Infrastrata PLC INFA Final results for the year ended 31 July 2012

  Infrastrata PLC (INFA) - Final results for the year ended 31 July 2012

RNS Number : 9416R
Infrastrata PLC
26 November 2012




                                 



26 November 2012   
 For Immediate Release

                                      

                                      

                                      

                               InfraStrata plc

                       ("InfraStrata" or the "Company")

                                      

                                      

                Final results for the year ended 31 July 2012

                                      

InfraStrata plc  (AIM:INFA), the  independent  petroleum exploration  and  gas 
storage company, is pleased  to announce final results  for the year ended  31 
July 2012.  The  Company  is  also  separately  releasing  an  update  on  its 
exploration activities.



Operational highlights



· Increasing  focus on  exploration activities  - significant  prospective 
resources have been identified through a work programme largely funded to date
by partners.

· In January 2012 Islandmagee Storage  Limited (65% owned by the  Company) 
entered into  agreements  with  BP  Gas Marketing  Limited  ("BPGM")  for  the 
appraisal of the project and the option  for BPGM to acquire a 50.495%  equity 
interest.

· Subject to consents and project funding, plans are underway to drill  an 
exploration well in County Antrim, an appraisal well of an existing  discovery 
in Dorset, and  an appraisal well  funded by BPGM  at Islandmagee, all  during 
2013.

· Planning permission  received in  October 2012 for  the Islandmagee  gas 
storage project.

· Potential for Portland project gas  pipeline to provide an export  route 
for gas production from the Company's P1918 licence.

· Potential for salt production at Portland site has also been  identified 
and being  evaluated  - enabling  the  future option  for  gas storage  to  be 
retained.



Financial highlights



· Exploration programme  of £2,261,262  undertaken with cash  cost to  the 
Company of only £34,564.

· New equity issued to raise £1,400,000 before expenses.

· Portland project has been impaired - non-cash transaction.

· BPGM  funded the  Islandmagee  gas storage  project  to the  extent  of 
£475,689 during the financial year.

· General and administrative expenditure well controlled.

· Loss for  the year  of £19,727,362  (2011: profit  of £4,310,311)  after 
£18,420,125 charge (2011: gain of £2,511,925) relating to Portland.

· Cash  and  cash  equivalents  at 31  July  2012  of  £1,918,201  (2011: 
£714,969).





Commenting on the results and outlook,  Andrew Hindle, CEO of InfraStrata  plc 
said:



"The Company has continued to  focus on oil and  gas activities in two  areas: 
County Antrim in Northern Ireland and Dorset in Southern England.  InfraStrata 
works alongside strong  and experienced  partners in projects  in both  areas. 
During the  past two  years  the focus  has  shifted towards  the  exploration 
projects in both areas where significant progress has been made and two  wells 
are being planned for 2013, which together with the planned appraisal well for
the Islandmagee  gas  storage  project,  have the  potential  to  unlock  very 
significant value for shareholders."





For further information please contact:



InfraStrata plc



Andrew Hindle, Chief Executive Officer
 020 8332 1200

Craig Gouws, Chief Financial Officer



Financial PR - Buchanan



Richard Darby/Gabriella Clinkard
 
 020 7466 5000



Nominated Advisor and Broker - Arden Partners plc



Richard Day/Justine Waldisberg
 
020 7614 5917







Notes to Editors:



Background on InfraStrata plc



InfraStrata is an independent petroleum  exploration and gas storage  company. 
The Company is focused on two areas in the UK, in Dorset, England and  Antrim, 
Northern Ireland.



Further    information    is    available    on    the    Company's    website 
www.infrastrata.co.uk.





In accordance with the AIM Rules - Note for Mining and Oil and Gas  Companies, 
the information contained in  this announcement has  been reviewed and  signed 
off by the  Chief Executive  Officer of InfraStrata  plc Dr  Andrew Hindle,  a 
Chartered Geologist with over 25 years' experience.

CHAIRMAN'S STATEMENT



The past few  years have  been challenging and  in response  to a  fundamental 
shift in  market  conditions, I  am  pleased to  report  that we  have  worked 
successfully  to  reposition  the  business  and  identify  routes  to   build 
significant shareholder  value  within a  realistic  timeframe. We  have  made 
considerable progress on  our exploration  projects and we  have advanced  the 
Islandmagee gas  storage project  through to  successful receipt  of  planning 
approval.



Chronologically, your company was  created on the back  of a single large  gas 
storage project based at Portland in  Dorset and our difficulties in  securing 
funding  or  otherwise  realising  value  from  the  project  have  been  well 
documented during  an unprecedented  shift in  the fundamental  economics  and 
markets for seasonal gas storage facilities. In seeking to broaden our base we
have embraced a smaller, more flexible and commercially attractive gas storage
project, at Islandmagee in Northern Ireland. In addition to being able to meet
the demands of  seasonal storage,  this facility would  also be  able to  meet 
short-term fluctuations  in demand  on the  gas network  throughout the  year, 
resulting in a greater value to the traded markets. We have also  capitalised 
on our  knowledge  of the  areas  near to  our  storage projects  and  secured 
exploration licences PL1/10 and  P1918 close to each  and in this respect  the 
emphasis of the Company's development has changed. Meanwhile we have continued
to preserve the planning permissions for  the Portland project and looked  for 
additional or alternative projects to use both the site and those permissions.



The greater flexibility of  the Islandmagee project  compared to Portland  has 
meant that, with our partner Mutual Energy, we were able to secure  investment 
from BP Gas Marketing in the Islandmagee storage project. Our association with
BP Gas Marketing and  Mutual Energy in respect  of the Islandmagee project  is 
poised to enter a new phase now that planning permission has been granted  and 
we expect shortly to be assessing how best to unlock value for shareholders in
the near term.



