REG - Beacon Energy PLC - Interim Results
13/01/2023 07:00
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RNS Number : 5822M Beacon Energy PLC 13 January 2023
13 January 2023
Beacon Energy plc
("Beacon Energy" or the "Company")
Interim Results
Beacon Energy plc (AIM: BCE), the energy company seeking
growth through acquisition or farm-in to interests in discovered upstream
projects, announces its half-yearly report for the six months ended 31 October
2022.
Enquiries:
Beacon Energy plc +44 (0)1624 681 250
Larry Bottomley (CEO)
Strand Hanson Limited (Financial and Nominated Adviser) +44 (0)20 7409 3494
Rory Murphy / James Bellman
Buchanan (Public Relations) +44 (0)20 7466 5000
Ben Romney / Jon Krinks
Tennyson Securities Limited (Joint Broker) +44 (0)20 7186 9030
Peter Krens / Ed Haig-Thomas
Optiva Securities Limited (Joint Broker) +44 (0)20 3411 1881
Christian Dennis
The Interim Report will be available from the Company's website
www.beaconenergyplc.com (http://www.beaconenergyplc.com)
Chairman's Statement
Dear fellow shareholders,
I am delighted to present the following statement in support of the interim
results for the six months ended 30 October 2022.
Following the disappointing outcome on the Buffalo well announced in January
2022, the Board has refocused the strategy for the Company and substantially
reduced its cost base in order to preserve cash on behalf of shareholders and
assess the next steps.
In this context, the Company's strategy, which is to create a self-funding oil
and gas production company taking advantage of growth opportunities being
generated as industry players reshape their portfolios to manage the energy
transition to net-zero emissions, remains both appropriate and compelling.
To implement this strategy, on 26 July 2022 the Company successfully raised
£425,000 from new and existing shareholders, including £80,000 from
Directors of the Company, to support the pursuit of value enhancing
acquisition opportunities. The Board appreciates the continued support shown
by shareholders during this fund raise.
On 9 September 2022, the Company announced that it had entered into a
non-binding Heads of Terms ("HoT") with the majority owner of a European oil
and gas company. Under the HoT, the Company would acquire the European company
for a combination of new shares in the Company and an earn out based on oil
production (the "Potential Acquisition"). The HoT included standard
conditions, including an exclusivity period and the completion of satisfactory
due diligence.
Subsequently, and in anticipation of the Potential Acquisition, the Company
sought approval from shareholders to change the Company's name to Beacon
Energy plc. The change of name was to reflect an exciting new chapter in the
Company's story and the rebrand process was delivered in a highly cost
effective manner.
On 16 December 2022, the Company was delighted to announce that it had entered
into a conditional Share Purchase Agreement ("SPA") with Tulip Oil Holding
B.V. ("Tulip") and Deutsche Rohstoff A.G. ("DRAG") (collectively, the
"Sellers") relating to the purchase of the entire issued and to be issued
share capital of Rhein Petroleum GmbH ("Rhein Petroleum"), (the
"Proposed Transaction").
The Board of Beacon Energy ("Board") considers the Proposed Transaction to
represent a transformational, value enhancing transaction for shareholders,
which is fully aligned with Beacon Energy's growth strategy.
The Board believes the Proposed Transaction will deliver:
· A full-cycle portfolio of largely operated production,
development, appraisal and exploration assets located onshore Germany, a low
political risk jurisdiction
· A near-term active work programme designed to enhance
production and cash flow
· An experienced operating team in Rhein Petroleum that has a
track record of exploration, appraisal, development and production operations
· Strong HSE record and a firm commitment to environmentally
responsible hydrocarbon production
· A well-understood existing production base, generating
immediate revenue
· A material 2P net reserve base of 3.85 mmbbl and a 2C net
contingent resource base of 22.96 mmbbl, located across four core assets as
assessed by SGS Nederland B.V, and included in a Competent Person's Report
("CPR"), which will form part of the Admission Document to be sent to
shareholders in due course
· A commercially attractive programme with the economic results
of the CPR describing an NPV10 valuation of €52.8 million from the
development and production of the 2P reserve base, assuming, inter alia, capex
of €15.7 million for a 3 well programme and facilities upgrade and
utilising forward oil pricing as at 14 November 2022
· Access to a built-in growth pipeline of onshore, material,
high-margin, low-risk and near-term development and appraisal opportunities
The Proposed Transaction is considered a reverse transaction under the AIM
Rules for Companies and is therefore subject, inter alia, to the issue of a
new AIM Admission Document and obtaining shareholder approval for the Proposed
Transaction.
Full details of the terms and conditions of the Proposed Transaction are
available on the Company's website, and in particular the Company's
announcement dated 16 December 2022.
