Quarterly Report • May 24, 2018
Quarterly Report
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First Quarter Report 2018
May 23, 2018
| Contents 2 | |
|---|---|
| Highlights and events 3 | |
| Operational update 4 | |
| Financial information 6 | |
| Outlook 9 | |
| Condensed consolidated financial statements 10 | |
| Notes to the condensed consolidated financial statements 14 | |
| Other information 18 |
Cash and cash equivalents of USD 5.1 million as at March 31, 2018, not including USD 1.5 million of cash which was refunded to the Company with accumulated interest post-period-end following the settlement of the Aje dispute
The development of the Tortue oil field continued according to plan in the quarter with drilling activities underway using the Borr Norve jack-up drilling rig. The first development well, DTM-2H, was successfully completed in April in the Dentale D6 reservoir with the subsea tree installed ready for production start-up. An appraisal well, DTM-3, has also been drilled in the western flank of the Tortue field, and encountered oil in the Gamba and Dentale D2B and D6 reservoirs. Development of the western flank of the field is likely to form part of Phase 2 development at Tortue, where preliminary preparation has commenced. Reserves discovered by the DTM-3 well on the western flank of Tortue will be booked in due course. In May, a second development well, DTM-3H, was spudded from the DTM-3 top hole section and will be completed as the Phase 1 Gamba production well. Following the drilling of these wells at Tortue, an additional well will be drilled on the Ruche North East prospect in the vicinity of the Ruche field in the centre of the license area. The drilling campaign is expected to be completed during the third quarter, after which the subsea equipment will be installed in preparation for the FPSO hook-up. We expect first oil from Phase 1 to be achieved in the second half of 2018 and the Operator estimates that initial gross production rates will be in the range of 10,000 to 15,000 barrels of oil per day. Initial planning for Phase 2 at Tortue is underway, and is likely to consist of a further 2 production wells in the Gamba and Dentale D6 reservoirs.
Production system optimisation has been carried out at the Aje FPSO during the quarter and this has resulted in production increasing to a steady level of around 400 barrels of oil per day net to Panoro. The field produced an average of 384 barrels of oil per day net to Panoro during the quarter, and this compares to 285 barrels of oil per day net in Q4 2017, which was affected by some shut-ins. Production from the Aje field continued from the Aje-4 and Aje-5 wells, with the Aje-4 well producing from the Cenomanian oil reservoir and the Aje-5 well producing from the oil rim of the Turonian reservoir. A lifting from the field was completed in April 2018. The Turonian gas FDP submitted in 2017 continues to be reviewed by the Nigerian Regulators and in parallel, the process for the renewal of the OML 113 lease in June 2018 has continued.
Panoro is updating its independent reserves report for Aje with AGR TRACS International, and preliminary results have been published in our 2017 Annual Statement of Reserves. The update indicates that gross remaining 2P and 2C resources of 136 million barrels of oil equivalent combined could be produced from the Aje field, with gross 3P and 3C resources of 233 million barrels of oil equivalent.
On January 2, 2018, Panoro announced that PPAL had entered into a definitive and binding settlement agreement (the "Agreement") with the other OML 113 joint-venture partners. The Agreement resolved and settled the dispute between the OML 113 joint-venture partners in relation to drilling of new development wells.
The highlights of the Agreement included:
Panoro remains committed to explore all options to maximise value at Aje, including, but not limited to, a partial or full divestment of its participation in OML 113.
Following the completion of legal formalities with the Aje dispute, USD 1.5 million was released post-period-end to the Company with accumulated interest.
In Brazil, termination agreements for the surrender of Coral and Cavalho Marinho licences have been signed between the JV partners and Brazilian Regulator ANP. The next steps involve various regulatory clearances before dissolution of JV operations. The Company's formal exit from its historical Brazilian business is still ongoing with slow progress towards the approval of abandonment by the Brazilian regulators and resolution of pending historical corporate items including taxes. Management is working actively with advisors and where relevant, the operator Petrobras to bring matters to a close and to ensure that the ongoing costs are kept to a minimum. However, the timing and eventual costs of such conclusion is uncertain at this stage.
Panoro Energy reported an EBITDA of negative USD 1.2 million for the first quarter, 2018, compared to negative USD 1.5 million in the fourth quarter, 2017.
