REG - Europa Oil & Gas - Final results for the year to 31 July 2024
28/10/2024 07:00
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RNS Number : 7670J Europa Oil & Gas (Holdings) PLC 28 October 2024
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil
& Gas
28 October 2024
Europa Oil & Gas (Holdings) plc
("Europa" or the "Company")
Final results for the year to 31 July 2024
Europa Oil & Gas (Holdings) plc, the AIM traded West Africa, UK and
Ireland focused oil and gas exploration, development and production company,
announces its final audited results for the 12-month period ended 31 July
2024.
The full Annual Report and Accounts will be available shortly on the Company's
website at www.europaoil.com (http://www.europaoil.com) and will be mailed to
those shareholders who have requested a paper copy.
Financial performance
· Revenue declined 46% to £3.6 million, reflecting lower oil
production (which included a three- month shut in period at Wressle) and lower
realised oil prices (2023: £6.7 million)
· Gross profit of £0.3 million (2023: £3.4 million)
· Pre-tax loss of £6.8 million after non-cash exploration impairment
loss of £5.0 million (2023: pre-tax loss of £0.9 million after non-cash
impairment loss of £1.7 million)
· Net cash used in operating activities £0.6 million (2023: £2.8
million net cash generated by operations)
· Cash balance at 31 July 2024: £1.5 million (2023: £5.2 million)
Operational highlights - Building a balanced portfolio of exploration and
production assets
Equatorial Guinea
· Europa announced a ground-breaking deal in December 2023 with the
acquisition of a 42.9% stake in Antler Global Limited ("Antler"), which has an
80% working interest in licence EG-08 offshore Equatorial Guinea. This gives
rise to a joint venture arrangement
· Europa agreed a US$3 million cash subscription for new ordinary
shares in Antler, with the payments being made in four instalments and which
has now completed
· EG-08 is a highly prospective licence which has three drill-ready
prospects, with internally estimated Mean Prospective Resource of 1.4 TCF of
gas equivalent
· Antler and our technical team has further evaluated the seismic data
across the block and has identified additional prospectivity, resulting in a
Mean Prospective Resource of 2.1 TCF of gas equivalent
· Antler commenced a farm-down process in Q3 this year with a view to
bringing in a partner for drilling, potentially in 2025
· A discovery from only one of the three main prospects could be
quickly tied back to existing gas infrastructure located 9km to the south
Offshore Ireland - lower risk / very high reward infrastructure-led
exploration in proven gas play in the Slyne Basin
· Licence FEL 4/19 contains the Inishkea West gas exploration prospect,
which has been mapped as a large four-way closure with a prospective resource
Pmean of 1.5 TCF of recoverable gas
· The FEL 4/19 licence extension was granted by the Irish Government,
extending the licence term to 31 January 2026
· Following the licence extension, a farm-out process has begun again
with the aim of bringing in a partner to assist with the drilling of the
prospect
· Inishkea West is within easy tie-back range of the Corrib gas field
situated some 18 kilometres to the southeast. This proximity to the Corrib
infrastructure, the mapped four-way closure, the large prospective resource,
and the reduced seal risk means that the Inishkea West prospect has become the
primary exploration target on the FEL 4/19 licence
Onshore UK - net production declined 48% to 137 barrels of oil per day
("bopd") (2023: 265 bopd) following planned downtime and increased water cut
on the Wressle oilfield
· We continue to progress our Cloughton asset to determine if
commercial rates can be obtained using modern completion techniques so that
the 192 BCF (Pmean) GIIP potential can be monetised. Terms have been agreed
for the site and work has now commenced to secure the necessary permits
required to drill an appraisal well, expected to be in 2026. Given the
proximity to the UK gas network and quality of the natural gas contained
within the reservoir, a successful appraisal well could be quickly brought
online, displacing LNG imports and reducing global emissions
· Wressle production declined throughout the period
o Gross production averaged 357 bopd throughout the period (2023: 710 bopd),
with Europa's net share equating to 107 bopd (2023: 213 bopd)
o A jet pump was installed on the Wressle-1 well that took three months to
complete and resulted in interrupted production between mid-August through to
early November 2023
· A new seismic interpretation and mapping exercise across the Wressle
field has highlighted a potentially significant increase in resources from the
Ashover Grit and the results of the analysis are now being incorporated into
the field development plan. The intention is that two back-to-back development
wells will be drilled from the existing Wressle site. Planning consent was
received for the project in September, however the North Lincolnshire
Council's decision to grant planning permission has subsequently been
challenged in light of the Finch Supreme Court judgement which ruled that
scope three emissions must be considered in planning applications for oil and
gas developments. This is expected to result in the planning approval being
rescinded. The Wressle Joint Venture is now going to submit further
information that covers potential scope three emissions such that a future
planning process could be approved. The wells will be drilled at the earliest
opportunity, once the necessary consents and regulatory approvals have been
received
· In addition to the two development wells, work is ongoing to monetise
the associated gas being produced from Wressle by connecting to a local gas
distribution network. This work is expected to be completed around the same
time as the development wells and is subject to the same regulatory approvals
· The revised CPR on Wressle was completed in H2 2023 by ECRE which
incorporated the new field interpretation, historical production performance
data and the field development plan. The key highlights of the CPR included:
263% increase in 2P Reserves compared to 2016 CPR, reclassification of 1,883
mboe in Penistone Flags Contingent Resources to 2P Reserves, 59% upgrade to
the Ashover Grit and Wingfield Flags Estimated Ultimate Recoverable and 23%
upgrade to Broughton North Prospective Resources
· Total net production of 137 bopd was produced from Europa's UK
onshore fields during the year with Wressle contributing roughly 78% of this
and the remainder coming from the three older fields
Offshore UK - Serenity discovery in the North Sea
· The recent change in government in the UK and the continued
uncertainty of the domestic regulatory and fiscal environment has sharply
increased the possibility of future fiscal changes for the oil and gas
industry, which we believe could negatively impact the economics of the
Serenity project
· Given that the Serenity licence was due to expire at the end of
September 2024, we have therefore taken the decision to allow the licence to
lapse, which has resulted in a £4.9 million impairment of the capitalised
costs associated with the project
UK offshore licensing round
· In 2022, Europa participated in the UK Government's 33(rd) offshore
oil and gas licensing round and in May 2024 the Company was contacted by the
North Sea Transition Authority (the "NSTA") who proposed a licence-sharing
arrangement between Europa and another party for a new licence. After careful
consideration, the Company has decided not to accept the proposed shared
licence given the recent new country entry into the highly prospective EG-08
licence and the limited resources of the Company. The Board believes that the
risk/reward proposition for new assets in the UK is currently challenging
Board
· Simon Oddie resigned in November 2023
· Stephen Williams resigned in November 2023
· Simon Ashby-Rudd was appointed in December 2023
· Eleanor Rowley was appointed in April 2024
Post reporting period events
· In September 2024, we were delighted that planning approval was
awarded for two new development wells on the Wressle field which we expect to
drill back-to-back next year. As a result of the Finch Supreme Court ruling
and a proposed legal challenge to the granting of planning permission for the
next phase of the Wressle development, it is expected that the planning
consent will be rescinded once the court process has concluded. The Wressle
Joint Venture plan to submit further information that covers potential scope
three emissions such that a future planning process could be approved
· We have decided against applying to extend the Serenity licence in
the North Sea following its expiry at the end of September 2024 and given the
ongoing uncertainties around the oil and gas fiscal regime in the UK
Investor presentation and Q&A
CEO William Holland, COO Alastair Stuart and Chief Geologist Jamie White will
be hosting an online presentation and Q&A for investors on Monday, 2
December 2024.
To register for the event, please visit:
https://www.engageinvestor.com/company/europa-oil-gas-holdings-plc?tab=events&company=follow
(https://www.engageinvestor.com/company/europa-oil-gas-holdings-plc?tab=events&company=follow)
Change of accounting reference date
The Company is changing its accounting reference date from 31 July to 31
December, with immediate effect. Accordingly, its current accounting period,
which commenced on 1 August 2024, will now end on 31 December 2025.
As a result of this change, the Company's forthcoming financial reporting
calendar will be as follows:
· Announcement of unaudited interims for the five-month period from 1
August 2024 to 31 December 2024, to be announced within 3 months of the period
end, being by no later than 31 March 2025;
· Announcement of unaudited interims for the eleven-month period from 1
August 2024 to 30 June 2025, to be announced within 3 months of the period
end, being by no later than by 30 September 2025; and
· Publication of audited report and accounts for the seventeen-month
period from 1 August 2024 to 31 December 2025, to be announced within 6 months
of the period end, being by no later than by 30 June 2026.
William Holland, CEO of Europa, said:
"Europa announced a highly material new country entrance during the 2023/24
financial year, with the acquisition of a 42.9% stake in Antler Global,
providing us with significant near-term exposure to exploration in Equatorial
Guinea through the EG-08 licence. I cannot overstate how exciting an
opportunity this is for Europa and its stakeholders, given the sheer scale of
the prize on offer in this highly prospective hydrocarbon province. With over
2 TCF of nearfield, infrastructure-led, low-risk, Amplitude versus Offset
("AVO") supported prospects identified which can be quickly brought online,
EG-08 is a world-class asset. We have a data room up and running and have
already seen considerable interest from industry. We are targeting completion
of a farm-out within the coming months and have concurrently started planning
for a well to be drilled, which could spud as early as next year.
We continue to progress our Irish business throughout the year and are hoping
to farm-out a portion of our 100% owned licence FEL 4/19, which contains the
1.5 TCF Inishkea West near-field exploration prospect. I am pleased to report
that a licence extension was granted by the Irish Government, extending the
licence term from January 2024 to 31 January 2026. Last October, we announced
the results of our internally generated seismic reprocessing which has
materially improved the subsurface imaging of the prospect. We now have much
greater confidence in the quality of the seal and trap at Inishkea West. A
prospect of this size and quality simply has to be drilled in my opinion, not
least because of the significant impact a successful discovery would have on
Ireland's security of energy supply for a number of years.
Since assuming operatorship of Cloughton in July 2023 we have made steady
progress with the appraisal work on PEDL343, which is an onshore UK licence.
We have agreed terms for a site on which to establish a drilling pad and have
initiated the planning approval process in order to drill an appraisal well on
the field to test if the estimated 192 BCF (Pmean) GIIP can be produced at
commercial rates. We believe that whilst the UK continues to consume gas,
which is forecast to continue beyond 2050, that the most responsible source
is, both commercially and environmentally, domestic gas. For that reason, a
development of the Cloughton gas field is fully aligned with the UK
Government's British Energy Security Strategy and Net Zero 2050 goals.
We continued to develop and produce from our core assets onshore UK, where we
continue to invest in our flagship Wressle oilfield. Planning is ongoing to
develop the gassy Penistone Flags reservoir with two back-to-back wells as
soon as the necessary approvals have been received. We believe that these
wells will boost oil production and enable the export of gas into the local
network grid, thus eliminating the need for flaring.
In the year, we delivered revenues of £3.6 million, and whilst this was
roughly half of the previous year's, we invested significantly in the Wressle
field with the successful installation of a jet pump. The extensive works on
the jet pump and associated production facilities meant that Wressle was
offline for three months which materially impacted the volume of oil that we
produced. This was further exacerbated by lower oil prices during the period,
resulting in the reduced revenue for the year. Nevertheless, we ended the year
with a cash balance of £1.5 million in Europa accounts, £0.7 million in
Antler accounts (gross) and we continue to generate cashflow from Wressle and
our other onshore UK assets.
