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RNS Number : 1706S
Phoenix Global Resources PLC
29 September 2017
 

29 September 2017

Phoenix Global Resources plc

("Phoenix")

UNAUDITED INTERIM RESULTS FOR TREFOIL HOLDINGS B.V.
FOR THE SIX MONTH PERIOD TO 30 JUNE 2017

Phoenix Global Resources plc (AIM: PGR; BCBA: PGR), the independent Argentina-focused oil and gas exploration and production company, announces the unaudited interim results for the six month period ending 30 June 2017 in respect of Trefoil Holdings B.V. ("Trefoil", the "Company" or, together with its subsidiaries, the "Group"). Trefoil represents the Mercuria Oil and Gas Business in Argentina that combined with Andes Energia Plc on 10 August 2017 immediately prior to the enlarged group being renamed Phoenix Global Resources plc. Petrolera El Trebol S.A. ("PETSA") is an Argentina registered company and is the sole operating company of the Trefoil Holdings B.V. Group.

Operational review

Period highlights

·     The Group continued its appraisal work on the Vaca Muerta shale formation in the Puesto Rojas block and made an application to the Province of Mendoza for an unconventional exploitation concession for the area

·     Three wells were drilled during the period in the Puesto Rojas block, two of which also reached Vaca Muerta in addition to the conventional horizons

·     During the period one conventional well (CP1014 ST) was completed in the Puesto Rojas area with initial production of 785 bopd (30 day average) on a  working interest basis, from the Chachao formation

·     Two development wells were drilled in the Santa Cruz Sur area

·     Two exploration wells were drilled on the Angostura and Rio Cullen concessions in Tierra del Fuego

·     Average realised oil price of US$49.57 per bbl, a decrease of US$8.27 per bbl or 14% compared to H1 2016 as the de-regulation of the Argentina domestic oil price brings closer parity to international benchmarks

·     Average realised gas price of US$3.87 per mmbtu, an increase of US$1.05 or 37% compared to H1 2016

·     EBITDA of US$15.0 million, a 43.8% reduction compared to H1 2016 as a result of lower oil prices and, as previously indicated, the re-phasing of the development and production programme for Puesto Rojas to 2H 2017 as the Group focused on Vaca Muerta evaluation in H1 2017

·     At the period end net debt was US$16.1 million

Post period highlights

·     On 10 August 2017, the combination with Andes Energia Plc, the AIM-listed Argentina exploration and production company, created a scaled pure play Argentina oil and gas company with significant Vaca Muerta and other unconventional acreage together with access to public markets

·     Five further wells were drilled in the Puesto Rojas area, three of which have appraised unconventional potential. One further well was drilled in the Santa Cruz Sur area. Appraisal and testing of these wells is ongoing

·     The Company recompleted a well at Cerro Del Medio which was previously producing 40 bopd and is producing post recompletion more than 300 bopd, which provides good initial indications of expanding our existing Agrio play with significant development potential, including with horizontal wells,  in this prolific horizon.

·     The Company has agreed with its JV partners that it will assume operatorship of the Rio Atuel exploration block from Tecpetrol effective from 1 October 2017. In addition, the Company has agreed to acquire Tecpetrol's 33.34% stake in the area, which will increase the Company's stake to 66.67% and add approximately 82,000 working interest acres

·     Average monthly oil production from the blocks in the Malargüe region has increased to approximately 2,750 working interest bopd during the second half of September compared to an average of 2,326 working interest bopd in H1 2017

·     Average monthly total production, as of 24 September 2017 is 8,751 working interest boepd, of which oil production is 5,371 working interest bopd and gas production is 3,380 working interest boepd

 

For further information, please contact:

 

Phoenix Global Resources plc

Anuj Sharma, CEO

Philip Wolfe, CFO

T: +54 11 5258 7500

T: +44 20 7839 4974

 

Stockdale Securities

 

Antonio Bossi

David Coaten

 

T: +44 20 7601 6100

 

Panmure Gordon

 

Adam James

Atholl Tweedie

 

T: +44 20 7886 2500

 

Camarco

 

Billy Clegg

Gordon Poole

James Crothers

 

T: +44 20 3757 4980

 

Qualified Person Review

In accordance with AIM guidance for mining, oil and gas companies, Mr. Javier Vallesi and Mr. Greg Easley have reviewed the information contained in this announcement. Mr. Vallesi, Chief Operating Officer of the Group, is a petroleum engineer with over 22 years of experience in the oil and gas industry and is a member of the Argentinian Institute of Oil and Gas. Mr. Easley, Senior Manager Reservoir and Engineering, is a petroleum engineer with over 10 years of experience in the oil and gas industry, is a licenced Professional Engineer in the State of Texas and is a member of the Society of Petroleum Engineers.

