REG - Beacon Energy PLC - Interim Results
29/09/2023 07:00
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RNS Number : 0758O Beacon Energy PLC 29 September 2023
29 September 2023
Beacon Energy plc
("Beacon Energy" or the "Company")
Interim Results
Beacon Energy (AIM:BCE), the full-cycle oil and gas company with a portfolio
of production, development, appraisal and exploration onshore German assets
through its wholly-owned subsidiary, Rhein Petroleum GmbH
("Rhein Petroleum"), is pleased to announce its Interim Results for the six
months ended 30 June 2023.
Mark Rollins, Non-Executive Chairman of Beacon Energy, commented:
"During the period, the Board has worked tirelessly and has made excellent
progress in delivering the Company's strategy which is to pursue the
acquisition of value enhancing opportunities to develop and grow a
self-funding upstream oil & gas company.
The data we have gathered during the drilling of the SCHB2(2.) well indicates
the potential for substantial reserve and production upside for the Stockstadt
Mitte segment - up to and potentially more than the High Case (5.8 mmbbls)
outlined in the Company's December 2022 CPR which clearly bodes well for the
long-term value we believe we can realise from the asset.
With the SCHB-2(2.) now safely and successfully completed, the Company's
priority is establishing flowrates through clean-up of the wellbore, and
eventual installation of an Electrical Submersible Pump.
Based on the technical data acquired through the drill which demonstrated the
high quality reservoir encountered at the well location, the Company's
technical analysis indicates that with a successful clean-up operation and
implementation of artificial lift initiatives, the well has the potential to
deliver in the region of 900 bopd net production to Beacon. At those flow
rates, the Company would expect to deliver operating cash flows in excess
of US$1.5 million per month (assuming $80/bbl Brent).
I would like to thank our new and existing shareholders for their ongoing
support of the Company, management team and our strategy. We are very excited
about the year ahead with an active work programme designed to create
long-term value for Beacon's shareholders."
Enquiries:
Beacon Energy plc +44 (0)20 7466 5000
Larry Bottomley (CEO) / Stewart MacDonald (CFO)
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 / Barry Archer / George Pope
Tennyson Securities Limited (Joint Broker) +44 (0)20 7186 9030
Peter Krens / Ed Haig-Thomas
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 June 2023.
During the period, the Board has worked tirelessly and has made excellent
progress in delivering the Company's strategy which is to pursue the
acquisition of value enhancing opportunities to develop and grow a
self-funding upstream oil & gas company.
On 16 December 2022, the Company was pleased to announce that it had entered
into a conditional Share Purchase Agreement with Tulip Oil Holding B.V. and
Deutsche Rohstoff A.G. for the purchase of the entire issued and to be issued
share capital of Rhein Petroleum GmbH, (the "Transaction"), an established
company with a full-cycle portfolio of largely operated production,
development, appraisal and exploration assets located onshore Germany.
The Company successfully completed a fundraise of £6.0 million with new and
existing shareholders in March 2023 despite challenging market conditions,
providing capital to complete the Transaction. Critically, as the upfront
consideration for the Transaction was paid in shares, the net funds raised for
the acquisition process were to be deployed into the work programme and the
Company was able to acquire the existing production facility, production,
reserves and resources associated with Rhein Petroleum for zero upfront cash
consideration. Following receipt of shareholder approval, the Company
completed the Transaction on 11 April 2023. This represented a
transformational, value enhancing transaction for shareholders, which was
fully aligned with Beacon Energy's growth strategy and provides the Company
with a strong platform, underpinned by core value, to deliver the longer-term
growth strategy.
Immediately upon completion of the Transaction, the Company secured a drilling
rig to drill the SCHB-2 development well on the Erfelden field. Drilling
operations commenced on 19 June 2023. Notwithstanding operational issues
encountered during drilling, the Schwarzbach-2(2.) ("SCHB-2(2.)") well reached
total drill depth of 2,255m metres (1,717 metres True Vertical Depth) on 13
August 2023 with electric wireline well logging completed shortly thereafter.
