TIDMCAB
RNS Number : 1749O
Cabot Energy PLC
30 September 2019
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. With the publication of this announcement, this
information is now considered to be in the public domain.
30 September 2019
Cabot Energy Plc
("Cabot", the "Group" or the "Company")
2019 Interim Results
Net loss reduced by 68% to US$1.3 million versus H1 2018
Trade creditors reduced by 54% to US$2.6 million versus Year End
2018
Cabot Energy (AIM: CAB), the AIM quoted oil and gas company
focussed on creating predictable production growth in Canada,
announces its unaudited consolidated results for the six months
ended 30 June 2019 ("H1 2019" or the "Period").
Financial Summary
-- Net loss of US$1.3 million (H1 2018: US$4.2 million net loss)
-- Trade creditors reduced by 54% to US$2.6 million, a reduction
of US$3.1 million from the 2018 year end. Historic Canadian
outstanding and overdue creditor liability payments have been made
on schedule. At 30 June 2019, 78% (30 September 2019, 91%) had been
settled with the balance of US$0.25 million scheduled to be paid,
on plan, by 31 December 2019
-- Revenue of US$4.1 million (H1 2018: US$7.5 million)
-- Gross profit of US$0.3 million (H1 2018: US$0.8 million gross profit)
-- Adjusted EBITDA at break-even (H1 2018: US$0.8 million)
-- Raised US$3.1 million gross proceeds via a combination of
share subscriptions and an open offer in March, of which US$2.0
million was contributed by Cabot's majority shareholder, High Power
Petroleum ("H2P")
-- Completed a share capital reorganisation to consolidate the
Company's ordinary shares via a ratio of 100:1 in March 2019
-- Group cash balance of US$0.4 million as at 30 June 2019
Production and Operational Highlights
-- Maintained approximately US$20/bbl average production costs
due to a focus on operational efficiencies and cost controls (full
year 2018 approx. US$20/bbl and full year 2017 approximately
US$33/bbl)
-- Sales price of Edmonton Light Oil ("Edmonton") (after
transportation costs and crude oil marketing fees) averaged
approximately US$46/bbl (H1 2018: approx. US$53/bbl), including
US$48/bbl in Q2 2019
-- Gross production averaged 485 barrels of oil per day ("bopd")
(H1 2018: 761 bopd), reflecting the fact that, since June 2018,
expenditure has only been made on critical items resulting in
deferred production increases, in addition to the normal well
declines
-- Reached agreement with the Department for Energy and Mining
of the Government of South Australia to relinquish PEL 629
exploration licence in the Otway Basin, South Australia
Post-period Highlights
-- In August 2019, Cabot's wholly-owned Canadian subsidiary,
Cabot Energy Inc., entered into a non-binding term sheet for an
asset-level loan facility (the "Loan Facility") of up to C$5.0
million with a Calgary-based private energy lender to complete a
Winter Work Programme
-- Raised US$0.5 million (GBP0.4m) gross proceeds in July 2019
and a further US$0.35 million (GBP0.28 million) gross proceeds in
September 2019 by way of subscriptions from H2P
-- H2P has committed to participating with a second subscription
tranche of at least US$0.35 million in October 2019 (totalling a
minimum subscription of US$0.7 million in this funding round). The
Company intends to enable all shareholders to participate in this
funding round via an open offer
-- Throughout Q3, the Company continued to progress the planning
and procurement for up to ten well workovers and stimulations,
("Summer Work Programme") to be undertaken during October and
November. Operational activity sequencing shall be driven by the
most cost-efficient logistics and execution opportunities, with
respect to well access during periods of heavy rainfall. Once
completed using the funds from the proposed subscriptions (see
below), this will enable access, subject to certain conditions
precedent, to the Loan Facility
-- Exit of onshore Italy to re-focus on the high-impact 1
billion barrels of offshore exploration prospects in the Adriatic
and Sicily Channel areas
-- Group cash balance as at 27 September 2019 of US$0.3 million
James Dewar, Interim Non-Executive Chairman, commented: "I am
pleased to report to shareholders that Cabot is executing on its
near-term growth Strategy 2020, as set out in the Annual Report.
Strategy 2020 involves simplifying the Company's growth strategy
and focussing on Canada, building a track record of project
execution and cost control. This is evidenced year to date by the
Company:
-- Repositioning the portfolio to focus on 100% owned and
operated assets which will enable low-cost onshore Canadian
production growth and, in due course, further exploration in
offshore Italy;
-- Strengthening the Canadian balance sheet such that, prior to
commencing the Winter Work Programme, the Company will have cash on
the balance sheet, positive cashflow, no legacy creditors and no
debt;
-- Agreeing a debt term sheet to fully finance the Winter Work
Programme of up to 4 horizontal wells to produce existing proven
reserves, subject to completion of the lender's due diligence;
and
-- Obtaining commitment from H2P to support the Summer Work
Programme ahead of further strengthening the balance sheet for the
remainder of 2019 and for 2020.
Whilst the fundraisings in recent months and the possibility of
commencing a debt-funded Winter Work Programme are significant,
positive developments, the Group's financial position remains
delicate. Until the Company secures additional equity funding in
October 2019 and completes on the new debt to fund the Winter Work
Programme (aimed at increasing production levels and operating
cashflows), there remains a material uncertainty which would cast
significant doubt upon the Group's continued ability to meet its
future operating commitments, its corporate obligations or operate
as a going concern.
