TIDMMEN
RNS Number : 1181E
Molecular Energies PLC
28 June 2023
28 June 2023
Molecular Energies PLC
("Molecular", "the Company", or "the Group")
Audited Results for the year ended 31 December 2022
2023 update and outlook
AGM date
Molecular (AIM: MEN), the international energy company is
pleased to announce its audited results for the year ended 31
December 2022 and a 2023 update and outlook.
The Company's Annual Report will be posted to Shareholders on 30
June 2023 together with the Notice for the Annual General
Meeting.
Peter Levine, Chairman, commented:
"The year under report was challenging and volatile in certain
ways, rewarding in others and, considering all the circumstances,
the results were sound. However, activities since the start of the
year point to a more stable future and there is potential for some
exciting developments in the Group as a whole going forward.
"As separately announced today, we are encouraged by the
progress made in Green House Capital and look forward to developing
its potential as a separate listed entity."
Highlights FY2022
Financial
-- Adjusted EBITDA contribution from Argentina US$9.8 million
(2021: US$10.5 million) with adjusted Group EBITDA* of US$7.0
million (2021: US$7.5 million).
-- Group revenue of US$33.2 million (2021: US$34.1 million) as
lower sales volumes, due in part to the Rio Negro incident, were
offset by higher realised prices in both Argentina and the USA.
-- The average price across the Group was US$55.9/boe (2021:
US$40.7/boe) due to the recovery in market prices in the year.
-- Net cash generated by operating activities increased by 3% to
US$11.4 million (2021: US$11.1 million).
-- Free cash generation from core operations* (excluding
workovers) of US$11.3 million (2021: US$12.8 million).
-- Year-end cash balances US$7.9 million (2021: US$2.0 million).
-- After depreciation, depletion and amortisation of US$8.8
million (2021: US$11.5 million) loss after tax of US$10.5 million
(2021 profit US$4.6 million).
-- Borrowings at year end increased to US$47.5 million (2021:
US$29.3 million). Of this, US$35 million is third party financial
debt in Argentina with no recourse to the Group. The majority of
this is dollar-based debt at low average interest rates of less
than 5%. This has no material impact on the Group as it is a
dollar-based business. The balance is in effect peso-denominated
which is advantageous to the Group. The balance of US$11.9 million
is owed by the Group to IYA, an affiliate company of Chairman Peter
Levine. The increase in third party debt in Argentina relates to
the heavy capex programme last year and the incident at the Puesto
Flores facility. All borrowings are being serviced in accordance
with their terms.
-- Since the end of the period, the IYA debt has been converted
to an interest free loan with a maturity now out to the end of 2025
and financial borrowings in Argentina have been measurably reduced
with much of the remaining debt refinanced and extended on
attractive terms.
Corporate
-- Name of Company changed from 'President Energy PLC' to
'Molecular Energies PLC' to reflect the expansion of our interests
in alternative energies and related technologies.
-- Capital reorganisation consolidating every 200 existing
ordinary shares into one consolidated share, and the sub-division
of every such consolidated share into one new ordinary share and
one deferred share.
-- Further tranche of US$3.585 million in bonds issued to the
Argentine market to fund further working capital and capital
expenditure. The interest rate was 3.89% with a 25-month repayment
period and an initial 16-month capital repayment holiday.
-- Market value of retained 22.5% holding in Atome Energy PLC
("Atome"), the Company's green hydrogen and ammonia affiliate,
increased in US dollar terms by approximately 14% throughout the
year, whilst the share price in GB pound terms increased by
approximately 28%.
-- Became 75% beneficial shareholder in Green House Capital, an
incubator company for alternative energy projects which is subject
to a separate RNS today regarding the potential forthcoming
spin-off.
Operations
-- Group net average production 1,708 boepd (2021: 2,473 boepd).
-- Production in Argentina adversely impacted by the incident in
Rio Negro concession announced on 11 August 2022 that impacted on
production from the Puesto Flores oil field in the latter parts of
the year.
-- Three new well drilling programme in Salta, Argentina
commenced late 2021 and successfully completed during the year. All
three wells on stream and now producing.
-- Argentina well operating costs per boe in 2022, excluding
royalties and workovers* US$25.9 per boe (2021: US$17.0) due to
lower production.
-- Group-wide administrative costs stable at US$4.5m (2021:
US$4.4m) excluding directly attributable Atome expenses in
2021.
-- Work on our Paraguay exploration well progressed with our partners.
-- Studies continued regarding potential secondary recovery
project in the Rio Negro concession.
-- Exploration planning continued at the Martinez del Tineo
field which, subject to rig availability, is slated to be drilled
towards the end of 2023.
-- Matorras and Ocultar licences in Salta successfully relinquished.
Production and reserves
-- Net 2P (proven and probable) reserves in Argentina at year
end, as confirmed by an independent reserves audit of 18.9 mmboe
(2021: 24.4 mmboe).
-- Louisiana 1P current proven producing reserves to be written
off completely this year and contingency for liabilities
released.
