REG - ADM Energy PLC - Interim Results
29/09/2022 11:30
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RNS Number : 1850B ADM Energy PLC 29 September 2022
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.
29 September 2022
ADM Energy plc
("ADM" or the "Company")
Interim Results
ADM Energy plc (AIM: ADME; BER and FSE: P4JC), a natural resources investing
company, announces its interim results for the six months ended 30 June 2022.
Investment Highlights:
Aje Field, OML 113
· The JV Partners are making progress in their development plans for
OML 113 and have been advancing plans to replace the current Floating
Production Storage and Offloading ("FPSO") to increase gas handling capacity
in order to support development plans to monetise the Field's significant wet
gas potential (estimated at potentially 1.2 trillion cubic feet ("Tcf") of wet
gas resources after redevelopment of the field). *as per AGR Tracs 2019
Competent Persons Report ("CPR")
· Post-period events:
o In July 2022, ADM noted the conclusion of PetroNor E&P Limited's
("PetroNor") acquisition of Panoro Energy ASA's ("Panoro") interest in OML
113, providing a strong endorsement of the quality and considerable potential
of the Aje field
o In August 2022, completed the 17(th) Lifting at the Aje Field totalling
94,187 barrels with a net share of 8,683 barrels to ADM, which equates to
ADM's profit interest of approximately 9.2%
Barracuda Field OML 141
· Announced the result of the CPR on the Barracuda Field with a 2U
(P50) case, the NPV10 is +$99mm with an IRR of 45%, assuming at least 70mmbbls
STOIIP is discovered
· Post-period, in July 2022, the Court extended the injunction secured
by ADM to November 2022. The Company entered into settlement talks with Noble
Hill-Network Limited ("NHNL")
Corporate:
· In January 2022, the Company completed an equity fundraising of
approximately £561,000 with Optima Resources Holding Limited
Osamede Okhomina, CEO of ADM Energy, said: "We made good progress in the first
half of 2022. The conclusion of PetroNor's acquisition of Panoro's stake in
the asset demonstrated confidence in the potential of Aje. The completion of
the transaction is expected to accelerate the JV Partners' Final Investment
Decision on the long-term field development plans to take Aje to the next
stage. The development of the Aje Field will give the partners the opportunity
to monetise the wet gas resources, estimated at potentially 1.2 trillion cubic
feet at Aje. At Barracuda, we announced the result of our CPR with a 2U (P50)
case, the NPV10 is +$99mm with an IRR of 45%, assuming at least 70 mmbbls
STOIIP is discovered, and further analysis must be carried out in order to
make an investment decision.
"We will continue to target projects of undervalued 2P reserves with highly
attractive risk-reward profiles, as we drive forward our strategy of building
a multi-asset portfolio, having had encouraging discussions with potential
partners regarding various opportunities. We are also looking in areas of
renewable energy where there are opportunities to add value to our portfolio.
We hope to capitalise on the upcoming prospects that can take ADM Energy to
the next phase of its development and growth."
Enquiries:
ADM Energy plc +44 20 7459 4718
Osamede Okhomina, 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
About ADM Energy PLC
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural resources investing
company with an existing asset base in Nigeria. ADM Energy holds a 9.2% profit
interest in the oil producing Aje Field, part of OML 113, which covers an area
of 835km² offshore Nigeria. Aje has multiple oil, gas, and gas condensate
reservoirs in the Turonian, Cenomanian and Albian sandstones with five wells
drilled to date.
ADM Energy is seeking to build on its existing asset base in Nigeria and
target other investment opportunities across the West African region in the
oil and gas sector with attractive risk reward profiles such as proven nature
of reserves, level of historic investment, established infrastructure and
route to early cash flow.
Operating Review
OML 113 - Aje Field
In January 2022, Panoro and PetroNor announced that the transaction for Panoro
to sell 10% of its ownership to PetroNor had received all government approvals
and that the transaction would formally close within 90 days.
Following this, the conclusion of the transaction came post period, in July
2022, when it was announced that Panoro had completed the sale of 100% of its
ownership in OML 113 to PetroNor. PetroNor's decision to take a significant
stake in the Aje field underscores Aje's substantial, long-term, high-quality
value proposition.
The completion of the transaction and the addition of a new, experienced
partner in PetroNor is expected to accelerate the JV Partners' ability to
advance the project to Final Investment Decision on the long-term field
development plans for the Aje Field. The Field Development Plan, which
includes the potential drilling of three new wells, could significantly
increase production of oil and gas liquids at a time nations around the world
are seeking new sources of oil and gas. Chief Engineer on the Aje
Development, Dr Babatunde Pearse, who has an IOC background and extensive
industry experience will lead the planning, development and oversee Front End
Engineering Design ("FEED") studies to support the Final Investment Decision.
