RNS Number : 3745J
Mosman Oil and Gas Limited
29 March 2018
 

29 March 2018

 

Mosman Oil and Gas Limited

("Mosman" or the "Company")

 

Half Year Report

 

Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration, development and production company, announces its results for the six months ended 31 December 2017, which have been reviewed by the appointed auditors.

 

Operations Review

 

Strategy

Mosman's strategic objective continues to be that of identifying opportunities which will provide operating cash flow and have further development upside, in conjunction with adding value to the Company's existing exploration permits.

 

Three Producing Projects in USA

Interests in three onshore producing projects were acquired in 2017, demonstrating that the Company is moving forward effectively in achieving its objectives of building a production operation. These projects are:

 

1.  Welch Permian Basin Project (Texas);

2.  Arkoma Stacked Pay Project (Oklahoma); and

3.  Strawn (Texas).

 

There has been considerable management focus on both acquiring and then enhancing the production characteristics of the three producing projects.  A total of $997,302 was expended on acquisition costs and development expenditure which included workovers and largely one-off repairs that were identified to increase production and develop individual assets.

 

In addition, the Board evaluated other potential acquisitions opportunities that were not pursued principally because they did not meet the defined strategy. The Board continues to review additional opportunities to enhance its producing portfolio.

 

Sales

Revenue attributed to Mosman was $321,348.

 

In the three months ending 31 March 2018, Revenue attributed to Mosman was c$215,000.

 

The numbers for the quarter to 31 March 2018 reflect Mosman's share of approximately c2,550 barrels of oil sold less, transport and royalty costs.

 

From those sales revenues, Lease Operating Expenses are paid.

 

Existing Exploration Permits

In the short term, Mosman remains focused on its strategically important and high-impact production and development assets in the USA, whilst in parallel in Australia, it continues to make good progress on the exploration portion of its portfolio that, following rationalisation, has resulted in Mosman owning and operating two 100% owned granted permits (EP 145 & 156) and one application (EPA 155) which total 5,458 sq. km.

 

During the six months $284,043 was expended on advancing those assets.

 

General

In parallel with the successful implementation of its stated strategy to build a production portfolio that provides operational cash flow, the Board has prioritised capital expenditure while also managing field operating costs and general and administrative costs.  As a result, most costs have been reduced when compared to the same period in 2017, particularly administration and corporate expenditure.

 

Corporate

 

Funding

In September, Mosman raised £600,000 by way of a placing and subscription of 50,000,000 new ordinary shares of no par value in the capital of the Company ("New Ordinary Shares") at 1.2p per share. The proceeds of the Placing were raised to accelerate the development of the US onshore oil production assets to increase production and cash flow, in addition to the potential acquisition of additional onshore production assets, for general corporate working capital purposes and for the ongoing costs associated with the review and due diligence on other acquisition opportunities being evaluated.

 

Gem International Resources Inc

Mosman currently owns c7.6 million shares in the TSX-V listed GEM International Resources Inc. ("GEM") (TSX-V: GI). GEM shares remain suspended due to the previous board failing to complete the required financial reporting. The newly appointed board which includes Mosman's chairman is reviewing the financial and corporate status of the company and have arranged for the required reports to be prepared and audited. That process will be concluded shortly.

 

It is anticipated a shareholders meeting will then be called to determine the appropriate  business plan going forward.

 

Outlook

 

The second half of the year started well with the USA assets all generating cash flow due to production improvements, lower costs and higher oil prices. The strategy of acquiring oil production assets when oil prices were low is proving to be sound given recent increases in both oil production and the oil price and we look forward to building on the platform we have now established for the business.

 

Competent Person's Statement

The information contained in this announcement has been reviewed and approved by Andy Carroll, Technical Director for Mosman, who has over 35 years of relevant experience in the oil industry. Mr. Carroll is a member of the Society of Petroleum Engineers.

 Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

 

Enquiries:

Mosman Oil & Gas Limited

John W Barr, Executive Chairman

Andy Carroll, Technical Director

jwbarr@mosmanoilandgas.com

acarroll@mosmanoilandgas.com

 

NOMAD and Broker

SP Angel Corporate Finance LLP

Stuart Gledhill / Richard Hail / Soltan Tagiev

+44 (0) 20 3470 0470

 

Gable Communications Limited

Justine James / John Bick

+44 (0) 20 7193 7463

mosman@gablecommunications.com

 

 

Updates on the Company's activities are regularly posted on its website www.mosmanoilandgas.com.