The current poor market  conditions for seasonal storage  mean that we do  not 
consider that it is likely we can realise the Portland gas storage project  in 
the short term. As a  result, we have been obliged  to look critically at  the 
cost pool. As a Board,  we consider it is  appropriate to take a  conservative 
approach to  the  applicable  accounting  treatment of  the  project  and  the 
carrying value of the asset in the Company's accounts. This has resulted in  a 
substantial reduction in the financial asset value of the project cost carried
on our balance sheet. There are no cash cost implications on the re-assessment
and there remain clear commercial  opportunities for the Portland site,  which 
the Group will continue to  assess and explore. Not  least of these are  those 
historic costs associated with the gas pipeline which has potential value  for 
the P1918 petroleum licence or gas imports. The costs incurred in drilling the
Portland-1 well and acquiring the  Portland seismic data have been  recognised 
as an exploration  and evaluation  intangible asset in  the Group's  financial 
statements. In the shorter term, the use of the brownfield site and  attendant 
planning permissions are currently under appraisal  as a potential for a  salt 
solution mining facility, in its own right.



The Company also  made significant progress  during the year  to 31 July  2012 
with the petroleum exploration project in Northern Ireland where we are at  an 
advanced stage of reviewing the additional seismic data acquired earlier  this 
year. The data looks very encouraging and the prospects of drilling our  first 
exploration well during 2013 appear strong.



In offshore Dorset the exploration is at an earlier stage following the formal
award of the P1918 licence  in first half 2012,  but the presence of  existing 
oil and gas discoveries  within the licence area  marks it out as  prospective 
for the Company  and good progress  is anticipated in  the coming year.  These 
exciting developments  encourage me  to believe  that there  exists  potential 
within these exploration projects to unlock significant shareholder value.



May I conclude by offering  my thanks to our  small but highly effective  team 
for  the  progress  made  over  the  past  eighteen  months  across  both  the 
exploration acreage and the  Islandmagee gas storage project  and also to  our 
shareholders for their support. 2012 has been another challenging year but one
in which significant progress has been made, one in which the emphasis of  the 
Company has  been repositioned  and one  in which  our progress  justifies  my 
expectation that 2013 could be a very good year for your Company.





CHIEF EXECUTIVE'S OPERATING REVIEW



The Company has  continued to focus  on oil  and gas activities  in two  areas 
within the United Kingdom;  County Antrim in Northern  Ireland; and Dorset  in 
Southern England. InfraStrata works alongside strong and experienced  partners 
in projects in both  areas. During the  past two years  the focus has  shifted 
towards the exploration projects in both areas where significant progress  has 
been made and two wells  are being planned for  2013, which together with  the 
planned appraisal well for the Islandmagee gas storage project - all have  the 
potential to unlock very significant value for shareholders.



County Antrim, Northern Ireland



Islandmagee Project



Islandmagee Storage Limited  ("IMSL") was  granted planning  permission for  a 
£400 million  natural  gas storage  facility  at Islandmagee,  Co  Antrim,  in 
October 2012. IMSL  was also granted  a Gas Storage  Licence from the  Utility 
Regulator in October  2012. IMSL  plans to  create seven  caverns, capable  of 
storing up to a total of 500 million cubic metres of gas in Permian salt  beds 
approximately 1,500 metres beneath Larne Lough.



IMSL is an independent  Northern Ireland registered  company; a joint  venture 
between a wholly-owned  subsidiary of  InfraStrata plc  (65% shareholder)  and 
Moyle Energy Investments Limited, part of the Mutual Energy group of companies
(35% shareholder). In January 2012 we were very pleased to announce that  IMSL 
had entered into  agreements with BP  Gas Marketing Limited  ("BPGM") for  the 
appraisal of the project and the option  for BPGM to acquire a 50.495%  equity 
interest in IMSL.  Under the terms  of a Joint  Appraisal Agreement, BPGM  has 
agreed to fund the activities necessary to develop the project, including  the 
drilling of the first borehole, up to  the point where a decision can be  made 
on whether to proceed with its detailed engineering design. BPGM has also paid
IMSL a  total of  £600,000  (a third  on signing  of  an option  agreement  in 
September 2011,  a third  on signing  the agreement  in January  2012 and  the 
remainder on the  grant of  planning permission  in October  2012). The  first 
payment was used to complete a land purchase for the project and the remaining
funds were used to settle a portion of InfraStrata's loan account to IMSL.



The  Islandmagee  project  has  a  number  of  advantages  which  enhance  its 
commercial  case.  These  include  being  immediately  adjacent  to  gas   and 
electrical infrastructure, the salt being at an optimum depth for gas  storage 
and close to  a water source  for solution mining  of the salt  to create  the 
caverns. The project is also designed to access the extrinsic value of the gas
storage market in the UK  and Ireland by being  able to respond to  short-term 
volatility.



The proposed gas storage facility will make a significant contribution to  the 
security of gas supplies for the whole island of Ireland. Ireland is dependent
on gas for around 65% of electricity  generation with 90% of the island's  gas 
imported via a  single pipeline  from Scotland. The  facility, when  complete, 
will store  enough gas  to satisfy  Northern Ireland's  demand for  around  60 
days. Northern  Ireland has  a target  to generate  40% of  electricity  from 
renewables by  2020 -  this will  primarily be  achieved through  wind-powered 
generation. A shift  to renewable energy  sources is likely  to result in  an 
increasing reliance  on gas-fired  power stations  to support  the  inherently 
intermittent supply from wind.  Rapid cycle gas  storage facilities, such  as 
this planned  project,  will  be  important to  respond  to  the  increasingly 
fluctuating demands for gas to fuel this electricity generation requirement.



The estimated timescale for the project is approximately seven years, with the
first cavern becoming operational after five years. The initial appraisal well
drilling is planned, subject to  confirmation on the regulatory framework  for 
the project, in 2013. Samples of  the Permian salt will provide the  technical 
confirmation and final design parameters for the project.



Petroleum Exploration Project - PL1/10 Larne-Lough Neagh Basin



A group led by InfraStrata plc  was awarded Petroleum Licence PL1/10 in  March 
2011 by  the Department  of  Enterprise, Trade  and Investment  ("DETI").  The 
licence covers an area of 663 square kilometres over what the Company believes
is a very prospective largely  unexplored sedimentary basin. The licence  term 
is  five  years  with  a  drill-or-drop  decision  required  by  March   2014. 
InfraStrata plc has  a direct  operated interest of  30%, with  a further  40% 
shareholding in Brigantes  Energy Limited which  holds a 40%  interest in  the 
licence -  resulting in  an overall  net licence  interest of  46%. The  other 
partners in the licence are Cairn Energy (20%) and Terrain Energy (10%).



