SOUND ENERGY PLC

Earnings Release • Apr 28, 2015

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RNS Number : 4673L

Sound Oil PLC

28 April 2015

28 April 2015

Sound Oil plc

("Sound Oil" or the "Company")

Preliminary Results for the year ended 31 December 2014

Sound Oil (SOU.LN), the European / Mediterranean focused upstream oil and gas company, is pleased to announce its unaudited preliminary results for the year ended 31 December 2014.

Production Highlights

•    First full calendar year of production from Rapagnano with volumes ahead of Company expectations at 3.82 MMScm (135 MMScf)

•    First gas production from Casa Tiberi on 28 July 2014 with production of 0.62 MMScm (21.9 MMScf)

•    Total revenues in the year largely covering the Italian cost base

Exploration Highlights

•    Badile Environmental Impact Assessment approved in March 2015 marking a significant milestone towards drilling of the exploration well with mid-case prospective resource of 178Bscf and NPV10 of €486m

•    Ongoing negotiations to farmout the Badile permit

Appraisal and Development Highlights

•    Spudding of second Nervesa well to address the southern limb of the field on 23 April 2015 and test results expected early June 2015

•    Final approval of the Environmental Impact Assessment for the Nervesa gas discovery production concession. The award of the Nervesa field production concession from the Italian Ministry of Economic Development is expected to follow shortly. First commercial gas expected in 2015

•    Permit for the Laura gas discovery received and ongoing negotiations to farmout the permit

Financial Highlights

·     Unaudited cash balance of £12.6 million as at 31 December 2014

Strategy and Outlook

The Company's ambition is to build a mid cap Mediterranean oil and gas business  The Company's initial strategic focus has been our onshore gas portfolio in Italy, which is a healthy blend of high upside exploration, low risk appraisal / development assets and some solid, cost covering, production.

The Company is currently working on various transformational transactions, including:

·     Advanced discussions on a strategic partnership with a major oil and gas company to fund and technically de-risk a selection of Sound Oil's assets

·     Farming in to a Southern Mediterranean onshore gas discovery with very significant estimated reserves and exploration upside

·     Consolidation in Italy, including the acquisition of various onshore exploration, development and production assets

For further information please contact:

Vigo Communications - PR Adviser Patrick d'Ancona Chris McMahon	Tel: +44 (0)20 7016 9573
Sound Oil James Parsons, Chief Executive Officer	j.parsons@soundoil.co.uk
Smith & Williamson - Nominated Adviser Azhic Basirov David Jones Ben Jeynes	Tel: +44 (0)20 7131 4000
Peel Hunt - Broker Richard Crichton Charles Batten	Tel: +44 (0)20 7418 8900

NPV10 refers to a net present value at a discount rate of 10%; MMScm means million standard cubic metres of gas; MMScf means million standard cubic feet of gas; and. Bscf means billion standard cubic feet of gas.

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2014

		31-Dec-14 Unaudited	31-Dec-13 Audited
	Notes	£'000	£'000
Revenue	2	983	482
Operating costs		(658)	(265)
Impairment of Producing Assets		(723)	-
Exploration costs		(74)	(4,038)
Gross profit/(loss)		(472)	(3,821)
Administrative expenses		(2,773)	(2,616)
Group operating loss from continuing operations		(3,245)	(6,437)
Finance revenue		7	9
Foreign exchange gain/(loss)		(661)	(304)
External interest costs		(1,022)	(132)
Loss for period before and after taxation		(4,921)	(6,864)
Other comprehensive income(loss)
Foreign currency translation income/(loss)		127	557
Total comprehensive loss for the period	2	(4,794)	(6,309)
Loss for the period attributable to:
Owners of the company		(4,921)	(6,864)
Non-controlling interests		-	-
		2014 Pence	2013 Pence
Loss per share and diluted for the period		(1.40)	(2.40)
Attributable to the equity holders of the parent (pence)		(1.40)	(2.40)

