TIDMFEP
RNS Number : 8207X
Forum Energy Plc
21 February 2012
21 February 2012
FORUM ENERGY PLC
("Forum Energy" or the "Company")
Audited results for the year ended 31 December 2011
Forum Energy, the UK incorporated oil and gas exploration and
production company with a focus on the Philippines, today announces
its audited results for the year ended 31 December 2011.
OPERATIONAL Highlights
-- First sub-phase 2D and 3D seismic surveys work programme
completed during 2011, results expected by mid 2012
-- Continued discussions with potential farm-in partners on the development of SC72
-- Planning of second sub-phase of the SC72 licence underway
with drilling to commence before June 2013
-- Libertad Gas Field power generation commenced in February
2012 and planning for drilling of onshore wells in 2013 at the
Service Contract 40 licence area
-- Net Galoc production of 56,000 barrels 2011 with net
production of 36,000 barrels expected in 2012
Financial and Corporate Highlights
-- Revenues of US$12.7 million in 2011 (2010: US$6.1 million)
-- Gross Profit of US$5.8 million in 2011 (2010: US$2.1 million)
-- Fixed overhead costs reduced further to US$2.0 million in 2011 (2010: US$2.4 million)
-- Net Profit of US$3.4 million (2010: loss US$0.6 million)
-- Drawdown of U$6 million facility during 2011 of US$10 million
3 year facility agreement with Philex
-- Total equity of US$47 million as of 31 December 2011 (2010: US$44 million)
Robin Nicholson, Executive Chairman, commented:
"The successful implementation of the first sub-phase work
programme over our key asset, SC 72, located offshore West Palawan
marked a significant step forward for Forum. With the results of
last year's seismic shoot carried out in 2011 expected in mid 2012,
our plans are now under way for further appraisal and development
through the drilling of the first wells in the area since the
1980's - as we move through and beyond the second sub phase of the
SC72 contract and the development of this key asset.
I am confident that Forum is well positioned to take full
advantage of SC72 with the financial backing from Philex Petroleum
Corporation and its major shareholders, Philex Mining Corporation
and the First Pacific Group in Hong Kong.
We are extremely excited to be moving forward with the appraisal
and development of the SC72 licence and to reporting the results of
our seismic over SC72 and our precise plans for the drilling of the
second sub-phase wells, which we expect will be executed before
June 2013. In addition, support from the Philippine government is
encouraging and as we proceed we are well positioned to pursue our
goal of establishing the commerciality of the hydrocarbons within
SC72."
For further information please contact:
Forum Energy Plc
Andrew Mullins, Executive Director Tel: +44 (0) 1932 445 344 Execution Noble & Company Limited
Harry Stockdale / John Llewellyn-Lloyd Tel: +44 (0) 20 7456 9191 Or visit the Company's website:
www.forumenergyplc.com <http://www.forumenergyplc.com>
OVERVIEW
Forum's principal asset is a 70% interest in Service Contract 72
"SC72" an 8,800-square kilometre ("Km(2) ") offshore petroleum
licence situated west of Palawan Island in the West Philippine Sea.
In 2006, results from a 248 Km(2) 3D seismic survey over the
licence area indicated a mean volume of 3.4TCF gas-in-place ("GIP")
with significant upside potential. It is a primary objective of the
company to establish the commerciality of the hydrocarbons within
SC72.
During 2008 Philex Mining Corporation ("Philex") a company
listed on the Philippine Stock Exchange, acquired an effective
61.44% controlling stake (held directly and indirectly) in the
Company. An additional fundraising in November 2009 of GBP1.5
million increased Philex's stake (held directly and indirectly) to
62.59%.
In September 2011, the Philex subsidiary which held these
investments, Philex Petroleum Corporation, was listed on the
Philippine Stock Exchange. Philex Petroleum Corporation now
directly and indirectly controls 64.45% of the Ordinary Share
capital of the Company.
In 2010, the Company entered into a US$10 million facility
agreement with Philex. The facility is available for a three year
period at an interest rate of US LIBOR + 4.5% and enabled the
Company to fund its 70% share of the first sub-phase work programme
over SC72. As at 31 December 2011 the Company had utilised US$6
million of this facility with US$4 million still available for draw
down.
