REG - Westmount Energy Ld - Interim Results
26/03/2024 07:00
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RNS Number : 2212I Westmount Energy Limited 26 March 2024
26 March 2024
WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Interim Results
Westmount Energy Limited (UK AIM: WTE.L, USA OTCQB: WMELF), the AIM-quoted oil
and gas investment company focussed on the Guyana-Suriname Basin is pleased to
announce its unaudited Interim Results for the six months ended 31 December
2023.
Copies of the Company's results are available on the Company's website,
www.westmountenergy.com, and will be posted to shareholders shortly.
CHAIRMAN'S REVIEW
2023 Highlights
· Company had cash of £0.34M and listed marketable securities of
£0.61M at Period End, 31st December 2023; no debt
· Canje Block, Guyana - Cumulative Impact Assessment filed with
Guyanese EPA in September 2023 suggests potential drilling on Canje from 2024
- though specific guidance on timeline not yet available from Canje partners
· Kaieteur Block - Exit of ExxonMobil and Hess with licence equity
being returned to Ratio Petroleum 50% and CEC 50%; Ratio Petroleum farm-down
process continues with a primary objective of bringing a new deepwater
operator to the block before February 2025
· Full redemption of outstanding Loan Notes by CEC - with large
American Private Equity Fund converting approximately USD $22.2M of Loan Notes
into circa 2.45M CEC common shares (an implied conversion metric of circa USD
$9.03 per share).
·
· Orinduik Block - ECO Atlantic becomes operator and continues in 2nd
Renewal Period with 100% Participating Interest plus commitment to drill 1
well to Cretaceous; farm-down process underway
· Investment in Africa Oil Corp - confirmation that Orange Basin,
offshore Namibia, is a major emerging hydrocarbon province with 7 significant
discoveries reported since early 2022
· Major milestones reported in the appraisal of the giant Venus
light oil discovery, with successful drilling of large step-out appraisal
wells at Venus-1A, Mangetti-1x and the successful testing of sidetracked
Venus-1X discovery well
· Continuing news-flow anticipated from Namibian investment in 2024
with ongoing drilling/testing operations at Venus appraisal wells, Mangetti-1x
discovery plus additional exploration program
· JHI completes acquisition of 100% interest in Production Licence
PL001 in the North Falkland Basin from Argos Resources Ltd.
Investment portfolio summary
As of the 31st December 2023 Westmount had a cash balance of £0.34M, listed
marketable securities of £0.61M, and is debt free.
As of 31st December 2023, Westmount holds 300,000 shares in Africa Oil Corp
("AOC") representing approximately 0.065% of the issued common shares in AOC
as of 29th February 2024. On the 29th September 2023 AOC paid a cash dividend
of USD$0.025 per common share. On 4th March, 2024 AOC declared a semi-annual
cash dividend of USD$0.025 per common share, payable on the 28th March 2024 to
shareholders of record on the 8th March 2024.
As of the 31st December 2023 Westmount held a total of 5,651,270 shares in JHI
Associates Inc ("JHI"). Upon completion of the Argos-JHI transaction, as
announced on the 25th September 2023, and subsequent to the voluntary
liquidation of Argos and the distribution of JHI Consideration Shares to Argos
shareholders it is estimated that Westmount will hold circa 5,684,866 shares
in JHI, representing approximately 6.24% of the enlarged issued share capital
of JHI.
As of 31st December 2023, Westmount holds 474,816 common shares in Cataleya
Energy Corporation ("CEC") representing approximately 5.26% of the issued
shares in CEC, as of 6th January 2023. Subsequent to period end CEC has
redeemed in full USD $43,782,722 in convertible loan notes previously issued
to a certain noteholder (the "Noteholder"), a large American Private Equity
Fund, between April 2020 and January 2023. The loan notes have been redeemed
via the repayment of USD $21,590,000 in cash and the conversion of USD
$22,192,722 into 2,458,705 CEC common shares. The transaction closed on the
15th March 2024 and CEC is now debt free. As a result of this loan note
conversion the Noteholder has now become a significant shareholder in CEC,
with a shareholding of approximately 21.4% of the enlarged CEC share capital.
Post redemption of these loan notes, Westmount retains a holding of 474,816
common shares in CEC, representing approximately 4.13% of the enlarged issued
share capital of CEC.
Westmount continues to hold 1,500,000 shares in Eco (Atlantic) Oil & Gas
Ltd. ("EOG"), representing approximately 0.4% of the common shares in issue as
of 2nd August 2023.
Westmount continues to hold 89,653 shares in Ratio Petroleum representing
approximately 0.04% of the issued share capital.
The complete investment portfolio is summarised in Table 1. The reported
financial loss for the period is primarily made up of a non-cash loss on
financial assets held at fair value through the profit and loss, some of which
is as a result of Foreign Exchange movements on the portfolio Investments when
valued at the period end.
