TIDMTRP
RNS Number : 4051N
Tower Resources PLC
18 May 2015
18 May 2015
Tower Resources plc
Preliminary Results to 31 December 2014
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)),
the AIM listed Africa focussed oil and gas exploration company,
announces its preliminary results for the 12 months ended 31
December 2014.
Highlights:
-- Placing raised gross GBP19.3 million (US$32.0 million)
-- Portfolio diversified into Kenya, South Africa and Zambia
-- Drilling of the Welwitschia-1/1A well, offshore Namibia,
completed with remaining Albian Carbonate potential untested
-- Cash balance at year-end of US$7.9 million (2013: US$17.5 million)
Graeme Thomson, Chief Executive Officer of Tower Resources,
said:
"2014 was a very active year for Tower with a focus on
de-risking and further diversifying our African portfolio into
South Africa, Zambia and Kenya. We were all extremely disappointed
with the result of the Welwitschia well offshore Namibia and,
post-period, the onshore Badada-1 in Kenya. Both wells, however,
had enormous potential for Tower, had been validated by first class
partners, and have provided valuable information about the blocks
which remain prospective.
We currently have limited commitments, and are exploring several
opportunities to develop our portfolio further including our
anticipated entry into the Dissoni Block, offshore Cameroon. Tower
will also continue to seek potential partners to share its
exploration costs where desirable or necessary to move our most
exciting prospects along faster."
Contacts
Tower Resources plc
Graeme Thomson (CEO)
Andrew Matharu (VP - Corporate Affairs)
+44 20 7253 6639
Peel Hunt LLP (Nominated Adviser and Joint Broker)
Richard Crichton/Ross Allister
+44 20 7418 8900
GMP Securities Europe LLP (Joint Broker)
Rob Collins/Emily Morris
+44 20 7647 2800
Vigo Communications
Chris McMahon/ Patrick d'Ancona
+44 20 7016 9570
Chairman and Chief Executive's Joint Statement
The last year has been a difficult period for the oil and gas
industry, with prices falling and exploration losing favour with
investors. Tower has suffered along with everyone else, but we
nevertheless find ourselves with an attractive portfolio of
exploration blocks in which our current work obligations are
largely met, which puts us in a better position than most to
weather the current storm and prepare for better times.
2014 began with a great deal of commercial activity. In addition
to the fundraising for the Welwitschia well in Namibia operated by
Repsol, we acquired Rift Petroleum which brought us several
attractive exploration blocks in South Africa (working together
with New Age) and also Zambia as operator, and we farmed into Block
2B in Kenya, working together with Taipan Resources and Premier
Oil. In addition we were already negotiating as the preferred
bidder for the Dissoni Block, offshore Cameroon.
We drilled two wells in frontier areas in Namibia and Kenya,
both of which had offered material upside and had been validated by
the presence of highly experienced farminees, Repsol and Premier
Oil.
We were all deeply disappointed with the result of the
Welwitschia well offshore Namibia, which we completed in June, not
merely because of the lack of reservoir in the Maastrichtian and
Palaeocene targets, but also due to the well's failure to test the
deeper targets, notably the Albian carbonates. Nevertheless, we
reached an amicable agreement with the operator Repsol regarding
the cost of the well, our share of which was a little below budget,
and the prospectivity of the deeper section remains. We are in
discussions regarding next steps, but our current thinking is to
wait for other operators to be ready to begin a fresh drilling
campaign in the area before committing to a further well. We have
taken the conservative course in writing down our Namibian assets
in the meantime, but we continue to believe that Namibia will
become a significant oil and gas province in the future, and we
still intend to play a role in that.
The onshore Badada-1 well on Block 2B in Kenya, which was
drilled after the year-end and in which we have a 15% interest,
confirmed our geological model of the basin, but also failed to
find a commercial discovery. We have written off the cost of the
well, but in practice we are now reviewing the further
prospectivity on the block with the benefit of the data we have now
obtained.
We are excited by the potential of our operated blocks in
Zambia, where our geological fieldwork has been very promising.
This has shown us that the ingredients for a working petroleum
system appear to exist on our blocks. We are progressing into a new
phase of the licence, which now consists of three one-year periods,
and will be looking for a farminee to assist in the exploration of
this area.
