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Zephyr Energy PLC - Half-year Report

RNS Number : 2345Z
Zephyr Energy PLC
17 September 2020
 

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

 

17 September 2020

 

Zephyr Energy plc

("Zephyr", the "Company" or the "Group")

 

Interim Results for the six months ended 30 June 2020

 

 

Zephyr Energy plc (AIM: ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development, is pleased to announce its unaudited interim results for the six months ending 30 June 2020.

 

A copy of the interim results report will shortly be available on the Company's website http://www.zephyrplc.com.

 

Colin Harrington, Chief Executive Officer, said:

 

"In the Company's recent Annual Report, we outlined that following the completion of its restructuring, Zephyr is a clean, low-overhead, unlevered and value-focused vehicle from which to build, with a strategy and value set designed to deliver responsible growth for all stakeholders.

 

"Over the coming months, we expect to see further exciting developments on our existing project in the Paradox Basin, Utah (the "Paradox project") as well as the expansion of the Group's asset portfolio through acquisitions or partnerships.

 

"I would like to thank our shareholders and advisers for their continued support at this pivotal time for the Company."

 

 

Contacts:

 

Zephyr Energy plc

Colin Harrington (CEO)

Chris Eadie (CFO)

 

 Tel: +44 (0)20 7225 4590

Allenby Capital Limited - AIM Nominated Adviser

Jeremy Porter / Liz Kirchner

 

 Tel: +44 (0)20 3328 5656

 

Turner Pope Investments - Broker

Andy Thacker / Zoe Alexander

 

Flagstaff Strategic and Investor Communications - PR

Tim Thompson / Mark Edwards / Fergus Mellon

 Tel: +44 (0)20 3657 0050

 

 

Tel: +44 (0) 20 7129 1474

 

 

 

 

ZEPHYR ENERGY PLC

INTERIM REPORT FOR THE SIX MONTHS TO 30 JUNE 2020

The Board of Zephyr Energy plc ("Zephyr", the "Company" or the "Group") is pleased to present its unaudited interim report for the six-month period to 30 June 2020.

CHIEF EXECUTIVE'S STATEMENT

OVERVIEW AND OUTLOOK

As we all know, the first six months of 2020 were extraordinarily turbulent on both a global and sector basis which resulted in extreme volatility in the oil and gas markets.

 

As Zephyr's CEO, I am proud of the steps the Company has taken over the last twelve months, which have enabled us to weather these storms and to emerge well positioned for the future. The restructuring of both the Group's legacy asset base and our Paradox project have, in particular, been critical steps in helping us achieve this. In addition, the willingness of our Board, management and select partners to sacrifice compensation in order to provide the Company with financial flexibility, has demonstrated the team's alignment with the broader shareholder base and signifies a unified belief in the growth potential of the Zephyr platform.  

 

We know there are significant challenges ahead, but with no debt, very low fixed costs and overheads, the untapped potential of the Paradox project and our exciting potential growth opportunities in the Rocky Mountain region, we are optimistic about our future prospects.

 

Our continued focus has remained the same since my tenure began last year.  Every action and investment decision is weighed up against our core values - we always strive to be responsible stewards of both our investors' capital and of the environment and communities in which we work.  This includes the following points of focus:

·    We will continue to protect the Group, safeguard its existing asset base and to position it for attractive growth opportunities;

·    We will continue to seek creative and beneficial funding opportunities in an effort to unlock value from the current Paradox Basin asset, as evidenced by the recent selection of our acreage for a U.S. Government funded research well;

·    We will continue to adopt a disciplined focus on growth via the acquisition of producing or near-term development opportunities in the Rocky Mountain region.  Even in this challenging environment we believe that attractive, value-additive acquisitions are available and may be acquired using non-traditional funding structures;

·    We will continue with our programme of tight financial control and cash preservation which will enable the Group to continue trading effectively; and

·    We will continue to ensure management and the Board are aligned with shareholders through significant ownership of shares - the Board currently controls over 25% of the Company's issued share capital.

 

As we recently announced, I am delighted by the current progress on the Paradox project and excited at the prospect of spudding a research focused well before the end of this calendar year. We are working with our partners on the project to ensure that this initial well can be planned to maximise value to all stakeholders, and I believe this activity will act as a catalyst for the long-awaited unlocking of value from the project.

 

Over the last few weeks, we have also completed the rebranding of the Company, capped by the change of Company name from Rose Petroleum plc to Zephyr Energy plc. However, the rebranding is about very much more than just a change of name - I want Zephyr to be a Company of which all its stakeholders can be proud, one focused on delivering strong economic returns as well as being a responsible steward of its surrounding environment. I want Zephyr to stand for excellence not only in its operations but also in its pursuit of responsible growth.

