REG - Challenger Energy - Annual Results for the Year Ended 31 December 2024
13/06/2025 07:00
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RNS Number : 6777M Challenger Energy Group PLC 13 June 2025
13 June 2025
Challenger Energy Group PLC
("Challenger Energy" or the "Company")
AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
Challenger Energy (AIM: CEG) is pleased to announce its audited Annual Results
for the year ended 31 December 2024.
The 2024 Annual Report and Financial Statements will be posted to
shareholders by 18 June 2025 along with the notice of the Company's Annual
General Meeting to be held on 24 July 2025 at 11.00 a.m. British Summer
Time at The Engine House, Alexandra Road, Castletown, Isle of Man IM9 1TG.
The 2024 Annual Report and Financial Statements are set out in full below
and are also available on the Company's website https://www.cegplc.com/
(https://www.cegplc.com/) .
For further information, please contact:
Challenger Energy Group PLC Tel: +44 (0) 1624 647 882
Eytan Uliel, Chief Executive Officer
Zeus - Nomad and Joint Broker Tel: +44 (0) 20 3829 5000
Simon Johnson/Antonio Bossi/Darshan Patel/ George Duxberry
Stifel - Joint Broker Tel: +44 (0) 20 7710 7600
Ashton Clanfield / Callum Stewart / Simon Mensley
Gneiss Energy Limited - Financial Adviser Tel: +44 (0) 20 3983 9263
Jon Fitzpatrick / Paul Weidman / Doug Rycroft
CAMARCO - Financial PR Tel: +44 (0) 20 3757 4980
Billy Clegg / Georgia Edmonds / Emily Hall
Jonathan Paterson - Investor Relations Tel: +1 475 477 9401
jonathan.paterson@harbor-access.com
Notes to Editors
Challenger Energy is an Atlantic-margin focused energy company, with a current
high-impact position in Uruguay, where the Company holds two offshore
exploration licences, totalling 19,000km(2) (gross) and is partnered with
Chevron on the AREA-OFF 1 block. Challenger Energy is quoted on the AIM market
of the London Stock Exchange and the OTCQB in the United States.
https://www.cegplc.com (https://www.cegplc.com/)
Chairman's Letter to the Shareholders
Dear Shareholders,
It is my pleasure to report to you as Chairman of your Company.
In my last report I commented on our considerable progress with regard to our
strategic objectives. Again I am pleased to report that through 2024 and the
early part of 2025 we have continued to deliver considerable value to
shareholders, which has been partially reflected in our market
capitalisation: adding value for our Uruguay AREA OFF-1 and AREA OFF-3
licences, announcing the sale of our business in Trinidad and Tobago, exposing
the Company to the wider and deeper US investment market, and all whilst
maintaining a stringent cash policy resulting in capital requirements being
funded for our foreseeable work programmes.
In Trinidad and Tobago, we announced a sale of the Company's subsidiary
companies that consist of our whole business in that country. Assuming a
successful completion of that transaction in 2025, we will have made the
Company entirely focused on Uruguay. It is a credit to our team in Trinidad
and Tobago that we continue to have safe and sustained operations whilst the
sale progresses, and I take this opportunity of thanking that team on behalf
of shareholders and the Board for their continued hard work and diligent
approach in a period of change.
In Uruguay, we completed the farm-out of AREA OFF-1. We have worked
extensively and proactively with Chevron since then to continue the pace of
work on that block, and look forward to a successful start of seismic
operations later this year. The technical work on AREA OFF-3 continues to
progress as planned and the Company anticipates results of that work in Q3
2025, enabling us to commence a farmout process on that block. Overall, 2026
is shaping up to be a hugely exciting year for Challenger Energy in respect of
our Uruguayan position. We remain unique as the only smaller cap company
present in that region, holding substantial acreage positions in our blocks.
Eytan gives far more detail on our plans in his CEO Report.
In May 2024, we reported on the strategic investment by Charlestown Energy in
the Company. Robert Bose has proven to be a great addition to the Board. In
addition, we have exposed our Company to the US investment market by listing
on the OTCQB Venture Market in April 2025. Initial results show considerable
interest in the Company.
Finally, and as always, I thank the staff of Challenger Energy for their
efforts last year, the Board for their guidance and insight and, of course,
our shareholders for their continued support.
Iain McKendrick Chairman
12 June 2025
Chief Executive Officer's Report to the Shareholders
Dear fellow Shareholders,
This is my fifth report to you, the owners of the Company, in my capacity as
Chief Executive Officer.
The 2024 period under review was a transformational one for Challenger Energy.
Highlights were that we farmed out the AREA OFF-1 block in Uruguay to Chevron,
we advanced our second Uruguay block (AREA OFF-3), we made progress on
achieving value from our other assets, and we continued our efforts to reshape
the Company in a corporate sense.
As we look to the second half of 2025 and beyond, I am more convinced than
ever that we are at an inflection point. Financially and operationally, we
are in the best position we have been in for many years. The hard work of the
last few years means that over the coming 12-24 months a significant
value-creation opportunity lies ahead of us. Details are provided in my
commentary below.
URUGUAY
What a difference a few years can make in the frontier hydrocarbon exploration
industry!
Shareholders will recall that Challenger Energy first started doing business
in Uruguay in May 2020, when we secured the AREA OFF-1 licence, offshore
Uruguay. At that time the Covid-19 pandemic was engulfing the world, and
Uruguay was not yet on the global industry's radar. This meant that when we
decided to enter Uruguay, we were the sole licence holder in that country.
In early 2022, very large, globally relevant discoveries were made by
supermajors (TotalEnergies and Shell) from exploration wells drilled offshore
Namibia (and subsequently multiple additional discoveries have followed,
including most notably GALP Energia's Mopane discovery and Rhino Resources'
recent Capricornus well). The Orange Basin in Namibia, which is where these
discoveries have been made, is in geological terms the conjugate margin to
offshore Uruguay. This is a fact of enormous significance to those active in
the industry, in that the data emerging from the discoveries in Namibia
significantly increases the likelihood of the presence of oil-producing
source rock offshore Uruguay.
For this reason, the exploration success in Namibia saw an almost instant
surge in industry interest to secure offshore licences in Uruguay and the
surrounding region. Activity commenced on long dormant blocks in Argentina,
and in late 2023 a number of majors picked up multiple blocks in a Brazil bid
round (with another scheduled for later this year).
In the specific case of Uruguay, the impact was even more pronounced: by the
end of 2023, 100% of Uruguay's offshore blocks had been licensed, with
Challenger Energy holding two of the seven available blocks, and the other
five blocks having been awarded to much larger industry players. That is to
say, in under two years (and unique to anywhere else in the world) Uruguay
went from being almost entirely unlicensed and unheralded, to being fully
licensed and, apart from Challenger Energy, only to industry 'heavyweights'
who had made sizeable work programme commitments in order to secure those
licences.
It is thus no exaggeration to say that offshore Uruguay has, in the past few
years, emerged as a global exploration "hotspot". And within that "hotspot",
our Company has emerged not only as one of the largest acreage-holders, but
also as the only junior E&P (exploration and production) company with any
position in the region, with two world class assets and a growing prospect
inventory.
Consequently, as shareholders are aware, through 2022 and 2023 we rapidly
shifted our strategy, to prioritize Uruguay so as to meet the enormous
industry interest that we could see was building. The full effect of this
shift became evident in 2024, the period under review, when our assets in
Uruguay unambiguously became the central focus of Challenger Energy's
business.
AREA OFF-1
As I noted in the last Annual Report, through the course of 2023 Challenger
Energy had undertaken a high-quality technical work programme for AREA OFF-1,
the result of which was the identification of three primary prospects in the
licence area. In aggregate, we delineated a robust prospect inventory of
approximately 2 billion barrels (Pmean) and up to 5 billion barrels (P10),
thus
establishing that AREA OFF-1 is a world-class asset.
In 2023 we had also commenced a formal, adviser-led farmout process, with the
objective of securing a partner for AREA OFF-1. Our aim was to introduce a
respected industry participant who could provide the further expertise and
capital needed to rapidly take the block forward to 3D seismic acquisition
and, ultimately, exploration well drilling.
The results of our efforts - technical and commercial - became evident during
the period under review, when in March 2024 we announced a farmout agreement
with Chevron. A series of regulatory approvals followed, which took most of
2024 to finalise, but on 28(th) October 2024 the transaction with Chevron was
completed. This represented the culmination of a huge body of work by many
people over an extended period of time, and is an outcome we are extremely
proud of.
The transaction agreed with Chevron saw the US-based supermajor assume a 60%
operating interest in AREA OFF-1, paying us
$12.5 million in cash as an entry fee, agreeing to carry 100% of the costs of
3D seismic acquisition campaign (up to a gross total cost of $37.5 million,
net value to Challenger Energy of up to $15 million), and thereafter if the
decision is made to proceed to drilling of an initial exploration well,
carrying 50% of our share of costs associated with that well (up to a total
gross cost of
$100 million, net value to Challenger Energy of up to $20 million).
As I have said in many forums over the past 12 months, we believe these
transaction terms, as agreed with Chevron, are very attractive.
Firstly, whilst all CEOs will claim that their company is undervalued, in this
case, if properly analysed, the embedded value to our Company in the AREA
OFF-1 farmout arrangement represents multiples of our current share price -
something I believe the equity market is yet to fully appreciate.
Secondly, and far more importantly, the AREA OFF-1 farm-out has transformed
Challenger Energy, in that (i) our strategy and technical work has been
validated by one of the world's leading energy companies - the resulting
intangible benefit in terms of our industry "credentials" is immeasurable,
(ii) going forward, the AREA OFF-1 project will be operated by a highly
capable partner who has made a clear commitment to accelerated activity, and
(iii) we have retained a material stake of 40% in the licence, which gives us
enormous flexibility when it comes time to consider how we participate in any
future success case.
We are now working closely with our new partner in anticipation of upcoming
activity on AREA OFF-1. We share a common goal with Chevron, which is to see a
3D seismic acquisition commence as soon as possible - as at the date of this
report, the expectation is that this will be in Q4 2025, subject to
finalization of permitting by the Uruguayan Ministry of Environment. It is
this activity, and subsequent well drilling, which we believe will ultimately
unlock the considerable value potential we see in this asset.
AREA OFF-3
Whilst AREA OFF-1 might be described as "the jewel in the crown" of Challenger
Energy's portfolio, our second block in Uruguay, AREA OFF-3, offers
considerable promise as well: based on initial assessment, a resource
potential of up to 2 billion barrels and up to 5 trillion cubic feet gas (c. 1
billion barrels equivalent), from multiple exploration plays.
In June 2023, Challenger Energy had been designated as the party to whom the
AREA OFF-3 licence would be awarded, on attractive terms. This award was
finalised in March 2024, with the initial four-year exploration period for
AREA OFF-3 commencing in June 2024.
As soon as the initial four-year exploration period commenced, we began our
technical work programme for the block on an accelerated basis. Unlike AREA
OFF-1, the AREA OFF-3 block has not only existing 2D seismic coverage, but 3D
seismic coverage as well, which means our work programme can be focused on 3D
seismic reprocessing. Having existing 3D seismic to work with is a
significant advantage the value of which to Challenger Energy may not be
fully appreciated: the existing 3D seismic of interest on AREA OFF-3 would, if
acquired today, cost up to $40 million and take 1-2 years to acquire - whereas
we now have the benefit of this prior expense, and the ability to accelerate
the AREA OFF-3 timeline by several years.
Through the second half of 2024 and the first half of 2025, we have made
solid progress on the technical work programme. As at the date of this report,
reprocessing of 1,250 km(2) of 3D seismic data from the previously acquired BP
survey is complete, and a satellite seep and slick study, a seabed
geochemistry study and a multibeam echo sound survey have also been completed,
with encouraging complementary results to ongoing seismic work. The next stage
of our work programme for AREA OFF-3 is now underway: technical analysis and
interpretation ahead of updated mapping, prospect definition and volumetrics,
with anticipated completion in Q3 2025.
Once finalised, this work programme (similar in scope to that undertaken for
AREA OFF-1) is expected to underpin a formal farmout process for AREA OFF-3
through the second half of 2025. That is, our strategy for AREA OFF-3 is to
follow the same formula that produced a successful outcome for AREA OFF-1:
first, undertake high quality technical work to establish the prospectivity
of the block and then, with the benefit of that technical work, seek to bring
in a partner via a farmout process.
OTHER ASSETS
Trinidad and Tobago
Our strategy in Trinidad and Tobago, where we have small onshore production
fields, has been twofold: achieve financial breakeven from core assets, and
streamline operations / divest assets, so as to release value from them.
In terms of results, total 2024 production from the producing fields was
constant (on a like-for-like basis almost identical to 2023 production), and
total operating expenses and G&A (general and administrative expenses) was
similarly constant. We were thus successful in our desire to operate the
business on a generally cashflow breakeven basis. As in previous years, we
did record a (relatively small) net operating loss, and we once again
reconsidered the carrying value of the Trinidadian licences on our balance
sheet, taking a further write-down in the asset values associated with the
business.
More significantly, during 2024 we made progress with our desire to extract
value from the assets in Trinidad and Tobago. In February 2024 we exited the
Bonasse licence, in a way that relieved us of liabilities and commitments, and
thereafter we were able to focus effort on finding a monetisation pathway for
the remainder of the business. This effort culminated in February 2025, when
we reached agreement to sell all of our remaining business, assets and
operations in Trinidad and Tobago. As at the date of this report that
transaction remains pending regulatory approvals, but we expect it to close by
30 June 2025, at which time we will see the complete exit from Trinidad
finalised. This means the entirety of the Trinidad and Tobago business - with
all associated income, assets, liabilities, exposures and administrative cost
- will thereafter no longer feature in our financial statements.
The Bahamas
In relation to the Company's licences in The Bahamas, throughout the course of
2024 we continued to pursue a renewal of those licences into a third
exploration period. In parallel we continued to explore various alternative
strategies seeking to monetise our Bahamian position. Tangible progress in the
period was limited, but we are persevering, with a view to achieving a result
in the coming 12 months.
CORPORATE
With the benefit of the validation provided by the Chevron farmout, in 2024
we also took the opportunity to focus on a number of corporate 'housekeeping'
actions. At the heart of which was a simple objective: to attract new
investors to the Company especially longer-term institutional investors - who
understand what we are trying to do in Uruguay, and the timeframes involved.
During the period, we undertook a share consolidation, reducing the number of
outstanding shares from about 10 billion to about 250 million. This was
necessary because the large number of shares in issue, combined with the
relatively low trading value per share, was a bar to investment in the Company
by various parties, including in particular many institutional investors (a
number of leading global share custodians are not permitted, in accordance
with their custody rules, to hold shares in a company where its share trading
value is below 1 penny per ordinary share).
This proved crucial to securing a meaningful equity investment from
Charlestown Energy Partners LLC, initially in the form of a debt instrument
(May 2024), which converted into equity - at a premium price - on closing of
the Chevron farmout (October 2024), and in the process making Charlestown
Energy one of the Company's largest shareholders.
Charlestown Energy is a specialist energy investor associated with Charlestown
Capital Advisors, a family office located in New York that was founded in
2005, and that has been making investments globally in E&P since 2016. Of
particular relevance is the fact that since 2019 Charlestown Energy has been a
cornerstone shareholder in Sintana Energy Inc, a TSX-listed exploration
company. Sintana maintains an indirect interest in a portfolio of exploration
licences in Namibia, including in particular having an interest in the GALP
Energia discovery in the Orange Basin. Given the parallel between what has
happened in Namibia in recent years and what we hope may happen in Uruguay in
the coming years, we were thus very pleased to have been able to attract an
investor such as Charlestown Energy to Challenger Energy.
Consistent with the long-term, strategic nature of Charlestown Energy's
investment, Mr. Robert Bose was also invited to join the Board (May 2024).
Robert has been the Managing Member of Charlestown Energy since 2016, having
joined Charlestown Capital Advisors as a principal in 2014. Prior, he spent 17
years in the Global Investment Banking Group at the Bank of Nova Scotia, most
recently as Managing Director and Head of the Power & Utilities Group,
with a specifical focus on the energy and power sectors. Robert is currently
also serving as Chief Executive Officer of Sintana, which as noted represents
a significant holding in Charlestown Energy's current portfolio. Robert's
addition to our Board is extremely complementary, giving us the benefit of
his experience, network, and industry insights that are highly relevant to
Challenger Energy's position in Uruguay.
Indeed, the combination of the Chevron partnership for AREA OFF-1, and adding
Charlestown Energy to the register and Robert to the Board, appears to have
made a difference, in that over the course of the past 18 months we have seen
an increasing number of new (and longer-term focused) institutions, family
offices and high net worth investors join our register. In particular, we have
seen a strong increase in interest from North American-based investors, and we
have thus made a concerted effort to market our Company more widely, alongside
our normal investor engagement activities in the UK. As part of this effort,
we listed on the OTCQB Ventures Market (April 2025), which affords US-based
investors a much easier route to becoming shareholders in Challenger Energy -
early uptake from investors in that market has been encouraging.
FINANCIAL PERFORMANCE AND FUNDING
For the 2024 period under review, we recorded a loss of $1.1 million (2023:
$13.4 million). This includes the impact of the gain made on completion of the
AREA OFF-1 farmout, as well as various non-cash items, most notably non-cash
losses arising from accounting impairments associated with the Trinidadian
assets.
Given the nature of our business, in past Annual Reports we have identified
"burn" as the most relevant metric to evaluating our financial performance -
that is, the amount of cash used in running/sustaining our business across any
given period. In that respect, as noted, during 2024 our Trinidad and Tobago
operations continued to operate on a largely self-sustaining basis (thus
requiring minimal cash support), and the G&A cost for the rest of our
business was $3.9 million, or approximately $324,000 per month. This is an
increase of 37% as compared to 2023 ($2.4 million), but the 2024 figure
includes a number of sizeable one-off amounts associated with the Chevron
farmout (for example, legal and commercial advisory fees and success fees). If
these are excluded, our 2024 overhead was consistent with that of 2023, and
below the $200,000 per month cash "burn" target that we have had for many
years: a level which represents the basic costs needed to stay in business as
an AIM-listed vehicle, and which compares favourably with most of our peers.
Undoubtedly the financial highlight of 2024 was the receipt of $12.5 million
in cash on closing of the AREA OFF-1 farmout. This enabled us to completely
"clean house" in a financial sense - settling all outstandings, definitively
addressing any legacy financial exposures, and ensuring that our funding
needs for the coming years are fully met. We ended 2024 with approximately
$8.4 million of unrestricted cash holdings (plus we had a further $1.3 million
of restricted cash, which is money held in support of work programme
performance guarantees and bonds, and which will be released back to us over
time once work programme commitments are fulfilled). Against this robust cash
position we have no debt, our "burn" is low (as noted, we target keeping it
below $2.4 million per annum), the minimum work programme on AREA OFF-1 in
Uruguay has been completed and our share of costs for upcoming 3D seismic will
be carried by Chevron, the work programme for AREA OFF-3 is modest, and we
have no unfunded forward work programme commitments.
This is significant, in that it means we have adequate financial resource
available to ensure that all currently expected costs and future operations
for all of 2025, 2026, and into 2027 are fully-funded. This level of clear
financial runway is a relatively rare situation for most "junior" E&P
companies, and certainly puts Challenger Energy into the best position,
capital-wise, it has been in for quite some time. This does not take into
account the possibility of additional funding inflows in this time frame -
with AREA OFF-1 we have retained a relatively large 40% working interest and
thus the ability to farmout a further interest in that asset; with AREA OFF-3,
like with the AREA OFF-1 farmout, we will be seeking a cash element to any
farmout transaction. Success in either case would secure the balance sheet
even further into the future.
ESG (Environmental, Social, and Governance)
A core value we have sought to embed into everything we do at Challenger
Energy is to ensure that achieving our commercial objectives never comes at
the expense of harm to people or the environment, and that our "social licence
to operate" is maintained intact at all time. We want to be known as a
responsible, reliable operator and a partner / employer of choice.
I am thus pleased to report that in 2024, across all of our operations, there
were no incidents of note - whether personal injury, property damage or
environmental. We maintained productive and positive relationships with all
relevant Governments and regulatory bodies, and we continued our policy of
investing considerably in Company-wide training programs and ESG awareness
activities. As in previous years, we also made a number of targeted social and
welfare contributions in the communities where we operate.
In summary, in 2024, the Company's excellent ESG performance record continued.
Everyone at Challenger Energy is committed to ensuring that this does not
change in the future.
OUTLOOK
During 2024 we cemented our position as one of the largest acreage holders in
Uruguay, and we showed that we are a company that does what it promises to do
- technically, through excellent work; commercially, in being able to reach a
market-leading farmout for the AREA OFF-1 block; and strategically, in
developing an enviable position that no other junior player was able to
develop, in what has become a global exploration "hot spot".
In the next 12-24 months we expect to see Chevron rapidly take the AREA OFF-1
project forward, initially with a 3D seismic acquisition campaign and
thereafter, assuming the results of the 3D are as we anticipate, exploration
well drilling. In the same timeframe we will conclude our technical work
programme for AREA OFF-3, with a view to then securing a partner via a farmout
process - again, the ultimate objective being to see that block move forward
to exploration well drilling. All of this activity will occur against a
backdrop of heightened industry interest in the region, and substantial
exploration work being undertaken by others offshore Uruguay, northern
Argentina, and southern Brazil. And, over the next 12 months, we also expect
to conclude our efforts to extract value from our assets in Trinidad and
Tobago, as well as reach a resolution in relation to our licences in The
Bahamas.
