TIDMRKH
RNS Number : 8377Z
Rockhopper Exploration plc
16 December 2014
16 December 2014
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Interim Results for the Six Months Ended 30 September 2014
Rockhopper Exploration plc (AIM: RKH), the oil and gas
exploration and production company with interests in the North
Falkland Basin and the Greater Mediterranean region, is pleased to
announce its interim results for the six months ended 30 September
2014.
Operational and Financial Highlights
-- Phased, lower cost development solution adopted for the Sea Lion field
-- Revised commercial arrangements agreed with Premier Oil
(subject to documentation and board approvals)
-- Rig secured for four well exploration drilling campaign in
North Falkland Basin - targeting spud on first well in early March
2015
-- Completion of recommended offer for Mediterranean Oil & Gas plc
-- Progressing recently acquired Greater Mediterranean portfolio
o Plans advancing to increase production at Guendalina gas
field
o Civita onshore gas development project sanctioned
o Participation in Montenegro and Croatian licence rounds
-- Cash resources at 30 September 2014 of $205 million
As previously announced, the Company's accounting reference date
is being changed from 31 March to 31 December and as a result the
next audited financial statements to be published will be for the 9
month period to 31 December 2014.
Pierre Jungels, Chairman of Rockhopper, commented:
"Adoption of a phased lower cost development solution for Sea
Lion, together with revised commercial arrangements with Premier,
significantly de-risks the development and allows us to move
towards project sanction without the need to bring in a third
party. While the expected date for project sanction has been
delayed to mid 2016, we continue to target first oil during
2019.
With the multi-operator drilling programme in the North Falkland
Basin expected to start in the first quarter next year, the four
firm wells in which Rockhopper has an equity interest will target a
total of approximately 160 mmbbls of prospective resources (Pmean)
net to Rockhopper with further upside in the Isobel/Elaine
region.
Since completion of the MOG takeover in August, encouraging
progress has been made in our recently acquired Mediterranean
portfolio - we will continue to grow that business in a low-cost,
value accretive manner."
For further information, please contact:
Rockhopper Exploration plc
Tel: (via Vigo Communications) - 020 7016 9571
Sam Moody - Chief Executive
Stewart MacDonald - Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Joint Broker)
Tel: 020 7523 8000
Henry Fitzgerald-O'Connor
Liberum Capital (Joint Broker)
Tel: 020 3100 2227
Clayton Bush
Vigo Communications
Tel: 020 7016 9571
Peter Reilly
Patrick d'Ancona
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REVIEW
When we last wrote to you in June, we remarked that the year
ahead had the potential to be transformational for your company.
Since that time, and despite a material fall in the global price
for oil, the company continues to make significant progress on the
delivery of its strategy.
Phased, lower cost development concept for Sea Lion
In response to the fall in oil prices, Rockhopper and Premier
have agreed to adopt a phased, lower cost development solution for
the Sea Lion field with the initial phase targeting the
commercialisation of approximately 160 mmbbls in the North East
segment of the field, located in licence PL032.
The concept is likely to consist of 10-15 wells in total with
production via a leased floating, production, storage and
offloading vessel ("FPSO") and will target a gross plateau of
approximately 50,000 to 60,000 barrels of oil per day. Cost to
first oil for the initial phase is anticipated at less than $2
billion, significantly less than previous estimates for the TLP
concept.
Importantly, Premier has confirmed that a project of this size
can be funded from existing facilities and cash flows and that a
farm-out is no longer a pre-requisite to sanction the project. As a
result of the change in concept, sanction for Sea Lion has been
delayed to mid 2016 although Rockhopper continues to target first
oil in 2019.
Subsequent phases of the development, which will require
separate project sanction, will then target the remaining resources
in PL032, the already discovered resources in PL004 and any
potential additional resources discovered during the 2015
exploration campaign.
In light of the move to a phased development, Rockhopper and
Premier have agreed to amend their commercial arrangements. Details
are outlined below, but most importantly, Rockhopper remains fully
funded through a combination of Development Carry and amended loan
from Premier.
Proposed revised commercial terms (subject to documentation and
respective board approvals)
-- Rockhopper to access the full $48 million Exploration Carry
for the 2015 drilling campaign
-- Rockhopper to contribute 40% of pre sanction costs, currently
estimated at $100 million gross
-- Rockhopper to retain $337 million Development Carry for the
initial phase; a further $337 million Development Carry deferred to
the next phase of development
-- Existing Standby Finance arrangements to be simplified to a
more traditional loan structure of up to $750 million from
Premier
Rockhopper's anticipated net cash outflow for Falklands
activities during 2015 remains in line with previous guidance at
approximately $50-70 million.
