Share capital 63 37
Convertible debt option reserve 9,495 8,909
Share premium 110,004 63,203
Share-based payments reserve 23,178 22,613
Currency translation reserve (112) (180)
Retained earnings (91,461) (52,955)
--------- ---------
Equity attributable to the equity holders
of the parent 51,167 41,627
Non-controlling interests (137) (120)
--------- ---------
Total equity 51,030 41,507
--------- ---------
NON-CURRENT LIABILITIES
Convertible loan notes 31,202 27,110
--------- ---------
31,202 27,110
--------- ---------
CURRENT LIABILITIES
Trade and other payables 5,526 3,564
Current tax payable 58 64
--------- ---------
5,584 3,628
--------- ---------
TOTAL LIABLITIES 36,786 30,738
--------- ---------
TOTAL EQUITY AND LIABILITIES 87,816 72,245
--------- ---------
The financial statements were approved by the Board of Directors and authorised for issue on 24 June 2011 and are signed on its behalf by:
Roland Wessel Rob Shepherd Director Director
Dominion Petroleum Limited
consolidated statement of cash flows
for the year ended 31 december 2010
2010 2009
$'000 $'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year (38,523) (10,506)
Increase in inventory (130) (255)
(Increase)/decrease in other receivables (782) 1,457
(Decrease)/increase in other payables (1,217) 815
Income tax expense 53 51
Unrealised foreign exchange movement (750) 29
Depreciation 230 175
Loss on disposal of property, plant and
equipment 11 8
Impairment of oil and gas assets 33,526 -
Share-based payment expense 597 2,122
Finance income (59) (40)
CASH USED IN OPERATIONS (7,044) (6,144)
Income taxes paid (59) (50)
--------- ---------
NET CASH FROM OPERATING ACTIVITIES (7,103) (6,194)
INVESTING ACTIVITIES
Interest received 59 40
Oil and gas exploration expenditure (29,140) (3,581)
Reimbursement of past exploration costs - 1,219
Proceeds from disposal of plant and equipment 2 35
Acquisition of property, plant and equipment (172) (27)
--------- ---------
CASH USED IN INVESTING ACTIVITIES (29,251) (2,314)
--------- ---------
FINANCING ACTIVITIES
Costs of re-financed convertible loan notes - (830)
Issue of ordinary share capital (net of
issue costs) 46,827 9,617
Payment made for forfeit of options (32) -
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES 46,795 8,787
--------- ---------
Increase/(decrease) in cash and cash equivalents 10,441 279
Cash and cash equivalents at beginning of
period 4,706 4,497
Exchange gains/losses on cash and cash equivalents 700 (70)
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 15,847 4,706
--------- ---------
DOMINION PETROLEUM LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 december 2010
Equity
Share- attributable
Convertible based Currency to owners Non-
Share Debt option Share payments translation Retained of the controlling Total
Capital reserve premium reserve reserve earnings parent Interests equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 January
2010 37 8,909 63,203 22,613 (180) (52,955) 41,627 (120) 41,507
-------- ------------ -------- --------- ------------ --------- ------------- ------------ ---------
Total
comprehensive
income for
the year - - - - 68 (38,506) (38,438) (17) (38,455)
Issue of share
capital (net
of issue
costs) 26 - 46,801 - - - 46,827 - 46,827
Share-based
payments - - - 597 - - 597 - 597
Cash settled
options - - - (32) - - (32) - (32)
Equity portion
of
convertible
loan note - 586 - - - - 586 - 586
At 31 December
2010 63 9,495 110,004 23,178 (112) (91,461) 51,167 (137) 51,030
-------- ------------ -------- --------- ------------ --------- ------------- ------------ ---------
At 1 January
2009 17 16,884 22,590 20,514 (139) (50,951) 8,915 (60) 8,855
-------- ------------ -------- --------- ------------ --------- ------------- ------------ ---------
Total
comprehensive
income for
the year - - - - (41) (10,446) (10,487) (60) (10,547)
Issue of share
capital (net
of issue
costs) 20 - 40,613 505 - - 41,138 - 41,138
Share-based
payments - - - 1,594 - - 1,594 - 1,594
Equity portion
of
convertible
loan note - (7,975) - - - 8,442 467 - 467
-------- ------------ -------- --------- ------------ --------- ------------- ------------ ---------
At 31 December
2009 37 8,909 63,203 22,613 (180) (52,955) 41,627 (120) 41,507
-------- ------------ -------- --------- ------------ --------- ------------- ------------ ---------
Dominion Petroleum Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 december 2010 (CONTINUED)
The following describes the nature and purpose of each reserve within owners' equity:
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal
value.
