SeaEnergy Announces Half Year Results (UK)

SeaEnergy, the energy ventures company focused on growing oil and gas and renewables businesses, today announces half year results for the six months ended 30 June, 2011.

Commenting on today’s announcement Steve Romp, Executive Chairman, said:

“SeaEnergy is in a strong position. Following the successful and highly value accretive disposal of SERL to Repsol, we have a strong balance sheet and no debt and are poised to capture a number of opportunities within both the renewable and oil & gas sectors of the energy market. This is an industry in which the team has successfully built businesses in the past and have the vision and energy to create a unique energy ventures business of scale.

 Our oil & gas investments are at an interesting stage, in particular with the near term potential of our increased holding in Lansdowne Oil & Gas. With a number of near term potential share price catalysts, we face the future with a high degree of confidence and look forward to creating further value for investors.

 Elsewhere our development of a unique vessel for the operation and maintenance of wind turbines situated in deep and rough water has been well received by potential charterers. We are confident in the significant commercial opportunity of this strand of our business, and are working to maximise our chances of success in near term bidding rounds. We are also identifying other high margin opportunities in the servicing of the offshore wind industry.”

Interim Results for the six months ended 30 June 2011

Chairman’s Statement

The successful disposal, completed in June this year, of SeaEnergy Renewables Limited (“SERL”), our 80% owned offshore wind farm development business, to Repsol of Spain, has ensured that the Company is in the best shape financially it has been for many years. SeaEnergy is now debt free, with cash in the bank and several exciting business development opportunities, any of which we believe could develop into further significant success. The management team is energised and feeling positive about the road ahead.

 The SERL disposal has given us greater flexibility for the future and we have been able to re-define what and who we are – “An energy ventures company focussed on growing oil and gas and renewables businesses”. We have learned much from the SERL experience and believe we are at the leading edge of offshore wind, a global industry which, notwithstanding the challenges posed by risks to the global economy and financing difficulties, offers long-term growth potential, particularly through servicing these large developments as they are built and operated.

 Financial review

The Group recorded a profit from continuing operations after tax of £27.0 million for the first six months of 2011 compared to a loss of £4.2 million for the first six months of 2010. Included in the profit for the current period is a gain on the disposal of SERL of £32.8 million. Operating expenses increased from £2.6 million in the prior period to £6.1 million in the current period, largely due to the provision for contractual bonuses associated with the disposal of SERL and associated employer’s national insurance totalling £3.3 million. Net finance income was £0.1 million (expense of £1.6 million in the same period of 2010). The decrease in net finance expense is mainly due to losses of £0.6 million (6 months to 30 June 2010: losses of £0.5 million) on equity swap settlements, offset by a favourable fair value adjustment of £0.7 million (6 months to 30 June 2010: £1.1 million unfavourable) on equity swap carrying values. These arrangements, entered into in September 2009, concluded in May 2011.

 Share of gains in associates and other related movements increased from £nil to £0.3 million. This comprised associate losses of £0.1 million offset by increased share of net assets of £0.4 million.

 Group cash balances at 30 June 2011 were £27.0 million compared with £1.0 million a year earlier. A retention of £3.0 million, plus interest, on the SERL sale is receivable in June 2012 subject to there being no warranty claims. Cash outflows from operating activities totalled £2.3 million, the same as in the 6 months to 30 June 2010. £32.3 million was raised, after expenses, through the disposal of SERL (6 months to 30 June 2010: £nil). £0.8 million was used to acquire intangible assets for SERL prior to its sale, (6 months to 30 June 2010: £1.0 million). No cash was raised in the period through the issue of new equity (6 months to 30 June 2010 £0.2 million). Proceeds from derivatives were £0.5 million (6 months to 30 June 2010: £1.7 million). Prior to its repayment a further £1.3 million was drawn under the loan facility provided by LC Capital Master Fund Limited (6 months to 30 June 2010: £nil). A total of £3.9 million was used to repay that facility in full with interest and fees totalling £1.0 million on completion of the disposal of SERL, (6 months to 30 June 2010: £0.5 million).

 Total equity attributable to the equity holders of the Company has increased from £2.6 million at 30 June 2010 to £28.5 million as at 30 June 2011. The increase arises primarily from profits and other movements on retained earnings of £28.9 million.

Oil and Gas

AIM listed Lansdowne Oil & Gas pic, in which we hold a 24.68% interest, continues to make good progress, having completed this year’s 3D seismic acquisition programme in the Celtic Sea ahead of schedule and on budget. The interpreted results of that programme are expected to be available before the end of the year. SeaEnergy, as Lansdowne’s founder and one of its largest shareholders, was pleased to participate in Lansdowne’s July fundraising where we invested an additional £1.7 million at 15p per share, increasing our holding to its current level. Lansdowne’s share price at close of dealings yesterday was 24.75 pence.

 Lansdowne raised a total of £6.1 million to fund its 20% interest in the Barryroe oil appraisal well, which is scheduled to be drilled before the end of the year. Currently our investment in Lansdowne has a market value of £7.5 million.

 The prospectivity of offshore Montenegro has never drifted far from my mind and we continue to monitor developments there, where a new Hydrocarbons Law enacted in 2010 has stimulated increased international interest in the area. Our much improved financial position should allow us to focus renewed attention on reviving activity in the region.

I have nothing new to report with regard to our other oil and gas interests.

Renewables

I have written previously about our plans to build an offshore wind services business focussed on specialised operations and maintenance (“O&M”) vessels. We have engaged with many potential customers and can confirm widespread support for our design and operational concept. Converting that support to a firm charter is our priority. To date, the only tender for such offshore wind support vessels has been for a project in the Baltic Sea. Our vessel design is specified for the more challenging wave, tide and weather conditions encountered in the North Sea, and is therefore over specified for the more benign conditions in the Baltic. The requirement for the first such vessels in the North Sea (primarily UK and Germany) is expected to occur in 2014 and we are actively preparing to participate in the first of such tenders for the North Sea which are expected to be issued next month.

 We are now moving forward with additional technical work to finalise the optimal design for the O&M vessel. This comprises tank testing and the preparation of detailed engineering drawings, both of which are required to put us in a position to initiate construction of our first new-build vessel, once an initial charter has been secured.

 In addition, we are investigating with potential customers and ship-owners the potential for a nearer-term charter of an existing ship for this winter which would demonstrate our concept, allow us to optimise the design of vessel features and working processes in real working conditions and, importantly, would generate earlier revenue.

 Outlook

Shareholders will recently have received a circular calling a General Meeting of the Company for 6 October 2011 in order to allow us to commence the process of reconstructing our balance sheet. This will pave the way for the Company to be in a position where it may make a distribution to shareholders, pay a dividend or buy back some of its own shares following completion of the audit of the Company’s 2011 results. It has been deeply frustrating to see our shares trading at a significant discount to net cash and having the ability to buy back some of our shares, to be held in treasury or for cancellation, will be a useful tool. I would strongly urge those shareholders who have not yet done so to vote in favour of the Resolutions at next week’s General Meeting.

 In preparation for the balance sheet reconstruction, and the associated Court process, we recently settled the long outstanding Schlumberger debt, paying £950,000 in cash to settle in full a debt that we were carrying at £1.3 million. The removal of that creditor should help facilitate the Court process and has also removed the potential dilution to Shareholders that would have occurred if Schlumberger had exercised its right to have the debt settled through the issue of new shares in the Company.

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Source: seaenergy-plc, September 29, 2011