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Share Name Share Symbol Market Type Share ISIN Share Description
Petrel Resources Plc LSE:PET London Ordinary Share IE0001340177 ORD EUR0.0125
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.10 -2.47% 3.95 3.80 4.10 4.05 3.95 4.05 107,645 15:13:44
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 0.0 -1.7 -1.3 - 6

Petrel Resources PLC Interim Statement

21/09/2020 7:00am

UK Regulatory (RNS & others)


Petrel Resources (LSE:PET)
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TIDMPET

RNS Number : 4952Z

Petrel Resources PLC

21 September 2020

21(st) September 2020

Petrel Resources plc

("Petrel" or "the Company")

Interim Statement for the six months ended 30 June 2020

Petrel Resources plc (AIM: PET) today announces financial results for the six months ended 30(th) June 2020.

Petrel is a hydrocarbon explorer with interests in Iraq, Ghana and offshore Ireland. The world oil and gas industry has taken a public relations hammering in recent times yet world demand continues, and will continue, to grow. Society is very dependent on oil, gas and petrochemicals.

As an example, the world in 2020 relies on sterile plastic packaging for syringes, PPE, etc.

Our daily lives are improved by a multitude of hydrocarbon based products. Renewables are growing and will continue to grow, but for the coming decades, oil and gas will be the dominant source of energy. This will require new discoveries, Petrel will play a part in this.

Petrel has three areas of interest. Iraq, where we have had a presence since 1999, Ghana, where discussions are ongoing since 2008 and offshore Ireland, where Petrel operated in the 1980s and re-entered six years ago.

Iraq

Petrel is active once more in Iraq after a hiatus since 2010 due to political and financial instability. We negotiated a large exploration block, Block 6, in the Western Desert in 2005. Nothing has happened there in the recent past. In discussions in early 2020, before the Covid-19 pandemic, with Ministry officials we renewed our Block 6 interest and re-presented the technical slides done by the Company on the Merjan-Kefl-West Kifl oil discoveries which remain undeveloped. We did extensive work under a Technical Co-operation Agreement on possible ways to develop these discoveries.

With appropriate terms and pipeline access, the Merjan oil-field seems poised for early development: it was discovered, as an oil reservoir, by Mobil in 1982, but work did not proceed, mainly for political reasons. Petrel's work on Merjan did not suggest that the area was gas-prone. The discovery well - Me-1- was located using 2D seismic on a Jurassic reef. No reef or oil was found in the Jurassic, but the well discovered oil in the Upper Cretaceous Hartha Formation. Recent analysis of 3D data focusses on the Jurassic seismic feature, and does not discuss the nature of any hydrocarbons in the well or the area. The Hartha reservoir in the well tested oil and water, without a significant flow of gas.

Given the scope to reduce emissions through gas development, we should also bear Iraq's gas potential in mind: a staggering 16 billion cm (0.6 tcf) of gas are flared yearly (including valuable liquids), which is about half Iraq's gas output. We proposed gas and condensate recovery on Subba & Luhais, at various times, from 2004 through 2010, but the necessary legal framework was not then in place. With appropriate terms and infrastructure, gas economics are also attractive.

As lowest cost oil producer Iraq is well poised to benefit from the development of the oil market. Their output can easily double in size.

Tano 2A Offshore Block - Ghana

Petrel holds a 30% interest in the Tano 2A block (Clontarf 60% and local interests 10%) Negotiations began in 2008, were finalised in 2010 and ratification was expected shortly thereafter. The saga has dragged on for close to a decade. In the past year high level contacts were reopened. A series of meetings proposed for March 2020 were cancelled indefinitely due to the pandemic.

Despite low oil prices, offshore Ghana remains attractive with good geology and acceptable financial terms. In recent weeks the country is re-opening from lockdown so the cancelled meetings are expected to occur by year end.

Offshore Ireland

This is sad scene. State policy has effectively stymied offshore exploration. All new licences are banned and while existing licences may proceed it is highly probable that any discovery will not be commercialised, it will likely take years to get an exploration permit, if ever, and maybe decades to get planning permission in the face of a small vociferous objecting minority

Petrel holds a 10% working interest in Licence FEL 11/18 in the Porcupine. Excellent work has been done by the operator Woodside Petroleum but it is difficult to see how Woodside will commit the tens of millions to drill.

Tamraz Group

The acquisition of a 29% stake by the Tamraz group in July 2019 was widely welcomed by shareholders followed by approval to go to 51%.

The new investors were unable to complete the purchase of the additional shares while the ownership of most of the 29% became uncertain. High Court proceedings stopped any dealings in shares held by the Tamraz Group. This position persists though there is ongoing contact.

Future

Petrel is well funded for ongoing activities. The focus is once again Iraq.

