Upland (LSE:UPL), the oil and gas company actively building a portfolio of attractive upstream assets, is pleased to
announce the publication of its unaudited results for the six months ended 31st December 2015.
- Delivered on its end of 2015 target for a public Listing, securing a Listing on the Official List of the UK Listing
Authority (“UKLA”) in October 2015
- Raised £1.3 million before expenses in IPO despite difficult market conditions
- Successful in the 14th UK Onshore Oil and Gas Licensing Round bid for Petroleum Exploration and Development
Licence (“PEDL”) 299 in the East Midlands (“Hardstoft”)
- Pending official award of PEDL 299, ready to progress field development plans at Hardstoft
- Carrying out rigorous due diligence on a number of potentially high impact, low-cost onshore opportunities in
- Cash at end of period £1.167m and no debt
CEO of Upland, Dr. Stephen Staley commented:
“Within a few weeks of our London Stock Exchange Listing in October 2015 and after extensive technical work, in the 14th UK Onshore Oil and Gas Licensing Round Upland and its highly experienced consortium partners were awarded a wonderful first asset in PEDL 299. Within this licence, we are particularly familiar with and interested in the rejuvenation of the historically producing Hardstoft structure. Once the award is formally confirmed by the Oil & Gas Authority, and following the acquisition of seismic data, we plan to develop this old oilfield by directionally drilling one or more new conventional wells utilising modern technology. The Upland consortium was combined with Ineos Upstream, part of the multinational Ineos conglomerate and PEDL 299 is the only one of the 21 PEDLs recently announced as awarded to Ineos in which they have a partner.
With an 80% chance of success for the contingent resource and 64% for the prospective resource, this first asset aligns well with Upland’s philosophy to ensure that the Company’s foundations for growth and longer term shareholder value are firmly underpinned by a low-cost, low-risk asset which is economically robust even at low oil prices. Upland is fully funded for its commitments at Hardstoft and the Upland consortium has a high degree of confidence in the success of rejuvenating this field. Should Upland successfully achieve commercial oil production then, with the backing of production revenues, the Company will have taken a significant step in building a portfolio of attractive upstream assets and delivering value for shareholders.”
As previously alluded to, Upland is presently evaluating a number of other attractive high-quality opportunities onshore UK and is also leveraging strong regional contacts to extend the potential acquisition focus to Malaysia, a jurisdiction we consider extremely attractive.”
For more detailed information please see the full Director’s and interim report below. The Interim Report and Accounts will be available shortly at the Company’s website www.uplandres.com
UPLAND RESOURCES LIMITED REPORT OF THE DIRECTORS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2015
The second half of 2015 was a time of great positive change for Upland Resources (“Upland” or the “Company”). Not only did Upland deliver upon its stated ambition to secure a public listing, but the Company and consortium partners were successful in their application for the award of an onshore UK oil and gas licence by the Oil & Gas Authority (“OGA”) as part of the 14th UK Onshore Licensing Round.
On 17th December 2015, the Upland consortium was offered for award Petroleum Exploration and Development Licence (“PEDL”) 299 in the East Midlands. During the assessment of the bids by OGA, the Upland consortium was combined with Ineos Upstream, part of the multinational Ineos conglomerate. As detailed below, of specific interest to Upland is the historically producing Hardstoft Oil Field (“Hardstoft”), which the consortium plans to rejuvenate using modern technology.
On 26th October 2015, Upland’s shares were admitted to listing on the Official List of the UK Listing Authority (”UKLA”) by way of a standard listing under Chapter 14 of the UKLA’s Listing Rules and to trading on the London Stock Exchange’s main market.
At listing, the Company issued 130,000,000 new ordinary shares at a price of 1 pence per share, raising £1.3 million before expenses. Market conditions were very difficult but, despite this environment, our fundraising efforts were successful. We would like to thank our supportive shareholders for their confidence in the management team and our strategy. We would also like to extend our thanks to all our corporate advisors for doing an excellent job in supporting the Company through the Official List process.
As a result of this successful fundraising, Upland is in a strong financial position: able to fund its obligations at Hardstoft and simultaneously assess new opportunities.
We regard Hardstoft as an excellent first asset and, following extensive technical work by Upland and its highly experienced bid partners, we have a high degree of confidence in the success of rejuvenating this field. Indeed, with low work programme costs, a potentially low risk of failure and economics which are robust even at depressed oil prices, Hardstoft aligns well with our strategy to ensure that our assets have an extremely attractive risk : reward balance.
Upland looks forward to formal notification of the award of an initial 5-year permit at Hardstoft and expects that this may be delivered in the next few weeks. Once this has been granted, the consortium will seek to embark upon the first steps toward Hardstoft Field development, beginning with seismic acquisition.
The Company has also not been idle with regards to its commitment to search for additional high impact, low-cost production and / or exploration assets and we continue to assess a number of opportunities within the UK and elsewhere. Through our Chairman Norza Zakaria, Upland has recently extended the potential acquisition focus to Malaysia.
Operating environment creating attractive opportunities
The second half of 2015 presented a generally difficult environment for the oil and gas industry. It saw Brent prices fall from above US$60/bbl at the start of the period to below US$40/bbl at its close, continuing the relentless downward trend begun in 2014. For oil companies with production whose price is linked to that of the Brent, WTI or other international benchmarks, this was, and continues to be, a very challenging time. This weakness in the oil and gas markets has also made access to capital more difficult for companies like Upland, as investors became more wary of the sector as a whole.
