REG - Challenger Energy - Annual Report for the year ended 31 Dec 21 Part 2
30/09/2022 07:16
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RNS Number : 2574B Challenger Energy Group PLC 30 September 2022
12 Right of use assets
Cost Leased properties $ 000's Motor Group 2021
vehicles
468 17 - (1)
$ 000's Total Company
62 $ 000's Leased properties $ 000's
- 530 42
(30) 17 17
- (30)
(1)
At 1 January 2021
Additions
Disposals
Foreign exchange difference on translation
At 31 December 2021 484 32 516 59
Accumulated depreciation 398 35 433 30
At 1 January 2021
Depreciation 72 14 86 15
Disposals - (17) (17)
Foreign exchange difference on translation - - - -
At 31 December 2021 470 32 502 45
Net book value
At 31 December 2021 14 - 14 14
At 31 December 2020 70 27 97 12
Right of use assets
Leased properties $ 000's Motor vehicles $ 000's Group 2020 Company
Total Leased properties $ 000's
$ 000's
Cost
At 1 January 2020 355 62 417 42
Acquisition of Columbus Energy Resources PLC (note 15) 53 - 53 -
Additions 60 - 60 -
Foreign exchange difference on translation - - - -
At 31 December 2020 468 62 530 42
Accumulated depreciation 206 13 219 15
At 1 January 2020
Depreciation 192 22 214 15
Foreign exchange difference on translation - - - -
At 31 December 2020 398 35 433 30
Net book value 70 27 97 12
At 31 December 2020
At 31 December 2019 149 49 198 27
13 Investment in associate - Group
2021 2020
Cost $ 000's $ 000's
At 1 January 47 -
Acquisition of Columbus Energy Resources PLC (note 15) - 47
Disposal of associate* (47)
At 31 December - 47
* In 2020, the Group had a 25% interest in Beach Oilfield Limited,
following a restructuring of the commercial arrangement with Beach Oilfield
Limited which took effect in Q4 2021, the Group no longer holds an interest in
this company and management determined that the recoverable amount of this
investment is nil.
14 Investment in subsidiaries 2021 $ 000's 2020
$ 000's
Company 50,940 29,560
Cost
At 1 January
Acquisition of Columbus Energy Resources PLC (note 15) - 21,380
At 31 December 50,940 50,940
Challenger Energy Group PLC, the parent company of the Group, holds 100% of
the share capital of the following companies:
Company Country of registration Proportion held Nature of business
Direct
BPC (A) Limited Isle of Man 100% Holding Company
BPC (B) Limited Isle of Man 100% Holding Company
BPC (C) Limited Isle of Man 100% Holding Company
BPC (D) Limited Isle of Man 100% Holding Company
BPC (A) Limited Bahamas 100% Oil and Gas Production and Exploration Company
Columbus Energy Resources Limited England & Wales 100% Holding Company
Indirect
Via BPC (A) Limited
BPC Limited Bahamas 100% Investment Company
Bahamas Offshore Petroleum Ltd Bahamas 100% Investment Company
Island Offshore Petroleum Ltd Bahamas 100% Investment Company
Sargasso Petroleum Ltd Bahamas 100% Investment Company
Privateer Petroleum Ltd Bahamas 100% Investment Company
Columbus Oil & Gas Limited Bahamas 100% Investment Company
Via Columbus Energy Resources Limited
Columbus Energy Holdings Ltd Cyprus 100% Holding Company
Columbus Energy Resources
South America B.V. Netherlands 100% Holding Company (for Suriname Branch)
BPC Uruguay Holdings Limited England & Wales 100% Dormant Company
Via Columbus Energy Holdings Ltd
Columbus Energy CPS (Cyprus) Ltd Cyprus 100% Investment Company
Columbus Energy Byron Ltd Cyprus 100% Investment Company
Columbus Energy (Cyprus) Ltd Cyprus 100% Investment Company
Columbus Energy Investments Ltd Cyprus 100% Investment Company
Via Columbus Energy CPS (Cyprus) Ltd
Compañia Petrolifera de Sedano S.L.U. Spain 100% Oil and Gas Production and Exploration Company
Via Columbus Energy Byron Ltd
Leni Gas and Oil US Inc. United States 100% Dormant Company
Via Columbus Energy (Cyprus) Ltd
Columbus Energy (St Lucia) Ltd St Lucia 100% Investment Company
Via Columbus Energy (St Lucia) Ltd
CEG Icacos Trinidad Ltd Trinidad & Tobago 100% Oil and Gas Production and Exploration Company
CEG Management Services Trinidad Ltd Trinidad & Tobago 100% Oil and Gas Services Company
CEG Goudron Trinidad Ltd Trinidad & Tobago 100% Oil and Gas Production and Exploration Company
CEG Bonasse Trinidad Limited Trinidad & Tobago 100% Oil and Gas Production and Exploration Company
Caribbean Rex Ltd St Lucia 100% Investment Company
Steeldrum Oil Company Inc St Lucia 100% Investment Company
Steeldrum Petroleum Group Ltd Trinidad & Tobago 100% Investment Company
CEG Inniss-Trinity Trinidad Ltd Trinidad & Tobago 100% Oil and Gas Production and Exploration Company
CEG South Erin Trinidad Ltd Trinidad & Tobago 100% Oil and Gas Production and Exploration Company
Cory Moruga Holdings Ltd Trinidad & Tobago 100% Dormant Company
West Indian Energy Group Ltd Trinidad & Tobago 100% Oil and Gas Services Company
T-REX Resources (Trinidad) Ltd Trinidad & Tobago 100% Oil and Gas Production and Exploration Company
CEG Well Services Trinidad Ltd Trinidad & Tobago 100% Oil and Gas Services Company
15 Business combination
Acquisition in 2020
On 7 August 2020, the Company completed a merger with Columbus Energy
Resources PLC (CERP), effected by means of a Court sanctioned scheme of
arrangement under Part 26 of the UK Companies Act 2006 (the "Scheme").
Pursuant to the Scheme, a total of 757,261,511 new ordinary shares of the
Company (pre-consolidation) were issued and allotted to holders of CERP
shares.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of the Columbus
Energy Group at the date of acquisition were:
Fair value recognised on acquisition
$ 000's
Assets
Cash and cash equivalents 1,039
Restricted cash 911
Trade and other receivables 3,086
Inventories 154
Investment in associate (note 13) 47
Right of use assets (note 12) 53
Property, plant and equipment and decommissioning costs (note 11) 3,665
Oil and gas properties (note 11) 23,412
Intangible assets (note 10) 2,492
Abandonment fund 1,257
Deferred tax asset 9,274
45,390
Liabilities
Trade and other payables (12,281)
Lease liabilities (note 20) (56)
Provisions (note 22) (6,169)
Borrowings (3,276)
Deferred tax liability (9,273)
(31,055)
Total identifiable net assets at fair value 14,335
Goodwill (note 10) 7,045
Purchase consideration transferred (shares issued at fair value) 21,380
Analysis of cash flows on acquisition
Net cash acquired with the subsidiary (included in cash flows from investing 1,039
activities)
Net cash flow on acquisition 1,039
The fair value of the trade receivables amounted to $252,000 which were
collected during 2021.
Goodwill arising on acquisition is attributable to the Group's enhanced
strength following the creation of a portfolio of operations in varying
jurisdictions and in various stages of the hydrocarbon value cycle.
In 2020, from the date of acquisition, Columbus Energy Resources PLC
contributed $1,417,000 of revenue and $4,149,000 of loss before tax from
continuing operations of the Group. If the combination had taken place at the
beginning of 2020, revenue from continuing operations would have been
$3,507,000 and loss before tax from continuing operations for the Group would
have been $28,251,000.
16 Trade and other receivables 2021 2020
Group $ 000's Company Group Company $ 000's
$ 000's
$ 000's
Current trade and other receivables
Trade and other receivables 308 - 291 -
VAT receivable (*) 1,768 18 1,468 101
Other receivables (**) 1,427 26 1,447 92
Prepayments 768 122 2,092 45
Other deposits 3 - 15 -
Total 4,274 166 5,313 238
Non-current trade and other receivables
Escrow and Abandonment funds (***) 1,564 - 1,297 -
Amounts owed by subsidiary undertakings (****) - 113,187 - 83,839
Total 1,564 113,187 1,297 83,839
Set out below is the movement in the allowance for expected credit losses on
amounts owed by subsidiary undertakings:
Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
At 1 January - 7,171 - -
Provision for expected credit losses (*****) - 5,813 - 7,171
At 31 December 2021 - 12,984 - 7,171
(*) VAT receivable is stated after impairments to recoverable amounts
totalling $313,000, which have been recognised in the year (2020: $139,000).
