Earnings Release • May 30, 2014
Earnings Release
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African Petroleum Corporation Ltd Interim Financial Report for the First Quarter
2014
African Petroleum Corporation Limited is an independent oil and gas exploration company operating eight licences in four countries offshore West Africa (Côte d'Ivoire, Liberia, Senegal and Sierra Leone). The Company's assets are located in fast-
| 02 | About Us |
|---|---|
| Company Highlights | |
| 03 | CEO Statement |
Statement of Responsibility
04-06 Operational Update
07 Health, Safety and Environment Outlook
08-17 Financial Reports
emerging hydrocarbon basins, principally the West African Transform Margin, where several discoveries have been made in recent years.
African Petroleum Corporation has a significant opportunity to become a leading independent exploration company through its highly prospective acreage offshore West Africa. The Company continues to achieve key operational milestones across its four licences, rapidly maturing its exploration portfolio, acquiring more than 15,000km2 of 3D seismic data and drilling three exploration wells, one of which was a discovery.
African Petroleum Corporation is among the largest net acreage holders in the West African Transform Margin, rivalling industry majors such as Anadarko Petroleum, Chevron Corporation and Lukoil. The Company has mean prospective oil resources in excess of 5.2 billion barrels, further highlighting the scale of its presence in the region.
5.2 billion barrels net unrisked mean prospective oil resources over a diversified portfolio with discoveries along the margin
Favourable low cost deepwater environment with no significant above or below ground hazards
Seeking partners to share the value and rewards > "Liquid Rich" prospectivity
Numerous exploration and appraisal wells in neighbouring blocks in 2014
Catalyst wells provide potential to de-risk portfolio
Recent licence extensions provides opportunity to leverage learnings and find partners
"This is an exciting time for the Company with several key milestones achieved already this year. 2014 has seen extensions granted in Liberia, Côte d'Ivoire, and Sierra Leone, a capital raising of A\$20 Million and approval to list on the Oslo Axess. African Petroleum Corporation is in a strong position as we prepare for a drilling campaign in 2015 that will look to unlock the potential in our West African assets and move into the next phase of delivery and growth."
We confirm that, to the best of our knowledge, the condensed set of financial statements for the first quarter of 2014, which has been prepared in accordance with IAS 34 Interim Financial Statements, gives a true and fair view of the Company's consolidated assets, liabilities, financial position and results of operations, and that the interim management report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph.
In Côte d'Ivoire, African Petroleum Corporation holds a 90% working interest in offshore licences CI-509 and CI-513 (the "CI Licences"), the remaining 10% is held by Petroci the national oil company of Côte d'Ivoire. The Company was awarded CI-513 in December 2011 and CI-509 in March 2012, with a combined net acreage of 2,284Km2 .
In October 2012, the Company acquired 4,200Km2 of 3D seismic data over the CI Licences, fulfilling the seismic work commitments of the first exploration phase for both licences. Fast-track 3D
seismic data was received in November 2012, while final 3D seismic depth processing of the entire survey was completed in March 2014. Interpretation of the data has identified a number of significant prospects, with net unrisked mean prospective oil resources of 1,560 MMstb (ERC Equipoise, CPR 2014).
African Petroleum Corporation is actively seeking strategic partners in the Côte d'Ivoire acreage. Significant well campaigns are due to take place offshore Côte d"Ivoire in 2014, with exploration and appraisal wells planned by, amongst others, Vitol, Anadarko and Total. In April 2014, Total announced a discovery of hydrocarbons in block CI-514, adjacent to African Petroleum Corporation's acreage with 40 meters of net oil pay and 34˚ API light oil. These catalyst wells provide potential to de-risk the Company's acreage.