Given the above, the commencement of this year's Summer and
Winter Work Programmes are crucial milestones in generating
positive cashflow and returning the Company to growth. Our mid-term
strategy for 2021 and beyond continues to focus on building the
Canadian prospects, generating cashflow to support a move towards a
future dividend policy and to explore upside potential in offshore
Italy.
I would like to take this opportunity to thank all stakeholders
for their continuing support and patience as we make progress in
what are challenging times for the whole industry."
Scott Aitken, Chief Executive Officer, commented: "Our focus in
the first half of 2019 was to source short- and long-term finance
to rebuild the Company's balance sheet from the cost overruns in
2017 and the first half of 2018 and to fund our strategy for
growth. We were able to maintain production costs at approximately
US$20/bbl through rigorous cost controls despite being unable to
invest in non-safety critical activity to arrest the natural
production decline. This cost control, alongside short-term funding
from H2P and the return of the Edmonton oil price towards its
historic price differential with West Texas Intermediate, gave the
Company time to secure longer term debt funding, announced on 2
September 2019.
"With a term sheet for asset level funding in place, we have
initiated a Summer Work Programme of up to ten well workovers and
stimulations, planned to be followed by a Winter Work Programme of
drilling up to four new horizontal development wells, totalling a
minimum US$7.0 million investment.
"The work programmes are in line with our strategy to create
predictable production and cashflow growth from the Company's 100%
owned and operated Canadian assets, where there is significant
potential for incremental production increases at a low operating
cost."
Enquiries:
Cabot Energy Plc +44 (0)20 7469 2900
Scott Aitken, CEO
Petro Mychalkiw, CFO
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Joint Broker
David Hignell, Richard Hail, Richard
Redmayne
Luther Pendragon +44 (0)20 7618 9100
Financial PR
Harry Chathli, Alexis Gore, Joe
Quinlan
Note to Editors:
Cabot Energy (AIM: CAB) is an oil and gas company focussed on
creating predictable production growth in Canada. Comprehensive
information on Cabot Energy and its oil and gas operations,
including press releases, annual reports and interim reports are
available from Cabot Energy's website: www.cabot-energy.com
All financial values are stated in United States Dollars ($)
unless otherwise indicated.
Operational Review
The end of the first half 2019 marks approximately a year since
the new management team and Board were appointed. It has been a
year of transition for Cabot, with substantial operational changes
implemented throughout the Group and a renewed focus on financial
and operational discipline. The improvements implemented in the
business helped to maintain production costs at approximately
US$20/bbl and laid the foundation for the Company to source and
secure short- and long-term funding, which strengthens the
Company's financial position and will support its growth plans to
create predictable production and cashflow growth from the
Company's 100% owned and operated Canadian assets.
Canadian Operations
The Group's 100% owned and operated production operations in
north west Alberta, Canada, extend to nearly 47,000 acres (as at 30
June 2019) and include extensive processing and storage facilities.
Management proactively acquires and releases land to optimise
ownership in accordance with subsurface analysis. 26 wells are
currently in production and a further 19 existing wells have the
potential to be returned to production through intervention and
workover operations.
The Group averaged gross production of 485 bopd in the first
half of 2019 (H1 2018: 761 bopd), reflecting the fact that, since
June 2018, expenditure has only been made on critical items
resulting in deferred production, in addition to the normal wells
and field declines. The Company continued to run a zero-based
budgeting structure for new operating and capital expenditures
during the period as management maintained its disciplined focus on
cost control.
Post period, production in July and August averaged 431 bopd and
426 bopd due to maintenance issues with two key wells, both of
which are expected to be resolved as part of the forthcoming
workover programme.
Funding secured for Summer and Winter Work Programmes
On 2 September 2019, the Company announced it had secured equity
funding from its supportive majority shareholder, H2P, to fund a
Summer Work Programme. In addition, it was announced that Cabot's
wholly-owned Canadian subsidiary, Cabot Energy Inc., had entered
into a non-binding term sheet for the Loan Facility of up to C$5.0
million, with a Calgary-based private energy lender, to fund a
Winter Work Programme.
With a term sheet for asset level funding in place, subject to
completion of the lenders due diligence, a Summer Work Programme of
up to ten well workovers and stimulations will, subject to the
satisfaction of the Loan Facility conditions precedent, enable
access to the debt facility, which will be used to undertake a
Winter Work Programme. The Winter Work Programme, is intended to
include the drilling of up to four new horizontal development wells
to produce existing proven reserves, and total a minimum US$7.0
million investment.
Having maintained production costs at approximatelyUS$20/bbl,
the Company considers the Summer and Winter Work Programmes as
crucial milestones in generating positive cashflow and returning
the Company to growth.
Italian Assets
The Group has a portfolio of 4 exploration permits and 6
applications which have the potential to generate high returns on
investment over the medium- to long-term. The portfolio consists of
offshore licenses in the southern Adriatic and Sicily Channel. The
Group has recently withdrawn from an onshore exploration permit in
the Po Valley.
