TIDMVOG
RNS Number : 0146S
Victoria Oil & Gas PLC
28 September 2017
Victoria Oil & Gas Plc
("VOG", "Group" or the "Company")
INTERIM FINANCIAL REPORT FOR THE SIX MONTHSED 30 JUNE 2017
Victoria Oil & Gas Plc, the integrated natural gas producing
utility, today announces its unaudited interim results for the six
months ended 30 June 2017.
Operational Highlights
-- Average daily Logbaba field gross production rate increased
by 11.4% to 14.6mmscf/d (six months to 30 June 2016:
13.1mmscf/d).
-- 2,345mmscf of gross gas sold from Logbaba (six months to 30 June 2016: 2,282mmscf).
-- Completion of flow lines to the new wells.
Drilling Highlights
-- Completion of well La-107, drilled to 3,180m Measured Depth
("MD"), has been completed for production. Preliminary analysis
indicated 35m of net gas sand in the Upper Logbaba Formation, plus
23m of net gas sand in the Lower Logbaba Formation. Flow test
results were very positive with 54mmscf/d flowrate through
70/64(ths) inch choke and 146mmscf/d Absolute Open Flow ("AOF")
potential. First gas flowed to the processing plant for sale on 22
September 2017.
-- Rig skidded to La-108 to resume drilling operations.
Sidetrack drilling has recommenced, where approximately 100m of net
gas-bearing sands were encountered. At 26 September 2017, the rig
is drilling ahead at 2,085m Measured Depth ("MD")
Financial Highlights
-- $15.4 million Revenue (six months to 30 June 2016: $23.6 million).
-- $4.4 million EBITDA (six months to 30 June 2016: $14.2 million).
-- $25.2 million Net Debt position (at 31 December 2016 Net Cash: $1.8 million).
-- 5% Cameroonian State participation in Logbaba; 3%
relinquished by Gaz du Cameroun S.A. ("GDC").
Corporate Highlights
-- Farm-out agreement with EurOil Limited ("EurOil"), a Bowleven
Plc subsidiary, under which a VOG subsidiary will acquire on
completion an 80% working interest in the 2,237 km(2) Bomono
licence, adjacent to Gaz du Cameroun's ("GDC") Logbaba field. This
transaction remains subject to Government approval.
-- Seismic interpretation on Matanda field (75% participating
interest, subject to Government approval) shows considerable gas in
place potential and several drilling targets.
Ahmet Dik, Chief Executive Officer of VOG, commented:
"The year has been very productive for the Company, with the
delivery of very positive drilling results and the completion of
well La-107, where we have encountered a combined 58m of net gas
sands. Production flow testing has confirmed the commercial
viability of the gas-bearing reservoir sands detected in the Upper
and Lower Logbaba formations, and initial flows through the
processing facility yielded positive results.
The developments at Logbaba are very encouraging as we take the
first steps towards our longer-term ambition of producing
100mmscf/d. The Douala region alone continues to show a long-term
demand for 150mmscf/d of natural gas, and we believe VOG is
uniquely placed to take advantage of that market as the dominant
onshore gas producer in country."
Sam Metcalfe, the Company's Subsurface Manager has reviewed and
approved the technical information contained in this
announcement.
This announcement contains inside information.
For further information, please visit www.victoriaoilandgas.com
or contact:
Victoria Oil & Gas Plc
Kevin Foo / Ahmet Dik / Laurence Read Tel: +44 (0) 20 7921
8820
Strand Hanson Limited (Nominated and Financial Adviser)
Rory Murphy / Angela Hallett / Stuart Faulkner Tel: +44 (0) 20
7409 3494
Shore Capital Stockbrokers Limited (Joint Broker)
Mark Percy / Toby Gibbs (corporate finance) Tel: +44 (0) 207 408
4090
Jerry Keen (corporate broking)
FirstEnergy Capital LLP (Joint Broker)
Jonathan Wright/David van Erp Tel: +44 (0) 207 448 0200
Camarco (Financial PR)
Billy Clegg Tel: +44 (0) 203 757 4983
Nick Hennis Tel: +44 (0) 203 781 8330
Victoria Oil & Gas Plc
Unaudited Interim Condensed Consolidated Financial
Statements
For the Six Months to 30 June 2017
CHAIRMAN'S LETTER
Dear Shareholder,
On behalf of the Board, I am pleased to report our unaudited
interim results for the six months to 30 June 2017 ("H1 17") and to
update you on the Company's progress.
Victoria Oil & Gas Plc ("VOG", the "Company" or the "Group")
currently generates revenue through its 57% participating interest
in the Logbaba Project in Douala, Cameroon, which is held by its
100% owned subsidiary Gaz du Cameroun S.A. ("GDC"). Having built a
gas distribution network in and around the city of Douala of over
50km, the business has the characteristics of an energy utility,
however we also need to drill gas wells to add reserves and enable
production build out, which are the characteristics of a typical
E&P company. Developing a small, traditionally "stranded" gas
deposit, installing a gas distribution network and delivering
consistent gas to over 30 sites, and securing long-term contracts
at free market prices for this gas is a unique and significant
achievement, and one of which all VOG shareholders should be
proud.
Strategy and Direction
The challenge we now face is building our business into one
which is four to five times our current size. I believe that this
growth is achievable within five years, but it will require greater
gas reserves and there is a growing demand for that gas. GDC is
very well positioned, as the only onshore gas supplier in Cameroon,
to meet this demand, which we believe is greater than the
150mmscf/d demand for natural gas in the Douala region alone.
Whilst our average daily production during the period was
14.6mmscf/d, we are aiming to capture 100mmscf/d of this market by
2021. This production cannot be met by the Logbaba Field alone, so
we have long planned to access the gas resources on both the
Matanda and Bomono Blocks, which were explored, appraised and
developed by their previous owners.
I believe the transformational events for the Company that
framed 2016 and H1 17 were the assignments of majority interests in
the Matanda and Bomono licences. Whilst both assignments are
pending regulatory approval, we believe that these additions
present VOG with the opportunity to build gas reserves in lower
pressure formations than at Logbaba, resulting in more
cost-effective drilling and production programmes. Importantly,
these additions are a significant step forward in terms of
achieving our strategy of capturing 100mmscf/d of the Douala gas
market. These assignments, which cost the Company very little up
front, will, we believe, be seen in the future as "game changers"
that allowed VOG to expand its business and maintain its position
as a leading energy provider in Cameroon. With majority stakes in
three contiguous blocks, Logbaba, Matanda and Bomono, and control
of over 3,500km(2) of prime gas exploration and development
territory, covering most of the onshore Douala Basin, we will be in
a very strong position to achieve our strategy.
