TIDMHNL
RNS Number : 2714L
Hague and London Oil PLC
30 September 2016
30 September 2016
Hague and London Oil PLC
("Company", "HALO")
Unaudited Interim Results for the Half-Year ended 30 June
2016
Hague and London Oil PLC (AIM: HNL) is pleased to announce its
unaudited interim results for the half-year ended 30 June 2016.
Highlights
Strategic
-- Strategy redefined and portfolio restructured to adapt to
current markets
-- Higher risk assets being spun off into 49% owned subsidiary
Vermeer Exploration BV ("Vermeer") in exchange for $500,000 in
funding for HALO's operations
-- MoU with ENGIE to cooperate on acquisition of development and production assets in Europe
Operational
-- Acquired new Western Sahara Blocks from Premier Oil (SADR);
now allocated to Vermeer's portfolio
-- Farm-in to Duyung licence in Indonesia terminated
Financial
-- Loss before taxation of GBP0.48 million (1H 2015: loss GBP0.76 million)
-- Cash balance of GBP0.16 million as at 30 June 2016 (YE 2015: GBP0.28m)
-- Cost discipline maintained with a further reduction in admin costs.
Post-period and outlook
-- Negotiations and due diligence ongoing for a number of
low-risk opportunities with existing or near-term production
-- Increased holding in French Guyana licence to 7.5% as part of
the licence extension application process by operator Total; to be
allocated to Vermeer
Andrew Cochran, Chairman and Interim CEO, commented:
"HALO has responded to the challenging market conditions, so
far, in 2016 by re-structuring the company and placing the
higher-risk, longer-term, assets into a private entity: Vermeer
Exploration BV. The listed company, HALO PLC, shall subsequently
focus on lower risk ventures and this has started with HALO's
relationship with Engie to jointly pursue natural gas assets in
Europe whereby Engie would offer funding solutions and structured
finance options to support growth and acquisitions. The spin off of
Vermeer creates liquidity for the company in a non-dilutive manner
for shareholders. Going forward HALO is very excited about the
opportunities for organic and inorganic growth within the lower
risk profile it is now focused on. Vermeer represents a longer-term
strategy appealing to an entirely different group of investors yet
HALO maintains some exposure to that upside with its continued
shareholding. We have pursued the appropriate acquisitions and
partnerships for the new structure as we demonstrated with our MoU
with Engie. Our cost discipline and the cash injection from a
spin-off to Vermeer has enabled HALO to remain a very efficient
operation through this phase of corporate transformation and growth
suited to the current market conditions."
For further information please contact:
+44 20 7520
Hague and London Oil PLC 9268
Andrew Cochran, Chairman
and Interim CEO
Natalia Erikssen, IR/PR enquiries
Stifel Nicolaus Europe Limited +44 20 7710
(NOMAD & Broker) 7600
Callum Stewart / Ashton Clanfield
Chairman's review
This year started with a depressed market for oil & gas
companies, as well as commodities in general as a global
phenomenon, but the first half was a period of high activity for
HALO. We saw the downturn as an opportunity to restructure,
reposition and rebuild the business, not only to allow it to
survive through the temporary challenges, but also to position it
for growth within current conditions or an improved price
cycle.
Our determination to build a strong business led to a number of
tough decisions. First of all, we terminated our Duyung Farm-in
Agreement. Whilst we had done all we could from our side, the
delays in government approvals meant that we were running a risk of
missing operational deadlines which would challenge the Company's
ability to operate within safe and responsible conditions. We chose
to protect HALO from this risky exposure, and instead focused on
restructuring the business in a manner reflective of the global
market conditions.
In May 2016, we announced a restructuring and repositioning of
the Company to focus on lower cost, lower risk opportunities in
Europe. As a result of this restructuring, HALO is now concentrated
on pursuing the acquisition of producing, lower-risk or near-term
development assets, primarily in Europe. In the current risk-averse
environment, HALO's valuation and investment profile suffered from
exposure to high-risk exploration, affecting our future ability to
secure funding for lower-risk endeavours.
