RNS Number:4765K
Aminex PLC
29 April 2003
AMINEX PLC
("Aminex" or "the Company")
Preliminary Results for the year ended 31 December 2002
Aminex, the oil and gas company listed on the London and Irish Stock Exchanges,
today announces its preliminary results for the year ended 31 December 2002.
Highlights
* Tanzania drilling programme expected to commence in third quarter 2003
* Tanzanian drilling costs substantially reduced from original estimate
* $7.5 million returned to shareholders
* Absence of Komi revenue coupled with high bid defence costs of $2
million has resulted in net loss for year of $4.95 million
* Strong balance sheet with no net debt
Overview
The Group's activities now have a much stronger bias towards high impact
exploration following the successful sale of the Komi assets and the subsequent
distribution to shareholders. This is reflected in the acquisition in early 2002
of Tanzoil, a major holder of exploration acreage in Tanzania.
Financial Review
In 2001 the Group disposed of its assets in the Komi Republic of Russia, as a
consequence of which current oil and gas production is now restricted to the
Group's operations in the United States and its interest in Tatarstan production
through its shareholding in Ideloil.
As a consequence of this change of strategy outlined above, in particular the
disposal of the greater part of the Group's Russian oil production, but also as
a consequence of reduced US gas production, Group turnover has decreased from
$11.3 million in 2001 to $3.5 million in 2002. Cost of sales has similarly
contracted from $7.3 million in 2001 to $2.3 million in 2002.
The current period results have also been adversely affected by an ill
considered and unsolicited bid for the Company in early 2002 which the Group
successfully defended but at a cost of $2 million.
After offsetting the Group's share of Ideloil's operating profit and its share
of loss arising from its interest in the oilfield services joint venture,
including associated provisions, the loss on ordinary activities before interest
amounted to $4.97 million which compares with a profit of $5.52 million in 2001
(the latter figure including a $5.7 million profit on disposal of the Group's
55% interest in OOO AmKomi).
The resulting net loss after tax for the Aminex Group for the twelve months
ended 31 December 2002 amounted to $4.95 million. This compares with a profit
of $4.94 million for 2001.
The Balance Sheet reflects a positive cash position and no debt. A distribution
to shareholders of $7.5 million, representing part of the proceeds of the Komi
asset sale, was made by way of a capital reduction.
Operations
In the United States net oil production has marginally increased over that of
the previous year; likewise the average oil price was slightly higher. Gas
production was lower than for the previous year. The average gas price achieved
this year was $3.24 per mcf, almost half the $5.28 per mcf achieved in 2001.
In the September 2002 Interim Statement, Aminex reported that production from
the gas well at Sabine Lake would commence towards the end of the year. However,
the operator has encountered further technical delays in tying in the gas and
first production is now not expected to commence until the middle of this year.
The Alta Loma gas field came on stream in August 2002 and has made a significant
contribution to operating profit. At Vinton the new production from the "3D
Areas" is approximately double that for the previous year, following the
drilling of a successful well. Production from the core area also increased
following successful well workovers.
Work has continued during the period to advance the new prospects at Antelope
and Benchmark, both in Texas. A well was drilled on the Kodiak, Texas prospect
that encountered encouraging gas bearing sands but was not tested due to heavy
water intrusion.
The 2001 Annual Report made reference to a lawsuit regarding an accident
resulting from the collapse of a drilling rig derrick in the USA. Aminex,
acting as agent for the seller, sold the rig to a Texan company Corpus Christi
Drilling & Workover LLC ("CCD"). This lawsuit has since been resolved with all
original claims dismissed. However, in recent weeks CCD has filed a lawsuit
against Aminex and others, seeking recovery of, amongst other things, property
damage to the drilling rig and lost revenue. While there can be no certainty
regarding the outcome of this matter, the Directors believe on the information
currently available that there is no basis for any claims against Aminex.
In the Russian Federation the sole producing asset is the Group's 23.8 %
interest in the Dachnoye oil field in Tatarstan, operated by the Group's
associated company Ideloil. The Dachnoye Field produced 676,000 barrels of oil
in 2002, compared to 459,000 barrels in the previous year, an increase of 47%.