 

ACQUISITION RATIONALE AND CRITERIA

 

The Board believes that strong financial returns can be generated from the highly fragmented smaller end of the U.S.A. oil exploration and production sector, and we have restructured the Group so that it can be a stable public growth vehicle targeting this part of the market. The Board also believes that the construction of a balanced portfolio, exhibiting both free cash flow and long-term development opportunities, is core to successful growth.

 

The Board's vision for a balanced portfolio includes:

·    production assets acquired at compelling valuations using non-traditional funding structures;

·    near-term, lower-risk yet highly economic development opportunities located in core acreage positions in established basins. In particular, we will target infill horizontal development drilling opportunities in basins long established through vertical production; and

·    longer-term, high-potential appraisal and exploration projects designed to add significant scale.

 

The Board believes that the Group already has significant long-term appraisal and exploration exposure through its restructured Paradox Basin asset, and as such we are focusing our acquisition efforts on near-term development and production opportunities. We continue to appraise a number of potential opportunities with our high-level methodology based on the following factors, and all acquisitions will need to be consistent with the criteria listed below:

 

Geographic criteria:  

Utah, Colorado or Wyoming (the "Rocky Mountain Region")

 

Portfolio criteria: 

Near-term development ("PUD") or accretive producing ("PDP") opportunities

 

Expertise criteria:     

Prior management experience of operating such an asset or similar assets

 

Cash flow criteria:       

Cash flow generative within 12 months of acquisition

 

Entry criteria:             

Proprietary acquisition angle (such as via land strategy, relationship, or unique view on upside opportunity) or uncommonly good value

 

Partner validation:     

Strategic financial or industry partner validation

 

Running room:

Growth potential for future development on the asset acquired or via options for additional acreage acquisition

 

In addition to this screening criteria, and in an effort to build increased predictability, accuracy and efficiency into our project screening and valuation process, management has developed a series of proprietary tools for use in evaluating assets in our region of focus. 

 

Led by the Group's technical team, and building from datasets compiled by independent analytics providers, we are creating a comprehensive geological basin model which allows the Group to quickly review and rank operators, locations and wells in order to focus on targets perceived as having the highest value. This technology-led strategy has already proven useful, both as a deal identification and rapid screening tool, and in demonstrating the value which the Group brings to potential investor and industry partnerships. It is an initiative that will add significant value to the Group as we move forward.

 

The Board also believes that this technology-led approach gives the Group an advantage over other local market participants, and we have already seen the benefits while appraising new opportunities. Our technological edge, combined with the network and experience of the Board, has allowed us to find and screen many potential investment opportunities in a highly efficient manner. Our combined technology and relationship approach are encompassed within the proposed investment in the McCoy project.

 

McCOY UPDATE

 

In November 2019, the Group announced that it had entered into a Letter of Intent ("LOI") with Captiva Energy Holdings II, LLC ("CEH") for the proposed acquisition of an initial 10% of CEH's 89.5% net working interest in the 317-acre McCoy lease located in the Denver-Julesburg Basin ("DJ Basin") in Weld County, Colorado, U.S.A. In addition, the Group has an option to acquire, at its sole discretion, up to a further 80% of CEH's 89.5% working interest in the McCoy lease ("Option"). This Option will expire at the end of December 2020.

 

Our proposed McCoy acquisition will provide the Group with near-term, low-risk horizontal development drilling exposure in the prolific Niobrara shale play, and on acreage contiguous to other major DJ Basin operators including Occidental Petroleum Corporation, Great Western Operating Company LLC, (a subsidiary of Great Western Petroleum), and Crestone Peak Resources. The DJ Basin is a mature oil basin currently undergoing a resurgence as vertical production is replaced with successful one and two-mile horizontal well developments. The McCoy lease is located in an active part of the DJ Basin and a horizontal redevelopment of the existing productive lease is proposed.

 

Due to the economic crisis related to coronavirus and the associated downturn in the oil price since the Group signed the McCoy deal, the McCoy project was not drilled in the first half of 2020 as originally planned. However, the Board has been able to extend the Group's Option to proceed with the acquisition until the end of December 2020. This is expected to give time for a recovery in the oil price and in market sentiment. In addition, capital costs to drill two-mile wells in the DJ Basin have been reduced by over 30% over the last three months, significantly lowering break even prices on horizontal developments. The Group believes that in the current market with lowered capital costs, the breakeven oil price at McCoy will be below US$30 per barrel of oil equivalent ("BOE").