In concluding my review of 2024, I wish to express my appreciation for the
support we received throughout the year from our Board, stakeholders,
regulators, suppliers, contractors and shareholders. I would also like to take
this opportunity to especially thank all of our team. I say it each year, and
I mean it sincerely: although we are a small company, we have highly-skilled,
committed, and loyal employees, whose hard work and dedication is the
foundation on which our success over the past few years has been built.
As I noted at the start of this report, 2024 was a transformational year for
Challenger Energy, such that I believe the outlook for our Company over the
coming 12-24 months is strong. Multiple value-creating opportunities now lie
before us, and your management is working every day, to ensure that we are
able to capitalise on these opportunities in a way that creates maximum value
for shareholders.
Eytan Uliel
Chief Executive Officer
12 June 2025
Challenger Energy Overview
Challenger Energy is an Atlantic-margin energy company, with a focus on high
impact, globally material exploration assets. The Company's shares are traded
on the Alternative Investment Market of the London Stock Exchange (AIM: CEG)
and on the OTCQB Venture Market in the United States (OTCQB: BSHPF).
The following is a brief summary of key aspects of the Company's assets,
operations and business. Additional information is available on the Company's
website: www.cegplc.com (http://www.cegplc.com/) . (http://www.cegplc.com/)
Challenger Energy's Uruguay Assets
Challenger Energy's main area of focus is exploration activity offshore
Uruguay, where the Company has an interest in two blocks: AREA OFF-1 and AREA
OFF-3. Combined these represent a total licence holding of approximately
27,800 km(2) (net to Challenger Energy approximately 19,000 km(2)), making the
Company one of the largest offshore acreage holders in Uruguay, and the only
"junior" with a position in offshore Uruguay and the broader offshore region
(including northern Argentina and southern Brazil).
FIGURE 1: OFFSHORE LICENCE HOLDERS, URUGUAY
Uruguay is located along the Southern Atlantic coast of South America, sharing
its northern border with Brazil and its southern and western borders with
Argentina. In 2024, the country was ranked as 15(th) globally on the Democracy
Index, and ranked first in Latin America for democracy, anti-corruption
efforts, and ease of doing business. Uruguay is also a leader in providing
reliable, sustainable, and affordable energy, supported by a strong policy
framework that encourages exploration and production, with an emphasis on
promoting responsible development of the nation's energy mix.
Conjugate margin discoveries offshore Southwest Africa have led to
considerable interest in the exploration potential offshore Uruguay. The data
and improved technical understanding provided from recent discoveries in the
Orange Basin, offshore Namibia, have accelerated licencing, seismic
acquisition, and drilling across the region of Uruguay, northern Argentina and
southern Brazil. Notably, the discoveries and activities offshore Namibia have
significantly enhanced confidence in the presence of a potentially prolific
new petroleum system offshore Uruguay, including Challenger Energy's blocks.
As of the date of this report, the entire available offshore acreage in
Uruguay has been licenced. Aside from the two blocks in which the Company
holds an interest, all other offshore Uruguayan blocks and proximate blocks in
southern Brazil and northern Argentina are held by supermajors, national oil
companies and much larger industry participants. This highlights the growing
strategic interest in the region, with sizeable collective work programmes
planned over the next few years.
AREA OFF-1
AREA OFF-1 is a large block covering approximately 14,557 km(2) and located
approximately 100 - 150 kms offshore Uruguay in relatively shallow water depth
(50 to 800 metres). Challenger Energy was the first company to bid in the new
Uruguay Open Round in May 2020, and in June 2020, the Company was awarded AREA
OFF-1. The licence contract was signed in May 2022, with the initial four-year
exploration period commencing on 25(th) August 2022. In late 2022, in view of
growing industry interest in Uruguay's offshore, the Company made a decision
to accelerate and expand the work required to be completed on AREA OFF-1
during the first four-year exploration period. In doing so, three material
prospects with significant resource potential were identified and
delineated. These prospects were named Teru Teru, Anapero and Lenteja, and are
summarised as follows:
PROSPECT NAME DEPOSITIONAL ENVIRONMENT STRATIGRAPHIC AGE
TERU TERU Slope turbidite to shelf margin wave delta AVO supported - Class I to II Mid to Upper Cretaceous Albian to Campanian
ANAPERO Outer shelf margin stacked sands AVO supported - Class II Upper Cretaceous Campanian
LENTEJA Lacustrine alluvial syn-rift sealed by regional unconformity; No AVO Lower Cretaceous Neocomian
identified
On 6(th) March 2024, following a formal process, the Company entered into a
farmout agreement with a subsidiary of Chevron for the AREA OFF-1 block. On
29(th) October 2024, following obtaining of the required approvals from the
Uruguayan regulatory authorities, the farmout took legal effect. The key terms
of the farmout agreement are (i) Chevron acquired a 60% participating interest
in the AREA OFF-1 block, and assumed operatorship, (ii) Challenger Energy
retained a 40% non-operating interest in the block, (iii) upon completion,
Challenger Energy received a cash payment of $12.5 million from Chevron as an
entry fee, with these funds available to support the further development of
the Company's business, (iv) Chevron will carry 100% of Challenger Energy's
share of the costs associated with the 3D seismic campaign on the AREA OFF-1
block, up to a maximum total programme cost of
$37.5 million (up to $15 million value net to Challenger Energy), and (v)
following the 3D seismic campaign, should Chevron decide to drill an initial
exploration well on AREA OFF-1, Chevron will carry 50% of Challenger Energy's
share of costs associated with that well, up to a maximum total well cost of
$100 million (up to $20 million value net to Challenger Energy).
As at the date of this report, The Uruguayan Ministry of Environment is
holding public consultations regarding the issuance of the prerequisite
environmental permits for the proposed 3D seismic acquisition campaign over
AREA OFF-1, as well as over other offshore areas in Uruguay under contract to
other industry participants. The Company expects the necessary permits will be
issued to allow for seismic acquisition on AREA OFF-1 to start in early Q4
2025. In anticipation of permits being issued, various operators are already
in discussions with seismic companies for planned surveys across the Uruguay
offshore region. The goal is to sequence the 3D seismic programme timing based
on weather, acquisition parameters and integrated operations seeking incident
free and efficient acquisition campaigns. The parties associated with AREA
OFF-1 (operator Chevron, Challenger Energy) are working collaboratively in
this process along with ANCAP.
AREA OFF-3
AREA OFF-3 is a large block covering an area of 13,252 km(2) and located
approximately 75 to 150 kms offshore Uruguay in relatively shallow water
depths (25 to 1,000 metres). Challenger Energy bid for the block in May 2023
and was awarded the licence in June 2023. Subsequently, the licence contract
was signed on 7(th) March 2024, with the initial four-year exploration period
commencing on 7(th) June 2024. Challenger Energy hold a 100% working interest
in and is the operator of the block.
The licence for AREA OFF-3 provides for a modest work commitment in the
initial four-year exploration period, comprising of reprocessing 1,250km(2) of
legacy 3D seismic data and undertaking two geotechnical studies. There is no
drilling obligation in the initial four-year exploration period. However,
similar to AREA OFF-1, Challenger Energy's plan during the initial four-year
exploration period is to accelerate and expand the technical work programme.
As at the date of this report, the Company is in the midst of its technical
work programme for AREA OFF-3, which it expects will be completed during Q3
2025. As with AREA OFF-1, the Company is also planning to pursue an early
partnering strategy in the form of a formal farmout process in the second half
of 2025, with the objective of securing cash and a carry in an accelerated
work programme.
Other Assets
Trinidad and Tobago: Challenger Energy holds a 100% interest in, and is the
operator of, three producing fields, all onshore Trinidad. Across these
fields, there are a total of approximately 250 wells, of which approximately
60 are in production at any given time. On 18(th) February 2025, the Company
entered into a transaction for the sale of all of the Company's assets,
business and operations in Trinidad and Tobago. As at the date of this report,
completion of that transaction is pending regulatory approvals in Trinidad and
Tobago - the Company expects the transaction to complete on or before 30 June
2025.
The Bahamas: Challenger Energy holds four exploration licences offshore The
Bahamas. In early 2021, the Perserverance-1 exploration well was drilled in
this licence area. In March 2021, the Company applied to the Government of The
Bahamas to renew the licences for a third three-year exploration period. As at
the date of this report, this renewal is still pending. The Company is
pursuing various other options for achieving value from these assets.
People and Operations
The Company's registered office is in the Isle of Man. Additionally, the
Company has operational offices in London (United Kingdom), Montevideo
(Uruguay), and San Fernando (Trinidad). The business employs approximately 75
staff.
The Company's Board, management team, and staff possess a wide range of skills
and extensive technical and industry experience - profiles of Board members
and senior executive members can be found on the Company's website,
www.cegplc.com (http://www.cegplc.com/) . (http://www.cegplc.com/)
Environmental, Social & Governance Statement
ESG Philosophy and Management
ESG considerations are central to Challenger Energy's business strategy. We
believe that the pursuit of commercial objectives must never come at the
expense of the health, safety, or wellbeing of individuals, communities, or
the environment. We acknowledge our responsibility and our duty of care to our
employees, contractors, suppliers, and the broader communities in which we
operate. Our objective is to eliminate lost time injuries and incidents,
through rigorous preventative measures and continuous improvement. The Company
takes great pride in its exemplary Health, Safety, Environment, and Security
("HSE&S") track record and strives to be an employer and partner of
choice, and to make a valued contribution to the communities and nations in
which it operates.
The Company is committed to conducting business with integrity, transparency,
and in accordance with the highest ethical standards. Challenger Energy
fosters a professional, respectful, and inclusive working environment, and
actively supports the personal and professional development of its employees.
We value how diversity - including in gender, nationality, faith and personal
background - benefits our business and how the unique experiences of our
employees contribute to a positive environment within Challenger Energy.
Operating in various international locations, we both rely on and impact the
people and institutions in these areas. Challenger Energy is part of the
societies in which we operate, and we are committed to being a responsible
corporate citizen, and to making enduring and meaningful contributions to the
communities around us.
We are acutely aware of our environmental responsibilities, and we strive to
minimize our ecological impact. Challenger Energy is dedicated to responsible
environmental stewardship and aims for zero environmental incidents.
Challenger Energy maintains a robust and structured HSE&S Management
System, comprising a comprehensive set of policies, procedures, and practices.
This system is consistently applied across the organisation and is subject to
regular review and updates to ensure continued excellence in all relevant
HSE&S areas.
Governance
Challenger Energy operates in the energy sector, which is governed by
stringent laws and regulations imposed by host Governments and international
regulators, as well as often being the subject of intense public scrutiny.
Additionally, as Challenger Energy's shares are traded on the AIM Market of
the London Stock Exchange and the OTCQB Ventures Market in the United States,
the Company is subject to various additional rules and regulations associated
with being a publicly traded entity. Consequently, the Board is dedicated to
upholding the highest standards of corporate governance at all times.
QCA Code
In accordance with the rules of the AIM Market of the London Stock Exchange,
Challenger Energy is required to apply a recognised corporate governance code
and demonstrate its compliance with that code, including any deviations. Since
Challenger Energy is not obligated to follow the UK Corporate Governance Code,
the Directors have chosen to apply the QCA Corporate Governance Code (the "QCA
Code") as their standard of measurement.
In accordance with the AIM Rules for Companies, Challenger Energy departs from
the QCA Code in relation to Principle 7 - "Evaluate board performance based on
clear and relevant objectives, seeking continuous improvement." Challenger
Energy's Board is small and extremely focused on implementing the Company's
strategy. However, given the size and nature of the Company, the Board does
not consider it appropriate to have a formal performance evaluation procedure
in place, as described and recommended in Principle 7 of the QCA Code. The
Board will closely monitor the situation as and when the Company grows.
The Board and its Committees
The Board meets regularly to discuss and review all aspects of Challenger
Energy's activities. A Board Charter has been approved and adopted, outlining
the membership, roles, and responsibilities of the Board. The Board is
primarily responsible for formulating, reviewing, and approving Challenger
Energy's strategy, budgets, major capital expenditures, acquisitions, and
divestments. The Board currently consists of the Non-executive Chairman (Iain
McKendrick), the Managing Director and CEO (Eytan Uliel), and three
Non-executive Directors (Stephen Bizzell, Simon Potter and Robert Bose). Iain
McKendrick (Non-executive Chairman) was independent on appointment to the
Board. In addition, Stephen Bizzell, Simon Potter and Robert Bose (all Non-
executive Directors) are deemed independent by the Board. All Directors have
access to management, the Company Secretary, and Challenger Energy's
professional advisers. Overall, the Board is responsible for the long-term
success of the Company and providing leadership to the business including
culture, values and ethics, and ensuring effective corporate governance and
succession planning. The Board operates in an accountable, open and
transparent environment where the views of all Directors and the actions of
Executive Directors and management can be challenged. The Board is satisfied
it has the appropriate balance of skills and experience on the one hand, and,
independence and knowledge on the other, to enable it to discharge its
respective duties and responsibilities effectively, and that all Directors
have adequate time to fulfil their roles.
Iain McKendrick has over 30 years of industry experience, including having
held Board positions with several listed companies. He was previously with NEO
Energy, was Chief Executive Officer of Ithaca Energy, was Executive Chairman
of Iona Energy, and spent several years with TotalEnergies, including acting
as Commercial Manager of Colombia. Iain is the Chair of the Company's Health,
Safety, Environmental and Security Committee and is a member of the Company's
Remuneration and Nomination Committee.
Eytan Uliel assumed the position of Chief Executive Officer from 27(th) May
2021, having previously served as the Company's Commercial Director since
2014. Eytan is a finance executive with significant oil and gas industry
experience. He has extensive experience in mergers and acquisitions, capital
raisings, general corporate advisory work, oil and gas industry-specific
experience in public market takeovers and transactions, private treaty
acquisitions, and farmin / farmout transactions. He has held executive roles
in various ASX and SGX listed companies. Prior to working with Challenger
Energy, from 2009 2014 Eytan was Chief Financial Officer and Chief
Commercial Officer of Dart Energy Limited, an ASX listed company that had
unconventional gas assets (coal bed methane and shale gas) in Australia, Asia
and Europe, and Chief Commercial Officer of its predecessor company, Arrow
International Ltd, a Singapore based company that had unconventional gas asset
primarily in Asia and Australia. He holds a Bachelor of Arts (Political
Science) and Bachelor of Laws (LLB) degree from the University of New South
Wales, and was admitted as a solicitor in the Supreme Court of New South Wales
in 1997. Eytan is a member of the Company's Remuneration and Nomination
Committee and the Company's Health, Safety, Environmental and Security
Committee.
Simon Potter was previously the Chief Executive Officer of the Company for
nearly 10 years and oversaw the safe drilling of the Perseverance-1 well in
The Bahamas. Simon assumed the role of a Non-Executive Director in May 2021.
Simon qualified as a geologist with an M.Sc. in Management Science and has
over 30 years oil and gas industry and mining sector experience. From the
Zambian Copperbelt to a 20-year career with BP he has held executive roles in
companies managing oil and gas exploration, development and production; gas
processing, sales and transport; and LNG manufacture, marketing and
contracting, in Europe, Russia, America, Africa and Australasia. On leaving
BP, having helped create TNK-BP, he took up the role of CEO at Hardman
Resources where he oversaw growth of the dual AIM and ASX listed company into
an oil producer with considerable exploration success ahead of executing a
corporate sale to Tullow Oil. Simon is Chair of the Company's Remuneration and
Nomination Committee and a member of the Company's Health, Safety,
Environmental and Security Committee.
Stephen Bizzell has over 25 years' corporate finance and public company
management experience in the resources sector in Australia and Canada with
various public companies. He is the Chairman of boutique corporate advisory
and funds management group Bizzell Capital Partners Pty Ltd., a firm which
over the last 15 years has raised more than A$1.5 billion in equity capital
for its associated entities. He is also the Chair of ASX listed MAAS Group
Holdings Ltd, Chair of ASX listed Savannah Golfields Ltd, and a Non-executive
Director of ASX listed Strike Energy Limited and Renascor Resources Limited.
He was an Executive Director of ASX listed Arrow Energy Ltd from 1999 until
its acquisition in 2010 by Shell and PetroChina for A$3.5 billion. Stephen
qualified as a Chartered Accountant and early in his career was employed in
the Corporate Finance division of Ernst & Young and the Corporate Tax
division of Coopers & Lybrand. He has had considerable experience and
success in the fields of corporate restructuring, debt and equity financing,
and mergers and acquisitions. Stephen is Chair of the Company's Audit
Committee.
Robert Bose is the Managing Member of Charlestown Energy Partners, a private
investment company associated with a New York- based family office that has
been making investments globally in upstream E&P businesses since 2016.
Robert is also the Chief Executive Officer and a member of the Board of
Directors of Sintana Energy, Inc., a Toronto Venture Exchange listed oil and
gas exploration company with a portfolio of licences in Namibia. Robert is
also a non-executive director of New Zealand Energy Corp., also a Toronto
Venture Exchange listed company providing gas, gas storage and liquids
solutions to support the domestic energy economy in New Zealand and is also on
the Board of Managers of Black Bayou Energy Hub, a private company developing
a gas storage opportunity on the Gulf Coast of the U.S. Prior to joining
Charlestown, Robert spent 17 years in the Investment Banking Group at
Scotiabank, most recently as Managing Director and Industry Head, Global Power
& Utilities. Robert is a member of the Company's Audit Committee.
Audit Committee
The Audit Committee of the Board consists of Stephen Bizzell (Chair) and
Robert Bose, with input from the Finance Director as needed. The Audit
Committee is primarily responsible for ensuring Challenger Energy's financial
performance is accurately reported and monitored, reviewing the scope and
results of the audit, evaluating its cost-effectiveness, and maintaining the
independence and objectivity of the auditor. Additionally, the Audit Committee
oversees public reporting and the Company's internal controls. A Charter of
the Audit Committee, which defines its membership, roles, and
responsibilities, has been approved and adopted. All members of the Audit
Committee have access to the Company Secretary and the Company's professional
advisers, including direct access to the Company's auditor. The Audit
Committee meets regularly and convened twice in 2024, with all members present
at both meetings. Effective 1 July 2024, Robert Bose replaced Iain McKendrick
on the Audit Committee.
Renumeration and Nomination Committee
The Remuneration and Nomination Committee consists of Simon Potter (Chair),
Iain McKendrick, and Eytan Uliel. This committee is responsible for
recommending executive and senior management remuneration packages, including
bonus awards and share options, to the Board of Directors. It also assists the
Board in identifying and evaluating potential new Directors, ensuring that the
size, composition, and performance of the Board are suitable for the Company's
activities. Shareholders of Challenger Energy ultimately have the
responsibility for determining Board representation. The Remuneration &
Nomination Committee meets as needed and convened once in 2024, with all
members present.
Health, Safety, Environmental and Security Committee
The Board has a Health, Safety, Environmental, and Security Committee, which
consists of Iain McKendrick (Chair), Simon Potter, and Eytan Uliel. The
HSE&S Committee's purpose is to assist the Directors in establishing ESG
strategy, reviewing, reporting, and managing Challenger Energy's performance,
assessing compliance with applicable regulations, internal policies, and
goals, and contributing to the Company's risk management processes. In 2024,
the HSE&S Committee met five times, with all members present at each
meeting.
Record of Board Meetings
There were three formal meetings of the Board of Challenger Energy in the
period 1 January 2024 to 31 December 2024. In addition, there were a number of
other ad-hoc gatherings of the Board through the period.
Internal Control
The Directors acknowledge their responsibility for Challenger Energy's system
of internal control and for reviewing its effectiveness. The system of
internal control is designed to manage the risk of failure to achieve the
Company's strategic objectives. It cannot totally eliminate the risk of
failure but will provide reasonable, although not absolute, assurance against
material misstatement or loss.
Going Concern
These financial statements have been prepared on a going concern basis, which
assumes that Challenger Energy will continue in operation for the foreseeable
future.
On 6(th) March 2024, Challenger Energy entered into a farmout agreement with
Chevron, a leading global energy company, in relation to the AREA OFF-1
licence offshore Uruguay. Pursuant to the farmout agreement, Challenger Energy
received a $12.5 million upfront cash payment at completion (29(th) October
2024) along with Chevron agreeing to carry the Company's share of certain
future work programme costs. In addition, the Company was entitled to an
adjustment payment of approximately $0.2 million related to AREA OFF-1 costs
incurred in the period between signing of the farmout agreement and completion
of the transaction (received on 29(th) October 2024), as well as the release
of $0.3 million of restricted cash held at balance sheet date to secure
performance of AREA OFF-1 work obligation commitments (which release was
finalised on 12(th) May 2025).
