RNS Number:1527Q
Northern Petroleum PLC
25 September 2003
Embargoed 0700hrs 25 September 2003
Northern Petroleum Plc
("Northern" or the "Company")
Interim Results for the Six Months Ended 30 June 2003
Highlights
*Turnover growth from last year of #29,398 to #224,879 for six months
*Exciting oil discovery at Avington
*Increased confidence in the potential of the south of England prospects
*Increase in value of investment in Ramco Energy Plc
*Continued profitable production in Spain
*New licences awarded in Italy
Chairman, Richard Latham, commented,
"During this period we have been a partner in an exciting onshore oil discovery
in the south of England. I am confident that we may look forward with optimism
to the outcome of production tests at Avington and, of more importance, the
drilling of several other highly attractive prospects in the region."
For further information please contact,
Derek Musgrove
Northern Petroleum Plc
020 7743 6080
Chris Roberts / Ben Simons
Hansard Communications
020 7245 1100 / 0771 309 0135
Chairman's Statement
I am delighted to report that in the first half of 2003 your Company has been a
partner in the first onshore oil discovery in the south of England since 1987.
This has provided us with added confidence in seeking and drilling further
re-appraisal prospects in the area, where we hold greater licence interests
ranging from 41.75% to as much as a possible 80%.
The work on the Great Oolite formation in the south of England reported to you
in June is beginning to be rewarded. In July we acquired a 5% interest in PEDL
070 and promptly drilled the Avington-2 oil discovery. This is now undergoing
production testing for a 120 day period. It is intended that the well be tested
both before and after acid stimulation, in order to assess the productivity of
the well as so far no stabilised flow rates have been measured. It is necessary
to gather data for reservoir modelling and to make a preliminary estimation of
recoverable oil reserves.
The decision to acquire PEDL 070, which included the Avington well interest, was
taken after applying the techniques to re-interpret the electric log information
from Avington-1. This provided us with the necessary confidence to make the
investment. We now have fully earned our 5% interest in the licence, having paid
10% of the pilot well drilling costs.
The success at Avington in which we hold a 5% interest is of importance, but I
continue to emphasise that the greater impact on the Company should come when we
drill the Sandhills structure on the Isle of Wight (41.75% interest), the newly
acquired PEDL 089 (up to 80% interest under option) and any of many targets
identified in PEDLs 125 and 126 (50% interest). We hope that this will realise
the full potential of our investment.
I am pleased to report that Ramco Energy plc, in which Northern holds 294,118
shares, is making excellent progress on their development of the Seven Heads Gas
Field offshore southern Ireland. This has resulted in an increase in value of
this holding.
In Spain we have continued to profitably produce oil at Ayoluengo totalling
-27,693 barrels during the half year. Whilst I am disappointed that this level
is slightly less than forecast, I am confident that this project will realise
its full potential upon implementation of a modest capital expenditure
programme. It has been a source of frustration for the Company that to date the
partners in this project have not been forthcoming with this investment. The
field operating costs are predominantly fixed and independent of production
level, thus only very limited costs will attach to any increase in production. I
continue to see the Ayoluengo field as an attractive investment. The recent
relocation by Marriot of their No. 7 rig to the Ayoluengo site for storage could
substantially reduce the costs of any new drilling operations.
Our legal action against Arkhangelskgeoldobytcha ("AGD"), now a subsidiary of
Lukoil, continues, however, I am restrained by the rules of the arbitration
process from offering any detailed and informative comments.
In addition to the action that our subsidiary company, Northern Petroleum
Limited, has brought, we now understand that AGD has requested a court in
Arkhangel to rule that certain documents remove the jurisdiction to Russia. We
have filed preliminary statements in dispute of such claim. The issue will next
be addressed on 16th October 2003. I assure shareholders that recourse to legal
action was only taken in the face of a complete and regrettable lack of response
to communications from Northern Petroleum Limited to the particular Russian
partner over a substantial period. I can assure shareholders that it was neither
the expectation nor objective of the Company to pursue an action of this length.