(**) Other receivables predominantly comprises balances owing from joint
venture partners in Trinidad and Tobago and certain other receivables.
(***) Pursuant to certain production and exploration licences, the Company is
obligated to remit payments into an Escrow Fund and a separate Abandonment
fund based on production, amounts paid vary by licence. The Company remits
US$0.25 per barrel of crude oil sold (Escrow fund), and between US$0.28 to
US$1.00 (varying by licence) to an abandonment fund and the funds will be used
for the future abandonment of wells in the related licenced area.
(****) The amounts owed by subsidiary undertakings are interest free and
repayable on demand. At 31 December 2021 a loss allowance for expected credit
losses of $12,984,000 is provided for with $5,813,000 recognised in the year
(2020: $7,171,000) in respect of the recoverability of amounts due from
subsidiary undertakings.
(*****) A 100% provision for expected credit losses has been applied to all
receivable balances relating to Trinidad and Tobago and Suriname operations as
the Company cannot reasonably foresee the actual timing of recovery of these
balances.
17 Inventories
2021 2020
Group $ 000's Company Group Company
$ 000's
$ 000's
$ 000's
Crude oil 73 - 60 -
Consumables
186 - 112 -
Total 259 - 172 -
18 Restricted cash 2021 2020
Group $ 000's Company Group Company
$ 000's
$ 000's
$ 000's
Credit card security 76 27 77 27
Licence related bonds 484 30 469 30
Bank deposits - - 400 -
Total 560 57 946 57
Bank deposits consist of funds held as security for bank loans in Trinidad and
Tobago. Funds restricted against licence related bonds consist of $30,000
(2020: $30,000) relating to the Group Uruguay licence and $454,000 (2020:
$439,000) relating to the Group's licences in Trinidad and Tobago. Amounts
held at the year-end have been classified as current as they may be recovered
at any point following cancellation of the associated corporate credit card
facilities, discharge of the relevant licence obligation or cancellation of
the relevant licence and repayment of the relevant bank loans.
19 Trade and other payables
2021 2020
Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
Current trade and other payables*
Trade and other payables 14,701 9,852 5,353 72
Accruals 8,836 923 13,267 432
Total 23,537 10,775 18,620 504
2021
2020
Group $ 000's Company Group Company
$ 000's
$ 000's
$ 000's
Current trade and other payables*
Trade and other payables 14,701 9,852 5,353 72
Accruals 8,836 923 13,267 432
Total 23,537 10,775 18,620 504
*Included in the current trade and other payables are exploration and
evaluation payables balances amounting to $7,916,000 (2020: $4,707,000).
As noted in an RNS on the 13(th) December 2021 the Group undertook a
comprehensive balance sheet restructuring process, which process was completed
in March 2022. This process resulted in a reduction in balance sheet payables,
debts and potential liability exposure from approximately $23.5 million to
approximately $2.5 million, being the estimated liabilities amount that would
require settlement in cash in the foreseeable future. The substantial majority
of these settlements, whilst agreed during the last quarter of 2021, were only
due and paid in the first quarter of 2022 and beyond. As these restructuring
agreements were conditional on making settlements post year end the
liabilities are recorded in full and are undiscounted at the balance sheet
date. See note 28 for more detail.
20 Lease liabilities
2021 2020
Group Company Group Company $ 000's
$ 000's
$ 000's
$ 000's
At 1 January 105 13 205 28
Acquisition of Columbus Energy Resources PLC (note 15) - - 56 -
Additions 17 17 60 -
Accretion of interest 7 1 17 1
Payments (93) (17) (233) (16)
At 31 December 36 14 105 13
Current 36 14 105 13
Non-current - - - -
Set out above are the carrying amounts of lease liabilities and the movements
during the period.
The following are the amounts recognised in profit or loss:
2021 2020
Lease liabilities Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
Depreciation expense of right-of-use assets 86 15 214 15
Interest expense on lease liabilities 7 1 17 1
Expense relating to short-term leases 265 - 13 -
At 31 December 358 16 244 16
The Group has elected not to recognise right of use assets and lease
liabilities for short term leases lease term of 12 months or less and leases
for low value assets. The Group recognises the payments associated with these
leases as expenses on a straight-line basis over the lease term.
21 Borrowings 2021 2020
Group $ 000's Company Group Company
$ 000's
$ 000's $ 000's
Current borrowings
Convertible loan(1) 462 462 - -
Secured loan(2) 26 - 27 -
Unsecured loan(3) 83 - 249 -
Secured loan(4) - - 17 -
Secured loan(5) - - 132 -
Secured loan(6) 72 - 62 -
Unsecured loan(7) - - 11 -
Total 643 462 498 -
2021 2020
Group $ 000's Company Group Company $ 000's
$ 000's $ 000's
Non-current borrowings
Convertible loan(1) - - 1,120 1,120
Secured loan(2) - - 54 -
Secured loan(4) - - 6 -
Secured loan(5) - - 200 -
Secured loan(6) 187 - 259 -
Total 187 - 1,639 1,120
1 On 30 December 2020, the Company drew down £1,110,000
(US$1,511,000) of a £3,000,000 (US$4,084,000) first tranche of a convertible
loan previously agreed with Bizzell Capital Partners Pty Ltd. As part of this
initial draw down in 2020, £287,000 (US$396,000) was recognised as the equity
component. Tranche 1 had a total fair value, after deduction of all facility
costs, of £2,800,000 (US$3,812,000). The term of the loan was 3 years from
the date of draw-down. The holder had the right, at any time prior to
maturity, to elect to convert the Notes (principal plus any accrued interest)
into fully paid ordinary shares in the Company. Initially, the conversion
price was set at a 25% premium to the price of the Company's next capital
raising (if any) or at 6p per share, whichever was the lower. Subsequently, in
February 2021 the conversion price was amended by agreement to 0.8p per share.
In May 2021 the balance of the £3,000,000 facility was drawn down in full,
resulting in a further £370,000 (US$505,000) equity component being
recognised. Thereafter £2,500,000 (US$3,496,000) of the facility amount was
converted into ordinary shares resulting in a £579,000 (US$787,000) equity
conversion, leaving a remaining principal outstanding of £342,000
(US$462,000) and residual equity component of £84,000 (US$114,000) at 31
December 2021. Subsequent to year end the remaining balance was converted into
ordinary shares as part of the restructuring completed in March 2022.
2 The loan was issued by RBC Royal Bank Limited in June 2015 in
respect of the Columbus Energy Resources Plc business. Repayments were over 7
years and the loan is denominated in Trinidad and Tobago Dollars.
3 The loan was issued by BNP Paribas in 2015 in respect of the
Columbus Energy Resources Plc business. In December 2016, the outstanding
balance of US$2.6m was refinanced and retired, and all security was removed,
leaving a final unsecured payment of US$0.25m due on 31 December 2019. In
November 2020 this loan balance was refinanced with the outstanding balance to
be repaid over one year commencing in February 2021. In November 2021 this
loan balance was subject to a re-settlement resulting in a reduced payment
terms with final settlement made in February 2022. The loan is denominated in
US Dollars.
4 The loan was issued by Ansa Merchant Bank Limited in May 2018
in respect of the Columbus Energy Resources Plc
business. Repayments are over 4 years and the loan is denominated in Trinidad
and Tobago Dollars. The loan was fully repaid during 2021.
5 In December 2019 the Columbus Energy Resources Plc business
drew down on a new working capital loan facility with Republic Bank Limited.
Repayments were over 3 years with the final payment due in November 2022. The
loan is denominated in Trinidad and Tobago Dollars. The loan was fully repaid
during 2021.
6 In July 2019 the Columbus Energy Resources Plc business drew
down on a new working capital loan facility (New Sunchit Loan). Repayments are
over 5 years with the final payment due in June 2024. The loan is denominated
in Trinidad and Tobago Dollars.
7 In January 2020 the Columbus Energy Resources Plc business
drew down on a new working capital facility (Solution One). Repayments are
over 1 year and the loans are denominated in Trinidad and Tobago Dollars. The
loan was fully repaid in 2021.