We have negotiated a detailed work programme with the Government
of Cameroon for the Dissoni Block, and now expect to be ready to
sign a final PSC in mid-2015. During 2014 and the past few months
we have already completed a significant amount of further
preparatory work on this licence, and we intend to acquire 3D
seismic during the next twelve months, probably with a partner.
We have other licences now in our pipeline, but we are not
seeking to rush any of these discussions given the current funding
climate.
STRATEGY
Our strategy for the year ahead is as follows:
-- To maintain and to develop our high-impact exploration
portfolio while minimising our forward commitments and costs where
appropriate
-- To farm-out some or all of the costs of future commitments
where it is desirable or necessary to move our most exciting
prospects along faster
-- To seek opportunities through further asset or corporate
transactions in order to optimize the portfolio
MOVING FORWARD
We are exploring several opportunities and will continue to do
so until we find the right ones to execute, at the right time. In
the meantime, we already have a good inventory of prospects, and we
look forward to telling you more about these later in the year.
Setbacks are inevitable in the exploration business, but
successful wells are usually achieved with the help of the data
obtained from unsuccessful ones. We cannot expect every well we
drill to succeed; but we do believe that we are building valuable
data sets and relationships in several basins and countries, and
that this effort will bear fruit in time.
The 2014 Annual Report is being printed and is expected to be
posted to shareholders at the end of this week.
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
Note $ $
------------------------------------------------- ----- ------------- ------------
Revenue - -
Cost of sales - -
Gross profit - -
------------------------------------------------- ----- ------------- ------------
Other administrative expenses (1,447,548) (2,442,106)
Pre-licence expenditures (4,584,545) (1,284,554)
Impairment of exploration and evaluation assets 2 (50,569,455) -
------------------------------------------------- ----- ------------- ------------
Total administrative expenses (56,601,548) (3,726,660)
Group operating loss (56,601,548) (3,726,660)
Finance income 10,066 27,413
Finance expense (12,007) (121,506)
Gain on acquisition of subsidiary - 484,625
Loss for the year before taxation (56,603,489) (3,336,128)
Taxation - -
Loss for the year after taxation (56,603,489) (3,336,128)
Other comprehensive income - -
Total comprehensive expense for the year (56,603,489) (3,336,128)
------------------------------------------------- ----- ------------- ------------
Basic loss per share (USc) (1.64c) (0.16c)
------------------------------------------------- ----- ------------- ------------
Diluted loss per share (USc) (1.64c) (0.16c)
------------------------------------------------- ----- ------------- ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Share-based
Share Share payments Retained
capital premium reserve (1) losses Total
$ $ $ $ $
At 1 January 2013 2,837,320 58,272,549 1,740,739 (47,790,465) 15,060,143
----------------------------------------------- ---------- ------------ ------------ -------------- -------------
Shares issued for cash net of costs 1,362,116 13,184,577 - - 14,546,693
Shares issued on acquisition of subsidiary 194,460 2,430,750 - - 2,625,210
Shares issued on settlement of third party
fees 5,037 66,454 - - 71,491
Total comprehensive income for the year - - 627,340 (3,336,128) (2,708,788)
At 31 December 2013 4,398,933 73,954,330 2,368,079 (51,126,593) 29,594,749
----------------------------------------------- ---------- ------------ ------------ -------------- -------------
Shares issued for cash net of costs 949,602 31,066,041 - - 32,015,643
Shares issued on acquisition of subsidiary 920,700 31,295,880 - - 32,216,580
Shares issued on settlement of third party
fees 60,177 841,944 - - 902,121
Shares issued on exercise of options/warrants 17,126 396,397 - - 413,523
Total comprehensive income for the year - - 1,664,731 (56,603,489) (54,938,758)
Transfers between reserves - - (456,128) 456,128 -
At 31 December 2014 6,346,538 137,554,592 3,576,682 (107,273,954) 40,203,858
----------------------------------------------- ---------- ------------ ------------ -------------- -------------
(1) The share-based payment reserve has been included within the
retained loss reserve and is a non-distributable reserve.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
2014 2013
Note $ $
----------------------------------- ----- -------------- -------------
Non-current assets
Property, plant and equipment 2,611 966
Exploration and evaluation assets 2 34,004,145 12,927,367
34,006,756 12,928,333
----------------------------------- ----- -------------- -------------
Current assets
Trade and other receivables 2,313,714 2,285,381
Cash and cash equivalents (1) 7,941,833 17,454,712
10,255,547 19,740,093
----------------------------------- ----- -------------- -------------
Total assets 44,262,303 32,668,426
----------------------------------- ----- -------------- -------------
Current liabilities
Trade and other payables 4,058,445 3,073,677
Total liabilities 4,058,445 3,073,677
----------------------------------- ----- -------------- -------------
Net assets 40,203,858 29,594,749
----------------------------------- ----- -------------- -------------
Equity
Share capital 3 6,346,538 4,398,933
Share premium 137,554,592 73,954,330
Retained losses (103,697,272) (48,758,514)
Total shareholders' equity 40,203,858 29,594,749
----------------------------------- ----- -------------- -------------
(1) Includes restricted cash of $693k (2013: $nil).
