identifying and realising potential2011+interim.pdf · tilodiran 2 and 3 wells within the colombian...

Identifying and realising potentialGlobal Energy PLC Interim Report 2011

Global Energy Development PLC Interim Report 2011

Global Energy Development PLC is a petroleum exploration and production company focused on Latin America, an area in which the management team has decades of operating experience and in which they have pursued a long-term strategy of finding and developing reserves.

ContractsThe Company’s balanced portfolio covers the countries of Colombia and Peru, and comprises a base of production, workover opportunities and developmental drilling.

The Company held as at September 2011 six contracts: five in Colombia and one in Peru.

ReservesThe independent petroleum engineers Ralph E. Davis Associates, Inc (“RED”) reported that as at 31 December 2010: proved plus probable (“2P”) reserves net to the Company totalled 124.6 million barrels of oil equivalent (“BOE”); and proved plus probable plus possible (“3P”) reserves net to the Company totalled 218.1 million BOE.

AIMThe Company’s shares have been traded on AIM, a market operated by the London Stock Exchange, since March 2002 (LSE-AIM: “GED”).

01Global Energy Development PLCInterim Report 2011

• NetProfitof$3.9million(firsthalfof2010:$1.3millionNetLoss);

• Revenueincreasedby52%to$17.1milliononcomparablepriorperiod(firsthalfof2010:$11.3million);

• Grossprofitincreasedby138%to$7.4milliononcomparablepriorperiod(firsthalfof2010:$3.1million);

• Averagegrossproductionincreased15%at244,040barrelsofoil(“bbls”)oncomparablepriorperiod(firsthalfof2010:212,692bbls);

• AsaresultofthesuccessfulworkoverprogrammeoftheTilodiran2and3wellswithintheColombianRioVerdecontract,grossproductionforthemonthofJune2011increased86%to68,317bbls(monthofJune2010:36,642bbls);

• Averagecashnetbackperbarrelsoldof$61(firsthalfof2010:$43);

• Taxcreditof$1.2millionreflectedintheincomestatementasaresultofrealisedtaxlossesreportedtotheColombiantaxauthoritiesandalsoduetofavourablefluctuationsinthepeso-dollarexchangerate;

• Capitalexpendituresof$3.3million,predominantlyrelatedtothesuccessfulworkoverprogrammeoftheTilodiran2and3wellsandimprovedsurfacehandlingfacilities;

• Debtrepaymentsof$1.3million,fundedoutofcashflowfromoperationsandcashavailable;and

• Purchaseandcancellationof$0.6millioninvariablecouponconvertiblenotesdue2012plusallaccruedinterestinconsiderationfortheissueof317,000ordinarysharesof1peach.

Highlights

01 Highlights02 ChairmanandManagingDirector’sStatement&ReviewofOperations04 UnauditedFinancialHighlights04 ReserveInformation–UKGAAP05 IndependentReviewReporttoGlobalEnergyDevelopmentPLC06 CondensedConsolidatedStatementofComprehensiveIncome07 CondensedConsolidatedStatementofFinancialPosition08 CondensedConsolidatedCashFlowStatement09 CondensedConsolidatedStatementofChangesinEquity10 UnauditedNotesFormingPartoftheCondensedConsolidatedInterimFinancialInformation16 CorporateDirectory

Contents

02Global Energy Development PLC Interim Report 2011

FinancialsFavourableoilpricingalongwithanincreaseintheCompany’sdailyproductionvolumesgeneratedthesignificantlyimprovedresultsreportedbytheCompanyforthefirsthalfof2011(the“Period”).Revenuesforthesixmonthsended30June2011increased52%to$17.1million(sixmonthsended30June2010:$11.3million).CrudeoilcommoditypricesincreasedduringthePeriodwiththeCompanyaveraging$93.59perbarrel(“bbl”),a36%increaseagainst$68.97perbblinthefirsthalfof2010.

AsaresultofthesuccessfulworkoverprogrammecompletedinJune2011ontheCompany’sTilodiran2andTilodiran3wellswithintheColombianRioVerdeConcessionContract,netproduction(afterallroyaltypayments)duringthePeriodrose16%to212,934bbls(firsthalfof2010:183,658bbls).ThecountryofColombia,wheretheCompanymaintainsitsoperationsandcrudeoilproduction,hassustainedanincreaseinoveralldrillingactivitiesandhydrocarbonproductionwhichhasledtocompetitivepressuresforoperatorsintransportingandmarketingcrudeoilproduction.Duringthefirsthalfof2011,theCompany’snetsalesvolumeswere182,750bbls(firsthalfof2010:163,343bbls),andtheCompanyheldinunsoldcrudeoilinventoryapproximately41,000netbarrelsasat30June2011.ThroughtheCompany’smarketingefforts,theCompany’snetcrudeoilinventoryat30June2011wassubsequentlysoldinthemonthofJuly2011.

