REG - Egdon Resources PLC - Interim Results
26/04/2022 07:16
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220426:nRSZ2803Ja&default-theme=true
RNS Number : 2803J Egdon Resources PLC 26 April 2022
26 April 2022
EGDON RESOURCES PLC
("Egdon" or "the Group" or "the Company")
Interim Results for the Six Months Ended 31 January 2022
Egdon Resources plc (AIM: EDR), a UK focused energy company, today announces
its unaudited results for the six months ended 31 January 2022 ("the
period").
Overview and Highlights
Operational and Corporate
· Production during the period increased by 156% to 43,420 barrels
of oil equivalent ("boe") equating to 205 boe per day ("boepd") (H1 2021:
16,928 boe and 92 boepd)
· Wressle production has significantly exceeded the original 500
barrels of oil per day ("bopd") expectation and is currently producing at
permit constrained rates of 760-800 bopd following upgrades to the production
facilities
· Egdon has assumed the operatorship, increased its equity to 40%
and agreed an extension to 20 March 2024 in PEDL343 which contains the
Cloughton gas discovery
· Planning permission was refused for the drilling of a side-track
well, testing and long-term production at the Biscathorpe project
Financial Performance
· Oil and gas revenues increased by 500% during the period to
£2.551 million (H1 2021: £0.424 million) as a result of significantly
increased production and strengthening commodity prices
· Profit before impairments/write backs of £0.715 million (H1
2021: loss of £0.763 million)
· Overall profit for the period of £1.222 million including
£0.507 million write-back (H1 2021: loss of £1.039 million including £0.276
million of impairments)
· Cash and cash equivalents of £2.084 million (H1 2021: £2.422
million and 31 July 2021: £1.96 million).
· Net current assets as at 31 January 2022 of £1.165 million,
which includes UJO debt of £1.07 million and £0.417 million deferred
consideration for Wressle (31 January 2021: net current liability of £0.126
million, which includes liability for £0.962 million convertible loan and
£0.417 million deferred consideration for Wressle)
Subsequent Events
· On 10 March 2022 a revised incentive package was put in place for
all employees through the issue of new share options and the cancellation of
all historical share options
· On 14 March 2022, planning permission was refused to extend the
existing consents to drill the North Kelsey-1 exploration well and will be
appealed during H2 2022
· On 5 April 2022 the Government announced that it had commissioned
the British Geological Survey to advise on the latest scientific evidence
around shale gas extraction
· An appeal against the refusal of planning for the Biscathorpe
project was submitted on 12 April 2022
· During April 2022, Shell advised Egdon and the North Sea
Transition Authority ("NSTA") of its intention to withdraw from licences P1929
and P2304, containing the Resolution and Endeavour gas discoveries. Egdon is
considering its options, including its ongoing commitment to the licences and
will discuss these options with the NSTA.
Outlook
· Post-period end production and revenues have continued to be
strong with February and March revenues of £0.480 million and £0.953 million
respectively
· The Company is funded for all near-term committed activity
including the loan repayment of £1.07 million due in May 2022
Our key operational focus for the coming period will be:
· Continuing to optimise oil and gas production from the Ashover
Grit reservoir at Wressle, building on the strong performance to date
· Progressing gas monetisation at Wressle
· Finalising plans for development of the material Contingent
Resources in the Penistone Flags at Wressle
· Progressing drilling plans to target incremental oil production /
near field exploration opportunities at the Keddington oil field and the field
redevelopment at Waddock Cross
· Securing planning consent via appeal for the Biscathorpe and
North Kelsey projects
· Further developing the Company's energy transition opportunities
including repurposing of the Dukes Wood-1 well for geothermal heat
Online Presentation and audiocast
A webcast of the interim results presentation will be available from 07.00
through the following link:
https://webcasting.buchanan.uk.com/broadcast/62458a79893940516d342a2a
(https://webcasting.buchanan.uk.com/broadcast/62458a79893940516d342a2a)
Commenting on the results, Philip Stephens, Chairman of Egdon said;
"The period has been has been an exceptional one for the Company. Revenues
have increased fivefold and this has resulted in a return to profit after the
challenges of recent years. Significantly increased commodity prices and
increased production have made this possible. The Wressle field continues to
exceed our expectations and the Ceres gas field is providing a late life
renaissance.
