PETROGRAND AB: INTERIM REPORT JANUARY - MARCH 2010
(Thomson Reuters ONE) -
* Sale of production subsidiary STS-Service completed
* Extraordinary general meeting of shareholders resolves in favour of a new
business plan including change of company name from Malka Oil AB (publ) to
Petrogrand AB (publ)
* Operating income for the 1st quarter amounted to TSEK 12,261 (TSEK 21,489 )
of which TSEK 12,261 (TSEK 21,489) attributable to the discontinued
operations
* Net result after tax for the 1st quarter amounted to TSEK -9,099 (TSEK
-118,448) of which TSEK -3,331 (TSEK -115,090) attributable to the
discontinued operations
* Earnings Per Share for the 1st quarter amounted to SEK 0.00 (SEK -0.35) of
which SEK 0.00 (SEK -0.34) attributable to the discontinued operations
MD's report
Dear Shareholders,
In the first quarter of 2010, we completed the sale of our production subsidiary
STS-Service in the Tomsk region to Gazprom Neft Vostok. Our shareholders
resolved to accept the board's proposal of the sale at an extraordinary general
meeting of shareholders on December 17, 2009. A period of hard work to
investigate the company's strategic options for the future preceded the proposal
to sell. The transaction was completed on February 5, 2010 with the registration
of the change of ownership by the Russian authorities.
An important factor in the decision to propose a sale were the legal disputes
involving STS-Service. It should therefore be pointed out that all disputes and
payment commitments in the discontinued operations amounting to approximately
50 million SEK were transferred to Gazprom Neft Vostok as part of the
transaction
Following the completion of the transaction, we have been working intensely on a
new business plan and at an extraordinary general meeting of shareholders on 27
April, our shareholders resolved to accept our plan for the future. A general
description of the business plan is included in this report but I would like to
mention something about the overall thinking and circumstances behind the new
plan.
In Russia, there are a large number of small oil companies that are not
interesting for the large oil producers. These small companies are in various
stages of their development of exploration and production and are often in a
financially difficult situation with need of new financing for their continued
operations. With its strong financial position, Petrogrand will be able to
assist these target companies with financing. In return Petrogrand will gain
control and influence and with its experienced staff will assist in the
development of the target companies in such a way that their assets will
increase in value.
A period has passed since the completion of the transaction involving
STS-Service. We have used this time in order to thoroughly develop the plans for
our future operations. But at the same time, our remaining staff in Russia has
actively received and investigated several interesting business proposals in
line with our new business plan. In the period before the extraordinary
shareholders' meeting, as many as 48 licenses and licensing areas had been
reviewed and many of these have potential for the future.
We are happy to be able to put a difficult period behind us and move forward. My
conviction is that we are well placed for an exciting future and I feel very
motivated by the shareholders' approval of our new business plan.
Maks Grinfeld
Managing Director Petrogrand AB
Comment on the Group's result and financial position
Turnover and result
In early February 2010, the sale of the subsidiary STS-Service to Gazprom Neft
Vostok was completed. Since the discontinued operations within STS-Service have
constituted the main part of Petrogrand's operations, the following comments
relate to the discontinued operations if nothing else is indicated.
Operating income for the January-March period amounted to TSEK 12,261 (TSEK
21,489), of which revenues from oil sales were TSEK 12,247 (TSEK 21,470). All
oil sales during the 1(st) quarter were made in January, since the transfer of
ownership of the production subsidiary STS-Service took place in the beginning
of February.
Gross profit amounted to TSEK 5,648 (TSEK -8,588). This amount includes an
amortization charge of TSEK -172 (TSEK -6,383).
During the report period, the company did not have any selling and distribution
expenses (TSEK -966). Administrative costs and other operating expenses amounted
to a total of TSEK -5,200 (TSEK -15,466). The amount of expenses during the
quarter also reflects the fact that the production subsidiary was transferred to
the new owner in the beginning of February.
Operating profit for the January-March period amounted to TSEK 448 (TSEK
-25,020).
Net financial items amounted to TSEK -3,679 (TSEK -78,084).
The tax item for the January-March period amounted to TSEK -100 (TSEK -11,986).
