TIDMAEN
RNS Number : 9383Y
Andes Energia PLC
23 May 2016
23 May 2016
ANDES ENERGIA PLC
("Andes" or the "Company" or with its subsidiaries the
"Group")
Final Results for the year ended 31 December 2015
The Board of Andes Energia is pleased to report final results
for the year ended 31 December 2015.
OVERVIEW
Year ended 31 December 2015 2014
------------------------- ----- -----
US$m US$m
------------------------- ----- -----
Revenue 66.8 48.2
------------------------- ----- -----
Operating profit 2.8 *5.5
------------------------- ----- -----
EBITDA 16.8 *8.8
------------------------- ----- -----
Net cash generated from
operating activities 18.1 14.6
------------------------- ----- -----
* Before impairment charges of US$ 3.8 million
HIGHLIGHTS
2015 highlights:
-- Average production rate of 3,211* boepd in 2015 (2014: 1,700
bpd) with the increase primarily arising from the Chachahuen
conventional field and the acquisition of the interest in Interoil
Exploration and Production ASA ("Interoil").
-- Acquisition of interest in Interoil with 5.7 million 2P
reserves and producing assets (producing approximately 1,500 boepd
at the date of acquisition) in Colombia and collaboration agreement
with Canacol Energy Limited resulting in a net controlling interest
of 26%.
-- A total of 57 development and appraisal wells were drilled
and 5 wells were converted to injection wells in the Chachahuen
block, which is now producing 1,325 bpd net to Andes (2014: 709
bpd).
-- Las Varillas x-1 well was successfully fracked and tested in
the Vaca Muerta shale formation with the well producing 90 bpd
during a 48 hour initial testing period.
-- A 91% increase in EBITDA.
-- Successful US$ 9 million fund raise.
-- US$ 10 million cancellation of existing Andes bond through the issue of shares.
-- Termination of joint venture agreement in Brazil without further obligations.
-- 2015 average selling prices of US$ 71 and US$ 47 per barrel
in Argentina and Colombia respectively.
Post year end highlights:
-- Current daily production: Argentina 2,300 bpd; Colombia 1,240 boepd; total 3,540 boepd.
-- Current selling prices of approximately US$ 62 and US$ 40 per
barrel in Argentina and Colombia respectively.
Alejandro Jotayan, CEO said:
"During 2015 we accomplished very demanding objectives,
significantly increasing revenues, completing the acquisition of an
interest in Interoil and continuing the successfull drilling
program in the Chachahuen block. In 2016 we will continue to focus
on our drilling program in the Chachahuen block and the development
of our other assets. Furthermore, the new government, elected in
November 2015, has already implemented changes that are expected to
benefit the Argentine oil and gas industry and attract foreign
capital into the country."
For further information please contact:
Andes Energia plc Nicola Mallo Huergo, Chairman T: +54 11 4110
5150
Alejandro Jotayan, CEO
Billy Clegg, Head of Communications
Stockdale Securities Antonio Bossi T: +44 20 7601 6100
David Coaten
Camarco Gordon Poole T: +44 20 3757 4980
Qualified Person Review
In accordance with AIM guidance for mining, oil and gas
companies, Mr. Juan Carlos Esteban has reviewed the information
contained in this announcement. Mr. Juan Carlos Esteban, an Officer
of the Group, is a petroleum engineer with over 30 years of
experience and is a member of the SPE (Society of Petroleum
Engineers).
Note to Editors:
Andes Energia plc is an oil and gas exploration and production
company focused on onshore assets in South America with a market
capitalisation of circa GBP115m. The Company has its main
operations in Argentina and Colombia.
The Company has approximately 25* MMbbls of conventional 2P
reserves, and it also has certified prospective resources of 640
MMboe, primarily in the Vaca Muerta unconventional development in
Argentina and over 7.5 million acres across South America.
The Company has approximately 250,000 net acres in the Vaca
Muerta formation, which is the second largest shale oil deposit in
the world and the only producing shale oil deposit outside of North
America, currently producing 45,000 boepd. Over 300 wells have
already been drilled and fracked in the Vaca Muerta formation.
Andes is the only AIM quoted company on the London Stock
Exchange with exposure to the Vaca Muerta shale.
The Company currently produces approximately 3,540* boepd in
Argentina and Colombia from six conventional fields in Argentina
and two in Colombia, with positive cash flows generated.
*Includes 100% of Interoil's net reserves and production in
which Andes holds a 26% interest
Annual Report
The Company will shortly be posting to shareholders a copy of
the audited annual report for the year ended 31 December 2015
together with the notice for the Annual General Meeting, to be held
at the offices of Nabarro LLP at 125 London Wall, London EC2U at
2.30p.m. on 30 June 2016. The annual report will be made available
on the Group's website at www.andesenergiaplc.com.ar after it has
been posted to shareholders.
STRATEGIC REPORT
OVERVIEW
Andes Energia plc ("Andes" or the "Company" and with its
subsidiaries the "Group") is a Latin American oil and gas
production, appraisal and exploration group, with interests in
Argentina, Colombia and Paraguay. Our audited financial results
incorporating the results of Andes together with its subsidiaries
and joint operations for the year ended 31 December 2015 are set
out below.
Year ended 31 December 2015 2014
------------------------- ----- -----
US$m US$m
------------------------- ----- -----
Revenue 66.8 48.2
------------------------- ----- -----
Operating profit 2.8 *5.5
------------------------- ----- -----
EBITDA 16.8 *8.8
------------------------- ----- -----
Net cash generated from
operating activities 18.1 14.6
------------------------- ----- -----
* Before impairment charges of US$ 3.8 million
The Group recorded an EBITDA of US$ 16.8 million for the year
compared with an EBITDA of US$ 8.8 million in 2014 before
impairment charges and a net loss of US$18.4 million (2014: US$10.9
million).