Convertible debt Amount of proceeds on issue of convertible debt
option relating to the equity component (i.e. option
to convert the debt into share capital).
Share premium Amount subscribed for share capital in excess
of nominal value.
Share-based payment Cumulative fair value of amounts charged in respect of
share based payment and warrant arrangements.
Currency translation Gains/losses arising on translating the net
assets of overseas operations into US Dollars.
Retained earnings Cumulative net gains and losses recognised in
the consolidated statement of comprehensive
income
Dominion Petroleum Limited
abridged notes
for the year ended 31 december 2010
1 Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs"), and are in accordance with IFRS as issued by the IASB.
The consolidated financial statements have been prepared on the historical cost basis, as modified by the revaluation of property, plant and equipment, available for sale financial assets, and financial assets and liabilities, including derivative financial instruments, at fair value through profit or loss.
The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in the most appropriate application in applying the Group's accounting policies.
Going concern
The Directors have prepared cash projections showing the need to raise additional funds to finance the minimum exploration work programme and working capital requirements for the next twelve months.
The Directors have engaged Merrill Lynch and RBC to raise cash by an equity placement sufficient to cover the funding requirements for the next twelve months. The Directors are confident that an equity placement will be agreed and that the required shareholder approval will be obtained to conclude the placing. However there can be no guarantee that an equity placement will complete. Failure to raise the required funds may result in the Group failing to meet its minimum exploration work programme and working capital requirements.
The financial statements have been prepared on a going concern basis as the Directors expect the Group will be able to raise the required funds. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
Changes in accounting policies
(a) New and amended standards adopted by the Group
The following new standards and amendments to standards are mandatory for the first time for the Group for financial year beginning 1 January 2010.
Standard Effective Impact on initial application
date
IAS 39 - Amendment 1 Jul 2009 The amendment clarifies the
- Financial Instruments: principles for determining
Recognition and eligibility of hedged items. The
Measurement: amendment did not have any impact on
Eligible Hedged the current or prior years'
Items financial statements. Future
transactions will be accounted for
consistently with this amendment.
IFRS 2 - Amendment 1 Jan 2010 The amendments clarifies that where
- Group Cash-settled a parent (or another group entity)
Share-based Payment has an obligation to make a
Transactions cash-settled share-based payment to
another group entity's employees or
suppliers, the entity receiving the
goods or services should account for
the transaction as equity -settled.
The amendment did not have any
impact on the current or prior
years' financial statements. Future
transactions will be accounted for
consistently with this amendment.
'Additional exemptions 1 Jan 2010 This is not relevant to the Group as
for first-time it is an existing IFRS preparer.
adopters' (Amendment
to IFRS 1)
Improvements Generally The improvements in this Amendment
to IFRSs (2009) 1 January clarify the requirements of IFRSs
2010 and eliminate inconsistencies within
and between Standards. The
improvements did not have any impact
on the current or prior years'
financial statements
IFRIC 17 - Distributions 1 Jan 2010 The interpretation provides guidance
of Non-cash Assets on how to measure distribution of
to Owners assets other than cash. The
application of this interpretation
did not have any impact on the
current or prior year's financial
statements. Future transactions will
be accounted for consistently with
this interpretation.
IFRIC 18 - Transfer 1 Jan 2010 The interpretation clarifies the
of Assets from treatment of agreements in which an
Customers entity receives from a customer an
item of property that it must use to
provide the customer with an
on-going access to goods or
services. The application of this
interpretation did not have any
impact on the current or prior
year's financial statements. Future
transactions will be accounted for
consistently with this
interpretation.
