REG - Barryroe Offshore - Half-year Report
30/09/2022 11:00
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RNS Number : 3497B Barryroe Offshore Energy PLC 30 September 2022
2022 Half Year Results
Dublin and London - 30(th) September, 2022
Barryroe Offshore Energy (AIM and Euronext Growth: "BEY"), the Irish based
energy company, today announces its unaudited interim results for the half
year ended June 30, 2022.
Alan Curran, Interim Chief Executive, Barryroe Offshore Energy said:
"As Ireland grapples to define a secure energy transition plan in the face of
the West's economic war with Russia, the Barryroe Field presents a unique
opportunity to develop an indigenous source of oil and gas. Successful
development of the Field will not only contribute to Ireland's energy security
and transition to a carbon neutral economy, but will also create significant
employment opportunities and provide strategic and fiscal value to the Irish
economy, at no cost to the Irish taxpayer.
Our successful summer fundraising confirmed the strength of our shareholder
base and support for the company's strategy. We await the long anticipated
regulatory consent for the Lease Undertaking, which will unlock our plans and
commitments for the essential appraisal prior to development of the Barryroe
Field".
2022 OPERATIONAL AND FINANCIAL HIGHLIGHTS
Operational
· Barryroe, North Celtic Sea (SEL 1/11)
o In February 2022, the Board announced the full results of its strategic
review.
o Continued efforts to secure regulatory consent for the Lease Undertaking,
without which the planned appraisal well cannot proceed.
Financial
· Operating Loss for the period of €0.947 million versus €1.065
million in 2021.
· Loss for the period of €2.345 million versus a profit of €1.628
million in 2021. The figure to 30 June 2022 included a net non-cash expense in
relation to warrants of €1.293 million, versus a net non-cash gain of
€3.155 million in 2021.
· Basic loss per share was €0.24 cents versus earnings of €0.18 in
2021.
· Diluted loss per share was €0.21 cents versus earnings of €0.14
in 2021.
· At 30 June 2022, total cash and cash equivalents were €2.188
million versus €3.645 million at 30 June 2021.
· The Company had no bank or bond debt as at 30 June 2022.
· In June 2022, the Company raised gross proceeds of $1.8 million
(equivalent to approximately £1.5 million) through the subscription for
45,312,316 Placing Securities and 51,686,693 Subscription Securities (each of
which comprised one New Ordinary Share and one STG1.5 Warrant). The issue of
the Warrants was approved by shareholders at the AGM in July 2022. The
warrants are exercisable up to the 26 July 2023.
· The £0.09 warrants expired on the 6 May 2022. No £0.09 warrants
were exercised before they expired.
2022 YEAR TO DATE IN REVIEW
Governance Changes
In July 2022, Alan Curran was appointed Interim Chief Executive and James
Menton resumed the role of Non-Executive Chairman. On 25(th) August 2022,
James Menton announced that he would stand down as Chairman and leave the
Board within the following 90 days.
Strategy
Since the Board was reconstituted in July 2021, we have adopted a realistic
and pragmatic approach to the formulation of our Barryroe Strategy. The Board
continues to give careful regard to the dynamics of the current regulatory
environment and the energy transition issues of security of supply, growing
energy demand and the continuing need to attract foreign direct investment as
Ireland progresses securely towards carbon neutrality by 2050. The Board's key
near term objectives and priorities remain as follows:
· Follow-up and engagement with the GeoScience Regulation Office (GSRO)
in relation to the application for the Lease Undertaking.
· Ensuring that the Company has the breadth and depth of experience,
competency and skills within the technical team to support the Board in the
formulation and delivery of the Barryroe Strategy.
· Enhancing the understanding of the Barryroe Project and the
opportunities it presents for shareholders and all other key stakeholders.
The Barryroe Lease Undertaking - Status
Prompt regulatory granting of the Barryroe Lease Undertaking remains
fundamental to the execution of the Board's strategy. Securing the Lease
Undertaking continues to be the Board's main focus.
Since August 2021, the Board has proactively and repeatedly engaged with the
GeoScience Regulation Office (GSRO) and the Minister for the Environment,
Climate and Communications (DECC), expressing a sense of urgency over the
granting of the Lease Undertaking. The Board has also engaged with a number of
other key stakeholders, including public representatives, in order to move the
DECC/GSRO review process forward. Despite these efforts, a decision on the
Lease Undertaking is still outstanding.
In the Board's view, there is no reasonable justification for the ongoing
delay. The Board believes that all required technical and financial
information in relation to the Barryroe Lease Undertaking has been submitted
to the GSRO. The Board is confident that the Barryroe Field offers a highly
valuable resource that, at no cost to the State, could contribute to:
· Ireland's energy security over the next decade.
· Ireland's energy transition to a carbon neutral economy.
· carbon reduction through import substitution.