As a consequence of the move to a phased development, Rockhopper
and Premier are seeking an extension to the licence term from
FIG.
North Falkland exploration campaign imminent
On the exploration front, we are very excited that a rig has
been contracted to drill four high impact exploration wells in the
North Falkland Basin during 2015. The rig is currently due to
arrive in the Falklands as early as March 2015 with the first well
in the programme targeting the Zebedee prospect.
Recently acquired Mediterranean portfolio
Outside of the Falklands, in August we completed the acquisition
of AIM listed Mediterranean Oil & Gas plc ("MOG"). Through MOG,
Rockhopper acquired a portfolio of production, development and
exploration interests in Italy, Malta and France with a combined 2C
contingent resource of over 32 mmboe at an acquisition price of
less than $1 per barrel.
Since the acquisition of MOG, Rockhopper has made good progress
in advancing the portfolio including progressing options to
increase production at the offshore Guendalina gas field,
sanctioning the Civita onshore gas development and the application
for licences in Montenegro and Croatia.
In November the Italian government passed new legislation
through the Parliament which should accelerate planning processes
and allow development projects in the country to progress.
Outlook
Adoption of a phased lower cost development solution for Sea
Lion, together with revised commercial arrangements with Premier,
significantly de-risks the development and allows us to move
towards project sanction without the need to bring in a third
party. While the expected date for project sanction has been
delayed to mid 2016, we continue to target first oil during
2019.
With the multi-operator drilling programme in the North Falkland
Basin expected to start in the first quarter next year, the four
firm wells in which Rockhopper has an equity interest will target a
total of approximately 160 mmbbls of prospective resources (Pmean)
net to Rockhopper with further upside in the Isobel/Elaine
region.
Since completion of the MOG takeover in August, encouraging
progress has been made in our recently acquired Mediterranean
portfolio - we will continue to grow that business in a low-cost,
value accretive manner.
DR PIERRE JUNGELS CBE SAMUEL MOODY
CHAIRMAN CHIEF EXECUTIVE OFFICER
15 DECEMBER 2014
CHIEF OPERATING OFFICER'S REVIEW
Overview
In addition to the exciting high impact four well exploration
programme in the North Falkland Basin which has the potential to
double our net resources, Rockhopper will also have a busy year in
its Greater Mediterranean region as we build our presence in our
second core area in line with our strategy.
Italy
Onshore Italy in the 100% operated Aglavizza production
concession we now have the final regional approvals enabling
commencement of procurement and construction of the production
facilities and pipeline from the Civita-1 wellhead through to the
main gas pipeline entry point. First production from the Civita
field is expected in H2 2015.
Technical work for this licence area is now focused on
identification of additional drilling locations within the
development concession allowing further low cost, high return
activity.
Elsewhere in Italy we are working closely with ENI to sidetrack
one of the two gas production wells on the Guendalina Field located
offshore in the Northern Adriatic that has been shut in following
damage to the wellbore experienced in 2012. The sidetrack is
anticipated to restore production to close to the pre-damage levels
(possibly to more than double the production rates today) and is
currently scheduled to commence in Q4 2015.
The Ombrina Mare project offshore Italy in the Abruzzo region is
still anticipating determination of the AIA (Integrated
Environmental Assessment) submission in January 2015. In the case
of a successful outcome we will be commencing the final award
process of the production concession with the Ministry of Economic
Development in Q1 2015.
Malta
In Malta we have informed the Ministry that we will be
withdrawing from the Area 4 licence at the end of the first
exploration phase on the 18th January 2015 following the
integration of the results of the Hagar Qim well drilled in Q2/Q3
2014.
Elsewhere, in Area 3 the processing of the 2D broadband survey
is nearing completion and its interpretation will enable a decision
on whether an extension to the Exploration Study Agreement with a
3D survey commitment will be made.
Croatia and Montenegro
Rockhopper has applied for acreage in the first offshore
licencing rounds in Croatia and Montenegro. The outcomes of such
applications are expected later this month in the case of Croatia
and early 2015 for Montenegro.
Asset Integration
We are delighted with the progress achieved in our review and
integration of the assets since the completion of the acquisition
of MOG in August and 2015 will be an important year to consolidate
activities in the region.
FIONA MACAULAY
CHIEF OPERATING OFFICER
15 DECEMBER 2014
CHIEF FINANCIAL OFFICER'S REVIEW
Overview
From an accounting perspective, the main event during the period
was the acquisition of Mediterranean Oil & Gas Plc ("the
Acquisition"), an AIM listed exploration and production company
with operations in the Greater Mediterranean region. This has had a
material impact on the balance sheet of the group, particularly
with the addition of production assets, goodwill arising on
acquisition as well as a long term decommissioning provision in
relation to the production assets.
