02:00 Wed 30 Sep 2020
ADM Energy PLC - Half-yearly Results

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.
ADM Energy plc
("ADM" or the "Company")
Half-yearly Results
ADM Energy plc (AIM: ADME; BER and FSE: P4JC), a natural resources investing company, announces its interim results for the six months ended
Investment Highlights:
5% equity investment in the Aje field, part of OML 113 offshore
· Operations largely unaffected by COVID-19 and oil production continued throughout the period, except during scheduled technical maintenance on the FPSO
· Two wells (Aje-4 and Aje-5) producing at an average of 2,126 bopd (H1 2019: 2,967 bopd), with 106 net to ADM. The temporary drop in production reflects a period of maintenance on the FPSO and the Partners anticipate production will increase in H2 2020
· Total gross production volume of approximately 394,812 barrels of oil from January to
· Asset-level operational costs reduced by 37.5% - breakeven reduced to
· Partners exercised right to store oil on FPSO for later sale with anticipated recovery in crude oil price
· The next lifting is planned for
· Entered into an agreement with EER to increase revenue interest in OML 113 from 5% to 9.2%, expected to complete in H2 2020
o Significantly increases ADM's net 2P reserves from 8.9 MMboe to 16.4 MMboe with net daily reserves, based on current production, rising from 106 bopd to approximately 196 bopd
Corporate Highlights:
· Signed strategic alliance MoU with Trafigura to develop African energy projects and provide conditional pre-finance of up to
· Raised
· Secondary listing on the
Post Period Highlights:
· Strengthened the Board with the appointment of two high-calibre Non-executive Directors, Sir
· Added two oil and gas veterans,
· Raised additional equity and debt of
· Submitted bid for a marginal field in
"By storing oil on the FPSO, we have avoided making sales at depressed prices and are now positioned to benefit from any potential increased forward curve in oil prices as the global economy begins to re-open. We are excited by the prospects at the Aje field and are increasing our stake from 5% to 9.2% ahead of plans to drill three new wells in 2021, potentially significantly increasing production to 9,000 bopd.
"We continue to drive forward our strategy to build a multi-asset portfolio by targeting projects with highly attractive risk-reward profiles. As oil majors continue to look to divest assets, the current economic climate has further depressed their value but not their quality, which presents attractive investment opportunities. With a strengthened management team and Board, extensive contacts and experience in
Enquiries:
ADM Energy plc | +44 20 7459 4718 |
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Cairn Financial Advisers LLP | +44 20 7213 0880 |
(Nominated Adviser) |
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Hybridan LLP | +44 20 3764 2341 |
(Lead Broker) |
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Pello Capital Limited | +44 20 3700 2500 |
(Joint Broker) |
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| +49 69 920540 |
(Designated Sponsor) |
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| +44 20 7618 9100 |
(Financial PR) |
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Harry Chathli, |
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About ADM Energy PLC
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural resources investing company with an existing asset base in
ADM Energy is seeking to build on its existing asset base in
Investor Presentation
The Company will host an investor meeting, via conference call, on
The call is open to all existing and potential shareholders. Interested parties can register to attend https://docs.google.com/forms/d/1umfzyTUp8XP8icZvuoHwLSKvs4yPz9I6Nv29gAbb2r8/edit.
Participants are requested to submit questions in advance by
Operating Review
The end of the first half marks approximately a year since ADM appointed
The changes are reflected in the Company's progress during the first six months of the year. ADM agreed an MoU for a strategic partnership with Trafigura Pte Ltd ("Trafigura"), one of the largest commodity trading groups in the world, to jointly develop and finance approved future acquisitions, including conditional pre-financing of up to
The steps taken form part of a strategy implemented by the new management team to increase shareholder value by expanding its portfolio of projects through the acquisition of undervalued 2P reserves without the risks associated with high cost exploration.
Aje Field Investment
The Aje field, part of OML 113, covers an area of 835km² offshore
In
In the first six months of 2020, production from the Aje field was 2,126 bopd (H1 2019: 2,967 bopd). The temporary drop in production was largely due to scheduled technical maintenance on the FPSO and the joint venture partners ("Partners") anticipate production will increase in the second half of the year.
The Partners took decisive measures in response to the COVID-19 pandemic to ensure the safety of crew on the floating production storage and offloading unit ("FPSO"). This included adapting the rotation policy and implementing support processes onshore and offshore. As a result, operations at the Aje field have been largely unaffected during the period.