We estimate that over $350 million has been spent on Matanda and
Bomono since 2010, three wells have been drilled (all of which
tested gas), and 650 line-km of 2D seismic and 203km(2) of 3D
seismic has been acquired, therefore de-risking the projects
substantially and to VOG's advantage. Our subsurface technical team
is in the process of assessing all the data across the three blocks
and I am very excited with the potential of the onshore prospects,
which have never been assessed as a "whole" before. Work is
currently underway to identify drillable targets in the Matanda and
Bomono Blocks by the end of 2017, with a view to drilling wells in
2018-2019.
Among the leads that have been identified internally is one with
un-risked prospective resources of approximately 1tcf of gas in the
onshore Matanda Cretaceous Logbaba Formation in a large structure
near the Missellele-1 well. This structure is only some 8.7km from
the current western leg of our pipeline on the Bonaberi side. There
is still more work to do in identifying and evaluating further
prospects on the blocks and I am very confident that as the
sub-surface team continues its work, more prospects of this quality
and size will be identified.
Logbaba Drilling Programme
At [26 September 2017], well La-107 has been successfully
drilled and completed to its planned measured depth of 3,180m
(3,166m total vertical depth ("TVD")) where the base of the Logbaba
Formation was encountered. Preliminary analysis of the La-107 logs
indicated that we have encountered 35m of net gas sand in the Upper
Logbaba Formation, as previously announced, plus 23m of net gas
sand in the Lower Logbaba Formation. The production tree was
installed on La-107 and perforating and flow testing has been
completed. Testing of the well was completed with a maximum
flowrate of 54mmscf/d through a 70/64(ths) inch choke and
146mmscf/d Absolute Open Flow potential.
The flow lines tying in the new wells to the production facility
have been installed and commissioned. First gas successfully flowed
through the processing facility on 22 September 2017.
The rig has been released from La-107 and skidded to La-108
where sidetrack drilling operations have resumed. Approximately
100m of net gas-bearing sands were encountered between the top of
the Logbaba Formation at 1,670m TVD and at 2,702m TVD at La-108. At
26 September 2017, the rig is drilling ahead at 2,085m Measured
Depth ("MD").
GDC's plan is to progressively develop additional gas supplies
from Logbaba from wells La-105, La-107 and La-108 over the next six
months. Following the flow tests from La-107, this well can be
placed into production to supplement gas from La-105. The Board
believes that the additional reserves expected from La-107 and
La-108 will also allow GDC to conclude longer-term contracts with
Douala based high-volume customers.
The total cost of drilling wells La-107 and La-108 is expected
to be $70 million gross ($40 million cost to VOG).
Logbaba Operations Update
The sales figures from the Logbaba Project in Cameroon are as
follows:
6 months ended 6 months ended
----------------------------- ------------------ ------------------
30 June 2017 30 June 2016
----------------------------- ------------------ ------------------
Gas sales - Thermal Power
(mmscf) 689 529
----------------------------- ------------------ ------------------
Gas sales - Grid Power
(mmscf) 1,656 1,753
----------------------------- ------------------ ------------------
Gas sales - Total (mmscf) 2,345 2,282
----------------------------- ------------------ ------------------
Attributable gas sales
- Total (mmscf) 1,400 2,127
----------------------------- ------------------ ------------------
Average daily gas production
(mmscf/d) 14.6 13.1
----------------------------- ------------------ ------------------
Condensate sold (bbls) 17,963 26,047
----------------------------- ------------------ ------------------
Attributable condensate
sold (bbls) 10,727 24,417
----------------------------- ------------------ ------------------
The table refers to gross Logbaba Project sales, unless
specified as attributable to VOG. On a gross basis, gas sales from
the Logbaba Project have continued to grow due to new thermal
customers. The sales team has been active during the period in
signing up the next phase of thermal customers connections along
existing pipeline and working with bigger power providers on larger
off-take agreements which we will be able to engage with once the
drilling and expansion works have completed.
Gas was produced and delivered to our customers in Douala on an
uninterrupted basis during the reporting period without any
significant safety incidents, underlining our commitment to operate
in a safe and environmentally friendly manner.
During the period, the Group extended the gas supply agreement
with ENEO Cameroon S.A. ("ENEO"), the Cameroon energy joint venture
between UK Group Actis and the Cameroon Government, until 31
December 2017. The extension will enable ENEO and GDC to optimise
all technical and financial elements of a long-term gas supply
arrangement. The take-or-pay components will remain in place and,
until year end, an interim gas price of US$7.50/mmbtu has been
agreed. Negotiations to extend the gas supply agreement beyond 2017
are ongoing. ENEO could potentially increase their power supply of
50MW to beyond 100MW. With the positive drilling results, and the
pipeline network in place, GDC is well positioned to supply gas to
support this expansion.
GDC commenced two projects to upgrade its gas production
facility in Douala with the objective of modernising its automation
systems and increasing the amount of gas recoverable from its
existing reservoirs.
The automation project, comprised the installation of hardware
and software to upgrade the control system of the gas production
facility to the latest Siemens automation system. One of the key
benefits of this new system is the ability to expand and
incorporate new facilities easily as the number of production wells
and facilities of GDC expands.
The second project comprised installation of a heat exchanger
and a compressor package. The equipment was installed in two
stages; in the first stage, the heat exchanger has been
successfully installed and commissioned. The second stage, the
installation of the compressor package has been installed and is
currently being commissioned. These plant improvements enable
greater flexibility in gas feed conditions, such as temperature and
pressure, and will allow operations to optimise production from
La-105, La-107 and La-108 when it comes online.
Since 1 June 2016, Logbaba Project revenues, which up to that
date fully accrued to GDC, have been split in accordance with the
participating interests with RSM Production Corporation of Denver,
USA (GDC 60%). The Logbaba Project has entered into a Participation
Agreement, enabling SNH to take up their maximum 5% participating
interest in the Logbaba Project. As a result, with effect from 12
June 2017, the Group's participating interest has reduced from 60%
to 57% to accommodate SNH's interest.
Financial Results
The impact of the adjustments in the Logbaba participating
interest has resulted in the Company's share of revenue for H1 17
of $15.4 million being $8.2 million lower than the corresponding
period in the prior year. This reduction, despite an increase in
gross production, flows directly to the EBITDA for the period.
The successful completion of La-107 will provide increased gas
supply and give the Company the opportunity to grow revenue
significantly in the medium term.
Funding
The ongoing drilling programme has resulted in the Group
reporting a net debt position of $25.2 million.