BUSINESS REVIEW
Andes's portfolio includes:
-- 47 licences
-- Over 7.5 million net acres of licence area
-- 25 million bbls of 2P net reserves in Argentina and Colombia
-- 640 millon boe of net contingent and prospective resources
-- 2015 average production of approximately 3,211* boepd
-- 250,000 net acres in Vaca Muerta
The Group has interests in producing, development and
exploration assets. The Group has 25 million bbls of conventional
2P reserves in Argentina and Colombia and certified prospective
resources of 640 million boe. The Group's licences cover over 7.5
million acres across South America and has approximately 250,000
net acres in the Vaca Muerta formation, which is the second largest
shale oil deposit in the world and the only producing shale oil
deposit outside of North America. Over 1,000 wells have already
been drilled and fracked in the Vaca Muerta formation. The Group
currently produces 3,500* boepd from 6 conventional fields in
Argentina and 2 conventional fields in Colombia.
OPERATIONAL REVIEW
2015 highlights:
-- Average production rate of 3,211* boepd in 2015 (2014: 1,700
bpd) with the increase primarily arising from the Chachahuen
conventional field and the acquisition of the interest in Interoil
Exploration and Production ASA ("Interoil").
-- Acquisition of interest in Interoil with 5.7 million 2P
reserves and producing assets (producing approximately 1,500 boepd
at the date of acquisition) in Colombia and collaboration agreement
with Canacol Energy Limited resulting in a net controlling interest
of 26%.
-- A total of 57 development and appraisal wells were drilled
and 5 wells were converted to injection wells in the Chachahuen
block, which is now producing 1,325 bpd net to Andes (2014: 709
bpd).
-- Las Varillas x-1 well was successfully fracked and tested in
the Vaca Muerta shale formation with the well producing 90 bpd
during a 48 hour initial testing period.
-- A 91% increase in EBITDA.
-- Successful US$ 9 million fund raise.
-- US$ 10 million cancellation of existing Andes bond through the issue of shares.
-- Termination of joint venture agreement in Brazil without further obligations.
-- 2015 average selling prices of US$ 71 and US$ 47 per barrel
in Argentina and Colombia respectively.
Post year end highlights:
-- Current daily production: Argentina 2,300 bpd; Colombia 1,240 boepd; total 3,540 boepd.
-- Current selling prices of approximately US$ 62 and US$ 40 per
barrel in Argentina and Colombia respectively.
Andes continued with its stated strategy to expand and diversify
its oil and gas portfolio during 2015 and has been able to increase
its average production from 1,700 boepd in 2014 to 3,211* boepd in
2015. Andes has experienced strong performance from its
conventional activities and is currently reviewing strategies,
taking into account market conditions, to develop its position in
the Vaca Muerta formation.
Argentina
Summary
Current Net
Type Province Licences 2P reserves Resources production acres
(MMbbls) (MMbbls) (bbls/day)
Conventional production/shale
development Mendoza 7 17.3 368.7 2,300 496,946
Conventional development Mendoza 4 1.6 2.0 - 2,575
Shale oil development Neuquén 2 0.2 171.0 - 39,230
Conventional/unconventional Río
exploration Negro 1 N/A 32.0 - 124,788
Conventional/unconventional
exploration Chubut 7 N/A 16.7 - 2,771,402
Conventional exploration Salta 3 N/A 50.0 - 2,865,439
Conventional exploration Mendoza 6 N/A 0.0 - 332,678
Total 30 19.1 640.4 2,300 6,633,058
--------- ------------ ---------- ------------ ----------
Conventional production/shale development
Chachahuen block - Mendoza
Licence status
During 2015 the Province of Mendoza issued a resolution creating
a new period of evaluation for the heavy crude oil prospect in the
north part of the Chachahuen block, whilst the southern areas
passed into the second period exploration and development phases.
An area totalling approximately 460 km(2) of the original
Chachahuen licence area has now been relinquished.
As a consequence of the above the Chachahuen block has now been
divided into the following sub blocks:
Chachahuen Sur (Development block)
After the declaration of commerciality in October 2013, the
Mendoza province awarded an initial exploitation period of 25
years. This development block covers an area of 72 km(2) in the
south of the Chachahuen block that borders the energy-rich Neuquén
Province.
Development and Delineation Drilling
As part of our ongoing development drilling program a total of
57 new development and appraisal wells were drilled and completed
during 2015, which are all producing wells.
During 2015 a total of 12 appraisal wells were drilled and
completed successfully, which have extended the field limits. The
wells targeted the clastic member, cycle 2 and 3 of the Rayoso
formation deposited during the early Cretaceous period in a
predominantly continental environment. These separate units are
composed of a succession of fine sandstones, red mudstones, and
minor evaporates.
Oil Production
A total of 114 wells are now on stream producing approximately
6,624 bpd (1,325 bpd net to Andes). In all wells a progressive
cavity pump artificial lift system has been installed which best
suits the conditions of the wells and has long been proven to be
efficient.
As part of the second stage of the infrastructure development a
new oil pipeline was commissioned. The new pipeline has a diameter
of 6 inches and this 10 km extension will reduce transportation
costs
Enhanced Oil Recovery - Water Flood Project
During the year, 2 injection wells were drilled, completed and
tied to the injection network and 9 additional production wells
were converted to injection wells increasing the average rate of
injection from 825 bpd to 3,600 bpd through a total of 17 injection
wells increasing the recovery rate.