Summary/Outlook
Notwithstanding the energy transition, exploration spending in deepwater and
ultra-deepwater areas is forecast to continue to grow as the majors and NOCs
seek to high-grade their portfolios, consolidate assets and to dominate this
space. Exploration 'hotspots' with high success rates, such as the deepwater
Guyana-Suriname Basin and the Orange Basin, are areas that are well positioned
to capture their share of this increased exploration spending.
Westmount's strategy continues to be one of seeking value creation for
shareholders via exposure to high impact exploration and appraisal drilling
programs.
With respect to offshore Guyana, while most of the pieces of the jigsaw appear
to be in place for the Canje Block, we await guidance with respect to timing
of further discretionary drilling. We note the September 2023 filing by the
operator ExxonMobil of a Cumulative Impact Assessment ("CIA") for the Canje
Block with the EPA. This CIA report indicates that exploration drilling on the
Canje Block could potentially recommence from 2024, though this guideline has
not yet been confirmed by our investee, JHI, or any of the Canje partners. The
exit of ExxonMobil and Hess from the Kaieteur Block is a setback with respect
to drilling timeframes for Kaieteur, though a farm-down process is underway
with a view to bringing new entrants, including a deepwater operator, to the
block prior to February 2025. We are also encouraged that CEC's Noteholder, a
large American Private Equity Fund, has elected to convert USD $22,192,722 of
its outstanding loan notes into 2,458,705 CEC common shares (an implied
conversion metric of circa USD $9.03 per share) and has now become a 21.4%
shareholder in CEC. We believe that this new investment into CEC reflects
confidence that the ongoing farm-down process can bring new partners and a
resumption of drilling on the Kaieteur Block, which has been substantially
derisked by the Tanager-1 discovery, yet remains underexplored.
With respect to the Orinduik Block, there is now a firm commitment to drill a
well to the Cretaceous, prior to January 2026 - and EOG has already commenced
a farm-down process with a view to bringing new partners to the block to
support this effort.
The pace of exploration activity in the Orange Basin, offshore Namibia,
indicates the continuing appetite amongst major players for exploration
drilling in this prolific emerging province, where seven discoveries have been
reported since early 2022. While Westmount's investment in AOC offers exposure
to the ongoing successes on Block 2913B, unfortunately, share price responses
have been disappointing so far, in part due to the limited disclosure around
these operations, and in our opinion, do not reflect the value being created.
Nevertheless, an exciting program of drilling and testing lies ahead in 2024,
with further appraisal drilling/testing at Venus and Mangetti discoveries and
potential follow-on drilling of a portfolio of substantial exploration targets
that have already been identified on the block, including the Kokerboom,
Damara and Damara South prospects. In addition, the recent farm-down news
reported by our investees AOC and EOG with respect to Block 3B/4B, offshore
South Africa, offers line of sight to exposure to a further two high impact
wells in the Orange Basin.
While Westmount's strategy continues to be one of seeking value creation for
shareholders via exposure to high impact exploration and appraisal drilling
programs, in this changing landscape we remain open to consolidation
manoeuvres which offer shareholder value.
GERARD WALSH
Chairman
25 March 2024
For further information, please contact:
Westmount Energy
Limited
www.westmountenergy.com (http://www.westmountenergy.com)
David King,
Director
Tel: +44 (0) 1534 823000
Cavendish Securities plc (Nomad and Broker) Tel: +44 (0) 20 7397 8900
Neil McDonald / Pete Lynch
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2023
Six months ended Six months ended
31 December 2023 31 December Year ended
(unaudited) 2022 30 June 2023
£ (unaudited) (audited)
£ £
Net fair value losses on financial assets held at fair value through profit or (531,596) (2,512,900) (2,718,218)
loss
Investment income 11,762 - 11,816
Finance income 1,928 2,393 9,096
Administration expenses (139,930) (143,932) (253,071)
Foreign exchange (losses)/gains (3,686) 1,985 (23,893)
Operating loss (661,522) (2,652,454) (2,974,270)
Loss before tax (661,522) (2,652,454) (2,974,270)
Tax - - -
Comprehensive loss for the period / year (661,522) (2,652,454) (2,974,270)
Basic loss per share (pence) (0.46) (1.84) (2.06)
Diluted loss per share (pence) (0.46) (1.84) (2.06)
All results are derived from continuing operations.
The Company had no items of other comprehensive income during the period /
year.