In March 2011, a total of 565 Km(2) of 3D seismic data was
acquired over the Sampaguita Gas Field and 2,202 Line-Km of 2D
seismic data was acquired to further define additional leads
identified within the SC72 acreage and to possibly upgrade existing
leads to prospects. This work, which satisfied Forum's obligations
with the Philippine Department of Energy under the first sub-phase
of the SC72 contract, was primarily designed to provide a more
comprehensive evaluation of the SC72 property and to identify
potential sites for appraisal wells.
The Company commenced processing and interpretation of the
acquired data in 2011 and the results of this are expected to be
available by mid 2012.
The Company is in the process of planning the execution of the
second sub-phase work programme which is expected to involve the
drilling of up to two wells before June 2013.
In addition to moving ahead with the approved work programme,
the Company continues to have discussions with potential strategic
partners for the purpose of accelerating the development of
SC72.
The Company's shares are traded on AIM under the symbol FEP.
ASSET SUMMARY
SC72
In February 2010, the GSEC101 exploration licence was converted
into Service Contract 72. The area of the block was reduced from
10,360 Km(2) to 8,800 Km(2) as part of this conversion.
The block contains the Sampaguita Gas Discovery with expected
mean GIP of 3.4 TCF and a number of additional leads. In 2008, a
Joint Venture was formed with Monte Oro Resources and Energy, Inc.
("MORE") which qualified the JV for the Filipino Participation
Incentive Allowance "FPIA". Through a 30% farm-out to MORE, the JV
will receive 7.5% of any gross revenues, prior to sharing revenues
with the government. In the first quarter of 2011, the Company
completed565 Km(2) of 3D seismic acquisition over the Sampaguita
Gas Field and 2,202 Line-Km of 2D seismic data was also acquired
over the block in order to further define additional leads.
The Company is currently planning the execution of the second
sub-phase work programme at SC72 which is expected to involve the
drilling of up to two wells before June 2013.
The Company is also continuing to discuss potential partnerships
with regards to SC72 to assist and augment in the successful
acceleration of the development of the project.
NW PALAWAN
Forum's main interest in this area is a 2.27% interest in the
producing Galoc Field. Galoc produced a total of 2.4 million
barrels in 2011 with an estimated total of 1.61 million barrels
expected to be produced in 2012. Forum received net revenues after
deduction of share of operating costs of US$10.1 million in 2011
(2010: US$4.1 million). The projected fall in production for 2012
reflects the fact that the operations will be closed for the period
December 2011 to March 2012 whilst new lifting equipment is
installed which is expected to extend production.
Forum also has nominal production from the SC6/14 Nido/Matinloc
fields also contained within this block.
SC40
The SC40 block in which Forum has a 66.67% interest contains
numerous onshore prospects and leads with offshore potential. In
addition, the Libertad Gas Field contained within the block is now
currently being developed with DESCO and, whilst not material to
the group's revenues, first production commenced in February 2012.
Further ventures to produce across this significant acreage are
underway and the Company is planning to drill onshore wells in
2013. The Company also continues to explore the possibility of
co-operation with other companies in this area.
The Company's Hycalog drilling rig is located in the Central
Maya Bulge "CMB" area located in the Northern area onshore SC40 and
can be transported via land and utilised for further drilling
activities contingent on the results of the Company's on-going
exploration programme.
EXECUTIVE CHAIRMAN'S STATEMENT
Dear Shareholder,
The successful implementation of the first sub-phase work
programme over our key asset, SC72, located offshore West Palawan
marked a significant step forward for Forum. The results of last
year's seismic shoot carried out are expected in mid 2012 and our
plans are now under way for further appraisal and development
through the drilling of the first wells in the area since the
1980's - as we move through and beyond the second sub phase of the
SC72 contract and the development of this key asset.
I am confident that Forum is well positioned to take full
advantage of SC72 with the financial backing from Philex Petroleum
Corporation and its major shareholders, Philex Mining Corporation
and the First Pacific Group in Hong Kong.
SC72 (70% interest)
The SC72 licence covers an area of 8,800 Km(2) and contains the
Sampaguita Gas Discovery with expected mean gas-in-place ("GIP") of
3.4 TCF and a number of additional leads. The results of the
seismic interpretation are expected to be available in mid 2012 and
this work is expected to define up to two drilling locations which
we expect to be implemented as part of the Company's second
sub-phase work programme to be initiated by mid 2013. It remains
our goal to establish the commerciality of the hydrocarbons within
SC72.
A total of 565 Km(2) of 3D seismic data was acquired over the
Sampaguita Gas Field and 2,202 Line-Km of 2D seismic data was also
acquired over the block in early 2011, exceeding the government of
the Philippines minimum contractual requirements under the first
sub-phase of the contract.