 

 

Condensed Consolidated Statement of Profit or Loss

and Other Comprehensive Income for the Half Year Ended 31 December 2017

All amounts are in Australian Dollars

 

 

Notes

Consolidated

6 months to     31 December 2017

$

Consolidated

6 months to  31 December 2016

$

 

 

 

 

Revenue

 

321,348

-

Cost of sales

2

(164,826)

-

Gross profit

 

156,522

-

 

 

 

 

Interest income

 

6,336

1,629

Other income

 

709

2,108

 

 

 

 

Administrative expenses

 

(67,195)

(95,624)

Corporate expenses

3

(406,119)

(437,858)

Directors fees

 

(60,000)

(60,000)

Exploration expenses incurred not capitalised

 

(52,163)

-

Employee benefits expense

 

(47,875)

(35,157)

Evaluation and due diligence

 

(154,077)

-

Non cash share based payments expense

 

(40,567)

-

Loss on foreign exchange

 

-

(77,671)

Depreciation expense

 

(5,599)

(7,092)

Costs associated with abandoned acquisitions

4

(9,815)

(138,733)

Pre-acquisition costs

 

(44,775)

-

Share of net loss from joint operation

 

(6,428)

-

Loss from ordinary activities before income tax expense

 

(731,046)

(848,398)

 

 

 

  

Income tax expense

 

-

-

 

 

 

 

Net loss for the period

 

(731,046)

(848,398)

 

 

 

 

Other comprehensive loss

 

 

 

Items that may be reclassified to profit or loss

 

 

 

Fair value loss on AFS shares

5

(190,309)

(67,221)

Foreign currency (loss)/gain

5

(10,415)

59,397

Other comprehensive loss for the period, net of tax

 

(200,724)

(7,824)

Total comprehensive loss attributable to members of the entity

 

(931,770)

(856,222)

 

 

 

 

Basic and diluted loss per share

 

(0.36) cents

(0.41) cents

 

 

 

The accompanying notes form part of these financial statements.

 

Condensed Consolidated Statement of Financial Position

As at 31 December 2017

All amounts are in Australian Dollars

 

 

Notes

Consolidated

Balance as at 31 December 2017

Consolidated

Balance as at 30 June      2017

 

 

 

$

$

 

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

 

830,685

1,666,139

Trade and other receivables

7

407,183

394,605

Inventory

 

195,437

-

Other assets

8

27,098

35,690

Other financial assets

6

97,979

288,288

Total current assets

 

1,558,382

2,384,722

 

 

 

 

Non-Current Assets

 

 

 

Property, plant & equipment

 

201,284

211,016

Oil and gas assets

9

1,747,456

749,620

Capitalised oil and gas exploration expenditure

10

4,150,919

4,073,115

Total non-current assets

 

6,099,659

5,033,751

 

 

 

 

Total Assets

 

7,658,041

7,418,473

 

 

 

 

Current Liabilities

 

 

 

Trade and other payables

11

548,461

353,769

Provisions

 

153,709

158,165

Total current liabilities

 

702,170

511,934

 

 

 

 

Total Liabilities

 

702,170

511,934

 

 

 

 

Net Assets

 

6,955,871

6,906,539

 

 

 

 

Shareholders' Equity

 

 

 

Contributed equity

12 a)

26,226,848

25,286,313

Reserves

12 b)

250,982

1,058,126

Accumulated losses

 

(19,515,531)

(19,499,941)

Equity attributable to shareholders

 

6,962,299

6,844,498

Non-controlling interest

 

(6,428)

62,041

 

 

 

 

Total Shareholders' Equity

 

6,955,871

6,906,539

 

 

 

 

 

 

 

The accompanying notes form part of these financial statements.

