Interim Results

Published Monday 29th, September 2008.

Article Category: Reports

Summary
ANDES ENERGIA PLC Andes or the Company or with its subsidiaries the Group ANDES ENERGIA PLC – UNAUDITED 2008 INTERIM RESULTS Andes, the Latin American energy group, is pleased to announce its interim results for the six months ended 30 June 2008. Financial highlights • Revenues up 21% to US$66.5 million (H1 2007: US$54.9 million)
• EBITDA up 53% to US$8.8 million (H1 2007: US$ 5.8 million) • Earnings per share of 0.07 cents Operational highlights • Exercise of the option to acquire a further 25.5% indirect interest in the share capital of EDEMSA. Andes now owns 51% of EDEMSA. • Increase in electricity tariffs charged by EDEMSA of between 10% and 27%, implemented on 1 February 2008, equivalent to an average tariff increase of 20%. • Receipt of notification that the shareholders of Patagonia Oil & Gas S.A., Andes is consortium partner in certain oil and gas interests, had entered into a funding agreement worth up to US$94.5 million with PetroSaudi International Limited (PetroSaudi). • Drilling commenced on the Confluencia licence block in the San Jorge basin. Luis Alvarez Poli, Chief Executive Officer, said:”We are pleased with the continued progress we have made this year. The implementation of the tariff increase at EDEMSA has resulted in a significant increase in revenue and EBITDA for the Group. Throughout this year we have worked towards advancing our oil and gas exploration interests and the commencement of drilling on the Confluencia licence block is an exciting step in the development of our oil and gas exploration strategy.” Enquiries: Andes Energia Luis Alvarez Poli, Chief Executive Officer Nigel Duxbury, Finance Director T: 020 7495 5326 Arbuthnot Securities James Steel Antonio Bossi T: 020 7012 2000 Bishopsgate Communications Maxine Barnes Nick Rome T: 020 7562 3350 Note to Editors: Andes is a Latin American energy group, with electricity distribution, hydro-electric power and oil and gas interests in Argentina. The Company\\\’s focus is on the Argentinean energy sector. A Union Transitoria de Empresas (UTE), is a registered joint venture. UTEs have been established to manage the licence blocks held under the consortium agreement with Patagonia Oil & Gas S.A. Andes holds a 20% royalty interest, a 20% carried interest and a 3% working interest in the licences held by the consortium. Chairman’s review I am pleased to report that first-half revenues have increased by 21% to US$66.5 million with a resulting increase in EBITDA of 53% to US$8.8 million. These results primarily reflect the benefit of the average tariff increase of 20% implemented in February 2008 by EDEMSA. A further tariff review is due to be completed by 1 February 2009 to establish a reasonable tariff for the third period of the licence agreement. In February 2008 we also completed the acquisition of a further 25.5% indirect interest in EDEMSA. Whilst the results of HASA have been adversely impacted by low rainfalls and the resulting low water levels in the dam, we are confident that this position is starting to turn around following recent rainfall. Our prime focus this year has been the development of our oil and gas exploration interests. Seismic data interpretation on Confluencia, Buen Pasto, San Bernardo, Rio Senguerr and Sierra Cuadrada blocks has been completed. There is approximately 6,000km of available information to be reprocessed, which, it is estimated, will take approximately four months. The UTEs have entered into a tendering process to secure a contractor to conduct a further 2D and 3D seismic data acquisition program for 2,000km 2D and 1,000km² 3D seismic. Two contractors have been short-listed and this work is due to start shortly and is expected to be completed by the end of October. The specifics of the program will be defined on a case-by-case basis. Carson Helicopters Inc., Aerogravity Division, from the USA, has been contracted to carry out a 34,780km² aeromag and aerogravity program over the licence blocks in the San Jorge basin. As of the date of this announcement approximately 32,466km² of the program area has been covered, representing 93% of the planned program. Subject to weather conditions, this program is expected to be completed shortly. Soil gas geochemical surveys have been conducted by Exploration Technologies, Inc. A total of 1,196 samples have been gathered from the Confluencia, Buen Pasto, San Bernado, Pampa Salamanca Norte, Rio Senguerr and Sierra Cuadrada blocks. Preliminary results indicate a high level of gas anomalies, particularly in the Rio Senguerr block, the northern portion of the Confluencia block and the western portion of the Pampa Salamanca Norte block, which may prove prospective. Once completed, the results of the survey, the seismic and the geochemical programs will be correlated allowing the Group to assess and select additional drill targets. The joint venture consortium has signed a drilling contract with San Antonio Internacional, a subsidiary of Pride International Inc., to carry out exploration drilling in the San Jorge basin. The Group has an interest in six licence blocks in this basin, Confluencia, San Bernardo, Pampa Salamanca Norte, Buen Pasto, Sierra Cuadrada and Rio Seguerr. These blocks cover an area of approximately 25,000km². An initial four well exploration drilling program is planned Drilling of the first well commenced on 23 September 2008 on the Confluencia licence block in the San Jorge basin. The first well will be drilled to a total maximum depth of 2,000 metres from surface and should take approximately 20 days to drill to target depth. This well is designed to evaluate the potential oil bearing zone identified through the interpretation of acquired seismic data and old well logs. The Group plans to drill its second well in the San Bernardo block. It is expected that this well will be located close to the existing producing fields in adjacent licence areas, subject to completion of seismic interpretation. It is anticpated that the third and fourth wells will also be drilled on licence blocks in the San Jorge basin. The location of these wells will be subject to further interpretation and evaluation of data, which will allow the Group to identify potential prospects. The UTEs have committed up to US$21 million to fund these exploration programs. This expenditure is covered by the funding arrangement with PetroSaudi, which the Company announced on 25 February 2008. We have appointed Juan Carlos Esteban as Chief Executive Officer of the Group’s oil and gas interests. Juan Carlos Esteban joined the Group from YPF. At YPF he was responsible for production activities in Argentina and Bolivia and for the operations of YPF’s fields in North Mendoza and Malargue in the Cuyana and Neuquen basins. He has significant knowledge and experience in the areas where the Group holds its licences and is a valuable addition to our team. Your Company has established a strong management, technical and operational team with which to fulfill its exploration strategies. We are confident that our efforts throughout 2008 will allow the Company to quickly advance its exploration of the various licences. We are grateful to Shareholders for their continued support and look forward to updating you on developments in the near future. Michael Stevens Chairman Attached Consolidated income statement for the six months ended 30 June 2008

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