Throughout the year, we worked on various development options for the Serenity
oil discovery in the Central North Sea. However, we became increasingly
concerned about the political and fiscal backdrop in the UK as time
progressed. We have evaluated the options for commercialisation of the asset
and do not believe in the current environment it is attractive for Europa
shareholders. Consequently, in September 2024 we chose not to extend the
Serenity licence, which we believe is in the best interest of Europa and its
shareholders.
Following the expected activity from our new-country entry into Equatorial
Guinea, progress with our onshore UK projects at Cloughton and Wressle along
with our Irish acreage, I believe we are well positioned to continue to grow
the Company, and I look forward to updating shareholders over the coming
twelve months."
For further information, please visit www.europaoil.com
(http://www.europaoil.com/) or contact:
William Holland Europa Oil & Gas (Holdings) plc mail@europaoil.com
Samantha Harrison / Ciara Donnelly / Elliot Peters Grant Thornton UK LLP - Nominated Adviser +44 (0) 20 7383 5100
Peter Krens Tennyson Securities +44 (0) 20 7186 9033
Patrick d'Ancona / Finlay Thomson / Kendall Hill Vigo Consulting +44 (0) 20 7390 0230
Chairman's Statement
Introduction
The 2023/2024 financial year was a busy, and at times challenging, period for
Europa as we focused on progressing workstreams surrounding our new Equatorial
Guinea (EG) licence whilst ensuring the Company maintains a healthy balance of
producing, exploration and appraisal assets. Against a backdrop of
well-documented macroeconomic pressures and political tensions impacting
UK-focused hydrocarbon businesses, we have still managed to identify a
suitable location for an appraisal well at Cloughton and, alongside our
partners, have ensured Wressle remains cash generative. Through our decision
to turn our new ventures focus on Africa and not apply for an extension to the
Serenity licence, we have further diversified our asset mix whilst reducing
our exposure to some of the negative political rhetoric surrounding the UK
upstream sector. We continue to focus on finding good farm-in partners for our
EG and Irish assets as an important near-term priority.
Equatorial Guinea
In the final month of 2023, we were delighted to complete the acquisition of a
42.9% stake in Antler, which has an 80% working interest in licence EG-08
offshore Equatorial Guinea in West Africa. This entry into West Africa was a
prudent decision underpinned by the wealth of exploration and development
project experience the Europa team and board has across the region. We
consider EG-08 to be a highly prospective, low risk opportunity for the
Company and have been encouraged by the Equatorial Guinean Government's robust
support and regular communication since we acquired a stake in the licence.
We estimate that EG-08 has total prospective resources of 2.1 TCFE and, given
it contains what we consider to be drill-ready prospects consisting of three
independent targets totalling 1.4 TCFE (Pmean) with a 70% geological chance of
success ("GCOS"), we regard EG-08 as a relatively low risk, high impact
opportunity which is close to infrastructure so can be brought quickly into
production, if successfully appraised.
We have now initiated the farm-in process to secure a partner capable of
providing us with the financial support necessary to advance this exciting
project, whilst we will continue to evaluate other opportunities that arise in
this prolific hydrocarbon region which is well regulated and supportive of the
upstream hydrocarbon industry.
Offshore Ireland
Following the Irish Government's decision to extend the FEL 4/19 exploration
licence until 2026, we have continued with our extensive search for a suitable
farm-in partner during the period. Located off the west coast of Ireland, FEL
4/19 is ideally positioned adjacent to the Corrib gas field, which has been
producing gas for domestic consumption for a number of years and has
sufficient ullage to monetise a discovery on our licence. FEL 4/19 contains
the large 1.5 TCF low-risk Inishkea West gas prospect where a discovery could
be brought online quickly providing domestic gas with significantly lower
emissions intensity than imported gas from the UK, Norway or other
jurisdictions.
During the period, we also published an updated emissions report for FEL 4/19.
The third-party study, which calculated the expected emissions associated with
the development of a future 1 TCF indigenous gas discovery on the licence,
demonstrated that our gas resource at the Inishkea West prospect has the
potential to eradicate the need for higher emissions intensity gas imports
from the UK for up to three years whilst helping Ireland meet its carbon
emission reduction targets.
Russia's invasion of Ukraine and the geopolitical turmoil that has ensued have
highlighted to governments worldwide, but particularly those in Europe, the
importance of energy security. We will continue to ensure Irish politicians,
councillors and all key stakeholders are well informed on our licence and the
role it could play in mitigating Ireland's dependence on expensive, carbon
intensive overseas imports.
Onshore UK
At our principal producing asset Wressle, development work to enhance
production rates included the installation of a jet pump during the period.
This involved a three-month shutdown of the well and, as a result, Wressle's
average gross production rate during the year was 357 bopd. The well continues
to perform at rates above the independent Competent Person's P10 production
profile, which was updated and announced in January 2024. Wressle continues to
generate cashflow and, post-period end, we were pleased to announce receipt of
planning consent from North Lincolnshire Council for the further development
of the Wressle well site. We are disappointed that the planning permission is
likely to be rescinded following a legal challenge in light of the recent
Finch Supreme Court judgement which ruled that scope three emissions must be
considered in planning applications for oil and gas developments. The Wressle
Joint Venture is now going to submit further information that covers potential
scope three emissions such that a future planning process could be approved.
The works will include extending the existing site to accommodate the drilling
of two new wells and construction of gas processing facilities and a 600m
underground gas pipeline to connect Wressle to the local gas distribution
network. This will result in zero routine flaring as the gas sales further
increase revenues.
In February 2024, we announced that the NSTA had granted us a two-year
extension to our PEDL 343 (Cloughton) licence. The extension has enabled us to
continue our ongoing work on the licence, where we estimate Cloughton to have
gross gas initially in place (GIIP) volumes of 192 BCF (Pmean). The Cloughton
discovery well, drilled in 1986, was looking for oil and demonstrated good
quality sweet gas that flowed naturally at rates of up to 28,000 scf/day. We
believe that a well could flow at rates of 6 mmscf/day using the modern
completion techniques.
We have selected Burniston Mill as our location for an appraisal well at
Cloughton and continue to engage with stakeholders to obtain the necessary
permits and consents needed to drill the well in order to demonstrate the
productivity of the field, which remains a key target for 2025.
Offshore UK
Post-period end, we announced that we do not intend to apply to the North Sea
Transition Authority for an extension to the Serenity licence, which
consequently expired on 30 September 2024. As a result, the incurred costs
associated with Serenity that the Company has capitalised on its balance sheet
will be written off.
Board Changes
In November 2023, Simon Oddie and Stephen Williams decided to withdraw their
candidacy for re-election from the resolutions at the Annual General Meeting
("AGM"). Consequently, they ceased to serve as directors of the Company after
the AGM. Simon and Stephen both made a significant contribution to the
development of Europa, and on behalf of the board and the Company, I would
like to put on record our sincere thanks to them, and best wishes for their
future endeavours.
In December 2023, the board was strengthened with the addition of Mr Simon
Ashby-Rudd as independent non-executive director. Simon has extensive
experience in the upstream energy sector which includes 30 years in investment
banking roles at large financial institutions, including Dresdner Kleinwort
Benson, Citigroup, and Standard Bank where he was Global Head of Oil &
Gas. He was the founding European partner at Tristone Capital, which was a
leading UK boutique M&A and equity advisory firm before it was acquired by
Macquarie Bank. Simon has significant global experience in advising energy
companies on corporate strategy and capital structuring and has spent much of
his career focused on Europe and Africa.
In April 2024, we further strengthened the board with the appointment of Dr
Eleanor Rowley as independent non-executive director. Eleanor is an
exploration geologist and a successful hydrocarbon finder who has extensive
experience in the upstream energy sector, with a particular focus on African
projects. Eleanor's extensive knowledge of exploration and appraisal asset
evaluation has already contributed significant value to Europa, with her
skillset highly complementary to the board's existing strengths.
Importantly, appointing a third independent non-executive director has
enhanced the independent governance at Europa, returning the board to a
majority of independent directors.
Conclusion and Outlook
By developing a well-balanced portfolio of assets across trusted oil and gas
jurisdictions, we remain in a stable position to deliver solid operational
progress in the coming months.
2025 will be an exciting period for Europa with activity across many of our
assets that has the potential to materially drive shareholder value. Wressle
remains one of the UK's leading onshore oilfields and a key cash generator for
Europa, and the proposed two well development would generate important
revenues for the Company. At Cloughton, appraisal drilling to test the
reservoir productivity could result in the UK's largest onshore gas field,
which, given its proximity to gas infrastructure, could be brought online
quickly.
In addition, we have exciting near-term gas exploration opportunities at our
Equatorial Guinea licence, as well as our Ireland licence, and continue to
search for ideal farm-inees for both assets. Both assets are close to gas
infrastructure so, like Cloughton, both can be brought online quickly
following a successful well.
On behalf of the board, I would like to thank all Europa employees who have
helped us mitigate the impact of macroeconomic and domestic headwinds
prevalent across the period. We look forward to what should be a highly
productive next 12 months for Europa with a number of key projects progressing
as planned.
Brian O'Cathain (Non-Executive Chairman)
25 October 2024
The financial information set out below does not constitute the company's
statutory accounts for 2024 or 2023. The financial information has been
prepared in accordance with UK adopted international accounting standards on a
basis that is consistent with the accounting policies applied by the group in
its audited consolidated financial statements for the year ended 31 July 2024.
Statutory accounts for the years ended 31 July 2024 and 31 July 2023 have been
reported on by the Independent Auditors.
The Independent Auditors' Report on the Annual Report and Financial Statements
for 2024 and 2023 were unqualified and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year
ended 31 July 2023 have been filed with the Registrar of Companies. The
statutory accounts for the year ended 31 July 2024 will be delivered to the
Registrar in due course.
Qualified Person Review
This release has been reviewed by Alastair Stuart, Europa's Chief Operating
Officer, who is a petroleum engineer with over 35 years' experience and a
member of the Society of Petroleum Engineers and has consented to the
inclusion of the technical information in this release in the form and context
in which it appears.
Consolidated statement of comprehensive income
For the year ended 31 July 2024 2023
Note £000 £000
Continuing operations
Revenue 2 3,566 6,653
Cost of sales 2 (3,117) (3,448)
Impairment of producing fields 12 (189) 177
Total cost of sales (3,306) (3,271)
---------------------------------- ----------------------------------
Gross profit 260 3,382
Exploration impairment 11 (4,968) (1,686)
Administrative expenses (1,855) (1,872)
Share of loss from associate (2) -
Finance income 6 223 9
Finance expense 7 (439) (717)
------------------------------------ ------------------------------------
Loss before taxation 3 (6,781) (884)
Taxation expense 8 - 32
------------------------------------ ------------------------------------
Loss for the year (6,781) (852)
==================== ====================
Other comprehensive (loss) / profit
Items which will not be reclassified to profit /(loss)
Profit on investment revaluation 9 - 5
Items which may be reclassified to profit /(loss)
Exchange differences on translation of foreign operations (17) -
------------------------------------ ------------------------------------
Total other comprehensive (loss) / profit (17) 5
==================== ====================
Total comprehensive loss for the year attributable to the equity shareholders (6,798) (847)
of the parent
=================== ===================
Earnings per share (EPS) attributable to the equity shareholders of the parent Note Pence per share Pence per share
from continuing operations
Basic EPS 10 (0.71)p (0.09)p
Diluted EPS (0.71)p (0.09)p
The accompanying notes form part of these financial statements.