As previously announced, on 12 February 2019 the Italian
government signed a decree enacting the suspension of work on all
oil and gas exploration permits or applications for new exploration
permits in Italy whilst a review is undertaken (the "Moratorium").
The suspension will be lifted as soon as consensus is reached on
the terms under which the different areas will proceed with oil and
gas exploration. In the event that no consensus is reached within
24 months of the commencement of the Moratorium, the suspension
will be lifted. The legislation enables the Italian government to
reappraise the exploration permits it has granted.
Cabot's exploration permits have all been subjected to a
rigorous environmental review and the Group is optimistic for a
positive outcome that will enable an immediate return to
exploration activity. The Group is prepared to rapidly progress its
permits as soon as the review is completed, whenever that occurs
within the next 17 months.
Offshore permits
Adriatic: The Group received approval from the Environmental
Impact Assessment to conduct a 3D seismic programme over the permit
areas. A positive opinion has been received on the pre-seismic
ante-operam work subsequently undertaken. To ensure that the
licence is ready to proceed with exploration work as soon as the
Moratorium is lifted, additional environmental data is being
collected.
Sicily Channel: The EIA and exploration drilling permit have now
been received for the Vesta oil prospect.
The Group is in negotiations to secure funding for 100% of the
drilling costs for exploration wells in each of the Cygnus and
Vesta oil prospects via a farm-out of our permit interests. This
would optimise the cost of exploration versus the upside of these
prospects.
Onshore permits
Po Valley Cascina Alberto: The Group previously farmed out the
Po Valley Cascina Alberto exploration permit to Shell Italia
E&P S.p.A. ("Shell"), maintaining a 20% interest.
As stated on 20 August 2019, the Company has been reviewing its
Italian licence portfolio during the Moratorium with a view to
prioritising the Company's significant offshore opportunities in
the Adriatic and the Sicily Channel. In line with this strategy,
Cabot reached an agreement with its partner Shell to jointly
withdraw from this licence. This process will be at no cost to
Cabot as Shell agreed a payment to cover the associated costs and
inconveniences. An RNS announcing this agreement was issued on 26
September 2019.
The withdrawal from the Cascina Alberto licence follows a
strategic assessment by the Company of the benefits of divesting
its interests in certain non-core assets to generate funds for
ongoing working capital requirement to advance the rest of the
Group's assets.
Rockhopper: Italian government approval of the potential
transaction with Rockhopper plc was not received by the long stop
date of 31 December 2018. As announced on 3 January 2019, the Group
and Rockhopper plc mutually agreed to not proceed with the proposed
transaction.
Australian Assets
As announced on 9 April 2019, Cabot reached an agreement with
The Department for Energy and Mining of the Government of South
Australia to relinquish PEL 629 onshore exploration licence in the
Otway Basin, South Australia in order to focus the Group's
financial and operational resources on its core assets. The licence
had been in suspension since June 2014 and, as at December 2018,
the Net Book Value was zero, with the majority of the asset
impairment (US$0.97 million) booked in 2015.
Financial Review
Against naturally declining field production and a lack of
available third party development capital, the Group's liquidity
was maintained during the Period through a series of fundraisings
and H2P financial assistance measures, to fund the partial
settlement of outstanding balances with trade creditors in Canada
and the UK and to provide short term working capital for the
Group's immediate needs. A total of US$3.1 million equity proceeds
were raised during the Period via a combination of share
subscriptions and an open offer in March, of which US$2.0 million
was contributed by H2P; in addition, H2P provided a financial
assistance package equivalent to US$0.3 million (a mixture of trade
debtors settled in cash and H2P trade liabilities settled by the
issue of shares). In February 2019 the Company also completed a
share capital reorganisation involving a 100:1 share consolidation.
At 30 June 2019 H2P's interest in the Company had increased to
61.8%. Following the additional subscription from H2P on 2
September 2019, H2P now has an interest of 72.2% of the Company's
issued share capital.
Despite a year-on-year 13% decrease in the average Edmonton
crude sales price (after transport and marketing costs) and a 37%
reduction in year-on-year net oil sales volumes, Canada production
netback per barrel (crude price less production costs, expressed
per barrel of oil produced) before depletion and amortisation only
declined by 4% from approximately US$21/bbl to approximately
US$17/bbl. This reflected a reduction in Crown royalties per barrel
and, most importantly, robust production cost controls which saw
year-on-year production costs per barrel maintained at
approximately US$20/bbl, despite lower volumes to absorb fixed
production costs such as facilities.
The Edmonton Light Oil price recovered during the Period
following the sharp drop in Q4 2018 due to extended United States
Mid-West refinery shut-ins for maintenance and a resulting glut of
local Alberta oil supply, which saw the Edmonton price fall to an
average of US$25/bbl in Q4 2018, representing a 45% discount to the
WTI crude benchmark price. The H1 2019 average Edmonton price
(after transportation costs and crude oil marketing fees) was
approximately US$46/bbl (H1 2018: US$53/bbl) and the discount to
WTI was approximately 8%, reflecting the restoration of the
historic price differential.
Year-on-year adjusted (adjusting for non-recurring and
exceptional items) Group earnings before interest, taxation,
depletion, depreciation and amortisation ("EBITDA") declined from a
profit of US$0.8 million in 2018 to break-even for the Period.
