RNS Number : 7204Z
Sound Oil PLC
28 September 2009
 



28 September 2009


Sound Oil plc

("Sound Oil" or the "Company")


Interim results for the six months ended 30 June 2009


Sound Oil, the upstream oil and gas company with assets in Indonesia, announces its unaudited interim results for the six months ended 30 June 2009.


Key features


  • Considerable progress at Citarum PSC.
  • Continued efforts to attract new investors into the Bangkanai PSC.
  • Active pursuit of new production and development opportunities.
  • Tight control of overheads with £11.8 million in cash and no debt.


Commenting, Gerry Orbell, Chairman of Sound Oil, said:


"Looking forward, the Board considers that the cash balance at end June is sufficient to cover our exploration commitments for the twelve months from today's date.  The Company continues to review new production and development opportunities for potential acquisition and strengthening of our asset portfolio."


Further information on the Company can be found at www.soundoil.co.uk.





For further information please contact:


Sound Oil
07903 861 145
Gerry Orbell, Chairman
 
 
 
Smith & Williamson Corporate Finance
020 7131 4000
Azhic Basirov
 
David Jones
 
 
 
Buchanan Communications
020 7466 5000
Tim Thompson
 

 


  Chairman's Statement


Considerable progress has been made towards completion of the outstanding work commitments on the Citarum Production Sharing Contract (PSC), onshore JavaIndonesia. Over 40% of the initial 750 km 2D seismic program has been acquired, covering the Subang-Purwakarta areas, approximately 100 km southeast of Jakarta in the central part of the block. These data are currently being processed and recorded and the quality is superior to that acquired in the adjacent areas by previous operators. On preliminary results the Operator has identified a number of interesting leads in the depth range 1700-2000 m which it is hoped to mature into prospects for drilling. Completion of the remainder of the data in the eastern part of the block is expected near the end of 2009 to early 2010. Drilling of the three exploration wells is scheduled to commence in the second half of 2010.


On Bangkanai PSC, onshore KalimantanIndonesia, we are continuing with our efforts to attract new investors into the licence with a view to re-starting the stalled exploration activity on the block. Development of the Kerendan gas field and implementation of the gas to power project retains a high priority with the Indonesian Government and negotiations are currently in progress to agree a gas price and conclude a gas sales agreement with the state electricity company PLN. First gas is anticipated in 2011.


The Company continues to review new production and development opportunities for potential acquisition and strengthening of our asset portfolio in the area. To this end our technical teams in UK and Indonesia are actively pursuing a number of opportunities through various Government and private offerings.


In the first six months of 2009 the Group incurred a net loss of £1,861,000 compared with £726,000 in the same period last year. We reduced operating costs in the period and the majority of the net loss was due to an unrealised foreign exchange loss and reduced interest received. In more detail, exploration expenditure in the Income Statement was £244,000 compared with the first half of 2008, £293,000, and administration costs were £610,000 compared with £668,000 in the equivalent period in 2008. Bank deposit interest received was £6,000 (2008 £221,000) and the unrealised currency loss was £1,028,000 on our US$ holdings due to the recent weakening in that currency (2008 gain £14,000).


As the Group's exploration activity is in Indonesia and is accounted for in US$, there has also been a reduction in the six month period in the sterling value of assets, liabilities and cash in the Balance Sheet and the foreign currency reserve reduced to £2.2 million from £5.3 million at end 2008. Capital investment in the Indonesian exploration licences before currency translation movement was £569,000 in the period (2008 £883,000). Cash balances in sterling terms were £11.8 million at end June 2009 compared with £14.6 million at the end of 2008.


Looking forward, our financial situation remains very similar to that reported three months ago in our 2008 Annual Report. Based on the budget estimates of the operator of the Citarum PSC and on our own experience of the lead times for exploration activity at Bangkanai, the Board considers that the cash balance at end June is sufficient to cover our exploration commitments for the twelve months from today's date. Further funding and licence extensions will be needed to complete the full licence commitments.


