TIDMFEP
RNS Number : 2829Y
Forum Energy Plc
20 February 2013
20 February 2013
FORUM ENERGY PLC
("Forum Energy" or the "Company")
Audited results for the year ended 31 December 2012
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 2012.
Operational Highlights
-- SC72 seismic interpretation and resources update completed in
April 2012, which showed an improvement in the resources previously
known and supported the case to proceed with the drilling
programme
-- Granted an extension to August 2015 to complete the second
sub-phase obligations of drilling wells on SC72
-- Libertad Gas Field power generation commenced in February 2012
-- Upgrade of the Galoc floating production, storage and
offloading vessel completed on schedule in March 2012
-- Participation in the Galoc Phase II development approved
Financial Highlights
-- Revenues of US$4.5 million in 2012 (2011: US$12.7 million)
-- Gross Profit of US$0.9 million in 2012 (2011: US$5.8 million)
-- Net Loss of US$1.0m before impairment charge in relation to
SC40 (2011: profit US$3.4 million)
-- Non-core investment in SC40 written down by US$25.4 million to US$3.3 million
-- Net Loss of US$26.4 million after SC40 impairment charge
-- Cash of US$5.8 million at year end (2011: US$2.8 million)
-- Loans payable at year end $15 million (2011: $6 million), due to Philex Mining Corporation
Robin Nicholson, Executive Chairman, commented:
"Whilst our net loss this year was significant, this
predominantly related to our recognition of the need to revalue our
non-core assets at SC40, following receipt of a new independent
report on resource estimates. We remain focused on our key asset,
SC72, and on our goal of establishing the commerciality of the
potential hydrocarbon resources within the SC72 Concession."
For further information please contact:
Forum Energy Plc
Andrew Mullins, Executive Director Tel: +44 (0) 1932 445 344
Execution Noble & Company Limited
Harry Stockdale 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 ('Km2') offshore petroleum licence
situated west of Palawan Island in the West Philippine Sea. In
2006, results from a 248 Km2 3D seismic survey over the licence
area indicated a mean volume of 3.4 trillion cubic feet ('TCF')
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.
In March 2011, a total of 565 Km2 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.
SC72 seismic interpretation and resources update was completed
in April 2012, which showed an improvement in the resources
previously known and supported the case to proceed with the
drilling programme.
During 2012, the increased territorial disputes between the
Philippine and Chinese governments resulted in the Company being
unable to obtain permission to deploy vessels to perform the
planned drilling programme. Recognizing that these matters were
beyond the control of the Company, in January 2013 the Philippine
Department of Energy granted an extension to August 2015 for the
Company to complete its second sub-phase work obligations which are
expected to cost in excess of US$50 million.
During the year, the Company commissioned a third party review
of the prospects for Service Contract 40 ("SC40") which resulted in
a write-down of the carrying value of the investment in SC40 by
US$25.36 million. The Company will continue to undertake
exploration work on this property and look for opportunities to
farm out further segments of the block to replicate the producing
Libertad Gas field model which came into production in 2012.
ASSET SUMMARY
SC72 (70% interest)
The SC72 license was awarded on 15 February 2010. It covers an
area of 8,800 Km2 and contains the Sampaguita Gas Discovery which
has the potential to contain In-Place Contingent Resources of 2.6
trillion cubic feet (TCF) of gas plus another In-Place Prospective
Resources totaling 5.4 TCF based on a resource assessment performed
in 2012 by Weatherford Petroleum Consultants, an independent
qualified competent person. The results of the study were used to
define the location of two wells, to be named Sampaguita-4 and
Sampaguita-5, which if successfully drilled, would be expected to
increase the amount of potentially recoverable resources. The
drilling of two wells is part of the work programme of the Company
for the second-sub-phase of SC72, which must be completed by 14
August 2015, having recently been granted an extension by the
Philippine Department of Energy.
