REG - ADM Energy PLC - Half-yearly Results
28/09/2023 07:00
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RNS Number : 9145N ADM Energy PLC 28 September 2023
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.
28 September 2023
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
2023
Investment Highlights:
Blade Oil V, LLC ("Blade V")
· Acquired Blade V for $1.6 million, containing five oil leases,
including one in the Midway-Sunset Oilfield, a major US field
· Primary focus of portfolio is a 70% working interest in a
three-well drilling programme targeting shallow oil production on the Altoona
Lease
· Concurrent with the acquisition, ADM issued secured convertible
loan notes ("SCLN") worth up to $1.5 million through subscription agreements
Aje Field, OML 113
· ADM continues to work with the Aje Partners to progress
development plans for the Aje Field, including replacement of the Floating
Production Storage and Offloading ("FPSO")
Corporate
· In April 2023, Appointed Stefan Olivier as CEO, previously
co-founder of MX Oil plc (now ADM Energy plc), and Claudio Coltellini as
Non-executive Director
Stefan Olivier, CEO of ADM Energy, said: "I am pleased with the progress made
since joining as CEO of ADM earlier this year. The acquisition of Blade V,
with a portfolio of highly promising North American oil and gas assets, can be
a cornerstone project for the Company for years to come. During the period, we
have also significantly reduced costs and restructure the short term debt on
our balance sheet, putting ADM on a more solid footing to build on. Blade V
ties in with our strategy to identify near-term cash generating opportunities
in established oil and gas regions to strengthen our investment portfolio.
"We are excited to forge ahead with plans to drill three wells at the Altoona
Lease which sits within a major US field, the Midway-Sunset Oilfield. We
continue to work with our partners at Aje to advance development plans as we
believe it can be a core value enhancing asset within our portfolio. The Board
and I see a great opportunity to enhance ADM's value and look forward to
updating the market as we progress."
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.
Acquisition of Blade V
In May 2023, ADM acquired Blade V from OFX Holdings LLC (Formerly TN Black
Gold, LLC ("OFX") for a total maximum consideration of US$1,614,000. Blade V
owns a portfolio of interests in oil and gas projects, the primary focus of
which is a 70% working interest in a three-well drilling programme targeting
shallow oil production on the Altoona Lease in the Midway-Sunset Oilfield,
Kern County, California. The first drill programme is expected to commence in
Q4 2023 and the board is optimistic that funding for the project will be
requested soon under the previously announced CLN.
The Midway Sunset Oil Field, the largest in California and third largest in
the U.S., has a history of over 3 billion barrels of oil production since
1889. Surrounded by Chevron Corporation on three sides, ADM's Altoona Lease is
a direct beneficiary of the infrastructure and pipelines built to service
Chevron's production in the area. The Altoona Lease is a unique opportunity
for ADM to benefit from substantial investment and de-risking of the target
opportunities by a major company.
Aje
Aje remains a core part of our investment portfolio and the next steps will be
for the JV Partners to agree on the long-term field development plans for the
Aje Field. Discussions with JV partners are ongoing to replace the current
FPSO and unlock the field's vast wet gas potential estimated at 1.2 trillion
cubic feet. Production remains temporarily paused while the partners agree
the development plans and the Company will update the market in due course.
Barracuda
As previously stated, due to the strategic focus of the Company on the recent
acquisition and potential of Blade V, alongside the protracted legal
proceedings at Barracuda, the Company made the decision to write off the
investment in Barracuda for prudence.
New leadership and board changes
Stefan Olivier was appointed as CEO in April 2023. Stefan has extensive
experience in the oil and gas sector, including as the co-founder of MX Oil
plc, now ADM Energy. Stefan has been on the Boards of several other public and
private companies and brings years of experience of working in natural
resources. He will drive forward our strategy of building a multi-asset
portfolio, as evidenced in his short time here by the acquisition of Blade V.
In addition, the Board further strengthened to Board with the appointment of
Claudio Coltellini as a Non-executive Director. With approximately 15 years of
investment experience in the U.S. oil and gas sector, Claudio currently holds
the position of CEO in multiple private U.S. oil and gas companies, each with
a focus on investments in Texas, California, Kansas, and Louisiana. His
extensive expertise positions him perfectly to contribute valuable insights
and guidance as we harness the potential of the Company's Blade V acquisition.
