PETROGRAND AB • Net financial items in the first quarter amounted to TSEK 26 021 (627), including currency effects of approximately TSEK 24 447 (-411).
• Net result after tax for the first quarter amounted to TSEK 18 180 (-8 951).
• Earnings per share for the period amounted to SEK 0.45 (-0.22).
• Total comprehensive result for the first quarter of 2015 was TSEK 13 687 (-22 629)
The figures in brackets represent the corresponding period 2014
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Petrogrand AB Interim Report January-March 2015
MD's reportDear shareholders of Petrogrand,I was appointed CEO of Petrogrand only a month ago after the end of the first quarter. Therefore I want to keep this report section relatively short. Petrogrand publishes its annual report for 2014 next week, and then I will elaborate my view on the company's development.
In the first four months of 2015 we finally saw the end of the long, costly and loud power struggle with our associated company Shelton Petroleum AB. This process reached its peak at an Extraordinary Shareholders' Meeting on April 10, after the end of the report period, when a new Board of Directors was appointed, and I was appointed as CEO.
No oil was produced by Petrogrand in the first quarter 2015. However, in early April the acquisition of
49% of the oil producing company Ripiano Ltd was completed, and Ripiano's Russian subsidiaries currently produce around 1,600 barrels of oil per day, whereof 49% is attributable to Petrogrand.
With this short introduction I welcome you to study this quarterly report more in detail on the following pages. I am honored to be CEO of Petrogrand, and I look forward to communicating with you, the shareholders of Petrogrand, on a more regular basis.
Sincerely,
Dmitry Zubatyuk
Managing Director
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Petrogrand AB Interim Report January-March 2015
Comments on the Group's result and financial position as per 31 March 2015. Turnover and resultThe Group had no operating income during the period January - March 2015 (-) and did not have any production related operating expenses (-).The Group did not have any costs for sales and distribution during the report period (-). Administration costs amounted to TSEK -7 841 (-9 578).
Financial income amounted to TSEK 2 885 (1 061). Net financial items amounted to TSEK 26 021 (627), which includes currency effects of approximately TSEK 24 447 (-411) mainly due to the revaluation of the investment in RUB and USD on the period closing date. Both RUB and USD have appreciated significantly during the first three months of 2015.
Result before tax amounted to TSEK 18 180 (-8 951). There was no tax charged for the period. Earnings per share for the period amounted to SEK 0.45 (-0.22).InvestmentsAt the end of the third quarter 2013, the intangible fixed assets of the group were fully impaired. Thus no intangible fixed assets are reported on the Group's balance sheet as per 31 March 2015.Financing and liquidityAs of 31 March 2015 the Group's available liquid assets in total amounted to TSEK 207 547 (266 649).
At the end of the report period, assets amounting to TSEK 63 186 (-) were invested in Eurobonds in Russia. These assets are reported as 'financial assets at fair values through profit and loss' on Group's and Parent Company's balance sheets.
As of 31 March 2015, Petrogrand group holds 4 900 563 B-shares in Shelton Petroleum AB (publ) ('Shelton'). Thereof 4 700 000 shares were held by Tenaziltan Ltd and 200 563 were held by Petrogrand AB. The market price per Shelton share at the end of the period was SEK 11.30. The value of the investment based on the market price amounts to TSEK 55 376.
Total financial assets, including shares in Shelton, on 31 March 2015 amounted to TSEK 326 109 (338 009).EmployeesThe number of employees in Group companies at the end of the period was 12 (14), whereof women
6 (7) and men 6 (7).Comments on the Parent CompanyThe Parent Company income statement during first quarter 2015 includes a write-down of loans
given to Russian subsidiaries. Previous loans were written down before the start of the year, thus the value of loans in the balance sheet of the Parent Company is equal to SEK 0.