Despite the 46% (US$3.4 million) reduction in year-on-year
revenues, adjusted EBITDA remained positive, reflecting strong
production netbacks and effective administrative expense cost
controls.
No impairment triggers were identified during the Period in
respect of the Group's Canadian assets and the most recent
independent reserves report continues to support the asset carrying
values, resulting in no impairment expense being recognised. Based
upon the Group's current understanding of new legislation enacted
by the Italian government in February 2019, there were also no
impairment triggers identified during the Period in respect of the
Group's offshore exploration asset carrying values and no
impairment expense has been recognised.
The Group's net current liabilities at 30 June 2019 were US$1.7
million, compared with net current liabilities of US$4.5 million at
31 December 2018; the improvement largely reflected the continuing
settlement and reduction of significant overdue Canadian trade
creditors (being mainly unbudgeted expenditure and legacy cost
over-runs incurred from previous work programmes), pursuant to
binding agreements reached by the Group in January 2019. Despite
profitable Canadian operations and Group net cash inflows from
financing activities during the Period of US$2.9 million, the Group
cash balance was US$0.4 million at 30 June 2019 (31 December 2018:
US$0.9 million), reflecting the settlement of historic creditors
and the Group's administrative expenses, which are driven in part
by the costs of being a quoted company.
Following negotiations, the Group recently accepted a penalty of
US$160,000 imposed by the Alberta Energy Regulator in relation to
the 2017 pipeline leak and subsequent salt water contamination of
the surrounding soil. The US$90,000 credit to other operating costs
in these interim results relates to the partial release of the
US$250,000 provision which was made at the end of 2018.
6 Months 6 Months
ended ended Year ended Year ended
30 June 30 June 31 December 31 December
Canada Performance Unit 2019 2018 % Change 2018 2017
Average WTI crude price US$/bbl 57.32 65.5 (12%) 64.73 50.94
Average Edmonton crude price
discount to WTI crude price % (8%) (9%) (11%) (17%) (5%)
Average Edmonton crude sales
price (after transport & marketing
costs) US$/bbl 45.89 52.83 (13%) 47.21 43.06
Annual gross production mbbls 88 138 (36%) 256 150
Average gross production per
day bopd 485 761 (36%) 703 410
Annual net production mbbls 88 137 (36%) 255 112
Annual net sales mbbls 88 140 (37%) 257 110
$/bbl
Unit $/bbl $/bbl Change $/bbl $/bbl
Production netbacks:*
Crude sales price US$/bbl 45.89 52.83 (6.94) 47.21 43.06
Royalties US$/bbl (7.04) (11.46) 4.43 (11.10) (5.81)
Repairs (excl. regular, planned
maintenance) US$/bbl (1.41) (0.77) (0.64) (1.43) (1.11)
Production costs US$/bbl (20.44) (19.87) (0.58) (19.99) (32.70)
Netback before depletion & amortisation US$/bbl 16.99 20.73 (3.73) 14.69 3.43
========================================= ========= ========= ========= ========= ============= =============
% 37% 39% (2pp) 31% 8%
=================================================== ========= ========= ========= ============= =============
Depletion & amortisation US$/bbl (14.28) (15.67) 1.39 (14.12) (10.24)
Netback after depletion & amortisation US$/bbl 2.71 5.06 (2.35) 0.57 (6.80)
========================================= ========= ========= ========= ========= ============= =============
% 6% 10% (4pp) 1% (16%)
=================================================== ========= ========= ========= ============= =============
* Netback is a measure of profitability which is not specifically defined
under IFRS or other generally accepted accounting principles. It is a
measure of oil and gas sales revenue net of royalties, production and
transportation expenses and is commonly used across the oil and gas industry
as a benchmark to compare performance between time periods.
6 months 6 months 6 months
ended 30 ended 30 ended 30 Year ended
June June June 31 December
2019 2018 Change 2018
Group EBITDA US$'000 US$'000 US$'000 US$'000
==================================== ==================== ========== ========== =============
Loss from operations (1,128) (3,521) 2,393 (5,996)
Add back: depletion, depreciation
& amortisation 1,265 2,172 (907) 3,636
==================== ========== ========== =============
EBITDA 137 (1,349) 1,486 (2,360)
======================================= ==================== ========== ========== =============
Adjusting items:
Gain on step acquisition - (2,774) 2,774 (2,649)
Loss on termination
of option - 2,178 (2,178) 2,178
Impairment losses - 620 (620) 413
Environmental remediation
costs (90) 1,139 (1,229) 1,264
Restructuring expenses - 859 (859) 1,049
Business acquisition/disposal
expenses - 115 (115) 215
Adjusted EBITDA 47 788 (741) 110
==================================== ==================== ========== ========== =============
* EBITDA is a measure of profitability which is not specifically defined
under IFRS or other generally accepted accounting principles. It is a
measure of a company's operating performance which can be used to compare
profitability among companies, as it eliminates the effects of financing,
accounting for capital expenditures and taxation.