Chachahuen Sur (Exploration block)
This exploration block covers an area of 478 km(2). A two and a
half year extension has been granted, subject to the following
commitments:
-- Acquire 478 km(2) of 3D seismic; this was completed in the second half of 2015
-- Process and interpret acquired 3D seismic
-- Drill 4 exploratory wells; this was completed in the second half of 2015
Chachahuen Norte (Exploration block)
In this zone a new oil play has been explored by drilling five
shallow stratigraphic wells. This campaign targeted the sandstone
pinch-out of the Neuquén group in the north part of the Chachahuen
block. Several fresh oil shows and core samples soaked in heavy,
viscous and biodegraded oil were recovered during the drilling
stage.
A three year evaluation period has been granted to evaluate the
potential of this zone, which covers an area of 1,480 km(2),
subject to the following commitments:
-- Complete 1 previously drilled well
-- Drill 1 stratigraphic well targeting the Neuquén group
-- Implement a 2 well pilot project to test productivity
-- Delineate 10 shallow well drilling program
Chachahuen Centro (Exploration block)
This exploration block covers an area of 464 km(2). A two year
extension has been granted to the JV, subject to the following
commitments:
-- Acquire 267 km(2) of 2D seismic; this was completed in the second half of 2015
-- Drill 1 exploratory well
Exploratory Activities
3D and 2D seismic programs have been completed successfully,
with 3D covering 552 km(2) on the Chachahuen Sur exploration block
and the Chachahuen development block and 2D covering 267 km(2) on
the Chachahuen Centro block. Computer processing of the 3D data is
in progress and preliminary results have identified the "LaOrx-1"
prospect targeting the Centenario, Mulichinco and deeper Tordillo
formations. The low cost exploration well "LaOrx-1" is located
approximately 17 km southeast of the discovery well "Chus x-2" on
the Chachahuen Sur development block. The completion program and
analysis of results is due to be finished in June 2016.
A second low cost exploration well "CeMo x-1" has been spudded
on the "Chachahuen Centro" block targeting Mulichinco, a Centenario
formation. The well is located approximately 37 km northeast of the
discovery well "Chus x-2".
Puesto Pozo Cercado and Chañares Herrados blocks - Mendoza
Interventions on wells CHH-1014 and CHH-1031 were performed to
replace the sucker rod system with electrical submersible pumps
(ESPs) increasing oil production by approximately 38 bpd.
An overhaul of the existing oil treatment plant was performed
and commissioned at the end of December, which involved building a
new bund wall for the four oil storage tanks, a pump relocation, a
new walkway and a new internal flowline.
El Manzano West block - Mendoza
As part of the well reactivation program the Company
successfully re-entered and tested wells "EM x-1" and "EM-3", which
came on stream at an initial rate of 79 bpd and 20 bpd
respectively. After a period, a sharp decline occurred with both
wells stabilising at approximately 6 bpd. These operations were
performed with our own rig and crew, targeting the Agrio
formation.
Mirador del Valle x-1, the discovery well of the Neuquén group
produced at a stable rate of 45 bpd (18 bpd net to Andes), whilst
production from the second unconventional well, Las Varillas x-1,
after a year of startup, remained steady at a rate of 15 bpd (6 bpd
net to Andes).
Andes has a 100% working interest in all production from the
Agrio formation and a 40% carried interest in production from the
other formations, including Vaca Muerta.
Vega Grande block - Mendoza
Workover intervention was performed on well VGx-2 to stimulate
the Agrio formation. As a result oil production increased by 9 bpd.
Well VG x-1 came on stream in December 2014 and after a year
producing from the unfracked Vaca Muerta formation stabilized at a
rate of 28 bpd production with an associate water cut of 10% (26
bpd net).
Conventional production/unconventional exploration
Ñirihuau block - Chubut
A total of 160 km of 2D seismic was reprocessed and
reinterpreted, which gave us an increased understanding of the
structure of the block. As part of our commitments and to gain a
better understanding of the static model, we plan to acquire 50 km
of additional 2D seismic.
Colombia
Andes has interests in 13 exploration licences and 2 producing
licences including licences held through its 26% interest in
Interoil.
On 20 January 2015 Andes acquired a 51% interest in Interoil
through the participation in a placing of 330,000,000 Interoil
shares at a price of NOK 0.11 per share (approximately US$4.95
million). Subsequently on 16 November 2015 Andes announced that it
had entered into a collaboration agreement with Canacol Energy Ltd
reducing its holding to 26% for a consideration of US$3.2 million.
Due to Andes retaining control of Interoil it has been consolidated
in the financial statements. Interoil operates production and
exploration oil and gas licences in Colombia and has over 30 years
of operating experience in the country. In December 2015 the
Colombian assets on average produced 1,333 boepd (862 bpd oil and
471 boepd gas) and had approximately 5.2 million boe of net 2P
reserves (3.0 million bbls of oil and 12.2 BCF of gas) as at 31
December 2015.
Puli field
A comprehensive study was performed to gain a better
understanding of the reservoir distribution, reservoir continuity
and also the complexity of faults in order to design a water flood
project. After completing the static model a preliminary pilot
project was identified and a conceptual simulation is being
conducted in order to provide a better understanding of the fluid
behaviour to define the optimal water injection pattern in the
pilot project.
Workovers campaign
As a result of a comprehensive review of petrophysical
properties, new drilled/behind-pipe oil-bearing intervals were
identified in the prolific Chicoral formation conformed by mid to
coarse grain sandstones with low percent of clay matrix, with good
porosity and permeability and a second objective identified in the
Doima formation formed by fluvial channel sandstones. On October
2015 a rig was mobilised for a workover campaign:
-- MN-28 well - An oil producer from the Chicoral Formation in
which a new zone was drilled at 145ft, which resulted in oil
production increasing by 14 bpd;
-- MN-6SH well - A 32ft zone was drilled in the Doima formation,
discovering a new gas zone producing 1MMscft (Cumulative at 31
March 2016: 56 MMscft );
-- MNS-4 well - An additional 63ft zone was drilled in the
Chicoral formation increasing oil production by 4 bpd; and
-- MN-4 well - An additional 28ft zone was drilled in the Doima
formation increasing production by 24 bpd.