The licence is located  within the Larne-Lough Neagh  Basin, a SW-NE  trending 
Permo-Triassic Basin, overlying  an older Carboniferous  sequence. The  basin 
has historically received little attention from explorers - the primary reason
is the  thick development  of Palaeocene  Antrim Flood  Basalts overlying  the 
target horizons. This has been a barrier to effective seismic imaging but with
the recent technological advances in data processing, it is now opening up.



The group has acquired, using onshore specialist contractor Tesla  Exploration 
International Limited, a total of 400  kilometres of 2D seismic data over  two 
campaigns, the first  in October/November 2011  and the second  in June  2012. 
Following the first survey,  structures were identified  below the basalt  and 
large leads mapped in the east of  the licence area. This eastern area  became 
the focus for the  second survey. The  Company believes the  new data has  the 
potential to  open up  an exciting  new area  for petroleum  exploration  with 
significant potential.



There has been  a limited amount  of drilling in  the Larne-Lough Neagh  Basin 
over  the  past  40  years;  largely  for  coal  exploration  and   geothermal 
feasibility. However  this has  confirmed the  development of  good  sandstone 
reservoirs and  seals within  the  thick Permo-Triassic  sedimentary  section, 
similar to those  found in our  analogue, the prolific  East Irish Sea  Basin. 
Oil-prone source rocks have been identified on the margins of the Basin within
the Carboniferous section,  and gas-prone coals  have also been  mined to  the 
west in the Coalisland area,  and along the North  Antrim coast. The basin  is 
also along trend from the Midland Valley  of Scotland where oil and gas  prone 
rocks of Carboniferous age are well known. It is anticipated that in the  more 
deeply buried areas of the Larne-Lough Neagh Basin the Carboniferous will have
been buried sufficiently to  generate oil and possibly  also gas. As with  any 
new exploration province anywhere, the  presence of a working petroleum  basin 
remains the highest risk of the play and can only be resolved by drilling.



The 2011 data, together with the new 2012 survey were both processed by  Fugro 
Seismic Imaging Limited, a world leader in the processing of challenging  land 
data, during July to October 2012.  Since October 2012 the interpretation  has 
been on-going. A  trend of  large structures within  the eastern  half of  the 
licence has been high-graded.

The initial licence term commitments to DETI have now been exceeded. The joint
venture proposes to drill its first exploration well during 2013. Work is  now 
commencing on identifying  a suitable surface  site from which  to drill,  and 
engaging with local  stakeholders. It  is hoped that  it will  be possible  to 
drill the  well  in  a  coordinated  programme with  the  first  well  on  the 
Islandmagee gas  storage  project,  to  realise  technical  synergies  and  in 
particular to save costs for both projects.



Dorset, Southern England



Portland Project - Gas storage and salt solution mining



Planning permission was granted for a  1,000 million cubic metres gas  storage 
facility and associated infrastructure in 2008. The Company has run two formal
processes to unlock value in the project. The first in 2007/8 had to be halted
when interested parties  withdrew from  the process as  the financial  markets 
collapsed in the  autumn of  2008. A  second process  was run  in 2009/10  and 
resulted in  US  company, eCORP  International  LLC ("eCORP"),  taking  a  50% 
interest in the project during 2010 in return for funding the project  through 
the next stage of pre-construction activity.



Between 2010  and 2012,  eCORP invested  £1.9 million  in the  project,  which 
included lease payments, securing the majority of landowner agreements for the
37 kilometre gas pipeline connection  to the National Transmission System  and 
undertaking works on the site to implement the main site planning  permission. 
However  this  investment  was  against  a  backdrop  of  a  closing  of   the 
summer-winter gas price spread,  which undermines the  financial case for  all 
but the very flexible gas storage projects in the UK, such as the  Islandmagee 
project, which are  able to respond  to the volatility  in prices rather  than 
longer-term seasonal trends.  With the continuing  poor market conditions  for 
seasonal  gas  storage  facilities  and  a  refocusing  of  eCORP's   European 
operations, InfraStrata  reached agreement  with eCORP  in June  2012  whereby 
InfraStrata acquired  100% of  the project  again and  eCORP's former  funding 
obligations were  restructured into  an obligation  to provide  funding for  a 
further US$2.88 million, in the form  of monthly payments of US$120,000  until 
May 2014. The deal was structured so that eCORP would earn a 7.5% share of the
future profits from the Portland project in return for its total investment in
Dorset projects of approximately £3.7 million.



The Company believes it is unlikely that the seasonal gas storage market  will 
improve in the short-term, but it  remains a longer-term play as pressure  for 
reliable winter supplies increases and the UK's indigenous production  reduces 
further. Against this backdrop, InfraStrata has conducted a review of all  the 
potential projects which could be sited at Portland in the short-term to build
upon the  existing planning  permissions. These  included the  generation  and 
export of electricity, carbon capture  & storage ("CCS"), salt production  and 
export, gas imports and the siting of petroleum production facilities.



An application for funding for  a CCS pilot at the  site to the Department  of 
Energy and Climate Change ("DECC") in 2012 proved unsuccessful. The Company is
now focused on  the potential for  salt production at  the site. The  location 
adjacent to a deep water port makes the export of salt to UK and international
markets potentially attractive. If such a project could be established in  the 
shorter-term it would enable the Company to retain the option for gas  storage 
in the longer-term.



The gas pipeline construction  authorisation from DECC is  viewed as being  of 
considerable potential value and will be maintained pending its future use  as 
a potential export line for gas from production in the area (discussed further
below), or for gas imports.





Petroleum Exploration Project - P1918, Wessex Basin



A group led by InfraStrata plc was awarded Petroleum Licence P1918 in December
2011, effective  February  2012.  The  licence  term  is  four  years  with  a 
drill-or-drop decision required  by February  2014. InfraStrata  has a  direct 
operated interest of  70%, with  a further  40% shareholding  in Corfe  Energy 
Limited which holds a 20%  interest in the licence  - resulting in an  overall 
net licence interest of 78%. The other partner in the licence is Cairn  Energy 
(10%). InfraStrata acquired a  50% licence interest from  eCORP (subject to  a 
7.5% share of future profits) in June 2012.



