ADRIATIC OIL PLC: Preliminary Announcement of Final Results
28 February 2013
Adriatic Oil Plc ("Adriatic", the "Company" or the "Group") Preliminary Announcement of Final Results The Board of Adriatic Oil Plc, the ISDX Growth Market quoted international oil and gas exploration company, is pleased to present results for the twelve months to 30 September 2012 (the "Period"), which has seen positive developments at the Company and a diversification of its portfolio interests, offering investors an opportunity to be part of a fast moving business run by management with demonstrable track records. HIGHLIGHTS FOR THE PERIOD AND AFTERWARDS: • Four successful equity Placings in the Periodraising a total of GBP 564,000 gross (2011: GBP 213,050); • Purchase of Pelagian Oil Limited; • Goodwill written off in the P&L account and the balance sheet; • Award of Licensing Option 12/5 and farm-out of the Licensing Option to Fastnet Oil & Gas plc; • 25% Farm-In to Seaward Production Licence P1921 in relation to Blocks 12/18 and 12/19c with option to increase to 50%; • Jean-Denis Bouvier appointed as a Non-Executive Director; • Diversified asset base; and • Relatively low operating costs and overheads and no debt. The Company's strategy is to add shareholder value by proving and developing leads and plays in areas which the Company's Board considers to be high potential oil and gas provinces. Current activities are focused on the North Celtic Sea, the UK North Sea and the Adriatic Sea Basin. Adriatic Oil's ordinary shares are quoted on the ISDX Growth Market (operated by ICAP Securities & Derivatives Exchange Limited) under the ticker symbol 'ADOP'. The Company's new website is available at www.adriaticoil.com During the period the Company incurred a loss after taxation but before the writing off of goodwill, of GBP 229,954, which would have represented a basic loss of 0.11p per share as compared to a loss after taxation in the previous year of GBP 204,776 and a basic loss per share of 0.29p per share. The Directors however decided as a matter of policy to write off the goodwill in the Group's balance sheet associated with the Company's acquisition of Pelagian Oil Limited, which amounted to GBP 904,412. When this write off of goodwill is included in the profit and loss account, it shows a loss for the year after tax for the Period of GBP 1,134,366, representing a basic loss per share of 0.53 p (in 2011 the loss for the year after tax was GBP 204,776 and the basic loss per share was 0.29p). CORPORATE REVIEW IRELAND - North Celtic Sea In October 2011, Adriatic and two partners submitted an application for six exploration blocks in the North Celtic Sea. These part-Blocks, 49/18, 49/19, 49 /20, 49/23, 49/24 and 49/25 cover an area of 881 square kilometres. In November 2012, the Petroleum Affairs Division of the Irish Department of Communications, Energy and Natural Resources issued licensing option 12/5, "Shanagarry" (the "Licensing Option"), over the six applied exploration blocks to Adriatic (80%) and its two partners (20%). The Licensing Option commences from 1 December 2012 until 31 May 2014. Well 49/19-1 was drilled by Marathon Oil Corporation and Enterprise Oil in 1984 and was not fully tested due to operational issues and poor gas economics, as the Kinsale gas field satisfied the Irish domestic market and no gas interconnector existed to the UK at the time. Immediately after the completion of the Licensing Option grant, Adriatic and its partners farmed out, (subject to government approval), 64.5% of the Licensing Option to Fastnet Oil & Gas plc ("Fastnet"), with Adriatic retaining 15.5% of its original 80% participation in the Licensing Option. Fastnet will become the operator of the Licensing Option and will carry Adriatic through the whole work programme and acquire a minimum of 200 square kilometres of new 3D seismic data over the area. A condition of the Licensing Option is that a detailed specified work programme is to be carried out. The main elements of the work programme include; reprocessing 600 km. of 2D seismic data, analysis of the data for the drill stem tests carried out in the Basal Wealden and Purbeck reservoir sequences and a regional analysis of the working