The Challenger Energy group of companies incurred a consolidated operating
loss of $1.9 million for the financial year ended
31 December 2024, however current assets exceed current liabilities by
approximately $4.9 million as of 31 December 2024, which includes
approximately $5.9m in respect of current payables owing in Trinidad and
Tobago that Challenger Energy expects to exit completely following the
completion of the announced sale of all of the Company's business and
operations in Trinidad and Tobago (completion of this transaction, as at the
date of this report, is pending regulatory approval). In addition, completion
of the sale of the Company's business and operations in Trinidad and Tobago is
expected to see the Company receive approximately
$0.5m in cash and approximately $0.75 million in saleable listed securities
over the course of 2025. At 31 December 2024, the Company had approximately
$8.4 million in unrestricted cash holdings and approximately $1.3 million in
restricted cash holdings (restricted cash is cash that is held in Company bank
accounts but which is pledged in support of work programme obligations and to
which access is restricted - once relevant work programme obligations are met
that restricted cash will in due course becomes unrestricted and thus freely
available for use by the Company).
Given the foregoing, the Directors have prepared these financial statements
on a going concern basis: based on current cash holdings and cash flow
forecasts, Challenger Energy expects to have adequate financial resources to
support its operations for the next 12 months (and well into the foreseeable
future beyond that). In addition, the Directors note that the Company is a
publicly listed company on a recognised stock exchange, thus affording the
Company the ability to raise equity capital, debt and/or hybrid financing
alternatives as and when the need arises. The Company has a robust track
record in this regard, having raised in excess of $100 million in equity and
alternative financing in the past.
Anti-bribery and Corruption ('ABC')
Challenger Energy enforces a zero-tolerance policy for bribery, corruption, or
unethical conduct in our business. Our policies mandate compliance with
applicable anti-bribery and corruption ("ABC") laws, particularly the UK
Bribery Act 2010, as well as all relevant laws in the jurisdictions where we
operate. We have implemented a documented system of ABC policies and
procedures that provide a consistent framework across the Company and all its
operations, ensuring our employees are aware of potential threats and
maintaining appropriate governance of ABC matters. In 2024, all employees were
required to attend mandatory ABC training.
Anti-Money Laundering ('AML')
Challenger is acutely aware of the risks posed by money laundering and
terrorist financing. These criminal activities not only threaten society but
also impact the Company, its partners, shareholders, and staff. The Company
exercises the highest level of vigilance in all its operations to combat these
threats. This vigilance also applies to third-party associates involved with
the Company. Annual AML training is mandatory for all Challenger Energy staff.
Taxation
Depending on the jurisdiction of operation, Challenger Energy is subject to
various taxes, including corporate income tax, supplemental petroleum taxes,
royalties, other fiscal deductions, value-added taxes, and payroll taxes. As
a responsible operator and corporate citizen, the Company is committed to
complying with all relevant tax laws in every jurisdiction where it operates.
Adhering to tax laws and regulations is fundamental to our license to operate,
and we take this obligation seriously.
Risk Management
Understanding the principal risks that Challenger Energy faces, and ensuring
that we then have appropriate controls in place to manage those risks, is
critical to our business operations. Managing business risks and opportunities
is a key consideration in determining and then delivering against the
Company's strategy. The Company's approach to risk management is not intended
to eliminate risk entirely, but provides the means to identify, prioritise and
manage risks and opportunities. This, in turn, enables the Company to
effectively deliver on its strategic objectives in line with its appetite for
risk.
The Board's Responsibility for Risk Management
The Board has overall responsibility for ensuring Challenger Energy's risk
management and internal control frameworks are appropriate and are embedded at
all levels throughout the organisation. Principal risks are reviewed by the
Board and are specifically discussed in relation to setting the Company's
strategy, developing the business plan to deliver that strategy, and agreeing
annual work programmes and budgets.
Principal risks and uncertainties
The principal risks facing Challenger Energy, together with a description of
our assessment of the potential impacts of those risks eventuating, the
appetite / tolerance for the risk, and mitigation strategies and measures, are
presented below. Identified risks are segregated between those that we can
influence and those which are outside our control. Where we can influence
risks, we have more control over outcomes. Where risks are external to the
business, we focus on how we control the consequences of those risks
materialising.
KEY RISKS THAT WE CAN INFLUENCE
1. Risks related to health, safety, environment and security ('HSE&S')
Description of the risk
Oil and gas exploration, development and production activities can be complex
and are physical in nature. HSE&S risks cover many
areas including major accidents, personal health and safety, compliance with
regulations and potential environmental harm.
Potential impact if the risk materialises: High
Probability of the risk
materialising: Low
Risk Appetite
Challenger Energy has a very low appetite for risks associated with HSE&S
- it is a central tenet of our business that achievement of our commercial
objectives should not come at the expense of harm to people, community or the
environment.
Mitigation
At all times Challenger Energy strives to ensure the safety of its employees,
contractors and visitors, and we strive for a zero- incident rate. We are very
conscious of the natural environment that we operate in and seek to minimise
our environmental impact and footprint. This mitigation effort is reflected
in various ongoing activities, including training, safety awareness
activities, adoption and implementation of policies and procedures, and
rigorous HSE&S controls and monitoring.
2. Risks related to exploration, appraisal, development and production
of hydrocarbons
Description of the risk
The ultimate success of Challenger Energy is based on its ability to create
value through exploration activity across the existing
portfolio, to maintain and grow production from existing assets, and to
undertake selective activity to grow the asset portfolio. Failure to do so may
adversely impact on the Company's business.
Potential impact if the risk materialises:
High
Probability of the risk
materialising: Moderate
Risk Appetite
Challenger Energy has some tolerance for this risk given that it is central to
the business proposition for any hydrocarbon exploration and production
company, but acknowledges the need to have effective controls in place in this
area to mitigate the risk to the greatest extent possible.
Mitigation
The Company's team of employees are very experienced in the industry and in
the operation of oil and gas assets at various stages of their life cycle -
from identification and securing of assets through to exploration, appraisal,
development and production. In addition, Challenger Energy has built a trusted
network of service providers who are similarly familiar with the assets /
business.
3. Risks relating to geology, including reserves and resources
Description of the risk
The evaluation of geology, including the estimation of oil and gas reserves
and resources, typically involves a high level of
subjective judgment based on available geological, technical and economic
information.
Potential impact if the risk materialises:
Medium
Probability of the risk
materialising: Low
Risk appetite
Challenger Energy tolerates some risk related to the estimation of reserves
and resources given that it is central to the business proposition for any
hydrocarbon exploration and production company.
Mitigation
The Company has a strong focus on subsurface analysis, and our business
activities are typically technically led. We employ industry technical
specialists and qualified reservoir engineers and geologists who work closely
with our team to ensure integrity in evaluation of assets and optimal asset
performance.
4. Risks arising from a concentrated portfolio
Description of the risk
Challenger Energy's assets are concentrated in three locations in the western
Atlantic margin (Uruguay, Trinidad and Tobago, and
The Bahamas), with a disproportionate share of the Company's current overall
value being concentrated in only one location: Uruguay. This exposes
Challenger Energy disproportionately to adverse events / developments
occurring in those locations.
Potential impact if the risk materialises:
Medium
Probability of the risk
materialising:
High
Risk appetite
Challenger Energy has a moderate appetite for this risk, recognising that it
is an inevitable feature of the Company's business model.
Mitigation
The Company seeks to maintain active understanding and involvement in the
countries / communities in which it operates, so as to be aware of emerging
risks and prepared as to how best to respond. Additionally, the Company is
continuously seeking to selectively add new assets in new locations, so as to
spread the portfolio concentration risk more broadly.
5. Financing risk
Description of the risk
Oil and gas exploration, development and production activities are capital
intensive. The Company relies on investment capital to
operate its business. Failure to be able to access investment capital when
required could adversely impact the Company's business.
Potential impact if the risk materialises:
High
Probability of the risk
materialising:
Moderate
Risk appetite
Challenger Energy has a low appetite for financing risk, because the
inability to fund financial commitments, including licence obligations, could
significantly delay the development of the Company's assets and erode value
creation. Moreover, financial or operational commitments are often a
pre-condition to the grant of a licence, and the Company's inability to
satisfy these could result in financial penalties and/or termination of
licences, which would negate the entire premise of the Company's business.
Mitigation
Challenger Energy has a strong track record over many years of successfully
raising finance to fund its activities as and when required. The Company's
Board and senior management have deep experience and a strong track record in
sourcing investment capital for hydrocarbon exploration and production
businesses. Additionally, the Company has various specialist advisers to
assist in this area.
6. Key personnel risk
Description of the risk
The Company has a relatively small group of key people responsible for the
Company's activities and operations. The Company is
thus exposed to the risk that arises if one or more of those key people were
no longer available to provide services.
Potential impact if the risk materialises:
Moderate
Probability of the risk
materialising:
Moderate
Risk appetite
Challenger Energy has a moderate appetite for this risk, recognising that it
is an inevitable feature of the Company's size and business model.
Mitigation
The Company, wherever possible, seeks to ensure that "back-up" capability
exists for all key tasks and responsibilities. The Company maintains
procedures and policies to enable continuing operations in various contingency
situations, including the loss of key personnel. The Company also has various
retention and incentive arrangements in place, designed to secure ongoing
service of key personnel.
7. Risks associated with bribery and corruption
Description of the risk
There is a risk that third parties or staff could be encouraged to become
involved in corrupt or questionable practices. This risk is
especially pronounced given that some of the jurisdictions in which the
Company operates are considered "developing", and thus may lack some of the
regulatory controls typically associated with more developed economies.
Potential impact if the risk materialises:
High
Probability of the risk
materialising:
Low-moderate
Risk appetite
Challenger Energy has a zero-tolerance policy regarding bribery and
corruption. This is because any involvement in, or even mere association with
bribery and corruption exposes the Company and the people who work in the
Company's businesses to potential civil and criminal liability, as well as
significantly eroding the Company's reputation and "social licence to
operate", on which the Company's viability depends.
Mitigation
Challenger Energy, its Board and management have an established anti-bribery
and corruption ("ABC") policy, which is strictly enforced, and which is also
reinforced through frequent mandatory training and awareness programs for all
staff. The Company also requires and ensures that third-party contractors and
advisers follow its procedures and policies related to ABC.
KEY RISKS BEYOND OUR INFLUENCE
8. Fiscal and political risks
Description of the risk
The Company operates in multiple jurisdictions, including the Isle of Man, the
United Kingdom, Uruguay, Trinidad and Tobago, and The Bahamas. The Company is
therefore exposed to in-country fiscal and political risk in each
jurisdiction in which it operates. In particular, several of these
jurisdictions are considered to be "emerging" or "developing" markets, where
the fiscal and political risk - real or perceived - may be higher than that
typically encountered in more developed markets.
Potential impact if the risk
materialises: High
Probability of the risk
materialising:
Moderate
Risk appetite
Challenger Energy accepts a modest amount of fiscal and political risk, as a
natural feature of its business model.
Mitigation
The Company closely monitors the fiscal and political situation in the
jurisdictions it operates in with a view to identifying and minimising the
downside risk presented by changes in fiscal and political circumstances, and
considers the current structure and operation of the respective governments in
each of the jurisdictions of its operations to present low risk to the
Company. Further, the Company seeks to interact regularly and proactively with
relevant Governments, Government Ministries and Agencies, and the state-owned
oil and gas companies in the jurisdictions in which it operates. Challenger
Energy has no exposure to Russian oil production, and enacted sanctions have
had no impact on the Company's business or operations. Challenger Energy has
no US- based operations, and does not rely on US-sourced equipment or
supplies, and thus recent developments in relation to tariffs in the United
States are not expected to have any material impact on the Company's business.
9. Risks related to general market and economic conditions
Description of the risk
The Company operates in an industry that is globally significant, and where
industry activity and sentiment is highly sensitive to
changes in macro-economic and general market conditions.
Potential impact if the risk materialises:
Moderate
Probability of the risk
materialising:
Moderate
Risk appetite
Challenger Energy has a moderate appetite for this risk.
Mitigation
The Company closely monitors the general economic and market conditions in the
jurisdictions it operates in with a view to identifying and minimising the
downside risk presented by changes in those conditions.
10. Foreign exchange risk
Description of the risk
The Company's principal reporting and operating currency is United States
dollars, but it conducts operations in various
jurisdictions, and has expenses denominated in various other currencies,
including in UK Pounds Sterling, Uruguayan pesos, Bahamian dollars, and
Trinidad and Tobago dollars. As such, the Company is exposed to the risk of
adverse movements in the exchange rate between various currencies.
Potential impact if the risk
materialises: Moderate
Probability of the risk
materialising:
Moderate
Risk appetite
Challenger Energy has a low-to-moderate appetite for this risk.
Mitigation
The Company maintains deposits in various currencies, especially USD and GBP,
typically in sufficient amount to cover all forecast expenses in that currency
for the next 6-12 months, such that the Company is naturally hedged against
short-term adverse currency movements. While the Company has not hedged its
currency exposure in the past, the Company closely monitors currency
fluctuations with a view to assessing potential downside risk vis-à-vis
foreign currency requirements (and the timing thereof) so as to determine the
efficacy of any potential hedge.
11. Risks related to oil sales
Description of the risk
All of the Company's current production is derived from its assets in Trinidad
and Tobago and sold to a single customer, Heritage
Petroleum Company Limited, the Trinidad and Tobago state-owned national oil
and gas company. The Company is thus exposed to the risk of having only a
single customer, as well as exposed to commodity price risk in relation to
sales of crude oil. Demand can be negatively affected by economic conditions
in Trinidad and Tobago, and globally.
Potential impact if the risk materialises:
High
Probability of the risk
materialising:
Moderate
Risk appetite
Challenger Energy accepts demand risk related to its crude oil production. The
Company has a low-to-moderate appetite for commodity price risk, in that a
decline in oil prices could adversely affect the profitability, cash flow
and financial position of the Company's business in Trinidad and Tobago.
Mitigation
All of the Company's production in Trinidad is sold to Heritage Petroleum
Company Limited under the terms of the respective production licences /
production sharing agreements, under which the Company is fully exposed to
adverse commodity price fluctuation (and also conversely benefits from
favourable commodity price movement). There is no history of Heritage
Petroleum Company Limited refusing delivery of crude produced by the Company,
and the Company accepts this potential risk. The Company does not use hedging
instruments to mitigate oil price risk as the volumes are relatively small and
significant volatility observed in crude prices in the recent years coupled
with oil futures curve backwardation make it difficult to assess effectiveness
of
a hedge.
Directors' Report
The Directors present their report and the audited financial statements of
Challenger Energy Group PLC ("Challenger Energy" or "the Company") and the
consolidated group consisting of the Company and the entities it controlled
(the "Group") at the end of, or during, the financial year ended 31 December
2024.
Directors
The following persons were Directors of the Company for the whole of the
financial year under review:
Iain McKendrick (Non-Executive Chairman) Stephen Bizzell (Non-Executive
Director) Simon Potter (Non-Executive Director)
Eytan Uliel (Chief Executive Officer and Managing Director)
Mr. Robert Bose (Non-Executive Director) joined the Board of Directors of the
Company on 20 May 2024.
Principal Activity
The principal activity of the Group during the financial year under review
consisted of oil and gas exploration, appraisal, development and production in
Uruguay, Trinidad and Tobago and The Bahamas.
Results and dividends
The results of the Group for the year are set out on page 25 and show a loss
for the year ended 31 December 2024 of $1,050,000 (2023: loss of $13,421,000).
The total comprehensive loss for the year of $1,319,000 (2023: loss of
$10,986,000) has been transferred to the retained deficit. The results
include an impairment charge of intangible and tangible assets in Trinidad and
Tobago totalling $4,723,000 (2023: $12,957,000, this prior year amount
including a full write down of goodwill of $4,610,000).
The Directors do not recommend payment of a dividend (2023: nil).
Significant Shareholders
The following tables represent shareholdings of 3% or more notified to the
Company as at 31 December 2024:
Shareholder Shares Held %
Hargreaves Lansdown Asset Management 27,325,179 11.16
Choice Investments (Dubbo) Pty Ltd 16,740,000 6.84
Mr. Eytan Uliel 15,122,432 6.18
Hobart Capital 13,998,925 5.72
Bizzell Capital Partners 12,892,671 5.26
Interactive Investor 11,698,561 4.78
Mr. Mark Carnegie 11,200,000 4.57
Rookharp Capital Pty Ltd 10,560,000 4.31
Charlestown Energy(*) 9,000,000 3.68
Interactive Brokers 8,886,322 3.63
Merseyside Pension Fund 8,347,000 3.41
Morgan Stanley 7,900,245 3.23
TOTAL 153,671,335 62.77
((*))Charlestown Energy held a convertible note in the Company, which was
converted on 8 November 2024 into 20 million shares, which in aggregate
represented an interest of approximately 8.17% in the Company. On issuance
those shares were allocated between Charlestown Energy and various investment
partners of Charlestown Energy, such that Charlestown Energy's holding was 9
million shares, and the holding of other parties represents the balance of 11
million shares.
The table above is updated regularly by the Company to reflect movements in
shareholdings as notified to the Company from time to time. For the most
up-to-date listing, shareholders should refer to the Company's website:
www.cegplc.com/investor- (http://www.cegplc.com/investor-)
relations/major-shareholders.
Directors' Shareholding and Options
The interests in the Company at balance sheet date of all Directors who hold
or held office on the Board of the Company at the year-end and subsequent to
year-end are stated below.
Number of Shares Number of Options
Director 31-Dec-24 31-Dec-24
Iain McKendrick 1,709,198 2,240,000
Simon Potter 1,437,256 1,480,000
Stephen Bizzell 1,023,786 1,480,000
Robert Bose -(*) 1,480,000
Eytan Uliel 15,122,432 9,200,000
Total 19,292,672 15,880,000
(*)Note: Mr. Robert Bose is a Managing Member of Charlestown Energy which held
a 3.68% investment in the Group as at 31 December 2024.
Record of Board Meetings
There were 3 formal board meetings of the Company during the financial year.
Number of Number of
Board Meetings Board Meetings
Director Attended Eligible to Attend
Iain McKendrick 3 3
Simon Potter 3 3
Stephen Bizzell 3 3
Robert Bose 2 2
Eytan Uliel 3 3
During the period there were also a number of ad-hoc and informal gatherings
of the Board to discuss various items.
Statement of Directors' Responsibilities in respect of the financial statements
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable Isle of Man law and
regulation.
Company law requires the Directors to prepare financial statements for each
financial year. The Directors have elected to prepare the Group and Company
financial statements in accordance with International Financial Reporting
Accounting Standards as adopted by the IASB ("IFRSs"). The financial
statements are required by law to give a true and fair view of the assets,
liabilities and financial position of the Group and the Company and of the
profit or loss of the Group and Company for that period.
In preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether IFRSs have been followed, subject to any
material departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group and the Company
will continue in business.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Group and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and the Company and to enable them to ensure that the financial
statements comply with the Isle of Man Companies Acts 1931 to 2004. They are
also responsible for safeguarding the assets of the Group and the Company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities. The Directors are responsible for the maintenance
and integrity of the Company's website. Legislation in the Isle of Man
governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
On behalf of the Board
Eytan Uliel Director
12 June 2025
Independent auditor's report to the members of Challenger Energy Group PLC
Opinion
We have audited the financial statements of Challenger Energy Group PLC
("Company") and its subsidiaries (the "Group''), which comprise the
Consolidated Statement of Comprehensive Income, Consolidated and Company
Statements of Financial Position, Consolidated and Company Statements of Cash
Flows and Consolidated and Company Statements of Changes in Equity for the
year ended 31 December 2024, and the related notes to the financial
statements, including material accounting policy information.
The financial reporting framework that has been applied in the preparation of
the financial statements is applicable law and International Financial
Reporting Accounting Standards as adopted by IASB (IFRS).
In our opinion, Challenger Energy Group PLC's consolidated and company
financial statements:
• give a true and fair view in accordance with IFRS of the assets,
liabilities and financial position of the Group and the Company as at 31
December 2024, and of the Group and Company's financial performance and cash
flows for the year then ended; and
• have been properly prepared in accordance with the requirements
of the Isle of Man Companies Acts of 1931 to 2004.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ('ISAs (UK)') and applicable law. Our responsibilities under those
standards are further described in the 'Responsibilities of the auditor for
the audit of the financial statements' section of our report. We are
independent of the Group and Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in
the Isle of Man, including the FRC's Ethical Standard and the ethical
pronouncements established by Chartered Accountants Ireland, applied as
determined to be appropriate in the circumstances for the entity. We have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the validity of the directors'
assessment of the Group and Company's ability to continue to adopt the going
concern basis of accounting included:
• gaining an understanding of the business and the management's
process for developing a going concern assessment;
• evaluating management's future cash flow forecasts prepared up
to December 2026 and the process by why they were prepared, verifying the
mathematical accuracy of calculations, and agreeing the opening and subsequent
period cash positions;
• assessing management's underlying cash flow projections and
evaluating and challenging the assumptions such as corporate and
administrative expenses. In doing so, we compared forecast costs with
historical expenditure trends, post year end management accounts and to other
external and internal sources, where appropriate;
• assessing and validating the impact of the expected post year
end cash inflow sources including the proceeds from sale of the Group's
business, assets and operations in Trinidad and Tobago and refund of
performance guarantee;
• making inquiries with management and reviewing the board minutes
in order to understand the future plans and to identify potential
contradictory information; and
• assessing the completeness and appropriateness of management's
going concern disclosures in the financial statements.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and Company's ability
to continue as a going concern for a period of at least twelve months from the
date when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
financial period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and the directing of efforts of the engagement
team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and
therefore we do not provide a separate opinion on these matters.
