REG - Lansdowne Oil & Gas - Results for the year ended 31 December 2020
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Steve Boldy, the Chief Executive Officer of the Company (responsible for arranging release of this announcement).
28 June 2021
Lansdowne Oil & Gas plc
("Lansdowne" or "the Company")
Audited results for the year ended 31 December 2020
Lansdowne Oil & Gas ("Lansdowne" or "the Company") is pleased to announce its audited results, for the year ended 31 December 2020. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and the Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.
Lord Torrington, Independent Non-Executive Chairman, commented:
I am pleased to report that, with the oil price having returned to pre-pandemic levels of c. $70/bbl, the Barryroe Partners (Lansdowne 20% and Exola/Providence 80%) have retaken control of the project and will now be masters of our destiny. Lansdowne retains 69MM boe net 2C resources and we look forward to returning to operations and moving to development.
The onset of the global Covid-19 Pandemic early in 2020 led quickly to a down-turn in all economic activity and oil and gas prices declined dramatically, with the Brent Oil price sliding below $30/bbl.
Nevertheless, work continued on Barryroe and in April it was announced that a non-binding term sheet had been signed with SpotOn Energy Limited ("SpotOn"), a Norwegian company working with a consortium of world leading service providers to deliver cost effective offshore oil and gas developments and this led to the Barryroe Partners (Lansdowne 20% and Exola/Providence 80%) signing a Farm-Out Agreement ("FOA") with SpotOn at the end of November.
Under the Agreement, SpotOn was to fund 100% of an Early Development Scheme (EDS) focused on the eastern part of Barryroe and the subsequent full field development, to earn a 50% interest in the Licence.
The rationale for locating the EDS in the eastern part of Barryroe is that the 48/24-10z well was drilled in this area and established good flow rates from the Basal Wealden A Sand (3,504 bopd) as well as strong gas flow rates from the overlying Basal Wealden C Sand. Furthermore, the 3D seismic quality is optimal in this area and the structural configuration shows low dips and little faulting. The concept of a phased development of Barryroe, commencing in the eastern part of the field, has long been advocated and a first well location was identified by the Barryroe Partners in 2017 - labelled the K Location. A site survey application was lodged for this area in 2020.
After the year end, work continued on the technical and funding aspects of the Barryroe EDS, but problems arose with certain aspects of SpotOn's planned financing model and it became apparent that SpotOn would not be able to deliver the funding as required under the FOA and during April 2021 the Barryroe Partners terminated the FOA, as allowed under its terms.
The Barryroe Partners have now retaken control of the project and Lansdowne will as a result retain its 20% original equity in the project, maintaining 69MM Boe net 2C resources.
In April 2021 a revised Lease Undertaking work programme was submitted to the Department of the Environment, Climate and Communications, designed to move Barryroe to a declaration of commerciality, turning 2C resources into 2P reserves and subsequently seeking the award of a Petroleum Lease, prior to the commencement of production via the EDS.
Approval to proceed with a site survey over the K Location was granted in February 2021 and operations are expected to take place later this year, with the drilling of the K well expected in the second half of 2022.
It has been another difficult year, but the world is cautiously moving forward and emerging from the effects of the Covid-19 Pandemic. The oil price has returned to pre-Pandemic levels and currently sits at near $70/bbl. Studies have long shown that Barryroe is a viable project above c. $25/bbl and will deliver strong returns at current oil and gas prices.
Barryroe contains significant volumes of both oil and gas and can play a vital role in delivering secure indigenous supplies for Ireland during the transition to a low carbon future.
The quest to move forward the development of Barryroe's oil and gas resources has been a long and sometimes frustrating journey and I would like to thank all our shareholders for their continued support through this difficult time.
We now look forward to the resumption of operations and moving the Barryroe project to development.
Operational highlights
· Barryroe Oil Field (SEL 1/11)
o Termination of the Farm-Out Agreement following the failure of SpotOn to fulfil the terms
o Updated Lease Undertaking submitted to the Department of the Environment, Climate and Communications in April 2021, with an updated work programme designed to move Barryroe to a declaration of commerciality, turning 2C resources into 2P reserves
Financial highlights
· In February 2020, the Company placed 83,333,333 new ordinary shares on 0.1 pence each ("Ordinary Shares") at a placing price of 0.6 pence a share to raise £500,000 before costs
· At the same time, the Shareholder Loans entered into with Brandon Hill Capital and LC Capital in June 2019, were converted into new Ordinary Shares at the placing price
· Warrants granted in connection with the Placing and conversion of Shareholder Loans - 139,368,491 warrants granted at an exercise price of 1.2 pence per share.
· During the fourth quarter 73,066,666 warrants were exercised, raising and additional £876,800 for the Company
· Cash balances at 31 December 2020 of £0.64 million (2019: £0.02 million).
· Operating expenses for the year were £0.3 million (2019: £0.1 million).
· Loss for the year after tax of £0.4 million (2019: loss £0.2 million).