 

 

 

Condensed Consolidated Statement of Changes in Equity

For the Half Year Ended 31 December 2017

All amounts are in Australian Dollars

 

 

Accumulated

Losses

Contributed Equity

Reserves

Non-Controlling Interest

Total

 

$

$

$

$

$

Balance at 1 July 2016

(11,151,593)

25,235,869

1,304,610

-

15,388,886

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

Loss for the period

(848,398)

-

-

-

(848,398)

Other comprehensive income for the period

-

-

7,824

-

7,824

Total comprehensive loss for the period

(848,398)

-

7,824

-

(840,574)

 

 

 

 

 

 

Transactions with owners, in their capacity as owners, and other transfers:

 

Cancellation of shares on selective share buyback

900,000

(900,000)

-

-

-

Total transactions with owners and other transfers

900,000

(900,000)

-

-

-

Balance at 31 December 2016

(11,099,991)

24,335,869

1,312,434

-

14,548,312

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2017

(19,499,941)

25,286,313

1,058,126

62,041

6,906,539

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

Loss for the period

(724,618)

-

-

(6,428)

(731,046)

Other comprehensive loss for the period

-

-

(200,724)

-

(200,724)

Total comprehensive loss for the period

(724,618)

-

(200,724)

(6,428)

(931,770)

 

 

 

 

 

 

Transactions with owners, in their capacity as owners, and other transfers:

 

New shares issued

-

1,013,376

-

-

1,013,376

Cost of raising equity

-

(72,841)

-

-

(72,841)

Options issued

-

-

40,567

-

40,567

Options expired

646,987

-

(646,987)

-

-

Total transactions with owners and other transfers

646,987

940,535

(606,420)

-

981,102

Balance at 31 December 2017

(19,577,572)

26,226,848

250,982

55,613

6,955,871

 

 

These accompanying notes form part of these financial statements
 

Condensed Consolidated Statement of Cash Flows

For the Half Year Ended 31 December 2017

All amounts are in Australian Dollars

 

 

 

Consolidated

6 months to    31 December 2017

Consolidated

 6 months to 31 December 2016

 

 

$

$

 

 

 

 

Cash flows from operating activities

 

 

 

Receipts from customers

 

134,839

-

Interest received & other income

 

7,040

3,485

Payments to suppliers and employees

 

(619,075)

(663,232)

Bonds refunded

 

3,035

-

Net cash used in operating activities

 

(474,161)

(659,747)

 

 

 

 

Cash flows from investing activities

 

 

 

Payments for property, plant & equipment

 

(4,240)

-

Payments for exploration and evaluation

 

(284,043)

(311,025)

Payments for AFS financial assets

 

-

(394,511)

Costs associated with abandoned acquisitions

 

(9,815)

(138,732)

Payments for oil and gas acquisitions

 

(656,191)

-

Payments for oil and gas assets

 

(341,111)

-

Net cash used in investing activities

 

(1,295,400)

(844,268)

 

Cash flows from financing activities

 

 

 

Proceeds from shares issued

 

1,013,375

-

Payments for costs of capital

 

(72,841)

-

Transactions with non-controlling interest

 

(6,427)

-

Net cash provided by financial activities

934,107

-

 

 

 

 

Net decrease in cash and cash equivalents

 

(835,454)

(1,504,015)

Cash and cash equivalents at the beginning of the financial period

 

1,666,139

3,758,555

Cash and cash equivalents at the end of the financial period

 

 

830,685

2,254,540

 

 

 

 

 

 

 

The accompanying notes from part of these financial statements

 

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2017

All amounts are Australian Dollars

 

1. Summary of Significant Accounting Policies

 

Statement of Compliance

 

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS34 'Interim Financial Reporting'. The half-year report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report.

 

Basis of preparation

 

The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts presented in Australian dollars, unless otherwise noted.

 

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Group's 2017 annual financial report for the financial year ended 30 June 2017, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

 

Going Concern

The Group recognises that its ability to continue as a going concern to meet its debts when they fall due is dependent on the Group raising funds as required to pay its debts as and when they fall due. The directors have reviewed the business outlook and are of the opinion that the use of the going concern basis of accounting is appropriate as they believe the Group will achieve this.

 

However, the conditions outlined above create uncertainty that may cast significant doubt as to whether the Group will continue as a going concern and, therefore whether the Group will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in these financial statements. This financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern.

 

Adoption of new or revised accounting standards and interpretations

 

The Group has adopted all of the new and revised standards and interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. The Group has not early adopted any accounting standards or interpretations.

 

The adoption of all new and revised standards and interpretations has not resulted in any changes to the Group's accounting policies and has no effect on the amounts reported for the current or prior half-years.