Overall audit strategy
We designed our audit by determining materiality and assessing the risks of
material misstatement in the financial statements. In particular, we looked
at where the directors made subjective judgements, for example, in respect of
significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. We also addressed the
risk of management override of internal controls, including evaluating whether
there was any evidence of potential bias that could result in a risk of
material misstatement due to fraud.
Based on our considerations as set out below, our areas of focus included:
• Valuation of the Group's intangible exploration and evaluation
assets; and
• Valuation of the Group's tangible oil and gas assets.
How we tailored the audit scope
Challenger Energy Group Plc is the holder of several oil & gas exploration
and production licences located in Uruguay, Trinidad & Tobago and The
Bahamas.
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the directors that may have
represented a risk of material misstatement.
We performed an audit of the financial information of four components and
performed specified audit procedures for a further six components. The
remaining components of the Group were considered non-significant and these
components were subject to analytical procedures.
Components represent business units across the Group considered for audit
scoping purposes.
Materiality and audit approach
The scope of our audit is influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, such as our understanding of the entity and its
environment, the history of misstatements, the complexity of the Group and the
reliability of the control environment, helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures and to
evaluate the effect of misstatements, both individually and on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the Group
and Company at 0.75% of total assets at 31 December 2024. We have applied
this benchmark because the main objective of the Group is to utilise its
existing oil and gas assets and exploration and evaluation assets to provide
investors with returns on their investments.
We have set performance materiality for the Group and Company at 65% of
materiality, having considered business risks and fraud risks associated with
the entity and its control environment. This is to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected
misstatements in the financial statements exceeds materiality for the
financial statements as a whole.
We agreed with the audit committee and directors that we would report to them
misstatements identified during our audit above 2.5% of Group and Company
materiality, as well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Significant matters identified
The risks of material misstatement that had the greatest effect on our audit,
including the allocation of our resources and effort, are set out below as
significant matters together with an explanation of how we tailored our audit
to address these specific areas in order to provide an opinion on the
financial statements as a whole. This is not a complete list of all risks
identified by our audit.
Significant matter Description of Significant Matter and Audit Response
Valuation of the Group's intangible exploration and evaluation assets The intangible exploration and evaluation assets include an amount of $94.0
million (2023: $94.0 million) relating to the exploration and evaluation
(Notes 1.28 (i) and (iii), 10, 12 and 14) assets in the Bahamas. The offshore exploration license is pending renewal
with the Bahamian Government for a third three-year exploration period since
March 2021. The Group believes that the extensive studies showing sufficient
potential hydrocarbon volumes in untested horizons and structures within the
Bahamas licence area support the recoverability of the Group's capitalised
exploration costs, however, the delay on the part of the Bahamian Government
may result in some or all of the carrying value of the capitalised exploration
costs not fully recoverable. The Group remains in discussions with the
Bahamian Government over the terms of the licence renewal.
The Group reviews and tests for impairment its exploration and evaluation
assets on an ongoing basis when facts and circumstances suggest that the
carrying amount may exceed its recoverable amount. The Group's intangible
exploration and evaluation assets amounted to $94.8 million as at 31 December
2024 (2023: $95.7 million).
The valuation of the Group's intangible exploration and evaluation assets also
impacts the Company's investment in subsidiaries holding the Group's
intangible exploration and evaluation assets amounting to $43.7 million (2023:
$29.6 million) and the amount owed by subsidiary undertakings amounted to
$114.1 million (2023: $114.9 million). The recoverability of the Company's
investments in subsidiaries and amounts owed by subsidiary undertakings are
dependent on successful development or sale of the respective licence areas.
Significant auditor's attention was deemed appropriate because of the
materiality of the exploration and evaluation assets and the pending renewal
of the Bahamas licences into a third exploration period since March 2021. In
addition, the valuation of the Group's exploration and evaluation is a key
judgmental area due to the level of subjectivity in estimating the expected
future cash flows. As a result, we considered these as key audit matters.
The following audit work has been performed to address the risks:
• Obtaining an understanding and evaluation of the design and
implementation of key controls relevant to the valuation processes;
• Obtained management's assessment of each impairment trigger in
accordance with IFRS 6 - Exploration of Mineral Resources and performed test
of reasonableness on the assumptions used including sensitivity analysis of
prospect volumes of the explorations;
• Assessed whether the Group had the rights to explore in the
relevant geographical areas by obtaining supporting documentation such as
licence agreements and assessed compliance with licence conditions. In doing
so, we have obtained understanding of the licence renewal process and relevant
documentation submitted to the Bahamian Government;
• Enquired to determine whether management had the intention to
carry out exploration and evaluation activity in the relevant exploration
areas;
• Reviewed and challenged management's cash flow forecast models
to assess the level of the budgeted expenditure on these areas, and obtained
details of contracts;
• Assessed the outcome of drilling activities as to whether any
impairment indicators were present to suggest that the carrying value of these
exploration and evaluation assets is unlikely to be recovered through
development or sale; and
• Held meeting with management and their consultant regarding
updates on their discussions with the Bahamian Government.
Because of the inherent uncertainty surrounding the Bahamian licence renewal,
the judgements and assumptions made by the Directors mentioned in Note 1.28
may differ from the actual results, and such differences could be material.
The ultimate outcome of this matter is uncertain and the financial statements
do not include any potential adjustments that may be required arising out of
alternative outcomes.
The carrying value of the Group's tangible oil and gas assets after impairment
amounted to $1.9 million as at 31 December 2024 (2023: $7.6 million).
Significant auditor's attention was deemed appropriate because of the
materiality of the tangible oil and gas assets. In addition, the valuation of
the Group's tangible oil and gas assets is a key judgmental area due to the
level of subjectivity in estimating the expected future cash flows. As a
result, we considered these as key audit matters.
The following audit work has been performed to address the risks:
• Obtaining an understanding and evaluation of the design and
implementation of key controls relevant to the valuation processes;
• Assessed the impairment model prepared by management and
challenged the key assumptions in determining fair value less cost of
disposal;
• Assessed whether the model used was appropriate and checked the
related calculations;
• Discussed key assumptions underlying the impairment model with
management, such as fair value and cost assumptions and performed procedures
to validate their reasonableness.
• Issued instructions to and directed the work of the component
auditor in Trinidad and Tobago in relation to the audit of tangible oil and
gas assets.
• Held regular meetings with and reviewed the working papers of
the component auditor to ensure that sufficient appropriate audit evidence was
obtained over the recoverability of the Group's tangible oil and gas assets.
We completed our planned audit procedures, with no exceptions noted.
Other information
Other information comprises information included in the annual report, other
than the financial statements and our auditor's report thereon, including the
Chief Executive Officer's Report to the Shareholders and Directors' Report.
The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies in the financial
statements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Acts 1931 to 2004 require us to report to you if, in our opinion:
• the Group and Company have not kept proper books of account, or
if proper returns adequate for our audit have not been received from branches
not visited by us; or
• the financial statements are not in agreement with the books of
account and returns; or
• the financial statements do not contain particulars as to loans
to, and remuneration of, Directors; or
• we have not received all the information and explanations which
are necessary for the purposes of our audit.
Responsibilities of management and those charged with governance for the financial statements
As explained more fully in the Statement of Director's Responsibilities,
management is responsible for the preparation of the financial statements
which give a true and fair view in accordance with IFRS, and for such internal
control as directors determine necessary to enable the preparation of
financial statements are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, management is responsible for
assessing the Group and Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to
liquidate the Group or Company or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Group and
Company's financial reporting process.
Responsibilities of the auditor for the audit of the financial statements
The objectives of an auditor are to obtain reasonable assurance about whether
the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report that includes
their opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of an auditor's responsibilities for the audit of the
financial statements is located on the Financial Reporting Council's website
at: www.frc.org.uk/auditorsresponsibilities.
(http://www.frc.org.uk/auditorsresponsibilities) This description forms part
of our auditor's report.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. Owing to the inherent limitations of an audit, there is an
unavoidable risk that material misstatement in the financial statements may
not be detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK). The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below.
Based on our understanding of the Group and industry, we identified that the
principal risks of non-compliance with laws and regulations related to
compliance with AIM Listing Rules, Data Privacy law, Employment Law,
Environmental Regulations, Health & Safety, and we considered the extent
to which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have a direct
impact on the preparation of the financial statements such as the local law,
Isle of Man Companies Act 1931 to 2004 and local tax legislations. The Audit
engagement partner considered the experience and expertise of the engagement
team to ensure that the team had appropriate competence and capabilities to
identify or recognise non-compliance with the laws and regulation. We
evaluated management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of
controls), and determined that the principal risks were related to posting
inappropriate journal entries to manipulate financial performance and
management bias through judgements and assumptions in significant accounting
estimates, in particular in relation to significant one-off or unusual
transactions. We apply professional scepticism through the audit to consider
potential deliberate omission or concealment of significant transactions, or
incomplete/inaccurate disclosures in the financial statements.
The group engagement team shared the risk assessment with the component
auditors so that they could include appropriate audit procedures in response
to such risks in their work.
In response to these principal risks, our audit procedures included but were
not limited to:
• enquiries of management board and audit committee on the
policies and procedures in place regarding compliance with laws and
regulations, including consideration of known or suspected instances of
non-compliance and whether they have knowledge of any actual, suspected or
alleged fraud;
• inspection of the Group's and Company's regulatory and legal
correspondence and review of minutes of board and audit committee meetings
during the year to corroborate inquiries made;
• gaining an understanding of the entity's current activities, the
scope of authorisation and the effectiveness of its control environment to
mitigate risks related to fraud;
• discussion amongst the engagement team in relation to the
identified laws and regulations and regarding the risk of fraud, and
remaining alert to any indications of non-compliance or opportunities for
fraudulent manipulation of financial statements throughout the audit;
• identifying and testing journal entries to address the risk of
inappropriate journals and management override of controls
• designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing
• challenging assumptions and judgements made by management in
their significant accounting estimates, including impairment assessment of
intangible exploration and evaluation assets, tangible oil and gas assets,
investment in subsidiaries and amounts owed by subsidiary undertakings;
• reviewing of the financial statement disclosures to underlying
supporting documentation and inquiries of management; and
• requesting information from component auditors on instances of
non-compliance with laws or regulations that could give rise to a material
misstatement of the group financial statements.
The primary responsibility for the prevention and detection of irregularities
including fraud rests with those charged with governance and management. As
with any audit, there remains a risk of non-detection or irregularities, as
these may involve collusion, forgery, intentional omissions,
misrepresentations or override of internal controls.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the company's members, as a body, in accordance
with Section 15 of Companies Act 1982. Our audit work has been undertaken so
that we might state to the company's members those matters we are required to
state to them in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
Cathal Kelly
(Senior Statutory Auditor)
For and on behalf of Grant Thornton
Chartered Accountants & Statutory Auditors 13-18 City Quay
Dublin 2 Ireland
12 June 2025
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
Year ended Year ended
31 December 31 December
Note 2024 2023
$ 000's $ 000's
Continuing operations
Net petroleum revenue 2 3,454 3,588
Cost of sales (3,908) (4,162)
Gross loss (454) (574)
Administrative expenses 2/3 (6,391) (4,362)
Impairment 3/10/11 (4,723) (12,957)
Gain on disposal of intangible exploration and evaluation assets 3/10 9,285 -
Operating foreign exchange gain/(loss) 340 (1,969)
Operating loss (1,943) (19,862)
Other income 121 429
Finance costs, net 9 (306) (99)
Loss before taxation from continuing operations (2,128) (19,532)
Benefit from/(provision) for income tax 5 25 (30)
Loss for the year from continuing operations (2,103) (19,562)
Discontinued operations
Gain after tax for the year from discontinued operations 13 1,053 6,141
Loss for the year attributable to equity holders of the parent company (1,050) (13,421)
Other comprehensive (expense)/income
Exchange differences on translation of foreign operations (269) 2,435
Other comprehensive (expense)/income for the year net of taxation (260) 2,435
Total comprehensive expense for the year attributable to equity holders of the
parent company
(1,319) (10,986)
(Loss)/earnings per share (cents) 8
Basic (loss)/earnings per share
- From continuing operations (0.98) (0.20)
- From discontinued operations 0.49 0.06
Total (0.49) (0.14)
Diluted earnings (loss) per share
- From continuing operations - -
- From discontinued operations - -
Total - -
The accompanying accounting policies and notes form an integral part of these statements.
financial
Refer to note 26 for the Company's comprehensive expense for the year.
Consolidated Statement of Financial Position
At 31 December 2024
At At
31 December 31 December
Note 2024 2023
$ 000's $ 000's
Assets
Non-current assets
Intangible exploration and evaluation assets 10 94,766 95,726
Goodwill 10 - -
Tangible assets 11 3,858 9,734
Escrow and abandonment funds 14 1,656 1,601
Deferred tax asset 5 1,333 4,637
Total non-current assets 101,613 111,698
Current assets
Trade and other receivables 14 2,709 3,202
Inventories 15 148 280
Restricted cash 16 1,299 825
Cash and cash equivalents 18 8,434 1,005
Total current assets 12,590 5,312
Total assets 114,203 117,010
Liabilities
Non-current liabilities
Provisions 19 (4,805) (5,669)
Deferred tax liability 5 (1,378) (4,707)
Total non-current liabilities (6,183) (10,376)
Current liabilities
Trade and other payables 17 (7,644) (8,182)
Borrowings 18 - -
Total current liabilities (7,644) (8,182)
Total liabilities (13,827) (18,558)
Net assets 100,376 98,452
Shareholders' equity
Called-up share capital 20 3,206 2,753
Share premium reserve 20 183,235 180,507
Share based payments reserve 21 5,698 5,636
Retained deficit (110,722) (109,672)
Foreign exchange reserve (4,325) (4,056)
Other reserves 20 23,284 23,284
Total equity attributable to equity holders of the parent company 100,376 98,452
The accompanying accounting policies and notes form an integral part of these
financial statements. Refer to note 26 for the Company's comprehensive
expense for the year.
These financial statements were approved and authorised for issue by the
Board of Directors of the Company on 12 June 2025 and signed on its behalf by:
Eytan Uliel Iain McKendrick
Director
Director
Company Statement of Financial Position
At 31 December 2024
At At
31 December 31 December
Note 2024 2023
$ 000's $ 000's
Assets
Non-current assets
Property, plant and equipment 11 2 5
Investment in subsidiaries 12 43,650 43,650
Trade and other receivables 14 114,057 114,903
Total non-current assets 157,709 158,558
Current assets
Trade and other receivables 14 415 165
Restricted cash 16 1,007 525
Cash and cash equivalents 18 8,134 594
Total current assets 9,556 1,284
Total assets 167,265 159,842
Liabilities
Non-current liabilities
Borrowings 18 - -
Total non-current liabilities - -
Current liabilities
Trade and other payables 17 (10,690) (1,978)
Borrowings 18 - -
Total current liabilities (10,690) (1,978)
Total liabilities (10,690) (1,978)
Net assets 156,575 157,864
Shareholders' equity
Called-up share capital 20 3,206 2,753
Share premium reserve 20 183,235 180,507
Share based payments reserve 21 5,328 5,266
Retained deficit (64,729) (60,197)
Other reserve 20 29,535 29,535
Total equity attributable to equity holders of the parent company 156,575 157,864
The accompanying accounting policies and notes form an integral part of these
financial statements.
These financial statements were approved and authorised for issue by the
Board of Directors of the Company on 12 June 2025 and signed on its behalf by:
Eytan Uliel Iain McKendrick
Director
Director
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
Year ended Year ended
31 December 31 December
2024 2023
$ 000's $ 000's
Cash flows from operating activities
Loss before taxation from continuing operations (2,128) (19,532)
Decrease/(increase) in trade and other receivables 172 (549)
Increase in trade and other payables and provisions 107 445
Decrease/(Increase) in inventories 111 (115)
Impairment of tangible and intangible assets (notes 10 and 11) 4,723 12,957
Depreciation of property, plant and equipment (note 11) 1,377 1,617
Gain on disposal of Intangible exploration and evaluation assets (notes 3 and (9,285) -
10)
Loss on disposal of property, plant and equipment (note 11) (12) 80
Amortisation (note 10) 25 26
Share settled payments (note 21) 149 102
Other income (121) (429)
Finance costs (note 9) 306 99
Share based payments (note 21) 62 1
Foreign exchange (gain)/loss on operating activities (340) 1,969
Net cash outflow from operating activities (4,854) (3,329)
Cash flows from investing activities
Purchase of property, plant and equipment (note 11) (260) (93)
Proceeds from sale of property, plant and equipment 55 -
Payments for exploration and evaluation assets (1,732) (1,039)
Increase in restricted cash (473) (1)
Proceeds on disposal of Intangible exploration and evaluation assets (note 3) 12,730 -
Proceeds from sale of subsidiaries, net of cash sold (1) 2,194
Other income received 195 67
Interest received (note 9) 53 -
Net cash inflow from investing activities 10,567 1,128
Cash flows from financing activities
Principal elements of lease payments - (22)
Finance costs (2) (19)
Proceeds of borrowings (note 18) 1,800 636
Repayment of borrowings (note 18) - (432)
Net cash inflow from financing activities 1,798 163
Net increase/(decrease) in cash and cash equivalents 7,511 (2,038)
Effects of exchange rate changes on cash and cash equivalents (82) 591
Cash and cash equivalents at beginning of year 1,005 2,452
Cash and cash equivalents at end of year 8,434(*) 1,005(*)
Cash and cash equivalents included in disposal group - -
Cash and cash equivalents for continuing operations 8,434(*) 1,005(*)
(*)This does not include $1,299,000 in restricted cash holdings at 31 December
2024 (2023: 825,000) - refer to note 16 for details.
The accompanying accounting policies and notes form an integral part of these
financial statements.
(*)This does not include $1,007,000 in restricted cash holdings at 31 December
2024 (2023: $525,000) - refer to note 16 for details.
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Called up Share Share based Retained deficit Foreign Other reserves Total Equity
share capital premium reserve payments reserve exchange reserve
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Group
At 1 January 2023 2,540 180,240 5,635 (96,999) (5,743) 23,284 108,957
Loss for the year - - - (13,421) - - (13,421)
Currency translation
differences - - - 748 1,687 - 2,435
Total comprehensive income/ (expense)
- - - (12,673) 1,687 - (10,986)
Share capital issued 213 267 - - - - 480
Share based payments - - 1 - - - 1
Total contributions by and distributions to owners of the Company
213 267 1 - - - 481
At 31 December 2023 2,753 180,507 5,636 (109,672) (4,056) 23,284 98,452
Loss for the year - - - (1,050) - - (1,050)
Currency translation
differences - - - - (269) - (269)
Total comprehensive expense
- - - (1,050) (269) - (1,319)
Share capital issued 453 2,728 - - - - 3,181
Share based payments - - 62 - - - 62
Total contributions by and distributions to owners of the Company
453 2,728 62 - - - 3,243
At 31 December 2024 3,206 183,235 5,698 (110,722) (4,325) 23,284 100,376
The accompanying accounting policies and notes form an integral part of these
financial statements.
Company Statement of Changes in Equity
For the year ended 31 December 2024
Called up Share Share based Retained deficit Other reserve Total Equity
share capital premium reserve payments reserve
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Company
At 1 January 2023 2,540 180,240 5,265 (51,127) 29,535 166,453
Loss for the year - - - (9,070) - (9,070)
Total comprehensive expense - - - (9,070) - (9,070)
Share capital issued 213 267 - - - 480
Share based payments - - 1 - - 1
Total contributions by and distributions to owners of the Company
213 267 1 - - 481
At 31 December 2023 2,753 180,507 5,266 (60,197) 29,535 157,864
Loss for the year - - - (4,532) - (4,532)
Total comprehensive expense - - - (4,532) - (4,532)
Share capital issued 453 2,728 - - - 3,181
Share based payments - - 62 - - 62
Total contributions by and distributions to owners of the Company
453 2,728 62 - - 3,243
At 31 December 2024 3,206 183,235 5,328 (64,729) 29,535 156,575
The accompanying accounting policies and notes form an integral part of these
financial statements.
Notes to the financial statements for the year ended 31 December 2024
1 Material accounting policy information
1.01 General information and authorisation of financial statements
The Group is the holder of several hydrocarbon exploration and production
licences located in Uruguay, Trinidad and Tobago and The Bahamas.
The Company is a limited liability company incorporated and domiciled in the
Isle of Man. The address of its registered office is The Engine House,
Alexandra Road, Castletown, Isle of Man IM9 1TG. The Company's review of
operations and principal activities is set out in the Directors' Report. See
note 12 to the financial statements for details of the Company's principal
subsidiaries.
The accounting reference date of the Company is 31 December.
1.02 Statement of compliance with IFRS
The Group's financial statements have been prepared in accordance with
International Financial Reporting Accounting Standards as adopted by IASB
("IFRS"). The Company's financial statements have been prepared in accordance
with IFRS and as applied in accordance with the provisions of the Isle of Man
Companies Acts 1931 to 2004. As permitted by part 1 Section 3(5) of the Isle
of Man Companies Act 1982, the Company has elected not to present its own
Statement of Comprehensive Income for the year. The principal accounting
policies adopted by the Group and the Company are set out below.