Furthermore, it is not in keeping with the Company's normal practice.
In Italy we are delighted to have recently been awarded, subject to satisfactory
environmental impact studies, two offshore licences in which Northern holds a
70% interest. These are d92E.R-NP (offshore the Tiber Delta area) and d344C.R-NP
(offshore between Sicily and Malta).
We continue to await the award of five further applications in Italy. We believe
that the potential for discoveries is high. The main thrust is to search for gas
in the prolific Po Valley region and for oil and gas offshore south of Sicily in
areas close to the Tunisian and Libyan boundaries. The slowness of the licensing
procedures at least allows us to concentrate in the short term on the UK.
Outlook
For the near future I am confident that we may look forward with optimism to the
outcome of production tests at Avington and the drilling of several highly
attractive south of England prospects. In Spain we are endeavouring to reach an
agreement with our partners to implement plans to achieve a welcome increase in
production with considerable benefit to our operating profit margins.
Richard Latham
Chairman
Consolidated Profit and Loss Account
6 month 6 month
period ended period ended Year ended
30 June 30 June 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
# # #
---------------------- ----------- ---------- ----------
Turnover 224,879 - 29,398
Cost of sales
---------------------- ----------- ---------- ----------
Production costs 192,992 - 16,258
Depreciation, depletion and 95,711 10,513 92,760
amortisation ----------- ---------- ----------
----------------------
288,703 10,513 109,018
---------------------- ----------- ---------- ----------
Gross profit/(loss) (63,824) (10,513) (79,620)
Administrative expenses (335,063) (261,531) (396,331)
Other operating income 12,800 - 31,500
---------------------- ----------- ---------- ----------
Operating loss (386,087) (272,044) (444,451)
Profit on disposal of oil and gas - - 1,776,741
assets
Provision against fixed asset - - (731,820)
investment
Loss on disposal of current asset - (15,164) (15,164)
investment
Provision against current asset 151,471 - (227,940)
investment
Interest receivable 22,590 3,811 37,845
---------------------- ----------- ---------- ----------
Profit/(loss) on ordinary (212,026) (283,397) 395,211
activities before taxation
Tax on profit/(loss) on ordinary (3,258) - (154,461)
activities ----------- ---------- ----------
----------------------
Profit/(loss) for the period (215,284) (283,397) 240,750
---------------------- ----------- ---------- ----------
Basic profit/(loss) per share (0.13)p (0.18)p 0.15p
---------------------- ----------- ---------- ----------
Diluted profit/(loss) per share (0.12)p (0.17)p 0.14p
---------------------- ----------- ---------- ----------
Statement of Total Recognised Gains and Losses
6 month 6 month
period ended period ended Year ended
30 June 30 June 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
# # #
--------------------- ---------- ---------- ----------
Profit/(loss) for the period (215,284) (283,397) 240,750
Exchange differences on
retranslation
of net assets of subsidiary (111) (37,881) (27,179)
undertakings ---------- ---------- ----------
---------------------
Total recognised gains and (215,395) (321,278) 213,571
losses ---------- ---------- ----------
---------------------
Consolidated Balance Sheet
30 June 30 June 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
# # #
--------------------- ---------- ---------- ----------
Fixed assets
Intangible assets 238,012 1,253,904 180,965
Negative goodwill (32,207) - (42,595)
Tangible assets 143,724 979 164,562
Investments 1 720,933 1
--------------------- ---------- ---------- ----------
Total fixed assets 349,530 1,975,816 302,993
--------------------- ---------- ---------- ----------
Current assets
Debtors 392,021 41,120 392,728
Investments 923,531 - 772,060
Cash at bank and in hand 1,589,126 259,350 1,806,220
--------------------- ---------- ---------- ----------
2,904,678 300,470 2,971,008
Creditors:
Amounts falling due within one 584,007 99,419 396,085
year ---------- ---------- ----------
---------------------
Net current assets 2,320,671 210,051 2,574,923
Creditors: amounts falling due 40,710 - 38,130
after more than one year
