REG - 88 Energy Limited - ASX LODGEMENT OF ANNUAL REPORT

88 EnergyAnnouncement

08/03/2023 07:00

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RNS Number : 1684S  88 Energy Limited  08 March 2023

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 2022 (the
"Annual Report") has been lodged on the ASX along with the Company's 2022
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 2022 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
 Andrew Edge                                      Tel: +61 410 276 744
 Michael Vaughan                                  Tel: +61 422 602 720

 EurozHartleys Ltd
 Dale Bryan                                       Tel: + 61 8 9268 2829

 Cenkos Securities Plc                            Tel: +44 (0)20 7397 8900
 Derrick Lee                                      Tel: +44 (0)131 220 6939
 Pearl Kellie                                     Tel: +44 (0)131 220 9775

 

CHAIRMAN'S STATEMENT

Dear Shareholders,

It is with pleasure that I present 88 Energy's Annual Report, which contains
details of our exploration activities, operations, and financial position as
of 31 December 2022.

The global oil and gas market has undergone several significant changes since
I first joined the 88 Energy Board. Throughout the year, the world has
transitioned from the initial uncertainty caused by the COVID-19 pandemic to a
period of geopolitical instability with the war in Ukraine causing disruptions
to energy trade in Europe and beyond. At the same time, global attitudes and
changing market sentiment in relation to the clean energy transition and
decarbonisation initiatives have led to volatility in the oil and gas market.

This uncertainty has resulted in ongoing tightness in investment in the oil
and gas industry. However, I firmly believe that the prevailing macroeconomic,
political, and social factors that have contributed to the current global
energy challenges demonstrate that hydrocarbons will have a significant role
in global energy demand for the foreseeable future.

Within this context, 88 Energy is strategically placed to capitalise on
investment opportunities that the oil and gas industry will continue to offer.
Our combination of large acreage position, infrastructure-led exploration and
ongoing capital discipline is, and will continue to be, attractive.

During the year, we acquired a ~73% working interest in Project Longhorn, a
suite of quality oil and gas assets in the proven Texan Permian Basin. To
date, the production of oil from these wells has resulted in net cash flow
returns of more than A$4 million. Further opportunities exist to grow output
and returns from these assets over the coming years.

In August 2022, we announced the decision to separate Project Icewine into two
independent prospective resource estimates, Icewine West and Icewine East.
Going forward, we are set to focus on Icewine East, renamed Project Phoenix,
to reflect our refreshed exploration strategy for the acreage. As a measure of
our conviction in the prospectivity of Project Phoenix, in the same month as
the announcement of the maiden independent Prospective Resource Estimate for
Phoenix, we raised gross proceeds of A$14.9 million to further advance planned
exploration well activities on this acreage.

Through third quarter of 2022, we completed an interpretation of the
previously licensed Franklin Bluffs 3D seismic survey data on Project Phoenix.
Results from the analysis were used to define 'sweet spots' for the Shelf
Margin Delta (SMD), Slope Fan System (SFS), Basin Floor Fan (BFF) and Kuparuk
(KUP) play fairways. This critical analysis has informed our planned 2023
exploration activities and proposed drilling location, Hickory-1, which is
designed to intersect and test up to six stacked conventional reservoirs. In
December, we executed a contract with Nordic Calista for their Rig-2 to drill
the Hickory-1 exploration well, with targeted spud in early March 2023.

In November 2022, the Company was announced as the winning bidder for select
acreage offered as part of the North Slope Areawide 2022W Oil and Gas lease
sale. The new acreage, known as Project Leonis, is another fantastic addition
to our highly prospective Alaskan asset base.  Comprising 10 leases covering
approximately 25,600 contiguous acres, Leonis is an attractive exploration
proposition, which the Company is eager to progress. Further studies will be
conducted to properly understand the regional setting and faulting of the area
before making any definitive commitment to a future program of work.

I wish to thank all 88 Energy personnel and contractors for their efforts over
the past year. We have a first-class team of truly committed professionals,
dedicated to maximising the potential of our projects. We will continue to
progress and refine the 88 Energy business model through furthering
exploration activities in our core project areas, targeting large-scale
hydrocarbon deposition and seeking out new venture opportunities.

