REG - 88 Energy Limited - ASX LODGEMENT OF ANNUAL REPORT

88 EnergyAnnouncement

18/03/2022 07:16

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RNS Number : 2588F  88 Energy Limited  18 March 2022

88 ENERGY LIMITED

ASX 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 2021 (the
"Annual Report") has been lodged on the ASX along with the Company's 2021
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 2021 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

 Finlay Thomson, Investor Relations               Tel: +44 7976 248471

 Fivemark Partners, Investor and Media Relations  Tel: +61 410 276 744

 Andrew Edge / Michael Vaughan                    Tel: +61 422 602 720

 EurozHartleys Ltd                                Tel: +61 8 9268 2829

 Dale Bryan

 Cenkos Securities                                Tel: +44 131 220 6939

 Neil McDonald / Derrick Lee

 

 

CHAIRMAN'S STATEMENT

 

Dear Shareholders,

It is my pleasure to write to you after joining 88E in early August 2021 as
Non-Executive Chairman.  I was attracted to 88E as a function of the quality
of both its prospects and people.  At the time of writing, I am more enthused
than ever with the outlook for our business.

 

The past year has been one of substantial achievement for 88E.  Against a
backdrop of persistent COVID-19 related challenges, the business has advanced
its plans efficiently, significantly, and rapidly.  This progress has been
delivered alongside a resurgence in global energy prices, as the world
increasingly recognises the significant role that hydrocarbons must continue
to play in servicing transitional energy needs.

 

Our most significant exploration activity during 2021 was drilling the
Merlin-1 exploration well on our Project Peregrine acreage.  Merlin-1 was
spudded in March 2021 with drilling operations completed in April 2021.
Final interpretation of results was completed in August 2021 with post well
evaluation successfully demonstrating the presence of light oil in the N20,
N19 and N18 targets. This outcome was a highly significant one for 88E and has
given us great confidence in aggressively pursuing further exploration work at
Project Peregrine, including the upcoming drilling of the Merlin-2 appraisal
well.

 

In June 2021, we announced the successful acquisition of the residual 50%
working interest in Project Peregrine from Alaska Peregrine Development
Company.  This was an outstanding outcome in delivering us full control of,
and upside from, future Project Peregrine activities, while still retaining
flexibility to potentially farm-out to a partner with greater operational
capability at a future point.

 

That same month, 88E executed an agreement to sell its Alaskan Oil and Gas
Credits for US$18.7 million.  This sale accelerated the timeframe of our
value realisation from the Tax Credits and enabled the full repayment of our
outstanding debt of US$16.1 million.  With its debt free balance sheet, 88E
now holds significant flexibility with respect to future funding and capital
management initiatives.  In September 2021, we also raised A$24 million via
an equity placement to domestic and international institutional and
sophisticated investors.  These funds are being directed towards drilling of
the Merlin-2 appraisal well and general corporate activities.

 

At the time of writing, 88E had recently received the Permit to Drill for the
Merlin-2 appraisal well, mobilised the Arctic Fox rig to the drilling
location, and excitingly, spudded the Merlin-2 well on 7 March 2022.  This
well is located to the east of Merlin-1, where the multiple stacked sequences
within the Brookian Nanushuk Formation are expected to be of enhanced
thickness and quality.  We look forward to updating you regularly on the
progress of Merlin-2 drilling and results.

 

We have also been closely monitoring activity adjacent to the northern border
of our Project Icewine acreage, where the Kuparuk was reported from the
Talitha-A well drilled last year by Pantheon Resources.  This may have
positive implications for the same formation in our Icewine acreage.
Further, at the time of writing, Pantheon is undertaking flow testing
activities on Talitha-A, as well as undertaking drilling and planned testing
of the Theta West well.

 

During Q1 2021, 88E acquired the Umiat Oil Field to the immediate south of
Project Peregrine.  As part of the acquisition, we received the Umiat 3D
seismic data.  Further analysis of this data has provided a better
understanding of the Peregrine reservoir geometries to the north as well as
highlighting the potential for future development of an Ultra-Low Sulphur
Diesel (ULSD) production facility at Umiat.

