REG - Europa Oil & Gas - Interim Results
17/04/2024 07:01
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RNS Number : 8719K Europa Oil & Gas (Holdings) PLC 17 April 2024
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil
& Gas
17 April 2024
Europa Oil & Gas (Holdings) plc
("Europa" or the "Company")
Interim Results
Europa Oil & Gas (Holdings) plc, the AIM quoted UK, Ireland and West
Africa focused oil and gas exploration, development and production company,
announces its unaudited interim results for the six-month period ended 31
January 2024.
Financial Performance
· Revenue £1.4 million (H1 2023: £3.7 million)
· Gross loss £0.1 million (H1 2023: £1.5 million profit)
· Pre-tax loss of £1.0 million (H1 2023: pre-tax loss £1.3 million)
after impairment charge of £0.2 million (H1 2023: exploration impairment
charge £1.7 million)
· Net cash used in operating activities £0.3 million (H1 2023: £1.7
million generated by operating activities)
· Cash balance at 31 January 2024: £3.8 million (31 July 2023: £5.2
million), of which £1.1 million is restricted (see note 8 of the financial
statements)
Operational Highlights
Onshore UK
· Over the three months to January 2024, after the completion of the
jet pump installation at Wressle, production has averaged over 530 boepd (net
160 boepd to Europa), which is above the forecast upside case from the recent
independent technical report (the "CPR")
· Total production across our whole portfolio net to Europa averaged
116 bopd during the H1 period, a 57% decrease on H1 last year
· Wressle net production to Europa decreased 57%, from 207 bopd in H1
2023 to 88 bopd during H1 2024, due to a three-month shutdown period required
to source and install a jet pump for artificial lift on the Wressle-1 well
· Wressle continues to be the second most productive onshore UK
oilfield
· During March 2024 the well is produced with 24.3% water cut and
remains materially 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 two back-to-back development
wells will be drilled from the existing Wressle site and planning and
permitting work for these wells is ongoing. The wells will be drilled at the
earliest opportunity, subject to receipt of regulatory approval
· 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 H1 2024 by ECRE which
incorporated the new field interpretation, historical production performance
data and the field development plan. The key highlights of the CPR included:
o 263% increase in 2P Reserves compared to 2016 CPR
o Reclassification of 1,883 mboe in Penistone Flags Contingent Resources to
2P Reserves
o 59% upgrade to the Ashover Grit and Wingfield Flags Estimated Ultimate
Recoverable
o 23% upgrade to Broughton North Prospective 2U Resources
· At Cloughton we continue with our stakeholder engagement and believe
that we have identified a number of suitable pad locations for an appraisal
well which, following commercial rates being established from the appraisal
well, could subsequently be used to develop the discovery. Negotiations with
landowners to secure a pad are ongoing
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 (note 8)
· Europa agreed a US$3 million cash subscription for new ordinary
shares in Antler, with the payments being made in four instalments (see note 8
of the financial statements)
· EG-08 is a highly prospective licence which already has three
drill-ready prospects, with internally estimated total prospective resources
of 1.4 trillion cubic feet of gas equivalent ("TCFE")
· Antler expects to commence a farm-down process in Q2 this year with a
view to bringing in a partner for drilling
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 licence term to 31 January 2026
· Licence FEL 4/19 contains the Inishkea West gas exploration prospect,
estimated by Europa to hold 1.5 TCF of recoverable gas
· Following the license extension, a farm-out process has begun again
with the aim of bringing in a partner to assist with the drilling of the
prospect
Offshore UK
· Progress continues with the potential development of the Serenity oil
discovery in the Central North Sea alongside our partner i3 Energy plc, ahead
of the licence's current expiry date in September 2024
· 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
· Whilst we continue to assess various development scenarios for
Serenity, we are concerned about possible future UK fiscal changes in the
event of a change of government which could negatively impact the economics of
the project
ESG
· The Company continues to build on the ESG review performed last year
which focused on integrating the ESG principles adopted by Europa into the
