REG - Westmount Energy Ld - Half-year Report

Westmount EnergyAnnouncement

13/03/2019 07:05

RNS Number : 6667S
Westmount Energy Limited
13 March 2019
 


WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Interim Results
The Company is pleased to announce its Interim Results for the six months ended 31 December 2018. A copy of the results is available on the Company's website, www.westmountenergy.com, and will be posted to shareholders shortly.
CHAIRMAN'S REVIEW
2018 Highlights
 
·      Focus remains on Guyana-Suriname Basin - a global exploration hotspot
 
·      Operating Profit of £364,445 for the 6 month period to 31 December 2018
 
·      £1,600,000 raised via Convertible Loan Note in October 2018
 
·      Investments in Eco (Atlantic) Oil & Gas Limited, Ratio Petroleum and JHI Associates Inc performing strongly
 
·      Positioned for exposure to multi-well, funded, drilling campaign offshore Guyana, during 2019/2020

 
·      Acquisition of Net Profits Interests in three Offshore UK Petroleum Licences

  
·      Evaluation of Exploration & Production opportunities with potential for a substantial transaction continue
 
In spite of a volatile oil price environment in the second half of 2018 offshore Guyana continued to be a major 'good news story' attracting strong industry and investor interest. A number of proven oil plays, high quality reservoirs, substantial light oil discoveries and an exploration drilling success rate of circa 85% to date have all confirmed the deepwater Guyana-Suriname Basin as an emerging prolific hydrocarbon province. In late August 2018 ExxonMobil announced its 9th oil discovery (Hammerhead-1) on the Stabroek Block, which is reported to be a new play (Tertiary) opening discovery adjacent to the Orinduik Block. This was followed by further announcements in early December of the 10th oil discovery (Pluma-1), bringing cumulative discovered recoverable resources in the basin to in excess of five billion oil equivalent barrels. Two additional discoveries were announced in early February 2019 - an oil discovery (Tilapia-1) and a gas-condensate discovery (Haimara-1).  
 
Your Company's investments in Eco (Atlantic) Oil & Gas Limited ("EOG"), JHI Associates Inc ("JHI") and Ratio Petroleum Energy Limited Partnership ("Ratio Petroleum") provide exposure to three highly prospective blocks (Orinduik, Canje and Kaieteur - all adjacent to the Stabroek Block) which offer near term carried or pre-funded drilling opportunities with the potential for transformational value changes in

their success cases.


A circa 2% equity stake in EOG provides exposure to pre-funded drilling on the Orinduik Block which is located up-dip of the Liza-1 (Cretaceous) and Hammerhead-1 (Tertiary) discoveries. EOG has a 15% participating interest in the block with their share of the planned 2019 drilling campaign fully funded by a Total Farm-in agreement announced in September 2018. The block operator, Tullow, has announced that the first of two planned wells on the block will be spudded, on the Jethro Prospect, in the second quarter of 2019. It has also been announced that the Orinduik partners have contracted the Stena Forth, a sixth generation drillship, to execute this drilling campaign.
 
Post the current accounting period your Company announced that it had increased its equity position in JHI to circa 3% of the issued share capital. JHI's main asset is a 17.5% carried interest in the Canje Block covering over 6,000 square kilometres, immediately outboard of the Stabroek Block.  As a result of a farm-in by Total, announced in February 2018, JHI is carried for the drilling of up to four wells and is funded for the drilling of additional wells. Subject to Guyanese government approvals and drillship availability, it is anticipated that the first well in the Canje Block will be drilled in late 2019 or early 2020, with the possibility to drill two or three additional wells by the end of 2020.
 
Your Company holds a circa 1% equity position in Ratio Petroleum which includes amongst its assets a 25% carried interest in the Kaieteur block, offshore Guyana. The block operator Exxon-Mobil, acquired a 5,700 km2 3D seismic survey in 2016 and subsequent to the processing and interpretation of this dataset, in February 2019, it informed Ratio Petroleum that it had elected to drill a well on the Kaieteur Block.
 
Continued exploration success on the Stabroek Block combined with the pre-drill de-risking and high-grading of drilling opportunities, on the neighbouring Orinduik, Canje and Kaieteur blocks, have all contributed to rising asset values which is reflected in your Company's financial performance. The reported net operating profit of £364,445, for the six months to 31 December 2018, is primarily driven by the share price performance of the various investments including EOG (+500% since February 2017) and Ratio Petroleum (+200% since June 2018).
 
