TIDMNUOG
RNS Number : 9900Z
Nu-Oil and Gas PLC
21 December 2017
21 December 2017
Nu-Oil and Gas plc
("Nu-Oil" or "the Company")
Audited Results for the year ended 30 June 2017
Nu-Oil, the independent Oil and Gas Company, today announces its
audited annual results for the year ended 30 June 2017.
HIGHLIGHTS
Building a portfolio of Stranded Fields
-- Continuing focus on the development of stranded and marginal
fields through the investment in, and relationship with, Marginal
Field Development Company ("MFDevCo") Ltd. in which the Company
holds a 50% interest.
-- Strategy focused on utilising engineering solutions that
reduce both Capex and Opex and are redeployable to build a
portfolio of low risk, highly appraised marginal assets.
-- The Company is actively seeking new assets in conjunction with MFDevCo.
Western Newfoundland
-- The Company entered into a Production Sharing Agreement (the
"PSA") with PVF Energy Services Inc. ('PVF') for PL2002-01(A) on 31
January 2017. The PSA provides for the Company to receive 50% of
net revenue from production following the recovery of any costs
incurred by PVF in performing its obligations.
-- Operations have commenced on PL2002-01(A) and the Company awaits the results.
-- An Option Agreement was signed with G2 Energy Corp ("G2
Energy") whereby G2 Energy has an exclusive option to earn 100% of
the Company's working interest in the Deep Rights on EL1070, with
the Company's wholly owned subsidiary, Enegi Oil Inc., retaining a
5% gross overriding royalty should the option be exercised.
-- The transactions above allow for the Company to concentrate
its efforts on the acquisition of a marginal field portfolio in
conjunction with MFDevCo while costs in western Newfoundland are
minimised but activity advanced.
Financial
-- Loss before tax for the year was GBP1,671,000 (2016:
GBP816,000). The main area of expense has been the continuing
development of the foundations for the marginal field initiative.
Management continued to significantly cut costs in western
Newfoundland but increased its expenditure with respect to the
implementation of the marginal field strategy. The loss included
depreciation charges of GBP367,000 in the period relating to
intangible assets consistent with its accounting policies.
-- The Group has a net liability position of GBP1,880,000 (2016:
GBP3,239,000). The net liabilities mainly relate to the loan owed
to Shard Capital Management ("Shard") and to related party
creditors. At this time neither Shard nor related parties have
sought to recover these debts and it is expected that they will
continue to support the Group.
-- The Group had cash balances of GBP654,000 at 30 June 2017 (2016: GBPnil).
-- The status of commercial discussions on a number of projects
and the Company's current cash position provide management with the
confidence that the business model has the potential to allow the
Group to satisfy its liabilities and operate as a going
concern.
-- During the year, the Company raised GBP3,357,000 (before
expenses of GBP328,000) through the issue of new ordinary
shares.
-- Post year end, in July 2017, the Company raised GBP1,419,000
(before expenses of GBP110,000) through the issuance of new
ordinary shares in a placing and through the exercise of
warrants.
OUTLOOK
-- Clear focused strategy for commercialising stranded and marginal fields.
-- Recent enquiries provide directors and management with
confidence regarding the viability of the business model and
provide confidence that the Company can add further projects to its
portfolio.
Alan Minty, Executive Chairman of Nu-Oil, commented:
"We are pleased with the strong recovery of the Company over the
last 12 months which in no small part is down to the continuing
support of shareholders for which we are grateful. New investment
has reinvigorated our assets in western Newfoundland and we look
forward to the results of the operations that are currently being
conducted. The funds we have raised over the last 12 months have
enabled us to stabilise the Company and put more effort into our
marginal field strategy from which we expect to see tangible
results in 2018."
The Annual Report and Accounts for the year ended 30 June 2017
and the notice of AGM will be available to download from the
Company's website at www.nu-oilandgas.co.uk and both documents will
be posted to shareholders today.
Enquiries
Nu-Oil and Gas plc
Simon Bygrave, Investor Tel: +44 (0)161 817
Relations 7460
Nigel Burton, CEO Tel: +44 (0)7785 234
447
Strand Hanson Limited Tel: +44 (0)20 7409
3494
Rory Murphy
Ritchie Balmer
Jack Botros
Beaufort Securities Limited Tel: +44 (0)20 7382
8300
Jon Belliss
Elliot Hance
www.nu-oilandgas.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
STRATEGIC REPORT
CHAIRMAN'S STATEMENT AND OPERATIONAL REVIEW
The Company's share price has recovered strongly over the last
year, despite the sector still suffering from low oil prices and
inactivity following the oil price crash of 2014. This seemed
unlikely last September when the share price was under 10% of its
current level but management has worked to reinvigorate the Company
and this has seen tangible results. We have raised additional
capital for implementation of our marginal field strategy and a
number of transactions aimed at ensuring that the current asset
portfolio in Newfoundland is rejuvenated have been concluded; the
ultimate aim is to establish a revenue stream that can form the
foundation for the Company's continued growth.