The P1918 licence covers three offshore Blocks 97/14, 97/15 and 98/11, with  a 
total area of 584 square kilometres adjacent to the Dorset coast and close  to 
the giant Wytch Farm oilfield.



Within and immediately  adjacent to  the licence area  there are  a number  of 
active oil and gas seeps. A total of seven wells have previously been  drilled 
within the  licence area,  including the  first UK  offshore well  in 1963  on 
Lulworth Banks in Block 97/14. Six of these wells encountered oil or gas shows
and three flowed oil  or gas on  test. The advances  in technology and  higher 
petroleum prices mean that the licensees are hopeful of being able to  develop 
one of the existing  discoveries profitably as a  base from which to  appraise 
the full potential of the area. The  focus has been on the offshore  extension 
of the Purbeck Prospect, an  anticline in the east of  the licence, up dip  of 
the onshore well  Southard Quarry-1,  which encountered  petroleum at  several 
stratigraphic levels in  1989 but was  not tested. This  large structure  lies 
largely within  Licence  P1918.  InfraStrata  will  commence  reprocessing  of 
existing data to  define further  the sub-surface  target location  for a  new 
appraisal well. It is proposed to drill the well directionally from an onshore
location, subject to planning  permission and project  funding, in the  latter 
part of 2013.



The gas pipeline consent for the  Portland project may prove a key  investment 
to export gas from the area and realise this potential.



Funding review



BPGM funded the  Islandmagee gas  storage project  to the  extent of  £475,689 
during the financial year under the terms of a Joint Appraisal Agreement. BPGM
will continue funding the development  of the Islandmagee gas storage  project 
through 2013 including the drilling of an appraisal well. We anticipate  that 
the drilling of  this well will  trigger the detailed  engineering and  design 
phase and  an unlocking  of value  in the  project for  InfraStrata through  a 
monetising  of  its  interest  in  the  project.  The  project  proceeding  to 
construction will also be a further cash boost to InfraStrata with  settlement 
of partner  Mutual  Energy's  share  of  the loan  account  which  is  due  to 
InfraStrata and which currently stands at £1.2 million.



The Company has no debt and has been successful in attracting investment  into 
its projects.  In addition,  cash revenue  of £253,932  has been  earned  from 
partners for managing the  various projects, resulting in  a net cash  outflow 
(before legal costs  relating to  transactions) during the  financial year  of 
£78,000 per  month. A  placing of  shares  in February  2012 has  secured  the 
necessary funds to meet administration and general expenditure of the  Company 
and support processes to unlock the inherent value in our range of projects.



InfraStrata has been  funded for  its share  of the  PL1/10 seismic  programme 
through the introduction of  partners (gross expenditure to  year end of  £2.2 
million). A portion of  the first well in  Northern Ireland is already  funded 
under an existing farmout  agreement. We expect  to see continued  significant 
interest from industry partners in our acreage and will assess the options for
securing the balance of the funding for the first exploration well.



In the Dorset  projects, the  restructuring agreement with  eCORP has  secured 
$120,000 per  month funding  until May  2014.  At the  same time  as  reaching 
agreement with eCORP, agreement was also reached with Portland Port Limited to
modify the existing leases at the Portland site. Portland Gas Storage  Limited 
is able to terminate, without financial  penalty, the leases annually in  June 
of each year until 2018.



InfraStrata has funded the majority of its share of the initial work programme
in the Dorset  exploration project,  comprising seismic  mapping and  prospect 
characterisation, through a farmout of an 8% interest to Corfe Energy  Limited 
in August 2012. InfraStrata is likely to seek to farmout a further interest in
the licence to fund the drilling and testing of an appraisal well. The Company
holds a large equity position,  following the eCORP licence acquisition,  with 
which to manage a farmout funding process during 2013.



InfraStrata plc  also  holds a  shareholding  in two  independent  exploration 
companies, Brigantes  Energy  and  Corfe  Energy,  who  are  partners  in  its 
exploration projects and are self-funding. InfraStrata Director William Colvin
represents the Company's interest on the Board of each exploration company.



Brigantes holds a  40% interest  in licence  PL1/10 in  Northern Ireland,  and 
Corfe a 20% interest in offshore Dorset licence P1918. The companies raised  a 
further  £750,000  each  during  2012  in  private  share  placings,  diluting 
InfraStrata's shareholding from 50% to 40%. At an appropriate time InfraStrata
could sell  its  interests in  these  companies to  unlock  the value  of  its 
investments for shareholders.





OUTLOOK



Good progress has been made in assessing and defining the prospectivity within
the Company's  exploration acreage.  The coming  year will  see an  increasing 
focus of  the  Company's activities  towards  its exploration  portfolio.  The 
upside potential  of the  licences for  the  Company is  expected to  be  very 
significant. Characterisation of  the primary prospects  in each licence  will 
continue as preparations commence  for drilling and  testing the plays,  which 
are expected during the second half of 2013.



The coming  year will  see  the Islandmagee  gas storage  project  progressing 
further following the  successful granting of  planning permission in  October 
2012. Drilling of the first well is expected to take place in 2013 subject  to 
confirmation of the regulatory  framework for the project.  The data from  the 
seismic acquisition on licence  PL1/10 in Northern  Ireland will be  processed 
and interpreted and is expected to lead to an exploration well being  drilled, 
hopefully using the same rig as the Islandmagee well.



In Dorset, evaluation  of existing data  in licence P1918  will be  progressed 
further with seismic reprocessing of data over the most prospective structure.
It is  anticipated  that  preparatory  work, including  the  submission  of  a 
planning application, will be commenced to  enable the joint venture to  drill 
the first appraisal well in the licence from an onshore location. At  Portland 
options to  progress  projects by  building  on existing  technical  work  and 
consents will continue to be reviewed.



Unlocking the inherent value  of the Company's projects  during the coming  12 
months is management's primary objective. The Company looks forward to working
with partners and stakeholders to progress all of our projects.