Company's planning and wider strategy. As part of this process, an emissions
data gathering process has been initiated to establish an emissions baseline
to benchmark Europa against our peers and to potentially establish targets for
future cuts
· 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 around £100,000 to the fund
Board
· Following consultations with shareholders, Simon Oddie and Stephen
Williams withdrew their candidacy for re-election at the 2023 Annual General
Meeting held on 23 November. This left the board without a majority of
non-executive directors
· On 21 December 2023 Mr Simon Ashby-Rudd was appointed to the board as
a senior 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, and brings to the board his significant
global experience in advising energy companies on corporate strategy and
capital structuring. He has spent much of his career focused on Europe and
Africa
Post Period
· On 14 February 2024, the North Sea Transition Authority ("NSTA")
notified Europa that it has agreed to a two-year extension of the Initial Term
to 20 July 2026 and a two-year extension of the Second Term to 20 July 2028
for PEDL 343 (Cloughton)
· On 8 April 2024 Dr Eleanor Rowley was appointed to the board as
independent non-executive director. Eleanor is a proven hydrocarbon finder who
has extensive experience in the upstream energy sector working as a
geoscientist in both exploration and development projects. Her extensive
knowledge of exploration and appraisal asset evaluation will complement the
existing strengths of the board very well and her appointment as independent
non-executive director enhances the independent governance at Europa,
returning the board to a majority of independent directors
Will Holland, CEO of Europa, said:
"It has been an exciting first half to the financial year with Europa entering
into a ground-breaking deal in Equatorial Guinea in West Africa. The
acquisition of a 42.9% stake in Antler gives the Company material exposure to
highly prospective exploration acreage in a genuinely exciting geography. I
have always believed that Europa could extend its vast knowledge base into new
territories and am very hopeful for the future that in our new licence
provides.
We continue to progress our activities offshore West Ireland and I am very
pleased that the Irish Government granted us an extension to licence FEL 4/19
containing the 1.5TCF Inishkea West gas prospect, located only 18km from
existing infrastructure and the European gas network. I remain very optimistic
about our chances of farming this out to a credible industry partner who can
then carry us through the exploration phase of the licence.
Despite the lower revenues during the interim period, due to the temporary
shutdown to install the jet pump at Wressle, our balance sheet remains robust
and we expect to continue generating meaningful cashflow from our UK assets.
This sets Europa up well for the future and will allow us to work up our well
balanced portfolio and deliver value for shareholders."
* * ENDS * *
For further information, please visit www.europaoil.com
(http://www.europaoil.com/) or contact:
William Holland Europa Oil & Gas (Holdings) plc mail@europaoil.com
James Dance / James Spinney / Rob Patrick 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
Chairman's Statement
A key focus of the first half of the financial year was to identify a new
opportunity that would be highly complementary to our existing asset portfolio
and help drive the Europa business forward. The period culminated in the
potentially transformational acquisition of a 42.9% stake in Antler, which has
an 80% working interest in the highly prospective, infrastructure-supported
licence EG-08 offshore Equatorial Guinea in West Africa.
We estimate that EG-08 has total prospective resources of 1.4 TCFE and, given
it contains what the Company considers to be drill-ready prospects consisting
of three independent targets, we regard EG-08 as a relatively low risk, high
impact opportunity with near field exploration potential.
The acquisition is directly in-line with our strategy to build and maintain a
balanced portfolio of exploration and production assets in geographies where
our board and management team have extensive in-country experience. Equatorial
Guinea's Government is highly supportive of its domestic oil and gas industry
and remains committed to seeking external investment from private and public
companies worldwide, as it aims to cement its position as one of sub-Saharan
Africa's major hydrocarbon hubs. We look forward to updating shareholders on
developments at the licence in due course.