Production continues at a high level and the resultant positive cash flow
supported by continuing high commodity prices enables us to be confident that
we will be able fully to fund our current plans."
For further information please contact:
Egdon Resources plc
Mark Abbott, Martin
Durham
01256 702 292
Buchanan
Ben Romney, Jon
Krinks
020 7466 5000
Nominated Adviser & Joint Broker - WH Ireland Limited
Chris Hardie, Megan
Liddell
0207 220 1666
Joint Broker - VSA Capital Limited
Andrew Monk (Corporate
Broking)
020 3005 5000
Andrew Raca (Corporate Finance)
About Egdon
Egdon Resources plc (LSE: EDR) is an established UK-based energy company
focused on onshore exploration and production in the UK.
Egdon holds interests in 37 licences in the UK and has an active programme of
exploration, appraisal and development within its portfolio of oil and gas
assets. Egdon is an approved operator in the UK. Egdon was formed in 1997
and listed on AIM in December 2004.
Qualified Person Review
In accordance with the AIM Rules - Note for Mining and Oil and Gas Companies,
this release has been reviewed by Mark Abbott, Managing Director of Egdon, who
is a geoscientist with over 30 years' experience and is a member of the
Petroleum Exploration Society of Great Britain and a Fellow of the Geological
Society. Mr Abbott has consented to the inclusion of the technical
information in this release in the form and context in which it appears.
Evaluation of hydrocarbon volumes has been assessed in accordance with the
2018 Petroleum Resources Management System (PRMS) prepared by the Oil and Gas
Reserves Committee of the Society of Petroleum Engineers (SPE) and reviewed
and jointly sponsored by the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), the Society of Petroleum
Evaluation Engineers (SPEE), the Society of Exploration Geophysicists (SEG),
the Society of Petrophysicists and Well Log Analysts (SPWLA) and the European
Association of Geoscientists & Engineers (EAGE).
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
Chairman's Statement
I am pleased to report on the results for the six months ended 31 January 2022
and provide an update on our business.
Financial and Statutory Information
The period has seen a significant strengthening of the financial position of
the Company driven by a 500% increase in oil and gas revenues during the
period to £2.551 million (H1 2021: £0.424 million) as a result of
significantly increased production and strengthening commodity prices. The
average realised price per barrel of oil equivalent was 135% higher at
$79.32/boe (H1 2021: $33.81/boe).
Profit before impairments or write-backs was £0.715 million (H1 2021: loss of
£0.763 million).
The overall profit for the period was £1.222 million including £0.507
million of write-backs in relation to Ceres as a result of an improved revenue
profile (H1 2021: loss of £1.039 million including £0.276 million of
impairments).
Cash and cash equivalents as at 31 January 2022 were £2.084 million (H1 2021:
£2.422 million and at 31 July 2021: £1.96 million).
Net current assets as at 31 January 2022 stood at £1.165 million, which
included debt of £1.07 million and £0.417 million deferred consideration for
Wressle (31 January 2021: net current liability of £0.126 million, which
includes liability for £0.962 million convertible loan and £0.417 million
deferred consideration for Wressle). The deferred consideration for Wressle
was paid post period end in March 2022.
The Group had net assets at 31 January 2022 of £28.641 million (H1 2021:
£25.658 million).
Post-period end production and revenues have continued to be strong with
February and March revenues of £0.480 million and £0.953 million
respectively. The Company is funded for all near-term committed activity
including the loan repayment of £1.07 million due in May 2022.
Strategy
The Company's strategy takes account of the opportunities and challenges
presented by the wider economic and political environment and the UK's move to
Net Zero carbon emissions by 2050.
1) Maintain geographical focus on the UK
2) Focus on growth in production and revenue through conventional
production, appraisal and exploration projects
3) A near term focus on developing low carbon energy transition projects
utilising Egdon's existing assets, knowledge of the UK's onshore geology and
core technical skills and operating experience
4) Maintain our significant portfolio of unconventional resources assets
whilst working to address the moratorium
ESG
Egdon wishes to build value through developing sustainable long-term
relationships with partners and the community and is committed to the highest
standards of health, safety and environmental protection; these aspects
command equal prominence with other business considerations. The Board
recognise the need to minimise emissions from our operations and are committed
to using a "best available techniques" approach to achieve this and to monitor
and report performance. We expect to be able report progress during the coming
period in quantifying and verifying our current emissions and developing firm
plans to minimise and reduce these thorough a defined plan of action.
