REG - Deltic Energy PLC - Interim Results
24/08/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220824:nRSX9915Wa&default-theme=true
RNS Number : 9915W Deltic Energy PLC 24 August 2022
The information contained within this announcement is deemed by the Company to
constitute inside information for the purposes of Regulation 11 of the Market
Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
24 August 2022
Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural Resources
Deltic Energy Plc ("Deltic" or "the Company")
Interim Results
Deltic Energy Plc, the AIM-quoted natural resources investing company with a
high impact exploration and appraisal portfolio focused on the Southern and
Central North Sea, is pleased to announce its interim results for the six
months ended 30 June 2022.
Highlights
· Potentially transformational Pensacola exploration well with Shell due
to commence drilling in October, targeting an estimated 309 BCF (P50
Prospective Resources) of natural gas.
· Recently committed to a second potentially company-making exploration
well with the Selene prospect which contains an estimated 318 BCF (P50
Prospective Resources) of natural gas.
· In the current environment of high energy prices and with ongoing
security of supply issues these two prospects will be enormously valuable if
successful.
· The Deltic-Capricorn Joint Venture ("JV") is making significant
progress across five Southern North Sea licences including taking delivery of
new 3D seismic data across licence P2428.
· Deltic's technical team have successfully completed the initial phase
of geological work on the Syros prospect in the Central North Sea, and a
farm-out process has now commenced as a result.
· Confirmation of new licensing round to be launched in autumn.
Preparatory work in anticipation of the UK's 33(rd) Offshore Licensing Round
has commenced with Deltic looking to further strengthen and diversify its
portfolio.
· Following significant investment across the portfolio, including
preparatory works for the Pensacola well, the Company has maintained a strong
balance sheet with cash of £7.6m as at 30 June 2022 (30 June 2021: £11.1m)
and remains fully funded for the Pensacola well.
· Loss for the period of £1,031,280 (six months to 30 June 2021:
£691,754).
· Cash out flow for the period of £2,464,362 (six months to 30 June
2021: £873,064).
Graham Swindells, CEO, commented:
"I am extremely proud of what we have achieved in the year so far and very
excited about the outlook for our company. We have seen considerable progress
made across our business, with key developments involving our Pensacola and
Selene Prospects, which contain over 600 BCF (P50 Prospective Resources) of
natural gas, as well as progressing the licences which formed part of our
transformational farmout and partnership with Capricorn Energy. As we stand on
the verge of drilling our first well on Pensacola with our partner Shell, and
with Selene now to follow, we are further demonstrating the success of our
business model which is focussed on identification of early stage
opportunities and taking them from licensing through to drilling whilst
introducing partners of the highest calibre."
Chairman's Statement
The future of UK North Sea natural gas is looking very good: not only is this
domestic resource a good investment, but it is also a great way to provide
skilled UK jobs; to deliver much needed income to the UK Treasury; and to
ensure secure domestic supplies of energy whilst minimising greenhouse gas
emissions compared with imported volumes. Climate change is a major threat and
must be countered by a number of means including natural gas. This is in-line
with the Committee on Climate Change's proposals; the Intergovernmental Panel
on Climate Change and North Sea Transition Deal. All of these recognise the
continued demand for natural gas with carbon capture and storage where
projects are underway across the UK.
In the last year, the UK has become more aware of the importance of natural
gas for heating of homes, businesses, hospitals and schools, and for cooking
family meals, as well as being the single biggest source of UK electricity
generation. Unfortunately, this realisation has come with ever-increasing
costs and concerns over security of supply due to our dependence upon imports.
Energy supplies and costs are presented in almost every news programme at
present.
The dependence upon imported gas and a global energy market are the result of
policy decisions taken over the previous 15 to 20 years: cheap sources of
overseas' volumes appeared attractive to an economy where oil and gas
absolutely dominate the energy landscape of transport, heating and power
generation. The growth of Liquid Natural Gas ("LNG") transportation increased
diversity of suppliers around the globe but then fuelled demand as new markets
accessed the growing supply. The USA had never exported natural gas before
2016. Today, it is the biggest exporter of LNG in the world, including to the
UK. This global competition, along with the economic rebound post-COVID and
Russia's invasion of Ukraine, have caused gas prices to the UK consumer to
soar significantly. Imported LNG creates double the greenhouse gas emissions
of our domestic supply.
Deltic and other companies stand ready to fill this gap with a conveyor belt
of potential gas fields ready or preparing for the first phase of exploration
drilling. At Pensacola, operated by Shell, operations have begun to prepare
the seabed for the arrival of the drilling rig. Selene, also with Shell as
operator, is approved for drilling and plans are underway. The team at
Capricorn is busy analysing a group of prospects for the next wave of drilling
and the small team at Deltic is looking to add more prospects in the upcoming
licensing round. Both Shell and Capricorn were introduced to these
opportunities by Deltic.