We have high hopes for the assets in western Newfoundland but
the assets are complex. Resource estimates have always indicated
good production rates are possible and the additional activity
currently being carried out on PL2002-01(A) is part of the
'proving-up' exercise but it is choosing the best investment
strategy which is key. To achieve short term growth, we require
capital to undertake the various workover tasks and more capital to
implement appropriate longer term plans and the most effective
strategy, we believe, is that currently being adopted. We have
executed a Production Sharing Agreement with PVF Energy Services
Inc. ('PVF') whereby the investment to commence generating the
value from the western Newfoundland assets is predicated on the
work PVF are undertaking at their expense which 'ring-fences' the
demands on the Company even as it seeks to re-value the assets. It
is hoped that the discussions taking place with PVF with respect to
a further farm-in agreement will yield greater investment and more
wider ranging activity on PL2002-01(A). We aim to announce the
results of those discussions in due course.
We've chosen a strategy of external investment for our Canadian
assets because, in our view, the best way to achieve higher
valuations of the Company is to target, lower risk, well appraised
but undervalued fields. This led to the marginal field strategy and
our investment in Marginal Field Development Company ('MFDevCo').
The strategy removes our exposure to the major risk of the oil
sector, namely the need for exploration drilling, and allows us to
focus on the more controllable factors associated with project
development or redevelopment, depending on the field. All the parts
are in place to implement the strategy and success should yield the
valuation multiples we expect from our business model.
I would like to address the issues of timetables associated with
project acquisition under this strategy; this has been raised by
many shareholders and it is important that a number of factors in
the acquisition process are understood. The negotiating process and
timeline ebbs and flows and any estimates made by management
represent management's opinion at that time considering the state
of such negotiations. Issues can arise, priorities can change and
there are often numerous parties involved and permissions required
to conclude a transaction. We can state though, that management are
working hard to implement that strategy and should we be successful
we expect large returns will be made by all concerned; the Company,
field owners, Consortium members and most importantly
shareholders.
Following a period of extensive screening, the Company has
identified a number of targets, and has prioritised a small set of
those. The successful acquisition of only one would, in our
opinion, have a huge impact. For each opportunity, the potential
benefit offered by our approach has been identified and verified
against pro forma engineering models but a level of detailed
engineering needs to be performed to agree commercial terms with
the asset owners and secure the appropriate finance, which in most
cases will be vendor finance secured from suppliers. In many ways,
the downturn in the industry is hugely beneficial due to reduced
field costs, the risk that suppliers are willing to take to employ
resources and infrastructure and the financing terms available.
Recent proposals to field owners focus on the provision, in
conjunction with members of MFDevCo's consortium, of a turnkey
solution for field redevelopment where the services provided to a
project are secured against production and production royalties are
granted in favour of the facilitating party. Such proposals are
well received by asset owners as they retain field equity, do not
need to raise finance themselves and see large valuation increases
in their assets.
Western Newfoundland
With respect to our assets in western Newfoundland, the
Company's wholly owned subsidiary, Enegi Oil Inc. entered into a
Production Sharing Agreement (the 'PSA') with PVF Energy Services
Inc. ('PVF') for PL2002-01(A). The PSA provides for the Company to
receive 50% of net revenue from production following the recovery
of any costs incurred by PVF in performing its obligations. The
term of the PSA is five years and PVF are covering all costs
associated with an agreed work programme aimed at restoring
production from PL2002-01(A) (the 'Work Programme'). In addition to
PVF providing 100% of the funding for the Work Programme, PVF will
also fund 100% of ongoing operations on PL2002-01(A) in exchange
for 50% of net revenue from production following the recovery of
its costs.
The primary objective of the first phase of the Work Programme
is to clean up the well and remove obstructions that have been
preventing the well from flowing in advance of an extended well
test. Progress achieved thus far includes:
-- Salt blockages have been cleared.
-- Communication has been re-established between the reservoir and the surface.
-- Pressure recovery is strong.
-- PVF have experienced no issues that are believed to have the
potential to compromise the successful completion of this first
phase of the Work Programme.
Although the Work Programme is taking longer than originally
forecast operations are advancing towards achieving the primary
objective and we are confident that the well test will commence
shortly. Technical programmes often have to be modified and in
western Newfoundland this requires approval from the Department of
Natural Resources for any alterations before proceeding. In
addition, due to the remote location and the lack of local oilfield
supply services, equipment has to be brought in from outside the
province, which takes time both to source and to be delivered.
