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| Date/Time | Headline | Source |
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| 16-11-09 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 5288C
Xtract Energy plc
16 November 2009
16 November 2009
AIM: XTR
XTRACT ENERGY PLC
("Xtract" or "the Company")
Preliminary results for the year ended 30 June 2009
Xtract, which identifies and invests in a diversified portfolio of early stage energy sector technologies and businesses with significant growth potential, today announces its preliminary results for the year ended 30 June 2009.
Operational Highlights
* Extrem Energy A.S. ("Extrem") drilled its first well, Sarikiz-2, in the Alasehir licence area. Subsequent testing indicated a producible and commercial oil discovery.
* In October 2008, Xtract and Santos International Holdings Pty Ltd ("Santos") entered a farm-in agreement in relation to Xtract's wholly-owned subsidiary, Zhibek Resources Limited ("Zhibek"). Santos assumed operatorship and 75% control of Zhibek. These arrangements significantly reduced overall cash burn for the Group.
* The sale of 44.8 million shares in MEO Australia Ltd ("MEO") at an average price of A$0.20 per share raised A$8.89 million after brokerage and reduced Xtract's holding during the period to 14,375,629 shares, representing approximately 3.44% of MEO's issued equity.
Post Period Highlights
* Production testing at Satikiz-2 was ultimately successful and the well has been shut in as a production well with commercial production expected to commence in the final quarter of 2009.
* On 5 August 2009, Xtract exercised its option to increase its share-holding in Extrem Energy to 34% by contributing a third and final optional tranche of US$1.75 million.
* In August 2009, Xtract acquired an additional 1.775 million Elko shares, by exchanging 26,625,000 Wasabi shares for Elko shares, increasing its holding in the company to approximately 36.8%.
* By August 2009, Xtract had disposed of its remaining MEO holdings at an average price of A$0.49 for the total amount of A$ 7.00 million after brokerage.
* As part of its drive to simplify its portfolio and to focus on its oil and gas interests, Xtract sold its remaining interest in Wasabi Energy Ltd ("Wasabi") during September 2009 at A$ 0.011 per share for A$ 1.38 million after brokerage.
Andy Morrison, Chief Executive of Xtract Energy, commented:
"The operations of the Group have been substantially transformed over the period under review in response to dramatic changes in market conditions. The move away from being essentially a passive investment company to one with more active involvement in its assets was achieved more quickly than was foreseen last year. Although much has been done to position the Company for the future, the transformation is as yet incomplete. The prize for getting it right can be substantial, even in these more challenging post-boom times."
For further information, please contact:
Xtract Energy plc Andy Morrison, CEO +44 (0) 20 7079 1798
Smith & Williamson Corporate David Jones +44 (0) 20 7131 4000
Finance Limited Azhic Basirov
For further Information on Xtract please visit www.xtractenergy.co.uk
Chairman's Statement
The first six to nine months of the financial year were marked by financial turmoil and declining commodity prices which made for extremely challenging investment conditions. Share prices for smaller quoted energy firms such as Xtract declined, driven in part by the need for liquidity of hedge funds and other investors. The sustained adverse market conditions and a heightened uncertainty over the outlook for oil prices necessitated a reassessment of the Group's investment priorities. The final months of the period saw some tentative signs of recovery in the global economy, although there remains a high level of uncertainty over future trends and management of the Group's cash position remains a priority.
Given the circumstances, I am pleased to be able to say that there are some notable positive achievements to report in the period. Indications are that our new joint venture in Turkey, Extrem Energy A.S. ("Extrem"), may have made a more promising oil discovery than was expected with its first on-shore well in its Alasehir license area and that it has the potential to become a cornerstone of the portfolio. Further details of the developments and operations in Turkey can be found in the CEO's Review section of this report.
Some tough decisions were needed
In the first part of the period, the Company had to make some tough decisions to reduce cash burn and to focus its investments in the most promising areas. This included placing the technology development of subsidiary Xtract Oil Ltd into hibernation, although Xtract Oil Ltd intends to maintain its mineral rights over its 2.12 billion barrels of indicated and inferred resources until conditions improve sufficiently to attract further investment.
The Company succeeded in putting its interests in Kyrgyzstan onto a stable footing by ending its involvement in the water injection project and farming out 75% of the exploration venture to Santos in exchange for commitments to fund up to US$8.5 million towards a 2009-10 exploration programme. These arrangements significantly reduced overall cash burn and enabled the Company to gain exposure to a potentially interesting exploration target at a manageable level of investment.
In order to help protect and advance shareholder interests in the new business environment, we decided that action was required to change the board of associate, Elko Energy Inc ("Elko"). In December 2008, three independent non-executive directors of Elko resigned, together with the CEO, Rudolf Kleiber. John Conlon (a director of Xtract) and Jack Bray (a director of DM Bray Capital) were appointed and Jeremy Kane agreed to remain as an independent non-executive director for a temporary period to continue to represent the interests of the minority shareholders. Andy Morrison remained on the Board and became Acting CEO of Elko, pending the appointment of Peter Moir who commenced full time employment as director, President and CEO of Elko on 26 January 2009.
The back-drop provided by the economic and financial challenges in the early part of the year were made more serious for the Group by the disappointing outcome of the drilling campaign by associate MEO Australia Ltd ("MEO") in the North-West Shelf of Australia. The Zeus-1 well spudded in January 2009. Testing results confirmed the primary objective sands to be water rather than gas-bearing and the well was plugged and abandoned in February 2009. Fortunately, the Group was not over-committed to MEO having positioned itself to gain from the significant upside that would have arisen from success at Zeus-1, whilst at the same time seeking to ensure that its other portfolio businesses had sufficient funding whatever the drilling result.
Our investment in Turkey proved to be a turning point
In Turkey, under the terms of the agreement with Merty Energy ("Merty"), we created a Turkish company, Extrem Energy A.S. ("Extrem") in which Xtract and Merty initially held 20% and 80% interests respectively. Xtract invested US$5.0 million to fund Extrem's initial work programme and Merty applied for the transfer of a portfolio of seven licence interests into Extrem. On 30 June 2009, Xtract exercised its option to increase its share-holding by contributing a second tranche of US$1.75 million. A third and final optional tranche of US$1.75 million was subscribed on 05 August 2009 to take the Company's holding to the current level of 34%.
The Group remained flexible as market conditions evolved
The new Elko board has advanced the asset portfolio considerably during the year and is now much better placed to attract industry participants to farm in to developments in the Netherlands and Denmark. Discussions with infrastructure providers have advanced alongside discussions with potential partners. The external market remains capital-constrained which presents challenges to even the best-prepared projects, but we remain optimistic that Xtract can recover its investment in Elko and potentially achieve an attractive return. We would like to bring Elko to a liquidity event as soon as practicable.
In April 2009, Xtract announced that it had entered into a conditional agreement with Lysander Minerals Corporation ("Lysander") of Canada under which the Company would acquire new common shares and warrants in Lysander in exchange for Xtract's entire interest in Elko. The proposed arrangement aimed to crystallise the value of Elko within the Company's portfolio and provide valuable commercial flexibility to the Xtract Group. From a financial perspective it promised to strengthen liquidity by increasing the proportion of the Group's holdings in publicly listed entities.
At the present time, discussions with Lysander are paused while Lysander works on its other planned investments. Negotiations on the conditional agreement may or may not resume at a later date.
During the second quarter of 2009, Xtract began a process of managed exit from its investment in MEO in order to finance other investments within its portfolio and to improve overall liquidity. During the course of the reporting period, the Company had reduced its holding in MEO from approximately 14.2% to approximately 3.4% of the issued capital, raising a total of A$8.95 million. By 7 August 2009, the Company had sold all of its remaining shares in MEO. As a result of the disposals, Xtract no longer holds any interest in MEO. The total return on investment over the holding period was an estimated 124% (see side panel for details).
In other developments, investee company Wasabi Energy Ltd ("Wasabi") raised approximately A$4.6 million in June 2009 through a pro-rata rights issue of convertible preference shares. Funds from the issue were used to discharge A$2.36 million of convertible loan notes and to provide working capital. The balance of $1.15 million of the outstanding loan notes was repaid by the distribution of 35,000,000 Xtract shares to the note holders. The distribution of the Xtract shares resolved the cross-holding situation that had arisen from the 2008 sale of these shares by Cambrian Mining Plc to Wasabi. As a result of the rights issue, Xtract's holding in Wasabi at the end of the period had reduced to approximately 12.1%. In post-period developments the disposal of Xtract's remaining holding in Wasabi was completed.