In the period, we achieved revenue of £1.4 million (H1 2023: £3.7 million),
driven by Wressle's ongoing production. Compared to H1 2023, net unrestricted
cash decreased to £2.7 million in the first half of the financial year (31
July 2023: £5.2 million), whilst the average realised oil price decreased by
8% to US$81 per barrel. The investment in maintenance and upgrades to Wressle
is part of our prudent strategy to manage production rates from the field
which in turn maximise value, and we are highly focused on our strategic field
development plan. Work continues on the two-well development programme and
concurrent monetisation of the associated gas being produced from Wressle. The
timing of these works remains subject to regulatory approvals being granted
but both Europa and the operator expect the work programme to commence late
2024.
In January 2024, we were delighted to receive confirmation from the Irish
Government that the Minister for the Department of the Environment, Climate
and Communications has granted an extension to Phase 1 of our offshore Ireland
licence FEL 4/19. The licence, which now runs until at least 31 January 2026,
represents an exciting opportunity for Europa to support Ireland's energy
security ambitions and, as demonstrated by a recent third-party emissions
study on the licence commissioned by the Company, gas produced from FEL 4/19
would have considerably lower carbon emissions compared to imports from the
UK. We are committed to seeking a farm-in partner to drill this highly
prospective licence which contains the extensive 1.5 TCF Inishkea West gas
prospect.
Following the departure of two non-executive directors at the end of 2023 we
have undertaken an extensive search to find suitable replacements and I am
delighted that Simon Ashby-Rudd agreed to join the board in December. His
extensive upstream experience as an investment banker, financial advisor and
strategic advisor will be invaluable as we look to grow the business. Dr
Eleanor Rowley then joined the Europa board in April 2024. She has extensive
experience both in exploration and appraisal/development projects and will
bring valuable technical expertise and leadership to the board. Her deep
knowledge of exploration and appraisal asset evaluation will complement the
existing strengths of the board very well and her appointment as independent
non-executive director enhances the independent governance at Europa,
returning the board to a majority of independent directors.
With the extensions to FEL 4/19 and our PEDL343 (Cloughton) licence, in
addition to the recently completed EG-08 acquisition, we have solid
foundations in place to support a productive remainder of the year and future.
I'd like to thank the entire Europa team for their hard work and dedication
throughout the period, without which we wouldn't have been able to complete
the potentially significant EG-08 deal that provides investors with exposure
to a low-risk, high impact opportunity in West Africa. As always, we will
continue to ensure shareholders are updated on activities at all Europa assets
on a regular basis and look forward to an eventful period for the Company.
Mr Brian O'Cathain (Non-Executive Chairman)
16 April 2024
Operational Review
Financials
Average daily H1 2024 production was 116 boepd compared to 268 boepd in H1
2023, predominantly due to the three-month shutdown period at Wressle to
install a jet pump for artificial lift. In addition, there was an 8% decrease
in average realised oil price to US$81 per barrel (H1 2023: US$88) and foreign
exchange movements had a negative impact on revenues as US dollar sales
converted to pound sterling at US$1.27 (H1 2023: US$1.18).
· Revenue was £1.4 million (H1 2023: £3.7 million)
· Net cash used in operating activities was £0.3 million (H1 2023:
£1.7 million net cash generated by operating activities)
· The Group's unrestricted cash balance as at 31 January 2024 was
£2.7 million (31 July 2023: £5.2 million)
During the interim period, the Company subscribed to new equity share capital
in Antler Global Limited for a total cash consideration of £2.4 million (US$3
million) which is payable in four instalments. As at the reporting date, a
total of £2 million consideration remained unpaid and is included in trade
and other payables. Restricted cash of £1.1 million is related to that
portion of the unpaid consideration which the Company held for and on behalf
of Antler until such time as a new Antler bank account was operational, which
occurred in March 2024.