Provision for liabilities and 81,420 - 76,260
charges ---------- ---------- ----------
---------------------
Total assets less liabilities 2,548,071 2,176,867 2,763,466
--------------------- ---------- ---------- ----------
Capital and reserves
Called up share capital 6,035,889 6,012,889 6,035,889
Share premium account 5,297,560 5,268,810 5,297,560
Profit and loss account (8,785,378) (9,104,832) (8,569,983)
--------------------- ---------- ---------- ----------
Shareholders' funds 2,548,071 2,176,867 2,763,466
--------------------- ---------- ---------- ----------
Shareholders' funds attributable
to
-- equity shares (1,886,109) (2,257,313) (1,670,714)
- non-equity shares 4,434,180 4,434,180 4,434,180
--------------------- ---------- ---------- ----------
2,548,071 2,176,867 2,763,466
--------------------- ---------- ---------- ----------
Consolidated Statement of Cash Flows
6 month 6 month
period ended period ended Year ended
30 June 30 June 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
# # #
---------------------- --------- --------- ---------
Net cash outflow from operating (87,971) (344,096) (637,849)
activities
Returns on investments and
servicing of finance
Interest received 20,590 3,811 37,845
Capital expenditure and financial (149,713) 44,658 (148,603)
investments
Acquisitions and disposals - - 1,999,850
---------------------- --------- --------- ---------
Cash outflow before financing (217,094) (295,627) 1,251,243
Financing
Issue of ordinary shares for cash - 522,870 522,870
(net of commissions) --------- --------- ---------
----------------------
Increase/(decrease) in cash for (217,094) 227,243 1,774,113
the period --------- --------- ---------
----------------------
Reconciliation of operating loss
to net cash flow from operating --------- --------- ---------
activities:
----------------------
Operating loss (386,087) (272,044) (444,451)
---------------------- --------- --------- ---------
Depreciation, depletion and 102,509 10,513 93,537
amortisation
Amortisation of negative (6,798) - (777)
goodwill
Depreciation - non oil and gas 2,052 337 760
tangible assets
Decrease/(increase) in operating 2,706 13,760 (338,034)
debtors and prepayments
Increase/(decrease) in operating 197,647 (111,826) 51,116
creditors and accruals --------- --------- ---------
----------------------
298,116 (72,052) (193,398)
---------------------- --------- --------- ---------
Net cash outflow from operating (87,971) (344,096) (637,849)
activities --------- --------- ---------
----------------------
Reconciliation of net cash flow to movement in net funds:
Increase/(decrease) in cash for the (217,094) 227,243 1,774,113
period
Net funds at start of period 1,806,220 32,107 32,107
--------------------- ------------ -------- ----------
Net funds at end of period 1,589,126 259,350 1,806,220
--------------------- ------------ -------- ----------
Notes to the Accounts
1. The results for the period are all derived from continuing activities.
2. For oil and gas projects, the full cost accounting policy has been
adopted, whereby all costs are accumulated in cost pools and are then written
off to the extent that they are not supported by underlying oil and gas
reserves, unless the expenditure relates to an area where it is too early to
make such a decision. Expenditure in the latter category has been included on
the balance sheet under intangible assets.
3. During the second half of 2003 the Company will perform a final fair
value review of its acquisition of the producing Ayoluengo oil field, with any
required adjustments being made in the 2003 annual accounts.
4. The calculation of loss per share has been based on the loss after
taxation for the period and the 160,170,900 ordinary shares in issue throughout
the period.
5. The unaudited results have been prepared on the basis of the accounting
policies adopted in the annual accounts for the year ended 31 December 2002.
6. The interim report is unaudited and does not constitute Statutory
Accounts as defined in Section 240 of the Companies Act 1985. A copy of the
group's 2002 Statutory Accounts has been filed with the Registrar of Companies.
7. The interim report for the six months to 30 June 2003 was approved by the
Directors on
24th September 2003.
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