Galoc (2.27% interest)
Production from the Galoc development reached 1.5 million
barrels gross in 2012 and is expected to produce 2.6 million
barrels in 2013. The Company has a 2.27% interest in the field and
received US$2.5 million (US$10.1 million in 2011) after deduction
of share of operating costs from crude sales from the field during
the year. A second phase of development is expected to commence in
the second half of 2013 with the drilling of two additional
production wells, which is expected to boost production from the
current 5,410 gross barrels of oil per day (bopd) to 12,000 bopd in
the third quarter of 2013. The company secured US$2.58 million of
financing from BNP Paribas to fund 60% of the estimated US$4.33
million share of development costs for this phase of the
project.
SC40 (66.67% interest)
SC40 contains the Libertad gas field and the Maya field as well
as several prospects and leads. On 30 January 2009, Forum entered
into a Gas Sale & Purchase Agreement ("GSPA") with Desco, Inc.,
for the development of the Libertad gas field for power generation.
On 6 February 2012, commercial production at the Libertad Field
commenced and, as at 31 December 2012, the field has produced
around 72.5 million cubic feet of gas gross. However these revenues
are not material to the Group's cash flow. Having received a
resource assessment from Petroleum Geo-Services Asia Pacific Pte
Ltd (PGS) on 19 February 2013, an independent competent person, the
investment in SC40 was written down by $25.4 million to $3.25
million. An important factor in this assessment was that third
parties had experienced a dry hole while drilling within the
Central Tañon Straits which significantly reduced the likelihood of
a commercially viable hydrocarbon deposit in this region.
LATEST RESOURCE ESTIMATES AT SERVICE CONTRACT 40
On 19 February 2013, the Company was presented with a new
competent persons report, prepared by PGS on the SC40 contract
area. SC40 contains a developed gas field, two tested oil prospect
s and nine untested oil and gas exploration leads and prospects.
This report included probabilistic resource estimates for the gas
field and all of the leads and prospects, as follows:
SC40 - In-place Reserves:
Gross Net Attributable
----------------- ------------------------------------- -------------------------------------
Gas Reserves (1P) (2P) (3P) (1P) (2P) (3P)
Low Best High Low Best High
Estimate Estimate Estimate Estimate Estimate Estimate
----------- ----------- ----------- ----------- ----------- -----------
Libertad Field 0.9 1.2 4.1 0.6 0.8 2.7
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Total for Gas
(GIIP)
BCF 0.9 1.2 4.1 0.6 0.8 2.7
----------------- ----------- ----------- ----------- ----------- ----------- -----------
SC40 - In-place Contingent Resources:
Risk
Gross Net Attributable Factor
----------------- ------------------------------------- ------------------------------------- ---------
Oil & Liquids (1C) (2C) (3C) (1C) (2C) (3C) (RF)
Contingent Low Best High Low Best High
Resources Estimate Estimate Estimate Estimate Estimate Estimate
----------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Toledo 1.1 1.6 2.4 0.7 1.1 1.6 8%
----------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Maya 7.2 12.5 20.2 4.8 8.3 13.5 <5%
----------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Total for
Oil & Liquids
(OIIP)
MMbbls 8.3 14.1 22.6 5.5 9.4 15.1
----------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
SC40 - In-place Prospective Resources:
Risk
Gross Net Attributable Factor
--------------------- ------------------------------------- ------------------------------------- ---------
Oil & Liquids Low Best High Low Best High (RF)
Prospective Estimate Estimate Estimate Estimate Estimate Estimate
Resources
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Prospects
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Tambongon
Clastics 115 237 410 76.7 158.0 273.3 9%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Tambongon
Limestone 90 219 427 60.0 146.0 284.7 9%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Sabil Point 23 50 90 15.3 33.3 60.0 7%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Batbatan South 22 44 76 14.7 29.3 50.7 9%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Jibitnil Island 20 38 61 13.3 25.3 40.7 8%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Leads
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Batbatan SE 19 37 63 12.7 24.7 42.0 <5%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Central Tañon 4 7.8 13.7 2.7 5.2 9.1 <5%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
North Maya 6.5 9.8 14.3 4.3 6.5 9.5 <5%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Agojo 0.8 1.6 2.7 0.5 1.1 1.8 <5%
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Total for
Oil & Liquids
(OIIP) MMbbls 300.3 644.2 1,157.7 200.2 429.5 771.8
--------------------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
The net attributable amounts in respect of SC40 represent the
Company's 66.67% interest in the estimated resources. These
pre-drill estimates of resources are based on certain assumptions
and the information and interpretations currently available. There
can be no assurances that these assumptions or estimates will prove
to be accurate as future technical evaluations and results,
including drilling results, could lead to variations or differ
materially from those included in PGS' report.