With the Antler acquisition we have deployed significant capital where we
believe it will generate the maximum return for our shareholders. The money
invested will fund the full exploration work programme on EG-08 until at least
the end of 2025, with a proportion of it expected to return to the Company as
we charge for the technical and commercial work that we undertake. The further
development of Wressle, progression of evaluation work on Cloughton and the
Inishkea farm-out remains top priorities for the Company which we aim to
pursue at the fastest pace possible. We do, however, retain sufficient
optionality in terms of timing of the related expenditure and always aim to
manage expenditure profiles of any new commitments within the confines of
available resources, whilst also constantly monitoring the capital structure
of the Company and the availability of, and potential need for, future
financing.
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
Due to the three-month shut-in period at Wressle impacting our production and
lower realised oil prices, our H1 2024 financial performance was significantly
weaker than the previous year. The shutdown of the Wressle oilfield for
planned maintenance and the installation of a jet pump, which is normal for an
oil well and is designed to extend the life of the field, will ultimately
improve production rates and hence cashflow from the field. Wressle production
averaged a net 160 boepd over the last three months of the reporting period.
Despite the investment in our key producing asset, and the significant
investment in Antler, our balance sheet remains robust with unrestricted cash
at the period end of £2.7 million (£5.2 million at the end of July 2023).
As we have alluded to in the past, we are always looking for additional
geographies where we can reallocate our inhouse expertise. Such an opportunity
arose in Equatorial Guinea towards the end of last year, where we are
investing in a very high-quality licence with three drill-ready and
potentially transformational prospects. We expect to progress this licence as
a major shareholder in Antler throughout the coming months, with a view to
commencing a farmout process within this calendar year.
We continue to progress the FEL 4/19 licence offshore Ireland and were pleased
by the support shown by the Irish Government to extend our licence out to
January 2026. We will continue to work up the technical data around the 1.5TCF
Inishkea West exploration prospect and have restarted the farm out process to
find a suitable partner to carry us through the exploration phase. Ireland
desperately needs domestic supplies of low emission gas and we want to play
our part in delivering this.
Our work on the offshore UK discovery Serenity is ongoing with our partner i3
Energy and we continue to assess development options. With its proximity to
nearby existing infrastructure, we continue to investigate the possibility of
developing the field using the infrastructure around Repsol's Blake Field.
However, we are mindful that the risk of a future UK Government removing the
Energy Profits Levy (EPL) investment allowance may negatively impact the
economics of Serenity and may jeopardise any future development.
During the period, we continued work to implement our ESG strategy. We have
adopted ESG practices that go beyond the requirements of an AIM-quoted company
and will continue to progress these to help contribute to the 2050 Net Zero
target.
Will Holland
CEO
16 April 2024
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
Equatorial Guinea Douala Sub Basin, Gulf of Guinea EG-08 Amberjack, Barracuda, Corvina Antler 1 34.32% 2 Exploration
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% Production
PEDL182 Broughton North Egdon 30% Exploration
PEDL299 Hardstoft Ineos 25% Exploration
PEDL343 Cloughton Europa 40% Exploration
Central North Sea P.2358, BLOCK 13/23C Serenity i3 25% Appraisal
Financials
Unaudited condensed consolidated statement of comprehensive income
6 months to 31 January 2024 6 months to 31 January 2023 Year to 31 July 2023
(audited)
£000 £000 £000
Continuing operations
Revenue 1,420 3,695 6,653
Cost of sales (1,381) (2,135) (3,448)
Impairment of producing fields (174) (18) 177
Total cost of sales (1,555) (2,153) (3,271)
------------------------------------- ------------------------------------- -------------------------------------
Gross (loss) / profit (135) 1,542 3,382
Exploration write off (note 3) - (1,685) (1686)
Administrative expenses (914) (846) (1872)
Finance income 245 1 9
Finance expense (220) (299) (717)
------------------------------------- ------------------------------------- -------------------------------------
Loss before taxation (1,024) (1,287) (884)
Taxation (note 5) - - 32
------------------------------------- ------------------------------------- -------------------------------------
