TIDMFEP
RNS Number : 7750F
Forum Energy Plc
25 February 2015
25 February 2015
FORUM ENERGY PLC
("Forum Energy" or the "Company")
Audited results for the year ended 31 December 2014
Forum Energy, the UK incorporated oil and gas exploration and
production company with a focus on the Philippines, today announces
its audited results for the year ended 31 December 2014.
FINANCIAL HIGHLIGHTS
-- Revenues of US$6.8 million in 2014 (2013: US$4.4 million)
-- Gross Profit of US$2.9 million in 2014 (2013: US$1.5 million)
-- Administrative expense reduced to US$1.6 million in 2014
(2013: total administrative expense of US$2.5 million)
-- Net Profit attributable to owners of the parent of US$0.2
million (2013: loss US$2.9 million)
-- Working capital of US$1 million at year end (2013: US$0.3 million)
-- Philex Petroleum loan facility due for repayment 24 November
2016 currently US$15.5 million due (2013: US$15.2 million)
-- Available funds of US$2.5 million under the Philex loan
facility as at 31 December 2014 (2013: US$2.8 million)
OPERATIONAL HIGHLIGHTS
-- Unable to commence SC72 drilling programme due to the
on-going maritime dispute between the Philippine and Chinese
governments. An extension was granted to August 2016 to complete
the second sub-phase obligations of drilling wells on SC72.
Commencement of offshore exploration activities remains subject to
securing the necessary approvals from the DOE and other relevant
Philippine Government agencies.
-- Galoc Oil field production increased to an average of 8,000
barrels of oil per day (bopd) in 2014, compared to an average of
4,720 bopd in 2013, this follows the completion of Phase II of the
development in November 2013, which involved the drilling of two
additional wells. The average oil price achieved in 2014 was $107
per barrel of oil (2013 - $110). Average prices per barrel declined
sharply in the last quarter of 2014 and has continued to decline in
2015 up to the date of these results.
-- The operator of the Galoc oil field, The Galoc Production
Company (GPC), is reviewing plans for the Phase III development of
the Galoc oil field, which potentially may involve the drilling of
an additional production well and also an exploration well in the
Galoc Mid or Galoc North prospects.
-- With regards to SC40, we have identified potential
prospective onshore areas. Geological and geophysical activities on
these areas are on-going along with continued discussions with
potential farm-in partners
Robin Nicholson, Chairman, commented: "Whilst it is
disappointing that we have been unable, as a result of matters
beyond our control, to carry out drilling under the second
sub-phase of the Service Contract 72 contract, we remain committed
to pursuing the project and continue to have the support of the
Philippine Government as demonstrated by the extension awarded in
respect of the second sub-phase. We remain financially committed to
ensure the Company ultimately achieves its objectives at such time
as government approval to proceed with work at SC72 is granted. Our
producing Galoc field performed well in 2014 and we increased gross
profit to US$2.9 million, but are expecting lower levels of gross
profit in 2015, due to lower oil prices and lower levels of
production at the Galoc field. We thank our shareholders for their
ongoing support and will continue to update the market as
developments occur".
The Company expects to announce, in due course, when it has
posted its Annual Report and Accounts and AGM Notice.
For further information please contact:
Forum Energy Plc
Andrew Mullins, Executive Director Tel: +44 (0) 208 616 7297
Execution Noble & Company Limited
Harry Stockdale Tel: +44 (0) 20 7456 9191
John Riddell
Or visit the Company's website:
www.forumenergyplc.com <http://www.forumenergyplc.com>
OVERVIEW
The company's primary focus is on developing its current
production and exploration licences.
The principal asset of the company is a 70% interest in Service
Contract 72 (SC72), an 8,800-square kilometre (Km2) offshore
petroleum licence situated west of Palawan Island in the West
Philippine Sea. In 2006, results from a 250 Km2 3D seismic survey
over the licence area indicated a mean volume of 3.4 trillion cubic
feet (TCF) gas-in-place (GIP) with significant upside potential. It
is a primary objective of the company to establish the
commerciality of the hydrocarbons within SC72 by continuing further
exploration subject to securing the necessary approvals from the
Philippine Department of Energy (DOE) and other relevant Philippine
Government agencies which has been pending resolution of the
maritime dispute in the West Philippine Sea.
In March 2011, a total of 565 Km2 of 3D seismic data was
acquired over the Sampaguita Gas Field and 2,202 Line-Km of 2D
seismic data was acquired to further define additional leads
identified within the SC72 acreage and to possibly upgrade existing
leads to prospects. This work, which satisfied Forum's obligations
with the DOE under the first sub-phase of the SC72 contract, was
primarily designed to provide a more comprehensive evaluation of
the SC72 property and to identify potential sites for appraisal
wells.
SC72 seismic interpretation and resources update was completed
in April 2012, which showed an improvement in the resources
previously known and supported the case to proceed with the
drilling programme as part of the second sub-phase of the SC72
contract.
During 2012, the company was unable to secure the necessary
approvals from the DOE for the scheduled exploration activities in
the SC72 contract area. Recognising that these matters were beyond
the control of the company, in January 2013 the DOE granted a one
year extension to August 2015 for the company to complete its
second sub-phase work obligations which are expected to cost in
excess of US$50 million.
On 22 January 2013, an arbitration case under Annex VII to the
United Nations Convention on the Law of the Sea was commenced when
the Philippines served China with Notification and Statement of
Claim "with respect to the dispute with China over the maritime
jurisdiction of the Philippines in the West Philippine Sea."
Further information about the ongoing case is available on the
website of the Permanent Court of Arbitration
(www.pca-cpa.org).
As announced in July 2014, the DOE granted a further one year
extension to August 2016 for the company to complete the second
sub-phase of the planned programme.
Our largest producing asset is the Galoc oil field which
accounts for 87% of our total income (2013: 76%). We plan to
continue participating in the continued development of the field to
maximise our revenue stream.
ASSET SUMMARY
SC72 (70% interest)
The SC72 licence was awarded on 15 February 2010. It covers an
area of 8,800 Km2 and contains the Sampaguita Gas Discovery which
has the potential to contain In-Place Contingent Resources of 2.6
TCF of gas plus another In-Place Prospective Resources totalling
8.8 TCF including the North Bank prospect, based on a resource
assessment performed in 2012 by Weatherford Petroleum Consultants,
an independent qualified competent person. The results of the study
were used to define the location of two wells, to be named
Sampaguita-4 and Sampaguita-5. The drilling of two wells is part of
the work programme of the company for the second sub-phase of SC72,
which must be completed by 14 August 2016, having been granted a
second extension by the DOE.
Commencement of offshore exploration activities in the SC72
contract area remains subject to securing the necessary approvals
from the DOE and other related Philippine Government agencies which
is pending resolution of the maritime dispute in the West
Philippine Sea. Based on initial discussions with the DOE and the
previous experience of the company, the board of directors are
confident that adjustments in the schedule of the current and
succeeding sub-phases will be obtained in case of further
delays.