Notwithstanding the actions taken by the Partners, the global public health emergency has had a significant impact on global markets which in turn has put downward pressure on the crude oil price. In light of market volatility, the Partners reduced operating costs at project level by 37.5% on average, including a decrease in the FPSO lease cost. This successfully reduced the project break-even cost to
As further mitigation against market volatility, ADM and the Partners decided to delay oil sales and store production on the FPSO, which has up to 750,000 barrels of storage capacity, in order to benefit from the anticipated rise in the oil price. To date, this strategy has been vindicated and the Directors expect the forward curve to continue to improve in Q4 2020. The next lifting is planned for
Field Development Plan
The Partners continue discussions to reach a Final Investment Decision on a new development plan. This includes the drilling of three new wells in 2021, which may potentially significantly increase production of oil and gas liquids from 2,126 bopd experienced in H1 2020 to up to 9,000 bopd (approximately 900 barrels per day ("bpd") net to ADM, post completion of agreement with EER). It will also monetise the rich Dry Gas in the Aje field, where it has been estimated there is over 1.1 trillion cubic feet ("Tcf") of Gas initially in Place ("GIIP") which could be supplied to the
The Partners continue to explore various methods of financing, one of which is the
Listing in
During the period, ADM added secondary listings on the
Strengthening the Board and Technical Team
A key aspect of ADM's growth strategy is to leverage its expertise and contacts to invest in attractive near-term production assets. In line with this strategy, ADM further strengthened both its Board and its technical team post period with high-calibre individuals that bring significant value to the Company.
In
In addition to the new Board appointments, ADM appointed two oil and gas veterans,
These senior additions add to the Company's breadth of industry expertise and knowledge of the West African region, which will help ADM to appraise and progress investment opportunities as part of its asset selection and development strategy.
Marginal Bid Round
In
Financial Review
In light of market volatility, the Company decided to not make any sales during the period due to the depressed oil prices at the time. As a result, revenue for the six months was £nil (H1 2019:
The Company's operating costs were off-set by the inventory of oil stored in the FPSO and so they were also £nil (H1 2019:
As a result, the loss after taxation for the period increased to
The Directors do not propose a dividend (H1 2019: £nil). Cash and cash equivalents as at
Funding
In
In
Post-period, in
COVID-19 and Outlook
While COVID-19 continues to have an impact worldwide, operations at the Aje field have continued uninterrupted with oil being produced at Aje-4 and Aje-5. Asset-level cost reductions have successfully reduced the break-even cost to
The Company is confident in the Aje field's prospects as it gears towards a Final Investment Decision on the Partners' development plans to drill three new wells in 2021, potentially significantly increasing production up to 9,000 bopd. These plans have been significantly de-risked by the entry of PetroNor as a partner, a strong endorsement of the viability of the asset and its significant potential upside.
The Board is progressing its stated strategy to deliver growth by building its portfolio of assets. The Company continues to target undervalued projects with attractive risk-reward profiles by originating deals for appraisal, development and producing assets. It has submitted a bid in
It remains a buyer's market as upstream majors continue portfolio rationalisation via divestments in
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED
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| Unaudited 6 months ended 30 June 2020 | Unaudited 6 months ended 30 June 2019 | Audited Year ended 31 December 2019 |
| Notes | £'000 | £'000 | £'000 |
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Continuing operations |
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Revenue |
| - | 2,171 | 2,519 |
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Operating costs |
| - | (2,094) | (2,444) |
Administrative expenses |
| (938) | (511) | (1,721) |
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Operating loss |
| (938) | (434) | (1,646) |
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Finance costs |
| (37) | (14) | (27) |
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Loss on ordinary activities before taxation |
| (975) | (448) | (1,673) |
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Taxation |
| - | - | - |
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Loss for the period |
| (975) | (448) | (1,673) |
Other Comprehensive income: |
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Exchange translation movement |
| 529 | 45 | (272) |
Total comprehensive loss for the period |
| (446) | (403) | (1,945) |
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Basic and diluted loss per share | 2 |
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From continuing and total operations |
| (1.5)p | (1.3)p | (3.8)p |
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UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
| Notes | Unaudited 30 June 2020 | Unaudited 30 June 2019 | Audited 31 December 2019 |
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| £'000 | £'000 | £'000 |
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NON-CURRENT ASSETS |
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Development costs |
| 16,212 | 16,403 | 15,708 |
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| 16,212 | 16,403 | 15,708 |
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CURRENT ASSETS |
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Investments held for trading |
| 200 | 200 | 200 |
Inventory |
| 740 | - | - |
Trade and other receivables |
| 337 | 41 | 562 |
Cash and cash equivalents |
| 52 | 84 | 15 |
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| 1,329 | 325 | 777 |
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CURRENT LIABILITIES |