Loss for the period (1,024) (1,287) (852)
Other comprehensive loss
Items that will not be reclassified to profit or loss, net of tax
Loss on investment revaluation - (8) 5
------------------------------------- ------------------------------------- -------------------------------------
Total comprehensive loss for the period attributed to the equity shareholders (1,024) (1,295)
of the parent
(847)
======================== ======================== ========================
Pence per share Pence per share Pence per share
Earnings per share (EPS) attributable
to the equity shareholders of the parent
Attributable to the equity shareholders of the
Basic EPS (note 4) (0.11)p (0.13)p (0.09p)
Diluted EPS (note 4) (0.11)p (0.13)p (0.09p)
Unaudited condensed consolidated statement of financial position
31 January 2024 31 January 2023 31 July
2023
(audited)
£000 £000 £000
Assets
Non-current assets
Intangible assets (note 6) 7,476 6,769 7,146
Property, plant and equipment (note 7) 2,374 2,526 2,417
Investment in joint venture (note 8) 2,425 - -
------------------------------------- ------------------------------------- -------------------------------------
Total non-current assets 12,275 9,295 9,563
------------------------------------- ------------------------------------- -------------------------------------
Current assets
Investments - 16 -
Inventories 10 26 19
Trade and other receivables 989 1,509 893
Restricted cash (note 8) 1,121 - -
Cash and cash equivalents 2,709 5,146 5,165
------------------------------------- ------------------------------------- -------------------------------------
Total current assets 4,829 6,697 6,077
------------------------------------- ------------------------------------- -------------------------------------
Total assets 17,104 15,992 15,640
==================== ==================== ========================
Liabilities
Current liabilities
Trade and other payables (note 9) (3,030) (1,602) (781)
------------------------------------- ------------------------------------- -------------------------------------
Total current liabilities (3,030) (1,602) (781)
------------------------------------- ------------------------------------- -------------------------------------
Non-current liabilities
Trade and other payables (6) (15) (12)
Long-term provisions (note 10) (4,586) (4,372) (4,368)
---------------------------------- ---------------------------------- -------------------------------------
Total non-current liabilities (4,592) (4,387) (4,380)
---------------------------------- ---------------------------------- -------------------------------------
Total liabilities (7,622) (5,989) (5,161)
----------------------------------- ----------------------------------- -------------------------------------
Net assets 9,482 10,003 10,479
==================== ==================== ========================
Capital and reserves attributable to equity holders of the parent
Share capital 9,592 9,592 9,592
Share premium 23,682 23,682 23,682
Merger reserve 2,868 2,868 2,868
Retained deficit (26,660) (26,139) (25,663)
---------------------------------- ---------------------------------- -------------------------------------
Total equity 9,482 10,003 10,479
===================== ======================== =======================
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 2023 9,592 23,682 2,868 (25,663) 10,479
Comprehensive loss for the period
Loss for the period attributable to the equity shareholders of the parent - - - (1,024) (1,024)
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Total comprehensive loss for the period - - - (1,024) (1,024)
---------------------------------- ---------------------------------- --------------------------------- ------------------------------ -------------------------------
Contributions by and distributions to owners
Share-based payments - - - 27 27
---------------------------------- ---------------------------------- ---------------------------------- --------------------------------- ------------------------------
Total transactions with owners - - - 27 27
----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- -----------------------------------
Balance at 31 January 2024 9,592 23,682 2,868 (26,660) 9,482
======================= ======================= ======================= ======================= =======================
Unaudited
Balance at 1 August 2022 9,565 23,660 2,868 (24,864) 11,229
Comprehensive loss 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 loss 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
======================= ======================= ======================= ======================= =======================
Audited
Balance at 1 August 2022 9,565 23,660 2,868 (24,864) 11,229
Comprehensive loss for the period
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 27 22 - - 49