John Teeling

Chairman

18(th) September 2020

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement. In addition, market soundings (as defined in MAR) were taken in respect of the matters contained in this announcement, with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the company and its securities.

S

   For further information please visit http://www.petrelresources.com/   or contact: 
 
            Petrel Resources 
 John Teeling, Chairman                  +353 (0) 1 833 2833 
 David Horgan, Director 
 
 Nominated Adviser and Broker 
 Beaumont Cornish - Nominated Adviser 
 
  Roland Cornish 
  Felicity Geidt                          +44 (0) 020 7628 3396 
 Novum Securities Limited - Broker 
  Colin Rowbury                            +44 (0) 20 399 9400 
 
 Blytheweigh - PR                        +44 (0) 207 138 3206 
  Megan Ray                               +44 (0) 207 138 3553 
  Madeleine Gordon-Foxwell                +44 (0) 207 138 3208 
 
 Teneo 
  Luke Hogg                                +353 (0) 1 661 4055 
  Alan Tyrrell                             +353 (0) 1 661 4055 
  Ross Murphy                              +353 (0) 1 661 4055 
 
 
                                            Petrel Resources plc 
                                     Financial Information (Unaudited) 
 
 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE 
  INCOME 
                                                          Six Months Ended                       Year Ended 
                                                          30 June              30 June               31 Dec 
                                                               20                   19                   19 
                                                        unaudited            unaudited              audited 
                                                          EUR'000              EUR'000              EUR'000 
 
 Administrative expenses                                    (243)                (115)                (345) 
 Impairment of deferred development costs                       -                    -              (1,614) 
                                              -------------------  -------------------  ------------------- 
 OPERATING LOSS                                             (243)                (115)              (1,959) 
 
 LOSS BEFORE TAXATION                                       (243)                (115)              (1,959) 
 
 Income tax expense                                             -                    -                    - 
                                              -------------------  -------------------  ------------------- 
 LOSS FOR THE PERIOD                                        (243)                (115)              (1,959) 
 
 Items that are or may be reclassified 
  subsequently to profit or loss 
 Exchange differences                                         (9)                   24                (119) 
 TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD                  (252)                 (91)              (2,078) 
                                              ===================  ===================  =================== 
 
 LOSS PER SHARE - basic and diluted                       (0.16c)              (0.11c)              (1.50c) 
                                              ===================  ===================  =================== 
 
 
                                                          30 June              30 June               31 Dec 
 CONDENSED CONSOLIDATED BALANCE SHEET                          20                   19                   19 
                                                        unaudited            unaudited              audited 
                                                          EUR'000              EUR'000              EUR'000 
 ASSETS: 
 NON-CURRENT ASSETS 
 Intangible assets                                            985                2,593                  984 
                                              -------------------  -------------------  ------------------- 
                                                              985                2,593                  984 
                                              -------------------  -------------------  ------------------- 
 
 CURRENT ASSETS 
 Trade and other receivables                                   49                   59                   38 
 Cash and cash equivalents                                    409                  178                  368 
                                              -------------------  -------------------  ------------------- 
                                                              458                  237                  406 
 TOTAL ASSETS                                               1,443                2,830                1,390 
                                              -------------------  -------------------  ------------------- 
 
 CURRENT LIABILITIES 
 Trade and other payables                                   (654)                (643)                (630) 
                                              -------------------  -------------------  ------------------- 
                                                            (654)                (643)                (630) 
                                              -------------------  -------------------  ------------------- 
 
 NET CURRENT LIABILITIES                                    (196)                (406)                (224) 
 NET ASSETS                                                   789                2,187                  760 
                                              ===================  ===================  =================== 
 
 EQUITY 
 Share capital                                              1,963                1,307                1,867 
 Capital conversion reserve fund                                8                    8                    8 
 Capital redemption reserve                                   209                  209                  209 
 Share premium                                             21,786               21,601               21,601 
 Share based payment reserve                                   27                   27                   27 
 Translation reserve                                          367                  519                  376 
 Retained deficit                                        (23,571)             (21,484)             (23,328) 
                                              -------------------  -------------------  ------------------- 
 TOTAL EQUITY                                                 789                2,187                  760 
                                              ===================  ===================  =================== 
 
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                                         Capital      Capital        Share based 
                     Share     Share    Redemption   Conversion        Payment        Translation   Retained    Total 
                    Capital   Premium    Reserves     Reserves        Reserves         Reserves      Losses    Equity 
                    EUR'000   EUR'000    EUR'000      EUR'000          EUR'000          EUR'000     EUR'000    EUR'000 
 