The JV Partners are now progressing with plans to replace the current FPSO,
following their assessment that it is not a viable option to facilitate the
growth and development plans at OML 113. As previously announced, the JV
partners have committed to a temporary suspension of production and
demobilisation of the field in order to ensure sufficient capacity and
production capability moving forward. The JV Partners are in discussions with
a number of potential suppliers and working towards securing a suitable FPSO
that will match plans to significantly increase oil production and monetise
over 1.2 Tcf of wet gas resources in the redevelopment of the Aje field
regarding which, the Company will update the market in due course.
Post period, in August 2022, the Company announced the 17th lifting at the Aje
field for a total of 94,187 barrels. In this third Lifting since ADM
consolidated its interest in the Aje Field, the Company received a net share
of 8,683 barrels, which equated to ADM's profit interest of approximately
9.2%. The proceeds of the Lifting contributed towards continued work on the
development plans for the Aje field with the JV Partners.
OML 141 - Barracuda Field
In March 2022, ADM announced the result of a competent person's report on the
Barracuda Field in OML141, offshore Nigeria. The results of the CPR covering
the Barracuda Field in OML141 show that, for the 2U (P50) case, the NPV10 is
+$99mm with an IRR of 45% and, therefore, the prospect is considered to be
robust for development, assuming at least 70mmbbls STOIIP is discovered.
Barracuda took a major step forward with the completed CPR which showed it has
the potential to be prospective for development. In 2022, the Company will
continue work and analysis to help better understand the asset's potential
prior to making a further investment decision.
Interim Injunction
Following the ongoing legal proceedings in respect to the Company's interest
in Barracuda, the Company and K.O.N.H (UK) Ltd ("KONH") obtained an interim
injunction at the Federal High Court of Nigeria, Lagos ("Court"), restraining
NHNL from selling, disposing, divesting or tampering with the 70% shareholding
interest of KONH in NHNL to third-party investors or in any other manner
whatsoever. Subsequently, NHNL applied to the court to set aside the interim
injunction. The court pronounced NHNL's application as lacking in merit and
the application was dismissed.
Post period, the Court has adjourned this matter until 16 November 2022. The
Company and NHNL informed the Court they are in settlement discussions with a
view to resolving the dispute. If an agreement cannot be reached that will
satisfy the Company's demands, ADM will await the Court's final determination
of the suit. The interim injunction remains in place.
Financial Review
In the six months to 30 June 2022, the revenue (£600,000) and accrued
operating costs (£530,000) reflected the 17th lifting at the Aje Field
equating to a net share of 8,683 barrels for ADM's 9.2% profit interest.
During the period, administrative expenses of £897,000 were down year-on-year
(H1 2021: £1,173,000) due to cost saving measures and a decrease in
transaction and due diligence activities.
On 21 January 2022, the Company announced that it had raised a total of
£561,000 through a subscription for 51,000,000 shares at 1.1p per share from
Optima Resources Holding Ltd. 15.3 million warrants to subscribe for shares at
4.5p per share were issued in connection with the share issue. The warrants
have an exercise period of two years.
In the six months to 30 June 2022, ADM's net assets increased by nearly 10% to
£12m due to the substantial movement in the USD/GBP exchange rate in the
period, which has had a positive £1.4m impact on the Company's net asset
position.
Outlook
The Company made good progress in the first half in 2022, building a solid
foundation for growth. In Aje, ADM has an interest in a high-quality asset
with scope for significant increase in production. Furthermore, PetroNor
taking a considerable stake emphasises the opportunity in Aje and finalises
the addition of another highly experienced partner to the OML 113 which will
provide ideal support to take Aje to the next stage of development.
The completion of the Barracuda CPR was a major step forward. The Company will
continue to undergo further analysis to help recognise the assets full
potential before making an informed investment decision.