The Company is also continuing to assess potential partnerships
in SC72, although there are no proposals currently in place.
Galoc (2.27% interest)
Production from the Galoc development reached 2.4 million
barrels gross in 2011 (56,000 barrels net to the Company) and is
expected to produce 1.61 million barrels in 2012 (36,000 barrels
net to the Company). The Company has a 2.27% interest in the field
and received US$10.1 million (US$4.1 million in 2010) after
deduction of share of operating costs from crude sales from the
field in 2011. A second phase of development is expected to
commence in 2012.
SC40 (66.67% interest)
The Gas Sale and Purchase Agreement with Desco was approved by
the Department of Energy in July 2009 and production from the
Libertad field has commenced, the Philippine Energy Regulation
Commission (ERC) granted a certificate of compliance (COC) to Desco
allowing operation of the 1MW facility and enabling Desco to sell
the generated power to the local grid though Cebu II Electric
Cooperative ("Cebeco")
On 30 January 2009, Forum entered into a Gas Sale and Purchase
Agreement ("GSPA") agreement with Desco, Inc. to develop the
Libertad Gas Field. Under the agreement Desco will install up to
3MW of power generating units at the site in Northern Cebu using
gas turbines. Currently, a GE Jenbacher Turbine rated at 1mw has
been installed.
The gas will be sold to Desco at an agreed rate of US$1.50 per
million BTU (British Thermal Units) for the first 0.70 billion
cubic feet of gas (BCF) extracted and utilized, and US$1.60 per
million BTU for any gas produced beyond 0.70 BCF. Desco will sell
the electricity produced to Cebeco under a power supply
agreement.
On 6 February 2012, commercial production at the Libertad Field
commenced, although these revenues are not material to the group's
cash flow this represents key progress at SC40.
In addition, further ventures to produce across the significant
SC40 acreage are underway with drilling on the block planned for
2013. The Company's Hycalog drilling rig is also located in the
North Cebu area and may be utilised for further drilling activities
contingent on the results of the Company's on-going exploration
programme.
Financial Results and Key Financial Indicators
The Group recorded a gross profit of US$5.8 million for the 12
months ended 31 December 2011 compared to US$2.1 million profit for
the previous year. Our revenues increased by 110% to US$12.7
million due to full production at Galoc and a 18.7% increase in oil
prices. G&A costs continued to reduce by 17% year-on-year to
US$2 million.
The Group recorded a net profit after tax of US$3.4 million,
compared to a net loss after tax of US$0.6 million in 2010.
This generated earnings per share of US$0.104 (2010: loss per
share US$0.013).
Cash Flow
The Company's working capital decreased from US$11.7 million to
US$4.7 million, including the US$4 million available of the
facility agreement with Philex and taking into account US$3.3
million of liabilities at year end due to Basic Energy (Note 8).
Cash and cash equivalents at the end of the period stood at US$2.8
million.
During the year payments totalling US$4.9 million (2010 - US$1.8
million) were made to Basic Energy under the 2005 purchase
agreement of the Company's existing N.W.Palawn assets which include
Galoc. It is expected that final liabilities to Basic totalling
US$3.3 million at year end will be settled within 2012.
Outlook for 2012
We are extremely excited to be moving forward with the appraisal
and development of the SC72 licence and to reporting the results of
our seismic over SC72 and our precise plans for the drilling of the
second sub-phase wells, which we expect will be executed before
June 2013. In addition, support from the Philippine government is
encouraging and as we proceed we are well positioned to pursue our
goal of establishing the commerciality of the hydrocarbons within
SC72."
We take this opportunity to thank our shareholders, our staff
and the Board of Directors, employees and consultants for their
valuable assistance in our endeavours to add value to your
investment in the Company.
Yours sincerely,
Robert C. Nicholson
Executive Chairman
21 February 2012
Consolidated statement of comprehensive income
for the year ended 31 December 2011
Year ended Year ended
31 December 31 December
2011 2010
US$'000 US$'000
Revenue 12,734 6,068
Cost of sales (6,913) (4,009)
Gross profit 5,821 2,059
Administrative expenses (1,987) (2,397)
Profit/(loss) from operations 3,834 (338)
Finance income 7 15
Finance expenses (421) (235)
Profit/(loss) before tax 3,420 (558)
Taxation - -
Profit/(loss) for the year 3,420 (558)
Total comprehensive profit/(loss) for the year 3,420 (558)
Profit/(loss) and total comprehensive profit/(loss) attributable
to:
Owners of the Parent 3,457 (438)
Non-controlling interest (37) (120)
3,420 (558)
US Cents US Cents
Earnings/(loss) per Ordinary Share (US cents) attributable to
equity holders of the Parent
Basic and diluted 10.4 (1.3)
All of the results of the Group during the year relate to
continuing activities.