Negative EBITDA in the first quarter is predominantly the recurring General and Administration (G&A) costs and is also reflective of no Aje revenue or operating costs as there was no lifting in the period. The latest lifting completed immediately after the reporting period and will therefore be recognised in the second quarter report.
No oil and gas revenue was recorded in the first quarter as there was no lifting at Aje compared to fourth quarter, 2017 where USD 1.6 million was recorded based on the Company's net entitlement barrels of 25,978 bbls.
Costs attributed to operations were nil at Aje for the first quarter compared to operating costs of USD 2.2 million in the previous quarter. The absence of a lifting in the quarter resulted in all opex costs since the last lifting being capitalized in the cost of inventory; these costs will be expensed in the second quarter when the revenue from the 7th Aje lifting will be recognised.
Panoro Energy reported a net loss of USD 2.2 million from continuing operations for the first quarter, 2018, a decrease in loss of USD 2.2 million, compared to a loss of USD 4.4 million in the fourth quarter, 2017. The previous quarter loss is higher due to recognition of impairment provision, following the impairment review made in the fourth quarter, 2017 on both Aje and Dussafu. There is no impairment adjustment recognised in the current quarter.
Exploration related costs increased marginally from USD 18 thousand for the fourth quarter, 2017 to USD 43 thousand in the current quarter.
General and Administration (G&A) costs from continuing activities were cyclically higher in the first quarter at USD 1.0 million, compared to USD 0.8 million in the fourth quarter, 2017. In both periods, the costs relating to the Aje dispute have been separately reported as non-recurring dispute costs of USD 95 thousand in the first quarter and USD 45 thousand in the fourth quarter.
Depreciation for the first quarter, 2018 was a charge of USD 0.9 million. This is compared to a positive USD 0.1 million in the previous quarter, where a correction to a previous quarter was recorded. The underlying depreciation charge for the fourth quarter, 2017 was USD 0.2 million. The quarter-on-quarter increase in depreciation reflects changes to the Aje 2P independently certified oil reserves disclosed in the 2017 Annual Statement of Reserves.
EBIT from continuing operations was thus a negative USD 2.1 million in the first quarter, 2018, compared to a negative USD 4.1 million in the fourth quarter 2017.
Net financial items amounted to a net expense of USD 130 thousand in the first quarter, 2018 compared to an expense of USD 286 thousand in the fourth quarter, 2017.
Loss before tax from continuing activities was USD 2.2 million in the first quarter, 2018 which was lower by USD 2.2 million compared to the previous quarter loss of USD 4.4 million.
Net loss for the period from discontinued operations in Brazil was USD 44 thousand for the current quarter, a decrease in loss of USD 16 thousand from the previous quarter.
The total net loss was USD 2.3 million, compared to a net loss of USD 4.4 million in the previous quarter.
Minor movement in other comprehensive income was a result of currency translation adjustments for reporting purposes in the quarter.
Panoro Energy reported an EBITDA of negative USD 1.2 million for the first quarter, 2018, compared to negative USD 2.5 million in the same period in 2017.
Negative EBITDA in the first quarter, 2018 is predominantly the recurring General and Administration (G&A) costs. No Aje revenue or operating costs were recognised in line with group's accounting policy due to absence of any lifting in the current period.
No oil and gas revenue was recorded in the first quarter, 2018 as there was no lifting at Aje, whereas first quarter, 2017 results included USD 1.3 million of revenue from the sale of Company's net entitlement of 26,210 bbls of oil.
Panoro Energy reported a net loss of USD 2.2 million from continuing operations for the first quarter, 2018, a decrease in loss of USD 1.2 million, compared to a loss of USD 3.4 million in the same period in 2017. The decrease in loss was mainly due to higher operating costs recognised in the first quarter, 2017.
Exploration related costs decreased to USD 43 thousand in the first quarter, 2018, down from USD 81 thousand in same period in 2017.
General and Administration costs from continuing operations were USD 1.0 million for first quarter, 2018, down from USD 1.2 million for the same period in 2017. In the first quarter, 2018, USD 0.1 million of costs directly related to the Aje dispute have been reported separately as non-recurring dispute costs; there were no such costs in the same period in 2017.
Depreciation for the period was USD 0.9 million, increasing from USD 0.8 million in the same period in 2017 with both periods relating to the depreciation of the Aje Cenomanian oil field. First quarter, 2018 is reflective of the changes to the independently certified Aje 2P reserves as reported in the 2017 Annual Statement of Reserves.