 

The past year has also seen evolution in the leadership of our business.  I
congratulate Ashley Gilbert on his elevation to the role of Managing Director
and CEO.  I hold Ashley in the highest esteem and believe that he is already
demonstrating himself an excellent executive leader for our business.  I
would also like to take this opportunity to thank our previous CEO, the
long-serving David Wall, for his commitment and energy to 88E.  We wish David
all the best in his future endeavours.

 

We also welcomed Joanne Kendrick to the 88E Board as Non-Executive Director
and Rob Benkovic and Oli Mortensen to the roles of Chief Operating Officer and
Chief Financial Officer, respectively.  Thank you also to my predecessor as
Chairman, Michael Evans, for his lengthy and committed service to the
business.

 

I would like to recognise the Department of Natural Resources, the Alaska Oil
and Gas Conservation Commission, the North Slope Borough, Bureau of Land
Management and other regulatory agencies that have facilitated our exploration
efforts on the North Slope.  Thank you also to all 88E personnel and
contractors who have worked hard, in sometimes trying conditions, to deliver
the successes of last year.  We have a first-class team of truly committed
professionals who strongly believe in the potential of our acreage and our
approach to exploring it.

 

Finally, I would also like to thank you, our shareholders, for your ongoing
support.  The 88E business model has always focussed on targeting large-scale
hydrocarbon deposits.  The size of the prizes we are pursuing is large, and
sometimes the accompanying patience required is also.  I thank our
shareholders for pursuing this journey with us and we look forward to further
unlocking the huge potential value residing in our world-class Alaskan
acreage.  Stay well.

 

Yours faithfully,

 

Philip Byrne

Non-Executive Chairman

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

                                                                                 Note  2021         2020
                                                                                       $            $
 Revenue from continuing operations
 Other income                                                                    3(a)  4,448,699    246,778

 Administrative expenses                                                         3(b)  (3,048,444)  (1,399,215)
 Occupancy expenses                                                                    (86,765)     (60,664)
 Employee benefit expenses                                                       3(c)  (1,958,388)  (1,841,758)
 Share-based payment expense                                                     18    (738,965)    (122,870)
 Depreciation and amortisation expense                                                 (84,449)     (93,387)
 Finance cost                                                                          (1,195,703)  (2,595,406)
 Other expenses                                                                  3(d)  (48,471)     (16,218,575)
 Foreign exchange (loss) / gain                                                        302,297      51,463
 Loss before income tax                                                                (2,410,189)  (22,033,633)
 Income tax expense                                                              4     -            -
 Loss after income tax for the year                                                    (2,410,189)  (22,033,633)

 Other comprehensive income / (loss) for the year

 Items that may be reclassified to profit or loss
 Exchange differences on translation of foreign operations                             4,855,236    (7,120,022)
 Other comprehensive income / (loss) for the year, net of tax                          4,855,236    (7,120,022)

 Total comprehensive income / (loss) for the year attributable to members of 88        2,445,047    (29,153,655)
 Energy Limited

 Loss per share for the year attributable to the members of 88 Energy Limited:
 Basic and diluted loss per share                                                5     (0.0001)     (0.003)

 

The Consolidated Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the notes to the financial statements.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

                                             Note  2021              2020
                                                   $                 $
 ASSETS
 Current Assets
 Cash and cash equivalents                   6     32,317,887        14,845,347
 Trade and other receivables                 7     935,930           5,079,630
 Other Current Asset                         7     10,224,959
 Total Current Assets                              43,478,776        19,924,977

 Non-Current Assets
 Plant and equipment                         8     9,675             4,641
 Exploration and evaluation expenditure      9     101,357,767       48,213,290
 Other Assets                                10    936,536           17,216,644
 Total Non-Current Assets                          102,303,978       65,434,576

