World Oil Resources Ltd

Transcription

1 World Oil Resources Ltd (formerly Eromanga Hydrocarbons Ltd) A.B.N and Controlled Entities 31 DECEMBER 2011 HALF-YEAR FINANCIAL REPORT 1

2 Company Directory Directors Mr Michael Goldhirsch Mr Philip Galloway Mr Stephen Shnider Mr John Weston Secretary Mr Stephen Shnider Solicitors to the Company Quinert Rodda & Associates Level Collins Street Melbourne. Vic Bankers Westpac Banking Corporation 360 Collins Street Melbourne. Vic Registered Office Level St Kilda Road Melbourne. Vic Auditors Grant Thornton Audit Pty Ltd Level Spring Street Melbourne. Vic Share Registry Computershare Investor Services Pty Ltd Yarra Falls 452 Johnston Street Abbotsford. Vic Stock Exchange Listing Shares are listed on the Australian Stock Exchange. Code WLR, WLROA 2

3 Directors' Report Your directors submit their report for the half-year ended 31 December DIRECTORS The names of the company s directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated. Michael Goldhirsch (Chairman) Philip Galloway (Managing Director) Stephen Shnider John Weston Joshua Goldhirsch (resigned 24th October 2011) REVIEW AND RESULTS OF OPERATIONS The net consolidated operating loss after tax of the economic entity for the half year ended 31 December 2011 was $2,283,206 (2010: $3,388,376). CORPORATE FINANCE AND CAPITAL STRUCTURE In April 2009, The Company established a $10 million equity placement facility with Fortrend Securities Pty Ltd. The Company can place securities with Fortrend at any time during the three year period ending April On 16 September 2011, the Company completed a placement of 7,748,331 Ordinary shares fully paid for a consideration of $0.02 per ordinary share. On 12 September 2011, the Company announced that it was making a pro-rata non-renounceable rights issue to all shareholders, whereby shareholders were invited to subscribe for 1 new share for every two shares held, with a subscription price of $0.02. The rights issue was underwritten to $2.4 million by Truestone Capital Ltd. On 17 October 2011, 32,402,700 Ordinary shares fully paid were issued to shareholders who had subscribed via the rights issue. On 18 October 2011, 87,597,300 Ordinary shares fully paid were issued to the underwriter in relation to the shortfall. On 24 October 2011,the Company completed a placement of 30,000,000 Ordinary shares fully paid for a consideration of $0.02 per ordinary share. SIGNIFICANT EVENTS DURING THE PERIOD At the Annual General Meeting of the Company on the 25th November 2011, shareholders approved the change of the Company name to World Oil Resources Ltd. 3

4 Directors' Report Review of Operations Results Summary Half year revenue of $388,242. Production of 3,658 Bbl oil and 13,827 mcf gas for the half year, from World Oil Resources Limited s share of the Klick Field in Oklahoma. World Oil Resources Limited went on title for a 50% working interest in 14,972 acres covering the WB-W field, Kansas. Commenced drilling the Socrates 1H well, the first modern horizontal well drilled on the WB-W field. The well was drilled and logged during January Raised $3m (after costs) via a rights issue to existing shareholders and placement to new shareholders. Klick Oil Field, Woods County Oklahoma WLR 49.2% Net Working Interest The Klick Oil Project covers 320 acres in the area known as the Kanokla Mississippi Lime Play. World Oil Resources Limited holds a 49.2% net working interest (NWI) in the field with the operator, CMX Inc also holding 49.2% NWI. Chesapeake Energy (NYSE:CHK) has a 1.6% NWI. After royalties, WLR s net revenue interest is 39.9%. The Joint Venture drilled and completed the Klick 1H horizontal well in January World Oil Resources Limited s share of production for the half year was 3,658 Bbl oil and 13,827 mcf of gas. The Joint Venture is evaluating different options for disposing of water from the well with the aim of increasing oil production and reducing operating costs. Welch-Bornholdt Whery Field, Rice and McPherson Counties, Kansas WLR 50% Net Working Interest World Oil Resources Limited holds a 50% NWI in 14,972 acres covering the Welch-Bornholdt Wherry (WB-W) field in Rice and McPherson counties, Kansas. CMX Inc holds the remaining 50% NWI and is operator. The acreage position was assembled by CMX Inc. and World Oil Resources Limited primarily during the 2011 calendar year. 4

