TIDMIPL
RNS Number : 6874S
Indago Petroleum Limited
22 May 2009
Indago Petroleum Limited
Final Results
Indago Petroleum Limited ("the Company") announces its Final Results for the
year ended
31 December 2008.
HIGHLIGHTS
OPERATIONAL
* Al Jariya-1 well at Jebel Hafit penetrated the Natih objective resulting in an
underground blow out. Al Jariya-1 well abandoned as a result.
* Natih objective interpreted as being water bearing.
* Exploration well on Adam prospect also abandoned before reaching target due to
operational problems.
* Evaluation of other prospects in Indago's Oman blocks did not reach the Group's
expectations.
* Indago Group's share of costs of re-drilling Jebel Hafit and Adam estimated to
be at least US$35 million.
* Post Balance Sheet decision to exit Oman.
FINANCIAL AND COMMERCIAL
* Indago subsidiary received total of US$29.4 million from insurance underwriters
as a result of Al Jariya-1 blow out, including settlement.
* Efforts to farm-out blocks in Oman proved unsuccessful.
* All potential work commitments in Oman eliminated by divesting blocks and paying
US$3.5 million to RAK Petroleum.
* Following disposal, Indago Group had cash of about US$35 million and no work
commitments.
OUTLOOK
* Voluntary liquidation proposed as a result of representations by major
shareholder.
* Efforts to find M&A counterparty ceased.
* Board will relinquish responsibilities on appointment of liquidator.
* Net assets available for distribution currently estimated at US$32.5 million.
Tim Eggar, Chairman commented:
"Since its IPO, Indago has charted a distinctive path: in 2007 returning capital
to shareholders and now planning a voluntary liquidation. Certainly, the
Company's financial returns have been less than intended, although, through a
combination of judgement and good fortune, all the activities planned at the IPO
were undertaken with only a small loss of shareholder value. The way forward is
disappointing, but a necessary response to the inability of the Company to
pursue any other course given the wishes of the main shareholder."
Further Information
+--+--------------------------------+----------------------------------+
| Indago Petroleum Limited | |
+-----------------------------------+----------------------------------+
| | Tim Eggar, Chairman | +44(0) 7771 597 499 |
+--+--------------------------------+----------------------------------+
| | David Bremner, CEO | + 1 805 708 4892 |
+--+--------------------------------+----------------------------------+
| | Martin Groak, CFO | + 44 (0) 7949 209 301 |
+--+--------------------------------+----------------------------------+
| | |
+-----------------------------------+----------------------------------+
| Ambrian Partners Limited (Nomad | +44 (0) 20 7634 4705 |
| and Broker) | |
+-----------------------------------+----------------------------------+
| | Marc Cramsie | |
+--+--------------------------------+----------------------------------+
| | Harry Stockdale | |
+--+--------------------------------+----------------------------------+
| | |
+-----------------------------------+----------------------------------+
| College Hill Associates | + 44 (0) 20 7457 2020 |
+-----------------------------------+----------------------------------+
| | Nick Elwes | |
+--+--------------------------------+----------------------------------+
| | Paddy Blewer | |
+--+--------------------------------+----------------------------------+
Chairman's Statement
On 14 April 2009, Indago announced the disposal of the Group's remaining
exploration licence interests in Oman to RAK Petroleum, its joint venture
partner. As a result of the transfer to RAK, Indago's assets comprised cash
balances of approximately US$35 million and the Company had no remaining work
commitments. Two weeks later, on 28 April 2009, Indago also announced the
proposed winding up of the Company and the return of capital to shareholders.
This situation was the culmination of several months during which the Board
considered various strategic alternatives; a process about which I informed
shareholders when Indago released its half yearly report for 2008. In
particular, during recent months the Board became aware of some potentially
attractive opportunities to merge Indago with other upstream companies. Indago's
healthy balance sheet and lack of work programme obligations, coupled with the
funding constraints being experienced by the sector, meant that such
combinations might have been achieved on terms which were advantageous to both
sets of shareholders.
However, shortly before the announcement on 28 April 2009, Meridian Oil & Gas
(Middle East) Limited, which holds approximately 43% of the ordinary shares in
Indago, formally informed the Board that it would not support any proposed
future strategy other than the return of all the Company's available cash to
shareholders. After much consideration, the Board concluded that, in these
circumstances, any proposal for an alternative strategy was not practicable and
that winding up Indago represented the only available way forward. Although this
is disappointing, it is appropriate to acknowledge the sustained support that
Meridian has given to Indago since its inception, both before and after the IPO
in December 2005.