Galoc (2.27% interest)
Production from the Galoc development reached 2.9 million
barrels gross in 2014 (1.72 million barrels gross in 2013) and is
expected to produce 2.2 million barrels in 2015. The company has a
2.27% interest in the field and received US$4.6 million (US$2.1
million in 2013) after deduction of share of operating costs from
crude sales from the field during the year. The second phase of
development was completed in November 2013 with the drilling of two
additional production wells.
The Galoc Production Company (GPC) are reviewing plans for the
Phase III development of the Galoc oil field, which potentially may
involve the drilling of an additional production well and also an
exploration well in the Galoc Mid or Galoc North prospects.
SC40 (66.67% interest)
SC40 contains the producing Libertad gas field and the Maya
field as well as several other prospects and leads. On 30 January
2009, the company entered into a Gas Sale & Purchase Agreement
(GSPA) with Desco, Inc., for the development of the Libertad gas
field for power generation. On 3 February 2012, commercial
production at the Libertad Field commenced. The total production
from the Libertad Field in 2014 was 41 million cubic feet of gas
(79 million cubic feet of gas in 2013), the reduced production was
due to a prolonged shutdown caused by engine problems. However
these revenues of US$62,000 (2013 - US$ 115,000), are not
considered to be material to the group's cash flow.
Having identified the prospective exploration onshore areas over
the rest of SC40 in 2014, further technical studies and discussion
with potential farm-in partners, are on-going.
LATEST RESOURCES AT SERVICE CONTRACT 72
In 2012, Weatherford Petroleum Consultants ("Weatherford")
completed a report on SC72, which took into account the 565 Km2 of
3D seismic data over the Sampaguita Gas Field and the 2,202 Line-Km
of 2D seismic data over SC72. Weatherford produced the following
summary of unrisked resources initially in place:
SC72 - In-Place Contingent Resources
Gross Net Attributable Risk Factor
--------- --------- --------- --------- ----------------- --------- ------------
Oil & Liquids Low Best High Low Best High
Contingent
Resources Estimate Estimate Estimate Estimate Estimate Estimate
---------------- --------- --------- --------- --------- ----------------- --------- ------------
Sampaguita
segment 2 34 59 103 24 41 72 0.50
Sampaguita
segment 4 3 6 12 2 4 8 0.50
---------------- --------- --------- --------- --------- ----------------- --------- ------------
Total for Oil
& Liquids
(OIIP) MMbbls 37 65 115 26 45 80
---------------- --------- --------- --------- --------- ----------------- --------- ------------
Sampaguita
segment 2 1,348 2,354 4,110 944 1,648 2,877 0.50
Sampaguita
segment 4 127 249 488 89 174 342 0.50
---------------- --------- --------- --------- --------- ----------------- --------- ------------
Total for Gas
(GIIP) BCF 1,475 2,603 4,598 1,033 1,822 3,219
---------------- --------- --------- --------- --------- ----------------- --------- ------------
SC72 - In-Place Prospective Resources
Gross Net Attributable
--------- --------- --------- --------- -------------------- -----
Oil & Liquids Low Best High Low Best High
Prospective
Resources Estimate Estimate Estimate Estimate Estimate Estimate
----------------- --------- --------- --------- --------- --------- --------- -----
Sampaguita
segment 1 40 76 146 28 53 102 0.48
Sampaguita
segment 3 34 61 110 24 43 77 0.45
North Bank
prospect 43 83 160 30 58 112 0.16
----------------- --------- --------- --------- --------- --------- --------- -----
Total Oil &
Liquids (OIIP)
MMbbls 117 220 416 82 154 291
----------------- --------- --------- --------- --------- --------- --------- -----
Sampaguita
segment 1 1,603 3,055 5,821 1,122 2,139 4,075 0.48
Sampaguita
segment 3 1,357 2,441 4,393 950 1,709 3,075 0.45
North Bank
prospect 1,706 3,303 6,398 1,194 2,312 4,479 0.16
----------------- --------- --------- --------- --------- --------- --------- -----
Total for Gas
(GIIP) BCF 4,666 8,799 16,612 3,266 6,160 11,629
----------------- --------- --------- --------- --------- --------- --------- -----
The net attributable amounts in respect of SC72 represent the
company's 70% interest in the estimated resources. These pre-drill
estimates of resources are based on certain assumptions and the
information and interpretations currently available. There can be
no assurances that these assumptions or estimates will prove to be
accurate as future technical evaluations and results, including
drilling results, could lead to variations or differ materially
from those included in Weatherford's report.
The methods and terms used in the preparation of these summaries
are in accordance with Society of Petroleum Engineers guidelines.
For more details please refer to www.spe.org.
LATEST RESERVES AT GALOC OIL FIELD
In March 2014, RISC Operations Pty Ltd (RISC), a leading
independent petroleum advisory firm, was appointed to complete a
reserves review of the Galoc field for Otto Energy, which at the
time owned the Galoc Production Company, the operator of the Galoc
oil field. RISC has extracted a table of reserves for Forum Energy
to use in its 2014 Annual Report, as disclosed below:
Estimated Ultimate Recovery (EUR) 1P 2P 3P
and Reserves Proven Reserves Proven and Proven and
Probable Reserves Probable and
Possible Reserves
--------------------------------------- ----------------- ------------------- -------------------
MMbbl oil MMbbl oil MMbbl oil
--------------------------------------- ----------------- ------------------- -------------------
EUR at 1st Jan 2013 21.7 25.4 30.4
--------------------------------------- ----------------- ------------------- -------------------
EUR at 1st Jan 2014 21.51 25.06 26.66
--------------------------------------- ----------------- ------------------- -------------------
Change in EUR -1% -1% -12%
--------------------------------------- ----------------- ------------------- -------------------
Cumulative Production to 1st Jan
2014 11.66 11.66 11.66
--------------------------------------- ----------------- ------------------- -------------------
Gross Field Reserves at 1st Jan
2014 9.85 13.40 15.00
--------------------------------------- ----------------- ------------------- -------------------
PSC Contractor Entitlement Reserves
at 1st Jan 2014 8.34 11.42 12.64
--------------------------------------- ----------------- ------------------- -------------------
Forum Energy Net Entitlement Reserves
at 1st Jan 2014 0.19 0.26 0.29
--------------------------------------- ----------------- ------------------- -------------------
Notes:
1. The ultimate recovery and cumulative production exclude 0.395 MMbbl
from the Galoc-1 EPT.
2. The equity of Forum Energy Philippine Corporation in the Galoc field
is 2.27575%.
----------------------------------------------------------------------------------------------------
RISC's review was completed to SPE PRMS standards. All
assumptions and forecasts (technical, commercial and others) are
the same as those generated for Otto Energy, using Otto Energy's
and RISC's estimates and public domain data at the time.