5 Directors' Report Review of Operations (continued) Welch-Bornholdt Whery Field, Rice and McPherson Counties, Kansas WLR 50% Net Working Interest (continued) In late December 2011 the WB-W Joint Venture commenced drilling the Socrates 1H well on the acreage. The well was successfully drilled and logged with a lateral section of 4,201 feet. Socrates 1H is the first modern horizontal well to be drilled in either Rice or McPherson counties and the Joint Venture s objective is to demonstrate that the Mississippian age reservoir at WB-W can be developed with modern horizontal drilling technology. This technology has allowed significant recoveries of remaining oil-in-place at analogous fields in Kansas and Oklahoma. The Mississippian age reservoir formation is up to 20 meters thick at WB-W. Approximately 1400 vertical wells have been drilled over more than 60 years on the fields and aggregate production totals 46 million barrels of mainly high quality 32 API sweet crude oil. Historic production from the field peaked in the mid-1960s with some further re-development in the mid 1980s. However there has been little development since then, and the field has not benefitted from modern drilling and completion technology. A local refinery, NCRA, is located less than 40 miles from the field. Harpia and Guara Oil & Gas Field Sergipe-Alagoas Basin, On-shore Brazil WLR 40% World Oil Resources Limited holds a 40% interest in the Harpia Oil Field production license and in the Guara Field development license in the Sergipe Alagoas Basin, on-shore Brazil. There was no investment in these operations during the period. This is because of an ongoing disagreement with the Operator, Nord Oil & Gas SA on technical and commercial aspects of the full field development. 5

6 Directors' Report (continued) AUDITOR'S INDEPENDENCE DECLARATION An independence declaration has been provided by the company s auditor, Grant Thornton Audit Pty Ltd. A copy of this declaration is attached to, and forms part of the interim financial report for the half year ended 31 December Signed in accordance with a resolution of the directors. Philip Galloway Director Melbourne, 15 March

7 Directors' Declaration The directors of World Oil Resources Ltd declare that the financial statements and notes set out on pages 8 to 17; (a) comply with Accounting Standards, the Corporations Act 2001 and other mandatory professional requirements, and (b) give a true and fair view of the consolidated entity s financial position as at 31 December 2011 and of its performance, as represented by the results of its operations and its cash flow. (c) In the opinion of the directors, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Made in accordance with a resolution of the directors. On behalf of the directors Philip Galloway Director Melbourne, 15 March

8 Consolidated Statement of Comprehensive Income For the half year ended 31 December 2011 CONSOLIDATED Notes 2011 $ 2010 $ Oil Sales 2 388,242 - Cost of Sales (29,407) - Gross Profit 358,835 - Other income 2 10,545 42,831 Total revenue 369,380 42,831 Production lease operating expense 2 (74,121) (31,500) Occupancy expenses (19,686) (33,535) Share registry expenses (24,854) (9,246) ASX expenses (35,130) (28,037) Audit fees (46,028) (38,313) Accounting expense - (11,300) Employee expenses 2 (88,884) (363,405) Consultancy expenses - (10,442) Legal expenses (30,725) (26,249) Office expenses (10,462) (83,187) Travel expense (3,146) (66,397) Directors fee expense (11,250) (25,001) Regulatory expenses (277) (631) Foreign exchange loss (2,098,996) (2,673,288) Amortisation expenses (192,918) - Other expenses (16,109) (30,676) Loss before income tax (2,283,206) (3,388,376) Income tax expense - - Loss after tax for the period (2,283,206) (3,388,376) Other comprehensive income Exchange differences on translation of foreign operations Change in fair value of equity securities available for sale 1,174,640 74,033 1,568,427 - Other comprehensive income net of tax 1,248,673 1,568,428 Total comprehensive income for the period (1,034,533) (1,819,949) Earnings per share (cents per share) Basic\diluted for loss for the half-year Basic\diluted for loss for the half-year (total comprehensive income) (0.45) (0.21) (1.52) (0.82) 8