Since Indago's admission to AIM in December 2005, the Company has already
returned US$318 million to shareholders. Combined with the estimated net assets
available at liquidation of US$32.5 million, the total sum possibly returned to
shareholders could be around US$350 million. This compares to a market
capitalisation of about $320 million at the time of the IPO. Shareholders should
be aware, however, that the precise timing and amount of the capital return will
be a decision of the liquidator, assuming their appointment at the AGM.
When exchange rate movements are factored in, the return to shareholders since
the IPO in Sterling is estimated to be a small loss (around 3%). This loss of
value in Sterling terms is regrettable. Since December 2005, however, Indago has
drilled the main exploration objectives identified at the time of the IPO
(Hagil, Izz, Jebel Hafit and Adam) and completed the highly successful appraisal
well on the West Bukha field. This drilling programme exposed shareholders to
substantial potential upside. Context is also provided by widespread negative
financial returns during this period. For example, there has been a decline of
about 45% in the AIM Oil and Gas Index since December 2005 and the FTSE 350
Index has lost about 17% over the same period. The upstream sector especially is
notoriously cyclical. Events have vindicated, therefore, the Board's decision in
2007 to realize value from Indago's portfolio when it was available. Against
this background, the inability of the Company to re-invest cash now while the
prices of upstream shares and assets are depressed is particularly frustrating.
A circular will be distributed with the Annual Report and Accounts dealing with
the liquidation process and containing a resolution seeking shareholders'
approval of the liquidation and the appointment of a liquidator. Immediately
upon this appointment, the Board will relinquish its responsibilities for the
conduct of Indago's affairs in favour of the liquidator, including the return of
capital to the shareholders. I will, therefore, cease to be Chairman of Indago
Petroleum Limited. It has been my pleasure to hold that position since October
2005. I wish to thank you, the shareholders, for your support during that time.
I am also grateful to my colleagues on the Board, the employees of Indago - both
past and present - and our advisors for their immense contributions to the Group
since its inception.
Tim Eggar
Chairman
Indago Petroleum Limited
CHIEF EXECUTIVE'S REPORT
GROUP HIGHLIGHTS
Financial Highlights
Loss for the year: US$21.1 million
In the light of the proposed winding up of the business, the audited accounts
have been prepared on a break-up basis. The consolidated loss for the year,
under International Financial Reporting Standards (IFRS), therefore
reflects the costs incurred in 2008 relating to the two aborted drilling
campaigns in Blocks 31 and 47 in the Sultanate of Oman and impairments taken in
view of the transfer in April 2009 of three subsidiaries to RAK Petroleum
Oman Limited ("RAK"). These losses were mitigated by the substantial insurance
recovery negotiated following the blowout at the Al Jariya-1 well at Jebel Hafit
and agreed by the insurers before the balance sheet date.
Naturally, this year's financial result cannot be compared with last year's
result of a profit of US$294 million, which was mainly due to a profit on
disposal of US$306 million from the sale of the vast majority of the Group's
Assets.
The Board is not recommending a final dividend, but the Company is proposing to
distribute all available cash to shareholders via a capital distribution.
Net current assets:US$38.4 million
The Group had cash assets of over US$18.7 million and insurance receivables of
approximately US$22 million at the year end. The insurance monies were all
received by April 2009 and after making provisions for creditors, the Group has
net current assets at the year end of US$38.4 million. The current projection
for the liquidation is that the Company will have net assets in the region
of US$32.5 million to distribute, subject to further retentions deemed
appropriate by the liquidator.
Exploration and the withdrawal from Oman
During the year, the Group completed the drilling of two wells in Oman with
disappointing results. The financial impact was partially mitigated, however, by
the insurance recovery which put the Company in a strong, flexible cash
position. In the light of this, and the financial crisis that has recently
engulfed the world, it was decided to consider Indago's strategic options.
One element in our deliberations was that, although Oman is an excellent place
to do business, we had experienced very significant cost overruns during the
drilling of both the Al Jariya and Zad wells. Consequently, maintaining the
level of our participation in Oman at a time when capital markets are very
reluctant to provide additional funding for exploration and the scope for
farming out is limited would have been a significant risk.