Political and Regulatory
The UK is committed by law to reaching Net Zero carbon emissions by 2050.
The public narrative around this during the lead up to and following COP26 was
a demonisation of oil and gas. However, it is a fact that in the period to
2050, the UK cannot rely on renewables alone for all its energy needs and that
there will be a continuing need for oil and gas. On most projections, the UK
will have a significant import dependency for oil and particularly gas in the
period to 2050 and beyond. The national and local benefits of indigenous oil
and gas supplies are clear and even more compelling in the context of the
current energy crisis. The recently announced Government energy review has
belatedly recognised the importance of UK oil and gas production and has begun
to reconsider the potential role for UK shale-gas. Indigenous hydrocarbons
have a positive impact on energy security, balance of payments, tax, business
rates, employment and importantly also have material pre-combustion emissions
savings. Without indigenous oil and gas, the UK will simply 'offshore' its
emissions, employment, and fiscal benefits and be at the mercy of
international energy markets.
Oil and Gas
Egdon holds interests in 37 licences in the UK (H1 2021: 41 licences) with
exposure to the full cycle of opportunities from exploration through to
development and production. Egdon's website (www.egdon-resources.com
(../../MarkA/AppData/Local/MarkA/AppData/Local/NRPortbl/DMS_LIVE/MICHAI/www.egdon-resources.com)
) provides further details of the Company's assets and operations.
Highlighted below are key changes to our licence portfolio during the period
and post-period end.
Licence Changes
PEDL343 Licence extended to 20 March 2024, Egdon assumed operatorship and increased
interest to 40%
PEDL209 Egdon increased interest to 100% due to withdrawal of other JV parties (note
not yet completed)
PEDL202 Interest in licence relinquished during August 2021
PEDL's 339, 258 and 259 Licences relinquished between 1 February 2021 and 31 July 2021
Production
Production during the period was 205 boepd (H1 2021: 92 boepd) being primarily
from Wressle and Ceres as well as contributions from Keddington and Fiskerton
Airfield. This production was achieved despite Wressle only recommencing flow
on 19 August and the Ceres field being shut-in for annual maintenance for 20
days during September.
Wressle (Egdon 30%) quickly exceeded our pre-production expectations of 500
bopd on resumption of production following the successful proppant-squeeze and
coiled-tubing operation on the 19 August 2021. Instantaneous rates of over
1,000 bopd have been achieved. Early restrictions to production have been
successfully addressed through upgrades and modifications to the site
facilities, including installation of a secondary separator and progressive
upgrades to the gas incineration system which have culminated in the
installation of a larger capacity enclosed incineration unit. Production is
currently limited by the 10 tonnes per day gas incineration limit imposed by
the Environmental Permit to between 760-800 bopd (228-240 bopd net). Once
the gas monetisation development is complete, this production limitation will
be removed and the production rate is expected to be increased significantly.
Pressure test analysis has indicated potential flow rates for Wressle-1 of
between approximately 1,200 and 1,500 bopd.
Since production commenced at Wressle-1 in January 2021, the cumulative
production has exceeded 150,000 barrels of oil with no formation water
produced to date.
A revised Field Development Plan was submitted to the NSTA during April
2022.
The likely preferred gas monetisation approach will be to export the gas via a
short pipeline (approximately 600m) into the local gas distribution network.
This will require regulatory consents (Planning and EA) and it is hoped to be
completed in time for gas sales during the coming winter. This export route
will also be available in the longer term for the development of the Penistone
Flags reservoir where detailed work is underway to produce the gross Mid-case
Contingent Resources of 1.53 million barrels of oil and 2 billion cubic feet
of gas.
Environmental monitoring throughout the operations has shown no measurable
impact on surface or groundwater quality, no related seismicity and that noise
levels have been within the permitted levels.
In the coming period we will:
a) Complete the installation of the remaining permanent production
facilities
b) Progress planning and permitting and implement the gas monetisation
plan, reduce gas flaring and remove the limitations on oil production
c) Advance the development plan and consenting process to enable
production from the Penistone Flags reservoir
The Ceres gas field (Egdon 10%) is undergoing a late-life renaissance for the
Company contributing material revenues and cash flow. During the period, Ceres
net production averaged 54 boepd with gas prices averaging 184 p/therm or
$123.5/boe (H1 2021: 24p/therm or $29.2/boe). A reassessment of the life of
field economics has led to the reversal of a previous impairment of £0.507
million.
