November 03, 2008 02:26 ET
Final Results
ISIN: GB00B04BP253/GBP/PLUS-exn
3 November 2008
ATI Oil Plc ("ATI", "the Group", or "the Company")
Final Results for the Year Ended 30 April 2008
Highlights - Operational
- 26.61 million barrels of 2P reserves at Rovesti and Giove attributable to ATI assessed by independent
petroleum engineers, with NPV10 value of US$205 million at US$60 Brent, equivalent to approximately 133p per
share;
- Appointment of an experienced industry Chief Executive;
- Partial farm out of Savio (anticipated to be drilled Q1 2009), Longastrino and Cerasa licences (mean,
combined and unrisked Prospective Resources of all mapped prospects in the three licences is 750 bcf (100%)
recoverable) to Indofin Group, and other transactions under discussion across the portfolio;
- Independent resource evaluation of six of the Company's drilling prospects in the Adriatic Sea, with the
combined potential of the prospects assessed at 2.29 billion barrels of oil in place at a P50 probability,
rising to a potential of 6.03 billion barrels at a P10 probability (ATI 50%); and
- Additional drillable prospects identified across the portfolio bring combined oil and gas potential of
18.7 billion barrels of oil in place (4.86 billion Prospective Resources) and 184 million barrels of oil
equivalent (127 million barrels of oil equivalent) at a P50 probability respectively (ATI 50%).
Highlights - Financial
- Cash in hand of GBP365,360 (2007: GBP403,310); and
- Loss for the year of GBP294,253 (2007: GBP295,062).
Per Gunnar Løge, Chief Executive of ATI commented:
"We are pleased to have increased the 2P reserve base of the Group and to have added further drillable prospects
to the inventory. ATI is now very much in deal mode and intends to crystallise as much of this potential as
possible. This process has commenced with the recent announcement of the Indofin Group as a new partner in three
Po Valley licences, which will bring forward drilling activity and, in the event of one or more discoveries, gas
production.
This is anticipated to be the first of several deals as discussions are ongoing across the portfolio. We have
confidence that the potential of our assets will be further demonstrated over the coming months."
Chairman's Statement
As anticipated last year, the Group has achieved a key corporate objective in increasing the 2P reserve base in
the Southern Adriatic to 26.61 million barrels. The independent petroleum engineering reports conducted by
Blackwatch Petroleum Services indicate NPV10 values for the Rovesti and Giove discoveries of US$610 million at
US$70 Brent and US$410 million at US$60 Brent. At US$70 Brent this gives a 2P level value of approximately US$305
million to ATI for its interests in these two assets alone.
In addition to the discoveries, our interests in the highly prospective Durres Basin, which stretches from
southern Italy to Albania, have significant exploration potential. In the FR.39.NP and FR.40.NP fully awarded
licences alone, the exploration potential has also been assessed by the same independent petroleum engineers at
1.26 to 6 billion barrels of oil in place. All but one of these six drillable prospects were recognised and
mapped by the previous operator, Enterprise Oil, a highly successful UK independent oil company in Italy.
The Southern Adriatic is therefore undoubtedly a key area for the Group, with three further licences now at the
preliminary award stage in addition to the two licences that hold the Rovesti and Giove discoveries. There has
been considerable industry interest in the potential of this area, however a conscious decision has been taken
not to conclude a significant deal until the three preliminary awarded licences have been fully decreed and their
potential can be better assessed. FR.39.NP and FR.40.NP are only in their second year so time is on the joint
venture's side to fully assess the region's potential.
The period since the year end has seen some significant changes to your Board.
Barry Lonsdale left the Board on 30 May, however the Company continues to have the benefit of his advice and
support under contract. Although he was only appointed as a director in 2004, Barry has been integral to the
building of this substantial portfolio in Italy over the past eight years, an effort that has produced together
with Northern Petroleum Plc ("Northern") a venture that now covers an exploration area under management in Italy
larger in size to that of Eni. I thank Barry on behalf of both the Board and shareholders for the valuable work
he has done, and will continue to do, in building and exploiting this significant position in Italy.