· significant job creation and tax contributions.
Irish Government Policy and Barryroe
In September 2019, the Irish Government affirmed that all existing licences,
which included Barryroe, would be allowed to run their full term. It should be
firmly understood that Barryroe is a discovered oil and gas field, not a
wildcat prospect, in relatively shallow waters not far off the coast of Cork.
It requires an appraisal well to be drilled to confirm the reservoir and
hydrocarbon characteristics before a phased development can be initiated. That
well can be progressed only once the Lease Undertaking is issued.
It is our view that the potential offered by the successful exploitation of
the Barryroe Field would be an important element in the execution of
Government policy, as enunciated by the Department of the Environment, Climate
and Communications' (DECC) "Policy Statement on Security of Electricity
Supply" (November 2021) and Section 3.7 of the "National Risk Assessment
2021/2022 - Overview of Strategic Risk".
Current Government policy does not restrict Ireland's use of hydrocarbon
fuels; it merely precludes new oil and gas exploration in Irish waters. The
Board believes that the Irish Government's delay in allowing progress on
existing oil and gas licences adds unnecessarily to the risk of energy
shortages.
The Case for Barryroe
Geopolitical Challenges
The war in Ukraine has re-emphasised the value of national self-sufficiency
across the whole range of primary energy sources. As Ireland moves towards a
much bigger share of renewable sources, through the transition to net-zero
carbon by 2050, there will be an ongoing, albeit diminishing, level of
residual demand for oil and gas to meet Ireland's energy consumption needs.
The impact of rising imported energy prices, and the growing potential for
significant interruption to imported energy supplies, is currently a key focus
for all Governments throughout Europe.
Energy Security and Vulnerability
The Economic and Social Research Institute (ESRI) recently ranked Ireland as
the fourth-most energy insecure country in Europe. Currently, Ireland imports
70% of its gas needs through two interconnectors running from Scotland to
Ireland. The remaining 30% comes from the Corrib Field, which is expected to
be depleted by the end of the decade.
Ireland's reliance on the UK for the bulk of its gas supply puts the country
in an extremely vulnerable position. Following Brexit, Ireland is no longer
compliant with the EU's requirements for energy security, according to the
Commission for Regulation of Utilities (CRU). Ireland's gas import
infrastructure runs through the UK, a "third country". Ireland has a unique
opportunity to harness its own supply of oil and gas by enabling appraisal and
development of the Barryroe Field. Not to do so would, in the Board's view,
have a detrimental impact on resilience through the coming decade of Ireland's
energy transition and would represent a very significant missed opportunity
from a strategic, fiscal and energy security perspective.
The Department of the Environment, Climate and Communications published its
report on the security of energy supply to Ireland's Electricity and Natural
Gas Systems on 19(th) September 2022. The Company will engage in the
consultation process, with submissions due by 28(th) October 2022.
Energy Transition - The Need for Barryroe
Ireland has a clear goal of being carbon neutral by 2050 and we acknowledge
that expanding renewable sources of energy must be the main focus in the years
ahead. Barryroe is a confirmed oil and gas field. With contingent and
prospective in place gas resources in excess of 1tcf, it has the potential to
contribute significantly to Ireland's gas balance over the next 10 to 15
years.
Furthermore, most of Ireland's transport options, particularly freight
transport and aviation, currently run on oil, all of it imported.
Transitioning completely away from oil will not happen overnight. Successful
optimisation of the Barryroe Field can contribute significantly to meeting
Ireland's energy demand during the transition over the coming decade, without
prejudicing achievement of a carbon neutral economy in Ireland by 2050.
Environmental Benefits - Carbon Reduction Through Import Substitution
The relative benefits of indigenous sources of energy are significant. For
example, gas produced in Ireland results in up to 30% lower carbon emissions
than gas from outside Europe. This is due to a combination of more efficient
production technologies, and less energy expended due to shorter pipeline
transport (given that long distance pipeline transport requires pumping
booster stations).
Technical Strategy
Earlier this year, the completion of our strategic review along with the
Competent Persons Report (CPR) confirmed a core area "base case" of 81.2 MMstb
of Gross 2C oil resources that can be accessed through an initial two-phase
development project, initially addressing just one reservoir in the central
core segments of the Field. The CPR, which remains consistent with the 2013
whole field assessment, confirmed a Net Present Value (NPV) of $401m to
Barryroe Offshore Energy's interest in this initial project only, based on a
10% discount factor and a $70 Brent oil price. The initial development project
is predicated on the outcome of appraisal drilling to confirm the reservoir
and hydrocarbon phase characteristics in the key Basal Wealden A Sands and the
lateral extent of the shallower C Sands, with up to 400 bcf of gas resource in
place. The initial project will advance the potential for further development
of other Barryroe reservoirs, including those holding its discovered and
prospective in place gas resources in excess of 1 tcf.