On 11 September 2023, the Company announced an update on the SCHB-2(2.) well.
The key updates in respect of the SCHB-2(2.) well were as follows:
· The SCHB-2(2.) well encountered an excellent 34-metre gross interval
containing 28 metres of oil-bearing net reservoirs in the
Pechelbronner-Schichten ("PBS") sandstones within the Stockstadt Mitte segment
of the Erfelden field.
· These oil-bearing reservoirs were encountered approximately 25 metres
high and 10 metres thicker than prognosis, with porosities averaging 18% in
the Lower PBS and 21% in the Upper PBS, with no water-bearing sands in the 42m
hydrocarbon column.
· With all these metrics above or at the top of the range of pre-drill
expectations, the likelihood is that this will result in a material upgrade to
recoverable reserves in Stockstadt Mitte and a de-risking of 2.4 million
barrels of contingent resources already ascribed to Schwarzbach South.
· Based on these excellent reservoir properties and the light oil
recovered, standard oil-industry analysis indicates that an initial production
rate in excess of 900 barrels of oil per day ("bopd") could be achieved.
Higher rates of production have been achieved on historic wells in the area.
· Following perforation and acidization, reservoir clean-up operations
commenced on 8 September 2023, and since that time the well has produced a
mixture of oil, gas and drilling fluids.
· Given delays in the programme, the drilling rig was released on 10
September 2023, with clean-up of the well to continue on site.
As a result of excellent drilling results and increased expectations around
recoverable volumes and production, the Company successfully completed an
oversubscribed fundraise of £4.3 million with new and existing shareholders
on 15 September 2023. The additional funds will be utilised to satisfy
outstanding costs associated with the well, fund further activities required
to realise the full potential of the well and provide liquidity during the
well clean-up process. As a result, the Company moves considerably closer to
its goal of becoming a self-funding business.
Outlook
With the SCHB-2(2.) now safely and successfully completed, the Company's
priority is establishing flowrates through clean-up of the wellbore, and
eventual installation of an Electrical Submersible Pump. Based on the
technical data acquired through the drill which demonstrated the high quality
reservoir encountered at the well location, the Company's technical analysis
indicates that with a successful clean-up operation and implementation of
artificial lift initiatives, the well has the potential to deliver in the
region of 900 bopd net production to Beacon. At those flow rates, the
Company would expect to deliver operating cash flows in excess of US$1.5
million per month (assuming $80/bbl Brent).
In parallel, work will commence immediately to quantify expected reserve and
resources increases and existing development plans will be updated to reflect
learnings from the SCHB-2(2.) well and increased resource base with the aim of
accelerating drilling and maximising the value of this highly attractive
asset.