Post period
Post 30 June 2019, the Group has continued to focus on liquidity
and securing finance to implement its growth plans. In July and
September 2019, H2P subscribed for additional ordinary shares for
total gross proceeds of US$0.8 million, increasing H2P's interest
in the Company to 72.2%. In addition, H2P committed to providing a
further minimum of US$0.35 million by participating in further
subscriptions to be launched in October 2019. This, combined with
securing a non-binding term sheet for an asset-level Loan Facility
of up to C$5.0 million with a private energy lender, will allow the
Group to undertake a Summer Work Programme and a Winter Work
Programme, subject to prevailing prices and the satisfaction of
certain lender conditions precedent.
Outlook
The last 12 months has seen a period of necessary transition for
Cabot, with substantial operational changes implemented throughout
the Group and a clear focus on financial and operational
discipline. This helped to maintain production costs at
approximately US$20/bbl. Encouragingly, the spread between WTI and
Edmonton prices returned to normal historical levels from January
2019 onwards. With Alberta government commitments to bolster
pipeline capacity, the Group remains reasonably confident in the
outlook for the Edmonton Light Oil price.
With a term sheet in place for asset level funding, the Company
has a clear route to drive forward its growth strategy and execute
a full programme of well recompletions, workovers and new drills to
increase production. The Summer Work Programme of up to ten well
workovers and stimulations in October and November 2019 shall,
subject to the satisfaction of the Loan Facility conditions
precedent, enable access to the debt facility to fund a Winter Work
Programme of drilling up to four new horizontal development wells
totalling a minimum US$7.0 million investment. Following the
investment, Management believes that the Summer and Winter Work
Programmes will have a positive impact on operations and overall
production levels.
Condensed Consolidated Statement of Profit or Loss
for the six months ended 30 June 2019
6 months 6 months
ended ended
30 June 2019 30 June 2018*
(Unaudited) (Unaudited)
Notes US$'000 US$'000
============================================================ ====== ============= ==============
Revenue 4,074 7,491
============================================================ ====== ============= ==============
Production costs (2,545) (4,510)
Depletion and amortisation - plant, property and equipment (1,254) (2,152)
============================================================ ====== ============= ==============
Cost of sales (3,799) (6,662)
============================================================ ====== ============= ==============
Gross profit 275 829
Pre-licence costs - (7)
Administrative expenses (1,493) (1,537)
Other operating costs 2 90 (2,782)
Other operating income - 2,774
Loss on acquisition of subsidiaries and other assets - (2,178)
Impairment losses - (620)
============================================================ ====== ============= ==============
Loss from operations (1,128) (3,521)
Finance income - 29
Finance costs (176) (29)
============================================================ ====== ============= ==============
Loss before tax (1,304) (3,521)
Tax charge (40) (662)
============================================================ ====== ============= ==============
Loss for the period (1,344) (4,183)
============================================================ ====== ============= ==============
Attributable to
Equity shareholders of the Company (1,342) (4,183)
Non-controlling interests (2) -
============================================================ ====== ============= ==============
(1,344) (4,183)
============================================================ ====== ============= ==============
Earnings per share **
Basic loss per share on loss for the period 3 (5.6 cents) (6.6 cents)
============================================================ ====== ============= ==============
Diluted loss per share on loss for the period 3 (5.6 cents) (6.6 cents)
============================================================ ====== ============= ==============
All results are from continuing activities.
Notes 1 to 8 form an integral part of this announcement.
*The 2018 comparatives have been re-presented to reclassify
US$749,000 deferred tax previously reported in Other operating
income, to be part of the deferred tax charge. In addition,
US$859,000 restructuring expenses previously included in
Administrative expenses have been reclassified to Other operating
costs. These changes are consistent with the classifications in the
2018 Annual Report.
**The comparative numbers for 2018 have been restated following
the 1 for 100 share consolidation on 1 March 2019.
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income
for the six months ended 30 June 2019
6 months 6 months
ended ended
30 June 2019 30 June 2018
(Unaudited) (Unaudited)
US$'000 US$'000
======================================================================= ============= =============
Loss for the period (1,344) (4,183)
======================================================================= ============= =============
Other comprehensive profit / (loss):
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 1,154 (2,302)
======================================================================= ============= =============
Other comprehensive profit / (loss) for the period, net of income tax 1,154 (2,302)
-
======================================================================= ============= =============
Total comprehensive loss for the period (190) (6,485)
======================================================================= ============= =============
-
Attributable to:
Equity shareholders of the Company (188) (6,485)
Non-controlling interests (2) -
======================================================================= ============= =============
(190) (6,485)
======================================================================= ============= =============
Notes 1 to 8 form an integral part of this announcement.