Information on the Reserves in this statement relating to
Service Contract SC14-C (Galoc Sub Block) is based on an
independent review and audit conducted by RISC and fairly
represents the information and supporting documentation reviewed.
The review and audit was carried out in accordance with the SPE
Reserves Auditing Standards and the SPE-PRMS guidelines under the
supervision of Mr. Peter Stephenson, a Partner of RISC. Mr.
Stephenson has a M.Eng in Petroleum Engineering, is a member of the
SPE and IChemE and has more than 30 years of relevant
experience.
The Galoc Production Company (GPC) is the operator of the Galoc
oil field and has a 33% interest in the field. In 2015 Otto Energy
sold GPC to Nido Petroleum for US$108 million. GPC's only asset was
the interest in the Galoc oil field at the time of the sale.
LATEST RESOURCE ESTIMATES AT SERVICE CONTRACT 40
On 19 February 2013, the company was presented with a new
competent persons report, prepared by PGS on the SC40 contract
area. SC40 contains a developed gas field, two tested oil prospects
and nine untested oil and gas exploration leads and prospects. This
report included probabilistic resource estimates for the gas field
and all of the leads and prospects, as follows:
SC40 - In-Place Reserves:
Gross Net Attributable
--------- --------- --------- --------- ----------------- ---------
(1P) (2P) (3P) (1P) (2P) (3P)
Low Best High Low Best High
Gas Reserves Estimate Estimate Estimate Estimate Estimate Estimate
---------------- --------- --------- --------- --------- ----------------- ---------
Libertad Field 0.9 1.2 4.1 0.6 0.8 2.7
---------------- --------- --------- --------- --------- ----------------- ---------
Total for Gas
(GIIP) BCF 0.9 1.2 4.1 0.6 0.8 2.7
---------------- --------- --------- --------- --------- ----------------- ---------
SC40 - In-Place Contingent Resources:
Gross Net Attributable Risk Factor
--------- --------- --------- --------- -------------------- ------------
(1C) (2C) (3C) (1C) (2C) (3C)
Oil & Liquids Low Best High Low Best High
Contingent Estimate Estimate Estimate Estimate Estimate Estimate (RF)
Resources
---------------- --------- --------- --------- --------- --------- --------- ------------
Toledo 1.1 1.6 2.4 0.7 1.1 1.6 8%
Maya 7.2 12.5 20.2 4.8 8.3 13.5 <5%
---------------- --------- --------- --------- --------- --------- --------- ------------
Total for
Oil & Liquids
(OIIP) MMbbls 8.3 14.1 22.6 5.5 9.4 15.1
---------------- --------- --------- --------- --------- --------- --------- ------------
SC40 - In-Place Prospective Resources:
Gross Net Attributable Risk
Factor
------------------------------- ------------------------------- --------
Oil & Liquids Low Best High Low Best High
Prospective Resources Estimate Estimate Estimate Estimate Estimate Estimate (RF)
------------------------- --------- --------- --------- --------- --------- --------- --------
Prospects
Tambongon Clastics 115.0 237.0 410.0 76.7 158.0 273.3 9%
Tambongon Limestone 90.0 219.0 427.0 60.0 146.0 284.7 9%
Sabil Point 23.0 50.0 90.0 15.3 33.3 60.0 7%
Batbatan South 22.0 44.0 76.0 14.7 29.3 50.7 9%
Jibitnil Island 20.0 38.0 61.0 13.3 25.3 40.7 8%
Leads
Batbatan SE 19.0 37.0 63.0 12.7 24.7 42.0 <5%
Central Tañon 4.0 7.8 13.7 2.7 5.2 9.1 <5%
North Maya 6.5 9.8 14.3 4.3 6.5 9.5 <5%
Agojo 0.8 1.6 2.7 0.5 1.1 1.8 <5%
Total for Oil & Liquids
(OIIP) MMbbls 300.3 644.2 1,157.7 200.2 429.5 771.8
------------------------- --------- --------- --------- --------- --------- --------- --------
The net attributable amounts in respect of SC40 represent the
Company's 66.67% interest in the estimated resources. These
pre-drill estimates of resources are based on certain assumptions
and the information and interpretations currently available. There
can be no assurances that these assumptions or estimates will prove
to be accurate as future technical evaluations and results,
including drilling results, could lead to variations or differ
materially from those included in PGS' report.
The methods and terms used in the preparation of these summaries
are in accordance with Society of Petroleum Engineers guidelines.
For more details please refer to www.spe.org.
In accordance with AIM Guidelines, Mr A.J. Williams, BSc (Hons)
in Geology, a distinguished member of the Petroleum Exploration
Society of Australia (PESA) and a member of the American
Association of Petroleum Geologists (AAPG) is the qualified person
that has reviewed the technical information in relation to SC40
contained in the tables on this page. Mr Williams has 33 years of
varied petroleum geology, geophysics and resource management
experience and is a manager of Reservoir Group at PGS, an
independent consultancy specialising in petroleum reservoir
evaluation and economic analysis.
STRATEGIC REPORT
Business Review
Service Contract 72
The encouraging results of the resource assessment study
conducted in early 2012 by Weatherford Petroleum Consultants
supported the case to proceed with the drilling of the Sampaguita-4
and Sampaguita-5 wells in 2013. However, commencement of our
drilling programme has been delayed due to the on-going maritime
dispute between the Philippine and Chinese governments. In the
meantime, we carried out a seismic reprocessing program involving
close to 3,000 line-Km of 2D data with CGG as contractor, which was
completed in November 2013. The project aims to map out prospects
and leads of SC72 outside the Sampaguita field.
The required environmental and local government permits,
including the strategic environmental plan clearance from the
Palawan Council for Sustainable Development were secured in 2013.
Commencement of offshore exploration activities in the SC72
contract area remains subject to the securing the necessary
approvals from the Department of Energy and other related
Philippine Government agencies. Based on initial discussions with
the DOE and the previous experience of the company, the board of
directors are confident that adjustments in the schedule of the
current and succeeding sub-phases will be obtained in case of
further delays.
Galoc
The company has a 2.27% interest in the Galoc oil field. Gross
production during the year averaged 8,000 bopd (2013: 4,720 bopd);
the increase is due to the commencement of production of Phase II
in December 2013. Receipts totalled US$4.6 million (2013: US$2.1
million) after deduction of share of operating costs. Phase II of
the development commenced in production in December 2013 with the
drilling of two additional production wells, Galoc 5 and Galoc 6.
Total oil production is expected to be around 2.2 million barrels
in 2015. In 2015 Otto Energy sold their 33% interest in the field
for US$108 million to Nido Petroleum. Nido Petroleum the new
operators are reviewing the options for Phase III of development,
however, it remains a contingent programme up to this time.