This is the Deltic business model working as intended.
The UK needs North Sea natural resources. Deltic has a portfolio of North Sea
natural resources investments that are ready to be progressed.
Mark Lappin
Chairman
24 August 2022
CEO Statement
I am delighted with what we have achieved in the year so far and excited about
what we have to look forward to. The year to date has seen considerable
progress made across our business, with the key developments involving our two
flagship prospects, Pensacola and Selene, which we hold with Shell, as well as
progressing the five licences which formed part of our transformational farm
out and partnership with Capricorn Energy. Our achievements so far this year
have reinforced and demonstrated our company's business model and strategy
which is centred around identification of opportunities at early stage and
taking them from licensing through to drilling whilst introducing partners of
the highest calibre. As such, our company is now about to drill its first well
with Shell with an additional well just announced, further enhancing and
de-risking the Deltic investment case.
In terms of near term drilling activity, in June we confirmed that a rig
contract had been signed with Maersk for the drilling of the Pensacola
exploration well. Pensacola will be drilled using the Maersk Resilient, a high
quality jack-up rig, which has previously been under contract to Shell and is
currently drilling a production well for Shell in the Dutch sector of the
Southern North Sea. We are particularly pleased to be using a quality rig
which is fully operational, which should allow us to benefit from the
operational efficiencies that are associated with a "hot" rig. The commitment
to the Maersk rig has also allowed us to firm up the drilling schedule and
represents another important step and a key milestone as we move closer to
drilling the much anticipated Pensacola well. Well planning is in its final
stages and Pensacola is expected to be drilled in October. A successful
outcome on this first well would be transformational for Deltic and our
shareholders.
Most recently, we confirmed that Shell had taken the key step of making a
positive well investment decision and, hence, commitment to drilling our
Selene Gas Prospect on Licence P2347 in the Southern North Sea. The industry's
regulator has been informed of the well investment decision which importantly,
means that Selene is now a firm well. A well slot has yet to be confirmed and
will be subject to drilling schedules, but this is expected to be firmed up as
well planning progresses.
The importance of the further firm commitment from Shell to drill this
material, high-impact, low-risk gas prospect cannot be underestimated and
represents another highly significant milestone for Deltic. The addition of
another committed well to our programme, following recent confirmation that
Pensacola will be drilled, significantly de-risks Deltic's investment case,
and is a further endorsement of the quality of Deltic's assets. It
demonstrates the success of our business model to identify opportunities and
create a conveyor belt of exploration opportunities moving from licensing to
drilling whilst attracting the highest quality partners such as Shell.
At the start of the year, we had only just completed our groundbreaking farm
out with Capricorn Energy across a contiguous group of five licences within
our Southern North Sea gas exploration portfolio. I have been very pleased to
see the commitment that has been made throughout the course of the year
following this wide ranging partnership. Significant investment has been made
across the licences, focused primarily on licence P2428 (Cupertino Area) on
which new seismic was acquired and is being interpreted. However, significant
investment is also being made into work programmes to advance licences P2567
(Cadence), P2560, P2561 and P2562 (South Breagh Area).
We remain confident that the partnership has the potential to yield a number
of drilling opportunities as this work continues and look forward to
continuing to build our partnership with Capricorn as we jointly progress the
next high impact drilling targets.
In the Central North Sea, although it has not been possible to secure a
partner to drill the Dewar prospect, we have made excellent progress in
maturing our recently awarded Syros prospect on Licence P2542. The purchase of
recently reprocessed seismic data has facilitated a revised and more robust
interpretation of the prospect by our technical team. Following this work, we
now consider Syros to be a low risk prospect with estimated P50 prospective
resources of 24.5 mmboe and a 58% geological chance of success. Syros also
sits in close proximity to existing infrastructure with multiple offtake
opportunities which would allow it to be quickly and easily developed. We are
in the process of launching a farm out process with the aim of introducing a
partner to drill this prospect.
Although not always obvious, Government support for the North Sea is strong.
This was highlighted when the UK's Energy Security Strategy was announced in
April, which, in addition to stressing the importance of UK energy security
and the need for further investment, confirmed that a further licensing round
would be launched in autumn this year. Acquiring new licences through
licensing rounds has been, and remains, an important component of Deltic's
strategy and success to date, and we are keenly anticipating the opportunity
this provides to further enhance the Company's asset base and portfolio of
potential drilling opportunities.
Whilst the much publicised introduction of the Energy Profits Levy ("Levy") in
May was not a move Deltic would have supported or felt made a great deal of
sense economically, it has however created a significant opportunity for
Deltic. As an exploration company, Deltic is not subject to the Levy, however,
as a company that thrives on partnerships for drilling, the associated
introduction of the Investment Allowance, which creates a 90% cost saving on
new investment in the North Sea, means that the economics of Deltic's projects
are significantly enhanced such that active companies subject to the Levy will
have a greater incentive to invest in new projects and exploration, such as
those within the Deltic portfolio. Accordingly, Deltic will seek to take
advantage of this opportunity to create further partnerships, farm outs and to
facilitate drilling activity.
