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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Urals EN. | LSE:UEN | London | Ordinary Share | CY0107130912 | ORD USD0.126 (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 35.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS No 5315f UNITED ENERGY PLC 30 April 1999 UNITED ENERGY plc Preliminary Results for Year Ended 31 December 1998 Production and Reserve Growth offset by Collapse in World Oil Prices SUMMARY Production increased by 42% to 2,176 boepd. Proved reserve base up 8% to 4.6 million boe. Reserve additions more than replaced production for the seventh year in a row. Operating costs reduced by 12% to US$4.57/boe. Agrigen's planning appeal rejected resulting in exceptional provision of #0.87 million. AmBrit's US oil and gas assets sold for US$22 million subject to shareholder approval. The collapse in world oil prices resulted in received oil and gas prices down 34% and 21% respectively resulting in a loss of #2.4 million after exceptional items. John F Billington, Chairman of United Energy plc said: "1998 has been a very difficult year for small oil and gas companies with the prospect of weak product prices in the near term. Your Board therefore decided to seek a buyer for the US interests to crystallise the value of the assets and avoid the attrition of worth within the Company over the next few years." An explanatory circular relating to the proposed disposal of assets to Castle Energy Corporation announced on 13 April 1999 is being mailed to shareholders. Contact: Nick Tamblyn, Chief Executive - 01242 253773 Derek Howard-Orchard, Group Technical Director - 01242 253773 Chairman's Statement 1998 has been a very difficult year. Despite continuing to build solid growth in production and reserves, the severe erosion in world oil prices, from an already weak position at the beginning of the year, has negated the achievements of the past three years. I am, therefore, disappointed to have to report a loss of #2.40 million after exceptional items amounting to #1.62 million. Had 1997 average oil and gas prices prevailed in 1998, excluding the loss in Agrigen, the Company would have been able to report a profit of #1.7 million. US Oil and Gas Operations Despite strong production growth throughout the year and a significant reduction in operating cost per boe the US$4.67 per boe fall in average oil and gas prices reduced cash flows by US$3.7 million. As a result of the nature of the business, the fall in product prices hits upstream oil and gas companies in a variety of ways which compounds the problems currently faced by AmBrit Energy. Not only are cash flows reduced, but the proved reserve base is decreased as the economic limit is reached earlier in the life of the field at lower prices. With a smaller reserve base and reduced pricing, gearing is increased disproportionately as the base against which funds are borrowed is worth less. Furthermore, depletion is increased as costs are spread over a smaller reserve base. Consequently, your Board determined at the end of last year to seek the sale of either AmBrit or its oil and gas assets in order to safeguard future value to shareholders as I refer to below. Agrigen As I mentioned in last year's Report and Accounts, in December 1997, Northampton Borough Council rejected our revised planning application, despite having passed a resolution to grant permission for a similar scheme in 1992 and having supported the scheme during the period that both the NFFO licence and the Thermie grant were awarded. Two independent legal opinions from well respected planning counsel confirmed that we had good grounds for appeal with a better than average chance of success. On the basis of that advice we prepared for an appeal hearing set for October 1998. The Planning Inspector's decision to dismiss Agrigen's planning appeal for the Nunn Mills Biomass Power Station was announced by your Company in early February 1999. We are surprised that, in view of HM Government's objectives for renewable energy, his decision failed to address the National and European issues and was based on a parochial concern that the visual intrusion of the building and emissions stack combined with the emission of an albeit harmless visible water vapour plume, would be detrimental to Nene Valley and the regeneration of the development area. Planning approval was the last significant hurdle to be overcome to bring the scheme to fruition. Early in 1999, marketing of the Nunn Mills Biomass Power Station project was initiated resulting in a number of strong indications of interest which confirmed your Board's view that the project had significant