On 22 April 2014 African Petroleum Corporation announced PSC Amendments to both licences CI-509 and CI-513. The PSC Amendments include an adjustment of the licence periods providing for one-year extensions to the first exploration periods of both licences at the expense of the duration of future exploration periods. This adjustment allows the Company more time for drilling of the first period commitment wells in these blocks. The first exploration period for block CI-509 is extended to March 2016 and block CI-513 has been extended to December 2015. The Company intends to use some of this additional time to integrate recently completed 3D seismic depth processing into the optimisation of exploration well locations as several new amplitude supported prospects have now arisen from the newly processed PSDM 3D data and prior prospects mapped for the 2014 CPR are now being reassessed with the new data. The new PSDM can now be better calibrated to the recent results of Total's oil discovery in CI 514, as African Petroleum Corporation had pre traded the 3D covering both Total's CI 514 operated acreage and the acreage immediately north of CI 513 and CI 509 held by the Vitol operated group. The CPR will be updated with the incorporation of the new interpretation off the new PSDM prior to year end. The Company also intends to use the additional time from the licence extensions to secure the appropriate sixth generation rig for a wider drilling programme, and build a partnership group to explore in the promising area of the Côte d'Ivoire deep-water margin.
In Liberia, African Petroleum Corporation is the operator and holds a 100% working interest in production sharing contracts LB-08 and LB-09 with combined net acreage of 5,352Km2 . The Company has conducted an extensive work programme on its Liberian licences. In 2010, African Petroleum Corporation completed the acquisition and processing of 5,100Km2 of 3D seismic data over both licences. The interpretation of this data identified numerous prospects and leads in the Upper Cretaceous post rift section and also a number of Cretaceous aged syn-rift opportunities.
African Petroleum Corporation has successfully executed an exploration programme in LB-09, with three wells drilled; Apalis-1, Narina-1 and Bee Eater-1. In September 2011, African Petroleum Corporation completed drilling of its first exploration well, Apalis-1, on LB-09. The well encountered oil shows in several geological units including the shallow unlogged (Tertiary-Paleocene) and proved source rock in the Cenomanian. The Narina-1 well was drilled on LB-09 in January 2012 targeting a major Turonian fan system. The well encountered a combined total of 32 metres of net oil pay in the primary objective Turonian and underlying Albian reservoirs with no oil water contacts observed. African Petroleum Corporation's discovery at Narina-1 was the first well to prove a working petroleum system in the central Liberian basin, an extremely positive result for the Company and one that improves the chances of success elsewhere in the area. The Company drilled its third well, Bee Eater-1, on LB-09 in January 2013. The well tested an up-dip axial section of the Turonian slope fan in which the Company's Narina-1 discovery has been made in 2012. The Bee Eater-1 well encountered a tight reservoir interval but provided the impetus to integrate the information into a predictive model for improved reservoir in slope fans outboard and down-dip. These new findings have been incorporated into a revised interpretation of the subsurface across the portfolio, with new basin floor fan prospects identified.
In September 2013, the Company completed reprocessing of all the 3D seismic data from its Liberian licences to improve image quality and support the maturation of additional prospects and appraisal opportunities. Certain areas would benefit from additional improvement of the seismic image and so currently both 3D reprocessing and acquiring new high-resolution 3D seismic is being considered for LB-09 to cover two key exploration prospects (Narina West and Night Heron) near the Narina-1 well. The high-resolution 3D seismic survey, should it go ahead, will incorporate lessons learned from seismic reprocessing and will be acquired utilising the latest state of the art technology. Detailed stratigraphic analysis and reservoir quality prediction from seismic data will assist in the rapid assessment of both Narina West and Night Heron to further de-risk the licence area to enable accurate well positioning and efficient development in the event of appraisal success. In LB-08, new seismic data is also being considered to cover three prospects (Lovebird, Darter and Turaco) in the Southern corner of the licence area. Encouraging amplitude support for reservoir and potentially hydrocarbons exists within the current re-processed dataset. However, near surface effects (shallow slump zone "mass transport deposit") degrades seismic data quality. Investment in both of these new 3D high resolution datasets, should they be acquired, will better delineate and further de-risk the prospects prior to drilling, however recent rework by the Company has identified several technology uplifts that can achieve potentially the same result through reprocessing the existing 3D seismic data at much lower cost, thus several 3D seismic reprocessing options are being investigated first to see if the uplift can be achieved without the need to acquire new higher resolution 3D seismic data – both or either option are subject to the approval of NOCAL. The Company has identified a number of key prospects in the Liberian licences with net unrisked mean prospective oil resources of 3,230 MMstb (ERC Equipoise, CPR 2014). Anadarko (operator) with partners Cepsa and Mitsubishi plan to drill 2 wells in Q2/Q3 in block 10 (adjacent to the Company's acreage) this year. Again, the results of these wells will have some bearing on the prospectivity of African Petroleum Corporation's acreage.