 

About Phoenix:

Phoenix Global Resources is a London Stock Exchange (AIM: PGR) and Buenos Aires Stock Exchange (BCBA: PGR) listed independent Argentina-focused oil and gas exploration and production company.  The Company has over 6.3 million licensed working interest acres in Argentina (of which over 5 million are operated), 61.7 million boe of working interest 2P reserves and average production of approximately 11,300 working interest boepd in 2016. Phoenix has significant exposure to the unconventional opportunity in Argentina through its 400,000 working interest acres of Vaca Muerta potential.

Phoenix's website is www.phoenixglobalresources.com



 

Chief Executive Officer's Review

NORTH ARGENTINA SEGMENT

Puesto Rojas - Cerro Mollar - Cerro Mollar Oeste - Cerro Mollar Norte

Appraisal activity

In H1 2017 the Company launched a three-well drilling campaign on the Puesto Rojas block. The campaign included two appraisal wells that reached the Vaca Muerta shale formation that lies beneath the existing conventional production horizons in the Puesto Rojas area allowing for further data acquisition for future unconventional appraisal programmes.

While the appraisal and testing of these wells is at an early stage, the initial results from the 2017 drilling campaign has shown that the Vaca Muerta formation is prevalent within the Puesto Rojas area and that it represents a potentially prolific development prospect for the Company.

The drilling activity undertaken to date in the Vaca Muerta formation represents an initial test programme to confirm the overall prospectivity of the formation. Based on the encouraging results of the initial programme and in order to expand the appraisal programme the Company has applied to the Province of Mendoza for an unconventional exploitation concession for the Puesto Rojas block.  

The term of the unconventional exploitation concession is 35 years which includes a pilot phase of between three to five years. If successful in its application, the Company plans to expedite and conclude the pilot programme within three years. Following the conclusion of the agreed pilot phase the Company will be able to progress the full development of the unconventional resource in Vaca Muerta.

While the results of the test programme have been encouraging, the Company is unable at this time to determine conclusively the prospectivity of the Vaca Muerta formation on Puesto Rojas and will provide further updates as both the administrative and physical activities continue.

The Vaca Muerta shale formation represents a significant exploration and development opportunity for the Group and the formation has been the subject of significant interest and investment from the international oil and gas community. The Vaca Muerta shale formation has the potential to be a significant asset for Argentina in terms of inward investment, job creation and energy security.

The Company recompleted a well at Cerro Del Medio which was previously producing 40 bopd and is producing post recompletion more than 300 bopd, which provides good initial indications of expanding our existing Agrio play with significant development potential, including with horizontal wells,  in this prolific horizon.

Majors including ExxonMobil and Chevron have been active in Vaca Muerta with YPF historically. In 2017 there have been a number of further new joint ventures announced by YPF and others including those by Shell, BP, Total/Pan American Energy, Wintershall, Schlumberger and Statoil.

The level of investments made and activity undertaken further underscores the potential of the Vaca Muerta opportunity.

Development drilling

In the period, the Company has continued the Cerro Pencal development programme commenced in 2013. At 30 June 2017 nine wells were on stream in the Cerro Pencal Field and producing over 2,500 working interest bopd. A number of the wells represent drilling success in new discoveries that are producing with low water cut and relatively high daily production rates.

Cerro Mollar Oeste and Cerro Mollar Norte are small concessions located west of the Cerro Mollar field that are operated by the Company with 100% working interest.  The net revenue interest on these areas is 84.32% and 88.0% respectively. Together Cerro Mollar Oeste and Cerro Mollar Norte currently produce a little over 200 bopd of working interest production from six wells, with no gas.

Oil production

Oil production decreased 17% during the period, from 2,808 working interest bopd during the first half of 2016 to 2,326 working interest bopd in the same period in 2017. The production programme for the Puesto Rojas - Cerro Mollar area was rephased to the second half of the year as the priority objective for the Group in H1 2017 was the initial appraisal and evaluation activity on the Vaca Muerta shale formation.

Refugio Tupungato - Mendoza

The Company has operated the Tupungato area since October 2006, holding a 100% working interest that translates to a 80.52% net revenue interest. The area produces primarily crude oil. Oil production remained stable in the period with average daily production in H1 of 2017 of 1,000 working interest bopd to the Company as compared to 1,051 working interst bopd during the equivalent period in 2016. Production is derived from 38 active wells of which 24 are in the Tupungato field and 14 in the Refugio-Tupungato field.  Any gas produced from the area is consumed in operations.