New standards, interpretations and amendments adopted without an impact on the Group's consolidated financial statements effective from 1 January 2024
• Classification of Liabilities as Current or Non-current
(Amendments to IAS 1)
• Lease Liability in a Sale and Leaseback (Amendments to
IFRS 16)
• Supplier Finance Arrangements (Amendments to IAS 7 and
IFRS 7)
• Non-current Liabilities with Covenants (Amendments to IAS
1)
New and revised standards and interpretations not applied
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 December 2024 reporting periods and have not been
early adopted by the Group and the Company. These standards are not expected
to have a material impact on the Group and the Company in the current or
future reporting periods and on foreseeable future transactions.
1.03 Basis of preparation
The financial statements have been prepared on the historical cost basis,
except for the measurement of certain assets and financial instruments at
fair value as described in the accounting policies below.
The financial statements have been prepared on a going concern basis, refer
to note 1.28 for more details.
The financial statements are presented in United States Dollars ($) and all
values are rounded to the nearest thousand dollars ($'000) unless otherwise
stated.
1.04 Basis of consolidation
The financial statements incorporate the results of the Company and the Group
using the acquisition method. Control is achieved where the Company is exposed
to, or has rights to, variable returns from its involvement with the relevant
Group entity and has the ability to affect those returns through its power
over that entity.
Inter-company transactions and balances between Group companies are eliminated
in full.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used in line with those used by
the Group.
1.05 Business combinations
On the acquisition of a subsidiary, the business combination is accounted for
using the acquisition method. In the consolidated statement of financial
position, the acquiree's identifiable assets and liabilities are initially
recognised at their fair values at the acquisition date. The cost of an
acquisition is measured as the fair value of aggregated amount of the
consideration transferred, measured at the date of acquisition. The
consideration paid is allocated to the assets acquired and liabilities assumed
on the basis of fair values at the date of acquisition. Acquisition costs not
directly related to the issuance of shares in consideration are expensed when
incurred and included in administrative expenses. Acquisition costs which are
directly related to the issuance of shares in consideration are deducted from
share premium. The results of acquired operations are included in the
consolidated statement of comprehensive income from the date on which control
is obtained.
If the cost of acquisition exceeds the fair value of the identifiable net
assets attributable to the Group, the difference is considered as purchased
goodwill, which is not amortised but annually reviewed for impairment. In the
case that the identifiable net assets attributable to the Group exceed the
cost of acquisition, the difference is recognised in profit or loss as a gain
on bargain purchase.
1.05 Business combinations continued
If the initial accounting for a business combination cannot be completed by
the end of the reporting period in which the combination occurs, only
provisional amounts are reported, which can be adjusted during the measurement
period of up to 12 months after acquisition date.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
1.06 Intangible assets - exploration and evaluation assets
Exploration and evaluation expenditure incurred which relates to more than one
area of interest is allocated across the various areas of interest to which it
relates on a proportionate basis. Exploration and evaluation expenditure
incurred by or on behalf of the Group is accumulated separately for each area
of interest. The area of interest adopted by the Group is defined as a
petroleum title.
Expenditure in the area of interest comprises direct costs and an appropriate
portion of related overhead expenditure but does not include general overheads
or administrative expenditure not linked to a particular area of interest.
As permitted under IFRS 6, exploration and evaluation expenditure for each
area of interest, other than that acquired from the purchase of another
entity, is carried forward as an asset at cost provided that one of the
following conditions is met:
• the costs are expected to be recouped through successful
development and exploitation of the area of interest, or alternatively by its
sale; or
• exploration and/or evaluation activities in the area of
interest have not, at the reporting date, reached a stage which permits a
reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or in
relation to, the area of interest are continuing.
Such costs are initially capitalised as intangible assets and include payments
to acquire the legal right to explore, together with the directly related
costs of technical services and studies, seismic acquisition, exploratory
drilling and testing. Exploration and evaluation expenditure which fails to
meet at least one of the conditions outlined above is taken to the
consolidated statement of comprehensive income.
Expenditure is not capitalised in respect of any area of interest unless the
Group's right of tenure to that area of interest is current.
Intangible exploration and evaluation assets in relation to each area of
interest are not amortised until the existence (or otherwise) of commercial
reserves in the area of interest has been determined.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying amount may exceed its recoverable
amount. In accordance with IFRS 6, the Group reviews and tests for impairment
on an ongoing basis and specifically if the following occurs:
a) the period for which the Group has a right to explore in the
specific area has expired during the period or will expire in the near
future, and is not expected to be renewed;
b) substantive expenditure on further exploration for and
evaluation of hydrocarbon resources in the specific area is neither budgeted
nor planned;
c) exploration for and evaluation of hydrocarbon resources in
the specific area have not led to the discovery of commercially viable
quantities of mineral resources and the Group has decided to discontinue such
activities in the specific area; or
d) sufficient data exists to indicate that although a
development in the specific area is likely to proceed the carrying amount of
the exploration and evaluation asset is unlikely to be recovered in full from
successful development or by sale.
An impairment loss is recognised for the amount by which the asset's carrying
value exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely independent of
the cash inflows from other assets or groups of assets (cash-generating
units).
Net proceeds from any disposal of an exploration asset are initially credited
against the previously capitalised costs. Any surplus proceeds are credited to
the consolidated statement of comprehensive income.
1.07 Oil and gas development/producing assets and commercial reserves
If the field is determined to be commercially viable, the attributable costs
are transferred to development/production assets within tangible assets in
single field cost centres.
Subsequent expenditure is capitalised only where it either enhances the
economic benefits of the development/producing asset or replaces part of the
existing development/producing asset.
Decreases in the carrying amount are charged to the consolidated statement of
comprehensive income.
Net proceeds from any disposal of development/producing assets are credited
against the previously capitalised cost. A gain or loss on disposal of a
development/producing asset is recognised in the consolidated statement of
comprehensive income to the extent that the net proceeds exceed or are less
than the appropriate portion of the net capitalised costs of the asset.
Commercial reserves are proven and probable oil and gas reserves, which are
defined as the estimated quantities of crude oil, natural gas and natural gas
liquids which geological, geophysical and engineering data demonstrate with a
specified degree of certainty to be recoverable in future years from known
reservoirs and which are considered commercially producible. There should be
at least a 50% statistical probability that the actual quantity of recoverable
reserves will be more than the amount estimated as a proven and probable
reserves.
1.08 Depletion and amortisation
All expenditure carried within each field is amortised from the commencement
of production on a unit of production basis, which is the ratio of oil and gas
production in the period to the estimated quantities of commercial reserves at
the end of the period plus the production in the period, generally on a
field-by-field basis. In certain circumstances, fields within a single
development area may be combined for depletion purposes. Costs used in the
unit of production calculation comprise the net book value of capitalised
costs plus the estimated future field development costs necessary to bring
the reserves into production. Changes in the estimates of commercial reserves
or future field development costs are dealt with prospectively.
1.09 Decommissioning
Where a material liability for the removal of production facilities and site
restoration at the end of the productive life of a field exists, a provision
for decommissioning is recognised. The amount recognised is the present value
of estimated future expenditure determined in accordance with local conditions
and requirements. The cost of the relevant tangible fixed asset is increased
with an amount equivalent to the provision and depreciated on a unit of
production basis. Changes in estimates are recognised prospectively, with
corresponding adjustments to the provision and the associated fixed asset.
1.10 Property, plant and equipment
Property, plant and equipment is stated in the consolidated statement of
financial position at cost less accumulated depreciation and any recognised
impairment loss. Depreciation on property, plant and equipment other than
exploration and production assets, is provided at rates calculated to write
off the cost less estimated residual value of each asset on a straight-line
basis over its expected useful economic life. Depreciation rates applied for
each class of assets are detailed as follows:
Furniture, fittings and equipment 1 -
4 years
Motor
vehicles
5 years
Leasehold
improvements
Over the life of the lease
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount with any impairment charge being taken to the consolidated
statement of comprehensive income.
Gains and losses on disposals are determined by comparing proceeds with
carrying amount and are recognised in the consolidated statement of
comprehensive income.
1.11 Non-current assets and liabilities classified as held for sale and discontinued operations
A discontinued operation is a component of the Group that either has been
disposed of, or is classified as held for sale. A discontinued operation
represents a separate major line of the business for which a disposal or
divestment is considered to be active and highly probable of taking place at
reporting date. Profit or loss from discontinued operations comprises the
post-tax profit or loss of discontinued operations and the post-tax gain or
loss recognised on the measurement to fair value less costs to sell or on the
disposal group(s) constituting the discontinued operation.
Non-current assets classified as held for sale are presented separately and
measured at the lower of their carrying amounts immediately prior to their
classification as held for sale and their fair value less costs to sell.
However, some held for sale assets such as financial assets or deferred tax
assets, continue to be measured in accordance with the Group's relevant
accounting policy for those assets. Once classified as held for sale, the
assets are not subject to depreciation or amortisation.
Any profit or loss arising from the sale of a discontinued operation or its
remeasurement to fair value less costs to sell is presented as part of a
single line item, profit or loss from discontinued operations. See Note 13
for further details.
1.12 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined by the weighted average cost formula, where cost is determined from
the weighted average of the cost at the beginning of the period and the cost
of purchases during the period. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to be incurred
in marketing, selling and distribution.
1.13 Revenue recognition
Revenue from sales of oil and natural gas is recognised at the transaction
price to which the group expects to be entitled, exclusive of indirect taxes
and excise duties. Revenue is recognised when performance obligations have
been met, on delivery of product and when control of the product is
transferred to the customer.
1.14 Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling
at the date of each transaction. Foreign currency monetary assets and
liabilities are retranslated using the exchange rates at the balance sheet
date. Gains and losses arising from changes in exchange rates after the date
of the transaction are recognised in the consolidated statement of
comprehensive income. This treatment of monetary items extends to the Group's
intercompany loans whereby gains and losses arising from changes in the
exchange rate after the date of transaction are also recognised in the
consolidated statement of comprehensive income. Intercompany loans are
provided to subsidiaries in the Group with the expectation that these loans
will be collected in the foreseeable future. Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign
currency are translated at the exchange rate at the date of the original
transaction.
In the financial statements, the net assets of the Group are translated into
its presentation currency at the rate of exchange at the balance sheet date.
Income and expense items are translated at the average rates for the period.
The resulting exchange differences are recognised in equity and included in
the translation reserve. The consolidated financial statements and company
financial statements are presented in United States Dollars ("$"), which is
the functional currency of the Company. Subsidiaries in the Group have a range
of functional currencies including United States Dollars, UK Pound Sterling,
Trinidad and Tobago Dollars, Bahamian Dollars, and Euros.
1.15 Leases
The Group leases various offices, warehouses, equipment and vehicles. Rental
contracts are typically made for lease terms of 12 months or less.
Payments associated with short-term leases of equipment and vehicles and all
leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise IT equipment and small items of
office furniture.
1.16 Financial instruments
Financial assets
The Group classifies its financial assets as financial assets held at
amortised cost. Management determines the classification of
its financial assets at initial recognition.
The Group classifies its financial assets as financial assets held at
amortised cost only if both of the following criteria are met:
- the asset is held within a business model whose objective is
to collect the contractual cash flows; and
- the contractual terms give rise to cash flows that are
solely payments of principal and interest.
Measurement
Financial assets held at amortised cost are initially recognised at fair
value, and are subsequently stated at amortised cost using the effective
interest method. Financial assets at amortised cost comprise 'cash and cash
equivalents' at variable interest rates, 'restricted cash', 'escrowed and
abandonment funds' and 'trade and other receivables' excluding 'prepayments'.
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit losses
associated with its financial assets held at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk.
The Group applies the expected credit loss model to financial assets at
amortised cost. When indicators of impairment exist for amounts due from
subsidiary undertakings, expected credit losses are assessed on the basis that
the loan is repayable on demand as of the reporting date. If the subsidiary
has sufficient liquid assets to settle the loan immediately, any expected
credit loss is likely to be immaterial. However, if the subsidiary cannot
demonstrate its ability to repay the loan on demand, the Company recognises an
expected credit loss. This involves estimating the potential loss based on how
much of the loan is likely to be recovered and the expected timing of
recovery, both of which require judgement.
Financial liabilities
The Group classifies its financial liabilities as other financial
liabilities. Other financial liabilities are recognised initially at fair
value and are subsequently measured at amortised cost using the effective
interest method. Other financial liabilities consist of 'trade and other
payables' and 'lease liabilities'. Trade and other payables represent
liabilities for goods and services provided to the Group prior to the end of
the financial period which are unpaid. The amounts are unsecured and are
usually paid within
30 days of recognition.
Fair value measurement
Fair value is the price that would be received when selling an asset or paid
to transfer a liability in an orderly transaction between market participants
in its principal or most advantageous market at the measurement date. All
assets and liabilities for which fair value is measured or disclosed in the
financial statements are further categorised using the following three-level
hierarchy that reflects the significance of the lowest level of inputs used
in determining fair value.
- Level 1 - Quoted prices are available in active markets for
identical assets or liabilities as of the reporting date. Active markets are
those in which transactions occur in sufficient frequency and volume to
provide pricing information on an ongoing basis.
- Level 2 - Pricing inputs are other than quoted prices in
active markets used in Level 1. Prices in Level 2 are either directly or
indirectly observable as of the reporting date. Level 2 valuations are based
on inputs, included quoted forward price for commodities, time value and
volatility factors, which can be substantially observed or corroborated in the
marketplace.
- Level 3 - Valuations in this level are those with inputs
that are not based on observable market data.
At each reporting date, the Group determines whether transfers have occurred
between levels in the hierarchy by reassessing the level of classification
for each financial asset and financial liability measured or disclosed at
fair value in the financial statements based on the lowest level input that
is significant to the fair value measurement as a whole. Assessments of the
significance of a particular input to the fair value measurement require
judgement and may affect the placement within the fair value hierarchy.
1.16 Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with
financial institutions with original maturities of three months or less. For
the purposes of the statement of cash flows, restricted cash is not included
within cash and cash equivalents (refer to note 16 for details of restricted
cash).
1.17 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are deducted, net of tax,
from the share premium. Net proceeds are disclosed in the statement of changes
in equity.
Costs of share issues are written off against the premium arising on the
issues of share capital.
1.18 Finance costs
Borrowing costs are recognised as an expense when incurred.
1.19 Borrowings
Borrowings are initially recognised at fair value, net of any applicable
transaction costs incurred. Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the income statement over the period of the
borrowings using the effective interest method (if applicable).
Interest on borrowings is accrued as applicable to that class of borrowing.
Convertible loans
Loans with certain conversion rights are identified as compound instruments
with the liability and equity components separately recognised. On initial
recognition the fair value of the liability component is calculated by
discounting the contractual stream of future cash flows using the prevailing
market interest rate for similar non-convertible debt. The difference between
the fair value of the liability component and the fair value of the whole
instrument is recorded as equity within the convertible debt option reserve.
Transaction costs are apportioned between the liability and the equity
components of the instrument based on the amounts initially recognised. The
liability component is subsequently measured at amortised cost using the
effective interest rate method, in line with other financial liabilities. The
equity component is not remeasured. On conversion of the instrument, equity is
issued and the liability component is derecognised. The original equity
component recognised at inception remains in equity.
No gain or loss is recognised on conversion.
1.20 Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
When the Group expects some or all of a provision to be reimbursed, for
example under an insurance contract, the reimbursement is recognised as a
separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the statement of
comprehensive income net of any reimbursement.
1.21 Dividends
Dividends are reported as a movement in equity in the period in which they are
approved by the shareholders.
1.22 Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax, including overseas tax, is provided at amounts expected to be
paid (or recovered) using the tax rates and laws that have been enacted or
substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, except where the Group
is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and adjusted to the extent that it is probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the consolidated statement of comprehensive income,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
1.23 Impairment of assets
At each balance sheet date, the Group assesses whether there is any indication
that its tangible and intangible assets have become impaired. Evaluation,
pursuit and exploration assets are also tested for impairment when
reclassified to oil and natural gas assets. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment, if any. If it is not possible to estimate the
recoverable amount of the individual asset, the recoverable amount of the
cash-generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of
its fair value less costs of disposal and its value in use. The value in use
is the present value of the future cash flows expected to be derived from an
asset or cash-generating unit. This present value is discounted using a
pre-tax rate that reflects current market assessments of the time value of
money and of the risks specific to the asset, for which future cash flow
estimates have not been adjusted. If the recoverable amount of an asset is
less than its carrying amount, the carrying amount of the asset is reduced to
its recoverable amount. That reduction is recognised as an impairment loss.
The Group's impairment policy is to recognise a loss relating to assets
carried at cost less any accumulated depreciation or amortisation immediately
in the consolidated statement of comprehensive income.
Impairment of goodwill
Goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the cash-generating units, or groups of cash-generating
units, that are expected to benefit from the synergies of the combination.
Goodwill is tested for impairment at least annually, and whenever there is an
indication that the asset may be impaired. An impairment loss is recognised on
cash-generating units, if the recoverable amount of the unit is less than the
carrying amount of the unit. The impairment loss is allocated to reduce the
carrying amount of the assets of the unit by first reducing the carrying
amount of any goodwill allocated to the cash-generating unit, and then
reducing the other assets of the unit, pro rata on the basis of the carrying
amount of each asset in the unit.If an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the revised estimate of its
recoverable amount but limited to the carrying amount that would have been
determined had no impairment loss been recognised in prior years. A reversal
of an impairment loss is recognised in the statement of comprehensive income.
Impairment losses on goodwill are not subsequently reversed.
1.24 Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, expected
to be settled within 12 months of the reporting date are recognised in other
payables in respect of employees' services up to the reporting date and are
measured at the amounts expected to be paid when the liabilities are settled.
Share-based payments
Where equity settled share-based instruments are awarded to employees or
Directors, the fair value of the instruments at the date of grant is charged
to the consolidated statement of comprehensive income over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based
on the number of instruments that eventually vest. Market vesting conditions
are factored into the fair value of the instruments granted. As long as all
other vesting conditions are satisfied, a charge is made irrespective of
whether the market vesting conditions are satisfied. The cumulative expense
is not adjusted for failure to achieve a market vesting condition.
Where equity instruments are granted to persons other than employees or
Directors, the consolidated statement of comprehensive income is charged with
the fair value of goods and services received.
Bonuses
The Group recognises a liability and an expense for bonuses. Bonuses are
approved by the Board and a number of factors are taken into consideration
when determining the amount of any bonus payable, including the recipient's
existing salary, length of service and merit. The Group recognises a provision
where contractually obliged or where there is a past practice that has created
a constructive obligation.
Pension obligations
For defined contribution plans, the Group pays contributions to privately
administered pension plans. The Group has no further payment obligations once
the contributions have been paid. The contributions are recognised as an
employee benefit expense when they are due.
Termination benefits
Termination benefits are payable when employment is terminated by the Group
before the normal retirement date, or whenever an employee accepts voluntary
redundancy in exchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to a termination and when the
entity has a detailed formal plan to terminate the employment of current
employees without the possibility of withdrawal. Benefits falling due more
than 12 months after the end of the reporting period are discounted to their
present value.
1.25 Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors that makes strategic decisions. The performance of operating
segments is assessed on the basis of key metrics applicable, such as barrels
of oil produced per day, "netbacks" per barrel, revenue and operating profit.
The Board has determined there is a single operating segment: oil and gas
exploration, appraisal, development and production. However, there are four
geographical segments: Uruguay (operating), Trinidad and Tobago (including a
single operating segment and a separate disposal group (refer to note 13)),
The Bahamas (operating), and The Isle of Man, UK, Spain, Saint Lucia and
Cyprus (all non-operating).
1.26 Share based payments reserve
This reserve is used to record the value of equity benefits provided to
employees and Directors as part of their remuneration and provided to
consultants and advisors hired by the Group from time to time as part of the
consideration paid.
1.27 Critical accounting estimates, judgements and assumptions
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a risk of causing material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
(i) Recoverability of oil and gas exploration and production assets
Impairment of Trinidad and Tobago and Suriname intangible and tangible oil and gas assets and property plant and equipment
The Directors carried out an impairment review of the Group's tangible and
intangible assets in Trinidad and Tobago, to determine whether the carrying
value of these assets exceeded their fair value. The impairment assessment was
undertaken by reference to various market data points and industry valuation
standards, including, where applicable, discounted cashflows. Post-year-end
the Group entered into an agreement for the sale of all of its business and
operations in Trinidad and Tobago - completion of this transaction is pending
as at the date of this report. Based on this agreement an implied valuation of
$6 million (as announced on 18 February 2025) was used to apply a Fair Value
Less Costs of Disposal methodology which has been considered in the impairment
testing for the year ended 31 December 2024. Following this exercise, the
Directors determined to record an impairment of $4,723,000 for the Trinidad
and Tobago tangible assets.
For the year ended 31 December 2023, a $4,610,000 full write-down of goodwill
was recorded. In addition to this, two of the cash generating units ("CGUs")
located in Trinidad and Tobago did not meet performance expectations. For
these continuing operations, an impairment assessment was prepared on a "value
in use" basis using discounted future cash flows based on expected future
field performance, a forward oil price of $70 per barrel and a pre-tax
discount rate of 10%. Applying this methodology impairments were identified
in the relevant CGUs. Consequently, an impairment of related Trinidad and
Tobago tangible assets of $8,290,000 within these CGUs was recognised in the
prior year balance sheet. A further impairment of
$57,000 was recorded to the intangible asset in Suriname following the Group's
decision to relinquish its licence there during the prior year.