Gas prices have continued to surge in the course of 2022, and the critical
importance of energy security is now being recognised. At the start of the
year, most commentators believed that the spike in prices would be relatively
short lived. However, as the energy crisis and conflict between Russia and
Ukraine has continued, there appears to be a general acceptance that a
structural shift has occurred in how our energy needs will be met such that
energy prices will remain significantly higher than historic averages in the
longer term, which should encourage further investment in exploration.
Fortunately, Deltic is not in the business of predicting gas prices and its
projects are all robust and profitable at low prices down to 30p/therm and
below (five year forward curve (August 2022) is +120 p/therm). Importantly,
we believe that overall outlook for our company and our industry remains very
positive.
Looking ahead, we are incredibly excited at being on the verge of drilling our
first well with Shell. That will inevitably be the primary focus over the
coming months, but we are equally excited about having added a further well to
our drilling schedule in the form of Selene, as well as advancing our other
prospects to the drilling stage and continuing to build our portfolio of
opportunities. The quality of our prospects, coupled with strong partners
committed to exploration and the opportunity to further grow our business,
gives us a great deal of confidence in our potential to build on what we have
achieved so far, to progress multiple drilling opportunities over time, and to
grow a business which will play its part in the energy transition whilst
creating long term value for our shareholders.
Graham Swindells
Chief Executive Officer
24 August 2022
Operating Review
It has been another positive period with the Company announcing a number of
key milestones, including the signing of the rig contract for the Pensacola
well, which is due to spud in October, and the announcement that the
Shell-Deltic JV had reached a positive well investment decision on the Selene
prospect. This means Deltic and its shareholders are now participating in two
firm wells, operated by our partner Shell, which Deltic estimates are
targeting combined gross P50 prospective resources of 627 BCF with 252 BCF (50
mmboe) net to Deltic.
The benefits of Deltic's portfolio of licences, which contain a diverse range
of prospects in different geological plays, is becoming apparent as Capricorn
continues to invest significant time and resources in maturing the prospect
inventory across the five Southern North Sea licences which were farmed out to
Capricorn in 2021. It is anticipated that this work could result in a number
of further exploration wells in the coming years.
The initial geotechnical evaluation of the Syros prospect, located on Licence
P2542 in the Central North Sea close to existing infrastructure on the
Montrose-Arbroath high, has been completed with the revised prospect estimated
to contain P50 prospective resources of 24.5 mmboe. On the back of this
re-evaluation, work is now commencing on attracting partners to take this
opportunity through to drilling.
Additionally, the Deltic technical team has been planning for the upcoming
33rd Licensing Round which the North Sea Transition Authority ("NSTA") has
indicated will commence before the end of this year with licence awards
expected mid-2023.
Southern North Sea Assets
P2252 - Pensacola (30% Deltic, Shell 70% (Operator))
During the period, the partnership has been focused on the preparatory works
required for the drilling of the Pensacola exploration well. It was announced
on 29 June that the rig contract had been signed by Shell and that the Maersk
Resilient would be drilling the Pensacola well once it has completed
operations on a Shell operated development well in the Dutch sector.
Preparation of the seabed at the well location, in anticipation of arrival of
the drilling rig, has been completed and the well is scheduled to be spudded
in October.
A drilling the well on paper ("DWOP") exercise was recently carried out with
Shell, Deltic, Maersk and other key service companies in The Netherlands to
refine the well design and operations in general. A further separate session
was held focussing specifically on data acquisition, wireline logging, coring
and well testing plans.
Pensacola is a Zechstein Reef prospect located to the north-west of the Breagh
gas field in the Southern North Sea. Deltic estimates the prospect to contain
gross P50 prospective resources of 309 BCF, with a 55% geological chance of
success, which will rank Pensacola as one of the highest impact exploration
targets to be drilled in the gas basin in recent years.
Under the terms of the farm out to Shell, Deltic was carried through the
initial work programme including the acquisition of new 3D seismic across the
Pensacola prospect. Costs for the Pensacola well are shared in-line with the
licence working interests, and Deltic remains funded for the costs of the
Pensacola well.
P2437 - Selene (50% Deltic, 50% Shell (Operator))
On 26 July, Deltic was delighted to announce that the JV has made a positive
well investment decision in relation to the Selene prospect. The NSTA have
been informed of the partnership's intention to move to Phase C of the
licence, and, as a result of the positive well investment decision, the
process of appointing Shell as the licence and well operator has commenced.