Service Contract 40
On 3 February 2012, commercial production at the Libertad Field
commenced. The total production in 2014 was 41 million cubic feet
of gas (79 million cubic feet of gas in 2013). The reduced
production was due to a prolonged shutdown caused by engine
problems. The Libertad Field was impaired by US$729,000 in 2013 as
reservoir pressure decline rate forecasts show ultimate recoverable
gas resource will be lower than earlier estimated.
In early 2013, the land gravity survey in northern Cebu was
concluded and the gravity data processing and interpretation were
completed in May 2013. Also, reprocessing of approximately 500
line-Km of vintage 2D seismic data was completed by Fairfield
Vietnam in October 2013.
A technical evaluation study on the SC40 was completed in 2014,
which focused on the prospectivity of onshore northern Cebu.
Further activities such as land gravity and geochemical surveys are
being considered in 2015 by Forum alone or in cooperation with
potential partners.
Business Model
The company operates exclusively in the oil and gas sector in
the Philippines.
The senior staff at the company have over 25 years' experience
in the Philippines oil and gas sector, which gives the company the
ability to maximise the value of our producing and exploration
assets.
The Philippines' economy was among the world's fastest-growing
in 2014 with a 6.2% growth in gross domestic product (GDP)
according to the International Monetary Fund (IMF). For 2015, the
IMF forecasts a 6.3% growth for the Philippines, trailing only
China and India across Asia. The Asian Development Bank (ADB),
however, is forecasting slightly higher GDP growth rate of 6.4% in
2015. In May 2014, the DOE launched a new contracting round for
petroleum and coal to attract energy investors to develop the
country's indigenous energy resources. At the same time, the DOE
has been actively promoting renewable energy (RE) development and
use to lessen the country's dependency on imported fuel.
Objectives and Strategy
The core objective of the company is to maximise the potential
of all of its current licences, to increase its income and the
continued reduction of administrative expenses.
The company plans to achieve these objectives by:
-- the development of Service Contract 72 by completing its
obligations under the second sub-phase of the licence;
-- the continued participation in the development of the Galoc oil field;
-- the continued review of the prospective onshore areas of
Service Contract 40 onshore prospects, to identify any potential
drilling targets; and
-- the continued review of staff numbers and the company's administrative expenses.
Financial Results and Key Financial Indicators
Our revenues increased by 54% in 2014 to US$6.8 million due to a
70% increase in production at the Galoc oil field, with the
commencement of Phase II production in December 2013.
The gross profit increased 88% to US$2.9 million due to the
increased production at Galoc and a reduction in cost per barrel of
oil from Galoc of $29 in 2013 to $23 in 2014.
The administrative expense reduced 35% to US$1.6 million, as the
company continues to reduce staffing cost and to review all company
expenditure.
The group recorded a net profit attributable to equity holders
of the parent of US$0.2 million, compared with a net loss of US$2.9
million in 2013 which generated a profit per share of US0.6 Cents
(2013: loss per share US8.3 Cents).
During the year, the cost of the development of SC72 was minimal
at US$0.05 million (2013: US$0.4 million) as permission to start
the second sub-phase has not been obtained, due to the territorial
dispute between the Philippine and Chinese governments. Future
spending on SC72 will be minimal until the United Nations tribunal
rules on the West Philippine Sea disputed area, where SC72 is
located.
The capital spending on the Galoc oil field in 2014 reduced to
US$0.7 million (2013: US$4.2 million), as Phase II of its
development was completed in November 2013.The possible development
of Phase III will not occur until 2016 at the earliest.
The company's working capital, excluding the loan from Philex
Petroleum Corporation increased from US$0.3 million (2013) to US$1
million (2014) principally due to cash generated from the Galoc oil
field.
Cash and cash equivalents at the end of the period stood at
US$0.8 million (2013: US$0.2 million). The outstanding amount of
the loan with Philex Petroleum Corporation was US$15.5 million
(2013: US$15.2 million).
Principal Risks and Uncertainties
BUSINESS RISK
The Directors have identified the following current principal
risks in relation to the company's future performance. The relative
importance of risks faced by the company can, and is likely, to
change with progress in the company's strategy and developments in
the external business environment.
Strategy risk
The company's strategy may not deliver the results expected by
shareholders. The Directors regularly monitor the appropriateness
of the strategy, taking into account both internal and external
factors, and the progress in implementing and modifying the
strategy as may be required based on results. Key elements of this
process are annual business plans and strategy reviews, monthly
reporting and regular Board meetings.
The Board has identified the development of SC72, as an
important element of the company's strategy and recognises the
risks to this development represented by the current territorial
disputes between the Philippine and Chinese governments.
Exploration risk
Exploration activities within the company's licences may not
result in a commercial discovery. Forum is pursuing a growth
strategy with a concentrated portfolio of exploration assets. The
historic industry average exploration drilling success rate is
approximately one success for every five wells. There is no
certainty of success from the existing portfolio.
Forum mitigates the exploration risk through the experience and
expertise of the company's specialists, the application of
appropriate technology and the selection of prospective exploration
assets.
Health, Safety, Environment, and Security (HSES) risk
The company conducts operations in the Philippines. There is a
risk of an HSES incident in these operations, with the potential
impact on staff, contractors, communities and the environment, and
to have a negative impact on the company's reputation. This risk is
mitigated through the implementation of the company's HSES
management system, training of staff and selection of
contractors.
Counterparty risk
Forum's cash resources may be negatively affected by failure of
counterparty. To mitigate this risk, the company holds a large
proportion of its cash reserves in US Dollars on deposit with banks
and institutions with a minimum credit rating of AA-. The currency
for most contracts, procurement, services and oil sales is US
Dollars and therefore the company believes it is not particularly
exposed to large currency fluctuations.
Country risk
The company's assets are located in a non-OECD country.
Governments, regulations and the security environment may change
with a consequential effect on the company's assets.
Country risk is mitigated by monitoring the political,
regulatory and security environment within the country in which
Forum holds assets, engaging in constructive discussions where and
when appropriate, and introducing third party expertise if this may
assist in resolution of issues affecting the company's assets.
In addition to the current principal risks identified above and
general business risks, the group's business is subject to risks
inherent in oil and gas exploration, development and production
activities.
Executive Chairman's Statement
2014 was another quiet year in relation to our core asset, SC72,
after we were unable to secure an approval from the DOE to drill
our two commitment wells. The company has put on hold all offshore
exploration activities until said DOE approval is obtained. We will
continue to appraise our shareholders of any developments.
We have identified the potential prospective onshore areas of
SC40, geological and geophysical activities in these areas continue
along with continued discussions with potential farm-in
partners.
The Galoc Field Phase II development was successfully completed
in December 2013, with the additional two production wells
increasing output to 8,000 bopd from 4,720 bopd in 2013. The Galoc
Field has been a steady provider of cash to fund operations and we
anticipate this will continue, but at a reduced rate due to the
current oil price and a decline in production. Gross production is
forecast to decrease from 2.9 million barrels in 2014 to 2.4
million barrels in 2015, Forum share of Galoc is 2.27%.