In October 2018 the Company announced that it had raised £1,600,000 through the issue of 10% unsecured Convertible Loan Notes 2021, in spite of the challenging environment of steeply declining oil prices during Q4 2018 and general market nervousness pertaining to global economic outlook and Brexit related uncertainties. As a result, your Company held approximately £1,350,000 in cash resources at the end of this accounting period.
 
In addition, during the second half of 2018, the Company reported that it had acquired Net Profit Interests ("NPI") in three Offshore UK blocks - being a 0.5% NPI in licence P1918 (Colter Prospect), a 0.5% NPI in licence P2222 (Oulton Discovery) and a 1.0% NPI in licence P2235 (Wick Prospect). In January 2019, the Wick Prospect (11/24b-4) was reported to be unsuccessful.  On 8 March 2019 operations were completed at the Colter Prospect (98/11a-6) where a new oil discovery, Colter South, was reported in the initial vertical wellbore. A side-track to the North Colter target encountered the Sherwood Sandstone reservoir deeper than expected, indicating the Colter accumulation is smaller than pre-drill estimates. Further work will now commence to fully evaluate all the data from the well and assess forward work programmes and options for commercialisation.
Outlook
 
The London market has started to take notice of developments in Guyana and there is significant appetite for access to investment opportunities in this area, as evidenced by the recent doubling of the EOG share price. There are currently few ways for investors to gain material exposure to the Guyana story. Westmount now offers shareholders and potential investors' access to this opportunity as your Company's focus remains on seeking additional exposure and deployment of capital towards exploration opportunities in the Guyana-Suriname basin.
 
To date all of the deepwater drilling activity, offshore Guyana, has been on the ExxonMobil operated Stabroek block. However, in the coming months we expect to see drilling commence on the adjacent blocks. There is an exciting time ahead, as Westmount now owns approximately 3% of JHI, 2% of EOG, and 1% of Ratio Petroleum, which provides shareholders with exposure to an estimated 3-7 carried wells, in the most prolific emerging hydrocarbon province worldwide, over the next 12-18 months. Success in any of these wells could result in transformational value changes for your Company.
 
 
 
GERARD WALSH
Chairman
12 March 2019
 
 
 
 
 
 
 
For further information, please contact:
 
Westmount Energy Limited                             www.westmountenergy.com
David King, Director                                            Tel: +44 (0) 1534 823133
Jane Vlahopoulou                                              
 
Cenkos Securities plc (Nomad and Broker)
Harry Hargreaves                                               Tel: +44 (0) 20 7397 8900
Nicholas Wells 
 
 
 
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2018
 




 


Six months ended
31 Dec 2018
(unaudited)
£


 


Six months ended
31 Dec 2017
(unaudited)
£


 


Year ended
30 Jun 2018
(audited)
£




Net profit on financial assets held at fair value through profit or loss


424,084


 


254,106


 


722,333




Net profit on financial liabilities held at fair value through profit or loss


49,564


 


-


 


-




Administration expenses


(106,203)


 


(53,461)


 


(150,166)




Share options expensed


(3,000)


 


(3,000)


 


(11,087)




 


 


 


 


 


 




Operating profit


364,445


 


197,645


 


561,080




 


 


 


 


 


 




Finance charges


 


 


 


 


 




Loan interest expense


(105,024)


 


-


 


-




 


 


 


 


 


 




Profit before tax


259,421


 


197,645


 


561,080




 


 


 


 


 


 




Tax


-


 


-


 


-




 


 


 


 


 


 




Comprehensive income for the period / year


259,421


 


197,645


 


561,080




 


 


 


 


 


 




 


 


 


 


 


 




Basic profit per share (pence)


0.55


 


0.48


 


1.34




Diluted profit per share (pence)


0.55


 


0.39


 


1.34




 
 
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 2018
 




 


31 Dec 2018
(unaudited)
£


 


31 Dec 2017
(unaudited)
£


 


30 Jun 2018
(audited)
£




 


 


 


 


 


 




ASSETS


 


 


 


 


 




Non-current assets


 


 


 


 


 




