REG - Europa Oil & Gas - Interim Results
24/04/2023 07:15
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RNS Number : 1293X Europa Oil & Gas (Holdings) PLC 24 April 2023
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil
& Gas
24 April 2023
Europa Oil & Gas (Holdings) plc
("Europa" or the "Company")
Interim Results
Europa Oil & Gas (Holdings) plc, the AIM quoted UK and Ireland focused oil
and gas exploration, development and production company, announces its
unaudited interim results for the six-month period ended 31 January 2023.
Financial Performance
· Highest interim revenues recorded in Company's history as a result of
continued excellent operational performance and a strong oil price
· Revenue £3.7 million (H1 2022: £2.2 million)
· Gross profit £1.5 million (H1 2022: £0.9 million)
· Pre-tax loss of £1.3 million (H1 2022: pre-tax profit £0.7 million)
after exploration impairment charge of £1.7 million (H1 2022: impairment
reversal £0.4 million)
· Net cash from operating activities £1.7 million (H1 2022: £0.9
million)
· Unrestricted cash balance at 31 January 2023: £5.1 million (31 July
2022: £1.4 million)
Operational Highlights
Onshore UK - Wressle oilfield continues to exceed expectations, generating
strong levels of revenues and production
· Total production net to Europa averaged 268 bopd during the H1
period, a 29% increase on H1 last year
· Wressle net production to Europa increased 55% from 134 bopd to 207
bopd as the field performed better than expected
· Wressle now the second most productive onshore UK oilfield
· The well continues to produce under natural flow with zero water cut
and remains highly cash generative
· 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 the next development well
will be drilled from the existing Wressle site and planning and permitting
work for the well is ongoing. The well will be drilled at the earliest
opportunity, subject to receipt of regulatory approval
· Ongoing work to utilise the associated gas being produced from
Wressle which is expected to lead to further increases in oil production
during H2 2023
· An independent technical report has been commissioned which will
incorporate the new field interpretation, historical production performance
data and the field development plan. The report is expected to be completed
during June 2023
Offshore Ireland - Low risk / high reward infrastructure-led exploration in
the proven Slyne Basin gas play
· The FEL 4/19 licence extension was granted by the Irish Government,
extending the initial phase to January 2024
· Licence FEL 4/19 contains the Inishkea gas exploration prospect,
estimated by ERCE, a third-party reserves auditor to hold 1.5 tcf of
recoverable gas
· A farm-out process has begun which is expected to conclude by year
end 2023, with the aim of bringing in a partner to assist with the drilling of
the prospect
· Given the security of supply issues that Ireland faces, the Board
believes that it is in the interest of Ireland that this prospect is drilled
as soon as reasonably possible, especially as local existing infrastructure
would make any development a low carbon intensity project
Offshore UK
· Progress continues with the development of the Serenity oil discovery
in the Central North Sea alongside our partner i3 Energy
· Despite drilling an appraisal well in October 2022 that failed to
encounter hydrocarbons, the partners believe that Serenity offers a
commercially viable development opportunity with a number of potential
development scenarios available given local infrastructure
· A future development could result in approximately 1,000 bopd net to
Europa's 25% interest
Morocco
· The extension to the Initial Period of the Inezgane Licence offshore
Morocco announced on 21 October 2020 came to an end in November 2022, and
Europa decided not to progress to the First Extension Period
ESG
· Initiated ESG review focused on integrating the ESG principles
adopted by Europa into the Company's planning and wider strategy
· Europa contributes to the Wressle Community Fund, which has been
operating since early 2022 and provides funds to meet the needs of local
charities and community groups. The Company and its Wressle JV partners make
an annual contribution of £100,000 to the fund
Post Period
· In March 2023, the Company announced that Simon Oddie was stepping
down as CEO, with Will Holland moving from his role as CFO to replace him with
immediate effect
· The operator of Wressle announced that gross revenues from the field
since August 2021 had reached US$35.0 million by late March 2023, representing
approximately US$10.5 million net to Europa
· On 3 April 2023 Alastair Stuart, a petroleum engineer with over 30
years of experience, was appointed Chief Operating Officer and an Executive
Director of the Company. Mr Stuart has been a consultant at Europa since 2012
and more recently has been intimately involved in the development of the
Wressle Field
· In order to ensure that the finance function within Europa is
suitably resourced, the Company has increased its existing mandate with
Clifton Financial Solutions Limited ("Clifton"). Clifton already provides
accounting services to Europa and from April 2023 will also provide
administrative services that would typically fall under the remit of a CFO
Will Holland, CEO of Europa, said:
"I am pleased to report my first set of interim results as CEO showing record
operational numbers which resulted in Europa continuing to be in a strong
financial position. These numbers were all generated whilst Simon Oddie was
CEO and are a testament to the excellent job that he has done at Europa since
2018.