Oil (bbls) Natural Gas Total (mmboe)
Production (mmcf)
Country 2022 2021 2022 2021 2022 2021
Argentina 408,999 561,947 1,172.5 1,838.9 604.4 868.4
USA 15,470 19,831 22.6 87.0 19.2 34.3
424,469 581,778 1,195.1 1,925.9 623.6 902.7
Net Reserves (mboe) Argentina USA Total
As at 31 December
2021 24,399.5 723.8 25,123.3
Revisions in reserves (4,894.2) (681.6) (5,575.8)
Production (604.4) (19.2) (623.6)
As at 31 December
2022 18,900.9 23.0 18,923.9
---------- -------- ----------
Reserve revisions in Argentina reflect the results of production
performance, drilling and workovers in the year and the subsequent
independent auditor's reserve report by J&R Consultora. It is
important to note that the reserves as at 31 December 2022 do not
represent the total of what is present and/or recoverable in the
respective fields in Rio Negro but only what are present and/or
recoverable over the remaining term of Molecular's current licenses
to 2026 / 2027. It is contemplated that, in due course, Molecular's
core licences will be extended for a further 10 years which would
then increase the reserves, ceteris paribus.
* Calculation of all quoted metrics not directly corresponding
to GAAP measures are detailed in the Alternative Performance
Measure glossary and cross referenced to the Notes where
applicable
Current Trading
Argentina
With a second separator this month brought up to full capacity
in the core area of Puesto Flores, oil production is climbing, with
an anticipated level from that field by the beginning of July of
over 150m3/day. This excludes oil and gas production from our other
fields in Rio Negro such as Estancia Vieja and Puesto Prado.
Production from Salta Province is stable at approximately
60m3/day.
A frac campaign is slated to commence in the Puesto Flores field
by September targeting, on a success case, an initial additional
60m3/day of oil production. A mobile workover/light drilling rig
has been identified to be acquired by the Group and put into
working order within the next few months which will enable
Molecular to react to downhole issues in wells as and when they
arise and reactivate relevant shut-in wells whether in Rio Negro or
Salta Province. The rig, which, if purchased, is expected to cost
some US$1.5 million, is intended to be funded without recourse to
equity dilution.
A new high-impact exploration well is scheduled to start to be
drilled before the end of the year at the Martinez del Tineo field
in the Puesto Guardian Concession, Salta. Previously considered as
a farm-out candidate, Molecular has decided to go it alone. The
well is going through its planning and permission stages, and it
will be targeting both an oil rim with existing 2P reserves of 1.1
mmboe in the Martinez del Tineo field and a deeper gas exploration
reservoir of a potentially larger size of some 110 mmboe of
unrisked resources (as estimated by Gaffney, Cline) but with a
lower chance of success. The size of the prize is however too big
to ignore. The well's cost is still being assessed but is likely to
be in the region of US$5 million and is intended to be funded
without recourse to equity dilution.
With elections coming up later this year, it is hoped that 2024
will see a more stable macro environment for Argentina with the
EBITDA for our Argentine business expected to increase for Q2 from
the US$2 million in Q1.
Paraguay
The high-impact well to be drilled at the Tapir location in the
Chaco, Paraguay is now scheduled to commence mid-August with the
further delay due to a further inspection of the rig by Molecular
requiring the drilling company to make additional repairs with
drill safety a paramount concern. The delays place no further cost
burden on Molecular or its partner, CPC.
All other necessary preparations are in hand, and we look
forward to at last getting down to business. I plan to be on site
when this happens.
Atome
This spin-out from Molecular has proved to be a great success
with the Company founding Atome from scratch within the last three
years. Since the IPO at the end of 2021, Atome has gone from
strength to strength with the share price increasing approximately
30% since the IPO. With a market capitalisation of some US$55
million, Molecular retains a solid investment of 22.5% in Atome
after providing Molecular shareholders with a substantial dividend
in specie at the time of the 2021 IPO.
With the recent Baker Hughes investment into Atome, Molecular
looks forward to Atome's future with confidence.
Green House
Following on from the success of the spin-off of Atome,
Molecular has initiated steps towards spinning-off this division in
the latter part of this year to unlock the value in Green House not
currently reflected by being part of the Molecular Group. The
spin-off will expose Green House to a wider investor audience that
is more focussed on green-energy solutions in a similar manner to
Atome. Reference is made to the separate announcement made by the
Group in this regard at the same time as announcement of these
report and accounts.
Management
The Board appointed Jordan Coleman as CEO (non-board) of our
hydrocarbons division late last year and these results prove the
positive impact he is having on operations. Similarly, the Board
now intends to appoint a CEO of our Green House division in the
near term.
Outlook
The outlook for Molecular is looking a tad brighter. With good
traction and new elections in Argentina this year, two high-impact
wells planned, material progress on the business within Green
House, allied with its potential spin-off later this year, there
are many moving parts. Whilst one has to be severely realistic as
to the chances of success in exploration wells, the Group has
positives to look forward to over the next 12 months.
The Company's Annual Report will be posted to shareholders on 30
June 2023.