The need for additional liquidity in the Company has been reduced for the time being by the disposal of our stakes in MEO Australia Ltd and Wasabi Energy Ltd, but liquidity remains a challenge on which management is focused.
On 13 July 2009, Cambrian Mining Plc was itself taken over by Western Coal Corporation ("Western Coal") with the result that Western Coal took over as the Group's major shareholder holding approximately 45.3% of the issued capital.
Increased focus on core oil and gas portfolio
The year under review has been one of considerable change. Xtract has demonstrated its flexibility to adapt to these challenging and unprecedented times. The consolidation that has taken place over the past twelve months has resulted in a stronger and leaner company. Xtract looks forward to further success in Turkey and the return to the overall stability of world financial markets. Xtract is committed to focusing its resources on its core oil and gas portfolio (including oil shale) and to continue to provide sustained growth for shareholders.
Dated: 13 November 2009
John Newton
Executive Chairman
CEO's Review
The operations of the Group have been substantially transformed over the period under review in response to dramatic changes in market conditions. The move away from being essentially a passive investment company to one with more active involvement in its assets was achieved more quickly than was foreseen last year. Although much has been done to position the Company for the future, the transformation is as yet incomplete. The prize for getting it right can be substantial, even in these more challenging post-boom times.
Underpinning our relative confidence in the future is our recent investment in Turkey, where on-shore appraisal and development opportunities offer promising rewards for manageable levels of financial commitment. The off-shore licences within the Turkish portfolio provide additional upside potential which can be accessed when investment conditions permit.
Extrem Energy A.S. (Turkey)
On 31 August 2008, the Company completed a definitive agreement with Merty Energy, Petroleum Exploration, Education and Services Inc ('Merty') of Turkey regarding an investment in a new exploration and production joint venture. Xtract and Merty, together, aim to create medium-sized oil and gas exploration and production business initially focused on Turkey, where Merty has particular expertise and experience.
Under the terms of the agreement, the parties created a Turkish company, Extrem Energy A.S. ("Extrem") in which Xtract and Merty initially held 20% and 80% interests respectively. Xtract invested US$5.0 million to fund Extrem's initial work programme and Merty applied for the transfer of a portfolio of seven licence interests into Extrem.
The licences transferred to the new company include 100% interests in offshore licences at Candarli Bay and in the Sea of Marmara and onshore licences at Edirne and Siraseki plus an 80% interest in an onshore licence at Alasehir. The other 20% of the Alasehir licence is owned by Turkish company, Petrako Petrol Gas and Industrial Co. The intention of the partners is that the lower risk onshore developments at Alasehir and at Edirne will provide early oil and gas revenues to enable the company to develop the offshore licences, including the very exciting prospect at Candarli Bay.
The first well drilled by Extrem, known after as Sarikiz-2 was drilled in the Alasehir licence area. The Alasehir Basin is a tertiary clastic basin located in the XVII-Izmir District of South-West Turkey, in an industrial area. The basin has a sedimentary succession of 3,000-4,500m in thickness created by large rifting faults and has a geothermal gradient that causes early maturation of hot shales. The reservoir is lower-middle Miocene clastics, which are also thought to provide the source. Effective seals are provided by bounding faults and clay zones within the formation.
The well was spudded on 31 October 2008 and drilling was completed to the target depth of 1,843m at 1630hrs on 07 December 2008. Wire line logging and pressure testing indicated a producible and commercial oil discovery. Following completion of the logging procedures, 23 levels of sandstone were assessed to have producible oil. Of these, 12 levels with a combined reservoir thickness of 75m were selected for subsequent production testing. The total reservoir thickness encountered greatly exceeded the pre-drill estimate of 10m.
The Sarikiz-2 production test began on 15 May 2009 and was completed on 30 July 2009. It took much longer than originally expected due to various technical complexities that were encountered, but it was ultimately successful. The well was shut in as a production well with commercial production expected to commence in the final quarter of 2009 following construction of the necessary surface facilities. Production performance from the initial wells will be analysed to determine the optimal well configuration to drain the structures over a reasonable field life of 20-25 years. Formal field development plans and reserve categorisation will be finalised once commercial production has been established.
In addition to developments at Alasehir, Extrem completed technical work on its other on-shore licence areas during the year with a view to identifying future drilling targets. The results from seismic and GORE geochemical surveys over the Siraseki licence area near the Syrian border gave rise to a new prospect called Menekselik. The sandstone structure is a fault bounded anticline with an estimated area of 11.2 square km and an expected pay thickness of 30m.
At Edirne in the Thrace basin of western Turkey, a programme of seismic acquisition was completed on 9 August 2009. The acquisition of GORE geochemical data was completed on 19 September 2009. The seismic and geochemical data will be analysed together to identify drilling targets in this well-established gas-bearing zone. If successful, these targets will be drill-ready by early 2010. The area is close to existing downstream infrastructure, so production can be established quickly in the event of success.
In summary, Extrem has developed an impressive portfolio of near term production potential and highly prospective drill-ready targets. The rate of growth of Extrem will be governed to a large extent by the speed at which production can be brought on and at which reserves are confirmed by independent experts.
Elko Energy Inc (Dutch and Danish North Sea)
Elko operates the largest offshore exploration licence in Denmark with an area of 1.3 million acres. The licence area offers P50 un-risked net prospective resources of 1.8 billion barrels oil or 8.4 Tcf of gas (evaluated by Tracs International, an independent reservoir engineer, in May 2008). Elko owns 80% of the licence with 20% held by a Danish government entity.
In the Netherlands sector of the North Sea, Elko operates two gas-bearing exploration blocks. Block P1 is located on the southern margin of Southern Permian Gas basin and covers 51,623 acres. Eight wells have been drilled by previous operators. Of these, five encountered gas on three separate structures. Block P2 is directly adjacent and east of Block P1. Elko holds both licences which represent a 60% working interest. Dutch Government partner Energie Beheer Nederland BV (EBN) owns the remaining 40% working interest.
A National Instrument 51-101 independent engineering report was prepared by TRACS International during 2008 on the hydrocarbon resources contained within the P1 and P2 Blocks. The report estimated hydrocarbon gas in place at over 250 bcf within the Slochteren sandstone with additional prospects identified which could contain a further 500 bcf.
Progress on the Dutch assets was hampered during 2008 by the lack of a joint operating agreement and the inability of former licence partner Oyster BV to attract interest in the intended disposal of its holding. This situation became more acute with the decline in oil and gas prices and the significant deterioration in investment conditions in the later part of the year.
Unfortunately, Elko did not meet its objective of making an Initial Public Offering and a listing on a recognised stock exchange within one year of the December 2007 pre-IPO fund-raising. Although much of the preparatory work was completed, Elko's financial advisors suggested the IPO be delayed due to market volatility. As equity and debt markets became largely inaccessible to small-cap companies, attention has turned to finding funding partners amongst strategic and industry participants.
The disappointing performance of Elko in the first part of the year led Xtract to review its approach to the investment. Whilst recognising the achievements of Mr Rudi Kleiber, founder and former CEO, in establishing Elko as a promising independent operator, Xtract determined that a new board at Elko would leave it better positioned to advance its attractive asset portfolio and bring it to market when conditions permitted.
The board changes were brought about by a process initiated in December 2008 by Xtract and DM Bray Capital LLC ("DM Bray"), at that time the two largest shareholders of Elko who together held approximately 48% of the voting interests in Elko. Xtract and DM Bray called for the replacement of the Board with a new slate of directors.
As a result of the changes, Andy Morrison remained a director of Elko and was joined on the Elko Board by fellow Xtract Director, Mr John Conlon and DM Bray nominee Mr Jack Bray. Former Elko Chairman, Jeremy Kane agreed to remain as an independent non-executive director for a temporary period to continue to represent the interests of the minority shareholders. The board changes were aimed at increasing alignment of Elko's strategy with the interests of all shareholders.
In January 2009, Elko confirmed the appointment of a new President and Chief Executive Officer, Mr Peter Moir with effect from 26 January 2009.