In Senegal, African Petroleum Corporation holds an 81% operated working interest in exploration blocks Rufisque Offshore Profond ("ROP") and Senegal Offshore Sud Profond ("SOSP") (together the "Senegal Licences"). The Company's Senegal licences are located offshore southern and central Senegal, with a net acreage of 14,804Km2 . To date, the Company has acquired 10,000Km2 of 2D seismic data over the Senegal Licences and has compiled an extensive regional database. In May 2012, the Company completed a 3,600Km2 3D seismic data acquisition over the SOSP licence block. In the ROP block an existing 3D seismic data (2007 vintage) covers 1800km2 and was purchased from Petrosen. This base dataset will benefit from reprocessing, which is underway
and the final product will be delivered in Q4 2014. Several large Cretaceous turbidite fan 'leads' have been identified, these will be matured to prospects when the reprocessed data has been evaluated. Oil was encountered just to the East in the Rufisque Dome and accordingly the petroleum system is proven in the area. Cairn Energy and Conoco Philips have commenced a two well drilling campaign offshore Senegal during 2014, and the results from this campaign will aid in the evaluation of the prospectivity of African Petroleum Corporation's Senegal Licences.
In Sierra Leone, the Company holds 100% operated working interest in offshore licences SL-03 and SL-4A-10. African Petroleum Corporation was awarded a 100% interest in SL-03 in April 2010, which is currently in its initial exploration period, while licence SL-4A-10 was awarded as part of Sierra Leone's third offshore licencing round in 2012 and is also in the initial exploration period. The Company's Sierra Leone licences cover a combined net acreage of 5,855Km2 and are located to the south of Freetown, offshore Sierra Leone.
Since gaining operatorship of the Sierra Leone licences, African Petroleum Corporation has acquired 3D seismic data covering 2,500km2 on block SL-03 and 2D seismic data over the SL-4A-10 licence and is currently performing extensive geological and geophysical work on both blocks. The Company has already identified a number of key prospects in the Sierra Leone licences, one of which has net unrisked mean prospective oil resources of 434 MMstb (ERC Equipoise, CPR 2014). Following discussions with the Government of Sierra Leone, in September 2013, the Company received a two-year extension to the first exploration period for SL-03, extending the first exploration period on the block to April 2015. On SL-4A-10, the Company has interpreted existing 2D seismic and has identified a number of promising prospects for verification. TGS-Nopec acquired a multi-client 3D seismic survey over parts of SL-4A-10 in October 2011, which the Company is considering to licence for further geological and
geophysical work. The Company intends to acquire a 3D survey of approximately 1,500km2 over SL-04-10 during 2014 to cover the rest of the Vega lead thus fulfilling the remaining licence obligations in Sierra Leone.
As an operator of offshore concessions, it is the duty of African Petroleum Corporation to provide a safe working environment and minimize any adverse impact on the environment. HSE is embedded throughout all of the Company's core operations. In this regard we strive for continuous improvement as lessons learned from past operations are incorporated into business practices going forward.