Annual General Meeting and Investor Q&A
The Annual General Meeting will be held on Tuesday 25 July 2023
at 1.00 p.m. BST at Carrwood Park, Selby Road, Leeds LS15 4LG.
For further information, please visit
www.molecularenergiesplc.com or contact:
Molecular Energies PLC
Peter Levine, Chairman
Rob Shepherd, Group FD +44 (0) 207 016 7950
finnCap (Nominated Advisor and Broker)
Christopher Raggett, Tim Harper +44 (0) 207 220 0500
Notes to Editors
Molecular Energies PLC is an AIM listed company at the forefront
of energy development and has interests across the energy spectrum,
from oil and gas projects to subdivisions in the green and
alternative energy sub-sectors.
The Company has oil and gas production in Argentina as well as
exploration assets in both Argentina and Paraguay. The Company has
two separate subdivisions which are focused on early-stage
opportunities in the green and/or alternative energy sub-
sector.
Activities in the green and alternative energy space are being
carried out under the Green House Capital brand and through AIM
listed Atome Energy PLC, a green hydrogen, ammonia, and fertiliser
company operating in Paraguay, Costa Rica and Iceland, in which
Molecular currently has 22.5%.
With a strong strategic and institutional base of support, an
in-country management team as well as the Chairman whose interests
as the largest shareholder are aligned to those of its
shareholders, Molecular gives UK investors access to an energy
growth story combined with world class standards of corporate
governance, environmental and social responsibility.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR"). The person who arranged for the release of this
announcement on behalf of the Company was Peter Levine,
Chairman.
Detailed Financial Review
2022 has proved a challenging year as production decline in both
Argentina and USA hydrocarbon businesses have impacted on the
financial returns. While world oil prices have been higher than
2021, controlled prices in Argentina and restricted access to
export markets has limited the ability of the Group to benefit from
these. However, efforts have continued to focus on developing
alternative energy businesses with the establishment of Green House
Capital to pursue opportunities akin to that achieved with Atome in
2021 which will assist in rebalancing the assets and business of
the Group going forward. The Group retains a 22.5% stake in Atome,
with the accounting rules governing consolidation of investments in
associate undertakings with significant influence, shareholders
will need to look to the Company Balance Sheet to see the
improvement in the market value of the investment in the period as
highlighted in Note 9.
Revenue fell by 3% to US$33.2 million (2021: US$34.1 million) as
lower sales volumes were offset by higher realised prices in both
Argentina and the USA; the average Group product price was
US$55.9/boe (2021: US$40.7/boe) due to the recovery in market
prices in the year. Overall Group production fell by 31% to 1,708
boepd (2021: 2,473 boepd).
Production in Argentina was adversely impacted by an incident in
our Rio Negro concession that impacted on production from the
Puesto Flores oil field in the latter part of the year although the
financial impact was partially offset by a successful insurance
claim.
Cost of sales decreased to US$30.3 million (2021: US$33.4
million) due to lower production related depreciation and a one-off
credit arising on the release of an abandonment provision.
Free cash generation from core operations excluding changes in
working capital, administrative expense and non-recurring workovers
fell by 12% to US$11.3 million (2021: US$12.8 million).
After depreciation, depletion and amortisation of US$8.8 million
(2021: US$11.5 million) and administrative expenses of US$4.5
million (2021: US$5.8 million), the Group recorded a reduced
operating loss of US$1.6 million (2021: loss US$5.0 million).
Included within administrative expenses in 2021 were US$1.4
million of directly attributable Atome expenses largely offset by
the US$1.3 million non-operating gain arising on migration to an
associate investment, and directly linked to the US$1.3 million
receivable ultimately recovered in 2022. The overall impact of
Atome related expenses was essentially neutral in 2021.
An impairment of US$10.0 million (2021: US$0.1 million) was
recognised in the period. Following a decision to focus exploration
efforts the Hernadarias concession was relinquished in 2023
resulting in an impairment of the carrying value at the end of 2022
of US$8.5 million. While the reduction in USA reserves triggered an
impairment review and an impairment of US$1.4 million.
Non-operating gains largely arising on recoveries of previously
impaired costs, insurance proceeds and asset disposals resulted in
a US$1.3 million gain (2021: gain US$14.5 million) in contrast to
the Atome related gains in the prior period. Higher interest on
Argentina related borrowings were offset by foreign exchange gains
including related treasury income. Loss before tax for the year was
US$12.2 million (2021: profit US$5.7 million) with loss after tax
totalling US$10.5 million (2021 profit: US$4.6million).
Argentine operating performance
Production in Argentina decreased by 30% to 604,411 boe (2021:
868,427 boe) or 1,656 boepd (2021: 2,379 boepd). Average realised
sales prices in Argentina rose by 35% to US$54.7 per boe (2021:
US$40.6 per boe) benefitting from partial exposure to world market
prices on export sales.