Financial Review
During the period, the Company significantly reduced administrative expenses
to £292,000 year-on-year (H1 2022: £897,000 loss).
Loss for the period decreased 55% to £460,000 (H1 2022: £834,000 loss)
On 25 May 2023, the Company announced, alongside the acquisition of Blade V,
that it has entered into subscription agreements to issue secured convertible
loan notes ("SCLNs") with an aggregate face value of up to US$1.5 million, of
which US$900,000 has been subscribed for and US$600,000 remaining available
for subscription. The SCLN has a three-year term, an interest rate
payable-in-kind (which maybe settle with cash or non-cash payments) of 8.0%
per annum and the principal together with any interest due may be converted at
any time at a share price of 1.2p per share.
In addition to the subscriptions, the Company agreed with certain directors
and creditors to convert outstanding contractual liabilities of £683,117 into
56,926,417 new ordinary shares in the Company at the price of 1.2p per new
ordinary share.
The Company also continues to work with its creditors and larger shareholders
to restructure and refinance its short term liabilities with structure, medium
term debt whilst the Company looks to develop cash generating assets.
Accordingly, the Company has entered into a loan facility for £125,000 from
Catalyse Capital Ltd on a six month basis, maturing on 1 March 2024, with an
interest rate of 15.0% for the term. The proceeds of the loan will be used
for working capital and business development purposes.
Outlook
The Blade V acquisition has provided ADM with highly prospective assets
including, with Altoona, assets in the third largest oilfield in the United
States. These assets offer an exciting opportunity to add value, as well as
diversifying the ADM portfolio. We are quickly moving forward with the
development of these assets, having now secured the funding to initiate
development activities at the Altoona Lease. In addition, we have worked to
prudently reduce our costs throughout this period, which provides us with a
stronger footing through the second half of the financial year.
Our newly strengthened Board and experienced technical team provide us with
the ability to fully exploit the significant opportunity the acquisition of
Blade V represents. Following geopolitical uncertainty and price volatility
that has characterised the last year, we are now seeing a strengthened
commodity price environment which we expect to continue over the medium term
and are confident that we will be able to utilise our experience and exciting
asset portfolio to grow and bring value to the Company.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
Notes £'000 £'000 £'000
Continuing operations
Revenue - 600 662
Operating costs(1) (78) (530) (369)
Administrative expenses (292) (897) (1,723)
Impairment of investment (576)
Consultancy fee income -
Operating loss (370) (827) (2,006)
Movement in fair value of investments - - -
Finance costs (90) (7) (116)
Loss on ordinary activities before taxation (460) (834) (2,122)
Taxation - - -
Loss for the period (460) (834) (2,122)
Other Comprehensive income:
Exchange translation movement 3 (484) 1,370 1,339
Total comprehensive loss for the period (944) 536 (783)
Basic and diluted loss per share 2
From continuing and total operations (0.1)p (0.3)p (0.8)p
(1) ADM Energy's share of operating costs at asset level
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Share capital Share premium Exchange translation reserve Other reserves Retained deficit Total
equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2022 10,267 38,014 (709) 960 (37,546) 10,986
Loss for the year - - - - (834) (834)
Exchange translation movement - - 1,370 - - 1,370
Total comprehensive expense for the year - - 1,370 - (834) 536
Issue of new shares 510 51 - - - 561
Share issue costs - (28) - - - (28)
Issue of convertible loans 10,267 38,014 (709) 960 (37,546) 10,986
Warrants issued in settlement of fees - - - - (834) (834)
At 31 December 2022 11,194 38,090 630 943 (39,649) 11,208
Loss for the period - - - - (460) (460)
Exchange translation movement - - (484) - - (484)
Total comprehensive gain for the period - - (484) - (460) (944)
Issue of new shares 726 146 - - - 871
Share issue costs - - - - -
At 30 June 2023 11,920 38,236 146 943 (40,109) 11,135
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 17,593 17,970 17,899
Fixed asset investments - 576 -
17,593 18,546 17,899
CURRENT ASSETS
Investments held for trading 28 28 28
Inventory 35 36 36
Trade and other receivables 39 201 22
Cash and cash equivalents 86 127 25
188 392 111
CURRENT LIABILITIES
Trade and other payables 1,322 1,920 2,240
Borrowings 67 289 -
1,389 2,209 2,240
NET CURRENT LIABILITIES (1,201) (1,817) (2,129)