Consolidated statement of financial position
As at 31 July 2024 2023
Note £000 £000
Assets
Non-current assets
Intangible assets 11 2,664 7,146
Property, plant and equipment 12 1,928 2,417
Investments in joint ventures 13a 2,406 -
---------------------------------- ----------------------------------
Total non-current assets 6,998 9,563
---------------------------------- ----------------------------------
Current assets
Inventories 14 9 19
Trade and other receivables 15 1,309 893
Cash and cash equivalents 1,463 5,165
---------------------------------- ----------------------------------
Total current assets 2,781 6,077
---------------------------------- ----------------------------------
Total assets 9,779 15,640
==================== ====================
Liabilities
Current liabilities
Trade and other payables 16 (1,387) (781)
------------------------------------ ------------------------------------
Total current liabilities (1,387) (781)
------------------------------------ ------------------------------------
Non-current liabilities
Trade and other payables 16 (6) (12)
Long-term provisions 19 (4,607) (4,368)
---------------------------------- ----------------------------------
Total non-current liabilities (4,613) (4,380)
---------------------------------- ----------------------------------
Total liabilities (6,000) (5,161)
----------------------------------- -----------------------------------
Net assets 3,779 10,479
==================== ====================
Capital and reserves attributable to equity holders
of the parent
Share capital 20 9,592 9,592
Share premium 20 23,682 23,682
Merger reserve 20 2,868 2,868
Foreign currency translation reserve 20 (17) -
Retained deficit (32,346) (25,663)
---------------------------------- ----------------------------------
Total equity 3,779 10,479
====================== ======================
These financial statements were approved by the board of directors and
authorised for issue on 25 October 2024 and signed on its behalf by:
William Holland, CEO
Company registration number 05217946
The accompanying notes form part of these financial statements.
Consolidated statement of changes in equity
Attributable to the equity holders of the parent
Share Share premium Merger FCTR Retained deficit Total
capital
reserve equity
£000 £000 £000 £000 £000 £000
Balance at 1 August 2022 9,565 23,660 2,868 - (24,864) 11,229
Comprehensive loss for the year
Loss for the year attributable to the equity shareholders of the parent (852) (852)
- - - -
Other comprehensive profit attributable to the equity shareholders of the 5 5
parent
- - - -
---------------------------------- ---------------------------------- --------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive loss for the year - - - - (847) (847)
---------------------------------- ---------------------------------- --------------------------------- --------------------------------- ------------------------------ -------------------------------
Contributions by and distributions to owners
Issue of share capital (net of issue costs) 27 22 - - - 49
Share-based payments (note 21) - - - - 48 48
---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total contributions by and distributions to owners 27 22 - - 48 97
---------------------------------- ---------------------------------- --------------------------------- --------------------------------- ------------------------------ -------------------------------
Balance at 31 July 2023 9,592 23,682 2,868 - (25,663) 10,479
=================== =================== =================== =================== ===================== ==================
Share Share premium Merger FCTR Retained deficit Total
capital
reserve equity
£000 £000 £000 £000 £000 £000
Balance at 1 August 2023 9,592 23,682 2,868 - (25,663) 10,479
Comprehensive loss for the year
Loss for the year attributable to the equity shareholders of the parent - - - - (6,781) (6,781)
Other comprehensive loss attributable to the equity shareholders of the parent - - - (17) - (17)
---------------------------------- ---------------------------------- --------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive loss for the year - - - (17) (6,781) (6,798)
---------------------------------- ---------------------------------- --------------------------------- --------------------------------- ------------------------------ -------------------------------
Contributions by and distributions to owners
Share-based payments (note 21) - - - - 98 98
---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total contributions by and distributions to owners - - - - 98 98
---------------------------------- ---------------------------------- --------------------------------- --------------------------------- ------------------------------ -------------------------------
Balance at 31 July 2024 9,592 23,682 2,868 (17) (32,346) 3,779
=================== =================== =================== =================== ===================== ==================
The accompanying notes form part of these financial statements.
Company statement of financial position
As at 31 July 2024 2023
£000 £000
Note
Assets
Non-current assets
Property, plant and equipment 12 37 49
Investments 13b 2,343 2,343
Investments in joint ventures 13a 2,425 -
Amounts due from Group companies 15,22 5,502 22,143
------------------------------------ ------------------------------------
Total non-current assets 10,307 24,535
------------------------------------ ------------------------------------
Current assets
Other receivables 15 236 129
Cash and cash equivalents 164 121
-------------------------------------- --------------------------------------
Total current assets 400 250
--------------------------------------- ---------------------------------------
Total assets 10,707 24,785
====================== =====================
Liabilities
Current liabilities
Trade and other payables 16 (436) (250)
------------------------------------ ------------------------------------
Total current liabilities (436) (250)
------------------------------------ ------------------------------------
Trade and other payables 16 (6) (12)
------------------------------------ ------------------------------------
Total non-current liabilities (6) (12)
---------------------------------- ----------------------------------
Total liabilities (442) (262)
------------------------------------ ------------------------------------
Net assets 10,265 24,523
==================== ====================
Capital and reserves attributable to equity holders of the parent
Share capital 20 9,592 9,592
Share premium 20 23,682 23,682
Merger reserve 20 2,868 2,868
Retained deficit (25,877) (11,619)
-------------------------------------- --------------------------------------
Total equity 10,265 24,523
====================== ======================
The Company has taken advantage of the exemption provided under Section 408 of
the Companies Act 2006 not to publish its individual statement of
comprehensive income and related notes. The loss dealt with in the financial
statements of the parent Company is £14,356,000 (2023: £8,964,000 profit).
These financial statements were approved by the board of directors and
authorised for issue on 25 October 2024, and signed on its behalf by:
William Holland
CEO
Company registration number 05217946
The accompanying notes form part of these financial statements.
Company statement of changes in equity
Share Share premium Merger Retained deficit Total
capital
reserve equity
£000 £000 £000 £000 £000
Balance at 1 August 2022 originally stated 9,565 23,660 2,868 (20,631) 15,462
Comprehensive profit for the year
Profit for the year attributable to the equity shareholders of the parent 8,964 8,964
- - -
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive profit for the year - - - 8,964 8,964
Contributions by and distributions to owners
Issue of share capital (net of issue costs) 27 22 - - 49
Share-based payments (note 21) - - - 48 48
---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total contributions by and distributions to owners 27 22 - 48 97
---------------------------------- ---------------------------------- -------------------------------- ------------------------------ ----------------------------
Balance at 31 July 2023 9,592 23,682 2,868 (11,619) 24,523
==================== =================== ================== ======================= =================
Share Share premium Merger Retained deficit Total
capital
reserve equity
£000 £000 £000 £000 £000
Balance at 1 August 2023 originally stated 9,592 23,682 2,868 (11,619) 24,523
Comprehensive profit for the year
Loss for the year attributable to the equity shareholders of the parent - - - (14,356) (14,356)
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive profit for the year - - - (14,356) (14,356)
Contributions by and distributions to owners
Issue of share capital (net of issue costs) - - - - -
Share-based payments (note 21) - - - 98 98
---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total contributions by and distributions to owners - - - 98 98
---------------------------------- ---------------------------------- -------------------------------- ------------------------------ ----------------------------
Balance at 31 July 2024 9,592 23,682 2,868 (25,877) 10,265
==================== =================== ================== ======================= =================
The accompanying notes form part of these financial statements
Consolidated statement of cash flows
For the year ended 31 July 2024 2023
Note £000 £000
Cash flows from / (used in) operating activities
Loss after tax from continuing operations (6,781) (852)
Adjustments for:
Share-based payments 21 98 48
Depreciation 12 781 1,133
Impairment / (reversal) of producing field 12 189 (177)
Exploration impairment 11 4,968 1,686
Share of loss from joint venture 2 -
Finance income (223) -
Finance expense 7 439 717
Taxation expense recognised in profit and loss 8 - (32)
(Increase) / decrease in trade and other receivables (416) 973
Decrease in inventories 10 17
Increase / (decrease) in trade and other payables 320 (765)
------------------------------------ ------------------------------------
Net cash (used in) / generated by operations (613) 2,748
Income taxes paid - 32
------------------------------------ ------------------------------------
Net cash (used in) / generated by operating activities (613) 2,780
======================= =======================
Cash flows from / (used in) investing activities
Purchase of property, plant and equipment (679) (564)
Purchase of intangible assets (486) (5,047)
Investment in joint venture 13 (2,138) -
Cash guarantee re Morocco - 263
Cash escrow deposit re Serenity - 6,622
----------------------------------- -----------------------------------
Net cash (used in) / generated from investing activities (3,303) 1,274
==================== ====================
Cash flows (used in) / from financing activities
Gross proceeds from issue of share capital 20 - 49
Proceeds from borrowings - 1,000
Repayment of borrowings - (1,040)
Lease liability payments (7) (20)
Lease liability interest payments (1) (2)
Finance costs (1) (35)
Disposal of listed shares - 29
----------------------------------- -----------------------------------
Net cash used in financing activities (9) (19)
===================== =====================
Net (decrease) / increase in cash and cash equivalents (3,925) 4,035
Exchange gain / (loss) on cash and cash equivalents 223 (264)
Cash and cash equivalents at beginning of year 5,165 1,394
----------------------------------- -----------------------------------
Cash and cash equivalents at end of year 1,463 5,165
===================== =====================
The accompanying notes form part of these financial statements.
Company statement of cash flows
For the year ended 31 July 2024 2023
£000 £000
Cash flows used in operating activities Note
(Loss) / profit after tax from continuing operations (14,356) 8,964
Adjustments for:
Share-based payments 21 98 48
Depreciation 12 26 38
Movement in intercompany loan provision 22 15,567 (7,997)
Finance income (2,333) (1,928)
Finance expense 1 13
(Increase) / decrease in trade and other receivables (105) 36
Decrease in trade and other payables (101) (273)
----------------------------------- -----------------------------------
Net cash used in operating activities (1,203) (1,099)
======================= =======================
Cash flows from / (used in) investing activities
Purchase of property, plant and equipment (14) (61)
Investment in joint venture (2,138) -
Movement on loans to Group companies 3,407 1,052
----------------------------------- -----------------------------------
Net cash flows generated from investing activities 1,255 991
======================= =======================
Cash flows used in financing activities
Gross proceeds from issue of share capital 20 - 49
Proceeds from borrowings - 1,000
Repayment of borrowings - (1,040)
Lease liability principal payment (7) (15)
Lease liability interest payment (1) (1)
Finance costs (1) (13)
----------------------------------- -----------------------------------
Net cash used in financing activities (9) (20)
======================= =======================
Net increase / (decrease) in cash and cash equivalents 43 (128)
Cash and cash equivalents at beginning of year 121 249
----------------------------------- -----------------------------------
Cash and cash equivalents at end of year 164 121
===================== =====================
The accompanying notes form part of these financial statements.
Notes to the financial statements
1 Accounting Policies
General information
Europa Oil & Gas (Holdings) plc is a public company incorporated and
domiciled in England and Wales, limited by shares, with registered number
05217946. The address of the registered office is 30 Newman Street, London,
W1T 1PT. The principal activity of the company is oil and gas exploration,
appraisal, development and production.
The functional and presentational currency of the Company is Sterling (UK£),
which is also the presentational currency of the Group.
Basis of accounting
The consolidated and individual Company financial statements have been
prepared in accordance with applicable UK adopted International Accounting
Standards.
The accounting policies that have been applied in the opening statement of
financial position have also been applied throughout all periods presented in
these financial statements. These accounting policies comply with each IFRS
that is mandatory for accounting periods ending on 31 July 2024.