Keddington (Egdon 45%) continued to contribute tangible revenues during this
time of high oil prices. A subsurface review of the field has highlighted a
viable drilling location in the east of the field targeting up to 180,000
barrels of incremental production. With planning consent already in place,
this presents an opportunity to increase production via a development
side-track from one of the existing wells. In addition, a near-field
exploration opportunity exists at Keddington South (Mean Prospective Resources
of 635,000 barrels of oil) and the Louth Prospect (Mean Prospective Resources
of 600,000 barrels of oil).
Fiskerton Airfield (Egdon 80%) continued production during the period. Our
focus remains on maximising production from the existing wells and managing
costs. Longer term, there is potential for the site to be used to manage any
produced water from other Egdon sites through the existing water injection
well and for potential geothermal repurposing.
Other key near-term projects identified to increase production levels are
summarised below.
Waddock Cross (Egdon 55%) is currently shut-in. Given the large in-place oil
volume (gross Mean oil in place of c. 57 million barrels of oil) this asset
has been high graded by the Company. Egdon's assessment has shown that
redevelopment of the field is technically and economically viable and despite
the JV partners seeing the asset as non-core, Egdon will progress planning and
permitting work with a view to securing regulatory consents by end 2022 ahead
of a drilling programme in 2023.
The Kirkleatham gas field (Egdon 68%) remains shut-in. Potential exists for a
side-track to access a volume of gas in the attic of the structure with
additional upside in the underlying Carboniferous sequences. We are currently
in advanced discussions regarding a potential farm-out and hope to be able to
update shareholders in the near future.
Planning consent was granted on appeal to reinstate production from the
Avington oil field (Egdon 28%) and the operator is currently finalising plans
to reinstate one or more wells on the field.
Exploration/Appraisal
Egdon has assumed the operatorship of PEDL343, increasing its interest to 40%
and agreeing an extension of the initial term of the licence with the OGA (now
North Sea Transition Authority "NSTA") to 20 March 2024 along with an
associated retention area work programme. The licence contains the Cloughton
tight gas discovery, which flowed gas from a number of different reservoirs
when flow tested in 1984. Egdon and its joint venture partners plan to
undertake an assessment of both the conventional and unconventional resource
potential of the licence area.
On 1 November 2021 planning consent was refused for the drilling of a
side-track well, testing and long-term oil production at Biscathorpe (Egdon
35.8%). The application had been recommended for approval by Lincolnshire
County Council's ("LCC") planning officers. Post period-end, on 12 April
2022, Egdon submitted a comprehensive statement of case in support of its
appeal against the decision. We will update shareholders as the appeal process
progresses. The proposed side-track would target gross Mean Prospective
Resources of 6.50 million barrels of oil as estimated by Egdon.
The application to extend the existing planning permission to drill the North
Kelsey-1 exploration well was refused by LCC's planning committee on 14 March
2022. The decision was disappointing given the compelling case presented and
the positive recommendation of LCC's Planning Officer. Given this, we will
bring forward an appeal against this decision during H2 2022. The North Kelsey
Prospect (PEDL241: Egdon 50%) is considered an analogue to the Wressle field
and has gross Mean Prospective Resources of 6.47 million barrels of oil in
multiple reservoirs.
During April 2022, Shell advised Egdon and the NSTA of its decision to
withdraw from licences P1929 and P2304, containing the Resolution and
Endeavour gas discoveries. Egdon is considering its options, including its
ongoing commitment to the licences and will discuss these options with the
NSTA ,. Wewill update shareholders our preferred option and the NSTA position
is known.
Shale-Gas
The Group's shale-gas acreage position in Northern England is 164,280 net
acres (664km(2) net). This remains a significant and potentially highly
valuable position with Egdon estimating Mean volumes of undiscovered gas in
place of 47.6 trillion cubic feet of gas (independently assessed by ERCE in
2016). Our core area is the Gainsborough Trough of Nottinghamshire,
Lincolnshire and Yorkshire where the Group holds interests in 71,361 net acres
(2021: 71,361 net acres). The geology of each basin and site is different.
The Gainsborough Trough, is characterised by its simple structure and limited
faulting. The results from the 2019 Springs Road-1 well (Egdon 14.5%) compare
favourably with some of the best US commercial shale operations and highlight
a potentially world class resource in the prospective Gainsborough Shale.