                                              Notes          2012         2011
                                                                £            £
Continuing operations
Revenue                                                   253,932      240,290
Cost of sales                                                   -            -
Gross profit                                              253,932      240,290
Administrative expenses                               (1,259,206)  (1,180,485)
Operating loss                                        (1,005,274)    (940,195)
Finance income                                             2,596       11,139

Share of loss of Joint Venture                  3    (10,306,395)    (452,089)
Impairment of interest in Joint Venture         3    (10,626,210)            -
Gain arising on assuming control of the                                    
former Joint Venture
                                                3       2,512,480            -
Share of loss of Associates                             (174,869)            -
Loss before taxation                                 (19,597,672)  (1,381,145)
Taxation                                                        -            -
Loss for the year from continuing operations                                

                                                     (19,597,672)  (1,381,145)
(Loss)/profit for the year from discontinued                                
operations
                                                        (129,690)    5,691,456
(Loss)/profit for the year attributable to                                  
the equity holders of the parent
                                                                            

                                                     (19,727,362)    4,310,311
Other comprehensive income                                      -            -
Total comprehensive (loss)/profit for the                                   
year attributable to the equity holders of
the parent                                                                  

                                                     (19,727,362)    4,310,311
Basic and diluted earnings per share            2
Continuing operations                                    (23.30)p      (1.82)p
Discontinued operations                                 (0.15)p       7.49p
Continuing and discontinued operations                                      

                                                         (23.45)p        5.67p



                                               Notes          2012        2011
                                                                 £           £
Non-current assets
Intangible fixed assets                                  3,399,473           -

Property, plant and equipment                                7,471      15,161
Investment in joint venture                      3               -  22,473,516
Investments in associates                        3       2,705,131   2,880,000

Other receivables                                          768,102           -
Total non-current assets                                 6,880,177  25,368,677
Current assets
Trade and other receivables                              1,114,145     140,526
Available for sale financial assets                         12,500      12,500
Cash and cash equivalents                                1,918,201     714,969
                                                         3,044,846     867,995
Assets classified as held for sale               4       3,206,003   2,744,731
Total current assets                                     6,250,849   3,612,726
Current liabilities
Trade and other payables                                 (905,750)   (104,158)
Liabilities directly associated with assets                                
classified as held for sale
                                                 4        (73,032)    (29,928)
Total current liabilities                                (978,782)   (134,086)
Net current assets                                       5,272,067   3,478,640
Non-current liabilities
Deferred income tax liabilities                        (1,201,296)           -
Net assets                                              10,950,948  28,847,317
Shareholders' funds
Share capital                                            9,099,160   7,826,433
Share premium                                           11,920,219  11,848,946
Merger reserve                                           8,988,112   8,988,112
Share based payment reserve                                333,735     322,431
Retained earnings                                     (19,865,967)   (138,605)
                                                                           

Attributable to owners of the parent                    10,475,259  28,847,317

                                                                 
Non-controlling interests                        5         475,689           -
Total equity                                            10,950,948  28,847,317



                                                                                            

                                                                                            

                                                                                            

                                                                                            

                                                                                            

                             Share              Share              Attributable Non-controlling
                           premium              based                    to the        interest
                  Share               Merger  payment     Retained    owners of
                capital              reserve  reserve     earnings   the parent                 Total equity
                      £          £         £        £            £            £               £            £
                                                                                           

Balance at 31           11,381,095                                   23,562,254               -
July 2010     7,380,420            8,988,112  302,435  (4,489,808)                                23,562,254
Profit for                       -                  -                 4,310,311               -
the year              -                    -             4,310,311                                 4,310,311
Total                                                                                      
comprehensive
profit for                       -                  -                 4,310,311               -
the year              -                    -             4,310,311                                 4,310,311
                                                                                                      

Shares issued   446,013    467,851         -        -            -      913,864               -    913,864
                                                                                                   

                                                                                                   

Share based           -          -         -   60,888            -       60,888               -       60,888
payments
Share options         -          -         - (40,892)       40,892            -               -            -
lapsed
                                                                                           

Balance at 31           11,848,946                                   28,847,317               -
July 2011     7,826,433            8,988,112  322,431    (138,605)                                28,847,317
Loss for the                     -                                 (19,727,362)               -
year                  -                    -        - (19,727,362)                              (19,727,362)
Total                                                                                       
comprehensive                                       
loss for the                     -                                 (19,727,362)               -
year                  -                    -        - (19,727,362)                              (19,727,362)
                                                                                                     

                                                                                                     

Shares issued 1,272,727     71,273         -        -            -    1,344,000               -    1,344,000
                                                                                           

Share based                      -                                       11,304               -
payments              -                    -   11,304            -                                    11,304
                                                                                           

BP Gas                                                                                      
Marketing
Limited -                                                                                   
Islandmagee
Storage                          -                                            -         475,689
Limited
option (note
5)                    -                    -        -            -                                   475,689
                                                                                          

Balance at 31 9,099,160 11,920,219 8,988,112  333,735 (19,865,967)   10,475,259         475,689   10,950,948
July 2012
                                                                                                       

                                                  Notes        2012       2011
                                                                  £          £
                                                   

Net cash (used in) operating activities             6     (266,553)  (982,526)
Investing activities
Interest received                                             2,596     11,139
Purchase of intangible assets                              (34,564)  (324,520)
Purchase of plant and equipment                           (371,510)  (108,706)
Cash outflow on disposal of subsidiary                                      

                                                                  -    (6,264)
Cash inflow on acquisition of subsidiary                                    

                                                             53,574          -
Net cash (used in) investing activities                   (349,904)  (428,351)
Financing activities
Proceeds on issue of ordinary shares                      1,344,000    864,864
Non-controlling interest                            5       475,689          -
Net cash generated from financing activities              1,819,689    864,864
Net increase/(decrease) in cash and cash
equivalents                                               1,203,232  (546,013)
Cash and cash equivalents at beginning of year              714,969  1,260,982
Cash and cash equivalents at end of year                  1,918,201    714,969
Cash and cash equivalents consist of:
Cash at bank                                            £1,918,201   £714,969



Significant non-cash transactions

The significant non-cash transaction for the  year ended 31 July 2012 was  the 
assumption of control over the previous joint venture - see note 3.



