REG - ADM Energy PLC - Half-year Report
31/12/2024 07:15
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RNS Number : 6607R ADM Energy PLC 31 December 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
31 December 2024
ADM Energy plc
("ADM" or the "Company")
Half-yearly Results
ADM Energy plc (AIM: ADME; BER and FSE: P4JC), a natural resources investing
company, announces its half-yearly results for the six months ended 30 June
2024
Investment Highlights:
JKT Reclamation, LLC ("JKT")
· Investment resulting in a 30.6% net economic interest effective 1
January 2024.
· For the first half of 2024, JKT had gross sales of 5,029 barrels
of oil resulting in US$480,050 in revenue and pre-tax cash flow of US$26,573
to ADM's 100.0% interest.
· JKT made distributions to members of US$47,200 during the first
six months of 2024 of which US$35,000 was to the Company (Note, the Company
will receive approximately 70% of distributions until it has recovered 150% of
its investment).
· From July of 2024 the Company has participated with other owners
of JKT to upgrade the facilities to increase sales volumes and to streamline
costs to improve margins.
Vega Oil and Gas, LLC ("Vega")
· Acquisition of 100% membership interest of Vega effective 1 June
2024.
· Vega owns interest in three wells in Moore County, TX - the Sneed
415, Thompson 7330 and 7331 wells.
· The Sneed 415 was producing during the month of June 2024 and
produced 348.47 net barrels resulting in US$26,827.17 in net revenue. Vega
recognised a net pre-tax profit for the month of US$7,909.65.
· The Company intends to turn the Thompson 7330 and 7331 to
production and has undertaken to complete a new tank battery to facilitate
production from the wells.
Aje Field, OML 113 ("Aje")
· ADM continues to work with the Aje Partners to progress
development plans for the Aje Field while continuing discussions related to
the monetisation of its interest in Aje.
At the end of period under review, the Company had £66,000 in cash and cash
equivalents. Within the period, both the JKT and the Vega investments began to
distribute cash to the Company, and whilst the Board remains confident of the
performance of its portfolio of investments, the Company is currently in a
constrained capital position. As such, the Directors remain committed to
continually and carefully monitoring the working capital position of the
Company going forwards.
Stefan Olivier, CEO of ADM Energy, said: "The investments in JKT and Vega
represent the next phase of the rebuilding of ADM. We now have interest in
two profitable businesses with significant room for near- and long-term growth
and expansion.
We believe these two businesses will drive ADM to a cash flow positive
position as we start 2025 and are excited about future plans that will be
shared with the market in due course."
Enquiries:
ADM Energy plc +44 20 7459 4718
Stefan Olivier, CEO
www.admenergyplc.com (http://www.admenergyplc.com/)
Cairn Financial Advisers LLP +44 20 7213 0880
(Nominated Adviser)
Jo Turner, James Caithie
Hybridan LLP +44 20 3764 2341
(Broker)
Claire Louise Noyce
ODDO BHF Corporates & Markets AG +49 69 920540
(Designated Sponsor)
Michael B. Thiriot
Gracechurch Group +44 20 4582 3500
(Financial PR)
Harry Chathli, Alexis Gore, Henry Gamble
Operating Review
ADM's strategy focuses on identifying investment opportunities that are
near-term producing assets in proven oil and gas jurisdictions to enhance our
investment portfolio.
Investment in JKT Reclamation, LLC
In April 2024, ADM acquired an interest in SW Oklahoma Reclamation, LLC
("SWOK") to reinitiate operations at the JKT Reclamation facility in Wilson,
Oklahoma. As a result of the Investment, the Company owns a 30.6% interest
in JKT Reclamation LLC ("JKT Reclamation"), a revenue generative Oklahoma
Limited Liability Company, engaged in the purchase, processing and sale of
residual oil from oil tanks (tank bottoms) and other oilfield waste streams
containing significant concentrations of crude oil. The consideration for the
investment was US$827,500 paid via the issue of 43,200,000 ordinary shares at
a nominal share price of 1p per share for a value of US$540,000, a cash
investment of US$287,500 for working capital into JKT Reclamation and the
grant of 14,640,000 3-year, 1.0p warrants. The effective date of the
investment was 1 January 2024.