EBIT from continuing operations was thus a negative USD 2.1 million for the first quarter, 2018, compared to a negative USD 3.3 million in the same period of 2017.
Net financial items amounted to an expense of USD 111 thousand in the current period compared to an expense of USD 32 thousand in the same period in 2017. This is due to accretion of notional interest on the Aje Asset Decommissioning Liability and finance charges.
Loss before tax from continuing activities was USD 2.2 million for the first quarter, 2018, compared to the loss of USD 3.4 million for the same period in 2017. The higher loss in first quarter 2017 is originating from higher operating costs recognised for Aje field and higher G&A costs.
Net loss for the period from discontinued operations in Brazil was USD 44 thousand for the period, compared to a net loss of USD 102 thousand for the same period in 2017.
The total net loss for the first quarter, 2018 was USD 2.3 million, compared to a net loss of USD 3.5 million for the same period in 2017.
Minor movement in respective periods to other comprehensive income was a result of currency translation adjustments for reporting purposes.
Movements in the Group statement of financial position during the first quarter of 2018 were a combination of the following:
Non-current assets amounted to USD 26.1 million at March 31, 2018, an increase of USD 0.7 million from December 31, 2017.
The overall movement in total non-current assets relates to capital additions on Dussafu in the quarter of USD 1.5 million, partially offset by the effect of the Aje depreciation charge of USD 0.9 million. Property, furniture, fixtures and equipment remained largely unchanged.
Other non-current assets remained unchanged at USD 0.1 million for both quarters and mainly relates to the tenancy deposit for office premises.
Current assets amounted to USD 10.4 million as of March 31, 2018, compared to USD 9.8 million at December 31, 2017.
Trade and other receivables stood at USD 0.3 million, a decrease from USD 0.6 million at the end of December 2017, reflecting a decrease in Panoro's portion of unspent cash held in the Dussafu JV. USD 3.5 million has been accumulated and held on the balance sheet as the cash cost of Aje crude oil inventory and accumulated operating costs, prior to being expensed in the second quarter of 2018 upon recognition of sale on lifting.
Cash and cash equivalents stood at USD 5.1 million at March 31, 2018, not including USD 1.5 million cash held as collateral against Aje dispute costs by the UK Court Funds Office, which was refunded to the Company with accumulated interest, postperiod-end. On an overall basis, cash balances decreased from USD 6.3 million at December 31, 2017. No Aje related cash calls were paid during the quarter, and there was no receivable from any lifting.
Equity amounted to USD 15.1 million as of March 31, 2018, compared to USD 17.3 million at the end of December 2017. The change reflects the loss for the period.
Total non-current liabilities of USD 12.1 million as at March 31, 2018, compared to USD 11.1 million as at December 31, 2017 and include the decommissioning provision for the Aje field.
There is also the increase to the non-recourse loan from BW Energy in relation to the funding of the Dussafu development. As of March 31, 2018, Panoro's drawdown on the non-recourse loan was USD 3.1 million compared to USD 2.2 million as at December 31, 2017. The non-recourse loan is repayable through Panoro's allocation of the cost oil in accordance with the Dussafu PSC, after paying for the proportionate field operating expenses. The repayment will start at First Oil on Dussafu. During the repayment phase, Panoro will still be entitled to its share of profit oil, as defined in the PSC, from the Dussafu operations.
Other non-current liabilities include USD 6.8 million associated with historic cash calls on Aje, which will be settled from surplus funds, where available, from Aje crude sales after paying for current costs and JV liabilities.
Current liabilities amounted to USD 9.3 million at March 31, 2018, compared to USD 6.8 million at the end of December 2017.
Accounts payable, accruals and other liabilities amounted to USD 9.2 million, an increase from USD 6.7 million at the end of December 2017. The increase in part, represents Aje operational accruals as at March 31, 2018. The tax liability of USD 0.1 million remain unchanged and relates to recognised historical tax liability in Brazil.