Financial assets at fair value through profit or loss


2,818,357


 


974,697


 


1,727,539




Current assets


 


 


 


 


 




Other receivables


3,063


 


2,984


 


8,213




Cash and cash equivalents


1,343,190


 


466,839


 


557,182




 


1,346,253


 


469,823


 


565,395




 


 


 


 


 


 




Total assets


4,164,610


 


1,444,520


 


2,292,934




 


 


 


 


 


 




 


 


 


 


 


 




LIABILITIES AND EQUITY


 


 


 


 


 




Non-current liabilities


 


 


 


 


 




Derivative financial instruments


49,500


 


-


 


-




Borrowings


598,375


 


-


 


-




 


647,875


 


-


 


-




Current liabilities


 


 


 


 


 




Trade and other payables


46,360


 


38,200


 


43,170




Derivative financial instruments


936


 


-


 


-




Borrowings


957,254


 


-


 


-




 


1,004,550


 


38,200


 


43,170




 


 


 


 


 


 




Total liabilities


1,652,425


 


38,200


 


43,170




 


 


 


 


 


 




EQUITY


 


 


 


 


 




Share capital


4,244,166


 


3,772,244


 


4,244,166




Share option account


366,993


 


355,906


 


363,993




Retained earnings


(2,098,974)


 


(2,721,830)


 


(2,358,395)




Total equity


2,512,185


 


1,406,320


 


2,249,764




 


 


 


 


 


 




Total liabilities and equity


4,164,610


 


1,444,520


 


2,292,934




 


 


 


 


 


 




 
 
 
 
 
 
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2018
 




 


 


Share capital account
£


Share option account
£


Deficit
£


Total equity
£




As at 1 July 2017


 


3,772,244


352,906


(2,919,475)


1,205,675




 
Comprehensive Income
Profit for the year ended 30 June 2018


-


-


561,080


561,080




Transactions with owners
Warrants converted at 7.5p per nil par value ordinary share


471,922


-


-


471,922




Share options expensed


 


-


11,087


-


11,087




 


 


 


 


 


 




As at 30 June 2018


 


4,244,166


363,993


(2,358,395)


2,249,764




 


 


 


 


 


 




Comprehensive Income


 


 


 


 


 




Profit for the period ended 31 December 2018


-


-


259,421


259,421




Transactions with owners


 


 


 


 




Share options expensed


 


-


3,000


-


3,000




 


 


 


 


 


 




As at 31 December 2018


 


4,244,166


366,993


(2,098,974)


2,512,185




 




 


 


Share capital account
£


Share option account
£


Deficit
£


Total equity
£




As at 1 July 2016


 


2,966,720


349,906


(2,718,975)


597,651




 


 


 


 


 




Comprehensive Income


 


 


 


 




Loss for the year ended 30 June 2017


-


-


(200,500)


(200,500)




Transactions with owners
Subscription and open offer at 5p per nil par value ordinary share


805,524


-


-


805,524




Share options expensed


 


-


3,000


-


3,000




 


 


 


 


 


 




As at 30 June 2017


 


3,772,244


352,906


(2,919,475)


1,205,675




 
 
 
 
 
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2018
 




 


Six months ended
31 Dec 2018
(unaudited)
£


 


Six months ended
31 Dec 2017
(unaudited)
£


 


Year ended
30 Jun 2018
(audited)
£




Cash flows from operating activities


 


 


 


 


 




Total comprehensive income for the period / year


259,421


 


197,645


 


 
 
        561,080


 




Adjustments for:


 


 


 


 


 


 




Net profit on financial assets at fair value through profit or loss


(424,084)


 


(254,106)


 


(722,333)


 




Net profit on financial liabilities at fair value through profit or loss


(49,564)


 


-


 


-


 




Interest on borrowings


105,024


 


-


 


-


 




Share options expensed


3,000


 


3,000


 


 
11,087


 




Decrease in other receivables


5,150


 


7,794


 


 
2,565


 




Increase / (decrease) in trade and other payables


3,190


 


(35,536)


 


 
 
(30,566)


 




Purchase of investments


(808,999)


 


-


 


 
(284,615)


 




Proceeds from sale of investments


142,265


 


-


 


-


 




Net cash out flow from operating activities


(764,597)


 


(81,203)


 