During the year, thirteen new wells were drilled and completed. Aminex continues
through the local arbitration courts to dispute the issue in early 2002 of new
shares by Ideloil to an outside investor at below their full value which has had
the effect of diluting Aminex's equity interest from 29.7% to 23.8%.
During the year the Group reacquired at a nominal cost from its partner Ci4net
its 50% shareholding in Amossco which is now operating as a wholly owned
subsidiary of Aminex PLC. In addition to its normal trading activities, the
Amossco organisation will provide the necessary support services for the Group's
Tanzanian joint venture.
Tanzanian venture
In February 2002 Aminex acquired the entire share capital of Tanzoil NL, an
Australian privately-owned company which was the largest holder of acreage
onshore and offshore in Tanzania. The acquisition of Tanzoil was selected from
a wide range of competing opportunities as offering high exploration potential
close to existing proved reserves, a working hydrocarbon system, large
individual prospect sizes, proximity to infrastructure under construction and a
welcoming and stable political environment offering fair fiscal terms. In the
oil industry, timing in the cycle is all-important and Aminex believed and
continues to believe that Tanzania's oil and gas potential is poised to take
off. The dramatic speed of oil and gas development in West Africa in recent
years reflects not only its geological potential but also a rush by
industrialised countries to secure oil and gas reserves away from the troubles
of the Middle East, brought into sharp focus by the Iraq war. East Africa, in
Aminex's view, offers its own array of exploration potential which has been
largely ignored. However the recent arrival of both Shell and Petrobras in
Tanzanian waters suggests that Aminex is not alone in identifying the potential
of the East African margin. Aminex's forthcoming programme will be the first
offshore new drilling in Tanzania for twelve years. During all its exploration
history, only eight wells have ever been drilled offshore Tanzania, of which two
were gas discoveries of approximately 1 trillion cubic feet each, five had oil
and gas shows and one was a technical failure. This is a very small effort in a
large area.
Of three licences acquired with Tanzoil, Aminex has now relinquished the Selous
onshore licence as being too speculative to justify investment of shareholders'
funds but retains and is concentrating on the Nyuni and Ruvuma licences. A
Production Sharing Agreement on the Nyuni licence calls for two wells to be
drilled in the next twelve months.
The Nyuni licence adjoins the trillion cubic feet Songo Songo gas field, which
is part of the internationally financed Songas project to bring gas via a 230
kilometre pipeline to Dar es Salaam, to which the Nyuni licence has rights of
access.
In December 2002, Aminex announced the signing of a heads of agreement with
Petromar S.A. ("Petromar"), a wholly-owned subsidiary of Petrom SA ("Petrom) the
state oil company of Romania, to drill two wells in the Nyuni licence using
Petromar's Orion type jack-up rig "Atlas". The cost of the two well programme
was estimated to be $15 million. Detailed work by Petrom and Aminex has since
shown that while the Atlas rig is suited to such a programme, the mobilisation
of this rig to East Africa is much more complicated and expensive than first
calculated. As a consequence, the programme has been significantly redesigned
to use a Romanian F200 land rig, drilling the Nyuni and Okuza wells from two
small islands in the Nyuni licence area. The total estimated cost of these two
wells to reach the same geological targets is now budgeted to be significantly
less than the original $15 million estimated.
In December 2002, Aminex also announced the signing of a farm-in agreement with
Petrom, for it to earn a 30% interest in the Nyuni licence. In recent days,
Petrom has made Aminex aware, despite the formal farm-in agreement, that it is
not yet able to execute a joint operating agreement for Nyuni pending completion
of its ongoing privatisation process. Aminex has decided that it will not wait
until this privatisation is completed and will proceed anyway to initiate the
planned drilling programme using the F200 land rig at the significantly reduced
cost in order to fulfil the licence terms on a timely basis. It is anticipated
that a definitive contract for use of the rig will be signed in the next twenty
one days and that the rig will be in place and ready for work early in the third
quarter of this year. The F200 rig contract will provide a more effective and
economic solution than the original project.
Aminex has been working in Tanzania for just over a year. The company is
breaking new ground in many ways in this very remote location which is far from
oil industry infrastructure. Planning and logistics are complex but are being
undertaken thoroughly with a view to minimising setbacks.