The methods and terms used in the preparation of these summaries
are in accordance with Society of Petroleum Engineers guidelines.
For more details please refer to www.spe.org.
In accordance with AIM Guidelines, Mr. A.J. Williams, BSc (Hons)
in Geology, a distinguished member of the Petroleum Exploration
Society of Australia (PESA) and a member of the American
Association of Petroleum Geologists (AAPG) is the qualified person
that has reviewed the technical information in relation to SC40
contained in the tables above. Mr Williams has 32 years of varied
petroleum geology, geophysics and resource management experience
and is a manager of Reservoir Group at Petroleum Geo-Services
Asia-Pacific Pte Ltd, an independent consultancy specialising in
petroleum reservoir evaluation and economic analysis.
LATEST RESOURCES AT SERVICE CONTRACT 72
In 2012, Weatherford Petroleum Consultants ("Weatherford")
completed a report on SC72, which took into account the 2,202
Line-Km of 2D seismic data over SC72 and 565 Km2 of 3D seismic data
over the Sampaguita Gas Field in SC72. Weatherford produced the
following summary of unrisked resources initially in place:
SC 72 - In-place Contingent Resources
Gross Net Attributable
----------------- ------------------------------------- -------------------------------------
Oil & Liquids Low Best High Low Best High
Contingent Estimate Estimate Estimate Estimate Estimate Estimate
Resources
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 2 34 59 103 24 41 72
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 4 3 6 12 2 4 8
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Total for
Oil & Liquids
(OOIP) MMbbls 37 65 115 26 45 80
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 2 1,348 2,354 4,110 944 1,648 2,877
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 4 127 249 488 89 174 342
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Total for
Gas (GIIP)
BCF 1,475 2,603 4,598 1,033 1,822 3,219
----------------- ----------- ----------- ----------- ----------- ----------- -----------
SC 72 - In-place Prospective Resources
Gross Net Attributable
----------------- ------------------------------------- -------------------------------------
Oil & Liquids Low Best High Low Best High
Prospective Estimate Estimate Estimate Estimate Estimate Estimate
Resources
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 1 40 76 146 28 53 102
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 3 34 61 110 24 43 77
----------------- ----------- ----------- ----------- ----------- ----------- -----------
North Bank
prospect 43 83 160 30 58 112
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Total Oil
& Liquids
(OOIP) MMbbls 117 220 416 82 154 291
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 1 1,603 3,055 5,821 1,122 2,139 4,075
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Sampaguita
segment 3 1,357 2,441 4,393 950 1,709 3,075
----------------- ----------- ----------- ----------- ----------- ----------- -----------
North Bank
prospect 1,706 3,303 6,398 1,194 2,312 4,479
----------------- ----------- ----------- ----------- ----------- ----------- -----------
Total for
Gas (GIIP)
BCF 4,666 8,799 16,612 3,266 6,160 11,629
----------------- ----------- ----------- ----------- ----------- ----------- -----------
The net attributable amounts in respect of SC72 represent the
Company's 70% interest in the estimated resources. These pre-drill
estimates of resources are based on certain assumptions and the
information and interpretations currently available. There can be
no assurances that these assumptions or estimates will prove to be
accurate as future technical evaluations and results, including
drilling results, could lead to variations or differ materially
from those included in Weatherford's report.
The methods and terms used in the preparation of these summaries
are in accordance with Society of Petroleum Engineers guidelines.
For more details please refer to www.spe.org.