Condensed Consolidated Statement of Financial Position
at 30 June 2019
At 30 June 2019 At 31 December 2018
(Unaudited) (Audited)
Notes US$'000 US$'000
==================================================== ====== ================ ====================
Assets
Non-current assets
Intangible assets 4 24,518 24,502
Goodwill 4 1,059 1,019
Property, plant and equipment 5 39,898 39,309
Deferred tax asset 4,463 4,358
==================================================== ====== ================ ====================
69,938 69,188
Current assets
Inventories 113 86
Trade and other receivables 985 698
Cash and cash equivalents 366 888
==================================================== ====== ================ ====================
1,464 1,672
==================================================== ====== ================ ====================
Total assets 71,402 70,860
==================================================== ====== ================ ====================
Liabilities
Current liabilities
Trade and other payables 2,640 5,724
Provisions 485 480
==================================================== ====== ================ ====================
3,125 6,204
Non-current liabilities
Provisions 10,693 10,173
Deferred tax liabilities 2,526 2,544
==================================================== ====== ================ ====================
13,219 12,717
==================================================== ====== ================ ====================
Total liabilities 16,344 18,921
==================================================== ====== ================ ====================
Net assets 55,058 51,939
==================================================== ====== ================ ====================
Capital and reserves
Share capital 16,147 15,807
Share premium 44,403 41,441
Merger reserve 14,190 14,190
Share incentive plan reserve 183 183
Foreign currency translation reserve (7,875) (9,029)
Retained earnings and other distributable reserves (11,987) (10,645)
==================================================== ====== ================ ====================
Equity attributable to owners of the parent 55,061 51,947
==================================================== ====== ================ ====================
Non-controlling interests (3) (8)
==================================================== ====== ================ ====================
Total equity 55,058 51,939
==================================================== ====== ================ ====================
Notes 1 to 8 form an integral part of this announcement.
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2019
6 months ended 6 months ended
30 June 2019 30 June 2018
(Unaudited) (Unaudited)
US$'000 US$'000
================================================================================= =============== ===============
Cash flows from operating activities
Loss for the period before taxation (1,304) (3,521)
Depletion and amortisation 1,254 2,152
Depreciation - non-oil and gas property, plant and equipment 11 20
Impairment losses on intangible assets - 13
Impairment losses on property, plant and equipment - 607
Decommissioning and abandonment expenditure (31) (501)
Business acquisition expenses - 115
Credit arising from step acquisition revaluation of property, plant and equipment - (2,774)
Loss on extinguishing option over property, plant and equipment - 2,178
Finance income - (19)
Finance costs 122 29
Foreign exchange loss/ (gain) 54 (10)
Share-based payments - 669
================================================================================== =============== ===============
Net cash inflow/(outflow) before movements in working capital 106 (1,042)
================================================================================== =============== ===============
(Increase)/decrease in inventories (23) 243
(Increase)/decrease in trade and other receivables (282) 297
(Decrease)/increase in trade and other payables (i) (1,142) 283
================================================================================== =============== ===============
Net cash (outflow)/inflow from changes in working capital (1,447) 823
================================================================================== =============== ===============
Taxes paid - -
Interest received - 19
Interest paid - (1)
================================================================================== =============== ===============
Net cash outflow from operating activities (1,341) (201)
================================================================================== =============== ===============
Cash flows from investing activities
Investments in property, plant and equipment (ii) (1,959) (8,690)
Expenditure on exploration and evaluation assets (154) (575)
Business acquisitions including acquisition costs - (1,115)
Net cash outflow from investing activities (2,113) (10,380)
================================================================================== =============== ===============
Cash flows from financing activities
Issue of ordinary shares (iii) 3,140 15,544
Share issue expenses (226) (281)
Capital contributions from non-controlling interests 7 2
================================================================================== =============== ===============
Net cash inflow from financing activities 2,921 15,265
================================================================================== =============== ===============
Net (decrease)/increase in cash and cash equivalents (533) 4,684
Cash and cash equivalents at start of period 888 1,775
Effect of exchange rate movements 11 (219)
================================================================================== =============== ===============
Cash and cash equivalents at end of period 366 6,240
================================================================================== =============== ===============
Notes to the Condensed Consolidated Cash Flow Statement:
i. Excludes settlement of Canadian trade payables in respect of
investments in property, plant and equipment (2019: $1,698,000;
2018: ($78,000)) and settlements of trade payables by way of issue
of ordinary shares (2019: $388,000; 2018: $nil).
ii. Includes settlement of Canadian trade payables in respect of
investments in property, plant and equipment (see i above).
iii. Excludes issue of ordinary shares for non-cash
consideration, for example in respect of settlement of trade
creditors (see i above).
The Condensed Consolidated Cash Flow Statement presents cash
movements and excludes non cash movements in assets and liabilities
such as exchange differences on translation of foreign
operations.
