Interim Results

White Nile Limited 25 March 2008 White Nile Ltd / Ticker: WNL / Index: AIM / Sector: Oil & Gas 25th March 2008 White Nile Ltd ('White Nile' or 'the Company') Interim Results White Nile Ltd, the AIM listed oil and gas exploration company, announces its results for six months ended 31 December 2007. Chairman's Statement This has been another period of both advancement and frustration as we continue to build on our stated objective of becoming a leading independent oil producer focused on Southern Sudan and the surrounding region. As investors will know, our first acquisition involved the signing of an agreement with the Government of Southern Sudan ("GOSS") to develop the 67,000 sq km Block Ba in Southern Sudan. Our second was the acquisition of our Ethiopian concession areas where, following extensive evaluation under a Joint Study Agreement, we signed a Production Sharing Agreement ("PSA") with the Government of Ethiopia in January 2008 for a 29,000 sq km block in the Southern Rift Basin in south-western part of the country. In line with our expansion strategy, I am now pleased to announce that we are taking a 49% stake in CAMEC Kenya, a Kenyan subsidiary of Central African Mining and Exploration Company Plc in return for funding 49% of the past and future costs. CAMEC Kenya has a Production Sharing Contract ("PSC") with the Government of Kenya to explore and develop the hydrocarbon potential of Block 11, a 25,000 sq km block located in north west Kenya, which immediately abuts the Southern Sudan border and is contiguous to our PSA area in Ethiopia. With interests in Southern Sudan, Ethiopia and now Kenya, we are advancing our strategy, gaining exposure across the region and de-risking our operations by expanding our geographical area. We are actively looking at and evaluating additional opportunities that we believe have the ability to further increase our regional presence and build value for our shareholders. Southern Sudan We remain frustrated by the lack of clarification being received from the authorities in Southern Sudan. We believe that we have demonstrated our commitment to the country through our investment and development work targeted at proving the hydrocarbon potential of Block Ba. We completed the first phase of exploration work, including high-density 2D seismic acquisition and interpretation, to gain a clearer understanding of the prospectivity of the Jonglei sub-basin of the Muglad Basin. Following target identification, we commenced drilling the Kedelai exploration well, to determine the hydrocarbon bearing potential of the south-eastern extension of the Muglad basin and in particular to evaluate reservoir objectives in the Aradeiba and Bentiu formations. With this investment, in tandem with the implementation of significant community development programmes, our objectives and commitment remain very clear. As reported in the final results, we have had numerous assurances from leading Southern Sudanese government figures that our interests will be protected, with the likelihood being that we would be included in a consortium that will develop Block B in Southern Sudan, including Block Ba, Block Bb and Block Bc. A delegation of Southern Sudanese government officials, headed by His Excellency the Vice President of the Government of Southern Sudan, Dr Riek Machar, met the Board, its nominated adviser and certain shareholders in London in September 2007, and reiterated that White Nile would receive a 22.5% interest in the enlarged Block B. More recent indications are that White Nile will receive a majority stake in a new company that will control the 22.5% stake in the aforementioned consortium in tandem with Nile Petroleum Corporation Limited. However, this has not progressed to date and, without clarity of title, while maintaining a presence in Juba and our camps on the oil block, our operations remain temporarily suspended until the Board receives full clarification of its position within Southern Sudan. It has also become apparent that White Nile is part of a bigger economic and political picture that is being played out in Sudan. The allocation of oil assets, the re-drawing of Block entitlements, the establishment of oil industry infrastructure and relations between the north and south are all affecting the decision process. Indeed, the south has 85% of the oil reserves in Sudan and the right to secede in 2011, which again seems to be impacting the way in which oil companies is the country are being allowed to operate. However, we remain committed to the development of oil in South Sudan and we are ready to re-start full operations as soon as we receive clarity. Ethiopia We have signed a PSA with the Government of Ethiopia for a 29,000 sq km block in the Southern Rift Basin in south-western Ethiopia, and were awarded sole rights for the exploration, development and production of petroleum in the contract area in return for satisfying various development commitments. The PSA follows a two year Joint Study Agreement ("JSA") with the Ethiopian Government's Petroleum Operations Department of the Ministry of Mines