Activity is currently on pause due to the moratorium on hydraulic fracturing
for shale-gas introduced in November 2019.
On 5 April 2022 the Government announced that it had commissioned the British
Geological Survey to advise on the latest scientific evidence around shale gas
extraction and that it would report in around three months. This review is a
logical and welcome move by the Government and we await the findings of the
report with interest. Gas heats over 80% of our homes and generates around 40%
of our electricity and will continue to be an important part of our energy mix
out to 2050 and beyond. UK shale gas could be a strategically important
national resource with the potential to reduce the UK's growing reliance on
gas imports, whilst reducing gas prices, improving our balance of payments,
increasing tax revenues and creating skilled jobs whilst importantly also
reducing the carbon footprint of the gas we all use. On this last point, the
forecast pre-combustion carbon footprint of UK shale gas is around a quarter
of that of liquified natural gas, which is currently being landed in the UK in
large volumes.
The industry stands ready to move quickly to establish and ramp-up indigenous
gas production should the moratorium be lifted and planning timelines be
addressed.
Geothermal, Energy Storage, Hydrogen and Renewables
Egdon has focused on energy transition opportunities which utilise the
Company's core skills, knowledge, and operating experience.
Our initial focus has been on the geothermal potential within our existing
wells and fields. A programme to plug and abandon the existing Dukes Wood-1
oil well and recomplete it for geothermal heat production has been developed
and submitted to the NSTA. It is anticipated that subject to regulatory
approval, this work, which is a proof of concept, will commence during 2022.
Egdon is working with Creative Geothermal Solutions Limited (CGS) on this and
other geothermal opportunities.
Egdon is also currently reviewing a number of opportunities in energy storage,
hydrogen and renewable generation and hopes to make progress in relation to
these in the coming period.
Outlook
Production guidance for the full financial year 2021-22 is 240 boepd with
production during H2 2022 guided at 275-285 boepd.
Operationally, in the short-term we will continue to focus on the key
highlighted projects within our conventional portfolio, whilst maintaining our
substantial acreage position in the nascent shale-gas play and working with
our Industry partners and peers to demonstrate to the regulators that we can
operate safely to deliver lower emission UK shale-gas to support the energy
transition and provide energy security.
Our key activities and focus for the coming year will be:
· Continuing to optimise oil and gas production from the Ashover
Grit reservoir at Wressle, building on the strong performance to date
· Progressing gas monetisation at Wressle
· Finalising plans for development of the material Contingent
Resources in the Penistone Flags at Wressle
· Progressing drilling plans to target incremental oil production /
near field exploration opportunities at the Keddington oil field and field
redevelopment at Waddock Cross
· Securing planning consent via appeal for the Biscathorpe and
North Kelsey projects
· Further developing the Company's energy transition opportunities
including repurposing of the Dukes Wood-1 well for geothermal heat
As always, I would like to thank our shareholders for their continued support
and the unwavering effort of the Egdon team on behalf of shareholders. With
both Wressle and Ceres contributing significant cash flow and the recognition
by Government of the important role of indigenous oil and gas as part of the
energy transition and for security of supply we can look forward with renewed
confidence to the future.