Well operating costs in Argentina before non-recurring items*
rose by 52% to US$25.9/boe (2021: US$17.0/boe) on lower volumes
associated with production decline. Depreciation fell during the
year to US$12.1/boe (2021: US$12.9/boe)* reflecting changes in
future reserve development cost estimates. The extension of the Rio
Negro licence period and/or the secondary recovery project which
are both under discussion with the Neuquén Province would lead to a
significant reduction in depreciation rates. Overall, following the
annual independent review, proved and probable reserves in
Argentina decreased by 21% largely on the Rio Negro assets. This
change triggered an impairment review for these cash generating
units, but no impairment was considered necessary.
USA operating performance
Overall production from the Group's working interest in US
operations fell by 44% to 53 boepd (2021: 94 boepd). Despite
production rates returning to previous levels in May 2022,
production stagnated in middle of the year requiring a two-month
shut-in and further workover of the well. Production resumed in
early November, but it became apparent by the end of the year that
future performance from the new reservoir zone would be materially
below historic levels triggering a reduction in future reserves and
an impairment review. Subsequent to the higher depreciation charge,
an impairment of US$1.4 million was recognised.
Average realised prices in the US more than doubled over the
prior year to US$87.8/boe (2021: US$43.1/boe). Well operating costs
excluding royalty related expenses and non-recurring workovers*
rose to US$44.1 /boe (2021: US$14.3 /boe) due to lower production
levels. Depreciation rose during the year to US$72.4/boe (2021:
US$6.3/boe)* due to the reduction in future reserves estimates.
This asset has now been sold by the Group and the accounts for
2023 will show a release of the associated contingent
liabilities.
Corporate
While much of the focus in 2021 was on the value creation in
bringing Atome to the market, development drilling in Argentina and
concluding the farm out of the Pirity Concession in Paraguay,
activity through 2022 focused on transition. The Group changed its
name to Molecular Energies plc and with the sub-division of shares
in October 2022, the emphasis was on preparing the business for the
future. New entities have been created under the Green House
Capital division that are expected to develop new alternative
energy opportunities in future periods. Argentina remains the core
hydro-carbon division and continues to self-fund through access to
local capital markets. Through 2022, preparations to drill the
exploration well on the Pirity concession in 2023 continued.
Accordingly, management consider that it is appropriate to continue
to capitalise the balance of US$46 million at 31 December 2022
(2021: US$54 million).
Investment in the Oil & Gas Assets component of Property,
Plant and Equipment in the year amounted to US$24.2 million (2021:
US$ 14.7 million) with the completion and re-entry of four wells in
the Salta Concession in Argentina, installation of new facilities
in Rio Negro following fire damage and capitalised workovers in
Argentina. In the USA, ownership of the Pacific Enterprises well
was acquired for future use as a saltwater disposal well.
Overall, Trade and Other Payables increased to US$24.1 million
(2021: US$22.0 million) due to obligations arising on drilling
commitments.
Trade and Other Receivables decreased to US$11.7 million (2021:
US$11.9 million). In financing Argentine drilling activity, the
Group managed currency exposure by prepaying for US$1.6 million
(2021: US$3.2 million) of drilling costs to be discharged on future
activity. Under borrowing arrangements, proceeds are received net
of interest earned in future periods resulting in a prepayment of
interest.
At the end of the year, the Group had a net current liability of
US$19.4 million (2021: US$9.2 million). However, after deducting
the liabilities on drilling and capital accruals, which are
periodic in nature as detailed in Note 19, the underlying net
current liability from ongoing operations is lower at US$7.1
million (2021: US$3.2 million). Year-end cash balances were US$7.9
million (2021: US$2.0 million).
Key Performance Indicators
Key Performance Indicators are used to measure the extent to
which Directors and management are reaching key business objectives
for the Group. The principal methods by which the Directors monitor
the Group's performance are volumes of net production, well
operating costs and the extent of exploration success. The
Directors also carry out a regular review of cash available for
exploration and development and review actual capital expenditure
and operating expenses against forecasts and budgets.
Increase/
2022 2021 (Decrease)
Production mboe
USA 19.2 34.3 -44.0%
Argentina 604.4 868.4 -30.4%
Total net hydrocarbons 623.6 902.7 -30.9%
------- ------- ------------
Well operating costs US$000*
USA 1,000 488 104.9%
Argentina 15,917 15,538 2.4%
Total operating costs 16,917 16,026 5.6%
------- ------- ------------
Well operating costs per boe US$*
USA 52.1 14.2 266.1%
Argentina 26.3 17.9 47.2%
Total well operating costs per
boe US$ 27.1 17.8 52.8%
------- ------- ------------
* calculation of all quoted metrics not directly corresponding
to GAAP measures are detailed in the Alternative Performance
Measure glossary and cross referenced to the Notes where
applicable
Underlying operating costs excluding non-recurring items have
been calculated and detailed in the Alternative Performance Measure
section of this report.