The Wressle oilfield's continued excellent performance has underpinned our
significant growth in revenues during the period, and a number of projects are
underway to enable increased oil production and gas monetisation from the
field. The first phase of the gas utilisation project was completed in January
2023, whereby three microturbines were connected to provide site power which
have resulted in a c. 10% increase in oil production. The second stage is the
installation of a gas engine to generate 1.4 MW of electricity into a local
private power network.
In addition to building on our corporate ESG framework, the cornerstone of our
long-term commitment to the global energy transition, we initiated a farm-out
process for our Irish offshore licence FEL 4/19. Within the licence is the
extensive Inishkea gas prospect containing an estimated 1.5 tcf of gas, and we
recognise the significant potential of FEL 4/19 to help alleviate Ireland's
energy security concerns by providing the nation with a dependable source of
gas produced with low carbon emissions.
Europa remains a highly cash generative business, and our robust financial
foundations will enable us to continue to work towards optimising our existing
assets in the second half of the year, whilst we also pursue potential UK
offshore and onshore opportunities to add to our well-balanced portfolio and
deliver further value for shareholders."
* * ENDS * *
For further information, please visit www.europaoil.com
(http://www.europaoil.com/) or contact:
William Holland / Murray Johnson Europa Oil & Gas (Holdings) plc mail@europaoil.com
James Dance / James Spinney Strand Hanson Limited - Nominated & Financial Adviser +44 (0) 20 7409 3494
Peter Krens Tennyson Securities +44 (0) 20 7186 9033
Patrick d'Ancona / Finlay Thomson / Kendall Hill Vigo Consulting + 44 (0) 20 7390 0230
Notes to Editors
Europa Oil & Gas (Holdings) plc has a diversified portfolio of multi-stage
hydrocarbon assets which includes production, development and exploration
interests, in countries that are politically stable, have transparent
licensing processes, and offer attractive terms. Average production for the
6-month period ending 31 January 2023 was 268 bopd. In April 2022, Europa
farmed into P.2358, Block 13/23c ("Serenity") in the Outer Moray Firth area of
the North Sea. The licence contains the 2019 Serenity oil discovery, in which
Europa now has a 25% interest. The Company holds one exploration licence
offshore Ireland, which has the potential to host gross mean un-risked
prospective resources of 1.5 trillion cubic feet ("tcf") gas. Inishkea is a
near field gas prospect in the Slyne Basin which the Company classifies as
lower risk due to its close proximity to the producing Corrib gas field and
associated gas processing infrastructure.
Chairman's Statement
The first half of the financial year was a significant period for Europa, and
the outstanding performance of Wressle, our flagship producing asset, has
enabled us to strengthen our financial foundations by continuing to deliver
material cashflow, facilitating further investment in our existing assets.
Europa welcomed the UK Government's 33(rd) offshore oil and gas licensing
round, and we remain in a favourable position to pursue opportunities in the
North Sea, as well as onshore UK, to add domestic projects with minimal
emissions to our already diverse asset portfolio.
In the period, we delivered revenue growth of 68% to £3.7 million (H1 2022:
£2.2 million), driven by Wressle's impressive daily production rate of 689
bopd during the period. Compared to H1 2022, net cash increased substantially
to £5.1 million in the first half of the financial year (H1 2022: £0.6
million), whilst the average realised oil price increased by 13% to US$88 per
barrel. Planned gas monetisation solutions for Wressle, coupled with the
planned drilling of a development well scheduled for H2 2023, demonstrates our
continued commitment to upgrading this key asset to augment production and
generate additional revenues, whilst also eliminating gas flaring from the
field.