Acquisition of Vega Oil and Gas, LLC
ADM acquired a 100% equity interest in Vega Oil and Gas, LLC, a Texas Limited
Liability Company with assets in Moore County, Texas. The acquisition was
effective from 1 June 2024. The transaction was funded by a US$150,000
capital commitment by ADM USA, a US$100,000 borrowing facility from a private,
third-party US lender and the issuance of 20 million, 5-year warrants in the
Company with an exercise price of 1.0 pence.
The Vega Wells, in aggregate, produced an average of 26 barrels of oil per day
(net to the interest of Vega) in January, February and March 2024. As of the
effective date the Sneed 415 was producing with the Thompson 7330 and 7331
shut-in awaiting completion of a new tank battery.
Aje
ADM continues to work with the Aje Partners to progress development plans for
the Aje Field while continuing discussions related to the monetisation of its
interest in Aje. In continued conversations with other parties regarding the
realisation of ADM's investment in the legacy OML113 asset.
Financial Review
During the period, the Company generated £138,000 of revenue from its JKT and
Vega operations in the US (H1 2023: nil revenue).
Loss for the period increased 28% to £589,200 (H1 2023: £460,000 loss)
mainly due to an increase in administrative expenses to £565,700 (H1 2023:
£292,000). In the first half of 2023, administrative expenses were abnormally
low whilst FY2023 administrative expenses reached £1,575,000 showing a large
increase from H1 2023 to H2 2023. Management expect administrative expenses in
FY2024 to be in-line or lower than recorded in FY2023.
In June 2024, in conjunction with the acquisition of Vega, ADM Energy (USA),
Inc., a 100% owned subsidiary of the Company ("ADM USA") entered into a
financing agreement with OFX Holdings, LLC ("OFXH"), a substantial shareholder
of the Company, which provides for up to US$600,000 in financing (the "Total
Financing") to be made available to ADM USA of which an Initial Advance of
$225,000 was received at Closing and used to fund commitments associated with
the Vega transaction and additional investment requirements associated with
JKT.
As part of the financing, certain debt-for-equity conversion agreements were
completed with OFX Holdings, LLC; Ventura Energy Advisors, LLC; and, Catalyse
Capital, Ltd. for the conversion of a total of £532,752 in debt and accrued
and unpaid interest into ordinary shares in the Company at a price of 1.0p per
share as follows.
In April 2024 in conjunction with the investment in JKT the Company raised
approximately £220,500 via a Subscription for a total of 22,050,000 ordinary
shares at 1p per share with an additional US$180,000 in loans converted into
ordinary shares resulting in the issuance of 30,400,000 new ordinary shares of
the Company at 1p per share.
The Company and OFX Holdings, LLC have terminated the remaining contingent
payment associated with the Blade Oil V, LLC assets.
Outlook
The Board view the investments in JKT and Vega as the twin cornerstones of its
strategy to achieve positive operating cash flow for the Company in 1H 2025.
The Board believes that JKT has significant near-term potential for growth and
expansion of profit margins without requiring significant external cash
resources. Over July-September of 2024 JKT undertook certain improvements to
the facility including installation of its 550-barrel capacity mixing tank and
additional separation and heating equipment. Whilst production was paused, JKT
took the opportunity to reevaluate the efficacy of the production line,
address legacy issues, and make further amendments to the site. This included:
the installation of the mixing tank and pumps; the clean-out of storage/sales
tanks to avoid contaminating sale-able product; the addition of vertical and
horizontal separation equipment; the addition of a vertical heater-treater;
the installation of metering and chemical injection equipment; and the
reconfiguration of oil tanks to help improve the efficiency of process. JKT
is now in the process of re-starting operations and believes that it can
significantly grow sales volumes, with targets of achieving to 2,000+ barrels
per month on a consistent basis in 2025.