However, for the reasons stated above, Upland was successful in its fundraising. The Board believes that this funding, coupled with our low overheads and freedom from debt, puts the Company in a strong position in this operating environment. The financial pressure on many of our potential competitors means that Upland has access to many acquisition and farm-in opportunities and there is less competition for new acreage. In addition, the low oil price has led to service companies and equipment suppliers struggling to fill their order books, which has in turn led to a substantial reduction in costs across the industry.
As such, there are a number of interesting opportunities (ranging in maturity from producing to exploration) which the Company is assessing within the UK and elsewhere.
In Malaysia, our excellent local contacts mean that we are also well positioned to take advantage of potential opportunities in this region too.
New Ventures – Hardstoft
Upland applies its philosophy of using its extensive contacts and experience, plus rigorous due diligence, in the pursuit of assets which are attractive and robust – technically, politically and commercially, at low oil and gas prices.
In line with this strategy, Upland and its partners were delighted to be offered for award PEDL 299 in the 14th UK Onshore Licencing Round within which lies the historically producing Hardstoft structure.
This is our first asset. As a result of a new interpretation of the existing data by Upland, we brought in Europa Oil & Gas and Shale Petroleum as partners. During the assessment of the bids by OGA, our consortium was combined with Ineos Upstream, part of the multinational Ineos conglomerate, as OGA is keen to see both the conventional and unconventional potential of the area developed. Ineos’ focus is on unconventional shale gas and oil whereas the Upland consortium’s focus is on the exploration, appraisal and development of the conventional potential. Principally, this is the rejuvenation of the Hardstoft Oil Field, the UK’s first oil field, using modern technology.
Hardstoft was first drilled in 1919 and successfully produced oil for five years utilising a simple vertical well. The Upland consortium is planning to directionally drill a new well to access vertical fractures which should allow an efficient production of Hardstoft’s oil reserves.
An independent Competent Person’s Report (“CPR”) prepared by Blackwatch Petroleum Services Limited (“Blackwatch”) on behalf of Upland estimates there to be 3.10 MMbbl of contingent resource plus 3.65 MMbbl prospective resource (making a total of 6.75 MMbbl resource) in the broader Hardstoft structure alone, all sitting in Block SK46c of PEDL 299 and on a ‘best’ or central case basis. Total Hardstoft resources net to Upland, based on Blackwatch’s CPR, is estimated at 1.125 MMbbl. Blackwatch estimates the chance of success for the contingent resource at 80% and 64% for the prospective resource.
Results for the period
The financial results for the six month period ended 31 December 2015 are appended to this report.
Upland made a pre-tax loss of £200,249 for the six months to 31st December 2015, compared to a £221,069 loss for the previous full year. The principal reason for the increased costs and losses in the six month period are the one-off expenditures associated with the Listing of the Company’s shares.
The Company has no debt and continues to be in a strong position to finance its obligations.
Your Board believes that Upland has a bright future ahead of it.
Risks and uncertainties
The Group has identified the following as key risks in the second six months of this financial year:
– Sub-surface risks
Risk (1): The success of the business relies on accurate and detailed analysis of the sub-surface. This can be impacted by poor quality data, either historical or recently gathered, and limited coverage. Certain information provided by external sources may not be accurate. Mitigation: All externally provided and historical data is rigorously examined and discarded when appropriate. New data acquisition is considered and adequate programmes implemented, but historical data can be reviewed and reprocessed to improve the overall knowledge base. Risk (2): Data can be misinterpreted leading to the construction of inaccurate models and subsequent plans. Mitigation: All analytical outcomes are challenged internally and peer reviewed. Interpretations are carried out on modern geoscience software.
– Corporate risks
Risk: The Group’s success depends upon skilled management as well as retention of technical and administrative staff and consultants. The loss of service of critical members of the Group’s team could have an adverse effect on the business. Mitigation: The Group periodically reviews the compensation and contract terms of its staff and consultants.
This interim report and accounts for the six month period ended 31st December 2015 (the “Interim Report and Accounts”) has not been audited or reviewed pursuant to the Financial Reporting Council guidance on ‘Review of Interim Financial Information”.
Statement of Directors’ Responsibilities
The Interim Report and Accounts are the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report and Accounts in accordance with the Disclosure and Transparency Rules (the “DTRs”) of the United Kingdom’s Financial Conduct Authority (the “FCA”). The DTRs require that the accounting policies and presentation applied to the half yearly figures must be consistent with those applied in the latest published annual accounts.
The Directors confirm that, to the best of their knowledge, the set of financial statements contained in the Interim Report and Accounts, which have been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’ as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group, as required by DTR 4.2.2 and in particular include a fair review of:-
- the important events that have occurred during the half of the financial year and their impact on the set of financial statements contained in the Interim Report and Accounts, as required by DTR 4.2.7R;
- the principal risks and uncertainties for the remaining half of the year as required by DTR 4.2.7R; and
- related party transactions that have taken place in the first half of the current financial year.
The Directors of Upland Resources Limited are Norza Zakaria (Non-Executive Chairman), Stephen Staley (Chief Executive Officer) and Jeremy King (Non-Executive).
Norza Zakaria Chairman
Stephen Staley Chief Executive Officer
30th March 2016
UPLAND RESOURCES LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE INTERIM SIX MONTH PERIOD ENDED 31 DECEMBER 2015
|6 months to 31|
30 June 2015
|Loss before taxation||(200,249)||(221,069)|
|Loss and Total Comprehensive Income for the Period Attributable to|
Equity Owners of the Parent Company
|Loss per share in pence – basic and diluted||(0.15)||(0.26)|
The results above derive wholly from continuing operations.
see pdf for full report.