9 Consolidated Statement of Financial Position as at 31 December 2011 Notes CONSOLIDATED As at 31 December 2011 $ As at 30 June 2011 $ ASSETS Current Assets Cash and cash equivalents 1,840, ,884 Receivables 34,457 72,404 Total Current Assets 1,874, ,288 Non-current Assets Other financial assets 8 127,005 52,972 Deferred Exploration Expenditure 9 1,838, ,620 Development Assets 9 7,490,357 8,561,473 Production Assets 9 2,361,773 2,455,547 Total Non-current Assets 11,817,767 11,494,612 TOTAL ASSETS 13,692,512 11,768,900 LIABILITIES Current Liabilities Trade and other payables 139, ,082 Total Current Liabilities 139, ,082 Non-Current Liabilities Payables Total Non-Current Liabilities TOTAL LIABILITIES 140, ,582 NET ASSETS 13,552,220 11,587,318 EQUITY Issued capital 7 56,357,445 53,358,010 Reserves 6 12,175,610 10,926,937 Accumulated losses (54,980,835) (52,697,629) TOTAL EQUITY 13,552,220 11,587,318 9

10 Consolidated Statement of Cash Flows for the half-year ended 31 December 2011 CONSOLIDATED 2011 $ 2010 $ Cash flows from operating activities Receipts from customers 353,785 - Payments to suppliers and employees (311,349) (1,181,136) Interest Received 10,545 79,504 Net cash flows from/(used in) operating activities 52,981 (1,101,632) Cash flows from investing activities Payments for exploration costs (1,414,012) (2,426,299) Net cash flows used in investing activities (1,414,012) (2,426,299) Cash flows from financing activities Proceeds from issue of shares (net of share issue costs) 2,999, ,797 Net cash inflow from financing activities 2,999, ,797 Net increase\(decrease) in cash held 1,638,404 (2,691,134) Cash at beginning of period 201,884 3,738,632 Cash at end of period 1,840,288 1,047,498 10

11 Consolidated Statement of Changes in Equity for the half-year ended 31 December 2011 CONSOLIDATED Issued Capital Reserves Retained Earnings Total $ $ $ $ Balance at 1 July ,121,213 9,643,290 (48,983,538) 12,780,965 Total comprehensive income for the period -- 1,568,427 (3,388,376) (1,819,949) Shares issued during the period 885, ,500 Share issue costs during the period (48,703) (48,703) Balance at 31 December ,958,010 11,211,717 (52,371,914) 11,797,813 Balance at 1 July ,358,010 10,926,937 (52,697,629) 11,587,318 Total comprehensive income for the period -- 1,248,673 (2,283,206) (1,034,533) Shares issued during the period 3,154, ,154,966 Share issue costs during the period (155,531) (155,531) Balance at 31 December ,357,445 12,175,610 (54,980,835) 13,552,220 11