 

The current expectation is a forecast drilling commencement date in the first half of 2021, for an initial 12 well drilling programme with two-mile long laterals.

 

PARADOX UPDATE

 

Over the last twelve months, the Board completed a comprehensive review of the Paradox project and elected to pursue a strategy for the Paradox which included the following steps:

 

·    Focusing on the most prospective acreage (as identified by the 3D seismic acquisition undertaken by the Group and from the subsequent verification work carried out by Schlumberger);

·    Releasing acreage that the Group believes to be non-prospective or on too short a lease to merit further exploration work and / or expenditure; and

·    Actively acquiring further contiguous acreage in areas we consider most prospective.

 

Investors should expect a continued reshaping of the Paradox position as the Company remains an active manager of its leasehold position, and the work to secure longer lease terms and contiguous acreage in areas we consider most prospective remains ongoing. 

 

This 'high-grading' process has enabled Zephyr to secure the project for the long-term while at the same time reducing carrying costs while a farm-in partner is sought. The Board believes that a concentrated focus on the most highly prospective acreage will increase the appeal of the project to potential funding partners.

 

In the Board's view, the high-grading of the Paradox project acreage will create a long-term sustainable future for the project, one which meets the Board's selection criteria and which will positively complement the Group's future balanced asset portfolio.

 

The positive recent news that a research well will be drilled on the Paradox project acreage before the end of the year is an extremely exciting development for the Group, and one which will hopefully act as a catalyst for the Group to be able to unlock the value from the Paradox project while minimising asset level and corporate level dilution.

 

Paradox research well

 

As announced on 2 September 2020, the Company has been working with a project team led by the University of Utah's Energy & Geoscience Institute ("EGI") in collaboration with the Utah Geological Survey (the "UGS") and other Utah-based partners. The project is entitled "Improving Production in Utah's Emerging Northern Paradox Unconventional Oil Play" and its goal is to assess and perform optimisation analyses for more focused, efficient and less environmentally-impactful oil production strategies in the northern Paradox Basin, particularly in the Pennsylvanian Paradox Formation's Cane Creek shale and adjacent clastic zones. This project is sponsored by the U.S. Department of Energy and its National Energy Technology Laboratory (the "DOE").

 

As part of this study, the EGI and UGS are planning to drill a vertical stratigraphic test well to gather data to improve the understanding of the Paradox Basin play. The proposed well would target the Cane Creek and potentially the C18/19 reservoirs, acquiring both core data and a comprehensive well log suite in order to provide valuable new basin data.

 

Over a period of several months, the project team has analysed multiple potential well locations across the Paradox Basin and the Group is delighted that, subject to negotiation of final funding terms and permitting, the EGI and UGS have selected the Group's leased acreage on which to drill the well. The Company's location was selected for a number of reasons, including the quality of the Group's underlying 3D seismic data (which can be tied into the well results to build a stronger integrated predictive model) as well as a favourable surface location which will be sited on a pre-existing pad.

 

It is proposed that the test well will be spudded before the end of this year and be funded by the existing DOE grant to EGI.

 

The spudding of this test well will provide multiple benefits to the Group. Not only will the Group be able to utilise valuable data acquired from the test well, but the Board believes that data gained from the well would be highly beneficial to the Group's continuing farm-in and institutional funding discussions regarding its Paradox acreage.

 

FINANCIAL REVIEW

 

The financial information is reported in United States Dollars ("US$").

 

Income Statement

 

The Group reports a net profit after tax from continuing operations of US$0.9 million or a profit of 0.32 US cents per share for the six months ended 30 June 2020 (30 June 2019: net loss after tax from continuing operations of US$0.8 million or a loss of 0.56 US cents per share).

 

The profit for the period, when compared to the prior year comparative period, is primarily the result of unrealised foreign exchange differences that arise on the restatement of the Company's loans to its subsidiaries. These foreign exchange differences resulted in an unrealised gain of US$1.6 million for the six months ended 30 June 2020 (30 June 2019: unrealised gain of US$0.1 million). The unrealised gain in this period is the result of the strengthening of the US dollar against sterling.

 

Administrative expenses for the period were lower than those incurred over the same period in the prior year at US$0.6 million (30 June 2019: US$0.8 million). The reduction was primarily the result of reduced staff and employee costs due to the Group's recent cost reduction programme.

 

Balance Sheet

 

Intangible assets at 30 June 2020 were US$13.6 million (30 June 2019: US$13.3 million). The primary reason for the increase was the ongoing investment into the Paradox project.

 

Cash and cash equivalents at 30 June 2020 were US$0.4 million (30 June 2019: US$0.5 million). Cash conservation remains a key priority of the Board.