We are actively focused on finding a partner to farm-in to our FEL 4/19
licence located off the west coast of Ireland. The licence contains the
extensive, low-risk Inishkea prospect and could potentially play an integral
role in the energy transition by providing Ireland with a dependable source of
indigenous energy that is projected to have a much lower carbon footprint than
gas imported from Europe. Inihskea could provide over 60% of the forecast
Irish gas demand for up to 10 years and the development of a discovery would
form an essential element of Ireland's energy security. As well as providing
for c.180 high quality secure jobs for another c.15 years, Inishkea gas also
has an extremely low emissions intensity. It is estimated that Inishkea gas
production would be one twelfth of the emissions intensity of UK imported gas,
and less than one fiftieth of the emissions intensity of LNG imported from the
USA. In H1 2023, the Irish Government granted an extension to the first phase
of our licence, which now runs until January 2024, and we look forward to
working constructively with the Department of the Environment, Climate and
Communications as we seek to progress FEL 4/19 to drilling.
Although our appraisal well at Serenity did not encounter oil-bearing sands,
Europa continues to explore options for the development of the oilfield in the
Central North Sea. We are currently evaluating with our partners the
possibility of developing the discovered reserve via the Repsol Sinopec's Tain
field, which could be as a unified development and potentially highly material
to Europa.
On behalf of the Board, I would like to express my sincere thanks to Simon
Oddie for his hard work and leadership as CEO of Europa and wish him well as
he begins his well-earned retirement. I am glad that he has agreed to continue
as a non-executive director at Europa and look forward to continuing to work
with him in a non-executive capacity. I would also like to thank our
management team, employees, and consultants for their hard work and dedication
over the course of the reporting period and beyond. We also thank our
shareholders for their continued support and look forward to updating the
market on our operational and business activities during this exciting period
for the Company.
Mr Brian O'Cathain (Non-Executive Chairman)
24 April 2023
Operational Review
Financials
Average daily H1 2023 production was 268 boepd compared to 208 boepd in H1
2022. There was a 13% increase in average realised oil price to US$88 per
barrel (H1 2022: US$77.84). Foreign exchange movements had a slight positive
impact on revenues as US dollar sales converted to pound sterling at US$1.18
(H1 2022: US$1.35).
· Revenue was £3.7 million (H1 2022: £2.2 million)
· Net cash received from operating activities was £1.7 million (H1
2022: £0.9 million)
· The Group's unrestricted cash balance as at 31 January 2023 was
£5.1 million (31 July 2022: £1.4 million)
Based upon the Group cashflow forecasts, the Directors have concluded that
there is a reasonable expectation that the Group will be able to continue in
operational existence for the foreseeable future, which is deemed to be at
least 12 months from the date of signing the consolidated financial
information. Further comments on going concern are included in note 1 to the
financial statements below.
Conclusion and Outlook
We delivered a strong H1 2023 financial performance, underpinned by the high
levels of revenue generated from our UK onshore producing assets, particularly
the Wressle oilfield. In addition to substantially increasing our revenues to
£3.7 million (H1 2022: £2.2 million) and achieving a gross profit of £1.5
million (H1 2022: £0.9 million), we also considerably strengthened our
balance sheet, resulting in net cash of £5.1 million at the end of the
period. Wressle, currently the second most productive onshore UK oilfield,
continues to surpass all expectations, and we remain committed to further
enhancing the field's efficiency and increasing production through gas
monetisation solutions, alongside advancing the development drilling to enable
further production.
During H1 2023, the first phase of our 100%-owned offshore Ireland licence FEL
4/19, which contains two prospects that have the potential to deliver over 2
tcf of gas, was extended by the Irish authorities. With the Inishkea prospect
located only 11km from the producing Corrib gas field, we believe FEL 4/19 has
the potential to provide Ireland with a reliable fast track gas development to
supply low carbon emission energy, helping satisfy the nation's energy
security demands alongside accommodating the transition to net zero. Following
the extension, we are well positioned to continue conducting technical studies
of the licence as we focus on securing a partner to farm-in to the project.