Outlook for 2015
We remain focused on our goal of establishing the commerciality
of the potential hydrocarbon resources within the SC72, but
recognise that we face significant challenges in the West
Philippine Sea where SC72 is located. We appreciate that this goal
can only be realised with the continuing support of the Philippine
Government.
I would like to take this opportunity once again to thank our
shareholders, our staff and members of the Board of Directors, for
their continuing support and commitment.
Robert Nicholson
Executive Chairman
24 February 2015
Consolidated statement of comprehensive income
for the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
Note US$'000 US$'000
Revenue 2 6,811 4,426
Cost of sales (3,956) (2,906)
--------------------------------------------------------- ------- ------------------- -------------
Gross profit 2,855 1,520
--------------------------------------------------------- ------- ------------------- -------------
Administrative expenses (1,619) (2,507)
Impairment charge 3 (41) (1,298)
--------------------------------------------------------- ------- ------------------- -------------
Total operating expenses (1,660) (3,805)
--------------------------------------------------------- ------- ------------------- -------------
Profit/(loss) from operations 1,195 (2,285)
Finance income 24 248
Finance expenses (866) (1,271)
--------------------------------------------------------- ------- ------------------- -------------
Profit/(loss) before tax 353 (3,308)
Taxation (200) (337)
--------------------------------------------------------- ------- ------------------- -------------
Profit/(loss) for the year from continuing operations 153 (3,645)
Other comprehensive income 65 60
--------------------------------------------------------- ------- ------------------- -------------
Total comprehensive profit/(loss) for the year 218 (3,585)
--------------------------------------------------------- ------- ------------------- -------------
Profit/(loss) and total comprehensive loss attributable
to:
Owners of the parent 207 (2,938)
Non-controlling interest 11 (647)
--------------------------------------------------------- ------- ------------------- -------------
218 (3,585)
--------------------------------------------------------- ------- ------------------- -------------
US Cents US Cents
--------------------------------------------------------- ------- ------------------- -------------
Profit/(loss) earnings per Ordinary Share (US Cents)
attributable to equity holders of the company
Basic and diluted 0.6 (8.3)
--------------------------------------------------------- ------- ------------------- -------------
All of the results of the group during the year relate to
continuing activities.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2014
2014 2013
Note US$'000 US$'000
Assets:
Non-current assets
Exploration, evaluation and development assets 6 27,883 27,534
Oil and gas properties 7 7,583 8,863
Other property, plant and equipment 4 56
Deferred tax 119 287
Other receivables 10 117
Investments - 9
Total non-current assets 35,599 36,866
----------------------------------------------------- ----- ---------- ---------
Current assets
Inventories 464 307
Trade and other receivables 1,080 2,398
Derivative asset - 22
Cash and cash equivalents 778 242
Total current assets 2,322 2,969
----------------------------------------------------- ----- ---------- ---------
Total assets 37,921 39,835
----------------------------------------------------- ----- ---------- ---------
Liabilities:
Non-current liabilities
Loans 15,500 16,438
Deferred tax 45 23
Other liabilities and provisions 4,034 3,917
Total non-current liabilities 8 19,579 20,378
----------------------------------------------------- ----- ---------- ---------
Current liabilities
Loans - 1,239
Trade payable and other payables 1,104 1,198
Income tax payable 225 225
Total current liabilities 8 1,329 2,662
----------------------------------------------------- ----- ---------- ---------
Total liabilities 20,908 23,040
----------------------------------------------------- ----- ---------- ---------
Total net assets 17,013 16,795
----------------------------------------------------- ----- ---------- ---------
Capital and reserves attributable to equity holders
of the company
Share capital 6,322 6,322
Share premium 51,061 51,061
Retained deficit (40,863) (41,070)
----------------------------------------------------- ----- ---------- ---------
16,520 16,313
Non-controlling interest 493 482
----------------------------------------------------- ----- ---------- ---------
Total capital and reserves 17,013 16,795
----------------------------------------------------- ----- ---------- ---------
The financial statements of Forum Energy Plc (registered number
05411224) were approved by the Board of Directors and authorised
for issue on 24 February 2015. They were signed on behalf of the
Board of Directors by:
Paul Wallace
Finance Director
Statement of changes in equity
for the year ended 31 December 2014
Non- Total capital
Share Share Retained controlling and
capital premium deficit Total interest reserves
Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- -------- -------- --------- -------- ------------ --------------
Balance as at 1 January
2013 6,322 51,061 (38,132) 19,251 1,129 20,380
Loss for the year - - (2,998) (2,998) (647) (3,645)
Other comprehensive
income - - 60 60 - 60
---------------------------- -------- -------- --------- -------- ------------ --------------
Total comprehensive
income for the year - - (2,938) (2,938) (647) (3,585)
---------------------------- -------- -------- --------- -------- ------------ --------------
Balance as at 31 December
2013 6,322 51,061 (41,070) 16,313 482 16,795
---------------------------- -------- -------- --------- -------- ------------ --------------
Profit for the year - - 142 142 11 153
Other comprehensive
income - - 65 65 - 65
---------------------------- -------- -------- --------- -------- ------------ --------------
Total comprehensive
income for the year - - 207 207 11 218
---------------------------- -------- -------- --------- -------- ------------ --------------
Balance as at 31 December
2014 6,322 51,061 (40,863) 16,520 493 17,013
---------------------------- -------- -------- --------- -------- ------------ --------------
Share capital represents the nominal value of shares issued. The
share premium account holds the balance of consideration received
in excess of the par value of the shares.
The retained deficit is the cumulative net gains and losses
recognised in the statement of comprehensive income adjusted for
transfer on exercise, cancellation or expiry of options from the
share option reserve.
No interim of final dividend has been paid or proposed during
the year.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
--------------------------------------------------------- ------------ ------------
Restated*
Cash flows from operating activities
Profit/(loss) before tax from operations 353 (3,308)
Adjustments for:
Depletion and depreciation 1,899 938
Impairment charge 41 729
Write off of accounts receivable 149 -
Loss on sale of exploration equipment - 569
Loss on investments 9 2
Finance income - (1)
Interest charge on loan facility 852 1,050
Hedging (gain)/losses and charge (3) 219
Working capital adjustment
Decrease/(increase) in trade and other receivables 1,274 (164)
Increase in inventories (88) (60)
Increase /(decrease) in trade and other payables 49 (1,290)
(Decrease)/Increase in provisions and employee benefits (4) 26
---------------------------------------------------------- ------------ ------------
Cash flows from operating activities 4,531 (1,290)
Tax paid (15) (393)
---------------------------------------------------------- ------------ ------------
Net cash used in operating activities 4,516 (1,683)
Investing activities:
Purchase of oil and gas properties (475) (25)
Purchase of property, plant and equipment - (2)
Disposal of property, plant and equipment - 45
Purchase of exploration, evaluation and development
asset (349) (6,629)
Disposal of exploration equipment - 1,294
Interest received - 1
---------------------------------------------------------- ------------ ------------
Net cash used in investing activities (824) (5,316)
Financing activities:
Loan facility drawn down 300 2,677
Loan facility repayments (2,477) -
Hedging payments (151) (70)
Interest paid (828) (1,126)
---------------------------------------------------------- ------------ ------------
Net cash from financing activities (3,156) 1,481
---------------------------------------------------------- ------------ ------------
Net increase/(decrease) in cash and cash equivalents 536 (5,518)
Cash and cash equivalents at beginning of the year 242 5,760
---------------------------------------------------------- ------------ ------------
Cash and cash equivalents at end of the year 778 242
---------------------------------------------------------- ------------ ------------
*Certain amounts shown here do not correspond to the 2013
financial statements and reflects adjustments made.
