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RNS Number : 6699I 88 Energy Limited 28 March 2024
28 March 2024
88 ENERGY LIMITED
LODGEMENT OF ANNUAL REPORT
88 Energy Limited (ASX:88E; AIM:88E) ("88 Energy" or "Company") advises that a
copy of the Company's Annual Report for the year ended 31 December 2023 (the
"Annual Report") has been lodged on the ASX along with the Company's 2023
year-end Corporate Governance Statement and Appendix 4G.
The Annual Report, which was sent to shareholders today, is available on the
Company's website at www.88energy.com (http://www.88energy.com) along with
copies of each of these other documents.
Set out below is the Chairman's Statement as included in the Annual Report.
Also, set out below is a summary of the Company's audited financial
information for the year ended 31 December 2023 as extracted from the Annual
Report, being:
· Consolidated Statement of Comprehensive Income;
· Consolidated Statement of Financial Position;
· Consolidated Statement of Changes in Equity; and
· Consolidated Statement of Cash Flows.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing
Director
Tel: +61 8 9485 0990
Email:investor-relations@88energy.com
Fivemark Partners, Investor and Media
Relations
Michael
Vaughan
Tel: +61 422 602 720
EurozHartleys Ltd
Dale
Bryan
Tel: +61 8 9268 2829
Cavendish Capital Markets
Limited
Tel: +44 (0) 207 220 0500
Derrick
Lee
Tel: +44 (0) 131 220 6939
Pearl Kellie
Tel: +44 (0) 131 220 9775
CHAIRMAN'S STATEMENT
Dear Shareholders,
It is my pleasure to present 88 Energy's Annual Report, outlining our
exploration and appraisal activities, operations, and financial position for
the financial year 2023.
It has been another eventful year in the oil and gas market, with volatile
prices and supply constraints arising from persisting geopolitical tensions,
macroeconomic uncertainties, and the increasing role of renewable energy in
the global energy mix. However, as greater focus is placed on the clean energy
transition, governments and major utilities are beginning to realise more than
ever that maintaining a reliable, secure supply of traditional energy is
crucial to meeting future energy demands.
To successfully leverage these challenges and opportunities requires an
openness to change and a high degree of flexibility, which I believe are part
of 88 Energy's core strengths. Over the past two years, we have evolved our
strategy to enhance shareholder value through identifying new and exciting
opportunities across the oil and gas lifecycle. Our evolved strategy is
evidenced through our ongoing exploration and appraisal agenda and portfolio
balancing activities that we achieved during the year. This included divesting
our interests in the non-core Yukon acreage and commencing activities to
identify farm-in partners to augment future exploration and appraisal of our
high-impact Alaskan assets. Also, expanding our footprint at Project Longhorn
by gaining access to cost-effective work-over opportunities to increase
production and cashflow, and new-country entry into Namibia which represents
one of the last frontier oil and gas jurisdictions capable of delivering
multi-billion-barrel discoveries, as evidenced by the recent offshore light
oil discoveries.
The Hickory-1 exploration well at Project Phoenix was successfully completed
in April 2023 with very positive results from the wireline logging suite and
sidewall coring program. Hickory-1 was subsequently cased and suspended as
planned, to carefully design the flow test and stimulation program in
conjunction with industry experts, utilising available offset information and
Hickory-1 data to provide the best possible outcome during the flow test
operations that are now underway. Hickory-1 pre-drill expectations were met or
exceeded on reservoir quality and thickness, with oil shows and net log pay
calculated across all primary and secondary reservoirs and identified a new
reservoir, the Upper Slope Fan System (Upper SFS), which had not been
previously tested by 88 Energy or other nearby-operators. The Upper SFS had
the best oil shows across all reservoirs intersected in the Hickory-1 well and
the mapping of the Upper SFS demonstrated a reservoir zone more laterally
extensive than previously considered.
We released an Independently certified Contingent Resource estimate for
Project Phoenix of 250 million barrels of oil equivalent from the Basin Floor
Fan (BFF) which is the deepest reservoir encountered in Hickory-1. The
Contingent Resource was achieved by demonstrating reservoir continuity through
seismic and well data to nearby third-party wells with successful flow tests
in the BFF. The Contingent Resource confirmation at the BFF enabled Hickory-1
to be classified as a discovery, but more importantly, bodes well for the
shallower and less thermally mature (more oil prone) Slope Fan System (SFS)
and Shelf Margin Delta (SMD) reservoirs, which are the focus for the Hickory-1
flow test.