The new board got to work quickly. Elko completed the acquisition of Oyster Energy BV on 19 February 2009, increasing Elko's combined working interest in Netherlands Blocks P1 and P2 from 33% to 60%. The acquisition of Oyster resolved the previous lack of a joint operating agreement and enabled Elko to proactively progress the development and marketing of the Dutch assets.
During the first quarter of 2009, an integrated block development concept for the discoveries and prospects on Blocks P1 and P2 was prepared. The concept provided for the offshore removal and underground storage of CO2 contained in gas within the P1/P2 discoveries. The geology, geophysical and reservoir engineering definitions were further developed to create an outline field development plan and to pin-point an appraisal well location.
Discussions with offshore facilities and pipeline infrastructure owners identified a number of options for the offshore removal and storage of CO2 and the onward transportation of sales gas to European markets. A number of potential new financing partners have been identified to replace Oyster via a farm out of a percentage of Elko's working interest in Blocks P1 and P2. Partnering discussions continue in parallel with discussion with infrastructure owners.
After the reporting period on 26 August 2009, Elko and its subsidiary Dragon Energy Inc ("Dragon") signed an overriding royalty agreement whereby Elko will benefit from a 2.5% overriding royalty from future revenues from the Kotaneelee field, over a maximum term of five years capped at an aggregate value of CDN$750,000. In exchange Elko returned to Dragon 15,600,000 common shares representing its 51% ownership and Jack Bray, Peter Moir and Andy Morrison resigned from the board of Dragon.
Dragon holds a 30.667% working interest in the Kotaneelee field in the Yukon Territory, Canada operated by Devon Energy Corp. Gas production at Kotaneelee is in decline and gas prices in North America are depressed resulting in a significantly weakened revenue stream from current production levels. The disposal of Dragon eliminated a potential liability from Elko's balance sheet.
In Denmark, enhanced seismic processing of the Chalk prospects was undertaken. The results are part of a marketing initiative aimed at securing an additional financing partner or partners. Elko has designed a low cost exploration drilling initiative that will further de-risk its future work on the Danish asset. These plans have been favourably received by its Danish state partner and the Danish Energy Agency because of the lower risk scenario they offer as Elko aims to exploit the asset's exceptionally high potential.
Whilst much has been achieved by the new Elko board, the company remains in a challenging situation. Its projects are attractive, but capital-intensive. Financing discussions are advanced, but there can be no assurance that these will ultimately lead to definitive arrangements. It is hoped to unlock the assets and enable them to be taken forward through the exploration and appraisal phases thereby adding significant intrinsic value to the portfolio. In managing its investment in Elko, Xtract drives for its success whilst at the same time preparing for alternative scenarios.
MEO Australia Ltd (Australia)
At the beginning of the reporting period, MEO Australia Ltd ("MEO") had formed a strategic alliance with Resource Development International ("RDI") whereby RDI farmed into WA-361-P for a 35% interest by funding 80% of the Zeus-1 well and was granted options to participate in MEO's remaining projects.
The global financial market downturn in late 2008 caused a deferral of the planned IPO of RDI. As a result, RDI was unable to exercise its options to farm-in to WA-359-P and WA-360-P by December 1 and they lapsed. RDI's options in relation to MEO's Timor Sea Projects also lapsed on 31 December 2008. MEO secured a 12 month extension to drill/drop options on WA-359-P and WA-360-P which were originally due to expire 1 January 2009 and negotiated variations to the work programs with the Designated Authority.
The Zeus-1 well spudded on 17 January 2009. An MDT formation pressure testing program confirmed the primary objective sands to be water bearing and the well was plugged and abandoned in February 2009. While the results from Zeus-1 were disappointing, MEO remains optimistic that its North West Shelf acreage has the potential to host substantial gas accumulations adjacent to existing and planned LNG infrastructure.
In May 2009, the Federal Government renewed Major Project Facilitation status for the Tassie Shoal Methanol and the Timor Sea LNG Projects. Tassie Shoal is an area of shallow water in Australian waters about 275 km north-west of Darwin with significant undeveloped gas fields within a 150 km radius.
As noted in the Chairman's statement, Xtract had largely exited its position in MEO by the end of the year and has now completed that manoeuvre. Whilst we continued to have confidence in the prospects for MEO, we decided to focus our resources on our investment in Extrem. We believe that Extrem offers a stable growth platform and one which can only be accessed by market investors through participation in Xtract.
Zhibek Resources Ltd (Kyrgyzstan)
In October 2008, Xtract and Santos International Holdings Pty Ltd ("Santos"), a subsidiary of Santos Ltd, Australia's second largest oil and gas company entered a farm-in agreement in relation to Xtract's wholly-owned subsidiary, Zhibek Resources Limited ("Zhibek"). Santos assumed operatorship and control of Zhibek.
Under the agreement, Santos is funding up to US$8.5 million of Zhibek's near-term exploration programme, which includes a 2D seismic programme over the Tash Kumyr and Pishkaran licence areas in the Fergana basin area in the Kyrgyz Republic, to earn a 75% interest in Zhibek. The seismic acquisition programme commenced in November 2008 and was completed in February 2009. Analysis and interpretation are in progress. If the seismic results are in line with expectations, a well is planned for 2010. Zhibek has now dropped the Pishkaran licence in order to focus on Tash Kumyr.
Xtract retains representation on the Board of Zhibek and will contribute up to US$1.5 million to Zhibek's funding in the latter stages of the current exploration programme and may contribute to Zhibek's future exploration and development programs.
As part of re-arranging its Central Asian investments, commitments, and staffing, Xtract ceased its involvement in development of a water injection project at the Beshkent-Togap oil field in Kyrgyzstan. Wholly owned subsidiary Zhibek Oil and Gas Ltd was closed and de-registered.
Oil Shale
Julia Creek, Queensland, Australia
In August 2008, the Queensland Premier announced a 20-year moratorium on a proposed oil shale development in the Whitsunday coastal region, and a 2-year review period for oil shale developments throughout the state during which no new mining activity would be permitted. Although the mineral rights of Xtract's 100% subsidiary Xtract Oil Ltd ("XOL") in Queensland were not affected, the review created uncertainty over the extraction of the underlying oil shale.
In December 2008, XOL held a meeting with representatives of the Queensland government to present the progress of XOL's technology and to understand the proposed review process. The response to the technical progress was encouraging but the government representatives were not able to give much further information about the review process or its likely impact. Under these circumstances, Xtract took the decision to scale back significantly its projected investment in the development of oil shale technology.
Prior to scaling back Julia Creek activities, laboratory testing had provided indicative temperature and pressure conditions for generation of oil using natural gas as a source of both hydrogen and heat. A scoping study, which was based on the results of tests completed before the Government announced its policy review, indicated that a commercial project based on XOL's technology could be feasible.
XOL continues to maintain mineral rights over its 2.12 billion barrels of indicated and inferred resources at Julia Creek. By maintaining the mineral rights at limited cash expense, Xtract retains the option to exploit the resource when investment conditions are more supportive.
Tarfaya, Morocco and Nevis Valley, New Zealand
In September 2008, the company announced the creation of a joint venture in Morocco with Alraed Limited Investment Holding Company WLL, a company controlled by His Highness, Prince Bandar Bin Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia. This was the culmination of discussions that had lasted several months. The joint venture company, Xtract Energy (Oil Shale) Morocco SA, went on to sign a Memorandum of Understanding with the Moroccan Office National des Hydrocarbures et des Mines ("ONHYM") for the purposes of evaluation and possible development of an oil shale deposit near Tarfaya, in the south west part of Morocco. Xtract holds 70% of the joint venture.
Following the decision in December to hibernate work on Xtract's proprietary technology in Australia and in light of market turmoil and falling oil prices, no significant work was done by the joint venture during the reporting period. A decision as to whether to conduct an initial pre-feasibility study is pending. Since July 2009, investment conditions have started to improve and it is hoped that work can begin during the current financial year.
The Company's oil shale tenements in the Nevis Valley in New Zealand were relinquished.
Other Interests
Until the end of the period, Xtract continued to hold approximately 12.1% of Wasabi Energy Ltd ("Wasabi"), a diversified investor in traditional and renewable energy technologies. As part of its drive to simplify its portfolio and to focus on its oil and gas interests, Xtract sold its entire remaining interest in Wasabi during September 2009.