In this pursuit of a more balanced, lower risk portfolio, we
signed an MoU with ENGIE, an established operator and leading
European gas and power utility, to cooperate on natural gas asset
acquisitions in Europe, a mature and low-risk market with an
abundant opportunity set. ENGIE brings to the table its substantial
footprint in European gas markets and its expertise in energy
management with potential gas off-take to help structure any such
asset acquisitions or offer HALO the ability to more effectively
market any of its future natural gas. This MoU is a demonstration
of HALO's determination and ability to build relationships with
larger, well-funded entities in the market. We are currently
carrying out due diligence and conducting negotiations on a number
of potential acquisitions which are deemed to meet our criteria and
will update the market in due course.
Whilst we acknowledge the risk-off attitude of equity capital
markets, we also recognise the potential of some of our exploration
assets. For this reason, we found a solution enabling HALO's
investors to retain some exposure to higher risk assets, without
damaging the valuation and risk profile of the listed entity nor
diluting shareholders for additional liquidity. This summer we
announced the creation of Vermeer Exploration B.V., a subsidiary of
HALO, as the vehicle for holding such higher risk assets. HALO's
equity holdings in Western Sahara have been, and French Guyana
assets are in the process of, being transferred to Vermeer, which
will continue to see these opportunities progress as a private
entity. It has already added four additional licences in Western
Sahara acquired by HALO from Premier Oil, at minimal cost. We have
also announced the intention to acquire the full interest in HALO's
French Guyana joint venture, Northpet Investments Limited
("Northpet") from a subsidiary of Northern Petroleum, and
subsequently increasing the equity participation to 7.5% of equity
in the Guyane Maritime Permit. The licence expired earlier this
year and Total, operator, has applied for an extension. This
transaction would enable HALO shareholders to retain, at low cost,
exposure to the existing heavy investment and high potential basin
within the licence.
The spin-off of higher risk exploration assets also brought to
HALO an important injection of liquidity, without diluting its
shareholders. 25.5% of the share capital of Vermeer was acquired by
a group of private investors (the "Vermeer investors"), including
Andrew Cochran, for a consideration of $250,000. Upon completion of
the acquisition of Northpet a further sum of $250,000 will be
received in return for a further 25.5% of Vermeer's shares. The
funding provided through this transaction, coupled with HALO's
strict cost discipline, provides HALO with the necessary resources
to carry on its operations through challenging times.
Throughout the remainder of the year we expect to maintain high
activity levels, in major part behind the scenes, as we continue to
scrutinise asset acquisition opportunities. Having restructured the
business for the long term and moved on to the next phase, we are
confident to deliver on our growth strategy for HALO.
Financial review
In the period under review, the loss before taxation was GBP0.48
million (1H 30 June 2015: loss GBP0.76 million) and loss per share
stood at 2.00p (1H: loss of 3.15p). Administration costs were
GBP482,520 (1H: GBP762,256).
As at 30 June 2016, the Company had a cash balance of GBP0.16
million (YE 2015: GBP0.28 million). The first payment of $250,000
from the Vermeer Investors was received during the period. The
second payment of $250,000 is due on completion of the Northpet
acquisition outlined above.
Project Review
Indonesia
In September 2015, HALO announced that it had entered into a
conditional agreement with West Natuna Exploration Limited ("WNEL")
to acquire 85% in the Duyung Production Sharing Contract, located
in the Natuna Sea, Indonesia.
The transaction was subject to customary regulatory and
government approvals. Since the signing of the agreement, HALO's
management worked hard to complete the transaction and had secured
extensions in the absence of timely progress within the approvals
process. Despite HALO's and WNEL's best efforts to secure these
approvals in a timely manner, within an extended "long-stop" date
agreed by HALO and WNEL, none of the approvals had been received
prior to the start of April 2016.
Therefore the decision was taken to terminate the Farm-In
Agreement, with an effective date of 1 April 2016, and the Duyung
licence itself will expire on 15 January 2017. The Company then
announced its corporate restructuring, spin-off and new focus on
lower risk ventures in more developed jurisdictions.
Western Sahara (Saharawi Arab Democratic Republic, "SADR")
Maghreb Exploration Limited (a wholly owned subsidiary of HALO)
and Comet Petroleum (SADR) Limited (a wholly-owned subsidiary of
Tower Resources plc) each hold a 50% interest in three licence
blocks under Assurance Agreements in the SADR - Bojador, Guelta and
Imlili.