SOUTH ARGENTINA SEGMENT

Santa Cruz-Sur

In the year to date three development wells were drilled in Santa Cruz-Sur. Of the three wells, one well was conventionally completed and produced gas in H1 2017 and as of August was producing 1459 gross mcf per day. The remaining two wells are currently undergoing fracture stimulation and are expected to be onstream in H2 2017.

Rio Cullen

The Rio Cullen block is located in Tierra Del Fuego and is also operated by Roch. One exploration well, RC.x-1002, was drilled during the period. The well also targeted the Tobifera and Springhill formations. The well was completed in June 2017 through hydraulic fracture stimulation and as of August 2017 was producing at a rate of 876 mcf per day with minimal water production.

Both the well at Angostura and that at Rio Cullen were drilled as part of the exploration commitments entered under the ten-year extension to the concession agreement.



 

Production

Production by area is summarised as follows:

 

 

H1 2016

H2 2016

H1 2017

Area

Operator

Oil bbl/day

Gas mscf/day

Oil bbl/day

Gas mscf/day

Oil bbl/day

Gas mscf/day

Atamasqui

Roch

2

-

1

-

1

-

Angostura

PETSA

349

0

351

-

333

-

Cajón de las Caballos

Roch

158

94

150

39

165

41

Cajón Oriental

YPF S.A.

_-

-

-

-

-

-

Campo Bremen

Roch

61

3,174

63

3,371

60

3,170

Cerro Mollar Norte

PETSA

74

-

-

-

100

-

Cerro Mollar Oeste

PETSA

102

-

95

-

93

-

Chañares Herrados

Chañares

306

71

252

54

200

49

Chorillos

Roch

592

9,585

574

9,451

534

9,296

Las Violetas

Roch

102

3,860

95

3,763

90

3,466

Moy Aike

Roch

89

101

73

111

90

128

Océano

Roch

29

2,424

33

2,473

31

2,240

Palermo Aike

Roch

-

-

-

-

-

-

Puesto Pozo Cercado

Chañares

121

28

133

24

122

24

Puesto Rojac Cerro-Mollar

PETSA

2,631

253

2,407

339

2,133

774

Refugio Tupungato

PETSA

1,051

140

1,059

142

1,000

139

Rio Atuel

Tecpetrol

24

21

5

3

-

-

Rio Cullen

Roch

5

112

5

109

4

100

Sur Rio Deseado Oeste

Roch

8

-

8

-

8

-

Totals

 

5,704

19,863

5,304

19,879

4,964

19,427

 

Financial review

Six-months ended 30 June

 

2017

2016

 

 

US$MM

US$MM

Revenue

 

58.0

68.2

Operating (loss)/profit

 

(5.1)

11.6

EBITDA

 

15.0

27.1

Net cash flows from operating activities

 

5.5

25.7

 

Revenue decreased by US$10.2 million to US$58.0 million as compared to the equivalent period in the prior year due to lower oil prices achieved and lower oil production.

The Argentina domestic oil price has declined as the Government continues to allow the regulated domestic price to move towards parity with international benchmark prices. The average price achieved per bbl sold fell from US$57.84 in H1 2016 to US$49.57 in H1 2017. The fall in the domestic price resulted in a decline in revenue of US$8.6 million as compared to H1 2016. In addition, oil sales volumes were lower in H1 2017 than in H1 2016 with 940,394 bbls sold in H1 2017, down 94,631 period on period. The decline in sales volumes resulted in US$4.7 million less revenue in H1 2017 as compared to the same period in the previous year.

Offsetting the decline in oil revenues, the average gas price achieved in the period was $1.05 per mmbtu higher at US$3.87 per mmbtu as compared to US$2.82 in H1 2016. The increase in gas prices period on period resulted in an increase in revenue in H1 2017 of US$3.1 million compared to H1 2016. Gas volumes remained largely consistent period on period.

The Group recorded an operating loss of US$5.1 million in H1 2017 as compared to a gain of US$12.1 million on H2 2016. The decrease in operating profit is due principally to the decline in revenues of US$10.2 million together with the net impairment loss of US$5.7 million related to the relinquishment of the Puesto Pozo Cercado licence area. The gross impairment loss amounted to US$7.9 million representing the net investment in PP&E related to the block. This was offset by a tax credit recognised of US$2.2 million (35%).

EBITDA decreased by US$12.1 million to US$15.0 million compared to H1 2016 and driven primarily by the fall in sales revenue.

The net loss for the Group increased by US$6.8 million from US$0.2 million in H1 2016 to US$7.0 million in H1 2017. This was again driven by the decline in revenues in H1 2017 as compared to the same period in the previous period and the impairment loss of US$7.9 million in the current period offset by a lower tax charge in H1 2017 as compared to H1 2016. The tax charge in H1 2017 was US$8.9 million lower than in H1 2016 due to less revenue earned and the tax credit recognised in 2017 related to the impairment of Puesto Pozo Cercado.