Statement of changes in equity
for the year ended 31December 2011
Share Non- Total capital
Share Share option Retained controlling and
capital premium reserve deficit Total interest reserves
Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000
Balance as at 1 January 2010 5,941 50,869 493 (14,326)
42,977
1,454 44,431
Total comprehensive loss for the year - - - (438) (438)
(120) (558)
Transfer to retained deficit - - (55) 55 - - -
Issue of shares (net of issue costs) 41 95 - - 136 - 136
Balance as at 31 December 2010 5,982 50,964 438 (14,709)
42,675
1,334 44,009
Total comprehensive income for the year - - - 3,457 3,457 (37)
3,420
Balance as at 31 December 2011 5,982 50,964 438 (11,252)
46,132
1,297 47,429
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2011
2011 2010
US$'000 US$'000
Assets:
Non-current assets
Property, plant and equipment 5,888 3,673
Intangible assets 50,730 42,630
Investments 24 18
Total non-current assets 56,642 46,321
Current assets
Inventories 57 419
Trade and other receivables 1,862 1,151
Cash and cash equivalents 2,761 2,464
Total current assets 4,680 4,034
Total assets 61,322 50,355
Liabilities:
Non-current liabilities
Loans 6,000 -
Other liabilities and provisions 3,929 3,994
Total non-current liabilities 9,929 3,994
Current liabilities
Trade payable and other payables 3,964 2,352
Total current liabilities 3,964 2,352
Total liabilities 13,893 6,346
Total net assets 47,429 44,009
Capital and reserves attributable to equity holders of the
Company
Share capital 5,982 5,982
Share premium 50,964 50,964
Share option reserve 438 438
Retained deficit (11,252) (14,709)
46,132 42,675
Non-controlling interest 1,297 1,334
Total equity 47,429 44,009
The financial statements were approved and authorised for issue
by the Board on 21 February 2012.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31December 2011
Year ended Year ended
31 December 31 December
2011 2010
US$'000 US$'000
Cash flows from operating activities
Profit/(loss) before tax for the year 3,420 (558)
Adjustments for:
Depreciation 4,718 2,454
Gain on financial assets (6) (13)
Finance income (1) (2)
Foreign exchange losses 160 35
Interest paid on loan facility 261 -
8,552 1,916
Increase in trade and other receivables (711) (512)
Decrease/(increase) in inventories 362 (354)
Increase in trade and other payables 1,547 843
Increase in provisions and employee benefits - 26
Net cash flows from operating activities 9,750 1,919
Investing activities:
Purchase of property, plant and equipment (6,934) (2,001)
Disposal of property, plant and equipment 1 42
Purchase of intangible assets (8,100) (1,771)
Finance income 1 2
Finance expense (261) -
Net cash from investing activities (15,293) (3,728)
Financing activities:
Issue of ordinary share capital (net of issue costs) - 136
Loan facility drawn down 6,000 -
Net cash from financing activities 6,000 136
Net increase/(decrease) in cash and cash equivalents 457
(1,673)
Cash and cash equivalents at beginning of the year 2,464
4,172
Exchange losses on cash and cash equivalents (160) (35)
Cash and cash equivalents at end of the year 2,761 2,464
Notes to the financial statements
for the year ended 31December 2011
1 ACCOUNTING POLICIES
Basis of preparation
The accounting policies have been consistently applied to all
the years presented, unless otherwise stated. The Group financial
statements have been prepared and approved by the Directors in
accordance with International Financial Reporting Standards IFRSs
and IFRIC interpretations, issued by the International Accounting
Standards Board (IASB) as endorsed for use in the EU ("IFRSs") and
those parts of the Companies Act 2006 that are applicable to
companies that prepare their financial statements under IFRS.
The financial information for the years ended 31 December 2011
and 31 December 2010 does not constitute statutory accounts as
defined by section 435 of the Companies Act 2006 but is extracted
from the audited accounts for those years. The 31 December 2010
accounts have been delivered to the Registrar of Companies. The 31
December 2011 accounts will be delivered to Companies House within
the statutory filing deadline. The auditors have reported on those
accounts; their report was unqualified and did not contain
statements under Section 498 (2) - (3) of the Companies Act
2006.