Since the settlement of the Aje dispute, the Company has performed a review of historical costs incurred and recognised the liabilities associated with such expenditures in the balance sheet. The proportionate joint venture liabilities resulting from the workover and side-tracks at Aje-5 have been higher than anticipated and in combination with the operation accruals have resulted in proportional liabilities of USD 8.2 million as of March 31, 2018. Such liabilities are current in nature and are expected to be repaid in full by the end of financial year 2018. In addition to these, USD 6.8 million is classified as long-term liabilities which as per the terms agreed between OML 113 Joint Venture partners, certain transitional arrangements were introduced whereby unpaid cash calls will not be immediately payable. During the transition period, any excess funds from Panoro's entitlement of crude liftings after paying for its share of operating expenditure shall be used to repay unpaid cash calls. In addition to this, commercial arrangements agreed as part of the interim settlement measures are expected to have the effect of increasing Panoro's existing revenue interest up to the end of 2018. We do not anticipate any use of Panoro's cash resources and expect it to be funded from the sale of our share of Aje crude. An Aje lifting was completed in early April 2018, which will provide net proceeds to Panoro in excess of USD 3 million; Panoro's share of these proceeds will reduce Aje related payables (which includes operating costs) in the second quarter 2018.
The Board of Directors Panoro Energy ASA May 23, 2018
Chairman of the Board Non-Executive Director Non-Executive Director
Julien Balkany Hilde Ådland Alexandra Herger
Torstein Sanness Garrett Soden Non-Executive Director Non-Executive Director
| Q1 | Q4 | Q1 | ||
|---|---|---|---|---|
| Amounts in USD 000 | Note | 2018 | 2017 | 2017 |
| (Unaudited) | ||||
| Continuing Operations | ||||
| Oil and gas revenue | - | 1,577 | 1,327 | |
| Total revenues | - | 1,577 | 1,327 | |
| Operating costs | - | (2,224) | (2,542) | |
| Exploration related costs | (43) | (18) | (81) | |
| Non-recurring dispute costs | (95) | (45) | - | |
| General and administrative costs | (1,040) | (829) | (1,248) | |
| EBITDA | (1,178) | (1,539) | (2,544) | |
| Depreciation, depletion and amortisation | (872) | 112 | (776) | |
| Impairment of Assets | - | (2,606) | - | |
| Share based payments | (51) | (52) | (20) | |
| EBIT - Operating income/(loss) | (2,101) | (4,085) | (3,340) | |
| Interest costs net of income | (83) | (272) | (1) | |
| Other financial costs net of income | (34) | (33) | (38) | |
| Net foreign exchange gain / (loss) | (8) | 19 | 7 | |
| Net income/(loss) before tax | (2,226) | (4,371) | (3,372) | |
| Income tax benefit/(expense) | - | (14) | 18 | |
| Net income/(loss) for the period from continuing operations | (2,226) | (4,385) | (3,354) | |
| Discontinued operations | ||||
| Net income / (loss) for the period from discontinued operations | 4 | (44) | (60) | (102) |
| Net income / (loss) for the period | (2,270) | (4,445) | (3,456) | |
| Exchange differences arising from translation of foreign operations | ||||
| Other comprehensive income/(loss) for the period (net of tax) | (3) | - | (2) | |
| Total comprehensive income/(loss) for the period (net of tax) | (2,273) | (4,445) | (3,458) | |
| Net income /(loss) for the period attributable to: | ||||
| Equity holders of the parent | (2,270) | (4,445) | (3,456) | |
| Total comprehensive income / (loss) for the period attributable to: | ||||
| Equity holders of the parent | (2,273) | (4,445) | (3,458) | |
| Earnings per share | 5 | |||
| (USD) – Basic and diluted for income/(loss) for the period attributable to equity holders of the parent - Total |
(0.05) | (0.10) | (0.08) | |
| (USD) – Basic and diluted for income/(loss) for the period attributable to equity holders of the parent - Continuing operations |
(0.05) | (0.10) | (0.08) |
The accompanying notes form an integral part of these condensed consolidated financial statements.
The accompanying notes form an integral part of these condensed consolidated financial statements.