Income Statement
The loss before tax for the period remained level at $3
million.
The revenue of $1 million reflects the gas sales since
acquisition from the former MOG group's production assets. After
cost of sales, the gross profit largely covers the incremental
administrative expenses of the now enlarged group.
Exploration and evaluation expenses remained broadly level with
the prior period.
Administrative expenses have increased by $3 million to $6
million. This primarily relates to non-recurring advisory and legal
fees in relation to the Acquisition in the period as well as the
aforementioned incremental administrative costs of the acquired
Mediterranean operations based in Rome.
The share based payment charge has reduced slightly in the
period, but additional share based incentives were awarded after
the period end under the company's Long Term Incentive Plan and so
the charge is expected to increase in future periods.
Foreign exchange translation gave rise to a $3 million gain in
the period and this is almost entirely due to the tax liability,
arising from the farm out in 2012, being a sterling denominated
balance. Whilst this liability is partially offset by sterling
denominated cash balances, following the Acquisition in the period
the majority of the group's balances are dollar denominated.
Finance income has decreased significantly during the period.
This is due to a decline in deposit rates as well as the average
cash balances held during the current period being reduced. Returns
on deposits are expected to be similarly flat during the remainder
of the period to 31 December 2014.
There has been no tax charge during the period.
Statement of Comprehensive Income
The functional currency of the newly acquired MOG group is
euros. As such the assets and liabilities are translated at the
exchange rate at the end of the reporting period and income and
expenses are translated at exchange rates at the dates of the
relevant transactions. The resulting exchange differences, $3
million loss during the period, are recognised in the Statement of
Comprehensive Income and taken to the Foreign Currency Translation
Reserve.
Balance Sheet
The main movements during the period relate to the Acquisition
and the provisional fair value of the assets and liabilities
assumed as disclosed in note 6 Acquisition of subsidiaries.
As well as the acquired exploration and evaluation assets, the
group capitalised $8 million of expenditure relating to the
Falkland Island licences. Of this, $7 million related to
Rockhopper's share, net of carry, of long lead items for the 2015
exploration campaign. Rockhopper's share of costs in relation to
the Sea Lion development during the period was covered by the
development carry from Premier, however $1 million was spent on
independent validation studies and capitalised staff costs.
The increase in property, plant and equipment almost entirely
relates to the fair value of the acquired production assets.
Inventories relate to wellheads and casing acquired as part of
the Acquisition, with the majority of it being earmarked for a
potential exploration well on the Monte Grosso licence.
Other receivables have increased by $3 million. Again the
increase is in relation to the newly acquired Mediterranean
business. As operator in the Mediterranean region of a number of
production assets the increase in receivables is expected to be
consistent going forward.
Other payables, for the same reason as other receivables, have
increased by $4 million.
Current tax payable remains at GBP64 million although in dollar
terms this has reduced to $105 million from $107 million at the
year end. This movement is entirely due to a foreign exchange gain
on the tax liability which is a sterling denominated balance. The
company continues to engage in active and constructive dialogue
with the Falkland Islands Government on the CGT position.
Documentation of the agreement in principle in relation to this has
progressed and is expected to be agreed in the near future.
Resources available are $205 million consisting of term deposits
of $130 million and cash and cash equivalents of $75 million. This
is a reduction of $42 million from the position at 31 March 2014
with the majority of this being the $24 million of net cash outflow
on acquisition of MOG, $8 million in relation to intangible
additions described above, $5 million of operating cash outflows
including the $2 million of fees in relation to the Acquisition and
$5 million in working capital adjustments.
The Acquisition was partly funded through a new issue of
Rockhopper ordinary shares. The premium on these shares of $11
million, based on the market value at the closing market price on
the last trading day before the deal became effective, has been
credited to the Merger Reserve. Other movements relate to share
options exercised during the period as well as shares awarded as
part of the staff Share Incentive Plan.
As previously announced, the Company's accounting reference date
is being changed from 31 March to 31 December and as a result the
next audited financial statements to be published will be for the 9
month period to 31 December 2014.
OUTLOOK
With $205 million of cash on our balance sheet, we have the
resources to fund the near term expenditure required for our share,
after carries, of the upcoming 2015 Falkland exploration campaign
and Sea Lion pre-sanction costs, which in aggregate are estimated
at $50-70 million. Whilst Rockhopper is fully funded post project
sanction through the development carry and the replacement loan
from Premier, work continues investigating the merits of reserve
based lending to potentially improve on the terms available through
these existing agreements. In addition, we have the resources and
technical ability to maximise the value in the portfolio of assets
acquired as part of the MOG acquisition.
