GLOBAL PETROLEUM LIMITED 11 March 2016
Global Petroleum announces its unaudited interim financial results for the six months to 31 December 2015.
Copies of the full Half Year Financial Report are also available from the ASX website at www.asx.com and from the Company's web site at www.globalpetroleum.com.au.
Global Petroleum Limited | |
Peter Hill, Managing Director & CEO | +44 (0) 20 7495 6802 |
Damien Cronin, Company Secretary | +61 (0) 7 3310 8732 |
RFC Ambrian Limited (Nominated Adviser & Joint Broker) | |
Samantha Harrison / Charlie Cryer | +44 (0) 20 3340 6800 |
FirstEnergy Capital LLP (Joint Broker) | |
Hugh Sanderson | +44 (0) 20 7448 0200 |
Tavistock (Financial PR & IR) | |
Simon Hudson / Ed Portman | +44 (0) 20 7920 3150 |
For further information please contact:
We are pleased to present to you the Global Interim Financial Report for the half year ended 31 December 2015.
Oil prices in the second half of 2015 have remained weak, with the Brent price averaging US$48.00 per barrel.
During the period the Company's Petroleum Exploration Licence covering two Blocks, 1910B and 2010A in the Walvis Basin Offshore Namibia, has been extended by the Namibian authorities into Phase 2, which is for a duration of 24 months from 3 December 2015 with a reduced Minimum Work Programme which does not now contain a well commitment. Previously Phase 1 of the Licence was extended for one year until December 2015, in return for an additional work programme, involving further modelling using both seismic and gravity data, which was completed in the period. The results of this combined seismic and gravity work has proved to be very encouraging with regard to the hydrocarbon potential in Global's offshore blocks. Notably the work has increased confidence in a syn-rift oil play in the outboard or deep water region offshore Namibia and the likely presence of both reservoir and source within the Company's blocks. Combined with the existing prospect portfolio within the blocks, this has improved Global's views on the overall prospectivity of the acreage. The Company has now commenced the seismic re-processing part of the new Minimum Work Programme.
The Company continues to progress the process for award of its four exploration applications offshore Italy.
During the half year ended 31 December 2015, the Group recorded a loss after tax of US$1,287,728 (31 December 2014: loss US$2,317,830). Cash balances at 31 December 2015 amounted to US$11,391,676 (30 June 2015: US$12,707,727). The Group has no debt.
BoardFollowing the end of the period, Peter Dighton resigned from the Board due to the increasing demands of his other business interests, to which Mr Dighton wishes to devote more time. The Company has commenced a process to recruit a replacement Non-Executive Director resident in Australia.
We believe that the Company has been vindicated in its strategy of de-emphasising frontier exploration, and of being highly selective regarding the type and quality of the assets which might be potential additions to the Company's portfolio. The Board first adopted this strategy in mid-2014, prior to the slide in the oil price which has now continued for 18 months.
It is our belief that it will be very challenging for the smaller Exploration and Production companies to make progress in a large proportion of the exploration licences which they have acquired, in Africa and elsewhere, over the last few years. The frontier acreage secured is often of variable quality, and many of the companies which hold it do not have the funds to carry out even early-stage exploration operations. Moreover, the larger independents and majors who would normally be expected to farm-in to fund drilling have cut their exploration budgets to significantly lower levels - and when they do return with the impetus of an improvement in the commodity price, they can be expected to be highly selective with regard to exploration opportunities.
Whilst it is frustrating that the Company has not yet completed a transformative deal, we would reassure shareholders that we have been very active in discussions with potential counterparties. Our available cash puts us in a very strong position compared to many of our peers, but the ability to raise further funds from conventional market sources is extremely limited. This is a major inhibiting factor in our evaluation of opportunities, which often require further capital either as a component of, or immediately post an acquisition.
Many of our peers and some larger companies have little remaining cash and limited access to new finance, and a significant proportion also have debt. This being the case, we expect to have no shortage of potential counterparties with whom to engage.
John van der Welle Peter Hill
Chairman Chief Executive Officer
1. OPERATING AND FINANCIAL REVIEW
Namibian Project
The Namibian Project consists of an 85% participating interest in Petroleum Exploration Licence Number 29 ("Licence") covering Offshore Blocks 1910B and 2010A in the Republic of Namibia. The Licence, issued on 3 December 2010, covers 11,730 square kilometres and is located in offshore Namibia in water depths ranging from 1,300 metres to 3,000 metres.
The Initial Exploration Period of the Licence expired in December 2014, and Global fulfilled its corresponding work obligations approximately halfway through the initial four year term. They included reinterpretation of 2,800 kilometres of purchased seismic, and commissioning a high resolution 2D seismic acquisition programme of approximately 2,000 kilometres over the acreage. The new data confirmed the presence of two large structures and other potential leads. Accordingly, the Company decided to seek a partner for the next phase of exploration activity on its acreage, commencing with 3D seismic. This ultimately proved unsuccessful given recent mixed drilling results both in Namibia and Atlantic margin frontier plays generally, coupled with the low oil price environment having negatively affected industry and market sentiment. Inevitably, this had a bearing on farm-out processes in Namibia.
Of the wells drilled offshore Namibia, Global regards the HRT operated Wingat-1 well as being the most significant in that liquid hydrocarbons were recovered from the Aptian interval, thus establishing for the first time the presence of a source rock actively generating oil in the Walvis Basin.