Going concern
The directors have prepared a cash flow forecast for the period ending 31
October 2025 (the "going concern period"), which considers the continuing and
forecast cash inflow from the Group's producing assets, the cash held by the
Group at October 2024, less administrative expenses and planned capital
expenditure.
As at 31 July 2024 the Group had cash of £1.5 million and net current assets
of £1.4 million and no borrowings.
Oil price estimates for the base case cash flow forecast are based on the
Quarter 3 ERCE forward price curve, which assumes an average oil price in 2025
of $81.70 per barrel, whilst production estimates are sourced from the January
2024 Competent Person's Report for Wressle and augmented by the Group's
internal modelling taking into account recent actual production. The Group has
planned, but as yet not-committed, capital expenditures related to its
projects for which the timing of the expenditure is uncertain and depends on
factors outside the control of the Group, such as being granted planning
consents and permits to conduct operations. The directors have considered
multiple scenarios in relation to the timing of expenditures, including
capital expenditure. The directors have also stress tested various cash flow
scenarios with extreme downside assumptions such as a $65 per barrel oil price
and a 50% reduction in Wressle volumes.
For the going concern period the Group has forecast expenditure, including
potential capital expenditure, in excess of its currently available cash
resources and cash inflows from its producing assets. For the Group to pursue
all of its capital projects in a timely and efficient manner it is likely to
require additional funding during the going concern period to enable it to
meet its obligations as they fall due. In addition, should either or both of
the extreme downside scenarios materialise, the need for further funding could
be accelerated.
Having considered the prepared cashflow forecasts, likely availability of
investor support and asset-backed debt, the directors consider that they will
have access to adequate resources during the going concern period. As a
result, they consider it appropriate to continue adopting the going concern
basis in the preparation of the financial statements.
There can be no assurance that the cash received from fund raises and debt
issuance will match the directors' expectations, and this may affect the
Group's ability to carry out its work programmes as expected.
Should the Group and Company be unable to continue trading as a going concern,
adjustments would have to be made to reduce the value of the assets to their
recoverable amounts, to provide for further liabilities which might arise and
to classify non-current assets as current. The financial statements have been
prepared on the going concern basis and do not include the adjustments that
would result if the Group and Company were unable to continue as a going
concern.
The directors have concluded, as at the date of approval of these financial
statements, that there is a reasonable expectation that the Group and Company
will still have sufficient cash resources to be able to continue as a going
concern and meet its obligations as and when they fall due over the going
concern period.
Basis of consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control. Intra
Group balances are eliminated on consolidation. Unrealised gains on
transactions between the Group and its subsidiaries are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
The Group is engaged in oil and gas exploration, development and production
through unincorporated joint operations.
Joint arrangements
Joint arrangements are those arrangements in which the Group holds an interest
on a long-term basis which are jointly controlled by the Group and one or more
venturers under a contractual arrangement. When these arrangements do not
constitute entities in their own right, the consolidated financial statements
reflect the relevant proportion of costs, revenues, assets and liabilities
applicable to the Group's interests in accordance with IFRS 11. The Group's
exploration, development and production activities are presently conducted
jointly with other companies in this way.
For the licences where the Group does not hold 100% equity a joint arrangement
exists. The equity and voting interest of the Group is disclosed in the table,
activities are typical for activities in the oil and gas sector and are
strategic to the Group's activities. The principal place of business for all
the joint arrangements is the UK.
Investments in joint ventures
Investments in joint ventures shall be recognised when the Group has joint
control and rights to the net assets of the arrangement. The equity method of
accounting will be applied to investments in joint ventures. Under this
method, the Group's investment is initially recognised at cost, including
direct incremental transaction costs, and adjusted thereafter for the
post-acquisition change in the Group's share of net assets of the joint
venture. The Group's share of joint ventures' profit or loss is recognised in
the Group's statement of comprehensive income. Where necessary, adjustments
are made to the financial statements of joint ventures to bring the accounting
policies used into line with those of the Group. Distributions received from
joint ventures will reduce the carrying amount of the investments. Unrealised
gains or losses on other transactions between the Group and its joint ventures
are eliminated to the extent of the Group's interest in them. At each
reporting date, the Group will assess whether there is any indication that
investments in joint ventures may be impaired. An impairment loss will be
recognised when the recoverable amount of the investment is less than its
carrying amount. The Company will recognise its investment in the joint
venture at cost less impairment losses.
Revenue recognition
The Group follows IFRS 15. The standard provides a single comprehensive model
for revenue recognition. The core principle of the standard is that an entity
shall recognise revenue when control passes on the transfer of promised goods
or services to customers at an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or
services. The standard introduced a new contract-based revenue recognition
model with a measurement approach that is based on an allocation of the
transaction price. This is described further in the accounting policies below.
Contracts with customers are presented in an entity's balance sheet as a
contract liability, a contract asset, or a receivable, depending on the
relationship between the entity's performance and the customer's payment. The
Group's accounting policy under IFRS 15 is that revenue is recognised when the
Group satisfies a performance obligation by transferring oil to a customer.
The title to oil and gas typically transfers to a customer at the same time as
the customer takes physical possession of the oil or gas. Typically, at this
point in time, the performance obligations of the Group are fully satisfied.
Revenue is measured based on the consideration to which the Group expects to
be entitled under the terms of a contract with a customer. The consideration
is determined by the quantity and price of oil and gas delivered to the
customer at the end of each month.
Non-current assets
Oil and gas interests
The financial statements with regard to oil and gas exploration and appraisal
expenditure have been prepared under the full cost basis. This accords with
IFRS 6 which permits the continued application of a previously adopted
accounting policy. The unit of account for exploration and evaluation assets
is the individual licence.
Pre-production assets
Pre-production assets are categorised as intangible assets on the statement of
financial position. Pre-licence expenditure is expensed as directed by IFRS 6.
Expenditure on licence acquisition costs, geological and geophysical costs,
costs of drilling exploration, appraisal and development wells, and an
appropriate share of overheads (including directors' costs) are capitalised
and accumulated on a licence-by-licence basis. These costs which relate to the
exploration, appraisal and development of oil and gas interests are initially
held as intangible non-current assets pending determination of technical
feasibility and commercial viability. On commencement of production these
costs are tested for impairment prior to transfer to production assets. If
licences are relinquished, or assets are not deemed technically feasible or
commercially viable, accumulated costs are written off to cost of sales.
Production assets
Production assets are categorised within property, plant and equipment on the
statement of financial position. With the determination of commercial
viability and approval of an oil and gas project the related pre-production
assets are transferred from intangible non-current assets to tangible
non-current assets and depreciated upon commencement of production within the
appropriate cash generating unit.
Impairment tests
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash generating
units) as disclosed in notes 11 and 12. As a result, some assets are tested
individually for impairment and some are tested at cash generating unit level.
Impairment tests are performed when indicators as described in IAS 36 are
identified. In addition, indicators such as a lack of funding or farmout
options for a licence which is approaching termination or the implied value of
a farm-out transaction are considered as indicators of impairment.
An impairment loss is recognised and charged to cost of sales for the amount
by which the asset's or cash generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair value,
reflecting market conditions less costs to sell, and value in use based on an
internal discounted cash flow evaluation. All assets are subsequently
reassessed for indications that an impairment loss previously recognised may
no longer exist or have decreased. A previously recognised impairment loss is
reversed only if there has been a change in the assumptions used to determine
the asset's or cash generating unit's recoverable amount since the last
impairment loss was recognised. The reversal is limited so that the carrying
amount of the asset or cash generating unit does not exceed either its
recoverable amount, or the carrying amount that would have been determined,
net of depreciation/amortisation, had no impairment loss been recognised for
the asset or cash generating unit in prior years. Such a reversal is credited
to cost of sales.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As
well as the purchase price, cost includes directly attributable costs and the
estimated present value of any future unavoidable costs of dismantling and
removing items. The corresponding liability is recognised within provisions.
Depreciation
All expenditure within tangible non-current assets is depreciated 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 proven
plus probable commercial reserves at the end of the period, plus the
production in the period. Costs used in the unit of production calculation
comprise the net book value of capitalised costs. Changes in the estimates of
commercial reserves or future field development costs are dealt with
prospectively.
Furniture and computers are depreciated on a 25% per annum straight line
basis.
Reserves
Proven and probable oil and gas reserves are estimated quantities of
commercially producible hydrocarbons which the existing geological,
geophysical and engineering data shows to be recoverable in future years. The
proven reserves included herein conform to the definition approved by the
Society of Petroleum Engineers ('SPE') and the World Petroleum Congress
('WPC'). The probable and possible reserves conform to definitions of probable
and possible approved by the SPE/WPC using the deterministic methodology.
Reserves used in accounting estimates for depreciation are updated
periodically to reflect management's view of reserves in conjunction with
third party formal reports. Reserves are reviewed at the time of formal
updates or as a consequence of operational performance, plans and the business
environment at that time.
Reserves are adjusted in the year that formal updates are undertaken or as a
consequence of operational performance and plans, and the business environment
at that time, with any resulting changes not applied retrospectively.
Future decommissioning costs
A provision for decommissioning is recognised in full at the point that the
Group has an obligation to decommission an appraisal, development or producing
well. A corresponding non-current asset (included within producing fields in
note 12) of an amount equivalent to the provision is also created. The amount
recognised is the estimated cost of decommissioning, discounted to its net
present value and is reassessed each year in accordance with local conditions
and requirements. The discount rate used is the risk-free rate, adjusted for
risks that are not already included in the forecast cash flows. For producing
wells, the asset is subsequently depreciated as part of the capital costs of
production facilities within tangible non-current assets, on a unit of
production basis. Any decommissioning obligation in respect of a
pre-production asset is carried forward as part of its cost and tested
annually for impairment in accordance with the above policy.
Changes in the estimates of commercial reserves or decommissioning cost
estimates are dealt with prospectively by recording an adjustment to the
provision, and a corresponding adjustment to the decommissioning asset. The
unwinding of the discount on the decommissioning provision is included within
finance expense.
Acquisitions of exploration licences
Acquisitions of exploration licences through acquisition of non-operational
corporate structures that do not represent a business, and therefore do not
meet the definition of a business combination, are accounted for as the
acquisition of an asset. Related future consideration that is contingent is
not recognised as an asset or liability until the contingent event has
occurred.
Taxation
Current tax is the tax payable based on taxable profit/(loss) for the year.
Deferred income taxes are calculated using the balance sheet liability method
on temporary differences. Deferred tax is generally provided on the difference
between the carrying amounts of assets and liabilities and their tax bases.
However, deferred tax is not provided on the initial recognition of goodwill,
nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in subsidiaries
and joint ventures is not provided if reversal of these temporary differences
can be controlled by the Group and it is probable that reversal will not occur
in the foreseeable future. Tax losses available to be carried forward as well
as other income tax credits to the Group are assessed for recognition as
deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the
underlying deductible temporary difference will be able to be offset against
future taxable income. Current and deferred tax assets and liabilities are
calculated at tax rates that are expected to apply to their respective period
of realisation, provided they are enacted or substantively enacted at the
reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the statement of comprehensive income, except where they relate
to items that are charged or credited directly to equity in which case the
related deferred tax is also charged or credited directly to equity.
Foreign currency
The Group and Company prepare their financial statements in Sterling.
Transactions denominated in foreign currencies are translated at the rates of
exchange ruling at the date of the transaction. Monetary assets and
liabilities in foreign currencies are translated at the rates of exchange
ruling at the reporting date. Non-monetary items that are measured at
historical cost in a foreign currency are translated at the exchange rate at
the date of transaction. Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange rates at the date the
fair value was determined.