At 30 June 2017, the headroom on existing debt facilities was
$4.9 million. To supplement the remaining drilling programme costs,
GDC has obtained a letter of offer from a local financial
institution in Cameroon to extend our debt facilities, and we will
be looking to complete on the offer in due course.
With the successful completion of well La-107, known potential
of La-108, and the anticipated Government approval of the
assignments for Matanda and Bomono, the Goup has an exciting future
and I look forward to giving you regular updates on our
progress.
Kevin Foo
Executive Chairman
27 September 2017
Financial Review
The interim report for the six-month period ended 30 June 2017
("current period" or "H1 17") is compared to the six-month period
ended 30 June 2016 ("prior period" or "H1 16") as required by
International Financial Reporting Standards ("IFRS").
During the current period, the Group acquired an 80%
participating interest in the Bomono block in Douala. The Bomono
and Matanda participating interests, both subject to Governmenl
approval, in conjunction with the Logbaba participating interest
will strengthen the Group's position within the Douala basin. This
is an exciting development, which the Group looks forward to
developing in the coming years.
The successful completion of well La-107 significantly reduces
the sustainability risk under which the Group had previously
operated owing to the Douala operations being dependent on a single
producing well. In addition, the anticipated increase in reserves
resulting from La-107 will enable the Group to enter negotiations
for a number of long-term, high volume gas supply agreements with
electricity producers and other industries within Douala, which
provides significant potential to grow the business.
Revenue and Results
30 June 2017 30 June 2016
For the six-month period ended $000 $000
-------------------------------------------------- ------------ ------------
Performance
Revenue 15,420 23,637
Operating (loss)/profit (4,446) 4,309
Depreciation 8,866 9,896
EBITDA 4,420 14,205
-------------------------------------------------- ------------ ------------
(Loss)/earnings per share - basic
(cents) (4.11) 0.90
- diluted (cents) (4.11) 0.89
Operational - Logbaba production
Gas sales (mmscf) - gross 2,345 2,282
- attributable 1,400 2,127
Condensate sales (bbls) - gross 17,963 26,047
- attributable 10,727 24,417
30 June 2017 31 December
2016
As at $000 $000
-------------------------------------------------- ------------ ------------
Financial Position
Net (debt)/cash position (25,172) 1,781
-------------------------------------------------- ------------ ------------
Performance
The Logbaba Project has continued to increase production for the
six months ended 30 June 2017. The Group's revenue for the current
period was $15.4 million, some $8.2 million lower than the prior
period (H1 16: $23.6 million). Revenue is derived entirely from the
Logbaba Project in Cameroon. Gas is sold to customers for thermal
energy production and electricity generation, with revenue also
generated from the sale of condensate, a by-product from gas
production and processing.
The decrease in revenue in the current period, which is
reflected in the reduced attributable gas and condensate sales
volumes, is due to the following:
-- In accordance with the Logbaba Farm-In Agreement, GDC was
entitled to 100% of the revenues generated by the Logbaba Project
until the initial exploration costs, which GDC incurred, are
recovered. Thereafter revenues are shared in accordance with the
participating interests in the Logbaba Concession, of which GDC
owns 60%, in the same manner that operating costs and post
exploration capital costs are shared. As at 31 May 2016, the
Logbaba Project reached the milestone whereby the initial
exploration costs were recovered; and from 1 June 2016 onwards
revenues, operating costs and capital costs are shared in
accordance with participating interests of the parties;
-- The Company entered into a Participation Agreement, enabling
SNH to take up their maximum 5% participating interest in the
Logbaba Project. As a result, with effect from 12 June 2017, the
Group's participating interest has reduced from 60% to 57% to
accommodate SNH's interest;
-- As a result of the above, attributable gas volumes as a
percentage of gross gas produced at Logbaba was 59.7% in the
current period, compared to 93.2% in the prior period;
-- The Group extended the gas supply agreement with ENEO
Cameroon S.A. ("ENEO"), the Cameroon energy joint venture between
UK Group Actis and the Cameroon Government, until 31 December 2017.
An interim gas price of US$7.50/mmbtu has been agreed; and
-- Delays in the drilling programme have impeded the Logbaba
Project's ability to meaningfully grow production and revenue
generation. With the successful completion of La-107 the Group is
now able to engage in earnest with the larger off-takers with the
aim of signing further gas supply agreements. The Logbaba Project
will also be able to move forward with process plant expansion
plans to enable greater volumes of gas to be produced from the
Logbaba site.
Cost of sales of $12.4 million (H1 16: $15.2 million) included
$2.3 million (H1 16: $3.9 million) of production royalties, $8.9
million of depreciation linked to revenue generating assets (H1 16:
$9.2 million) and $1.2 million of other production related
expenditure (H1 16: $2.1 million). Production royalties are a
variable cost associated with GDC's share of revenue relating to
the attributable volumes of gas produced during the period. The
reduction in royalties is directly linked to the reduction in
attributable hydrocarbon revenues. Depreciation is a variable cost
associated with the gross volumes of gas produced during the
period. At 31 December 2016, the Group impaired well La-106, which
has reduced the reserve basis against which the remaining well,
La-105, is depreciated. As a result, and due to the increase in
gross volumes produced by the Logbaba Project, the depreciation
charge for the current period is only $0.3 million lower than the
prior period.
EBITDA, which excludes depreciation from operating profit prior
to financing charges and tax, reflects earnings of $4.4 million (H1
16: $14.2 million), a $9.8 million reduction on the prior period.
This reflects the impact on revenue highlighted above, but does
indicate the positive cash generation from the Logbaba Project.
Certain finance charges have been capitalised to intangible
assets as they relate to the drilling programme.
The loss after taxation of the Group for the six months to 30
June 2017 amounted to $4.5 million (a profit of $1.0 million in the
prior period).
The Group's Russian West Medvezhye asset remains fully impaired
and available for disposal.
Financial Position
Intangible Assets
The increase in intangible assets during the period of $15.0
million recognises GDC's share of the drilling programme costs.
Property, plant and equipment
Oil and gas assets, which include the Logbaba wells and the
pipeline assets, are depreciated on a 'unit of production' basis.
At 31 December 2016, well La-106 was fully impaired. The increased
gross production during the period and the reserve base adjustment
to exclude reserves attributable to La-106 resulted in a unit of
production depreciation charge for the period of $8.5 million (H1
16: $9.2 million). Additions during the period, predominantly
pipeline related, amounted to $0.3 million (H1 16: $2.6
million).
Investment in associate
The 35% ownership in Cameroon Holdings Limited recovers a
portion of the royalties paid by GDC, and is reflected in the
consolidated accounts as 'Share of profit of associate'.