Well timing is yet to be confirmed, although, based on previous timelines,
Deltic expects the well will be spudded within the next 18 months. Meanwhile,
efforts will focus on refining the well location and data acquisition
programmes to support site survey work, well engineering, and permitting work
during the summer of 2023.
Deltic remains convinced that the Selene Prospect is one of the largest
unappraised structures in the Leman Sandstone fairway of the Southern Gas
Basin and estimates that it contains gross P50 Prospective Resources of 318
BCF of gas (with a P90 to P10 range of 132 to 581 BCF) with a geological
chance of success of 70%.
Under the terms of the farm out with Shell, Deltic holds a 50% working
interest in the licence, but will be carried for 75% of the costs of drilling
and testing the well on the Selene prospect, up to a gross aggregate of USD$25
million.
P2428 - Cupertino Area (Deltic 40%, Capricorn 60% (Operator))
The final processed version of the new 3D seismic data over Licence P2428 was
delivered at the beginning of May with further additional products to aid
interpretation developed by Capricorn during June and July. The new 3D data is
generally of good quality and vastly superior to the legacy 2D data that had
been available prior to the 3D seismic being acquired. Naturally, the Plymouth
prospect was the initial focus, given the potential read-across from the
Pensacola well to be drilled later this year. However, the new 3D data does
not support the earlier interpretation made on the legacy 2D seismic and the
prospect has been downgraded in relation to the other prospects and leads
which exist on the licence. Interpretation of the new data is ongoing, with
Capricorn now directing its attention towards maturing the other prospects and
leads in the Carboniferous, Leman Sandstone, and the Triassic Bunter
Sandstone, including the Cupertino and Richmond prospects which were the
original focus of the licence application.
In addition to the seismic interpretation, Capricorn is completing and
integrating a number of other geological workflows into local and regional
models, including petrophysical analysis, sedimentological studies, basin
modelling and structural analysis to support the maturation of the various
prospects and leads identified on the block.
P2567 - Cadence (Deltic 40%, Capricorn 60% (Operator))
During the period, Capricorn has been focused on acquiring and integrating the
available legacy seismic data, various geotechnical datasets, and the results
of new petrophysical analysis into its regional model. Significant effort has
been expended on understanding the legacy VE08 3D seismic survey that covers
the entire licence area to determine the best technical way forward for
reprocessing, and improving the data quality of that survey, using the most
up-to-date seismic reprocessing workflows. This enhanced dataset is expected
to be delivered before the end of the year and will allow for a robust
assessment of the Triassic and Carboniferous prospectivity identified across
the licence area.
P2560, P2561 and P2562 - South Breagh Area (Deltic 40%, Capricorn 60%
(Operator))
Similar to Licence P2567, Capricorn has been focused on acquiring and
integrating the available legacy seismic and geotechnical datasets into its
regional model. This has included the purchase of a number of seismic datasets
and commencement of seismic reprocessing of the Lochran 3D seismic survey
which covers much of Licence P2560 and the northern part of P2562. It is
expected that the reprocessed seismic dataset will be available in early
2023.
P2435 - Blackadder (Deltic 25%, Parkmead 75% (Operator))
Deltic has been informed by the Operator, The Parkmead Group, that a farm out
partner could not be found to assist in the maturation of the Blackadder
prospect, and that a positive well investment decision could not be taken
within the current licence timelines. There are a number of technical
challenges with the Blackadder prospect, including inadequate seismic image
quality associated with the legacy datasets and a structurally complex
setting. The Operator has recommended that the licence be relinquished and the
NSTA has been informed that the partnership intends to relinquish the licence
at the end of the current licence term on 30 September.
Central North Sea Assets
P2542 - Syros (Deltic 100%)
During the period, the Deltic technical team has been focused on maturing the
Syros oil prospect based on a newly reprocessed seismic dataset that was
delivered in Q1 2022. The Syros prospect has been recognised by previous
operators, however the new seismic dataset with significantly enhanced image
quality has allowed for a significant reinterpretation, resulting in a simpler
and more robust prospect. The Syros prospect is now considered to be a simple
rotated fault block, with the Fulmar reservoir very similar to the adjacent
Godwin and Caley fields which produced first hydrocarbons in 2014 and 2017,
respectively.
The prospect is estimated to contain P50 prospective resources of 24.5 mmboe
with P90-P10 range of 12.4 to 33.3 mmboe and a GCOS of 58%. There are multiple
offtake options locally with the Arbroath-Carnoustie infrastructure located
only 6.5km to the east, and multiple other offtake options including Cayley,
Arbroath, Shaw and Gannet within 13km of the licence.
Initial feedback from operators in the area has been positive and a farm out
process is commencing with the aim of receiving offers before the end of the
year.