over the prospective East African rift system in the southwest of the country. Geophysical and geological work, primarily in the Omo River area to the north of Lake Turkana, confirmed the presence of deep potential hydrocarbon bearing sedimentary basins within the JSA area. The prognosis by the Company and its advisors is that the contract area is sited at an intersection between a south-eastern extension of the petroliferous Cretaceous and early Tertiary basins of Southern Sudan, in particular the Muglad rift system and the younger East African rift system, which is proving petroliferous in Uganda as highlighted by Tullow Oil Plc's recent progress. Under the PSA, the Government of Ethiopia has granted the sole right to White Nile to explore, develop and produce petroleum in the contract area. There is an initial Exploration Period of four years from the date of execution, and a Development Period and Production Period of 25 years from the date of adoption of the development plan. During the initial Exploration Period, White Nile is required to incur minimum expenditure of $6,000,000 for seismic operations and $8,000,000 for drilling operations. White Nile plans to begin seismic operations in Q4 2008, prior to which it will conduct extensive geological field work and preparation for the geophysical programme. Kenya Our 49% interest in CAMEC Kenya will further increase our regional exposure. CAMEC Kenya has a PSA with the Government of Kenya to explore and develop the hydrocarbon potential of Block 11, a 25,000 sq km block located in north west Kenya. Block 11 lies between Lake Turkana and the international borders with Sudan in the north west, Uganda in the west and Ethiopia in the north. It straddles the so-called Turkana Depression and includes the sedimentary basins of Gatome and Lotikipi. The Turkana Depression is a zone of interaction between three rift systems: 1. the NW-SE Cretaceous rift system, which links the productive Muglad Basin of Sudan with the Anza Graben of Kenya 2. the NNW-SSE Paleogene rift system of Western Turkana, which is thought to link with the petroliferous Melut Basin of Sudan 3. the NNE-SSW Oligo-Miocene Turkana Rift of Northern Kenya/Southern Ethiopia, which is analogous to the Albert rift of Uganda where commercial oil has recently been discovered Results White Nile remains focussed on the development of its oil concessions in Southern Sudan and the surrounding region. The Company is still in the exploration stage and therefore is not producing revenue. As such, the Company is reporting a pre-tax loss of £799K (2006: £699K). Outlook We are focussed on expanding our reach and exploration portfolio and will continue to evaluate opportunities in Africa in order to add value for our shareholders. Our participation in CAMEC Kenya marks a further step in this strategy of building a regional oil company with high quality assets in exciting petroliferous regions. Not only does it give us exposure to north west Kenya but also complements our land positions in Ethiopia and Southern Sudan. We remain frustrated with the situation in Southern Sudan but are confident of our position and entitlements. In the coming year we anticipate the implementation of seismic programmes first in Kenya and subsequently in Ethiopia. I would like to take this opportunity to thank the management team, shareholders and all those involved in the Company who have supported and assisted in its development and look forward to updating the market on our progress. Phil Edmonds Chairman Unaudited Income Statement for the six months ended 31 December 2007 Six Six months months ended ended Year 31.12.07 31.12.06 ended 30.06.07 £000 £000 £000 Operating expenses (1,144) (796) (1,663) Operating loss (1,144) (796) (1,663) Financial income 346 101 245 Financial expenses (1) (4) (6) Net financing income 345 97 239 Loss before tax (799) (699) (1,424) Income tax expense - - - Loss for the period (799) (699) (1,424) Basic and diluted earnings per share (pence) (0.230) (0.219) (0.439) Unaudited Statement of Recognised Income and Expense for the six months ended 31 December 2007 Six Six months months ended ended Year 31.12.06 31.12.06 ended 30.06.07 £000 £000 £000 Loss for the period (799) (699) (1,424) Total recognised income and expense for the period (799) (699) (1,424) Unaudited Balance Sheet as at 31 December 2007 31.12.07 31.12.06 30.06.07 £000 £000 £000 Assets Property, plant and equipment 1,122 728 1,224 Intangible assets 35,725 20,454 30,414 Total non-current assets 36,847 21,182 31,638 Trade and other receivables 1,534 2,331 3,556 Cash and cash equivalents 11,075 10,926 16,729 Total current assets 12,609 13,257 20,285 Total assets 49,456 34,439 51,923 Liabilities Trade and other payables (209) (1,064) (1,698) Total current liabilities (209) (1,064) (1,698) Net assets 49,247 33,375 50,225 Equity Issued capital 347 329 347 Share premium 52,284 35,557 52,464 Retained earnings (3,384) (2,511) (2,586) Total equity 49,247 33,375 50,225 Unaudited Cash Flow Statement for the six months ended 31 December 2007 Six Six months months ended ended Year ended 31.12.07 