Total Equity and Liabilities 36,494 35,258
| Q1 | Q4 | Q1 | |
|---|---|---|---|
| 2018 | 2017 | 2017 | |
| Amounts in USD 000 | (Unaudited) | ||
| Cash flows from operating activities | |||
| Net (loss)/ income from continuing operations | (2,226) | (4,371) | (3,372) |
| Net (loss)/ income from discontinued operations | (44) | (42) | (102) |
| Net (loss)/ income for the period before tax | (2,270) | (4,413) | (3,474) |
| Adjusted for: | |||
| Depreciation | 872 | (112) | 776 |
| Impairment and asset write-off | - | 2,606 | - |
| Exploration related costs | 43 | 18 | 81 |
| Net finance costs | 117 | 305 | 39 |
| Share-based payments | 51 | 52 | 21 |
| Foreign exchange gains/losses | 13 | (19) | (7) |
| Increase/(decrease) in trade and other payables | 2,261 | 253 | 3,643 |
| (Increase)/decrease in trade and other receivables | (169) | 286 | (452) |
| (Increase)/decrease in crude oil inventory | (2,084) | (459) | (2) |
| Taxes paid | (19) | (31) | 4 |
| Net cash flows from operating activities | (1,185) | (1,514) | 629 |
| Cash flows from investing activities Proceeds from disposal of Assets |
- | 1,000 | - |
| Investment in exploration, production and other assets | (1,526) | (775) | (3,698) |
| Increase/(decrease) in non-recourse loan | 1,526 | 775 | - |
| Net cash flows from investing activities | - | 1,000 | (3,698) |
| Cash flows from financing activities | |||
| Net proceeds from Equity Private Placement | - | - | - |
| Net financial income (net of charges paid) | 4 | (2) | (8) |
| Movement in restricted cash balance | - | - | (980) |
| Net cash flows from financing activities | 4 | (2) | (988) |
| Effect of foreign currency translation adjustment on cash balances | (3) | - | (1) |
| Change in cash and cash equivalents during the period | (1,184) | (516) | (4,058) |
| Cash and cash equivalents at the beginning of the period | 6,317 | 6,833 | 4,768 |
| Cash and cash equivalents at the end of the period | 5,133 | 6,317 | 710 |
The accompanying notes form an integral part of these condensed consolidated financial statements.
| Attributable to equity holders of the parent | ||||||||
|---|---|---|---|---|---|---|---|---|
| For the three months ended March 31, 2018 Amounts in USD 000 |
Issued capital |
Share premium |
Treasury Shares |
Additional paid-in capital |
Retained earnings |
Other reserves |
Currency translation reserve |
Total |
| At January 1, 2018 - (Audited) | 299 | 297,490 | (503) | 122,206 | (358,766) | (37,647) | (5,758) | 17,320 |
| Net income/(loss) for the period-Continuing Operations | - | - | - | - | (2,226) | - | - | (2,226) |
| Net income/(loss) for the period-Discontinued Operatio | - | - | - | - | (44) | - | - | (44) |
| Other comprehensive income/(loss) | - | - | - | - | - | - | - | - |
| Total comprehensive income/(loss) | - | - | - | - | (2,270) | - | - | (2,270) |
| Employee share options charge/(benefit) | - | - | - | 52 | - | - | - | 52 |
| At March 31, 2018 - (Unaudited) | 299 | 297,490 | (503) | 122,258 | (361,036) | (37,647) | (5,758) | 15,102 |
| Attributable to equity holders of the parent | ||||||||
|---|---|---|---|---|---|---|---|---|
| For the three months ended December 31, 2017 Amounts in USD 000 |
Issued capital |
Share premium |
Treasury Shares |
Additional paid-in capital |
Retained earnings |
Other reserves |
Currency translation reserve |
Total |
| At September 30, 2017 - (Unaudited) | 299 | 297,503 | (503) | 122,154 | (354,321) | (37,647) | (5,758) | 21,726 |
| Net income/(loss) for the period-Continuing Operations | - | - | - | - | (4,385) | - | - | (4,385) |
| Net income/(loss) for the period-Discontinued Operatio | - | - | - | - | (60) | - | - | (60) |
| Other comprehensive income/(loss) | - | - | - | - | - | - | - | - |
| Total comprehensive income/(loss) | - | - | - | - | (4,445) | - | - | (4,445) |
| Transaction costs on purchase of own shares | - | (13) | - | - | - | - | - | (13) |
| Employee share options charge/(benefit) | - | - | - | 52 | - | - | - | 52 |
| At December 31, 2017 - (Audited) | 299 | 297,490 | (503) | 122,206 | (358,766) | (37,647) | (5,758) | 17,320 |
| Attributable to equity holders of the parent | ||||||||
|---|---|---|---|---|---|---|---|---|
| For the three months ended March 31, 2017 Amounts in USD 000 |
Issued capital |
Share premium |
Treasury Shares |
Additional paid-in capital |
Retained earnings |
Other reserves |
Currency translation reserve |
Total |
| At January 1, 2017 - (Audited) | 305 | 297,503 | - | 122,101 | (322,176) | (37,647) | (5,758) | 54,328 |
| Net income/(loss) for the period-Continuing Operations | - | - | - | - | (3,354) | - | - | (3,354) |
| Net income/(loss) for the period-Discontinued Operations | - | - | - | - | (102) | - | - | (102) |
| Other comprehensive income/(loss) | - | - | - | - | - | - | - | - |
| Total comprehensive income/(loss) | - | - | - | - | (3,456) | - | - | (3,456) |
| Employee share options charge/(benefit) | - | - | - | 20 | - | - | - | 20 |
| At March 31, 2017 - (Unaudited) | 305 | 297,503 | - | 122,121 | (325,633) | (37,647) | (5,758) | 50,892 |
The accompanying notes form an integral part of these condensed consolidated financial statements.