petroleum systems encountered in the 49/19-1 well. The working capital requirement for Fastnet arising in respect of the work programme under the Licensing Option is expected to be approximately GBP 285,000. IRELAND - Atlantic Margin, North Porcupine Basin, Licence 1/04 In the second half of the year ended 30 September 2011, Adriatic negotiated the acquisition of a 0.6% Net Profit Bonus ("NPB") in respect of each hydrocarbon accumulation within the area of the Frontier Exploration Licence 1/ 04 (the "Frontier Exploration Licence") in the North Porcupine prospect Atlantic Margin, in offshore Ireland. The Frontier Exploration Licence, located at the northern limit of the North Porcupine Basin comprises of part blocks 26/27, 26/ 28, 35/2 and 35/3. As part of this acquisition, Adriatic Oil will be carried through all capital investment in exploration, appraisal, development and production and, will also have no exposure to any operating costs. The Frontier Exploration Licence contains the undeveloped Connemara oil field and two exploration opportunities, the "H" and the "C 1" Prospects. Third party information available to the Directors indicates the following: The Connemara oil field was discovered and partially appraised by BP during 1979-1984. In the period 1995-1999, Statoil of Norway acquired new 3D seismic and appraised the North East area of the field by drilling two horizontal wells. These wells have flowed light oil, at rates of up to 6,000 barrels of oil per day ("bopd"). The operator of the Frontier Exploration Licence, San Leon Energy Plc has informed that the current phase of the Frontier Exploration Licence requires a well commitment to move to the next stage of licensing and is looking for interested parties to participate in an exploration programme and to fund part of the exploration well costs. Water depths are up to 400m, with a well target depth of 3,000m. UK NORTH SEA - Inner Moray Firth In December 2012, Adriatic announced a 25% Farm-In to the Seaward Production Licence P192, in relation to Blocks 12/18 and 12/19c which are located in the Inner Moray Firth area of the UK's North Sea (the "Seaward Production Licence"). Adriatic has also secured an option whereby, for an increased capital commitment, the Company can increase its stake in the Seaward Production Licence to 50%. The Farm-In has been approved by the UK Department of Energy and Climate Change. Blocks 12/18 and 12/19c were originally applied for and secured under licence in the 26th UK Seaward Licensing Round by Elixir Petroleum Limited, the previous 100% interest holder (pre-Farm-In) and operator. The work obligations in relation to the Seaward Production Licence involve the purchase of 3D seismic data and a "drill-or-drop" decision is required to be made by early 2014. The Seaward Production Licence blocks are contiguous and are located approximately 150km north east of Inverness, approximately 40 km east of Wick in north-east Scotland and in a water depth of approximately 75m. The Seaward Production Licence blocks lie to the north east of the Beatrice oil field, located in Block 11/30a and to the west of the Captain oil field in Block 13/ 22a. A regulatory announcement made by Elixir in January 2012 stated that "A single large stratigraphic prospect has been identified in the Middle Jurassic Beatrice Formation on the northern edge of the Smith Bank High. The prospect is predicted to have Beatrice Formation sands as the reservoir, which has been identified as an acoustic impedance anomaly on several 2D seismic lines. No wells to date have targeted the Smith Bank High in the Blocks." Under the terms of the Farm-In Agreement, Adriatic Oil has agreed to pay a cash consideration of GBP 9,000 and to fund the cost of interpreting 3D seismic data, up to a maximum of GBP 60,000. Costs thereafter will be met pro rata to participating interests. Once the relevant 3D seismic data has been interpreted, the Company will be entitled to exercise its option to acquire a further 25% interest. If it is determined that the data needs to be reprocessed then the consideration will comprise an obligation to pay 50% of Elixir Petroleum Limited's then 75% participating share of the reprocessing costs. If