Bolstered by the UK Government's continued commitment to investing in the
exploration of North Sea hydrocarbons, we continue to assess development
options for the offshore UK Serenity oilfield alongside partner i3 Energy.
With Serenity strategically located nearby existing infrastructure, one
cost-effective solution we are exploring is to develop the discovered reserve
via Repsol Sinopec's Tain Field. A potential unitised development could
deliver significant benefits to Europa and our shareholders, with net
production to Europa anticipated to be c.1,000 bopd.
During the period, we continued to work on our ESG strategy to ensure that the
ESG principles adopted by Europa Board are integrated into our planning and
wider strategy. We have pledged to go beyond the necessary ESG-related
requirements of an AIM-quoted company and look forward to building on the
significant ESG progress generated in H1 2023 to help contribute to the 2050
Net Zero target.
With a balanced portfolio of producing, appraisal, and exploration assets,
Europa is ideally placed to explore further opportunities to develop and
acquire high potential assets which could facilitate the energy transition and
generate additional value for our shareholders. Management looks ahead to the
second half of the financial year with confidence and remains fully focused on
delivering our strategic priorities.
Will Holland
CEO
22 April 2023
Qualified Person Review
This release has been reviewed by Alastair Stuart, 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.
Licence Interests Table
Country Area Licence Field/ Operator Equity Status
Prospect
Ireland Slyne Basin FEL 4/19 Inishkea, Inishkea West Europa 100% Exploration
UK East Midlands DL 003 West Firsby Europa 100% Production
DL 001 Crosby Warren Europa 100% Production
PL199/215 199/215 Whisby-4 BPEL 65% Production
PEDL180 Wressle Egdon 30% Development
PEDL181 Europa 50% Exploration
PEDL182 Broughton North Egdon 30% Exploration
PEDL299 Hardstoft Ineos 25% Appraisal
PEDL343 Cloughton Egdon 40% Appraisal
Central North Sea P.2358, BLOCK 13/23C Serenity i3 25% Exploration
Financials
Unaudited condensed consolidated statement of comprehensive income
6 months to 31 January 2023 6 months to 31 January 2022 Year to 31 July 2022
(audited)
£000 £000 £000
Continuing operations
Revenue 3,695 2,191 6,584
Cost of sales (2,135) (1,246) (3,806)
Impairment of producing fields (18) - (570)
Total cost of sales (2,153) (1,246) (4,376)
------------------------------------- ------------------------------------- ---------------------------------
Gross profit 1,542 945 2,208
Exploration (write off)/write back (note 3) (1,685) 360 -
Administrative expenses (846) (463) (821)
Finance income 1 20 239
Finance expense (299) (119) (238)
------------------------------------- ------------------------------------- ---------------------------------
(Loss)/profit before taxation (1,287) 743 1,388
Taxation (note 5) - - (32)
------------------------------------- ------------------------------------- ---------------------------------
(Loss)/profit for the period (1,287) 743 1,356
Other comprehensive income
Items that will not be reclassified to loss, net of tax
Loss on investment revaluation (8) (17) (18)
------------------------------------- ------------------------------------- -------------------------------------
Total comprehensive (loss)/income for the period attributed to the equity (1,295) 726
shareholders of the parent
1,338
======================== ======================== ========================
Pence per share Pence per share Pence per share
Earnings/(loss) per share (EPS) attributable
to the equity shareholders of the parent
Attributable to the equity shareholders of the
Basic EPS (note 4) (0.13)p 0.13p 0.19p
Diluted EPS (note 4) (0.13)p 0.13p 0.18p
Unaudited condensed consolidated statement of financial position
31 January 2023 31 January 2022 31 July
2022
(audited)
£000 £000 £000
Assets
Non-current assets
Intangible assets (note 6) 6,769 2,960 3,785
Property, plant and equipment (note 7) 2,526 4,006 3,021
------------------------------------- ------------------------------------- -------------------------------------
Total non-current assets 9,295 6,966 6,806
------------------------------------- ------------------------------------- -------------------------------------
Current assets
Investments 16 25 24
Inventories 26 50 36
Trade and other receivables 1,509 822 1,866
Restricted cash - 238 6,884
Cash and cash equivalents 5,146 624 1,394
------------------------------------- ------------------------------------- -------------------------------------
Total current assets 6,697 1,759 10,204
------------------------------------- ------------------------------------- -------------------------------------
Total assets 15,992 8,725 17,010
==================== ==================== ========================
Liabilities
Current liabilities
Borrowing (note 8) - (10) (40)
Trade and other payables (1,602) (1,177) (1,573)
------------------------------------- ------------------------------------- -------------------------------------