We have welcomed two directors to the Board since the last Annual General Meeting. Per Gunnar Loge, a Norwegian
national, was appointed as Chief Executive in June. Per brings with him over 35 years of experience in the oil
and gas sector. In 2005, he founded, and was Chief Executive Officer of Ener Petroleum ASA, a Norwegian
independent, which was acquired by Dana Petroleum plc in 2007. Prior to that he founded, and was Chief Executive
Officer of OER Oil AS, another Norwegian independent, which was taken over by Endeavour International Corp. in
2004.
At the same time Erik Jorgensen joined the Board as a non-executive director. He also brings substantial industry
experience having spent much of his career with Shell and Standard Bank. Both Per Gunnar and Erik will strengthen
the Company's ability to both exploit the current potential of the Group's asset base and progress forward from
it.
Per Gunnar and Erik are, in accordance with the Company's Articles of Association, required to retire following
their appointment by the Board and, being eligible, offer themselves for election at the 2008 Annual General
Meeting.
The increase in reported 2P reserves has once again achieved a high added asset value at a low cost in line with
our corporate strategy during a period in which a loss of £0.29 million, the same as in 2007, was reported.
Activities during the period continued to be undertaken with the benefits of financing through partial drawdown
of £2 million loan facility provided by Northern. The repayment date of the loan was extended to 31 December
2008, with the support of Northern, which holds a 37%interest in the Company. This will provide further time to
complete efforts to realise the value of certain assets and to provide further funding for operational activities
in 2009 and beyond. The first farmout has recently been concluded with the Indofin Group ("Indofin"), and
discussions are ongoing with third parties concerning asset transactions across the portfolio. It is our
experience that our industry remains very much open for business, despite the current challenging equity markets.
The most imminent operational activity is the drilling of a substantial gas prospect on the Savio licence, which
is now scheduled for Q1 2009. Indofin will earn a 20% interest in each of the Savio, Longastrino and Cerasa
licences in the eastern Po Valley through payment of back costs and a promote on the first well in each licence.
In Savio and Longastrino, Avobone, an Indofin subsidiary, will pay 40% (i.e. a 20% promote) of the well costs and
30% in Cerasa. The benefits of the agreements are shared equally between Northern and ATI. The 2006 Abbadesse
discovery lies immediately between the Savio and Longastrino licences in the same target formation. The drilling
of Longastrino and Cerasa is, subject to planning consents, scheduled for the second half of 2009.
Calendar 2008 has seen almost unprecedented volatility in the oil price, briefly rising as high as $147 per
barrel during July but having now fallen to approximately $60 per barrel. The exact effects of the new financial
world are as yet unknown but there are in the energy sector and in Italy still reasons for confidence.
Shareholders should feel some comfort from the fact that most of our existing asset base was in place by 2005
based on the prevailing economics, a time when oil and gas prices were lower than they even are today.
With the increase in our reported 2P reserves to 26.61 million barrels and the appointment of a new Chief
Executive it has been a year of progress, although your Board had aimed to achieve more in the way of farmouts.
In spite of these recent successes, the Group currently does not have sufficient cash resources to meet the terms
of its loan repayment currently due on 31 December 2008 nor to remain operational for the next 12 months or
continue the development of its assets. Therefore the Board are currently pursuing a combination of a number of
financing methods, including the raising of new equity capital, debt financing, asset sales and farm outs, in
order to ensure that the Group will have adequate cash resources to settle the outstanding loan and going forward
to both remain in operation and realise the potential of its asset base.
I hope to report further on all these efforts in the coming months and believe that the recent Indofin farmout
marks the completion of the first of several deals which I believe will demonstrate the prospectivity of the
Group's Italian assets.