EXECUTIVE CHAIRMAN'S STATEMENT
Dear Shareholder,
2012 has been a year of mixed fortunes. Whilst we received an
independent report on Service Contract 72 in April 2012 which
indicated increased resources, we were unable to commence our
drilling programme because of territorial disputes between the
Philippine and Chinese governments. However, we have been granted
an extension to August 2015 to allow us to complete our obligations
under this service contract. We have also more recently received an
independent report on the properties covered by Service Contract
40, which has resulted in this investment being written down by
over 85%. The Galoc Field, which has been a steady provider of cash
to fund our operations, was closed for the first quarter of the
year to allow for a scheduled upgrade of its facilities. However
the field is now back in full production and we are optimistic
about benefits we hope to receive from the Phase II
development.
Service Contract 72
In the early part of 2012, we received encouraging results from
our analysis of the 2011 seismic work following the acquisition of
2,202 line-km of 2D and 565 km(2) of 3D seismic data over our SC72
licence area between 15 January and 12 March 2011. The resource
assessment study was conducted by Weatherford Petroleum
Consultants, an independent consulting group, in the first half of
2012 and supported the case to proceed with the drilling
programme.
We were unable to commence our drilling programme because of
territorial disputes between the Philippine and Chinese
governments. However the Philippine Department of Energy ("DOE")
granted us an extension to August 2015 to allow us to complete our
obligations under this service contract.
In the meantime, and recognizing our on-going commitment to the
project, a seismic reprocessing program is being planned in 2013 to
further assess the prospectivity of other areas outside the
Sampaguita field within SC72. The programme will concentrate on
mapping other prospects and leads outside the Sampaguita
discovery.
We remain in close dialogue with the Government on how best to
progress the development of this important asset and will of course
be keeping our shareholders appraised of progress throughout the
year.
Galoc
The Company has a 2.27% interest in the Galoc oil field. Gross
production during the year averaged 5,410 barrels of oil per day
(bopd) (2011: 6,637 bopd) producing for 268 days (2011: 320 days).
Production reached 1.5 million barrels gross in 2012 and is
expected to produce 2.6 million barrels gross in 2013. Receipts
totalled US$2.5 million (US$10.1 million in 2011) after deduction
of share of operating costs from crude sales from the field during
the year. A second phase of development is expected to commence in
the second half of 2013 with the drilling of two additional
production wells, which is expected to boost gross field production
from the current 5,410 bopd to 12,000 bopd. The company secured
US$2.58 million of financing from BNP Paribas to fund 60% of the
estimated US$4.33 million share of development costs for this phase
of the project. An exploration well is also being planned at Galoc
to test another prospect adjacent to the Galoc Field, although this
remains a contingent programme.
Service Contract 40
On 6 February 2012, commercial production at the Libertad Field
commenced and, as at 31 December 2012, the field had produced
around 72.5 million cubic feet of gas gross representing net
revenues of US$88,000.
In 2012, the Company commissioned a resource assessment study to
be undertaken by Petroleum Geo-Services Asia Pacific Pte Ltd (PGS)
, who are an independent competent person. The results of the
study, received on 19 February 2013, downgraded previously
identified leads and prospects within SC40. An important factor in
this assessment was that third parties had experienced a dry hole
in drilling efforts within the Central Tañon Straits which
significantly reduced the likelihood of the existence of a
commercially viable hydrocarbon deposit in this region. In light of
this report, and applying appropriate caution, the carrying value
of the investment in SC40 has been written down by US$25.4 million
to US$3.25 million. This carrying value reflects the potential of a
number of smaller onshore locations within SC40.
The search for other commercial deposits across the SC40 acreage
does however continue, with an exploration programme consisting of
seismic reprocessing and interpretation as well as a land gravity
survey being planned for 2013. Whilst this further work is planned
within 2013 to assess the onshore prospects of SC40 it cannot be
said with any certainty at this point that further work will lead
to any commercial realization in the near term.
The Philippine Economy and Outlook
The World Bank predicts an above 6% economic growth for the
Philippines for the next three years, with 6.2% for 2013. This will
be driven by increased infrastructure spending, higher demand for
exports, overseas workers' remittances, and strong consumer
consumption. A midterm election scheduled in May 2013 would help
boost spending as well.