ThelimitedavailablecapacityofColombia’scurrentpipelineinfrastructurehasalsocontinuedtoleadtorisingtransportationcostsfortruckingthemajorityoftheCompany’soilsales.Costofsalesincreased18%duringthePeriodto$9.7million(firsthalfof2010:$8.2million).Despitethisincrease,theCompanyaveragedacashnetbackperbblof$61.05forthePeriod(firsthalfof2010:$43.18),andGrossProfitincreasedto$7.4millionduringthePeriodagainst$3.1millioninthesameperiodintheprioryear.

Intermsofcashposition,theCompanyendedthePeriodwithcashandcashequivalentsof$5.7million.CapitalexpendituresforthePeriodwere$3.3millionprimarilyrelatedtotheRioVerdeworkoverprogrammehighlightingtheCompany’semphasisonenhancingcashflowfromoperations,improvingshareholdervalueandincreasingproductionratesbydevelopingitsreservebase.

OperationsInApril2011,theCompanycommencedworkoveroperationsatitsTilodiran2andTilodiran3wellslocatedwithintheRioVerdeConcessionContract.Theworkoveroperationswerecompletedinmid-Maywithtestingandtheinstallationoftemporaryfacilitiescompletedbymid-June2011.TheresultsofthoseworkoverstooktheCompanyfromaveragegrossdailyproductionofapproximately1,100barrelsofoilperday(“bopd”)priortothecompletionoftheseworkoverstoanaveragegrossdailyproductionof2,200bopdfollowingtheworkoversandthrough30June2011.Followingthecompletionoftesting,theCompanyundertookaninternalreviewofitsdevelopmentprogrammefortheTilodiranfieldanddeterminedfurtherevaluationsandstudieswererequired.TheCompanypresentedtheANH(theNationalHydrocarbonsAgencyinColombia)withtheconclusionsofitsinitialinternalstudiesinJuly2011andsubmittedamodifieddevelopmentprogrammetotheagencyrequestingthesuspensionofthepreviouslyplanneddevelopmentdrillingoftwowells,theTilodiran4andTilodiran5respectively,untilsuchtimeasathirdpartyevaluationreportiscompletedwithregardtothebestdevelopmentprogrammeforthatfield.TheCompanybelievesitsinternalanalysisandthethirdpartystudywillsupportthefollowing:

Thesubstantialradialflowdrainageareascombined•inbothTilodiran2andTilodiran3representcurrentProvedDevelopedProducingreservesinexcessoftherisked3PreservesestimatedforallofTilodiranFieldbytheindependentreserveengineers,RalphE.Davisasof31December2010.

Noadditionaldevelopmentdrillingwillberequiredto•drainanyTilodiranfieldreservesbeyondthoseunderproductionintheTilodiran2andTilodiran3wells.

ChairmanandManagingDirector’sStatement&ReviewofOperations


InAugust2011,theANHformallyapprovedthesuspensionofthedrillingofTilodiran4andTilodiran5wellsbasedontheCompanycompletingthethirdpartyreservoirstudyandreportandprovidingtheresultsofsuchreporttotheANH.TheCompanyanticipateshavingthethirdpartystudycompletedwithinthenextfourtofivemonthsandpresentedtotheANHinthefirstquarterof2012.

ThepositiveresultsofincreasedcrudeoilproductionfromtheTilodiranworkoverprogrammebroughtwithitchallengessuchastheneedforupgradedtreatmentfacilities,increasedwaterproduction,logistics,transportationandmarketing.Alongwiththeincreasedcrudeoilproduction,waterhandlingincreasedsubstantially,primarilyfromtheTilodiran2well.TheCompanyiscurrentlyoperatingwithtemporaryfacilitiesatitsTilodiranfieldpendingthedesignandconstructionofpermanentfacilities.PermanentupgradedfacilitiesareintendedtoincludeawaterinjectionconversionoftheCompany’sexistingRioVerde2welloncetherequisiteenvironmentalandotherregulatorypermitsareobtained.Also,inAugust2011,theCompanyelectedtotemporarilysuspendproductionfromtheTilodiran2wellwhiletheCompanyfinalisesfieldwaterdisposalpreparations.TheoilratefromtheTilodiran2wellwasstablepriortotemporaryshut-in.TheCompanyplanstorecommenceproductionfromtheTilodiran2wellimmediatelyfollowingtheconversionandstartupofwaterdisposaloperationsutilisingRioVerde2.