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
Note $ $
----------------------------------------------------------------------- ----- ------------- ------------
Cash outflow from operating activities
Group operating loss for the year (56,601,548) (3,726,660)
Depreciation of property, plant and equipment 563 112
Share-based payments 5 1,664,731 627,340
Impairment of intangible exploration and evaluation assets 2 50,569,455 -
Operating cash flow before changes in working capital (4,366,799) (3,099,208)
Increase in receivables and prepayments (28,333) (1,054,133)
Increase in trade and other payables 984,768 526,714
Cash used in operations (3,410,364) (3,626,627)
Interest received 10,066 27,414
----------------------------------------------------------------------- ----- ------------- ------------
Cash used in operating activities (3,400,298) (3,599,213)
----------------------------------------------------------------------- ----- ------------- ------------
Investing activities
Exploration and evaluation costs (39,429,653) (7,658,658)
Purchase of property, plant and equipment (2,208) (1,078)
Release of restricted cash held in escrow - 5,600,000
Acquisition of subsidiary (net of cash acquired) - 4,210,099
Net cash used in investing activities (39,431,861) 2,150,363
----------------------------------------------------------------------- ----- ------------- ------------
Financing activities
Cash proceeds from issue of ordinary share capital net of issue costs 3 33,331,287 14,546,693
Finance costs (12,007) (121,506)
Net cash from financing activities 33,319,280 14,425,187
----------------------------------------------------------------------- ----- ------------- ------------
(Decrease)/increase in cash and cash equivalents (9,512,879) 12,976,337
Cash and cash equivalents at beginning of year 17,454,712 4,478,375
Cash and cash equivalents at end of year (1) 7,941,833 17,454,712
----------------------------------------------------------------------- ----- ------------- ------------
(1) Includes restricted cash of $693k (2013: $nil).
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
Tower Resources plc is quoted on the AIM market of the London
Stock Exchange. It has the TIDM code TRP and is incorporated in
England.
The Group's consolidated financial statements for the year ended
31 December 2014, from which this financial information has been
extracted, and for the comparative year ended 31 December 2013 are
prepared on a going concern basis and in accordance with IFRS as
adopted by the EU ("IFRS"), and in accordance with those parts of
the Companies Act 2006 applicable to companies reporting under
IFRS.
The financial information for the year ended 31 December 2014
set out in this preliminary announcement does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006 but it is derived from those accounts. The financial
information for the year ended 31 December 2013 is derived from the
statutory accounts for that year which have been delivered to the
Registrar of Companies. The Consolidated Statement of Financial
Position at 31 December 2014, the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and the related
notes for the year then ended have been extracted from the Group's
2014 statutory financial statements upon which the auditor's
opinion is unqualified and includes a going concern 'emphasis of
matter' statement. The announcement has been agreed with the
company's auditor for release.
The Group's business activities, future development, financial
performance and position are discussed in the Strategic Report. The
Group's capital management policy is to raise sufficient funding to
finance the Group's near term exploration and development
objectives.