In Mexico, Xtract maintained its ownership of Sermines Inc and its licence portfolio of gold exploration properties. No significant operational activity was undertaken during the year.
Dated: 13 November 2009
Andy Morrison
Chief Executive Officer
Investing policy
Xtract Energy identifies opportunities and invests in a portfolio of early stage energy sector businesses and projects with very significant growth potential. We engage actively with the associated management teams to build and crystallise shareholder value through critical technical inputs, board-level experience and the application of corporate finance expertise. We aim to achieve returns for our shareholders through the capital growth of our investments.
The Directors evaluate new investment opportunities from time to time and may engage the Company in additional businesses and projects in conventional and non-conventional fields such as oil shale. Opportunities considered may be green field and/or involve the acquisition of or participation in already existing businesses which may be quoted or unquoted. Due to the typically active nature of our engagement with investee companies, we expect that our portfolio will continue to be focused on a relatively limited number of significant investments rather than being very broadly spread.
Geological information and estimates of resources
Extrem Energy
The geological information and estimates of resources contained in the annual report relating to Xtreme Energy has been provided using the SPE standards and includes the following terms: "mbbl" (million barrels); "bcf" (billion cubic feet); "P50" ("development pending - contingent resources"). This information has been reviewed and approved by Ongun Yoldemir, Managing Director of Extrem Energy, who has a masters degree in geological engineering and worked as an explorationist in the oil and gas sector in the Middle East, Kazakhstan, Azerbaijan, and North Sea, has over 28 years' experience in the resource and energy sector and is a member of the American Association of Petroleum Geologists, European Association of Geologists and Engineers, the Society of Exploration Geophysicists and several related Turkish institutions.
XOL
The geological information and estimates of resources contained in the annual report relating to XOL has been provided using the internationally recognised Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code - 2004 Edition). This information has been reviewed and approved by Dr John E. Shirley (Managing Director of Xtract Oil Limited), who has a BSc and PhD in Geophysics from the University of Tasmania, over 40 years' experience in the resource and energy sector and is a member of the Society of Petroleum Engineers.
Elko and MEO
Elko, as an unquoted company, and MEO, as an ASX quoted company, are not subject to the AIM Rules and the geological information and estimates of resources contained in this annual report relating to these companies has been supplied by these companies and has not been reviewed by a named "qualified person" as defined and required by the AIM Note for Mining, Oil and Gas Companies.
Consolidated Income Statement
Year ended 30 June 2009
Note Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
Continuing operations
Administrative and operating (2,101) (2,885)
expenses
Share of results of associates (1,431) (1,707)
Operating loss (3,532) (4,592)
Investment revenue 3 124 207
Finance costs (323) -
Other gains and losses 3 (18,805) 5,340
(Loss)/Profit before tax (22,536) 955
Tax credit/(expense) 5 5,729 (932)
(Loss)/Profit for the year from (16,807) 23
continuing operations
Discontinued operations
Loss for the year from discontinued 9 (1,294) (811)
operations
Loss for the year 4 (18,101) (788)
Attributable to:
Equity holders of the parent (18,101) (788)
Minority interest - -
(18,101) (788)
Net Loss per share
From continuing operations
Basic (pence) 6 (2.24) 0.00
Diluted (pence) 6 (2.24) 0.00
From continuing and discontinued
operations
Basic (pence) 6 (2.41) (0.11)
Diluted (pence) 6 (2.41) (0.11)
Consolidated statements of recognised income and expenditure
Year ended 30 June 2009
Note Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
(Losses)/gains on revaluation of 10 (9,098) (1,963)
available-for-sale investments taken to
equity
Unwinding of fair value gains on transfer 10 - (547)
to investment in associate
Minority interest movement due to a 10 91 -
subsidiary becoming an associate
Exchange differences on translation of 10 705 829
foreign operations
Tax credit/(expense) on items taken 10 2,616 540
directly to equity
Net (loss)/gain recognised directly in (5,686) (1,141)
equity
Transferred to income statement on sale 6,518 (1,558)
of available-for-sale investment
Loss for the year (18,101) (788)
Total recognised income and expense for
the year
(17,269) (3,487)
Attributable to:
Equity holders of the parent (17,269) (3,487)
(17,269) (3,487)
Consolidated balance sheets
As at 30 June 2009
Note As at As at
30 June 2009 30 June
£'000 2008
£'000
Non-current assets
Intangible assets 7 - 10,494
Property, plant and equipment 21 28
Investments in associates 5,619 3,900
Investments in subsidiaries - -
Financial assets 8 3,215 15,962
Loans to subsidiaries - -
Deferred consideration 310 -
Deferred tax asset 284 595
9,449 30,979
Current assets
Derivative financial instruments 8 - 23
Trade and other receivables 717 130
Advance payment 2,760 -
Cash and cash equivalents 3,182 6,362
Assets held for sale 9 - 2,324
6,659 8,839
Total assets 16,108 39,818
Current liabilities
Trade and other payables 486 439
Current tax liabilities 3,740 3,636
Loans from subsidiaries - -
Liabilities directly associated with assets 9 - 69
classified as held for sale
4,226 4,144
Net current assets/(liabilities) 2,433 4,695
Non-current liabilities
Deferred tax liabilities 14 5,595
Total liabilities 4,240 9,739
Net assets 11,868 30,079
Consolidated balance sheets
As at 30 June 2009
Note As at As at
June 30 June 30
2009 2008
£'000 £'000
Equity
Share capital 10 752 752
Share premium account 10 24,394 24,394
Share based payments reserve 10 976 956
Available for sale reserve 10 (2,945) (2,981)
Revaluation reserve 10 - 962
Exchange translation reserve 10 1,516 811
Retained earnings 10 (12,825) 5,276
Equity attributable to equity holders of the 11,868 30,170
parent
Minority interest 10 - (91)
Total equity 11,868 30,079
Consolidated cash flow statements
Year ended 30 June 2009
Note Year ended Year
30 June ended
2009 30 June
£'000 2008
£'000
Net cash used in operating activities 11 (2,332) (2,431)
Investing activities
Interest received 3 124 207
Government grants 3 179 119
Purchase of property plant and equipment (8) (83)
Acquisition of intangible assets - (78)
Disposal of trading investments - 665
Purchase of trading investments - (433)
Disposal of available for sale 3,668 1,086
investments
Purchase of available for sale 8 (65) (424)
investments
Disposal of associates 8 - 9,751
Acquisition of associates 8 (1,465) (4,223)
Prepayment for an associate (2,760) -
Purchase of shares (590) -
Net cash (used in)/from investing (917) 6,587
activities
Financing activities
Proceeds on issue of shares - warrants - 642
Loans to subsidiaries - -
Loans from subsidiaries - -
Net cash (used in)/from financing - 642
activities
Net (decrease)/increase in cash and cash (3,249) 4,798
equivalents
Cash and cash equivalents at beginning 6,362 1,582
of year
Effect of foreign exchange rate changes 69 (18)
Cash and cash equivalents at end of year 3,182 6,362
1. General information
Xtract Energy plc is a company incorporated in Great Britain under the Companies Act 2006. The address of the registered office is 55-56 St James Street, London SW1 1LA.
The financial information set out in this announcement does not constitute the Group's statutory accounts for the years ended 30 June 2009 or 2008, but is derived from those accounts. Statutory accounts for the period ended 30 June 2008 have been delivered to the Registrar of Companies and those for the year ended 30 June 2009 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their report for the years ended 30 June 2008 and 30 June 2009 drew attention to disclosures made in those financial statements concerning existence of a material uncertainty relating to the Group's ability to continue as a going concern, without qualifying the report. Please refer to note 12 for further information on this matter.
2. Significant accounting policies
Basis of accounting and going concern
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. A summary of the more important accounting policies is set out in the Company's statutory accounts, and consideration of a material uncertainty relating to the application of the going concern basis is detailed in note 12.