Gerry Orbell


Chairman

25 September 2009


  Interim Consolidated Income Statement

for the six months ended 30 June 2009




Six months 
ended 
30 June

2009

Six months 
ended 
30 June

 2008

Year 

ended 
31 December 2009

 

 

Unaudited

Unaudited

Audited

 

Notes

£'000

£'000

£'000

Exploration costs

 

(244)

(293)

(2,926)

Gross loss

 

(244)

(293)

(2,926)

Administrative expenses

 

(610)

(668)

(1,179)

Group trading loss

 

(854)

(961)

(4,105)

Other income

 

15

-

10

Group operating loss from continuing operations

 

(839)

(961)

(4,095)

Finance revenue

 

6

221

250

Foreign exchange (loss)/gain

 

(1,028)

14

3,917

(Loss)/profit before income tax

 

(1,861)

(726)

72

Income tax charge

 

-

-

(27)

(Loss)/profit for the period attributable to the equity holders of the parent


(1,861)

(726)

45

Other comprehensive (loss)/income:





Foreign currency translation (loss)/income


(3,087)

189

6,494

Total comprehensive (loss)/income for the period attributable to the equity holders of the parent


(4,948)

(537)

6,539

(Loss)/profit per share (basic) for the period attributable
to ordinary equity holders of the parent (pence)*

5

(0.27)

(0.10)

0.01


*Diluted profit per share at 31 December 2008 was 0.1 pence. Diluted loss per share for June 2008 and June 2009 has not been disclosed as inclusion of unexercised options would be anti-dilutive.


  Interim Consolidated Balance Sheet

at 30 June 2009




30 June 

2009

30 June 2008

31 December

 2008



Unaudited

Unaudited

Audited


Note

£'000

£'000

£'000

Non-current assets





Property, plant and equipment


46

79

65

Intangible assets


4,625

3,829

5,277

Exploration and evaluation assets

6

20,944

18,471

23,307

Other debtors


672

425

651



26,287

22,804

29,300

Current assets





Other debtors


259

654

414

Inventories


-

249

-

Prepayments


32

24

75

Cash and short term deposits


11,830

11,994

14,625



12,121

12,921

15,114

Total assets


38,408

35,725

44,414

Current liabilities





Trade and other payables


785

1,115

1,188

Income tax


27

-

27



812

1,115

1,215

Non-current liabilities





Deferred tax liabilities


4,625

3,829

5,277

Provisions


91

82

104



4,716

3,911

5,381

Total liabilities


5,528

5,026

6,596

Net assets


32,880

30,699

37,818

Capital and reserves





Equity share capital


36,456

36,456

36,456

Foreign currency reserve


2,202

(1,003)

5,289

Accumulated deficit


(5,778)

(4,754)

(3,927)

Total equity


32,880

30,699

37,818



  Interim Consolidated Statement of Changes in Equity

for the six months ended 30 June 2009



Share capital   £'000

Share
premium

£'000

Accumulated

deficit

£'000

Foreign currency reserves

£'000

Total equity £'000

At 1 January 2009

692

35,764

(3,927)

5,289

37,818

Total loss for the period

-

-

(1,861)

-

(1,861)

Other comprehensive (loss)/income

-

-

-

(3,087)

(3,087)

Total income and expense for the period

-

-

(1,861)

(3,087)

(4,948)

Share based payments

-

-

10

-

10

At 30 June 2009 (unaudited)

692

35,764

(5,778)

2,202

32,880








Share 

capital

Share 

premium

Accumulated 

deficit

Foreign 

currency

reserves

Total 

equity


£'000

£'000

£'000

£'000

£'000

At 1 January 2008

692

35,764

(4,015)

(1,205)

31,236

Total loss for the period

-

-

(726)

-

(726)

Other comprehensive (loss)/income

-

-

(13)

202

189

Total income and expense for the period

-

-

(739)

202

(537)

At 30 June 2008 (unaudited)

692

35,764

(4,754)

(1,003)

30,699





Foreign



Share

Share

Accumulated

currency

Total


capital

premium

deficit

reserves

equity


£'000

£'000

£'000

£'000

£'000

At 1 January 2008

692

35,764

(4,015)

(1,205)

31,236

Total profit for the year

-

-

45

-

45

Other comprehensive (loss)/income

-

-

-

6,494

6,494

Total income and expense for the year

-

-

45

6,494

6,539

Share based payments

-

-

43

-

43

At 31 December 2008 (audited)

692

35,764

(3,927)

5,289

37,818


Interim Consolidated Cash Flow Statement

for the six months ended 30 June 2009


 

 


Six months

ended
30 
June
2009

Six months
  ended
30
June 2008

Year ended 31 December 2008


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Cash flow from operating activities





Cash flow from operations

(1,073)

(1,146)

(1,652)

Interest received

6

221

250

Net cash flow from operating activities

(1,067)