Notes to the financial statements
for the year ended 31 December 2014
1 ACCOUNTING POLICIES
1.1 Basis of preparation
The policies have been consistently applied to all the years
presented, unless otherwise stated. The group financial statements
have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards (IFRSs) and IFRIC
Interpretations, issued by the International Accounting Standards
Board (IASB) as endorsed for use in the European Union (IFRSs) and
those parts of the Companies Act 2006 that are applicable to
companies that prepare their financial statements under IFRS.
The financial information for the years ended 31 December 2014
and 31 December 2013 does not constitute statutory accounts as
defined by section 435 of the Companies Act 2006 but is extracted
from the audited accounts for those years. The 31 December 2013
accounts have been delivered to the Registrar of Companies. The 31
December 2014 accounts will be delivered to Companies House within
the statutory filing deadline. The auditor's report on those
financial statements was unqualified and did not contain a
statement under s498 (2) - (3) of Companies Act 2006.
The consolidated financial statements have been prepared on a
historical cost basis, except for derivative financial instruments
that have been measured at fair value. The consolidated financial
statements are presented in US Dollars, and all values are rounded
to the nearest thousand (US$ thousand), except where otherwise
indicated.
1.2 Going concern
The group is currently conducting exploration and development
activities using existing funds including those generated by the
group's interests in producing assets, including the Galoc oil
field. In the absence of a defined timetable for further activity
related to the appraisal and development of SC72, the group's cash
flow forecasts are mostly dependent on the performance of the Galoc
field and prices achieved from the sale of the associated
production. Despite the substantial fall in oil prices in the third
quarter of 2014 continuing into 2015, the group is confident of
still generating cash from its interest in Galoc due the operating
cash costs of $23 per barrel.
The Directors are currently reviewing various funding options
for the continued development of SC72 once the territorial dispute
between the Philippine and Chinese governments has been
resolved.
The Directors secured a loan facility with Philex Petroleum
repayable on 24 November 2016 in the amount of US$18 million. At
the date of approval of these financial statements US$15.5 million
has been drawn down under the facility. Based on the Group's cash
flow forecasts, the directors believe that the group will not have
sufficient funds available to repay the loan when it falls due for
repayment in November 2016. As such, the directors are in
discussions with Philex Petroleum and its other major shareholders
regarding the current terms of the loan repayment. These
discussions are currently at an early stage and there can be no
guarantee of their success.
However, the directors believe that through either
renegotiations of the Philex Petroleum loan facility or other
potential sources of debt and equity capital available lead to a
reasonable expectation that the Group will continue in operational
existence for the foreseeable future. For these reasons, they
continue to adopt the going concern basis of accounting in
preparing these financial statements.
1.3 Critical accounting estimates and judgements in relation to
SC72
With respect to exploration license SC72, there is significant
uncertainty about the future outcome of the territorial dispute
between the Philippine and Chinese Governments in relation to the
West Philippine Sea area where the Group's SC72 asset is located.
Further exploration work in relation to the second sub-phase and
all subsequent sub-phases has been suspended until the territorial
dispute in the West Philippine Sea has been resolved. There is
currently no fixed timeframe for the matter to be concluded. The
Group's best estimate as at the date of these financial statements
is that the territorial dispute will ultimately be resolved in such
a way that the Company will be able to recover the carrying amount
of $23,735,000 recorded at the balance sheet date but significant
uncertainty remains as to how, and when, this will be resolved. The
ultimate outcome of these matters cannot be presently determined
and no impairment has been recorded in respect of the SC72
intangible exploration asset in the financial statements. If the
maritime dispute is not resolved, the intangible assets included in
the balance sheet with a carrying value of $23,735,000 would be
fully impaired, as the Company would not be able to recover the
carrying amount. Details of any impairment charges recognized in
the income statement are provided in Note 3, below.
1.4 Auditors' Emphasis of Matter statement in relation to the
recoverability of exploration assets
In forming their opinion on the consolidated financial
statements, which is not modified, the auditors, Ernst & Young
LLP, have considered the adequacy of the disclosure concerning the
significant uncertainty over the resolution of the maritime dispute
in the West Philippine Sea, and its impact on the recoverability of
the Group's intangible exploration assets. If the maritime dispute
is not resolved, the intangible assets included in the balance
sheet with a carrying value of $23,735,000 would be fully impaired,
as the Company would not be able to recover the carrying amount.
The ultimate outcome of these matters cannot be presently
determined and no impairment has been recorded in respect of the
intangible exploration assets in the financial statements.
2 SEGMENT ANALYSIS
The group's costs and sales are based on geographic areas and
they are not larger than a segment. The group currently has one
pool, the Philippines.
Geographical information
Revenues from external Non-current assets
customers
2014 2013 2014 2013
US$'000 US$'000 US$'000 US$'000
---------------- ------------ ----------- ---------- ---------
United Kingdom - - 10 170
Philippines 6,811 4,426 35,589 36,696
---------------- ------------ ----------- ---------- ---------
6,811 4,426 35,599 36,866
---------------- ------------ ----------- ---------- ---------
All of the 2014 revenues (2013: 100%) were generated from
Philippine-based assets including the Galoc, Libertad, Nido and
Matinloc fields.
Annual revenue from major customers is detailed below:
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
--------------------------------- ------------ ------------
Hyundai Oilbank Company Limited 2,196 -
GS Caltex Corporation 1,415 -
Thai Oil Public Co. Ltd 1,191 -
Shell Petroleum corporation 797 912
SK Energy Company Limited 731 -
MT Bei Hai Ming Wand - 872
MT Bang Gong Hu - 839
MT Pacific Bridge - 762
MT Xuan Wu Hu - 697
Revenue of US$481,000 (2013: US$344,000) is attributable to
external customers with individual revenue amounts less than 10% of
the group's revenue.