The technical strategy for the Barryroe Field is primed for implementation
within a short timeframe. Subject to regulatory consent for the Lease
Undertaking, the Board is seeking to proceed with appraisal drilling as soon
as practicable. In expectation of a timely and satisfactory outcome, the Board
intends to proceed to a phased development leading to first production in late
2026. The Company urgently requires a positive decision on the Lease
Undertaking in order to ensure that the Barryroe Field can soon begin to play
a key role in Ireland's energy future.
Share Placing - June 2022
In June 2022, the Company raised gross proceeds of $1.8 million (equivalent to
approximately STG£1.5 million) through the subscription for 45,312,316
Placing Securities and 51,686,693 Subscription Securities (each of which
comprised one New Ordinary Share and one STG1.5p Warrant). The issue of the
Warrants was approved by shareholders at the AGM in July 2022. The Board is
thankful of the continuous, consistent support of its shareholders to develop
the Barryroe Field.
Name Change - Barryroe Offshore Energy
The Company indicated in its annual results for 2021 that it intended to
change its name to Barryroe Offshore Energy. The Board believes the new name
properly reflects the focus of the company and serves as a reminder of the
underlying potential of its primary asset, as part of Ireland's secure energy
transition. To achieve this, an extraordinary resolution was included at the
AGM held on 27(th) July and was duly passed by shareholders. The name change
became effective from 27(th) September. It is important to note that there is
no underlying change to the value or number of existing shares held by
shareholders. The new ticker for both the AIM and Euronext market is BEY.
The Future
The Board is keenly aware of the global climate challenge, which has been
exacerbated by an energy security crisis as a result of the war in Ukraine.
The impact of rising energy prices, and the potential for significant
interruption to energy supplies, is a focus for governments throughout Europe.
The challenges we face are stark and disruption to energy supplies could lead
to severe economic and social impacts.
It is a strategic imperative that Irish Government policy allows for
pragmatism with regard to energy policy. Ireland is now at a critical juncture
in planning for its energy future, though it is very widely accepted that
Ireland will continue to require oil and gas to supplement available renewable
sources for decades to come.
Investor Enquiries:
o Barryroe Offshore Energy P.l.c. Tel: 353 1 219
4074
Alan Curran
Chief Executive
o Investor
Relations
Tel: 353 1 2194074
Job Langbroek
o J & E
Davy Tel:
353 1 679 6363
Anthony Farrell
Media Enquiries:
o AM O'Sullivan
PR
Tel: 353 87 9881890 / tina@amosullivanpr.ie
Tina Quinn
BARRYROE OFFSHORE ENERGY P.l.c.
Condensed consolidated income statement
For the 6 months ended 30 June 2022
Notes 6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
Continuing operations
Administration expenses 2 (947) (1,065) (2,369)
Operating loss (947) (1,065) (2,369)
Finance income 3 - 3,765 6,699
Finance expense 4 (1,398) (1,072) (888)
(Loss)/profit before income tax (2,345) 1,628 3,442
Income tax expense - - -
(Loss)/profit for the period (2,345) 1,628 3,442
(Loss)/profit per share (cent)
Basic (loss)/profit per share 11 (0.24) 0.18 0.36
Diluted (loss)/profit per share 11 (0.21) 0.14 0.30
The total recognised (loss)/profit for the period is entirely attributable to
equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
BARRYROE OFFSHORE ENERGY P.l.c.
Consolidated statement of comprehensive income
For the 6 months ended 30 June 2022
Notes 6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
(Loss)/profit for the financial period (2,345) 1,628 3,442
OCI Items that may be reclassified into profit or loss
Foreign exchange translation differences 5,918 1,930 4,982
Total income recognised in other comprehensive income from continuing
operations
5,918 1,930 4,982
Total comprehensive income/(expense) for the period 3,573 3,558 8,424
The total comprehensive income/(expense) recognised for the period is entirely
attributable to equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
BARRYROE OFFSHORE ENERGY P.l.c.
Consolidated statement of financial position
As at 30 June 2022
Notes 30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
Assets
Exploration and evaluation assets 5 73,529 62,723 66,983
Property, plant and equipment - 3 1
Total non-current assets 73,529 62,726 66,984
Trade and other receivables 6 275 154 388
Cash and cash equivalents 2,188 3,645 1,923
Total current assets 2,463 3,799 2,311
Total assets 75,992 66,525 69,295
Equity
Share capital 7 71,926 71,829 71,829
Share premium 7 261,278 260,271 260,272
Undenominated capital 623 623 623
Foreign currency translation reserve 15,534 6,564 9,616
Share based payment reserve 893 962 767
Accumulated losses (283,833) (283,561) (281,370)
Total equity attributable to equity holders of the company 66,421 56,688 61,737
Liabilities
Decommissioning provision 9 6,225 6,346 6,056
Total non-current liabilities 6,225 6,346 6,056
Warrant liability 10 2,344 2,948 460
Trade and other payables 8 1,002 543 1,042
Total current liabilities 3,346 3,491 1,502
Total liabilities 9,571 9,837 7,558
Total equity and liabilities 75,992 66,525 69,295
The accompanying notes are an integral part of these condensed consolidated
financial statements.