Significant non-cash transactions for the year ended 31 July 2011 comprise the
loss of control of  three companies which were  previously subsidiaries -  see 
note 3.



Cash flows arising from discontinued activities

Cash flows arising from discontinued operations are analysed in note 6.

 1. Basis of preparation



The financial information set out in  this announcement does not comprise  the 
Company's statutory accounts for the years ended 31 July 2012 or 31 July 2011.
The financial information has  been extracted from  the statutory accounts  of 
the Company for the years ended 31 July 2012 and 31 July 2011.



The auditor, Nexia Smith & Williamson, has reported on the statutory  accounts 
for the years ended 31  July 2012 and 2011;  the reports were unqualified  and 
did not  contain a  statement under  either section  498(2) or  498(3) of  the 
Companies Act 2006.  The statutory accounts  for the year  ended 31 July  2011 
have been delivered to the Register of Companies; those for the year ended  31 
July 2012 were approved by the Board on 23 November 2012 and will be delivered
to the Registrar of Companies following the Company's Annual General  Meeting. 
InfraStrata plc adopted International Financial Reporting Standards (IFRS)  as 
adopted by  the  European Union  effective  in July  2012,  as the  basis  for 
preparation of its  financial statements. The  financial information has  been 
prepared under the historical cost  convention as modified by the  revaluation 
of certain financial  assets. There was  no change to  the Group's  accounting 
policies for the year ended 31 July 2012 as compared to those published in the
statutory accounts for the year ended 31 July 2011.



The Directors  have prepared  the financial  statements on  the going  concern 
basis which assumes that the Group will continue in operational existence  for 
the foreseeable future.



The Islandmagee gas storage project in which InfraStrata plc currently holds a
65% interest is funded by BP  Gas Marketing Limited ("BPGM"). Under the  terms 
of a Joint Appraisal Agreement, BPGM  agreed to fund the activities  necessary 
to develop the project, including  the drilling of the  first well, up to  the 
point where a decision  can be made  on whether to  proceed with its  detailed 
engineering design.



The exploration of licence PL1/10 has largely been funded to date by partners,
however InfraStrata plc will be required to fund its interest once the initial
phase of  exploration  is  complete  and  the  partners  decide  to  drill  an 
exploration well.  InfraStrata plc  is currently  funded for  a third  of  its 
interest of  a well  and will  be seeking  to farmout  a further  interest  to 
complete the funding.



On 1 June 2012, eCORP agreed to subscribe for US$2.88 million of Portland  Gas 
Limited preference shares over the following two years. It is anticipated that
these funds will enable the Company to settle existing commitments.  Petroleum 
exploration activities  in P1918  have largely  been and  are expected  to  be 
funded through farmouts as and when considered necessary.



The Directors believe that the disposal of an interest in Islandmagee  Storage 
Limited is the best way of maximising shareholder value by allowing an  entity 
other than InfraStrata plc to develop this project. It is expected that such a
disposal will  provide  working  capital  for  the  Group  and  will  transfer 
responsibility for funding future development  of the Islandmagee gas  storage 
project to the new partner.



After making inquiries and considering all the relevant factors in relation to
the Group, the  Directors have  a reasonable  expectation that  the Group  has 
adequate resources to  continue in operational  existence for the  foreseeable 
future. For this  reason, they continue  to adopt the  going concern basis  of 
accounting in preparing the annual financial statements.















2. Earnings per share                                    2012             2011

                                                            £                £
   (Loss)/profit
   The (loss)/profit for the
   purposes of basic and diluted
   loss per share being the net loss
   attributable to equity
   shareholders:
   Continuing operations                         (19,597,672)      (1,381,145)
   Discontinued operations                          (129,690)        5,691,456
   Continuing and discontinued                   (19,727,362)        4,310,311
   operations
   Number of shares
   Weighted average number of                                               
   ordinary shares for the purposes
   of basic earnings per share                     84,122,359       75,978,414
   Basic and diluted earnings per
   share
   Continuing operations                             (23.30)p          (1.82)p
   Discontinued operations                            (0.15)p            7.49p
   Continuing and discontinued                       (23.45)p            5.67p
   operations
   For 2012, the share options were not  dilutive as a loss was incurred.  For 
   2011 diluted earnings per share calculations are not presented as there was
   no material  difference between  the weighted  average number  of  ordinary 
   shares for  the purposes  of  basic earnings  per  share and  the  weighted 
   average number of ordinary shares for the purposes of diluted earnings  per 
   share; the  basic and  diluted earnings  per share  are the  same for  both 
   years.



3. Investments                                                 
                                                    2012        2011

                                                       £           £
   Investment in joint venture (note 3A)
   At 1 August                                22,473,516           -
   Additions                                           -  22,925,605

   Share of losses                          (10,306,395)  (452,089)
   Impairment                               (10,626,210)           -
   Disposal                                  (1,540,911)           -
   At 31 July                                          -  22,473,516
                                                               
   Investment in associates (note 3B)                          
                                                               
   At 1 August                                 2,880,000           -
   Additions                                           -   2,880,000

   Disposals                                           -           -
   Share of losses                             (174,869)

                                                       
   At 31 July                                  2,705,131   2,880,000
   Total investments at the end of the year    2,705,131  25,353,516
                                                               







3. Investments (continued)



A. Joint venture - Portland Gas Limited



The Group held 50%  of the ordinary  shares of Portland Gas  Limited as at  31 
July 2011.  Portland Gas  Limited  is involved  in  developing a  gas  storage 
facility on the Isle of Portland, Dorset and the related gas pipelines between
Portland and Mappowder. This joint venture is a private company, registered in
England and Wales and is not listed on any public exchange.



Under the terms of a Restructuring Agreement on 1 June 2012, the 50%  interest 
of the ordinary shares of Portland Gas Limited, held by eCORP, were  converted 
into non-voting preference shares. Accordingly,  as from that date, the  Group 
owned all the ordinary  shares and held all  the voting rights. In  accordance 
with IFRS, the change in the control  is accounted for as the disposal of  the 
interest in the joint venture and  the acquisition of a subsidiary.  Therefore 
the investment is  accounted for  as a wholly  owned subsidiary  in the  Group 
financial statements at 31 July 2012. The primary reason for the Restructuring
Agreement was the refocusing of eCORP's European operations.