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2019
Retained
Share Foreign earnings
Share incentive currency and other Non -
Share premium Merger plan translation distributable controlling Total
capital account reserve reserve reserve reserves Total interests equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
At 1 January
2019 15,807 41,441 14,190 183 (9,029) (10,645) 51,947 (8) 51,939
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Total
comprehensive
loss for the
period 1,154 (1,342) (188) (2) (190)
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Contributions by and distributions to owners of the Company
Issue of shares
during the
period 340 3,188 - - - - 3,528 - 3,528
Costs and fees
associated with
share issue - (226) - - - - (226) - (226)
Equity share
warrants
exercised - - - - - - - - -
Share-based
payments - - - - - - - - -
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Total
contributions
by and
distributions
to owners of
the Company 340 2,962 - - - - 3,302 - 3,302
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Changes in ownership interests in subsidiaries
Capital
contributions
from
non-controlling
interests - - - - - - - 7 7
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Total changes in
ownership
interests in
subsidiaries - - - - - - - 7 7
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
At 30 June 2019 16,147 44,403 14,190 183 (7,875) (11,987) 55,061 (3) 55,058
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2018
Retained
Share Foreign earnings
Share incentive currency and other Non -
Share premium Merger plan translation distributable controlling Total
capital account reserve reserve reserve reserves Total interests equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
At 1 January
2018 11,110 23,655 14,190 335 (5,162) (5,191) 38,937 - 38,937
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Total
comprehensive
loss for the
period - - - - (2,302) (4,183) (6,485) - (6,485)
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Contributions by and distributions to owners of the Company
Issue of shares
during the
period 4,559 18,067 - - - - 22,626 - 22,626
Costs and fees
associated with
share issue - (281) - - - - (281) - (281)
Equity share
warrants lapsed
or cancelled - - - (436) - 394 (42) - (42)
Share-based
payments - - - 669 - - 669 - 669
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Total
contributions
by and
distributions
to owners of
the Company 4,559 17,786 - 233 - 394 22,972 - 22,972
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Changes in ownership interests in subsidiaries
Capital
contributions
from
non-controlling
interests - - - - - - - 2 2
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
Total changes in
ownership
interests in
subsidiaries - - - - - - - 2 2
================= ======== ======== ======== ========== ============ ============== ======== ============ ========
At 30 June 2018 15,669 41,441 14,190 568 (7,464) (8,980) 55,424 2 55,426
----------------- -------- -------- -------- ---------- ------------ -------------- -------- ------------ --------
Notes to the Condensed Consolidated Interim Financial
Statements
for the six months ended 30 June 2019
1. Basis of preparation
This unaudited condensed consolidated interim financial
information has been prepared using the recognition and measurement
principles of International Accounting Standards, International
Financial Reporting Standards and Interpretations adopted for use
in the European Union (collectively EU IFRSs). The principal
accounting policies used in preparing the interim results are
unchanged from those disclosed in the Group's Annual Report for the
year ended 31 December 2018, save for the new and revised standards
noted below. These statutory accounts are available on the
Company's website (www.cabot-energy.com) or by application to the
Company's registered office.
The financial information for the six months ended 30 June 2019
and 30 June 2018 is unaudited and does not constitute statutory
financial statements of Cabot Energy Plc and its subsidiaries. The
comparative financial information for the full year ended 31
December 2018 has been derived from the statutory financial
statements for that period. A copy of those statutory financial
statements has been delivered to the Registrar of Companies. The
auditor reported on those accounts; the report was unqualified and
did not contain any statement under section 498(2) or 498(3) of the
Companies Act 2006.
Adoption of new and revised standards
The Group has adopted IFRS 16 "Leases" from 1 January 2019 which
provides a new model for lease accounting in which all leases,
other than short term leases and leases of low value assets, will
be accounted for by the recognition on the Statement of Financial
Position of a right-of-use asset and a lease liability, and the
subsequent amortisation of the right-of-use asset over the lease
term. IFRS 16 is effective for annual periods beginning on or after
1 January 2019 and has had a negligible effect on the Group's
financial statements. IFRS 16 does not apply to leases to explore
for or use minerals, oil, natural gas and similar non-regenerative
resources. The Group has decided to apply the exemption contained
within IFRS 16 for leases with a lease term of 12 months or less
and containing no purchase options. There are no other Standards
and Interpretations in issue but not yet adopted that the Directors
anticipate will have a material effect on the reported income or
net assets of the Group.
Going concern
The Board has reviewed and considered the possible outcomes of
future operations and forecast cash flows, in conjunction with
accounts, budgets and financial plans, and believe that future
external capital could be found to allow the Group to continue.
This understanding leads the Directors to believe that the Group
has sufficient resources to continue in operation at least until 12
months after the date of this document and are managing the Group's
assets to realise further capital to allow the development and
growth of the business during that time and beyond. The financial
statements are therefore prepared on a going concern basis.
However, until the Company secures new equity funding in October
2019 and completes the new debt to fund the Winter Work Programme
(aimed at increasing production levels and operating cashflows),
there remains a material uncertainty which would cast significant
doubt upon the Group's continued ability to meet its future
operating commitments, its corporate obligations or operate as a
going concern. The financial statements do not include the
adjustments that would result if the Group and the Company were
unable to continue as a going concern.
2. Other operating expenses
6 months ended 6 months ended
30 June 2019 30 June 2018
(Unaudited) (Unaudited)
$'000 $'000
================================= =============== ===============
Finance costs
Share-based payments - 669
Environmental remediation costs (90) 1,139
Restructuring costs - 859
Business acquisition expenses - 115
================================= =============== ===============
(90) 2,782
================================= =============== ===============
Environmental remediation costs and penalties
Following negotiations, the Group has accepted a penalty of
US$160,000 imposed by the Alberta Energy Regulator in relation to
the 2017 pipeline leak and subsequent salt water contamination of
the surrounding soil. The US$90,000 credit in 2019 relates to the
partial release of the US$250,000 provision made at the end of
2018. In 2018 environmental remediation expenses of US$945,000 were
incurred for inspections and repairs to the Group's Canadian
pipelines as a consequence of the pipeline leak in the Rainbow area
reported in 2017. In addition, the Group incurred US$194,000
expenses to remediate and clean up two oil spills and to extinguish
a fire on one of the Rainbow area leases.
