re: IEC.L - Imperial Energy 500p - 2005 Interim Report filed
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Imperial Energy Corporation PLC
16 September 2005
Imperial Energy Corporation PLC
Interim Results for the Six Months ended 30 June 2005
Imperial Energy Corporation PLC ('Imperial'), the oil exploration and production
company, announces interim results for the six months ended 30 June 2005.
Highlights
Exploration and appraisal programme delivers results:
• 100% success rate in recovering oil from all seven wells tested in the
first year's exploration programme
• Good flow rates achieved from five of the wells with the other two to
complete testing in the coming winter season
• Independent evaluation of reserves estimates report issued by TRACS in
July 2005 giving Imperial total 2P (P50) expected recoverable reserves in
excess of 190 million barrels net to Imperial
• Report relates only to five fields within Imperial's total
sizeable portfolio and focuses on the ongoing testing and
drilling programme on Nord Imperial, Blocks 69 and 77 and
Allianceneftegaz Blocks 70 and 85
• Potential technical and commercial upside within those five
fields
• In addition there a number of other prospects are under review
which could substantially increase these figures
• Current total net present value discounted at 10% ('NPV10'), of
Imperial's net interest in these five properties, is estimated at
$525 million using a conservative rate of $30 / bbl oil
• First appraisal/production well on Block 77 spudded 15 September 2005
with three further wells on this Block scheduled to follow in immediate
succession
• Production planned to begin early 2006 at an initial level, net to
Imperial, of 2,000 boepd estimated to rise to 20,000 boepd by the end
of 2008.
Commercial deals continue to strengthen asset portfolio:
• Acquisition, in August 2005, of a further 39.5% of Allianceneftgaz for
US$17.8 million thereby bringing the total Imperial holding to 90.5%.
Raised additional funds:
• Placing, in July 2005, of a total of 12,660,000 new ordinary shares of
2.5 pence each at a price of 400 pence per share, raising approximately
£50 million before commissions and expenses.
Commenting on the results, Peter Levine, Chairman and Chief Executive said:
'The first six months of this financial year have seen excellent operational
results, exceeding our expectations from Imperial's first exploration programme
We are now preparing a very aggressive schedule moving forward through 2006.
This will include not only extensive drilling but also commencement of
production which we project to increase significantly through 2008 and beyond. '
For further information contact:
Imperial Energy
Peter Levine +44 (0) 20 7758 9658
Pelham PR
James Henderson +44(0)20 7743 6673/
+44(0) 777 4444 163
CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW
Introduction
I am pleased to report that during the first six months of 2005 we have made
significant progress in meeting our objectives of confirming potential reserves
and demonstrating that oil can be delivered at commercial rates.
Financial Results
Losses for the six months were £1.9 million (2004 £0.2 million) being 7.94p per
share (2004 1.9p). Net assets at the period end were £18.9 million (2004 £1
million).
Exploration expenditure for the six months was £8.6 million (2004 £0.1 million).
During the period warrants were exercised for 303,000 shares at 160 pence per
share.
There were no borrowings and no gearing.
Dividend
Taking into account the stage of Imperial's development, the Directors do not
recommend the payment of any dividend.
Review of Operations
Western Siberia
Sibinterneft (43.35% net interest with effective control)
Sibinterneft, located in the Tomsk region of Western Siberia, was the first
asset to be acquired in July 2004 and gave Imperial its platform in this oil
prolific region. The presence of oil was identified through drilling and
seismic in Soviet times.
Following the 2005 seismic programme Imperial is planning an exploration well on
Block 74 during the 2005-2006 season.
Allianceneftegaz (90.5% net interest)
Allianceneftegaz, based in Tomsk Oblast, Western Siberia, owns nine individual
licenses representing four separate blocks covering some 10,000 square
kilometres. The main part of the acreage blocks 70, 85 and 86 is located
directly between producing Yukos and Sibneft oil fields.
In March we began drilling one new well Maiskaya 392 on Block 70. Two potential
pay zones were identified from the cores and wire line logging.
The Lower Tyumen interval in the Maiskaya 392 well has now been tested over
several weeks by pumping and production has stabilised at around 113 bpd of 46
degree API oil with a water cut of 50%. This rate would be expected to be
considerably improved by conducting a larger frac. Furthermore this well is more
than 30m below the crest of the structure so that in wells further up dip, a
greater portion of the reservoir than the 15m perforated so far, could be tested
and the water cut would be reduced, resulting in up to several times the rate of
oil production so far obtained from this interval.