The provisions of the Restructuring Agreement include the following:

• eCORP's 50% interest in Portland  Gas Limited has been converted  into 
preference  shares   and  eCORP's   former  funding   obligations  have   been 
restructured into an obligation to subscribe a further US$2,880,000  ($120,000 
per month; eCORP  receivable) for  further preference shares  of Portland  Gas 
Limited over the next two years. The preference shares will provide eCORP with
a 7.5% share of the future profits distributed by Portland Gas Limited.

• InfraStrata plc has  also acquired eCORP's 50%  interest in the  26^th 
Round petroleum  exploration licence  P1918, offshore  Dorset (increasing  the 
Company's direct interest to 78%). In return InfraStrata plc has granted eCORP
a 7.5% share of the future profits generated on the acquired licence interest.



Portland Gas Limited  fully impaired  its investment in  the Portland  Project 
prior to the restructuring. The Portland gas storage project, like many  other 
developing gas storage projects  in the United Kingdom  has not achieved  full 
funding. This is largely due to the project being only marginally economic  at 
the current  winter/summer  natural gas  price  differential and  the  project 
construction start date is thus uncertain. The Group's share of the impairment
charge and other losses was £10,306,395.



The Group's investment in the joint venture was then subject to an  impairment 
review and as a result, an impairment loss of £10,626,210 was recognised.  The 
impairment reduced  the  Group's  investment  in  the  joint  venture  to  its 
estimated fair  value.  This  fair  value was  estimated  by  considering  the 
estimated value of  the underlying assets  of Portland Gas  Limited; the  only 
assets considered to have  a value for accounting  purposes is the  Portland-1 
well data and seismic data, which are described more fully below.



The Portland Gas Limited gain on bargain purchase, as described below,  arises 
due to the net assets acquired having a higher fair value than the fair  value 
of the Group's  50% interest  in the ordinary  share capital  of Portland  Gas 
Limited immediately prior to the Restructuring Agreement. The gain on  bargain 
purchase has been credited to profit or loss in the statement of comprehensive
income and will not impact the Group income tax.















3. Investments (continued)



Portland Gas Limited assets acquired at 1 June                         
2012:
                                     Book value of              Fair value of
                                   assets acquired             assets acquired
                                                    Fair value
                                                   adjustments
                                                 £           £               £
Non-current assets
Intangible assets                                                         

- Portland-1 well data                     -   2,764,909       2,764,909
- P1918 licence interest                   -     600,000         600,000
Financial asset
- eCORP receivable                         -     922,763         922,763
Current assets
eCORP receivable                                 -     935,356         935,356
Cash                                        53,574           -          53,574
Accounts receivable                        226,111           -         226,111
Current liabilities
Accounts payable                         (248,026)           -       (248,026)
Non-current liabilities
Inter-company balance                    (127,437)     127,437               -
Deferred tax liabilities                         - (1,201,296)     (1,201,296)
                                                                          

Total identifiable net assets             (95,778)   4,149,169       4,053,391
Consideration (fair value of                                                 
interest previously accounted for
as a joint venture)                                                  1,540,911
                                                                            

Gain on bargain purchase                                             2,512,480



The fair value of  the Portland-1 well  data comprises the  fair value of  the 
well data obtained from the well which was drilled on Portland in 2006 and the
seismic data acquired in  the same year. Reference  was made to the  historic 
cost to estimate the  fair value. The  fair value of the  50% interest in  the 
P1918 licence acquired from eCORP was  determined by reference to the  farmout 
of an 8% interest to  Corfe Energy Limited in August  2012. The fair value  of 
the eCORP receivable was determined by estimating the present value of  future 
Portland Gas  Limited preference  share  subscription receipts  expected.  The 
deferred tax liability raised is attributable to the assets acquired based  on 
the difference between the respective fair values recognised and the tax based
of the underlying assets at an enhanced tax rate of 23%.



The fair  value of  the  joint venture  interest (£1,541,011)  represents  the 
Group's 50% share of the Portland-1 well data and seismic data value.



















3. Investments (continued)



Net cash inflow arising on acquisition:
                                                                             £
Cash consideration                                                           -
Cash acquired                                                           53,574
Amount of revenue and net loss of Portland Gas
Limited since the acquisition date:
Revenue                                                                      -
Net loss                                                               183,430
Amount of revenue and net  loss of the combined  entity as if the  acquisition 
date had  been as  of the  beginning of  the reporting  period (the  net  loss 
presented below  includes  the impairment  of  the Portland  Gas  Limited  net 
assets):
Revenue                                                                 73,932
Net loss                                                            21,121,970

B. Associates



The Group has 40% interests  (2011: 50%) in both  of Corfe Energy Limited  and 
Brigantes Energy Limited  which are involved  in the hydrocarbon  exploration. 
The associates are private  companies, incorporated in  England and Wales  and 
are not listed on any public exchanges.



The following table summarises the Group's share of the assets and liabilities
of each of these associates as recorded in each associates' audited  financial 
statements made up to 31 July 2012  and after making adjustments to align  the 
accounting policies of the associates with those of the Group:





Corfe Energy Limited
                                             2012        2011

                                                £           £
Long-term asset                            32,320      99,372

Current assets                            781,356     719,694
Current liability                        (10,012)   (106,334)
Long-term liability                       (1,210)           -
                                                          

Group's share of net assets of associate  802,454     712,732



















3. Investments (continued)



Brigantes Energy Limited
                                                2012                      2011

                                                   £                         £
Long-term asset                              376,234                   108,284

Current assets                               428,412                   720,839
Current liability                            (7,335)                 (117,028)
Long-term liability                          (1,210)                         -
                                                                           

Group's share of net assets of               796,101                   712,095
associate
                                                                       
              The revenue  and  net loss  of  each of  these  associates  as 
              recorded in each associates' audited financial statements made
              up to 31 July 2012 and  after making adjustments to align  the 
              accounting policies of the associates with those of the Group:

              
Corfe Energy Limited                                                         
                                           2012                         2011
                                                                             
                                              £                            £
                                                                             
Revenue                                  69,491                       14,911 
                                                                             
Total loss for the year                  63,864                       13,776 
Group's share of losses                  83,354                            - 
                                                                             
Group's share of other                        -          -                 - 
comprehensive loss
                                                                             



Brigantes Energy Limited

                                             2012     2011

                                                £               £
Revenue                                    69,491          14,911
Total loss for the year                    60,653          13,776
Group's share of losses                    91,515               -
Group's share of other comprehensive loss       - -             -



The 2011 share  of associate losses  are accounted for  in the 2012  financial 
year.



