Going concern
On 15 February 2010, the Company was awarded the Service
Contract over the SC72 licence area. The first sub phase Work
Programme was completed in March 2011. The second sub phase Work
Programme requires a minimum spend commitment of US$6 million by 30
June 2013.
There is also $3.3 million of additional consideration payable
to Basic Petroleum the Galoc oil field, after paying US$6.7
million.
The Group expects to be able to meet the requirements of these
commitments through the remaining US$4 million facility agreement
entered into between the Group and Philex Mining Corporation, the
30% farm-out to Monte Oro Resources and from revenues generated
from the Galoc oil field. On this basis and after making enquiries,
the Directors have a reasonable expectation that the Company and
the Group as a whole have adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.
2 SEGMENT ANALYSIS
The Group has three reportable segments:
- Producing assets
- Exploration assets
- Head office costs
The operating results of each of these segments are regularly
reviewed by the board of Directors in order to make decisions about
the allocation of resources and assess their performance:
The segmental results for the year ended 31 December 2011 are as
follows:
Producing Exploration Head Office
Assets Assets Costs Total
US$'000 US$'000 US$'000 US$'000
Revenue 12,734 - - 12,734
Cost of sales (6,913) - - (6,913)
Gross profit 5,821 - - 5,821
Administrative expenses (135) - (1,852) (1,987)
Profit/(loss) from operations 5,686 - (1,852) 3,834
Finance income - - 7 7
Finance expenses - (261) (160) (421)
Profit for the year 5,686 (261) (2,005) 3,420
The segmental results for the year ended 31 December 2010 are as
follows:
Producing Exploration Head Office
Assets Assets Costs Total
US$'000 US$'000 US$'000 US$'000
Revenue 6,068 - - 6,068
Cost of sales (4,009) - - (4,009)
Gross profit 2,059 - - 2,059
Administrative expenses (120) - (2,277) (2,397)
Profit/(loss) from operations 1,939 - (2,277) (338)
Finance income - - 15 15
Finance expenses - - (235) (235)
Profit for the year 1,939 - (2,497) (558)
The segmented assets and liabilities at 31 December 2011 are as
follows:
Producing Exploration Head Office
Assets Assets Costs Total
US$'000 US$'000 US$'000 US$'000
Total non-current assets 5,811 50,730 101 56,642
Total current assets 3,173 418 1,089 4,680
Total assets 8,984 51,148 1,190 61,322
Total non-current liabilities (15) (9,914) - (9,929)
Total current liabilities (3,685) (213) (66) (3,964)
Total liabilities (3,700) (10,127) (66) (13,893)
Net assets 5,284 41,021 1,124 47,429
The segmented assets and liabilities at 31 December 2010 are as
follows:
Producing Exploration Head Office
Assets Assets Costs Total
US$'000 US$'000 US$'000 US$'000
Total non-current assets 3,580 42,630 111 46,321
Total current assets 2,253 508 1,273 4,034
Total assets 5,833 43,138 1,384 50,355
Total non-current liabilities (79) (3,915) - (3,994)
Total current liabilities (1,861) (275) (216) (2,352)
Total liabilities (1,940) (4,190) (216) (6,346)
Net assets 3,893 38,948 1,168 44,009
Other segmented items 31 December 2011 are as follows:
Producing Exploration Head Office
Assets Assets Costs Total
US$'000 US$'000 US$'000 US$'000
Capital expenditure 6,923 8,100 11 15,034
Depreciation 4,692 - 26 4,718
Other segmented items 31 December 2010 are as follows:
Producing Exploration Head Office
Assets Assets Costs Total
US$'000 US$'000 US$'000 US$'000
Capital expenditure 1,896 1,771 105 3,772
Depreciation 2,415 - 39 2,454
Revenue
All of the 2011 revenues (2010 - 100%) were generated from
Philippine based assets the Galoc, Nido & Matinloc fields.
3 EArnings/(LOSS) PER SHARE
Earnings/(loss) per Ordinary Share has been calculated using the
weighted average number of shares in issue during the relevant
financial periods. The weighted average number of equity shares in
issue for the period is 33,364,533 (2010: 33,256,478).