Further sensitivity analysis performed in the 2023 impairment assessment
determined the following:
- A $5 per barrel decrease in the oil prices would result
increase the overall impairment charge to $8,879,000 to the CGUs;
- A 5% decrease in production would increase the overall
impairment charge to $8,972,000 to the CGUs; and
- A 5% increase in the pre-tax discount rate would increase
the overall impairment charge to $8,542,000 to the CGUs. Refer to note 10
(intangible assets) and note 11 (tangible assets).
Carrying value of capitalised exploration costs
Costs capitalised as exploration assets are assessed for impairment when
circumstances suggest that the carrying value may exceed its recoverable
value. This assessment involves judgement as to the likely commerciality of
the asset, the future revenues and costs pertaining and the discount rate to
be applied for the purposes of deriving a recoverable value.
The carrying value of exploration costs at 31 December 2024 is $94,766,000
(2023: $95,726,000) relating almost entirely to the cost of exploration
licences, geological and geophysical consultancy, seismic data acquisition and
interpretation and the drilling of an exploration well in The Bahamas. The
Group's exploration activities are subject to a number of significant and
potential risks including licence obligations, requirement for further
funding, geological and development risks, and
political risk.
The recoverability of these assets is dependent on the discovery and
successful development of economic reserves, including the ability to raise
finance to develop future projects or alternatively, sale of the respective
licence areas.
The carrying value of the Group's exploration and evaluation expenditure is
reviewed at each balance sheet date and, if there is any indication that it is
impaired, its recoverable amount is estimated. Estimates of impairment are
limited to an assessment by the Directors of any events or changes in
circumstances that would indicate that the carrying value of the asset may not
be fully recoverable. Any impairment loss arising is charged to the
consolidated statement of comprehensive income.
On 21 February 2019, the Group received notification from the Bahamian
Government of an extension of the term of its four licences in The Bahamas to
31 December 2020, with the requirement that the Company commence an
exploration well in the licences area before the end of the extended term. On
23 March 2020 the Group notified the Government of The Bahamas that, due to
the impacts of the global response to the Covid-19 pandemic, a force majeure
event had occurred under the terms of its licences, such that the term of the
licences needed to be extended beyond 31 December 2020 commensurate with the
duration of the force majeure event. In November 2020 the Group received
notification from the Government of The Bahamas agreeing to an extension of
these licences to 30 June 2021 as a result of the force majeure event. On 20
December 2020, the Group commenced drilling of the Perseverance-1 exploration
well on its offshore licences area in The Bahamas, with drilling activity
ceasing on 7 February 2021. Whilst the well demonstrated the presence of
hydrocarbons, commercial volumes of movable hydrocarbons were not present at
this drilling location. Subsequently the Group undertook an extensive review
of the data gathered from the Perseverance-1 well to determine the extent to
which this data indicates remaining prospectivity in deeper, untested
horizons, as well as horizons of interest at other locations in its offshore
licences area in The Bahamas. The results of this review indicate that
substantial prospectivity remains in sufficient potential volumes such that
further exploration activity on these licences is merited. On the basis of the
revised prospect volume inventory for these untested horizons and structures,
the Group undertook an exercise to determine whether the present value of any
future economic benefit which may be derived from hydrocarbon extraction from
these licences is sufficient to support the carrying value of the capitalised
costs at 31 December 2024. Following this review, the Group has determined
that the present value of these future economic benefits exceeds the carrying
value of this asset and that consequently no impairment of this asset is
required.
Given this, in March 2021, the Group notified the Government of The Bahamas
of its election to renew the four licences in The Bahamas into a further
three-year exploration period, having discharged the obligation to drill an
exploration well on the licences area before the expiry of the second
exploration term (which expired on 30 June 2021). Since then, the Group has
been in discussions with the Government of The Bahamas regarding the renewal
of these licences. As at the date of this report the renewal application
remains under review with the Government of The Bahamas. Notwithstanding that
the Group's application to renew the licences into a third exploration period
has now been pending for a considerable length of time, management considers
this to be within the bounds of normal expectation in The Bahamas, given that
(i) the renewal of the licences from the first exploration period into the
second exploration period took almost five years, (ii) a new Government was
elected in The Bahamas in September 2021, and (iii) Covid-19 pandemic related
lock downs caused significant administrative delays all across the world.
Once this renewal process is completed, the key obligation for the new
three-year period of the licences would be the drilling of a further
exploration well within the licences area before the expiry of the renewed
licences term. The ability of the Group to discharge this obligation would be
contingent on securing the funding required to execute the required
exploration well.
(ii) Going concern
These financial statements have been prepared on a going concern basis, which
assumes that the Group will continue in operation for the foreseeable future.
On 6 March 2024, the Group entered into a farmout agreement with Chevron, a
leading global energy company, in relation to the Group's AREA OFF-1 licence
offshore Uruguay, pursuant to which the Group received a $12.5 million cash
payment at completion (on 29 October 2024) along with Chevron agreeing to
carry the Group's share of certain future work programme costs. In addition,
the Group was entitled to an adjustment payment of approximately $0.2 million
related to AREA OFF-1 costs incurred in the period between signing of the
farmout agreement and completion of the transaction (received on 29 October
2024), as well as the release of $0.3 million of restricted cash held at
balance sheet date to secure performance of AREA OFF-1 work obligation
commitments (which release was finalised on 12 May 2025).
At 31 December 2024, the Group had approximately $8.4 million in unrestricted
cash and approximately $1.3 million in restricted cash (restricted cash, as
detailed in note 16, is cash that is held in Company accounts but which is
pledged in support of performance of work programme obligations, and thus
access to that cash is restricted - as work programme obligations are met that
cash will in due course become unrestricted, and thus available to the Company
for general use purposes).
Whilst the Group incurred an operating loss of $1.9 million for the financial
year ended 31 December 2024, as of 31 December 2024 the Group's current assets
exceed current liabilities by approximately $4.9 million, which includes
approximately $5.9m in respect of current payables owing in Trinidad and
Tobago, which the Group expects to exit completely following the completion of
the announced sale of all of the Group's business and undertakings in Trinidad
& Tobago. In addition to this, completion of the sale of the Group's
business in Trinidad and Tobago is expected to result in net receipts by the
Group through the course of 2025 of approximately $0.5m in cash and
approximately $0.75 million in freely tradeable listed securities, which would
increase the Group's overall cash position.
Given the foregoing, the Directors of the Company have thus prepared these
financial statements on a going concern basis: based on the Group's current
cash holdings and current cash flow forecasts, the Group expects to have
adequate financial resources to support its operations for the next 12 months
(and well into the foreseeable future beyond that). In addition, the Directors
note that the Company is a publicly listed company on a recognised stock
exchange, thus affording the Company the ability to raise equity capital, debt
and/or hybrid financing alternatives as and when the need arises. The Company
has a robust track record in this regard, having raised in excess of US$100
million in equity and alternative financing in the past.
(iii) Recoverability of investment in subsidiaries and amounts owed by subsidiary undertakings in the Company statement of financial position
The investment in the Company's direct subsidiaries and amounts owed by
subsidiary undertakings at 31 December 2024 stood at $43,650,000 (2023:
$43,650,000) and $125,757,000 (2023: $128,924,000) respectively.
Ultimate recoverability of investments in subsidiaries and amounts owed by
subsidiary undertakings is dependent on successful development and commercial
exploitation, increasing production through optimisation of existing wells,
drilling of new infill wells and/or the application of improved oil recovery
methods or alternatively, sale of the respective licence areas. The carrying
value of the Company's investments in subsidiaries is reviewed at each balance
sheet date and, if there is any indication of impairment, the recoverable
amount is estimated. Estimates of impairments are limited to an assessment by
the directors of any events or changes in circumstances that would indicate
that the carrying values of the assets may not be fully recoverable.
Similarly, the expected credit losses on the amounts owed by subsidiary
undertakings are intrinsically linked to the recoverable amount of the
underlying assets. Any impairment losses arising are charged to the statement
of comprehensive income.
At 31 December 2024, an impairment of the Company's investment in Columbus
Energy Resources Limited of nil (2023:
$7,300,000) was recorded. In addition to this a loss allowance for expected
credit losses of $11,699,000 (2023: $14,021,000) was held in respect of the
recoverability of amounts due from subsidiary undertakings.
1.28 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated as net profit/(loss)
attributable to members of the Company, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends,
divided by the weighted average number of ordinary shares, adjusted for any
bonus element.
Diluted earnings per share is calculated as net profit attributable to
members of the Company, adjusted for:
(i) Costs of servicing equity (other than dividends) and
preference share dividends;
(ii) The post-tax effect of dividends and interest associated with
dilutive potential ordinary shares that have been recognised as expenses; and
(iii) Other non-discretionary changes in revenues or expenses during
the period that would result from the dilution of potential ordinary shares,
divided by the weighted average number of ordinary shares and dilutive
potential ordinary shares, adjusted for any bonus element.
1.29 Investment in subsidiary in the Company statement of financial position
Investments in subsidiaries are recognised at initial cost of acquisition,
less any impairment to date.
2 Turnover and segmental analysis
Management has determined the operating segments based on the reports reviewed
by the Board of Directors of the Company that are used to make strategic
decisions. The Board has determined there is a single operating segment: oil
and gas exploration, appraisal, development and production. However, there are
four geographical segments: Uruguay (operating), Trinidad and Tobago
(including a single operating segment and a separate disposal group (refer to
note 13)), The Bahamas (operating), and The Isle of Man, UK, Spain, Saint
Lucia and Cyprus (all non-operating).
The Uruguay segment includes the exploration licences and technical works
which commenced in 2022 in respect of AREA OFF-1 and in 2024 in respect of
AREA OFF-3. The segment including Trinidad and Tobago has been reported as the
Group's direct oil and gas producing and revenue generating operating segment.
The Bahamas segment includes the Bahamian exploration licences on which
drilling activities were conducted in 2020 and 2021. The non-operating segment
includes the Isle of Man (the Group's parent) and the UK, which provide
management services to the Group, and entities in Spain, Saint Lucia and
Cyprus all of which are non-operating in that they either hold investments or
are dormant/in the process of being wound up. Their results are consolidated
and reported on together as a single segment.
Trinidad Disposal
Uruguay Trinidad Bahamas Non-Operating
Operating Operating Group Operating Entities Total
Year ended 31 December 2024 $'000 $'000 $'000 $'000
$'000 $'000
Operating profit/(loss) by geographical area
Net petroleum revenue - - - 3,454
(*)
- 3,454
Operating - (73) (4,020) (1,943)
profit/(loss)
9,154 (7,004)
Other - - 48 121
income
- 73
Finance costs - (282) (306)
(net)
(2) (22)
Profit/(loss) before taxation from
continuing - (73) (4,254) (2,128)
operations
9,152 (6,953)
Other information
Gain after tax for the year from
discontinued 1,053 - - 1,053
operations
- -
Administration - (73) (3,894) (6,391)
expenses
(130) (2,294)
Depreciation, - (1) (21) (1,402)
amortisation
- (1,380)
Impairment - - (271) (4,723)
- (4,452)
Capital - - - (2,778)
additions
(2,510) (268)
Segment assets
Tangible and intangible - 93,963 38 98,624
assets
429 4,194
Deferred tax - - - 1,333
asset
- 1,333
Escrow and abandonment - - - 1,656
funds
- 1,656
Trade and other - 500 353 2,709
receivables
7 1,849
Inventories - - - 148
- 148
Restricted - - 1,007 1,299
cash
- 292
Cash - - 8,182 8,434
- 252
Consolidated total - 94,463 9,580 114,203
assets
436 9,724
Segment liabilities
Trade and other - (1,054) (709) (7,644)
payables
(2) (5,879)
Deferred tax - - - (1,378)
liability
- (1,378)
Provisions - - (2,331) (4,805)
- (2,474)
Consolidated total - (1,054) (3,040) (13,827)
liabilities
(2) (9,731)
(*) Sales revenues were derived from a single customer within each of these
operating countries.
Uruguay Trinidad & Suriname Trinidad & St Lucia Disposal Bahamas Non-Operating Total
Operating Operating Group Operating Entities
Year ended 31 December 2023 $'000 $'000 $'000 $'000 $'000 $'000
Operating loss by geographical area
Net petroleum revenue (**) - 3,588 - - - 3,588
Operating loss (29) (11,802) - (96) (7,935) (19,862)
Other income - 407 - 22 - 429
Finance costs net - (5) - - (94) (99)
Loss before taxation from continuing operations
(29) (11,400) - (74) (8,029) (19,532)
Other information
Gain after tax for the year from
discontinued operations - - 6,141 - - 6,141
Administration expenses (29) (1,800) - (96) (2,437) (4,362)
Depreciation, amortisation - (1,605) - (2) (36) (1,643)
Impairment - (8,214) - - (4,743) (12,957)
Capital additions (1,149) (149) - - (5) (1,303)
Segment assets
Tangible and intangible assets 1,363 9,800 - 93,964 333 105,460
Deferred tax asset - 4,637 - - - 4,637
Escrow and abandonment funds - 1,601 - - - 1,601
Trade and other receivables 1 2,558 - 500 143 3,202
Inventories - 280 - - - 280
Restricted cash - 299 - - 526 825
Cash - 368 - - 637 1,005
Consolidated total assets 1,364 19,543 - 94,464 1,639 117,010
Segment liabilities
Trade and other payables - (6,047) - (1,053) (1,082) (8,182)
Deferred tax liability - (4,707) - - - (4,707)
Provisions - (3,194) - - (2,475) (5,669)
Consolidated total liabilities - (13,948) - (1,053) (3,557) (18,558)
(*) Sales revenues were derived from a single customer within each of these
operating countries.
3 Operating loss - Group
2024 2023
$ 000's $ 000's
Operating loss is arrived at after charging:
Fees payable to the Company's auditors and its associates for:
- the audit of the Company and Group financial statements 197 200
- non audit related services 7 -
Directors' emoluments - fees and benefits (*) 1,064 638
Impairment of tangible and intangible assets (**) 4,723 12,957
Depreciation (***) 1,377 1,617
Amortisation 25 26
Gain on disposal of Intangible exploration and evaluation assets (****) 9,285 -
(*) See note 7 for further details. (**) See note 10 for further details.
(***) Depreciation of certain oil and gas assets of $1,010,000 (2023:
$1,193,000) has been recognised within cost of sales.
(****) On 29 October 2024, the Group announced the completion of a farmout
agreement for a 60% interest in the AREA OFF-1 block, located offshore
Uruguay, to Chevron Mexico Finance LLC. As a result of the transaction, the
Company received a cash payment of $12.5 million and retained a 40%
non-operating interest in AREA OFF-1.
The proceeds were applied against the carrying value of intangible exploration
and evaluation assets, which totalled $3.4 million (note 10) in the Group's
Uruguayan subsidiary, CEG Uruguay S.A., at the time of completion. These
assets were written off to the income statement, resulting in a gain on
disposal of $9.3 million.
2024 2023
$ 000's $ 000's
Administrative expenses
Travel and accommodation 232 171
Stock exchange costs 100 51
Staff costs - cash settled 1,796 1,443
Staff costs - share settled (note 21) 149 72
Share based payments 62 1
Professional fees - cash settled 1,806 981
Professional fees - share settled (note 21) - 30
Other Trinidad taxes and interest costs 417 366
Office rental costs 111 117
Motor vehicle costs 99 95
(Gain)/loss on disposal of tangible assets (12) 80
IT and communications costs 83 89
Investor and public relations costs 125 125
Insurance costs 163 133
Depreciation and amortisation 388 450
Bad debt expense 658 -
Other 214 158
Total 6,391 4,362
4 Staff costs - Group
2024 2023
$ 000's $ 000's
Wages and salaries - cash (*) 2,713 2,498
Wages and salaries - share settled (note 21) 149 72
Share based payments 62 1
Other staff costs 187 140
Total 3,111 2,711
(*) Staff costs of $1,104,000 (2023: $1,195,000) has been recognised within
cost of sales.
5 Taxation - Group
2024 2023
$ 000's $ 000's
Analysis of tax charge in the year
Tax (credit)/charge on ordinary activities (25) 30
Factors affecting the tax charge for the year:
Loss on ordinary activities before tax (2,128) (19,532)
Standard rate of income tax in the IOM -% -%
Loss on ordinary activities multiplied by the standard rate of income tax - -
Effects of:
Overseas tax on profits (25) 30
Current tax charge for the year (25) 30
Deferred tax:
The net deferred tax balances solely relate to the Company's Trinidad and
Tobago operations. The components of the asset and liability for the years
ended December 31, 2024 and 2023 were as follows:
Deferred tax asset $ 000's
At 1 January 2023 7,375
Movement in losses carried forward (2,735)
Foreign exchange difference on translation (3)
At 31 December 2023 4,637
At 1 January 2024 4,637
Movement in losses carried forward (3,306)
Foreign exchange difference on translation 2
At 31 December 2024 1,333
Deferred tax liability
At 1 January 2023 7,415
Adjustment for property and equipment (2,705)
Foreign exchange difference on translation (3)
At 31 December 2023 4,707
At 1 January 2024 4,707
Adjustment for property and equipment (3,332)
Foreign exchange difference on translation 3
At 31 December 2024 1,378
Deferred tax assets arise on recognition of deferred tax liabilities which
arise on taxable temporary differences. As these temporary differences unwind,
release of the deferred tax liabilities creates a taxable profit against
which deferred tax assets are utilised. At 31 December 2024, the Group had an
unrecognised deferred tax asset of $25,780,000 (2023: $22,146,000) calculated
at 43.11% (2023: 42.3%) (weighted average across taxable entities) in respect
of an estimated $108,571,000 (2023: $71,806,000) of accumulated tax losses.
The deferred tax asset was not recognised as there was insufficient evidence
to suggest that it would be recoverable in future periods.
The recognition of movements in deferred tax assets and deferred tax
liabilities in the consolidated statement of comprehensive income for the year
have given rise to a net deferred tax credit of $25,000 (2023: tax charge of
$30,000).
5 Dividends
During the year, no dividends were paid or proposed by the Directors (2023:
nil).
6 Directors' remuneration - Group
2024 2023
$ 000's $ 000's
Directors' remuneration 1,064 638
Cash payments Share based payments
(*)Share-settled
payments Total
2024 $ 000's $ 000's $ 000's $ 000's
Non-Executive Directors
Iain McKendrick 110 - - 110
Stephen Bizzell 93 - - 93
Simon Potter 98 - - 98
Robert Bose 28 2 - 30
Executive Directors
Eytan Uliel 507 2 224 733
836 4 224 1,064
(*) 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 21 for further details.
Cash payments Share based payments Share-settled payments
Total
2023 $ 000's $ 000's $ 000's $ 000's
Non-Executive Directors
Iain McKendrick 64 - - 64
Stephen Bizzell 44 - - 44
Simon Potter 50 - - 50
Executive Directors
Eytan Uliel 480 - - 480
638 - - 638
8 Loss per share - Group
The calculation of loss per share is based on the loss after taxation divided
by the weighted average number of shares in issue during the year:
2024 2023
Loss for the year from continuing operations ($ 000's) (2,103) (19,562)
Profit after tax for the year from discontinued operations ($ 000's) 1,053 6,141
Loss for the year attributable to equity holders of the parent company ($ (1,050) (13,421)
000's)
Weighted average number of ordinary shares used in calculating basic earnings 215 9,823
per share (millions)
Basic loss per share from continuing operations (expressed in cents) (0.98) (0.20)
Basic earnings per share from discontinued operations (expressed in cents) 0.49 0.06
Basic loss per share total (expressed in cents) (0.49) (0.14)
Diluted
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares. The Company had one category of dilutive potential ordinary
shares: share options/warrants. For these share options/warrants, a
calculation is performed to determine the number of shares that could have
been acquired at fair value (determined as the average annual market share
price of the Company's shares) based on the monetary value of the subscription
rights attached to outstanding share options/warrants. The number of shares
calculated as above is compared with the number of shares that would have been
issued assuming the exercise of the share options/warrants. Share
options/warrants outstanding at the reporting date were as follows:
2024 2023
Total share options and warrants in issue (number) (see note 21) 45,549,590 1,791,544,485
Weighted average number of diluted shares used in calculating basic loss per 253 11,253
share (millions)
Diluted earnings per share from continuing operations (expressed in cents) - -
Diluted loss per share from discontinued operations (expressed in cents) - -
Diluted earnings per share total (expressed in cents) - -
For the years ended 31 December 2024 and 31 December 2023 as the inclusion of
potentially issuable ordinary shares would result in a decrease in the loss
per share, they are considered to be anti-dilutive and as such, a diluted loss
per share was not included.