BARRYROE OFFSHORE ENERGY P.l.c.
Consolidated statement of changes in Equity
For the 6 months ended 30 June 2022
Share Capital €'000 Undenominated capital €'000 Share Premium €'000 Foreign Currency Translation Reserve €'000 Share Based Payment Reserve €'000 Accumulated losses €'000 Total €'000
At 1 January 2022 71,829 623 260,272 9,616 767 (281,370) 61,737
Loss for financial period - - - - - (2,345) (2,345)
Currency translation - - - 5,918 - - 5,918
Total comprehensive income - - - 5,918 - (2,345) 3,573
Transactions with owners, recorded directly in equity
Shares issued in period 97 - 1,006 - - (118) 985
Share based payments in period - - - - 126 - 126
At 30 June 2022 71,926 623 261,278 15,534 893 (283,833) 66,421
At 1 January 2021 71,743 623 256,773 4,634 806 (285,189) 49,390
Loss for financial period - - - - - 1,628 1,628
Currency translation - - - 1,930 - - 1,930
Total comprehensive income - - - 1,930 - 1,628 3,558
Transactions with owners, recorded directly in equity
Shares issued in period 86 - 3,498 - - - 3,584
Share based payments in period - - - - 156 - 156
At 30 June 2021 71,829 623 260,271 6,564 962 (283,561) 56,688
At 1 January 2021 71,743 623 256,773 4,634 806 (285,189) 49,390
Loss for financial year - - - - - 3,442 3,442
Currency translation - - - 4,982 - - 4,982
Total comprehensive income - - - 4,982 - 3,442 8,424
Transactions with owners, recorded directly in equity
Share based payment expense - - - - 338 - 338
Share options lapsed in year - - - - (377) 377 -
Shares issued in year 86 - 3,499 - - - 3,585
Transactions with owners, recorded directly in equity 86 - 3,499 - (39) 377 3,923
At 31 December 2021 71,829 623 260,272 9,616 767 (281,370) 61,737
BARRYROE OFFSHORE ENERGY P.l.c.
Consolidated statement of cash flows
For the 6 months ended 30 June 2022
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
Cash flows from operating activities
(Loss)/profit before income tax for the period (2,345) 1,628 3,442
Adjustments for:
Depreciation 1 3 15
Finance income - (3,765) (6,699)
Finance expense 1,398 1,072 888
Equity settled share based payment charge 126 156 338
Foreign exchange - (19) (16)
Change in trade and other receivables 113 69 (165)
Change in trade and other payables (40) (272) 227
Net cash outflow from operating activities (747) (1,128) (1,970)
Cash flows from investing activities
Acquisition of exploration and evaluation assets (517) (331) (1,492)
Cash calls in respect of exploration and evaluation assets 25 - 262
Acquisition of property, plant and equipment - (2) (2)
Net cash used in investing activities (492) (333) (1,232)
Cashflows from financing activities
Proceeds from issue of security instruments (see note 7) 1,695 2,974 2,974
Security instrument Issue costs (182) - -
Net cash from financing activities 1,513 2,974 2,974
Net increase in cash and cash equivalents 274 1,513 (228)
Cash and cash equivalents at beginning of period 1,923 2,110 2,110
Effect of exchange rate fluctuations on cash and cash equivalents (9) 22 41
Cash and cash equivalents at end of period 2,188 3,645 1,923
The accompanying notes are an integral part of these condensed consolidated
financial statements.
BARRYROE OFFSHORE ENERGY P.l.c.
Note 1 - Accounting Policies
General Information
BARRYROE OFFSHORE ENERGY P.l.c. (previously known as "Providence Resources
P.l.c") ("the Company") is a Company incorporated and domiciled in the
Republic of Ireland. The registration number of the Company is 268662 and the
address of the registered office is Paramount Court, Corrig Road, Sandyford
Business Park, Dublin 18, D18 R9C7. The unaudited consolidated interim
financial statements of the Company for the six months ended 30 June 2022 (the
"Interim Financial Statements") include the Company and its subsidiaries
(together referred to as the "Group"). The Interim Financial Statements were
authorised for issue by the Directors on 30 September 2022.
Basis of accounting
These interim financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting and should be read in conjunction with the
Group's last annual consolidated financial statements as at and for the year
ended 31 December 2021 ('last annual financial statements'). They do not
include all of the information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to explain events
and transactions that are significant to an understanding of the changes in
the Group's financial position and performance since the last annual financial
statements.