 TOTAL ASSETS                                      145,782,754       85,359,552

 LIABILITIES
 Current Liabilities
 Trade and other payables                    11    5,796,350         5,326,634
 Provisions                                  12    146,270           339,199
 Total Current Liabilities                         5,942,620         5,665,833

 Non-Current Liabilities
 Borrowings                                  13    -                 20,782,366
 Total Non-Current Liabilities                     -                 20,782,366

 TOTAL LIABILITIES                                 5,942,620         26,448,199

 NET ASSETS                                        139,840,134       58,911,353

 EQUITY
 Contributed equity                          14    285,809,214       208,963,513
 Reserves                                    15    23,074,244        16,580,975
 Accumulated losses                                (169,043,324)     (166,633,135)
 TOTAL EQUITY                                      139,840,134

                                                                     58,911,353

 

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 2021

 

                                                           Issued Capital  Reserves     Accumulated Losses  Total
                                                           $               $            $                   $
 At 1 January 2021                                         208,963,513     16,580,975   (166,633,135)       58,911,353
                                                           -               -            (2,410,189)         (2,410,189)

 Loss for the year
 Other comprehensive income                                -               4,855,236    -                   4,855,236
 Total comprehensive income/(loss) for the year after tax  -               4,855,236    (2,410,189)         2,445,047

 Transactions with owners in their capacity as owners:
 Issue of share capital                                    80,305,041      -            -                   80,305,041
 Issue of Options                                          -               1,072,790    -                   1,072,790
 Settlement of vested PR's                                                 (173,722)                        (173,722)
 Share-based payments                                      -               738,965      -                   738,965
 Share issue costs                                         (3,459,340)     -            -                   (3,459,340)
 Balance at 31 December 2021                               285,809,214     23,074,244   (169,043,324)       139,840,134

 At 1 January 2020                                         185,619,885     23,578,127   (144,599,502)       64,598,510
                                                           -               -            (22,033,633)        (22,033,633)

 Loss for the year
 Other comprehensive loss                                                  (7,120,022)  -                   (7,120,022)
 Total comprehensive income/(loss) for the year after tax  -               (7,120,022)  (22,033,633)        (29,153,655)

 Transactions with owners in their capacity as owners:
 Issue of share capital                                    24,130,013      -            -                   24,130,013
 Share-based payments                                                      122,870      -                   122,870
 Share issue costs                                         (786,386)       -            -                   (786,386)
 Balance at 31 December 2020                               208,963,513     16,580,975   (166,633,135)       58,911,353

 

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 FINANICAL YEAR ENDED 31 DECEMBER 2021

                                                             Note  2021          2020
                                                                   $             $

 Cash flows from operating activities
 Payment to suppliers and employees                                (4,594,024)   (3,141,403)
 Interest received                                                 841           2,634
 Interest & finance costs                                          (1,052,539)   (2,237,210)
 Other Income                                                      -             259,072
 Net cash flows used in operating activities                 6(b)  (5,645,722)   (5,116,907)

 Cash flows from investing activities
 Payments for exploration and evaluation activities                (41,791,086)  (41,521,267)
 Contribution from JV Partners in relation to Exploration          20,816,000    32,184,152
 Payments for Bonds                                                (112,730)     -
 Proceeds from sale of tax credits                                 24,233,263    -
 Net cash flows generated from/used in investing activities        3,145,447     (9,337,115)

 Cash flows from financing activities
 Proceeds from issue of shares                               14    42,521,478    14,870,000
 Share issue costs                                                 (2,523,150)   (840,000)
 Payment of borrowing                                              (20,909,692)  (398,880)
 Net cash flows from financing activities                          19,088,636    13,631,120

 Net increase/(decrease) in cash and cash equivalents              16,588,361    (822,902)

 Cash and cash equivalents at the beginning of the year            14,845,347    15,903,117
 Effect of exchange rate fluctuations on cash held                 884,179       (234,868)
 Cash and cash equivalents at end of year                    6(a)  32,317,887    14,845,347

 

The Consolidated Statement of Cash Flows should be read in conjunction with
the notes to the financial statements.

 

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