Total current liabilities (1,602) (1,187) (1,613)
------------------------------------- ------------------------------------- -------------------------------------
Non-current liabilities
Borrowings (note 8) - (35) -
Trade and other payables (15) (11) (4)
Long-term provisions (note 9) (4,372) (3,510) (4,164)
---------------------------------- ---------------------------------- -------------------------------------
Total non-current liabilities (4,387) (3,556) (4,168)
---------------------------------- ---------------------------------- -------------------------------------
Total liabilities (5,989) (4,743) (5,781)
----------------------------------- ----------------------------------- -------------------------------------
Net assets 10,003 3,982 11,229
==================== ==================== ========================
Capital and reserves attributable to equity holders of the parent
Share capital 9,592 5,665 9,565
Share premium 23,682 21,157 23,660
Merger reserve 2,868 2,868 2,868
Retained deficit (26,139) (25,708) (24,864)
---------------------------------- ---------------------------------- -------------------------------------
Total equity 10,003 3,982 11,229
===================== ======================== =======================
Unaudited condensed consolidated statement of changes in equity
Share Share Merger Retained Total equity
capital premium reserve deficit
£000 £000 £000 £000 £000
Unaudited
Balance at 1 August 2022 9,565 23,660 2,868 (24,864) 11,229
Comprehensive income for the period
Loss for the period attributable to the equity shareholders of the parent (1,287) (1,287)
- - -
Other comprehensive loss attributable to the equity shareholders of the parent (8) (8)
- - -
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive income for the period - - - (1,295) (1,295)
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Contributions by and distributions to owners
Issue of share capital 27 22 - - 49
Share-based payments - - - 20 20
---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total transactions with owners 27 22 - 20 69
----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- -----------------------------------
Balance at 31 January 2023 9,592 23,682 2,868 (26,139) 10,003
======================= ======================= ======================= ======================= =======================
Unaudited
Balance at 1 August 2021 5,665 21,157 2,868 (26,441) 3,249
Profit for the period attributable to the equity shareholders of the parent 743 743
- - -
Other comprehensive loss attributable to the equity shareholders of the parent (17) (17)
- - -
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive loss for the period - - - 726 726
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Contributions by and distributions to owners
Share-based payments - - - 7 7
---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total transactions with owners - - - 7 7
----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- -----------------------------------
Balance at 31 January 2022 5,665 21,157 2,868 (25,708) 3,982
======================= ======================= ======================= ======================= =======================
Audited
Balance at 1 August 2021 5,665 21,157 2,868 (26,441) 3,249
Profit for the year attributable to the equity shareholders of the parent 1,356 1,356
- - -
Other comprehensive loss attributable to the equity shareholders of the parent (18) (18)
- - -
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive loss for the year - - - 1,338 1,338
--------------------------------- --------------------------------- -------------------------------- ------------------------------ -------------------------------
Contributions by and distributions to owners
Issue of share capital 3,900 2,722 - - 6,622
Issue of share warrants - (219) - 219 -
Share-based payments - - - 20 20
---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total transactions with owners 3,900 2,503 - 239 6,642
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Balance at 31 July 2022 9,565 23,660 2,868 (24,864) 11,229
================================== ================================== ================================== =============================== ==============================
Unaudited condensed consolidated statement of cash flows
6 months to 6 months to Year to
31 January 2023 31 January 2022 31 July
2022
(audited)
£000 £000 £000
Cash flows generated from operating activities
(Loss)/profit after taxation (1,287) 743 1,356
Adjustments for:
Share-based payments 20 7 20
Depreciation 551 627 1,618
Taxation charge recognised in profit and loss - - 32
Impairment of producing fields 18 - 570
Exploration write-off 1,685 - -
Reversal of cost accrual on relinquishment of licences - (360) -
Finance income - (20) -
Finance expense 299 119 238
Decrease/(increase) in trade and other receivables 356 (300) (1,344)
(Increase)/decrease in inventories 10 (27) (13)
Decrease in trade and other payables 54 90 18