IFRIC 9/ IAS 1 Jan 2010 The amendment clarifies the
39 - Amendment treatment of embedded derivatives in
- Embedded Derivative host contracts that are classified
out of fair value through profit or
loss. The application of this
interpretation did not have any
impact on the current or prior
year's financial statements. Future
transactions will be accounted for
consistently with this
interpretation.
IFRIC 16 - Hedges 1 Jan 2010 The interpretation provides guidance
of a Net Investment for application of hedge accounting
in a Foreign in foreign operations. The
Operation application of this interpretation
did not have any impact on the
current or prior year's financial
statements. Future transactions will
be accounted for consistently with
this interpretation.
-------------------------- ----------- -------------------------------------
No other IFRS issued and adopted but not yet effective are expected to have an impact on the Group's financial statements.
(b) Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these financial statements which have not been adopted early:
Standard Description Effective
date
IAS 32 Amendment - Classification of Rights Issues 1 Feb 2010
IFRIC Extinguishing Financial Liabilities with 1 Jul 2010
19 Equity Instruments
IFRS Amendment - First Time Adoption of IFRS 1 Jul 2010
1
IAS 24 Revised - Related Party Disclosures 1 Jan 2011
IFRIC Amendment - IAS 19 Limit on a defined 1 Jan 2011
14 benefit asset
IFRS Amendment - Transfer of financial assets 1 Jul 2011
7 *
IFRS Severe Hyperinflation and Removal of Fixed 1 Jul 2011
1 * Dates for First-time Adopters
Improvements to IFRSs (2010) * 1 Jan 2011
IAS 12 Deferred Tax: Recovery of Underlying Assets 1 Jan 2012
*
IFRS Financial instruments 1 Jan 2013
9 *
The Group has not yet assessed the impact of IFRS 9. Except for the amended disclosure requirements of IAS 24, the above revised standards, amendments and interpretations are not expected to materially affect the Group's reporting or reported numbers.
* Not yet endorsed by European Union.
Basis of consolidation
The consolidated financial information incorporates the results of the Group as at 31 December 2010.
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method of accounting. In the consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained.
Jointly controlled assets
Jointly controlled assets are arrangements in which the Group holds an interest on a long term basis which are jointly controlled by the Group and one or more venturers under a contractual arrangement. Some of the Group's exploration activities are conducted jointly with other companies in this way. The Group accounts for its share of assets, liabilities, income and expenditure of the joint ventures in which
the Group holds an interest, classified in the appropriate balance sheet and income statement headings.
Foreign currency
The functional and presentational currency of Group companies is US dollars, except for Dominion Petroleum Administrative Services Limited, whose functional currency is UK Sterling. Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the statement of financial position date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated statement of comprehensive income.
On consolidation, the results of overseas operations are translated into US dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the statement of financial position date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "currency translation reserve").
Segment reporting
For management purposes the Group is organised into operating segments. Management review the Group's performance by reviewing the results of the exploration activities by geographic location in each African licence area, and reviewing the corporate administrative and finance activity of the head office function in London.
Segment results and total assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly head office assets and expenses and capitalised borrowing costs.
Financial assets
The Group's loans and receivables comprise other receivables and cash and cash equivalents in the statement of financial position. Cash and cash equivalents include cash in hand and deposits held on call with banks. Any interest earned is accrued monthly and classified as interest. Other receivables are stated at amortised cost less impairment.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability arose.
-- Trade and other payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently recognised at amortised cost using the effective interest rate method.
-- Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds from issue of the convertible loan notes and the fair value attributed to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity (Convertible debt option reserve). The financial liability component is subsequently carried at amortised cost using the effective interest rate method and is accreted up to the redemption amount each year.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Company's Common Shares are classified as equity instruments. These are recorded at the proceeds received net of direct issue costs.
Borrowing costs
Interest incurred on the convertible loan notes used to fund the Group's exploration expenditure is capitalised as part of its oil and gas exploration assets. The Group does not incur any other interest costs that qualify for capitalisation under IAS 23 'Borrowing costs'.