 As at 1 January 
  2019                1,307    21,601          209            8                  27           495   (21,369)     2,278 
 Total 
  comprehensive 
  income                                                                          -            24      (115)      (91) 
                   --------  --------  -----------  -----------  ------------------  ------------  ---------  -------- 
 As at 30 June 
  2019                1,307    21,601          209            8                  27           519   (21,484)     2,187 
 
 Shares issued        1,360         0                                                                            1,360 
 Shares cancelled     (800)                      0                                                               (800) 
 Total 
  comprehensive 
  income                                                                          -         (143)    (1,844)   (1,987) 
                   --------  --------  -----------  -----------  ------------------  ------------  ---------  -------- 
 As at 31 
  December 2019       1,867    21,601          209            8                  27           376   (23,328)       760 
 
 Shares issued           96       185                                                                              281 
 Total 
  comprehensive 
  income                                                                          -           (9)      (243)     (252) 
                                       -----------  -----------  ------------------  ------------ 
 As at 30 June 
  2020                1,963    21,786          209            8                  27           367   (23,571)       789 
                   ========  ========  ===========  ===========  ==================  ============  =========  ======== 
 
 
 CONDENSED CONSOLIDATED CASH FLOW                   Six Months Ended      Year Ended 
                                                    30 June     30 June       31 Dec 
                                                         20          19           19 
                                                  unaudited   unaudited      audited 
                                                    EUR'000     EUR'000      EUR'000 
 CASH FLOW FROM OPERATING ACTIVITIES 
 Loss for the period                                  (243)       (115)      (1,959) 
 Impairment charge                                        0           0        1,614 
                                                 ----------  ----------  ----------- 
                                                      (243)       (115)        (345) 
 
 Movements in Working Capital                            13           9         (28) 
                                                 ----------  ----------  ----------- 
 CASH USED IN OPERATIONS                              (230)       (106)        (373) 
 
 NET CASH USED IN OPERATING ACTIVITIES                (230)       (106)        (373) 
                                                 ----------  ----------  ----------- 
 
 INVESTING ACTIVITIES 
 Payments for exploration and evaluation 
  assets                                                (2)        (47)        (151) 
                                                 ----------  ----------  ----------- 
 NET CASH USED IN INVESTING ACTIVITIES                  (2)        (47)        (151) 
                                                 ----------  ----------  ----------- 
 
 FINANCING ACTIVITIES 
 Shares issued                                          281           0          560 
                                                 ----------  ----------  ----------- 
 NET CASH GENERATED FROM FINANCING ACTIVITIES           281           0          560 
                                                 ----------  ----------  ----------- 
 
 NET INCREASE/(DECREASE) IN CASH AND 
  CASH EQUIVALENTS                                       49       (153)           36 
 
 Cash and cash equivalents at beginning 
  of the period                                         368         330          330 
 
 Effect of exchange rate changes on 
  cash held in foreign currencies                       (8)           1            2 
 CASH AND CASH EQUIVALENT AT THE 
  OF THE PERIOD                                         409         178          368 
                                                 ==========  ==========  =========== 
 
 

Notes:

   1.    INFORMATION 

The financial information for the six months ended 30 June 2020 and the comparative amounts for the six months ended 30 June 2019 are unaudited.

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements have been prepared applying the accounting policies and methods of computation used in the preparation of the published consolidated financial statements for the year ended 31 December 2019.

The interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2019, which are available on the Company's website www.petrelresources.com

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

   2.    No dividend is proposed in respect of the period. 
   3.    LOSS PER SHARE 
 
                                           30 June         30 June         31 Dec 
                                              20              19              19 
                                             EUR             EUR             EUR 
 Loss per share - Basic and Diluted           (0.16c)         (0.11c)         (1.50c) 
 
 
 Basic and diluted loss per share 
                          The earnings and weighted average number of ordinary shares 
                      used in the calculation of basic loss per share are as follows: 
                                              EUR'000         EUR'000         EUR'000 
 Loss for the period attributable 
  to equity holders                             (243)           (115)         (1,959) 
 
 
 Weighted average number of ordinary 
  shares for the purpose of basic 
  earnings per share                      150,821,396     104,557,246     130,647,568 
 
 
 

Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.

   4.    INTANGIBLE ASSETS 
 
                                        30 June    30 June     31 Dec 
                                             20         19         19 
 Exploration and evaluation assets:     EUR'000    EUR'000    EUR'000 
 Opening balance                            984      2,523      2,523 
 Additions                                    2         47        196 
 Impairment                                   -          -    (1,614) 
 Exchange translation adjustment            (1)         23      (121) 
                                       ________   ________   ________ 
 Closing balance                            985      2,593        984 
 
 

Exploration and evaluation assets relate to expenditure incurred in exploration in Ireland and Ghana. The directors are aware that by its nature there is an inherent uncertainty in Exploration and evaluation assets and therefore inherent uncertainty in relation to the carrying value of capitalized exploration and evaluation assets.