· Diluted loss per share of 0.05 pence (2019: loss 0.03 pence).
· The Company has net 2C Resources of 69 MMboe and is trading at a valuation of around $0.13 per contingent resource barrel.
For further information please contact:
Lansdowne Oil & Gas plc
+353 1 963 1760
Steve Boldy
SP Angel Corporate Finance LLP
+44 (0)20 3470 0470
Nominated Adviser and Joint Broker
Stuart Gledhill
Richard Hail
Brandon Hill Capital Limited
+44 (0) 20 3463 5061
Joint Broker
Oliver Stansfield
Notes to editors:
About Lansdowne
Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focused, oil and gas exploration and appraisal company quoted on the AIM market and head quartered in Dublin.
For more information on Lansdowne, please refer to www.lansdowneoilandgas.com
Results for the year ended 31 December 2020
Chairman's Statement
Introduction
I am pleased to report that, with the oil price having returned to pre-pandemic levels of c. $70/bbl, the Barryroe Partners (Lansdowne 20% and Exola/Providence 80%) have retaken control of the project and will now be masters of our destiny. Lansdowne retains 69MM boe net 2C resources and we look forward to returning to operations and moving to development.
The year 2020 started with a renewed Farm-Out campaign for the Barryroe Field and initial progress was quite promising, with several parties reviewing the asset.
The onset of the global Covid-19 Pandemic, however, led quickly to a down-turn in all economic activity and oil and gas prices declined dramatically, with the Brent Oil price sliding below $30/bbl.
Nevertheless, work continued on Barryroe and in April it was announced that a non-binding term sheet had been signed with SpotOn Energy Limited ("SpotOn"), a Norwegian company working with a consortium of world leading service providers to deliver cost effective offshore oil and gas developments. A period of exclusivity was granted to SpotOn, to agree an appraisal work programme and commercial terms and conclude a binding farm-out agreement.
This led to the Barryroe Partners (Lansdowne 20% and Exola/Providence 80%) signing a Farm-Out Agreement ("FOA") with SpotOn at the end of November.
Under the Agreement, SpotOn was to fund 100% of an Early Development Scheme (EDS) focused on the eastern part of Barryroe and the subsequent full field development, to earn a 50% interest in the Licence. SpotOn was to fund the Barryroe Partners retained 50% interest (Lansdowne 10%, Exola/Providence 40%) by a non-recourse loan.
The rationale for locating the EDS in the eastern part of Barryroe is that the 48/24-10z well was drilled in this area and established good flow rates from the Basal Wealden A Sand (3,504 bopd) as well as strong gas flow rates from the overlying Basal Wealden C Sand. Furthermore, the 3D seismic quality is optimal in this area and the structural configuration shows low dips and little faulting. The concept of a phased development of Barryroe, commencing in the eastern part of the field, has long been advocated and a first well location was identified by the Barryroe Partners in 2017 - labelled the K Location. A site survey application was lodged for this area in 2020.
After the year end, work continued, on the technical and funding aspects of the Barryroe EDS, but problems arose with certain aspects of SpotOn's planned financing model and they were granted additional time, to the end of April 2021, to find a solution. Unfortunately, it became apparent that despite being granted this additional time, SpotOn would not be able to deliver the funding as required under the FOA and during April the Barryroe Partners terminated the FOA, as allowed under its terms.
The Barryroe Partners have now retaken control of the project and Lansdowne will as a result retain its 20% original equity in the project, maintaining 69MM Boe net 2C resources.
In April 2021, a revised Lease Undertaking work programme was submitted to the Department of the Environment, Climate and Communications, designed to move Barryroe to a declaration of commerciality, turning 2C resources into 2P reserves and subsequently seeking the award of a Petroleum Lease, prior to the commencement of production via the EDS
Approval to proceed with a site survey over the K Location was granted in February 2021 and operations are expected to take place later this year, with the drilling of the K well expected in the second half of 2022
Financial Results
In February 2020, the Company placed 83,333,333 new ordinary shares of 0.1 pence each ("Ordinary Shares") at a placing price of 0.6 pence a share to raise £500,000 before costs (the "Placing").
At the same time, the Shareholder Loans entered into with Brandon Hill Capital Ltd and LC Capital in June 2019, were converted into new Ordinary Shares at the placing price.
In connection with the Placing and the conversion of the Shareholder Loans, the Company also granted a total of 139,368,491 warrants, on a one warrant per Placing or Loan Share basis, to subscribe for new Ordinary shares in the Company at a price of 1.2 pence per share, with an expiry date of 31 December 2020.
During the fourth quarter some 73,066,666 of the warrants were exercised, raising an additional £876,800 for the Company. The remainder of the Warrants lapsed on expiry at 31 December 2020.
In December £175,000 of the LC Capital Loan ("the Loan") was repaid, leaving c. £980,000 outstanding. The term of the Loan was extended to 31 December 2021 and in conjunction with the Loan extension, 26 million Warrants were issued to LC Capital at an exercise price of 1.2p and an expiry date of 31 December 2021.