3 IMPAIRMENT CHARGE
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
--------------------------------------------------- ------------ ------------
Impairment of other property, plant and equipment 41 -
Impairment of Investment
Impairment of oil and gas property 729
Loss on sale of exploration equipment - 569
--------------------------------------------------- ------------ ------------
41 1,298
--------------------------------------------------- ------------ ------------
The Libertad gas field has been written down by US$729,000 in
2013 to a value of US$345,000, due to a reduction in the field's
estimated ultimate recoverable gas reserves which is the
recoverable amount of the asset (cash generated unit). The
recoverable amount of the asset is its value in use.
The impairment of exploration equipment of US$569,000 in 2013 is
based on the amount received for the sale of exploration equipment
during the prior year.
Refer to Note 1.3 above outlines the Group's assumptions,
judgements and estimates in concluding on the impairment assessment
for the Group's interest in exploration asset SC72. No impairment
has been recognised in the period related to this exploration asset
(2013 - $nil).
4 PROFIT/(LOSS) PER SHARE
Basic earnings per share amounts are calculated by dividing the
profit or loss for the year attributable to ordinary equity holders
of the parent by the weighted average number of Ordinary Shares
outstanding during the year.
Profit for the group attributable to the equity holders of the
company for the year US$0.2 million (2013: Loss US$2.94
million).
Year ended Year ended
31 December 31 December
2014 2013
--------------------------------------------------------- ------------ ------------
Weighted average number of equity shares for the period
in issue 35,549,533 35,549,533
Fully diluted number of equity shares for the period
in issue 35,549,533 35,549,533
--------------------------------------------------------- ------------ ------------
5 ADJUSTED PROFIT/(LOSS) PER SHARE
In order to show results from operating activities on a
consistent basis, an adjusted earnings per share is presented which
excludes certain items as set out below. It is emphasised that the
adjusted earnings per share is a non-GAAP measure. The Board
considers the adjusted earnings per share to better reflect the
underlying performance of the group.
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
--------------------------------- ------------ ------------
Profit/(loss) for the group 207 (2,938)
Adjustment:
Impairment charge 41 1,298
--------------------------------- ------------ ------------
Adjusted profit/(loss) per year 248 (1,640)
--------------------------------- ------------ ------------
6 EXPLORATION, EVALUATION AND DEVELOPMENT ASSETS
Unevaluated Unevaluated
oil and oil and
gas and gas and
development development
costs costs
2014 2013
Group US$'000 US$'000
------------------------------------ ------------- -------------
Cost and net book value
At 1 January 27,534 27,567
Additions 349 4,841
Transfer to oil and gas properties - (4,874)
At 31 December 27,883 27,534
------------------------------------ ------------- -------------
The unevaluated oil, gas and mining costs relate to the
acquisition of the group's assets in the Philippines.
The net book values of assets included within exploration,
evaluation and development assets are as follows:
31 Dec 31 Dec
2014 2013
US$'000 US$'000
SC72 23,735 23,689
SC40 3,748 3,511
SC6A 53 51
SC6B 299 283
SC14 48 -
------ -------- --------
27,883 27,534
------ -------- --------
7 OIL AND GAS PROPERTIES
Oil and
gas
costs
US$'000
-------------------------------------------------------------- --------
Cost
At 1 January 2014 20,960
Additions 669
Reclassification (220)
At 31 December 2014 21,409
-------------------------------------------------------------- --------
Depreciation
At 1 January 2014 12,097
Charge for the year 1,939
Reclassification (210)
-------------------------------------------------------------- --------
At 31 December 2014 13,826
-------------------------------------------------------------- --------
Cost
At 1 January 2013 16,790
Additions 25
Impairment (729)
Transfer from exploration, evaluation and development assets 4,874
-------------------------------------------------------------- --------
At 31 December 2013 20,960
-------------------------------------------------------------- --------
Depreciation
At 1 January 2013 11,019
Charge for the year 1,078
-------------------------------------------------------------- --------
At 31 December 2013 12,097
-------------------------------------------------------------- --------
Net book value
At 31 December 2014 7,583
-------------------------------------------------------------- --------
At 31 December 2013 8,863
-------------------------------------------------------------- --------
8 LIABILITIES
Group
2014 2013
Current US$'000 US$'000
------------------------ -------- --------
Loans - 1,239
Trade payables 58 5
Other payables 966 943
Employee benefits 80 122
Deferred premium - 79
Derivative liabilities - 40
Tax payable 225 234
------------------------ -------- --------
1,329 2,662
------------------------ -------- --------
The US$15 million loan in 2012 from Philex Mining Corporation
was originally due for repayment on 24 November 2013, but has been
assigned to Philex Petroleum Corporation and increased to US$18
million with the repayment date extended to 24 November 2016.
All amounts fall due for payment within one year.
Group
2014 2013
Non-current liabilities US$'000 US$'000
--------------------------- -------- --------
Loan facility 15,500 16,438
Other provisions 3,839 3,866
Decommissioning liability 195 -
Deferred premium - 51
--------------------------- -------- --------
19,534 20,355
--------------------------- -------- --------
Included in loan facility is a loan from Philex Petroleum
Corporation of US$15.5 million (2013 US$15.2 million) repayable on
24 November 2016. Philex Petroleum Corporation is one of the
company's major shareholders.
Other provisions
Other provisions comprise provisions under the share purchase
agreement for Forum Exploration Inc. dated 11 March 2003, amounts
of up to Philippine peso 171,650,193 (2013: Philippine peso
171,650,193) are due to the vendor out of the group's share of
future net revenues generated from licence SC40. The liability is
in Philippine Pesos there are movements during the year due to
changes in exchange rate as at 31 December 2014 - 44.7 Philippine
peso/USD (2013: 44.4 Philippine peso/USD). The timing and extent of
such payments is dependent upon future field production performance
and cannot be accurately determined at this stage.
Decommissioning provision
The Group makes full provision for the future cost of
decommissioning oil production facilities and pipelines on a
discounted basis on the installation of those facilities.
The decommissioning provision represents the present value of
decommissioning costs relating to oil and gas properties, which are
expected to be incurred up to 2019 for the Galoc Oil field and up
to 2017 for Libertad Gas Field. Which is when the producing oil and
gas properties are expected to cease operations. These provisions
have been created based on the Group's internal estimates.
Assumptions based on the current economic environment have been
made, which management believes are a reasonable basis upon which
to estimate the future liability. These estimates are reviewed
regularly to take into account any material changes to the
assumptions. However, actual decommissioning costs will ultimately
depend upon future market prices for the necessary decommissioning
works required that will reflect market conditions at the relevant
time. Furthermore, the timing of decommissioning is likely to
depend on when the fields cease to produce at economically viable
rates. This, in turn, will depend upon future oil and gas prices,
which are inherently uncertain.