Trade and other receivables
Trade receivables have increased mainly because of delays in
payment from GDC's major customer, who has provided promissory
notes in the amount of $10.1 million for the amounts owing to
30(th) April 2017. The promissory notes have been used as
collateral for a bridging facility with a local financial
institution and are reflected as current borrowings. The promissory
notes will mature in monthly intervals before the end of the year,
and payments received against the promissory notes will be utilised
to settle the facility. Post period end, the customer has continued
to make payments against amounts due after 30 April 2017, albeit
still beyond the contractual terms.
Borrowings
Total borrowings have increased by $19.3 million from $14.5
million in the comparative period to $33.8 million at 30 June 2017
as the drilling programme and other capital projects progressed.
The increased borrowings include the $10.1m bridging debt borrowed
against the customer promissory notes, which will be settled by the
end of the financial year. At the date of reporting, the exposure
on the bridging facility has reduced to $5.9 million in line with
the maturity dates of the promissory notes. The Group had $4.9
million remaining headroom on its facilities at period end.
Post period end the Group has received a signed offer letter
from a local financial institution in Cameroon to extend additional
debt facilities and management will be looking to complete on the
offer in due course.
Provisions and other payables
Provisions of $4.7 million have increased by $0.1 million from
31 December 2016 largely as a result of the unwinding of discount
on the non-current liability portion which is charged to the Income
Statement.
The $5.8 million reserve bonus provision is reflected under
other payables (prior period: $5.8 million).
Net Debt
The Group was in a net debt position of $25.2 million at 30 June
2017 (31 December 2016: net cash of $1.8 million). The increase in
net debt reflects the ongoing drilling programme costs incurred
during the period and the bridging facility raised in lieu of
customer payments. The debt to equity ratio has increased from
15.2% at 31 December 2016 to 31.6% at 30 June 2017.
Cash Flow
Operating activities
The Group generated cash flows from operating activities of $5.5
million during the period (prior period: $13.4 million). Working
capital increased by $16.0 million (prior period: $8.5 million),
mainly due to increased trade receivables (a significant amount of
which is secured by promissory notes from a customer), resulting in
net cash utilised in operating activities of $10.4 million (prior
period: cash generated of $5.0 million).
Investing activities
Drilling and pipeline activities resulted in costs of $15.7
million during the period (prior period: $9.6 million).
The Company received $0.5 million of dividends from associate
(prior period: $1.0 million).
Financing activities
$12.1 million was drawn down against the BGFIBank facility
during the period, and a further $10.1 million borrowed as a
bridging facility against promissory notes. Financing cash outflows
in the current period of $4.9 million (prior period: $1.2 million)
relate to the repayment of debt and associated interest.
Bomono Assignment
During the period, the Group concluded an agreement with
Bowleven Plc for the assignment of an 80% participating interest in
the Bomono PSC. The Bomono Block neighbours the Group's Logbaba and
Matanda Blocks, and has the existing Moambe well which exceeded
7mmscf/d during well flow tests which were carried out in early
2016. Bowleven Plc will remain as the 20% participation holder.
The deal is subject to various conditions precedent, as detailed
in the announcement of 6 March 2017, including the granting by the
Cameroon State of a two-year provisional exploitation licence and
various regulatory approvals required to formalise the transfer of
the assignment from Bowleven Plc to GDC Bomono S.A. The longstop
date on this transaction has been extended to 31 December 2017.
The deal includes:
-- GDC installing a pipeline connection from the Moambe well to
the existing GDC pipeline network, and the completion of civil
engineering works at the Moambe wellhead necessary for the gas
processing plant installation. The estimated capital cost of these
works is $6.0 million;
-- A 3.5% royalty from GDC Bomono S.A.'s production share of
hydrocarbons, with an aggregate cap limiting the total royalty
payments to US$20 million; and
-- GBP100,000 worth of the Company's ordinary shares.
The timing and amount of the Bomono work programme is subject to
ongoing negotiations with the Government. Under the Bomono PSC the
Government has the option to acquire a 10% participating interest
in exploitation activities. This means that should the Cameroonian
State exercise its option, the Group's interest would thereafter be
reduced to 72%.
We have subsequently been informed by the Government of their
preference for the assignment to be held by Gaz du Cameroun S.A.
("GDC"), the same entity that holds the Logbaba Concession, and for
GDC to be nominated as operator of the Bomono PSC. As a result, the
Government has not completed its formal process to confirm approval
of the Bomono assignment. We are in the process of making the
changes requested by the Government, which will require formal
Government approval. The Government has also not yet given formal
approval to the two-year provisional exploitation licence.
Matanda Assignment
Further to Government approval for the 75% assignment in the
Matanda block to GDC Matanda S.A., as detailed in our announcement
of 7 April 2016, we have subsequently been informed by the
Government of their preference for the assignment to be held by Gaz
du Cameroun S.A., the same entity that holds the Logbaba
Concession. As a result, the Government has not completed its
formal process to confirm approval of the Matanda assignment. We
are in the process of making the changes requested by the
Government, which will require formal Government approval.
The PSC governing the Matanda block grants the Cameroonian State
an option to acquire between a 5% and 25% participation in the
exploitation activities of the block, not a 5% as was reported.
This means that should the Cameroon State exercise its option, the
Group's interest would thereafter be reduced to between 71.25% and
56.25%, depending on the State's election.
Commitments
At 30 June 2017, GDC had $9.4 million of commitments pertaining
to the drilling programme, the majority of which is expected to be
incurred during 2017. The Group had other capital commitments of
$1.0 million at 30 June 2017 (31 December 2016: $Nil).
As the formal assignments of the participating interests in the
Matanda and Bomono blocks have not been completed, the work
programmes associated with these participating interests are not
recorded as commitments of the Group. The timing and amount of the
work programmes for both assignments are subject to ongoing
negotiations with the Government.
Post Balance Sheet Events
Capital reduction
Details of the reduction of capital, being the cancellation of
the Company's deferred shares and the cancellation of the share
premium account, were set out in the circular to shareholders,
dated 25 May 2017, and the proposal was approved by shareholders at
the Company's Annual General Meeting held on 28 June 2017.
On 26 July 2017, the Court approved the Company's application,
and the requisite documents have been filed to allow the Company to
execute the reduction of capital, which will be reflected in the
Company's report and accounts to 31 December 2017.
The reduction of capital does not change the number or rights of
issued ordinary shares of 0.5 pence each in the capital of the
Company, which remains at 110,571,762 ordinary shares.
Principal Risks and Uncertainties
The Board determines the key risks for the Group and monitors
mitigation plans and performance on a monthly basis. The principal
risks the Group has identified for the next six months are
summarised as follows:
-- Operational risk: Drilling operations and discovery risk.