STEWART MACDONALD
CHIEF FINANCIAL OFFICER
15 DECEMBER 2014
Group income statement
for the six months ended 30 september 2014
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Revenue 821 - -
Cost of sales (286) - -
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Gross Profit 535 - -
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Exploration and evaluation expenses (795) (623) (1,461)
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Costs in relation to acquisition (1,899) - -
Other administrative costs (3,860) (3,003) (12,341)
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Total administrative expenses (5,759) (3,003) (12,341)
Charge for share based payments (335) (288) (797)
Foreign exchange movement 2,723 (315) (2,631)
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Results from operating activities (3,631) (4,229) (17,230)
Finance income 411 836 1,499
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Loss before tax (3,220) (3,393) (15,731)
Tax 3 - (54,430) (62,542)
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Loss for the period/year attributable to the equity shareholders of
the parent company (3,220) (57,823) (78,273)
--------------------------------------------------------------------- ------ ------------- ------------- ---------
Loss per share: cents (basic & diluted) 4 (1.12) (20.34) (27.54)
--------------------------------------------------------------------- ------ ------------- ------------- ---------
All operating income and operating gains and losses relate to
continuing activities.
Group statement of comprehensive income
for the six months ended 30 September 2014
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
------------------------------------------------ ------- ------------- ------------- ---------
Loss for the period/year (3,220) (57,823) (78,273)
Other comprehensive income for the period/year (2,563) -- -
------------------------------------------------ ------- ------------- ------------- ---------
TOTAL COMPREHENSIVE INCOME FOR THE period/YEAR (5,783) (57,823) (78,273)
--------------------------------------------------------- ------------- ------------- ---------
Group balance sheet
as at 30 September 2014
As at As at As at
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
-------------------------------------------------------- ------ ------------- ------------- ----------
Notes $'000 $'000 $'000
NON CURRENT Assets
Intangible exploration and evaluation assets 5 191,075 152,215 153,656
Property, plant and equipment 15,077 463 353
Goodwill 6 11,419 - -
Other receivables 591 - -
CURRENT Assets
Inventories 2,537 - -
Other receivables 5,064 1,826 1,932
Restricted cash 556 300 309
Term deposits 130,000 150,000 185,000
Cash and cash equivalents 75,463 108,782 62,482
-------------------------------------------------------- ------ ------------- ------------- ----------
Total assets 431,782 413,586 403,732
-------------------------------------------------------- ------ ------------- ------------- ----------
CURRENT Liabilities
Other payables 4,803 1,226 3,084
Tax payable 7 104,501 3,109 107,056
NON-CURRENT Liabilities
Tax payable 7 - 95,731 -
Provisions 22,553 - -
Deferred tax liability 39,137 39,137 39,137
-------------------------------------------------------- ------ ------------- ------------- ----------
Total liabilities 170,994 139,203 149,277
-------------------------------------------------------- ------ ------------- ------------- ----------
Equity
Share capital 4,845 4,711 4,711
Share premium 491 55 170
Share based remuneration 4,710 4,287 4,597
Shares held by SIP trust (383) (252) (354)
Merger reserve 11,112 (243) (243)
Foreign currency translation reserve 1,560 4,123 4,123
Special reserve 541,964 578,759 541,964
Retained losses (303,511) (317,057) (300,513)
-------------------------------------------------------- ------ ------------- ------------- ----------
Attributable to the equity shareholders of the company 260,788 274,383 254,455
-------------------------------------------------------- ------ ------------- ------------- ----------
Total liabilities and equity 431,782 413,586 403,732
-------------------------------------------------------- ------ ------------- ------------- ----------
These financial statements were approved by the directors and
authorised for issue on 15 December 2014 and are signed on their
behalf by:
StEWART MAcDONALD
CHIEF FINANCIAL OFFICER
Group statement of changes in equity
for the six months ended 30 september 2014
Foreign
Currency
Shares
Share Share Share based held Merger Translation Special Retained Total
---------------
by SIP
capital premium remuneration trust reserve Reserve reserve losses equity
For the six
months ended
30 September
2014 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- -------- ------------- ---------- -------- ------------ -------- ---------- --------
Balance at 1
April 2014 4,711 170 4,597 (354) (243) 4,123 541,964 (300,513) 254,455
Total
comprehensive
income for
the period - - - - - (2,563) - (3,220) (5,783)
Acquisition of
subsidiary 126 - - - 11,355 - - - 11,481
Share based
payments - - 335 - - - - - 335
Shares issues
in relation
to SIP 1 48 - (29) - - - - 20
Exercise of
share options 7 273 (222) - - - - 222 280
--------------- -------- -------- ------------- ---------- -------- ------------ -------- ---------- --------
Total
contributions
by owners 134 321 113 (29) - - - - 539
--------------- -------- -------- ------------- ---------- -------- ------------ -------- ---------- --------
Balance at 30
September
2014 4,845 491 4,710 (383) 11,112 1,560 541,964 (303,511) 260,788
--------------- -------- -------- ------------- ---------- -------- ------------ -------- ---------- --------