The Vasugan interval in this well has now been tested without stimulation,
confirming its potential by producing clean oil of 43 degrees API at relatively
low rates expected without stimulation. Whilst fraccing and further testing of
this well will be carried out during the coming winter when it is possible to
bring in larger frac equipment, the results so far from this interval are very
encouraging.
The Vasugan reservoir overlies and falls within the larger aerial extent of the
Lower Tyumen reservoir so that it will be possible to produce both reservoirs
together from the same wells. Further appraisal drilling and testing of the
Maiskaya field with gross P50 recoverable reserves of the two reservoirs
together reported by TRACS of 42 million barrels will be carried out during the
2005-2006 winter season.
A new well will also be drilled on the South Festivalnaya field, which straddles
the boundary between Allianceneftegaz Blocks 70 and 86 and Nord Imperial Block
69 during this winter season. TRACS reported P50 gross recoverable reserves on
this field of 53 million barrels.
At least one further exploration well will also be drilled within this acreage
as well as a substantial seismic programme shot during the 2005/2006 winter
season.
Nord Imperial (80% net interest)
Nord Imperial interests, similarly situated in the Tomsk region, were acquired
at a Government auction in November 2004. The current 80% interest, the
original 60% interest acquired at auction with a further 20% having been
purchased for cash in December 2004, cost Imperial a total of US$2.4million .
Nord Imperial comprises two blocks, one , Block 77 of over 1,000 square
kilometres is adjacent to the southern part of Sibinterneft, Block 74. The
other, Block 69, extends over 2,000 square kilometres bordering the northern
part of Allianceneftegaz, Blocks 70 and 85.
Block 77 Snezhnaya and Dvoinoye
Our 2005 Winter Drilling programme comprised testing the Snezhnaya area on Block
77 by drilling one new well and re-entering and testing two old wells.
In April we announced the successful testing of the Dvoinoye 2 and Snezhnaya 133
wells which were re-entered and stimulated by fraccing. The TRACS report has
indicated P50 recoverable reserves of 39 million barrels gross on the Snezhnaya
field.
The new well Snezhnaya 135 has now been fracced and tested at a stabilised flow
rate of 201 boepd of 39 degree API oil. The frac was limited by the size of
available equipment and it is believed that at least a 50% improvement in
initial production rate could be achieved with a larger frac.
The well tests confirm the commercial potential of the Snezhnaya field and
Imperial is moving rapidly onto a programme of appraisal drilling in order to
commence early production. The first well of the 4 wells in this programme,
Snezhnaya 136 was spudded on 15 September. Imperial is also planning to shoot a
3D seismic survey over this field during the 2005-2006 winter season.
It is planned to install surface facilities so as to commence early production
from 6 wells by the spring of 2006. Oil will initially be transported to
pipeline entry points by truck in winter and barge along the navigable Vasugan
river, which borders the northern end of the field, in summer.
Block 69 Aikagalskaya and North Festivalnaya
Exploration has so far been of two fields, North Festivalnaya and Aikagalskaya.
In the North Festivalnaya 1 re-entry well the upper part of the Lower Tyumen
reservoir is being tested following fraccing. The well is still cleaning up
following a frac limited in size by the equipment transportable by helicopter
and has been flowing gas and condensate. The new well North Festivalnaya 3 was
drilled to a depth of 3301m and is being tested over a deeper interval of the
same reservoir as the test in North Festivalnaya 1. This well has flowed oil at
the modest rates expected prior to stimulation.
The logs and tests of the two wells now obtained confirm the presence of
hydrocarbons in the North Festivalnaya field. To determine the production
potential of wells in this field further testing of both wells is required
during the coming winter.
The re-entry of the Festivalnaya 252 well on the Aikagalskaya field was
initially delayed by technical problems associated with the condition in which
the well was abandoned, but is now being tested. It flowed at 126 boepd of 37
degree API oil on a 4mm choke at a stable rate without any stimulation, the best
flow rate Imperial has achieved so far, without stimulation. The oil, although
light, has relatively high viscosity compared to typical oil in the region and
the other wells Imperial has tested. It is planned to frac this well in the
coming winter to test the full production capability of this field, for which
TRACS reported recoverable reserves of 62 million barrels gross.