P2352 - Dewar (Deltic 100%)
Despite extensive efforts and a significant amount of interest from the
industry, a farm out partner could not be found to participate in the drilling
of the Dewar prospect within the current licence timelines. Consequently, the
intention is to relinquish the licence at the end of its current term on 30
September 2022 and the NSTA has been informed of our intention. The Company
will, however, consider re-applying for the Dewar licence as part of its
applications for new licences in the 33(rd) Licensing Round.
33rd Offshore Licensing Round
As part of the new UK Energy Security Strategy, the UK Government announced
that the 33rd Offshore Licensing Round would commence before the end of 2022.
The exact dates, process and areas to be included in the licensing round have
yet to be clarified by the NSTA, but Deltic expects the round to be opened in
Q4 2022 with potential licence awards in Q2 or Q3 2023.
Work has begun in-house to identify areas and prospects of interest, as well
as potential partnerships on certain opportunities. Given recent changes to
the UK tax regime, high resource prices and general industry sentiment,
especially towards natural gas opportunities, we are expecting this upcoming
round to generate significant interest.
Andrew Nunn
Chief Operating Officer
24 August 2022
Qualified Person
Andrew Nunn, a Chartered Geologist and Chief Operating Officer of Deltic, is a
"Qualified Person" in accordance with the Guidance Note for Mining, Oil and
Gas Companies, June 2009 as updated 21 July 2019, of the London Stock
Exchange. Andrew has reviewed and approved the information contained within
this announcement.
Financial Review
I am pleased to advise that Deltic finished the period to 30 June 2022 in good
financial health with a cash position of £7.6m (30 June 2021: £11.1m),
having started investing in the pre-drilling stage of the Pensacola well.
Income Statement
The Company incurred a loss for the period of £1,031,280, compared with a
loss of £691,754 for the six months to 30 June 2021.
The operating loss of £1,028,861 (six months to 30 June 2021: £674,718)
included operating activity cash expenditure of £1,155,363 (six months to 30
June 2021: £607,626), non-cash share-based payment expense of £136,341 (six
months to 30 June 2021: £61,435), a write down on the Blackadder licence of
£48,188 (six months to 30 June 2021: £nil), and other non-cash costs of
£56,997 not directly attributed to existing licences (six months to 30 June
2021: £62,585).
Expenditure directly relating to investment in the Company's North Sea
licences is capitalised to intangible assets, reflecting the ongoing technical
investment in the Company's portfolio of licences. Expenditure on intangible
assets, primarily related to Pensacola well costs, totalled £1,257,542 during
the period (six months to 30 June 2021: £210,884).
Trade and other payables of £162,516 (31 December 2021: £931,148) decreased
by £768,632 relating to operating and investing activities.
Balance Sheet
The Company's cash position was £7,627,843 at 30 June 2022 (31 December 2021:
£10,092,205), reflecting a net cash outflow of £2,464,362 for the period
(six months to 30 June 2021: £873,064). Cash used in operating activities for
the six months to 30 June 2022 was £1,155,363 (six months to 30 June 2021:
£607,626). A further £1,246,629 was used in investing activities (six months
to 30 June 2021: £210,993), including £1,257,542 relating to expenditure
capitalised in intangible assets (six months to 30 June 2021: £210,884), and
£749 relating to the purchase of property, plant and equipment (six months to
30 June 2021: £1,393).
Sarah McLeod
Chief Financial Officer
24 August 2022
UNAUDITED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE LOSS
For the period ended 30 June 2022
Note Period ended 30 June 2022 Period ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
£ £ £
Write down on relinquished intangible assets (48,188) - (288,551)
Other administrative expenses (980,673) (674,718) (1,912,987)
Total administrative expenses (1,028,861) (674,718) (2,201,538)
Other operating income - - 298,173
Operating loss (1,028,861) (674,718) (1,903,365)
Finance income 11,662 1,284 2,905
Finance costs (14,081) (18,320) (34,592)
Loss before tax (1,031,280) (691,754) (1,935,052)
Income tax expense - - -
Loss and comprehensive loss for the period attributable to equity holders of (1,031,280) (691,754) (1,935,052)
the Company
Loss per share from continuing operations expressed in pence per share: 3 (0.07)p (0.05)p (0.14)p
Basic and diluted
UNAUDITED BALANCE SHEET
As at 30 June 2022
Note 30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£ £ £
NON-CURRENT ASSETS
Intangible Assets 3,129,688 1,859,523 2,203,118
Property, Plant and Equipment 328,993 443,076 385,240
Other receivables 37,421 37,422 37,422
3,496,102 2,340,021 2,625,780
CURRENT ASSETS
Trade and other receivables 72,578 84,740 190,398