3. Revenue and other gains and losses
An analysis of the Group's revenue and
other gains and losses is as follows:
Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
Continuing operations
Interest on bank deposits 124 207
Total revenue 124 207
Continuing operations
Other gains and losses:
Gains on disposal of associate - 2,920
(Loss)/Gains on disposal of available for (9,312) 568
sale assets
Other income 37 255
Research and development grants (a) 179 119
Intangible impairment (9,431) -
Write down of investment in associate (267) -
(Decrease)/Increase in the fair value of (21) 233
derivative financial instruments
Gain on dilution of interest in associates 10 1,245
Total other gains and losses from (18,805) 5,340
continuing operations
Discontinued operations
Other gains and losses:
Write down of intangible assets - (530)
Dilution loss on the sale of subsidiary (698) -
Gains/Losses on disposal of fixed assets (477) 1
Total other gains and losses from (1,175) (529)
discontinued operations
Total other gains and losses (19,980) 4,811
(a) Government grants received in relation to research and development expenditure on oil shale extraction technologies in Australia.
4. Loss for the year
Loss for the year has been arrived at after charging/(crediting):
Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
Net foreign exchange losses/(gains) 241 (17)
Research and development costs 371 310
Depreciation of property, plant and equipment 15 37
Share based payments expense 20 200
Staff costs 520 666
Auditors' remuneration
Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
The analysis of auditors' remuneration is as
follows:
Fees payable to the Company's auditors and 68 80
their associates for the audit of the
Group's annual accounts
Fees payable to the Company's auditors and 25 102
their associates for the audit of the
Company's subsidiaries pursuant to
legislation
Total audit fees 93 182
Fees payable to the Group's auditors and its
associates for other services:
- other services relating to taxation 20 2
- other assurance services relating to 25 25
interim reviews
Total non-audit fees 45 27
138 209
5. Tax
Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
Current tax 47 2,530
Deferred tax (5,776) (1,598)
(5,729) 932
Corporation tax is calculated at 28% (2008: 28%) of the estimated assessable (loss)/profit for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The Group tax (credit)/charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
(Loss) / profit before tax:
Continuing operations (22,536) 955
Discontinued operations (1,294) (811)
(23,830) 144
Tax at the UK corporation tax rate of 28% (6,672) 41
(2008: 28%)
Tax effect of permanent differences (839) 35
Tax effect of unrecognised tax losses carried 1,351 559
forward and other temporary differences
Overseas taxes on disposal 47 2,466
Double tax relief (47) (2,231)
Impact of differing tax rates in overseas - 62
jurisdictions
Tax effect of writing off non-taxable 431 -
goodwill
Tax (credit)/expense for the year (5,729) 932
6. (Loss)/Earnings per share
From continuing operations
Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
(Loss)/Earnings for the purposes of basic (16,807) 23
and diluted earnings per share ("EPS") being
net (loss)/ profit for the year attributable
to equity holders of the parent
Number Number
Weighted average number of ordinary shares 751,765,026 729,535,781
for purposes of basic EPS
Effect of dilutive potential ordinary shares - 22,078,162
- options and warrants
Weighted average number of ordinary shares 751,765,026 751,613,943
for purposes of diluted EPS
The basic and diluted loss per share from continuing operations have been calculated using the loss from continuing operations for the year ended 30 June 2009 of £16,807,000 (2008 profit £23,000). The basic and diluted loss per share were calculated using a weighted average number of shares in issue of 751,765,026 (2008: 751,613,943).
From continuing and discontinued operations
Year Year
ended ended
30 June 30 June
2009 2008
£'000 £'000
Loss for the purposes of basic and diluted (18,101) (788)
earnings per share ("EPS") being net loss for
the year attributable to equity holders of
the parent
Number Number
Weighted average number of ordinary shares 751,765,026 729,535,781
for purposes of basic EPS
Effect of dilutive potential ordinary shares - -
- options and warrants
Weighted average number of ordinary shares 751,765,026 729,535,781
for purposes of diluted EPS
The basic and diluted loss per share from continuing and discontinued operations have been calculated using the loss from continuing and discontinued operations for the year ended 30 June 2009 of £18,101,000 (2008 loss £788,000). The basic and diluted loss per share were calculated using a weighted average number of shares in issue of 751,765,026 (2008: 751,613,943).
Where a loss has occurred, basic and diluted earnings per share are the same because the outstanding share options and warrants are anti-dilutive. Accordingly diluted EPS is equal to basic EPS.
7. Intangible assets
Total
£'000
At 1 July 2007 11,601
Foreign currency translation 1,203
Written off during the period (530)
Transfer to held for sale (1,858)
Additions 78
At 30 June 2008 10,494
Foreign currency translation (101)
Written off during the year (a) (10,393)
At 30 June 2009 -
(a) The assessment of intangible assets for any indications of impairment involves judgment. If an indication of impairment, as defined in IFRS 6 Exploration for and Evaluation of Mineral Reserves exists, a formal estimate of recoverable amount is performed and an impairment loss recognised to the extent that carrying amount exceeds recoverable amount, as prescribed by IAS 36 Impairment.
During the year under review, impairment indicators were identified in regard to mining rights for oil shale reserves, an intangible exploration and evaluation asset previously recognised in relation to Xtract Oil Limited which resulted in an impairment charge being recorded in the first half of the year. A period of sustained adverse market conditions and a heightened uncertainty over the outlook for oil prices have necessitated a reassessment of the Group's investment priorities. Under these circumstances, Xtract took the decision to scale back significantly its projected investment in the development of oil shale technology.
Due to the early stage of the exploration and evaluation of these mining rights, the directors are not able to establish a reliable and supportable estimate of recoverable amount as per the requirements of IAS 36 Impairment. Whilst the directors remain committed to the project in the long term, and perceive that the mining rights do continue to have potential value, because of the early development stage of the project, the perceived potential value was not supportable under the applicable accounting standards, as noted. Therefore the balance of mining rights, of £10,392,847 is deemed to be impaired and was written down to £nil through the income statement in the first half of the year and remains fully impaired at the year end..
8. Financial assets
Available for sale investments As at 30 June 2009 As at 30 June 2008
£'000 £'000
Opening balance 15,962 3,206
Unwinding of fair value on transfer - (547)
to investment in associate
Movement in fair value prior to - 26
transfer to investment in associate
Transferred to investments in - (818)
associates
Transferred from investments in - 21,021
associates
Acquired during the year (a) 590 424
Rights issue purchased during the 65 -
year
Disposed during the year (b) (4,304) (5,359)
Movement in fair value (c) (9,098) (1,991)
3,215 15,962
(a) During the financial year, the Company acquired 3,825,000 shares in an AIM-listed company, Rheochem Plc, for £589,873.
(b) MEO Australia Limited 44,772,185 shares sold during the year, as at 30 June 2009 14,375,629 MEO shares were still held by the Company.
(c) Movement in fair value of investments during the year based on the market value of shares held.
Available for sale investments comprise the Group's investment in listed securities, which are held by the Group as strategic investments. The fair value of available for sale investments is based on the share price at 30 June 2009. Available for sale investments held are subject to currency and market risk, refer to note 23. In the period subsequent to year end, the Group has disposed of all its holding in MEO Australia Limited and Wasabi Energy Limited, refer to note 13.
Derivative financial instruments As at 30 June 2009 As at 30 June 2008
£'000 £'000
Opening balance 23 9
Purchased during the period - 135
Expired during period (23)
Fair value increase - 311
Transferred to investments in - (128)
associates
Transferred to held for trading on - (304)
exercise of options
- 23
9. Discontinued operations
On 17 November 2008, Xtract International Limited, a wholly owned subsidiary of Xtract Energy Plc, entered into a Farm In Subscription Agreement over its wholly owned subsidiary, Zhibek Resources Limited ('Zhibek'). Under the terms of the agreement, Santos International Holdings Pty Ltd ('Santos'), a subsidiary of Santos Ltd, was issued shares to provide them with a 75% ownership interest in Zhibek. Santos will fund up to US$8.5 million of Zhibek's near term exploration programme, and assume operatorship and control of Zhibek. Xtract will maintain a presence on the board of Zhibek and will contribute US$1.5 million to Zhibek in the latter stages of the near term exploration programme.
Based on the terms of the Farm In Subscription Agreement, consideration received for the deemed disposal of 75% of Xtracts' interest in Zhibek has been established as the minimum excess funding to be provided by Santos over and above their ownership stake, being US$1 million. This consideration has been discounted using a rate of 15%, a rate deemed appropriate by the directors given the circumstances of the transaction, over the estimated time required to complete the near term exploration programme of 2 years. Accordingly the net present value of the deferred consideration for this transaction has been calculated at £609,793 and is being released as Santos provides the excess funding under the agreement.
