ABN 75 117 387 354
INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 30 JUNE 2016
TABLE OF CONTENTS
Page
Directors' Report 3
Projects 4
Auditor's Independence Declaration 6
Financial Statements
Consolidated Statement of Comprehensive Income 7
Consolidated Statement of Financial Position 8
Consolidated Statement of Changes in Equity 9
Consolidated Statement of Cash Flows 10
Notes to the Consolidated Financial Statements 11
Directors' Declaration 18
Independent Review Report 19
Corporate Directory 21
Directors' Report
In accordance with a resolution of the directors, the directors present their Report together with the Financial Report of Indago Energy Limited ("Indago" or "the Company") and its subsidiaries (together referred to as the "Consolidated Entity" or the "Group") for the half year ended 30 June 2016 (Period) and the Independent Auditor's Review Report thereon:
Directors
The Directors of Indago at any time during or since the end of the half year ended 30 June 2016 are:
Executive Directors
Stephen Mitchell Chairman (Appointed 12 January 2016, Executive Chairman since 4 February 2016) Mr Justin Pettett Managing Director (Resigned 12 January 2016)
Mr Ryan Messer Chief Operating Officer (Resigned 12 January 2016)
Non-Executive Directors
Mr Donald Beard (Appointed 12 January 2016) Mr Ray Shorrocks (Appointed 12 January 2016) Mr Daniel Lanskey (Resigned 3 February 2016)
Review of Operations
Total Comprehensive Income for the Consolidated Group for the period was a loss of $618,491 (2015: $993,795). Total Comprehensive Loss includes a gain of $71,898 (2015: gain of $937,935) arising on translation of foreign operations.
Revenue of the Consolidated Entity from discontinued oil and gas production for the half year ended 30 June 2016 was $10,513 (2015: $1,179,592). The decrease reflects the sale of the Four Rivers Assets on 1 January 2016 and the sale of the Capitola Assets on 2 March 2016.
For the half year ended 30 June 2016, the Company has recorded negative cash flows from operations of $1,389,039 (2015: negative $1,069,481).
The functional currency for the Company is US Dollars. The presentation currency for the Group's accounts is Australian Dollars. All figures quoted in this report are Australian Dollars unless otherwise specified.
Production
There was no production for the Company for the half year ending June 2016 (2015: 17,674 barrels of oil and 13,464 Mcf of natural gas).
Exploration Activities
Details of Indago's exploration activities are specified in the "Projects" section of the half year report.
SALES AND PRODUCTION
Half Year Sales Report (net to Indago)
|
Project
|
June 2016 Half Year
|
June 2015 Half Year
|
|
Natural Gas (Mcf)
|
Oil/Condensate (Bbls)
|
Natural Gas (Mcf)
|
Oil/Condensate (Bbls)
|
|
Four Rivers
|
0
|
0
|
0
|
3,864
|
|
Capitola
|
0
|
0
|
13,464
|
13,810
|
|
Total*
|
0
|
0
|
13,464
|
17,674
|
|
Total (BOE*)
|
0
|
19,918
|
* Natural gas is converted to barrels of oil equivalent (BOE) on the basis that 6 Mcf of natural gas is equivalent to 1 BOE.
PROJECTS
As the energy industry weathers low commodity prices and weakened capital market conditions, Indago remains focused on seeking new investment and acquisition opportunities while maintaining its position in the Newkirk Project.
Capitola Oil Project (37.5% - 100% WI)
The Capitola Project in Texas was sold for US$2.1 million on the 2 March 2016.
The Company suspended the development programme for Capitola in 2015 due to the declining oil prices and overall poor production performance of the four wells drilled. As a result of inactivity, the Company's interest in the project at the time of sale had reduced to 37.5% WI in the shallow rights of the undeveloped acreage (25% WI in the deep rights). Many of the leases were also due to expire during 2016. Production levels at the date of sale was approximately 100 BOE/day.
The board concluded that the Capitola asset had limited potential to generate any meaningful value for shareholders and as such considered that it was in the best interests of the Group to sell it. The carrying value at the date of sale was $US$2.2 million.
Four Rivers Project (8% - 25% WI)
In February 2016, the Four Rivers Project assets were sold with an effective date of 1 January 2016 for US$120,000, an amount equal to the carrying value of the asset as at 31 December 2015.
Newkirk Project (100% WI, 81.25% NRI)
Indago holds a 100% WI and 81.25% NRI in 4,049 acres located in Kay County, Oklahoma near Ponca City. The leases were largely acquired during 2015 with a three year primary term and two year bonus term. The project is located within the Mississippi Lime tight oil play, a relatively mature play in which hundreds of wells have been drilled in the past decade. At this time and in this low oil price environment, the Operator, Empire Energy Group (ASX:EEG) has no short-term plans to drill any wells. There is always a risk that leases will commence to expire prior to the establishment of a commercial play. Indago will therefore consider all options to create value from this asset including joint ventures, sale and possibly a modest drilling programme if energy prices improve.
Oil and gas leases held by Indago are contiguous with an additional 4,936 acres held by EEG. Under a Joint Operating Agreement, the two companies have agreed to the further development of the combined acreage (8,985 acres) on a 50/50 basis.