Cash and cash equivalents 7,627,843 11,095,794 10,092,205
7,700,421 11,180,534 10,282,603
TOTAL ASSETS 11,196,523 13,520,555 12,908,383
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital 4 7,029,824 7,029,824 7,029,824
Share premium 20,296,030 20,296,030 20,296,030
Share-based payment reserve 1,287,041 1,051,813 1,150,700
Accumulated retained deficit (17,844,829) (15,570,251) (16,813,549)
TOTAL EQUITY 10,768,066 12,807,416 11,663,005
CURRENT LIABILITIES
Trade and other payables 162,516 352,811 931,148
Lease liability 90,588 94,388 98,995
253,104 447,199 1,030,143
NON-CURRENT LIABILITIES
Lease liability 175,353 265,940 215,235
TOTAL LIABILITIES 428,457 713,139 1,245,378
TOTAL EQUITY AND LIABILITIES 11,196,523 13,520,555 12,908,383
UNAUDITED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2022
Share-based payment reserve Accumulated Retained deficit
Share capital Share premium Total
equity
£ £ £ £ £
Balance at 1 January 2022 7,029,824 20,296,030 1,150,700 (16,813,549) 11,663,005
Comprehensive income for the year
Loss for the period - - - (1,031,280) (1,031,280)
Total comprehensive loss for the period - - - (1,031,280) (1,031,280)
Contributions by and distributions to owners
Share-based payment - - 136,341 - 136,341
Total contributions by and distributions to owners - - 136,341 - 136,341
Balance at 30 June 2022 (Unaudited) 7,029,824 20,296,030 1,287,041 (17,844,829) 10,768,066
Balance at 1 January 2021 7,029,824 20,296,030 990,378 (14,878,497) 13,437,735
Comprehensive income for the year
Loss for the period - - - (691,754) (691,754)
Total comprehensive loss for the period - - - (691,754) (691,754)
Contributions by and distributions to owners
Share-based payment - - 61,435 - 61,435
Total contributions by and distributions to owners - - 61,435 - 61,435
Balance at 30 June 2021 (Unaudited) 7,029,824 20,296,030 1,051,813 (15,570,251) 12,807,416
Balance at 1 January 2021 7,029,824 20,296,030 990,378 (14,878,497) 13,437,735
Comprehensive income for the year
Loss for the year - - - (1,935,052) (1,935,052)
Total comprehensive loss for the year - - - (1,935,052) (1,935,052)
Contributions by and distributions to owners
Share-based payment - - 160,322 - 160,322
Total contributions by and distributions to owners - - 160,322 - 160,322
Balance at 31 December 2021 (Audited) 7,029,824 20,296,030 1,150,700 (16,813,549) 11,663,005
UNAUDITED STATEMENT OF CASH FLOWS
For the period ended 30 June 2022
Period ended 30 June 2022 Period ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
£ £ £
Cash flows from operating activities
Loss before tax (1,031,280) (691,754) (1,935,052)
Adjustments for:
Finance income (11,662) (1,284) (2,905)
Finance costs 14,081 18,320 34,592
Depreciation 57,276 57,317 115,355
Amortisation - 5,268 5,625
Loss on disposal of property, plant and equipment (279) - 1,842
Gain from farm-out of licence interest - - (298,173)
Write down on relinquished intangible assets 48,188 - 288,551
Share-based payment 136,341 61,435 160,322
(787,335) (550,698) (1,629,843)
Decrease / (increase) in trade and other receivables 64,467 (30,853) (136,511)
(Decrease) / increase in trade and other payables (432,495) (26,075) 143,297
Net cash used in operating activities (1,155,363) (607,626) (1,623,057)
Cash flows from investing activities
Purchase of intangible assets (1,257,542) (210,884) (853,744)
Purchase of property, plant and equipment (749) (1,393) (5,895)
Proceeds from exploration licence farm-ins - - 719,953
Interest received 11,662 1,284 2,905
Net cash used in investing activities (1,246,629) (210,993) (136,781)
Cash flows from financing activities
Payment of principal portion of lease liabilities (48,289) (36,125) (82,223)
Interest on lease liabilities (14,081) (18,320) (34,592)
Net cash used in financing activities (62,370) (54,445) (116,815)
Decrease increase in cash and cash equivalents (2,464,362) (873,064) (1,876,653)
Cash and cash equivalents at beginning of period / year 10,092,205 11,968,858 11,968,858
Cash and cash equivalents at end of period / year 7,627,843 11,095,794 10,092,205
NOTES TO THE FINANCIAL INFORMATION
For the period ended 30 June 2022
1. GENERAL
The interim financial information for the period to 30 June 2022 is unaudited
and does not constitute statutory accounts within the meaning of Section 434
of the Companies Act 2006.
2. ACCOUNTING POLICIES
The interim financial information in this report has been prepared on the
basis of the accounting policies set out in the audited financial statements
for the period ended 31 December 2021 together with new and amended standards
applicable to periods commencing 1 January 2022, which complied with UK
adopted International Accounting Standards (IFRS) in conformity with the
requirements of the Companies Act 2006, and with those parts of the Companies
Act 2006 applicable to companies reporting under International Financial
Reporting Standards ("IFRS").