Over the forthcoming year, the Company will work towards building on its reputation as a fast moving explorer in both emerging and frontier basins. The Company will work towards securing long-term strategic partners, firming up the funding base and executing a safe and low cost exploration programme in 2015. Such moves will be a significant step towards our goal to deliver the highest value and return to all our stakeholders.
With significant drilling activity taking place in adjacent acreage by majors, extensions granted over much of our acreage, an IPO completed and the first day of trading on the Oslo Axess anticipated for 30 May 2014, the Company is in an excellent position to unlock the prospective resources of our assets and mitigate risk.
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | Q1 2014 | Q1 2013 | YTD Q1 2014 | YTD Q1 2013 |
|---|---|---|---|---|
| USD\$ '000s | (unaudited) | (unaudited) | (unaudited) | (unaudited) |
| Revenue 6a |
836 | 87 | 836 | 87 |
| Depreciation expense | (258) | (514) | (258) | (514) |
| Consulting expense | (1,360) | (913) | (1,360) | (913) |
| Compliance and regulatory expenses | (269) | (276) | (269) | (276) |
| General administration expenses | (316) | (774) | (316) | (774) |
| Aircraft expenses | (834) | (408) | (834) | (408) |
| Impairment of aircraft | - | (1,300) | - | (1,300) |
| Impairment of related party loans & deposits | (180) | - | (180) | - |
| Rig demobilisation/cancellation costs | - | (3,753) | - | (3,753) |
| Travel expenses | (227) | (654) | (227) | (654) |
| Occupancy costs | (213) | (424) | (213) | (424) |
| Employee remuneration 6b |
(1,458) | (3,787) | (1,458) | (3,787) |
| Net foreign currency losses | (65) | (1) | (65) | (1) |
| Finance costs | (69) | - | (69) | - |
| Other expenses | (1) | - | (1) | - |
| Loss from continuing operations before income tax | (4,414) | (12,717) | (4,414) | (12,717) |
| Income tax expense | - | - | - | - |
| Loss for the period, attributable to the members | (4,414) | (12,717) | (4,414) | (12,717) |
| Other comprehensive income | ||||
| Items that may be subsequently reclassified to profit or loss: | ||||
| Foreign exchange gain/(loss) on translation of functional currency | 158 | (203) | 158 | (203) |
| Other comprehensive income/(loss) for the period, net of tax | 158 | (203) | 158 | (203) |
| Total comprehensive loss for the period | (4,256) | (12,920) | (4,256) | (12,920) |
| Loss for the period is attributable to: | ||||
| Non-controlling interest | 1 | (150) | 1 | (150) |
| Owners of the parent | (4,415) | (12,567) | (4,415) | (12,567) |
| (4,414) | (12,717) | (4,414) | (12,717) | |
| Total comprehensive loss for the period is attributable to: | ||||
| Non-controlling interest | 1 | (150) | 1 | (150) |
| Owners of the parent | (4,257) | (12,770) | (4,257) | (12,770) |
| (4,256) | (12,920) | (4,256) | (12,920) |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |||
|---|---|---|---|
| USD\$ '000s | Note | 31-Mar-14 | 31-Dec-13 |
| (Unaudited) | (Audited) | ||
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 7 | 7,935 | 7,914 |
| Trade and other receivables | 8 | 6,510 | 7,709 |
| Restricted cash | 9 | 12,075 | 12,074 |
| Prepayments | 642 | 1,266 | |
| Total current assets | 27,162 | 28,963 | |
| Non-current assets | |||
| Property, plant and equipment | 3,249 | 3,510 | |
| Restricted cash | 9 | - | - |
| Exploration and evaluation expenditure | 10 | 406,468 | 403,273 |
| Total non-current assets | 409,717 | 406,783 | |
| Total assets | 436,879 | 435,746 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Issued capital | 12 | 583,630 | 575,912 |
| Reserves | 13 | 17,438 | 17,282 |
| Accumulated losses | (193,985) | (189,571) | |