The Group's total assets are consistent period on period, after taking account of both additions and depreciation for the period, at US$249 million at 30 June 2017 compared to US$246 million at 30 June 2016. Property plant and equipment has increased by US$19.7 million reflecting the appraisal work programme undertaken on the Vaca Muerta formation in Puesto Rojas in the period. This is offset by a reduction in the level of trade receivables by US$16.5 million at 30 June 2017 compared to 30 June 2016. The reduction in trade receivables is partly as a result of lower oil prices resulting in lower invoiced revenue and a focus on working capital in the period.

The Group's net assets have increased by US$26.8 million as compared to 30 June 2016 primarily as a result of the issuance of new ordinary shares with an aggregate value of US$30.7 million to Upstream Capital Partners as part of the group restructuring undertaken in contemplation of the combination with Andes Energia Plc (now Phoenix Global Resources plc) that completed on 10 August 2017.

At 30 June 2017 the Group had cash on hand of US$7.1 million. In addition, borrowings were US$24.0 million lower at 30 June 2017 at US$23.2 million compared to US$45.0 million at 30 June 2016, again as a result of corporate restructuring undertaken in contemplation of the combination with Andes Energia Plc.

At the period end net debt, calculated as total financial liabilities less available cash and cash equivalents, was US$16.1 million and is approximately US$27.0 million at the date of this announcement.

Anuj Sharma
Chief Executive Officer
29 September 2017

Unaudited Consolidated Income statement

 

 

Note

Six months to 30 June 2017

Six months to 30 June 2016

Year to 31 December 2016



US$'000

US$'000

US$'000






Revenue

2

58,041

68,239

129,264

Government incentives


121

305

713

Cost of sales

(47,045)

(48,475)

(96,233)

Gross profit


11,117

20,069

33,744






Selling expenses


(2,758)

(2,510)

(5,452)

Administrative expenses


(5,582)

(5,487)

(7,581)

 

Impairment of property, plant and equipment

8, 10

(7,887)

-

-

Exploration expenses

5

(56)

(102)

(151)

Other operating (expense)/income, net

57

99

(326)

Operating (Loss)/profit


(5,109)

12,069

20,234






Finance income


9

2,134

2,281

Finance costs


(1,125)

(4,771)

(6,284)

Other finance results, net

(806)

140

1,639

(Loss)/profit before taxation


(7,031)

9,572

17,870






Income tax

6

43

(9,453)

(13,291)





(Loss)/profit for the year


(6,988)

119

4,579






(Loss)/profit attributable to:




Equity holders of the parent


(6,988)

119

4,579

Non-controlling interests

-

-

-


(6,988)

119

4,579

 

The accompanying notes are an integral part of these consolidated interim financial statements.

 

 



 

Unaudited Consolidated Statement of Financial Position



30 June 2017

30 June 2016

31 December 2016


Note

US$'000

US$'000

US$'000

Non-current assets





Property, plant and equipment

8

192,981

173,322

186,084

Intangible assets


7,942

9,494

8,610

Trade and other receivables


4,485

4,117

4,750

Total non-current assets


205,408

186,933

199,444






Current assets





Inventories


9,615

11,955

9,270

Trade and other receivables


26,561

43,615

25,410

Cash and cash equivalents


7,168

3,169

5,243

Total current assets


43,344

58,739

39,923






Current liabilities





Trade and other payables


32,945

32,623

22,562

Financial liabilities

9

13,094

41,561

43,933

Provisions


375

393

385

Total current liabilities


46,414

74,577

66,880






Non-current liabilities





Financial liabilities

9

10,150

1,033

1,101

Deferred income tax liabilities

7

34,847

39,324

38,008

Provisions


7,899

8,095

7,834

Total non-current liabilities


52,896

48,452

46,943






Net assets


149,442

122,643

125,544






Capital and reserves





Called up share capital


113,718

113,696

113,696

Share premium account


30,675

-

-

Other reserves


15,753

15,224

15,224

Retained earnings


(10,704)

(6,277)

(3,376)

Equity attributable to the equity holders of the parent


149,442

122,643

125,544

Non-controlling interests


-

-

-

Total equity


149,442

122,643

125,544






 

The accompanying notes are an integral part of these consolidated financial statements.