Careful field work by Aminex has resulted in the discovery of numerous,
naturally-occurring and previously undocumented surface oil seeps in the region,
including on Nyuni Island itself, directly above the first prospect to be
drilled. Correlation of seep samples and geochemical analysis of these samples
in the U.K. has for the first time provided direct evidence of the region's
potential for oil as well as gas.
Corporate Governance
This year has seen the publication of the Higgs Review. This Review proposes a
large number of changes to the Combined Code and has stimulated much discussion.
Your Board is giving careful consideration to these proposals and is conscious
of the need to establish and maintain procedures and practices which are
compatible with the principles inherent in the Combined Code, as eventually
modified by the Higgs proposals.
Aminex has long maintained an Audit Committee and a Remuneration Committee. In
addition, the Group has a Risk Committee and this, too, reports regularly to the
Board. The Board has not appointed a Nominations Committee since it is small
in number and finds it preferable to deal with Nomination Committee issues in
consultation.
The Board has eight Directors, of which three are Executive Directors and five
Non-Executive. Derek Tughan has been appointed Senior Non-Executive Director.
The composition of the Board reflects the principal skills required to manage
Aminex as well as the geographical diversity of its operations.
Prospects
Aminex is about to embark on a major offshore drilling programme in Tanzania
that offers the possibility of high rewards with commensurate exploration risk.
This is balanced by a well-established production operation in the USA.
As stated last year, Aminex believes that shareholder value can best be achieved
through taking positions in emerging areas where access can be gained to high
impact drilling opportunities. New areas are constantly under review.
29 April 2003
Enquiries:
Aminex PLC +44 (0)20 7240 1600
Brian Hall
College Hill +44 (0)20 7457 2020
James Henderson
Dennehy Associates +353 1 676 4733
Michael Dennehy
Consolidated Profit and Loss account for the year ended 31 December 2002
2002 2001
Note US$'000 US$'000
Turnover - Group and share of joint venture 4,738 14,018
Less share of joint venture turnover (1,242) (2,713)
3,496 11,305
Group turnover
- continuing operations 3,496 4,119
- discontinued operations - 7,186
Group turnover 3,496 11,305
Cost of sales (2,316) (7,273)
Amortisation of oil and gas properties (779) (1,507)
Gross profit 401 2,525
Administrative expenses (3,400) (3,336)
Exceptional item - bid defence costs (1,999) -
Group operating (loss)/profit
- continuing operations (4,998) (989)
- discontinued operations - 178
(4,998) (811)
Share of operating profit - Associate 856 833
Share of operating loss - Joint Venture (202) (211)
Provision against loans to joint venture (624) -
Total operating (loss)/profit
- continuing operations (4,968) (367)
- discontinued operations - 178
(4,968) (189)
Profit on disposal of subsidiary undertaking - 5,709
(Loss)/profit on ordinary activities before interest (4,968) 5,520
Interest receivable and other income 283 330
Interest payable and similar charges - Group (41) (193)
Interest payable and similar charges - Associate (88) (59)
Interest payable and similar charges - Joint Venture (8) (6)
(Loss)/profit on ordinary activities before taxation (4,822) 5,592
Tax on loss on ordinary activities - Group - (201)
- Associate (127) (118)
(Loss)/profit on ordinary activities after taxation (4,949) 5,273
Profit attributable to minority interest - equity - (332)
Retained (loss)/profit for the financial year (4,949) 4,941
Basic (loss)/earnings per Eur6 cent Ordinary Share (in UScents) 1 (5.67) 6.46
Diluted (loss)/earnings per Eur6 cent Ordinary Share (in UScents) 1 (5.67) 6.40
Consolidated Balance Sheet at 31 December 2002
2002 2001
US$'000 US$'000
Fixed assets
Intangible fixed assets 6,797 -
Tangible fixed assets 13,585 11,374
Financial assets:
Investments:
In joint venture - share of gross assets - 766
- share of gross liabilities - (759)
Investment in associate 4,000 3,308
Other financial assets - -
24,382 14,689
Current assets
Stocks 141 -
Debtors 4,791 3,211
Cash at bank and in hand 8,287 24,836
13,219 28,047
Creditors: amounts falling due within one year (5,940) (3,352)