4 further targets have been identified for workover
consideration.
Exploration licences
Andes is currently conducting regional geological studies,
petrophysical interpretation and reprocessing of existing seismic
data on its exploration licences in Colombia. In the YDND-5 block
67 soil gas samples were collected and additional geochemical
survey work will be carried out in YDND-8 and YDLLA-2 during the
dry season.
In the blocks LLA-2, LLA-28 and LLA-79 the Company has requested
from the regulator, the Agencia Nacional de Hidrocarburos ("ANH"),
an agreement to replace the seismic acquisition commitment with
high density geochemical sampling. On COR-6, a block located in the
Upper Magdalena Valley basin, Interoil had investment obligations
of US$ 22 million on the licence to be completed by November 2014.
However, due to environmental and in particular community issues,
it has not been possible for Interoil to commence work on the
licence. In April 2016 the ANH issued a new resolution pursuant to
which it reiterates the decision taken under the 2014 resolution
that Interoil is in breach of the licence contract, claiming it is
entitled to recover from Interoil, in the form of damages, the
amount committed by Interoil under the contract. Interoil continues
to believe it has a strong argument to defend the reasons why it
has been unable to fulfil its obligations on COR-6 and in view of
such limitations beyond its control, has offered to transfer its
commitments to another licence. Interoil will continue its dialogue
with the ANH and a conciliation hearing is scheduled for 25 May
2016 at which the board believes a solution that is satisfactory to
both parties can be found. The board believes that the likelihood
of the ANH enforcing a claim is reasonably remote.
Brazil
During the year the Group terminated its joint venture agreement
in Brazil without further obligations.
Paraguay
Itapua block: A geology field trip was performed and data was
gathered. As part of our licence commitments in November 2015 a
total of 250 soil gas samples were collected. Notwithstanding, the
board is focused on the development of its Colombia and Argentina
operations and is considering its options with regards to the
development of its interests in Paraguay.
TRADING PERFORMANCE
Revenue from operations increased from US$ 48.2 million in 2014
to US$ 66.8 million in 2015. Average production has increased from
1,700 bpd in 2014 to 3,211* boepd in 2015. Exploration and
development activities continue and the Group expects to see the
benefit of these programs in future years.
FINANCIAL PERFORMANCE
Revenue has significantly increased to US$ 66.8 million compared
with US$ 48.2 million in 2014, an increase of 39% primarily from
increased production in Chachahuen and the acquisition of Interoil.
Interoil's results are fully consolidated from 20 January 2015. The
loss before tax amounted to US$ 12.4 million compared with US$ 7.9
million in 2014.
EBITDA before exceptional items increased to US$ 16.8 million
from US$ 8.8 million in 2014, an increase of 91%.
The Group's total assets of US$ 265.3 million at the end of the
year are consistent with 2014. The increase in total assets
resulting from the impact of the acquisition of the interest in
Interoil, was offset by the impact of the devaluation of the
Argentine Peso in December 2015. The devaluation of the Argentine
Peso resulted in US$ 56.9 million of translation differences being
recognised in the comprehensive loss for the year (2014: US$ 48.8
million) primarily relating to intangible assets and PP&E,
which are carried in the functional currency of AR$ and does not
reflect an impairment in the carrying value of these assets.
Borrowings increased from US$ 57.7 million in 2014 to US$ 99.0
million at the end of the year primarily as a result of the
consolidation and recognition of borrowings of US$ 43.9 million
from the acquisition of the interest in Interoil. Net current
liabilities of approximately US$ 0.8 million at the year end were
57% down from last year.
At year end, the Group had cash and restricted cash resources of
US$ 27.3 million compared to US$ 10.6 million at the end of 2014.
Andes management believes the current cash position together with
the free cash flow generated from existing activities will be
sufficient to meet its ongoing working capital requirements and
investment commitments. The directors will not be recommending the
payment of a dividend.
EARNINGS PER SHARE
Basic and diluted loss per share was 2.11 cents in 2014 compared
to 2.68 cents in 2015. During the year the number of shares in
issue increased by 54 million to 606 million.
KEY PERFORMANCE INDICATORS
The directors use a range of performance indicators to monitor
progress in the delivery of the Group's strategic objectives, to
assess actual performance against targets and to aid management of
the business and consider the following to be relevant in assessing
performance.
Sales:
Sales provide a measure of the Group activity that is influenced
by production levels and oil prices. Revenue increased by US$ 18.6
million to US$ 66.8 million in 2015.
Price:
The average price of oil sales in Argentina in 2015 was US$ 71
per barrel compared to US$ 73 per barrel in 2014.
The average price of oil sales in Colombia in 2015 was US$ 47
per barrel.
Domestic oil prices in Argentina are not directly linked with
international price movements and have not been affected by recent
drops in WTI and Brent levels. National and Provincial States,
together with oil producers, refiners and retail vendors formally
agreed to establish a price of US$ 67.5 per barrel for "Medanito"
quality crude oil valid through 2016. Argentina used to be a net
oil exporter until 2008 with extensive infrastructure available to
transport oil from inland fields to the Atlantic Ocean coast. In
2015 the country was a net exporter of crude oil but a net importer
of gas. The new government is looking to balance the supply/demand
situation in the short term. All big refiners, except one, are
crude producers also, and all of them sell the refined products
domestically. Part of the refining capacity is located inland near
oil fields, at more than 1,000 km from the Atlantic coastline,
which implies a substantial transport cost to process imported
crude oil. There is, therefore, an incentive for the government to
promote the consumption of local crude oil instead of authorising
oil imports, even at a higher price than import parity, to avoid a
loss of foreign currency reserves and to incentivise domestic
production, investments, jobs and other activities.