IFRS is subject to amendment and interpretation by the International
Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and
there is an on-going process of review and endorsement by the UK Endorsement
Board since January 2021.
The financial information has been prepared on the basis of IFRS that the
Directors expect to be applicable as at 31 December 2022, with the exception
of IAS 34 Interim Financial Reporting.
The Directors have assessed the Company's ability to continue as a going
concern. Although the oil and gas industry faces a period of change under the
current geopolitical environment, the Company does not anticipate any negative
issues impacting its ability to operate as a going concern. Based on the cash
and cash equivalents balance at 30 June 2022 and the Company's commitments,
the Directors are of the opinion that the Company has adequate financial
resources to meet its committed Pensacola exploration programme, based upon
anticipated drilling costs per the planned work schedule, and working capital
requirements, and accordingly will be able to continue and meet its
liabilities as they fall due for a minimum of 12 months from the date of
signing these interim financial statements.
The condensed financial information for the period ended 31 December 2021 set
out in this interim report does not comprise the Group's statutory accounts as
defined in section 434 of the Companies Act 2006.
The statutory accounts for the year ended 31 December 2021, which were
prepared under UK adopted International Accounting Standards (IFRS) in
conformity with the requirements of the Companies Act 2006, and with those
parts of the Companies Act 2006 applicable to companies reporting under IFRS,
have been delivered to the Registrar of Companies. The auditors reported on
these accounts; their report was unqualified and did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006.
3. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
Given the Company's reported loss for the period, share options and warrants
are not taken into account when determining the weighted average number of
ordinary shares in issue during the year and therefore the basic and diluted
loss per share are the same.
Basic and diluted loss per
share
Period ended 30 June 2022 Period ended 30 June 2021 Year ended 31 December 2021
Loss for the period (£) (1,031,280) (691,754) (1,935,052)
Weighted average number of ordinary shares (number) 1,405,964,855 1,405,964,855 1,405,964,855
Loss per share from continuing operations (0.07)p (0.05)p (0.14)p
4. SHARE CAPITAL
a) Share Capital
The Company has one class of ordinary share which carries no right to fixed
income nor has any preferences or restrictions attached.
Issued and fully paid:
30 June 2022 30 June 2021 31 December 2021
£ £ £
1,405,964,855 ordinary shares of 0.5p each (30 June 2021: 1,405,964,855 7,029,824 7,029,824 7,029,824
ordinary shares)
5. SUBSEQUENT EVENTS
Subsequent to 30 June 2022, Deltic-Shell JV made a positive well investment
decision to drill the Selene Prospect (Licence P2437), and Deltic has taken
the decision to relinquish both the Blackadder Prospect (P2535) and Dewar
Prospect (Licence P2352).
6. COPIES OF INTERIM REPORT
Copies of the interim report are available to the public free
of charge from the Company at Deltic Energy Plc, First Floor, 150 Waterloo
Road, London, SE1 8SB during normal office hours, Saturdays and Sundays
excepted, for 14 days from today and will shortly be available on the
Company's website at www.delticenergy.com (http://www.delticenergy.com) .
Investing policy
In addition to the development of the North Sea Oil & Gas assets Deltic
Energy Plc has acquired to date, the Company proposes to continue to evaluate
other potential oil & gas and mining projects globally in line with its
investing policy, as it aims to build a portfolio of resource assets and
create value for shareholders. As disclosed in the Company's AIM Admission
Document in May 2012, the Company's Investment Policy is as follows:
The proposed investments to be made by the Company may be either quoted or
unquoted; made by direct acquisition or through farm-ins; either in companies,
partnerships or joint ventures; or direct interests in oil & gas and
mining projects. It is not intended to invest or trade in physical commodities
except where such physical commodities form part of a producing asset. The
Company's equity interest in a proposed investment may range from a minority
position to 100 per cent. ownership.
The Board initially intends to focus on pursuing projects in the oil & gas
and mining sectors, where the Directors believe that a number of opportunities
exist to acquire interests in attractive projects. Particular consideration
will be given to identifying investments which are, in the opinion of the
Directors, underperforming, undeveloped and/or undervalued, and where the
Directors believe that their expertise and experience can be deployed to
facilitate growth and unlock inherent value.
The Company will conduct initial due diligence appraisals of potential
projects and, where it is believed further investigation is warranted, will
appoint appropriately qualified persons to assist with this process. The
Directors are currently assessing various opportunities which may prove
suitable although, at this stage, only preliminary due diligence has been
undertaken.