The details of assets and liabilities sold are as follows:
As at
17 November 2008
£'000
Carrying value of subsidiary sold 1,778
Consideration received 610
Value of associate retained 470
Loss on sale 698
On the deemed disposal Xtract have recognised their remaining interest in Zhibek at 25% of Zhibek's previous carrying value of £470,000.
The directors undertook an impairment assessment of the investment in the associate and concluded that an impairment charge of £267,000 should be recognised in order to reflect the associate balance at its fair value indicated by the purchase consideration received from Santos.
The Group's balance sheet at 30 June 2009 reflects the following position with respect to Zhibek:
Investment in associate 456
Deferred consideration 310
766
Zhibek has been reflected as a discontinued operation for the periods ended 30 June 2009 and 30 June 2008.
The summary of Zhibek Balance Sheet as at 17 November 2008 was as follows:
As at
17 November
2008
£'000
Mining exploration rights 401
Cash and cash equivalents 31
Trade and other receivables 116
Inventories 11
Total assets classified as held for sale 559
Trade and other payables (112)
Total liabilities classified as held for sale (112)
Net assets of the disposal group 447
The results of the discontinued operations which have been included in the consolidated income statement, were as follows:
Year ended Year ended
30 June 30 June
2009 2008
£'000 £'000
Administrative and operating expenses (119) (282)
(Loss)/Gain on disposal of property, plant and - 1
equipment
Operating loss (119) (281)
Loss on disposal (698) -
Write down of intangible assets - (530)
Write down of tangible assets (477) -
Loss before tax (1,294) (811)
Attributable tax expense - -
Net loss attributable to discontinued operations (1,294) (811)
During the year, the discontinued operations operating cash inflow was £1,000. It did not generate or receive any cash in respect of financing or investing activities.
The effect of discontinued operations on segment results is disclosed in note 3.
10. Reconciliation of Changes in Equity
Share Share Share Available-for-sale Revaluation reserve Foreign currency Retained Minority Interest Total Equity
Capital premium based payments investments reserve translation reserve Earnings
account reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2007 704 23,800 411 547 962 (18) 6,064 (91) 32,379
Issue of shares 48 594 - - - - - - 642
Share based payments expense - - 200 - - - - - 200
Movement in share based - - 493 - - - - - 493
payments reserves of
associates
Tax effect of movement in - - (148) - - - - - (148)
share based payments reserves
of associates
Loss on revaluation of - - - (1,963) - - - - (1,963)
available-for-sale investments
Unwinding of fair value on - - - (547) - - - - (547)
transfer to investment in
associate
Tax effect of unwind of fair - - - 164 - - - - 164
value on transfer to
investment in associate
Deferred tax on revaluation of - - - 376 - - - - 376
available-for-sale investments
Transfer of available-for-sale - - - (2,236) - - - - (2,236)
revaluations to income
statement on disposal
Transfer of deferred tax on - - - 678 - - - - 678
revaluation of
available-for-sale assets on
disposal
Currency translation - - - - - 1,190 - - 1,190
differences
Tax effect of currency (361) (361)
translation differences
Loss for the period - - - - - - (788) - (788)
At 30 June 2008 752 24,394 956 (2,981) 962 811 5,276 (91) 30,079
Share Share Share Available-for-sale Revaluation reserve Foreign currency Retained Minority Interest Total Equity
Capital premium based payments investments reserve translation reserve Earnings
account reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2008 752 24,394 956 (2,981) 962 811 5,276 (91) 30,079
Issue of shares - - - - - - - - -
Share based payments expense - - 20 - - - - - 20
Subsidiary becoming associate - - - - - - - 91 91
(a)
Revaluation of intangible - - - - (962) - - - (962)
asset (b)
Loss on revaluation of - - - (9,098) - - - - (9,098)
available-for-sale investments
Deferred tax on revaluation of - - - 2,616 - - - - 2,616
available-for-sale investments
Transfer of available-for-sale - - - 9,312 - - - - 9,312
revaluations to income
statement on disposal
Transfer of deferred tax on - - - (2,794) - - - - (2,794)
revaluation of
available-for-sale assets on
disposal
Currency translation - - - - - 705 - - 705
differences
Profit for the year - - - - - - (18,101) (18,101)
At 30 June 2009 752 24,394 976 (2,945) - 1,516 (12,825) - 11,868
(a) Derecognising of minority interest on deconsolidation
(b) Reversal of previously recognised revaluation reserves on impairment of intangible assets
Available for sale reserve
The available for sale reserve is used to recognise fair value changes on available-for-sale investments.
Foreign Currency Translation reserve
The foreign currency translation reserve is used to record exchange differences arising from translation of the financial statements of foreign subsidiaries.
Share based payments reserve
The share based payments reserve is used to recognise the equity component of share base payments.
Revaluation Reserve
The revaluation reserve is made up of the revaluation of the assets of Xtract Oil Limited upon the piecemeal acquisition of that company.
11. Notes to the cash flow statement
Year ended 30 June 2009 Year ended 30 June 2008
£'000 £'000
Loss for the year (18,101) (788)
Adjustments for:
Share of results of associates 1,431 1,707
Investment revenue (124) (207)
Other (gains) and losses 20,158 (4,617)
Income tax (credit)/expense (5,729) 932
Government grants (179) (119)
Depreciation of property, 31 38
plant and equipment
Share-based payments expense 20 200
Due diligence fee income - (74)
Loss on disposal of property, - (1)
plant and equipment
Operating cash flows before (2,493) (2,929)
movements in working capital
(Increase)/Decrease in 47 (42)
inventories
(Increase)/Decrease in (573) 31
receivables
Increase /(Decrease) in 192 134
payables
Cash used in operations (2,827) (2,806)
Income taxes paid - -
Interest expenses 323 -
Foreign exchange differences 172 375
Net cash used in operating (2,332) (2,431)
activities
12. Going Concern
The Group is not currently generating revenues from its operations, and its forecasts and projections show that it would not have sufficient cash to make further investments in its existing and new projects in line with the Group's strategy as well as settle its current liabilities when due and meet its ongoing overheads without gaining access to additional funds. The Group continues to manage its investments as a portfolio, seeking to dispose of investments, bring in strategic partners and raise funds as appropriate to finance its obligations and to fund new investments. Management plans to address the Group's funding requirements through a combination of these measures. Management believes that it will be able to manage the Group's liquidity position successfully, but at this stage there is no committed transaction which would address the Group's cash requirements.
The directors have concluded that, given that the general economic climate remains challenging, these circumstances represent a material uncertainty that casts significant doubt upon the Group's and the Company's ability to continue as a going concern and that, therefore, the Company may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless after making enquiries, and considering the uncertainties above, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and financial statements.
13. Events after the balance sheet date
Disposal shares in MEO Australia Limited.
Between 23 July and 7 August 2009, Xtract sold the remaining 14,375,629 shares in MEO Australia Limited, receiving AUD $6,998,351 after brokerage costs.
Disposal shares in Wasabi Energy Limited.
During August - September 2009, Xtract disposed of its entire shareholding in Wasabi Energy Limited, receiving AUD $1,376,757 after brokerage costs for 126,551,786 shares. The remaining 26,625,000 Wasabi shares were exchanged into 1,775,000 Elko shares.
Elko Energy
In August 2009 Xtract has acquired additional 1,775,000 shares of Elko increasing its holding in the company to 36,775,000 (36.81%).
After the reporting period on 26 August 2009, Elko and its subsidiary Dragon Energy Inc ("Dragon") signed an overriding royalty agreement whereby Elko will benefit from a 2.5% overriding royalty from future revenues from the Kotaneelee field, over a maximum term of five years capped at an aggregate value of CDN$750,000. In exchange Elko returned to Dragon 15,600,000 common shares representing its 51% ownership and Jack Bray, Peter Moir and Andy Morrison resigned from the board of Dragon.
Dragon holds a 30.67% working interest in the Kotaneelee field in the Yukon Territory, Canada operated by Devon. Gas production at Kotaneelee is in decline and gas prices in North America are depressed resulting in a significantly weakened revenue stream from current production levels. The disposal of Dragon eliminated a potential liability from Elko's balance sheet.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BJBRTMMABBFL
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| 12-11-09 | HUG |
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Investment Update 12 November 2009 AIM: XTR
XTRACT ENERGY PLC
Xtract refers to the text set out below of a shareholder letter sent by Elko Energy Inc. ("Elko") to its shareholders (Xtract owns approximately 36.8% of Elko's issued share capital).
