Year-end report 2013 - Interfox Resources AB

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Name change from Archelon Mineral AB to Interfox Resources AB
Decision on distribution of previous operations as dividend
New board of directors appointed
Acquisition of oil exploration project in the Tomsk region in central Russia
Purchase offer regarding Archelon Mineral’s shares in Nordic Iron Ore raised 1,9 Mkr
Merger between Gotland Oil AB and Gripen Gas AB created Gripen Oil & Gas AB, which
was separately listed on AktieTorget
Dividend of shares in Archelon AB and Dividend Sweden
Net turnover during the period January – December amounted to SEK 164k (SEK 324k
2012)
Financial result SEK -3 654k (SEK -3 639k 2012)
Cash flow from current operations SEK -9 429k (SEK -5 049k 2012)
Current assets and accounts receivable at the end of the period amounted to SEK 6 164k
(SEK 7 594k)
Interfox Resources AB is an exploration company that seek to identify license properties with
potential to become significant oil and gas assets. The Company’s operations currently involve
the development of the Company’s first asset, license 71-1 “Elley-Igayskoye”. The strategy is to
secure the oil and gas reserves size and nature and then develop the asset and prepare for a sale
or a deep cooperation with a strategic partner.
Year 2013 ended with a complete makeover of the company, as the operations of Archelon
Mineral AB in December was transferred to a newly created subsidiary and given as dividend to
the shareholders. The company then transformed into an exploration company in the oil & gas
sector. Up until December the company ran its business according to the previously established
model. The decision to distribute the current business as dividend was taken at the EGM on
December 20, 2013, which also decided to acquire the oil & gas project in Tomsk and to execute
a rights issue, supported by a consortium of guarantors. The purpose of the now completed
rights issue is to finance the first phase of development.
Our current focus is completely on our very promising project in the Toms region of the Russian
Federation. It is an exploration project, where we aim to create significant value and then to
divest the project or to find an ideal partner. This is to be executed in a relatively short period, as
the initial development program spans over 18 months, in which we will re-enter one of the old
wells and drill one new well.
The information regarding the assets is relatively rich, considering the early stage of the project,
since we have two wells drilled in Soviet times with parts of its drill logs, cores and furthermore
some seismic data available. During drilling, hydrocarbons were discovered in both wells. Based
on this fact, we have no doubts that hydrocarbons are present. The exploration plan is designed
to in the most efficient way establish the amount of reserves and how they can be extracted. The
independent experts we have assigned both have analyzed all available data and have given the
project a considerable amount of resources. The investments we shall make aims to prove
reserves.
The first stage of this process, financed by the rights issue completed on February 3rd, is to
complete a re-entry of one of the old wells. Thereafter, a series of tests and data collection will
be performed with modern methods, in order to create the best possible information for design
of the coming new well.
The rights issue has given us the means to start the work. The infrastructure on the license block
is prepared and the work to get the drilling rig and material in place is being done currently.
Our estimate is that all equipment shall be in place on the license block mid-March and that the
actual re-entry shall be initiated at the end of March. When the detailed analysis has come far
enough, decision shall be taken on where and how to drill the first new exploration well.
We very much look forward to this task!
Anders Thorsell
CEO
The Company's acquisition of Mezhlisa gave
access to the prospective project that BNG
acquired at a public auction in August 2010,
license 71-1 "Elley-Igayskoye" in Tomsk
Oblast, Russia.
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A reserve report must be drawn up
and approved within six months of
discovery
In addition to these terms, there are terms
for environmental protection, reporting to
authorities and industrial safety etc.
The license area is 34 km2, and has been
designed to cover the only known structure
on the license area.
The license is a combined exploration and
production license, TOM01559NR, which
runs until September 2035.
In brief, the license terms stipulate that the
licensee shall:
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Prepare a work programme, which
can be revised while it is being
performed
Perform re-entry of one of the two
older wells on the license block
Reinterpret seismic data and design
exploration and work programme
Perform a exploration programme
within five years
If a commercial discovery of hydrocarbon is
made and the licensee ascertains reserves,
the following will apply for the licensee:
•
•
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An appraisal programme must be
developed and agreed within 12
months
A seismic 2D or 3D programme must
be commenced or a new well drilled
within 24 months
At least two wells must have been
drilled within four years, of which at
least one must have been drilled in
the third year
Interfox Resources AB believe that
hydrocarbons primarily can be found at
three different depths, in the layers from the
Jurassic period and in the weathered zone in
the layer between the Jurassic and Devonian
layers, as well as down in the Devonian
layers, between depths 3,000 and 4,500
metres deep. The Devonian layers have
traditionally not been prospected to a great
extent in Russia, and it was not until
recently that interest in them has increased
significantly. Previously, the rich assets in
the Jurassic layers or younger formations
were more than enough to meet needs and
have been better adapted to existing
established technology.