The Company has begun negotiations with PVF to agree a farm-in
which will bring additional investment into the development of
PL2002-01(A), primarily in the form of drilling investment. Further
drilling is likely to target areas of hydrothermal dolomite
down-dip from the current PAP#1-ST#3 well, which demonstrate
enhanced connectivity and porosity and are therefore believed to be
able to deliver higher flow rates. Nu-Oil has in the past
undertaken significant reservoir modelling work and will work
closely with PVF to ensure that this work and lessons learned from
previous operations are fully integrated into future planning,
alongside new data gathered from PVF's work, to maximise chances of
success. Negotiations on the farm-in agreement, which has been the
objective of both parties as referenced in the announcement of 22
June 2017, are ongoing and the Company will provide an update in
due course. Shareholders should note that, whilst both parties hope
to conclude an agreement, there is no guarantee one will be
reached.
In addition to the activity on PL2002-01(A), an Option Agreement
was signed with G2 Energy Corp ('G2 Energy') whereby G2 Energy has
an exclusive option to earn 100% of the Company's working interest
in the Deep Rights on EL1070, with Enegi Oil Inc., retaining a 5%
gross overriding royalty should the option be exercised. Pursuant
to the Option Agreement, G2 Energy had a period of 45 days to
conclude due diligence on EL1070, which was concluded
satisfactorily and the Option Agreement came into full effect.
Outlook
Significant changes have occurred to the Company's outlook over
the past 12 months and we expect that to continue over the coming
period as our negotiations and activity on a number of
opportunities, currently well-advanced, are concluded. We remain
confident of the successful conclusion of the first phase of
operations on PL2002-01(A) and we look forward to announcing the
results in due course. We are pleased to be continuing negotiations
with PVF on the future development of the Garden Hill field, one of
our legacy assets, which we believe, if successfully concluded,
will provide the opportunity for Nu-Oil to maximise its returns
from the field. In the meantime, the Board remains committed to
focusing its resources on the acquisition of marginal field
projects, in line with our stated strategy.
Finally, I would like to thank both management and shareholders
for their continued support and look forward to realising the
rewards from the opportunities that have been created over the last
few years.
Alan Minty
Chairman
FINANCIAL REVIEW
Revenue
No revenue was generated during the year. Management awaits the
results of activity on its lease, PL2002-01(A), to assess the
likelihood of it becoming revenue generating in future years. The
Company entered into a Production Sharing Agreement (the 'PSA')
with PVF Energy Services Inc. ('PVF') for PL2002-01(A). The PSA
provides for the Company to receive 50% of net revenue from
production following the recovery of any costs incurred by PVF in
performing its obligations.
Loss before tax
Loss before tax for the year was GBP1,671,000 (2016: GBP816,000
loss). The main area of expense has been the continuing development
of the foundations for the marginal field initiative. Management
continued to significantly cut costs in western Newfoundland but
increased its expenditure with respect to the implementation of the
marginal field strategy. The loss included depreciation charges of
GBP367,000 in the period relating to intangible assets. Operating
loss in effect was GBP1,304,000.
Statement of Financial Position
The consolidated statement of financial position for the Group
shows that net liabilities at 30 June 2017 were GBP1,880,000 (2016:
net liabilities of GBP3,239,000). The decrease in net liabilities
reflects fundraising activities that were undertaken in the period.
During the year the Company raised GBP3,357,000 (before expenses of
GBP328,000) through the issue of new ordinary shares. The majority
of the Group's liabilities are due to related parties and to Shard
Capital Management. It is the Group's view that these creditors are
supportive of the Group.
At 30 June 2017, the Group had cash balances of GBP654,000
compared to GBPnil at 30 June 2016 and raised an additional
GBP1,419,000 before expenses through the placement of shares and
exercise of warrants post year end. The Group had trade and other
payables of GBP3,781,000 at 30 June 2017 (2016: GBP4,604,000).
These cash balances when considered with the additional information
provided in Note 1 to the financial statements (see full Report and
Accounts for the year ended 30 June 2017) allow the Directors to
conclude that the Group and Company should be treated as a going
concern.
Cash flows
Cash inflows for the year were GBP683,000 compared to a net
outflow of GBP1,000 in 2016. The Group's cash position was
carefully managed during the year while it sought to implement its
marginal field strategy.
Future funding and capital requirements
The Directors believe that the Company has developed a very
attractive business model in choosing to focus on the development
of stranded and marginal fields. It has concluded the necessary
foundations and its global potential should see an upturn in
activity in 2018. Management believe that the Company has
sufficient resources to allow significant, tangible progress to be
achieved from its current resources. As a result of the size of
projects that the Company is targeting, project finance will be
required to realise project returns.