Fortheremainderof2011,withacashbalanceofapproximately$11millionasat31August2011,theCompanyisabletofocusonreducingitsoutstandingdebtobligationsandtoalsofocusondevelopmentopportunitieswithinitsotherfields,includingtheBolivarandBocachicofieldsinparticular.TheCompanyiscurrentlycompletingtheevaluationofarecompletionprojectatitsBolivarfieldwiththeintentofexecutingthatprojectbeforetheendofthisyear.

RecenteventshavedemonstratedthatvolatilityinthepublicmarketsmayhaveanimpactontheCompany’soperations,principallytherecentdeclinesinoilprices.Nonetheless,theCompanybelievesinthestrengthoflong-termoilprices.Withaportfolioofdevelopmentopportunities,astreamlinedorganisationandthepositivefinancialperformanceexperiencedduringthefirstsixmonthsof2011,theCompanyiswellpositionedandoptimisticwithregardtoimprovingitsproductionprofilethroughouttheremainderofthisyearandintothenextyear.

Mikel FaulknerChairman

Stephen VossManagingDirector


Six months ending

30 June 2011 $000

Sixmonthsending30June2010$000

Twelvemonthsending

31December2010$000

Revenue $17,096 $11,265 $23,763Profit/(Loss)beforetaxation 2,643 (575) (3,185)Cashnetbackperbbl1 61.05 43.18 48.81Expendituresoncapitalassets 3,331 8,712 10,816Totalcurrentassets 20,399 11,104 15,241Capitalandreserves 84,380 80,420 79,826

Basicearningspershare $0.11 ($0.04) ($0.06)Dilutedearningspershare $0.11 ($0.04) ($0.06)

Weighted average ordinary shares outstandingBasic 35,766,774 35,439,009 35,439,009Diluted 43,777,244 42,949,232 43,655,898

Figuresinthousandexceptforperbarrelandpershareinformation.

UnauditedFinancialHighlightsForthesixmonthsended30June2011

Quantity (bbls)

thousands

Future net revenue

$000

NPV at 10%

$000

Proved 47,023 $4,497,464 $1,560,818Probable 77,560 7,827,934 2,378,509

Total 124,583 $12,325,398 $3,939,327

1. Cashnetbackiscalculatedasrevenuelessnetoperatingexpenseandtransportationcostsdividedbynetbarrelssold.2. ThereserveinformationforGlobalEnergyDevelopmentPLChasbeencertifiedbyathird-partyfirm,RalphE.DavisAssociates,Inc.as

at31December2010.

ReserveInformation–UKGAAPasof31December20102


IntroductionWehavebeenengagedbytheCompanytoreviewthesetoffinancialinformationinthehalf-yearlyfinancialreportforthesixmonthsended30June2011whichcomprisestheConsolidatedStatementofComprehensiveIncome,theConsolidatedStatementofFinancialPosition,theConsolidatedCashFlowStatement,theConsolidatedStatementofChangesinEquityandrelatedexplanatorynotes1to12.

Wehavereadtheotherinformationcontainedinthehalf-yearlyfinancialreportandconsideredwhetheritcontainsanyapparentmisstatementsormaterialinconsistencieswiththeinformationinthecondensedsetoffinancialinformation.

Directors’ responsibilitiesTheinterimreport,includingthefinancialinformationcontainedtherein,istheresponsibilityofandhasbeenapprovedbytheDirectors.TheDirectorsareresponsibleforpreparingtheinterimreportinaccordancewiththerulesoftheLondonStockExchangeforcompanieswhosesecuritiesaretradedonAIMwhichrequirethatthehalf-yearlyreportbepresentedandpreparedinaformconsistentwiththatwhichwillbeadoptedintheCompany’sannualaccountshavingregardtotheaccountingstandardsapplicabletosuchannualaccounts.

Our responsibilityOurresponsibilityistoexpresstotheCompanyaconclusiononthecondensedsetoffinancialinformationinthehalf-yearlyfinancialreportbasedonourreview.

OurreporthasbeenpreparedinaccordancewiththetermsofourengagementtoassisttheCompanyinmeetingtherequirementsoftherulesoftheLondonStockExchangeforcompanieswhosesecuritiesaretradedonAIMandfornootherpurpose.Nopersonisentitledtorelyonthisreportunlesssuchapersonisapersonentitledtorelyuponthisreportbyvirtueofandforthepurposeofourtermsofengagementorhasbeenexpresslyauthorisedtodosobyourpriorwrittenconsent.Saveasabove,wedonotacceptresponsibilityforthisreporttoanyotherpersonorforanyotherpurposeandweherebyexpresslydisclaimanyandallsuchliability.