On 24 June 2016, HALO announced the acquisition, via Maghreb
Exploration Limited, of Premier Oil (SADR) Limited, which holds
interests in five exploration licence areas in the Saharawi Arab
Democratic Republic.
Premier SADR holds interests in the following exploration
licence areas: Daora (50%), Haouza (50%), Mahbes (50%), Mijek
(50%), Laguera (100%).
A nominal consideration of $1 was payable immediately to Premier
Oil and the Seller has also been granted a gross royalty of 5% over
future production revenue from the interests in the blocks held by
Maghreb and 5% of the proceeds of any eventual sale of these
interests in each case and in aggregate subject to an agreed cap
calculated as 90% of HALO's market capitalization as at the date of
the acquisition and, if it has increased, as at each calendar month
thereafter. In addition, the interests held by Premier SADR are
subject to a gross royalty in favour of Premier Oil of 5% over
future production revenue from such interests and 5% of the
proceeds of any eventual sale of such interests. There are no
revenues or profits currently attributable to the assets.
On completion, Maghreb was transferred to Vermeer, a subsidiary
of HALO.
HALO believes the SADR licences are a good strategic fit for
Vermeer due to their risk profile associated with on-going
political uncertainty, including overlapping licence claims between
the SADR and Morocco, whilst the promising geology is the main
attraction.
The licence areas lie on the Atlantic margin, which has seen
encouraging drilling results over the past 12 months, particularly
in Mauritania and Senegal, resulting in increased interest from
larger oil companies. The political situation in Western Sahara
remains complicated and, as a result, no operational activity is
expected in 2016 or 2017 but newsflow from activity in the general
region is expected throughout that period.
French Guyana
At the beginning of the period, the Group held a 44% interest in
Northpet Investments Limited (Northpet). Northpet held a 2.5%
interest (1.1% net to HALO) in the Guyane Maritime Permit. The
remaining 56% interest in Northpet was owned by Northern Petroleum
plc.
In May 2016, HALO announced an agreement, through its subsidiary
Vermeer, to participate in an extension of the Guyane Maritime
licence along with the new operator of the licence, Total SA. Under
the new arrangements, Total will hold 92.5% of the licence and act
as operator, with Northpet holding the remaining 7.5%. The original
licence period expires in June 2016 and the partnership is
currently re-aligning itself with respect to a possible extension,
subject to a French Government approval process.
HALO also announced the intention to acquire Northern's 56%
interest in Northpet through its subsidiary Vermeer for a nominal
consideration of GBP1. Following closing of the agreement, HALO's
remaining 44% holding in Northpet will be transferred to
Vermeer.
The extension would allow Vermeer to benefit, at a much higher
working interest, from the significant investment (in excess of
US$1bn) made to date in a proven hydrocarbon basin with significant
remaining potential within an environment where drilling costs are
a fraction of what they once were. The licence also has the benefit
of more than US$80 million invested in 3D seismic data; all of this
prior to a recent large-scale oil discovery in nearby Guyana that
has served to renew interest in these basins.
The Netherlands
On 4 August 2016 HALO announced that it had, through its
subsidiary Hague and London Oil B.V., signed a Memorandum of
Understanding (MoU) with ENGIE Global Energy Management ("ENGIE")
to co-operate on the acquisition by HALO of natural gas production
and reserves within Europe.
Under the MoU, HALO will contribute its upstream and commercial
capabilities to target, acquire and manage specific low risk
natural gas production assets in Europe.
ENGIE will contribute its substantial footprint in European gas
markets and its expertise in energy management to offer an
innovatively structured gas off-take, designed to help HALO secure
the funding of such assets whilst minimising the dilution to HALO's
shareholders.
No decisions have been made with respect to any specific
opportunity but HALO continues to review opportunities in the
country and applied for an offshore exploration licence in the F5
Block in late 2015. That process remains ongoing and definitive
results are expected very soon. Additionally, the Company is
preparing further applications for the Dutch Continental Shelf in
the coming months.