Foreign
currency
Shares
Share Share Share based held Merger translation Special Retained Total
---------------
by SIP
capital premium remuneration trust reserve reserve reserve losses equity
For the six
months ended
30 September
2013 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Balance at 1
April 2013 4,710 578,754 3,999 (212) (243) 4,123 - (259,234) 331,897
Total
comprehensive
income for
the period - - - - - - - (57,823) (57,823)
Share based
payments - - 288 - - - - - 288
Shares issues
in relation
to SIP 1 60 - (40) - - - - 21
Cancellation
of share
premium
account - (578,759) - - - - 578,759 - -
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Total
contributions
by owners 1 60 288 (40) - - - - 309
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Balance at 30
September
2013 4,711 55 4,287 (252) (243) 4,123 578,759 (317,057) 274,383
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Foreign
currency
Shares
Share Share Share based held Merger translation Special Retained Total
---------------
by SIP
capital premium remuneration trust reserve reserve reserve losses equity
For the year
ended
31 March 2014 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Balance at 1
April 2013 4,710 578,754 3,999 (212) (243) 4,123 - (259,234) 331,897
Total
comprehensive
loss for the
year - - - - - - - (78,273) (78,273)
Share based
payments - - 797 - - - - - 797
Share issues
in relation
to SIP 1 175 - (142) - - - - 34
Cancellation
of share
premium
account - (578,759) - - - - 541,964 36,795 -
Exercise of
SARs - - (199) - - - - 199 -
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Total
contributions
by owners 1 175 598 (142) - - - 199 831
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Balance at 31
March 2014 4,711 170 4,597 (354) (243) 4,123 541,964 (300,513) 254,455
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Group cash flow statement
for the six months ended 30 September 2014
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2014 2013 2014
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
------------------------------------------------------------------- ------- ------------- ------------- ----------
Cash OUTflows from operating activities
Net loss after tax (3,220) (3,393) (15,731)
Adjustments to reconcile net losses to cash utilised
Depreciation 319 148 282
Share based payment charge 335 288 797
Exploration impairment expenses - 2 2
Loss on disposal of tangible fixed assets - 13 13
Interest (276) (517) (1,003)
Foreign exchange (2,618) 329 2,672
---------------------------------------------------------------------------- ------------- ------------- ----------
Operating cash flows before movements in working capital (5,460) (3,130) (12,968)
Changes in:
Other receivables 1,246 172 (325)
Payables (6,010) (1,386) 459
---------------------------------------------------------------------------- ------------- ------------- ----------
Cash utilised by operating activities (10,224) (4,344) (12,834)
---------------------------------------------------------------------------- ------------- ------------- ----------
Cash OUTflows from investing activities
Capitalised expenditure on exploration and evaluation assets (7,735) (1,047) (2,485)
Purchase of equipment (231) (41) (65)
Acquisition of subsidiary (24,037) - -
Proceeds on disposal of exploration and evaluation assets - 655 665
Interest 343 78 955
Taxation - (37,206) (40,382)
---------------------------------------------------------------------------- ------------- ------------- ----------
Investing cash flows before movements in capital balances (31,660) (37,561) (41,312)
Changes in:
Payments on account - - -
Restricted cash (128) - -
Term deposits 55,000 (69,623) (104,623)
---------------------------------------------------------------------------- ------------- ------------- ----------
Cash utilised by investing activities 23,212 (107,184) (145,935)
---------------------------------------------------------------------------- ------------- ------------- ----------
Cash INflows from financing activities
Share options exercised 280 - -
Share incentive plan 20 21 34
---------------------------------------------------------------------------- ------------- ------------- ----------
Cash generated from financing activities 300 21 34
---------------------------------------------------------------------------- ------------- ------------- ----------
Currency translation differences relating to cash and cash equivalents (307) 2,925 3,853
Net cash inflow/(outflow) 13,288 (111,507) (158,735)
Cash and cash equivalents brought forward 62,482 217,364 217,364
---------------------------------------------------------------------------- ------------- ------------- ----------
Cash and cash equivalents carried forward 75,463 108,782 62,482
---------------------------------------------------------------------------- ------------- ------------- ----------
Notes to the condensed group financial statements
for the six months ended 30 september 2014
1 Accounting policies
1.1 Group and its operations
Rockhopper Exploration plc ('the company'), a public limited
company quoted on AIM, incorporated and domiciled in the United
Kingdom ('UK'), together with its subsidiaries (collectively, 'the
group') holds certain exploration licences granted in 2004 and 2005
for the exploration and exploitation of oil and gas in the Falkland
Islands. During the period it diversified its portfolio through the
acquisition of an exploration and production company with
operations principally in Italy. The registered office of the
company is Hilltop Park, Devizes Road, Salisbury, SP3 4UF.