Due to legislative uncertainty since 2017, exacerbated by the Taoiseach's public statements in September 2019 against the issue of new Atlantic oil exploration licences, Petrel has discontinued farm-out discussions with a gas super-major. Also, the board reluctantly dropped our 100% owned and operated Frontier Exploration Licence (FEL) 3/14, despite multiple identified targets. Similarly, the board decided not to apply to convert our prospective Licensing Option (LO) 16/24 into a Frontier Exploration Licence. Accordingly, the directors have impaired in full all expenditure relating to the above mentioned licences, resulting in an impairment charge of EUR1,613,591 in the prior year.

Petrel continues as a 10% working interest partner with Woodside in Frontier Exploration Licence (FEL) 11/18, in the Irish Atlantic's Porcupine Basin.

Relating to the remaining exploration and evaluation assets at the financial year end, the directors believe there were no facts or circumstances indicating that the carrying value of the intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors. The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves and is subject to a number of significant potential risks, as set out below:

-- Licence obligations;

-- Funding requirements;

-- Political and legal risks, including title to licence, profit sharing and taxation;

-- Exchange rate risk;

-- Financial risk management;

-- Geological and development risks;

Directors' remuneration of EURNil (2019: EUR30,000) and salaries of EURNil (2019: EUR15,000) were capitalised as exploration and evaluation expenditure during the financial year.

 
 Regional Analysis    30 Jun 20   30 Jun 19   31 Dec 19 
                        EUR'000     EUR'000     EUR'000 
 
 Ghana                      932         918         931 
 Ireland                     53       1,675          53 
                        _______     _______     _______ 
                            985       2,593         984 
 
 
   5.    SHARE CAPITAL 
 
                                                2019      2019 
                                             EUR'000   EUR'000 
 Authorised: 
 800,000,000 ordinary shares of EUR0.0125     10,000    10,000 
 
 
 
 Allotted, called-up and fully paid: 
                                                        Number      Share Capital    Premium 
                                                                          EUR'000    EUR'000 
 At 1 January 2019                                 104,557,246              1,307     21,601 
 Issued during the period                                    -                  - 
 
 At 30 June 2019                                   104,557,246              1,307     21,601 
 Issued during the period                          108,824,869              1,360          - 
 Cancellation of shares subsequent to year end    (64,035,976)          (800,450)          - 
 
 At 31 December 2019                               149,346,159              1,867     21,601 
 Issued during the period                            7,692,308                 96        185 
 
 At 30 June 2020                                   157,038,467              1,963     21,786 
 
 

Movements in issued share capital

On 30 July 2019 a total of 44,788,913 shares ("tranche 1 shares") were placed at a price of 1.25 cents per share. Proceeds were used to provide additional working capital and fund development costs.

*On 21 November 2019 the company held an Extraordinary General Meeting and received shareholder approval for the following transaction:

"64,035,976 Ordinary Shares of 1.25 cent each were to be issued to the Tamraz group at the placing price of 1.25 cent each."

These shares (known as the "tranche 2 shares") were issued and allotted to the Tamraz group on 21 November. The share certificates were retained by the Company until payment was received from the Tamraz group.

It became known to Petrel that prior to 31 December 2019 the Tamraz group had offered the tranche 1 shares in Petrel as collateral to lenders. This was in breach of lock in terms which were attached to those shares. In addition during December part of the tranche 1 shares were transferred to a third party, further breaching the terms of the lock in agreement in relation to those shares.

The Tamraz group also failed to pay proceeds due in relation to the tranche 2 shares within the timeline required by Petrel. As a result of these factors the tranche 2 shares were considered forfeited and were cancelled by the Group subsequent to year end.

Although the shares were not legally cancelled until after year end, they are considered to be forfeited as of year-end given the circumstances noted above and in particular, the fact that Tamraz were considered to be in default of funding arrangements and lock in terms.

Had these circumstances been known to the Group on 21 November 2019 the shares would not have been allotted or issued. The Group did not suffer any economic loss due to the transaction as they were able to cancel the tranche 2 shares. As a result the shares are considered to be economically forfeited at year end and have been deducted from share capital on the balance sheet.

On 18 May 2020 the Company announced that the tranche 2 shares have now been cancelled.

On 26 May 2020 a total of 7,692,308 shares were placed at a price of 3.25 pence per share. Proceeds were used to provide additional working capital and fund development costs.

   6.    POST BALANCE SHEET EVENTS 

There are no material post balance sheets events affecting the Group.

7. The Interim Report for the six months to 30(th) June 2020 was approved by the Directors on 18(th) September 2020.

   8.    The Interim Report will be available on the Company's website at www.petrelresources.com . 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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