 

CONCLUSION

 

In the Company's recent Annual Report, we outlined that following the completion of its restructuring, Zephyr is a clean, low-overhead, unlevered and value-focused vehicle from which to build and with a strategy and value set designed to deliver responsible growth for all stakeholders.

 

Over the next period we expect to see further exciting developments on our existing project in the Paradox Basin as well as the expansion of the Group's asset portfolio through acquisitions or partnerships.

 

I'd like to thank our shareholders and advisers for their continued support at this pivotal time for the Company.

 

 

 

 

 

 

Colin Harrington                                              

Chief Executive Officer 

                                                               

16 September 2020

 

 

 

 

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 20

 

 

 

Unaudited

six months

ended 30 June

Restated

unaudited

six months

 ended 30 June

 

Audited

year ended

31 December

 

 

2020

2019

2019

 

Notes

US$'000

US$'000

US$'000

 

 

 

 

 

Continuing operations

 

 

 

 

Administrative expenses

 

(613)

(806)

(1,785)

Development expenses

 

(104)

(146)

(206)

Foreign exchange gains/(losses)

 

1,623

126

(819)

 

 

                

                

                

Operating profit/(loss)

 

906

(826)

(2,810)

 

 

 

 

 

Impairment of financial assets

 

-

-

(201)

 

 

                

                

                

Profit/(loss) on ordinary activities before taxation

 

906

(826)

(3,011)

 

 

 

 

 

Taxation charge

 

-

-

-

 

 

                

                

                

Profit/(loss) for the period from continuing operations

 

906

 (826)

 (3,011)

Discontinued operations

 

 

 

 

Profit from discontinued operations, net of tax

 

-

9

1,987

 

 

                

                

                

Profit/(loss) for the period attributable to owners of the parent company

 

 

 

906

 

(817)

 

(1,024)

 

 

                

                

                 

 

 

 

 

 

Profit/(loss) per Ordinary Share

 

 

 

 

From continuing operations

 

 

 

 

Basic and diluted, cents per share

3

0.32

(0.56)

(1.74)

 

 

                

                

                

From continuing and discontinued operations

 

 

 

 

Basic and diluted, cents per share

3

0.32

(0.55)

(0.59)

 

 

                

                

                

           

 

 

 

 

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2020

 

 

Unaudited

six months

 ended 30 June

Unaudited

six months

 ended 30 June

Audited

year ended

31 December

 

 

2020

2019

2019

 

 

 

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

Profit/(loss) for the period attributable to owners of the parent company

 

 

906

 

(817)

 

(1,024)

 

 

 

 

 

 

 

Other comprehensive income

Items that may be subsequently reclassified to profit or loss, net of tax

 

 

 

 

 

Foreign currency translation differences on foreign operations

 

3,223

217

(1,669)

 

 

 

                

                

                

 

Total comprehensive income for the period attributable to owners of the parent company

 

 

4,129

 

(600)

 

(2,693)

 

 

 

                

                

                

 

                     

 

 

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2020

 

 

Unaudited

as at

 30 June

Unaudited

as at

 30 June

Audited

 as at

31 December

 

 

2020

2019

2019

 

Notes

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

4

13,586

13,326

13,549

 

Property, plant and equipment

 

44

19

77

 

 

                

                

                

 

 

 

13,630

13,345

13,626

 

 

                

                

                

 

Current assets

 

 

 

 

 

Trade and other receivables

 

88

398

112

 

Cash and cash equivalents

 

350

461

1,084

 

 

                

                

                

 

 

 

438

859

1,196

 

 

                

                

                

 

Total assets

 

14,068

14,204

14,822

 

 

                

                

                

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

(411)

(406)

(442)

 

Lease liabilities

 

(23)

-

(45)

 

 

                

                

                

 

 

 

(434)

(406)

(487)

 

 

                

                

                

 

Non-current liabilities

 

 

 

 

 

Lease liabilities

 

-

-

(8)

 

Provisions

 

(57)

-

(57)

 

 

                

                

                

 

 

 

(57)

-

(65)

 

 

                

                

                

 

Total liabilities

 

(491)

(406)

(552)

 

 

                

                

                

 

Net assets

 

13,577

13,798

14,270

 

 

                

                

                

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

5

40,688

40,536

40,688

 

Share premium account

 

37,975

36,796

37,975

 

Warrant reserve

 

227

341

568

 

Share-based payment reserve

 

3,341

3,702

3,748

 

Cumulative translation reserves

 

(11,612)

(8,996)

(9,972) 

 

Retained deficit

 

(57,042)

(58,581)