12 Notes to the Half-Year Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report. The half-year financial report should be read in conjunction with the annual Financial Report of World Oil Resources Ltd as at 30 June It is also recommended that the half-year financial report be considered together with any public announcements made by World Oil Resources Ltd and its controlled entities during the half-year ended 31 December 2011 in accordance with the continuous disclosure obligations arising under the Corporations Act The accounting policies adapted are consistent with those of the previous financial year and corresponding interim reporting period. (a) Basis of accounting The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 Interim Financial Reporting and other mandatory professional reporting requirements. The half-year financial report has been prepared on a historical cost basis and available-for-sale financial assets that have been measured at fair value. For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period. (b) Statement of compliance The half-year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June (c) Accounting Standards not Previously Applied The Group has adopted any new and revised Australian Accounting Standards issued by the AASB which are mandatory to apply to the current interim period. Disclosures required by these Standards that are deemed material have been included in this financial report on the basis that they represent a significant change in information from that previously made available. (d) Going Concern The financial report has been prepared on a going concern basis. This contemplates continuity of normal business activities and the realization of assets and settlement of liabilities in the ordinary course of business even though the Company has experienced operating losses of $2,283,206 during the half year period ending 31 December 2011 (2010: $3,388,376). The directors believe that the following factors support the going concern assumption: (i) Cash reserves at 31 December 2011 of $1,840,288 (ii) Access to a $10 million equity placement facility with Fortrend Securities Pty Ltd which expires in April 2012 (iii) Control over discretionary exploration expenditure. 12

13 Notes to the Half-Year Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 CONSOLIDATED 2011 $ 2010 $ 2 REVENUE AND EXPENSES (i) Revenue Revenue from operating activities: Oil Sales 388,242 - Other Revenue: Interest Revenue 10,545 42,831 Total Revenue 398,787 42,831 (ii) Expenses Operating loss before income tax is arrived at after: (a) Charging the following items: Employment Costs 88, ,405 Operating rental lease expense 16,128 33,116 Production lease operating expense 74,121 31,500 Cost of Sales 29, , ,021 3 EVENTS AFTER THE BALANCE SHEET DATE Since 31 December 2011, no event has arisen that would be likely to materially affect the operations of the company and its controlled entities or the state of affairs of the company and its controlled entities not otherwise disclosed in the financial report. 4 CONTINGENT ASSETS AND LIABILITIES Since the last annual reporting date, there has been no material change of any contingent liabilities or contingent assets. 13

14 Notes to the Half-Year Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER SEGMENTAL INFORMATION During the period the group identified the following segments in which Mining and Geological operated in Brazil and the USA, and Equity and Investment operated in Australia. Industry Segments Mining & Geological Equity & Investment Consolidated $ $ $ $ $ $ Revenue From external customers 388, ,242 - Interest Income ,545 42,831 10,545 42,831 Segment Revenues 388,242-10,545 42, ,787 42,831 Employee benefits expense - - (88,884) (363,405) (88,884) (363,405) Production operating costs (74,121) (31,500) - - (74,121) (31,500) Other expenses (2,455,307) - (63,681) (3,036,302) (641,939) (3,036,302) Segment Operating Loss (2,141,186) (31,500) (142,020) (3,356,876) (2,283,206) (3,388,376) Segment Assets (a) 11,848,996 10,835,315 1,843,516 1,117,637 13,692,512 11,952,952 Segment Liabilities (a) 104, ,487 35,468 37, , ,139 14

15 Notes to the Half-Year Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER RESERVES CONSOLIDATED 31 December 30 June $ $ Capital Profits 2,887,131 2,887,131 Asset Revaluation Reserve (a) 74,033 - Equity Benefits Reserve (share based payment) (b) 3,350,000 3,350,000 Foreign Currency Translation Reserve (c) 5,864,446 4,689,806 12,175,610 10,926,937 Movement during the year: (a) Asset Revaluation Reserve The asset revaluation reserve recognises the changes in fair value of available for sale financial assets. Balance at the beginning of the period - 9,397 Revaluation increment\(decrement) on listed shares 74,033 (9,397) Balance at the end of the period 74,033 - (b) Equity Benefits Reserve The equity benefits reserve recognises the fair value of equity settled share based payments. Balance at the beginning of the period 3,350,000 3,750,000 Expiry of Options - (400,000) Balance at the end of the period 3,350,000 3,350,000 (c) Foreign Currency Translation Reserve The foreign currency translation reserve recognises the changes in value of foreign currency transactions on translation of subsidiaries. Balance at the beginning of the period 4,689,806 2,996,762 Foreign currency exchange revaluation 1,174,640 1,693,044 Balance at the end of the period 5,864,446 4,689,806 15