The carrying amounts of all the borrowings approximate to their fair value.
Group
Borrowings Leases Cash Total
Net debt reconciliation $ 000's $ 000's $ 000's $ 000's
At 1 January 2020 - (205) 11,152 10,947
Acquisition of Columbus Energy Resources PLC (note 15) (3,276) (56) 1,039 (2,293)
Cash flows 1,179 216 5,491 6,886
Acquisition - leases - (60) - (60)
Foreign exchange adjustments (40) - 180 140
At 31 December 2020 (2,137) (105) 17,862 15,620
At 1 January 2021 (2,137) (105) 17,862 15,620
Cash flows (1,105) 93 (16,364) (17,376)
Acquisition - leases - (17) - (17)
Realisation of conversion feature 2,899 - - 2,899
Other (371) (7) - (378)
Foreign exchange adjustments (116) - 57 (59)
At 31 December 2021 (830) (36) 1,555 689
Net debt reconciliation Company
Borrowings $ 000's Leases $ 000's Cash Total
$ 000's
$ 000's
At 1 January 2020 - (28) 11,100 11,072
Cash flows (1,120) 15 5,917 4,812
Foreign exchange adjustments - - 143 143
At 31 December 2020 (1,120) (13) 17,160 16,027
At 1 January 2021 (1,120) (13) 17,160 16,027
Cash flows (1,753) 17 (16,149) (17,885)
Acquisition - leases - (17) - (17)
Realisation of conversion feature 2,899 - - 2,899
Other (371) - - (371)
Foreign exchange adjustments (117) (1) (97) (215)
At 31 December 2021 (462) (14) 914 438
22 Provisions - Group
Decommissioning* Other Total
$ 000's
$ 000's
$ 000's
At 1 January 2020 - - -
Acquisition of Columbus Energy Resources PLC 5,226 943 6,169
New provisions and allocations 26 4 30
Unwinding of discount 24 - 24
Foreign exchange difference on translation 91 - 91
At 31 December 2020 5,367 947 6,314
At 1 January 2021 5,367 947 6,314
New provisions and allocations 341 - 341
Unwinding of discount (126) - (126)
Foreign exchange difference on translation (230) (5) (235)
At 31 December 2021 5,352 942 6,294
* The provisions relate to the estimated costs of the removal of Trinidadian
and Spanish production facilities and site restoration at the end of the
production lives of the facilities. Decommissioning provisions in Trinidad and
Tobago have been subject to a discount rate of 5% (2020: 6%), expected cost
inflation of 1.4% (2020: 1.3%) and assumes an average expected year of
cessation of production of 2032. Decommissioning provisions relating to
facilities in Spain are undiscounted and uninflated as the field is no longer
operating.
Other provisions
In one of the Group's Trinidad and Tobago subsidiaries, there are licence fees
relating to an exploration and production licence that the subsidiary is
expecting to settle by way of negotiation with the Trinidadian Ministry of
Energy and Energy Industries ("MEEI"). A provision has been organised to
reflect management's best estimate of its obligation at balance sheet date.
However, the Group has formally written to MEEI proposing rebasing of this
licence whereby all claimed past dues would be cancelled, the annual licence
fees rebased to an appropriate level, and a new future work programme agreed.
To the extent a suitable arrangement of this nature cannot be agreed with
MEEI, the Company intends to surrender the licence, in which case the
subsidiary company holding the licence will be placed into administration, and
all liabilities claimed in respect of this licence will be eliminated, without
recourse to the Company, as confirmed by a legal opinion.
23 Share capital - Group & Company
Called up, allotted, issued and fully paid ordinary shares of 0.02p Number of shares Nominal value Share premium
(pre-consolidation 0.002p) each
$ 000's $ 000's
At 1 January 2020 2,134,762,786 61 96,157
Shares issued at average price of 2.4p per share 48,000,000 1 1,454
Shares issued at average price of 2p per share 3,250,000 - 82
Shares issued at average price of 1p per share 62,500,000 2 788
Shares issued at average price of 0.9p per share 79,059,830 2 914
Shares issued at average price of 1p per share 120,866,141 3 1472
Shares issued at average price of 2p per share 35,337,328 1 884
Shares issued at average price of 2.1p per share 868,888,792 23 24,220
Shares issued at average price of 2.6p per share 61,713,763 2 2,087
Shares issued at average price of 2.9p per share 5,429,206 - 205
Shares issued at average price of 2p per share 475,000,000 12 11,417
Shares issued at average price of 2p per share 154,552,357 4 1,190
Shares issued at average price of 2.9p per share 5,429,206 - 211
Shares issued at average price of 2.9p per share 35,759,140 1 1,412
Shares issued at average price of 2p per share 412,500,000 11 10,126
Shares issued at average price of 2p per share 3,624,800 - 98
At 31 December 2020 before capital reorganisation 4,506,673,349 123 152,717
At 31 December 2020 after capital reorganisation 450,667,335 123 152,717
At 1 January 2021 450,667,335 123 152,717
Shares issued at average price of 1.9p per share 19,687,500 5 5,106
Shares issued at average price of 0.27p per share 13,500,000 4 515
Shares issued at average price of 0.15p per share 14,938,577 4 300
Shares issued at average price of 3.5p per share 196,688,957 55 8,689
Shares issued at average price of 3.5p per share 74,658,600 21 3,665
Shares issued at average price of 0.15p per share 19,111,423 5 391
Shares issued at average price of 0.15p per share 7,270,522 1 351
At 31 December 2021 796,522,914 218 171,734
On 28 May 2021, the Company organised its share capital by way of a share
consolidation reducing the number of ordinary shares in issue by a ratio of
10:1. The nominal value of each ordinary share post share consolidation is
0.02p (pre-consolidation: 0.002p).
During the year, approximately 346 million shares were issued on a post
consolidation basis.
At the end of 2021, the number of shares in issue comprised approximately 797
million ordinary shares.
During the year, transaction costs for issued share capital totalled $754,000
(2020: $1,888,000). Of these $19,000 were paid in cash, $391,000 were offset
against the proceeds received from the issue of shares, with the balance
settled through the issue of share capital, these amounts were allocated
against share premium.
The total authorised number of ordinary shares at 31 December 2021 is
1,000,000,000 shares with a par value of 0.02 pence per share (2020:
pre-consolidation 10,000,000,000 shares with a par value of 0.002p). All
issued shares of 0.02 pence are fully paid.
Post balance sheet date, as part of a restructuring and recapitalisation
exercise, the Group issued 8,823,676,565 new ordinary shares of 0.02p each
through a placing and open offer to existing shareholders. Refer to note 28
for further details. As at the date of this report the Company's issued share
capital consists of 9,620,199,479 Ordinary Shares.
Reverse
acquisition Total other
Merger reserve* reserve* reserves
Other reserves $ 000's $ 000's $ 000's
At 31 December 2020 77,131 (53,847) 23,284
At 31 December 2021 77,131 (53,847) 23,284
In 2008, BPC Jersey Limited acquired Falkland Gold and Minerals Limited
('FGML') via a reverse acquisition, giving rise to the reverse acquisition
reserve. BPC Jersey Limited was the acquirer of FGML although FGML became the
legal parent of the Group on the acquisition date. FGML subsequently changed
its name to BPC Limited.
The merger reserve arose in 2010 as a result of the Group undergoing a Scheme
of Arrangement which saw the shares in the then parent company BPC Limited
replaced with shares in Challenger Energy Group PLC.
In the Company Financial Statements, the Other reserve balance of $29,535,463
(2020: 29,535,463) arises from the issue of shares in the Company as part of
the Scheme of Arrangement undertaken in 2010, which saw the shares in the then
parent company BPC Limited replaced with shares in Challenger Energy Group PLC
(formerly known as Bahamas Petroleum Company PLC and known as (BPC PLC at that
point), which became the new parent company of the Group.
24 Share based payments reserve - Group & Company
(A) Options and warrants
Share options have been granted to Directors, selected employees and
consultants to the Company.