Notes to the Condensed Consolidated Interim Financial
Statements
for the six months ended 30 June 2019
3. Earnings per share
Basic earnings per share amounts are calculated by dividing
profit or loss for the period attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing
profit for the period attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares
outstanding during the period, plus the weighted average number of
shares that would be issued on the conversion of dilutive potential
ordinary shares into ordinary shares. The calculation of the
dilutive potential ordinary shares related to employee and director
share option plans includes only those warrants or options with
exercise prices below the average share trading price for each
period.
6 months ended 6 months ended
30 June 2019 30 June 2018
(Unaudited) (Unaudited)
US$'000 US$'000
================================================================================= =============== ===============
Net (loss) / profit attributable to equity holders in basic calculation (1,342) (4,183)
================================================================================== =============== ===============
Net (loss) / profit attributable to equity holders used in dilutive calculation (1,342) (4,183)
================================================================================== =============== ===============
Number 000s Number 000s*
================================================================================= =============== ===============
Basic weighted average number of shares 23,891 6,333
Dilutive potential of ordinary shares:
Options exercisable under Company schemes - -
================================================================================= =============== ===============
Diluted weighted average number of shares 23,891 6,333
================================================================================== =============== ===============
As the Group made a loss in the period to 30 June 2019 there is
no dilution in the year from potential ordinary shares.
6 months ended 6 months ended
30 June 2019 30 June 2018
(Unaudited) (Unaudited*)
US$ US$
============================================== =============== ===============
Earnings per share
Basic loss per share on loss for the period (5.6 cents) (6.6 cents)
Diluted loss per share on loss for the period (5.6 cents) (6.6 cents)
============================================== =============== ===============
*The comparative numbers for 2018 have been restated following
the 1 for 100 share consolidation on 1 March 2019.
4. Intangible assets
30 June 2019 31 December 2018
(Unaudited) (Audited)
US$'000 US$'000
=================================== ============== =================
Exploration and evaluation assets 24,494 24,472
Goodwill 1,059 1,019
Computer software 24 30
==================================== ============== =================
25,577 25,521
=================================== ============== =================
5. Property, Plant and Equipment
30 June 2019 31 December 2018
(Unaudited) (Audited)
US$'000 US$'000
=============================== ============== =================
Oil and gas assets 39,860 39,265
Computer and office equipment 38 44
=============================== ============== =================
39,898 39,309
=============================== ============== =================
Notes to the Condensed Consolidated Interim Financial
Statements
for the six months ended 30 June 2019
6. Post balance sheet events
Between the balance sheet date of 30 June 2019 and the date that
this 2019 financial information has been published, the following
developments have been announced which have a material impact on,
or the understanding of, this financial information:
10 July 2019 Share issue
The Company announced that it had entered into an agreement with
H2P to raise US$0.5 million, before expenses, by way of a
subscription for 4,336,466 ordinary shares of 1 pence each at 9.25
pence per Ordinary Share. The net proceeds of the subscription were
used for working capital purposes and to fund the settlement of
amounts owed to the Group's creditors, predominantly trade
creditors of Cabot Canada. Following the completion of the
subscription, H2P were interested in 24,973,503 Ordinary Shares,
representing approximately 66.22 per cent of the Company's enlarged
issued share capital.
2 September loan term sheet, subscription and open offer
The Company announced that its Canadian subsidiary Cabot Energy
Inc. had signed a non-binding term sheet for an asset-level Loan
Facility of up to C$5.0 million with a private energy lender to
fund a winter work programme. In addition, the Company announced a
subscription agreement signed with H2P to subscribe for US$0.3
million to fund the commencement of a Summer Work Programme and an
open offer to be launched in October 2019. H2P committed to
participate in the open offer for a minimum amount of US$0.7
million.
19 September subscription to raise US$0.35 million
The Company announced that that it has entered into an agreement
with H2P to raise US$0.35 million gross (GBP0.28 million), before
expenses, by way of a subscription. The number of new ordinary
shares of 1 penny each in the Company to be issued to H2P and the
price per Subscription Share, will be determined by the issue price
under the Company's open offer to shareholders announced on 2
September, which is to be launched in October 2019. The US$0.35
million forms part of the minimum US$0.7 million commitment
announced on 2 September.
26 September update on Italian assets
The Company announced that the Group and Shell Italia E&P
S.p.A. ("Shell"), have agreed to withdraw from the Cascina Alberto
onshore exploration permit in the Po Valley, northern Italy (the
"Withdrawal"). Shell will make a payment to the Group to cover the
costs and inconveniences incurred in the process of the Withdrawal.
The Withdrawal is subject to the approval of the Italian
authorities, which is expected during Q4 2019.
7. Approval by directors
The interim results for the six months ended 30 June 2019 were
approved by the Directors on 30 September 2019.
8. Availability of interim report
The interim report will be made available in electronic format
on the Company's website, www.cabot-energy.com. Copies will be
available on request by application to the Company Secretary at the
Company's administrative office, being 93-95 Gloucester Place
London W1 6JQ.
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.
END
IR CKKDQDBKDKCN
(END) Dow Jones Newswires
September 30, 2019 07:45 ET (11:45 GMT)
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