1.2 Statement of compliance
These condensed consolidated interim financial statements of the
group, as at and for the six months ended 30 September 2014,
include the results of the company and all subsidiaries over which
the company exercises control.
The condensed interim consolidated financial statements have
been prepared in accordance with International Accounting Standard
("IAS") 34 Interim Financial Reporting as adopted by the European
Union ("EU"). They do not include all information required for full
annual financial statements, and should be read in conjunction with
the consolidated financial statements of the company and all its
subsidiaries as at the year ended 31 March 2014.
The comparative figures for the financial year ended 31 March
2014 are not the company's statutory accounts for that financial
year. Those accounts have been reported on by the company's auditor
and delivered to the registrar of companies. The report of the
auditor was: (i) unqualified; (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying his report; and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The condensed interim consolidated financial statements were
approved by the Board on 15 December 2014.
1.3 Basis of preparation
The results upon which these financial statements have been
based were prepared using the accounting policies set out below.
These policies have been consistently applied unless otherwise
stated.
These consolidated financial statements have been prepared under
the historical cost convention except, as set out in the accounting
policies below, where certain items are included at fair value.
Items included in the results of each of the group's entities
are measured in the currency of the primary economic environment in
which that entity operates (the "functional currency"). The
functional currency of the group acquired during the period is
euros. All other members of the group have a functional currency of
US$.
All values are rounded to the nearest thousand dollars ($'000)
or thousand pounds (GBP'000), except when otherwise indicated.
1.4 Going concern
These condensed group interim financial statements have been
prepared on a going concern basis as the directors are confident
that the group has sufficient funds in order to continue in
operation for the foreseeable future.
1.5 period end exchange rates
The period end rates of exchange actually used were:
30 September 2014 30 September 2013 31 March 2014
----------- ------------------ ------------------ --------------
GBP : US$ 1.62 1.61 1.66
EUR: US$ 1.27 1.35 1.38
----------- ------------------ ------------------ --------------
2 Revenue and segmental information
Six months ended 30 September 2014
Falkland Greater
Islands Mediterranean Corporate Total
$'000 $'000 $'000 $'000
--------------------------------------------- --------- -------------- ---------- --------
Revenue - 821 - 821
Cost of sales - (286) - (286)
--------------------------------------------- --------- -------------- ---------- --------
Gross profit - 535 - 535
Exploration and evaluation expenses (507) - (288) (795)
--------------------------------------------- --------- -------------- ---------- --------
Costs in relation to acquisition - - (1,899) (1,899)
Other administrative costs (82) (618) (3,860) (1,899)
--------------------------------------------- --------- -------------- ---------- --------
Total administrative expenses (82) (618) (5,059) (5,759)
Charge for share based payments - - (335) (335)
Foreign exchange movement 2,556 78 89 2,723
--------------------------------------------- --------- -------------- ---------- --------
Results from operating activities 1,967 (5) (5,593) (3,631)
Finance income - - 411 411
--------------------------------------------- --------- -------------- ---------- --------
Loss before tax 1,967 (5) (5,182) (3,220)
Tax - - - -
--------------------------------------------- --------- -------------- ---------- --------
Loss for period 1,967 (5) (5,182) (3,220)
--------------------------------------------- --------- -------------- ---------- --------
Reporting segments assets 161,906 70,006 199,870 431,782
Reporting segments liabilities 143,638 25,395 1,961 170,994
Six months ended 30 September 2013
Falkland Greater
Islands Mediterranean Corporate Total
$'000 $'000 $'000 $'000
------------------------------------- --------- -------------- ---------- ---------
Revenue - - - -
Cost of sales - - - -
------------------------------------- --------- -------------- ---------- ---------
Gross profit - - - -
Exploration and evaluation expenses (573) - (50) (623)
Administrative expenses - - (3,003) (3,003)
Charge for share based payments - - (288) (288)
Foreign exchange movement (3,272) - 2,957 (315)
------------------------------------- --------- -------------- ---------- ---------
Results from operating activities (3,845) - (384) (4,229)
Finance income - - 836 836
------------------------------------- --------- -------------- ---------- ---------
Loss before tax (3,845) - 452 (3,393)
Tax (54,430) - - (54,430)
------------------------------------- --------- -------------- ---------- ---------
Loss/profit for period (58,275) - 452 (57,823)
------------------------------------- --------- -------------- ---------- ---------
Reporting segments assets 152,215 - 261,371 413,586
Reporting segments liabilities 137,977 - 1,226 139,203
3 Taxation
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
-------------------------------------- -------------- ------------- ---------