The 30 June 2022 figures and the 30 June 2021 comparative figures do not
constitute statutory financial statements of the Group within the meaning of
the Companies Act, 2014. The consolidated financial statements of the Group
for the year ended 31 December 2021, together with the independent auditor's
report thereon, were filed with the Irish Registrar of Companies following the
Company's Annual General Meeting and are also available on the Company's
Website. The auditor's report on those financial statements was unqualified
and contains a "material uncertainty related to going concern" paragraph.
The condensed set of financial statements included in this half-yearly
financial report has been prepared on a going concern basis as the Directors
consider that the Group has adequate resources to continue in operational
existence for the foreseeable future (See below for further details on the
Directors assessment of going concern).
In preparing these interim financial statements, management has made
judgements and estimates that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. The significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those described in the last annual
report.
The Interim Financial Statements are presented in Euro, rounded to the nearest
thousand, which is the functional currency of the Company and also the
presentation currency for the Group's financial reporting.
The significant accounting policies applied in these interim financial
statements are the same as those applied by the Group in its consolidated
financial statements as at and for the year ending 31
BARRYROE OFFSHORE ENERGY P.l.c.
Note 1 - Accounting Policies (continued)
December 2021. Amendments to standards and interpretations which are effective
for the Group from 1 January 2022 do not have a material effect on the results
or financial posting in the interim financial statements as at and for the
period ending 30 June 2022.
Going concern
The Group had net assets of €66.4m, including cash on hand of €2.2m as at
30 June 2022. It recognised a loss after taxation of €2.3m for the six month
period, after a non-cash charge of €1.75m in respect of warrants issued on
17 June 2022, offset by a non-cash gain of €0.46m on the expiry in May 2022
of warrants that had been issued in May 2020. The Directors have carefully
considered the financial position of the Group and, in that context, have
prepared the interim financial statements on a going concern basis.
The Group's principal interest is the development of the Barryroe oil and gas
Field. The Barryroe Standard Exploration Licence period continued up until the
13 July 2021. Prior to its expiry, having met all the conditions attaching to
that Licence, the Group applied for the follow-on permit, being a Lease
Undertaking, which is subject to government approval. The approval process is
ongoing and the Directors anticipate that the Lease Undertaking will be
granted. The Directors note that the Irish Government has stated that all
existing licences will be allowed to run their full life cycle.
The Directors have carefully considered the financial position of the Group
and have prepared cashflow forecasts for the next 12 months, considering both
current and future expenditure commitments and the options available to fund
such commitments, including equity funding and other financing options in the
twelve month period from the date of approval of these interim financial
statements. In making their cashflow forecasts, critical underlying
assumptions, include the granting of the Barryroe Lease Undertaking on terms
and conditions that are acceptable and the subsequent successful completion of
an appropriate fund raising to meet the costs of the proposed Barryroe work
programme within the expected Lease Undertaking period.
The Directors have considered the matters set out above and determined that
the critical assumptions represent a material uncertainty that may cast
significant doubt upon the Group's ability to continue as a going concern. The
Directors note that, if either assumption were not fulfilled, the Group may be
unable to continue realising its assets and discharge its liabilities in the
normal course of business.
After making enquiries and considering the uncertainties described above, the
Directors have a reasonable expectation that the Group will have sufficient
funds available over the next 12 months to meet all its commitments as they
fall due and will have adequate resources to continue in operational existence
for the foreseeable future. The Directors note that the Group has continued to
have the strong support of its shareholders.
For these reasons, the Directors have adopted the going concern basis in
preparing the interim financial statements which do not include any
adjustments that would be necessary if this basis were subsequently adjudged
to be inappropriate.
BARRYROE OFFSHORE ENERGY P.l.c.
Note 2 - Administration Expenses
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
Corporate, exploration and development expenses 947 1,084 2,385
Foreign exchange gains net - (19) (16)
Total administration expenses for the period 947 1,065 2,369
Total charged to the income statement 947 1,065 2,369
Note 3 - Finance Income
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
Movement in fair value of warrants (note 10) - 3,765 5,643
Redetermination of decommissioning provision (note 9) - - 1,056
Total finance expense recognised in income statement - 3,765 6,699
Note 4 - Finance Expense
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
Unwinding of discount on decommissioning provision (note 8) 40 302 593
Foreign exchange on decommissioning provision - 159 294
Interest on right to use asset - 1 1
Issue costs associated with warrants 65 - -
Movement in fair value of warrants (note 10)* 1,293 610 -
Total finance expense recognised in income statement 1,398 1,072 888
*The €1.293m finance expense arises on the £0.015 warrant instruments
issued as part of the 17 June 2022 equity raise being fair valued at 30 June
2022 (expense of €1.753m) offset by that in respect of the £0.09 warrants
which expired on the 6 May 2022 (gain of €0.460m).