Imperial plans to drill appraisal wells on Aikagaskaya during the 2005-2006
winter season and also shoot seismic on the two Block 69 fields and the area
surrounding them. The Company is also assessing options for early production,
particularly for Aikagalskaya including an all weather road into the
Aikagalskaya and North Festivalnaya fields and future pipeline connections.
Kazakhstan
Sevkazgra (75% net interest)
Extending to some 4,000 square kilometres, Sevkazgra, situated in the Kostanai
region of northern Kazakhstan, is an intriguing prospect and was the second
acquisition made by Imperial. The area was the subject of exploration for
minerals, coal and oil in Soviet times. Oil at shallow depths was found in
some 25% of all wells drilled. However, in those times oil was not of
predominant interest and the area was left unexplored, with no seismic
investigation.
North Torgai Block
Processing of the 400 km seismic survey Imperial shot on this block has now been
completed and interpretation has commenced. Initial results show areas of
potential interest. Depending on analysis of these results Imperial will decide
whether additional seismic is required prior to drilling an exploration well.
Board Appointments
During the period Imperial has further added to its experienced board with the
appointment, in April, of Denis Capelson as Commercial Director and in July, Guy
Smith as Finance Director.
Denis, aged 34, was born in Novosibirsk, Siberia, Russia and has extensive
experience in both Kazakhstan and Russia. Educated in America, Denis read
Economics at the University of Utah and went on to gain an MBA from the
University of Chicago. Denis subsequently worked in Kazakhstan in investment
banking going on to work in the oil and gas sector for International Energy
Services Inc., a seismic and data processing company. Denis is based in
Imperial's London office.
Guy Smith, aged 35, graduated from the University of Birmingham and then
qualified as a Chartered Accountant with Price Waterhouse. After qualifying Guy
worked in Russia and Eastern Europe for a number of companies, including Coopers
and Lybrand where he worked closely with Russian companies developing their
financial management and reporting. For the last year he has been the Financial
Controller for Imperial Energy.
Post Period Financial Events
Following the end of the six months to June 30 2005 Imperial:
Acquired a further 39.5% of Allianceneftegaz for US$17.8 million thereby
bringing the total holding of Imperial to 90.5%
Raised approximately £50 million before costs and expenses by the placing of
12,660,000 new ordinary shares at 400 pence per share
In preparation of this statement it has been identified that due to errors in
transposition the increase in 2P (P50) expected reserves as a result of the
recent further Allianceneftegaz acquisition was in fact 21.85% resulting in 2P
(P50) reserves of 191.3 million barrels. Whilst NPV10 at US$40 per barrel is
now estimated at US$757 million, the figure for NPV10 at US$30 per barrel
remains correctly calculated at US$525 million rising to what Imperial estimates
as US$973 million NPV10 at US$50 per barrel.
Outlook
Imperial has achieved a 100% success rate in recovering oil from the 4 re-entry
wells and 3 new wells the Company has drilled during 2005, a record that
exceeded our expectations.
While further stimulation, additional drilling and long term production testing
is required to confirm the commercial viability of some of these fields,
Imperial is already planning to commence production from Snezhnaya, Block 77, in
early 2006 and evaluating options for early production on Festivalnaya Block 69.