Consolidated Balance Sheet

as at 31 December 2014

		31-Dec-14 Unaudited	31-Dec-13 Audited
	Notes	£'000	£'000
Non-current assets
Property, plant and equipment		13,200	1,476
Land and buildings		1,433	-
Intangible assets		8,888	19,500
		23,521	20,976
Current assets
Other debtors	3	2,173	1,978
Prepayments		157	185
Cash and short term deposits	4	12,608	543
		14,938	2,705
Total assets		38,459	23,681
Current Liabilities
Trade and other payables		2,194	2,797
Loans repayable in under one year	6	131	229
		2,325	3,026
Non-current liabilities
Deferred tax liabilities		2,099	2,165
Loans due in over one year	6	13,437	1,947
Provisions		1,164	1,226
		16,700	5,338
Total liabilities		19,025	8,364
Net Assets		19,434	15,317
Capital and Reserves
Equity share capital		71,298	63,085
Warrant Reserve		369	-
Foreign currency reserve		1,388	1,261
Accumulated deficit		(53,621)	(49,029)
Total Equity		19,434	15,317

Condensed Consolidated Statement of Changes in Equity

for the year ended 31 December 2014

	Share capital	Share premium		Accumulated Deficit		Warrant Reserve		Foreign currency reserves			Total equity
	£'000	£'000		£'000		£'000		£'000			£'000
At 1 January 2014	2,876	60,209		(49,029)		-		1,261			15,317
Total Loss for the period	-	-		(4,921)		-		-			(4,921)
Other comprehensive income	-	-		-		-		127			127
Total comprehensive income/(loss)	-	-		(4,921)		-		127			(4,794)
Issue of share capital	1,277	7,442		-		-		-			8,719
Fair value of warrants	-	-		-		369		-			369
Transaction costs	-	(506)		-		-		-			(506)
Share based payments	-	-		329		-		-			329
at 31 December 2014	4,153	67,145		(53,621)		369		1,388			19,434
	Share capital	Share premium		Accumulated Deficit		Foreign currency reserves			Total equity
	£'000	£'000		£'000		£'000			£'000
At 1 January 2013	2,870	60,213		(42,273)		704			21,514
Total Loss for the period	-	-		(6,864)		-			(6,864)
Other comprehensive income	-	-		-		557			557
Total comprehensive income/(loss)	-	-		(6,864)		557			(6,307)
Issue of share capital	6	43		-		-			49
Transaction costs	-	(47)		-		-			(47)
Share based payments	-	-		108		-			108
at 31 December 2013	2,876	60,209		(49,029)		1,261			15,317

Consolidated Cash Flow Statement

for the year ended 31 December 2014

	Year ended	Year ended
	31-Dec-2014	31-Dec-2013
	Unaudited	Audited
	£'000	£'000
Cash flow from operating activities
Cash flow from operations	(3,327)	(2,645)
Interest received	7	9
Net cash flow from operating activities	(3,320)	(2,636)
Cash flow from investing activities
Capital expenditure and disposals	(2,258)	(706)
Exploration and development expenditure	(1,089)	(6,482)
Net cash inflow on disposal of subsidiary	-	-
Net cash flow from investing activities	(3,347)	(7,188)
Proceeds from CSTI funding contract	(242)	1,664
Net proceeds from debt	11,398	-
Net Proceeds from equity issue	8,213	1,576
Interest payments	(280)	-
Net cash flow from financing activities	19,089	3,240
Net increase/(decrease) in cash and cash equivalents	12,420	(6,584)
Net foreign exchange difference	(355)	218
Cash and cash equivalents at the beginning of the period	543	6,909
Cash and cash equivalents at the end of the period	12,608	543

Notes to the Financial Statements

1.            Accounting policies

Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.

Sound Oil plc is a public limited company registered and domiciled in England and Wales under the Companies Act 2006.

The financial statements of the Group and its parent are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (IFRSs, as adopted by the European Union), IFRIC Interpretations; and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Full details of the Company's accounting policies will be included in its annual report and accounts for the year ended 31 December 2014.

2.            Segment Information

The Group categorises its operations into three business segments based on corporate, exploration and appraisal and development and production.

In the year ended 31 December 2014 the Group's exploration and appraisal activities were carried out solely in Italy The Group's reportable segments are based on internal reports about components of the Group which are regularly reviewed and used by the board of directors, being the Chief Operating Decision Maker ("CODM"), for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance.