Philip Stephens
Chairman
25 April 2022
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 January 2022
Unaudited Unaudited Audited
Six months
Six months
Year
ended
ended
ended
31-July-21
31-Jan-22 31-Jan-21
£'000
£'000
£'000
Revenue 2,551 424 1,093
Cost of sales - exploration costs written-off and pre-licence costs (63) (206)
(19)
Cost of sales - impairments of intangible fixed assets - (276) (276)
Cost of sales - impairment reversals of property, plant and equipment 507 - -
Cost of sales - depreciation, excluding impairments (526) (61) (85)
Cost of sales - amortisation of right-of-use asset (40) (56) (99)
Cost of sales - direct production costs (613) (473) (919)
Cost of sales - other, including shut-in fields (94) (69) (191)
Total cost of sales (785) (998) (1,776)
Gross profit/(loss) 1,766 (574) (683)
Administrative expenses (477) (469) (862)
Other operating income 52 100 157
1,341 (943) (1,388)
Finance income - net investment in sub-lease 23 25 50
Finance costs - convertible loans - (4) (84)
Finance costs (55) (20) (75)
Finance costs - unwinding of decommissioning discount (33) (30) (60)
Finance costs - lease liability charge (54) (67) (125)
Profit/(loss) before taxation 1,222 (1,039) (1,682)
Taxation - - -
Profit/(loss) for the period 1,222 (1039) (1,682)
Other comprehensive income for the period - - -
Total comprehensive income for the period attributable to equity holders of 1,222 (1,039) (1,682)
the parent
Profit/(loss) per share - note 3
Basic profit/(loss) per share 0.24p (0.32)p (0.51)p
Diluted profit/(loss) loss per share 0.24p (0.32)p (0.51)p
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 January 2022
Notes Unaudited Unaudited Audited
31-Jan-22
31-Jan-21
£'000
31-Jul-21
£'000
£'000
Non-current assets
Intangible assets 2 21,240 21,127 21,241
Property, plant and equipment 8,932 8,330 8,719
Right-of-use asset 567 671 618
Net investment in sub-lease 382 426 385
Total non-current assets 31,121 30,554 30,963
Current assets
Inventory - - -
Trade and other receivables 1,388 719 1,085
Cash and cash equivalents 4 2,084 2,422 1,960
Total current assets 3,472 3,141 3,045
Current liabilities
Trade and other payables (1,174) (2,170) (1,772)
Loans and borrowings 5 (1,007) (962) (1,008)
Lease liability within one year (126) (135) (128)
Total current liabilities (2,307) (3,267) (2,908)
Net current assets/(liabilities) 1,165 (126) 137
Total assets less current liabilities 32,286 30,428 31,100
Non-current liabilities
Lease liability after one year (987) (1,112) (1,013)
Loans and borrowings 5 - (1,020) -
Provisions (2,658) (2,638) (2,669)
Total non-current liabilities (3,645) (4,770) (3,682)
Net assets 28,641 25,658 27,418
Equity
Share capital 17,118 15,234 17,118
Share premium 27,513 26,967 27,513
Share-based payment reserve 123 123 123
Convertible debt option reserve - 27 -
Retained deficit (16,113) (16,693) (17,336)
28,641 25,658 27,418
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 January 2022
Unaudited Unaudited Audited
Six months
Six months
Year
ended
ended
ended
31-Jan-22
31-Jan-21
31-Jul-21
£'000
£'000
£'000
Cash flows from operating activities
Profit/(loss) before tax 1,222 (1,039) (1,682)
Adjustments for:
Depreciation and impairments of non-current assets 576 404 594
Impairment reversal of non-current assets (507) - -
Increase in decommissioning provision written off to cost of sales 32 6 29
Onerous contract provision written off to cost of sales - 119 -
Foreign exchange loss 1 - 5
Decrease in inventory - 5 5
(Increase)/decrease in trade and other receivables (356) 1,106 697
Decrease in trade and other payables (546) (698) (1,057)
Finance costs 142 121 344
Finance income (23) (25) (50)
Discount of decommissioning provision 101 - -
Net cash generated from/(used in) operating activities 642 (1) (1,115)
Investing activities
Payments for exploration and evaluation assets (175) (164) (385)
Proceeds from sale of exploration and evaluation assets - 212 210
Purchase of property, plant and equipment (231) (400) (719)
Redemption of redeemable preference shares - - 50
Net cash flow used in capital expenditure and financial investment (406) (352) (844)
Financing activities
Issue of shares - - 1,440
Costs associated with issue of shares - - (78)
Proceeds on issue of convertible loan notes-equity element - 28 -
Costs associated with issue of convertible loan notes-equity element - (1) -
Proceeds on issue of convertible loan notes-debt element - 1,023 1,051
Costs associated with issue of convertible loan notes-debt element - (65) (67)
Loan drawdown - 1,000 1,000
Interest paid on loan (56) - (67)
Redemption of redeemable preference shares - - (50)
Principal paid on lease liabilities (24) (15) (77)
Interest paid on lease liabilities (31) (42) (75)
Net cash flow (used in)/generated from financing (111) 1,928 (3,077)
125 1,575 1,118
Net increase in cash and cash equivalents
Cash and cash equivalents at the start of the period 1,960 847 847
Effects of exchange rate changes on the balance of cash held in foreign (1) - (5)
currencies
Cash and cash equivalents at the end of the period 2,084 2,422 1,960
In the period to 31 January 2022, significant non-cash transactions included
the reversal of the impairment to Ceres of £507,000. In the year to 31 July
2021 significant non-cash transactions included the recognition of the