 

Unaudited Consolidated Statement of Changes in Equity






Attributable to:



Called up share capital

Share premium account

Other reserves

Retained earnings

Equity holders of the parent

Non-controlling interests

Total equity


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

At 1 January 2016

113,696

-

15,224

(7,500)

121,420

1,220

122,640

Profit/(loss) for the period

-

-

-

119

119

-

119

Acquisition of non-controlling interest

-

-

-

764

764

(1,220)

(456)

[Translation differences]

-

-

340


340

-

340

Total comprehensive profit/(loss) for the period

113,696

-

15,564

(6,617)

122,643

-

122,643

Issue of ordinary shares

-

-

-

-

-

-

-

At 30 June 2016

113,696

-

15,564

(6,617)

122,643

-

122,643









At 1 January 2017

113,696

-

15,564

(3,716)

125,544

-

125,544

Profit/(loss) for the period

-

-

-

(6,988)

(6,988)

-

(6,988)

[Translation differences]

-

-

166

-

166

-

166

Total comprehensive profit/(loss) for the period

113,696

-

15,730

(10,704)

118,722

-

118,722

Transactions with owners:








Loan forgiveness

-

-

31,094

-

31,094

-

31,094

Issue of ordinary shares

22

30,675

(30,697)

-

-

-

-

Translation differences

-

-

(374)

-



(374)

At 30 June 2017

113,718

30,675

15,753

(10,704)

149,442

-

149,442

 

The accompanying notes are an integral part of these consolidated financial statements.

 



 

Unaudited  Consolidated Statement of Cash Flows


Note

Six months to 30 June 2017

Six months to 30 June 2016

Year to 31 December 2016



US$'000

US$'000

US$'000






Cash generated from operations

10

5,455

26,162

32,646

Net cash flows generated from operating activities


5,455

26,162

32,646






Cash flows from investing activities





Purchase of property plant and equipment


(11,428)

(3,984)

(24,977)

Proceeds from disposal of working interest


-

-

18,322

Net cash used in investing activities


(11,428)

(3,984)

(6,555)






Cash flows from financing activities





Repayment of borrowings


(2,948)

(21,657)

(29,224)

Proceeds from borrowings


11,280

4,479

12,430

Interest paid


(765)

(4,141)

(5,989)

Acquisition of non-controlling interest


-

(1,676)

(1,676)

Net cash generated from/(used in) financing activities


7,567

(22,995)

(24,459)






Net increase/ (decrease) in cash and cash equivalents


1,594

(817)

1,632

Cash and cash equivalents at the beginning of the period


5,243

4,200

4,200

Finance results, net, on cash and cash equivalents


331

(214)

(589)

Cash and cash equivalents at the end of the period


7,168

3,169

5,243

 

The accompanying notes are an integral part of these consolidated financial statements.



Notes to the interim financial information

1.     Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 June 2017 has been prepared in accordance with IAS 34, "Interim financial reporting" as adopted by the European Union. The interim financial information has been prepared for Trefoil Holdings B.V., the parent company of the Mercuria Oil and Gas Business in Argentina that was combined with the former Andes Energia Plc on 10 August 2017 by way of a reverse acquisition. Immediately following the combination the enlarged Group was renamed Phoenix Global Resources PLC (AIM: PGR.L) ("Phoenix") and was readmitted to AIM following the approval of the Admission Document. The condensed consolidated interim financial information should be read in conjunction with the historical financial information for the three years ended 31 December 2016 that was prepared in accordance with International Financial Reporting Standards as adopted by the European Union for the purposes of the Admission Document. The historical financial information for the three years ended 31 December 2016 was prepared under the provisions of Standard for Investment Reporting 2000. The historical financial information is included in the AIM Admission Document that was prepared as part of the reverse acquisition of Andes Energia PLC  which is available on the website of the enlarged group (www.phoenixglobalresources.com) or from the Phoenix Global Resources plc registered office.

 

The accounting policies applied in these interim financial statements are consistent with those applied in preparing the historical financial information and included in the Admission Document dated 24 July 2017 with the exception of certain recharges explained within the historical financial information.

 

The Group's business activities, together with factors likely to affect its future development, performance and position are set out in the operational and financial review sections of this report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the financial review section.

 

2.     Segment reporting

IFRS 8, "Operating Segments", requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the chief operating decision maker, which in the case of the Trefoil Holdings B.V. is considered to be the Mercuria Energy Group Limited's management, which is located in Geneva, Switzerland. Management considers and reviews operating segments by reference to geographic location. There are two reportable segments, "North Argentina Blocks" and "South Argentina Blocks". Segment performance is evaluated based on geographical operations.

The blocks included in each reportable segment are shown below:

 

Segment

 

Basin

Block

Operator

Working interest %

North Argentina blocks

Cuyana

Atamisqui

PETSA

100

Tupungato

PETSA

*100

Chañares Herrados - Puesto Pozo Cercado

CH S.A.