----------------------------------- ----------------------------------- -------------------------------------
Net cash generated from operations 1,706 879 2,495
Income taxes paid - - (32)
----------------------------------- ----------------------------------- -------------------------------------
Net cash generated from operating activities 1,706 879 2,463
======================== ======================== ========================
Cash flows from/(used in) investing activities
Purchase of property, plant & equipment (74) (406) (403)
Purchase of intangibles (4,669) (487) (1,246)
Cash guarantee re Morocco 260 - -
Cash escrow deposit re Serenity 6,622 - (6,621)
Interest received - - -
------------------------------------- ------------------------------------- -----------------------------------------------
Net cash from/(used in) investing activities 2,139 (893) (8,270)
======================== ======================== ========================
Cash flows (used in)/from financing activities
Gross proceeds from issue of share capital 49 - 7,020
Costs incurred on issue of share capital - - (398)
New borrowings 1,000 - -
Repayment of borrowings (1,040) (5) (10)
Lease liability payments (14) (7) (14)
Lease liability interest payments (2) (1) (2)
Finance costs (89) (2) (3)
------------------------------------- ------------------------------------- --------------------------------------
Net cash (used in)/from financing activities (96) (15) 6,593
======================== ======================== ========================
Net increase/(decrease) in cash and cash equivalents 3,749 (29) 786
Exchange gain/(loss) on cash and cash equivalents 3 12 (33)
Cash and cash equivalents at beginning of period 1,394 641 641
------------------------------------- ------------------------------------- -------------------------------------
Cash and cash equivalents at end of period 5,146 624 1,394
======================== ======================== ========================
Notes to the consolidated interim statement
1 Nature of operations and general information
Europa Oil & Gas (Holdings) plc ("Europa Oil & Gas") and subsidiaries'
(the "Group") principal activities consist of investment in oil and gas
exploration, development and production.
Europa Oil & Gas is the Group's ultimate parent Company. It is
incorporated and domiciled in England and Wales. The address of Europa Oil
& Gas's registered office head office is 30 Newman Street, London, W1T
1PT. Europa Oil & Gas's shares are admitted to trading on the AIM market
of the London Stock Exchange.
Basis of preparation
The Group's condensed consolidated interim financial information is presented
in Pounds Sterling (£), which is also the functional currency of the Europa
Oil & Gas.
The condensed consolidated interim financial information has been approved for
issue by the Board of Directors on 22 April 2023.
The condensed consolidated interim financial statements have been prepared in
accordance with the requirements of the AIM Rules for Companies. As permitted,
the Group has chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing this interim financial information.
The condensed consolidated interim financial information for the period 1
August 2022 to 31 January 2023 is unaudited. In the opinion of the Directors,
the condensed consolidated interim financial information for the period
presents fairly the financial position, and results from operations and cash
flows for the period in conformity with the generally accepted accounting
principles consistently applied. The condensed consolidated interim financial
information incorporates unaudited comparative figures for the interim period
1 August 2021 to 31 January 2022 and the audited financial year to 31 July
2022.
The financial information contained in this interim report does not constitute
statutory accounts as defined by section 435 of the Companies Act 2006. The
report should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 July 2022.
The comparatives for the full year ended 31 July 2022 are not the Group's full
statutory accounts for that year. A copy of the statutory accounts for that
year has been delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified and did not contain a statement under section
498 (2) - (3) of the Companies Act 2006.
Going concern
The Directors have prepared a cash flow forecast, which considers the
continuing and forecast cash inflow from the Group's producing assets, the
cash held by the Group at the half year end, less administrative expenses and
planned capital expenditure. The Directors have concluded, at the time of
approving the financial statements, that there is a reasonable expectation,
based on the Group's cash flow forecasts, that the forecasts are achievable
and accordingly the Group will be able to continue as a going concern and meet
its obligations as and when they fall due for a period of at least 12 months
from the date of signing the consolidated financial information. Accordingly,
they continue to adopt the going concern basis in preparing the condensed
consolidated interim financial information.