| Attributable to equity holders of the parent | 407,083 | 403,623 | |
| Non-controlling interests | (260) | (261) | |
| Total equity | 406,823 | 403,362 | |
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | 11 | 30,056 | 32,384 |
| Total current liabilities | 30,056 | 32,384 | |
| Total liabilities | 30,056 | 32,384 | |
| Total equity and liabilities | 436,879 | 435,746 |
| USD\$ '000s | Note | Ordinary Share capital |
Share-based payment reserve |
Accumulated losses |
Foreign currency translation reserve |
Non-controlling interest |
Total equity |
|---|---|---|---|---|---|---|---|
| Equity at 1 January 2013 | 575,912 | 25,795 | (101,468) | (11,951) | (135) | 488,153 | |
| Loss for the period | - | - | (12,717) | - | (150) | (12,867) | |
| Other comprehensive losses | - | - | - | 203 | - | 203 | |
| Equity at 31 March 2013 | 575,912 | 25,795 | (114,185) | (11,748) | (285) | 475,489 | |
| Equity at 1 April 2013 | 575,912 | 25,795 | (114,185) | (11,748) | (285) | 475,489 | |
| Loss for the period | - | - | (75,386) | - | 24 | (75,362) | |
| Other comprehensive losses | - | - | - | (341) | - | (341) | |
| Total comprehensive loss for the period | - | - | (75,386) | (341) | 24 | (75,703) | |
| Transactions with owners in their capacity as owners: |
|||||||
| Issue of capital | - | - | - | - | - | - | |
| Share-based payments | - | 3,576 | - | - | - | 3,576 | |
| Equity at 31 December 2013 | 575,912 | 29,371 | (189,571) | (12,089) | (261) | 403,362 | |
| Equity at 1 January 2014 | 575,912 | 29,371 | (189,571) | (12,089) | (261) | 403,362 | |
| Loss for the period | - | - | (4,414) | - | 1 | (4,413) | |
| Other comprehensive losses | - | - | - | 156 | - | 156 | |
| Total comprehensive loss for the period | - | - | (4,414) | 156 | 1 | (4,257) | |
| Transactions with owners in their capacity as owners: |
|||||||
| Issue of capital | 7,718 | - | - | - | - | 7,718 | |
| Equity at 31 March 2014 | 583,630 | 29,371 | (193,985) | (11,933) | (260) | 406,823 |
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||
|---|---|---|
| YTD Q1 2014 | YTD Q1 2013 | |
| USD\$ '000s | (Unaudited) | (Unaudited) |
| Cash flow from operating activities | ||
| Payments to suppliers and employees | (5,054) | (6,303) |
| Rental income | 599 | - |
| Interest received | 3 | 89 |
| Finance costs | (34) | - |
| Net cash flow from operating activities | (4,486) | (6,214) |
| Cash flow from investing activities | ||
| Payment for plant, equipment and aircraft | (15) | (296) |
| Proceeds from disposal of plant and equipment | 43 | |
| Payment for exploration and evaluation activities | (3,437) | (63,348) |
| Loan repaid by related parties | 113 | 184 |
| Loan to related parties | (108) | - |
| Cash backing security returned | - | 39,506 |
| Net cash flow from investing activities | (3,404) | (23,954) |
| Cash flow from financing activities | ||
| Proceeds from issue of shares | 7,959 | - |
| Capital raising costs | (241) | - |
| Net cash flow from financing activities | 7,718 | - |
| Net change in cash and cash equivalents | (172) | (30,168) |
| Cash and cash equivalents at the beginning of the period | 7,914 | 52,599 |
| Net foreign exchange differences | 193 | (13) |
| Cash and cash equivalents at the end of the period | 7,935 | 22,418 |
These financial statements are the interim financial statements of African Petroleum Corporation Limited ("African Petroleum Corporation") and its subsidiaries (hereafter "the Company") for the first quarter of 2014. African Petroleum Corporation is a public limited company incorporated and domiciled in Australia, with its main office located in London, United Kingdom, whose shares are publicly traded on the National Stock Exchange of Australia and will be traded on the Oslo Axess from 30 May 2014.