Philippines
The Company (through its wholly owned subsidiary HALO BV) holds
a 15% interest in Service Contract SC54A in the NW Palawan Basin,
offshore Philippines. The project holds a number of undeveloped oil
discoveries with much remaining exploration potential. The joint
venture sought, and was awarded, a three-year moratorium with
respect to exploration activities in SC54A in August 2014. The
Company continues to review the potential for operations there
during the moratorium period should commodity prices rise or
service costs fall to ensure commerciality in the future. There is
no planned activity on the licence in 2016 other than desktop
studies in preparation for 2018 activity.
United Kingdom
HALO, as Licence Administrator (i.e. Operator) of Promote Blocks
98/7b, 98/8a and 98/12 (northern part), holds a 35% interest
through its wholly owned subsidiary Wessex Hydrocarbons Limited.
Its partner, NWE Mirrabooka (UK) Pty. Ltd (a wholly owned
subsidiary of ASX-listed Norwest Energy NL) has a 65% interest.
The Promote Period of the licence expires on 30 November 2016.
Consultation between the partners is ongoing and a decision will be
made before the expiry date as to whether the Company applies to
extend the licence into the next phase.
Unaudited Condensed Consolidated Income Statement
for the six months ended 30 June 2016
Notes Six months Six months 18 months
ended 30 ended ended
June 30 31
2016 June December
2015 2015
GBP GBP GBP
Continuing operations:
Revenue - - -
Administrative expenses (482,520) (762,256) (2,964,219)
----------- ----------- ------------
Operating loss (482,520) (762,256) (2,964,219)
Finance income 124 972 2,982
Share of losses of joint ventures - - (3,552,591)
----------- ----------- ------------
Loss before taxation (482,396) (761,284) (6,513,828)
Taxation 2 - - -
----------- ----------- ------------
Loss and total comprehensive expense
for the financial period (482,396) (761,284) (6,513,828)
----------- ----------- ------------
Attributable to:
Equity shareholders of the Company (482,396) (761,284) (6,513,828)
----------- ----------- ------------
Basic and diluted loss per share
(pence) 3 (2.00) (3.15) (28.60)
Unaudited Condensed Consolidated Balance Sheet
as at 30 June 2016
Notes 30 30 31
June June December
2016 2015 2015
GBP GBP GBP
Assets
Non-current assets
Intangibles - 1,148,292 -
Property, plant
and equipment 19,234 19,614 19,538
Investments in
joint ventures - - -
------------- ----------------- --------------------
19,234 1,167,906 19,538
------------- ----------------- --------------------
Current assets
Trade and other
receivables 61,441 88,668 87,884
Cash and cash equivalents 164,203 951,533 277,924
------------- ----------------- --------------------
225,644 1,040,201 365,808
------------- ----------------- --------------------
Total assets 244,878 2,208,107 385,346
============= ================= ====================
Equity and liabilities
Capital and reserves
attributable to
the Company's equity
shareholders:
Share capital 965,343 965,343 965,343
Share premium account 16,800,122 17,860,5122 16,800,122
Merger reserve
account 1,060,400 - 1,060,400
Share-based payment
reserve 1,190,755 1,159,784 1,161,952
Other reserves 175,809 - -
Foreign exchange
reserve (73,208) (3,935) (66,432)
Retained earnings (20,261,656) (18,186,938) (19,779,260)
------------- ----------------- ----------------------
Total equity (142,435) 1,794,776 142,125
Liabilities
Trade and other
payables 387,313 258,513 243,221
Deferred consideration - 154,818 -
------------- ----------------- ----------------------
387,313 413,331 243,221
Total equity and
liabilities 244,878 2,208,107 385,346
============= ================= ======================
Unaudited Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2016
Notes Six months Six months 18 months
ended ended ended
30 30 31
June June December
2016 2015 2015
GBP GBP GBP
Cash outflow from operating
activities (282,628) (833,024) (2,177,393)
Cash flow from investing
activities:
Purchase of intangible
assets - (15,740) (43,098)
Purchase of plant and
equipment - (2,861) (24,644)
Investments in joint
ventures - - (85,169)
Interest received 124 972 2,982
----------- ------------- ----------------------------
Net cash (used in)/generated
from investing activities 124 (17,629) (149,929)
Cash flow from financing
activities:
Proceeds from part disposal
of subsidiary 175,809 - -
Net cash from acquisition
of subsidiary - - 624,360
----------- ------------- ----------------------------
Net cash generated from
financing activities 175,809 - 624,360
Net decrease in cash
and cash equivalents (106,695) (850,653) (1,702,962)
Impact of foreign exchange
on cash balances (7,026) 3,900 75,470
Cash and cash equivalents
at beginning of period 277,924 1,798,286 1,905,416
Cash and cash equivalents
at end of period 164,203 951,533 277,924
=========== ============= ============================
Notes to the Unaudited Financial Information for the six months
ended 30 June 2016
1 Accounting Policies
Basis of preparation
These condensed Half Yearly financial statements are for the
six-month period ended 30 June 2016.