In April, therefore, we announced the sale to RAK of our three subsidiaries
holding the licence interests in Oman. The terms of the sale included a payment
of US$3.5 million and Indago's release, subject to certain warranties, from all
obligations arising from joint operations and past transactions.
Winding up
At the time of writing, the Group has just under US$35 million of unencumbered
cash, with very low running costs, but no other oil and gas assets. Its largest
shareholder has made it clear that it wishes the Board to proceed as soon as
possible to a winding up of the Group and a return of all available cash to
shareholders. We are, therefore, putting into action the necessary steps to
allow this to be formalised via Special Resolution at the next Annual General
Meeting ("AGM"), where the Board will be recommending and seeking shareholder
approval for the appointment of an external liquidator. A circular to all
shareholders will explain the various issues in more detail.
We are also required under AIM rules, as the Company is now technically
designated an Investing Company, to include in the circular an alternative
investment strategy in the event that the 75% vote to liquidate is not achieved.
Assuming, however, that the liquidation is approved, we would expect the
liquidator to make two distributions; the first being the much more substantial
one. We would expect to give greater clarity on the process and timings at the
AGM.
The company continues to hold its cash balances in US Dollars and is currently
considering the currency for distribution.
Dr David Bremner
CEO
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
+--------------------------------------------+--------+---------------+--------------+
| | | Year ended | Year ended |
+--------------------------------------------+--------+---------------+--------------+
| | | 31 December | 31 December |
| | | 2008 | 2007 |
+--------------------------------------------+--------+---------------+--------------+
| | Notes | $000 | $000 |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| Revenue | 2 | - | 3,771 |
+--------------------------------------------+--------+---------------+--------------+
| Cost of sales | | - | (929) |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| Gross profit | | - | 2,842 |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| Exploration costs written off | | (39,446) | (11,678) |
+--------------------------------------------+--------+---------------+--------------+
| Administrative expenses | | (6,741) | (6,603) |
+--------------------------------------------+--------+---------------+--------------+
| Other income | 2 | 29,450 | 246 |
+--------------------------------------------+--------+---------------+--------------+
| Profit on disposal of subsidiaries and | | - | 306,024 |
| other assets | | | |
+--------------------------------------------+--------+---------------+--------------+
| Impairment loss | | (5,275) | - |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| (Loss)/profit before interest and taxation | | (22,012) | 290,831 |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| Interest income | 2 | 911 | 3,090 |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| (Loss)/profit before taxation | | (21,101) | 293,921 |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| Taxation | 4 | (40) | (66) |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| (Loss)/profit for the year attributable to | | (21,141) | 293,855 |
| equity holders of the parent company | | | |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
| Basic (loss)/earnings per share in US | 5 | (40) | 551 |
| cents | | | |
+--------------------------------------------+--------+---------------+--------------+
| Diluted (loss)/earnings per share in US | 5 | (40) | 511 |
| cents | | | |
+--------------------------------------------+--------+---------------+--------------+
| | | | |
+--------------------------------------------+--------+---------------+--------------+
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008
+---------------------------------------+---------+----------------+-----------------+
| | At 31 December | At 31 December |
+---------------------------------------+--------------------------+-----------------+
| | | 2008 | 2007 |
+---------------------------------------+---------+----------------+-----------------+
| | Notes | $000 | $000 |
+---------------------------------------+---------+----------------+-----------------+
| NON - CURRENT ASSETS | | |
+---------------------------------------+---------+----------------+
| Intangible assets | 6 | - | 22,457 |
+---------------------------------------+---------+----------------+-----------------+
| Property, plant and equipment | | - | 112 |
+---------------------------------------+---------+----------------+-----------------+
| | | - | 22,569 |
+---------------------------------------+---------+----------------+-----------------+
| CURRENT ASSETS | | | |
+---------------------------------------+---------+----------------+-----------------+
| Inventories | | - | 55 |
+---------------------------------------+---------+----------------+-----------------+
| Trade and other receivables | | 21,937 | 353 |
+---------------------------------------+---------+----------------+-----------------+
| Cash and cash equivalents | | 18,739 | 41,315 |
+---------------------------------------+---------+----------------+-----------------+
| | | 40,676 | 41,723 |
+---------------------------------------+---------+----------------+-----------------+
| TOTAL ASSETS | | 40,676 | 64,292 |
+---------------------------------------+---------+----------------+-----------------+
| | | | |
+---------------------------------------+---------+----------------+-----------------+