D R Musgrove
Chairman
31 October 2008
Consolidated Profit and Loss Account
For the year ended 30 April 2008
Year ended Year ended
30 April 30 April
2008 2007
Notes GBP GBP
Total Total
Administrative expenses - other (275,889) (250,385)
Administrative expenses - share incentives (53,559) (70,877)
Total administrative expenses (329,448) (321,262)
Other operating income 16,880 16,320
Operating loss (312,568) (304,942)
Interest receivable 18,315 9,880
Loss on ordinary activities before taxation and for the year (294,253) (295,062)
Basic and diluted loss per share 3 (0.31p) (0.32p)
All activities relate to continuing operations.
All recognised gains and losses in the current year and prior year are included in the profit and loss account.
Balance Sheet
at 30 April 2008
Group Company
2008 2007 2008 2007
Notes GBP GBP GBP GBP
----------------------------------------------------------------------------
Fixed assets
Intangible assets 4 2,242,918 1,513,362 - -
Tangible assets 5 267,753 - - -
Investments - - 120,600 120,600
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Total fixed assets 2,510,671 1,513,362 120,600 120,600
Current assets
Debtors 164,673 22,236 2,339,914 1,186,371
Cash at bank and in hand 365,360 403,310 365,360 403,310
530,033 425,546 2,705,274 1,589,681
Creditors: amounts falling
due within one 2,785,969 1,702,854 2,571,139 1,474,227
year
----------------------------------------------------------------------------
Net current (liabilities) /
assets (2,255,936) (1,277,308) 134,135 115,454
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Net assets 254,735 236,054 254,735 236,054
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Capital and reserves
Called up share capital 6 235,578 231,015 235,578 231,015
Share premium account 911,656 656,844 911,656 656,844
Share incentive plan reserve 98,214 112,276 98,214 112,276
Profit and loss account (990,713) (764,081) (990,713) (764,081)
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Shareholders' funds 254,735 236,054 254,735 236,054
----------------------------------------------------------------------------
Consolidated Statement of Cash Flows
for the year ended 30 April 2008
Year ended Year ended
30 April 30 April
2008 2007
Note GBP GBP
Net cash outflow from
operating activities (a) (68,331) (131,920)
Returns on investments and servicing
of financing
Bank interest received 18,315 9,880
Capital expenditure and financial
Investments (b) (997,309) (1,134,018)
Cash outflow before financing (1,047,325) (1,256,058)
Financing
Issue of ordinary shares for cash
(net of expenses) 259,375 27,407
Draw downs under loan agreements 750,000 1,250,000
(Decrease) / increase in cash in
the year (c) (37,950) 21,349
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(a) Reconciliation of operating loss to net cash
outflow from operating activities:
Year ended Year ended
30 April 30 April
2008 2007
GBP GBP
Operating loss (312,568) (304,942)
Share based payments 53,559 70,877
(Increase) / decrease in debtors and prepayments (142,437) 21,839
Increase in creditors and accruals 333,115 80,306
244,237 173,022
Net cash outflow from operating activities (68,331) (131,120)
(b) Capital expenditure and financial investment:
Year ended Year ended
30 April 30 April
2008 2007
GBP GBP
Expenditure on oil and gas assets 997,309 1,134,018
Net cash outflow from capital expenditure and
financial investment 997,309 1,134,018
(c) Analysis of net debt
At At
30 April Net cash 30 April
2007 outflow 2008
£ £ £
Cash at bank 403,310 (37,950) 365,360
Loans - amounts due within
one year (1,250,000) (750,000) (2,000,000)
Net debt (846,690) (787,950) (1,634,640)
(d) Reconciliation of movement in net cash flow to movement in net debt
Year ended Year ended
30 April 30 April
2008 2007
£ £
(Decrease) / increase in cash (37,950) 21,349
Increase in loans (750,000) (1,250,000)
Opening net (debt) / funds (846,690) 381,961
Closing net debt (1,634,640) (846,690)
1. BASIS OF PREPARATION
The financial information presented in this announcement does not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The information has however been extracted from the Company?s statutory accounts for the year ended 30 April 2008 which were approved by the Board on 31 October 2008 and on which the Company?s auditors have given an unqualified opinion.