Share-based payments - - - 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
================================== ================================== ================================== =============================== ==============================
Unaudited condensed consolidated statement of cash flows
6 months to 6 months to Year to
31 January 2024 31 January 2023 31 July
2023
(audited)
£000 £000 £000
Cash flows generated from operating activities
Loss after taxation (1,024) (1,287) (852)
Adjustments for:
Share-based payments 27 20 48
Depreciation 323 551 1,133
Taxation charge recognised in profit and loss - - (32)
Impairment/(reversal) of producing fields 174 18 (177)
Exploration write-off - 1,685 1,686
Finance income (245) - -
Finance expense 220 299 717
(Increase)/decrease in trade and other receivables (96) 356 973
Decrease in inventories 9 10 17
Increase/(decrease) in trade and other payables 302 54 (765)
----------------------------------- ----------------------------------- -------------------------------------
Net cash (used in) / generated from operations (310) 1,706 2,748
Income taxes paid - - 32
----------------------------------- ----------------------------------- -------------------------------------
Net cash (used in) / generated from operating activities (310) 1,706 2,780
======================== ======================== ========================
Cash flows (used in) / from investing activities
Purchase of property, plant & equipment (454) (74) (564)
Purchase of intangibles (330) (4,669) (5047)
Consideration paid for investment in joint venture (note 8) (464) - -
Cash guarantee re Morocco - 260 263
Cash escrow deposit re Serenity - 6,622 6,622
------------------------------------- ------------------------------------- -----------------------------------------------
Net cash (used in) / generated from investing activities (1,248) 2,139 1,274
======================== ======================== ========================
Cash flows used in financing activities
Gross proceeds from issue of share capital - 49 49
Proceeds from borrowings - 1,000 1,000
Repayment of borrowings - (1,040) (1,040)
Lease liability payments (20) (14) (20)
Lease liability interest payments (2) (2) (2)
Finance costs - (89) (35)
Disposal of listed shares - - 29
------------------------------------- ------------------------------------- --------------------------------------
Net cash used in financing activities (22) (96) (19)
======================== ======================== ========================
Net (decrease) / increase in cash and cash equivalents (1,580) 3,749 4,035
Exchange gain/(loss) on cash and cash equivalents 245 3 (264)
Cash and cash equivalents at beginning of period 5,165 1,394 1,394
------------------------------------- ------------------------------------- -------------------------------------
Cash and cash equivalents at end of period 3,830 5,146 5,165
======================== ======================== ========================
Of which:
Unrestricted 2,709 5,164 5,165
Restricted 1,121 - -
------------------------------------- ------------------------------------- -------------------------------------
3,830 5,146 5,165
======================== ======================== ========================
Notes to the consolidated interim statement
1 Nature of operations and general information
Europa Oil & Gas (Holdings) plc ("Europa Oil & Gas") and its
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 Europa Oil
& Gas.
The condensed consolidated interim financial information has been approved for
issue by the Board of Directors on 16 April 2024.
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 2023 to 31 January 2024 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 2022 to 31 January 2023 and the audited financial year to 31 July
2023.
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 2023.
The comparatives for the full year ended 31 July 2023 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,
planned capital expenditure and the committed further consideration payments
in relation to the investment in the Antler joint venture. 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 that the Group retains sufficient optionality in
relation to the timing of planned expenditure to accommodate potentially
adverse scenarios. 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 judgements and estimates
The preparation of condensed consolidated interim financial information
requires management to make judgements and estimates that affect the reported
amounts of assets and liabilities at the end of the reporting period.
Significant items subject to such judgements and estimates are set out in Note
1 of the Group's 2023 Annual Report and Financial Statements. Developments in
relation to significant judgements during the interim period are set out
below.