decommissioning provision of £80,000 and the convertible loan which was
subsequently converted to equity
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 January 2022
Share capital Share premium Share based payment reserve Retained earnings Total equity
Convertible debt option reserve
£'000 £'000 £'000 £'000 £'000 £'000
Balance as at 31 July 2020 15,234 26,967 123 - (15,654) 26,670
Total comprehensive income for the period - - - - (1,039) (1,039)
Issue of convertible loans - - - 27 - 27
Balance as at 31 January 2021 15,234 26,967 123 27 (16,693) 25,658
Total comprehensive income for the period - - - - (642) (642)
Issue of shares 1,152 288 - - - 1,440
Share issue costs - (78) - - - (78)
Transfer on conversion of loan notes to equity - debt element 732 374 - - - 1,106
Issue costs of convertible loan notes - (65) - - - (65)
Transfer on conversion of loan notes to equity - equity element - 27 - (27) - -
Balance as at 31 July 2021 17,118 27,513 123 - (17,335) 27,419
Total comprehensive income for the period 1,222 1,222
Balance as at 31 January 2022 17,118 27,513 123 - (16,113) 28,641
1. General information
Egdon Resources plc ('the Company' and ultimate parent of the Group) is a
public limited company listed on the AIM market of the London Stock Exchange
plc (AIM) and incorporated in England. The registered office is The Wheat
House, 98 High Street, Odiham, Hampshire, RG29 1LP.
This interim report was authorised for issue by the Directors on 25 April
2022.
Basis of preparation
The financial information set out in this interim report has been prepared in
accordance with UK adopted international accounting standards in conformity
with the requirements of the Companies Act 2006.
Adoption of new and revised standards
New standards, interpretations and amendments
New standards impacting the Group that have been adopted in the interim
financial statements for the six months ended 31 January 2022, but have not
had a significant effect on the Group are as follows:
· Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to
IFRS 9, IAS 39 and IFRS 7);
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37);
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
· Annual Improvements to IFRS Standards 2018-2020 (Amendments to
IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
· References to Conceptual Framework (Amendments to IFRS 3).
New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the reporting period beginning 1
August 2023
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
· Definition of Accounting Estimates (Amendments to IAS 8); and
· Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
Non-statutory accounts
The financial information set out in this interim report does not constitute
the Group's statutory financial statements for that period within the meaning
of Section 434 of the Companies Act 2006. The statutory financial statements
for the year ended 31 July 2021 have been delivered to the Registrar of
Companies. The auditors reported on those financial statements; their report
was unqualified and did not contain a statement under either Section 498 (2)
or Section 498 (3) of the Companies Act 2006. However, in their report on
the statutory financial statements for the year ended 31 July 2021, the
auditor drew attention, by way of emphasis of matter paragraph, to material
uncertainties related to the carrying value of the unconventional assets and
the impact of the moratorium on hydraulic fracturing for shale-gas in England.
The financial information for the six months ended 31 January 2022 and 31
January 2021 is unaudited.
Accounting policies
The condensed financial statements have been prepared under the historical
cost convention, except for the inclusion of certain financial instruments at
fair value.
The same accounting policies, presentation and methods of computation are
followed in these condensed financial statements as were applied in
preparation of the Group's financial statements for the year ended 31 July
2021.
Going concern
The Directors have prepared the financial statements on the going concern
basis, which assumes that the Group and the Company will continue in
operational existence without significant curtailment of its activities for
the foreseeable future.
Forward cash flows necessarily make assumptions as to the timing and value of
cash flows from production at the Group's producing sites. Whilst there is
currently no evidence that the timing or value of these revenues is
unrealistic, the Directors acknowledge that volatility in both oil and gas
prices, well performance uncertainties and realising of amounts invoiced to
joint venture partners, give some level of uncertainty in respect of the
timing of future cash flows.
The Group also retains options to access additional sources of funding via
debt and/or equity to fund certain future activities. Whilst, after having
made enquiries of our advisors, there is a high expectation on the part of the
Directors that such debt and/or equity will be available in the market as and
when required, a level of uncertainty exists in relation to this.
The Group has flexibility in relation to the timing and quantum of future
expenditures and will continue to look to balance financial exposure and risk
by minimising its exposure to future cash expenditure on existing projects
during the coming period.