This general purpose condensed interim financial report for the quarter ended 31 March 2014 has been prepared in accordance with IAS 34 Interim Financial Reporting and the supplement requirements of the Norwegian Securities Trading Act (Verdipapirhandelloven).
The interim financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial report.
It is recommended that the interim financial report be read in conjunction with the annual report for the year ended 31 December 2013 and considered together with any public announcements made by African Petroleum Corporation during the three months ended 31 March 2014 in accordance with the continuous disclosure obligations of the NSX Listing Rules.
The interim financial report is presented in United States Dollars.
The accounting policies adopted are consistent with those disclosed in the annual report for the year ended 31 December 2013.
The preparation of the interim financial report entails the use of judgements, estimates and assumptions that affect the application of accounting policies and the amounts recognised as assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are considered to be reasonable under the circumstances. The actual results may deviate from these estimates. The material assessments underlying the application of the Company's accounting policies and the main sources of uncertainty are the same for the interim accounts as for the annual accounts for 2013.
The interim financial report has been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
| Q1 2014 | Q1 2013 | YTD Q1 2014 | YTD Q1 2013 | |
|---|---|---|---|---|
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| US\$'000 | US\$'000 | US\$'000 | US\$'000 | |
| a) Revenue |
||||
| Bank interest income | 21 | 87 | 21 | 87 |
| Flight revenue | 527 | - | 527 | - |
| Other revenue | 288 | - | 288 | - |
| 836 | 87 | 836 | 87 |
| Q1 2014 | Q1 2013 | YTD Q1 2014 | YTD Q1 2013 | |
|---|---|---|---|---|
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| US\$'000 | US\$'000 | US\$'000 | US\$'000 | |
| a) Employee remuneration |
||||
| Employee benefits | 849 | 2,475 | 849 | 2,475 |
| Directors' remuneration | 640 | 1,312 | 640 | 1,312 |
| Share-based payments recognised | - | - | - | - |
| Share-based payments reversed | (31) | - | (31) | - |
| 1,458 | 3,787 | 1,458 | 3,787 |
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$'000 | US\$'000 | |
| Cash at bank and on hand | 7,935 | 7,914 |
| 7,935 | 7,914 |
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$'000 | US\$'000 | |
| Trade receivables | 2,504 | 2,109 |
| Loans receivable from related parties 1 | 1,875 | 1,862 |
| Other receivables | 2,131 | 3,738 |
| 6,510 | 7,709 |
1 During 2012, US\$841,994 (£521,252) was loaned to Karl Thompson to cover tax payable on performance shares awarded to Mr Thompson. In January 2013, an additional US\$200,658 (£124,107) was loaned to Mr Thompson to cover an additional 10% tax payable on these performance shares. The loan can only be used for the payment of the relevant tax (upon presentation of the tax amount) and must be repaid within 5 years or from the sale of any shares prior to this time. The shares are subject to a voluntary escrow, whereby the shares cannot be sold or transferred until the loan is discharged and the proceeds are to be applied to discharge the loan. Interest is charged on the loan at 4% with US\$11,147 (£6,714) of interest recognised during the current quarter (31 March 2013: US\$9,888 (£6,441)). The Loan Agreement was approved by the Board of Directors as being on arm's length terms. If prior to the repayment date the proceeds from the sale of the performance shares are insufficient in total to cover the loan, the Company will waive the remaining balance of the loan. This arrangement has been accounted for as a share-based payment.