Critical accounting estimates
The preparation of condensed consolidated interim financial information
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the end of the reporting period.
Significant items subject to such estimates are set out in Note 1 of the
Group's 2022 Annual Report and Financial Statements. During the interim period
significant additional expenditure was incurred on the drilling of the
Serenity farm-in appraisal well (note 6). Although the appraisal well was not
successful the original discovery is still deemed to be commercial and
significant work on evaluating the development potential of the discovered
hydrocarbon accumulations at Serenity was ongoing as at 31 January 2023. As
such the carrying value of the Serenity evaluation asset is justified by
reference to indicators of impairment as set out in IFRS 6 and the Group's
accounting policy for exploration and evaluation assets. Based on judgements
at 31 January 2023 there was no write-off capitalised exploration and
evaluation costs. The nature and amounts of other estimates have not changed
significantly during the interim period.
2 Summary of significant accounting policies
The condensed consolidated financial information has been prepared using
policies based on UK adopted International Accounting Standards. Except as
described below, the condensed consolidated financial information has been
prepared using the accounting policies which were applied in the Group's
statutory financial information for the year ended 31 July 2022.
(a) Accounting developments during 2022
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. The amendments and revisions were applicable for the period
ended 31 January 2023 but did not result in any material changes to the
financial statements of the Group.
(b) New standards, amendments and interpretations in issue but not yet
effective
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early. The Group is evaluating
the impact of the new and amended standards which are not expected to have a
material impact on the Group's results or shareholders' funds.
3 Exploration write back/(write off)
31 Jan 2023 31 Jan 2022 31 July 2022
£000 £000 £000
Release of cost accrual on relinquishment of licences - 360 -
Exploration write-off - Morocco (1,685) - -
----------------------------------- ----------------------------------- -----------------------------------
(1,685) 360 -
=================================== =================================== ===================================
The Initial Period of the Inezgane licence in Morocco expired in November 2022
and Group decided not to progress to the First Extension Period. All
previously capitalised costs in relation to this licence was written-off
during the period.
4 Earnings per share (EPS)
Basic EPS has been calculated on the loss 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 during the interim period
ending 31 January 2023, any potentially dilutive instruments were considered
to be anti-dilutive. Therefore, the diluted EPS is equal to the basic EPS.
The calculation of the basic and diluted earnings per share is based on the
following:
6 months to 6 months to Year to
31 January 2023 31 January 2022 31 July 2022 (audited)
£000 £000 £000
(Loss)/profit
(Loss)/profit for the period attributable to the equity shareholders of the (1,287) 743 1,356
parent
================== ================== ==================
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS 957,457,085 566,466,985 700,028,629
==== ===== ===== ==================== ==== ===== ===== ==================== ============ =========== ========== =
Number of shares
Weighted average number of ordinary shares for the purposes of diluted EPS 957,457,085 569,753,951 737,636,450
==== ===== ===== ==================== ======= === ======================== ============ =========== ========== =
5 Taxation
Consistent with the year-end treatment, current and deferred tax assets and
liabilities have been calculated at tax rates which were expected to apply to
their respective period of realisation at the period end. Due to incurring
qualifying expenditure on drilling the Serenity well, the Group did not
generate profits subject to the Energy Profits Levy during the interim period.