As always, I would also like to thank you, our shareholders, for your support
and dedication to our Company.  On behalf of the 88 Energy team, I wish to
reaffirm our commitment to unlocking the huge potential value residing in our
world-class Alaskan acreage.  I wish you all a wonderful and prosperous year
ahead. Stay safe and 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 2022

                                                                                 Note  2022          2021
                                                                                       $             $

 Other income                                                                    3(a)  21,760        4,448,699
 Share of profit/(loss) from equity accounted investment                         11    3,317,877     -

 Administrative expenses                                                         3(b)  (2,778,962)   (3,048,444)
 Occupancy expenses                                                                    (51,142)      (86,765)
 Employee benefit expenses                                                       3(c)  (2,335,914)   (1,958,388)
 Share-based payment expense                                                     18    (658,111)     (738,965)
 Depreciation and amortisation expense                                                 (60,307)      (84,449)
 Finance cost                                                                          (8,583)       (1,195,703)
 Other expenses                                                                        (12,869)      (48,471)
 Foreign exchange (loss) / gain                                                        493,647       302,297
 Exploration & Evaluation Impairment/Expense                                     3(d)  (68,649,314)                        -
 Loss before income tax                                                                (70,721,918)  (2,410,189)
 Income tax expense                                                              4     -             -
 Loss after income tax for the year                                                    (70,721,918)  (2,410,189)

 Other comprehensive income / (loss) for the year

 Items that may be reclassified to profit or loss
 Exchange differences on translation of foreign operations                             6,378,972     4,855,236
 Other comprehensive income / (loss) for the year, net of tax                          (64,342,946)  4,855,236

 Total comprehensive income / (loss) for the year attributable to members of 88        (64,342,946)  2,445,047
 Energy Limited

 Loss per share for the year attributable to the members of 88 Energy Limited:
 Basic and diluted loss per share                                                5     (0.0042)      (0.0001)

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 2022

                                             Note  2022           2021
                                                   $              $
 ASSETS
 Current Assets
 Cash and cash equivalents                   6     14,123,731     32,317,887
 Trade and other receivables                 7     1,549,816      935,930
 Other Current Asset                         7     -              10,224,959
 Total Current Assets                              15,673,547     43,478,776

 Non-Current Assets
 Plant and equipment                         8     20,337         9,675
 Exploration and evaluation expenditure      9     96,422,918     101,357,767
 Other Assets                                10    940,424        936,536
 Equity accounted investments                11    19,968,658     -
 Total Non-Current Assets                          117,352,337    102,303,978

 TOTAL ASSETS                                      133,025,884    145,782,754

 LIABILITIES
 Current Liabilities
 Trade and other payables                    12    1,105,132      5,796,350
 Provisions                                  13    244,736        146,270
 Total Current Liabilities                         1,349,868      5,942,620

 TOTAL LIABILITIES                                 1,349,868      5,942,620

 NET ASSETS                                        131,676,016    139,840,134

 EQUITY
 Contributed equity                          14    340,972,669    285,809,214
 Reserves                                    15    30,468,589     23,074,244
 Accumulated losses                                (239,765,242)  (169,043,324)
 TOTAL EQUITY                                      131,676,016    139,840,134

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 DECMEBER 2022

                                                           Issued Capital  Reserves    Accumulated Losses  Total
                                                           $               $           $                   $
 At 1 January 2022                                         285,809,214     23,074,244  (169,043,324)       139,840,134
 Loss for the year                                         -               -           (70,721,918)        (70,721,918)
 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

 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

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 DECEMEBR 2022

                                                                        Note  2022          2021
                                                                              $             $
 Cash flows from operating activities
 Payment to suppliers and employees                                           (4,907,742)   (4,594,024)
 Interest and other income received                                           20,126        841
 Interest & finance costs                                                     -             (1,052,539)
 Net cash flows used in operating activities                            6(b)  (4,887,616)   (5,645,722)

 Cash flows from investing activities
 Payments for equity accounted investments                                    (10,693,565)  -
 Payments for exploration and evaluation activities                           (52,644,427)  (41,791,086)
 Contribution from Joint Operation Partners in relation to Exploration        1,078,866     20,816,000
 Proceeds (payment) for Bonds                                                 137,930       (112,730)
 Proceeds from Sale of tax credits                                            -             24,233,263
 Distribution from Equity Accounted Investments                               4,281,910     -
 Net cash flows generated from/used in investing activities                   (57,839,286)  3,145,447

 Cash flows from financing activities
 Proceeds from issue of shares                                          14    47,052,778    42,521,478
 Share issue costs                                                            (3,149,329)   (2,523,150)
 Repayment of borrowings                                                      -             (20,909,692)
 Net cash flows from financing activities                                     43,903,449    19,088,636

 Net increase/(decrease) in cash and cash equivalents                         (18,823,453)  16,588,361

 Cash and cash equivalents at the beginning of the year                       32,317,887    14,845,347
 Effect of exchange rate fluctuations on cash held                            629,297       884,179
 Cash and cash equivalents at end of year                               6(a)  14,123,731    32,317,887

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

 

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