Consolidated Statement of Comprehensive Income
Year ended 31 December 2022
2022 2021
Note US$000 US$000
Continuing Operations
Revenue 33,233 34,147
Cost of sales 2 (30,344) (33,431)
--------- ---------
Gross profit/(loss) 2,889 716
Administrative expenses 3 (4,543) (5,764)
--------- ---------
Operating profit /(loss) before impairment
and non-operating gains/(losses) (1,654) (5,048)
Presented as:
Adjusted EBITDA 6,947 7,526
Non-recurring items (407) (751)
EBITDA excluding share options 6,540 6,775
Release of abandonment provision 711 -
Depreciation, depletion & amortisation (8,790) (11,456)
Share based payment expense (115) (367)
Operating profit / (loss) (1,654) (5,048)
------------------------------------------------ ----- ---------
Non-operating gains / (losses) 4 1,270 14,494
Loss on investment in associate undertaking (25) -
Impairment credit / (charge) 5 (10,016) (51)
--------- ---------
Profit / (loss) after impairment and
non-operating gains/(losses) (10,425) 9,395
Finance income 4,907 1,633
Finance costs (6,649) (5,324)
--------- ---------
Profit / (loss) before tax (12,167) 5,704
Income tax (charge)/credit comprises:
Current tax income tax (charge)/credit (59) -
Deferred tax: foreign exchange arising
on provision for future taxes (3,409) (1,341)
Deferred tax being underlying provision
for future taxes 5,137 216
------------------------------------------------ ----- --------- ---------
Total income tax (charge)/credit 1,669 (1,125)
Profit / (loss) for the year from continuing
operations (10,498) 4,579
Other comprehensive income, net of tax
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of
foreign operations 5 -
Total comprehensive profit /(loss) for
the year attributable
--------- ---------
to the equity holders of the parent (10,493) 4,579
========= =========
Earnings / loss per share 6 US cents US cents
Basic profit/(loss) per share from continuing
operations (102.02) 45.07
========= =========
Diluted profit(loss) per share from continuing
operations (102.02) 44.17
========= =========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Consolidated Statement of Financial Position
31 December 2022
2022 2021
ASSETS US$000 US$000
Non-current assets
Intangible exploration & evaluation assets 45,721 54,304
Goodwill 705 705
Property, plant and equipment 71,937 59,148
Investment in associate - 25
Deferred tax 45 350
Other non-current assets 103 103
118,511 114,635
--------- ---------
Current assets
Trade and other receivables 11,710 11,887
Stock - 1,336
Cash and cash equivalents 7,941 2,014
19,651 15,237
--------- ---------
TOTAL ASSETS 138,162 129,872
========= =========
LIABILITIES
Current liabilities
Trade and other payables 20,708 17,424
Borrowings 18,391 7,014
39,099 24,438
--------- ---------
Non-current liabilities
Trade and other payables 3,362 4,580
Long-term provisions 7,854 7,480
Borrowings 29,134 22,250
Deferred tax 250 2,283
40,600 36,593
--------- ---------
TOTAL LIABILITIES 79,699 61,031
========= =========
EQUITY
Share capital 36,179 36,179
Share premium 48 48
Translation reserve (50,235) (50,240)
Profit and loss account 64,647 75,145
Reserve for share-based payments 7,824 7,709
TOTAL EQUITY 58,463 68,841
--------- ---------
TOTAL EQUITY AND LIABILITIES 138,162 129,872
========= =========
Consolidated Statement of Changes in Equity
Year ended 31 December 2022
Reserve
Profit for share-
Share Share Translation and loss based
capital premium reserve account payments Total
US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1 January
2021 35,708 257,992 (50,240) (174,631) 7,538 76,367
Share-based payments - - - - 367 367
Debt conversion 82 58 - - - 140
Subscription 241 254 - - - 495
Exercise of options 148 48 - - (196) -
Capital reduction - (258,304) - 258,304 - -
Dividend in specie - - - (13,130) - (13,130)
Transactions with
the owners 471 (257,944) - 245,174 171 (12,128)
-------- ---------- ------------ ---------- ----------- ---------
Profit for the
year - - - 4,579 - 4,579
Other comprehensive
income
Exchange differences
on
translation - - 23 - - 23
Reclassified to
profit and loss - - (23) 23 - -
Total comprehensive
income for
the year - - - 4,602 - 4,602
-------- ---------- ------------ ---------- ----------- ---------
Balance at 1 January
2022 36,179 48 (50,240) 75,145 7,709 68,841
Share-based payments - - - - 115 115
Transactions with
the owners - - - - 115 115
-------- ---------- ------------ ---------- ----------- ---------
Loss for the year - - - (10,498) - (10,498)
Other comprehensive
income
Exchange differences
on
translation - - 5 - - 5
Total comprehensive
income for
the year - - 5 (10,498) - (10,493)
-------- ---------- ------------ ---------- ----------- ---------
Balance at 31 December
2022 36,179 48 (50,235) 64,647 7,824 58,463
======== ========== ============ ========== =========== =========
Attributable to the owners of the Company
Consolidated Statement of Cash Flows
Year ended 31 December 2022
2022 2021
US$000 US$000
Cash flows from operating activities
Cash generated by operating activities (note
7) 11,366 11,078
Interest received 244 145
11,610 11,223
--------- ---------
Cash flows from investing activities
Expenditure on exploration and evaluation
assets - (1,652)
Expenditure on development and production
assets (21,832) (19,431)
Proceeds from asset sales - 29
Insurance proceeds 1,289 -
Recovery of previously impaired costs 748 -
Proceeds from Paraguay farmout - 4,000
Acquisition & licence extension in Argentina - (284)
USA acquisition (450) -
Deposits with state authorities - (1)
(20,245) (17,339)
--------- ---------
Cash flows from financing activities
Loan drawn 40,345 11,731
Proceeds from issue of shares (net of expenses) - 495
Repayment of obligations under leases (1,067) (1,332)
Repayment of borrowings (21,747) (3,130)
Payment of interest and loan fees (4,366) (1,338)
13,165 6,426
--------- ---------
Net increase/(decrease) in cash and cash
equivalents 4,530 310
Opening cash and cash equivalents at beginning
of year 2,014 1,144
Exchange gains/(losses) on cash and cash
equivalents 1,397 560
Closing cash and cash equivalents 7,941 2,014
========= =========
Notes
1. Accounting policies and preparation
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2022 or 2021 but is derived from the 2022 accounts.