Any exchange differences arising on the settlement of items or on translating
items at rates different from those at which they were initially recorded are
recognised in the Statement of comprehensive income in the period in which
they arise. Exchange differences on non-monetary items are recognised in the
Statement of changes in equity to the extent that they relate to a gain or
loss on that non-monetary item taken to the Statement of changes in equity,
otherwise such gains and losses are recognised in the Statement of
comprehensive income.
Europa Oil & Gas (Holdings) plc is domiciled in the UK, which is its
primary economic environment and the Company's functional currency is
Sterling. The Group's current operations are based in the UK and Ireland and
the functional currencies of the Group's entities are the prevailing local
currencies in each jurisdiction. Given that the functional currency of the
Company is Sterling, management has elected to continue to present the
consolidated financial statements of the Group and Company in Sterling.
Investments
Investments, which are only investments in subsidiaries, are carried at cost
less any impairment. Additions include the net value of share options issued
to employees of subsidiary companies less any lapsed, unvested options.
Financial instruments
Financial assets and financial liabilities are recognised in the statement of
financial position when the Group becomes a party to the contractual
provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost,
at fair value through other comprehensive income ('FVTOCI') or at fair value
through profit or loss ('FVPL') depending upon the business model for managing
the financial assets and the nature of the contractual cash flow
characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all financial
assets, other than those at FVPL, at the end of each reporting period. The
Group applies a simplified approach to measure the credit loss allowance for
trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior
to reporting, past default experience and the impact of any other relevant and
current observable data. The Group applies a general approach on all other
receivables classified as financial assets. The general approach recognises
lifetime expected credit losses when there has been a significant increase in
credit risk since initial recognition.
The Group derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or have expired.
Fair value through other comprehensive income
The Group has a number of strategic investments in listed and unlisted
entities which are not accounted for as subsidiaries, associates or jointly
controlled entities. For those investments, the Group has made an irrevocable
election to classify the investments at fair value through other comprehensive
income rather than through profit or loss as the Group considers this
measurement to be the most representative of the business model for these
assets. They are carried at fair value with changes in fair value recognised
in other comprehensive income and accumulated in the fair value through other
comprehensive income reserve. Upon disposal any balance within fair value
through other comprehensive income reserve is reclassified directly to
retained earnings and is not reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend clearly
represents a recovery of part of the cost of the investment, in which case the
full or partial amount of the dividend is recorded against the associated
investment's carrying amount.
Purchases and sales of financial assets measured at fair value through other
comprehensive income are recognised on settlement date with any change in fair
value between trade date and settlement date being recognised in the fair
value through other comprehensive income reserve.
Amortised cost
This category is the most relevant to the Company. Loans and receivables are
non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. The losses arising from impairment are
recognised in a separate line in the income statement. This category generally
applies to trade and other receivables.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and include all highly liquid
investments with a maturity of three months or less.
Restricted cash are those amounts held by third parties on behalf of the Group
and are not available for the Group's use; these are recognised separately
from cash and cash equivalents on the balance sheet.
Financial liabilities
The classification of financial liabilities at initial recognition depends on
the purpose for which the financial liability was issued and its
characteristics. All purchases of financial liabilities are recorded on the
trade date, being the date on which the Group becomes party to the contractual
requirements of the financial liability. Unless otherwise indicated the
carrying amounts of the Group's financial liabilities approximate to their
fair values. The Group's financial liabilities consist of financial
liabilities measured at amortised cost and financial liabilities at fair value
through profit or loss.
Trade and other payables
Trade and other payables are initially recorded at fair value and subsequently
carried at amortised cost.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when the Group has
extinguished its contractual obligations, it expires or is cancelled. Any gain
or loss on derecognition is taken to the statement of comprehensive income.
Treatment of finance costs
All finance costs are expensed through the income statement. The Group does
not incur any finance costs that qualify for capitalisation.
Defined contribution pension schemes
The pension costs charged against profits are the contributions payable to the
scheme in respect of the accounting period.
Inventories
Inventories comprise oil in tanks stated at the lower of cost and net
realisable value. Cost is determined by reference to the actual cost of
production in the period.
Share-based payments
All goods and services received in exchange for the grant of any share-based
payment are measured at their fair values. Where employees are rewarded using
share-based payments, the fair values of employees' services are determined
indirectly by reference to the fair value of the instrument granted to the
employee. This fair value is appraised at the grant date and excludes the
impact of non-market vesting conditions (for example, profitability and sales
growth targets).
All equity-settled share-based payments are ultimately recognised as an
expense in the statement of comprehensive income with a corresponding credit
to reserves. Where options over the parent Company's shares are granted to
employees of subsidiaries of the parent, the charge is recognised in the
statement of comprehensive income of the subsidiary. In the parent Company
accounts there is an increase in the cost of the investment in the subsidiary
receiving the benefit.
If vesting periods or other non-market vesting conditions apply, the expense
is allocated over the vesting period, based on the best available estimate of
the number of share options expected to vest. Estimates are subsequently
revised if there is any indication that the number of share options expected
to vest differs from previous estimates. Any cumulative adjustment prior to
vesting is recognised in the current period. No adjustment is made to any
expense recognised in prior periods if the number of share options ultimately
exercised is different to that initially estimated.
Upon exercise of share options, the proceeds received, net of attributable
transaction costs, are credited to share capital, and where appropriate share
premium.
Critical accounting judgements and key sources of estimation uncertainty
Details of the Group's significant accounting judgements and critical
accounting estimates are set out in these financial statements and include:
Critical accounting judgements
· Carrying value of intangible assets (note 11) - carrying values are
justified with reference to indicators of impairment as set out in IFRS 6.
Based on judgements at 31 July 2024 there was £4,968k write off (2023:
£1,686k). On 13 September 2024 the Company announced that it does not intend
to apply to the North Sea Transition Authority for an extension to the
Serenity licence, which expired on 30 September 2024. The directors considered
this an adjusting event in relation to the year ended 31 July 2024 and as a
result, the incurred costs associated with Serenity that the Company has
capitalised on its balance sheet were written off.
The Phase 1 period of the FEL 4/19 licence was extended on 29 January 2024 for
a for a further period until 31 January 2026. The impairment indicator in
relation to the near-term expiry date of the licence that existed as at 31
July 2023 no longer existed as at 31 January 2024.
· Carrying value of investment in joint venture (note 13a) - the
investment in Antler Global Limited was assessed to establish whether the
investment may be impaired with consideration of the principles in IAS28 and
IAS36. In making this assessment management applies judgement to evaluate both
external and internal sources of information, including the financial
performance of the joint venture, market conditions, changes in the operating
environment in which the joint venture operates and other relevant factors.
Based on the current review, the directors have not identified any indicators
of impairment in relation to this investment in the joint venture as at 31
July 2024.
Critical accounting estimates
· Carrying value of property, plant and equipment (note 12) - carrying
values are justified by reference to future estimates of cash flows,
discounted at appropriate rates. The directors estimates variables like
reserves volumes, future oil prices, future capital and operating expenditure
and discount rates. The directors rely on third party formal reports and
historical reservoir performance to establish the appropriate reserves volumes
and production profiles to use in estimating future cash flows. Future costs
are based on internal or joint venture budgets, and discount rates are
estimated with reference to applicable external and internal data sources. The
directors utilise management's view on external analyst datasets in relation
to oil and gas price forecasts. At 31 July 2024 there was an net impairment of
£189k of producing assets, comprising mainly of the impairment of workover
costs incurred in relation to the Crosby Warren field (2023: £177k impairment
reversal).
· Deferred taxation (note 20) - assumptions regarding the future
profitability of the Group and whether the deferred tax assets will be
recovered.
· Decommissioning provision (note 21) - inflation and discount rate
estimates (3% and 10% respectively) are used in calculating the provision,
along with third party estimates of remediation costs.
· Share-based payments (note 23) - measurement of the fair value of
options granted uses valuation techniques where active market quotes are not
available. This involves developing estimates and assumptions consistent with
how market participants would price the instrument. Management bases its
assumptions on observable data as far as possible but this is not always
available. In that case, management uses the best information available.
Estimated fair values may vary from the actual prices that would be achieved
in an arm's length transaction at the reporting date.
· Reserves and resources (note 12) - reserves and resources are
estimated based on management's view and third-party formal reports and these
estimates directly impact the recoverability of asset carrying values that are
reported in the financial statements.
2 Operating segment analysis
In the opinion of the directors the Group has four reportable segments as
reported to the chief executive officer, being the UK, Ireland and West
Africa.
The reporting on these segments to management focuses on revenue, operating
costs and capital expenditure. The impact of such criteria is discussed
further in the Chairman's statement and strategic report of this annual
report.
Income statement for the year ended 31 July 2024
UK Ireland West Africa Total
£000 £000 £000 £000
Revenue 3,566 - - 3,566
Cost of sales (3,117) - - (3,117)
Impairment of producing fields (189) - - (189)
Cost of sales (3,306) - - (3,306)
--------------------------------- --------------------------------- --------------------------------- ---------------------------------
Gross profit 260 - - 260
Exploration impairment (4,968) - - (4,968)
Administrative expenses (1,855) - - (1,855)
Share of loss from joint venture - - (2) (2)
Finance income 222 1 - 223
Finance costs (439) - - (439)
----------------------------------- --------------------------------- --------------------------------- -----------------------------------
Loss before tax (6,780) 1 (2) (6,781)
Taxation - - - -
----------------------------------- --------------------------------- --------------------------------- -----------------------------------
Loss for the year (6,780) 1 (2) (6,781)
Segmental assets and liabilities as at 31 July 2024
UK Ireland West Africa Total
£000 £000 £'000 £000
Non-current assets 2,127 2,465 2,406 6,998
Current assets 2,781 - - 2,781
----------------------------------- --------------------------------- -------------------------------- -----------------------------------
Total assets 4,908 2,465 2,406 9,779
----------------------------------- ----------------------------------- -------------------------------- -----------------------------------
Non-current liabilities (4,613) - - (4,613)
Current liabilities (1,081) (19) (287) (1,387)
----------------------------------- ----------------------------------- --------------------------------- -----------------------------------
Total liabilities (5,694) (19) (287) (6,000)
----------------------------------- ----------------------------------- -------------------------------- -----------------------------------
Other segment items
Capital expenditure - cash flow 882 283 2,138 3,303
Depreciation 781 - - 781
Share-based payments 98 - - 98
Income statement for the year ended 31 July 2023
UK Ireland Morocco New ventures Total
£000 £000 £'000 £000 £000
Revenue 6,653 - - - 6,653
Cost of sales (3,448) - - - (3,448)
Impairment of producing fields 177 - - - 177
Cost of sales (3,271) - - - (3,271)
--------------------------------- --------------------------------- --------------------------------- --------------------------------- ---------------------------------
Gross profit 3,382 - - - 3,382
Exploration impairment - - (1,686) - (1,686)
Administrative expenses (2,078) 227 - (21) (1,872)
Finance income (4) 4 9 - 9
Finance costs (717) - - - (717)
----------------------------------- --------------------------------- --------------------------------- --------------------------------- -----------------------------------
Loss before tax 582 232 (1,677) (21) (884)
Taxation 32 - - - 32
----------------------------------- --------------------------------- --------------------------------- --------------------------------- -----------------------------------
Loss for the year 615 231 (1,677) (21) (852)
Segmental assets and liabilities as at 31 July 2023
UK Ireland Morocco New Ventures Total
£000 £000 £000 £'000 £000
Non-current assets 7,380 2,183 - - 9,563
Current assets 6,077 - - - 6,077
----------------------------------- --------------------------------- ----------------------------------- -------------------------------- -----------------------------------
Total assets 13,457 2,183 - - 15,640
----------------------------------- ----------------------------------- ----------------------------------- -------------------------------- -----------------------------------
Non-current liabilities (4,380) - - - (4,380)
Current liabilities (762) (19) - - (781)
----------------------------------- ----------------------------------- ----------------------------------- --------------------------------- -----------------------------------
Total liabilities (5,142) (19) - - (5,161)
----------------------------------- ----------------------------------- ----------------------------------- -------------------------------- -----------------------------------
Other segment items
Capital expenditure - cash flow 4,925 387 299 - 5,611
Depreciation 1,133 - - - 1,133
Share-based payments 48 - - - 48
100% of the total revenue (2023: 100%) relates to UK-based customers. Of
this figure, one end customer (2023: one) commands more than 95% of the total,
including sales made through operators to the end customer. UK revenue by site
was as follows: West Firsby £445,000 (2023: £489,000); Crosby Warren
£264,000 (2023: £447,000); Whisby £202,000 (2023: £387,000); and Wressle
£2,559,000 (2023: £5,330,000). Recharges of costs to Antler Global Limited
of £96,000 (2023: Nil) is included within revenue and is not eliminated.