The Directors view the future with considerable confidence
Peter Levine,
Chairman and Chief Executive
IMPERIAL ENERGY CORPORATION PLC
Consolidated Profit and Loss Account
Six Months to 24 February to 24 February to
30 June 2005 30 June 2004 31 December 2004
Unaudited Unaudited Audited
£000 £000 £000
Administrative Expenses (2,768) (163) (1,662)
Operating Loss (2,768) (163) (1,662)
Interest Receivable 175 9 162
Loss on ordinary activities before taxation (2,593) (154) (1,500)
Taxation - - -
Loss on ordinary activities after taxation (2,593) (154) (1,500)
Minority Interest 743 - 128
Loss for the financial period (1,850) (154) (1,372)
Loss per ordinary share - Basic (7.94)p (1.9)p (10.98)p
- Diluted (7.94)p (1.9)p (10.98)p
IMPERIAL ENERGY CORPORATION PLC
Consolidated Balance Sheet
At 30 June At 30 June At 31 December
2005 2004 2004
Unaudited Unaudited Audited
£000 £000 £000
Fixed Assets:
Intangible Assets 14,694 144 6,134
Tangible Assets 156 3 81
14,850 147 6,215
Current Assets:
Debtors due within one year 2,373 71 1,379
Cash at bank and in hand 2,704 928 13,823
5,077 999 15,202
Current Liabilities:
Creditors due within one year (2,039) (138) (1,416)
Net current assets 3,038 861 13,786
Total assets less current liabilities 17,888 1,008 20,001
Minority Interest 968 - 225
Net Assets 18,856 1,008 20,226
Capital and Reserves:
Called up share capital 585 245 577
Share premium account 21,493 917 21,021
Profit and loss account (3,222) (154) (1,372)
Shareholders Funds 18,856 1,008 20,226
IMPERIAL ENERGY CORORATION PLC
Consolidated Cash Flow Statement
Six Months to 24 February to 24 February to
30 June 2005 30 June 2004 31 December 2004
Unaudited Unaudited Audited
£000 £000 £000
Cash flow from operating activities (3,128) (96) (2,439)
Returns on investments and servicing 175 9 162
of finance
Capital expenditure and financial (8,646) (147) (1,483)
Investment
Acquisitions and disposals - - (2,266)
Cash flow before financing (11,599) (234) (6,026)
Financing 480 1,162 19,849
(Decrease)/Increase in cash in the period (11,119) 928 13,823
Reconciliation of net cash flow to movement in debt
Six Months to 24 February to 24 February to
30 June 2005 30 June 2004 31 December 2004
Unaudited Unaudited Audited
£000 £000 £000
(Decrease)/increase in cash in the period (11,119) 928 13,823
Movement in net funds in the period (11,119) 928 13,823
Net funds at beginning of period 13,823 - -
Net funds at end of period 2,704 928 13,823
IMPERIAL ENERGY CORPORATION PLC
Notes
(i) Basis of preparation
The interim financial statements, which are neither audited nor reviewed by the
auditors, have been prepared on the basis of the accounting policies as set out
in the Annual Report and Statement of Accounts for the period ended 31 December
2004.
The financial information contained in this announcement does not constitute
statutory financial statements within the meaning of Section 240 of the
Companies Act 1985.
The results for the period to 31 December 2004 are an abridged version of the
company's full accounts which carry an unqualified auditors' report and have
been filed with the Registrar of Companies.
(ii) Loss per share
The calculation of loss per share is based on the loss for the period of
£1,850,045 (2004 £154,391) and 23,287,385 (2004 8,010,857) the average number of
shares in issue for the period.
(iii) Taxation
No liability to UK or overseas taxation has arisen during the period and no
provision for deferred tax was considered necessary.
(iv) Dividend
The Directors do not recommend payment of a dividend.
(v) Group Statement of Total Recognised Gains and Losses
Unaudited
£'000s
Loss for the Financial Period (1,850)
Total Recognised Losses Relating to the Period (1,850)
(vi) Reconciliation of movement of shareholders' funds
Unaudited
£'000s
Opening Shareholders funds 20,226
New Share Capital Subscribed 8
Share premium on share issues less issue costs 472
Total recognised gains and losses for the period (1,850)
Closing Shareholders Funds 18,856
(vii) Reconciliation of loss on ordinary activities to net cash flow from
operating activities
Six Months to 24 February to 24 February to
30 June 2005 30 June 2004 31 December 2004
Unaudited Unaudited Audited
£000 £000 £000
Operating (loss) (2,768) (163) (1,662)
Depreciation 11 - 3
(Increase) in debtors (994) (71) (1,369)
Increase in creditors 623 138 589
Net cash (outflow) from
operating activities (3,128) (96) (2,439)
(viii) Post Balance Sheet Events
On 21 July 2005 12,660,000 ordinary shares were issued at 400 pence per share.
In August 2005 the Company acquired a further 39.5 % in OOO Allianceneftgaz for
US$17.8 million thereby bringing the total holding to 90.5%. The cost of the
acquisition was funded by $7.3 million cash and the issue and allotment of
1,225,834 ordinary shares at 480 pence per share on 30 August 2005.
On 6 September 2005 warrants were exercised, for cash, over 250,000 ordinary
shares. These were exercised at a price of 160 pence per share.
(ix) Interim Statement
The interim statement will be posted to shareholders. Copies will be available
from the Company's offices at 49 Berkeley Sq, Mayfair, London, W1J 5AZ |