28.08

Neuquina

Puesto Rojas - Cerro Mollar Oeste

PETSA

100

Cerro Mollar Norte

PETSA

**100

Rio Atuel

Tecpetrol

33.33

Cajón de los Caballos

Roch S.A

37.5

Cajón de los Caballos -Sector Oriental

Roch S.A

15

Llancanelo


**10

South Argentina blocks

Austral

Chorrillos, Campo Bremen, Moy Aike, Oceano & Palermo Aike

Roch S.A

***70

Río Cullen - Las Violetas - La Angostura

Roch S.A

12.62

Golfo San Jorge

Sur Río Deseado

Roch S.A.

24.92

 

Petrolera El Trebol S.A. ("PETSA") is an Argentina registered company and is the sole operating Company of the Trefoil Holdings B.V. Group.

(*) Due to agreements in place on the acquisition of the block between the former owners and YPF S.A., the Mercuria Oil and Gas Business assumes an overriding royalty at a maximum of 6% of production on Tupungato, to be paid in oil on a monthly basis to YPF S.A.

(**) On 10 May 2016, the Mercuria Oil and Gas Business agreed with YPF a swap of interests on the blocks Llancanelo and Cerro Mollar Norte, in Mendoza. The Mercuria Oil and Gas Business transferred to YPF its 10% participation in Llancanelo and received their 100% participation of Cerro Mollar Norte.

 (***) Due to agreements in place on the acquisition of the working interest in the blocks between the former owners and Burns International Inc., the Mercuria Oil and Gas Business assumes an overriding royalty at 5% of production on Campo Bremen, Moy Aike and Oceano, to be paid in cash on a monthly basis to Burns International Inc.

Below is detailed the information on each business segment considered by the Mercuria Oil and Gas Business' Management:

 

First half 2017

Unaudited

North Argentina Blocks

South Argentina Blocks

Unallocated/ Corporate

Total


US$'000

US$'000

US$'000

US$'000






Revenue

36,456

21,585

-

58,041






Profit/(loss) for the year

3,200

(2,019)

(8,169)

(6,988)

Add: Depreciation, depletion and amortisation

7,923

4,312

12

12,247

Add: Impairment of property, plant and equipment

7,887

-

-

7,887

Less: Finance income

-

-

(9)

(9)

Add: Finance costs

-

-

1,125

1,125

Add: Other finance results

(241)

385

661

805

Add: Taxation

(2,157)

-

2,114

(43)

EBITDA

16,612

2,678

(4,266)

15,024






Oil revenues

36,435

10,185

-

46,620

Bbls sold

745,645

194,749

-

940,394

Realised price US$/bbl

48.86

52.30

-

49.57






Gas revenues

21

11,400

-

11,421

Mm³

126,097

79,788,138

-

79,914,235

Realised price US$/mmbtu

4.58

3.87

-

3.87






Capex

22,860

6,928

-

29,788

 

First half 2016

Unaudited

North Argentina Blocks

South Argentina Blocks

Unallocated/ Corporate

Total


US$'000

US$'000

US$'000

US$'000






Revenue

49,966

18,273

-

68,239






Profit/(loss) for the year

16,243

5,735

(21,859)

119

Add: Depreciation, depletion and amortisation

10,202

4,548

7

14,757

Less: Finance income

(1,766)

-

(370)

(2,135)

Add: Finance costs



4,771

4,771

Add: Other finance results

(2,616)

113

2,643

140

Add: Taxation

-

-

9,453

9,453

EBITDA

22,063

10,396

(5,355)

27,105






Oil revenues

49,945

9,922

-

59,867

Bbls sold

875,405

159,621

-

1,035,025

Realised price US$/bbl

57.05

62.16

-

57.84






Gas revenues

21

8,350

-

8,372

Mm³

146,848

80,201,479

-

80,348,327

Realised price US$/mmbtu

3.89

2.82

-

2.82






Capex

7,966

2,281

45

10,292

 

3.     Cost of sales

 

Unaudited

Note

Six months to 30 June 2017

Six months to 30 June 2016

Year to 31 December 2016



US$'000

US$'000

US$'000






Opening inventory - crude oil


3,904

2,035

2,035

Production costs

4

44,655

49,180

98,102

Closing inventory - crude oil


(1,514)

(2,740)

(3,904)

Cost of sales


47,045

48,475

96,233

 

4.     Production costs

 

Unaudited


Six months to 30 June 2017

Six months to 30 June 2016

Year to 31 December 2016



US$'000

US$'000

US$'000






Depreciation, depletion and amortisation


12,247

14,757

26,646

Wages and salaries


2,554

2,251

6,067

Social security charges


443

360

1,068

Other personnel expenses


485

334

792

Materials and supplies


2,734

3,624

6,988

Wells and facilities maintenance


12,468

12,711

26,350

Transportation costs


3,162

3,377

7,178

Royalties


7,799

9,322

18,217

Landowners' easement and canon


1,471

1,211

2,239

Fuel gas and electricity


672

663

1,368

Insurance


427

369

863

Other


193

201

326

Production costs


44,655

49,180

98,102

 