The positive value for administrative expenditure in the Ireland segment in
2023 relates to the reversal of certain accrued licence expenditure which had
previously been impaired.
3 Profit / loss before taxation
Profit / loss before taxation is stated after charging/ (crediting):
2024 2023
£000 £000
Depreciation and amortisation on property, plant & equipment 781 1,133
12
Staff costs including directors 5 1,468 1,371
Diesel 131 174
Business rates 41 37
Site safety and security 97 98
Exploration impairment 11 4,968 1,686
Impairment / impairment reversal 12 189 (177)
Fees payable to the auditor for the audit 80 78
Operating leases - land and buildings 77 44
Foreign exchange (gain) / loss (208) 264
========== =========
4 Directors' emoluments
Directors' total emoluments for the Group and the Company are set out in the
tables below for the current and comparative years.
Salaries and fees BIK Pensions Share-based payments Total
2024
£000 £000 £000 £000 £000
BJ O'Cathain 48 - - - 48
SG Oddie (resigned 23 November 2023) 11 1 - - 12
S Williams (resigned 23 November 2023) 11 - - - 11
W Holland 263 3 20 49 335
A Stuart 198 6 16 22 242
S Ashby-Rudd (appointed 20 December 2023) 27 - - - 27
E Rowley (appointed 8 April 2024) 13 - - 13
---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
571 10 36 71 688
================== ================== ================== ================== ==================
Salaries and fees BIK Pensions Share-based payments Total
2023
£000 £000 £000 £000 £000
CW Ahlefeldt-Laurvig (resigned 27 April 2023) 18 2 - - 20
BJ O'Cathain 44 5 - 1 50
SG Oddie 344 47 - 4 395
S Williams 33 3 - 1 37
W Holland 230 32 18 38 318
A Stuart (appointed 3 April 2023) 53 7 5 - 65
---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
722 96 23 44 885
================== ================== ================== ================== ==================
Pension charges represent premiums paid to money purchase pension plans during
the year. Share-based payments charges represent the accounting charge in
respect of share options. No share options were exercised during the period
(2023: none).
5 Employee information
Average monthly number of employees including directors - Group 2024 2023
Number Number
Management and technical 8 7
Field exploration and production 4 5
---------------------------------- ----------------------------------
12 12
=================== ===================
Staff costs - Group 2024 2023
£000 £000
Wages and salaries (including directors' emoluments) 1,155 1,133
Social security 136 137
Pensions 79 53
Share-based payments (note 21) 98 48
----------------------------------- -----------------------------------
1,468 1,371
=================== ====================
Average monthly number of employees including directors - Company 2024 Number 2023
Number
Management and technical 8 7
---------------------------------- ----------------------------------
8 7
==================== ==================
Staff costs - Company 2024 2023
£000 £000
Wages and salaries (including directors' emoluments) 885 881
Social security 103 113
Pensions 63 37
Share-based payments 98 48
----------------------------------- -----------------------------------
1,149 1,079
==================== ==================
6 Finance income
2024 2023
£000 £000
Bank interest received 15 9
Foreign exchange gains 208 -
------------------------------ ------------------------------
223 9
================== ===================
7 Finance expense
2024 2023
£000 £000
Unwinding of discount on decommissioning provision (note 19) 437 416
Foreign exchange loss - 264
Other finance expense 2 37
------------------------------------ ------------------------------------
439 717
=================== ====================
8 Taxation
2024 2023
£000 £000
Movement in deferred tax asset (note 18) (2,102) 1,503
Movement in deferred tax liability (note 18) 2,102 (1,503)
Current tax - UK - 32
------------------------------------ ------------------------------------
Tax credit/(expense) - 32
==================== ==================
UK corporation tax is calculated at 40%
(2023: 40%) of the estimated assessable profit for the year being the
applicable rate for a ring-fence trade including the Supplementary Charge of
10%. From 24 May 2022 a new UK tax, the Excess Profits Levy ("EPL") applies to
the Group, and it is levied at 25% of assessable EPL profits for the period
from 26 May 2022 to 31 December 2022, and at 35% from 1 January 2023 onwards.
The proposed increase to the rate of EPL to 38% had not yet been substantially
enacted as at the reporting date.
2024 2023
£000 £000
Loss before tax (6,781) (884)
================== ==================
Tax reconciliation
Loss multiplied by the standard rate of corporation tax in the UK including (2,712) (354)
Supplementary Charge of 40% (2023: 40%)
Expenses not deductible for tax purposes 2,581 1,003
Deferred tax asset not recognised 113 192
Accelerated capital allowances (169) (1,802)
Taxed at a different rate (121) (3,995)
Losses carried forward 949 5,172
Previously unrecognised tax losses utilised (641) (266)
Prior year adjustment - 18
--------------------------------- ---------------------------------
Total tax (credit)/expense - (32)
=================== =================
9 Other comprehensive income
2024 2023
£000 £000
Profit on sale of investment - 5
=================== ================
On 8 May 2019, the Group disposed of its interest in PEDL143 to UK Oil &
Gas Plc ('UKOG') for consideration of 25,951,557 UKOG shares. At the time of
the sale the shares were worth 1.156p each, resulting in a total value of
£300,000. An irrevocable election was made to record gains and losses arising
on the shares as Other Comprehensive Income. The investment was revalued at
the year-end 2022 to £24,000 (0.09p per share) and was sold during 2023 for
£29,000 (0.11p per share).
10 Earnings per share
Basic earnings per share ('EPS') has been calculated on the (loss)/profit
after taxation divided by the weighted average number of shares in issue
during the period. Diluted EPS uses an average number of shares adjusted to
allow for the issue of shares on the assumed conversion of all in-the-money
options.
As the Group made a loss from continuing operations in the year, any
potentially dilutive instruments were considered to be anti-dilutive.
Therefore, the diluted EPS is equal to the basic EPS for the year. As at 31
July 2024 there was Nil (2023: 19,724,154) potentially dilutive instruments in
issue related to "in the money" options.
The calculation of the basic and diluted earnings per share is based on the
following:
2024 2023
£000 £000
Loss for the year attributable to the equity shareholders of the parent (6,781) (852)
======================= =======================
Weighted average number of shares
For the purposes of basic EPS 959,184,178 958,804,515
For the purpose of diluted EPS 959,184,178 958,804,515
11 Intangible assets
Intangible assets - Group 2024 2023
£000 £000
At 1 August 7,146 3,785
Additions 486 5,047
Exploration impairment (4,968) (1,686)
-------------------------------------- --------------------------------------
At 31 July 2,664 7,146
======================= =====================
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
2024 2023
£000 £000
Ireland FEL 4/19 (Inishkea) 2,444 2,166
UK PEDL181 - 112
UK PEDL182 (Broughton North) 35 34
UK PEDL343 (Cloughton) 185 108
Serenity - 4,726
-------------------------------- --------------------------------
Total 2,664 7,146
======================= =======================
Exploration impairment 2024 2023
£000 £000
Morocco (Inezgane) - (1,686)
Serenity (4,871) -
PEDL 181 (97) -
On 13 September 2024 the Company announced that it does not intend to apply to
the North Sea Transition Authority for an extension to the Serenity licence,
which expired on 30 September 2024. The directors considered this an adjusting
event in relation to the year ended 31 July 2024 and as a result, the incurred
costs associated with Serenity that the Company has capitalised on its balance
sheet was written off. Details of commitments are included in note 23.
12 Property, plant & equipment
Property, plant & equipment - Group
Furniture & computers Producing Right of use assets Total
fields
£000 £000 £000 £000
Cost
At 31 July 2022 18 15,714 67 15,799
Additions 38 290 24 352
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2023 56 16,004 91 16,151
Additions 21 460 - 481
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2024 77 16,464 91 16,632
==================== ==================== ================= ======================
Depreciation, depletion and impairment
At 31 July 2022 4 12,723 51 12,778
Charge for year 24 1,090 19 1,133
Impairment reversal in year - (177) - (177)
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2023 28 13,636 70 13,734
Charge for year 20 753 8 781
Impairment in year - 189 - 189
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2024 48 14,578 78 14,704
=================== ====================== ================= ====================
Net book value
At 31 July 2022 14 2,991 16 3,021
=============================== =============================== =============================== ===============================
At 31 July 2023 28 2,368 21 2,417
=============================== =============================== =============================== ===============================
At 31 July 2024 29 1,886 13 1,928
=============================== =============================== =============================== ===============================
The producing fields referred to in the table above are the production assets
of the Group, namely the oilfields at Wressle, Crosby Warren and West Firsby,
and the Group's interest in the Whisby W4 well.
The carrying value of each producing field was tested for impairment by
comparing the carrying value with the value-in-use. The value-in-use was
calculated using a discounted cash flow model with production decline rates
based on engineering estimates and recent production experience. Brent crude
price was based on the Quarter 3 ERCE forward curve, which assumes an average
oil price per barrel in the table below. For years after 2033 a 2% inflation
factor was applied.
Year Price Year Price Year Price
2024 $ 83.80 2028 $ 82.00 2032 $89.00
2025 $ 81.70 2029 $ 83.00 2033 $90.00
2026 $ 79.00 2030 $ 85.00
2027 $ 80.00 2031 $ 87.00
The post-tax discount rate of 10% (pre-tax 16.67%) is high because of the
applicable rates of tax in the UK. Cash flows were projected over the expected
life of the fields which is expected to be longer than five years.
Based on the assumptions set out above, an impairment of £189k of producing
assets, comprising mainly of the impairment of workover costs incurred in
relation to the Crosby Warren field (2023: impairment reversal of £177,000)
was required. The recoverable amount was calculated at a discount rate of 10%
(2023: 10%).
Sensitivity to key assumption changes
Variations to the key assumptions used in the value-in-use calculation, as
outlined above, would cause impairment of the producing fields as follows:
Impairment of producing fields £000
Production decline rate
+10% -
-10% -
Brent crude price per barrel
$65 flat -
$55 flat -
Pre-tax discount rate
20% -
25% -
None of the variations result in an impairment individually.