In the second half of 2025 Vega has purchased equipment and initiated
construction of a tank battery to allow the production of the Thompson 7330
and 7331 wells. Completion of this work is anticipated to allow Vega to more
than double the production and cash flow from its wells. As Vega enters 2025
it is evaluating opportunities to further grow production either through the
acquisition of additional existing wells and lease acreage or the initiation
of new drill wells in 2025.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2023
2024 2023
Notes £'000 £'000 £'000
Continuing operations
Revenue 138 - -
Cost of sales (16) - -
Operating costs 1 (#_ftn1) (142) (78) (210)
Administrative expenses (566) (292) (1,575)
Other gains - - 1,020
Impairment - - (16,843)
Operating loss (585) (370) (17,608)
Movement in fair value of investments - - -
Finance costs (15) (90) (191)
Loss on ordinary activities before taxation (600) (460) (17,799)
Taxation - - -
Loss for the period (600) (460) (17,799)
Other Comprehensive income:
Exchange translation movement 3 11 (484) (615)
Total comprehensive loss for the period (589) (944) (18,414)
Basic and diluted loss per share 2
From continuing and total operations (0.1)p (0.1)p (5.0)p
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Share Share Exchange translation reserve Other reserves Retained deficit Total
capital premium equity
£'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2022 11,194 38,090 630 962 (39,668) 11,208
Loss for the year - - - - (17,799) (17,799)
Exchange translation movement - - (615) - - (615)
Total comprehensive income / (expense) for the year - - (615) - (17,799) (18,414)
Issue of new shares 1,878 146 - - - 2,024
Issue of options & warrants - - - 33 - 33
Issue of convertible loans - - - 41 - 41
At 31 December 2023 13,072 38,236 15 1,036 (57,467) (5,108)
Loss for the year - - - - (589) (589)
Exchange translation movement - - 19 - - 19
Total comprehensive income / (expense) for the year - - 19 - (589) (570)
Issue of new shares 1,185 - - - - 1,185
Issue of options & warrants - - - 14 - 14
Issue of convertible loans - - - - - -
At 31 December 2023 14,252 38,236 34 1,050 (58,056) (4,479)
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 357 17,593 357
Investment in associates 2,292 - 1,062
2,649 17,593 1,419
CURRENT ASSETS
Investments held for trading - 28 -
Inventory - 35 -
Trade and other receivables 34 39 18
Cash and cash equivalents 66 86 -
100 188 18
CURRENT LIABILITIES
Trade and other payables 2,885 1,322 2,273
Borrowings - 67 -
Convertible loans 586 - 427
3,471 1,389 2,700
NET CURRENT LIABILITIES (3,371) (1,201) (2,682)
NON-CURRENT LIABILITIES
Other borrowings 478 1,072 638
Other payables 1,639 2,626 1,586
Decommissioning provision 1,640 1,559 1,621
3,757 5,257 3,845
NET ASSETS (4,479) 11,135 (5,108)
EQUITY
Ordinary share capital 14,257 11,920 13,072
Share premium 38,236 38,236 38,236
Other reserves 1,064 971 1,036
Currency translation reserve 19 135 15
Retained deficit (58,054) (40,126) (57,467)
Equity attributable to owners of the Company and total equity (4,479) 11,135 (5,108)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2023
2024 2023
£'000 £'000 £'000
OPERATING ACTIVITIES
Loss for the period (589) (460) (17,799)
Adjustments for:
Fair value adjustment to investments - - 29
Warrants issued in settlement of fees - - 10
Finance costs 13 90 184
FX on developments (intangibles) - - 420
Share based payment expense - 9 18
Impairment of intangible assets - - 16,843
Gains on settlement - - (1,521)
Depreciation and amortisation 41 - 57
Loss on disposal of leases - - 501
Shares issued as incentives - - 127
Other amounts written off - - 54
Decommissioning charge 18 73 57
Operating cashflow before working capital changes (517) (288) (1,020)
(Increase) in inventories - 1 36
(Increase)/decrease in receivables (16) (17) -
Increase/(decrease) in trade and other payables 665 (720) 258
Net cash outflow from operating activities 132 (1024) (726)
INVESTMENT ACTIVITIES
Loans to subsidiary operation - - -
Acquisition of subsidiary (1,702) - (8)
Net cash outflow from investment activities (1,702) - (8)
FINANCING ACTIVITIES
Issue of ordinary share capital 1,180 682 -
Share issue costs - - -
Proceeds from convertible loan note 159 450
Proceeds from borrowings 487 595 343
Repayment of borrowings (265) (193) (20)
Net cash inflow from financing activities 1,561 1,084 773
Net increase/(decrease) in cash and cash equivalents from continuing and total (9) 60 39
operations
Exchange translation difference (11) 1 (64)
Cash and cash equivalents at beginning of period 86 25 25