Elko Energy Inc. ('Elko') is pleased to provide this further regular update on the ongoing development of the Elko business. Elko Business Update Denmark
Following the reprocessing of approximately 3,000 km of seismic data
over our 02/05 Danish licence, Gaffney Cline and Associates (GCA)
evaluation has identified a large Chalk channel some 90 km long by 10
km wide across the 02/05 licence. It has the potential to be a good
hydrocarbon migration. The Chalk channel has the potential to hold a considerable volume of hydrocarbons which in a moderate case scenario could be 375 million barrels of recoverable oil. This new Chalk prospect is in addition to the previously identified deeper Rotliegendes sandstone prospect and the opportunity now exists to evaluate both the Chalk horizon and Rotliegendes sandstone horizon by drilling a single suitably designed well. Marketing of the Danish opportunity with the focus on the GCA Chalk evaluation has commenced within the industry. Ahead of entering the next phase of the exploration licence in April 2010, an optional commitment to drill a well has to be given to the Danish Energy Agency. The current estimate 100% cost of drilling a well capable of evaluating both horizons is US$15 million, excluding production testing (based on quotations from Well Management consultancies). Elko holds an 80% interest in the 02/05 licence. Netherlands The reservoir modeling of the P1 Block, P1-FA field has concluded that the optimal development plan will required five long reach horizontal wells to sustain a plateau production rate of 120 mmscf/d. An appraisal well location has been identified and a well proposal is under preparation for submission to the Dutch state authorities. On the P2 Block, reprocessing of previous 3D seismic is ongoing and will be complete by 2009 year end. Early fast track data has been analyzed and shows improved imaging over the existing discoveries and prospects. Also an additional new prospect has been identified. Elko continues to hold discussions with a number of potential new financing partners to replace Oyster via a promoted farm out of a percentage of Elko's working interest in Blocks P1 and P2. Securing a financing partner ahead of entering the next phase of the exploration licences on both Blocks P1 and P2 remains a priority for Elko. The date for this optional commitment to drill an appraisal well on P1 and a well on P2 is February 2010. It should be noted that Elko previously secured an eight month extension on the P1 licence first exploration phase from June 2009 until February 2010. The current cost estimate of drilling two wells on P1 and P2 is US$55 million (based on quotations from Well Management consultancies). Elko holds a 60% interest in the P1 and P2 licences. Licence Commitments Further details of Elko's licence commitments and guarantees can be found in note 17 of the Company's Audited Consolidated Financial Statements for the year ended December 31, 2008.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS We have made forward-looking statements in this President's Message that are subject to significant risks and uncertainties. These statements concern Elko's plans, expectations and objectives for future operations of Elko's licenses in the North Sea." Peter Moir President November 11, 2009 Further information on Elko can be found at www.elkoenergy.com Elko Energy Inc. is not subject to the AIM Rules and the information contained in this announcement has not been reviewed by a named "qualified person" as defined and required by the AIM Note for Mining, Oil and Gas Companies. Enquiries please contact:
Corporate Finance Azhic Basirov
About Xtract Energy
Xtract identifies and invests in a diversified portfolio of early
stage energy sector technologies and businesses with significant
associated management teams to achieve critical project milestones, to finance later development stages, and to build and crystallise value for all shareholders and partners. For further information on Xtract please visit www.xtractenergy.co.uk A short description of the principal assets of Xtract is set out below. These assets are either held directly or through wholly owned subsidiaries of the Company. Extrem Energy AS ("Extrem Energy") Extrem Energy is an exploration and production joint venture with Merty Energy of Turkey. The JV's aim is to create a new medium-sized oil and gas exploration and production business, initially focused on Turkey where Merty Energy has particular experience and expertise. Extrem Energy has a portfolio of licence interests including the high potential prospect at Candarli Bay in south-west Turkey. Xtract owns 34% of the issued share capital of Extrem Energy. Elko Energy Inc. ("Elko") Elko is a Canadian registered oil & gas exploration company which has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset is in the Danish North Sea; an 80% interest on 26 offshore blocks in a 5,400 sq km exploration and production licence close to the prolific Central Graben oil field. Technical work indicates the potential for significant reserves. Elko also holds a 60% operating interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea. Xtract owns approximately 36.8% of Elko's issued share capital. Zhibek Resources Ltd ("Zhibek Resources") Zhibek Resources is an oil and gas exploration and production company which has a 72% interest in the Tash Kumyr and Pishkoran exploration licences in the Kyrgyz Republic. Xtract has entered a farm-out agreement to fund a seismic and drilling programme for 2008-09. Xtract owns 25.0% of the issued share capital of Zhibek Resources. Xtract Oil Ltd ("XOL")
Xtract's wholly owned subsidiary, XOL, is focused on the development
of the Company's oil shale resources in Australia and the technology
for oil extraction from oil shale resources. Xtract has oil shale
exploration rights over mining tenements in the Julia Creek area of
Queensland. In addition to evaluating third party technologies, XOL
extraction of liquid hydrocarbon products from oil shale. Xtract Energy (Oil Shale) Morocco SA ("XOSM")
XOSM is a joint venture with Alraed Limited Investment Holding
Company WLL, a company controlled by His Highness, Prince Bandar Bin
Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a
Hydrocarbures et des Mines for the purposes of evaluation and possible development of an oil shale deposit near Tarfaya, in the south west part of Morocco. Xtract currently holds 70% of the joint venture.
---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement. More |
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| 06-11-09 | AFX UK Focus |
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Reuters messaging rm://ben.deighton.thomsonreuters.com@reuters.net
-------------------------------------------------------
Shares in Tribal Group rise 5.7 percent as Shore Capital initiates its coverage on the British public-sector consultant with a "buy" rating, citing strong cash flow and valuation attractions, alongside growing market opportunity.
The broker says Tribal has built positions in key public sector markets and expects "acquisitions to continue, but with a greater focus in building a cohesive business targeting growth opportunities in specific vertical markets."
Reuters Messaging rm://david.brett.reuters.com@reuters.net
----------------------------------------------------
IQE, a supplier of semiconductor wafer products, falls 2.7 percent after Panmure Gordon downgrades its rating to "hold" from "buy" and cuts its earnings forecasts for the firm, citing possible supply chain issues with its biggest customer Triquint.
Reuters Messaging rm://tricia.wright1.reuters.com@reuters.net
---------------------------------------------------
Shares in IQE fall 2.7 percent after Panmure Gordon downgrades its rating to "hold" from "buy" and cuts the firm's earnings forecasts, citing possible supply chain issues with its biggest customer Triquint.
Reuters Messaging rm://david.brett.reuters.com@reuters.net
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Reuters messaging rm://sharon.lindores.reuters.com@reuters.net
----------------------------------------------------
Panmure Gordon says phase IIb data, announced on Thursday, achieved by the China-focused firm's drug candidate HMPL-004 in the treatment of Ulcerative Colitis is "overwhelmingly positive".