Serenity appraisal intangible asset
The cost of the 2022 appraisal well and subsequent expenditure on appraising
the opportunity to develop discovered hydrocarbon accumulations have been
capitalised within intangible assets. Despite not incurring significant
expenditure on the Serenity appraisal prospect during the interim period,
Europa Oil and Gas and its joint venture partner, i3 Energy plc, have
continued efforts to establish a framework for a commercial development for
the prospect. This work was ongoing as at 31 January 2024. The directors have
performed an assessment of the existence of indicators of impairment as set
out in IFRS 6 and the Group's accounting policy for exploration and evaluation
assets and have considered the near-term expiry of the licence in September
2024 as a potential indicator of impairment. In the directors' judgment the
potential value of reserves that were discovered by the discovery well, based
on management's best estimate calculated on a discounted cash flow basis,
exceeds the carrying amount of the related capitalised Serenity intangible
asset as at 31 January 2024. There cannot however be certainty that at the end
of the evaluation period or at the expiry date of the licence, if earlier, a
commercial development of Serenity volumes can be achieved.
Based on judgements at 31 January 2024 there was no write-off of capitalised
exploration and evaluation costs, but should the joint venture not be able to
extend the licence in September 2024 on terms that are acceptable to the
Group, or secure an out of round licence renewal, the full carrying value of
the Serenity asset of £4.7 million may be impaired in full.
Accounting for investment in Antler Global Limited ("Antler")
During the interim period, Europa Oil and Gas acquired an equity interest of
42.9% in Antler (note 8), a company incorporated in the United Kingdom which
is party to a hydrocarbon production sharing agreement in Equatorial Guinea.
Under IFRS, the accounting for an interest in another entity depends on the
level of influence held over the investee by the investor. The nature and
extent of the influence that Europa Oil and Gas exercises over this investment
was assessed, and it was determined that it constituted a joint venture. This
assessment was based on the contractual arrangement and the facts and
circumstances that evidence joint control over the joint venture. Joint
ventures are accounted for using the equity method, which is described in note
2.
Assessment of indicators of impairment of investment in Antler
The Company acquired its interest in Antler in December 2023, as discussed
above. No indicators of impairment arose in the short period between
investment date and 31 January 2024.
FEL4/19 (Inishkea)
The Phase 1 period of this 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.
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 for
the new policy in relation investments in joint ventures 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 2023.
(a) Investment 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 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.
(b) Accounting developments during 2023
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 2024 but did not result in any material changes to the
financial statements of the Group.
(c) 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 off
31 Jan 2024 31 Jan 2023 31 July 2023
£000 £000 £000
Exploration write-off - Morocco - (1,685) (1,686)
----------------------------------- ----------------------------------- -----------------------------------
- (1,685) (1,686)
=================================== =================================== ===================================
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 2024, 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 2024 31 January 2023 31 July 2023 (audited)
£000 £000 £000
Loss
Loss for the period attributable to the equity shareholders of the parent (1,024) (1,287) (852)
================== ================== ====
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS 959,184,178 957,457,085 958,804,515
==== ===== ===== ==================== ==== ===== ===== ==================== ==== ===== ===== ====================
Number of shares
Weighted average number of ordinary shares for the purposes of diluted EPS 959,184,178 957,457,085 958,804,515
==== ===== ===== ==================== ======= === ======================== ============ =========== ========== =
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 existence of
qualifying carried forward tax losses, the Group did not generate profits
subject to the Energy Profits Levy during the interim period.