BARRYROE OFFSHORE ENERGY P.l.c.
Note 5 - Exploration and evaluation assets
€'000
Cost and book value
At 1 January 2021 60,425
Additions 331
Foreign exchange translation 1,967
At 30 June 2021 62,723
At 1 January 2021 60,425
Additions 1,492
Cash calls received in year (262)
Decommissioning redetermination 287
Foreign exchange translation 5,041
At 31 December 2021 66,983
At 1 January 2022 66,983
Additions 517
Cash calls received in period (25)
Foreign exchange translation 6,054
At 30 June 2022 73,529
The exploration and evaluation asset balance as at 30 June 2022 relates to the
Group's Barryroe interest.
The directors assessed all activities ongoing within exploration and
evaluation assets and determined that no impairment charge was required at 30
June 2022 (30 June 2021 - €nil). The directors recognise that the future
realisation of the Barryroe asset is dependent on the granting of the lease
undertaking which is subject to government approval, future successful
appraisal activities and the subsequent economic production of hydrocarbons.
Note 6 - Trade and other receivables
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
VAT recoverable 40 22 48
Prepayments 68 98 89
Amounts due from joint operation partner 167 34 251
Total 275 154 388
BARRYROE OFFSHORE ENERGY P.l.c.
Note 7 - Share Capital and Share Premium
Number
Authorised: '000 €'000
At 1 January 2022
Deferred shares of €0.011 each 9,944,066 109,385
Ordinary shares of €0.001 each 1,800,000 1,800
At 30 June 2022
Deferred shares of €0.011 each 9,944,066 109,385
Ordinary shares of €0.001 each 1,800,000 1,800
Number Share Capital Share Premium
Issued: '000 €'000 €'000
Deferred shares of €0.011 each
At 1 January 2021 6,441,373 70,854 5,691
At 31 December 2021 and 30 June 2022 6,441,373 70,854 5,691
Ordinary shares of €0.001 each
At 1 January 2021 888,803 889 251,082
Warrants exercised during 2021 86,062 86 3,498
At 30 June 2021 and at 31 December 2021 974,865 975 254,580
Shares issued in June 2022 96,999 97 1,007
At 30 June 2022 1,071,864 1,072 255,587
At 30 June 2022 (Total deferred and Ordinary shares) 7,513,237 71,926 261,278
On 17 June 2022, the Company issued 96,999,006 Ordinary Shares as part of
placing and subscription agreements which raised gross proceeds of $1.8
million (equivalent to €1.7 million) from security instruments before
expenses. Each of these security instruments comprised of one Ordinary Share
of €0.001 and one £0.015 Warrant.
The allotment and issue of the Warrants was subject to the passing of the
Warrant Resolutions by the shareholders. On 27 July 2022, the Warrant
Resolutions were successfully passed at the AGM.
On issuance, a fair value of €1.1m was attributed to the Ordinary Shares and
€0.6m to the Warrants, based on the effective share price at that date. In
line with the Group's accounting policies these Warrants are presented as
financial liabilities (note 10).
The holder of each Warrant can exercise its rights which allows that holder to
convert the Warrant into one ordinary share, with a par amount of €0.001, by
payment of the exercise price of £0.015. The warrants are non-transferable
and have an expiry date of 26 July 2023.
BARRYROE OFFSHORE ENERGY P.l.c.
Note 8 - Trade and other payables
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
Accruals 915 379 836
Other payables 87 164 206
Total 1,002 543 1,042
Note 9 - Decommissioning provision
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
At beginning of year 6,056 5,853 5,853
Unwinding of discount 40 302 593
Foreign exchange gain - 159 294
Redetermination of decommissioning provision - - (769)
Translation adjustment 129 32 85
Total 6,225 6,346 6,056
The decommissioning provision is reviewed annually to ensure that it reflects
the current market conditions and updated accordingly.
During 2021, the Board undertook a strategic review of Barryroe. The outcome
was that an appraisal well is planned to be drilled in 2023 preparatory to a
phased development, with first oil production expected by the end of 2026,
subject to Ministerial approval.
The Group anticipates that a decommissioning programme for other licence areas
(since relinquished) will be undertaken at the same time as the Group's
Barryroe wells, subject to regulatory consent and approval. Accordingly all,
decommissioning is projected to take place in 2047. The decommissioning
provision covers six wells of which five of are held in the Parent Company,
while one is held in Exola DAC.
The decommissioning provision has been calculated assuming industry
established oilfield decommissioning techniques and technology at current
prices, based on external expert reports where available and is discounted at
1.3% per annum, reflecting the associated risk profile. During 2021, the Group
undertook a review of the discount rate applied to the projected costs to
derive
BARRYROE OFFSHORE ENERGY P.l.c.