Scope of reviewWeconductedourreviewinaccordancewithInternationalStandardonReviewEngagements(UKandIreland)2410,‘‘ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity’’,issuedbytheAuditingPracticesBoardforuseintheUnitedKingdom.Areviewofinterimfinancialinformationconsistsofmakingenquiries,primarilyofpersonsresponsibleforfinancialandaccountingmatters,andapplyinganalyticalandotherreviewprocedures.AreviewissubstantiallylessinscopethananauditconductedinaccordancewithInternationalStandardsonAuditing(UKandIreland)andconsequentlydoesnotenableustoobtainassurancethatwewouldbecomeawareofallsignificantmattersthatmightbeidentifiedinanaudit.Accordingly,wedonotexpressanauditopinion.ConclusionBasedonourreview,nothinghascometoourattentionthatcausesustobelievethatthecondensedsetoffinancialinformationinthehalf-yearlyfinancialreportforthesixmonthsended30June2011isnotprepared,inallmaterialrespects,inaccordancewiththerulesoftheLondonStockExchangeforcompanieswhosesecuritiesaretradedonAIM.

BDO LLPCharteredAccountantsandRegisteredAuditors55BakerStreetLondonW1U7EUUK

5September2011

IndependentReviewReporttoGlobalEnergyDevelopmentPLC


Note

Six Months ended

30 June 2011

$ ’000 (Unaudited)

SixMonthsended30June2010$’000

(Unaudited)

TwelveMonthsended

31December2010$’000

(Audited)

Revenue 17,096 11,265 23,763ImpairmentofOil&Gasassets – (1,204) (1,185)OthercostofsalesincludingDD&A (9,705) (6,957) (17,419)

Costofsales (9,705) (8,161) (18,604)

Gross profit 7,391 3,104 5,159

Otherincome 9 5 26Administrativeexpenses (3,629) (2,914) (6,558)

Profit/(loss) from operations 3,771 195 (1,373)

Financeincome 10 6 28Financeexpense (1,138) (776) (1,840)

Profit/(loss) before taxation 2,643 (575) (3,185)

Taxcredit/(expense) 6 1,232 (759) 1,125

Profit/(loss) from continuing operations 3,875 (1,334) (2,060)

Total Comprehensive income/(loss) attributable to the equity holders of the parent 3,875 (1,334) (2,060)

Earnings/(loss) Per Share–Basic 4 $0.11 ($0.04) ($0.06)–Diluted 4 $0.11 ($0.04) ($0.06)

CondensedConsolidatedStatementofComprehensiveIncomeFortheperiodended30June2011


Note

30 June 2011


30June2010$’000

(Unaudited)


(Audited)

AssetsNon-currentassetsIntangibleassets 5,746 4,758 5,034Property,plantandequipment 101,780 104,428 102,896

Totalnon-currentassets 107,526 109,186 107,930

CurrentassetsInventories 2,964 1,948 1,550Tradeandotherreceivables 9,994 6,595 4,881Termdeposits 1,728 1,518 1,466Cashandcashequivalents 5,713 1,043 7,344

Totalcurrentassets 20,399 11,104 15,241

Total assets 127,925 120,290 123,171

LiabilitiesNon-currentliabilitiesConvertibleloannotes (16,577) (16,773) (16,967)Deferredtaxliabilities(net) 7 (5,764) (10,834) (8,034)Equitytaxliability (1,267) – –Long-termprovisions (3,278) (923) (2,982)Long-termloanspayable 8 (5,000) – –

Totalnon-currentliabilities (31,886) (28,530) (27,983)

CurrentliabilitiesTradeandotherpayables (10,107) (9,150) (14,566)Corporateandequitytaxliability (1,456) (2,190) (700)Provision (96) – (96)

Totalcurrentliabilities (11,659) (11,340) (15,362)

Totalliabilities (43,545) (39,870) (43,345)

Net assets 84,380 80,420 79,826

Capital and reserves attributable to equity holders of the companySharecapital 545 540 540Sharepremiumaccount 27,139 26,544 26,544Otherreserve 1,767 1,826 1,826Capitalreserve 210,844 210,844 210,844Retaineddeficit (155,915) (159,334) (159,928)

Total equity 84,380 80,420 79,826

Thefinancialinformationonpages6to15wasapprovedandauthorisedforissuebytheBoardofDirectorson5September2011andissignedonitsbehalfby:

Mikel Faulkner Stephen VossChairman–5September2011 ManagingDirector–5September2011

CondensedConsolidatedStatementofFinancialPositionAsat30June2011


Six months ended

30 June 2011


Sixmonthsended30June2010$’000

(Unaudited)

Twelvemonthsended


(Audited)

Cash flows from operating activitiesOperatingprofitbeforeinterestandtaxation 3,771 195 (1,373)Depreciation,depletionandamortisation 3,735 3,697 6,031(Increase)intradeandotherreceivables (3,698) (1,790) (26)(Increase)ininventories (1,414) (801) (402)Increaseintradeandotherpayables 1,828 6,866 1,670Increase/(decrease)inlong-termprovisions 213 (108) 1,959Lossondisposalofassets – – 692Othernon-cashitems – (40) (11)Share-basedpayments 103 120 252