(58,737)

 

 

                

                

                

 

Equity attributable to owners of the parent company

 

 

13,577

 

13,798

 

14,270

 

 

                

                

                

                     

 

 

 

 

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020 (Unaudited)

 

 

 

 

 

Share capital

 

Share premium account

 

 

Warrant reserve

Share-based payment reserve

 

Cumulative translation reserve

 

 

Retained deficit

 

 

 

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

As at 1 January 2020

40,688

37,975

568

3,748

(9,972)

(58,737)

14,270

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

Transfer to retained deficit in respect of lapsed warrants/options

 

 

-

 

 

-

 

 

(341)

 

 

(448)

 

 

-

 

 

789

 

 

-

Share-based payments

-

-

-

42

-

-

42

Effect of foreign exchange rates

 

-

 

-

 

-

 

(1)

 

-

 

-

 

(1)

 

 

 

 

 

 

 

 

Total transactions with owners in their capacity as owners

 

 

-

 

 

-

 

 

(341)

 

 

(407)

 

 

-

 

 

789

 

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

906

906

Other comprehensive income:

 

 

 

 

 

 

 

Currency translation differences

 

-

 

-

 

-

 

-

 

3,223

 

-

 

3,223

 

 

 

 

 

 

 

 

Total other comprehensive income for the period

 

-

 

-

 

-

 

-

 

3,223

 

-

 

3,223

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

3,223

 

906

 

4,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation differences on equity at historical rates

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(4,863)

 

 

-

 

 

(4,863)

 

 

 

 

 

 

 

 

As at 30 June 2020

40,688

37,975

227

3,341

(11,612)

(57,042)

13,577

 

 

 

 

 

 

 

 

                   

 

 

 

 

 

 

 

 

 

 

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2019 (Audited)

 

 

 

 

 

Share capital

 

Share premium account

 

 

Warrant reserve

Share-based payment reserve

 

Cumulative translation reserve

 

 

Retained deficit

 

 

 

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

As at 1 January 2019

40,504

36,472

341

3,645

(8,909)

(57,764)

14,289

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

Issue of equity shares

184

1,851

-

-

-

-

2,035

Expenses of issue of equity shares

 

-

 

(121)

 

-

 

46

 

-

 

-

 

(75)

Transfer to warrant reserve

-

(227)

227

-

-

-

-

Share-based payments

-

-

-

100

-

-

100

Transfer to retained deficit in respect of lapsed warrants

 

 

-

 

 

-

 

 

-

 

 

(51)

 

 

-

 

 

51

 

 

-

Effect of foreign exchange rates

 

-

 

-

 

-

 

8

 

-

 

-

 

8

 

 

 

 

 

 

 

 

Total transactions with owners in their capacity as owners

 

 

184

 

 

1,503

 

 

227

 

 

103

 

 

-

 

 

51

 

 

2,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

(1,024)

(1,024)

Other comprehensive income:

 

 

 

 

 

 

 

Currency translation differences

 

-

 

-

 

-

 

-

 

(1,669)

 

-

 

(1,669)

 

 

 

 

 

 

 

 

Total other comprehensive income for the period

 

-

 

-

 

-

 

-

 

(1,669)

 

-

 

(1,669)

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

(1,669)

 

(1,024)

 

(2,693)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation differences on equity at historical rates

 

 

-

 

 

-

 

 

-

 

 

-

 

 

2,515

 

 

-

 

 

2,515

Recycled foreign currency translations differences on discontinued operations

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(1,909)

 

 

-

 

 

(1,909)

 

 

 

 

 

 

 

 

As at 31 December 2019

40,688

37,975

568

3,748

(9,972)

(58,737)

14,270

 

 

 

 

 

 

 

 

                   

 

 

 

 

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2019 (Unaudited)

 

 

 

 

 

Share capital

 

Share premium account

 

 

Warrant reserve

Share-based payment reserve

 

Cumulative translation reserve

 

 

Retained deficit

 

 

 

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

As at 1 January 2019

40,504

36,472

341

3,645

(8,909)

(57,764)

14,289

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

Issue of equity shares

32

347

-

-

-

-

379

Expenses of issue of equity shares

 

-

 

(23)

 

-

 

-

 

-

 

-

 

(23)

Transfer to warrant reserve

-

-

-

-

-

-

-

Share-based payments

-

-

-

58

-

-

58

Effect of foreign exchange rates

 

-

 

-

 

-

 

(1)

 

-

 

-

 

(1)

 

 

 

 

 

 

 

 

Total transactions with owners in their capacity as owners

 

 

32

 

 

324

 

 

-

 

 

57

 