In addition to the Proposed Transaction, the Company was delighted to announce
that Interim CEO Larry Bottomley has agreed to become CEO on a permanent
basis. Larry's appointment will provide certainty and continuity for the
Company as we progress the Proposed Transaction, and Larry's transition into
the permanent role reflects the focused determination that he has delivered
through this year and his significant experience and expertise in leadership
roles of this kind.
It only remains for me to thank our shareholders for their ongoing support for
the Company, management team and our strategy. We are very excited about the
Proposed Transaction which, if successful, will underpin your Company with
cash flow, proven Reserves and Resources, and an active work programme
designed to create long-term value for Beacon's shareholders. We very much see
the Proposed Transaction as a first step in our strategy to build a material
international upstream oil and gas business with a focus on cash generative
assets and those with the potential to add significant value in the short to
medium term. We look forward to providing updates on our progress as we move
through the rest of the year.
Mark Rollins
Non-Executive Chairman
13 January 2023
Interim Consolidated Statement of Comprehensive Income
Unaudited Audited Unaudited
Six months ended
Year ended
Six months ended
31 Oct 2022
30 Apr 2022
31 Oct 2021
Notes $'000 $'000 $'000
Investment loss:
Impairment - (23,885) -
(23,885)
4 (19) (60) (50)
Asset evaluation and operating expenses
Other administrative expenses 4 (877) (2,818) (2,258)
Net loss before Finance Costs and Taxation (896) (26,763) (2,308)
Finance costs (55) (198) (49)
Share of net losses of associate accounted for using the equity method - (428) (149)
Loss before tax (951) (27,389) (2,506)
Tax expense - - -
Loss after tax attributable to owners of the parent (951) (27,398) (2,506)
Total comprehensive loss for the year attributable to owners of the parent (951) (27,398) (2,506)
Basic and diluted loss per share attributable to owners of the parent during the year 6 (0.07) (2.67) (0.24)
(expressed in US cents per share)
The accompanying notes from an integral part of these consolidated financial
statements.
Interim Consolidated Statement of Financial Position
Unaudited Audited Unaudited
31 Oct 2022
30 Apr 2022
31 Oct 2021
Notes $'000 $'000 $'000
Non-current assets
Property, plant & equipment - - 3
Other investments 7 - - 20,113
- - 20,116
Current assets
Other receivables 408 89 153
Cash and cash equivalents 616 662 5,861
1,024 751 6,014
Total assets 1,024 751 26,130
Current liabilities
Trade and other payables 8 (493) (304) (418)
Total liabilities (493) (304) (418)
Net assets 531 447 25,712
Equity attributable to equity holders of the company
Share premium 48,128 47,656 47,656
Share reserve 2,008 1,445 1,827
Accumulated deficit (49,605) (48,654) (23,771)
Total shareholder funds 531 447 25,712
The accompanying notes from an integral part of these consolidated financial
statements
Interim Consolidated Statement of Changes in Equity
Share premium Share reserve Accumulated deficit Total
equity
$'000s $'000 $'000s $'000s
Balance at 1 May 2021 47,656 1,039 (21,265) 27,430
Loss for the period to 31 October 2021 (unaudited) - - (2,506) (2,506)
Total comprehensive loss - - (2,506) (2,506)
Transactions with equity shareholders of the parent:
Share based payments - 788 - 788
Balance at 31 October 2021 (unaudited) 47,656 1,827 (23,771) 25,712
Loss for the period to 30 April 2022 - - (24,883) (24,883)
Total comprehensive loss - - (24,883) (24,883)
Transactions with equity shareholders of the parent:
Share based payments - (382) - (382)
Balance at 30 April 2022 (audited) 47,656 1,445 (48,654) 447
Loss for the period to 31 October 2022 (unaudited) - - (951) (951)
Total comprehensive loss - - (951) (951)
Transactions with equity shareholders of the parent:
Share based payments - 563 - 563
Proceeds from shares issued 490 - - 490
Cost of share issue (18) - - (18)
Balance at 31 October 2022 (unaudited) 48,128 2,008 (49,605) 531
The accompanying notes from an integral part of these consolidated financial
statements.
Interim Consolidated Cash Flow Statement
Unaudited Audited Unaudited
31 Oct 2022
30 Apr 2022
31 Oct 2021
Notes $'000 $'000 $'000
Cash flows from operating activities:
Loss before tax (951) (27,389) (2,506)
Adjustments for:
Share of net loss of associate - 428 149
Share-based payment 563 406 788
Impairment of investment - 23,885 -
Change in working capital items:
Movement in other receivables (319) 114 50
Movement in trade and other payables 189 (834) (720)
Net cash used in operations (518) (3,390) (2,239)
Cash flows from investing activities
Investment in associate - (4,051) -
Other investments - - -
Purchase of property, plant & equipment - - (3)
Net cash flows from investing activities - (4,051) (3)
Cash flows from financing activities
Proceeds from issue of share capital 490 - -
Share issue costs (18) - -
Net cash flows from financing activities 472 - -
Net (decrease)/increase in cash and cash equivalents (46) (7,441) (2,242)
Effect of exchange rate changes - - -
Cash and cash equivalents at beginning of period 662 8,103 8,103
Cash and cash equivalents at end of period 616 662 5,861
The accompanying notes from an integral part of these consolidated financial
statements.