Production:
Production is measured in barrels of oil per day and average
production increased from 1,700 bpd in 2014 to 3,211* boepd in
2015, which has primarily resulted from increased production in
Chachahuen and the acquisition of the interest in Interoil.
Resources and Reserves
At the end of 2015 the Group had 25 million boe of net 2P
reserves and certified resources of 640 million boe. The Group's
licences cover 7.5 million net acres.
Work programs:
During the year 57 wells were drilled and 11 workovers
completed.
SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
There were no significant events after the balance sheet
date.
OUTLOOK
Operationally, 2016 has started well, with Group production at
2,300 bpd in Argentina and 1,240 boepd in Colombia including
Interoil's production, taking production levels to 3,540* boepd.
Reference selling prices in Argentina have been set at US$ 67.5/bbl
with Andes receiving a slight discount to this based on oil
specification.
Andes, with its partner YPF, the state Argentine oil company,
has 42 new wells planned in 2016 to complete the original program,
of which 30 wells have been drilled since the year end. The wells
will be funded primarily by field production cash flow. Andes is
currently in discussions with YPF to finalise the plans for the
next drilling phase to include a further 90 new wells.
The new government, elected in November 2015, has already
implemented changes that are expected to benefit the Argentine oil
and gas industry and attract foreign capital into the country. The
Argentine domestic oil price is currently fixed at US$67.5 per
barrel; foreign currency controls have been lifted; and settlement
has been reached with a group of bond "holdout" creditors, which
will enable Argentina to once again access international capital
markets.
Alejandro Jotayan
Chief Executive Officer
*Includes 100% of Interoil's net reserves and production in
which Andes holds a 26% interest
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2015
31-Dec-15 31-Dec-14
US$'000 US$'000
Revenue 66,815 48,229
Production cost (45,705) (30,630)
Gross profit 21,110 17,599
Other operating income 4,010 996
Impairment charge - (3,796)
Distribution costs (4,657) (3,115)
Administrative expenses (17,626) (9,977)
---------- ----------
Operating profit 2,837 1,707
Finance income 9,343 3,783
Finance costs (24,627) (13,397)
Loss before taxation (12,447) (7,907)
Taxation (5,938) (3,012)
----------
Loss for the year (18,385) (10,919)
---------- ----------
Loss attributable to:
Equity holders of the parent (15,226) (10,919)
Non-controlling interests (3,159) -
(18,385) (10,919)
========== ==========
Loss per ordinary share Cents Cents
Basic and diluted loss per share (2.68) (2.11)
The finance costs are accrued and no material interest has been
paid during the year.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2015
31-Dec-15 31-Dec-14
US$'000 US$'000
Loss for the year (18,385) (10,919)
Translation differences (56,869) (48,760)
Total comprehensive
loss for the year (75,254) (59,679)
---------- ----------
Total comprehensive
loss attributable
to:
Equity holders of
the parent (72,095) (59,679)
Non-controlling interests (3,159) -
(75,254) (59,679)
========== ==========
The above items will not be subsequently reclassified to profit
and loss.
Andes Energia plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2015
31-Dec-15 31-Dec-14
US$'000 US$'000
Non-current assets
Intangible assets 109,258 165,104
Property, plant and equipment 94,145 61,185
Available for sale financial assets 5,599 1,646
Trade and other receivables 10,039 10,592
Deferred income tax assets 1,547 464
Total non-current assets 220,588 238,991
---------- ----------
Current assets
Inventories 1,954 618
Available for sale financial assets 1,414 2,644
Trade and other receivables 14,088 12,339
Restricted cash 9,593 5,944
Cash and cash equivalents 17,702 4,700
Total current assets 44,751 26,245
---------- ----------
Current liabilities
Trade and other payables 22,644 20,348
Financial liabilities 22,259 7,870
Provisions 691 -
Total current liabilities 45,594 28,218
---------- ----------
Non-current liabilities
Trade and other payables 18,169 9,326
Financial liabilities 76,767 49,793
Deferred income tax liabilities 38,005 47,614
Provisions 3,596 1,727
Total non-current liabilities 136,537 108,460
---------- ----------
Net assets 83,208 128,558
---------- ----------
Capital and reserves
Called up share capital 98,414 90,164
Share premium account 86,865 73,248
Other reserves (126,423) (69,554)
Retained earnings 21,685 34,700
Equity attributable to equity
holders of the parent 80,541 128,558
Non-controlling interests 2,667 -
Total equity 83,208 128,558
========== ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2015
Retained Other Total
Equity Share earnings Reserves equity
Called
up
Share premium
capital account
Attributable
to equity
holders Non
of the controlling
parent interests
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2014 84,216 58,281 45,172 (17,753) 169,916 - 169,916
--------- --------- ---------- ------------ ------------- -------------- ----------
Loss for the year - - (10,919) - (10,919) - (10,919)
Translation differences - - - (48,760) (48,760) - (48,760)
Total comprehensive
loss for the year - - (10,919) (48,760) (59,679) - (59,679)
--------- --------- ---------- ------------ ------------- -------------- ----------
Issue of ordinary
shares 5,948 14,967 - - 20,915 - 20,915
Deferred contingent
consideration shares - - - (3,041) (3,041) - (3,041)
Fair value of share
based payments - - 447 - 447 - 447
At 31 December
2014 90,164 73,248 34,700 (69,554) 128,558 - 128,558
--------- --------- ---------- ------------ ------------- -------------- ----------
Loss for the year - - (15,226) - (15,226) (3,159) (18,385)
Translation differences - - - (56,869) (56,869) - (56,869)
Total comprehensive
loss for the year - - (15,226) (56,869) (72,095) (3,159) (75,254)
--------- --------- ---------- ------------ ------------- -------------- ----------
Issue of ordinary
shares 8,250 13,617 - - 21,867 - 21,867
Fair value of share
based payments - - 332 - 332 - 332
Acquisition of
subsidiary 4,653 4,653
Reduction of interest
in subsidiary - - 1,879 - 1,879 1,173 3,052