5.     Exploration expenses

 

Unaudited


Six months to 30 June 2017

Six months to 30 June 2016

Year to 31 December 2016



US$'000

US$'000

US$'000






Geological and geophysical expenses


56

102

151

Exploration expenses


56

102

151

 

6.     Income tax

 

Unaudited


Six months to 30 June 2017

Six months to 30 June 2016

Year to 31 December 2016



US$'000

US$'000

US$'000

Current tax expense


3,165

661

5,816

Deferred tax expense


(3,208)

8,792

7,475

Total income tax (Credit)/expense


(43)

9,453

13,291

 

(Loss)/profit on ordinary activities before tax


(7,031)

9,572

17,870

Income tax calculated at statutory rate (Argentina, 35%)


2,461

(3,350)

(6,255)

Currency translation on the tax values for property plant and equipment


(2,563)

(3,409)

(5,877)

Currency translation on the tax values for other assets and liabilities


-

505

778

Exchange differences - functional currency


(195)

109

278

Exchange differences - local currency


484

(2,346)

311

Expiration of tax loss carry-forward


-

-

-

Non-deductible expenses


(234)

(860)

(1,207)

Permanent differences


(11)

(13)

-

Deferred tax assets not recognised


(268)

(358)

(672)

Fiscal assessments


158

577

-

Others


211

(308)

(647)

Total income tax expense


43

(9,453)

(13,291)

 

7.     Deferred tax

 

Unaudited


30 June 2017

30 June 2016

31 December 2016



US$'000

US$'000

US$'000

Deferred tax asset





Losses carried forward


-

-

-

Inventories


327

36

1,352

Other


220

-

-

Total deferred tax asset


547

36

1,352






Deferred tax liability





Property, plant and equipment


(31,949)

(35,430)

(35,372)

Fiscal assessments


(3,400)

(3,759)

(3,558)

Other


(46)

(170)

(230)

Total deferred tax liability


(35,395)

(39,359)

(39,360)

Net deferred tax liability


(34,848)

(39,323)

(38,008)

 

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that it is probable that the tax loss carry-forward can be used to offset current taxes payable in the future.

 

 

8.     Property, plant and equipment

 

Unaudited

Producing and development assets

Work in progress

Exploration and evaluation assets

Fixtures, fittings, equipment and vehicles

Total


US$'000

US$'000

US$'000

US$'000

US$'000

Cost






At 1 January 2017

369,143

18,057

6,804

4,420

398,424

Additions

-

29,777

-

12

29,788

Transfers

18,578

(18,800)

-

222

-

Disposals

(24,897)

(3,425)

-

-

(28,321)

At 30 June 2017

362,824

25,609

6,804

4,654

399,891







Accumulated depreciation






At 1 January 2017

(207,984)

-

-

(4,356)

(212,340)

On disposals

17,010

-

-

-

17,010

Charge for the period

(11,510)

-

-

(68)

(11,579)

At 30 June 2017

(202,484)

-

-

(4,424)

(206,908)







Net book value at 30 June 2017

160,338

25,610

6,804

230

(192,981)

 

Unaudited

Producing and development assets

Work in progress

Exploration and evaluation assets

Fixtures, fittings, equipment and vehicles

Total


US$'000

US$'000

US$'000

US$'000

US$'000

Cost






At 1 January 2016

349,269

13,065

3,334

4,402

370,070

Additions

4,124

6,129

-

39

10,292

Transfers

661

(661)

-

-

-

Disposals

(5,938)

-

-

-

(5,938)

At 30 June 2016

348,116

18,533

3,334

4,441

374,424







Accumulated depreciation






At 1 January 2016

(186,484)

-

-

(4,123)

(190,607)

On disposals

1,804

-

-

-

1,804

Charge for the period

(12,203)

-

-

(96)

(12,299)

At 30 June 2016

(196,883)

-

-

(4,219)

(201,102)







Net book value at 30 June 2016

151,233

18,533

3,334

222

173,322

 

 

 

 

 

 

9.     Financial liabilities

 

Unaudited


30 June 2017

30 June 2016

31 December 2016



US$'000

US$'000

US$'000






Financial liabilities


10,150

1,033

1,101

Non-current liabilities


10,150

1,033

1,101






Financial liabilities


12,952

40,593

12,099

Accrued interest


142

968

120

Current liabilities


13,094

41,561

12,219

 

During the first half of 2017, financial liabilities include bank loans denominated in Argentina Pesos  and repayable in accordance with the maturity profile summarised below at (i) fixed rates within a range of 15.25 percent to 25 percent, and (ii) variable rates within 'Badlar corregida' plus 2 per cent. Financial liabilities also include bank loans denominated in US Dollar, at fixed rates within a range of 2.5 per cent to 4.25 per cent. Approximately 53 per cent of these loans were collateralised by Stand-by Letters Issued by European banks on behalf of the Mercuria Group.