31.12.06 30.06.07 £000 £000 £000 Operating activities Loss before tax (799) (699) (1,424) Adjustments for: Depreciation of property, plant and equipment 182 31 135 Net interest income (345) (97) (239) (163) (66) (104) Working capital adjustments (Increase)/decrease in receivables (1,134) 9 (60) (Decrease)/increase in payables (1,488) 90 723 (2,785) 33 559 Interest paid (1) (4) (6) Net cash flow from operating activities (3,585) (670) (871) Investing activities Purchase of intangible assets (5,311) (3,607) (12,909) Purchase of property, plant and equipment (80) (524) (1,131) Interest received 346 101 245 Net cash flow from investing activities (5,045) (4,030) (13,795) Financing activities Proceeds from issue of share capital 3,156 9,577 26,844 Share issue costs (180) - (1,498) Net cash flow from financing activities 2,976 9,577 25,346 Net (decrease)/increase in cash and cash equivalents (5,654) 4,877 10,680 Cash and cash equivalents at start of the period 16,729 6,049 6,049 Cash and cash equivalents at end of period 11,075 10,926 16,729 Notes These interim financial statements do not constitute statutory accounts of the company within the meaning of Section 240 of the Companies Act 1985 and should be read in conjunction with the Annual Report for 2007. Statutory Accounts for the year ended 30 June 2007, which were prepared under accounting practices generally accepted in the UK, have been reported on by the auditors. The report of the Auditors was unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. 1 BASIS OF PREPARATION The accounting policies and methods of computation used in the preparation of the unaudited financial information are consistent with the principles of International Financial Reporting Standards ("IFRS") and its interpretations adopted by the International Accounting Standards Board ("IASB"), and adopted by the European Union. An explanation of the principal changes made in the transition from UK GAAP to IFRS is set out below. 2 EARNINGS/(LOSS) PER ORDINARY SHARE Basic earnings per share is calculated by reference to the loss for the financial period and the weighted average number of shares in issue in the period of 347,000,000 (six months to 31 December 2006: 318,704,918, year ended 30 June 2007: 324,627,397). There were no dilutive potential ordinary shares at the end of each period presented. 3 TRANSITION TO IFRS Introduction The Company has adopted International Financial Reporting Standards, as adopted for use in the European Union (IFRS), with effect from 1 July 2007. In accordance with IFRS 1, the group's transition date is 1 July 2006 being the start date for which the Company will present full comparatives information in the 2008 Annual Report and Accounts. An exercise to assess the full impact that the change to IFRS has had on the Company's reported equity, reported losses and accounting polices, has been completed. This is explained in more detail below: Basis of transition The accounting policies set out below have been applied in preparing the restatement of the financial statements for the six month period ended 31 December 2006 and year ended 30 June 2007 and in the preparation of an opening IFRS balance sheet at 1 July 2006. In preparing its opening IFRS balance sheet, the Company has adjusted amounts reported previously in financial statements prepared in accordance with its previous basis of accounting (UK GAAP). An explanation of how the transition from UK GAAP to IFRS has affected the Company's financial position, financial performance and cash flows is set out in the notes below. IFRS 1 exemptions The Company has elected to apply the following exemptions from full retrospective application (a) Fair value or revaluation at deemed cost: The group has not elected to restate items of property, plant and equipment to fair value at transition date. Effects of adopting IFRS on the Company's accounting policies Based on a review of the company's accounting policies, there are no changes required that would result in a change to the amounts previously recognised under UK GAAP. Therefore, the reported profit and equity of the company is not affected by the adoption of IFRS 1 and any changes are limited to presentation of the financial statements in line with the formats to be adopted for the year ended 30 June 2008. Effect of the adoption of IFRS on the cash flow statement Under IFRS, amounts previously classified as liquid resources under UK GAAP as a component of net debt have been classified as cash equivalents. Accordingly, cash flows attributable to liquid resources form part of the net increase or decrease in cash on restatement. There are no other significant changes to cash flows other than presentational changes to comply with the disclosure requirements of IAS 7 "Cash flow statements". * * E N D S * * For further information please visit or contact: Phil Edmonds White Nile Ltd Tel: 0845 108 6060 Jonathan Wright Seymour Pierce Ltd Tel: 020 7107 8000 Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7236 1177 This information is provided by RNS The company news service from the London Stock Exchange