It only remains for me to thank our new and existing shareholders for their
ongoing support of the Company, management team and our strategy. We are very
excited about the year ahead with an active work programme designed to create
long-term value for Beacon's shareholders. We very much see the acquisition of
Rhein Petroleum and the drilling of our first well as the first steps 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
29 September 2023
Interim Consolidated Statement of Comprehensive Income
Unaudited Audited Unaudited
Six months ended
Period ended
Six months ended
30 Jun 2023
31 Dec 2022
31 Oct 2022
Notes $'000 $'000 $'000
Income:
Operating income 313 - -
Other income 2 - -
Total income 315 - -
Crude oil purchase from partners (130) - -
Operating expenses (448) - -
Operating loss (263) -
4 (659) (1,004) (896)
Other administrative expenses
Net loss before Finance Costs and Taxation (922) (1,004) (896)
Finance costs (201) (47) (55)
Impairment of investment 6 (2,941) - -
Loss before tax (4,064) (1,051) (951)
Tax expense 324 - -
Loss after tax attributable to owners of the parent (3,740) (1,051) (951)
Total comprehensive loss for the year attributable to owners of the parent (3,740) (1,051) (951)
Basic and diluted loss per share attributable to owners of the parent during the year 7 (0.07) (0.08) (0.07)
(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
30 Jun 2023
31 Dec 2022
31 Oct 2022
Notes $'000 $'000 $'000
Non-current assets
Property, plant & equipment 11,569 - -
Intangible assets 1,597 - -
13,166 - -
Current assets
Other receivables 1,844 564 408
Restricted cash 8 2,075 - -
Cash and cash equivalents 4,491 306 616
8,410 870 1,024
Total assets 21,576 870 1,024
Current liabilities
Trade and other payables 9 (2,070) (411) (493)
Non-current liability 10 (5,571) - -
Total liabilities (7,641) (411) (493)
Net assets 13,935 459 531
Equity attributable to equity holders of the company
Share premium 54,278 48,128 48,128
Share reserve 2,047 2,036 2,008
Merger reserve 11,055 - -
Accumulated deficit (53,445) (49,705) (49,605)
Total shareholder funds 13,935 459 531
The accompanying notes from an integral part of these consolidated financial
statements
Interim Consolidated Statement of Changes in Equity
Share premium Share reserve Merger Reserve Accumulated deficit Total
equity
$'000s $'000 $'000 $'000s $'000s
Balance at 1 May 2022 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
Loss for the period to 31 December 2022 (audited) - - - (100) (100)
Total comprehensive loss - - - (100) (100)
Transactions with equity shareholders of the parent:
Share based payments - 28 - - 28
Balance at 31 December 2022 (audited) 48,128 2,036 - (49,705) 459
Loss for the period to 30 June 2023 (unaudited) - - - (3,740) (3,740)
Total comprehensive loss - - - (3,740) (3,740)
Transactions with equity shareholders of the parent:
Share based payments - 11 - - 11
Proceeds from shares issued 7,496 - - - 7,496
Cost of share issue (1,346) - - - (1,346)
Merger reserve - - 11,055 - 11,055
Balance at 30 June 2023 (unaudited) 54,278 2,047 11,055 (53,445) 13,935
The accompanying notes from an integral part of these consolidated financial
statements.
Interim Consolidated Cash Flow Statement
Unaudited Audited Unaudited
30 Jun 2023
31 Dec 2022
31 Oct 2022
Notes $'000 $'000 $'000
Cash flows from operating activities:
Loss before tax (3,740) (1,051) (951)
Adjustments for:
Share-based payment 11 591 563
Impairment at acquisition 2,941 - -
Tax expense (324) - -
Change in working capital items:
Movement in other receivables (1,280) (475) (319)
Movement in trade and other payables 1,659 107 189
Net cash used in operations (733) (828) (518)
Cash flows from investing activities
Investment in subsidiary - cash balances acquired 8 2,196 - -
Purchase of property, plant & equipment (1,031) - -
Net cash flows from investing activities 1,165 - -
Cash flows from financing activities
Proceeds from issue of share capital 7,496 490 490
Share issue costs (1,346) (18) (18)
Net cash flows from financing activities 6,150 472 472
Net (decrease)/increase in cash and cash equivalents 6,582 (356) (46)
Effect of exchange rate changes (322) - -
Cash and cash equivalents at beginning of period 306 662 662
Cash and cash equivalents at end of period 6,566 306 616
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.
Events during the period
On 11 April 2023, the Company acquired the entire issued share capital of
Rhein Petroleum GmbH, an upstream oil and gas business operating in Germany.
The Company's shares were re-admitted to trading on AIM on 11 April 2023.
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 period ended 31 December 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 31 December 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 period
ended 31 December 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 29 September 2023.
3 Going concern
The financial statements have been prepared on a going concern basis. The
Group monitors its cash position, cash forecasts and liquidity on a regular
basis and takes a conservative approach to cash management.