The search for new oil and gas deposits in the country is
expected to continue in 2013 with the award of new petroleum and
coal contracts following a bidding round that was undertaken in
2012. The next phase of development in the Galoc and Malampaya
fields in Palawan would help boost indigenous oil and gas
production, respectively. Well drillings and seismic surveys are
also being planned for the year, mostly in the Palawan and Sulu Sea
areas.
Financial Results and Key Financial Indicators
The Group recorded a gross profit of US$0.9 million for the 12
months ended 31 December 2012 compared to US$5.8 million profit for
the previous year. Our revenues decreased by 64% to US$8.2 million
due to a decrease in production at Galoc, from 6,637 bopd in 2011
to 5,410 bopd in 2012, principally as a result of the shut-in of
the field during the upgrade of the FPSO in the first half of the
year.
The Group recorded a net loss after tax of US$26.4 million after
impairment charges, compared to a net profit after tax of US$3.4
million in 2011. This generated a loss per share of US$0.743 (2011:
earnings per share US$0.104) including impairment of deferred
exploration assets.
During the year, the Company spent US$2.3 million (2011: US$7.8
million) developing its principal asset, SC72.
Cash Flow
The Company's working capital increased from US$0.7 million to
US$6.1 million, excluding the loan from Philex Mining Corporation.
Cash and cash equivalents at the end of the period stood at US$5.8
million. The outstanding amount of the loan with Philex Mining
Corporation was US$15 million.
During the year, payments totalling US$3.4 million (2011: US$4.9
million) were made to Basic Energy under the 2006 purchase
agreement of the Company's Northwest Palawan assets, which included
Galoc. It has been agreed that final liabilities to Basic Energy
totalling US$1 million at year end will be settled during 2013.
Outlook for 2013
We remain focused on our goal of establishing the commerciality
of the potential hydrocarbon resources within the SC72 Concession,
but recognize that we face significant challenges in the West
Philippine Sea where SC72 is located. We appreciate that this goal
can only be realized with the continuing support of the Philippine
Government.
I would like to take this opportunity once again to thank our
shareholders, our staff, and members of the Board of Directors, for
their continuing support and commitment.
Robert Nicholson
Executive Chairman
19 February 2013
Consolidated statement of comprehensive income
for the year ended 31 December 2012
Year ended Year ended
31 December 31 December
2012 2011
Note US$'000 US$'000
Revenue 4,522 12,734
Cost of sales (3,604) (6,913)
Gross profit 918 5,821
Other income 1,804 -
Administrative expenses (2,750) (1,987)
Impairment of deferred exploration assets 3 (25,359) -
Total operating expenses (28,109) (1,987)
(Loss)/profit from operations (25,387) 3,834
Finance income 1 7
Finance expenses (1,038) (421)
(Loss)/profit before tax (26,424) 3,420
Taxation - -
(Loss)/profit for the year (26,424) 3,420
Total comprehensive (loss)/profit for the year (26,424)
3,420
(Loss)/profit and total comprehensive (loss)/profit attributable
to:
Owners of the Parent (26,256) 3,457
Non-controlling interest (168) (37)
(26,424) 3,420
US Cents US Cents
(Loss)/earnings per Ordinary Share (US cents) attributable to
equity holders of the Parent
Basic and diluted 4 (73.9) 10.4
All of the results of the Group during the year relate to
continuing activities.
Statement of changes in equity
for the year ended 31 December 2012
Share Non- Total capital
Share Share option Retained controlling and
capital premium reserve deficit Total interest reserves
Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000
Balance as at 1 January 2011 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
Total comprehensive income for the year - - - (26,256) (26,256)
(168) (26,424)
Transfer to retained deficit - - (438) 438 - - -
Issue of shares 340 716 - - 1,056 - 1,056
Balance as at 31 December 2012 6,322 51,680 - (37,070) 20,932
1,129 22,061
Share capital represents the nominal value of shares issued. The
share premium account holds the balance of consideration received
in excess of the par value of the shares.
The share option reserve relates to the cumulative fair value of
options charged to the statement of comprehensive income adjusted
for transfer on exercise, cancellation or expiry. The transfer of
$438,000 between share option reserve and retained deficit during
2012 is due to the exercise of all options during 2012.