The holding Company, Panoro Energy ASA, was incorporated on April 28, 2009, as a public limited company under the Norwegian Public Limited Companies Act of June 19, 1997 No. 45. The registered organisation number of the Company is 994 051 067 and its registered address is c/o Michelet & Co Advokatfirma AS, Grundingen 3, 0250 Oslo, Norway.
The Company and its subsidiaries are engaged in exploration and production of oil and gas resources in West Africa. The condensed consolidated financial statements of the Group for the period ended March 31, 2018, were authorised for issue by the Board of Directors on May 23, 2018.
The Company's shares are traded on the Oslo Stock Exchange under the ticker symbol PEN.
The unaudited condensed consolidated financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting", as adopted by the EU. The condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the financial information and the risk factors contained in the Company's 2017 Annual Report and the Company's Prospectus, published in March 2016. A copy of the 2017 Annual Report is available on the Company's website at http://www.panoroenergy.com.
The condensed consolidated financial statements are presented in US Dollars and all values are rounded to the nearest thousand dollars (USD 000), except when otherwise stated.
The accounting policies adopted in preparation of these condensed consolidated financial statements are consistent with those followed in the preparation of the Group's 2017 Annual Report.
The Company had USD 5.1 million in cash and cash equivalents as of March 31, 2018, not including USD 1.5 million cash which was refunded to the Company with accumulated interest post-period-end; these funds had been held as collateral against costs in support of our legal dispute at Aje, which is now resolved and as such have been reclassified on the balance sheet as Cash Security Deposit. The Company expects it is fully funded through the development of Phase 1 at Dussafu, from cash balances, cash flow from operations, and the non-recourse loan from BWEG. Should additional funding be required in the future for additional capital expenditure for new development phases or working capital requirements, the Company has various alternatives available which it can explore to fulfil such additional requirements. The options include, amongst others, debt financing, offtake prepayment structures, and the issuance of shares. As a result, these interim financial statements have been prepared under the assumption of going concern and realization of assets and settlement of debt in normal operations.
The Group operated predominantly in one business segment being the exploration and production of oil and gas in West Africa. However, for the purpose of comparative information, the Brazilian segment has been included.
The Group's reportable segments, for both management and financial reporting purposes, are as follows:
Management monitors the operating results of business segments separately for the purpose of making decisions about resources to be allocated and of assessing performance. Segment performance is evaluated based on capital and general expenditure. Details of group segments are reported below.
| Q1 | Q4 | Q1 | |
|---|---|---|---|
| 2018 | 2017 | 2017 | |
| OPERATING SEGMENTS - GROUP NET SALES | (Unaudited) | ||
| Net average estimated daily production - Aje (bopd) | 384 | 285 | 248 |
| Oil sales (bbls) - Net to Panoro | - | 25,978 | 26,210 |
| OPERATING SEGMENT - WEST AFRICA | (Unaudited) | ||
| in USD 000 | |||
| EBITDA | (1,042) | 1,423 | (2,099) |
| Impairment of E&E Assets | - | 2,606 | - |
| Depreciation and amortisation | 854 | (130) | 759 |
| Segment assets | 30,984 | 29,675 | 57,915 |
| CORPORATE | |||
| in USD 000 | |||
| EBITDA | (136) | (2,962) | (445) |
| Depreciation and amortisation | 18 | 18 | 17 |
| Segment assets | 5,427 | 5,452 | 974 |
| DISCONTINUED OPERATIONS | |||
| in USD 000 | |||
| Income / (Loss) for the period from discontinued operations | (44) | (60) | (102) |
| Segment assets | 83 | 131 | 52 |
| CONSOLIDATED | |||
| in USD 000 | |||
| EBITDA | (1,178) | (1,539) | (2,544) |
| Income / (loss) for the period from discontinued operations | (44) | (60) | (102) |
| Depreciation and amortisation | 872 | (112) | 776 |
| Impairment of E&E Assets | - | 2,606 | - |
| Segment assets | 36,494 | 35,258 | 58,941 |
The segment assets represent position as of quarter ends and the statement of comprehensive income items represent results for the respective quarters presented. There are no differences in the nature of measurement methods used on segment level compared with the interim condensed consolidated financial statements. There are no inter-segment adjustments and eliminations for the periods presented.