Global Petroleum also remains optimistic about the potential of its Namibian blocks given the technical differentiation between the prospectivity on its blocks and the target drilled by Repsol in the neighbouring
block in mid-2014 - Welwitschia-1A. Notwithstanding the relative proximity of the assets, the great majority of the prospectivity in Global's acreage is mapped in older sediments. The deeper structures were not reached by the Welwitschia-1A well. Therefore, the significant potential of these deeper traps and reservoirs remains untested.
The Company agreed with the Namibian Ministry of Mines and Energy ("MME") a 12 month extension of the Initial Exploration Period of the Licence, to December 2015, on the basis of an agreed work programme which entailed further interpretation work on existing seismic data. The results of this combined seismic and gravity work has provided further encouragement with regard to the hydrocarbon potential in Global's offshore blocks. Notably the work has increased confidence in a syn-rift oil play in the outboard or deep water region offshore Namibia and the likely presence of both reservoir and source within the Company's blocks. Combined with the existing prospect portfolio within the blocks, this has improved Global's views on the overall prospectivity of the acreage. This improved view on prospectivity encouraged the Company to apply successfully to the MME for an extension into Phase 2 of the Licence ('First Renewal Exploration Period'), having a duration of 24 months to December 2017, on the basis of a revised Minimum Work Programme which involves:
The reprocessing of all existing 2D seismic lines across that portion of the Licence Area which is retained following the mandatory 50% relinquishment; and
Acquisition of 800km of long offset 2D over the retained acreage. The reprocessed existing 2D data will be used to assist with the design and location of the new survey.
Accordingly, there is now no well commitment during the two year term of the Renewal Period.
The Company's wholly owned subsidiary, Jupiter Petroleum (Namibia) Limited, remains operator with an 85% interest in the two blocks, with partners NAMCOR and Bronze Investments Pty Ltd holding 10% and 5% respectively, both as carried interests.
Permit Applications in the Southern Adriatic, Offshore Italy
In August 2013, the Company submitted an application and proposed work programme and budget to the Italian Ministry of Economic Development for four exploration areas offshore Italy (the "Permit Applications"). In accordance with Italian offshore regulations, Global had to meet certain technical and financial requirements. The Permit Applications were then published on 30 September 2013 in the Official Bulletin allowing other competitive bids to be made over the subsequent three months. No such bids were received and the Company submitted the relevant documentation at the end of May 2014 in relation to environmental impact. The precise timetable for final award of the four Permits is dependent upon a satisfactory outcome to this process which is continuing, and upon subsequent formalities in accordance with Italian legislation.
The southern Adriatic is currently undergoing a significant new phase of oil and gas exploration. There have been a number of recent applications in the Adriatic close to the Permit Applications. Adjacent to Italian waters, Montenegro held a licensing round in 2014, with Croatia following suit thereafter. Seismic acquisition companies have begun large, multi-client 2D acquisition programmes across the entire basin, from Italy to Croatia. In 2013 Shell and Petromanas announced the Shiprag discovery onshore Albania, which is thought to be linked to the same petroleum source rock and similar reservoir to some of those identified in the offshore Adriatic.
Business Development
Global remains in a strong financial position from which to fund work activity on its Namibian acreage, its Italian application interests (subject to award), and to implement a change of focus through acquisition. With regard to the wide range of potential new opportunities which Global has reviewed over the last months, some common factors have emerged: many counterparties have little cash and very limited access to capital, and a lack of capital for E&P projects exists generally. The Company's cash position therefore puts it in an advantageous position compared to many peers, but in order to create value in potential deals it is necessary to have visibility as to the availability of funds to finance new projects following an acquisition. Consistent with that strategy the Company has been involved in a number of detailed negotiations with counterparties holding appropriate assets. The structural issues with regard to finance mentioned above have proved to be a major hindrance in concluding transactions. Furthermore, even the most optimistic forecasts do not predict a return in the near-term to oil prices at the levels which prevailed in the first half of
2014. This being the case, it is apparent that potential acquisition counterparties are becoming increasingly realistic with regard to the terms at which they will be able to transact. However, the Company remains extremely selective regarding the quality of assets it would consider investing in, and the terms of such investment.
Presentation currency
The financial information in this half year report is presented in United States dollars (US$).
DIRECTORS
The directors of the Company at any time during or since the end of the half year are:
Non-ExecutiveMr John van der Welle - Chairman Mr Peter Blakey
Mr Damien Cronin
Mr Peter Dighton - (resigned 25 January 2016) Mr Peter Taylor
ExecutiveMr Peter Hill - Managing Director and Chief Executive Officer
ASX LISTING RULE 5.4.3
The following information is provided in accordance with ASX Listing Rule 5.4.3:
The Company holds Petroleum Exploration Licence Number 29 covering Offshore Blocks 1910B and 2010A in the Republic of Namibia.
No petroleum tenements were acquired by the Company during the review period. During the review period the Company surrendered its Juan de Nova Est Permit in the French Dependency of Juan de Nova.
No beneficial percentage interests in joint venture, farm-in or farm-out agreements were acquired or disposed of by the Company during the review period.
SUBSEQUENT EVENTS
Following the end of the reporting period, Peter Dighton resigned from the Board due to the increasing demands of his other business interests, to which Mr Dighton wishes to devote more time. The Company has commenced a process to recruit a replacement Non-Executive Director resident in Australia.
There has not arisen, in the interval between the end of the half year and the date of this report, any other item, transaction or event of a material nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations or the state of affairs in subsequent financial periods.
LEAD AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
The lead auditor's independence declaration is set out on page 10 and forms part of the Directors' Report for the six month period ended 31 December 2015.
Signed in accordance with a resolution of the directors:
10 March 2016
Global Petroleum Limited issued this content on 11 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 11 March 2016 09:03:20 UTC
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