Profits for the Group attributable to the equity holders of the
Company for the year are US$3,457,000 (2010: Loss -US$438,000).
The effect of the share options in issue under the Share Option
Plan is anti-dilutive.
4 PROPERTY, PLANT AND EQUIPMENT
Transport Furniture, Tools
Oil and gas and motor fixtures and other Group
costs equipment and fittings equipment Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2011 7,907 98 206 116 8,327
Additions 6,923 2 9 - 6,934
Disposals - (11) - - (11)
At 31 December 2011 14,830 89 215 116 15,250
Depreciation
At 1 January 2011 4,327 20 191 116 4,654
Charge for the year 4,692 19 7 - 4,718
Disposals - (10) - - (10)
At 31 December 2011 9,019 29 198 116 9,362
Cost
At 1 January 2010 6,011 74 196 116 6,397
Additions 1,896 95 10 - 2,001
Disposals - (71) - - (71)
At 31 December 2010 7,907 98 206 116 8,327
Depreciation
At 1 January 2010 1,912 28 177 112 2,229
Charge for the year 2,415 21 14 4 2,454
Disposals - (29) - - (29)
At 31 December 2010 4,327 20 191 116 4,654
Net book value
At 31 December 2011 5,811 60 17 - 5,888
At 31 December 2010 3,580 78 15 - 3,673
At 31 December 2009 4,099 46 19 4 4,168
5 INTANGIBLE ASSETS
Unevaluated Unevaluated
oil, gas oil, gas
and mining and mining
costs costs
US$'000 US$'000
Group 2011 2010
Cost and Net book value
At 1 January 42,630 40,859
Additions 8,100 1,771
At 31 December 50,730 42,630
The unevaluated oil, gas and mining costs relate to the
acquisition of the Group's assets in the Philippines.
The net book value of assets included within intangible fixed
assets are as follows:
- SC40 - US$29,024,000 (2010: US$28,689,000)
- SC72 - US$21,474,000 (2010: US$13,720,000)
- Others - US$232,000 (2010: US$221,000).
The Group have considered the intangible assets for indications
of impairment and have concluded that the recoverable amount of
assets is considered higher than the current book values therefore,
an impairment provision is not required
6 COMMITMENTS
At 31 December 2011, the Group had commitments totalling US$6
million in operational and exploration expenditure, for the second
sub-phase programme over Service Contract SC72 ("SC72") (31
December 2010: US$3 million).
7 RELATED PARTY TRANSACTIONS
During the year the following related party transactions
occurred within the Group:
Philex Mining Corporation is the majority shareholder and
ultimate controlling party of the Group.
Forum Philippines Holdings Ltd, a wholly-owned subsidiary of the
Group, entered into a US$10 million Facility Agreement ("the
Facility") with Philex Mining Corporation on 24 November 2010.
The Facility will be available for a three year period from the
24 November 2010 and funds can be borrowed at an interest rate of
US LIBOR + 4.5%. During 2011 US$6 million was drawdown to enable
the Group to fund its 70% share of a first sub-phase work programme
over Service Contract 72 ("SC72") which has now been completed.
Obligations arising from funds drawn under this Facility are not
convertible into the Company's or Forum Philippines' Ordinary
Shares.
Amounts due to Philex Mining Corporation in respect of this
facility agreement as at 31 December 2011 amounted to US$6,000,000
(2010: US$Nil). Arrangement fees paid to Philex Mining Corporation
during the year for the facility were US$Nil (2010: US$200,000).
Interest charged for use of the facility during the year was
US$261,952 (2010: US$Nil).
8 CONTINGENT LIABILITIES
Further to the announcement of 10 May 2011, the Company remains
in an arbitration process with Basic Energy Corporation ("BEC") in
relation to certain assets acquired from BEC.
Although the Company had signed a conditional settlement
agreement with BEC which would have concluded the arbitration
process this settlement agreement was not completed because certain
third party consents could not be obtained.
Out of the US$12 million of potential additional consideration,
the Directors have assessed that US$10 million would be payable
(approximately US$9 million net of the US$650,000 payment made, as
announced on 10 May 2011).
However, of this total US$10 million, US$6.7 million has been
paid up to the end of 2011, and the balance of U$3.3 million is
accrued within current liabilities (2010: US$1.2 million).
The Directors consider that a potential additional liability of
US$2 million is dependent upon net future field production levels
from the acquired assets and will not become payable due to the
current and forecast levels of production of these assets.
- END
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAAAFAFEAEFF
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