2. GOING CONCERN
The financial statements have been prepared on a going concern basis. However, the Group currently does not have sufficient cash resources to meet the terms of its loan repayment currently due on 31 December 2008 nor to remain operational for the next 12 months or continue the development of its assets. Therefore the Directors are currently pursuing a combination of a number of financing methods, including the raising of new equity capital, debt financing, asset sales and farm outs, in order to ensure that the Group will have adequate cash resources to settle the outstanding loan and going forward to both remain in operation and realise the potential of its asset base.
During the year independent engineering reports were received giving the Group an attributable 26.61 million barrels of probable oil reserves at Rovesti and Giove. In addition the marketability of Group?s Po Valley assets has been demonstrated by the recently announced farmout to Avobone Italy S.r.l. (?Avobone?). The directors are therefore confident that these assets, together with some other high potential offshore assets, will form the basis of successful financings. However they recognise that there is currently no assurance as to a successful outcome of the financing methods being pursued and these conditions indicate the existence of a material uncertainty which may cast significant doubt on the ability of the Group to continue as a going concern. These financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
3. LOSS PER SHARE
The basic and diluted loss per share is calculated by reference to the loss for the year of GBP294,253 (2007: loss of GBP295,062) and the weighted average number of ordinary shares in issue during the year of 93,628,740 (2007: 92,101,959). The effect of all potential ordinary shares arising from the exercise of warrants is considered anti-dilutive.
4. INTANGIBLE ASSETS
Intangible assets represent the cost of the investment in Italian oil and gas projects where it is too early to make a decision regarding the existence or otherwise of commercial reserves.
Group GBP
Cost:
At 1 May 2007 1,513,362
Additions 772,604
Transfer to tangible assets (note 5) (43,048)
At 30 April 2008 2,242,918
Amortisation:
At 30 April 2007 and at 30 April 2008 -
Net book value:
At 30 April 2008 2,242,918
At 30 April 2007 1,513,362
Loan interest capitalised during the year was GBP168,736 (2007: GBP48,778).
5. TANGIBLE ASSETS
GBP
Group
Cost:
At 1 May 2007 -
Additions 224,705
Transfer from tangible assets (note 4) 43,048
At 30 April 2008 267,753
Amortisation:
At 30 April 2007 and at 30 April 2008 -
Net book value:
At 30 April 2008 267,753
At 30 April 2007 -
The independent petroleum engineering reports by Blackwatch Petroleum Services indicate, based on a 10% discount rate, a net present valuation (?NPV10?) for the Rovesti and Giove discoveries of US$610 million at US$70 Brent and US$410 million at US$60 Brent.
On this basis the Directors are confident that there has been no impairment in the carrying value of fixed assets.
6. SHARE CAPITAL
2008 2007
GBP GBP
Authorised:
2,000,000,000 (2007: 2,000,000,000) ordinary
shares of 0.25p each 5,000,000 5,000,000
Allotted and called up:
94,231,000 (2007: 92,406,000) ordinary
shares of 0.25p each 235,578 231,015
Analysis of changes in share capital during the year:
2008 2007
GBP GBP
At 1 May 231,015 230,015
Shares issued for cash 4,563 1,000
At 30 April 235,578 231,015
7. ANNUAL REPORT
The Annual Report and Accounts are expected to be posted to shareholders shortly and will be available free of charge for a period of no less than one month by application to the Company Secretary at the Company's registered office Martin House, 5 Martin Lane, London, EC4R 0DP. They will also be available in electronic format from the Company's website, www.ati-oil.com.
The Directors of the Issuer accept responsibility for this announcement.
-Ends-
Contact Details:
ATI Oil Plc
Derek Musgrove - Chairman
Per Gunnar Løge - Chief Executive
Chris Foss - Finance Director
Tel: 020 7469 2940
St.Helen's Capital Plc
Barry Hocken/Duncan Vasey
Tel: 020 7628 5582
Hansard Communications
Chris Roberts
Tel: 020 7245 1100
For further information on ATI's Italian assets please see our web site, www.ati-oil.com.