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2017
2017 2016
GBP'000 GBP'000
------------------------------ --------- ---------
Revenue - -
Cost of sales - -
------------------------------ --------- ---------
Gross Result - -
------------------------------ --------- ---------
Administrative expenses (1,457) (815)
------------------------------ --------- ---------
Loss from operations (1,457) (815)
------------------------------ --------- ---------
Finance costs (214) (1)
------------------------------ --------- ---------
Loss before tax (1,671) (816)
------------------------------ --------- ---------
Taxation - -
------------------------------ --------- ---------
Loss for the year (1,671) (816)
------------------------------ --------- ---------
Loss per share (expressed in
pence per share)
Basic (0.2p) (0.3p)
Diluted (0.2p) (0.3p)
------------------------------ --------- ---------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2017
2017 2016
GBP'000 GBP'000
---------------------------------- --------- ---------
Loss for the year (1,671) (816)
Other comprehensive expense:
Currency translation differences 1 17
Other comprehensive income
for the year, net of tax 1 17
---------------------------------- --------- ---------
Total comprehensive expense
for the year (1,670) (799)
---------------------------------- --------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
2017 2016
GBP'000 GBP'000
----------------------------- --------- ---------
Non-current assets
Tangible fixed assets 242 868
Intangible assets 1,123 848
Other long term assets 493 479
----------------------------- --------- ---------
1,858 2,195
----------------------------- --------- ---------
Current assets
Trade and other receivables 922 1,150
Cash and cash equivalents 654 -
1,576 1,150
----------------------------- --------- ---------
Total assets 3,434 3,345
Current liabilities
Trade and other payables (3,781) (4,604)
Due to related parties (1,044) (1,514)
----------------------------- --------- ---------
(4,825) (6,118)
----------------------------- --------- ---------
Non-current liabilities
Provisions (489) (466)
----------------------------- --------- ---------
Total liabilities (5,314) (6,584)
----------------------------- --------- ---------
Net liabilities (1,880) (3,239)
Equity
Ordinary share capital 2,757 2,022
Share premium account 28,671 26,431
Reverse acquisition reserve 9,364 9,364
Other reserves (2,487) (2,487)
Warrant reserve 409 355
Accumulated losses (40,594) (38,924)
----------------------------- --------- ---------
Total equity (1,880) (3,239)
----------------------------- --------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2017
Ordinary Share Reverse Other
share premium acquisition reserves Warrant Accumulated Total
capital account reserve GBP'000(1) reserve Losses equity
GBP'000 GBP'000 GBP'000 (2) GBP'000(3) GBP'000 GBP'000
------------------------- --------- --------- ------------- ------------ ------------ ------------ ---------
Balance at 1
July 2015 1,857 26,137 9,364 (2,487) 355 (38,125) (2,899)
Comprehensive
expense
Loss for the
year - - - - - (816) (816)
Other comprehensive
income
Currency translation
differences - - - - - 17 17
Total other
comprehensive
income - - - - - 17 17
------------------------- --------- --------- ------------- ------------ ------------ ------------ ---------
Total comprehensive
expense - - - - - (799) (799)
Transactions
with owners
Effects of fundraisings 165 294 - - - - 459
------------------------- --------- --------- ------------- ------------ ------------ ------------ ---------
Total of transactions
with owners 165 294 - - - - 459
Balance at 1
July 2016 2,022 26,431 9,364 (2,487) 355 (38,924) (3,239)
Comprehensive
expense
Loss for the
year - - - - - (1,671) (1,671)
Other comprehensive
income
Currency translation
differences - - - - - 1 1
Total other
comprehensive
income - - - - - 1 1
Total comprehensive
expense - - - - - (1,670) (1,670)
Transactions
with owners
Effects of fundraisings 735 2,294 - - - - 3,029
Effects of warrants (54) 54
Total of transactions
with owners 735 2,240 - - 54 - 3,029
Balance at the
30 June 2017 2,757 28,671 9,364 (2,487) 409 (40,594) (1,880)
------------------------- --------- --------- ------------- ------------ ------------ ------------ ---------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2017
2017 2016
GBP'000 GBP'000
------------------------------- --------- ---------
Cash flows from operating
activities
Cash used in operations (2,346) (436)
Net cash used in operating
activities (2,346) (436)
-------------------------------- --------- ---------
Cash flows from financing
activities
Share capital issued for
cash 3,029 435
Net cash generated from
financing activities 3,029 435
-------------------------------- --------- ---------
Net increase / (decrease)
in cash and cash equivalents 683 (1)
Cash and cash equivalents
at the start of the year - 1
Exchange gains (29) -
Cash and cash equivalents 654 -
at the end of the year
-------------------------------- --------- ---------
Basis of presentation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the
EU), the Companies Act 2006 that applies to companies reporting
under IFRS, and IFRIC interpretations. The consolidated financial
statements have been prepared under the historical cost
convention.
Basis of consolidation
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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December 21, 2017 02:00 ET (07:00 GMT)
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