At 31 December
2015 98,414 86,865 21,685 (126,423) 80,541 2,667 83,208
--------- --------- ---------- ------------ ------------- -------------- ----------
Reserves Merger Warrant Reverse Translation Deferred Total
reserve reserve acquisition reserve consideration other
reserve reserve reserves
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2014 55,487 2,105 - (84,496) 9,151 (17,753)
--------- ---------- ------------ ------------- -------------- ----------
Translation differences - - - (48,760) - (48,760)
Total comprehensive
loss for the year - - - (48,760) - (48,760)
--------- ---------- ------------ ------------- -------------- ----------
Deferred contingent
consideration shares - - - 84 (3,125) (3,041)
At 31 December
2014 55,487 2,105 - (133,172) 6,026 (69,554)
--------- ---------- ------------ ------------- -------------- ----------
Translation differences - - - (56,869) - (56,869)
Total comprehensive
loss for the year - - - (56,869) - (56,869)
--------- ---------- ------------ ------------- -------------- ----------
At 31 December
2015 55,487 2,105 - (190,041) 6,026 (126,423)
--------- ---------- ------------ ------------- -------------- ----------
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2015
31-Dec-15 31-Dec-14
US$'000 US$'000
Cash generated from operations 18,751 14,640
Tax paid (643) -
Cash flows generated from operating
activities 18,108 14,640
---------- --------------------
Cash flows from investing activities
Purchase of property, plant and
equipment (24,418) (18,234)
Proceeds from sale of financial
assets 17 -
Proceeds from sale of interest
in subsidiary 814 -
Purchase of intangible assets (2,233) (1,785)
Purchase of financial assets (6,402) (84)
Acquisition of subsidiary, net
of cash acquired 12,018 -
Proceeds from sale of investments
in group companies 3,128 -
Net cash used in investing activities (17,076) (20,103)
---------- --------------------
Cash flows from financing activities
Repayments of borrowings (1,794) -
Proceeds from borrowings 6,107 8,601
Interest paid (837) -
Interest received 392 -
Proceeds from issue of shares 12,315 33
Net cash generated from financing
activities 16,183 8,634
---------- --------------------
Net increase in cash and cash
equivalents 17,215 3,171
Cash and cash equivalents at the
beginning of the year 10,644 8,178
Exchange losses on cash and cash
equivalents (564) (705)
Cash and cash equivalents at the
end of the year 27,295 10,644
---------- --------------------
1. GENERAL INFORMATION
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the years ended 31
December 2015 or 31 December 2014.
The financial information has been extracted from the statutory
accounts of the Company for the years ended 31 December 2015 and 31
December 2014. The auditors reported on those accounts; their
reports were unqualified and did not contain a statement under
Section 498(2) or Section 498(3) of the Companies Act 2006.
The Company has produced its statutory accounts for the year
ended 31 December 2015 in accordance with International Financial
Reporting Standards as adopted by the European Union and in
accordance with the Group's accounting policies that are unchanged
from those set out in the 2014 statutory accounts.
The statutory accounts for the year ended 31 December 2014 have
been delivered to the Registrar of Companies, whereas those for the
year ended 31 December 2015 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
2. SEGMENT REPORTING
IFRS 8 requires operating segments to be identified on the basis
of internal reports that are regularly reviewed by the chief
operating decision maker, which in the case of the Group is
considered to be the board of the Company. An operating segment is
a component of an entity that engages in business activities from
which it may earn revenue and incur expenses and whose results are
regularly reviewed by the board. The board considers and reviews
operating segments by reference to geographic location. In prior
years the board considered the operations to comprise one class of
business, oil and gas exploration, development and production and
the sale of hydrocarbons and related activities in one geographic
segment, Argentina. During the year under review, following the
acquisition of Interoil, the Group's reportable geographic segments
were Colombia and Argentina. The board monitors performance of the
business by analysing the revenue and EBITDA of each segment.
The following is an analysis of the Group's revenue, results and
EBITDA by operating segment:
2015 Argentina Colombia Unallocated Total
Analysis of revenue and
profit: Corporate
US$'000 US$'000 US$'000 US$'000
Revenue 49,052 17,763 - 66,815
---------- --------- ------------ ---------
Operating profit/(loss) 3,528 3,120 (3,811) 2,837
Finance income 629 1,629 7,085 9,343
Finance costs (8,247) (2,238) (14,142) (24,627)
(Loss)/profit before tax (4,090) 2,511 (10,868) (12,447)
Taxation (1,662) (4,276) - (5,938)
Loss for the year (5,752) (1,765) (10,868) (18,385)
Add: Depreciation and amortisation 9,018 4,891 - 13,909
Less: Finance income (629) (1,629) (7,085) (9,343)
Add: Finance costs 8,247 2,238 14,142 24,627
Add: Tax 1,662 4,276 - 5,938
EBITDA 12,546 8,011 (3,811) 16,746
---------- --------- ------------ ---------
3. TAXATION
31-Dec-15 31-Dec-14
US$'000 US$'000
Current tax (4,105) (3,635)
Deferred tax (1,833) 623
Tax charge (5,938) (3,012)
-------------------- ----------
Loss before income tax (12,447) (7,907)
Tax credit on loss at notional
rate of 35% 4,356 2,768
Effects of:
Expenses not deductible for tax
purposes (2,006) (132)
Effect of non-taxable items 1,194 375
Temporary differences due to the effect
of exchange rate movements (2,186) (210)
Recovery of deferred tax on impairment - 1,316
Tax losses for which no deferred
tax asset is recognised (7,296) (7,129)
Tax charge (5,938) (3,012)
-------------------- ----------
The Group is subject to a number of different tax regimes in the
countries in which it operates. At the end of 2015, the countries
in which the Group had the most activities are Argentina and
Colombia. As the majority of the Group's operations are based in
Argentina the tax rate of this country has been used as the
notional tax rate to perform the reconciliation above.