-- Other operational risks: HSE and security incidents, title and licence risks, well/process plant/pipeline integrity risks, reliance on key customer risk.
-- Financial risk: Ability to fund the entire drilling programme
with available funds, debt, operational cash flows and other
sources.
-- External risks: Capital constraints, global economic
volatility, commodity price risk, legal compliance regulatory or
litigation risk, adverse market sentiment, political and country
risk.
-- Strategic risks: Investment decisions, inadequate resources and reliance on key personnel.
-- Other financial risks: Funding risk, counterparty credit
risk, management of costs and capital spending, tax risk.
A more detailed listing of risks and uncertainties facing the
Group's business is listed on page [21] of the Report &
Accounts to 31 December 2016, which is available on the Victoria
Oil & Gas Plc website: www.victoriaoilandgas.com.
Going Concern
The Directors draw attention to the uncertainties surrounding
the renewal of the gas supply agreement with ENEO, the Group's
major customer, and the funding risk whereby the Group may not get
access to necessary financial resources. These uncertainties, if
they were to materialise, may have a significant impact on the
Group's ability to continue operating as a going concern.
The Directors are satisfied that the Group has sufficient
resources and facilities, or realistic access to financial
resources, to continue operations for the foreseeable future, being
a period of not less than twelve months from the date of
publication of this report. Accordingly, they continue to adopt the
going concern basis in preparing the condensed financial
information.
Directors' Responsibility Statement
The Directors confirm that to the best of their knowledge that
the unaudited interim condensed consolidated financial statements
have been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
There has been no movement in Directors during the period. A
list of the current Directors is available on the Company's
website: www.victoriaoilandgas.com.
Andrew Diamond
Finance Director
27 September 2017
Condensed Consolidated Income Statement
For the six-month period 30 June 30 June
ended 2017 2016
Unaudited Unaudited
Note $000 $000
------------------------------ ---- --------- ---------
Continuing operations
Revenue 15,420 23,637
Cost of sales (12,374) (15,234)
--------- ---------
Production royalties (2,313) (3,890)
Other cost of sales (10,061) (11,344)
--------- ---------
Gross profit 3,046 8,403
Sales and marketing expenses (39) (8)
Administrative expenses (6,834) (4,976)
Other losses (1,150) (164)
Share of profit of associate 531 1,054
Operating (loss)/profit (4,446) 4,309
Finance costs (124) (445)
------------------------------ ---- --------- ---------
(Loss)/profit before taxation (4,570) 3,864
Income tax credit/(expense) 69 (2,886)
------------------------------ ---- --------- ---------
(Loss)/profit for the
period - attributable
to shareholders of the
parent (4,501) 978
------------------------------ ---- --------- ---------
Cents Cents
------------------------------ ---- --------- ---------
(Loss)/earnings per share
- basic 4 (4.11) 0.90
(Loss)/earnings per share
- diluted 4 (4.11) 0.89
------------------------------ ---- --------- ---------
Condensed Consolidated Statement of Comprehensive Income
For the six-month period 30 June 2017 30 June 2016
ended
Unaudited Unaudited
$000 $000
----------------------------------- ------------ ------------
(Loss)/profit for the period (4,501) 978
Exchange differences on
translation of foreign operations (25) 26
------------------------------------ ------------ ------------
Total comprehensive (loss)/profit
for the period - attributable
to shareholders of the parent (4,526) 1,004
------------------------------------ ------------ ------------
Condensed Consolidated Statement of Financial Position
As at 30 June 2017 31 December
2016
Unaudited Audited
Notes $000 $000
------------------------------ ----- ------------ -----------
Assets:
Non-current assets
Intangible assets 5 32,606 17,638
Property, plant and equipment 6 72,918 81,434
Investment in associate 5,404 5,386
110,928 104,458
------------------------------ ----- ------------ -----------
Current assets
Inventories 17 11
Trade and other receivables 8 22,292 8,838
Cash and cash equivalents 7 8,630 16,261
Deferred tax assets 137 850
------------------------------ ----- ------------ -----------
31,076 25,960
------------------------------ ----- ------------ -----------
Total assets 142,004 130,418
------------------------------ ----- ------------ -----------
Liabilities:
Current liabilities
Trade and other payables 9 7,000 9,943
Provisions 10 1,385 1,442
Borrowings 7,11 17,749 6,707
------------------------------ ----- ------------ -----------
26,134 18,092
------------------------------ ----- ------------ -----------
Net current assets 4,942 7,868
------------------------------ ----- ------------ -----------
Non-current liabilities
Borrowings 7,11 16,053 7,773
Deferred tax liabilities 2,846 3,628
Provisions 10 3,275 3,144
Other Payables 9 2,831 2,814
------------------------------ ----- ------------ -----------
25,005 17,359
------------------------------ ----- ------------ -----------
Net assets 90,865 94,967
------------------------------ ----- ------------ -----------
Equity:
Called-up share capital 34,253 34,251
Share premium 230,635 230,436
ESOP Trust reserve (873) (843)
Translation reserve (17,710) (17,685)
Other reserve 10 66
Retained earnings - deficit (155,450) (151,258)
------------------------------ ----- ------------ -----------
Total equity 90,865 94,967
------------------------------ ----- ------------ -----------
Condensed Consolidated Statement of Changes in Equity
Retained
Share Share ESOP Translation Other earnings/
Trust
capital premium reserve reserve reserves (deficit) Total
$000 $000 $000 $000 $000 $000 $000
------------------------- ------- ------- ------- ----------- -------- --------- -------
For the six months
ended
30 June 2016 (Unaudited)
At 31 December 2015 34,246 230,194 (1,015) (17,721) 315 (120,635) 125,384
Effects of movement
in foreign exchange - - 98 - - - 98
Transfer expired
warrants to retained
earnings - - - - (315) 315 -
Total comprehensive
loss for the period - - - 26 - 978 1,004
------------------------- ------- ------- ------- ----------- -------- --------- -------
At 30 June 2016 34,246 230,194 (917) (17,695) - (119,342) 126,486
------------------------- ------- ------- ------- ----------- -------- --------- -------
For the six months
ended
30 June 2017 (Unaudited)
At 31 December 2016 34,251 230,436 (843) (17,685) 66 (151,258) 94,967
Shares issued 2 199 - - - - 201
Shares granted to