Notes to the Interim Consolidated Financial Statements
1 Reporting entity
Beacon Energy plc (the "Company") is domiciled in the Isle of Man. The
Company's registered office is at 55 Athol Street, Douglas, Isle of Man IM1
1LA. These consolidated financial statements comprise the Company and its
subsidiaries (together referred to as the "Group"). The Group is primarily
involved in the E&P business and on 16 December 2022 announced the
proposed acquisition of Rhein Petroleum GmbH, an upstream oil and gas business
operating in Germany. The Company's shares were suspended from trading on
AIM on 9 September 2022.
2 Basis of accounting
These interim consolidated financial statements have been prepared in
accordance with International Accounting Standard 34 "Interim Financial
Reporting". These interim consolidated financial statements do not include all
the information and disclosures required in the annual financial statements
and should be read in conjunction with the Group's annual financial statements
for the year ended 30 April 2022, which were prepared in accordance with IFRSs
as adopted by the United Kingdom. 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.
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 disclosed in the Group's
statutory financial statements for the year ended 30 April 2022.
The interim conciliated financial statements are presented in US Dollars
unless otherwise indicated.
There are no IFRSs or IFRIC interpretations that are effective for the first
time for the financial period beginning on or after 1 May 2022 that would be
expected to have a material impact on the Group.
The consolidated financial statements of the Group as at and for the year
ended 30 April 2022 are available upon request from the Company's registered
office at 55 Athol Street, Douglas, Isle of Man or the Company's website
www.beaconenergyplc.com (http://www.beaconenergyplc.com/)
These interim consolidated financial statements have been approved and
authorised for issue by the Company's Board of directors on 13 January 2023.
3 Going concern
The financial statements have been prepared on a going concern basis. The
Group did not earn any revenues during the period and currently holds no
material oil and gas interest. The operations of the Group are currently
financed from funds raised from shareholders. In common with many
pre-production entities, the Group may need to raise further funds in order to
progress its projects into the production of revenues.
The Group monitors its cash position, cash forecasts and liquidity on a
regular basis and takes a conservative approach to cash management. Following
the £425,000 equity fund raise completed in July 2022, as at 31 October 2022,
the Group had cash resources of US$616,000.
On 16 December 2022, the Group announced the proposed acquisition of Rhein
Petroleum GmbH, an upstream oil and gas business operating in Germany. The
Company has incurred due diligence and other transaction costs associated with
the proposed acquisition, and expects to incur further such costs.
Notes to the Interim Consolidated Financial Statements (continued)
Management's base case is that the potential acquisition will complete in
February 2023 and that, as part of the acquisition the Company will seek to
raise additional equity funding.
Management have also considered a number of downside scenarios, including
scenarios where the potential acquisition does not complete, or where
completion is delayed beyond February 2023.
Under the base case forecast, the Group will have sufficient financial
headroom to meet forecast cash requirements for the 12 months from the date of
approval of these consolidated financial statements. However, in the downside
scenarios, in the absence of any mitigating actions, the Group may have
insufficient funds to meet its forecast cash requirements. Potential mitigants
include deferral of expenditure and raising additional equity.
Accordingly, after making enquiries and considering the risks described above,
the Directors have assessed that following the closing of the proposed
acquisition the cash balance provides the Group with adequate headroom over
the forecast expenditure for the following 12 months - as a result, the
Directors are of the opinion that the Group is able to operate as a going
concern for at least the next twelve months from the date of approval of these
financial statements.
Nonetheless, these conditions indicate the existence of a material uncertainty
which may cast doubt on the Group's ability to continue as a going concern.
The financial statements do not include the adjustments that would be required
if the Group were unable to continue as a going concern.