Note 9 - Decommissioning provision (continued)
the net present value. The Group has used the 20 year Irish Government Bond
rates of 1.30% as an appropriate discount rate.
In relation to cost inflation, experience over the last decade indicates that
advances in technology and operations in the decommissioning of wells,
suggests that cost inflation may reasonably be expected to be offset by gains
in efficiency so the net effective cost inflation rate used was zero.
There was a €0.769 million adjustment to the decommissioning provision at
the end of 2021.
Note 10 - Warrants
On 17 June 2022, the Company raised gross proceeds of $1.8 million (equivalent
to €1.7 million) by the issue of security instruments with each security
instrument comprising one ordinary share, with a par amount of €0.001, one
£0.015 warrant (expiry 26 July 2023). The fair value of the shares was
calculated using the Black Scholes model with the data from the date of issue
on 17 June 2022. The value ascribed to the shares issued was €1,104,850.
This figure was then deducted from the total cash proceeds of €1,695,431,
leaving the remaining value attributable to the warrants of €590,581.
The following key input assumptions were applied to the initial valuation on
issuance of the shares:
£0.015 Shares
Number of shares issued 96,999,009
Volatility 148%
Time period 1 Year
Dividend yield 0%
Risk free interest rate (0.01%)
Issue price £0.015
Closing share Price €0.02
Initial fair value of each share €0.01139
Fair value at issue date €1,104,850
On 30 June 2022, the warrants were fair valued using appropriate inputs
including the closing share price on that day of €0.035. The period of 12
months was used for the volatility calculation for the £0.015 warrants which
would expire on 26 July 2023. The key assumption in the calculation of the
warrants is the volatility rate used in the Black Scholes model. The fair
value movement of €1.753m, being the difference between the issue date
valuation on 17 June 2022 and that on 30 June 2022, is recorded as a finance
expense in the income statement.
£0.015 Warrants
Number of warrants 96,999,009
Volatility 148%
Time period 1 Year
Dividend yield 0%
Risk free interest rate 0.002%
Exercise price £0.015
Closing share price 30 June 2022 €0.035
Fair value as at 30 June 2022 €2,344,303
BARRYROE OFFSHORE ENERGY P.l.c.
Note 10 - Warrants (continued)
The large movement in the warrant valuation from the 17 June 2022 to 30 June
2022 is driven by the increase in the closing share price. The closing price
on 17 June 2022 was €0.02 while on the 30 June 2022, it was €0.035.
During 2021, there were 86,061,529 £0.03 warrants exercised before they
expired on 6 May 2021. The fair value of the £0.03 warrants exercised during
the period to June 2021 was recognised as a finance expense of €0.61m in the
income statement with a corresponding increase in share premium.
January 21 February 21 March 21 April 21 May 21
Number of warrants 287,372 1,666,666 1,000,000 65,975,822 17,131,669
Volatility 135% 135% 135% 206% 208%
Time period 0.30 Year 0.18 Year 0.10 Year 0.016 Year 0.003 Year
Dividend yield 0% 0% 0% 0% 0%
Risk free interest rate (0.61%) (0.61%) (0.61%) (0.61%) (0.61%)
Exercise price €0.0337 €0.0342 €0.035 €0.035 €0.035
Weighted average closing share price €0.075 €0.075 €0.054 €0.0392 €0.038
Fair value €12,685 €71,219 €23,419 €439,557 €62,804
At 30 June 2021 and 31 December 2021, the £0.09 warrants were fair valued. No
£0.09 warrants were exercised, and they expired on 6 May 2022. The
assumptions are shown in the table below for the fair valuation as at 30 June
2021.
£0.09 Warrants
Number of warrants 177,973,004
Volatility 176%
Time period 0.83 Year
Dividend yield 0%
Risk free interest rate (0.61%)
Exercise price £0.09
Closing share price 30 June 2021 €0.043
Fair value as at 30 June 2021 €2,948,469
BARRYROE OFFSHORE ENERGY P.l.c.
Note 10 - Warrants (continued)
The table below shows the fair value movements:
Number of Warrants £0.03 Warrants Number of Warrants £0.09 Warrants Number of Warrants £0.015 Warrants Total
€'000 €'000 €'000
€'000
Fair value as at 31 December 2020 130,684,190 €3,158 177,973,004 €3,555 - - €6,713
January 21 exercised 287,372 €13 - - - - €13
February 21 exercised 1,666,666 €71 - - - - €71
March 21 exercised 1,000,000 €23 - - - - €23
April 21 exercised 65,975,822 €440 - - - - €440
May 21 exercised 17,131,669 €63 - - - - €63
Exercised fair value movement recognised in the income statement to 30 June 86,061,529 €610 - - - - €610
2021 (see note 3)
Fair value as at 30 June 2021 - - 177,973,004 €2,948 - - €2,948
Total fair value movement recognised in the income statement for the period to (€3,158) (€607) (€3,765)
30 June 2021 (see note 4)
Fair Value as at 31 December 2021 - - 177,973,004 €460 €460
Total fair value gain recognised in the income statement to 31 December 2021 (€2,548) (€3,095) (€5,643)
Initial fair value on 17 June 2022 - - - - 96,999,009 €591 €591
Fair value as at 30 June 2022 - - - - 96,999,009 €2,344 €2,344
Total fair value (gain)/loss recognised in the income statement to 30 June - - - (€460) - €1,753 €1,293
2022
BARRYROE OFFSHORE ENERGY P.l.c.