Property, plant & equipment - Company
Furniture & computers Right of use assets Total
£000 £000 £000
Cost
At 31 July 2022 18 37 55
Additions 37 24 61
------------------------------- ------------------------------- -------------------------------
At 31 July 2023 55 61 116
Additions 14 - 14
------------------------------- ------------------------------- -------------------------------
At 31 July 2024 69 61 130
==================== ====================== =======================
Depreciation
At 31 July 2022 4 25 29
Charge for year 24 14 38
------------------------------- ------------------------------- -------------------------------
At 31 July 2023 28 39 67
Charge for year 18 8 26
------------------------------- ------------------------------- -------------------------------
At 31 July 2024 46 47 93
==================== ================== ===================
Net book value
At 31 July 2022 14 12 26
=============================== =============================== ===============================
At 31 July 2023 27 22 49
=============================== =============================== ===============================
At 31 July 2024 23 14 37
=============================== =============================== ===============================
13 Investments
13a) Investment in joint ventures
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Investment in Antler Global Limited 2,406 - 2,425 -
On 20 December 2023, the Company completed the acquisition of an interest of
42.9% in Antler Global Limited ("Antler") by way of a subscription for 750,000
new ordinary shares for a total cash consideration of US$3,000,000
(£2,353,000). The consideration is payable in four instalments over a period
between the completion date and 1 October 2024 according to the following
schedule:
$000 £000
Five business days post completion 1,927 1,511
1 April 2024 387 304
1 July 2024 317 249
1 October 2024 369 289
----------------------- --------------------------
Total 3,000 2,353
=========== =============
Antler is a special purpose entity which on the date of the subscription for
shares by the Company held no identifiable assets, apart from the interest in
licence EG-08 offshore Equatorial Guinea, and no identifiable liabilities. The
investment has been initially recognised at the value of the purchase price
and direct incremental transaction costs of £72,000 for a total investment
value of £2,425,000. During the period after the investment by the Company
Antler has been engaged in exploration activities, the costs of which have
been capitalised as intangible assets resulting in an immaterial charge to its
statement of comprehensive income. Summarised financial information for Antler
at 31 July 2024 is included below:
31 July 2024
Summarised balance sheet £000
Current assets 981
Non-current assets 4,623
Current liabilities (158)
Net assets 5,446
Company % interest in Antler 42.857%
---------------------
Company share of net assets in 2,334
===========
31 July 2024
Summarised statement of comprehensive income £000
Revenue -
Loss from continuing operations (2)
---------------------
Total comprehensive loss (2)
===========
13b) Investments in subsidiaries - Company
2024 2023
£000 £000
At 1 August 2,343 2,343
Current year additions - -
----------------------------------------- -----------------------------------------
At 31 July 2,343 2,343
======================= ===================
The Company's investments at the reporting date include 100% of the share
capital in the following unlisted companies:
· Europa Oil & Gas Limited, which undertakes oil and gas
exploration, development and production in the UK.
· Europa Oil & Gas (West Firsby) Limited, which is non-trading.
· Europa Oil & Gas (Ireland West) Limited, which previously held
the interest in the FEL 2/13 licence.
· Europa Oil & Gas (Ireland East) Limited, which previously held
the interest in the FEL 3/13 and FEL 1/17 licences.
· Europa Oil & Gas (Inishkea) Limited, which holds the interest in
the FEL 4/19 and previously held the interest in FEL 3/19 licences.
· Europa Oil & Gas (New Ventures) Limited, which previously held
the interest in the Moroccan licence.
All six companies are registered in England and Wales, all having their
registered office at 30 Newman Street, London W1T 1PT.
The results of the six companies have been included in the consolidated
accounts.
Europa Oil & Gas Limited owns 100% of the ordinary share capital of Europa
Oil & Gas (UK) Limited (registered in England and Wales with registered
office at 30 Newman Street, London W1T 1PT and is non-trading).
14 Inventories - Group
2024 2023
£000 £000
Oil in tanks 9 19
====================================== ======================================
15 Trade and other receivables
Group Company
2024 2023 2024 2023
Current trade and other receivables £000 £000 £000 £000
Trade receivables 1,002 556 133 -
Other receivables 33 103 12 30
Corporation tax receivable 50 50 - -
Prepayments 224 184 91 99
-------------------------------- -------------------------------- ----------------------------------- -----------------------------------
1,309 893 236 129
================= ================= ==================== ====================
Non-current other receivables
Owed by Group undertakings (note 22) - - 5,502 22,143
=================== =================== ================== ===================
16 Trade and other payables
Group Company
Current trade and other payables 2024 2023 2024 2023
£000 £000 £000 £000
Trade payables 140 454 61 175
Lease liabilities 6 10 6 8
Other payables 1,241 317 369 67
-------------------------------------- -------------------------------------- --------------------------------------- ---------------------------------------
1,387 781 436 250
=================== =================== ==================== ====================
Non-current trade and other payables
Lease liabilities 6 12 6 12
17 Leases
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Amounts recognised in the statement of comprehensive income:
Interest on right of use liabilities (1) (1) (1) (1)
Amounts recognised in the statement of cash flows:
Repayment of lease liabilities - principal (7) (20) (7) (15)
Repayment of lease liabilities - interest (1) (2) (1) (1)
Maturity analysis (undiscounted):
Amounts due within 1 year (6) (9) (6) (8)
Amounts due after more than 1 year & less than 5 years (6) (12) (6) (12)
Amounts due after more than 5 years - - - -
The Group's right of use asset comprises the lease of one vehicle (note 12).
The corresponding lease liability for the right to use leased asset is
included within trade and other payables in the statement of financial
position (note 17).
18 Deferred tax - Group
2024 2023
Recognised deferred tax asset: £000 £000
As at 1 August - -
Charged to statement of comprehensive income - -
------------------------------------------ ------------------------------------------
At 31 July - -
====================== =======================
The Group has a deferred tax liability of £833,000 (2023: £2,935,000)
arising from accelerated capital allowances and a deferred tax asset of
£833,000 (2023: £2,935,000) arising from trading losses which will be
utilised against future taxable profits. These were offset against each other
resulting in a £nil net asset/liability (2023: £nil net asset/liability).
This offsetting was required because the Group settles current tax assets and
liabilities on a net basis.
Non-recognised long-term deferred tax asset
The Group has a non-recognised deferred tax asset of £11.8 million (2023:
£7.3 million), which arises in relation to ring-fenced UK trading losses of
£14.4 million (2023: £13.1 million), STC losses (including investment
allowances) of £14.3 million (2023: £13.1 million), non-ring-fenced UK
trading losses of £11.7 million (2023: £11.7 million), EPL losses of £5.8
million (2023: £4.1) and subsidiary losses and carried forward capital
expenditure of £7.9 million (2023: £7.3 million) that have not been
recognised in the accounts as the timing of the utilisation of the losses is
considered uncertain.
No deferred tax assets or liabilities are recognised in the Company.
19 Provisions - Group
Decommissioning provisions are based on third party estimates of work which
will be required and the judgement of directors. By their nature, timing and
the detailed scope of work required are uncertain.
Long-term provisions 2024 2023
£000 £000
As at 1 August 4,368 4,164
Charged to statement of comprehensive income (note 7) 437 416
Change in estimated phasing of cash flows (198) (212)
-------------------------------- --------------------------------
At 31 July 4,607 4,368
=================== ====================
The change in the estimated decommissioning provision resulted mainly from a
reassessment of the estimated timings of when such decommissioning activities
are undertaken at the end of their economic lives.
Sensitivity to key assumption changes
Variations to the key assumptions used in the decommissioning provision
estimates would cause increases / (reductions) to the provision as follows:
Further decommissioning provision £000
Inflation rate (current assumption 3%)
2% (716)
5% 836
Discount rate (current assumption 10%)
5% 1,549
15% (1,102)
No provisions have been recognised in the Company.
20 Called up share capital
2024 2023
£000 £000
Allotted, called up and fully paid ordinary shares of 1p
At 1 August 2023: 959,184,193 shares (1 August 2022: 956,466,985) 9,592 9,565
Issued in the year: nil shares (2023: 2,717,193 shares) - 27
-------------------------------- --------------------------------
At 31 July 2024: 959,184,178 shares (2023: 959,184,178) 9,592 9,592
============ =============
The following describes the purpose of each reserve within owners' equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of nominal value
Merger reserve Reserve created on issue of shares on acquisition of subsidiaries in prior
years
Retained deficit Cumulative net gains and losses recognised in the consolidated statement of
comprehensive income
Foreign currency translation reserve ('FCTR') Component of equity that arises from the translation of foreign operations'
financial statements into the reporting currency of the parent entity
21 Share-based payments
The Group operates an approved Enterprise Management Incentive ('EMI') share
option scheme for employees and an unapproved scheme for grants in excess of
EMI limits and for non-employees. Both schemes are equity-settled share-based
payments as defined in IFRS 2 Share-based payments. A recognised valuation
methodology is employed to determine the fair value of options granted as set
out in the standard. The charge incurred relating to these options is
recognised within operating costs.
Combined information for the two schemes operated by the Group is set out
below.
There are 60,265,474 ordinary 1p share options/warrants outstanding (2023:
41,550,628).
These are held as follows:
Holder 31 July 2024 31 July 2023
BJ O'Cathain - 2,950,000
SG Oddie - 9,200,000
SA Williams - 2,500,000
W Holland 20,000,000 7,721,000
A Stuart 15,000,000 -
Employees of the Group 15,840,000 3,800,000
Consultants and advisers 9,425,474 15,379,628
--------------------------------------------------- ---------------------------------------------------
Total 60,265,474 41,550,628
==================== ====================
The fair values of options were determined using a Black Scholes Merton model
or, in the case of those issued to advisers as part of the share issue, the
fair value was deemed to be the share issue price. Volatility is based on the
Company's share price volatility since flotation.
During the year Company cancelled 13,191,000 existing EMI options ("Historical
EMI Options") and replaced them with 50,000,000 new EMI options. As the new
EMI options were in part to replace the Historical EMI Options, this grant
constitutes a "modification" and as such there is no acceleration of the costs
related to the cancelled options, but instead the incremental fair value of
the new EMI options is estimated and recognised over the period of the new
options, with the expense relating to the original (cancelled) options
continuing to be recognised over the remainder of the original vesting period.
In total 14,114,154 options expired and 17,171,000 were cancelled, inclusive
of the Historical EMI Options (2023: 6,520,000 granted, 2,280,000 expired,
1,180,000 forfeited, and 2,717,193 exercised).
2024 2024 2023 2023
Number of options Average exercise price Number of options Average exercise price
Outstanding at the start of the year 41,550,628 2.04p 41,207,821 2.23p
Granted - employees/directors 50,000,000 1.08p 6,520,000 1.14p
Exercised - (2,717,193) 1.80p
Expired (14,114,154) 1.35p (2,280,000) 2.31p
Forfeited - (1,180,000) 3.66p
Cancelled (17,171,000) 2.70p
------------------------------------------------- ----------------------------------- ------------------------------------------------- -----------------------------------
Outstanding at the end of the year 60,265,474 1.21p 41,550,628 2.04p
Exercisable at the end of the year 10,145,474 1.82p 23,599,628 1.56p
The 50,000,000 new EMI options granted in January 2024 vest in three years,
and are exercisable conditional upon the Europa Oil & Gas (Holdings) plc
volume weighted average share price over the last 20 trading days prior to the
Vesting Date to be greater than or equal to 1.25 times the volume weighted
average share price over the last 20 trading days prior to the Grant Date, and
expire on the tenth anniversary of the grant date. The inputs used to
determine their values are detailed in the table:
Grant date 17 January 2024
Number of options 50,000,000
Share price at grant 1.025p
Exercise price 1.075p
Volatility 70.81%
Dividend yield Nil
Risk free investment rate 4.02%
Option life in years 10
Fair value per option 0.8p
Based on the fair values above, the charge arising from employee share options
was £98,000 (2023: £48,000). The charge relating to non-employee share
options was £Nil (2023: £Nil). The charge allocated directly to equity,
relating to the issue of options on the issue of share capital, was £Nil
(2023: £Nil).