4 Expenses
Administration fees and expenses consist of the following:
Unaudited Audited Unaudited
Six months ended
Year ended
Six months ended
31 Oct 2022
30 Apr 2022
31 Oct 2021
$'000 $'000 $'000
Corporate overheads:
- Directors' fees 292 1,396 1,266
- Professional fees 129 1,178 708
- Audit fees 2 45 27
- Administration costs 29 104 55
- Share based payments-warrants 425 - -
- Employee costs - 95 202
877 2,818 2,258
Asset evaluation and operating expenses:
- Office costs 19 60 30
- Travel and accommodation - - 20
19 60 50
Total expenses 896 2,878 2,308
Notes to the Interim Consolidated Financial Statements (continued)
5 Directors' remuneration
The remuneration of those in office during the period ended 31 October 2022
was as follows:
Unaudited Unaudited
Six months ended
Six months ended
Audited
31 Oct 2022 Year ended 31 Oct 2021
$'000 30 Apr 2022 $'000
$'000
Salaries paid in cash 88 1,133 582
Salary deferrals 66 - -
Accrued entitlement to shares and warrants 138 247 673
Directors' health insurance - 16 11
292 1,396 1,266
Mark Rollins (Chairman), and Larry Bottomley (Chief Executive Officer), are
entitled to a fixed monthly fee of $5,000 each payable in cash. The
Non-executive directors, Ross Warner and Stephen Whyte are entitled to a fixed
monthly fee of $2,500 each payable in cash. All the directors have agreed to a
salary deferral equal to their monthly fixed fees from August 2022 to January
2023.These deferred salaries will be paid once there is excess funding
available.
Share options and warrants with a value of $138,000 were issued to employees
accrued during the 6- month period to 31 October 2022. In the year to 30 April
2022, the warrants issued to employees and advisors accrued with a value of
$247,000.
6 Earnings per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
Unaudited Audited Unaudited
Outstanding at 31 Oct 2022
Outstanding at 30 Apr 2022
Outstanding at 31 Oct 2021
Loss attributable to owners of the Group (951) (27,389) (2,506)
(USD
thousands)
Weighted average number of ordinary shares in issue (thousands) 1,291,201 1,027,614 1,027,614
Loss per share (US cents) (0.07) (2.67) (0.24)
In accordance with International Accounting Standard 33 'Earnings per share',
no diluted earnings per share is presented as the Group is loss making.
Notes to the Interim Consolidated Financial Statements (continued)
7 Other investments
Unaudited Audited Unaudited
Outstanding at 31 Oct 2022
Outstanding at 30 Apr 2022
Total at 31 Oct 2021
US$'000 US$'000 US$'000
Buffalo Project - - 20,113
- - 20,113
8 Trade and other payables
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business. Accounts payable are
classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised initially
at fair value, and subsequently measured at amortised cost using the effective
interest method.
Unaudited Audited Unaudited
Outstanding at 31 Oct 2022
Outstanding at 30 Apr 2022
Outstanding at 31 Oct 2021
US$'000 US$'000 US$'000
Trade payables 151 51 166
Accruals and other payables 342 253 252
493 304 418
Notes to the Interim Consolidated Financial Statements (continued)
9 Shares in issue
The number of shares in issue at the beginning of the period was
1,027,613,961. The number of options and warrants on issue at the start of the
period was 118,259,511. On 26 July 2022 there was an issue of 500,000,000
ordinary shares for £0.085 which included one warrant per share and as a
result the number of shares in issue at the end of the period was
1,527,613,961 and the number of options and warrants increased to 618,259,511.
The warrants were issued at a valuation of 0.07p each, resulting in an
increase to the share reserve of US$425,000 and a corresponding expense as
shown in Note 4.
Options and warrants in issue:
Outstanding at 30 April 2022 Issued/(Expired) during the period Outstanding at 31 October 2022
Options
- Issued Pre 1/2/2020 450,000 - 450,000
- Issued 1/2/2020 13,750,000 - 13,750,000
- Issued 8/7/2020 2,500,000 - 2,500,000
- Issued 19/4/2021 83,710,000 - 83,710,000
- Cancelled options FY 2022 (66,600,000) - (66,600,000)
- Issued during FY 2022 30,000,000 - 30,000,000
63,810,000 - 63,810,000
Warrants
- Issued pre 1/2/2020 11,390,680 - 11,390,680
- Issued 10/12/2020 54,545 - 54,545
- Issued during 19/04/2021 - employee 3,851,159 - 3,851,159
- Issued during 19/04/2021-advisor 45,553,120 - 45,553,120
- Issued warrants 26/07/2022 - 500,000,000 500,000,000
- Expired warrants FY 2022 (6,399,993) - (6,399,993)
54,449,511 500,000,000 554,449,511
Total options and warrants 118,259,511 500,000,000 618,259,511
10 Commitments and contingencies
There were no capital commitments authorised by the Directors or contracted
other than those provided for in these financial statements as at 31 October
2022 (30 April 2022: None).
11 Subsequent events
On 17 November 2022 Advance Energy Plc changed its name to Beacon Energy Plc.
On 16 December 2022 the Company announced that it had entered into a
conditional share purchase agreement in respect of the proposed acquisition of
Rhein Petroleum GmbH, an upstream oil and gas business operating in Germany.
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