At 31 December 2014 the Group had cash balances of $7.9 million
and the Group is expected to need to raise additional funds,
possibly in 2015 in order to maintain sufficient cash resources for
its working capital needs and its committed capital expenditure
programmes for the next twelve months. The Directors are confident
that they can raise sufficient funds from either capital markets,
private investment or existing facilities and as a consequence,
believe that both the Group and Company are well placed to manage
their business risks successfully despite the current uncertain
economic outlook.
The Directors have a reasonable expectation that the Group has
adequate access to resources to continue in operational existence
for the foreseeable future and continue to meet, as and when they
fall due, its planned and committed exploration and development
activities and other liabilities for at least the next twelve
months from the date of approval of these financial statements. For
this reason the Directors continue to adopt the going concern basis
in preparing these financial statements.
However, there can be no guarantee that the required funds will
be raised within the necessary timeframe, consequently a material
uncertainty exists that may cast doubt on the Group's ability to
continue to operate as planned and to be able to meet its
commitments and discharge its liabilities in the normal course of
business for a period not less than twelve months from the date of
this report. The financial statements do not include the
adjustments that would result if the Group was unable to continue
in operation.
2. Intangible Exploration and Evaluation (E&E) assets
Exploration and evaluation assets Goodwill Total
$ $ $
---------------------------------- ------------ -------------
Cost
At 1 January 2014 42,533,925 8,023,292 50,557,217
Additions during the year (1) 71,646,233 - 71,646,233
At 31 December 2014 114,180,158 8,023,292 122,203,450
-------------------------------- ---------------------------------- ------------ -------------
Amortisation and impairment
At 1 January 2014 (33,640,099) (3,989,751) (37,629,850)
Impairment during the year (46,579,704) (3,989,751) (50,569,455)
At 31 December 2014 (80,219,803) (7,979,502) (88,199,305)
-------------------------------- ---------------------------------- ------------ -------------
Net book value
At 31 December 2014 33,960,355 43,790 34,004,145
At 31 December 2013 8,893,826 4,033,541 12,927,367
-------------------------------- ---------------------------------- ------------ -------------
(1) Additions during the year of $71.6 million comprise
consideration on acquisition of the Rift group of $32.2 million and
other net additions of $39.4 million.
In April 2014 the Company acquired 100% of the issued share
capital of Rift Petroleum Holdings Limited and its subsidiary
companies. The consideration totalled 550 million Tower shares with
a fair value of $32.2 million. The book value of the assets
acquired totalled $11.8 million generating a fair value adjustment
on acquisition of $20.4 million.
Also in April 2014 the Company farmed-in to Block 2B in Kenya.
The Company paid $4.5 million and issued 9 million Tower shares to
Taipan Resources in exchange for a 15% interest in the exploration
licence.
During the year the Company impaired assets totalling $50.6
million in accordance with IAS 36 "Impairment of Assets" following
the drilling of exploration wells in Namibia and Kenya. The
Directors believe that, whilst both licences evidence prospective
potential it is prudent to make a full provision against their
costs given the near-term nature of the licence renewal dates and
that the relevant joint ventures have not made any formal
application decisions in relation thereto. The carrying values will
be reviewed annually.
In June 2014 the Company announced that the Welwitschia-1A well
in Namibia did not encounter commercial accumulations of
hydrocarbons and was to be plugged and abandoned. Amounts of $38.4
million of capitalised E&E costs and $4.0 million of Goodwill
were impaired during the period with respect to Namibian
operations. At 31 December 2014 the carrying value of the Namibian
asset was $nil (2013: $12.6 million).
In February 2015 the Company announced that the Badada-1 well in
Kenya did not encounter commercial accumulations of hydrocarbons
and was to be plugged and abandoned. An amount of $8.2 million
comprising capitalised E&E costs has been impaired with respect
to the Badada-1 well at the year-end. At 31 December 2014 the
carrying value of the Kenyan asset was $nil (2013: $nil).