The retained deficit is the cumulative net gains and losses
recognised in the statement of comprehensive income adjusted for
transfer on exercise, cancellation or expiry of options from the
share option reserve.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2012
2012 2011
Note US$'000 US$'000
Assets:
Non-current assets
Property, plant and equipment 6 7,104 5,888
Intangible assets 7 28,051 50,730
Investments 11 24
Total non-current assets 35,166 56,642
Current assets
Inventories 70 57
Trade and other receivables 2,351 1,862
Cash and cash equivalents 5,760 2,761
Total current assets 8,181 4,680
Total assets 43,347 61,322
Liabilities:
Non-current liabilities
Loans - 6,000
Other liabilities and provisions 4,181 3,929
Total non-current liabilities 4,181 9,929
Current liabilities
Loans 15,000 -
Trade payable and other payables 2,105 3,964
Total current liabilities 17,105 3,964
Total liabilities 21,286 13,893
Total net assets 22,061 47,429
Capital and reserves attributable to equity holders of the
Company
Share capital 6,322 5,982
Share premium 51,680 50,964
Share option reserve - 438
Retained deficit (37,070) (11,252)
20,932 46,132
Non-controlling interest 1,129 1,297
Total capital and reserves 22,061 47,429
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2012
Year ended Year ended
31 December 31 December
2012 2011
Note US$'000 US$'000
Cash flows from operating activities
(Loss)/profit before tax for the year (26,424) 3,420
Adjustments for:
Depreciation 2,039 4,718
Impairment charge 25,359 -
Loss/(gain) on financial assets 13 (6)
Finance income (1) (1)
Foreign exchange losses 456 160
Interest paid on loan facility 569 261
2,011 8,552
Increase in trade and other receivables (489) (711)
(Increase)/decrease in inventories (13) 362
Increase in trade and other payables 381 1,547
Increase in provisions and employee benefits 57 -
Net cash flows from operating activities 1,947 9,750
Investing activities:
Purchase of property, plant and equipment (4,329) (6,934)
Disposal of property, plant and equipment - 1
Purchase of intangible assets 7 (3,903) (8,100)
Finance income 1 1
Finance expense (569) (261)
Net cash from investing activities (8,800) (15,293)
Financing activities:
Issue of ordinary share capital (net of issue costs) 1,056 -
Loan facility drawn down 9,000 6,000
Net cash from financing activities 10,056 6,000
Net increase in cash and cash equivalents 3,203 457
Cash and cash equivalents at beginning of the year 2,761
2,464
Exchange losses on cash and cash equivalents (204) (160)
Cash and cash equivalents at end of the year 5,760 2,761
Notes to the financial statements
for the year ended 31 December 2012
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 2012
and 31 December 2011 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 2011
accounts have been delivered to the Registrar of Companies. The 31
December 2012 accounts will be delivered to Companies House within
the statutory filing deadline. The auditor's report on those
financial statements was unqualified but did include a reference to
the uncertainties surrounding going concern, to which the auditors
drew attention by way of emphasis and did not contain a statement
under s498 (2) - (3) of 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 originally required a minimum spend commitment of US$6
million by 15 August 2013. On 9 January 2013, a two year extension
was approved by the Philippines Department of Energy. All of this
expenditure remains outstanding as at 31 December 2012.
Pursuant to the Compromise Agreement reached between the Company
and Basic Energy Corporation ("Basic Energy") on 21 June 2012, the
Company is required to make payments totaling US$2 million to Basic
Energy during 2013, of which US$1 million was outstanding as at 31
December 2012.
In addition to the above, the US$15 million three year loan
facility agreement entered into between the Group and Philex Mining
Corporation (the "Philex Loan Facility") is due for repayment on 24
November 2013.
Existing cash resources and revenue generated from the Galoc oil
field are expected to be sufficient to allow the Group to meet the
requirements of these commitments and overheads until repayment of
the Philex Loan Facility falls due on 24 November 2013. At this
point, further funds will be required to cover minimum spend
requirements and overheads for the remainder of the 12 month going
concern period.