The Company's subsidiaries in Brazil have been classified as discontinued operations under IFRS 5. The results of Brazilian segment for the comparative quarters have therefore been carved out of the operating results and presented below as discontinued operations. The Company is contesting some historical tax claims in Brazil for disallowance of costs dating back to tax year 2010 – 2011.
| Q1 | Q4 | Q1 | |
|---|---|---|---|
| 2018 | 2017 | 2017 | |
| USD 000 - (Unaudited) | |||
| Oil and gas revenue | - | - | - |
| Total revenues and other income | - | - | - |
| Production costs | - | - | - |
| Redundancies and restructuring costs | - | - | - |
| General and administration costs | (16) | (30) | (15) |
| EBITDA | (16) | (30) | (15) |
| Depreciation | - | - | - |
| Impairment | (9) | (10) | (68) |
| Share based payments | - | - | - |
| Gain/(loss) on sale of subsidiary | - | - | - |
| EBIT - Operating income / (loss) | (25) | (40) | (83) |
| Interest costs net of income | 1 | - | - |
| Other financial costs net of income | (1) | (2) | - |
| Net foreign exchange gain / (loss) | - | - | - |
| Income / (loss) before tax | (25) | (42) | (83) |
| Income tax benefit / (expense) | (19) | (18) | (19) |
| Net income/(loss) for the period from discontinued | |||
| operations | (44) | (60) | (102) |
| Earning per share – basic and diluted (USD) for the period from | |||
| discontinued operations | (0.00) | (0.00) | (0.00) |
| Q1 | Q4 | Q1 | |
|---|---|---|---|
| 2018 | 2017 | 2017 | |
| Amounts in USD 000, unless otherwise stated | (Unaudited) | ||
| Net profit / (loss) attributable to equity holders of the parent - Total | (2,270) | (4,445) | (3,456) |
| Net profit / (loss) attributable to equity holders of the parent - Continuing operations | (2,226) | (4,385) | (3,354) |
| Weighted average number of shares outstanding - in thousands | 42,502 | 42,502 | 42,502 |
| Basic and diluted earnings per share (USD) - Total | (0.05) | (0.01) | (0.10) |
| Basic and diluted earnings per share (USD) - Continuing operations | (0.05) | (0.01) | (0.10) |
| Licence Interest, | ||||
|---|---|---|---|---|
| Exploration and | Development | Production | ||
| Evaluation Assets | Assets | Assets | Total Assets | |
| USD 000 | USD 000 | USD 000 | USD 000 | |
| Net book value | ||||
| At January 1, 2018 (Audited) | 13,596 | 1,694 | 9,902 | 25,192 |
| Development Asset Additions | - | 1,526 | - | 1,526 |
| Depreciation | - | - | (854) | (854) |
| At March 31, 2018 (Unaudited) | 13,596 | 3,220 | 9,048 | 25,864 |
Upon commencement of commercial production from the Aje field, offshore Nigeria, historical costs capitalised since inception have been reviewed and bifurcated between costs attributable to Cenomanian Oil field and other gas discoveries on the OML 113 license. As a result, bifurcated costs have been broadly categorised between Exploration & Evaluation assets and Production Assets.
On Dussafu, the update on reserves and resources and commencement of the Dussafu development led to a review of the Dussafu capitalised costs; this resulted in the bifurcation of costs being rationalised and categorised between Exploration & Evaluation assets and Development Assets.