The renegotiation of terms of the Series A & B Loan Notes, following the re-financing on 13 August 2009, required adjustment of the financial liability to take account of the change in the present value of future cash flows. The change of terms did not result in a substantial modification of terms of an existing financial liability (as defined by IAS 39 para 40). The carrying value of the remaining liability is being amortised over the revised remaining term of the Loan Notes, the charge being included in borrowing costs capitalised.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period.
Warrants
Warrants issued as part of share subscriptions are treated as equity instruments and are valued using the Black-Scholes option pricing model. The initial proceeds from the share subscriptions (units consisting of share and warrants) are allocated to share capital, share premium and convertible debt reserve in accordance to their relative fair values.
Oil and gas assets - exploration and evaluation
In respect of all exploration expenditure the Group has adopted the full cost method of accounting. Pending determination of commercial reserves all expenditure relating to the acquisition, exploration and appraisal of oil and gas interests is capitalised as an intangible asset. On determination of commercial reserves the expenditure will be transferred to appropriate cost pools and amortised over the estimated life of the commercial reserves on a unit of production basis. Where costs associated with a licence have been capitalised and the licence is subsequently relinquished, the project is abandoned or is considered to be of no further commercial value to the Group, the relevant costs will be written off.
Impairment of oil and gas assets
Impairment tests on oil and gas assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e. the lowest Group of assets in which the asset belongs for which there are separately identifiable cash flows).
Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income, except to the extent they reverse gains previously recognised directly in equity. An impairment loss recognised for goodwill is not reversed.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions. All items of property, plant and equipment are carried at depreciated cost.
Freehold land is not depreciated. Depreciation is provided on all other items of property, plant and equipment to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates:
Buildings 2% per annum straight line
Computer/telecoms 25% per annum straight line
Motor vehicles 25% per annum straight line
Office equipment 25% per annum straight line
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Provisions
Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs from its tax base, except for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and
-- investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
-- the same taxable group company; or
-- different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
2 SEGMENTAL REPORTING
For management purposes, the Group is organised into three operating segments: Tanzania, Uganda and Democratic Republic of Congo. Corporate assets, liabilities and expenses relate to the general management, financing and administration of the Group conducted from a head office in the United Kingdom.
2010 Tanzania Uganda DRC Unallocated Total
$'000 $'000 $'000 $'000 $'000
Share-based payments - - - (597) (597)
Impairment costs (33,526) - - - (33,526)
Other administrative
expenses (826) (416) (189) (4,057) (5,488)
Finance costs (25) (12) (3) (23) (63)
Finance income 36 78 - 1,090 1,204
--------- ------- ------ ------------ ---------
Profit/(loss) before
taxation (34,341) (350) (192) (3,586) (38,470)
--------- ------- ------ ------------ ---------
Segment assets -
non-current 33,844 30,162 5,742 83 69,831
Segment assets - current 406 1,486 430 15,663 17,985
Segment liabilities
- non-current - - - 31,202 31,202
Segment liabilities
- current 930 715 3,665 274 5,584
Capital additions
- oil and gas assets 22,623 10,223 4,270 - 37,116
Unallocated impairment costs relate to the impairment of centrally-controlled capitalised finance costs which are attributable to the relinquished Mandawa and Kisangire licences in Tanzania.
2009 Tanzania Uganda DRC Unallocated Total
$'000 $'000 $'000 $'000 $'000
Share-based payments - - - (2,122) (2,122)
Impairment costs - - - - -
Other administrative
expenses (1,355) (1,050) (427) (5,348) (8,180)
Finance costs (36) (180) (5) 28 (193)
Finance income - 38 - 2 40
--------- -------- ------ ------------ ---------
Profit/(loss) before
taxation (1,391) (1,192) (432) (7,440) (10,455)
--------- -------- ------ ------------ ---------
Segment assets -
non-current 44,805 19,902 1,508 97 66,313
Segment assets -
current 609 915 109 4,299 5,932
Segment liabilities
- non-current - - - 27,110 27,110
Segment liabilities
- current 864 1,533 - 1,231 3,628
Capital additions
- oil and gas assets 6,962 3,372 3 - 10,336
During 2010 and 2009 the Group operated in one business segment being the exploration of oil and gas in East and Central Africa.