6 Intangible assets
31 Jan 2024 31 Jan 2023 31 July 2023
£000 £000 £000
At 1 August 7,146 3,785 3,785
Additions 330 4,669 5,047
Exploration write-off - (1,685) (1,686)
----------------------------------- ----------------------------------- -------------
At period end 7,476 6,769 7,146
=================================== =================================== ===================================
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
31 Jan 2024 31 Jan 2023 31 July 2023
£000 £000 £000
Serenity 4,746 4,647 4,726
Ireland FEL 4/19 (Inishkea) 2,408 1,890 2,166
UK PEDL181 113 106 112
UK PEDL182 (Broughton North) 35 34 34
UK PEDL343 (Cloughton) 174 92 108
----------------------------- ----------------------------- --------------------------------
----------------------------------- ----------------------------------- -----------------------------------
Total 7,476 6,769 7,146
============================ ================================ ================================
================================== ================================== =================================
7 Tangible assets
Property, plant & equipment
Furniture & computers Producing Right of use assets Total
fields
£000 £000 £000 £000
Cost
At 1 August 2022 18 15,714 67 15,799
Additions 38 290 24 352
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2023 56 16,004 91 16,151
Additions 13 441 - 454
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 January 2024 69 16,445 91 16,605
==================== ==================== ================= ======================
Depreciation, depletion and impairment
At 1 August 2022 4 12,723 51 12,778
Charge for year 24 1,090 19 1,133
Impairment - (177) - (177)
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 July 2023 28 13,636 70 13,734
Charge for period 9 309 5 323
Impairment - 174 - 174
------------------------------- ------------------------------- ------------------------------- -------------------------------
At 31 January 2024 37 14,119 75 14,231
=================== ====================== ================= ====================
Net Book Value
At 31 January 2024 32 2,326 16 2,374
=============================== =============================== =============================== ===============================
At 31 July 2023 28 2,368 21 2,417
=============================== =============================== =============================== ===============================
Cost
At 1 August 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 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
=============================== =============================== =============================== ===============================
8 Investments in joint ventures
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:
US$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. Antler made no material profit or loss during the short
period between the acquisition date and 31 January 2024. Summarised financial
information for Antler at 31 January 2023 is included below:
31 January 2024
£000
Current assets 1,961
Non-current assets 3,530
Net assets 5,491
Company % interest in Antler 42.857%
-----------------------------------
Company share of net assets in £000 2,353
===================================
Antler currently has a financial year end date of 30 September, and the
financial information is based on management accounts which have been adjusted
to have consistent IFRS accounting policies as the Group.
As prescribed in the subscription agreement, the Company held the first
installment in its own bank account for and on behalf of Antler until such
time as Antler's new bank account was fully operational. During this period,
the Company disbursed £392,000 (US$500,000) on behalf of Antler for the
acquisition of seismic data in partial satisfaction of the first installment.
Resultantly an amount of £1,121,000 (US$ 1,427,000), comprising that portion
of the first installment that remained in the Company's bank account for and
on behalf of Antler as at 31 January 2024 is designated as restricted cash.
This remaining amount was paid to Antler in March 2024.
9 Trade and other payables
Current trade and other payables 31 January 2024 31 January 2023 31 July 2023 (audited)
£000 £000 £000
Trade payables 325 1,331 454
Lease liabilities 9 15 10
Corporation tax payable - 32 -
Other payables 2,696 224 317
-------------------------------------- --------------------------------------- --------------------------------------
3,030 1,602 781
=================== ==================== ===================
Non-current trade and other payables
Lease liabilities 6 15 12
Included within current trade and other payables is £1,961,000 comprising the
total unpaid subscription consideration as at the reporting date.
10 Long term provisions
31 Jan 2024 31 Jan 2023 31 July 2023
£000 £000 £000
At 1 August 4,368 4,164 4,164
Change in estimated phasing of cash flows - - (212)
Charged to the statement of comprehensive income 218 208 416
----------------------------------- ----------------------------------- -----------------------------------
At period end 4,586 4,372 4,368
=================================== =================================== ===================================
Long term provisions relate exclusively to decommissioning obligations related
the Group's UK licences.
11 Post reporting date
On 14 February 2024 the North Sea Transition Authority ("NSTA") notified
Europa Oil and Gas that it has agreed to a two-year extension of the Initial
Term to 20 July 2026 and a two-year extension of the Second Term to 20 July
2028 for PEDL 343 (Cloughton).
On 8 April 2024 the Company announce the appointment of Dr Eleanor Rowley to
the board as Independent Non-executive Director with immediate effect.
1 Europa is a 42.9% shareholder in Antler and has one of the two seats on
the Antler board of directors
2 Antler holds an 80% interest in EG08, as a result Europa holds a 34.32%
net interest in the licence
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