 

-

 

 

-

 

 

413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

(817)

(817)

Other comprehensive income:

 

 

 

 

 

 

 

Currency translation differences

 

-

 

-

 

-

 

-

 

217

 

-

 

217

 

 

 

 

 

 

 

 

Total other comprehensive income for the period

 

-

 

-

 

-

 

-

 

217

 

-

 

217

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

217

 

(817)

 

(600)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation differences on equity at historical rates

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(304)

 

 

-

 

 

(304)

 

 

 

 

 

 

 

 

As at 30 June 2019

40,536

36,796

341

3,702

(8,996)

(58,581)

13,798

 

 

 

 

 

 

 

 

                   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                             

ZEPHYR ENERGY PLC

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June 2020

 

 

 

Unaudited

six months

 ended 30 June

Unaudited

six months

 ended 30 June

Audited

year ended

31 December

 

 

 

2020

2019

2019

 

Appendices 

US$'000

US$'000

US$'000

 

 

 

 

 

Net cash used in operating activities

a

(661)

(789)

(1,657)

 

 

 

 

 

Net cash (used in)/from investing activities

b

(38)

279

201

 

 

 

 

 

Net cash (used in)/from financing activities

c

(26)

356

1,922

 

 

 

                

                

                

 

Net (decrease)/increase in cash and cash equivalents

 

 (725)

 (154)

466

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,084

616

616

 

 

 

 

 

Effect of foreign exchange rate changes

 

(9)

(1)

2

 

 

 

                

                

                

 

Cash and cash equivalents at end of period

 

350

461

1,084

 

 

 

                

                

                

 

                 

 

 

ZEPHYR ENERGY PLC

APPENDICES TO THE CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June 2020

 

 

 

 

Unaudited

six months

 ended 30 June

Restated

Unaudited

six months

 ended 30 June

 

Audited

year ended

31 December

 

 

 

 

2020

2019

2019

 

 

 

 

US$'000

US$'000

US$'000

 

a

Operating activities

 

 

 

 

Profit/(loss) before taxation from continuing operations

906

(826)

(3,011)

 

Profit before taxation from discontinued operations

-


 

9


 

1,987


 

         

 

 

906

(817)

(1,024)

 

 

 

 

 

 

Fair value gain on investments

-

(27)

(27)

 

 

 

 

 

 

Adjustments for:

 

 

 

 

Depreciation of property, plant and equipment

29

3

35

 

Gain on disposal of property, plant and equipment

-

-

(5)

 

Gain on disposal of intangible exploration and evaluation assets

 

-

 

-

 

(122)

 

Impairment of financial assets

-

-

201

 

Share-based payments

5

58

100

 

Unrealised foreign exchange gain

(1,631)


 

(100)


 

(1,076)


 

         

 

Operating outflow before movements in working capital

(691)

(883)

(1,918)

 

Decrease in trade and other receivables

24

29

119

 

Increase in trade and other payables

6


 

65


 

142


 

         

 

Net cash used in operating activities

(661)



 

(789)



 

(1,657)



 

         

b

Investing activities

 

 

 

Purchase of intangible exploration and evaluation

assets

 

(38)

 

(223)

 

(428)

 

Proceeds on disposal of property, plant and equipment

-

-

5

 

Proceeds on disposal of intangible exploration and evaluation assets

 

-

 

-

 

122

 

Proceeds on disposal of investments

-


 

502


 

502


 

         

 

Net cash (used in)/from investing activities

(38)



 

279



 

201



 

         

c

Financing activities 

 

 

 

 

Proceeds from issue of shares

-

379

2,035

 

Expenses of issue of shares

-

(23)

(75)

 

Repayment of lease liabilities

(26)


 

-


 

(38)


 

         

 

Net cash (used in)/from financing activities

(26)



 

356



 

1,922



 

         
                 

 

 

 

 

 

 

 

ZEPHYR ENERGY PLC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

1.  ACCOUNTING POLICIES  

Basis of preparation

This report was approved by the Directors on 16 September 2020.

The condensed consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs')

The condensed consolidated interim financial statements are presented in United States Dollar ('US$') as the Group's trading operations, and the majority of its assets are primarily represented in US$.

The Company is domiciled in the United Kingdom. The Company's shares are admitted to trading on the AIM market.

The current and comparative periods to June have been prepared using the accounting policies and practices consistent with those adopted in the annual financial statements for the year ended 31 December 2019, and with those expected to be adopted in the Group's financial statements for the year ended 31 December 2020. In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the comparative income statement for the six months ended 30 June 2019 has been re-presented so that the disclosures in relation to discontinued operations relate to all operations that had been discontinued by the Balance Sheet date.