3 EARNINGS PER SHARE 2010 2009
$'000 $'000
Numerator
Loss for the year attributable to the equity
holders of the parent (38,506) (10,446)
-------------- ------------
Denominator
Number of shares 1,438,804,267 591,504,120
-------------- ------------
Weighted average number of shares used in basic
EPS
The potential Common Shares are not dilutive. The number of potential shares excluded on the grounds that they are non-dilutive is 402,283,512 (2009: 402,631,172).
4 OIL AND GAS EXPLORATION EXPENDITURE
Oil and
gas
exploration
expenditure
Cost $'000
At 1 January 2009 55,503
Additions 10,336
Disposals -
-------------------------
At 1 January 2010 65,839
Additions 37,116
Impairments (33,526)
-------------------------
At 31 December 2010 69,429
-------------------------
Net book value
At 31 December 2010 69,429
-------------------------
At 31 December 2009 65,839
-------------------------
Additions for the year include capitalised borrowing costs totalling
$4.7 mln (2009: $9.3 mln). An impairment charge of $33.5 mln
has been recognised in respect of the onshore Tanzanian licences,
Mandawa ($24.6 mln) and Kisangire ($8.9 mln). The amount of
impairment recognised represents the total exploration expenditure
incurred on the licences of which US$ 13.6 mln relates to finance
costs. The Directors have made the decision to impair the assets
due to the unsuccessful exploration results to date and the
lack of future prospects in these licences. As such, both licences
are in the process of being relinquished. Other than the amounts
due to the joint venture partners and the contingent liability
disclosed, the Company has no further liabilities in respect
of these licences. The remaining carrying value recognised in
Tanzania relates to the Selous and Offshore Block 7 licences.
An analysis of the carrying value of oil and gas exploration expenditure by main area of operation is set out below.
2010 2009
$'000 $'000
Tanzania 33,610 41,527
Uganda 30,077 19,840
Democratic Republic of Congo 5,742 1,472
69,429 65,839
------- -------
5 Post balance sheet events
Tanzania Deep Water Block 7 (Dominion Tanzania Ltd 100%, Operator)
On 5 April, 2011, Dominion announced that a 1 year extension to the Initial Exploration Period had been granted by the United Republic of Tanzania's Ministry of Energy and Minerals.
Uganda Exploration Area 4B (Dominion Uganda Limited 100%, Operator), Democratic Republic of Congo, Block V (Dominion DRC 46.75%)
On 27 April, 2011, Dominion submitted an application to the Government of Uganda seeking an extension of the EA4B licence into the Third Exploration Period, commencing in July 2011 and ending in July 2013.
Tanzania Onshore
On 23 March, 2011, Maurel et Prom advised the relevant authorities in Tanzania that the partners would be surrendering the Mandawa contract area.
New Ventures
Kenya
On 18 May, 2011, Dominion announced that it had entered into a PSC for offshore Block L9 in Kenya (Dominion interest 60%, operator).
Malta
On 24 June, 2011, Dominion announced that it had entered into an execution agreement to acquire a 75% operated working interest in the PSC for Blocks 4, 5, 6 and 7 of Area 4 Offshore Malta from Mediterranean Oil & Gas plc., conditional upon (i) Maltese government approvals and (ii) completion of the placing detailed herein.
Other
On 24 June, 2011, Dominion announced its intention to raise approximately US$ 55 mln (approximately GBP 34.4 mln) by way of a placing undertaken by Merrill Lynch and RBC. The Placing is conditional upon, amongst other things, shareholder approval.
Aside from funding the near-term exploration program for the existing assets and new ventures, part of the proceeds from the Placing are being used to retire at a discount approximately US$ 24 mln of the Company's existing secured senior convertible notes.
In addition, the Company also announced its intention, immediately prior to the issue of the Placing Shares, to consolidate the existing US$0.00004 common shares of the Company on a 20 for 1 basis into common shares of a nominal value of US$0.0008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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