In addition, the Company remains in the market to add additional high-quality
assets to its investment portfolio with its expertise, deep network and access
to capital. The Board believes ADM is well equipped to take advantage of a
market whereby upstream majors are in the process of extensive divestment
programmes and, in line with the Company's growth strategy, ADM will continue
to target undervalued projects in West Africa with attractive risk-reward
profiles and substantial upside for shareholders. In addition, and as part of
its investment strategy, ADM remains open to potential renewable energy
investments, primarily in Europe, if there is an opportunity to bring
additional value to shareholders.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2021
2022 2021
Notes £'000 £'000 £'000
Continuing operations
Revenue 600 785 1,751
Operating costs(1) (530) (1,124) (1,895)
Administrative expenses (897) (1,173) (2,340)
Impairment of investment -
Consultancy fee income -
Operating loss (827) (1,512) (2,484)
Movement in fair value of investments - - -
Finance costs (7) (25) (56)
Loss on ordinary activities before taxation (834) (1,537) (2,540)
Taxation - - -
Loss for the period (834) (1,537) (2,540)
Other Comprehensive income:
Exchange translation movement 3 1,370 (62) 141
Total comprehensive gain for the period 536 (1,599) (2,399)
Basic and diluted loss per share 2
From continuing and total operations (0.3)p (1.1)p (1.6)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 2022
Share capital Share premium Exchange translation reserve Other reserves Retained deficit Total
equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 9,450 36,591 (850) 817 (35,006) 11,002
Loss for the year - - - - (2,540) (2,540)
Exchange translation movement - - 141 - - 141
Total comprehensive expense for the year - - 141 - (2,540) (2,399)
Issue of new shares 817 1,517 - - - 2,334
Share issue costs - (94) - 27 - (67)
Issue of convertible loans - - - 2 - 2
Warrants issued in settlement of fees - - - 114 - 114
At 31 December 2021 10,267 38,014 (709) 960 (37,546) 10,986
Loss for the period - - - - (834) (834)
Exchange translation movement - - 1,370 - - 1,370
Total comprehensive gain for the period - - 1,370 - (834) 536
Issue of new shares 510 51 - - - 561
Share issue costs - (28) - - - (28)
At 30 June 2022 10,777 38,037 661 960 (38,380) 12,055
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
£'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 17,970 16,430 16,149
Fixed asset investments 576 - 576
18,546 16,430 16,007
CURRENT ASSETS
Investments held for trading 28 28 28
Inventory 36 104 33
Trade and other receivables 201 137 130
Cash and cash equivalents 127 137 110
392 406 301
CURRENT LIABILITIES
Trade and other payables 1,920 4,123 1,534
Borrowings 289 195 212
2,209 4,318 1,746
NET CURRENT LIABILITIES (1,817) (3,912) (1,445)
NON-CURRENT LIABILITIES
Convertible loans - 398 -
Other borrowings 247 - 247
Other payables 2,951 - 2,783
Decommissioning provision 1,476 1,073 1,264
4,674 1,471 4,294
NET ASSETS 12,055 11,047 10,986
EQUITY
Ordinary share capital 10,777 9,798 10,267
Share premium 38,037 37,822 38,014
Other reserves 960 882 960
Currency translation reserve 661 (912) (709)
Retained deficit (38,380) (36,543) (37,546)
Equity attributable to owners of the Company and total equity 12,055 11,047 10,986
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2021
2022 2021
£'000 £'000 £'000
OPERATING ACTIVITIES
Loss for the period (834) (1,537) (2,540)
Adjustments for:
Fair value adjustment to investments - - -
Warrants issued in settlement of fees - 56 114
Finance costs 7 25 56
Impairment of intangible assets - - -
Depreciation and amortisation - 48 47
Decommissioning charge 65 51 215
Operating cashflow before working capital changes (762) (1,357) (2,108)
(Increase) in inventories - (72) -
(Increase)/decrease in receivables (71) (28) (21)
Increase/(decrease) in trade and other payables 241 324 570
Net cash outflow from operating activities (592) (1,133) (1,559)
INVESTMENT ACTIVITIES
Proceeds on disposal of investments - 850 850
Acquisition of subsidiary - (180) (180)
Net cash outflow from investment activities - 670 670
FINANCING ACTIVITIES
Issue of ordinary share capital 561 932 1,406
Share issue costs (28) (43) (607)
Proceeds from short term loans 170 - -
Repayment of borrowings (100) (352) (338)
Net cash inflow from financing activities 603 537 1,001
Net increase/(decrease) in cash and cash equivalents from continuing and total 11 74 112
operations
Exchange translation difference 6 33 (32)
Cash and cash equivalents at beginning of period 110 30 30
Cash and cash equivalents at end of period 127 137 110
NOTES TO THE HALF-YEARLY REPORT
1. The financial information set out in this interim
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 interim 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
interim 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 2022, the Group recorded a loss for the period of £834,000 and had
net current liabilities of £1,817,000, after allowing for cash balances of
£127,000.
The Directors have prepared cashflow forecasts for twelve months following the
date of approval of this interim statement to assess whether the use of the
going concern basis of their preparation is appropriate. However, in the short
term the Group will require further additional funding in order to meet its
liabilities as they fall due. The Directors have taken into consideration the
level and timing of the Group's working capital requirements and have also
considered the likelihood of successfully securing funding to meet these
needs. In particular, consideration has been given to ongoing discussions
around further third-party investment and the extent to which these
discussions are advanced both in respect of short and longer term funding. The
Directors acknowledge that while they have an expectation that funding will be
secured based on this assessment, at the date of approval of these financial
statements, no such funding has been unconditionally committed. Therefore,
while the Directors have a reasonable expectation that the Group has the
ability to raise the additional finance required in order to continue in
operational existence for the foreseeable future, the uncertainty surrounding
the ability and likely timing of securing such finance indicates that a
material uncertainty exists that may cast significant doubt on the Group's
ability to continue as a going concern. Were no such funding to be secured,
the Group would have no realistic alternative but to halt operations and
prepare its financial statements on a non-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 2021 2021
(unaudited) (unaudited) (audited)
Weighted average number of shares in the period 249,563,736 140,486,609 155,014,671
Loss from continuing and total operations (£834,000) (£1,537,000) (£2,540,000)
Basic and diluted loss per share:
From continuing and total operations (0.3)p (1.1)p (1.6)p
3. Exchange translation movement
For the 6 months to 30 June 2022, the Group has reported £1.4m 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
2022 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 interim 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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