Comparative figures for the year ended 31 December 2019 have been extracted from the statutory financial statements for that period which carried an unqualified audit report which included an emphasis of matter in respect of going concern, did not contain a statement under section 498(2) or (3) of the Companies Act 2006 and have been delivered to the Registrar of Companies.

The financial information contained in this report does not constitute statutory financial statements as defined by section 434 of the Companies Act 2006, and should be read in conjunction with the Group's financial statements for the year ended 31 December 2019. This report has not been audited or reviewed by the Group's auditors.

During the first six months of the current financial year there have been no related party transactions that materially affect the financial position or performance of the Group and there have been no changes in the related party transactions described in the last annual financial report.

Having considered the Group's current cash forecast and projections, and following detailed conversations with the Company's brokers and major shareholders, the Directors have a reasonable expectation that the Company and the Group have, or have access to, sufficient resources to continue operating for at least the next 12 months. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.

The principal risks and uncertainties of the Group have not changed since the publication of the last annual financial report where a detailed explanation of such risks and uncertainties can be found.

2.  DIVIDENDS

The Directors do not recommend the payment of a dividend for the period.

 

 

3. PROFIT/(LOSS) PER ORDINARY SHARE

Basic profit/(loss) per Ordinary Share is calculated by dividing the net profit/(loss)for the period attributable to owners of the parent company by the weighted average number of Ordinary Shares outstanding during the period. The calculation of the basic and diluted profit/(loss) per Ordinary Share is based on the following data:

 

 

 

 

 

 

 

 

 

 

Continuing operations

unaudited

six months

 ended 30 June

2020

US$'000

 

 

Restated

continuing

operations unaudited

six months

ended 30 June

2019

US$'000

 

Restated

continuing and discontinued operations

unaudited

six months

 ended 30 June

2019

US$'000

 

 

 

 

Continuing operations

audited

year ended

31 December

2019

US$'000

 

 

 

Continuing and discontinued operations

audited

year ended

31 December

2019

US$'000

 

 

Profits/(losses)

 

 

 

 

 

 

 

 

Profits/(losses) for the purpose of basic profit/(loss) per Ordinary Share being net profit/(loss) attributable to owners of the parent company

 

 

 

 

 

 

 

 

 

906 


 

 

 

 

 

(826)


 

 

 

 

 

(817) 


 

 

 

 

 

(3,011)


 

 

 

 

 

(1,024)


 

 

                 

 

 

         

     Number

'000

Number

'000

Number

'000

Number

'000

Number

'000

 

 

Number of shares

 

 

 

 

 

 

 

 

Weighted average number of shares for the purpose of basic profit/(loss) per Ordinary Share

 

 

 

 

 

287,111


 

 

 

147,834


 

 

 

147,834


 

 

 

172,550


 

 

 

172,550


 

 

                 

 

Profit/(loss) per Ordinary Share

 

 

 

 

 

 

 

 

Basic and diluted, cents per share

 

 

 

0.32


 

 

 (0.56)


 

 

 (0.55)


 

 

(1.74)


 

 

 (0.59)


 

                 
                                   

Due to the losses incurred, there is no dilutive effect from the existing share options, share based compensation plan or warrants.

 

 

4.  INTANGIBLE ASSETS

 

 

   

Exploration and evaluation assets US$'000

Cost

 

 

 

 

At 1 January 2019

 

 

18,918

 

Additions

 

 

178

 

Exchange differences

 

 

7

 

 

 

 

                     

 

At 30 June 2019

 

 

19,103

 

Additions

 

 

223

 

Disposals - discontinued operations

 

 

(5,770)

 

Exchange differences

 

 

(7)

 

 

 

 

                     

 

At 31 December 2019

 

 

13,549

 

Additions

 

 

37

 

 

 

 

                     

 

At 30 June 2020

 

 

13,586

 

 

 

 

                     

 

 

 

 

Impairment

 

 

 

 

At 1 January 2019

 

 

5,770

 

Exchange differences

 

 

7

 

 

 

 

                     

 

At 30 June 2019

 

 

5,777

 

Disposals - discontinued operations

 

 

(5,770)

 

Exchange differences

 

 

(7)

 

 

 

 

                     

 

At 31 December 2019 and 30 June 2020

 

 

-

 

 

 

 

                     

 

 

 

 

Carrying amount

 

 

 

 

At 30 June 2020

 

 

13,586

 

 

 

 

                     

 

At 30 June 2019

 

 

13,326

 

 

 

 

                     

 

At 31 December 2019

 

 

13,549

 

 

 