For the period 1 January-31 March 2010, the Group in total reports a net result
after tax of TSEK -9,099 (TSEK -118,448) equivalent to an earnings per share of
SEK 0.00 (SEK -0.35). Of the net result, TSEK -3,331 (TSEK -115,090) is
attributable to the discontinued operations, equivalent to an earnings per share
of SEK 0.00 (SEK -0.34).
Investments
The Group's investments in tangible and intangible fixed assets during the
January-March period amounted to TSEK 1,674 (TSEK 9,271), of which investments
in intangible fixed assets represented TSEK 1,674 (TSEK 6,268).
Financing and liquidity
Cash balances in the Group amounted to TSEK 754,436 (TSEK 4,408) as of 31 March
2010.
The company in the fourth quarter of 2009 used a commitment from one of the
major shareholders concerning short-term bridge financing at market conditions
in order to meet its liquidity needs until receipt of payment from the buyer of
STS-Service. After receiving payment from the buyer in early February 2010, the
short-term credit including interest was repaid.
Legal disputes
Petrogrand's divested Russian subsidiary, STS-Service, was as of the end of
2009 involved in legal disputes with two local suppliers: OOO Kupir concerning
construction work and OOO EERB concerning drilling work.
As a result of the sale of STS-Service to Gazprom Neft Vostok in February 2010,
the disputes with OOO EERB and OOO Kupir have been transferred to Gazprom Neft
Vostok.
Petrogrand was as of 31 March 2010 involved in a legal dispute with Central Asia
Gold AB's Russian subsidiary OOO Tardan Gold concerning a bill of exchange
receivable. Petrogrand AB has per 31 December 2009 made a provision concerning
this receivable amounting to TSEK 14,046. After the end of the report period, an
agreement with an installment plan has been made with OOO Tardan Gold.
Employees
The number of employees in Group companies at the end of the report period was
17 (223), of which 12 (35) were women and 5 (188) were men.
Comment on the Parent Company
Of the financial costs in the income statement, an amount of TSEK 6,857 is a
write-down of loans given to the remaining Russian subsidiaries. These loans
have been given in order to cover expenses linked to the liquidation of the
subsidiaries. From a Group perspective, these costs have already been charged to
the result as part of the provisions made for liquidation and restructuring
costs in the result report for the 4(th) quarter of 2009.
In the balance sheet item current receivables, an amount of TSEK 14,000 is
included constituting the last part of the payment for STS-Service. This amount
was paid as agreed in the beginning of April.
Major events during the report period
Decision by the Russian Antimonopoly Service
At an extraordinary general meeting of shareholders on 17 December 2009,
Petrogrand's shareholders resolved to approve the board's proposal to sell the
company's production subsidiary STS-Service in the Tomsk region I Siberia to
Gazprom Neft Vostok. The Federal Antimonopoly Service of Russia ("FAS") gave its
approval to the transaction on 19 January 2010.
January 2010 production: 2,064 barrels per day
Petrogrand's total production of oil for the month of January 2010 amounted to
63,998 barrels compared to December 2009 when the production was 62,280 barrels.
On average, production was 2,064 barrels per day compared to 2,009 barrels per
day during December 2009. Oil sales for the month of January amounted to 67,733
barrels and the average price before tax was 29.61 USD per barrel.
Sale of STS-Service to Gazprom Neft Vostok completed
Russian authorities on 5 February 2010 registered the sale of Petrogrand AB's
Russian subsidiary STS-Service to Gazprom Neft Vostok. This means that the
transaction between Petrogrand AB and Gazprom Neft which was approved by the
shareholders of Petrogrand AB at an Extraordinary Shareholders' Meeting on
December 17, 2009 was completed.
Repayment of short-term credit
After receiving payment from the buyer of STS-Service in early February 2010,
the short-term loan which was received at market conditions from one of the
major shareholders in the fourth quarter of 2009 was repaid.
Presentation of new business plan and notice to convene extraordinary general
meeting of shareholders
On 26 March 2010, a new business plan for the future operations was presented
and the board gave notice to convene an extraordinary general meeting of
shareholders on 27 April at which the shareholders would make a resolution
concerning the new business plan. The alternative to continued operations would
be a liquidation of the company.
Operations
Petrogrand AB is an independent Swedish oil company within exploration and
production active in the Tomsk region in western Siberia in Russia.