| CURRENT LIABILITIES | | | |
+---------------------------------------+---------+----------------+-----------------+
| Trade and other payables | | (2,247) | (5,618) |
+---------------------------------------+---------+----------------+-----------------+
| | | | |
+---------------------------------------+---------+----------------+-----------------+
| | | | |
+---------------------------------------+---------+----------------+-----------------+
| TOTAL LIABILITIES | | (2,247) | (5,618) |
+---------------------------------------+---------+----------------+-----------------+
| | | | |
+---------------------------------------+---------+----------------+-----------------+
| NET ASSETS | | 38,429 | 58,674 |
+---------------------------------------+---------+----------------+-----------------+
| | | | |
+---------------------------------------+---------+----------------+-----------------+
| EQUITY | | | |
+---------------------------------------+---------+----------------+-----------------+
| Share capital | | 27 | 27 |
+---------------------------------------+---------+----------------+-----------------+
| Share premium | | 2 | - |
+---------------------------------------+---------+----------------+-----------------+
| Foreign currency translation reserve | | (12) | - |
+---------------------------------------+---------+----------------+-----------------+
| Retained profit | | 38,412 | 58,647 |
+---------------------------------------+---------+----------------+-----------------+
| TOTAL EQUITY | | 38,429 | 58,674 |
+---------------------------------------+---------+----------------+-----------------+
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2008
+---------------------------------------------+-------+----------------------+--------------+
| | Notes | 31 December | 31 December |
+---------------------------------------------+-------+----------------------+--------------+
| | | 2008 | 2007 |
+---------------------------------------------+-------+----------------------+--------------+
| | | $000 | $000 |
+---------------------------------------------+-------+----------------------+--------------+
| Operating activities | | | |
+---------------------------------------------+-------+----------------------+--------------+
| (Loss)/profit before taxation | | (21,101) | 293,921 |
+---------------------------------------------+-------+----------------------+--------------+
| Adjustments to reconcile (loss)/profit | | | |
| before taxation to net cash flows: | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Share-based payments | | 906 | 2,310 |
+---------------------------------------------+-------+----------------------+--------------+
| Capitalised exploration costs written off | | 26,968 | 5,583 |
+---------------------------------------------+-------+----------------------+--------------+
| Amortisation of and write off of intangible | | - | 48 |
| assets | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Depreciation of property, plant and | | 31 | 287 |
| equipment | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Profit on disposal of subsidiaries | | | (306,024) |
| | | - | |
+---------------------------------------------+-------+----------------------+--------------+
| Impairment charges | | 5,275 | - |
+---------------------------------------------+-------+----------------------+--------------+
| Prepayments and other receivables written | | 291 | - |
| off | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Interest income | | (911) | (3,090) |
+---------------------------------------------+-------+----------------------+--------------+
| Tax expense | | (62) | (66) |
+---------------------------------------------+-------+----------------------+--------------+
| Decrease / (increase) in inventories | | 55 | 63 |
+---------------------------------------------+-------+----------------------+--------------+
| Increase in receivables | | (21,875) | (1,014) |
+---------------------------------------------+-------+----------------------+--------------+
| (Decrease) / increase in payables | | (3,327) | (2,847) |
+---------------------------------------------+-------+----------------------+--------------+
| Increase in provisions | | - | 161 |
+---------------------------------------------+-------+----------------------+--------------+
| | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Net cash flows from operating activities | | (13,750) | (10,668) |
+---------------------------------------------+-------+----------------------+--------------+
| | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Investing activities | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Interest received | | 911 | 3,090 |
+---------------------------------------------+-------+----------------------+--------------+
| Purchase of property, plant and equipment | | (1) | (7,347) |
+---------------------------------------------+-------+----------------------+--------------+
| Purchase of intangible assets in joint | | (9,738) | (27,259) |
| ventures | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Proceeds from sale of subsidiaries and | | - | 356,675 |
| other assets net of cash and cash | | | |
| equivalents disposed off | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Net cash flows from investing activities | | (8,828) | 325,159 |
+---------------------------------------------+-------+----------------------+--------------+
| | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Financing activities | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Issue of share capital | | 2 | - |
+---------------------------------------------+-------+----------------------+--------------+
| Dividends paid | | - | (317,713) |