 

During the first half of 2016, financial liabilities include bank loans denominated in Argentina Pesos  and repayable in accordance with the maturity profile summarised below at (i) fixed rates within a range of 15.25 percent to 39 percent, and (ii) variable rates within a range of 'Badlar corregida' plus 1.5 and 5.75 per cent. Financial liabilities also include bank loans denominated in US Dollar, at fixed rates at 4.25 per cent. Approximately 62 per cent of these loans were collateralised by Stand-by Letters Issued by European banks on behalf of the Mercuria Group

 

 

Unaudited


30 June 2017

30 June 2016

31 December 2016



US$'000

US$'000

US$'000






Maturity profile





Within 1 year


13,094

41,561

12,970

Between 1 and 5 years


10,555

3,810

1,182



23,649

45,371

14,152

Future interest charges


(405)

(2,777)

(832)

Financial liabilities


23,244

42,594

13,320

 

10.  Cash generated from operations

 


Note

Six months to 30 June 2017

Six months to 30 June 2016

Year to 31 December 2016

(Loss)/profit for the year


(6,988)

119

4,579

Adjustments for:





Income tax charge


(43)

9,453

13,291

Interest income


(9)

(2,134)

(2,281)

Interest expense


1,126

4,771

6,284

Accretion of discount on asset retirement obligations


274

241

493

Exchange differences


375

333

(783)

Impaired receivables


-

-

689

Depreciation, depletion and amortisation


12,247

14,757

26,879

Disposal of property, plant and equipment


-

-

170

Amounts written off property, plant and equipment


7,887

-

-

Working capital adjustments:





(Increase)/decrease in trade and other receivables


(6,298)

(4,000)

(7,409)

(Increase)/decrease in inventory


(344)

(2,381)

301

(Decrease)/increase in trade and other payables


(2,552)

10,604

2,179

(Decrease)/increase in provisions


(220)

(1,103)

(1,816)

Income tax paid


-

(4,498)

(9,930)

Net cash flow from operations


5,455

26,162

32,646



11.  Events after the balance sheet date

 

Combination with the former Andes Energia Plc

 

On 10 August 2017 Andes Energia plc ("Andes") announced the completion of the combination with the Company. The combination was effected through the acquisition of the entire issued share capital of the Company in consideration for the issue of 1,899,106,385 consideration ordinary shares to the former shareholders of the Company by Andes. Immediately following the combination the enlarged Group was renamed Phoenix Global Resources plc (AIM: PGR.L; BCBS: PGR)) ("Phoenix") and was readmitted to AIM following the approval of the Admission Document. The Admission document that discusses the organisation of the enlarged Group and its activities in Argentina can be found on the Company's website (www.phoenixglobalresources.com).

 

The consideration Shares issued to Upstream Capital Partners represented 75.38% of the enlarged share capital on completion with the Andes shareholders holding 24.62%. The resulting ownership of Mercuria EG in the enlarged group on completion was approximately 78%.

 

Chañares Herrados and Puesto Pozo Cercado

 

On 21 August Phoenix Global Resources announced that it had been informed that Chañares Herrados S.A. ('CHSA'), the concessionaire and operator of the Chañares Herrados ("CH") and Puesto Pozo Cercado ("PPC") blocks, had presented to the Director of Hydrocarbons a new exploitation plan for the areas. CHSA was subsequently notified by the Province of Mendoza of its acceptance of the new plan.

 

Pursuant to this plan CHSA and the joint venture partners will relinquish 100% of the PPC block, which has production of approximately gross 423 bopd (net to Phoenix 331 bopd) and covers approximately 42,000 gross acres, and implement a work programme in the CH block with a gross investment commitment of approximately US$94 million over a four year period.

 

Phoenix's level of participation in the new work programme for the CH block, if any, has not yet been agreed with the operator.

 

 

 

 

 

 

 

 



 

Glossary

 




Bbl


Barrel

boepd


Barrels of oil equivalent per day

bopd


Barrels of oil per day

Mm³


Thousand cubic metres

mmbtu


Million British Thermal Units

mmscf


Million standard square feet

PETSA


Petrolera Es Trebol S.A.

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR EANNPASEXEFF

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