value. We have made a full provision against Agrigen Ltd amounting to #0.87 million which is carried as an exceptional item. The provision takes into account the proceeds received from the disposal of the Group's interest in the Nunn Mills site for #250,000. Outlook At first quarter 1999 pricing levels, AmBrit is not profitable. Its asset base is declining through production at around 20% per year and it is unlikely to be able to generate sufficient free cash flow to maintain its asset base over the medium term, either through acquisitions or drilling. AmBrit is under pressure from its lending bank to reduce debt in line with a re-determined loan facility by 1 July 1999, as are many other small US oil and gas companies, which is likely to result in a proliferation of properties for sale at the mid year. In view of the position predicated by the collapse in oil prices and weakening gas prices your Board decided, at the time of the 1998 interim results announcement, to investigate the sale of AmBrit or its assets in order to crystallise a value for shareholders rather than have the company wither away by attrition. As more fully described in a circular which is being sent to shareholders, AmBrit has received an offer of US$22 million from Castle Energy Corporation, which after payment of bank borrowings amounting to US$14.7 million and office closure costs net of working capital realisations estimated at US$300,000 leaves around US$7 million to be repatriated to United Energy. Failure to approve the proposed sale of the assets to Castle Energy Corporation will put the Group at risk due to the high level of debt in relation to the reduced value of the underlying security. In such an event, your Board would seek alternative disposals although it would be necessary to reach a new agreement with the bank. There is no guarantee that a successful refinancing could be achieved in a timely manner or at all. If the bank does not support the Group during negotiations of such a refinancing or such a refinancing is not achieved in a timely manner, the Group would have insufficient working capital. Assuming the sale of AmBrit's oil and gas assets to Castle Energy Corporation is completed without any material adjustment, United Energy should have net liquid assets of approximately 10p per share and an ongoing London Stock Exchange listing. Your Board is actively pursuing alternative business opportunities, and will report again to shareholders once a new business venture has been identified. John F Billington Chairman 30 April 1999 Consolidated Profit and Loss Account for the Year Ended 31 December 1998 1998 1997 Before ExceptionalExceptional Items Items Total Total #'000 #'000 #'000 #'000 Turnover 5,471 - 5,471 5,507 ______________________________ Cost of sales: Production costs (2,186) - (2,186) (1,760) Depletion of oil and gas interests (2,414) - (2,414) (1,665) Impairment of oil and gas interests - (750) (750) - _______________________________ (4,600) (750) (5,350) (3,425) _______________________________ Gross profit 871 (750) 121 2,082 Administrative expenses (910) - (910) (857) _______________________________ Operating (loss)/profit (39) (750) (789) 1,225 Loss from interest in associated undertaking (20) (870) (890) (26) Interest receivable and similar income 6 - 6 23 Interest payable and other charges (729) - (729) (394) ________________________________ (Loss)/profit on ordinary activities before taxation (782) (1,620) (2,402) 828 Taxation - - - (25) ________________________________ (Loss)/profit on ordinary activities after taxation (782) (1,620) (2,402) 803 ________________________________ (Loss)/earnings per share - basic (1) (6.2)p 2.1p (Loss)/earnings per share - diluted (6.2)p 2.0p ___________________ All items dealt with in arriving at the operating (loss)/profit for 1998 and 1997 relate to operations which, while continuing in 1998 and 1997 are to be discontinued. The result as shown in the profit and loss account is not materially different from the result on an unmodified historic cost basis. Note: 1.The calculation of loss per share is based on the loss on ordinary activities after taxation of #2,402,000 (1997: profit #803,000) and on the weighted average number of 38,891,895 ordinary shares in issue during the year (1997: 38,843,402). There is no dilutive effect in the current year. The diluted earnings per share in 1997 is calculated on a profit of #803,000 on 39,130,915 shares, being the basic weighted average of 38,843,402 shares and the dilutive potential ordinary shares of 287,513 shares relating to share options. Consolidated Balance Sheet at 31 December 1998 31 December 1998 31 December 1997 #'000 #'000 Fixed assets Intangible exploration assets 111 188 Oil and gas interests 12,009 10,628 Other tangible assets 322 98 Investments - 389 ____________________________________ 12,442 11,303 Current assets Debtors 1,453 1,137 Cash at bank 458 691 ____________________________________ 1,911 1,828 Creditors: amounts falling due within one year (3,223) (1,008) _____________________________________ Net current (liabilities)/assets (1,312) 820 _____________________________________ Total assets less current liabilities 11,130 12,123 Creditors: amounts falling due after more than one year (7,175) (5,683) ____________________________________ Net assets 3,955 6,440 ____________________________________ Capital and reserves Called up share capital 3,889 3,889 Share premium account 272 272 Other reserves: capital reserve 717 717 Profit and loss account (923) 1,562 ___________________________________ Shareholders' funds-equity 3,955 6,440 ___________________________________ Consolidated Cashflow Statement for the Year Ended 31 December 1998 1998 1997 #'000 #'000 Net cash inflow from operating activities 2,160 2,851 Returns on investments and servicing of finance (704) (325) Taxation 20 (45) Capital expenditure and financial investment (5,134) (4,630) Acquisitions (2) (51) __________ __________ Cash outflow before financing (3,660) (2,200) Net cash inflow from financing 3,247 2,186 __________ __________ Decrease in cash in the period (413) (14) __________ __________ Notes: 1. Under the existing arrangements with its banker, the Group is required to repay #1.7 million by 1 July 1999. The Company's wholly owned subsidiary, AmBrit Energy Corp., has entered into a conditional agreement, to dispose of all of its oil and gas properties for consideration of approximately #13.3 million. The proceeds of sale will be used to settle the Group's bank loan facilities which totalled #8.9 million at 31 December 1998. In the event that the disposal does not proceed it would be necessary for the Directors to reach a new agreement with the bank, which might require continued property disposals if the group is to continue as a going concern. There is a reference to the going concern basis in the Auditors' Report but their opinion is not qualified in this respect. 2. The financial information set out in this statement does not constitute the Company's statutory accounts for the years ended 31 December 1997 or 1998 but is derived from those accounts. Statutory accounts for 1997 have been delivered to the Registrar of Companies, whereas those for 1998 will be posted to shareholders shortly. The auditor has reported on those accounts; its reports were unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. 3. The Annual General Meeting will be held at the offices of Nabarro Nathanson, 50 Stratton Street, London W1X 6NX on 10 June 1999 at 11.00 am. Oil and gas reserves The Net Proved Oil and Gas Reserves Estimation as at 31 December 1998 was performed by The Scotia Group Inc. on all the Group's properties. Oil prices used for the evaluation were based on a 12 month average of West Texas Intermediate posted prices of 11.95 US$/bbl adjusted by lease for gravity and transportation fees. Similarly, gas prices were based on a 12 month average price for Texas Gulf Onshore Spot of 2.05 US$/mmbtu, adjusted for heating value, composition, gathering costs and regional differentials. Oil and gas prices, operating costs and capital expenditure were held constant for the economic life of the property. The results are summarised below:- Total Oil Oil GasEquivalent (mbbl) (mmcf) (mboe) Total Proved Reserves at 31 December 1997(1) 2,550.7 9,946.2 4,208.4 Changes during the year: Production (415.7) (2,270.3) (794.1) Disposals (36.0) (26.8) (40.5) Revisions - Existing properties (480.2) 2,186.4 (115.8) Acquisitions (260.4) 39.5 (253.8) Acquired during the year - Drilling program 156.3 5,162.1 1,016.7 Acquisitions 453.3 483.2 533.9 Total Proved Reserves at 31 December 1998(2) 1,968.0 15,520.3 4,554.8 As at 31 December 1998, the appraised value of Net Proved Oil and Gas Reserves which is estimated by the Group to be equal to the future net revenue discounted at 10% per annum, was #14.7 million (1997:#17.4 million). Notes: 1. These results are subject to the qualifications contained in a document referenced SHB/WWE/8063 "Evaluation of the oil and gas properties of United Energy plc Effective 31 December 1997." 2. These results are subject to the qualifications contained in a document referenced SHB/WWE/9029 "Evaluation of the oil and gas properties of United Energy plc Effective 31 December 1998." END FR IMMIBLLMJBTL
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