Details regarding each of the operations of each reportable segment is included in the following tables.

Segment results for the period ended 31 December 2014

	Corporate	Development & Production	Exploration & Appraisal	Total
	£'000	£'000	£'000	£'000
Sales and other operating revenues	-	983	-	983
Operating costs	-	(656)	-	(656)
Impairment of production assets	-	(723)	-	(723)
Exploration costs	-	-	(74)	(74)
Administration expenses	(2,773)	-	-	(2,773)
Operating loss segment result	(2,773)	(398)	(74)	(3,245)
Interest receivable	7	-	-	7
Finance costs	(1,552)	(131)	-	(1,683)
Loss for the period before taxation	(4,288)	(529)	(74)	(4,921)

The segments assets and liabilities at 31 December 2014 are as follows:

	Corporate	Development & Production	Exploration & Appraisal	Total
	£'000	£'000	£'000	£'000
Capital expenditure	-	13,112	10,409	23,521
Other assets	14,938	-	-	14,938
Total liabilities	(2,099)	(1,557)	(15,369)	(19,025)

The geographical split of non-current assets is as follows:

	UK		Italy
	£'000s		£'000s
Development and production assets	-		13,112
Fixtures, fittings and office equipment	42		46
Land and buildings	-		1,433
Goodwill	-		2,099
Exploration and evaluation assets	-		6,789
	42		23,479

Segment results for the period ended 31 December 2013

	Corporate 2013	Development & Production 2013	Exploration & Appraisal 2013	Total 2013
	£'000	£'000	£'000	£'000
Sales and other operating revenues	-	482	-	482
Operating costs	-	(265)	-	(265)
Impairment of exploration and evaluation assets	-	-	(4,038)	(4,038)
Administration expenses	(2,616)	-	-	(2,616)
Operating loss segment result	(2,616)	217	(4,038)	(6,437)
Interest receivable	9	-	-	9
Finance costs	(436)	-	-	(436)
Loss for the period before taxation	(3,043)	217	(4,038)	(6,864)

The segments assets and liabilities at 31 December 2013 were as follows:

	Corporate 2013	Development & Production 2013	Exploration & Appraisal 2013	Total 2013
	£'000	£'000	£'000	£'000
Capital expenditure	88	1,388	19,500	20,976
Other assets	2,705	-	-	2,705
Total liabilities	(2,165)	(578)	(5,621)	(8,364)

The geographical split of non-current assets were as follows:

	UK 2013		Italy 2013
	£'000s		£'000s
Development and production assets	-		482
Fixtures, fittings and office equipment	6		82
Goodwill	-		2,167
Exploration and evaluation assets	-		17,333
	6		20,970

3.            Other Debtors

				2014	2013
				£'000	£'000
Italian VAT				1,975	1,923
UK VAT				24	10
Other receivables				174	45
				2,173	1,978
Currency Analysis				2014 £'000	2013 £'000
US Dollar				-	11
Euro				2,117	1,955
GBP Sterling				56	12
				2,173	1,978

4.            Cash and Cash Equivalents

			2014 £'000	2013 £'000
Cash at bank and in hand			1,558	211
Cash equivalents:
Short term deposits			11,051	332
Carrying amount 31 December			12,608	543
being
in US Dollar			1	23
In Euros			11,205	187
In Sterling			1,402	333
			12,608	543

5.            Trade & Other Payables

				2014 £'000	2013 £'000
Trade Payable				1,016	2,317
Payroll taxes and social security				88	79
Accruals				1,090	401
				2,194	2,797
Currency Analysis				2014	2013
				£'000	£'000
Euro				747	2,397
Sterling				1,447	400
Total				2,194	2,797

6.            Loans and Borrowings

				2014 £'000	2013 £'000
Current Liabilities
Other loans				131	229
Non-current liabilities Other loans				13,437	1,947

7.            Financial Information

The financial information set out above does not constitute the Company's financial statements for the years ended 31 December 2013 or 31 December 2014. The financial information for 2013 is derived from the financial statements for 2013 which have been delivered to the Registrar of Companies. The auditors have reported on the 2013 statements; their report was unqualified.

This information is provided by RNS

The company news service from the London Stock Exchange

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