(462,782)


 




 


 


 


 


 


 


 




Cash flows from financing activities


 


 


 


 


 


 




Proceeds from borrowings


1,600,000


 


-


 


 
-


 




Interest and charges on borrowings


(49,395)


 


-


 


-


 




Proceeds from issue of ordinary shares


-


 


-


 


471,922


 




Net cash generated from financing activities


1,550,605


 


-


 


471,922


 




 


 


 


 


 


 


 




Net increase / (decrease) in cash and cash equivalents


786,008


 


(81,203)


 


9,140


 




Cash and cash equivalents at the beginning of the period / year


557,182


 


548,042


 


548,042


 




Cash and cash equivalents at the end of the period / year


1,343,190


 


466,839


 


557,182


 



 
 
 
 
 
 
 
 
 



 
 
 
 
 
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2018
 
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 June2018. The annual financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS").
 
In preparing these interim financial statements the management has applied IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers, which are applicable for accounting period beginning on or after 1 January 2018.
 
The application IFRS 9 has not had a material impact on the interim financial statements of the Company as the Company's classification and measurement of financial assets that was applied under IAS 39, Financial Instruments: Recognition and Measurement, remains consistent with IFRS 9.
 
The application of IFRS 15 has not had a material impact on the interim financial statements of the Company as it is the opinion of management that the Company had no material revenue streams from contracts during the current of prior period.
 
Accordingly, 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 2018.
 
 
 
 
 
 
 
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2018 (CONTINUED)
2. Investments




 


Six months ended
31 December 2018


 


Six months ended
31 December 2017


 


Year
ended
30 June
2018




 


(unaudited)


 


(unaudited)


 


(audited)




 


£


 


£


 


£




Argos Resources Limited, at market value


26,000


 


28,000


 


63,000




Cost, 1,000,000 shares


310,775


 


310,775


 


310,775




(31 December 2017: 1,000,000 shares, 30 June 2018: 1,000,000 shares)


 


 


 


 


 




 


 


 


 


 


 




Eco Atlantic Oil & Gas Oil Limited, at market value


1,193,750


 


790,625


 


987,500




Cost,  3,125,000 shares


500,000


 


500,000


 


500,000




(31 December 2017: 3,125,000 shares, 30 June 2018: 3,125,000 shares)


 


 


 


 


 




 


 


 


 


 


 




Rockhopper Exploration plc, at market value


-


 


75,210


 


146,838




Cost, nil shares


-


 


799,081


 


799,081




(31 December 2017: 358,142 shares, 30 June 2018: 358,142 shares)


 


 


 


 


 




 


 


 


 


 


 




Pancontinental Oil and Gas NL, at market value


-


 


6,939


 


6,716




Cost, nil shares


-


 


393,246


 


393,246




(31 December 2017: 3,000,000 shares, 30 June 2018: 3,000,000 shares)


 


 


 


 


 




 


 


 


 


 


 




JHI Associates Inc, at market value


1,121,100


 


73,923


 


110,555




Cost, 1,110,000 shares


809,840


 


61,274


 


100,841




(31 December 2017: 100,000 shares, 30 June 2018: 160,000 shares)


 


 


 


 


 




 


 


 


 


 


 




Ratio Petroleum Energy Limited Partnership, at market value


377,507


 


-


 


412,930




Cost, 1,200,000 shares


245,048


 


-


 


245,048




(31 December 2017: nil, 30 June 2018: 1,200,000 shares)


 


 


 


 


 




 
NPI Investments, at market value


 
100,000


 


 
-


 


 
-




At cost


100,000


 


-


 


-




 


 


 


 


 


 




Total market value


2,818,357


 


974,697


 


1,727,539




Total cost


1,965,663


 


2,064,376


 


2,348,991




 


 


 


 


 


 




Total fair value adjustment


852,694


 


(1,089,679)


 


(621,452)




Reverse prior year fair value adjustment


621,452


 


1,343,785


 


1,343,785




Current period fair value movement


1,474,146


 


254,106


 


722,333




 


 


 


 


 


 




Realised loss


(1,050,062)


 


-


 


-




Unrealised gain


1,474,146


 


254,106


 


722,333




Current period income statement impact


424,084


 


254,106


 


722,333




 


 


 


 


 


 




 
 




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