Cash generated from operations 4,538 8,139 8,792Taxespaid (430) (804) (1,766)

Net cash flows from operating activities 4,108 7,335 7,026

Investing activitiesCapitalexpenditure–Expenditureonproperty,plantandequipment (2,619) (8,508) (10,354)–Expenditureonintangibleassets (712) (204) (462)Disposalofproperty,plantandequipment – – 687Interestreceived 8 6 28Increaseinshort-terminvestments (262) (113) (61)

Net cash flows from investing activities (3,585) (8,819) (10,162)

Financing activitiesShort-termloans(paid)/drawnduringtheperiod (1,285) – 8,768Interestpaid (869) (541) (1,356)

Net cash flows from financing activities (2,154) (541) 7,412

(Decrease)/increase in cash and cash equivalents (1,631) (2,025) 4,276

Cash and cash equivalents at beginning of period 7,344 3,068 3,068

Cash and cash equivalents at end of period 5,713 1,043 7,344

CondensedConsolidatedCashFlowStatementFortheperiodended30June2011


ShareCapital$ ’000

SharePremium$’000

OtherReserves$’000

CapitalReserve$’000

Retaineddeficit$ ’000

Total$’000

At 1 January 2010 (Audited) 540 26,544 1,826 210,844 (158,120) 81,634Totalcomprehensivelossfortheperiod – – – – (1,334) (1,334)Share-basedpayments – – – – 120 120

At 30 June 2010 (Unaudited) 540 26,544 1,826 210,844 (159,334) 80,420Totalcomprehensivelossfortheperiod – – – – (726) (726)Share-basedpayments – – – – 132 132

At 31 December 2010 (Audited) 540 26,544 1,826 210,844 (159,928) 79,826Totalcomprehensiveincomefortheperiod – – – – 3,875 3,875Share-basedpayments – – – – 103 103Exerciseofconvertiblenotes(Note11) 5 595 (59) – 35 576

At 30 June 2011 (Unaudited) 545 27,139 1,767 210,844 (155,915) 84,380

CondensedConsolidatedStatementofChangesinEquityForthesixmonthsended30June2011


1. Accounting PoliciesBasis of PreparationThecondensedinterimfinancialinformationhasbeenpreparedusingpoliciesbasedonInternationalFinancialReportingStandards(IFRSandIFRICinterpretations)issuedbytheInternationalAccountingStandardsBoard(“IASB”)asadoptedforuseintheEU.ThecondensedinterimfinancialinformationhasbeenpreparedusingtheaccountingpolicieswhichwillbeappliedintheGroup’sstatutoryfinancialinformationfortheyearended31December2011.

2. Financial reporting periodThecondensedinterimfinancialinformationfortheperiod1January2011to30June2011isunaudited.IntheopinionoftheDirectorsthecondensedinterimfinancialinformationfortheperiodpresentsfairlythefinancialposition,resultsfromoperationsandcashflowsfortheperiodinconformitywiththegenerallyacceptedaccountingprinciplesconsistentlyapplied.Thecondensedinterimfinancialinformationincorporatescomparativefiguresfortheinterimperiod1January2010to30June2010andtheauditedfinancialyearto31December2010.

Thefinancialinformationcontainedinthisinterimreportdoesnotconstitutestatutoryaccountsasdefinedbysection435oftheCompaniesAct2006.Thecomparativesforthefullyearended31December2010arenottheCompany’sfullstatutoryaccountsforthatyear.AcopyofthestatutoryaccountsforthatyearhasbeendeliveredtotheRegistrarofCompanies.Theauditors’reportonthoseaccountswasunqualified,didnotincludereferencestoanymatterstowhichtheauditorsdrewattentionbywayofemphasiswithoutqualifyingtheirreportanddidnotcontainastatementundersection498(2)-(3)oftheCompaniesAct2006.

3. RevenueRevenueisattributabletoonecontinuingactivity,whichisoilproductionfromColombiaEnergyDevelopmentCo.(“CEDCo”),awholly-ownedsubsidiaryoftheGroup,locatedinColombia,SouthAmerica.

4. Earnings per shareBasicearningspershareamountsarecalculatedbydividingprofit/(loss)fortheperiodattributabletoordinaryequityholdersoftheparentbytheweightedaveragenumberofordinarysharesoutstandingfortheperiod.