On 11 April 2023, the Group completed the acquisition of Rhein Petroleum GmbH.
Drilling operations for the SCHB-2 well commenced on 19 June 2023. The well
encountered a material oil accumulation with excellent reservoir properties
however, due to significant operational issues during drilling, delays and
additional costs were experienced and as a result the rig had to be released
in mid-September, prior to completion of the clean-up of the well.
Installation of the rod pump is expected to be undertaken during October 2023.
In the interim period reservoir clean-up will continue into the wellbore.
Notes to the Interim Consolidated Financial Statements (continued)
As a result of excellent drilling results and increased expectations around
recoverable volumes and production, the Company successfully completed an
oversubscribed fundraise of £4.3 million with new and existing shareholders
on 15 September 2023.
As at 28 September 2023, the Group had cash resources excluding 'restricted
cash' of approximately US$6.5 million.
Management's base case is that the SCHB-2 well will continue to clean-up and
by the end of November 2023 production flow rates from the well will be
consistent with, or exceed, the "best estimate" outlined in the Competent
Persons Report ("CPR") published in December 2022.
Management have also considered a number of downside scenarios, including
scenarios where the well clean-up is more protracted, the production flow rate
from the well is materially below the "best estimate" outlined in the CPR, or
additional activities (and expenditure) are required in order to increase flow
rates.
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 and/or reduction of expenditure and
raising additional equity or debt funding.
Accordingly, after making enquiries and considering the risks described above,
the Directors have assessed that the cash balance and forecast cash flows
provide the Group with adequate headroom 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
Period ended
Six months ended
30 Jun 2023
31 Dec 2022
31 Oct 2022
$'000 $'000 $'000
Corporate overheads:
- Directors' fees 394 393 292
- Professional fees 170 103 129
- Audit fees 22 20 2
- Administration costs 73 63 48
- Share based payments-warrants - 425 425
- Employee costs - - -
Total expenses 659 1,004 896
Notes to the Interim Consolidated Financial Statements (continued)
5 Directors' remuneration
The remuneration of those in office during the period ended 30 June 2023 was
as follows:
Unaudited Unaudited
Six months ended
Six months ended
Audited
30 Jun 2023 Period ended 31 Oct 2022
$'000 31 Dec 2022 $'000
$'000
Salaries paid in cash 171 117 88
Salary deferrals 96 110 66
Accrued entitlement to shares and warrants 98 166 138
Directors' pension 13 - -
Directors' health insurance 16 - -
394 393 292
It should be noted that (a) the Directors (other than Ross Warner) have agreed
to receive Director Fee Shares in lieu of a proportion of their proposed fees
for the 24 month period following Admission, calculated on the basis of the
Fundraise Price; and (b) Ross Warner has agreed for the 24 month period
following from Admission to waive one third of the fees due to him under his
NED appointment letter. Larry Bottomley and Mark Rollins have agreed to take
55 percent. and 50 percent., respectively, of their proposed fees as Director
Fee shares, and Stewart MacDonald, Leo Koot and Stephen Whyte have agreed to
take 33 percent. of their proposed fees as Director Fee Shares.
Share options and warrants with a value of $98,000 were issued to employees
accrued during the 6- month period to 30 June 2023. In the period ended 31
December 2022, the warrants issued to employees and advisors accrued with a
value of $166,000.
6 Business Combination
On 11 April 2023, the Company acquired the entire issued share capital of
Rhein Petroleum GmbH, an upstream oil and gas business operating in Germany.
This transaction can be best described as a business combination under IFRS3.