Based on preliminary discussions with Philex, and in view of the
two year extension granted for the second sub-phase by the
Philippine Department of Energy, the board anticipates that the
terms of the Philex Loan Facility can be renegotiated which will
provide sufficient funds for a period of at least 12 months.
There can be no guarantee over the outcome of these negotiations
and, as a consequence, there is a material uncertainty over the
Group's ability to raise additional finance, which casts doubt on
the Group's ability to continue as a going concern. Further the
Group may be unable to realise its assets and discharge its
liabilities in the normal course of business.
However, 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. The financial statements do not
include the adjustments that would result if the Company was unable
to continue as a going concern.
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 2012 are as
follows:
Producing Exploration Head Office
assets assets costs Total
US$'000 US$'000 US$'000 US$'000
Revenue 4,522 - - 4,522
Cost of sales (3,604) - - (3,604)
Gross profit 918 - - 918
Other income 1,804 - - 1,804
Administrative expenses (267) (292) (2,191) (2,750)
Impairment charge of deferred exploration assets - (25,359) -
(25,359)
Profit/(loss) from operations 2,455 (25,651) (2,191)
(25,387)
Finance income - - 1 1
Finance expenses 141 (1,092) (87) (1,038)
Profit/(loss) for the year 2,596 (26,743) (2,277) (26,424)
The segmental results for the year ended 31 December 2011 are as
follows:
Producing Exploration Head Office
assets assets costs Total
US$'000 US$'000 US$'000 US$'000
Revenue 12,734 - - 12,734
Cost of sales (6,913) - - (6,913)
Gross profit 5,821 - - 5,821
Administrative expenses (135) - (1,852) (1,987)
Profit/(loss) from operations 5,686 - (1,852) 3,834
Finance income - - 7 7
Finance expenses - (261) (160) (421)
Profit for the year 5,686 (261) (2,005) 3,420
The segmented assets and liabilities at 31 December 2012 are as
follows:
Producing Exploration Head Office
assets assets costs Total
US$'000 US$'000 US$'000 US$'000
Total non-current assets 7,036 28,051 79 35,166
Total current assets 2,805 988 4,388 8,181
Total assets 9,841 29,039 4,467 43,347
Total non-current liabilities - (4,181) - (4,181)
Total current liabilities (1,221) (15,804) (80) (17,105)
Total liabilities (1,221) (19,985) (80) (21,286)
Net assets 8,620 9,054 4,387 22,061
The segmented assets and liabilities at 31 December 2011 are as
follows:
Producing Exploration Head Office
assets assets costs Total
US$'000 US$'000 US$'000 US$'000
Total non-current assets 5,811 50,730 101 56,642
Total current assets 3,173 418 1,089 4,680
Total assets 8,984 51,148 1,190 61,322
Total non-current liabilities (15) (9,914) - (9,929)
Total current liabilities (3,685) (213) (66) (3,964)
Total liabilities (3,700) (10,127) (66) (13,893)
Net assets 5,284 41,021 1,124 47,429
Other segmented items 31 December 2012 are as follows:
Producing Exploration Head Office
assets assets costs Total
US$'000 US$'000 US$'000 US$'000
Capital expenditure 2,860 2,213 76 5,149
Depreciation 2,030 - 9 2,039
Other segmented items 31 December 2011 are as follows:
Producing Exploration Head Office
assets assets costs Total
US$'000 US$'000 US$'000 US$'000
Capital expenditure 6,923 8,100 11 15,034
Depreciation 4,692 - 26 4,718
Revenue
All of the 2012 revenues (2011 - 100%) were generated from
Philippine based assets the Galoc, Nido & Matinloc fields.
3 impairment of deferred exploration assets
Year ended Year ended
31 December 31 December
2012 2011
US$'000 US$'000
Impairment of Deferred Exploration Assets 25,359 -
Having received a resource assessment from Petroleum
Geo-Services Asia Pacific Pte Ltd, an independent competent person,
the investment in SC40 was written down by US$25.4 million to
US$3.25 million.
The remaining balance of US$3.25million is based upon the
potential recovery from the Maya and Jibitnil projects.