On 5 February 2010, Russian Authorities registered the transfer of ownership of
the production subsidiary STS-Service to Gazprom Neft Vostok in line with the
resolution by the extraordinary general shareholders' meeting on 17 December
2009 to sell STS-Service to Gazprom Neft Vostok.
Following the transaction, the board of Petrogrand AB during the report period
was engaged in developing a new business plan for future operations. The
business plan was published in the end of March and on 26 March, the board gave
notice to convene an extraordinary general meeting of shareholders to take place
on 27 April at which the shareholders would make a decision concerning the new
business plan.
New business plan
Petrogrand's general business concept will be to carry on oil production through
acquired Russian oil companies and oil licenses. Petrogrand will also manage,
enhance the value of and sell Russian oil assets. The goal is to become one of
Sweden's leading oil companies on the Russian market by means of investments in
the Russian oil sector.
Petrogrand will initially as a strategy actively seek and execute strategic
acquisitions within the Russian oil sector. The company's acquisition strategy
will focus on small, cash flow generating target companies that are oil
producing or near production. Focus will also be on target companies that are in
need of additional capital and have a potential to be streamlined and enhanced
by better management. The acquisitions will be conditional upon Petrogrand's
control and significant influence in the form of its own management team in the
target companies. When a stable cash flow is achieved, Petrogrand will acquire
Russian oil licenses via state auctions and establish cooperation and
partnership structures with other oil companies and investors in order to create
strategically justified and industrially logical oil license portfolios. The
work involved in developing proposals for investments in target companies and
licenses will be performed in cooperation with the company's Russian contact
network including investment banks and government organizations.
The overall thinking and circumstances behind the new plan is the fact that in
Russia, there is a large number of small oil companies that are not interesting
for the large oil producers. These small companies are in various stages of
their development of exploration and production and are often in a financially
difficult situation with need of new financing for their continued operations.
With its strong financial position, Petrogrand will be able to assist these
target companies with financing. In return Petrogrand will gain control and
influence and with its experienced staff will assist in the development of the
target companies in such a way that their assets will increase in value.
Production status as of 31 March 2010
Petrogrand's production of oil and gas condensate during January-March 2010
amounted to 63,998 barrels. The total production took place in January. As a
result of the completion of the sale of STS-Service to Gazprom Neft Vostok in
early February, the company did not produce any oil during February and March.
Major events following the end of the report period
Extraordinary general meeting of shareholders approves the new business plan
including change of company name
On 27 April at an extraordinary general meeting of shareholders, the board's
proposal of a new business plan and change in the description of company
activities were approved. The plan includes a change of company name from
previous Malka Oil AB (publ) to Petrogrand AB (publ).
Change of name on First North
As of 25 May 2010, the company's share is trading under its new name Petrogrand
on First North. The short name of the share is "PETRO".
Share data
There have been no changes in the share capital during the report period.
Since the time of the rights issue and the conversion of the convertible bonds
in April 2009, the share capital of Petrogrand amounts to SEK 268,410,272
divided into 4,026,589,880 outstanding shares, each with a par value of SEK
0.0667.
Future reporting dates
Annual general meeting 2010: To be held 21 June 2010
January - June interim report: To be published 31 August 2010
January - September interim report: To be published 30 November 2010
Company information
The full name of the parent company is Petrogrand AB (publ). It is a public
limited company with head offices in Stockholm and the corporate registration
number 556615-2350. The address of the parent company is Birger Jarlsgatan
41A, 111 45 Stockholm. Its telephone number is +46 8 5000 7810 and fax number is
+46 8 5000 7815. Internet web site: www.petrogrand.com
This report has not been subject to review by the company's auditors.
Stockholm, 31 May 2010
The Board of Petrogrand AB (publ)
For further information, please contact:
Maks Grinfeld, MD, tel; +46 768 077 614
Sven-Erik Zachrisson, Chairman of the Board of Directors, tel: +46 8 41 05 45 96
For further information on Petrogrand AB, see the website www.petrogrand.com
[HUG#1420353]
INTERIM REPORT JANUARY - MARCH 2010: http://hugin.info/138739/R/1420353/369982.pdf
Unternehmensinformation / Kurzprofil:
Datum: 31.05.2010 - 18:01 Uhr
Sprache: Deutsch
News-ID 21715
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