Net current assets 7,279 24,695
Total assets less current liabilities 31,661 39,384
Creditors: amounts falling due after more than one year (136) (133)
Net assets 31,525 39,251
Capital and reserves
Called up share capital 6,156 5,661
Share premium account 35,212 38,823
Capital Conversion Reserve Fund 234 -
Foreign currency reserve 111 6
Profit and loss account (10,188) (5,239)
Shareholders' funds - equity 31,525 39,251
Consolidated Cash Flow statement for the year ended 31 December 2002
2002 2002 2001 2001
Note US$'000 US$'000 US$'000 US$'000
Net cash (outflow)/inflow from operating activities 2 (4,471) 1,034
Return on investments and servicing of finance
Interest received 212 107
Interest paid (40) (772)
Net cash inflow/(outflow) from returns on investments and 172 (665)
servicing on finance
Taxation
Overseas tax paid - (295)
Capital expenditure
Purchase of tangible fixed assets (2,249) (5,315)
Purchase of intangible fixed assets (1,206) -
Sale of tangible fixed assets 3 286
Net cash outflow from capital expenditure (3,452) (5,029)
Acquisitions and disposals
(Acquisition)/Disposal of subsidiary undertaking (253) 31,651
Cash transferred on acquisition/(disposal) of subsidiary 48 (440)
undertaking
Loans (advanced to)/repaid by joint venture (810) 145
Disposal of investments - 750
Net cash (outflow)/inflow from acquisitions and disposals (1,015) 32,106
Net cash (outflow)/inflow before use of liquid resources (8,766) 27,151
and financing
Management of liquid resources
Cash removed from/(placed on) short term deposits 15,007 (20,307)
Financing activities
Issue of ordinary share capital 32 27
Issue expenses (295) -
Return of capital (7,500) -
Expenses on return of capital (105) -
New loans drawn down 130 566
Repayment of loan (21) (7,286)
New finance lease obligations 70 -
Capital element of finance lease payments (94) (107)
Cash outflow from financing activities (7,783) (6,800)
(Decrease)/increase in cash (1,542) 44
Notes to the Financial Information
1. (Loss)/earnings per Ordinary Share
Basic (loss)/earnings per share 2002 2001
(Loss)/profit attributable to ordinary shareholders (US$4,949,000) US$4,941,000
Weighted average number of Ordinary Shares outstanding 87,343,188 76,533,228
Basic (loss)/earnings per share US(5.67) cents US6.46 cents
Basic (loss)/earnings per share is calculated by dividing the weighted average
number of Ordinary Shares in issue during the year into the (loss)/profit after
taxation for the year attributable to the shareholders of Aminex PLC.
Diluted (loss)/earnings per share 2002 2001
(Loss)/profit for diluted earnings per share calculation (US$4,949,000) US$4,941,000
Weighted average number of Ordinary Shares outstanding 87,343,188 76,533,228
Dilutive effect of share options and warrants - 705,000
Weighted average number of shares for the calculation of 87,343,188 77,238,228
diluted (loss)/earnings per share
Diluted (loss)/earnings per share US(5.67) cents US6.40 cents
For the purpose of calculating diluted earnings per share in 2001, dilutive
potential Ordinary Shares have been deemed to have been converted into Ordinary
Shares at the beginning of the period. There is no difference for the year
ended 31 December 2002 between the basic net loss per share and the diluted net
loss per share as all potentially dilutive Ordinary Shares outstanding have been
excluded from the computation as their effects are anti-dilutive.
2. Reconciliation of operating loss to net cash
inflow from operating activities
2002 2001
US$'000 US$'000
Operating loss (4,998) (811)
Depreciation charges 923 1,733
Increase in stocks (29) (34)
Decrease in debtors 443 271
Decrease in creditors (809) (188)
Foreign exchange movement (1) 63
Net cash (outflow)/inflow from operating activities (4,471) 1,034
3. Dividends
No dividend is proposed (2001: US$nil).
4. Acquisition of subsidiary undertaking
On 28 March 2002, Aminex PLC acquired the share capital of Tanzoil NL through
the issue of 13,461,538 Ordinary Shares of Euro0.06 each at Stg 26 pence per share.
5. 2002 Report and Accounts
The 2002 Report and Accounts will be posted to shareholders shortly.
6. Statutory information
The consolidated profit and loss account, balance sheet and cash flow statements
do not constitute statutory accounts within the meaning of the Companies
(Amendment) Act, 1986.
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