The structure is deemed a reef-like
structure with a very large amplitude
between the top and the bottom. The license
block is located in a part of the Western
Siberian Basin which comprises a subdivision, the Nuyrola Basin, which has 13
similar
properties
with
established
hydrocarbon deposits in the Devonian
layers. The Devonian layers are at greater
depths in Tomsk and consist in the case of
license block 71-1 primarily of limestone
with properties different from the
sandstone in the Jurassic layers.
The
greater depths result in higher pressure,
which, all other things being equal, leads to
higher flows of any hydrocarbons present
than if they were situated in a more shallow
location, such as in the Jurassic formations.
The core analysis conducted during the
Soviet period also show that the limestone
at this depth exhibits extensive fissuring to a
great degree. The fissures create the
conditions for gas and liquids to flow both
horizontally and vertically. Significant flows
of hydrocarbons from individual wells are
found in nearby license areas with similar
geology.
In the winter of 2012/2013, BNG ordered a
reinterpretation of the seismic data
encompassing both older profiles from the
Soviet period and modern ones collected
between 2007 and 2009 by major oil
company Sibneft for a large area. The order
went to renowned Russian company
Geoprime (partially owned by major
international companies Schlumberger and
Integra). Geoprime identified three very
interesting formations in the deeper
Devonian layers. This data was correlated
with information from the logs of the two
existing wells. The result is that Geoprime
sees four potential hydrocarbon-saturated
intervals. Geoprime estimates in a mineral
resource estimate according to Russian
standard that the license block in total
contains the equivalent of 134 million
barrels of oil equivalent in category C3,
which means that they are potentially
extractable and with an assumption that the
hydrocarbons are primarily gas and the rest
is oil and gas condensate. This is by no
means a reserve assessment. It is an
estimate
of
potential
mineral
assets/resources.
The estimated hydrocarbon-bearing zones
altogether have a total thickness of
approximately 148 m. The interpretations
confirmed the Company's own estimates
and geological models and correlates with
previously collected historical data. As far
the Company knows, these seismic maps are
the first ones that, with modern tools,
systematically cover the deeper Devonian
layers in this part of the Tomsk region and
possibly the entire Tomsk region. They are
based on 600 line kilometres of seismic
data, divided into 13 profiles.
The overview reflects the operations of
Archelon Mineral AB.
On December 20, 2013 the Company
changed name to Interfox Resources AB
(publ) from Archelon Mineral AB (publ).
On the extra general shareholders meeting
on December 20, 2013 the shareholders
decided to adopt the proposal from the
board regarding the acquisition of the oil
project in the Tomsk region in Central
Russia. The transaction will take place via
an acquisition of all shares in the Cyprus
based company Mezhliza Ltd, whose sole
asset is the oil project in Tomsk. The project
will be contributed to Mezhliza gradually via
a so called “farm-in”. Payment for Mezhlisa
will be executed in new issued shares.
After the acquisition of the oil project in
Tomsk and the transformation of the
operations Interfox Resources AB is traded
at the observation list on AktieTorget until
AktieTorget’s review committee decides to
return the Company’s share to the ordinary
listing. The short name for the share is IFOX
B.
The seller of the project, the Far East and
Pacific Investments Inc. ("FEPI") is now,
taking into account all share issues, the
owner of 25.9 percent of the shares in
Interfox Resources AB. This is also after
transferring 4.0 percent of the shares in the
company to Archelon AB for a total
remuneration of SEK 3, according to
agreement.
Anders
Thorsell,
Patric
Perenius
(remaining), Jens Bruno and Jan Lundström
form the new Board of directors in Interfox
Resources AB. At the first board meeting Jan
Lundström was elected as chairman and
Anders Thorsell was appointed CEO.
The extra general shareholders meeting
decided that the previous operations should
be transferred to a newly formed fully
owned subsidiary called Archelon AB that
should be handed out as dividend to the
shareholders per December 30 2013. For
each share in Interfox Resources AB one (1)
share in Archelon AB was distrbuted. The
share dividend in Archelon AB, "New
Archelon", was executed after the record
date December 30 2013. After the payout
the trading of the share was initiated on
AktieTorget.