As at March 31, 2018 and December 31, 2017, the Company had a registered share capital of NOK 2,125,109.80 divided into 42,502,196 shares with a nominal value of NOK 0.05.
The Company has in place a non-recourse loan from BW Energy in relation to the funding of the Dussafu development. As of March 31, 2018, Panoro's drawdown on the non-recourse loan was USD 3.1 million. The non-recourse loan is repayable through Panoro's allocation of the cost oil in accordance with the Dussafu PSC, after paying for the proportionate field operating expenses. The repayment will start at First Oil on Dussafu. During the repayment phase, Panoro will still be entitled to its share of profit oil from the Dussafu operations.
Since the settlement of the Aje dispute, the Company has performed a review of historical costs incurred and recognised the liabilities associated with such expenditures in the balance sheet. The proportionate joint venture liabilities resulting from the workover and side-tracks at Aje-5 have been higher than anticipated and in combination with the operation accruals have resulted in proportional liabilities of USD 8.2 million as of March 31, 2018. Such liabilities are current in nature and are expected to be repaid in full by the end of financial year 2018. In addition to these, USD 6.8 million is classified as long-term liabilities which as per the terms agreed between OML 113 Joint Venture partners, certain transitional arrangements were introduced whereby unpaid cash calls will not be immediately payable. During the transition period, any excess funds from Panoro's entitlement of crude liftings after paying for its share of operating expenditure shall be used to repay unpaid cash calls. In addition to this, commercial arrangements agreed as part of the interim settlement measures are expected to have the effect of increasing Panoro's existing revenue interest up to the end of 2018. We do not anticipate any use of Panoro's cash resources and expect it to be funded from the sale of our share of Aje crude. An Aje lifting was completed in early April 2018, which will provide net proceeds to Panoro in excess of USD 3 million; Panoro's share of these proceeds will reduce Aje related payables (which includes operating costs) in the second quarter 2018.
At Dussafu, the first development well, DTM-2H, completed successfully in April with the subsea tree installed ready for production start-up. An appraisal well, DTM-3, has also been drilled in the western flank of the Tortue field and encountered oil in Gamba and Dentale D2B and D6 reservoirs. In May, a second development well, DTM-3H, was spudded from the DTM-3 top hole section and will be completed as the Phase 1 Gamba production well.
| Bbl | One barrel of oil, equal to 42 US gallons or 159 liters |
|---|---|
| Bopd | Barrels of oil per day |
| Bcf | Billion cubic feet |
| Bm3 | Billion cubic meter |
| BOE | Barrel of oil equivalent |
| Btu | British Thermal Units, the energy content needed to heat one pint of water by one degree Fahrenheit |
| IP | Initial production |
| Mcf | Thousand cubic feet |
| MMcf | Million cubic feet |
| MMbbl | Million barrels of oil |
| MMboe | Million barrels of oil equivalents |
| MMBtu | Million British thermal units |
| MMm3 | Million cubic meters |
| Tcf | Trillion cubic feet |
| EBITDA | Earnings before Interest, Taxes, Depreciation and Amortisation |
This report does not constitute an offer to buy or sell shares or other financial instruments of Panoro Energy ASA ("Company"). This report contains certain statements that are, or may be deemed to be, "forward-looking statements", which include all statements other than statements of historical fact. Forward-looking statements involve making certain assumptions based on the Company's experience and perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to known or unknown risks, uncertainties and other factors. These risks and uncertainties include, among others, uncertainties in the exploration for and development and production of oil and gas, uncertainties inherent in estimating oil and gas reserves and projecting future rates of production, uncertainties as to the amount and timing of future capital expenditures, unpredictable changes in general economic conditions, volatility of oil and gas prices, competitive risks, counter-party risks including partner funding, regulatory changes including country risks where the Group's assets are located and other risks and uncertainties discussed in the Company's periodic reports. Forward-looking statements are often identified by the words "believe", "budget", "potential", "expect", "anticipate", "intend", "plan" and other similar terms and phrases. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report, and we undertake no obligation to update or revise any of this information.
For further information, please contact:
John Hamilton, Chief Executive Officer Qazi Qadeer, Chief Financial Officer [email protected] [email protected] Tel: +44 20 3405 1060 Tel: +44 20 3405 1060
Panoro Energy ASA/ Panoro Energy Limited Panoro Energy ASA/ Panoro Energy Limited
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