Our ongoing assessment of Icewine West identified a series of SMD prospects,
the majority of which have yet to be drilled. Following recent exploration
success with the SMD reservoir at Hickory-1, we intend to investigate these
prospects to add to an already extensive Icewine West prospective resource
portfolio.
Further North, at our Leonis Project, work progressed at pace with the
reprocessing and interpretation of 3D seismic as well as a review of regional
well data providing additional support for significant resource potential in
the Upper Schrader Bluff (USB). We remain on track to delineate an
independent, Certified Resource Estimate in 1H24, before commencing a formal
farm-out program.
In mid-year, we released an independent Prospective Resource update for
Project Peregrine. The certification resulted in two new prospects (N12 and
N13) being identified in the prolific Nanushuk Formation. The assessment also
indicated that up to three independent prospects could be assessed from a
single ice pad via a sidetrack from the Harrier-1 well pad, resulting in
significantly lower exploration costs. While we remain committed to Project
Peregrine, due to the proposed new regulations presented in September,
governing the management of subsurface resources in the National Petroleum
Reserve-A (NPR-A), we worked with the Bureau of Land Management Alaska (BLM)
in the fourth quarter and received approval to suspend Project Peregrine
leases for 12 months to 30 November 2024. The suspension provides relief from
A$0.5 million of lease rentals and allows us to continue with refining
internal geological and geophysical models and interpretation at minimum cost.
Through its investment in the Bighorn Energy LLC Joint Venture, the Company
has acquired an expanded footprint in our producing Permian Basin assets at
Project Longhorn. These acquisitions provide multiple development
opportunities and additional production to enhance our current output of ~360
BOE/day. Project Longhorn has performed solidly since it was added to the
portfolio in 2022 and supplements our core exploration and appraisal
activities.
Finally, we executed a three-stage farm-in agreement for up to a 45%
non-operated working interest in an onshore Petroleum Exploration Licence (PEL
93) covering a vast 18,500 km2 acreage position in the Owambo Basin of
Namibia. This farm-in provides us with a fantastic opportunity to earn a
significant working interest in a very large scale, highly prospective,
under-explored acreage position. The forward work-program is scheduled to
commence in Q2 2024, starting with a low impact 2D seismic program focusing on
confirming the structural closures of the 10 independent leads previously
identified and will be used to obtain a Maiden Prospective Resource Estimate
and define potential drilling locations.
I wish to thank our small but dedicated team for their efforts in delivering
key milestones over the past year, delineating future avenues of growth, and
identifying value drivers in such a dynamic market environment.
The path to value recognition is not always linear, and I wish to express my
gratitude to you, our shareholders, for your continuing dedication through the
88 Energy journey. Our Company is very well placed to unlock the huge
potential value residing in our balanced exploration, appraisal, and
production portfolio.
On behalf of the 88 Energy team, I wish you all a healthy and prosperous year
ahead.