Dilutedearningspershareamountsarecalculatedbydividingtheprofit/(loss)fortheperiodattributabletoordinaryequityholdersoftheparentbytheweightedaveragenumberofordinarysharesoutstandingduringtheperiodplustheweightedaveragenumberofordinarysharesthatwouldbeissuedontheconversionofallthedilutivepotentialordinarysharesintoordinaryshares.Thecalculation,ofthedilutivepotentialordinarysharesrelatedtoemployeeandDirectorshareoptionplans,includesonlythoseoptionswithexercisepricesbelowtheaveragesharetradingpriceforeachperiod.

UnauditedNotesFormingPartoftheCondensedConsolidatedInterimFinancialInformationForthesixmonthsended30June2011


4. Earnings per share continuedThefollowingreflectstheprofit/(loss)andsharedatausedinthebasicanddilutedearningspersharecalculations:

Six months ended

30 June 2011


Sixmonthsended30June2010$’000

(Unaudited)

Twelvemonthsended

31December2010$’000Audited

Net profit/(loss) attributable to equity holders used in basic calculation 3,875 (1,334) (2,060)Addbackinterestandaccretionchargeinrespectofconvertibleloannotes 727 722 1,457

Net profit/(loss) attributable to equity holders used in dilutive calculation 4,602 (612) (603)

Basic weighted average number of shares 35,766,774 35,439,009 35,439,009Dilutivepotentialordinaryshares Sharesrelatedtoconvertiblenotes 4,388,608 4,565,027 4,565,027 EmployeeandDirectorshareoptionplans 3,621,862 2,945,196 3,651,862

Diluted weighted average number of shares 43,777,244 42,949,232 43,655,898

ThecalculationofthedilutedEPSassumesallcriteriagivingrisetothedilutionoftheEPSareachievedandalloutstandingshareoptionsareexercised.

Duringtheperiodended30Juneand31December2010,theGroupreportedaloss.Therefore,becausetheeffectofthepotentiallydilutivesharesrelatedtoconvertibleloannotesandoutstandingshareoptionswouldbeanti-dilutive,aseparatedilutedlosspersharehasnotbeenreportedbecauseitisdeemedtoequalthebasiclosspershare.

5. Convertible loan notesAbalanceof$5,798,000in2005convertiblenotesand$11,303,000in2006convertiblenotesremainsoutstandingandunlesspreviouslyredeemed,convertedorpurchasedandcancelled,thenotesarerepayableinfullon30October2012andon8December2012,respectively.

6. Tax credit/(expense)TheGlobalEnergyDevelopmentPLCGroupissubjecttoUKandColombiantaxation.

UK taxationTheCompanydoesnotexpecttobeliableforUKcorporationtaxintheforeseeablefuturebecauseGlobalhadtradinglossesbroughtforwardof$25.6millionasat31December2010and$23.6millionasat31December2009andtheseareexpectedtoincreaseinthefuture.


6. Tax credit/(expense) continuedColombian taxation

TheGrouppaystaxesinColombiathoughthebranchofficeofitswholly-ownedsubsidiaryCEDCo.TheColombiancorporationtaxiscalculatedasthehigherofnetincometaxorpresumptiveincometaxwhicharedeterminedasfollows:

Presumptiveincometax.Analternativeminimumtaxcalculatedontheprioryeargrossequitylessliabilitiesat•arateof3%todeterminethepresumptiveincome.Arateof33%isappliedtothepresumptiveincometoarriveatthetaxobligation;or

Netincometax.Calculatedatarateof33%takingintoaccountrevenuesminuscosts,standarddeductions•andspecialdeductions.

Currently,CEDCopaysitsIncomeTaxbasedonPresumptiveIncomeTax.

Additionally,theGrouppaysanEquityTaxcalculatedusingataxablebaseoftheNetEquityasat1January2011andarateof6%.Thepaymentofthetaxisoverfouryearswithpaymentsmadetwiceperyear.

Themajorcomponentsofincometaxexpensefortheperiodsended30June2011and2010asdisclosedintheconsolidatedincomestatementare:

Consolidatedincomestatement30 June

2011 $000

30June2010$000

31December2010$000

Current taxes:Currentincometaxcharge 139 382 789Currentequitytaxcharge 859 400 820Otherswithholdings 40 17 107

Total current taxes 1,038 799 1,716

Deferred Tax:Relatingtooriginationandreversaloftemporarydifferences (2,270) (40) (2,841)Taxcreditreportedintheincomestatement (1,232) 759 (1,125)

7. Deferred tax liabilities (net)TheGroupoffsetstaxassetsandliabilitiesif,andonlyif,ithasalegallyenforceablerighttooffsetcurrenttaxassetsandcurrenttaxliabilitiesandthedeferredtaxassetsanddeferredtaxliabilitiesrelatedtocorporationtaxesleviedbythesametaxauthority.DeferredtaxassetsandliabilitieslistedarerelatedtocorporationtaxleviedbytheColombiantaxauthoritywithjurisdictionoverCEDCo.