4. Assets held for sale and discontinued operations
   (disposal group)
   The Company has announced, together with Moyle, that it has entered into an
   agreement with  BPGM regarding  the acquisition  of an  equity interest  in 
   Islandmagee Storage Limited owned by InfraStrata plc (65%) and Moyle (35%).
   Under the agreements, the equity interest  will arise through the issue  of 
   shares by Islandmagee Storage Limited rather than the sale of equity by the
   Group and the majority  of the proceeds  from the issue  of equity will  be 
   retained in  Islandmagee  Storage  Limited  to  fund  project  development. 
   Islandmagee Storage Limited  was classified as  held for sale  in 2011  and 
   continues to be so classified  as, in the opinion  of the directors, it  is 
   highly probable that  BPGM will exercise  its option and  the delay in  the 
   disposal was due to events outside the control of the company.

   

   Whilst the assets held  for sale are classified  as current assets, due  to 
   the nature of the arrangements described  above, the Group does not  expect 
   to receive cash inflows equivalent to, or  in excess of, the book value  of 
   the assets so classified.

   

   The measurement basis is the carrying amount.
                                                             2012         2011

                                                                £            £
   Assets classified as held for
   sale
   Freehold land                                          440,100            -
   Intangible assets - gas                                                  
   storage development costs
                                                        2,631,755    2,700,345
   Trade and other receivables                             64,772        1,066
   Cash and cash equivalents                               69,376       43,320

                                                                            
                                                        3,206,003    2,744,731

                                                                            



                                             2012    2011
 Liabilities classified as held for sale        £       £
 Current liabilities
 Trade creditors                           69,518   1,192
 Accruals                                   3,514  28,736

                                                        
                                            73,032 29,928









5. Non-controlling interest



BP Gas Marketing Limited  ("BPGM") paid an amount  of £475,689 to  Islandmagee 
Storage Limited in  relation to their  option to acquire  an interest in  that 
Company during  the  financial  year.  Should BPGM  exercise  its  option,  as 
described below,  this amount  will form  part of  the consideration  for  the 
equity issued to BPGM.



On 19  January 2012  an agreement  was entered  into with  BPGM regarding  the 
appraisal of  the  Islandmagee gas  storage  facility development  project  in 
County Antrim, and the grant of an option to BPGM to acquire a 50.495%  equity 
interest in Islandmagee Storage Limited.

Under the terms  of a Joint  Appraisal Agreement ("JAA"),  BPGM has agreed  to 
fund the activities necessary to develop the  project up to the point where  a 
decision can be made on whether to proceed with a detailed engineering design.
The greatest  item of  the  expenditure during  the  appraisal period  is  the 
drilling of the first well. The drilling of the well is subject to Islandmagee
Storage Limited obtaining other  key consents and  approvals for the  project, 
and a  regulatory and  operational  framework being  adopted by  the  Northern 
Ireland  and  Republic  of   Ireland  authorities  to  facilitate   commercial 
operations of the facility on a level playing field with storage elsewhere  in 
the UK and Ireland.

During the appraisal stage  of the project, BPGM  is responsible for  managing 
surface and sub-surface  engineering matters. Islandmagee  Storage Limited  is 
managing the regulatory, land and stakeholder relations together with drilling
and operating the well.

Islandmagee Storage Limited has received £200,000 on the grant of  exclusivity 
to BPGM in 2011, £200,000 was paid on signature of the agreement and a further
£200,000 was  paid on  the grant  of planning  permission for  the project  in 
October 2012. Islandmagee Storage Limited received £75,689 during the year for
works undertaken on the project which BPGM  undertook to fund in terms of  the 
JAA.











6. Cash (used in) operations                                    2012      2011
   Group                                                           £         £
   Operating loss for the year from continuing                              
   operations
                                                         (1,005,274) (940,195)
   Depreciation                                                7,690     9,499
   Increase in trade and other receivables                  (35,128)  (29,794)
   Increase/(Decrease) in trade and other payables                          

                                                             801,592 (174,449)
   Share option expense                                       11,304    60,888

   Shares issued in lieu of salary or bonus                   50,000    49,000

   Loss on sale of subsidiary                                      -     8,355
   Cash (used in)/from discontinued operations                              

                                                            (96,737)    34,170
   Cash (used in) continuing and discontinued
   operations                                              (266,553) (982,526)
   Cash flows arising from discontinued activities                          

                                                                2012      2011
   Group                                                           £         £
   Cash (used in)/from discontinued operations                              

                                                            (96,737)    34,170
   Investing activities                                    (371,510) (415,846)
   Financing activities                                      475,689         -



 Cash from/(used in) operations                               2012        2011
 Company                                                         £           £
 Operating loss for the year                          (23,793,664)   (858,467)
 Depreciation                                                6,869       3,358

 Decrease/(Increase) in trade and other                                     
 receivables
                                                         8,142,456   (892,408)
 Increase/(Decrease) in trade and other payables                            

                                                           721,110   (174,050)
 Share option expense                                       11,304      60,888

 Shares issued in lieu of salary or bonus                   50,000      49,000

 Loss on sale of subsidiary                                      -       8,355
 Impairment of inter-company receivables                15,247,011           -
 Cash from/(used) in operations                            385,086 (1,803,324)







7. Approval
   This announcement was approved by the Board on 23 November 2012.

   



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


FR BJBRTMBTTBRT -0- Nov/26/2012 07:00 GMT
 
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