Under Argentine tax law group relief, allowing taxable profits
to be offset against taxable losses of companies with the same
group, are not available.
The tax rate used for the 2015 and 2014 reconciliations above is
a notional corporate tax rate of 35% based on the rate payable by
corporate entities in Argentina on taxable profits under tax law in
that jurisdiction, which the board believes is the most appropriate
basis to use given the fact our main operations are based in
Argentina. There is no tax arising on any items within the
consolidated statement of comprehensive income.
The Group is liable to pay a minimum notional income tax at the
applicable tax rate (1%) for Argentina's subsidiaries, calculated
on the amount of computable assets at the closing of the financial
year. This tax is supplementary to income tax and the Group's tax
liability in each fiscal year will be the higher of the minimum
notional income tax and the income tax for the year. If the minimum
notional income tax for a given financial year exceeds the amount
of income tax, such excess may be carried forward as a partial
payment of income tax for any of the ten following fiscal
years.
The Colombian statutory tax rate for the year ending 31 December
2015 was 39% (2014: 34%), which included the 25% (2014: 25%)
general income tax rate and the fairness tax ("CREE") at 14% (2014:
9%).
In accordance with IAS 12, where an entity's tax return is
prepared in a currency other than its functional currency, changes
in the exchange rate between the two currencies generate temporary
differences with the respect to the valuation of non-monetary
assets and liabilities, which are recognised in the income
statement.
4. LOSS PER ORDINARY SHARE FROM CONTINUING OPERATIONS
Basic loss per share is calculated by dividing the net loss for
the year attributable to ordinary shareholders of the Group by the
weighted average number of ordinary shares outstanding during the
year. The basic and diluted loss per share are the same as there
are no instruments that have a dilutive effect on earnings.
31-Dec-15 31-Dec-14
Cents Cents
Basic and diluted loss per share (2.68) (2.11)
US$'000 US$'000
Loss for the year attributable
to equity holders (15,226) (10,919)
No.'000 No.'000
Weighted average number of shares 569,064 516,786
Effect of dilutive warrants - -
Diluted weighted average number
of shares 569,064 516,786
---------- ----------
No.'000 No.'000
Potential number of dilutive
warrants 59,240 30,693
---------- ----------
The warrants are deemed to be non-dilutive for the purposes of
this calculation.
5. FINANCIAL LIABILITIES
The Group
------------------------------------------
31-Dec-15 31-Dec-14
US$'000 US$'000
Current
Bank borrowings 7,235 -
Other borrowings 13,513 7,870
Financial leasing 25 -
Accrued financial interest 1,486 -
22,259 7,870
-------------------- --------------------
The Group
------------------------------------------
31-Dec-15 31-Dec-14
US$'000 US$'000
Non-current
Bonds 33,522 -
Bank borrowings 3,150 -
Other borrowings 35,094 49,659
Accrued financial interest 5,001 134
76,767 49,793
-------------------- --------------------
Total financial liabilities 99,026 57,663
-------------------- --------------------
In 2015 financial liabilities include a US$ 13.2 million
unsecured convertible loan that carries interest at a rate of 11%
repayable in June 2018; a US$ 22.9 million unsecured convertible
loan that carries interest at a rate of 11% repayable in March
2023; a US$ 0.2 million unsecured loan that carries interest at a
rate of 10% repayable within 5 years from the date of drawdown; a
US$ 1.6 million unsecured loan that carries interest at 10% repaid
in January 2016; a US$ 5.5 million unsecured loan that carries
interest at 9.5% + LIBOR repaid in February 2016; a US$ 33.5
million bond that carries interest at a rate of 6% per annum
repayable in January 2020; a US$ 8.7 million loan that carries
interest at a rate of 5.5% + LIBOR repayable in instalments by
April 2017; a US$ 1.7 million loan that carries interest at a rate
of 3.5% + DTF repayable in instalments by July 2016; a US$ 5.5
million unsecured loan that carries interest at 9.5% + LIBOR repaid
in February 2016; and US$ 6.2 million AR$ denominated loans that
carry interest at rates between 18% to 27% repayable within 3 years
some portion of which are classified as current.
In 2014 financial liabilities include a US$ 11.8 million
unsecured convertible loan that carries interest at a rate of 11%
repayable in June 2018; a US$ 30.5 million unsecured convertible
loan that carries interest at a rate of 11% repayable in March
2023; a US$ 0.2 million unsecured loan that carries interest at a
rate of 10% repayable within 5 years from the date of drawdown; a
US$ 1.4million unsecured loan that carries interest at 10%
repayable in April 2015; a US$ 5 million unsecured loan that
carries interest at 9.75% + LIBOR repayable in December 2015; and a
US$ 8.7 million AR$ denominated loan that carries interest at a
rate between 18% to 27% repayable within 3 years some portion of
which is classified as current.