Share options/warrants outstanding at the end of the period have exercise
prices ranging from 1.075p to 8p and the weighted average remaining
contractual life at the end of the period was 8 years (2023: 2.7 years).
22 Financial instruments
The Group's and Company's financial instruments comprise cash and cash
equivalents, bank borrowings, loans, and items such as trade and other
receivables and trade and other payables which arise directly from its
operations. Europa's activities are subject to a range of financial risks, the
main ones being credit; liquidity; interest rates; commodity prices; foreign
exchange; and capital. These risks are managed through ongoing review
considering the operational, business and economic circumstances at that time.
Financial assets - Group
Amortised cost Amortised cost Fair value through other comprehensive income Fair value through other comprehensive income
2024 2023 2024 2023
£000 £000 £000 £000
Trade and other receivables 1,085 709 - -
Cash and cash equivalents 1,463 5,165 - -
-------------------- -------------------- ----------------------- -----------------------
Total financial assets 2,548 5,874 - -
================================ ================================ ===================================== =====================================
Financial assets - Company
Amortised cost Amortised cost Fair value through other comprehensive income Fair value through other comprehensive income
2024 2023 2024 2023
£000 £000 £000 £000
Investments 2,343 2,343 - -
Amounts due from Group companies 5,502 22,143 - -
Trade and other receivables 145 30 - -
Cash and cash equivalents 164 121 - -
-------------------- -------------------- ----------------------- -----------------------
Total financial assets 8,154 24,637 - -
================================ ================================ ===================================== =====================================
Financial liabilities - Group
Amortised cost Amortised cost Fair value through other comprehensive income Fair value through other comprehensive income
2023 2023 2024 2023
£000 £000 £000 £000
Trade and other payables (1,381) (771) - -
Lease liabilities (12) (22) - -
-------------------- -------------------- --------------------- -----------------------
Total financial liabilities (1,393) (793) - -
================================ ================================ ===================================== =====================================
Financial liabilities - Company
Amortised cost Amortised cost Fair value through other comprehensive income Fair value through other comprehensive income
2024 2023 2024 2023
£000 £000 £000 £000
Trade and other payables (430) (242) - -
Lease liabilities (12) (20) - -
-------------------- -------------------- --------------------- -----------------------
Total financial liabilities (442) (262) - -
================================ ================================ ===================================== =====================================
Credit risk
The Group is exposed to credit risk as all crude oil production is effectively
sold to one multinational oil company. The customer is invoiced monthly for
the oil delivered to the refinery in the previous month and invoices are
generally settled in full within the same month that invoices are issued. At
31 July 2024 trade receivables were £1,002,000 (2023: £556,000). The fair
value of trade receivables and payables approximates to their carrying value
because of their short maturity. Any surplus cash is held on short-term
deposit with Royal Bank of Scotland. The maximum credit exposure in the year
was £1,002,000 comprising July 2024 oil sales and recharges to joint ventures
(2023 maximum exposure: £1,574,000). The Company exposure to third party
credit risk is negligible. The intercompany balances with its subsidiaries
have been appropriately provided for to account for potential impairments.
Liquidity risk
The Company currently has no overdraft or overdraft facility with its bankers.
The Group and Company monitor their levels of working capital to ensure they
can meet liabilities as they fall due. The following table shows the
contractual maturities (representing the undiscounted cash flows) of the
Group's and Company's financial liabilities.
Group Company
Trade and other payables Trade and other payables
At 31 July 2024 2023 2024 2023
£000 £000 £000 £000
6 months or less 1,387 781 436 250
-------------------------------------- -------------------------------------- --------------------------------------- ---------------------------------------
Total 1,387 781 436 250
================================ ================================ ===================================== =====================================
Cash and cash equivalents in both Group and Company are all available at short
notice.
Trade and other payables do not normally incur interest charges. There is no
difference between the fair value of the trade and other payables and their
carrying amounts.
Interest rate risk
The Group has no interest-bearing liabilities (note 18) and immaterial leases
(note 19). All loans and leases are at fixed rates of interest and the Group
and Company are not exposed to changes in interest rates.
Commodity price risk
The selling price of the Group's production of crude oil is set at a small
discount to Brent prices. The table below shows the range of prices achieved
in the year and the sensitivity of the Group's loss before taxation ('LBT') or
profit before tax ('PBT') to such movements in oil price. There would be a
corresponding increase or decrease to net assets. There is no commodity price
risk in the Company.
2024 2024 2023 2023
Price PBT Price PBT
Oil price Month US$/bbl £000 US$/bbl £000
Highest April 2024 88.90 250 $98.70 1,227
Average 82.40 (9) $83.30 (2)
Lowest December 2023 76.60 (239) $73.40 (791)
Foreign exchange risk
The Group's production of crude oil is invoiced in US$. Revenue is translated
into Sterling using a monthly exchange rate set by reference to the market
rate. The table below shows the range of average monthly US$ exchange rates
used in the year and the sensitivity of the Group's PBT / LBT to similar
movements in US$ exchange. There would be a corresponding increase or decrease
in net assets.
2024 2024 2023 2023
Rate PBT Rate PBT
US Dollar Month US$/£ £000 US$/£ £000
Highest July 2024 1.284 (187) 1.286 (410)
Average 1.260 (127) 1.212 (30)
Lowest October 2023 1.218 (17) 1.117 535
The table below shows the Group's currency exposures. Exposures comprise the
net financial assets and liabilities of the Group that are not denominated in
the functional currency.
Group Company
2024 2023 2024 2023
Currency Item £000 £000 £000 £000
Euro Cash and cash equivalents 2 18 2 -
Trade and other payables (5) (9) (5) (9)
US Dollar Cash and cash equivalents 1,219 5,102 68 75
Trade and other receivables - 556 - -
Trade and other payables 869 (47) 133 (47)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Total 2,085 5,620 198 (19)
==================== =================== ====================== ======================
Capital risk management
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 maintain an optimal capital structure to reduce the cost of
capital. The Group defines capital as being the consolidated shareholder
equity (note 22) and third-party borrowings (£Nil at 31 July 2024). The Board
monitors the level of capital as compared to the Group's long-term debt
commitments and adjusts the ratio of debt to capital as is determined to be
necessary, by issuing new shares, reducing or increasing debt, paying
dividends and returning capital to shareholders.
Intercompany loans
The loans to the subsidiaries are not classified as repayable on demand. IFRS
9 requires consideration of the expected credit risk associated with the loan.
As the subsidiary company does not have any liquid assets to sell to repay the
loan, should it be recalled, the conclusion reached was that the loan should
be categorised as stage 3.
As part of the assessment of expected credit losses of the intercompany loan
receivable, the directors have considered the published chance of success for
Inishkea, and applying the 33% general wildcat exploration success rate, the
loans to Europa Oil & Gas Inishkea have thus been deemed 67% provided.
The loans to Europa Oil & Gas New Ventures, Europa Oil & Gas (Ireland
West) and Europa Oil & Gas (Ireland East) have been provided in full due
to the relinquishment of the licences held by the subsidiaries.
During the year to 31 July 2024 there has been a decrease in the expected
recoverable value of the Group's Crosby Warren producing asset, mainly as a
result of a significant reduction in the anticipated water handling revenues
connected to the Wressle producing field. The cause of this is that updated
production simulations from the CPR indicates much reduced water production as
the reservoir becomes supported by gas break-out. Additionally, the estimated
recoverable value of the Wressle producing field was adversely impacted by the
reduction in forecast UK gas prices during the year. These factors led to an
increase in the provisions for impairment that had been made in relation to
loans to Europa Oil & Gas Ltd.
The movement in the provision was as follows:
Europa Oil & Gas Limited Europa Oil & Gas (Ireland West) Limited Europa Oil & Gas (Ireland East) Limited Europa Oil & Gas (Inishkea) Limited Europa Oil & Gas (New Ventures) Limited Total
£000 £000 £000 £000 £000 £000
============= ============= ============= ============= ============= =============
Gross loan balances
Loan balance at 31 July 2022 26,535 781 1,495 1,168 1,190 31,169
Movement in loan 1,027 (76) (153) 223 (145) 876
Loan balance at 31 July 2023 27,562 705 1,342 1,391 1,045 32,045
Movement in loan (1,255) - - 181 - (1,074)
Loan balance at 31 July 2024 26,307 705 1,342 1,572 1,045 30,971
Provisions
Provision at 31 July 2022 (14,043) (781) (1,495) (783) (797) (17,899)
Movement in provision 8,165 76 153 (149) (248) 7,997
Provision at 31 July 2023 (5,878) (705) (1,342) (932) (1,045) (9,902)
Movement in provision (15,446) - - (121) - (15,567)
Provision at 31 July 2024 (21,324) (705) (1,342) (1,053) (1,045) (25,469)
Net loan balance at 31 July 2022 12,492 - - 385 393 13,270
Net loan balance at 31 July 2023 21,684 - - 459 - 22,143
Net loan balance at 31 July 2024 4,983 - - 519 5,502
23 Capital commitments and guarantees
For PEDL181 the partners have agreed to drill two development wells and to
construct a gas export line. These activities remain contingent upon planning
permission being granted, the budget being approved by the JV partnership and
the availability of a suitable rig. The total net cost to Europa for the work
programme is estimated to be £1.3 million in 2025 and £2.5 million in 2026.
The final instalment of the Antler consideration was due on 1 October 2024 for
$369,000 (£289,000). This was paid on time after the reporting date
24 Lease commitments
Europa Oil & Gas Limited pays annual site rentals for the land upon which
the West Firsby and Crosby Warren oil field facilities are located.
Future minimum lease payments are as follows:
2024 2023
£000 £000
Less than 1 year 63 -
2-5 years 90 -
--------------------------------- ---------------------------------
Total 153 -
============ =============
25 Related party transactions
Key management are those persons having authority and responsibility for
planning, controlling and directing the activities of the Group. In the
opinion of the Board, the Group's and the Company's key management are the
directors of Europa Oil & Gas (Holdings) plc. Information regarding their
compensation is given in note 4.
During the year, the Company provided services to subsidiary companies as
follows:
2024 2023
£000 £000
Europa Oil & Gas Limited 319 336
Europa Oil & Gas (Inishkea) Limited 64 102
Europa Oil & Gas (New Ventures) Limited - 26
--------------------------------- ---------------------------------
Total 383 464
============ ==========
At the end of the year, after provisions, the Company was owed the following
amounts by subsidiaries:
2024 2023
£000 £000
Europa Oil & Gas Limited 4,983 21,684
Europa Oil & Gas (Inishkea) Limited 518 459
--------------------------------- ---------------------------------
Total 5,501 22,143
============ =============
26 Post reporting date events
On 13 September 2024 the Company announced that it does not intend to apply to
the North Sea Transition Authority for an extension to the Serenity licence,
which expired on 30 September 2024. As a result, the incurred costs associated
with Serenity that the Company has capitalised were written off during the
year.
On 16 September 2024 the Company announced that planning consent has been
received from North Lincolnshire Council for the further development of the
Wressle well site. As a result of the Finch Supreme Court ruling and a
proposed legal challenge to the granting of planning permission for the next
phase of the Wressle development, it is expected that the planning consent
will be rescinded once the court process has concluded. The Wressle Joint
Venture plans to submit further information that covers potential scope three
emissions such that a future planning process could be approved. The works
will include extending the existing site to accommodate the drilling of two
new wells and construction of gas processing facilities and an underground gas
pipeline to connect Wressle to the local gas distribution network.
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