The Group had no legal or constructive obligation to repurchase or settle any
options in cash. Movements in the number of share options and warrants
outstanding during the year are as follows:
2021 2020
Average exercise price per share No. Options & Warrants Average exercise price per share No. Options
& Warrants
At beginning of year before capital reorganisation 2.76p 486,159,599 2.34p 200,357,073
At beginning of year after capital reorganisation 27.60p 33.08p 8.66p - 48,615,960 (21,285,707) 69,467,641 - - - 2.87p 0.0072p -
Expired -
Granted 309,706,720
Exercised (23,904,194)
At end of year 12.81p 96,797,894 2.76p 486,159,599
Exercisable at end of year - - 1.97p 106,659,599
On 31 October 2019, all options then in issue were cancelled by mutual consent
with the option holders, and new options were issued during 2020 and 2021 to
various parties including management, various consultants and various finance
providers as detailed below.
The fair value of the warrants and options granted in the year was estimated
using the Black Scholes model. The inputs and assumptions used in calculating
the fair value of options granted in the year were as follows:
Warrants and options granted in 2021
Name Date granted Share price at date of grant pence Vesting date/criteria Number Exercise price pence Expiry date Expected volatility Expected life (years) Risk Dividend Fair value
free yield per
return option $
Finance provider 11/01/2021 1.849 11/01/2021 4,687,500 30.000 11/01/2022 14% 0.43 (0.11%) - $0.00
Finance provider 11/01/2021 1.849 11/01/2021 4,687,500 40.000 11/01/2022 14% 0.43 (0.11%) - $0.00
Consultant 25/01/2021 2.020 25/01/2021 937,500 20.000 25/01/2024 14% 0.39 (0.13%) - $0.12
Finance provider 27/05/2021 3.000 27/05/2021 1,300,000 3.500 26/05/2025 82% 0.32 0.06% - $0.06
Consultant 01/06/2021 2.890 01/06/2021 3,455,141 3.500 01/06/2023 82% 0.32 0.06% - $0.06
Consultant 01/06/2021 2.890 01/06/2021 2,235,715 3.500 01/06/2023 82% 0.32 0.06% - $0.06
Finance provider 01/06/2021 2.890 01/06/2021 1,964,285 3.500 01/06/2023 82% 0.32 0.06% - $0.06
Finance provider 01/06/2021 2.890 01/06/2021 1,000,000 3.500 01/06/2023 82% 0.32 0.06% - $0.06
Management options (Tranche 1) 23/07/2021 1.950 23/07/2021 16,000,000 4.000 22/07/2026 30% 0.41 0.08% - $0.00
Management options (Tranche 2) 23/07/2021 1.950 31/12/2021 16,000,000 4.500 22/07/2026 89% 0.87 0.08% - $0.01
Management options (Tranche 3) 23/07/2021 1.950 31/03/2022 16,000,000 5.000 22/07/2026 18% 0.87 0.08% - $0.00
Finance provider 02/09/2021 1.385 02/09/2021 1,200,000 3.500 01/09/2025 27% 0.3 0.20% - $0.00
69,467,641
Warrants and options granted in 2020
Name Date granted Share price at date of grant pence Vesting date/criteria Number Exercise price pence Expiry date Expected volatility Expected life (years) Risk Dividend Fair value
free yield per
return option $
Management options (Tranche 3) 14/08/2020 1.899 19/12/2020 8,700,000 2.800 14/08/2025 14% 0.53 (0.02%) - -
CERP Management nil cost options 14/08/2020 1.899 17/08/2020 17,029,394 0.002 2024-2027 - - - - -
Consultant 07/10/2020 1.939 07/10/2020 3,624,800 2.000 07/10/2022 35% 0.73 (0.01%) - $0.26
Management options (Tranche 2) 14/10/2020 2.300 14/10/2020 12,500,000 2.400 14/10/2025 35% 0.71 (0.04%) - $0.29
Management options (Tranche 3) 14/10/2020 2.300 19/12/2020 8,300,000 2.800 14/10/2025 14% 0.52 (0.04%) - -
Consultant 15/10/2020 2.255 15/10/2020 17,052,526 2.000 15/10/2022 35% 0.71 (0.05%) - $0.51
Management options (Tranche 2) 30/11/2020 2.525 30/11/2020 12,500,000 2.400 30/11/2025 35% 0.58 (0.02%) - $0.30
Finance provider 13/12/2020 2.354 13/12/2020 93,750,000 3.000 13/12/2021 14% 0.55 (0.13%) - -
Finance provider 13/12/2020 2.354 13/12/2020 93,750,000 4.000 13/12/2021 14% 0.55 (0.13%) - -
Consultant 21/12/2020 2.128 21/12/2020 37,500,000 2.000 21/12/2023 14% 0.52 (0.10%) - $0.20
Finance provider 21/12/2020 2.128 21/12/2020 5,000,000 2.000 21/12/2023 14% 0.52 (0.10%) - $0.20
309,706,720
The weighted average remaining contractual life of the options and warrants in
issue at 31 December 2021 was 3.25 years (31 December 2020: 2.46 years) and
the weighted average exercise price of these instruments was 12.81 pence per
share (31 December 2020: 2.76 pence). The range of exercise prices for options
outstanding at 31 December 2021 was 3.5 pence to 40 pence (31 December 2020:
2.0 pence to 4.0 pence).
The expected price volatility used in calculating the fair value of options
and warrants granted by the Company is determined based on the historical
volatility of the Company share price (based on the remaining life of the
options), adjusted for any expected changes to future volatility due to
publicly available information.
Post balance sheet date, as part of the reorganisation and restructure of the
Group, the substantial majority of options in issue were cancelled in
agreement with their holders. Of those options that were not cancelled the
exercise price is such that the options are expected to lapse unexercised in
accordance with their terms. Moreover, new options have been issued to
management, staff and various external consultants and advisors to the Group.
Refer to note 28 for further details.
B) Salary and fee deferrals
On 17 December 2014, the then Directors entered into an agreement for the
deferral of 20% of their salary and fees. On 1 April 2016, the then Directors
entered into a further agreement for the deferral of 50% of their fees and the
then CEO entered into an agreement for the deferral of 90% of his salary. On 1
January 2018 the then Directors (excluding the CEO) entered into a further
agreement for the deferral of 90% of their fees. In general terms the
deferrals were conditional on certain milestones being met and to be satisfied
in cash and in shares (calculated as the value of fees/salary forgone divided
by the volume weighted average closing price of the Company shares over each
month).
From 1 July 2018 the ongoing deferral of the then CEO's salary into
conditional share entitlements ceased, resulting in no further share-based
payment charges arising as regards the CEO salary from that date. See note 27
for further details.
On 15 October 2020, the Board determined that the criteria for cessation and
settlement of all deferred fees, namely the raising of at least $25m in
funding for the Perseverance 1 well, had been met. Furthermore, the Board
elected to novate all deferred fees that were to be settled in cash into
shares. Consequently, all deferred fees and salaries by directors and
executive management were settled through the issuance of 146,818,765 new
ordinary shares in the Company. See note 27 for further details.
Under IFRS 2, entitlements to ordinary shares under the above agreements
constitute the issuance of equity settled share-based payment instruments with
the following terms:
· Each month of deferred fee entitlements was treated as a
separate grant of options with the date of grant being the first day of the
month.
· The fair value of the options at grant was estimated as
the share price on the date of grant.
· Options awarded each month vested at the end of that
month.
The value of the instruments was estimated and was being charged to the
statement of total comprehensive income in monthly tranches as each month's
award of options vested.
Following approval by the Company shareholders at the AGM held on 17 September
2019, conditional entitlements to 21,300,000 shares in the Company were
granted to consultants in lieu of fees. All conditions associated with these
entitlements were identical to those granted to the Directors in the prior
years. The fair value of these instruments was estimated by reference to the
agreed value of services received by the Group.
The value of the instruments was estimated and was being charged to the
statement of total comprehensive income in monthly tranches as each month's
award of options vested, up to 30 September 2020, being the effective
settlement date of the deferred pay arrangements.
C) Expense arising from share-based payment transactions
Total expense arising from equity-settled share-based payment transactions:
2021 2020
$ 000's $ 000's
Options and warrants 84 274
Salary deferrals - 86
Total 84 360
The above charges in relation to share-based payments include $9,000 relating
to Directors (2020: $126,000), $8,000 related to staff and consultants (2020:
$45,000), $43,000 relating to warrants granted to the Company's advisors
(2020: $177,000) and $24,000 (2020: $12,000) relating to options granted to
providers of conditional convertible note finance.