Yours faithfully,
Philip Byrne
Non-Executive Chairman
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR
THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
Note 2023 2022
$ $
Other income 3(a) 500,927 21,760
Share of profit/(loss) from equity accounted investment 11 1,665,442 3,317,877
Administrative expenses 3(b) (2,690,171) (2,778,962)
Occupancy expenses (34,992) (51,142)
Employee benefit expenses 3(c) (2,911,375) (2,335,914)
Share-based payment expense 18 (879,455) (658,111)
Depreciation and amortisation expense (64,228) (60,307)
Finance cost (8,544) (8,583)
Other expenses (478,961) (12,869)
Foreign exchange (loss) / gain (49,514) 493,647
Exploration & Evaluation Impairment/Expense 3(d) (9,488,362) (68,649,314)
Loss before income tax (14,439,233) (70,721,918)
Income tax expense 4 - -
Loss after income tax for the year (14,439,233) (70,721,918)
Other comprehensive income / (loss) for the year
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (1,627,093) 6,378,972
Other comprehensive income / (loss) for the year, net of tax (1,627,093) (64,342,946)
Total comprehensive income / (loss) for the year attributable to members of 88 (16,066,326) (64,342,946)
Energy Limited
Loss per share for the year attributable to the members of 88 Energy Limited:
Basic and diluted loss per share 5 (0.0005) (0.0042)
The notes to the financial Consolidated Statement of Profit or Loss and Other
Comprehensive Income should be read in conjunction with the statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023
Note 2023 2022
$ $
ASSETS
Current Assets
Cash and cash equivalents 6 (a) 18,182,727 14,123,731
Trade and other receivables 7 3,973,934 1,549,816
Total Current Assets 22,156,661 15,673,547
Non-Current Assets
Plant and equipment 8 22,348 20,337
Exploration and evaluation expenditure 9 110,588,395 96,422,918
Other Assets 10 506,817 940,424
Equity accounted investments 11 23,251,219 19,968,658
Total Non-Current Assets 134,368,779 117,352,337
TOTAL ASSETS 156,525,440 133,025,884
LIABILITIES
Current Liabilities
Trade and other payables 12 556,544 1,105,132
Provisions 13 283,497 244,736
Total Current Liabilities 840,041 1,349,868
TOTAL LIABILITIES 840,041 1,349,868
NET ASSETS 155,685,399 131,676,016
EQUITY
Contributed equity 14 379,917,222 340,972,669
Reserves 15 29,972,652 30,468,589
Accumulated losses (254,204,475) (239,765,242)
TOTAL EQUITY 155,685,399 131,676,016
The Consolidated Statement of Financial Position should be read in conjunction
with the notes to the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31
DECEMBER 2023
Issued Capital Reserves Accumulated Losses Total
$ $ $ $
At 1 January 2023 340,972,669 30,468,589 (239,765,242) 131,676,016
Loss for the year - - (14,439,233) (14,439,233)
Other comprehensive income - (1,627,093) - (1,627,093)
Total comprehensive income/(loss) for the year after tax - (1,627,093) (14,439,233) (16,066,326)
Transactions with owners in their capacity as owners:
Issue of share capital 41,429,821 - - 41,429,821
Issue of Options - 251,701 - 251,701
Settlement of vested PR's - - - -
Share-based payments - 879,455 - 879,455
Share issue costs (2,485,268) - - (2,485,268)
Balance at 31 December 2023 379,917,222 29,972,652 (254,204,475) 155,685,399
At 1 January 2022 285,809,214 23,074,244 (169,043,324) 139,840,134
- - (70,721,918) (70,721,918)
Loss for the year
Other comprehensive income - 6,378,972 - 6,378,972
Total comprehensive income/(loss) for the year after tax - 6,378,972 (70,721,918) (64,342,946)
Transactions with owners in their capacity as owners:
Issue of share capital 58,524,106 - - 58,524,106
Issue of Options - 360,260 - 360,260
Settlement of vested PR's - (2,998) - (2,998)
Share-based payments - 658,111 - 658,111
Share issue costs (3,360,651) - - (3,360,651)
Balance at 31 December 2022 340,972,669 30,468,589 (239,765,242) 131,676,016
The Consolidated Statement of Changes in Equity should be read in conjunction
with the notes to the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER
2023
Note 2023 2022
$ $
Cash flows from operating activities
Payment to suppliers and employees (5,442,176) (4,907,742)
Interest and other income received 60,646 20,126
Net cash flows used in operating activities 6 (b) (5,381,530) (4,887,616)
Cash flows from investing activities
Payments for equity accounted investments (873,975) (10,693,565)
Payments for exploration and evaluation activities (29,903,780) (52,644,427)
Contribution from Joint Operation Partners in relation to Exploration 4,515,460 1,078,866
Proceeds (payment) for Bonds 584,840 137,930
Distribution from Equity Accounted Investments 2,010,345 4,281,910
Net cash flows generated from/used in investing activities (23,667,110) (57,839,286)
Cash flows from financing activities
Proceeds from issue of shares 14 35,414,713 47,052,778
Share issue costs (2,322,029) (3,149,329)
Net cash flows from financing activities 33,092,684 43,903,449
Net increase/(decrease) in cash and cash equivalents 4,044,045 (18,823,453)
Cash and cash equivalents at the beginning of the year 14,123,731 32,317,887
Effect of exchange rate fluctuations on cash held 14,951 629,297
Cash and cash equivalents at end of year 6(a) 18,182,727 14,123,731
The Consolidated Statement of Cash Flows should be read in conjunction with
the notes to the financial statements.
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