ESOP members - - 2 - - 251 253
Effects of movement
in foreign exchange - - (32) - - - (32)
Transfer to retained
earnings - - - - (56) 56 -
Total comprehensive
profit for the period - - - (25) - (4,501) (4,526)
------------------------- ------- ------- ------- ----------- -------- --------- -------
At 30 June 2017 34,253 230,635 (873) (17,710) 10 (155,450) 90,865
------------------------- ------- ------- ------- ----------- -------- --------- -------
Condensed Consolidated Cash Flow Statement
For the six-month period ended 30 June 2017 30 June 2016
Unaudited Unaudited
$000 $000
---------------------------------------- ------------ ------------
Cash flows from operating activities
(Loss)/profit for the period (4,501) 978
Income tax (credit)/expense (69) 2,886
Share of profit in associate (531) (1,054)
Finance costs 124 445
Depreciation and amortisation 8,866 9,896
Other losses 1,206 164
Share-based payments 453 107
---------------------------------------- ------------ ------------
5,548 13,422
Movements in working capital
Increase in trade and other receivables (13,111) (10,014)
Increase in inventories (25) (8)
(Decrease)/increase in trade
and other payables and provisions (2,824) 1,553
---------------------------------------- ------------ ------------
(15,960) (8,469)
Tax paid - -
---------------------------------------- ------------ ------------
Net cash (utilised in)/generated
from operating activities (10,412) 4,953
Cash flows from investing activities
Payments for intangible assets (14,844) (6,763)
Payments for property, plant
and equipment (346) (2,618)
Proceeds from disposal of property,
plant and equipment - (184)
Loan repayments received 50 -
Dividends received from associate 531 960
---------------------------------------- ------------ ------------
Net cash used in investing activities (14,609) (8,605)
Cash flows from financing activities
Borrowings - proceeds 22,222 5,912
Borrowings - repayments (4,213) (1,010)
Finance costs paid (639) (204)
---------------------------------------- ------------ ------------
Net cash generated from financing
activities 17,370 4,698
---------------------------------------- ------------ ------------
Net (decrease)/increase in cash
and cash equivalents (7,651) 1,046
---------------------------------------- ------------ ------------
Cash and cash equivalents - beginning
of period 16,261 13,230
Effects of exchange rate changes
on the balance of cash held in
foreign currencies 20 (144)
---------------------------------------- ------------ ------------
Cash and cash equivalents - end
of period 8,630 14,132
---------------------------------------- ------------ ------------
Notes to the Interim Condensed Consolidated Financial
Statements
1. GENERAL INFORMATION AND BASIS OF PREPARATION
The unaudited interim condensed consolidated financial
statements of Victoria Oil & Gas Plc and its subsidiaries ("the
Group") for the six months ended 30 June 2017 have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and in accordance with International Accounting Standard
("IAS") 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's consolidated financial statements for the twelve-month
period ended 31 December 2016.
The unaudited interim condensed consolidated financial
statements have been prepared on a going concern basis, under the
historical cost convention, except for the revaluation of certain
financial instruments.
The Group's presentation currency is the US Dollar and amounts
are rounded to the nearest thousand dollars ($000) except as
otherwise indicated.
In accordance with the Logbaba Farm-In Agreement, GDC was
entitled to 100% of the revenues generated by the Logbaba Project
until such time as the initial exploration costs, which GDC
incurred, are recovered. Thereafter revenues are shared in
accordance with the participating interests in the Logbaba
Concession, of which GDC owns 60%, in the same manner that
operating costs and post exploration capital costs are shared. As
at 31 May 2016 the Logbaba Project reached the milestone whereby
the initial exploration costs were recovered and therefore from 1
June 2016 onwards, revenues are shared in accordance with
participating interests of the parties. GDC entered into a
Participation Agreement, enabling SNH to take up their maximum 5%
participating interest in the Logbaba Project. As a result, with
effect from 12 June 2017, the Group's participating interest has
reduced from 60% to 57% to accommodate SNH's interest.
The Directors have given careful consideration to the
appropriateness of the going concern basis in the preparation of
the financial statements. The gas sale agreement with ENEO Cameroon
S.A. ("ENEO"), the Group's major customer, expired on 22 April
2017. Negotiations to renew this contract are in progress, and the
Directors expect the contract to be finalised in due course. There
is an agreement between the parties to continue trading until the
new contract is finalised. ENEO has continued to consume gas to the
date of publication of the interim condensed consolidated financial
statements.
The Group has net debt of $25.2 million at 30 June 2017, and
ongoing drilling cost commitments. Aside from operating cash, the
Directors believe that the Group will have ready access to
sufficient financial resources, including pursuant to a signed
offer letter from a local financial institution in Cameroon to
provide additional debt facilities, and other sources. The
Directors are of the view that the forecast operational
performance, cash resources on hand, and potential available credit
facilities are sufficient to fund its participating interest.
The Directors have concluded that the Group has adequate
resources available to maintain the Group's operations and to
continue in operational existence for the foreseeable future, and
therefore consider it appropriate to prepare the financial
statements on a going concern basis. Accordingly, these interim
financial statements do not include any adjustments to the carrying
amount and classification of assets and liabilities that may arise
if the Group was unable to continue as a going concern.
2. ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2016.
3. SEGMENTAL ANALYSIS
The Group has one class of business: development, production and
distribution of hydrocarbons and related activities, which is
reported to the Executive Chairman (the chief operating decision
maker) in the form of internal management reports on a regular
basis. The reportable segments are analysed on an operational
basis. Only the Cameroon segment is generating revenue, which is
from the sale of hydrocarbons. The accounting policies of the
reportable segments are the same as the Group's accounting
policies.