During 2012, US\$630,497 (£390,321) was loaned to Jens Pace to cover tax payable on performance shares awarded to Mr Pace. The loan can only be used for the payment of the relevant tax (upon presentation of the tax amount) and must be repaid within 5 years or from the sale of any shares prior to this time. The shares are subject to a voluntary escrow, whereby the shares cannot be sold or transferred until the loan is discharged and the proceeds are to be applied to discharge the loan. Interest is charged on the loan at 4% with US\$6,736 (£4,056) of interest recognised during the current quarter (31 March 2013: US\$5,990 (£3,898)). The loan agreement was approved by the Board of Directors as being on arm's length terms. If prior to the repayment date the proceeds from the sale of the performance shares are insufficient in total to cover the loan, the Company will waive the remaining balance of the loan. This arrangement has been accounted for as a share-based payment.
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$'000 | US\$'000 | |
| Current restricted cash | 12,075 | 12,074 |
| 12,075 | 12,074 |
Restricted cash balances represent interest bearing cash backed security provided in relation to the Company's exploration programmes. The security deposits will be released upon achievement of certain drilling milestones. The classification of restricted cash balances as either current or non-current within the Statement of Financial Position is based on management's estimate of the timing of completion of seismic acquisition and drilling milestones.
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$'000 | US\$'000 | |
| Acquisition cost at beginning of period (1 January) | 403,273 | 354,823 |
| Exploration expenditure incurred and capitalised during the period |
3,195 | 94,788 |
| Impairment | - | (46,338) |
| Acquisition cost at end of period | 406,468 | 403,273 |
The value of the Company's interest in exploration expenditure is dependent upon:
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$'000 | US\$'000 | |
| Trade payables | 3,671 | 6,063 |
| Withholding tax 1 | 13,551 | 13,551 |
| Other payables and accruals 2 | 11,374 | 11,279 |
| Share-based payments liability 3 | 1,460 | 1,491 |
| 30,056 | 32,384 |
1 An accrual for withholding tax in relation to the Company's exploration activities has been recognised. In certain jurisdictions the Company may be required to withhold payment on services provided by subcontractors. Any such amounts withheld are due to the tax authorities and will be credited against the subcontractors own income tax liability.
2Other payables include amounts accrued for in respect of seismic data interpretation and exploration activities
3Share-based payments liability relating to director loans as disclosed in Note 8.
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| No. of shares | No. of shares | |
| Fully paid ordinary shares | 568,996,637 | 565,144,637 |
| Reconciliation | ||
| Number of outstanding shares at beginning of period (1 January) | 565,144,637 | 565,144,637 |
| Issue of shares pursuant to a capital raising | 3,852,000 | - |
| Issue of shares pursuant to share based payment arrangements | - | - |
| Issue of shares on the exercise of options | - | - |
| Number of outstanding shares at the end of period | 568,996,637 | 565,144,637 |
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$'000 | US\$'000 | |
| Fully paid ordinary shares | 583,630 | 575,912 |
| Reconciliation | ||
| Amount of outstanding shares at beginning of period (1 January) | 575,912 | 575,912 |
| Issue of shares pursuant to a capital raising | 7,959 | - |
| Capital raising cost | (241) | - |
| Issue of shares pursuant to share based payment arrangements | - | - |
| Issue of shares on the exercise of options | - | - |
| Amount of outstanding shares at the end of period | 583,630 | 575,912 |
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$'000 | US\$'000 | |
| Share-based payments reserve | ||
| At beginning of period (as at 1 January) | 29,371 | 25,795 |
| Share-based payments | - | 3,576 |
| Total share-based payments reserve | 29,371 | 29,371 |
| Foreign currency translation reserve | ||
| At beginning of period (as at 1 January) | (12,089) | (11,951) |
| Foreign currency exchange differences arising on translation of functional currency to presentation currency |
156 | (138) |
| Total foreign currency translation reserve | (11,933) | (12,089) |
| Total reserves | 17,438 | 17,282 |
For management purposes, the Company is organised into one main operating segment, which involves exploration for hydrocarbons. All of the Company's activities are interrelated, and discrete financial information is reported to the Board (Chief Operating Decision Makers) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the financial statements of the Company as a whole.