The 4 700 000 B shares that were transferred on March 26, 2015 as a shareholders' contribution from Petrogrand AB via (fully owned) Sonoyta Ltd to Tenaziltan Ltd (fully owned by Sonoyta) have generated a realised loss in the Parent Company, that amounts to TSEK -35 855.
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Petrogrand AB Interim Report January-March 2015
In the end of the first quarter of 2015 the Parent Company has revaluated the remaining shares in Shelton Petroleum to a market price of SEK 11.30, which means a negative effect on equity amounting to TSEK -200.
Transactions with related parties during the report periodJames Smith, a member of the Board up to 10 April 2015, had a consultant agreement withPetrogrand regarding geologic services. This agreement has now been terminated.Major events during the report periodOn Tuesday the 10th of February, Petrogrand AB (publ) ('Petrogrand') signed a Letter of Intent (LOI) regarding the acquisition of 49 percent of the shares and votes in Ripiano Holding Ltd, a Cyprus holding company with two subsidiaries in Russia ('Ripiano'). Ripiano's subsidiaries produce some
1,600 barrels of oil per day as per the report date.
The purchase price amounts to MUSD 21.5. The deal was subject to approval by the board. Mikael Wallgren and Lars Jacobsson resigned from the board on 12 March 2015.
On 13 March 2015 the board announced that a Share Subscription Agreement was signed with
Ripiano. The agreement implied the purchase of 49% of newly issued shares and votes in Ripiano for
MUSD 21.5.Major events after the report periodOn 8 April 2015 all Russian personnel employed by LLC Petrogrand in Moscow were laid off with the last day off employment on 10 April 2015.
The final payment for subscribed shares in Ripiano was made by Petrogrand AB's subsidiary
Sonoyta Ltd on 9 April 2015.
A new board of directors in Petrogrand AB was elected at an Extraordinary General Meeting on 10
April 2015. Cheddi Liljeström, Dmitry Zubatyuk, Sven-Eric Zachrisson, Torbjörn Ranta and David Sturt were elected as ordinary Board Members. Cheddi Liljeström was elected as Chairman of the board of directors.
Following the EGM, the board of directors resolved to replace Maks Grinfeld with Dmitry Zubatyuk as new managing director and Sven-Eric Zachrisson as deputy managing director.
The newly elected board reversed the deal regarding a sale of Shelton shares that was announced on 9 April 2015. Petrogrand group as at the time of this report holds 4 700 000 B-shares in Shelton Petroleum. The remaining 200 563 shares were sold on the stock exchange before the EGM on 10 April 2015.OperationsPetrogrand AB is an independent Swedish oil company. Up to the end of the first quarter of 2015, the Company only owned exploration assets operated in the Tomsk region in western Siberia in Russia. Following the sale of its oil production subsidiary STS-Service early in 2010, a new business plan for future operations was developed. Petrogrand's general business concept is to engage in oil exploration and production through Russian oil companies and oil licenses.
The first investment in line with the new business plan was the Nizhnepaninsky license area in the Tomsk region. The license area was discovered in the 1960's and in 2013 the State Committee for Natural Resources registered the resources at 31.3 million tons, according to the Russian classification C3 (approximately 235 mmbbl). During winter and spring 2011, seismic surveys were
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Petrogrand AB Interim Report January-March 2015
carried out in the license area and the results laid the ground for exploration drilling which took place during the winter 2012.
Another project was the Muromsky-2 license area, also in the Tomsk region. After drilling an exploration well, and carrying out seismic surveys during 2012, the license area's estimated resources amount to 20.5 million tons, according to the Russian classification of C3 (about 154 mmbbl).
The exploration work performed on both these license blocks was however not successful enough. As described above this resulted in Petrogrand fully impairing the value of immaterial fixed assets related to said license blocks in 2013.
Following this, Petrogrand has in April 2015 through the acquisition of the 49% interest in Ripiano Ltd re-emerged as a Russian oil producer.
265 898 outstanding shares, each with a par value of SEK 1.
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