The following tables present revenue, (loss)/profit and certain
asset and liability information regarding the Group's business
segments:
Russia
and
Cameroon Kazakhstan Corporate Total
Six months to 30 June
2017 (Unaudited) $000 $000 $000 $000
---------------------------------- -------- ---------- --------- --------
Revenue 15,420 - - 15,420
---------------------------------- -------- ---------- --------- --------
Segment result (2,222) (318) (1,906) (4,446)
Finance costs (49) (11) (64) (124)
---------------------------------- -------- ---------- --------- --------
Loss before taxation (2,271) (329) (1,970) (4,570)
Income tax expense 69 - - 69
---------------------------------- -------- ---------- --------- --------
Loss for the period (2,202) (329) (1,970) (4,501)
---------------------------------- -------- ---------- --------- --------
Total assets 129,068 78 12,858 142,004
Total liabilities (47,737) (547) (2,855) (51,139)
Other segment information
Capital expenditure:
Intangible assets 15,381 - - 15,381
Property, plant and equipment 340 - 6 346
Depreciation and amortisation 8,855 - 11 8,866
Russia
and
Cameroon Kazakhstan Corporate Total
Six months to 30 June
2016 (Unaudited) $000 $000 $000 $000
---------------------------------- -------- ---------- --------- --------
Revenue 23,637 - - 23,637
---------------------------------- -------- ---------- --------- --------
Segment result 6,810 (488) (2,013) 4,309
Finance costs (348) (19) (78) (445)
---------------------------------- -------- ---------- --------- --------
Profit/(loss) before taxation 6,462 (507) (2,091) 3,864
Income tax expense (2,886) - -- (2,886)
---------------------------------- -------- ---------- --------- --------
Profit/(loss) for the
period 3,576 (507) (2,091) 978
---------------------------------- -------- ---------- --------- --------
Total assets 140,477 103 15,097 155,677
Total liabilities (25,158) (244) (3,789) (29,191)
Other segment information
Capital expenditure:
Intangible assets 6,763 - - 6,763
Property, plant and equipment 2,560 - 58 2,618
Depreciation and amortisation 9,891 - 5 9,896
---------------------------------- -------- ---------- --------- --------
4. (LOSS)/EARNINGS PER SHARE
Basic (loss)/earnings per share is computed by dividing the
(loss)/profit after tax for the period available to ordinary
shareholders by the weighted average number of ordinary shares in
issue and ranking for dividend, excluding those held by the ESOP
Trust. Basic and diluted loss per share is the same in the current
period as the effect of any potential ordinary shares was
anti-dilutive and was therefore excluded.
The following table sets forth the computation for basic and
diluted (loss)/earnings per share.
For the six-month period ended 30 June 2017 30 June 2016
Unaudited Unaudited
$000 $000
------------------------------------ ------------ ------------
(Loss)/profit for the period (4,501) 978
------------------------------------ ------------ ------------
Number Number
------------------------------------ ------------ ------------
Number of shares
Weighted number of ordinary shares
- basic 109,596,483 108,133,450
Dilutive potential of share options 582,500 1,299,312
Weighted number of ordinary shares
- diluted 110,178,983 109,432,762
------------------------------------ ------------ ------------
Cents Cents
------------------------------------ ------------ ------------
(Loss)/earnings per share - basic (4.11) 0.90
(Loss)/earnings per share -diluted (4.11) 0.89
------------------------------------ ------------ ------------
5. INTANGIBLE ASSETS
Exploration
and
evaluation
assets Software Total
Six months to 30 June
2017 (Unaudited) $000 $000 $000
------------------------- ----------- -------- -------
Cost
Opening balance 91,413 323 91,736
Additions 15,376 5 15,381
Disposals (381) (12) (393)
Effects of movement
in foreign exchange 849 - 849
------------------------- ----------- -------- -------
Closing balance 107,257 316 107,573
------------------------- ----------- -------- -------
Accumulated amortisation
and impairment
Opening balance 74,055 43 74,098
Charge for the period - 22 22
Disposals - (2) (2)
Effects of movement
in foreign exchange 849 - 849
------------------------- ----------- -------- -------
Closing balance 74,904 63 74,967
------------------------- ----------- -------- -------
Carrying amount 30
June 2017 32,353 253 32,606
------------------------- ----------- -------- -------
Additions to exploration and evaluation assets relate to the
drilling programme at Logbaba.
Exploration
and
evaluation
assets Software Total
Twelve months to 31
December 2016 $000 $000 $000
------------------------- ----------- -------- ------
Cost
Opening balance 71,511 44 71,555
Additions 16,687 279 16,966
Effects of movement
in foreign exchange 3,215 - 3,215
------------------------- ----------- -------- ------
Closing balance 91,413 323 91,736
------------------------- ----------- -------- ------
Accumulated amortisation
and impairment
Opening balance 70,840 23 70,863
Charge for the period - 20 20
Effects of movement
in foreign exchange 3,215 - 3,215
------------------------- ----------- -------- ------
Closing balance 74,055 43 74,098
------------------------- ----------- -------- ------
Carrying amount 31
December 2016 17,358 280 17,638
------------------------- ----------- -------- ------
6. PROPERTY, PLANT AND EQUIPMENT
Oil and gas assets are depreciated on a unit-of-production
basis. Following the impairment of well La-106 on 31 December 2016,
Management have revised the estimate of proven reserves for the
purposes of depreciation of well La-105.
Assets under construction comprise mainly of expenditure on the
uncompleted sections of the pipeline network and pipeline purchased
in advance of network development in Douala, Cameroon.
Plant Oil and Assets
and gas under
equipment interest construction Total
Six months to 30 June
2017 (Unaudited) $000 $000 $000 $000
------------------------ --------- -------- ------------ -------
Cost
Opening balance 41,180 72,725 1,796 115,701
Additions 6 64 276 346
Disposals (160) (387) - (547)
------------------------ --------- -------- ------------ -------
Closing balance 41,026 72,402 2,072 115,500
------------------------ --------- -------- ------------ -------
Depreciation
Opening balance 4,237 30,030 - 34,267
Disposals (157) (372) - (529)
Charge for the period 297 8,547 - 8,844
------------------------ --------- -------- ------------ -------
Closing balance 4,377 38,205 - 42,582
------------------------ --------- -------- ------------ -------
Carrying amount 30 June
2017 36,649 34,197 2,072 72,918
------------------------ --------- -------- ------------ -------
Plant and Oil and Assets
gas under
equipment interest construction Total
Twelve months to 31
December 2016 $000 $000 $000 $000
---------------------------- --------- -------- ------------ --------
Cost
Opening balance 38,252 101,603 - 139,855
Transfers from assets
under construction 2,891 - (2,891)- -
Additions 235 6,576 4,687 11,498
Disposals (198) - - (198)
Impairment of oil and
gas assets - (35,454) - (35,454)
---------------------------- --------- -------- ------------ --------
Closing balance 41,180 72,725 1,796 115,701
---------------------------- --------- -------- ------------ --------
Depreciation
Opening balance 3,147 25,274 - 28,421
Disposals (156) - - (156)
Impairment of oil and
gas assets - (12,707) - (12,707)
Charge for the period 1,246 17,463 - 18,709
Closing balance 4,237 30,030 - 34,267
---------------------------- --------- -------- ------------ --------
Carrying amount 31 December
2016 36,943 42,695 1,796 81,434
---------------------------- --------- -------- ------------ --------
7. NET (DEBT)/CASH
As at 30 June 2017 31 December
2016
Unaudited Audited
$000 $000
------------------------------------ ------------ -----------
Cash and cash equivalents 8,630 16,261
Borrowings: Current liabilities (17,749) (6,707)
Borrowings: Non-current liabilities (16,053) (7,773)
------------------------------------ ------------ -----------
(25,172) 1,781
------------------------------------ ------------ -----------
8. TRADE AND OTHER RECEIVABLES
As at 30 June 2017 31 December
2016
Unaudited Audited
$000 $000
------------------ ------------ -----------
Trade receivables 13,680 5,613
Other receivables 8,612 3,225
------------------ ------------ -----------
22,292 8,838
------------------ ------------ -----------
Trade receivables includes $10.1 million of invoiced gas sales
against which promissory notes have been received for payment. The
promissory notes have maturity dates ranging from three to six
months after the period end. At the date of reporting the value of
outstanding promissory notes was $5.9 million.