the data does not require reprocessing, the consideration will comprise of GBP 100,000 in cash and the grant of a 10% gross overriding royalty on the Company's participating interest. Adriatic has funded the acquisition of 3D seismic data and the interpretation of this data commenced in early January 2013. The Board is pleased to assist with the development of the prospect, (which Elixir Petroleum Limited has named the "Sunset" prospect) towards achieving drill-ready status. ALBANIA - application offshore Adriatic, North Rodoni The Board reports to shareholders that discussions with the Ministry of Economy, Trade and Energy, the National Agency of Natural Resources and Albpetrol remain on-going and Adriatic's application process has been delayed due to political reasons and the privatisation of the former state oil company, Albpetrol. Offshore Albania, in the Southern Adriatic, is one of the least explored shelf areas of the western Mediterranean Sea, with only six wells in 12,000 square kilometres. Hydrocarbons are present in four out of six wells drilled in Albanian waters, and have also been found to be present under the waters of Italy and Montenegro. The Aquila oil field under Italian waters of the Southern Adriatic, discovered in 1981 in water depths of 850m but not developed until 1993, has produced 25 million barrels of oil since production started in 1998. In two other areas under Italian waters, hydrocarbons have been found: an un-appraised oil accumulation in the Giove area and an un-appraised gas accumulation in the Falco discovery. The Company is aware of increased exploration activity in the Southern Adriatic. PELAGIAN OIL LIMITED In February 2012, Adriatic completed the acquisition of the entire share capital of Pelagian Oil Limited. Pelagian Oil Limited is an oil and gas exploration company with applications for four oil and gas production sharing agreements focused in the Adriatic. The experience and knowledge of Pelagian Oil Limited has helped Adriatic to expand and develop its current exploration assets and has assisted Adriatic in its further expansion. I am pleased to welcome to the Board Jean-Denis Bouvier, who was appointed as Non-Executive Director in August 2012. A qualified geologist with a BSc in Geology and a MSc. in Mining Engineering/Geology from the University of Geneva, Jean-Denis has more than 30 years of experience in oil and gas exploration and production. Jean-Denis is the Chief Executive of Petrogas E&P LLC which produces approximately 60,000 barrels of oil per day from fields in the Sultanate of Oman, Egypt and India. In December 2012, Adriatic appointed Yellow Jersey PR Limited as its financial public relations adviser to handle the Company's communications and media relations. To strengthen its balance sheet, Adriatic raised further equity finance in the year ended 30 September 2012 and after this period. Cash balances currently stand at approximately GBP 450,000 (cash balances as at 28 February 2012 stood at approximately GBP 50,000). OUTLOOK Although the continuing backdrop of the global economy and the small cap arena remains challenging, the Board remains excited about the Company's future prospects. Entering 2013 the management team remains energised and committed to the achievement of the Company's agreed business plan, which projects the achievement of further growth across the Company. As Chairman, I would like to take this opportunity to thank all shareholders and staff for their continued support. Jack Wilson Non-Executive Chairman On behalf of the Board CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2012
Notes Year ended Year ended 30 September 30 September 2012 2011 GBP GBP
Turnover - -
Administrative expenses (229,954) (204,776)
Goodwill on subsidiary 5 (904,412) - acquisition written off
Operating loss (1,134,366) (204,776)
Interest received - -
Loss on ordinary activities (1,134,366) (204,776) before taxation
Tax on loss on ordinary - - activities
Loss after taxation (1,134,366) (204,776)
Basic loss per share: (0.53)p (0.29)p
All of the Group's operations are classed as continuing. There were no gains or losses in the period other than those included in the above consolidated profit and loss account.