Note 11 - Earnings per share
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
€'000 €'000 €'000
(Loss)/profit attributable to equity holders of the company from continuing (2,345) 1,628 3,442
operations
The basic weighted average number of Ordinary shares in issue ('000)
In issue at beginning of year and end of period 974,864 888,803 888,803
Adjusted for share issue in the period 7,462 30,675 58,520
Weighted average number of ordinary shares 982,326 919,478 947,323
Basic (loss)/profit per share (cent) (0.24) 0.18 0.36
Dilutive share options 39,683 39,927 39,683
Dilutive warrants 96,999 177,973 177,973
Weighted average number of ordinary shares 1,119,008 1,137,378 1,164,979
Diluted (loss)/profit per share (cent) (0.21) 0.14 0.30
In the current period all potentially dilutive ordinary shares outstanding are
anti-dilutive, as shown above.
For prior periods, there is a difference in the basic and dilutive profit
attributable to ordinary shares for the periods ended 30 June 2021 and 31
December 2021.There were 39,683,000 (2021: 39,927,000) anti-dilutive share
options and 96,999,006 (2021: 177,973,004) anti-dilutive warrants in issue as
at 30 June 2022.
Note 12 - Share schemes
Options are recommended at a level to attract retain and motivate participants
in the competitive environment in which the Group operates, The Remuneration
Committee reviews and assesses proposals to grant share options to
participants.
Share option schemes were introduced in August 1997 (expired August 2007), May
2005 (expired October 2015) and June 2009 (expired in June 2019) under which
share options could be offered to employees, Directors and consultants. In
addition, a long-term incentive plan was introduced in 2016.
The Group now operates only the following employee share scheme ("2020
Scheme"):
2020 Scheme
In 2020, the directors adopted a share option scheme which contains certain
performance criteria. No options can be issued after 10 years of the scheme.
The option price is the market price immediately preceding the date of the
grant. The 2020 Scheme operates as an equity-settled share
BARRYROE OFFSHORE ENERGY P.l.c.
Note 12 - Share schemes (continued)
option scheme and the options granted are subject to certain conditions. No
option is exercisable more than seven years after grant date and no option is
exercisable within one year of grant.
The applicable criteria for the exercise of the options are;
(i) 33% of the total number of options granted are exercisable
after one year.
(ii) 33% of the total number of options granted are exercisable
after two years.
(iii) The remaining 33% of the total number of options granted are
exercisable after a further year has elapsed.
No Share options were issued in the period to 30 June 2022.
During the period to 30 June 2021, 9,000,000 share options were granted to
Directors under the 2020 Scheme.
Grant Date 21 May 2021
Number of options granted 9,000,000
Volatility 150%
Time period 7 Years
Dividend yield 0%
Risk free interest rate (0.0156%)
Exercise price €0.038
During the period to 31 December 2021, another 9,000,000 share options were
granted to Directors under the 2020 Scheme.
Grant Date 18 August 2021
Number of options granted 9,000,000
Volatility 98%
Time period 7 Years
Dividend yield 0%
Risk free interest rate (0.0156%)
Exercise price €0.046
The total share based payments expense in the period to 30 June 2022 charged
to the income statement was €126,000 (2021: €156,000).
Note 13 - Commitments
As at 30 June 2022, the Group has capital commitments of approximately €0.1m
(30 June 2021: €1.5m) to contribute to its share of costs of exploration,
evaluation and appraisal activities for the remaining part of the year.
However, subject to the timing of the Barryroe Lease Undertaking
BARRYROE OFFSHORE ENERGY P.l.c.
Note 13 - Commitments (continued)
being granted, then the Group could have an additional commitments of €1.3m
which comprises two years Lease Undertaking licence fees (back dated to July
2021).
Note 14 - Post Balance Sheet Events
On 4 July 2022, Alan Curran was appointed Interim Chief Executive.
On 25 August 2022, James Menton announced that he would stand down as Chairman
and leave the Board within the following 90 days.
On 27 September 2022, the company changed it's name from Providence Resources
Plc to Barryroe Offshore Energy Plc.
There have been no other significant events since the balance sheet date which
would require disclosure in or amendment to these interim financial
statements.
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