The financial information for the six months ended 30 June 2016
and 30 June 2015 is unaudited.
The interim financial information in this report has been
prepared on the basis of the accounting policies set out in the
audited financial statements for the 18 month period ended 31
December 2015 which complied with International Financial Reporting
Standards as adopted for use in the European Union ("IFRS").
IFRS is subject to amendment and interpretation by the
International Accounting Standards Board ("IASB") and the IFRS
Interpretations Committee and there is an ongoing process of review
and endorsement by the European Commission.
The financial information has been prepared on the basis of IFRS
that the Directors expect to be applicable for the period ended 31
December 2016.
Financial information contained in this document does not
comprise the Group's statutory financial statements as defined in
section 434 of the Companies Act 2006.
The statutory financial statements for the period ended 31
December 2015 have been delivered to the Registrar of Companies.
The auditors reported on these financial statements: their report
was unqualified, did not contain a statement under section 498(2)
or 498(3) of the Companies Act 2006, and included a going concern
matter to which the auditor drew attention by way of emphasis.
2 Taxation
There was no tax charge for the half yearly period due to the
loss incurred (6 months ended 30 June 2015: GBP nil). A deferred
tax asset in respect of trading losses and share-based payments has
not been recognised due to the uncertainty over timing of future
profits. The trading tax losses are recoverable against suitable
future trading profits.
3 Loss per Share Attributable to the Equity Shareholders of the Company
Basic loss per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Given the Group's reported loss for the period, share options
are not taken into account when determining the weighted average
number of ordinary shares in issue during the period and therefore
the basic and diluted earnings per share are the same.
Basic and diluted loss
per share
Six months Six months
ended ended Period ended
30 June 30 June 31 December
2016 2015 2015
pence pence pence
Loss per share from
continuing operation (2.00) (3.15) (28.60)
The earnings and weighted average number of ordinary
shares used in the calculation of basic and diluted
earnings per share are as follows:
Earnings used in the
calculation of total
basic and diluted earnings
per share (482,396) (761,284) (6,513,828)
Number of shares Six months Six months Period
ended ended ended
30 June 30 June 31 Dec
2016 2015 2015
Weighted average number
of ordinary shares for
the purposes of basic
and diluted earnings
per share 24,133,586 24,133,586 22,794,698
------------------------- ----------- ----------- -----------
4 Post Balance Sheet events
MoU with Engie
On 4 August 2016 HALO announced that it had, through its
subsidiary Hague and London Oil B.V., signed a Memorandum of
Understanding with ENGIE Global Energy Management to co-operate on
the acquisition by HALO of natural gas production and reserves
within Europe.
Under the MoU, HALO will contribute its upstream and commercial
capabilities to target, acquire and manage specific low risk
natural gas production assets in Europe.
ENGIE will contribute its substantial footprint in European gas
markets and its expertise in energy management to offer an
innovatively structured gas off-take, designed to help HALO secure
the funding of such assets whilst minimising the dilution to HALO's
shareholders.
5 Copies of the Half Yearly Report
A copy of this Half Yearly Report is available on the Company's
website at: www.haloil.co.uk
Glossary of terms
Bcf billion cubic feet
mcf thousands of standard cubic feet
mmboe million barrels of oil equivalent
mmbtu million British thermal units
This announcement contains inside information as defined in EU
Regulation No. 596/2014 and is in accordance with the Company's
obligations under Article 17 of that Regulation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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