Cash and cash equivalents at end of period 66 86 -
NOTES TO THE HALF-YEARLY REPORT
1. The financial information set out in this
half-yearly report does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. The group's statutory financial
statements for the period ended 31 December 2021, prepared under International
Financial Reporting Standards (IFRS), have been filed with the Registrar of
Companies. The auditor's report on those financial statements was
unqualified and did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
The half-yearly financial information has been prepared in accordance with the
recognition and measurement principles of International Financial Reporting
Standards (IFRS) and on the same basis and using the same accounting policies
as used in the financial statements for the year ended 31 December 2023. The
half-yearly financial statements have not been audited or reviewed in
accordance with the International Standard on Review Engagement 2410 issued by
the Auditing Practices Board.
Going concern
At 30 June 2024, the Group recorded a loss for the period of £0.59 million
and had net current liabilities of £3.47 million, after allowing for cash
balances of £66,000. In assessing whether the going concern assumption is
appropriate, the Directors take into account all available information for the
foreseeable future, in particular for the twelve months from the date of
approval of the financial statements. This information includes growing
revenue opportunities, management prepared cash flows forecasts, the group's
current cash balances, the group's existing and projected monthly running
costs and need for further fundings.
Following this assessment, the Directors have reasonable expectation that the
group can secure adequate liquidity to continue for the foreseeable future
through further funding. The Directors therefore have made an informed
judgement at the time of approving the financial statements that there is a
reasonable expectation that the group has adequate resources to continue in
operational existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the financial statements.
Whilst the Directors are confident, there is no absolute guarantee that such
funding and payment plan would be secured within the required timelines and
therefore indicates that a material uncertainty exists that may cast
significant doubt on the group's ability to continue as a going concern and,
therefore the group and company may be unable to realise their assets and
discharge their liabilities in the normal course of business. The auditors
have included material uncertainty in relation to going concern in the audit
opinion.
2. Earnings per share
The basic loss per share is calculated by dividing the loss attributable to
equity shareholders by the weighted average number of shares in issue.
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Weighted average number of shares in the period 516,517,600 333,468,072 352,852,268
Loss from continuing and total operations (589) (460) (17,799)
Basic and diluted loss per share:
From continuing and total operations (0.1)p (0.1)p (5.0)p
3. Exchange translation movement
For the 6 months to 30 June 2024, the Group has reported £0.01m as Other
comprehensive income, an exchange translation movement. This gain has been
triggered by the impact of movement in the currency exchange rates between US
dollars and GBP. The Group is exposed to currency risk to the extent that
there is a mismatch between the currency which assets are held and the Group
functional currency. The functional currency of the Group company is GBP. The
currency in which most assets and liabilities are denominated is US dollars.
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the date of transactions. Foreign
currency monetary assets and liabilities are translated into the functional
currency at the rates of exchange prevailing at the balance sheet date.
Foreign exchange gains and losses resulting from the settlement of foreign
currency transactions and from the translation exchange rates at 30th June
2024 of monetary assets and liabilities denominated in foreign currencies, are
taken to the income statement
4. No interim dividend will be paid.
5. Copies of the half-yearly report can be obtained
from: The Company Secretary, ADM Energy plc, 60, Gracechurch Street, London,
EC3V 0HR and are available to view and download from the Company's website:
www.admenergyplc.com.
1 (#_ftnref1) ADM Energy's share of operating costs at asset
level
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