A copy of the statutory accounts for the year to 31 December
2021 has been delivered to the Registrar of Companies and is also
available on the Company's website. Statutory accounts for 2022
will be delivered in due course. The auditors have reported on
those accounts; their report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006 in respect of the accounts for 2021 nor
2022.
Whilst the financial statements from which this preliminary
announcement is derived have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and applicable
law, this announcement does not itself contain sufficient
information to comply with IFRS. The Annual Report, containing full
financial statements that comply with IFRS, will be sent out to
shareholders by the end of June.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Therefore, in the preparation of the 2022
financial statements they continue to adopt the going concern
basis.
2022 2021
2 Cost of sales US$000 US$000
Depreciation 8,686 11,374
Release of abandonment provision (711) -
Royalties & production taxes 5,452 6,031
Well operating costs 16,917 16,026
30,344 33,431
======= =======
Well operating costs include US$407,000 (2021: US$751,000) in
non-recurring workover costs expensed in the period.
2022 2021
3 Administrative expenses US$000 US$000
Directors and staff costs (including non-executive
Directors) 2,519 2,530
Share-based payments 115 367
Depreciation 104 82
Other 1,805 2,785
4,543 5,764
======= ========
Attributable to Atome business included
above - (1,397)
4,543 4,367
======= ========
To allow for meaningful comparison, staff costs, share based
payments and depreciation expenses are reflected gross before the
effect of allocations to operating costs or balance sheet assets.
Other expenses are shown net of the effect of allocations totalling
US$1.3 million (2021: US$1.3 million).
Included with administrative expenses in 2021 are US$1.4 million
directly attributable to the Atome businesses which are no longer
part of the Group following the flotation at the end of December
2021.
4 Other non-operating (gains)/losses 2022 2021
US$000 US$000
Gain on dividend in specie of Atome shares - (13,130)
Recovery of impaired costs (748) -
Gain on insurance proceeds net of costs
derecognized (115) -
Gain on termination of leases (52) (18)
Other (gains)/losses arising on asset disposals (355) (29)
Gain on Atome transition to an associate
investment - (1,317)
(1,270) (14,494)
======== =========
Gains on insurance proceeds recovered in December 2022 relate to
an incident at a facility in Argentina and are net of the cost of
the asset impaired.
2022 2021
5 Impairment (credit) / charge US$000 US$000
Matorras & Ocultar in Argentina (intangible) - 51
Hernandarias concession in Paraguay (intangible) 8,583 -
USA operations (tangible) 1,433 -
10,016 51
======= =======
6 Earnings / (Loss) per share 2022 2021
US$000 US$000
Net profit / (loss) for the period attributable
to
the equity holders of the Parent Company (10,498) 4,579
========= =========
Number Number
'000 '000
Weighted average number of shares in issue 10,290 10,159
========= =========
US cents US cents
Earnings /(loss) per share
Basic earnings / (loss) per share from continuing
operations (102.02) 45.07
========= =========
Diluted earnings / (loss) per share from
continuing operations (102.02) 44.17
========= =========
Following the conversion and subdivision of shares in October
2022 the weighted average number of shares for 2021 have been
adjusted based on the conversion 200 to 1 share ratio duly
approved.
At 31 December 2022, 134,255 (2021: 207,544) share option and
share warrant awards were in issue that, if exercised, would dilute
earnings per share in the future. No dilution per share was
calculated for 2022 as with the reported loss they are
anti-dilutive.