2021 2020
Share settled payments $ 000's $ 000's
Professional advisory fees* 482 2,245
Issuance of shares in satisfaction of deferred salaries** 506 1,425
Total 988 3,670
* Represents the fair value of shares issued to various advisors and
consultants in lieu of cash for their fees. Included in this amount is a
$344,000 advisory fee in respect of the May 2021 share placement. In 2020
shares were issued to various advisors for fees in relation to the acquisition
of Columbus on 7 August 2020, further shares were issued to advisors following
the share placements in October and December 2020. The fair value of these
shares has been calculated based on the number of shares issued and the market
price of the Company shares on the date of issuance. These expenses have been
recognised in the Group statement of comprehensive income under "Professional
fees - share settled" within administrative expenses or share premium with
respect to the $344,000 advisory fee. These transactions do not fall within
the scope of IFRS 2, Share based payments.
** Represents the fair value of shares issued to directors and staff during
the year in settlement of deferred salary and fees, less the total value of
accrued salaries and fees on the date of settlement. The fair value of these
shares has been calculated based on the number of shares issued and the market
price of the Company shares on the date of issuance. Accruals for deferred
salary and fees had been recognised based on the value of contractual payments
forgone. The excess of the fair value of these shares issued over the total
accrued costs for deferred salary and fees to the date of settlement has been
recognised in the Group statement of comprehensive income under "Staff costs -
share settled" within 'Administrative expenses'. These transactions do not
fall within the scope of IFRS 2, Share based payments.
The table below discloses the total share-based payment charges for the year
included in the statement of comprehensive income by expense category.
2021 $ 000's 2020
$ 000's
Staff costs 17 171
Professional fees 43 177
Finance costs 24 12
Total 84 360
25 Financial instruments and risk management - Group & Company
The Group's activities expose it to a variety of financial risks: oil price,
liquidity, interest rate, foreign exchange, credit and capital risk. The
Group's overall risk management programme focuses on minimising potential
adverse effects on the financial performance of the Group.
Risk management is carried out by the CEO under policies approved by the Board
of Directors. The CEO identifies, evaluates and addresses financial risks in
close cooperation with the Group's management. The Board provides principles
for overall risk management, as well as policies covering specific areas, such
as mitigating foreign exchange risk, interest rate risk, credit risk and
investing excess liquidity.
The Group uses financial instruments comprising cash, and debtors/creditors
that arise from its operations. The net fair value of financial assets and
liabilities approximates the carrying values disclosed in the financial
statements. The financial assets comprise cash balances in bank Financial
Statements at call.
Oil Price Risk
The Group has been exposed to commodity price risk regarding its sales of
crude oil which is an internationally traded commodity. The Group sales prices
are closely linked to the West Texas Intermediate (WTI) Crude Oil benchmark
for sales in Trinidad and Tobago. The pricing of Group oil sales in Trinidad
and Tobago is set by the state oil company Heritage and the price realised by
the Company is typically at approximately 10% discount to WTI benchmark. The
Group does not take out hedging instruments for changes in oil prices, with
the risks to Group cashflows associated with changes in the oil price obtained
from Heritage being mitigated by controls over elective costs of well
workovers and other such production enhancing expenditure.
The spot prices per barrel for WTI are shown below:
2021 2020
Low Average High Low Average High
US$ US$ US$ US$ US$ US$
WTI 47.47 68.14 85.64 35.79 42.00 49.10
The below shows the Group's revenue sensitivity (gross of royalty deductions)
to an average price that is up to 30% lower and up to 30% higher than the
average price for that year:
2021 Decrease Current Increase
30% 20% 10% $ 000's 10% 20% 30%
$ 000's
$ 000's
$ 000's $ 000's $ 000's $ 000's
Trinidad and Tobago 4,151 4,744 5,337 5,930 6,523 7,116 7,709
Total 4,151 4,744 5,337 5,930 6,523 7,116 7,709
2020 Decrease Current Increase
30% 20% 10% $ 000's 10% 20% 30%
$ 000's
$ 000's
$ 000's $ 000's $ 000's $ 000's
Trinidad and Tobago 1,253 1,432 1,611 1,790 1,969 2,148 2,327
Total 1,253 1,432 1,611 1,790 1,969 2,148 2,327
Liquidity risk
The Group monitors its rolling cash flow forecasts and liquidity requirements
to ensure it has sufficient cash to meet its
operational needs. Surplus cash is invested in interest bearing current
Financial Statements and money market deposits.
Future funding requirements
The Group's internal cashflow forecasts monitor both the short and long-term
timelines, factoring in the known risks and uncertainties. These forecasts are
regularly updated and demonstrate that with the current cash reserves and
forecasted future revenue and available sources of funding, the Group is able
to continue in operation for at least the next 12 months. The Group financial
statements have therefore been prepared on a going concern basis. See noted
1.28 (ii) for further detail.
Financial liabilities
The Group's financial liabilities comprise its trade and other payables and
lease liabilities. Trade and other payables all fall due
within 1 year and it is the Group's payment policy to settle amounts in
accordance with agreed terms which is typically 30 days.
The tables below analyse the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities for all
non-derivative financial liabilities. The amounts disclosed in the table are
the contractual undiscounted cash flows. Balances due within 12 months equal
their carrying balances, because the impact of discounting is not significant.
Contractual maturities of financial liabilities at Less than 6 months 6 to 12 months Between 1 and 2 years Between 2 and 5 years Total contractual cash outflows Carrying amount
31 December 2021 - Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Trade and other payables 23,537 - - - 23,537 23,537
Lease liabilities 30 6 - - 36 36
Borrowings 607 36 187 - 830 830
Total 24,174 42 187 - 24,403 24,403
Note: The amounts above do not reflect the effect of the restructuring
commenced by the Group in late 2021 as the financial settlement of a
substantial portion of these liabilities occurred in 2022 (see further
information in Note 19 and Note 28).
Contractual maturities of financial liabilities at Less than 6 months 6 to 12 months Between 1 and 2 years Between 2 and 5 years Total contractual cash outflows Carrying amount
31 December 2021 - Company $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Trade and other payables 10,775 - - - 10,775 10,775
Lease liabilities 9 5 - - 14 14
Borrowings 462 - - - 462 462
Total 11,246 5 - - 11,251 11,251
Note: The amounts above do not reflect the effect of the restructuring
commenced by the Group in late 2021 as the financial settlement of a
substantial portion of these liabilities occurred in 2022 (see further
information in Note 19 and Note 28).
Contractual maturities of financial liabilities at 31 December 2020 - Group Less than 6 months 6 to 12 months Between 1 and 2 years Between 2 and 5 years Total contractual cash outflows Carrying amount
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Trade and other payables 18,620 - - - 18,620 18,620
Lease liabilities 41 52 12 - 105 105
Borrowings 12 486 198 1,441 2,137 2,137
Total 18,673 538 210 1,441 20,862 20,862
Contractual maturities of financial liabilities at 31 December 2020 - Company Less than 6 months Between Between 2 and 5 years Total contractual cash outflows Carrying amount
$ 000's 6 to 12 months 1 and 2 years $ 000's $ 000's $ 000's
$ 000's $ 000's
Trade and other payables 504 - - 504 504
-
Lease liabilities 8 5 - 13 13
-
Borrowings - - 1,120 1,120 1,120
-
Total 512 5 1,120 1,637 1,637
-
Interest rate risk
The Group's strategy for managing cash is to maximise interest income whilst
ensuring its availability to match the profile of the
Group's expenditure. This is achieved by regular monitoring of interest rates
and monthly review of expenditure forecasts.
The Group's exposure to interest rate risk relates to the Group's cash
deposits which are linked to short term deposit rates and therefore affected
by changes in bank base rates. At 31 December 2021 short term deposit rates
were in the range of 0% to 0.5% (31 December 2020: 0% to 0.5%) and therefore
the interest rate risk is not considered significant to the Group. An increase
in interest rate of 0.25% in the year would have had an insignificant effect
on the Group's loss for the year and the prior year.
Group borrowings are at fixed interest rates and therefore do not present an
interest rate risk.
Foreign currency risk
The Group operates internationally and therefore is exposed to foreign
exchange risk arising from currency exposures, primarily
with regard to Pound Sterling, Trinidad and Tobago Dollars and Euros.
The Company has a policy of not hedging foreign exchange and therefore takes
market rates in respect of currency risk; however, it does review its currency
exposures on an ad hoc basis. Currency exposures relating to monetary assets
held by foreign operations are included within the foreign exchange reserve in
the Group statement of financial position.