+---------------------------------------------+-------+----------------------+--------------+
| Net cash flows from financing activities | | 2 | (317,713) |
+---------------------------------------------+-------+----------------------+--------------+
| | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Decrease in cash and cash equivalents | | (22,576) | (3,222) |
+---------------------------------------------+-------+----------------------+--------------+
| Cash and cash equivalents at the start of | | 41,315 | 44,537 |
| the period | | | |
+---------------------------------------------+-------+----------------------+--------------+
| Cash and cash equivalents at the end of the | | 18,739 | 41,315 |
| period | | | |
+---------------------------------------------+-------+----------------------+--------------+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| GROUP | Notes | Share | Share | Foreign | Retained | Total |
| | | capital | premium | Currency | profit | $000 |
| | | $000 | $000 | Translation | $000 | |
| | | | | Reserve | | |
| | | | | $000 | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| At 1 January 2007 | | 27 | 112,170 | - | (31,975) | 80,222 |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Share-based payment | | - | - | - | 2,310 | 2,310 |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Total income and expenses for | | - | - | - | 2,310 | 2,310 |
| the year recognised in equity | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Profit for the year | | - | - | - | 293,855 | 293,855 |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Total income and expenses for | | - | - | - | 296,165 | 296,165 |
| the year | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Cancellation of share premium | | - | (112,170) | - | 112,170 | - |
| account | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Dividend paid | | - | - | - | (317,713) | (317,713) |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| At 31 December 2007 | | 27 | - | - | 58,647 | 58,674 |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Share-based payments | | - | - | - | 906 | 906 |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Foreign exchange translation | | - | - | (12) | - | (12) |
| differences | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Total income and expenses for | | - | - | (12) | 906 | 894 |
| the year recognised in equity | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Loss for the year | | - | - | - | (21,141) | (21,141) |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Total income and expenses for | | - | - | (12) | (20,235) | (20,247) |
| the year | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| Issue of share capital | | - | 2 | - | - | 2 |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| | | | | | | |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
| At 31 December 2008 | | 27 | 2 | (12) | 38,412 | 38,429 |
+-------------------------------+-------+---------+-----------+-------------+-----------+-----------+
NOTES
1. ACCOUNTING POLICIES
Basis of preparation
The information in this results announcement has been extracted from the
Company's audited financial statements and Annual Report for the year ended 31
December 2008 which has been prepared in accordance with the terms of the
Companies (Guernsey) Law 1994 and International Financial Reporting Standards
(IFRS) as adopted by the European Union (EU). The financial statements have been
prepared on a break-up basis as disclosed in the fundamental accounting concept
below.
The financial information set out in this announcement does not include all the
information and disclosures required in the annual financial statements and does
not constitute statutory accounts as defined in the Companies (Guernsey) Law
1994.
The Annual Results announcement and the Annual Financial Statements were
approved by the Board of Directors on 21 May 2009.
Fundamental Accounting Concept
The financial statements have been prepared on a break-up basis, reflecting the
anticipated closure of the Company and its remaining subsidiary subsequent to a
resolution to place the Group into Members' Voluntary Liquidation, which is
expected to be approved at a General Meeting of Shareholders scheduled for 10
July 2009. Accordingly, adjustments have been made in these accounts to provide
for the diminution in value of all non-current and current assets so as to
reduce their carrying value to their estimated realisable amount, and to
reclassify non-current assets and liabilities as current assets and
liabilities.
The Auditors' report on the financial statements for the year ended 31 December
2008 has an unqualified opinion.
2. REVENUE
Revenue disclosed in the income statement is analysed as follows:
+--------------------------------------+------------+--------------+------------+
| | | Year ended | Year ended |
| | | 31 December | 31 |
| | | 2008 | December |
| | | | 2007 |
+--------------------------------------+------------+--------------+------------+
| | | $000 | $000 |
+--------------------------------------+------------+--------------+------------+
| | | | |
+--------------------------------------+------------+--------------+------------+
| Oil and gas sales | | - | 3,771 |
+--------------------------------------+------------+--------------+------------+
| Other income | | 29,450 | 246 |
+--------------------------------------+------------+--------------+------------+
| Interest income | | 911 | 3,090 |
+--------------------------------------+------------+--------------+------------+
| | | 30,361 | 7,107 |
+--------------------------------------+------------+--------------+------------+
Revenue from oil and gas sales is derived from the same geographical source -
the Arabian Peninsula.