Other receivables include a receivable from the Cameroonian
State for the 3% of exploitation assets relinquished by GDC as a
result of the participation agreement signed by GDC whereby the
Cameroonian State has acquired a 5% participation interest in the
Logbaba Project (see Note 1). The receivable is contingent on the
finalisation of settlement negotiations following an audit of
Logbaba Project costs.
9. OTHER PAYABLES
In 2016, a confidential settlement agreement was reached, which
resolved all of the outstanding issues concerning the reserve bonus
and terminated the 1.2% royalty payable to the counterparty. $3.0
million is disclosed as a current liability under other payables,
and a further $3.1 million, discounted at 7% to $2.8 million,
disclosed as a non-current liability under other payables.
10. PROVISIONS
As at 30 June 2017 31 December
2016
Unaudited Audited
$000 $000
--------------------------- ------------ -----------
Decommissioning provisions 2,289 2,406
Production bonus provision 986 738
Provision for litigation 1,385 1,442
--------------------------- ------------ -----------
4,660 4,586
--------------------------- ------------ -----------
Decommissioning provisions relate to the Logbaba Concession and
Russian assets. Production bonus provisions relates to the Logbaba
Concession. Production levels have indicated that the required
production targets will be achieved.
11. BORROWINGS
As at 30 June 2017 31 December
2016
Unaudited Audited
$000 $000
--------------------------------- ------------------------------------- -----------
Loans - repayable in one year 17,749 6,707
Loans - repayable in two to five
years 16,053 7,773
33,802 14,480
--------------------------------- ------------------------------------- -----------
A local bank has approved a facility for GDC matching the
promissory notes amounts received from customers (see note 8). The
facility of $10.1 million at 30 June 2017, is interest free and has
repayment dates in line with the promissory note maturity dates,
which range from three to six months after the period end.
12. RELATED PARTY TRANSACTIONS
Cameroon Holdings Limited ("CHL") is held jointly by Victoria
Oil & Gas Plc (35%) and Logbaba Projects Limited (65%). HJ
Resources Limited ("HJR") has a 67% interest in Logbaba Projects
Limited. Kevin Foo (Executive Chairman) and certain members of his
family are the potential beneficiaries of a discretionary trust
that owns HJR. CHL is entitled to a production royalty based on GDC
revenue. The details of the royalty are set out in the Group's
Report and Accounts to 31 December 2016. During the period,
royalties of $2.3 million accrued to CHL by GDC. Dividends of $0.5
million were paid by CHL to Victoria Oil & Gas Plc and are
reflected as 'dividends received from associate' in the cash flow
statement.
No further related party transactions have taken place during
the six-month period ended 30 June 2017 which have materially
affected the financial position or the performance of the Group
during that period. The nature and amounts of related party
transactions in the first six months of the current financial year
are consistent with those reported in the Group's Report and
Accounts to 31 December 2016.
13. BOMONO ACQUISITION
During the period, the Group concluded an agreement with EurOil
Limited ("EurOil"), a Bowleven Plc subsidiary, for the assignment
of an 80% participating interest in the Bomono PSC. EurOil will
remain as the 20% participation holder.
The deal is subject to various conditions precedent, including
the granting by the Cameroon State of a two-year provisional
exploitation licence and various regulatory approvals required to
formalise the transfer of the assignment from EurOil to GDC. The
longstop date on this transaction has been extended to 31 December
2017.
The deal includes:
-- GDC installing a pipeline connection from the Moambe well to
the existing GDC pipeline network, and the completion of civil
engineering works at the Moambe wellhead necessary for the gas
processing plant installation. The estimated capital cost of these
works is $6.0 million;
-- A 3.5% royalty from GDC's production share of hydrocarbons,
with an aggregate cap limiting the total royalty payments to US$20
million; and
-- GBP100,000 worth of the Company's ordinary shares.
The amount and timing of the Bomono work programme are subject
to negotiations with the Cameroon State. Under the Bomono PSC the
Government has the option to acquire a 10% participating interest
in exploitation activities. This means that should the Cameroon
State exercise its option, the Group's interest would thereafter be
reduced to 72%.
14. COMMITMENTS
Capital commitments for equipment for the Logbaba plant of $1.0
million were in place at 30 June 2017. The equipment is expected to
be commissioned during Q3 2017.
At 30 June 2017, GDC had $9.4 million of commitments pertaining
to the drilling programme, which is expected to be incurred during
2017.
As the formal assignments of the participating interests in the
Matanda and Bomono blocks have not been completed, the work
programmes associated with these participating interests, for which
both the amount and timing are subject to negotiation with the
Cameroon State, are not recorded as commitments of the Group.
15. POST BALANCE SHEET EVENTS
Details of the reduction of capital, being the cancellation of
the Company's deferred shares and the cancellation of the share
premium account, were set out in the circular to shareholders,
dated 25 May 2017, and the proposal was approved by shareholders at
the Company's Annual General Meeting held on 28 June 2017.
On 26 July 2017, the Court approved the Company's application,
and the requisite documents have been filed to allow the Company to
execute the reduction of capital, which will be reflected in the
Company's report and accounts to 31 December 2017.
The reduction of capital does not change the number or rights of
issued ordinary shares of 0.5 pence each in the capital of the
Company, which remains at 110,571,762.
16. SEASONALITY
The Gas Sales Agreement with our grid power customer has a
take-or-pay clause which results in consumption levels varying
between the dry months (January to June) and rainy months (July to
December). The minimum monthly consumption level during the dry
months, when hydro-electric power is less prevalent, is three times
higher than during the rainy months, resulting in higher revenues
and operating profits from this customer in the first half of the
financial year than the second six-month period. Revenues and
operating profits for all other customers are more evenly spread
between the two half years.
17. APPROVAL OF INTERIM FINANCIAL STATEMENTS
The unaudited interim condensed consolidated financial
statements were approved by the Board of Directors on 27 September
2017.
Copies of the Interim report are available by download from the
Company's website at: www.victoriaoilandgas.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKODQPBKDFCB
(END) Dow Jones Newswires
September 28, 2017 02:02 ET (06:02 GMT)
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