NON-CURRENT LIABILITIES
Convertible loans - - -
Other borrowings 1,072 247 287
Other payables 2,626 2,951 2,718
Decommissioning provision 1,559 1,476 1,557
5,257 4,674 4,562
NET ASSETS 11,135 12,055 11,208
EQUITY
Ordinary share capital 11,920 10,777 11,194
Share premium 38,236 38,037 38,090
Other reserves 971 960 962
Currency translation reserve 135 661 630
Retained deficit (40,126) (38,380) (39,668)
Equity attributable to owners of the Company and total equity 11,135 12,055 11,208
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
£'000 £'000 £'000
OPERATING ACTIVITIES
Loss for the period (460) (834) (2,122)
Adjustments for:
Fair value adjustment to investments - - -
Warrants issued in settlement of fees - - -
Finance costs 90 7 116
Share based payment expense 9 - -
Impairment of intangible assets - - 576
Depreciation and amortisation - - 65
Decommissioning charge 73 65 138
Operating cashflow before working capital changes (288) (762) (1,227)
(Increase) in inventories 1 - -
(Increase)/decrease in receivables (17) (71) 108
Increase/(decrease) in trade and other payables (720) 241 138
Net cash outflow from operating activities (1024) (592) (961)
INVESTMENT ACTIVITIES
Proceeds on disposal of investments - - -
Acquisition of subsidiary - - -
Net cash outflow from investment activities - - -
FINANCING ACTIVITIES
Issue of ordinary share capital 682 561 1,061
Share issue costs - (28) (56)
Proceeds from short term loans 595 170 210
Repayment of borrowings (193) (100) (328)
Net cash inflow from financing activities 1,084 603 887
Net increase/(decrease) in cash and cash equivalents from continuing and total 60 11 (94)
operations
Exchange translation difference 1 6 9
Cash and cash equivalents at beginning of period 25 110 110
Cash and cash equivalents at end of period 86 127 25
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 2021. 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 2023, the Group recorded a loss for the period of £0.46m and had
net current liabilities of £1.20m, after allowing for cash balances of £86k.
In May 2023 the Company announced, alongside the acquisition of Blade V, that
it has entered into subscription agreements to issue secured convertible loan
notes ("SCLN") with an aggregate face value of up to US$1.5 million, of which
US$900,000 has been subscribed for and US$600,000 remaining available for
subscription. The SCLN has a three-year term, an interest rate payable-in-kind
(which maybe settle with cash or non-cash payments) of 8.0% per annum and the
principal together with any interest due may be converted at any time at a
share price of 1.2p per share. In addition to the subscriptions, the Company
agreed with certain directors and creditors to convert outstanding contractual
liabilities of £683,117 into 56,926,417 new ordinary shares in the Company at
the price of 1.2p per new ordinary share, helping the company reduce the
liabilities on the balance sheet. Also with the change of management the focus
of the company is now on finding near term producing assets so the company can
start earning revenue. In May 2023 the company announced the investment in
Blade V which holds an interest across 5 different wells in USA, all with near
term revenue potential.
As part of this deal, the company also has circa $251k available under its
debt facility with OFX.
The Directors have prepared cashflow forecasts for the period to June 2024 to
assess whether the use of the going concern basis for the preparation of the
financial statements is appropriate. In the short term, between the loan
facility, potential revenue and CLN proceeds the Group does not expect to need
short term funding to meet its liabilities as they fall due however the group
does expect in the period that more funding might be needed. The Directors
have a reasonable expectation based on past performance and current
discussions of support from stakeholders that additional finance would be
available should it be needed. Accordingly, the directors consider it
reasonable to prepare the financial statements on the going concern basis.
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
2022 2022 2022
(unaudited) (unaudited) (audited)
Weighted average number of shares in the period 333,468,072 249,563,736 252,369,021
Loss from continuing and total operations (£460,000) (£834,000) (£2,122,000)
Basic and diluted loss per share:
From continuing and total operations (0.1)p (0.3)p (0.8)p
3. Exchange translation movement
For the 6 months to 30 June 2023, the Group has reported £-0.48m as Other
comprehensive income, an exchange translation movement. This loss 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
2023 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.
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