The following table details the Group's sensitivity to a 10% increase and
decrease in the US Dollar against the relevant foreign currencies of Pound
Sterling, Euro and Trinidadian Dollar. 10% represents management's assessment
of the reasonably possible change in foreign exchange rates.
The sensitivity analysis includes only outstanding foreign currency
denominated investments and other financial assets and liabilities and adjusts
their translation at the year-end for a 10% change in foreign currency rates.
The table below sets out the potential exposure, where the 10% increase or
decrease refers to a strengthening or weakening of the US Dollar:
Profit or loss sensitivity Equity sensitivity
10% increase 10% decrease 10% increase 10% decrease
$ 000's $ 000's $ 000's $ 000's
Year ended 31 December 2021 32 (39) 225 (276)
Euro (30) 36 - -
Pounds Sterling 654 (800) 537 (656)
Trinidad and Tobago dollars
Total 656 (803) 762 (932)
Year ended 31 December 2020
Euro 17 (21) 249 (304)
Pounds Sterling 63 (77) 21 (26)
Trinidad and Tobago dollars 243 (297) 331 (404)
Total 323 (395) 601 (734)
Rates of exchange to $1 used in the financial statements were as follows:
At 31 December 2021 Average for the relevant consolidated year to 31 December 2021 At 31 December 2020 Average for the relevant consolidated year to 31 December 2020
Euro 0.845 0.883 0.814 0.842
Pounds Sterling 0.727 0.741 0.734 0.761
Trinidad and Tobago dollars 6.791 6.796 6.762 6.78
The Group holds cash as a liquid resource to fund the obligations of the
Group. The Group's cash balances are held in various currencies.
The currency profile of the financial assets is as follows:
Cash and short-term deposits 2021 $ 000's 2020
$ 000's
Sterling 341 723
Euros 27 3
US dollars 847 16,733
Trinidad and Tobago dollars 340 403
Total 1,555 17,862
The Group also has operations denominated in the Bahamian Dollar. As the
Bahamian Dollar is pegged to the US Dollar on a one for one basis these
operations do not give rise to any currency exchange exposures.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from prepayments
to suppliers for services, recoverable amounts from joint venture partners,
cash and cash equivalents, restricted cash and funds held in escrow and
abandonment funds. Prepayments made to suppliers are reviewed to assess the
credit risk presented before entering into contractual relationships that give
rise to prepaid balances. Periodic review of joint venture party balances is
undertaken to assess recoverability and discussions held with the partners to
address any potential recoverability issues. For banks and financial
institutions, only independently rated parties with a minimum rating of 'A'
are accepted. In order to mitigate credit risk arising from cash balances the
Group holds cash reserves with more than one counterparty. Funds in escrow and
abandonment funds are held with the Government of Trinidad and Tobago and so
are not considered to be subject to a material level of credit risk.
For the Company, credit risk also arises on recoverability of loans due from
subsidiary undertakings. Management assesses and manages these risks through
regular budgeting and performance analysis. Where it is deemed that there is
low probability with regards to the timing of recovery amounts receivable from
subsidiary undertakings provisions have been recognised, refer to note 16 for
further details.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade receivables
and contract assets.
Capital risk management
Capital is defined by the Group as all equity reserves, including share
capital and share premium. The Group's objectives when managing capital are to
safeguard the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to support the Group's business
operations and maximise shareholder value. The Group is not subject to any
externally imposed capital requirements.
26 Commitments and contingencies - Group & Company
Contingencies
One of the Group companies, CEG Inniss-Trinity Trinidad Limited (formerly
known as FRAM Exploration (Trinidad) Ltd), has been named as a defendant in an
ongoing matter in the High Court of Trinidad and Tobago in place since 2019,
and still ongoing at 31 December 2021. The Group's exposure, in the event of
an unsuccessful defence of the claim, is estimated to be in the region of
$0.7m to $0.9m, referable to the sums claimed, interest and legal costs. The
Group has filed a counterclaim which, if successful, may either fully
extinguish the Group's potential exposure or will substantially reduce the
Group's exposure. The parties to the claims continue to be in the process of
settlement discussions. The matter has not been concluded and its outcome
cannot be reliably estimated at this stage. In accordance with International
Accounting Standards (IASs) - 10 and 37, no provision has been made in these
financial statements in relation to this matter.
Other than as set out above, at 31 December 2021 and 2020, the Group and the
Company had no other material contingent liabilities that require disclosure
in these financial statements.
Expenditure commitments
The Group has certain minimum work obligations under the various of its
licences across its portfolio. In general, minimum work obligations are
specific to individual operating subsidiaries, and are not guaranteed by the
Company, and are therefore non-recourse to the Company. The consequence of
failing to meet a minimum work obligation, after unsuccessful renegotiation of
these obligations with the relevant regulatory authorities, is the potential
loss of the operating licence, and loss of associated business income. A
summary of the nature of such minimum work obligations and estimated capital
expenditure commitments, as of 31 December 2021, are set out below.
Nature of work Within one year Within two to five years More than five years
Trinidad and Tobago(1) Drilling of 1 well; Heavy workovers; Water injection Drilling of 2 wells; Heavy workovers; Water injection Heavy workovers
Suriname(2) - An extended well test of 2 stratigraphic horizons -
Uruguay(3) - Geological and geophysical studies; 2,000km seismic licencing and reprocessing -
The Bahamas(4) N/A - pending licence renewal -
Estimated Costs - $000 Within one year Within two to five years More than five years
Trinidad and Tobago 1,450 4,750 450
Suriname - 700 -
Uruguay - 800 -
The Bahamas - - -
Total 1,450 6,250 450
1 Trinidad and Tobago
The Group has certain minimum work commitments under its licences in Trinidad
and Tobago which generally include carrying out heavy work overs, drilling of
exploration and / or development wells, undertaking enhanced oil recovery
projects including water injection and / or carbon dioxide injection.
As of 31 December 2021, the term of one of the Group's licences was extended
to 31 March 2022 (and, subsequent to the year end, to 30 June 2022 and then 30
September 2022) to allow for ministerial approval required for the
finalisation and execution of the agreed form documentation in relation to a
fresh enhanced production service contract ("EPSC") with 30 September 2031
expiry. The EPSC will include certain minimum work obligations comprising CO2
pilot project, heavy workovers and the drilling of new wells.
2 Suriname
The Group holds an onshore licence for the exploration for and production of
hydrocarbons in Suriname. Under the terms of this licence, the Group is
obliged to undertake an extended well test in the licence area by October
2022. The Group has applied for an extension of the exploration period by 18
months in view of the Covid-19 pandemic and awaits confirmation of the
extension from the Surinamese regulator. In parallel, the Group is undertaking
detailed technical work to establish the design and scope for the extended
well test. The Group expects that such work will be carried out during 2023.
3 Uruguay
In June 2020, the Group was notified by ANCAP, the Uruguayan state oil
company, of the award of the Area OFF-1 block offshore Uruguay. At the balance
sheet date, formal issuance of the licence remained outstanding, however,
subsequent to the balance sheet date, the licence was formally signed on 25
May 2022. As a consequence, the Group will have a commitment to undertake
various technical investigations over the licence block before the expiry of
the four-year exploration period commencing 25 August 2022.
4 The Bahamas
On 21 February 2019, the Group received notification from the Bahamian
Government of the extension of the term of its four southern licences to 31
December 2020, with the requirement that the Group commence an exploration
well before the end of the extended term. In November 2020 the term of the
licence period was extended to 30 June 2021 following the outbreak of the
global Covid-19 pandemic and the declaration of the Group of force majeure
under the terms of its licences. On 20 December 2020, the Group commenced the
drilling of its licence obligation well in the Bahamas, Perseverance 1, which
was completed on 7 February 2021. As such, at present, the Group does not have
any committed work obligations in The Bahamas. In March 2021 the Company
notified the Government of the Bahamas that it was renewing the four southern
offshore exploration licences for a further three-year period, having
discharged its obligations under the previous licence term. The Group remains
in discussions with the Government over the terms of the renewal of these
licences and, once renewed, will have the obligation to commence a further
exploration well in the licence area before the expiry of the next three-year
term.