 

Exploration and Evaluation Costs

 

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area for which the rights to tenure are current and that has not at reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or relating to, the area of interest are continuing.

 

 

Impairment of Exploration and Evaluation Assets

 

The ultimate recoupment of the value of exploration and evaluation assets, is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets.

 

Impairment tests are carried out when there are indicators of impairment in order to identify whether the asset carrying values exceed their recoverable amounts. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts.

 

The key areas of judgement and estimation include:

 

·      Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities.

 

Oil and gas assets

 

The cost of oil and gas producing assets and capitalised expenditure on oil and gas assets under development are accounted for separately and are stated at cost less accumulated amortisation and impairment losses. Costs include expenditure that is directly attributable to the acquisition or construction of the item as well as past exploration and evaluation costs.

 

When an oil and gas asset commences production, costs carried forward are amortised on a units of production basis over the life of the economically recoverable reserves. Changes in factors such as estimates of economically recoverable reserves that affect amortisation calculations do not give rise to prior financial period adjustments and are dealt with on a prospective basis.

 

Segment Reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance.

 

 

 

Consolidated

6 months to 31 December 2017

Consolidated

     6 months to 31 December 2016

 

$

$

2.    Cost of sales

 

Cost of sales

38,168

-

Lease operating expenses

120,123

-

Oil and gas assets amortisation charge

6,535

-

 

164,826

-

 

3.    Corporate costs

 

Accounting, Company Secretary and Audit fees

100,252

71,362

Consulting fees

277,592

332,864

Legal and compliance fees

28,275

33,632

 

406,119

437,858

 

4.    Costs associated with abandoned acquisitions

 

 

Costs Incurred 

9,815

138,733

 

9,815

138,733

 

 

5.    Other comprehensive loss

 

Fair value loss on AFS shares

67,221

Foreign currency loss/(gain) 

(59,397)

 

200,724

7,824

 

 

 

Consolidated

Balance as at 31 December 2017

Consolidated

     Balance as at 30 June

2017

 

$

$

6.    Other financial assets

 

 

Shares in a listed entity

97,979

288,288

 

97,979

288,288

         

 

 

7.    Trade and other receivables

 

 

Deposits

198,851

GST receivable

40,950

44,197

Cash calls receivable

133,569

-

Other receivables

36,848

151,557

 

407,183

394,605

       

 

8.    Other assets

 

 

Prepayments

23,985

Accrued income

11,705

 

27,098

35,690

       

 

 

9.    Oil and gas assets

 

 

Costs brought forward

749,620

 

Acquisition of oil and gas assets

611,422

 

Capitalised equipment workovers

392,949

 

Amortisation

(6,535)

 

Carrying value at the end of the period

1,747,456

 

 

 

 

 

 

 

10.    Capitalised oil and gas expenditure

$

 

Costs brought forward

4,073,115

 

Exploration costs incurred during the period

79,177

 

FX movement

(1,373)

 

Carrying value at the end of the period

4,150,919

 

 

 

 

 

 

Consolidated

Balance as at 31 December 2017

Consolidated

     Balance as at 30 June

2017

11.    Trade and other payables

 

 

Trade creditors

423,239

279,582

Unearned revenue

-

11,867

Other creditors and accruals

125,222

62,320

 

548,461

353,769

 

 

 

12.    Contributed Equity

 

 

Ordinary Shares

 

 

Total shares at 31 Dec 17  295,282,151 (30 June 2017: 249,448,818) ordinary shares fully paid

26,226,848

25,286,313

 

 

 

 

a) Shares movements during the half-year

Value of shares

$

No. of shares

 

Balance at 30 June 2017

25,286,313

249,448,818

 

Shares issued

1,013,376

45,833,333

 

Cost of issued shares

(72,841)

-

Balance at 31 December 2017

26,226,848

295,282,151

 

 

 

 

 

 

b) Reserves

$

 

Balance at the beginning of the period

1,058,126

 

Fair value (loss)/gain on available-for-sale shares

(190,309)

 

Foreign currency translation reserve loss

(10,415)

 

Options issued during the period

40,567

 

Options expired in the period

(646,987)

 

Options reserve at the end of the period

250,982

 

 

 

 

 

c) Options movements during the half-year

 

 

 

No. of options

Balance as at 31 December 2017

 

 

 

 