4 (LOSS)/EARNINGS PER SHARE
(Loss)/earnings 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 35,549,533 (2011: 33,364,533).
Loss for the Group attributable to the equity holders of the
Company for the year US$26,256,000 (2011: Profit US$3,457,000).
The effect of the share options in issue under the Share Option
Plan is anti-dilutive.
5 ADJUSTED (LOSS)/EARNINGS PER SHARE
In order to show results from operating activities on a
consistent basis, an adjusted earnings per share is presented which
excludes certain items as set out below. It is emphasised that the
adjusted earnings per share is a non GAAP measure. The Board of
Forum consider the adjusted earnings per share to better reflect
the underlying performance of the Group.
Year ended Year ended
31 December 31 December
2012 2011
US$'000 US$'000
(Loss)/profit for the Group (26,256) 3,457
Adjustment:
Impairment of deferred exploration assets 25,359 -
Adjusted (loss)/profit per year (897) 3,457
6 PROPERTY, PLANT AND EQUIPMENT
Transport Furniture, Tools
Oil and gas and motor fixtures and other Group Company
costs equipment and fittings equipment Total Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2012 14,830 89 215 116 15,250 34
Additions 1,934 - 97 1 2,032 77
Transfer from intangible assets 1,223 - - - 1,223 -
At 31 December 2012 17,987 89 312 117 18,505 111
Depreciation
At 1 January 2012 9,019 29 198 116 9,362 34
Charge for the year 2,000 19 20 - 2,039 9
At 31 December 2012 11,019 48 218 116 11,401 43
Cost
At 1 January 2011 7,907 98 206 116 8,327 34
Additions 6,923 2 9 - 6,934 -
Disposals - (11) - - (11) -
At 31 December 2011 14,830 89 215 116 15,250 34
Depreciation
At 1 January 2011 4,327 20 191 116 4,654 34
Charge for the year 4,692 19 7 - 4,718 -
Disposals - (10) - - (10) -
At 31 December 2011 9,019 29 198 116 9,362 34
Net book value
At 31 December 2012 6,968 41 94 1 7,104 68
At 31 December 2011 5,811 60 17 - 5,888 -
At 31 December 2010 3,580 78 15 - 3,673 -
7 INTANGIBLE ASSETS
Unevaluated Unevaluated
oil, gas oil, gas
and mining and mining
costs costs
US$'000 US$'000
Group 2012 2011
Cost and net book value
At 1 January 50,730 42,630
Additions 3,903 8,100
Transfer to tangible assets (1,223) -
Impairment (25,359) -
At 31 December 28,051 50,730
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$3,250,000 (2011: US$29,024,000)
SC72 - US$23,765,000 (2011: US$21,474,000)
Others - US$1,036,000 (2011: US$232,000)
The Group have considered the intangible assets for indications
of impairment and have impaired the SC40 assets to reflect their
recoverable amount.
8 COMMITMENTS
At 31 December 2012, the Group and Company had commitments
totalling US$2.9 million in operational and exploration
expenditure, for the second
sub-phase programme over Service Contract SC72 ('SC72') (31
December 2011: US$6 million).
9 RELATED PARTY TRANSACTIONS
During the year the following related party transactions
occurred within the Group and Company:
Philex Mining Corporation is the majority shareholder and
ultimate controlling party of the Group.
In 2010 Forum Philippines Holdings Ltd, a wholly-owned
subsidiary of the Company, entered into a US$10 million Facility
Agreement ('the Facility') with Philex Mining Corporation on 24
November 2010. The facility was increased to US$15 million during
2012.
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 2012 US$9 million was drawn down (2011 -
US$6 million drawn down) to enable the Company to fund its 70%
share of the work programme over Service Contract 72 ('SC72').
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 2012 amounted to US$15,000,000
(2011: US$6,000,000). Interest charged for use of the facility
during the year was US$569,347 (2011: US$261,952).
10 CONTINGENT LIABILITIES
The Company reached a settlement agreement on potential
additional consideration in relation to assets previously acquired
with Basic Energy during 2012. The Company has no further
contingent liabilities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAEAEAALDEFF
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