At the extra general shareholder’s meeting a
decision was also made on the share
dividend of Dividend Sweden AB, where
Interfox Resources AB had acquired shares
for a symbolic amount. For each share
package of 13 shares in Interfox Resources
AB one (1) share in Dividend Sweden AB
was received. Record date for this
transaction was also set to December 30
2013. The payout of shares was executed in
the beginning of January 2014. These shares
are not publicly traded.
Due to the distribution of the former
business and the execution of the rights
issue, the meeting decided to reduce the
share capital (without redemption of
shares), when the quota value is changed
from 4 öre to 1 öre.
A new share issue in the spring of 2013
brought Gotland Oil AB, a company that was
formed on Archelon Mineral’s initiative,
about 7.5 million before related costs. The
issue was directed to the public in order to
achieve as good free float as possible in
preparation for listing on AktieTorget on 18
April 2013.
At the Annual General Meeting June 24,
2013, the shareholders of Gotland Oil AB
decided to merge with Gripen Gas AB. The
AGM decided that the company after the
merger will be renamed Gripen Oil & Gas
AB.
Public trading of the share was initiated
under the new name Gripen Oil & Gas AB on
10 July 2013, short name GOG.
The Board of Gripen Oil & Gas decided in
September to pursue a rights issue of shares
and warrants of approximately 15.3 million
SEK with preferential rights for existing
shareholders.
Archelon Mineral's holding in Gripen Oil &
Gas was transferred to Archelon AB in
connection with the distribution of the
former business as dividend.
During the July 2013 a loan of 4 million was
settled. The loan was raised in December
2012, where Archelons shareholding in
Nordic Iron Ore AB had been pledged as
collateral.
30 September 2013, the Board of Archelon
to set up a purchase offer, where Archelon
shareholders were given the option to buy
the remaining holding of about 640 000
shares in Nordic Iron Ore at a price of 8.50
per share. The offer took place between 14
and 28 October 2013. The outcome was that
about 220 000 shares were sold, which
raised about 1.9 million.
Archelon Mineral's holding in Nordic Iron
Ore was transferred to Archelon AB in
connection with the distribution of the
former business as dividend.
Geotermica AB works with the extraction of
geothermal energy. Activities are being
established in Italy, where geothermal heat
has for long been exploited for electricity
generation. Ownership in Geotermica
amounts to about 17.8 percent. For further
information, see the company website
www.geotermica.se.
Archelon Mineral Holdings in Geotermica
was transferred to Archelon AB in
connection with the distribution of the
former business as dividend.
Net turnover, SEK k
Result after financial items, SEK k
Total assets, SEK k
Equity ratio, %
Total employees
164
324
428
286
164
-3 654
-3 639
-4 597
6 441
-2 698
6 584
13 320
13 122
17 724
12 143
24
64
95
96
95
4
4
4
4
2
Return on total assets (%)
-36,7
27,5
Return on total equity (%)
-71,9
-34,6
Return per share (SEK)
-0,05
-0,05
Equity per share (SEK)
0,02
0,12
Quick ratio (%)
123
165
Number of A-shares
2 051 090
2 051 090
Number of B-shares
71 016 548
71 016 548
Total number of shares
73 067 638
73 067 638
Average number of shares
73 067 638
73 067 638
Net turnover
-
164
26
324
Other revenue
-
-
-
50
164
374
Operational costs
Materials
-2
-2
-
-78
-981
-1 823
-465
-1 302
-1089
-4 107
-1034
-4 134
-
-53
-18
-58
-2068
-5 821
-1491
-5 198
10
2 261
1471
1 471
2
12
10
87 381
-106
-106
-
-238
Result after financial costs
-2162
-3 654
-10
-3 639
Result before taxes
-2162
-3 654
-10
-3 639
Result of the period
-2162
-3 654
-10
-3 639
Other costs
Salaries
Depreciation
Operational results
Financial costs
Income from other investments and loans
Other interest income and other financial income
Interest and other financial costs
ASSETS
Fixed assets
Immaterial fixed assets
Other immaterial fixed assets
-
360
-
360
Equipment and other fixed assets
-
262
Other fixed assets
-
25
-
288
Other long term securities
-
4 835
Other long-term receivables
-
32
-
4 867
-
5 515
-
36
3 515
65
533
110
4 047
211
Cash
2 536
7 594
Total current assets
6 584
7 805
TOTAL ASSETS
6 584
13 320
Fixed assets
Financial fixed assets
Total fixed assets
Current assets
Current receivables
Accounts receivables
Other receivables
Prepayments and accrued income
EQUITY AND LIABILITIES
Equity
Restricted equity capital
Equity
1 397
1 397
2 923
2 923
1 333
2 511
-3 654
190
20 662
-11 368
-3 639
5 655
Total equity
1 587
8 578
Current liabilities
Accounts payable
Tax liabilities
Other liabilities
Accrued expenses and deferred income
143
25
4 000
829
38
26
4 093
586
4 997
4 743
6 584
13 321
Unrestricted equity
Share premium account
Retained earnings
Result of the period
TOTAL EQUITY AND LIABILITIES
Pledged assets
Pledged shares
-
1 751
Total
-
1 751
none
none
Commitments
Operating activities
Result after financial items
Adjustments for items not included in cash flow, etc.