Reuters Messaging rm://david.brett.reuters.com@reuters.net COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. More |
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| 06-11-09 | HUG |
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Investment Update 6 November 2009 AIM: XTR
XTRACT ENERGY PLC
Xtract Energy Plc ("Xtract") provides the following update on operations in the Alasehir licence area at its Turkish joint venture Extrem Energy A.S. ("Extrem Energy"). Alasehir-1 Production Test As announced on 21 September 2009, the Alasehir-1 well was re-entered on 19 September with a view to testing production from five intervals and, if successful, combining it with production planned from the Sarikiz-2 well. On 5 November, Extrem Energy took the decision to suspend further testing work on the well. Unfortunately, well conditions encountered were worse than expected and several attempts to repair the cement bonds were not successful. Some oil and water was produced from early attempts at production testing in two of the five intervals, but poor well conditions meant that it was not possible to determine with any confidence the actual composition of the reservoir fluids. Delay was encountered in awaiting specialist tools, but these did not in the end provide a solution. The failure of the production test is inconclusive as to the presence or not of commercial oil at Alasehir as it was not possible to isolate the target intervals to test them. It is therefore not possible to provide an estimate of the oil in place in the Alasehir part of the field at this time. Extrem Energy will review alternative approaches for the exploration and appraisal of the Alasehir part of the field in light of this development. In view of the difficulties faced at Alasehir-1, Extrem Energy has decided to next drill a new well Sarikiz-3 on the Sarikiz part of the field rather than carry out the previously announced re-entry of East Sarikiz-1. This will enable the drilling rig to catch up time lost at Alasehir-1. If it is decided to re-enter East Sarikiz-1 at a later date, a cheaper work-over rig may be used. An update on plans for Sarikiz-3 will be provided as soon as possible. Sarikiz-2 Production
On a brighter note, preparation for commercial production from
Sarikiz-2 has advanced considerably since the last update on 27
August 2009. Separation and storage facilities required at the well
site are in place and discussions with the Tupras refinery at Izmir
have confirmed their willingness and ability to buy the crude oil
production have been applied for and are expected to be in place to enable production to commence in the second half of November. Although the commencement of production is a little later than originally expected, its start will nevertheless mark an important milestone for Extrem Energy. Alasehir/Sarikiz Field Development In order to help inform decision-making by Xtract in relation to the Alasehir concession, Xtract commissioned a recognised independent expert firm to make an initial evaluation of work to date on the Alasehir concession area. The work was conducted during October 2009 and included site visits to Alasehir, data review and discussions with partner Merty Energy. In their report, the independent experts acknowledged that Sarikiz-2 represents an interesting new discovery and that the well has proven the presence of an active petroleum system in the basin whilst cautioning that much remains to be done to determine the extent of the fields and therefore before long-term commercial projections can be made. On the basis of the data supplied by Extrem Energy during the visit of the experts, the experts estimated the P50 prospective resources to be 96mbbl oil in place in the Sarikiz field and applied a recovery factor of 14% resulting in a corresponding 13mbbl estimate for recoverable oil. These estimates are significantly lower than Extrem Energy's previously published estimates of P50 oil in place of 371mbbl and recoverable oil of 74mbbl based on a recovery factor of 20%. In addition to the different recovery factors, the principal reasons for the differences lie in the assumptions made in relation to: (i) mean thickness of oil bearing areas (Extrem Energy - 50m; Expert - 25m); and (ii) the mean area of the oil bearing field (Extrem Energy - 13km2; Expert - 10km2). Following a review of the expert's report, Extrem Energy has confirmed its own previously published estimates and it should be noted that until further exploration and appraisal is conducted within the concession area, any volumetric estimates of oil in place are subject to a high degree of uncertainty. The assessments provided by both Extrem Energy and the independent expert are based on a geological model arising from seismic and geochemical analysis that has not yet been validated (or invalidated) by drilling data. The scope of work required of the expert did not amount to a fully fledged "Competent Persons Report". It is intended that such a report including the applicable resources categories and estimates will be prepared in early 2010, once production is established. In the opinion of the independent experts, Xtract has an interesting and capable partner in Merty Energy, but Xtract needs to play its full role as a non-operating partner to ensure success. Steps are already being taken to strengthen operating procedures and to start to build an independent management team at Extrem Energy. Further updates will be provided as appropriate. The information above relating to resource estimates has been provided using the SPE standards and includes the following terms: "mbbl" (million barrels); "P50" (midcase scenario in relation to reserve expectations.
The above information has been reviewed and approved by Ongun
Yoldemir, Managing Director of Extrem Energy, who has a masters
degree in geological engineering and worked as an explorationist in
the oil and gas sector in the Middle East, Kazakhstan, Azerbaijan,
and North Sea, has over 28 years' experience in the resource and
energy sector and is a member of the American Association of
Engineers, the Society of Exploration Geophysicists and several related Turkish institutions. Enquiries please contact:
Corporate Finance Azhic Basirov
About Xtract Energy
Xtract identifies and invests in a diversified portfolio of early
stage energy sector technologies and businesses with significant
associated management teams to achieve critical project milestones, to finance later development stages, and to build and crystallise value for all shareholders and partners. For further information on Xtract please visit www.xtractenergy.co.uk A short description of the principal assets of Xtract is set out below. These assets are either held directly or through wholly owned subsidiaries of the Company. Extrem Energy AS ("Extrem Energy") Extrem Energy is an exploration and production joint venture with Merty Energy of Turkey. The JV's aim is to create a new medium-sized oil and gas exploration and production business, initially focused on Turkey where Merty Energy has particular experience and expertise. Extrem Energy has a portfolio of licence interests including the high potential prospect at Candarli Bay in south-west Turkey. Xtract owns 34% of the issued share capital of Extrem Energy. Elko Energy Inc. ("Elko") Elko is a Canadian registered oil & gas exploration company which has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset is in the Danish North Sea; an 80% interest on 26 offshore blocks in a 5,400 sq km exploration and production licence close to the prolific Central Graben oil field. Technical work indicates the potential for significant reserves. Elko also holds a 60% operating interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea. Xtract owns approximately 36.8% of Elko's issued share capital. Zhibek Resources Ltd ("Zhibek Resources") Zhibek Resources is an oil and gas exploration and production company which has a 72% interest in the Tash Kumyr and Pishkoran exploration licences in the Kyrgyz Republic. Xtract has entered a farm-out agreement to fund a seismic and drilling programme for 2008-09. Xtract owns 25.0% of the issued share capital of Zhibek Resources. Xtract Oil Ltd ("XOL")
Xtract's wholly owned subsidiary, XOL, is focused on the development
of the Company's oil shale resources in Australia and the technology
for oil extraction from oil shale resources. Xtract has oil shale
exploration rights over mining tenements in the Julia Creek area of
Queensland. In addition to evaluating third party technologies, XOL
extraction of liquid hydrocarbon products from oil shale. Xtract Energy (Oil Shale) Morocco SA ("XOSM")
XOSM is a joint venture with Alraed Limited Investment Holding
Company WLL, a company controlled by His Highness, Prince Bandar Bin
Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a
Hydrocarbures et des Mines for the purposes of evaluation and possible development of an oil shale deposit near Tarfaya, in the south west part of Morocco. Xtract currently holds 70% of the joint venture.
---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement. More |
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Now now, Mark, you well know that comedy has 4.9m and has run out of cash. Smarty has 6m at the last count.
I hold my 1.9m and I have nodoubt that you hold your 1.4m. We're all holding because nothing has really changed. More | View thread (5) | Respond | Login to Vote up | Login to Vote down |
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| Fri 21:10 | ||||
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Here's some cash being transferred from the impatient to the patient... Reckon he's made a loss and is now off with what remains of his cash to make a loss somewhere else.
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| Fri 20:54 | ||||
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yep sold out @ 3.5p............y ? cause the inevitable was about to happen............a massive sell off !
drewboy........ "he's off - seems like his indepth analysis and figures weren't enough for him to ride a reduction in sp !!! " Are u for real ? ride a reduction ? Have u heard the expression "cash is king"............ the whole reason i invested was that i thought we'd have 3 wells online producing in the region of 1200bopd minimum, at present there is only one after a failure in the Aleshair field. I was sticking around with the hope that the east sarikiz well will be succesful but after reading the year end results regarding the cash issue i sold out....... whats going to happen if this well is a failure to ? cash will be low due to all the outlay for the 2drilling activities and no return....... what happens then ? Im not keen on gas assets much rather oil plays and these are the plays planned in the first half of 2010.............. theres to much supply, demand isnt there and prices are low. These gas plays jus wont provide the cash flow that is required to push this alot higher in the short term. As with any investment, esp AIM stocks(high risk), optimism and sendiment can change v quickly and unfortunately XTR got two kickings in a row. Would look to get bk in next summer if Candarli bay and elko licences get confirmed to be drilled...........but short term i dont see the risk ratio worth the investment........... will watch from the sidelines and see how things pan out. XTR need to be succesful in the next sarikiz well no questions. GL to all with ur investment More | View thread (5) | Respond | Login to Vote up | Login to Vote down |
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| Fri 16:44 |
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IMO Duchessofdreams your on to a winner I’m sure. This is a great entry for any would be investor. The oily's have taken a bashing today due to the barrel rate being a little lower. Fill your boots your in for a lovely ride.
DYOR & GL all even the shorters More | View thread (3) | Respond | Login to Vote up | Login to Vote down |
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