It is likely that the Company's financial resources will be invested in either
a small number of projects or one large investment which may be deemed to be a
reverse takeover under the AIM Rules. In every case, the Directors intend to
mitigate risk by undertaking the appropriate due diligence and transaction
analysis. Any transaction constituting a reverse takeover under the AIM Rules
will also require Shareholder approval.
Investments in early stage and exploration assets are expected to be mainly in
the form of equity, with debt being raised later to fund the development of
such assets. Investments in later stage projects are more likely to include an
element of debt to equity gearing. Where the Company builds a portfolio of
related assets, it is possible that there may be cross holdings between such
assets.
The Company intends to be an involved and active investor. Accordingly, where
necessary, the Company may seek participation in the management or
representation on the Board of an entity in which the Company invests with a
view to improving the performance and use of its assets in such ways as should
result in an upward re-rating of the value of those assets.
Given the timeframe the Directors believe is required to fully maximise the
value of an exploration project or early stage development asset, it is
expected that the investment will be held for the medium to long term,
although disposal of assets in the short term cannot be ruled out in
exceptional circumstances.
The Company intends to deliver Shareholder returns principally through capital
growth rather than capital distribution via dividends, although it may become
appropriate to distribute funds to Shareholders once the investment portfolio
matures and production revenues are established.
Given the nature of the Investing Policy, the Company does not intend to make
regular periodic disclosures or calculations of its net asset value.
The Directors consider that as investments are made, and new investment
opportunities arise, further funding of the Company will be required.
Forward looking statement
This interim report contains certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with the oil
and gas exploration and production business. Whilst the Directors believe the
expectation reflected herein to be reasonable in light of the information
available up to the time of their approval of this report, the actual outcome
may be materially different owing to factors either beyond the Company's
control or otherwise within the Company's control but, for example, owing to a
change of plan or strategy. Accordingly, no reliance may be placed on the
forward-looking statements.
Glossary of Technical Terms
PRMS:
Petroleum Resources Management System (2007)
BCF:
Billion Cubic Feet
mmboe: Million
barrels of oil equivalent
Prospective Resources: Are estimated volumes associated
with undiscovered accumulations. These represent quantities of petroleum which
are estimated, as of a given date, to be potentially recoverable from oil and
gas deposits identified on the basis of indirect evidence but which have not
yet been drilled.
Geological Chance of
Success (GCoS): for prospective
resources, means the chance or probability of discovering hydrocarbons in
sufficient quantity for them to be tested to the surface. This, then, is the
chance or probability of the prospective resource maturing into a contingent
resource. Prospective resources have both an associated chance of discovery
(geological chance of success) and a chance of development (economic,
regulatory, market and facility, corporate commitment and political risks).
The chance of commerciality is the product of these two risk components. These
estimates have been risked for chance of discovery but not for chance of
development.
P90 resource: reflects a volume
estimate that, assuming the accumulation is developed, there is a 90%
probability that the quantities actually recovered will equal or exceed the
estimate. This is therefore a low estimate of resource.
P50 resource: reflects a
volume estimate that, assuming the accumulation is developed, there is a 50%
probability that the quantities actually recovered will equal or exceed the
estimate. This is therefore a median or best case estimate of resource.
P10 resource:
reflects a volume estimate that, assuming the accumulation is developed,
there is a 10% probability that the quantities actually recovered will equal
or exceed the estimate. This is therefore a high estimate of resource.
The Prospective Resources have been presented in accordance with the 2007
Petroleum Resources Management System (PRMS) prepared by the Oil and Gas
Reserves Committee of the Society of Petroleum Engineers (SPE), reviewed, and
jointly sponsored by the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG) and the Society of Petroleum
Evaluation Engineers (SPEE).
**ENDS**
For further information please contact the following:
Deltic Energy Plc Tel: +44 (0) 20 7887 2630
Graham Swindells / Andrew Nunn / Sarah McLeod
Allenby Capital Limited (Nominated Adviser & Joint Tel: +44 (0) 20 3328 5656
Broker)
David Hart / Alex Brearley (Corporate Finance)
Kelly Gardiner (Sales and Corporate Broking)
Stifel Nicolaus Europe Limited (Joint Tel: +44 (0) 20 7710 7600
Broker)
Callum Stewart / Simon Mensley / Ashton Clanfield
Vigo Consulting (IR & PR Tel: +44 (0) 20 7390 0230
Adviser)
Patrick d'Ancona / Finlay Thomson / Kendall Hill
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BKNBQKBKBPFBRecent news on Deltic Energy
See all newsREG - Deltic Energy PLC - Selene Gas Project Update
AnnouncementREG - Deltic Energy PLC - Electronic Shareholder Communication
AnnouncementREG - Deltic Energy PLC - Operational Update
AnnouncementREG - Deltic Energy PLC - Holding(s) in Company
AnnouncementREG - Deltic Energy PLC - Selene Update and Economic Model
Announcement