Current tax:
Overseas tax - - -
Adjustment in respect of prior years - 54,430 62,542
--------------------------------------- ------------- ------------- ---------
Total current tax - 54,430 62,542
--------------------------------------- ------------- ------------- ---------
Deferred tax:
Overseas tax - - -
-------------------------------------- -------------- ------------- ---------
Total deferred tax - - -
-------------------------------------- -------------- ------------- ---------
Tax on loss on ordinary activities - 54,430 62,542
--------------------------------------- ------------- ------------- ---------
4 Basic and diluted loss per share
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2014 2013 2014
Number Number Number
------------------------------------------------------- ------------- ------------- ------------
Shares in issue brought forward 284,316,698 284,224,774 284,224,774
Shares issued
- Issued on 1 April 2014 400,000 - -
- Issued in relation to acquisition on 12 August 2014 7,481,816 - -
- Issued under the SIP 31,514 32,760 91,924
-------------------------------------------------------- ------------- ------------- ------------
Shares in issue carried forward 292,230,028 284,257,534 284,316,698
-------------------------------------------------------- ------------- ------------- ------------
Weighted average shares in issue 286,773,957 284,232,815 284,251,566
-------------------------------------------------------- ------------- ------------- ------------
$'000 $'000 $'000
---------------------------------------------- -------- --------- ---------
Net loss after tax (3,220) (57,823) (78,273)
Basic and diluted net loss per share - cents (1.12) (20.34) (27.54)
----------------------------------------------- -------- --------- ---------
The calculation of the basic loss per share is based upon the
loss for the period and the weighted average shares in issue. At
the period end the group had the following unexercised options and
share appreciation rights in issue.
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2014 2013 2014
Number Number Number
--------------------------- ------------- ------------- ----------
Share options 4,090,840 4,490,840 4,490,840
Long term incentive plan 1,761,535 - 1,761,535
Share appreciation rights 1,420,531 3,671,966 1,454,434
---------------------------- ------------- ------------- ----------
However as the group is reporting a loss for all periods then in
accordance with IAS33 the share options are not considered dilutive
because the exercise of the share options would have the effect of
reducing the loss per share.
5 intangible exploration and evaluation assets
Additions during the period predominantly relate to the fair
value of acquired assets as disclosed in note 6.Other movements are
principally in relation to the group's interests in the Falkland
Islands, with $7 million being in relation to long lead items and
infrastructure for the 2015 exploration campaign and $1 million
relating to work undertaken on the Sea Lion development.
6 acquisition of subsidiaries
In August 2014 Rockhopper completed the acquisition of the
entire issued share capital of Mediterranean Oil & Gas Plc
("MOG").
MOG was an AIM quoted exploration and production company with
operations in Italy, Malta and France. The acquisition of MOG
provides Rockhopper with a low cost entry into the Greater
Mediterranean region as well as providing established production
and revenue. MOG produces natural gas onshore and offshore in Italy
and has a balanced portfolio of exploration, appraisal and
development opportunities with reserves and contingent resources of
32 mmboe.
Under the terms of the agreement announced on 23 May 2014,
shareholders of MOG received 4.875 pence in cash and 0.0172 shares
of the company per MOG share.
The transaction has been accounted for by the purchase method of
accounting with an effective date of 11 August 2014 being the date
on which the group gained control of MOG. Information in respect of
the assets and liabilities acquired and the fair value allocation
to the MOG assets in accordance with the provisions of "IFRS3 -
Business Combinations" has been determined on a provisional basis
and is as follows:
Provisional recognised values
on acquisition
$'000
------------------------------------------------------ ------------------------------
Intangible exploration and appraisal assets 30,288
Property, plant and equipment 15,663
Long term other receivables 625
Inventories 2,683
Trade and other receivables 4,634
Restricted cash 268
Trade and other payables (6,845)
Long-term provisions (23,872)
------------------------------------------------------ ------------------------------
Net identifiable assets and liabilities 23,444
Goodwill 12,074
------------------------------------------------------ ------------------------------
Satisfied by:
Cash ($35,700,000 less $11,663,000 of cash acquired) 24,037
Equity instruments 7,481,816 ordinary shares 11,481
------------------------------------------------------ ------------------------------
Total consideration 35,518
------------------------------------------------------ ------------------------------
All balances with the exception of cash have been valued on a
provisional basis pending completion of independent
verification.
The fair value of equity instruments has been determined by
reference to the closing share price on the trading day immediately
prior to the completion of the acquisition.