6 Intangible assets
31 Jan 2023 31 Jan 2022 31 July 2022
£000 £000 £000
At 1 August 3,785 6,438 6,438
Additions 4,669 416 1,246
Transfer to property, plant & equipment - (3,894) (3,899)
Exploration write-off (1,685) - -
----------------------------------- ----------------------------------- -----------------------------------
At period end 6,769 2,960 3,785
=================================== =================================== ===================================
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
31 Jan 2023 31 Jan 2022 31 July 2021
£000 £000 £000
Serenity 4,647 - 410
Ireland FEL 4/19 (Inishkea) 1,890 1,698 1,789
Morocco Inezgane - 1,037 1,379
UK PEDL180 (Wressle) - - -
UK PEDL181 106 105 81
UK PEDL182 (Broughton North) 34 34 34
UK PEDL343 (Cloughton) 92 86 92
------------- ------------- ------------
----------------------------------- ----------------------------------- -----------------------------------
Total 6,769 2,960 3,785
============================ ================================ ================================
31 Jan 2023 31 Jan 2022 31 July 2022
£000 £000 £000
Transfer to Property, plant & equipment
UK PEDL180 (Wressle) - 3,894 3,899
----------------------------- ------------------------------- --------------------------------
Total - 3,894 3,899
============================ ================================ ================================
======= ======== ========
7 Tangible assets
Property, plant & equipment
Furniture & computers Producing Right of use assets Total
fields
£000 £000 £000 £000
Cost
At 1 August 2021 5 10,887 67 10,959
Additions 13 928 - 941
Transferred from intangible assets - 3,899 - 3,899
----------------------- -------------------------- ------------------------ -----------------------
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2022 18 15,714 67 15,799
Additions 35 15 24 74
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 January 2023 53 15,729 91 15,873
==================== ==================== ================= ======================
Depreciation, depletion and impairment
At 1 August 2021 3 10,552 35 10,590
Charge for year 1 1,601 16 1,618
Impairment - 570 - 570
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2022 4 12,723 51 12,778
Charge for period 10 532 9 551
Impairment - 18 - 18
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 January 2023 14 13,273 60 13,347
=================== ====================== ================= ====================
Net Book Value
At 31 January 2023 39 2,456 31 2,526
=============================== =============================== =============================== ===============================
At 31 July 2022 14 2,991 16 3,021
=============================== =============================== =============================== ===============================
Cost
At 1 August 2021 5 10,887 67 10,959
Transferred from intangible assets - 3,894 - 3,894
Additions - 370 - 370
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 January 2022 5 15,151 67 15,223
=================== ====================== ================= ====================
Depreciation, depletion and impairment
At 1 August 2021 3 10,552 35 10,590
Charge for period 1 617 9 627
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 January 2022 4 11,169 44 11,217
=================== ====================== ================= ====================
Net Book Value
At 31 January 2022 1 3,982 23 4,006
=============================== =============================== =============================== ===============================
8 Borrowings
31 Jan 2023 31 Jan 2022 31 July 2022
£000 £000 £000
Loans repayable in less than 1 year
Bounce back loan - 10 40
----------------------------------- ----------------------------------- -----------------------------------
Total short term borrowings - 10 40
================================== ================================== =================================
Loans repayable in 1 to 2 years
Bounce back loan - 10 -
Loans repayable in 2 to 5 years
Bounce back loan - 25 -
----------------------------------- ----------------------------------- -----------------------------------
Total long term borrowings - 35 -
================================== ================================== =================================
In June 2020, the Group received a Bounce Back loan for £50,000 under the
Government's Covid-19 policies. The annual rate of interest is 2.5%. The
loan was repaid in full in August 2022.
In September 2022, the Group entered into a loan agreement with Union Jack
Oil, a joint venture partner in the Group's Wressle oil field to borrow a
total of £1,000,000 at an annual rate of interest of 11%. The purpose of the
loan was to provide the Group with additional contingent liquidity for
Serenity well operations conducted in 2022. The additional liquidity was not
required and therefore the loan was repaid in full, with interest, in October
2022.
9 Long term provisions
31 Jan 2023 31 Jan 2022 31 July 2022
£000 £000 £000
At 1 August 4,164 3,393 3,393
Change in estimated phasing of cash flows - - 538
Charged to the statement of comprehensive income 208 117 233
----------------------------------- ----------------------------------- -----------------------------------
At period end 4,372 3,510 4,164
=================================== =================================== ===================================
10 Post reporting date
On 15 March 2023, the Company announced the retirement, with immediate effect,
of Simon Oddie and the appointment of William Holland as Chief Executive
Officer of the Company. William Holland previously held the office of Chief
Financial Officer. Simon Oddie remains on the Board of the Company as a
non-executive director.
On 3 April 2023, the Company appointed Alastair Stuart as Chief Operating
Officer and Executive Director of the Company.
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