3. Share capital
2014 2013
$ $
------------------------------------------------------------- ---------- ----------
Authorised, called up, allotted and fully paid
3,804,900,944 (2013: 2,638,318,217) ordinary shares of 0.1p 6,346,538 4,398,933
-------------------------------------------------------------- ---------- ----------
The share capital issues during 2014 are summarised as
follows:
Number of shares Share capital at nominal value Share premium
$ $
-------------------------------------------- ----------------- ------------------------------- --------------
At 1 January 2014 2,638,318,217 4,398,933 73,954,330
Shares issued for cash 579,475,280 966,727 31,462,438
Shares issued in lieu of fees payable 28,107,447 45,231 537,336
Shares issued on acquisition of subsidiary
undertakings and as farm-in consideration 559,000,000 935,647 31,600,488
At 31 December 2014 3,804,900,944 6,346,538 137,554,592
---------------------------------------------- ----------------- ------------------------------- --------------
4. Exploration expenditure commitments
The Group is committed to funding the following exploration
expenditure commitments as at 31 December 2014:
Country Interest Net commitment
PEL0010 (1) Namibia 30% 741,300
Block 2B (2) Kenya 15% 1,800,530
Imlili (3) SADR 50% -
Guelta (3) SADR 50% -
Bojador (3) SADR 50% -
Block 40 (4) Zambia 80% -
Block 41 (4) Zambia 80% -
Algoa-Gamtoos (4) South Africa 50% -
Orange basin (3) South Africa 50% -
2,541,830
-------------------------------------------------------------------------------------- --------- ---------------
(1) Budget for extension period expiring August 2015.
(2) Commitment to fund remaining budgeted Badada-1 well costs at 31 December 2014.
(3) PSC pending formal award.
(4) Formal submissions made to enter next phase of exploration period.
5. Share-based payments
In its Statement of Comprehensive Income the Company recognised
share-based payment charges of $1.7 million (2013: $627k)
In compliance with the requirements of IFRS 2 on share-based
payments, the fair value of options or warrants granted during the
year is calculated using the Black Scholes option pricing model.
For this purpose the volatility applied in calculating the above
charge varied between 82% and 140% (2013: 54% and 66%), depending
upon the date of grant, and the risk free interest rate was
0.50%.
The Company's share price ranged between 0.54p and 6.62p (2013:
1.15p and 4.85p) during the year. The closing price on 31 December
2014 was 0.65p per share. The weighted average exercise price of
the share options was 2.05p (2013: 2.97p) with a weighted average
contractual life of 4.28 years (2013: 3.12 years). The total number
of options vested at the end of the year was 45.3 million (2013:
19.2 million).
6. Acquisitions
In April 2014, the Group acquired 100% of the ordinary share
capital in Rift Petroleum Holdings Limited, an Isle of Man company
whose principal activity is as an investment holding company for
its oil and gas exploration subsidiaries in South Africa and
Zambia.
Details of the fair value of the identifiable assets and
liabilities acquired and the purchase consideration are as
follows:
Book value of assets (1) Fair value of assets
acquired Fair value adjustment acquired
$ $ $
----------------------------- ----------------------------- ---------------------- -----------------------------
Intangible exploration and
evaluation assets 11,862,849 20,353,731 32,216,580
Trade and other receivables 693,519 - 693,519
Cash 579,748 - 579,748
Trade and other payables (1,273,267) - (1,273,267)
11,862,849 20,353,731 32,216,580
----------------------------- ----------------------------- ---------------------- -----------------------------
Consideration paid (550 million ordinary shares with a fair
value of 3.5p per share) 32,216,580
------------------------------------------------------------- ---------------------- -----------------------------
(1) The fair value of the consideration paid for Rift is
considered to be the same as the fair value of the assets
acquired.
7. Subsequent events
On 7 January 2015, Tower announced the spud of the Badada-1 well
on Block 2B, onshore Kenya.
On 23 February 2015, Tower announced that the Badada-1 well had
not encountered commercial accumulations of hydrocarbons and was to
be plugged and abandoned.
On 19 March 2015, Tower announced that the GBP20.0 million EFF
funding facility with Darwin Strategic Limited was due to expire on
23 March 2015 and that Tower had decided not to renew this
facility.
On 24 March 2015, Tower announced the issue of 15.0 million
ordinary shares under contractual arrangements as part payment for
services provided in the fourth quarter of 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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