(925)

(1 ,402)

Cash flow from investing activities





Capital expenditure and disposals

(3)

(26)

(26)

Exploration expenditure

(569)

(883)

(1,638)

Investment in associate

-

-

(136)

Net cash flow from investing activities

(572)

(909)

(1 ,800)

Net decrease in cash and cash equivalents

(1,639)

(1,834)

(3,202)

Net foreign exchange difference

(1,156)

205

4,204

Cash and cash equivalents at the beginning of the period

14,625

13,623

13,623

Cash and cash equivalents at the end of the period

11,830

11,994

14,625


Notes to cash flow



Six  months

ended
30
June
2009

Six months ended
30 June 2008

Year ended 31 December 2008


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Cash flow from operations reconciliation




(Loss)/profit before tax

(1,861)

(726)

45

Finance revenue

(6)

(221)

(250)

Foreign exchange loss/(gain)

1,028

(14)

(3,917)

Exploration expenditure (written back)/written off

(2)

-

2,295

Income tax charge

-

-

27

(Decrease)/increase in accruals and short term creditors

(313)

841

700

Depreciation

16

24

58

Share based payments charge

10

-

43

Increase in long term provisions

-

-

(7)

Increase in long term debtors

(112)

(194)

(259)

Increase in inventories

-

(249)

-

Decrease/(increase) in short term debtors

167

(607)

(387)

Cash flow from operations

(1,073)

(1,146)

(1,652)


  Notes to the Interim Consolidated Financial Statements


1  Basis of preparation


The interim consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2006. The comparative financial information is based on the statutory accounts for the year ended 31 December 2008. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 235 of the Companies Act of 1985.


The interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2008 statutory accounts and in accordance with IAS 34 Interim Financial Reporting.


The seasonality or cyclicality of operations does not impact on the interim financial statements.


  Segment information


The Group has adopted IFRS 8, Operating Segments which requires information on the separate segments of a business.


The Group's activity is exploration for oil and gas in Indonesia under two Production Sharing Contracts (PSC's), Bangkanai and Citarum. To date there has been no development activity, production or turnover. The exploration expenditure written off to the Income Statement is not allocated to operating segments. Capitalised exploration expenditure in the Balance Sheet is comprised of £3.8 million for the Bangkanai PSC, £1.7 million for the Citarum PSC and £15.4 million for the fair value uplift which arose on acquisition of the company which owned the PSC's, (at end 2008 £4.2 million, £1.5 million and £17.6 million respectively). The decreases were due to the effect of the weakness of sterling in translation from US$.


3   Share-based payments


No share options were granted in the period.


  Related party transactions


There were no sales or purchases to or from related parties, no guarantees provided or received for any related party receivables or payables and no other transactions with related parties, directors' loans and other directors' interests.


5   Profit/(loss) per share


The calculation of basic profit/(loss) per ordinary share is based on the profit/(loss) after tax and on the weighted average number of Ordinary Shares in issue during the period. Basic profit/(loss) per share is calculated as follows:



Profit/(loss) after tax

Weighted average number of shares

Profit/(loss) per share


June 2009

June 2008

December 2008

June 2009

June 2008

December 2008

June 2009

June 2008

December 2008


£'000

£'000

£'000

million

million

million

pence

pence

pence

Basic

(1,861)

(726)

45

692

692

692

(0.27)

(0.10)

0.01


Diluted profit per share at 31 December 2008 was 0.01 pence. This includes the potential Ordinary Shares which would result from the exercise of the share options and is calculated on the profit of the year of £45,000 divided by 699 million dilutive potential Ordinary Shares.


Diluted loss per share has not been disclosed for June 2008 and June 2009 as inclusion of unexercised options would be anti-dilutive.

  

6  Exploration and evaluation assets




30 June

2009

30 June 2008

31 December

2008


£'000

£'000

£'000

Costs




At start of period

26,248

15,428

15,428

Additions

569

3,045

3,800

Exchange adjustments

(2,983)

(2)

7,020

At end of period

23,834

18,471

26,248

Impairment




At start of period

2,941

-

-

(Write back)/charge

(2)

-

2,295

Exchange adjustments

(49)

-

646

At end of period

2,890

-

2,941

Net book amount at end of period

20,944

18,471

23,307


7 Interim Report


Copies of the Company's interim report will be sent to shareholders shortly and will also be available on the Company's website: www.soundoil.co.uk.



This information is provided by RNS
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