 

                     

 

 

5.  SHARE CAPITAL

 

Unaudited

as at

 30 June

Unaudited

as at

 30 June

Audited

 as at

31 December

 

 

 

2020

2019

2019

 

 

 

Number

'000

Number

'000

Number

'000

 

 

 

 

 

 

 

 

Authorised

 

 

 

 

 

Ordinary Shares of 0.1p each

7,779,297

7,779,297

7,779,297

 

 

Deferred Shares of 9.9p each

227,753

227,753

227,753

 

 

 

 

                     

                     

                     

 

 

8,007,050

8,007,050

8,007,050

 

 

 

 

                     

                     

                     

 

Unaudited

as at

 30 June

Unaudited

as at

 30 June

Audited

 as at

31 December

 

 

 

2020

2019

2019

 

 

 

US$'000

 

US$'000

 

US$'000

 

 

 

Allotted, issued and fully paid

 

 

 

 

 

287,111,606 Ordinary Shares of 0.1p each (30 June 2019: 168,413,940: 31 December 2019 287,111,606)

383

231

383

 

 

227,752,817 Deferred Shares of 9.9p each

40,305

40,305

40,305

 

 

 

 

                     

                     

                     

 

 

40,688

40,536

40,688

 

 

 

 

                     

                     

                     

                     

The Deferred Shares are not listed on AIM, do not give the holders any right to receive notice of, or to attend or vote at, any general meetings, have no entitlement to receive a dividend or other distribution or any entitlement to receive a repayment of nominal amount paid up on a return of assets on winding up nor to receive or participate in any property or assets of the Company. The Company may, at its option, at any time redeem all of the Deferred Shares then in issue at a price not exceeding £0.01 from all shareholders upon giving not less than 28 days' notice in writing.

ISSUED ORDINARY SHARE CAPITAL

On 30 May 2019, the Company issued 25,000,000 Ordinary Shares of 0.1p each at a price of 1.2p per share, raising gross proceeds of US$0.4 million (£0.3 million).

On 28 August 2019, the Company issued 2,500,000 Ordinary Shares of 0.1p each at a price of 0.6p per share, raising gross proceeds of US$0.018 million (£0.015 million).

On 8 November 2019, the Company issued 31,182,780 Ordinary Shares of 0.1p each at a price of 1.1p per share, raising gross proceeds of US$0.4 million (£0.35 million).

On 22 November 2019, the Company issued 82,453,584 Ordinary Shares of 0.1p each at a price of 1.1p per share, raising gross proceeds of US$1.2 million (£0.9 million).

On 22 November 2019, the Company issued 1,325,757 Ordinary Shares of 0.1p each at a price of 1.1p per share, raising gross proceeds of US$0.019 million (£0.015 million).

On 9 December 2019, the Company issued 1,235,545 Ordinary Shares of 0.1p each at a price of 1.1p per share, raising gross proceeds of US$0.018 million (£0.014 million).

In November 2019, the Company undertook a fundraise which resulted in the issue of 31,182,780 Ordinary Shares of 0.1p each on 8 November, followed by a further 82,453,584 Ordinary Shares of 0.1p each on 22 November 2019, resulting in the total issue of 113,636,364 Ordinary Shares. In respect of these particular share issues, subscribers were also issued warrants to subscribe for 56,818,182 new Ordinary Shares, representing one warrant for every two placing shares. The warrants are exercisable at a price of 2 pence per Ordinary Share for a period of two years from the date of issue.

 

 

 

 

Ordinary

Shares

Number

'000

Deferred Shares

Number

'000

 

 

 

 

 

 

 

 

At 1 January 2019

 

143,414

227,753

 

 

Allotment of shares

 

25,000

-

 

 

 

 

 

                     

                     

 

At 30 June 2019

 

168,414

227,753

 

 

Allotment of shares

 

118,698

-

 

 

 

 

 

                     

                     

 

At 31 December 2019 and 30 June 2020

 

287,112

227,753

 

 

 

 

 

                     

                     

                 

6.  POST BALANCE SHEET EVENTS

At the Company's Annual General Meeting, held on 29 July 2020, the Shareholders approved the change of the Company's name from Rose Petroleum plc to Zephyr Energy plc.

All other matters relating to events occurring since the period end are reported in the Chief Executive Statement.

 

 

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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Lionel Therond on Rose Petroleum

Lionel Therond talks through Rose Petroleum and the completion of the initial structural interpretation of the 3D seismic data it acquired over its Gunnison Valley Unit (GVU) which is part of its larger lease holding in the Paradox Basin, Utah, U.S.A.

on 26/2/18

61 min read