The analysis of the location of non-current assets is as follows:
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| Countries | US\$'000 | US\$'000 |
| Liberia | 293,256 | 291,029 |
| Côte d'Ivoire | 51,334 | 51,492 |
| Senegal | 38,556 | 37,952 |
| Sierra Leone | 24,510 | 24,064 |
| United Kingdom | 1,928 | 2,113 |
| Other | 133 | 133 |
| 409,717 | 406,783 |
On 24 February 2014, the Company announced it had received firm commitments for a placing of 83,334,000 new fully paid ordinary shares ("Placing Shares") at A\$0.24 per Share with institutional and sophisticated investors, to raise a total of A\$20,000,160 before costs ("Placing"). The Placing took place in two tranches with the first tranche of 37,852,000 Placing Shares issued on 4 March 2014 and the second tranche of 45,482,000 Placing Shares issued on 8 April 2014.
On 22 April 2014, the Company announced that African Petroleum Côte d'Ivoire Limited, a wholly owned subsidiary of African Petroleum Corporation Limited, and the Government of Côte d'Ivoire had agreed amendments to the Production Sharing Contracts related to Blocks CI-509 and CI-513 (the "PSC Amendments"). The PSC Amendments include an adjustment to the licence periods providing for one year extensions to the first exploration periods of both licences at the expense of the duration of future exploration periods. This adjustment allows the Company additional time for drilling of the first period commitment wells in these blocks up to March 2016, in respect of CI-509, and up to December 2015 for CI-513.
On 30 April 2014 the Board of Directors of Oslo Børs resolved to admit the shares in African Petroleum Corporation to listing on Oslo Axess, a regulated market place under the Oslo Stock Exchange.
On 9 May 2014 African Petroleum Corporation resolved to launch an initial public offering (the "Offering") of the Company's shares on Oslo Axess. On 21 May 2014 the Company successfully completed the Offering raising NOK 48.6 million (approximately US\$8.2 million) and has fulfilled the conditions for listing as determined by the Board of Oslo Børs on 30 April 2014.
The Company has entered into obligations in respect of its exploration projects. Outlined below are the minimum expenditures required as at 31 March 2014 and 31 December 2013:
| 31-Mar-14 | 31-Dec-13 | |
|---|---|---|
| US\$ | US\$ | |
| Within one year | 5,710,427 | 40,507,191 |
| After one year but not more than five years | 100,323,675 | 66,610,540 |
| More than five years | - | - |
| 106,034,102 | 107,117,731 |
The carrying values of financial assets and financial liabilities at 31 March 2014 approximates their fair values.
Charles Matthews - Chairman Ernst & Young Stuart Lake – Chief Executive Officer 11 Mounts Bay Road Mark Ashurst – Executive Director Perth Gibril Bangura Western Australia 6000 Jeffrey Couch David King Telephone: +61 8 9429 2222 James Smith Facsimile: +61 8 9429 2436 Timothy Turner Anthony Wilson SHARE REGISTRAR
Claire Tolcon Perth
PRINCIPAL & REGISTERED OFFICE
Western Australia 6007
Telephone: +61 8 9388 0744
Facsimile: +61 8 9382 1411 Oslo Axess
Computershare Investor Services Pty Ltd COMPANY SECRETARY Level 2, 45 St George's Terrace Western Australia 6000
32 Harrogate Street Telephone: +61 8 9332 2000 West Leederville Facsimile: +61 8 9323 2033
Code: APCL
National Stock Exchange Code: AOQ
Stratton House 5 Stratton Street London, W1J 8LA United Kingdom
| Tel: | +44 (0)203 435 7700 |
|---|---|
| Fax: | +44 (0)203 435 7701 |
www.africanpetroleum.com.au
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