The maturity profile of financial liabilities based on gross
undiscounted cash flows including interest to maturity is
summarised below:
The Group
----------------------
31-Dec-15 31-Dec-14
US$'000 US$'000
Maturity profile
Within 1 year 22,259 8,126
Between 1 and 5 years 58,126 24,147
After 5 years 48,561 74,743
128,946 107,016
Interest payments (29,920) (49,353)
99,026 57,663
---------- ----------
6. CAPITAL COMMITMENTS
Over the next 3 to 6 years, the Group has licence commitments to
fulfil seismic acquisition programs and the drilling of exploration
wells. The Group has farm-in agreements with third parties to fund
these commitments on a number of its licences and will look to
secure further farm-in agreements or fund directly the commitments
under the other licences primarily from its operational cash
flow.
In Argentina the Group has a carried interest in the exploration
phase of the majority of its licences. Where the Group does not
have a carried interest there are commitments to complete 2D and 3D
seismic and 6 exploratory wells between 2017 and 2018.
In Colombia in respect of the licences held by Andes, on 6
licences there are commitments to complete 2D seismic and 6
exploratory wells by the end of 2017. On 3 licences there are
commitments to complete the reprocessing of seismic and petro
physical data during 2017. On 2 licences Phase I has been delayed
due to security and environmental issues.
In Colombia, in respect of licences held by Interoil, on 1
licence an extension to February 2017 to drill 1 well has been
requested and on 1 licence an extension to May 2018 to drill 8
wells will be requested. On COR-6, a block located in the Upper
Magdalena Valley basin, Interoil had investment obligations of US$
22 million on the licence to be completed by November 2014.
However, due to environmental and in particular community issues,
it has not been possible for Interoil to commence work on the
licence. In April 2016 the ANH issued a new resolution pursuant to
which it reiterates the decision taken under the 2014 resolution
that Interoil is in breach of the licence contract, claiming it is
entitled to recover from Interoil, in the form of damages, the
amount committed by Interoil under the contract. Interoil continues
to believe it has a strong argument to defend the reasons why it
has been unable to fulfil its obligations on COR-6 and in view of
such limitations beyond its control, has offered to transfer its
commitments to another licence. Interoil will continue its dialogue
with the ANH and a conciliation hearing is scheduled for 25 May
2016 at which the board believes a solution that is satisfactory to
both parties can be found. The board believes that the likelihood
of the ANH enforcing a claim is sufficiently remote.
As at the date of these financial statements the commitments in
monetary terms is unknown.
7. CASH GENERATED FROM OPERATIONS
Group
----------------------
31-Dec-15 31-Dec-14
US$'000 US$'000
Loss for the period before taxation (12,447) (7,907)
Adjustments from operating activities
Depreciation and amortisation 13,909 3,252
Exchange movements (3,555) 434
Revaluation of investments 56 (64)
Increase in inventories (1,032) (218)
Increase in trade and other receivables (6,196) (4,022)
Increase/(decrease) in creditors and
other payables 15,513 7,916
Decrease in intergroup loans - -
Finance costs 24,627 13,397
Finance income (9,343) (3,783)
Impairment write downs - 3,796
Movement in provisions (2,735) 1,392
Profit on sale of investments (378) -
Share based payments 332 447
Net cash generated from/(used in) operating
activities 18,751 14,640
---------- ----------
8. EBITDA
EBITDA is calculated as follows:
31-Dec-15 31-Dec-14
US$'000 US$'000
Loss for the year from continuing
operations (18,385) (10,919)
Add: Depreciation and amortisation 13,909 3,252
Add: Impairment write downs - 3,796
Less: Finance income (9,343) (3,783)
Add: Finance costs 24,627 13,397
Add: Tax 5,938 3,012
EBITDA 16,746 8,755
------------------- ----------
9. ACQUISITIONS
On 20 January 2015, the Company acquired a 51% interest in
Interoil Exploration and Production ASA, through its subsidiary
Andes Interoil Ltd. Interoil has interests in 2 exploration
licences and 2 producing licences in Colombia. The interest was
acquired through a private placement of 330,000,000 shares in
Interoil for a cash consideration fo US$ 4.9 million. The
acquisition of the interest in Interoil increases both reserves and
production in Colombia. The costs of acquisition were approximately
US$ 1.6 million.
A loss of US$ 5.9 million in relation to the acquired activities
has been recognised in the income statement for the year. Revenue
for the Group for the year includes US$ 17.8 million of revenue
from the Interoil operations. Had Interoil been acquired on 1
January 2015 a loss of US$ 6 million would have been recognised in
the income statement.
Interoil Exploration & Production
Inc. Book Fair value
Value
US$'000 US$'000
Net assets acquired
Tangible assets 43,545 43,545
Inventories 567 567
Cash and cash equivalents 16,863 16,863
Trade and other receivables 4,343 4,343
Trade and other payables (4,746) (4,746)
Borrowings (43,684) (43,684)
Provisions (3,753) (3,753)
Deferred tax (3,637) (3,637)
Non-controlling interest (4,653) (4,653)
-----------
4,845 4,845
--------- -----------
Excess of interest in the net
fair value of identifiable assets
and liabilities over cost -
Total purchase consideration 4,845
-----------
Net cash inflow on acquisition
Total purchase consideration (4,845)
Add: Cash and cash equivalents 16,863
12,018
-----------
The assets and liabilities acquired have been measured at fair
value at the date of acquisition. The board expects the trade
receivables acquired of US$ 4.3 million to be collectable.
Subsequent to the acquisition, on 16 November 2015 Canacol
Energy Ltd agreed to acquire 49% of the share capital of Andes
Interoil Ltd, which holds the Group's 51% interest in Interoil for
$3.1 million. The Company retains control of Interoil with a 26%
indirect interest.
10. EVENTS AFTER THE BALANCE SHEET
There were no significant events after the balance sheet
date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GIGDULBDBGLD
(END) Dow Jones Newswires
May 23, 2016 02:00 ET (06:00 GMT)
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