Temporarydifferencesbetweenthetaxbasesandnetbookcarryingvaluesariseinrelationtotheeffectofinflationadjustments,thedifferencesinexchangerateofnon-monetaryassets,differencesbetweentaxandaccountingdepreciation,thebalanceofpresumptiveincometaxexcessesgeneratedandtaxlossesgeneratedin2010.

UnauditedNotesFormingPartoftheCondensedConsolidatedInterimFinancialStatementscontinuedForthesixmonthsended30June2011


7. Deferred tax liabilities (net) continuedTheamountsthatareoff-setinthestatementoffinancialpositionareanalysedbelow:

Deferred tax assets 30 June

2011 $000

30June2010$000

31December2010$000

Deferredtaxassetstoberecoveredaftermorethan12months 14,135 1,239 12,837Deferredtaxassetstoberecoveredwithin12months 3,778 – 3,540

Total 17,913 1,239 16,377

Deferred tax liabilities 30 June

2011 $000

30June2010$000

31December2010$000

Deferredtaxliabilitytoberecoveredaftermorethan12months (23,649) (12,073) (24,244)Deferredtaxliabilitytoberecoveredwithin12months (28) – (167)

Total (23,677) (12,073) (24,411)

Deferred tax liabilities (net) (5,764) (10,834) (8,034)

Theeffectofthisnetdeferredincometax(“DIT”)movementonthecondensedconsolidatedstatementofcomprehensiveincomeisabenefitof$2.3millionresultingfromahigherDITassetof$1.5millionandlowerDITliabilityof$0.8million.

DITassetincreasedbecauseofhigherfiscallossesrecognitionby$5millionafterfinal2010incometaxfiling.•

DITliabilitydecreased$0.5millionduetothepeso-dollarexchangerateeffectand$0.3milliondueto•provisionsmovement.

8. Long-term loans payableOn3February2011,theCompany,asborrower,signedanamendment(The“LoanAmendment”)totheloanagreemententeredintowithHKNInc.,aslender,on14September2010.TheLoanAmendmentextendedthematuritydateoftheunderlyingrepaymentobligationforoneyeartoSeptember2012.Inexchangeforthisextension,theCompanyagreedtoincreasetheinterestratefrom10%perannumto10.5%perannum.

9. Interim dividendNointerimdividendhasbeendeclared.

10. Cash generating unitsCashGeneratingUnits(“CGU”)aredefinedastheassetsrepresentingthesmallestidentifiablesegmentsgeneratingcashflowsthatarelargelyindependentofcashflowsfromotherassetsorgroupsofassets.CGUsareidentifiedinaccordancewithIAS36“ImpairmentofAssets”,significantassetgroupsarenormallybutnotalways,singledevelopmentorproductionareas.

PipelinecapacityissuesinColombiaexperiencedin2010andcontinuingin2011haverequiredtheGrouptoreviewthewayinwhichitscrudeissoldtothirdparties.AllstrategiesadoptedtocommercialisetheCompany’scrude,reinforcetheGroup’srecognitionofasingleCGUfortheGroupatacountrylevel.ThosestrategiesrequirethattheCompanyretainflexibilitytosellitsproductioninvariouscombinationstovariousclientsdependingontherespectiveclient´sshippingandmarketingcapacities.


11. Share capital Six months ended

30 June 2011 (Unaudited)

Sixmonthsended30June2010(Unaudited)

Twelvemonthsended31December2010

Audited

Number of shares $’000

Numberofshares $’000

Numberofshares $’000

Allotted, called up and fully paid

Ordinary shares of 1p each 35,766,774 545 35,439,009 540 35,439,009 540

TheconceptofauthorisedcapitalwasremovedbytheCompaniesAct2006andthenewArticlesofAssociationadoptedbytheCompanyatthe2010AnnualGeneralMeetingdonotcontainanyreferencestoauthorisedsharecapitalandunissuedshares.

TheordinarysharesconfertherighttovoteatgeneralmeetingsoftheCompany,toarepaymentofcapitalintheeventofliquidationorwindingupandcertainotherrightsassetoutintheCompany’sarticlesofassociation.

TheordinarysharesalsoconfertherighttoreceivedividendsifdeclaredbytheDirectorsandapprovedbytheCompany.

On14January2011,theCompanyissued317,000ordinarysharesof1peachinconsiderationforthepurchaseandcancellationof$600,000variablecouponconvertiblenotesdue2012(the“Notes”)plusallaccruedinterestdueundertheNotes.Also,on12April2011,followinganoticeofexerciseofoptionsinrespectof10,765ordinarysharesof1peachintheCompany,theCompanyissuedtoAlanHenderson,adirectoroftheCompany,10,765ordinaryshares.