Balance at the beginning of period

7,859,372

 

     Expired options

(3,800,000)

 

     Incentive options issued to KMPs

7,500,000

 

     Options issued to other holders

2,500,000

 

Total

14,059,372

 

 

 

 

 

 

Of the 14,059,372 options on issue as at 31 December 2017, the following are held by directors of the Company:

J W Barr

4,000,000

 

 

A Carroll

4,000,000

 

 

J Young

1,500,000

 

 

 

Option details

 

Number of options

Exercise date

Exercise price

3,200,000

13 January 2019

$0.15

859,372

20 March 2019

£0.08

10,000,000

18 December 2020

£0.02

14,059,372

 

 

 

 

13        Segment Information

 

The Group has identified its operating segments based on the internal reports that are reviewed and used by the board to make decisions about resources to be allocated to the segments and assess their performance.

 

Operating segments are identified by the board based on the Oil and Gas projects in Australia the United States and New Zealand. Discrete financial information about each project is reported to the board on a regular basis.

 

The reportable segments are based on aggregated operating segments determined by the similarity of the economic characteristics, the nature of the activities and the regulatory environment in which those segments operate.

 

The Group has three reportable segments based on the geographical areas of the mineral resource and exploration activities in Australia, the United States and New Zealand. Unallocated results, assets and liabilities represent corporate amounts that are not core to the reportable segments.

 

 

 

 

(i)       Segment performance

New Zealand

$

United States

$

 

Australia

$

 

Total

$

Half-Year Ended 31 December 2017

 

 

 

 

Revenue

 

 

 

 

Oil and Gas Project Related Revenue

-

302,113

19,235

321,348

Interest revenue

-

-

709

709

Gain on foreign exchange

-

-

1,529

1,529

Other income

4,775

32

-

4,807

Segment revenue

4,775

302,145

21,473

328,393

 

 

 

 

 

Segment Result

 

 

 

 

-     Corporate costs

-

(1,187)

(404,932)

(406,119)

-     Administrative costs

(4,905)

-

(62,290)

(67,195)

-     Cost of sales

-

(38,169)

-

(38,169)

-     Lease operating expenses

-

(126,657)

-

(126,657)

-     Share of net joint operation loss

-

(6,428)

-

(6,428)

Segment net profit/(loss) before tax

(130)

129,704

(445,749)

(316,175)

 

 

Reconciliation of segment result to net loss before tax

 

 

 

 

Amounts not included in segment result but reviewed by the Board

 

 

 

 

-

Exploration expenses incurred, not capitalised

(52,163)

-

-

(52,163)

-

Evaluation and due diligence

-

(9,819)

(144,258)

(154,077)

-

Projects abandoned

(9,815)

-

-

(9,815)

-

Pre-acquisition costs

-

-

(44,775)

(44,775)

Unallocated items

 

 

 

 

-

Employee benefits

 

 

 

(107,875)

-

Share-based payments

 

 

 

(40,567)

-

Depreciation

 

 

 

(5,599)

Net Loss before tax from continuing operations

 

 

 

(731,046)

 

             
 

 

(i)       Segment performance (continued)

 

New Zealand

$

United States

$

 

Australia

$

 

Total

$

Half-Year Ended 31 December 2016

 

 

 

 

Revenue

 

 

 

 

Interest revenue

-

-

1,629

1,629

Other income

2,108

-

-

2,108

Segment revenue

2,108

-

1,629

3,737

 

 

 

 

 

Segment Result

 

 

 

 

-     Corporate costs

(23,850)

-

(474,008)

(497,858)

-     Administrative costs

(25,211)

-

(47,700)

(72,911)

-     Foreign exchange gain/(loss)

-

-

(77,671)

(77,671)

Segment net profit/(loss) before tax

(46,953)

-

(597,750)

(644,703)

 

 

 

 

 

 

Reconciliation of segment result to net loss before tax

 

 

 

 

Amounts not included in segment result but reviewed by the Board

 

 

 

 

-      Projects abandoned

(2,126)

-

(136,607)

(138,733)

Unallocated items

 

 

 

 

-

Employee benefits

 

 

 

(35,158)

-

Occupancy

 

 

 

(22,712)

-

Finance

 

 

 

(7,092)

Net loss before tax from continuing operations

 

 

 

(848,398)

 

 

 

 