9 Finance costs, net - Group
10 Intangible assets - Group
2024
Exploration &
Goodwill evaluation assets
$ 000's $ 000's
Cost
At 1 January 2024 7,045 101,127
Additions - 2,510
Disposal of Intangible exploration and evaluation assets - (3,445)
Foreign exchange difference on translation - (16)
At 31 December 2024 7,045 100,176
Accumulated amortisation and impairment
At 1 January 2024 7,045 5,401
Amortisation - 25
Foreign exchange difference on translation - (16)
At 31 December 2024 7,045 5,410
Net book value
At 31 December 2024 - 94,766
At 31 December 2023 - 95,726
Intangible assets - Group
2023
Exploration &
Goodwill evaluation assets
$ 000's $ 000's
Cost
At 1 January 2023 7,045 100,038
Additions - 1,149
Writedown - (57)
Foreign exchange difference on translation - (3)
At 31 December 2023 7,045 101,127
Accumulated amortisation and impairment
At 1 January 2023 2,435 5,378
Amortisation - 26
Impairment 4,610 -
Foreign exchange difference on translation - (3)
At 31 December 2023 7,045 5,401
Net book value
At 31 December 2023 - 95,726
At 31 December 2022 4,610 94,660
11 Tangible assets
2024
Group Company
Property, Decom- Property,
Oil and plant and missioning plant and
gas assets equipment (*) costs Total equipment (*)
$ 000's $ 000's $ 000's $ 000's $ 000's
Cost or Valuation
At 1 January 2024 36,839 7,094 2,973 46,906 12
Additions 80 179 9 268 -
Disposals (109) - - (109) -
Discontinued operations (8,249) - (702) (8,951) -
Foreign exchange difference on translation (46) (137) (5) (188) -
At 31 December 2024 28,515 7,136 2,275 37,926 12
Accumulated depreciation and Impairment
At 1 January 2024 29,208 6,013 1,951 37,172 7
Depreciation 1,010 231 136 1,377 3
Impairment 4,723 - - 4,723 -
Disposals (66) - - (66) -
Discontinued operations (8,249) - (702) (8,951) -
Foreign exchange difference on translation (52) (132) (3) (187) -
At 31 December 2024 26,574 6,112 1,382 34,068 10
Net book value
At 31 December 2024 1,941 1,024 893 3,858 2
At 31 December 2023 7,631 1,081 1,022 9,734 5
(*) Property, plant and equipment includes leasehold improvements.
Tangible assets
2023
Group Company
Property, Decom- Property,
Oil and plant and missioning plant and
gas assets equipment (*) costs Total equipment (*)
$ 000's $ 000's $ 000's $ 000's $ 000's
Cost or Valuation
At 1 January 2023 36,848 7,369 2,914 47,131 187
Additions 9 84 61 154 5
Disposals - (426) - (426) (180)
Foreign exchange difference on translation (18) 67 (2) 47 -
At 31 December 2023 36,839 7,094 2,973 46,906 12
Accumulated depreciation and Impairment
At 1 January 2023 20,011 6,009 1,555 27,575 140
Depreciation 1,193 285 139 1,617 12
Disposals - (346) - (346) (145)
Impairment 8,030 - 260 8,290
Foreign exchange difference on translation (26) 65 (3) 36 -
At 31 December 2023 29,208 6,013 1,951 37,172 7
Net book value
At 31 December 2023 7,631 1,081 1,022 9,734 5
At 31 December 2022 16,837 1,360 1,359 19,556 47
(*) Property, plant and equipment includes leasehold improvements.
12 Investment in subsidiaries
2024 2023
$ 000's $ 000's
Company Cost
At 1 January
43,650 50,940
Additions (*) - 10
Impairment (**) - (7,300)
At 31 December 43,650 43,650
(*) On 31 July 2023, ownership of Columbus Energy (St Lucia) Limited was
transferred from Columbus Energy (Cyprus) Limited to the Company, which now
directly controls this company.
(**) At 31 December 2023 an impairment of the Company's investment in Columbus
Energy Resources Limited of $7,300,000 was recorded.
Challenger Energy Group PLC, the parent company of the Group, holds 100% of
the share capital of the following companies:
(*) These subsidiaries are in the process of being wound up or liquidated as
part of a restructuring exercise to simplify the group structure and reduce
costs.
(**) As referenced in Note 25, on 18 February 2025 the Group announced that it
had entered into an agreement to sell its St. Lucia-domiciled subsidiary,
Columbus Energy (St. Lucia) Limited, including all of its subsidiaries,
assets, and operations in Trinidad and Tobago. Upon completion of the sale
(which remains pending as of the date of this report), the identified
subsidiaries will be fully divested from the Group.
For changes in the composition of the Group as a result of the sale of its
subsidiaries, please see Note 13 for details.
13 Discontinued operations
2024 Disposal:
Exit from the Bonasse licence (Trinidad South-West Peninsula):
On 27 August 2024, the Company entered into an arrangement to secure an
orderly and complete exit from the Bonasse licence. This comprised a
settlement agreement with the surface landowner and in parallel the transfer
of 100% of the share capital in CEG Bonasse Trinidad Limited, a Trinidad and
Tobago registered company that holds the Bonasse licence, to a third-party
acceptable to the surface landowner. The transfer agreement included that
third-party assuming and indemnifying the Group against all liabilities and
exposures associated with the Bonasse licence, and making payment to the
surface landholder of an agreed settlement amount, such that the Company
achieved a full exit from the Bonasse licence with no associated cost or cash
impact, and no future exposure. Consideration of $1 was received in cash
during the period. At the date of the disposal the carrying amounts of CEG
Bonasse Trinidad Limited net assets were as follows:
$ 000's
Assets
Cash and cash equivalent 1
Trade and other receivables 263
Inventories 21
Abandonment fund 3
288
Liabilities
Trade and other payables (635)
Provisions (751)
(1,386)
Total net liability (1,098)
Total consideration received in cash -
Less cash and cash equivalents disposed of (1)
Net cash received (1)
Gain on disposal (*) 1,097
(*) The gain on disposal is included in the gain for the year from
discontinued operations in the consolidated statement of profit and loss.
Reconciliation to gain from discontinued operations:
$ 000's
Gain on disposal (from sale of CEG Bonasse Trinidad Limited, as above) 1,097
Less losses resulting from CEG Bonasse Trinidad Limited for the period (44)
Gain after tax for the year from discontinued operations 1,053
The net cash flows incurred by the combined disposal group are, as follows:
$ 000's
Operating (57)
Investing (1)
Financing (4)
Net cash outflow (62)
2023 Disposals:
Sale of Cory Moruga:
On 20 December 2022, the Company entered into a binding heads of terms with
Predator Oil & Gas Holdings Plc ("POGH"), providing for the conditional
sale of the Company's interest in the non-producing Cory Moruga licence in
Trinidad through the sale of 100% of the share capital in T-Rex Resources
(Trinidad) Limited ("TREX"). The sale was completed on 6 November 2023.
However, on completion, and as a consequence of negotiations associated with
reaching an agreed position with the Trinidadian Ministry of Energy and Energy
Industries ("MEEI"), the Company and POGH agreed to vary certain terms of the
agreement between them, as follows:
- On completion, POGH paid to the Company US$1 million in
cash;
- A further US$1 million, which was due to be paid by POGH to
the Company six months from completion, was instead paid immediately by POGH
direct to MEEI, in part agreed settlement of past dues on the Cory Moruga
licence; and
- A contingent US$1 million payable by POGH to the Company in
the event of the Cory Moruga field achieving certain future production
benchmarks, and POGH granting to the Company a future back-in right to a 25%
interest in the Cory Moruga field at an uplifted multiple of cost base, were
agreed to no longer apply.
In addition to the cash consideration received, completion of the transaction
had the effect of extinguishing various liabilities in the Group's accounts
that related to TREX and the Cory Moruga licence, amounting to approximately
US$4.5 million. Further, in parallel with completion, all historical
differences and disputes between the Company and POGH in relation to the
Inniss-Trinity pilot CO(2) EOR Project were fully and amicably resolved,
pursuant to the terms of the previously announced Settlement Agreement between
the Company and POGH.
Consideration was received in cash during the period. At the date of the
disposal the carrying amounts of TREX net assets were as follows:
$ 000's
Assets
Trade and other receivables 852
Total assets 852
Liabilities
Trade and other payables (3,365)
Provisions (1,203)
Total liabilities (4,568)
Total net liability (3,716)
Total consideration received in cash 1,000
Less cash and cash equivalents disposed of -
Net cash received 1,000
Gain on disposal (*) 4,716
(*) The gain on disposal is included in the loss for the year from
discontinued operations in the consolidated statement of profit and loss.
Sale of South Erin:
On 14 February 2023 the Company entered into and simultaneously completed a
transaction for the sale of its St Lucia domiciled subsidiary company,
Caribbean Rex Limited ("CREX") which included all of its associated assets and
subsidiary entities. This included (via interposed subsidiaries) (i) CEG South
Erin Trinidad Limited ("CSETL") a Trinidad and Tobago registered company that
is party to a farmout agreement for, and is the operator of, the South Erin
field, onshore Trinidad and (ii) West Indian Energy Group Limited, a Trinidad
and Tobago registered service company.
Consideration was received in cash during the period. At the date of the
disposal the carrying amounts of CREX net assets were as follows:
$ 000's
Assets
Cash and cash equivalents 6
Restricted cash 89
Trade and other receivables 115
Tangible and intangible assets 402
Abandonment fund 106
Deferred Tax Asset 201
Total assets 919
Liabilities
Trade and other payables (989)
Provisions (808)
Borrowings (181)
Deferred tax liability (201)
Total liabilities (2,179)
Total net liability (1,260)
Total consideration received in cash 1,200
Less cash and cash equivalents disposed of (6)
Net cash received 1,194
Gain on disposal(*) 2,454
(*) The gain on disposal is included in the loss for the year from
discontinued operations in the consolidated statement of profit and loss.
Reconciliation to gain from discontinued operations:
$ 000's
Gain on disposal (from sale of TREX and subsidiaries as above) 4,716
Gain on disposal (from sale of CREX and subsidiaries as above) 2,454
Less losses resulting from TREX and subsidiaries for the period up to disposal (778)
date
Less losses resulting from CREX and subsidiaries for the period up to disposal (251)
date
Gain after tax for the year from discontinued operations 6,141
The net cash flows incurred by the combined disposal group are, as follows:
$ 000's
Operating 580
Investing 2,191
Financing (9)
Net cash outflow 2,762
14 Trade and other receivables
2024 2023
Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
Current trade and other receivables
Trade and other receivables 304 - 306 -
VAT receivable (*) 1,610 309 1,494 79
Other receivables (**) 85 4 732 -
Prepayments 668 72 631 56
Other deposits 42 30 39 30
Total 2,709 415 3,202 165
Non-current trade and other receivables
Escrow and Abandonment funds (***) 1,656 - 1,601 -
Loans due from subsidiaries (****) - 114,057 - 114,903
Total 1,656 114,057 1,601 114,903
Set out below is the movement in the allowance for expected credit losses of
loans due from subsidiaries:
Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
At 1 January - 14,021 - 14,737
Provision for expected credit losses (*****) - 784 - 739
Release of provision - - - (900)
Write offs - (3,106) - (555)
At 31 December - 11,699 - 14,021
(*) VAT receivable is stated after discounting to recoverable
amounts totalling $323,000, which have been recognised in the year (2023:
$373,000).
(**) 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 in
Trinidad and Tobago, the Company is obligated to remit payments into an Escrow
Fund and a separate Abandonment Fund. Payments are based on production, and
amounts paid vary by licence: US$0.25 per barrel of crude oil sold (Escrow
Fund), and between US$0.28 to US$1.00 varying by licence to the Abandonment
Fund (with those fund to be used for the future abandonment of wells in the
related licenced area).
(****) The loans due from subsidiaries are interest free and repayable on
demand. At 31 December 2024 a loss allowance for expected credit losses of
$784,000 (2023:
$739,000) is provided for with $11,699,000 recognised in the year (2023:
$14,021,000) 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 operations as the Company
cannot reasonably foresee the actual timing of recovery of these balances.
15 Inventories
2024 2023
Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
Crude oil 53 - 106 -
Consumables 95 - 174 -
Total 148 - 280 -
16 Restricted cash
2024 2023
Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
Credit card security 8 7 27 25
Licence related restricted bank deposits(*) 1,147 1,000 655 500
Bank deposits(**) 144 - 143 -
Total 1,299 1,007 825 525
(*) Licence related restricted bank deposits are cash amounts held
in separately identified Company bank accounts pledged in support of
fulfilment of work programme commitments on specific licences, and to which
access is restricted until those work program commitments are met. As at 31
December 2024 this consisted of$1,000,000 (2023: $500,000) relating to the
Group's Uruguay licences and $147,000 (2023: $155,000) relating to the Group's
licences in Trinidad and Tobago.
(**) Bank deposits consist of funds held as security for certain
environmental and / or performance bonds 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.
17 Trade and other payables
2024 2023
Group Company Group Company
$ 000's $ 000's $ 000's $ 000's
Current trade and other payables(*)
Trade and other payables 3,821 373 4,060 818
Accruals 3,823 218 4,122 160
Loan due to subsidiary undertaking - 10,099 - 1,000
Total 7,644 10,690 8,182 1,978
(*) Included in the current trade and other payables are
exploration and evaluation payables balances amounting to $6,500 (2023: nil).
Trade and other payables (including accruals) include dues, amounting to
approximately $1.4 million (2023: $2.2 million) in aggregate, that are
considered to be of a routine working capital nature, and that are being
settled in the ordinary course of business and / or under certain agreed
payment plans. The remainder of trade and other payables (including accruals)
include:
• approximately $4.8 million (2023: $4.1 million) is in
respect of taxes owed in Trinidad and Tobago that the Group expects to settle
by way of offset against tax refunds due to the Group in Trinidad and Tobago
($1.8 million (2023: $1.9 million), including under 'Trade and other
receivables'). The balance amount relates to a notional estimate of penalties
that apply in accordance with the tax laws in Trinidad and Tobago - as at the
date of this report these are notional estimates only and have not been levied
or assessed, and the Group does not expect that they will be levied or
assessed and that ultimately no cash payment will be required as the Group had
claimed the benefit of a tax amnesty during the 2021 tax amnesty period
implemented by the Trinidad and Tobago tax authorities, with the final
resolution of this matter remaining pending. Additionally, the Group has
estimated that it may be able to recover an additional $0.5 million (2023:
$0.5 million) in interest related to outstanding receivable balances,
contingent upon reaching a settlement with the Trinidad and Tobago tax
authorities - this amount is not reflected in the above table.
• approximately $1.4 million (2023: $1.8 million) is in
respect of various dues comprising, (i) $0.5 million (2023: $0.5 million) in
respect of potential insurance "top-up" exposure, due to the ultimate cost of
the Perseverance-1 well in The Bahamas exceeding the initial estimated cost -
however, as at the date of this report, the matter remains pending resolution
with the insurers, (ii) $0.6 million (2023: $0.6 million) in respect of
accrued licence fees in The Bahamas which the Group expects to offset against
$0.5 million (2023: $0.5 million) refundable advances (included in trade and
other receivables) resulting in no material incremental cash exposure to the
Group, and (iii) $0.3 million (2023: $0.7 million) in relation to legacy
accruals and historical creditors recognised in the financial statements
which the Group expects to be written-back following lapse of the relevant
statute of limitation period.
It is further noted that any amounts owed in Trinidad and Tobago are owed by
various indirectly held Trinidad and Tobago subsidiary entities of the Company
which are non-recourse to the Company, and which will cease to be reflected
as liabilities of the Group on completion of the sale of the entirety of the
Company's business in Trinidad and Tobago (refer to note 25). For reference,
assuming the sale of the Company's business in Trinidad and Tobago had been
completed on 31 December 2024, the total amount of trade and other payables
(including accruals) would have been $1.7 million for the Group.
18 Borrowings
(*) On 18 April 2024, the Group entered into a legally binding
term sheet with Charlestown Energy Partners LLC for an investment of
approximately £1,500,000 ($1,800,000). The investment was initially
structured as a loan, which would convert into equity at a fixed price of
0.168 pence per share (8.4 pence post share consolidation) upon the completion
of (i) the AREA-OFF-1 farmout to Chevron and (ii) a 1:50 share consolidation.
This conversion price represented an approximately 20% premium to the share
price at the time of the announcement. The loan accrued interest at an annual
rate of 12.0% (1% per month), compounded monthly. Upon conversion, the full
12-month interest became immediately payable. On 7 May 2024, the Group
confirmed that the final legal documentation for the Charlestown Energy loan
had been completed in accordance with the original term sheet and the loan
proceeds were received on 28 May 2024. Following the 1:50 share consolidation
(on 6 August 2024) and the completion of the AREA-OFF-1 farm-out to Chevron
(on 29 October 2024) the loan-including both the principal and accrued
interest totalling approximately £1,680,000 ($2,179,000)-was fully converted
into 20,000,000 ordinary shares. These shares were allotted on 8 November
2024.
(**) On 31 August 2023, the Company drew down a £550,000
(approximately $636,000) first tranche of a £3,300,000 (approximately
$4,198,000) convertible loan note facility agreed with a UK based alternative
asset management and investment firm. The loan notes, once drawn down, were
repayable within 36 months. Interest was fully pre- paid on draw down such
that on draw down 90% of the value of the loan notes was advanced in cash to
the Company. The holder of the loan notes had the right, at any time prior to
repayment, to elect to convert the loan notes into fully paid ordinary shares
in the Company at the lesser of (i) 140% of the Company's closing bid price on
the trading day immediately prior to the date of draw down, or (ii) 90% of the
lowest closing bid price in the five trading days immediately preceding the
date of the conversion. The loan notes were redeemable in cash by the Company,
all or in part, at any time after draw down at 105% of the par value. On 29
September 2023, the Company received a conversion notice in respect of
£165,000 of outstanding convertible notes requiring the company to issue
458,333,333 new ordinary shares. The new shares were issued on 5 October 2023.
On 27 October 2023, the Company announced it had re-financed the convertible
loan note facility and secured a short-term bridge loan of £346,500, the
proceeds of which were applied to immediately settle the unconverted balance
of the loan notes, including early redemption charges. As part of this
settlement the holder of the notes issued a further conversion notice in
respect of £55,000 of outstanding loan notes requiring the company to issue
100,000,000 new ordinary shares which were issued on 2 November 2023. The
outstanding bridge loan also included a 12% annual coupon accruing monthly.
The bridge loan was subsequently fully repaid on 7 November 2023.
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 2023 - (22) 2,453 2,431
Cash flows 204 22 (2,038) (1,812)
Realisation of conversion feature (268) - - (268)
Other 88 - - 88
Foreign exchange adjustments (24) - 590 566
At 31 December 2023 - - 1,005 1,005
At 1 January 2024 - - 1,005 1,005
Cash flows 1,800 - 7,511 9,311
Other (1,841) - - (1,841)
Foreign exchange adjustments 41 - (82) (41)
At 31 December 2024 - - 8,434 8,434
Net debt reconciliation Company
Borrowings Leases Cash Total
$ 000's $ 000's $ 000's $ 000's
At 1 January 2023 - - 2,174 2,174
Cash flows 204 - (1,590) (1,386)
Realisation of conversion feature (268) - - (268)
Other 88 - - 88
Foreign exchange adjustments (24) - 10 (14)
At 31 December 2023 - - 594 594
At 1 January 2024 - - 594 594
Cash flows 1,800 - 7,656 9,456
Other (1,841) - - (1,841)
Foreign exchange adjustments 41 - (116) (75)
At 31 December 2024 - - 8,134 8,134
19 Provisions - Group
Decommissioning (*)
$ 000's
At 1 January 2023 5,545
New provisions and allocations 61
Unwinding of discount (7)
Foreign exchange difference on translation 70
At 31 December 2023 5,669
At 1 January 2024 5,669
New provisions and allocations 9
Discontinued operations (751)
Unwinding of discount 28
Foreign exchange difference on translation (150)
At 31 December 2024 4,805
(*) 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 certain facilities in each location.
Decommissioning provisions in Trinidad and Tobago have been subject to a
discount rate of 5.13%-6.06% (2023: 4.32%-4.94%), expected cost inflation of
1.82% (2023: 1.87%) 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. The
Spanish subsidiary is currently in the process of being liquidated and
management's expectation is that the provision for decommissioning relating to
Spanish assets will be released on completion of this process.
20 Share capital - Group and Company
Nominal value Share premium
Called up, allotted, issued and fully paid ordinary shares of 1p each (2023: Number of shares $ 000's $ 000's
0.02p each)
At 1 January 2023 9,620,199,479 2,540 180,240
Shares issued at average price of 0.06p per share 315,533,332 77 135
Shares issued at average price of 0.04p per share 458,333,333 112 89
Shares issued at average price of 0.06p per share 100,000,000 24 43
At 31 December 2023 before capital reorganisation 10,494,066,144 2,753 180,507
At 31 December 2023 after capital reorganisation 209,881,322 2,753 180,507
Shares issued at average price of 7p per share 35,000,000 453 2,728
At 31 December 2024 244,881,322 3,206 183,235
On 6 August 2024, the Company reorganised its share capital and reduced the
number of ordinary shares in issue by a ratio of 1:50 (that is, 1 new ordinary
share for every 50 ordinary shares held). Following the reorganisation, the
nominal value of each ordinary share is 1 pence per share (pre-reorganisation:
0.02 pence per share).
During the year, 35 million shares were issued (2023: 874 million).
At the end of 2024, the number of shares in issue comprised 244,881,322
million ordinary shares.
During the year, transaction costs for issued share capital totalled $nil
(2023: $nil) which 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 2024 was
1,000,000,000 shares with a par value of 1 pence per share (post
consolidation) (2023 pre-consolidation: 50,000,000,000 shares of 0.02 pence
per share). All issued shares of 1 pence are fully paid.