Decommissioning Other provisions Total
------------------------- ---------------- ----------------- ------
At 1 January 2014 - 3,866 3,866
Arising during the year 195 - 195
Exchange rate movement - (27) (27)
At 31 December 2014 195 3,839 4,034
Comprising:
Current 2014 - - -
Non-current 2014 195 3,839 4,034
Current 2013 - - -
Non-current 2013 - 3,866 3,866
Interest-bearing loans and borrowings
Effective interest 2014 2013
rate
% Maturity US$'000 US$'000
----------------------------- ----------------- ------------ --------- ----------
Current
Libor
BNP Paribas facility + 6.0 31-Dec-14 - 1,239
----------------------------- ----------------- ------------ --------- ----------
- 1,239
Non-current
Libor
Philex Petroleum facility + 4.5 24-Nov-16 15,500 15,200
Libor
BNP Paribas facility + 6.0 31-Dec-15 - 1,238
----------------------------- ----------------- ------------ --------- ----------
15,500 16,438
------------------------------------------------------------ --------- ----------
US$2.4 million BNP Paribas facility
This loan was repaid during 2014. It was secured by a share
mortgage consisting over 100% of the share capital of Forum Energy
Philippines Corporation and security agreement for the rights and
interests in Project Accounts, Hedging Agreements, Agreed
Insurances, Offtake Agreement and intercompany loans.
US$15.5 million Philex Petroleum Corporation
This loan is unsecured and is repayable on 24 November 2016.
Total interest expense for the year on the interest-bearing
loans and borrowings was US$852,000 (2013: US$802,000), of which
none (2013: US$75,000) has been capitalised.
9 COMMITMENTS
At 31 December 2014, the group and company had commitments as
follows:
- US$4.2 million in operational and exploration expenditure, for
the second sub-phase programme over Service Contract 72 (SC72) (31
December 2013: US$4.2 million). This is subject to permission being
granted by the Philippine Department of Energy.
- US$0.05 million for SC40 work programme
10 RELATED PARTY TRANSACTIONS
During the year the following related party transactions
occurred within the group and company:
Philex Mining Corporation is the majority shareholder and
ultimate controlling party of the group.
In 2010 Forum Philippines Holdings Ltd, a wholly-owned
subsidiary of the company, entered into a US$10 million Facility
Agreement ("the Facility") with Philex Mining Corporation on 24
November 2010. The facility was increased to US$15 million during
2012. The Facility was available for a three-year period from 24
November 2010 and funds were borrowed at an interest rate of US
LIBOR + 4.5%. As at 31 December 2012 the full US$15 million was
drawn down to enable the company to fund its 70% share of the work
programme over SC72.
On 21 November 2013 the following amendments were made to the
Facility:
-- increase the Facility to US$18 million;
-- extended repayment date to 24 November 2016; and
-- Philex Mining Corporation assigned the facility to Philex
Petroleum Corporation, a major shareholder of the company and
wholly-owned subsidiary of Philex Mining Corporation.
All other terms of the Facility agreement remain the same.
Under the amended Facility agreement an additional US$0.3
million was drawn down during 2014.
The following transaction in relation to the Facility occurred
during the year:
31 Dec 31 Dec
2014 2013
US$'000 US$'000
Unaudited Audited
------------------------------------------------- ---------- --------
Loan amount due to:
Philex Mining Corporation - -
Philex Petroleum Corp. 15,500 15,200
------------------------------------------------- ---------- --------
Interest charge for use of facility payable to:
Philex Mining Corporation 649
Philex Petroleum Corporation 750 77
------------------------------------------------- ---------- --------
Interest due to:
Philex Mining Corporation 11 686
Philex Petroleum Corporation 789 77
------------------------------------------------- ---------- --------
Philex Petroleum Corporation is also the majority shareholder of
Pitkin Petroleum Plc (Pitkin). Pitkin was the operator in 2014 of
the following blocks which the Company have an interest in:
SC14C-2 West Linapacan - 2.27575% Company Interest
SC6A - Octon - 1.668% Company interest
Pitkin Petroleum Plc was solely responsible for the exploration
costs of these blocks until the discovery of first commercial oil.
On 1 January 2015 Pitkin withdrew from SC6A Octon, and is no longer
responsible for its exploration costs, as a result of the
withdrawal from this block Forum's share increased to 5.56%.
Forum Pacific Inc. is a 33.33% shareholder in Forum Exploration
Inc. Other provisions comprise provisions under the share purchase
agreement for Forum Exploration Inc. dated 11 March 2003, amounts
of up to Philippine peso 171,650,193 (2013: Philippine peso
171,650,193) are due to Forum Pacific Inc. out of the group's share
of future net revenues generated from licence SC40. The liability
is in Philippine Pesos there are movements during the year due to
changes in exchange rate as at 31 December 2014 - 44.7 Philippine
peso/USD (2013: 44.4 Philippine peso/USD). The timing and extent of
such payments is dependent upon future field production performance
and cannot be accurately determined at this stage
11 CONTINGENT LIABILITIES
The company and group have no contingent liabilities.
12 SUBSEQUENT EVENTS
On 1 January 2015 Pitkin, a related party withdrew from block
SC6A Octon, and is no longer responsible for its exploration costs,
as a result of the withdrawal from this block Forum's share
increased to 5.56%.
13 RETROSPECTIVE RESTATEMENT
The comparative period of consolidated statement of cash flows
has been adjusted due to presentation errors in the consolidated
statement of cash flow for the year ended 31 December 2013 to
reflect the following:
1) The amount of net hedging losses of $149,000 was not paid
during 2013 and therefore the presentation in the operating and
financing activities has been corrected to reflect the actual
payments made ($70,000) which was previously included within
interest paid.
In addition, the hedging losses of $70,000 were previously
presented within interest charge and finance costs on loan
facility. The losses have now been correctly included within
Hedging losses and charges increasing the total charge for year to
$219,000 after reclassification. The overall net impact on Finance
expenses line in the Consolidated Statement of Comprehensive Income
is $nil.
The corresponding lines in operating activities of the
Consolidated Statement of Cash Flows (Interest charge on loan
facility and Hedging (gains)/losses and charge) have now been
updated to reflect the reclassification of the $70,000 hedging
losses and charges payment made during 2013.
2) The loss on sale of exploration equipment in the amount of
$569,000 has been presented separately within the operating
activities of the cash-flow to present it separately from the
impairment charge in the prior year.
3) The disposal proceeds from the sale of exploration equipment
in the amount of $1,294,000 was previously presented net of the
amounts paid for the purchase of exploration equipment for
$1,863,000. The disposal proceeds have now been presented
separately within investing activities of the cash-flow.
The effect of these adjustments on the consolidated statement of
cash flows is set out below:
Effect on Consolidated Statement US$'000
of Cash Flow Effect on 31 December
2013
---------------------------------- -----------------------
Operating (149)
Investing -
Financing 149
Net increase in cash and cash -
equivalents
------------------------------------- -----------------------
- END -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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