 

 

(ii)       Segment assets

 

 

 

 

 

As at 31 December 2017

New Zealand

$

United States

$

 

Australia

$

Total

$

 

 

 

 

 

Segment assets as at 1 July 2017

392,510

953,669

6,072,294

7,418,473

Segment asset (decreases)/increases for the period

 

 

 

 

-

Capitalised exploration and evaluation

(338,973)

-

(1,921,375)

(2,260,348)

-

Capitalised oil and gas assets

-

(953,669)

-

(953,669)

-

Impairment of exploration and evaluation assets

(1,374)

-

-

(1,374)

-

FX movement exploration and evaluation assets

(52,163)

-

-

(52,163)

-

Other assets

355,401

1,900,857

1,250,864

3,507,122

Total assets from continuing operations

355,401

1,900,857

5,401,783

7,658,041

 

 

 

 

 

(iii)       Segment liabilities

 

As at 31 December 2017

New Zealand

$

United States

$

 

Australia

$

Total

$

 

 

 

 

 

Segment liabilities as at 1 July 2017

162,478

69,679

279,777

511,934

Segment liability increases/(decreases) for the period

(21,417)

284,365

(72,712)

190,236

 

141,061

354,044

207,065

702,170

Reconciliation of segment liabilities to total liabilities:

 

 

 

 

Other liabilities

-

-

-

-

Total liabilities from continuing operations

141,061

354,044

207,065

702,170

 

 

14               Producing assets

 

The Group currently has 3 producing assets, which the Board monitors as a separate item to the geographical and operating segments. The Arkoma, Strawn and Welch are Oil and Gas producing assets in the United States. It should be noted that the Strawn Project is a 50% joint operation with Blackstone Oil and Gas and as a result the amounts below are only the apportionment of the Mosman ownership right. Project performance, assets and liabilities and acquisition costs are all monitored by the line items below.

 

 

(i)       Project performance

 

 

 

 

 

Arkoma

$

Strawn

$

Welch

$

Total

$

Half-Year Ended 31 December 2017

 

 

 

 

Revenue

 

 

 

 

Oil and gas project related revenue

2,965

75,003

224,145

302,113

Other income

32

-

-

32

Segment revenue

2,997

75,003

224,145

302,145

 

 

 

 

 

Project-related expenses

 

 

 

 

-     Cost of sales

-

11,596

26,573

38,169

-     Lease operating expenses

-

57,667

81,710

139,377

Project cost of sales

-

69,263

108,283

177,546

 

 

Project gross profit

 

 

 

 

Gross profit

2,997

5,740

115,862

124,599

 

 

Overhead costs

 

 

 

 

-     Employee benefits

-

12,836

-

12,836

Project net profit/(loss) before tax

2,997

(7,096)

115,862

111,763

 

 

 

 

(ii)       Project assets

 

 

 

 

 

Project assets as at 1 July 2017

-

204,119

-

204,119

Project assets for the year

 

 

 

 

-     Cash

2,107

1,420

44,119

47,646

-     Cash calls receivable

-

66,785

533

67,318

-     Loans receivable

8,963

-

181,478

190,441

-     Inventory

-

26,221

142,994

169,215

-     Bonds receivable

-

32,340

-

32,340

 

11,070

126,766

369,124

506,960

Unallocated assets

 

 

 

 

-     Other assets

 

 

 

1,282

Total project assets

 

 

 

508,242

 

 

 

(iii)       Project liabilities

 

 

 

 

 

Project liabilities as at 1 July 2017

-

83,217

-

83,217

Project liabilities for the year

 

 

 

 

-     Accounts payable

-

43,747

215,642

259,389

-     Accrued expenses

-

-

16,064

16,064

-     Loans payable

8,077

31,142

21,693

60,912

 

8,077

74,889

253,399

336,365

 

 

 

 

 

Unallocated liabilities

 

 

 

 

-     Other liabilities

 

 

 

-

Total project liabilities

 

 

 

336,365

 

 

15                    Expenditure Commitments

 

(a)       Exploration

 

            The Company has certain obligations to perform minimum exploration work on Oil and Gas tenements held.  These obligations may vary over time, depending on the Company's exploration programs and priorities.  At 31 December 2017, total exploration expenditure commitments for the next 12 months are as follows:

 

Entity

Tenement

$

 

 

 

 

 

Petroleum Creek Limited

PEP 38526

-

 

Trident Energy Limited

EP 145

200,000

 

Oilco Pty Ltd

EPA 155

-

 

Oilco Pty Ltd

EP 156

-

 

 

 

200,000

 

 

These obligations are subject to variations by farm-out arrangements, sale of the relevant tenements or seeking expenditure exemption for previous year's expenditure. The Company has the option to elect to not carry out the minimum work program commitments pertaining to a specific permit, in which case the Company will relinquish its interest in the relevant permit.

