REG - 88 Energy Limited - LODGEMENT OF ANNUAL REPORT

88 EnergyAnnouncement

28/03/2024 07:15

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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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