16 Notes to the Half-Year Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER SHARE CAPITAL Issued and Paid up capital CONSOLIDATED 31 December June 2011 $ $ 232,251,669 Ordinary shares fully paid 48,543,138 48,543, ,748,331 Ordinary shares fully paid (a) 3,154,966 - Forfeited partly paid shares 5,236,068 5,236,068 Expired Options 400, ,000 Share issue costs (976,727) (821,196) 56,357,445 53,358,010 (a) On 16 September 2011, a placement of 7,748,331 Ordinary shares fully paid were issued to shareholders for a consideration of $0.02 per ordinary share. On 12 September 2011, the Company announced that it was making a prorata non-renounceable rights issue to all shareholders. Shareholders were invited to subscribe for 1 new share for every two shares held, with a subscription price of $0.02. The rights issue was underwritten to $2.4 million by Truestone Capital Ltd. On 17 October 2011, 32,402,700 Ordinary shares fully paid were issued to shareholders who had subscribed via the rights issue. On 18 October 2011, 87,597,300 Ordinary shares fully paid were issued to the underwriter in relation to the shortfall. On 24 October 2011, a placement of 30,000,000 Ordinary shares fully paid were issued to shareholders for a consideration of $0.02 per ordinary share. 8. OTHER FINANCIAL ASSETS NON CURRENT Available for sale financial assets Shares at fair value other entities (a) 2,705 2,705 Shares in other related parties at fair value 124,298 50,265 Acquired interest in joint venture operation (b) 409, ,091 Less provision for impairment (409,091) (409,091) Investments in other corporation ,005 52,972 (a) Relates to a minority interest in listed companies. (b) Relates to an acquired interest in the Edward Creek Base Metals Joint Venture (ECBMJV). World Oil Resources purchased a 21% contributing interest in the Edward Creek Base Metal Joint Venture (ECBMJV) for a consideration of $450,000 (inc GST). The consideration was satisfied by the issue of nine million fully paid ordinary shares and nine million options. The ECBMJV relates to an interest in exploration licence EL 3250 that covers an area of approximately 440 sq km in the Gawler Craton in South Australia. This interest has been fully impaired. 16

17 Notes to the Half-Year Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER (a) EXPLORATION AND EVALUATION ASSETS CONSOLIDATED 31 December 30 June $ $ At cost 1,838, ,620 Balance at end of financial period 1,838, ,620 Reconciliation Balance at beginning of financial period 424,620 9,277,164 Additions - expenditure incurred 1,396,417 2,971,226 Foreign exchange movements 17,595 (715,691) Transfer to development assets - (8,561,473) Transfer to production assets - (2,546,606) Balance at end of financial period 1,838, ,620 The exploration and evaluation assets related to the Welch-Bornholdt\Wherry project in Kansas, USA. The recoverability of the carrying amount of deferred exploration and evaluation expenditure is dependent on the successful development and commercial exploitation, or alternatively the sale, of the respective areas of interest. (b) DEVELOPMENTS ASSETS At cost 7,490,357 8,561,473 Balance at end of financial period 7,490,357 8,561,473 Reconciliation Balance at beginning of financial period 8,561,473 Foreign exchange movements (1,071,116) Transfer from exploration assets 8,561,473 Balance at end of financial period 7,490,357 8,561,473 The development assets relates to the Harpia & Guara fields in Brazil as considered technically and commercially viable and expenditure carried forward is expected to be recouped through sale or successful exploration of the areas. (c) PRODUCTION ASSETS At cost 2,652,130 2,546,606 Accumulated Amortisation (290,357) (91,059) Balance at end of financial period 2,361,773 2,455,547 Reconciliation Balance at beginning of financial period 2,455,547 Additions - expenditure incurred Foreign exchange movements 99,144 Transfer from exploration assets 2,546,606 Amortisation (192,918) (91,059) Balance at end of financial period 2,361,773 2,455,547 The production assets relate to the Klick area in Oklahoma, USA which commenced production during the 2011 financial year. 17

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