12. Subsequent eventsOn16June2011,HKNannouncedthetermsofamandatorycashoffertobemadebyHKNforalltheissuedandtobeissuedordinarysharesinGlobal(“GlobalShares”)notalreadyheldbyHKNandpersonsdeemedtobeactinginconcertwithit.Asstatedintheannouncementon16June2011,theobligationtomakethemandatoryofferaroseasaresultofLyford,aconcertpartyofHKN,enteringintoaconditionalagreementtoacquire3,565,936GlobalShares,representinganinterestofapproximately9.97%inGlobal,fromtheUnitedStatesMarshalsService(“Acquisition”).

On15July2011,theDirectorsofHKNandtheIndependentDirectorsofGlobalannouncedthattheyhadagreed,withtheconsentoftheTakeoverPanel,topostponethepostingoftheOfferDocumentuntiltheconditionstotheAcquisitionaresatisfiedandLyfordhascompletedtheAcquisition.ItwasfurtherannouncedthatcompletionoftheAcquisitionwassubjecttothesatisfactionofanumberofconditionsandwasanticipatedtotakeplaceonorbefore13September2011,subjecttoagreementbetweentheparties.

UnauditedNotesFormingPartoftheCondensedConsolidatedInterimFinancialStatementscontinuedForthesixmonthsended30June2011


On30August2011,GlobalwasnotifiedbyLyfordthatcertainoftheconditionstotheagreementinrelationtotheAcquisitionhadbeensatisfiedand3,565,936GlobalShares,representing9.97%oftheissuedsharecapitalofGlobalhadbeentransferredtoLyfordon29August2011atapriceofapproximately96centsperGlobalShare(equivalenttoapproximately59pperGlobalSharebasedonaclosingmidexchangerateof$1.64:£1on29August2011).Inaddition,theUnitedStatesMarshalsServicewishedtosellandLyfordpurchasedafurther223,000GlobalSharesatapriceof96centsperGlobalShare(equivalenttoapproximately59pperGlobalSharebasedonaclosingmidexchangerateof$1.64:£1on29August2011).Accordingly,HKNanditsconcertpartiesnowownorcontrolsharesrepresenting21,425,560GlobalShares,equivalentto59.90%oftheissuedsharecapitalofGlobalandLyfordnowholds9,120,236GlobalShares,equivalentto25.50%oftheissuedsharecapitalofGlobal.Lyfordhasalsoconditionallyagreedtoacquireafurther55,400GlobalSharesfromtheUnitedStatesMarshalsServiceatapriceof$1.05perGlobalShare(equivalenttoapproximately64pperGlobalSharebasedonaclosingmidexchangerateof$1.64:£1on29August2011).

AstheConcertPartynowholdsinexcessof50%ofthevotingrightsexercisableatageneralmeetingofGlobal,theOffer,whenmade,willbeunconditionalinallrespects.TheOfferDocumentwillbepostedtoGlobalShareholdersassoonaspracticableandinanyeventbynolaterthan9September2011.

Therewerenoothermaterialsubsequenteventsbetween30June2011andthedateofthisdocument.


CorporateDirectory

DirectorsMikelFaulkner(Chairman)StephenVoss(ManagingDirector)AlanHenderson(Non-executiveDirector)DavidQuint(Non-executiveDirector)

Executive ManagementElmerJohnston(OperationDirector)RocioCalderon(FinanceDirector)AnnaWilliams(DirectorofBusinessDevelopment)

SecretaryAnaMariaRevollo

Registered office3MoreLondonRiversideLondonSE12AQUK

RegisteredinEnglandNo.4330608

Websitewww.globalenergyplc.com

[email protected]

Company AdvisersNominated Adviser and BrokerMatrixCorporateCapitalLLPOneVineStreetLondonW1J0AHUK

AuditorsBDOLLP55BakerStreetLondonW1U7EUUK

RegistrarsCapitaRegistrarsNorthernHouseWoodsomePark,FenayBridgeHuddersfieldHD80GAUK

Independent Petroleum EngineersRalphE.DavisAssociates,Inc.1717St.JamesPlace,Suite460HoustonTexas77056USA

SolicitorsNortonRoseLLP3MoreLondonRiversideLondonSE12AQUK

Global Energy Development PLCInterim Report 2011

United Kingdom Registered OfficeGlobal Energy Development PLC3 More London RiversideLondon SE1 2AQUK

Colombia OfficeColombia Energy Development CoCalle 113, No. 7-21 Torre A, Of 1206 Bogota Colombia

www.globalenergyplc.com

identifying and realising potential2011+interim.pdf · tilodiran 2 and 3 wells within the colombian...

Documents