CONDENSED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023 31 December 2022 30 June 2023
(unaudited) (unaudited) (audited)
£ £ £
ASSETS
Non-current assets
Financial assets at fair value through profit or loss 4,247,606 4,449,684 4,779,202
4,247,606 4,449,684 4,779,202
Current assets
Other receivables 29,397 300,562 44,977
Cash and cash equivalents 345,913 864,768 478,200
375,310 1,165,330 523,177
Total assets 4,622,916 5,615,014 5,302,379
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 36,498 45,258 54,439
36,498 45,258 54,439
Total liabilities 36,498 45,258 54,439
EQUITY
Share capital 16,652,482 16,652,482 16,652,482
Share option account 469,670 469,670 469,670
Retained earnings (12,535,734) (11,552,396) (11,874,212)
Total equity 4,586,418 5,569,756 5,247,940
Total liabilities and equity 4,622,916 5,615,014 5,302,379
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
Share capital account Share option account Retained earnings Total equity
£ £ £ £
As at 1 July 2022 16,652,482 469,670 (8,899,942) 8,222,210
- - (2,974,270) (2,974,270)
Comprehensive Income
Loss for the year ended 30 June 2023
As at 30 June 2023 16,652,482 469,670 (11,874,212) 5,247,940
Comprehensive Income
Loss for the period ended 31 December 2023 - - (661,522) (661,522)
As at 31 December 2023 16,652,482 469,670 (12,535,734) 4,586,418
Share capital account Share option account Retained earnings Total equity
£ £ £ £
As at 1 July 2021 16,652,482 469,670 (1,472,692) 15,649,460
Comprehensive Income
Loss for the year ended 30 June 2022 - - (7,427,250) (7,427,250)
As at 30 June 2022 16,652,482 469,670 (8,899,942) 8,222,210
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2023
Six months ended Six months ended Year ended
31 December 2023 31 December 2022 30 June 2023
(unaudited) (unaudited) (audited)
£ £ £
Cash flows from operating activities
Total comprehensive loss for the period / year (661,522) (2,652,454)
(2,974,270)
Adjustments for:
Net loss on financial assets at fair value through profit or loss 531,596 2,512,900 2,718,218
Movement in other receivables 15,580 (290,416) (34,831)
Movement in trade and other payables (17,941) (7,672) 1,509
Net cash outflow from operating activities (132,287) (437,642) (289,374)
Cash flows from investing activities
Proceeds from return of capital on investment - 299,320 299,320
Purchase of investments - - (534,836)
Net cash inflow/(outflow) from investing activities - 299,320 (235,516)
(132,287) (138,322) (524,890)
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period / year 478,200 1,003,090 1,003,090
Cash and cash equivalents at the end of the period / year 345,913 864,768 478,200
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
1. Accounting Policies
Basis of accounting
The interim financial statements have been prepared in accordance with the
International Accounting Standard ("IAS") 34, Interim Financial Reporting.
The interim financial statements do not include all the information and
disclosures required in the annual financial statements and should be read in
conjunction with the Company's annual financial statements for the year ended
30 June 2023. The annual financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS").
The same accounting policies and methods of computation are followed in the
interim financial statements as in the Company's annual financial statements
for the year ended 30 June 2023.
2. Investments
Six months ended Six months ended Year
31 December 2023 31 December 2022 ended
30 June
2023
(unaudited) (unaudited) (audited)
£ £ £
Africa Oil Corp, at market value 442,680 - 503,317
Cost, 300,000 shares 534,836 - 534,836
(31 December 2022: nil shares, 30 June 2023: 300,000 shares)
Argos Resources Limited, at market value - 9,900 3,480
Cost, nil shares - 310,775 310,775
(31 December 2022: 1,000,000 shares, 30 June 2023: 1,000,000 shares)
Cataleya Energy Corporation, at market value 1,454,796 1,973,660 1,867,404
Cost, 474,816 shares 3,751,907 4,218,895 3,751,906
(31 December 2022: 474,816 shares, 30 June 2023: 474,816 shares)
Eco Atlantic Oil & Gas Oil Limited, at market value 165,000 276,750 216,750
Cost, 1,500,000 shares 240,000 240,000 240,000
(31 December 2022: 1,500,000 shares, 30 June 2023: 1,500,000 shares)
JHI Associates Inc, at market value 2,182,521 2,182,520 2,182,521
Cost, 5,651,270 shares 7,770,027 7,770,027 7,770,027
(31 December 2022: 5,651,270 shares, 30 June 2023: 5,651,270 shares)
Ratio Petroleum Energy Limited Partnership shares, at market value 2,609 6,854 5,730
Cost, 89,653 shares 22,256 22,256 22,256
(31 December 2022: 89,653 shares, 30 June 2023: 89,653 shares)
Total market value 4,247,606 4,449,684 4,779,202
Total cost 12,319,026 12,561,953 12,629,800
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023 (CONTINUED)
2. Investments (continued)
Six months ended Six months ended Year
31 December 2023 31 December 2022 ended
30 June
2023
(unaudited) (unaudited) (audited)
£ £ £
Total fair value adjustment (8,071,420) (8,112,269) (7,850,598)
Reverse prior year fair value adjustment 7,850,598 5,599,369 5,599,369
Current period fair value movement (220,822) (2,512,900) (2,251,229)
Unrealised loss (220,822) (2,512,900) (2,251,229)
Realised loss (310,774) - -
Current period income statement impact (531,596) (2,512,900) (2,251,229)
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