7 Notes to the consolidated statement cash
flows 2022 2021
US$000 US$000
Profit / (loss) from operations before taxation (12,167) 5,704
Interest on bank deposits (244) (145)
Interest payable and loan fees 6,649 5,324
Depreciation of property, plant and equipment 8,790 11,456
Impairment (credit)/charge 10,016 51
Release of abandonment provision (711) -
(Gain) / loss on non-operating transaction (1,270) (14,494)
Loss on investment in associate undertaking 25 -
Share-based payments 115 367
Foreign exchange difference (4,663) (1,488)
--------- ---------
Operating cash flows before movements in
working capital 6,540 6,775
Decrease / (increase) in receivables (3,137) (2,430)
Movement in stock 1,691 -
Increase / (decrease) in payables 6,272 6,733
Net cash generated by operating activities 11,366 11,078
========= =========
8 Segment reporting
Argentina Paraguay USA UK Total
2022 2022 2022 2022 2022
US$000 US$000 US$000 US$000 US$000
Revenue 31,463 - 1,686 84 33,233
Cost of sales
Depreciation 7,296 - 1,390 - 8,686
Release of abandonment
provision (711) - - - (711)
Royalties & production
taxes 4,968 - 484 - 5,452
Well operating costs 15,917 - 1,000 - 16,917
Administrative expenses 1,126 11 473 2,933 4,543
Segment costs 28,596 11 3,347 2,933 34,887
---------- --------- -------- -------- --------
Segment operating profit/(loss) 2,867 (11) (1,661) (2,849) (1,654)
========== ========= ======== ======== ========
Argentina Paraguay USA UK Total
2021 2021 2021 2021 2021
US$000 US$000 US$000 US$000 US$000
Revenue 32,669 - 1,478 - 34,147
Cost of sales
Depreciation 11,158 - 216 - 11,374
Royalties & production
taxes 5,612 - 419 - 6,031
Well operating costs 15,538 - 488 - 16,026
Administrative expenses 1,889 64 389 3,422 5,764
Segment costs 34,197 64 1,512 3,422 39,195
---------- --------- -------- -------- --------
Segment operating profit/(loss) (1,528) (64) (34) (3,422) (5,048)
========== ========= ======== ======== ========
Segment assets Argentina Paraguay USA UK Total
2022 2022 2022 2022 2022
US$000 US$000 US$000 US$000 US$000
Intangible assets 129 45,592 - - 45,721
Goodwill 705 - - - 705
Investment in associate - - - - -
Property, plant and
equipment 71,785 - 152 - 71,937
---------- --------- ------- ------- --------
72,619 45,592 152 - 118,363
Other assets 9,533 1,657 584 84 11,858
--------
82,152 47,249 736 84 130,221
========== ========= ======= ======= ========
Argentina Paraguay USA UK Total
2021 2021 2021 2021 2021
US$000 US$000 US$000 US$000 US$000
Intangible assets 129 54,175 - - 54,304
Goodwill 705 - - - 705
Investment in associate - - - 25 25
Property, plant and
equipment 57,022 - 2,126 - 59,148
---------- --------- ------- ------- --------
57,856 54,175 2,126 25 114,182
Other assets 10,257 1,350 582 1,487 13,676
--------
68,113 55,525 2,708 1,512 127,858
========== ========= ======= ======= ========
Segment assets can be reconciled to the Group as follows:
2022 2021
US$000 US$000
Segment assets 130,221 127,858
Group cash 7,941 2,014
Group assets 138,162 129,872
======== ========
Segment liabilities Argentina Paraguay USA UK Total
2022 2022 2022 2022 2022
US$000 US$000 US$000 US$000 US$000
Total liabilities 50,710 8,892 1,956 18,141 79,699
========== ========= ======= ======= =======
Argentina Paraguay USA UK Total
2021 2021 2021 2021 2021
US$000 US$000 US$000 US$000 US$000
Total liabilities 39,095 4,056 1,963 15,917 61,031
========== ========= ======= ======= =======
9 Atome Energy plc
Selected key financial extracts 2022 2021
US$000 US$000
Group Statement of Comprehensive Income
Administrative expense per Note 3 - (1,397)
Gain on Atome transition to an associate
investment per Note 4 - 1,317
Gain on dividend in specie of Atome
shares per Note 4 - 13,130
Loss on investment in associate undertaking (25) -
(25) 13,050
======= ========
Group Statement of Financial position
Non-current Investment in associate
at cost - 25
======= ========
Current receivable due from Atome - 1,291
======= ========
Company Profit & Loss Statement
Gain on dividend in specie of Atome
shares per Note 4 - 13,096
Gain arising on mark to market of investment 1,414 10,150
1,414 23,246
======= ========
Company Statement of Financial position
Investment in Atome Energy plc at market
value 11,589 10,175
======= ========
Alternative Performance Measures
The Group uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures include net debt and
well operating and underlying well operating costs per boe and free
cash flow. Where used in the context of segmental disclosure the
metrics are calculated in the same manner.
Net debt
Net debt is a useful indicator of the Group's indebtedness,
financial flexibility, and capital structure because it indicates
the level of cash borrowings after taking account of cash and cash
equivalents within the Group's business. Net debt is defined and
calculated as follows:
2022 2021
Net debt US$000 US$000
Borrowings Current (18,391) (7,014)
Borrowings Non-current (29,134) (22,250)
Cash 7,941 2,014
Net (debt)/ net cash (39,584) (27,250)
--------- ---------
Total operating cost and underlying well operating cost per
boe
Total operating cost per boe is a useful straight forward
indicator of the Group's costs incurred to produce oil and gas
including all relevant expenses. However, since royalty, production
taxes and similar expenses are not controllable these have been
disaggregated to allow well operating costs to be measured.