Other income in 2008 represents monies recoverable under insurance claims. Other
income in 2007 represented recharges of services provided to joint ventures.
3.DIVIDENDS PAID AND PROPOSED
The Directors do not intend recommending the declaration of a dividend.
4. TAXATION
The relationship between the expected tax expense based on the standard tax rate
of Indago Petroleum Limited at 0% (2007: 0%) and the tax expense actually
recorded in the consolidated income statement can be reconciled as follows:
+----------------------------------------------+------------+------------+
| | Year ended | Year ended |
| | 31 | 31 |
| | December | December |
| | 2008 | 2007 |
| | $000 | $000 |
+----------------------------------------------+------------+------------+
| | | |
+----------------------------------------------+------------+------------+
| (Loss) / profit before taxation | (21,101) | 293,855 |
+----------------------------------------------+------------+------------+
| Tax rate | Nil | Nil |
+----------------------------------------------+------------+------------+
| Expected tax expense | Nil | Nil |
+----------------------------------------------+------------+------------+
| | | |
+----------------------------------------------+------------+------------+
| Foreign taxes payable in respect of current | 40 | 66 |
| year | | |
+----------------------------------------------+------------+------------+
| Actual tax expense | 40 | 66 |
+----------------------------------------------+------------+------------+
| | | |
+----------------------------------------------+------------+------------+
5.(LOSS)/EARNINGS PER ORDINARY SHARE
The calculation of basic (loss) / earnings per share is based on a net loss
after taxation attributable to equity shareholders of the parent company for the
year ended 31 December 2008 of $21,141,000 (year ended 31 December 2007: profit
$293,855,000) and 53,340,454 ordinary shares, being the weighted average number
of ordinary shares in issue during the period (31 December 2007: adjusted for
the share consolidation 53,333,311).
In relation to the year ended 31 December 2008, the loss attributable to
ordinary shareholders and the weighted average number of ordinary shares for the
purpose of calculating the diluted earnings per share are identical to those
used for the basic earnings per share. This is because the exercise of share
options would have the effect of reducing the loss per share and is therefore
not dilutive under the terms of IAS 33.
The calculation of the diluted earning per share is based on net profit after
taxation attributable to equity shareholders of the parent for the year ended
31 December 2007 of $293,855,000 and 57,458,896 ordinary shares and options,
being the weighted average number of ordinary shares in issue during the period
(53,333,311), plus the weighted average number of 4,125,675 ordinary shares held
under options by past and present employees, advisers and brokers. No other
options would have vested by the end of the period.
6.INTANGIBLE ASSETS
+-------------------------------------------+----------------+
| | Exploration |
| | and appraisal |
| | expenditure |
| | $000 |
+-------------------------------------------+----------------+
| Cost: | |
+-------------------------------------------+----------------+
| At 1 January 2007 | 37,697 |
+-------------------------------------------+----------------+
| Additions | 27,259 |
+-------------------------------------------+----------------+
| Disposals | (36,916) |
+-------------------------------------------+----------------+
| Write offs | (5,583) |
+-------------------------------------------+----------------+
| At 31 December 2007 | 22,457 |
+-------------------------------------------+----------------+
| Additions | 9,738 |
+-------------------------------------------+----------------+
| Write offs | (26,968) |
+-------------------------------------------+----------------+
| At 31 December 2008 | 5,227 |
+-------------------------------------------+----------------+
| | |
+-------------------------------------------+----------------+
| Amortisation of licence fee and | |
| amounts written off: | |
+-------------------------------------------+----------------+
| At 1 January 2007 | 935 |
+-------------------------------------------+----------------+
| Charge for the period | 48 |
+-------------------------------------------+----------------+
| Disposals | (983) |
+-------------------------------------------+----------------+
| At 31 December 2007 | - |
+-------------------------------------------+----------------+
| Charge for the period | - |
+-------------------------------------------+----------------+
| Impairment | (5,227) |
+-------------------------------------------+----------------+
| At 31 December 2008 | (5,227) |
+-------------------------------------------+----------------+
| | |
+-------------------------------------------+----------------+
| Net book value at 31 December 2008 | - |
+-------------------------------------------+----------------+
| | |
+-------------------------------------------+----------------+
| Net book value at 31 December 2007 | 22,457 |
+-------------------------------------------+----------------+
+-------------------------------------------+----------------+
| Net book value at 1 January 2007 | 36,762 |
+-------------------------------------------+----------------+
The intangible asset additions in 2008 relate to drilling associated with the Al
Jariya-1 well on the Jebel Hafit prospect in Block 31 Oman ($4,810,000), along
with the costs of drilling the Zad-1 well on the Adam prospect in Block 47 Oman
($4,928,000). The Jebel Hafit costs have subsequently been written off following
an underground blowout and abandonment of the Al Jariya-1 well. As the well
penetrated the upper (Natih) reservoir, which is regarded as a specific and
separate target unrelated to the lower (Shuaiba) reservoir, the entire
capitalised costs of the Al Jariya-1 well of $26,373,000 have been written off.