Annual licence rental commitments
The Group is required under its Bahamian exploration licences to remit annual
rentals in advance to the Government in respect of
the licenced areas.
On 27 February 2020, the Company advised that, consequent on the granting of
Environmental Authorisation for the Perseverance #1 well, the Company and the
Government of The Bahamas had agreed a process seeking a final agreement on
the amount of licence fees payable for the balance of the second exploration
period (including the additional period of time to which the licence period
was extended as a result of force majeure). At the time, the parties entered
into discussions with a view to finalising this outstanding matter. This
discussion has been delayed owing to the State of Emergency declared and
ongoing business disruption caused by the national response to the Covid-19
outbreak in The Bahamas. However, subject to said confirmation, the Company
expects that an appropriate side-letter agreement will be finalised in due
course.
In March 2021 the Company notified the Government of The Bahamas that it was
renewing the four southern offshore exploration licences for a further
three-year period, having discharged its obligations under the previous
licence term. The Group remains in discussions with the Government over the
terms of the renewal of these licences, which will include agreement on the
level of annual rental fees payable over the renewed term.
The Group does not have any material annual rental payments payable on its
licences in Trinidad and Tobago, and Suriname and Uruguay, except for licence
fees in relation to an exploration and production licence that the subsidiary
is expecting to settle by way of negotiation with the Trinidadian Ministry of
Energy and Energy Industries ("MEEI") and expects to either relinquish the
licence or retain with immaterial annual licence fees obligation (see Note 22
for further details).
27 Related party transactions - Group & Company
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation. Transactions between other
related parties are outlined below.
Remuneration of Key Management Personnel
The Directors of the Company are considered to be the Key Management
Personnel. Details of the remuneration of the Directors
of the Company are disclosed below, by each of the categories specified in
IAS24 Related Party Disclosures.
2021 $ 000's 2020
$ 000's
Short-term employee benefits 796 575
Share-settled payments* 506 992
Share-based payments 9 126
Total 1,311 1,693
* Represents the fair value of shares issued to directors during the year in
settlement of deferred salary and fees, less the total value of accrued
salaries and fees on the date of settlement.
See note 7 for further details of the Directors' remuneration and note 24 for
details of the Directors' share-based payment benefits.
On 28 March 2019 the Company and the then CEO, Mr Simon Potter, agreed to
extend the term of his CEO contract for a further 12 months. On expiry of the
extended contract on 31 March 2020 the contract became cancellable by either
party on a rolling 3 month notice period basis.
Effective 1 September 2020, the Company and the then CEO, Mr Simon Potter,
agreed an increase to the annual CEO salary from $375,000 to $600,000.
On 15 October 2020, the then Board determined that the criteria for cessation
and settlement of all deferred fees (see note 24B), namely the funding for the
Perseverance 1 well, had been met. Furthermore, the then Board elected to
novate all deferred fees that were to be settled in cash into shares.
Consequently, all deferred fees and salaries owing to directors were settled
through the issuance of 107,413,150 new ordinary shares in the Company.
On 31 October 2019, share options were granted to key management personnel as
follows.
Tranche 1 Options Tranche 2 Options Tranche 3 Options Total
Simon Potter 20,000,000 15,000,000 25,000,000 60,000,000
William Schrader (resigned 5 March 2022) 1,500,000 750,000 750,000 3,000,000
James Smith (resigned 5 March 2022) 750,000 375,000 375,000 1,500,000
Adrian Collins (resigned 25 May 2021) 750,000 375,000 375,000 1,500,000
Ross McDonald (resigned 1 June 2021) 750,000 375,000 375,000 1,500,000
Total 23,750,000 16,875,000 26,875,000 67,500,000
On 31 October 2019, all share options previously granted to key management
personnel were cancelled by mutual consent, see note 24 for further details.
On 31 October 2020, share options were granted to key management personnel as
follows.
Tranche 1 Options Tranche 2 Options Tranche 3 Options Total
Simon Potter 6,250,000 - 6,250,000
-
William Schrader (resigned 5 March - -
2022) -
-
James Smith (resigned 5 March - -
2022) -
-
Adrian Collins (resigned 25 May - -
2021) -
-
Ross McDonald (resigned 1 June - -
2021) -
-
Total 6,250,000 - 6,250,000
-
On 30 November 2020, share options were granted to key management personnel as
follows.
Tranche 1 Options Tranche 2 Options Tranche 3 Options Total
Simon Potter 6,250,000 - - - - - 6,250,000
- - -
William Schrader (resigned 5 March - -
2022)
- - -
James Smith (resigned 5 March - -
2022)
-
Adrian Collins (resigned 25 May
2021)
-
Ross McDonald (resigned 1 June
2021)
-
Total 6,250,000 - 6,250,000
-
On 23 July 2021, share options were granted to key management personnel as
follows.
Tranche 1 Options Tranche 2 Options Tranche 3 Options Total
Simon Potter 500,000 500,000 500,000 1,500,000
Eytan Uliel (appointed 1 June 2021) 5,500,000 5,500,000 5,500,000 16,500,000
William Schrader (resigned 5 March 2022) 500,000 500,000 500,000 1,500,000
James Smith (resigned 5 March 2022) 500,000 500,000 500,000 1,500,000
Total 7,000,000 7,000,000 7,000,000 21,000,000
Post balance sheet date, as part of the reorganisation and restructure of the
Group, the options on issue to management personnel were cancelled in
agreement with their holders with new options issued. Refer to note 28 for
further details.
There is no ultimate controlling party of the Group.
Other related party transactions
During the current and prior year, the Group operated banking facilities with
RBC Royal Bank (Bahamas) Limited in Nassau,
The Bahamas. Ross McDonald, a director of the Company during the year, is also
a director of RBC Royal Bank (Bahamas) Limited.
At 31 December 2021, $4,000 was held on deposit with RBC Royal Bank (Bahamas)
Limited (31 December 2020: $97,000).
Transactions between the Company and its subsidiaries during the year are as
follows:
2021 2020
$ 000's $ 000's
Loans, goods and services provided to Columbus Energy Resources Ltd 2,262 6,897
Loans, goods and services provided to BPC Ltd 29,348 17,117
Loans, goods and services provided to Columbus Energy Resources South America 64 64
B.V.
Loans, goods and services provided to CEG Bonasse Trinidad Ltd 2,667 35
Loans, goods and services provided to CEG Goudron Trinidad Ltd 88 69
Loans, goods and services provided to CEG Management Services Ltd 273 44
Loans, goods and services provided to CEG Icacos Trinidad Ltd 49 2
Loans, goods and services provided to CEG Inniss-Trinity Trinidad Ltd 123 40
Loans, goods and services provided to CEG South Erin Trinidad Ltd 67 19
Loans, goods and services provided to T-REX Resources (Trinidad) Ltd 38 2
Loans, goods and services provided to Compañia Petrolifera de Sedano S.L.U. 182 -
35,161 24,289
At balance sheet date the Company is holding payables balance totalling
$7,916,000 relating to outstanding Perseverance-1 well creditors which remain
outstanding. Consequently, the Company's cashflow statement reflects this non
cash difference in the 'Advances to and payments on behalf of Group companies'
line totalling $27,239,000.
28 Events after the reporting period - Group & Company
On 13 December 2021 the Group announced that it had engaged in a comprehensive
restructuring process. Through this process, agreements had been reached with
various creditors and contractors such that the previously reported aggregate
balance sheet payables, debts and potential liability exposure position of
approximately $23.5 million was expected to be reduced by way of agreed
discounted final settlement payments, such that following such payments only
approximately $2.5 million of balance sheet payables, debts and potential
liability exposures would remain in total, being the estimated amounts
required to be settled in cash over the foreseeable future. However, as the
substantial portion of the settlements agreed in accordance with the
restructuring exercise were only due for payment in 2022, the impact of the
restructuring was deemed to be a non-adjusting post balance sheet event and
the amounts on the balance sheet as of 31 December 2021 do not fully reflect
the outcome of the restructuring. The post balance sheet date outcome of the
restructuring is summarised below:
· Perseverance-1 creditors: all remaining creditors from the
drilling of the Perseverance-1 well in The Bahamas in early 2021
(approximately US$11.3 million) agreed to be settled for total payment of
approximately $2.0 million in cash, of which approximately $0.6 million had
been paid prior to the year-end, with the remaining balance of approximately
$1.4 million payable during 2022;
· Trinidad and Tobago payables and creditors: approximately $3.0
million of payables and legacy creditors in Trinidad and Tobago had agreed to
be settled for total payment of approximately $1.0 million in cash, of which
approximately $0.6 million had been paid prior to the year-end, and
approximately $0.4 million payable during 2022, to reduce remaining payables
and legacy creditors in Trinidad and Tobago to approximately $1.5 million.