-3 654
-2 200
-3 639
-1 463
-5 854
-5 102
Cash flow from changes in working capital
Increase(-)/Decrease (+) of accounts receivable
Increase(+)/Decrease (-) of accounts payable
-3 836
262
-27
80
Cash flow from operating activities
-9 429
-5 049
Sale of immaterial fixed assets
Acquisition of material fixed assets
Sale of material fixed assets
Acquisition of financial assets
Sale of financial assets
360
288
4 867
-321
90
-1 030
2 454
Cash flow from investment activities
5 515
1 193
Financial operations
Share issue
Reduction of share capital
New liabilities
Dividends
Shareholder’s contribution
2 000
2 192
-500
-4 836
4 000
-
Cash flow from financial operations
-1 144
4 000
Cash flow of the period
Cash at the beginning of the period
-5 057
7 594
144
7 450
2 536
7 594
Cash flow from operating activities before
changes in working capital
Investment activities
Cash at the end of the period
A rights issue was conducted in February,
raising a gross SEK 23.7 million. In total
1 093 036 208 new shares were issued,
bringing the total number of shares to
1 232 770 512. Out of these 205 998 816
shares were subscribed by virtue of
subscription rights and 518,439,009 shares
without subscription rights. Out of the total
number of shares, 368 598 383 were
subscribed by The Far East and Pacific
Investments Inc, who in their turn
transferred 49 310 820 to Archelon AB for a
remuneration of SEK 3, according to
agreement.
In accordance with the dividend policy, the
Board will propose to the Annual General
Meeting that no dividend shall be paid for
2013.
Among the principal risks relating to the
company and the industry may be
mentioned that the company's operations
are subject to all of the risks and
uncertainties that businesses focused on
exploration,
acquisition,
development,
production and sale of oil and gas are
associated with. All oil and gas reserves and
oil and gas resources contain a degree of
uncertainty. In many cases, exploration
activities never get to development and
production. The company's potential
inability to retain and expand its reserves
would have a material adverse effect on the
company's business, results and financial
postition. The company may also suffer
accidents and damage to facilities, the
environment and staff, and natural
disasters. Any major incident could have an
adverse effect on the company's ability to
produce oil and gas. The company's
operations are located in Russia whose
political and legal system reform
continuously. These reforms may suffer
setbacks, which can create unsafe
conditions for investments.
The Company may in the future need to turn
to the capital market for additional funding.
Both the size and timing of the Company's
potential future capital requirements will
depend on a number of factors, including
the nature resource. There is a risk that the
required funding of operations is not
available at the right time and at reasonable
cost.
Interfox Resources' Annual Report for 2013
will be published by 30 April 2014. Out of
respect to both environmental and cost
reasons, Interfox Resources AB has decided
to primarily distribute the Annual Report
via the company's website. The printed
version will continue to be available to
order through contact with the company.
Interfox Resources Annual General Meeting
2014 will be held in Stockholm May 15,
2014 at. 16:00. Information on how
proposals are submitted and how to
participate will be posted on the website;
www.interfoxresources.se.
The company has in the preparation of this
interim report applied the Swedish Annual
Reports Act and the general advice as given
by the Swedish Accounting Standards
Board.
Annual report 2013 April 2014.
Q1 2014, January - March 2014 will be
published May 15 2014.
Q2 2014, April – June 2014, will be
published August 19 2014.
Q3 2014, July – September 2014, will be
published November 18 2014.
Year-end report 2014 February 17 2015.
Annual Shareholder’s meeting shall be held
on May 15 2014.
Financial reports, press releases and other
information are available on Interfox
Resouces’ website:
www.interfoxresources.se
This report has not been reviewed by the
auditors.
Stockholm February 20 2014
Jan Lundström
Anders Thorsell
Chairman
CEO and
member of the
board
Jens Bruno
Patrik Perenius
Member of the board
Member of the
board
`