Impact of the COVID-19 pandemic
The coronavirus pandemic has been a significant national and international
public health emergency. The roll-out of vaccinations and advent of effective
treatments has reduced the impact of the disease, and all Government
restrictions have now been removed. although the virus remains at high levels
of infection within the population. Throughout the Period, the primary
concern and focus for the Company was the health and safety of our employees,
contractors and other stakeholders. Egdon's office-based employees have
largely worked from home throughout the Period and we have established
procedures and plans to ensure continued safe operations at our sites. We will
continue to monitor the situation and act within all Government guidelines,
but do not anticipate any adverse impacts to our production operations in the
coming period.
2. Impairments
An impairment credit of £506,903 has been recognised in relation to the
licence held in Ceres (2021: impairment charge of £276,362 in relation to
licences PL161 and PL162). The impairment credit arises due to the improved
gas prices being achieved and the impact this has on future forecasts in 2025.
3. Profit/(loss) per share
Unaudited Unaudited Audited
Six months ended
Six months ended
31-Jan-22
31-Jan-21 Year ended
p
p
31-Jul-21
p
Basic 0.24 (0.32) (0.51)
Diluted 0.24 (0.32) (0.51)
The basic profit per share has been calculated on the profit on ordinary
activities after taxation of £1.222m (January 2021: loss of £1.039m; July
2021: loss of £1.682m) divided by the weighted average number of ordinary
shares in issue of 516,777,031 (January 2021: 328,315,625; July 2021:
331,615,357). The diluted profit per share has been calculated on the profit
on ordinary activities after taxation of £1.222m (January 2021: loss of
£1.039m; July 2021: £1.682m) divided by the diluted weighted average number
of ordinary shares in issue of 516,777,031 (January 2021: 328,315,625; July
2021: 331,615,357).
In all of the reported periods, all share options in issue were excluded as
their inclusion would have been anti-dilutive. At the period end, the
calculated average share price for the period is lower than the exercise price
of the warrants and share options in issue and therefore these potential
ordinary shares have not been included for the purposes of calculating the
diluted profit per share.
The post year end cancellation and reissue of certain share options has also
been considered and is considered to have no impact on the period end diluted
profit per share calculation as the option exercise price remains above the
average market price of the Company's shares for the period.
4. Cash and cash equivalents
Unaudited Unaudited Audited
31-Jan-22 31-Jan-21 31-Jul-21
£'000 £'000 £'000
Cash at bank at floating interest rates 494 1,439 785
Non-interest bearing cash at bank 1,590 983 1,174
2,084 2,422 1,960
Cash at bank at floating interest rates consisted of money market deposits
which earn interest at rates set in advance for periods up to three months.
5. Loans and borrowings
Unaudited Unaudited Audited
31-Jan-22 31-Jan-21 31-Jul-21
£'000 £'000 £'000
Current
Other loans (1,007) (962) (1,008)
Non-current
Other loans - (1,020) -
(1,007) (1,982) (1,008)
The loan facility held with Union Jack Oil plc is £1,007k. The loan drawn
down on 25 November 2020 has an 18 month term with the principal sum payable
at the end of the term or in part or in full at any earlier time at the
borrower's discretion. Interest accrues on a daily basis on the outstanding
loan amount at an interest rate of 11% per annum and is payable quarterly
commencing on April 2021. The loan is secured against an unencumbered 25%
interest in the Wressle Project (PEDL180, and PEDL182), including the Wressle
development project and associated infrastructure.
On 22 January 2021 Egdon announced it had issued £1.051 million of nominal 8%
unsecured convertible loan notes with a concert party of Petrichor Holdings
BV. The principal amount of the loan was repayable 12 months from the date of
issue at its total face value of £1.051 million or converted at any time into
shares at the holder's option at the conversion price of 1.55p per share. On
20 July 2021, the convertible loan notes were converted to 73,233,406 New
Ordinary 1p shares at an issue price of 1.55p.
6. Dividend
The Directors do not recommend payment of a dividend.
7. Publication of the Interim Report
This interim report is available on the Company's website
www.egdon-resources.com (http://www.egdon-resources.com/) .
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 FLFLASAIEFIFRecent news on Egdon Resources
See all newsREG - Egdon Resources PLC - Cancellation of Trading
AnnouncementREG - AIM Egdon Resources PLC - Cancellation - Egdon Resources Plc
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
Announcement