These payables and creditors all are at the level of Trinidadian subsidiary
entities with no recourse to the Company;
· Claims, legacy licencing payables and potential exposures in
Trinidad and Tobago: approximately $6.5 million of legacy claims, licencing
payables and potential financial exposures in Trinidad and Tobago were
expected to be reduced to less than US$1.0 million at nil cash cost. The
residual amount had been rescheduled on the basis of various agreed deferral
and payment plans, and was expected to be eliminated in the ordinary course of
business over the following 18 months;
· Convertible notes: approximately $0.7 million of outstanding
convertible notes (inclusive of accrued coupon) was agreed to be converted
into ordinary shares thereby eliminating this long-term liability at nil cash
cost - this conversion occurred in March 2022; and
· Well control insurance balancing payment: as a result of the
ultimate cost of the Perseverance-1 well, a "top-up" premium amount may be
sought by insurers in relation to the final overall cost of the insurance. As
at the date of this report the matter remains subject to negotiation with the
insurers given that the well was completed safely and without incident over 18
months ago.
On 26 January 2022 the Group announced its intention to undertake a
fundraising of up to £6.0 million (the "Fundraising") by way of a £4.0
million firm and conditional placing, including a firm and conditional direct
subscription, (the "Placing") of new ordinary shares of 0.02 pence each in the
capital of the Company ("Ordinary Shares") to new institutional and other
investors (the "Placing Shares") and a £2.0 million offer of new Ordinary
Shares to existing shareholders (the "Broker Option"). Completion of the
fundraising was conditional on passing of a number of resolutions at an EGM of
shareholders that was called for 4 March 2022.
On 4 March 2022 the Group announced that each of the three resolutions put to
shareholders at the Extraordinary General Meeting held at 11.00 a.m. on 4
March 2022 (the "EGM") were duly passed. As a result, the Company proceeded to
issue a total of 6,601,216,434 ordinary shares in respect of the Placing and
Broker Option, as well as up to 1,903,058,641 Settlement Shares as set out in
the Notice of EGM. The shares were issued and admitted to trading on AIM in
two tranches. As part of this process approximately £400,000 of convertible
loan notes outstanding as of 31 December 2021 were converted into shares,
resulting in the issuance of a total of 570,000,000 new ordinary shares in the
Company.
Accordingly, the Company completed the Fundraising on 4 March 2022, which was
oversubscribed, with the Company ultimately raising approximately £7.3
million (US$9.74 million) (before fees). At the same time a number of changes
to the Board and management team took effect on 5 March 2022 including:
- Iain McKendrick joining the Board as Non-Executive Chairman;
- William Schrader and James Smith stepping down from the Board;
- Tim Eastmond was appointed as Chief Financial Officer of Group
joining the Board as an Executive Director and subsequently resigning on 15
July 2022; and
- Gagan Khurana, the Group's Commercial Manager, assuming the
role of Chief Commercial Officer.
In addition, as part of the restructuring process, mutual agreements were
reached with certain of the Board members, staff, consultants and advisers of
the Group to cancel approximately 64 million options in issue as of 31
December 2021. As part of the restructuring the Company advised of its
intention to implement revised incentive arrangements on completion of the
Company's restructuring.
On 26 May 2022 the Group announced that final approvals were granted by decree
of the President of Uruguay resulting in the AREA OFF-1 licence being formally
signed on 25 May 2022, with the first 4-year exploration period under the
licence commencing on 25 August 2022.
On 15 July 2022, Mr Tim Eastmond resigned as a Chief Financial Officer and
Executive Director of the Company for personal reasons and Mr Gagan Khurana,
the Group's Chief Commercial Officer assumed the role of acting Chief
Financial Officer in addition to his commercial duties.
29 Comprehensive expense for the year - Company
The Company's expense for the year was $15,515,000 (2020: $12,392,000).
Glossary
1P proved reserves
2P proved plus probable reserves
3P proved plus probable plus possible reserves
AIM London Stock Exchange PLC's Alternative Investment Market
barrel or bbl 42 US gallons of oil
bbls barrels of oil
best estimate or P50 the most likely estimate of a parameter based on all available data, also
often termed the P50 (or the value of a probability distribution of outcomes
at the 50% confidence level)
bopd barrels of oil per day
contingent resources those quantities of petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations, but the applied project(s) are not yet
considered mature enough for commercial development due to one or more
contingencies. Contingent Resources may include, for example, projects for
which there are currently no viable markets, or where commercial recovery is
dependent on technology under development, or where evaluation of the
accumulation is insufficient to clearly assess commerciality
CPR Competent Persons Report
EOR enhanced oil recovery
EUR Estimated Ultimate Recovery are those quantities of petroleum estimated, as of
a given date, to be
potentially recoverable (referred to as Remaining Estimated Ultimate
Recoverable) plus those quantities that have been already produced
EPSC Enhanced production service contract, the form of contract under which the
Goudron field is operated on behalf of Heritage
Heritage Heritage Petroleum Company Limited, the Trinidadian state-owned oil & gas
company, and the successor of erstwhile Petroleum Company of Trinidad and
Tobago Limited (Petrotrin)
IPSC incremental production service contract, the form of contract under which the
Inniss-Trinity field is
operated on behalf of Heritage
MEEI Trinidad and Tobago Ministry of Energy and Energy Industries (formally the
Ministry of Energy and Energy Affairs, MEEA)
m thousand
mm million
mmbbls million barrels of oil
PPL private petroleum rights license
proved reserves those quantities of petroleum, which, by analysis of geoscience and
engineering data, can be estimated
with reasonable certainty to be commercially recoverable (1P), from a given
date forward, from known reservoirs and under defined economic conditions,
operating methods, and government regulations
probable reserves those additional reserves which analysis of geoscience and engineering data
indicate are less likely
to be recovered than Proved Reserves but more certain to be recovered than
Possible Reserves. It is equally likely that actual remaining quantities
recovered will be greater than or less than the sum of the estimated Proved
plus Probable Reserves (2P)
possible reserves those additional reserves which analysis of geoscience and engineering data
suggest are less likely
to be recoverable than Probable Reserves. The total quantities ultimately
recovered from the project have a low probability to exceed the sum of Proved
plus Probable plus Possible (3P) Reserves, which is equivalent to the high
estimate scenario
PRMS Petroleum Resources Management System
PSC Production Sharing Contract
reserves those quantities of petroleum anticipated to be commercially recovered by
application of development projects to known accumulations from a given date
forward under defined conditions
Staatsolie Staatsolie Maatschappij Suriname N.V, the state oil company of Suriname
STOIIP or oil in place stock tank oil initially in place, those quantities of oil that are estimated
to be in known reservoirs
prior to production commencing
SWP South West Peninsula of Trinidad
Weg naar Zee PSC signed with Staatsolie in October 2019 for the Weg naar Zee Block, an
onshore appraisal and development project in Suriname
WTI West Texas Intermediate, oil price marker crude
Corporate Directory
Company
Number
Registered in the Isle of Man with registered number 123863C
Current
Directors
Iain
McKendrick
Simon Potter
Non-Executive
Chairman
Non-Executive
Stephen
Bizzell
Eytan Uliel
Non-Executive
Chief Executive Officer
Secretary
Benjamin Proffitt
Registered Office
and 34 North
Quay
Corporate Headquarters
Douglas
Isle of Man
IM1 4LB
Registrar
Link Market Services (IOM) Limited
Clinch's House
Lord Street
Douglas
Isle of Man
IM99 1RZ
Auditor
PricewaterhouseCoopers LLC
Sixty Circular Road
Douglas
Isle of Man
IM1 1SA
Principal Legal
Advisors Quinn Legal
30 Ridgeway Street
Douglas
Isle of Man
IM1 1EL
Clyde & Co
St Botolph Building
138 Houndsditch
London
EC3A 7AR
United Kingdom
Nominated
Advisor
Strand Hanson Limited
26 Mount Row
London
W1K 3SQ
United Kingdom
Brokers
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
United Kingdom
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