2022 2021
Total operating cost per boe US$000 US$000
Royalties & production taxes (Note 2) 5,452 6,031
Well operating costs (Note 2) 16,917 16,026
Total operating costs 22,369 22,057
------- -------
Production (mmboe) 623.6 902.7
Total operating costs per boe US$ 35.87 24.43
======= =======
Where one-off or cyclical costs, such as workovers, are material
these have been disclosed and the underlying well cost per boe
referred to show the core performance. These have been defined and
calculated as follows:
2022 2021
Underlying well operating cost per boe US$000 US$000
Well operating costs (Note 2) 16,917 16,026
Less workover costs (per text in Note
2) (407) (751)
16,510 15,275
Production (mmboe) 623.6 902.7
Underlying well operating costs per boe
US$ 26.48 16.92
======= =======
Core operating performance arose in Argentina and was calculated
as follows:
2022 2021
US$000 US$000
Well operating costs (Note 2) 15,917 15,538
Less workover costs (252) (751)
15,665 14,787
Production (mmboe) 604.4 868.4
Underlying well operating costs per boe
US$ 25.92 17.03
======= =======
Administrative cost per barrel
Underlying administrative expense excluding non-recurring items
is calculated as follows:
2022 2021
Administrative cost per boe US$000 US$000
Administrative expense (note 3) 4,543 5,764
Attributable to Atome business included
above (note 3) - (1,397)
4,543 4,367
Production (mmboe) 623.6 902.7
Administrative cost per boe 7.29 4.84
======= ========
Adjusted EBITDA
The calculation is detailed on the Income Statement with further
details on the non-recurring items include below. The Adjusted
EBITDA for Argentina is calculated as follows:
2022 2021
Adjusted EBITDA Argentina US$000 US$000
Operating profit / (loss) 2,867 (1,528)
Release of abandonment provision (711) -
Depreciation, depletion & amortisation 7,400 11,278
EBITDA excluding share options 9,556 9,750
Non-recurring items 252 751
Adjusted EBITDA 9,808 10,501
------- --------
Non-recurring items
Where referred to in the calculation of Adjusted EBITDA and in
alternative performance measures these comprise the following:
2022 2021
Non-recurring US$000 US$000
Workover costs (per text in Note 2) 407 751
407 751
------- -------
Free cash generation from core operations
A measure of cash generation from operations excluding changes
in working capital, administrative expense and non-recurring
workovers. Used by management as an indication of cash generation
at asset level.
2022 2021
US$000 US$000
Sales 33,233 34,147
Royalties & production taxes (Note 2) (5,452) (6,031)
Well operating costs (Note 2) (16,917) (16,026)
Add back non-recurring workovers 407 751
11,271 12,841
--------- ---------
Included within the foreign exchange gains of US$4.7 million
(2021: US$1.5 million) as detailed in Note 9 are gains of US$ 1.4
million which arise on the treasury management of cash resources
("treasury income") takes the cash generation in the period to
US$12.7 million (2021: US$14.3 million).
Reconciliation to cash flow from operations
The reported cash flow generated from operating activities can
be reconciled to free cashflows from core operations as
follows:
2022 2021
US$000 US$000
Net cash generated by operating activities 11,366 11,078
Working capital movement (4,826) (4,303)
Add back administrative expense per Note
3 4,543 5,764
Add back non cash depreciation in admin
expense (Note 3) (104) (82)
Add back non cash share based payments
in admin expense (Note 3) (115) (367)
Add back non-recurring workovers 407 751
11,271 12,841
-------- --------
Depreciation per boe
Depreciation per barrel of oil equivalent can change between
accounting periods due to costs incurred, changes in reserves or
changes in future costs and hence is a useful metric for reporting
purposes.
Where calculated on at a group or segment level the calculation
is as follows:
-- Reported depreciation charge as reported in Cost of Sales per
Note 2 in accordance with IFRS GAAP reporting.
-- Divided by the barrel of oil equivalent of production
reported in the Chairman's Statement in accordance with industry
standards and state reports.
Glossary
Boe barrels of oil equivalent
Bopd barrels of oil per day
Boepd barrels of oil equivalent per day
M(3)/day cubic metres of oil per day
MMscf/d million standard cubic feet of gas production
per day
1P proven hydrocarbon reserves
2P proven and probable hydrocarbon reserves
Contingent Resources quantities of hydrocarbons estimated to be
potentially recoverable from known accumulations
Prospective Resources quantities of hydrocarbons estimated to be
potentially recoverable from undiscovered
accumulations
NPV10 net present value over the life of the concessions/licences
discounted by 10%
-ends-
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June 28, 2023 02:01 ET (06:01 GMT)
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