In addition there was a contingent consideration of up to a
maximum amount of 3.550 pence in cash for each MOG Share. The
availability of the contingent consideration, and the amount of
cash which would ultimately be payable was to be determined by the
success of an exploration well targeting the Hagar Qim prospect in
Offshore Malta Area 4, Block 7. As the Hagar Qim well was proved a
dry hole during the measurement period the fair value of this
contingent consideration was nil.
Goodwill arises due to the difference between the fair value of
the net assets and the consideration transferred and relates to the
portfolio of intangible exploration and appraisal assets, which
together have the optionality and potential to provide value far in
excess of this fair value as well as the strategic premium
associated with a significant presence in a new region. The
functional currency of MOG is euros. As such the goodwill is also
expressed in the same functional currency and subject to
retranslation at each reporting period end. The reduction in the
period from acquisition to the period end of $655,000 is entirely
due to this foreign currency difference. None of the goodwill
recognised is expected to be deductible for tax purposes.
Acquisition costs of $1,899,000 arose as a result of the
transaction. These have been recognised as part of administrative
expenses in the statement of comprehensive income.
Since the acquisition date, MOG has contributed $821,000 to
group revenues and $5,000 to group profit. If the acquisition had
occurred on 1 April 2014, group revenue would have been $2,678,000
and group loss for the period would have been $5,093,000.
7 Tax payable
Six months ended Six months ended Year ended
30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
------------------------- ----------------- ----------------- -----------
Current tax payable 104,501 3,109 107,056
Non current tax payable - 95,731 -
------------------------- ----------------- ----------------- -----------
104,501 98,840 107,056
------------------------- ----------------- ----------------- -----------
Current tax payable remains at GBP64 million although at the
period end exchange rate in dollar terms this equates to $105
million, a reduction from $107 million.
8 reserves
Set out below is a description of each of the reserves of the
group:
Share premium Amount subscribed for share capital in excess of its nominal value.
------------------------------------- -------------------------------------------------------------------------------
Share based remuneration The share incentive plan reserve captures the equity related element of the
expenses recognised
for the issue of options, comprising the cumulative charge to the income
statement for IFRS2
charges for share based payments less amounts released to retained earnings
upon the exercise
of options.
------------------------------------- -------------------------------------------------------------------------------
Shares held by SIP trust Shares held by the Share Incentive Plan ("SIP") trust represent the issue
value of shares
held on behalf of participants by Capita IRG Trustees Limited, the trustee of
the SIP.
------------------------------------- -------------------------------------------------------------------------------
Merger reserve The difference between the nominal value of shares issued with the nominal
value of the shares
received on the reversal of Rockhopper Resources Limited into Rockhopper
Exploration Plc on
23 February 2005. As well as the difference between the fair value and nominal
value of shares
issued as part of the acquisition of subsidiaries.
------------------------------------- -------------------------------------------------------------------------------
Foreign currency translation reserve Exchange differences arising on consolidating the assets and liabilities of
the group's subsidiaries
are classified as equity and transferred to the group's translation reserve.
------------------------------------- -------------------------------------------------------------------------------
Special reserve The reserve is non distributable and was created following the cancellation of
the share premium
on the 4 July 2013. It can be distributed or used to acquire the share capital
of the company
subject to receiving court approval.
------------------------------------- -------------------------------------------------------------------------------
Retained losses Cumulative net gains and losses recognised in the financial statements.
------------------------------------- -------------------------------------------------------------------------------
9 Post balance sheet events
SEA LION DEVELOPMENT UPDATE
On the 13 November Rockhopper and Premier Oil announced that
they had agreed to adopt a phased, lower cost development solution
for the Sea Lion field. In light of the move to a phased
development Rockhopper and Premier have agreed amendments to their
commercial arrangements (subject to documentation and internal
approvals). Highlights of the phased development concept and
amended commercial terms are disclosed in the Chairman and CEO
review.
INDEPENDENT REVIEW REPORT TO ROCKHOPPER EXPLORATION PLC
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the Interim Report for the six months
ended 30 September 2014 which comprises the group income statement,
the group statement of comprehensive income, the group balance
sheet, the group statement of changes in equity, the group cash
flow statement and the related explanatory notes. We have read the
other information contained in the Interim Report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The Interim Report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Interim Report in accordance with the AIM Rules.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this Interim
Report has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the interim report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the UK. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Report for the six months ended 30 September 2014 is
not prepared, in all material respects, in accordance with IAS 34
as adopted by the EU and the AIM Rules.
LYNTON RICHMOND
for and on behalf of KPMG LLP
Chartered Accountants
8 Salisbury Square
London
EC4Y 8BB
15 December 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DGBDDLBBBGSU
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