 

 

 

(b)       Capital Commitments

 

The Company had no capital commitments at 31 December 2017 (2016 - $Nil).

 

 

 

16        Subsequent Events

 

Material transactions arising since 31 December 2017 which will significantly affect the operations of the Company, the results of those operations, or the state affairs of the Company in subsequent financial periods are as follows:

 

Capital raise

In February 2018, the Company announced a capital raising which provided £500,000 in proceeds by placing 45,454,545 new ordinary shares at 1.1p per share. Included in the capital raise, a total of 750,000 warrants over shares were granted to SP Angel in connection with capital raise.

 

Welch update

 

A Pre-Feasibility Study (PFS) was commissioned by Mosman to determine the economic value of horizontal well drilling in the Welch Permian Basin project. The study provided positive anticipated flow rates of 60-120 bopd per well. Additionally, a Reserves Report has been commissioned and is due to be delivered in April 2018.

 

Arkoma option exercised

 

In February 2018, Mosman exercised the Amended First Option for Arkoma as it is an attractive oil acquisition with demonstrated production and medium term development, and fundamentally the Amended First Option meet Mosman's strategic objectives to acquire production with development upside.

 

To support the additional investment, Mosman has received a draft report from Moyes and Co ("Moyes") which has indicated that the project (gross 100%) includes the following:

·      The Project has a range of up to 2.5 million boe of recoverable oil and gas, including:

346,000 boe 2P (Proved and Probable Reserves);

610,000 boe 2C (Contingent Resources); and

·      a 2P Reserves NPV10 of US$4.3 million as of 1 February 2018.

 

The immediate plan at Arkoma is the upgrade of production facilities including large volume Electric Submersible Pumps and associated infrastructure. Anticipated gross production rates with the upgraded production facilities are expected to be in the range 80 to 120 bopd.

 

The key advantages of the exercise of this option are as follows:

·      The Amended First Option percentage has been increased from 20% to 30%;

·      Reduced  option exercise cost from US$875,000 to US$450,000;

·      Immediate upgrade of production facilities; and

·      The vendor has agreed to work with Mosman (and Blackstone) to explore and develop the adjacent area where it has rights to an existing 56 square mile 3D seismic survey with multiple exploration prospects.

 

Mosman has also executed an agreement with Blackstone ("Blackstone Agreement") to fund half of the cost of exercise of the Amended First Option and US$ 425,000 production facilities upgrade in return for half (15%) of the additional 30% interest in Arkoma. Blackstone will also contribute to the cost of Mosman's technical work in evaluating the asset to the amount of US$50,000.

 

 

Mosman considers the exercise of the Amended First Option and Blackstone Agreement (together the "Transaction") to be a material step to building a strong joint venture with Inland as Operator, together with Mosman and Blackstone as partners.

 

Mosman's initial interest of 10% in Arkoma has been increased to 12% in compensation for the cash paid for recent test work. The Transaction further increases Mosman's interest in the Project to 27%.

 

The three partners in the Project have agreed an immediate plan that is expected to generate production and cash flow while, in the longer term, plans are being considered for the next stage of the Project's development. The immediate plan at Arkoma is the upgrade of production facilities including large volume Electric Submersible Pumps and associated infrastructure. The cost of approximately US$425,000 will be equally shared by Mosman and Blackstone.

 

Anticipated gross production rates with the upgraded production facilities are expected to be in the range 80 to 120 bopd.

 

In March 2018 Mosman executed an amended second option to increase its interest in the Inland assets from the current 27% to 33.3% for a cost of USD 231,022 on or before 31 July 2018.

 

17        Dividends

 

No dividends have been paid or proposed during the half year ended 31 December 2017.

 

 

John W Barr

Executive Chairman

 

Dated this 29 March 2018

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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