Costs of $595,000 of capitalised drilling costs in relation to the Hawamel well
on Block 47 Oman have also been written off following discussions with the joint
venture partner on the likelihood of additional work being performed on this
well.
In April 2009, the Company disposed of its subsidiary Indago Ventures 47
Limited, which held the remaining capitalised costs relating to the Zad-1 well
on its balance sheet. In view of the disposal, the capitalised costs have been
impaired to nil.
The intangible asset disposals in 2007 included West Bukha development activity
and approximately 50% of amounts capitalised in relation to exploration drilling
at Hawamel and Al Jariya-1.
All licence fees have been amortised or written off.
7.COMMITMENTS
On 14 April 2009 the Company announced the signing of an agreement to transfer
its subsidiaries, Indago Ventures 31 Ltd., Indago Ventures 43 Ltd. and Indago
Ventures 47 Ltd. to RAK Petroleum Oman Ltd., a subsidiary of RAK Petroleum PCL,
in return for a payment by the Company of $3.5 million. The three subsidiaries
held the Group's interests in 49.9999% of the Exploration and Production Sharing
Agreements (EPSAs) in Blocks 31, 43A and 47 onshore the Sultanate of Oman,
respectively. Under the terms of the agreement, the Company and the Group, by
virtue of the transfer, are released from all past and future obligations with
respect to those EPSAs.
8. EVENTS SUBSEQUENT TO BALANCE SHEET DATE
Subsequent to the year end, the Company, RAK Petroleum PCL and the insurance
underwriters signed a Settlement Agreement formalising the full and final
settlement of the insurance claim for the Al Jariya-1 well. The insurance
proceeds of were received in full by 6 April 2009.
On 14 April 2009 the Company announced the signing of an agreement to transfer
its subsidiaries, Indago Ventures 31 Ltd., Indago Ventures 43 Ltd. and Indago
Ventures 47 Ltd. to RAK Petroleum Oman Ltd., a subsidiary of RAK Petroleum PCL.
The three subsidiaries held the Group's interests in 49.9999% of the EPSAs in
Blocks 31, 43A and 47onshore the Sultanate of Oman, respectively. Under the
terms of the agreement, the Company and the Group, by virtue of the transfer,
are released from all past and future obligations with respect to those EPSAs.
The Company has paid $3.5 million as consideration to RAK Petroleum PCL under
the terms of the agreement.
On 28 April 2009 the Company announced that its largest shareholder had
indicated that it would only support a strategy of returning all available cash
to shareholders. The Board of Directors had therefore determined that a winding
up of the Company was the only practicable course of action.
It is anticipated that total additional cash expenditure for the period 1
January 2009 to liquidation not provided for in these financial statements will
be approximately $5.8 million. These future costs are not provided for in these
IFRS financial statements as no constructive or legal obligation existed as at
31 December 2008 in accordance with IAS 37 "Provisions, Contingent Liabilities
and Contingent Assets".
REVIEW BY QUALIFIED PERSON
The technical information and opinions contained in this annual report have been
reviewed by Don Scott, a qualified Geoscientist (BSc (Hons) Geology -
Southampton 1963, MSc Applied Geophysics - Birmingham 1964) and a Fellow of the
Geological Society of London since 1964.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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