Reverse Total other reserves
Merger reserve (*) acquisition reserve (**)
$ 000's $ 000's $ 000's
At 31 December 2023 77,131 (53,847) 23,284
At 31 December 2024 77,131 (53,847) 23,284
(*) 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 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.
In the Company Financial Statements, the Other Reserve balance of $29,535,463
(2023: $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 Bahamas Petroleum Company
PLC (then BPC PLC), which became the new parent company of the Group.
21 Share based payments reserve - Group and Company
A) Options and warrants
Share options and warrants 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:
2024 2023
Average exercise price per share No. Options and Warrants Average exercise price per share(**) No. Options and Warrants(**)
At beginning of the year before capital reorganisation 0.20p 1,791,554,485 0.24 1,388,473,911
At the beginning of the year after capital reorganisation 10.00p 35,831,090 - -
Expired 1,252.80p (61,500) 4.69p (6,919,426)
Cancelled - - 0.19p (800,000,000)
Granted 10.24p 9,780,000 0.17p 1,210,000,000
Exercised - - - -
At end of year 8.38p 45,549,590 0.20p 1,791,554,485
Exercisable at end of year(*) 5.84p 27,269,590 0.24p 838,473,911
(*) Options and warrants for which relevant exercise hurdles and
criteria have been met and that therefore, in accordance with their terms, are
able to be exercised at any time by the holders of those options or warrants.
(**) Number of options and warrants and exercise prices are
disclosed on a pre-share consolidation basis. On 6 August 2024, the Company
reorganised its share capital and reduced the number of ordinary shares in
issue by a ratio of 1:50, and all options and warrants on issue were similarly
reduced by a ratio of 1:50, and exercise prices increased by a ratio of 50:1.
Refer to note 20 for further information.
The fair value of the options and warrants 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:
Options and warrants granted in 2024
Share price
at date of Exercise price pence Risk free return Fair value
grant pence Vesting date/criteria Expected volatility Expected life (years) Dividend yield per option $
Name Date granted Number Expiry date
Finance provider 22/05/2024 7.60 28/10/2024 2,100,000 10.00 21/05/2026 27% 1.72 4.50% - $0.01
Consultant 01/11/2024 5.75 01/11/2024 3,800,000 5.00 31/10/2027 11% 0.46 4.43% - $0.01
Management options (Tranche A) 04/11/2024 5.80 8p(*) 970,000 8.00 03/11/2029 30% 1.22 4.43% - $0.00
Management options (Tranche B) 04/11/2024 5.80 12p(*) 970,000 12.00 03/11/2029 27% 1.53 4.43% - $0.00
Management options (Tranche C) 04/11/2024 5.80 18p(*) 970,000 18.00 03/11/2029 26% 1.76 4.43% - $0.00
Management options (Tranche D) 04/11/2024 5.80 24p(*) 970,000 24.00 03/11/2029 27% 1.99 4.43% - $0.00
9,780,000
(*) The share price hurdle requires the market price to remain
above the hurdle price for 10 consecutive business days. If this performance
condition is met, 50% of the options become immediately exercisable, while the
remaining 50% can be exercised anytime after March 1, 2026.
Options and warrants granted in 2023
Share price
at date of Exercise price pence** Risk free return Fair value
grant pence Vesting date/criteria Expected volatility Expected life (years) Dividend yield per option $
Name Date granted Number** Expiry date
Management options (Tranche A) 30/08/2023 0.073 31/03/2024 240,000,000 0.100 29/08/2028 9% 1.24 5.23% - $0.00
Management options (Tranche B) 30/08/2023 0.073 0.1p(*) 240,000,000 0.150 29/08/2028 8% 1.24 5.23% - $0.00
Management options (Tranche C) 30/08/2023 0.073 0.15p(*) 240,000,000 0.225 29/08/2028 7% 1.24 5.23% - $0.00
Management options (Tranche D) 30/08/2023 0.073 0.225p(*) 240,000,000 0.300 29/08/2028 5% 1.24 5.23% - $0.00
Finance provider 02/11/2023 0.065 0.30p(*) 250,000,000 0.100 01/11/2026 21% 1.08 4.74% - $0.00
1,210,000,000
(*) The share price hurdle requires the market price to remain
above the hurdle price for 10 consecutive business days. If this performance
condition is met the options become immediately exercisable.
(**) Number of warrants/options and exercise prices are disclosed on a
pre-share consolidation basis. On 6 August 2024, the Company reorganised its
share capital and reduced the number of ordinary shares in issue by a ratio of
1:50, and all warrants/options on issue were similarly reduced by a ratio of
1:50, and all exercise prices were increased by a ratio of 50:1. Refer to note
20 for further information.
The weighted average remaining contractual life of the options and warrants in
issue at 31 December 2024 was 2.76 years (2023: 3.61 years) and the weighted
average exercise price of these instruments was 8.38 pence per share (2023:
0.2 pence - pre- consolidation). The range of exercise prices for options
outstanding at 31 December 2024 was 5 pence to 1,200 pence (2023: 0.10 pence
to 28 pence - pre-consolidation).
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 and warrants), adjusted for any expected changes to future volatility
due to publicly available information.
B) Expense arising from share-based payment transactions
Total expense arising from equity-settled share-based payment transactions:
2024 2023
$ 000's $ 000's
Options and warrants 62 1
Total 62 1
The above charges in relation to share-based payments include $4,000 relating
to Directors (2023: $nil), $nil related to staff and consultants (2023: $nil),
$42,000 relating to warrants granted to the Company's advisors (2023: $nil)
and $16,000 (2023: 1,000) relating to options granted to finance providers.
Share settled payments 2024 2023
$ 000's $ 000's
Professional advisory fees (*) 778 30
Issuance of shares in satisfaction of deferred salaries and contractual 149 72
payments to staff (**)
Financing (Charlestown Energy convertible loan) - see note 18 2,179 -
Total 3,106 102
(*) Represents the fair value of shares issued to various advisors
and consultants in lieu of cash fees, the majority of which reflects success
fee amounts payable following the completion of the farmout with Chevron. 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. For
the year ended 31 December 2024 these expenses were capitalised to intangible
assets. For the year ended 31 December 2023 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 advisory fees for raising share capital. 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.
2024 2023
$ 000's $ 000's
Staff costs 4 -
Professional fees 42 -
Finance costs 16 1
Total 62 1
22 Financial instruments and risk management - Group and 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 management of the Company under policies
approved by the Board of Directors. Management 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 accounts 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 Petroleum Company
Limited, 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 Petroleum Company Limited
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:
2024 2023
Low Average High Low Average High
US$ US$ US$ US$ US$ US$
WTI 66.73 76.62 87.69 $66.61 $77.56 $93.67
The table 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:
2024 Decrease Current Increase
30% 20% 10% 10% 20% 30%
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
3,163 3,615 4,067 4,519 4,971 5,423 5,875
Total 3,163 3,615 4,067 4,519 4,971 5,423 5,875
2023 Decrease Current Increase
30% 20% 10% 10% 20% 30%
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
3,364 3,845 4,325 4,806 5,287 5,767 6,248
Total 3,364 3,845 4,325 4,806 5,287 5,767 6,248
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 accounts and money market deposits.
Future funding requirements
The Group's internal cashflow forecasts monitor both short and long-term
timelines, factoring in 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's
financial statements have therefore been prepared on a going concern basis
(see note 1.28).
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 to 12 months Between Between Repayment Total contractual Carrying
6 months 1 and 2 years 2 and 5 years on demand cash outflows amount
31 December 2024 - Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Trade and other payables 7,644 - - - - 7,644 7,644
Total 7,644 - - - - 7,644 7,644
Less than Between Between Repayment Total contractual Carrying
Contractual maturities of financial liabilities at 6 months 6 to 12 months 1 and 2 years 2 and 5 years on demand cash outflows amount
31 December 2024 - Company $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Trade and other payables 591 - - - - 591 591
Intercompany loan due to subsidiary - - - - 10,099 10,099 10,099
Total 591 - - - 10,099 10,690 10,690
Less than Between Between Repayment Total contractual Carrying
Contractual maturities of financial liabilities at 6 months 6 to 12 months 1 and 2 years 2 and 5 years on demand cash outflows amount
31 December 2023 - Group $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Trade and other payables 8,182 - - - - 8,182 8,182
Total 8,182 - - - - 8,182 8,182
Less than Between Between Repayment Total contractual Carrying
Contractual maturities of financial liabilities at 6 months 6 to 12 months 1 and 2 years 2 and 5 years on demand cash outflows amount
31 December 2023 - Company $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Trade and other payables 978 - - - - 978 978
Intercompany loan due to subsidiary - - - - 1,000 1,000 1,000
Total 978 - - - 1,000 1,978 1,978
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 2024 short term deposit rates
were in the range of 0% to 4.57% (31 December 2023: 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 financial performance for the year and
in the prior year.
Group borrowings are at fixed interest rates and therefore do not present an
interest rate risk.
Foreign currency risk
The Group's principal reporting and operating currency is United States
dollars, but it conducts operations internationally in various jurisdictions,
and has expenses denominated in various other currencies. As such, the Group
is exposed to foreign exchange risk arising from currency exposures, primarily
with regard to UK Pounds 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.
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 2024
Euro - 207 (253)
-
UK Pounds (67) 9 (11)
Sterling
55
Trinidad and Tobago (770) 1 (1)
Dollars
630
Total (837) 217 (265)
685
Year ended 31 December 2023
Euro - 220 (269)
-
Pounds (11) 5 (6)
Sterling
9
Trinidad and Tobago (1,270) (509) 622
Dollars
1,039
Total (1,281) (284) 347
1,048
Rates of exchange to $1 used in the financial statements were as follows:
Average for the relevant consolidated Average for the relevant consolidated
year to year to
At At
31 December 2024 31 December 2024 31 December 2023 31 December 2023
Euro 0.924 0.904 0.924
0.961
UK Pounds 0.782 0.785 0.804
Sterling
0.797
Trinidad and Tobago 6.787 6.800 6.767
Dollars
6.820
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 2024 2023
$ 000's $ 000's
Sterling 939 106
Euros 24 25
US Dollars 7,344 675
Trinidad and Tobago Dollars 127 199
Total 8,434 1,005
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 reviews of joint venture party balances are
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 14 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.
23 Commitments and contingencies - Group and Company
Contingencies
One of the subsidiary companies in the Group, 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. The
matter has been ongoing since 2019, and remains ongoing as at 31 December 2024
and at the time of signing this report. The exposure of CEG Inniss-Trinity
Trinidad Limited, 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 Company
has not guaranteed the obligations of CEG Inniss-Trinity Trinidad Limited, and
is thus not itself exposed to the risk of an unsuccessful defence of this
claim. CEG Inniss- Trinity Trinidad Limited has filed a counterclaim which,
if successful, may either fully extinguish CEG Inniss-Trinity Trinidad
Limited's potential exposure or will substantially reduce the exposure. As at
the date of this report this 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 2024 and 2023, 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 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, assuming there is no ability to successfully renegotiate 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 2024, are set out below.
1 Trinidad and Tobago
Various Trinidad and Tobago registered indirectly held subsidiary entities of
the Company have certain minimum work commitments under relevant licences in
Trinidad and Tobago which generally include carrying out heavy work overs,
drilling of exploration and / or development wells, and undertaking enhanced
oil recovery projects including water injection and / or carbon dioxide
injection. The amounts referred to in the above table are estimated amounts
for the cost of the work items specified, assuming no delay, deferral, or
renegotiation of relevant work commitments with the relevant authorities in
Trinidad and Tobago (notwithstanding that delay, deferral and renegotiation of
work commitments have historically been typical for these licences). Moreover,
it is noted that any licence obligations are specific to the relevant
subsidiary entity in Trinidad and Tobago, and are non-recourse to the Company
and are not guaranteed by the Company, such that the Company is not
financially exposed to these expenditure commitments. Finally, as referenced
in Note 25, in February 2025 the Group announced that it had entered into an
agreement to sell its St. Lucia-domiciled subsidiary, Columbus Energy (St.
Lucia) Limited, including all of its subsidiaries, assets, and operations in
Trinidad and Tobago. Therefore, upon completion of the sale (which remains
pending as of the date of this report), the identified expenditure
commitments will be extinguished.
2 Uruguay
In June 2020, the Group was notified by ANCAP, the Uruguayan state oil
company, of the award of a licence for the Area
OFF-1 block offshore Uruguay. The licence contract was signed on the 25(th) of
May 2022 with the first four-year exploration period commencing on the 25(th)
of August 2022. As of 31 December 2023, the Group had substantially satisfied
all of its minimum work commitments for the initial four-year exploration
period. On the 6(th) of March 2024, the Group entered into a farmout agreement
with Chevron related to the AREA OFF-1 block. The farmout was completed on the
28(th) of October 2024. As part of the agreement Chevron will carry 100% of
the Group's share of the costs associated with the planned 3D seismic campaign
on the AREA OFF-1 block, up to a maximum of US$15 million net to the Company
(gross total cost $37.5 million). Following the 3D seismic campaign, should
Chevron decide to drill an initial exploration well on the block, Chevron will
carry 50% of the Company's share of costs associated with that well, up to a
maximum of US$20 million net to the Company (gross total cost up to $100
million).
In June 2023, the Group was notified by ANCAP of the award of a licence for
the OFF-3 block. The licence contract was signed on the 7(th) of March 2024.
The first four-year exploration period commenced on the 7(th) of June 2024.
During the initial exploration period the Group's minimum work obligations are
modest, comprising licencing and reprocessing of 1,250 km(2) of 3D seismic
data and undertaking two geotechnical studies. There is no drilling
obligation. The estimated cost of this minimum work program is approximately
$1.1 million with the work program to be completed prior to the 6(th) of June
2028. As at 31 December 2024 approximately 35% of this amount had already been
spent and paid. Over and above the minimum work program, additional
discretionary technical work may be conducted in respect of AREA OFF-3 to
enhance the technical understanding of the block, but does not expect that
this additional work
3 The Bahamas
On 21 February 2019, the Group received notification from the Government of
The Bahamas of the extension of the term of its four licences to 31 December
2020, with the requirement that the Group commence an exploration well on the
licences area 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 an initial exploration well in The Bahamas, Perseverance-1, which
was completed on the 7(th) of 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 seeking to renew
the four exploration licences for a further three-year period, having
discharged its obligations under the previous licence term. As at the date of
this report the Group remains in discussions with the Government of The
Bahamas over the terms of the renewal of these licences and, once renewed,
will have the obligation to commence a further exploration well in the
licences area before the expiry of the renewed three-year term.
Annual licence rental commitments
The Group does not have any material annual rental payments payable on its
licences in Uruguay or in Trinidad and Tobago.
The Group is required under its Bahamian exploration licences to remit annual
rentals in advance to the Government of The Bahamas 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, although as at the date of this report there has been no
substantive progress on this issue with the Government of The Bahamas. The
amount which the Group considers to be outstanding is small, and the Group
expects this will be addressed as part of the broader discussion around
renewal of the licences, as previously noted.
24 Related party transactions - Group and 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.
2024 2023
$ 000's $ 000's
Short-term employee benefits (paid in cash) 836 638
Share-settled payments (*) 224 -
Share-based payments 4 -
Total 1,064 638
(*) 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 21 for
details of the Directors' share-based payment benefits. Share options that
have been granted to the Key Management Personnel for the year ended 31
December 2024 are as follows:
2024 Tranche A Options Tranche B Options Tranche C Options Tranche D Options Total
Eytan Uliel 600,000 600,000 600,000 600,000 2,400,000
Robert Bose 370,000 370,000 370,000 370,000 1,480,000
Total 970,000 970,000 970,000 970,000 3,880,000
Share options that have been granted to the Key Management Personnel for the
year ended 31 December 2023 are as follows:
2023(*) Tranche A Options Tranche B Options Tranche C Options Tranche D Options Total
Iain McKendrick 28,000,000 28,000,000 28,000,000 28,000,000 112,000,000
Eytan Uliel 85,000,000 85,000,000 85,000,000 85,000,000 340,000,000
Simon Potter 18,500,000 18,500,000 18,500,000 18,500,000 74,000,000
Stephen Bizzell 18,500,000 18,500,000 18,500,000 18,500,000 74,000,000
Total 150,000,000 150,000,000 150,000,000 150,000,000 600,000,000
(*) Number of warrants/options in this table are disclosed on a
pre-share consolidation basis. On 6 August 2024, the Company reorganised its
share capital and reduced the number of ordinary shares in issue by a ratio of
1:50, and all warrants/options on issue were similarly reduced by a ratio of
1:50. Refer to note 20 for further information.
There is no ultimate controlling party of the Group.
Other related party transactions
Transactions between the Company and its subsidiaries during the year are as
follows:
2024 2023
$ 000's $ 000's
Loans, goods and services provided to Columbus Energy Resources Ltd 1,199 (599)
Loans, goods and services provided to BPC Ltd 72 122
Loans, goods and services provided to BPC Uruguay Holdings Ltd - 5
Loans, goods and services provided to Columbus Energy Resources South America - (254)
B.V.
Loans, goods and services provided to Columbus Energy (St Lucia) Ltd 3 5
Loans, goods and services provided to Steeldrum Oil Company Inc - (1,000)
Loans, goods and services provided to CEG Bonasse Trinidad Ltd (3,106) 34
Loans, goods and services provided to CEG Goudron Trinidad Ltd 183 55
Loans, goods and services provided to CEG Management Services Ltd 258 233
Loans, goods and services provided to CEG Icacos Trinidad Ltd 15 37
Loans, goods and services provided to CEG Inniss-Trinity Trinidad Ltd 59 51
Loans, goods and services provided to CEG South Erin Trinidad Ltd - (178)
Loans, goods and services provided to T-REX Resources (Trinidad) Ltd - (105)
Loans, goods and services provided to Compañia Petrolifera de Sedano S.L.U. - -
Loans, goods and services provided to Uruguay S.A. (10,521) 1,179
Loans, goods and services provided to CEG Off-3 Uruguay S.A. 437 -
(11,401) (415)
25 Events after the reporting period - Group and Company
On 18 February 2025, the Group announced that it has entered a transaction for
the sale of its St Lucia domiciled subsidiary company, Columbus Energy (St.
Lucia) Limited, which in turn holds various subsidiary entities collectively
representing all of the Group's business, assets and operations in Trinidad
and Tobago. The total transaction value agreed was $6 million (which could
increase to up to $8 million under certain future production criteria) whereby
the Group will receive cash and liquid securities of
$1.75 million made up of an initial deposit of $0.25 million in Predator Oil
and Gas Holdings Plc ("POGH") shares; $0.75 million on completion - $0.25
million in cash and $0.5 million in POGH shares; and $0.75 million, in cash,
in three equal instalments at
year-end 2025, 2026 and 2027; and on completion the buyer will assume all
liabilities, provisions and potential exposures of the business, assets and
operations in Trinidad and Tobago, which for the purposes of the transaction
were agreed to be $4.25 million. At year-end 2027, an additional contingent
payment of potentially up to $2 million is also available, under certain
conditions linked to production exceeding 750 bopd.
Completion of the sale is subject to prior approval of (i) the Group's
shareholders, and (ii) appropriate regulatory approval in Trinidad and Tobago,
with both approvals to be obtained prior to 30 April 2025 (or such later date
as the parties may agree).
On 27 March 2025, the Group received shareholder approval for the transaction
to proceed following the passing of a resolution at an extraordinary general
meeting.
On 2 April 2025, the Group announced that its ordinary shares had been
approved to trade on the OTCQB Venture Market ("OTCQB") in the United States,
and commenced trading on this day, under the ticker symbol "BHSPF". Trading of
the Company's shares on the OTCQB does not affect trading of the Company's
ordinary shares on AIM, which continues under the symbol "CEG", and no new
ordinary shares were issued through this process.
On 6 May 2025, the Group and the buyer agreed to a 60-day extension for
completion of the sale, to 30 June 2025, to allow for additional time to
secure the requisite regulatory approvals, given administrative uncertainty
due to the snap-election called in Trinidad and Tobago in March 2025. As at
the date of this report, completion of the transaction remains pending.
The 31 December 2024 results for Columbus Energy (St. Lucia) Limited and
subsidiary entities are presented below:
Income statement $ 000's
Revenue 3,454
Cost of sales (3,891)
Administration expenses (2,298)
Impairment (4,452)
Operating foreign exchange gains/(losses) 566
Finance costs (22)
Other income 73
Income tax credit 25
(6,545)
The major classes of assets and liabilities of Columbus Energy (St. Lucia)
Limited and subsidiary entities at 31 December 2024 are presented below:
$ 000's
Assets
Cash and cash equivalents 261
Restricted cash 292
Trade and other receivables 1,849
Inventories 148
Tangible and intangible assets 4,194
Abandonment fund 1,656
Deferred Tax Asset 1,333
9,733
Liabilities
Trade and other payables (5,938)
Provisions (2,474)
Deferred tax liability (1,378)
(9,790)
Total net liability (57)
26 Comprehensive expense for the year - Company
The Company's loss after tax for the year was $4,532,000 (2023: loss of
$9,070,000).
Corporate Directory
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. END FR MZGMVNZKGKZMRecent news on Challenger Energy
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