The reverse takeover transaction consisted of equity consideration of
3,488,549,633 ordinary shares and an associated consideration of 1,186,953,301
warrants at a price of 0.11 pence which is the fair value per share. On the
basis that the net assets acquired exceeded the consideration paid, negative
goodwill arose. This negative goodwill has been written off through the profit
and loss. Details of the purchase consideration and the net assets acquired
are as follows:
Goodwill
$'000
Consideration transferred at Fair value 5,143
Less: Net identifiable assets at acquisition (11,050)
Goodwill at acquisition (5,907)
Less: Adjustments of loan balance acquired (27,463)
Add: Deferred Tax assets on acquisition 30,409
Goodwill at reporting date (2,961)
Notes to the Interim Consolidated Financial Statements (continued)
7 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 30 Jun 2023
Outstanding at 31 Dec 2022
Outstanding at 31 Oct 2022
Loss attributable to owners of the Group (3,740) (1,051) (951)
(USD
thousands)
Weighted average number of ordinary shares in issue (thousands) 5,496,704 1,350,063 1,291,201
Loss per share (US cents) (0.07) (0.08) (0.07)
In accordance with International Accounting Standard 33 'Earnings per share',
no diluted earnings per share is presented as the Group is loss making.
8 Restricted cash
At reporting date, the Group had US$2,075,000 restricted cash, which is
backing guarantees to the mining authority related to future decommissioning.
This amount forms part of the US$2,196,000 cash balances acquired shown within
the cash flow statement.
9 Trade and other payables
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business. Accounts payable are
classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised initially
at fair value, and subsequently measured at amortised cost using the effective
interest method. The increase in trade payables reflects increased spend
related to the SCHB-2(2) well.
Unaudited Audited Unaudited
Outstanding at 30 Jun 2023
Outstanding at 31 Dec 2022
Outstanding at 31 Oct 2022
US$'000 US$'000 US$'000
Trade payables 1,793 230 151
Accruals and other payables 277 181 342
2,070 411 493
Notes to the Interim Consolidated Financial Statements (continued)
10 Non-current liabilities
The non-current liabilities consist of a loan with Tulip Oil Holding B.V and
provisions in relation to future abandonment and decommissioning costs.
Unaudited Audited Unaudited
Outstanding at 30 Jun 2023
Outstanding at 31 Dec 2022
Outstanding at 31 Oct 2022
US$'000 US$'000 US$'000
Tulip Oil Holding loan payable 3,433 - -
Provision for decommissioning 2,097 - -
Other non-current liabilities 41 - -
5,571 - -
11 Shares in issue
The number of shares in issue at the beginning of the period was
1,527,613,961. The number of options and warrants on issue at the start of the
period was 618,259,511. On 11 April 2023 there was an issue of 5,491,516,026
ordinary shares for £0.011 to raise £6.0 million. A further 3,488,549,633
shares were issued as consideration shares. The number of ordinary shares in
issue at the end of the period is 10,507,679,620. The number of options and
warrants increased to 2,709,564,441.
Options and warrants in issue:
Outstanding at 31 December 2022 Issued/(Expired) during the period Outstanding at 30 June 2023
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
- iIssued during FY 2023 - 770,542,318 770,542,318
63,810,000 770,542,318 834,352,318
Warrants
- 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 - adviser 45,553,120 - 45,553,120
- Issued warrants 26/07/2022 500,000,000 - 500,000,000
- Issued warrants 11/04/2023 - 1,325,753,299 1,325,753,299
549,458,824 1,325,753,299 1,875,212,123
Total options and warrants 613,268,824 1,325,753,299 2,709,564,441
Notes to the Interim Consolidated Financial Statements (continued)
12 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 30 June 2023
(31 December 2022: None).
13 Subsequent events
On 15 September 2023, the Company announced that it had issued 2,867,000,000
new ordinary shares by way of placing and a Primary Bid Offer at a fundraise
price of 0.15 pence to raise £4.3 million (the "Fundraise"). The net proceeds
of the Fundraise together with the Company's existing cash resources will be
used for general working capital prior to receipt of proceeds from the sale of
commercial production from SCHB-2(2.). Following admission, the Company now
has 13,374,679,620 ordinary shares in issue.
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