CONSOLIDATED BALANCE SHEET
As at 30 September 2012
Year ended Year ended 30 September 30 September 2012 2011 GBP GBP
Intangible 155,116 30,000
Investments 45,395 45,000
Total fixed assets 200,511 75,000
Prepayments 6,899 4,226
Cash at bank 364,391 136,124
Total current assets 371,290 140,350
Creditors (24,019) (101,856)
Net current assets/liabilities 347,271 38,494
Other liabilities - -
Net assets 547,782 113,494
Capital and reserves
Called up share capital 1,458,768 608,213
Share premium 1,075,100 357,000
Profit & loss account (1,986,086) (851,719)
Total shareholders' funds 547,782 113,494
---------- ---------- Notes: Note 1 - Accounting policies There have been no changes to the accounting policies adopted by the Group during the year ended 30 September 2012 and the year ended 30 September 2011. Note 2 - Loss per share from continuing operations attributable to the equity shareholders 2012 2011 GBP GBP
Loss for the purpose of basic and (1,134,366) (204,776) diluted loss per share being net (loss)/profit attributable to equity shareholders
Number of shares
Weighted average number of ordinary 213,852,675 70,532,089 shares for the purposes of basic loss per share
Loss per ordinary share:
Basic (0.53)p (0.29)p
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.
The calculation of diluted loss per share assumes conversion of all potential dilutive ordinary shares, all of which arise from share options or warrants. A calculation is done to determine the number of shares that could have been acquired at fair value, based upon the monetary value of the subscription rights attached to outstanding share options and warrants.
Given the Group's reported losses for the year, outstanding share options and warrants are not taken into account when determining the weighted average number of ordinary shares in issue during the year, and therefore the basic and diluted loss per share are the same.
Note 3 - Announcement information
The information contained within this announcement has been agreed with the Group's auditor. The financial information set out in this announcement does not constitute statutory accounts.
The results for the ended 30 September 2012 are consolidated figures due to the acquisition of Pelagian Oil Limited during the year, whereas the results for the year ended 30 September 2011 relate solely to Adriatic Oil Plc.
Note 4 - Dividend
The Directors do not propose to recommend the payment of a final dividend for the year ended 30 September 2012. No final dividend was paid in relation to the year ended 30 September 2011.
Note 5 - Goodwill on subsidiary acquisition written off
Goodwill arising on the acquisition of Pelagian Oil Limited amounted to £ 939,266. Following an impairment review, an amount of £904,412 was written off. This represents a non-cash item.
THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
ADRIATIC OIL PLC Bruno Müller +44 (0) 20 3178 4060
SVS SECURITIES PLC - ISDX Growth Market Corporate Adviser Peter Ward / Alexander Brearley +44 (0) 20 7638 5600
YELLOW JERSEY PR LIMITED - Financial PR Dominic Barretto / Anna Legge +44 (0) 20 3664 4087
NOTES TO EDITORS:
Adriatic Oil Plc is a publicly quoted UK-incorporated international oil and gas exploration company with a portfolio of activities focused on the North Celtic Sea, the UK North Sea and the Adriatic Sea Basin.
In the North Celtic Sea, the Company has agreed with Fastnet Oil & Gas plc to farm-out 64.5% of its original 80% interest in a Licensing Option which covers an area of 881 sq. km. Following execution of the Farm-in Agreements, the Company will hold 15.5% of the Licensing Option. The Company has a second small carried interest in offshore Western Ireland.
Separately, in the Inner Moray Firth area of the UK's North Sea, Adriatic Oil has secured a 25% Farm-In, approved by the UK Department of Energy and Climate Change, to Seaward Production Licence P1921 in relation to Blocks 12/18 and 12/ 19c and the Company has an option for a further 25%.
Adriatic Oil is also focused on making and progressing applications for offshore exploration opportunities in Albania, which holds the largest onshore oilfield ever found in Europe with 5.7 billion barrels of oil in place.
Adriatic Oil's strategy is to add shareholder value by proving and developing leads and plays in areas which the Directors of the Company consider to be high potential oil and gas provinces. Adriatic Oil's ordinary shares are quoted on the ISDX Growth Market (operated by ICAP Securities & Derivatives Exchange Limited) under the ticker symbol 'ADOP'. The Company's website is available at www.adriaticoil.com
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