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Trade and other payables | 3 | 2,761 | 1,255 | 1,555 |
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| 2,761 | 1,255 | 1,555 |
NET CURRENT LIABILITIES |
| (1,432) | (930) | (778) |
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NET ASSETS |
| 14,780 | 15,473 | 14,930 |
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EQUITY |
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Ordinary share capital |
| 8,965 | 8,687 | 8,817 |
Share premium |
| 34,310 | 33,357 | 34,012 |
Shares to be issued |
| - | - | 150 |
Reserve for options granted |
| - | 172 | - |
Reserve for warrants issued |
| 720 | 783 | 720 |
Exchange translation reserve |
| (88) | (297) | (617) |
Retained deficit |
| (29,127) | (27,229) | (28,152) |
Equity attributable to owners of the Company and total equity |
| 14,780 | 15,473 | 14,930 |
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED
| Share capital | Share premium | Shares to be issued | Reserve for options granted | Reserve for warrants issued | Exchange translation reserve | Retained deficit | Total equity |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
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At | 8,499 | 32,833 | - | 172 | 783 | (345) | (27,034) | 14,908 |
Loss for the year | - | - | - | - | - | - | (1,673) | (1,673) |
Exchange translation movement | - | - | - | - | - | (272) | - | (272) |
Total comprehensive expense for the year | - | - | - | - | - | (272) | (1,673) | (1,945) |
Issue of new shares | 318 | 1,322 | 150 | - | 299 | - | - | 2,089 |
Share issue costs | - | (143) | - | - | 21 | - | - | (122) |
Share options lapsed | - | - | - | (172) | - | - | 172 | - |
Share warrants lapsed/cancelled | - | - | - | - | (383) | - | 383 | - |
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At | 8,817 | 34,012 | 150 | - | 720 | (617) | (28,152) | 14,930 |
Loss for the period | - | - | - | - | - | - | (975) | (975) |
Exchange translation movement | - | - | - | - | - | 529 | - | 529 |
Total comprehensive expense for the period | - | - | - | - | - | 529 | (975) | (446) |
Issue of new shares | 148 | 306 | (150) | - | - | - | - | 304 |
Share issue costs | - | (8) |
| - | - | - | - | (8) |
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At | 8,965 | 34,310 | - | - | 720 | (88) | (29,127) | 14,780 |
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED
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| Unaudited 6 months ended 30 June 2020 | Unaudited 6 months ended 30 June 2019 | Audited Year ended 31 December 2019 |
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| £'000 | £'000 | £'000 |
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OPERATING ACTIVITIES |
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Loss for the period |
| (975) | (448) | (1,673) |
Adjustments for: |
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Finance costs |
| 37 | - | 27 |
Depreciation and amortisation |
| 43 | 14 | 112 |
Operating cashflow before working capital changes |
| (895) | (434) | (1,534) |
(Increase) in inventories |
| (740) | - | - |
Decrease/(increase) in receivables |
| 177 | (12) | (383) |
Increase/(decrease) in trade and other payables |
| 999 | (402) | (115) |
Net cash outflow from operating activities |
| (459) | (848) | (2,032) |
FINANCING ACTIVITIES |
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Issue of ordinary share capital |
| 352 | 752 | 1,939 |
Share issue costs |
| (8) | (40) | (122) |
Short term loan finance |
| 170 | - | - |
Net cash inflow from financing activities |
| 514 | 712 | 1,817 |
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Net increase/(decrease) in cash and cash equivalents from continuing and total operations |
| 55 | (136) | (215) |
Exchange translation difference |
| (18) | 4 | 14 |
Cash and cash equivalents at beginning of period |
| 15 | 216 | 216 |
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Cash and cash equivalents at end of period |
| 52 | 84 | 15 |
NOTES TO THE HALF-YEARLY REPORT
1. The financial information set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The group's statutory financial statements for the period ended
The half-yearly financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and on the same basis and using the same accounting policies as used in the financial statements for the year ended
Going concern
At
Since the end of June, the Company has raised additional equity funding of
2. Earnings per share
The basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue.
| Six months ended 30 June 2020 (unaudited) | Six months ended 30 June 2019 (unaudited) | Year ended 31 December 2019 (audited) |
Weighted average number of shares in the period | 65,616,001 | 34,911,287 | 44,280,670 |
Loss from continuing and total operations | (£975,000) | (£448,000) | (£1,673,000) |
Basic and diluted loss per share: |
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From continuing and total operations | (1.5)p | (1.3)p | (3.8)p |
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3. Trade and other payables
| Unaudited 30 June 2020 | Unaudited 30 June 2019 | Audited 31 December 2019 |
| £'000 | £'000 | £'000 |
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Trade payables | 344 | 55 | 327 |
OML 113 operating expenses* | 1,026 | 221 | 213 |
Other payables | 1,139 | 915 | 810 |
Accrued expenses | 82 | 64 | 205 |
Short term loan finance | 170 | - | - |
| 2,761 | 1,255 | 1,555 |
*OML 113 operating expenses will be settled by offset against revenue from oil sales.
4. No interim dividend will be paid.
5. Copies of the interim report can be obtained from: The Company Secretary, ADM Energy plc, 60 Gracechurch Street,
Glossary of Key Terms | |
2P | Proved + Probable; represent volumes that will be recovered with 50% probability |
bopd | Barrels of oil per day |
bpd | Barrels per day |
condensate | A mixture of hydrocarbons in either gas or liquid form |
FPSO | Floating Production Storage and Offloading |
GIIP | Gas initially in Place |
MMboe | Million barrels of oil equivalent |
reserves | Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions on production, approved for development or justified for development. Reserves are also classified according to the associated risks and probabilities (1P, 2P and 3P) |
Tcf | Trillion cubic feet |
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