The Group recorded an after tax loss of £0.4 million for the year ended 31 December 2020 compared to a loss of £0.2 million for the year ended 31 December 2019.
Group operating expenses for the year were £0.3 million, compared to £0.1 million in 2019.
Net finance expense for the year was £59,000 (2019: £57,000).
Cash balances of £0.64 million (2019: £0.02 million) were held at the end of the financial year
Total equity attributable to the ordinary shareholders of the Group was £14.8 million as at 31 December 2020 (£13.6 million as at 31 December 2019).
Outlook
It has been another difficult year, but the world is cautiously moving forward and emerging from the effects of the Covid-19 Pandemic. The oil price has returned to pre-Pandemic levels and currently sits at near $70/bbl. Studies have long shown that Barryroe is a viable project above c. $25/bbl and will deliver strong returns at current oil and gas prices.
The issue of climate change and the need to control emissions of greenhouse gases grows ever more prominent. There is no question but that the transition is underway to deliver low carbon/carbon neutral energy supplies.
There is also no doubt however, that this transition will take time. In 2020 gas provided 51% of Ireland's electricity generation and 64% of this gas was imported from Britain via interconnectors. Oil continues to be the dominant energy source in Ireland, with consumption of around 140,000bpd and 100% of this is imported.
Barryroe contains significant volumes of both oil and gas and can play a vital role in delivering secure indigenous supplies during the transition to a low carbon future.
There is also potential for Carbon Capture and Storage to be developed in conjunction with Barryroe, with CO2 being stored in the nearby depleted fields.
The quest to move forward the development of Barryroe's oil and gas resources has been a long and sometimes frustrating journey and I would like to thank all our shareholders for their continued support through this difficult time.
We look forward to the resumption of operations and moving the Barryroe project to development.
Lord Torrington
Chairman
25 June 2021
Lansdowne Oil & Gas plc
Consolidated Statement of Financial Position
As at 31 December 2020
2020
2019
Note
£'000
£'000
Assets
Non- current assets
Intangible assets
4
15,690
15,543
Current Assets
Trade and other receivables
17
20
Cash and cash equivalents
635
16
652
36
Total Assets
16,342
15,579
Equity and Liabilities
Shareholders' Equity
Share capital
5
11,930
11,722
Share premium
5
28,284
26,864
Currency translation reserve
59
59
Share-based payment reserve
923
923
Accumulated deficit
(26,412)
(26,005)
Total Equity
14,784
13,563
Non-Current Liabilities
Provisions
Current Liabilities
Shareholder loan
Trade and other payables
316
979
263
316
1,305
395
Total Liabilities
1,558
2,016
Total Equity and Liabilities
16,342
15,579
Lansdowne Oil & Gas plc
Consolidated Income Statement
For the year ended 31 December 2020
2020
2019
Note
£'000
£'000
Administrative expenses
(348)
(122)
Operating loss
(348)
(122)
Finance costs
(59)
(57)
Loss for the year before tax
(407)
(179)
Income tax
-
-
Loss for the year
(407)
(179)
Loss per share (pence):
Basic loss per ordinary share
3
(0.05p)
(0.03p)
Diluted loss per ordinary share
3
(0.05p)
(0.03p)
The results for the year all arise on continuing operations. The group has no other comprehensive income or expense in the current or prior year.
Lansdowne Oil & Gas plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Share
capital
£'000
Share premium
£'000
Share based payment
Reserve
£'000
Currency translation reserves
£'000
Accumulated deficit
£'000
Total
equity
£'000
Balance at 1 January 2019
11,718
26,833
923
59
(25,826)
13,707
Loss for the financial year
-
-
-
-
(179)
(179)
Total comprehensive loss for the year
-
-
-
-
(179)
(179)
Issue of new shares - gross consideration
4
31
-
-
-
35
Balance at 31 December 2019
11,722
26,864
923
59
(26,005)
13,563
Balance at 1 January 2020
11,722
26,864
923
59
(26,005)
13,563
Loss for the financial year
-
-
-
-
(407)
(407)
Total comprehensive loss for the year
-
-
-
-
(407)
(407)
Issue of new shares - gross consideration
208
1480
-
-
-
1,688
Cost of share issues
-
(60)
-
-
-
(60)
Balance at 31 December 2020
11,930
28,284
923
59
(26,412)
14,784
Lansdowne Oil & Gas plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
2020
2019
Note
£'000
£'000
Cash flows from operating activities
Loss for the year
(407)
(179)
Adjustment for:
Interest payable and similar charges
60
58
Decrease in trade and other receivables
3
28
(Decrease) in trade and other payables
(132)
(53)
Net cash used in operating activities
(476)
(146)
Cash flows from investing activities
Acquisition of intangible exploration assets
4
(147)
(232)
Net cash used in investing activities
(147)
(232)
Cash flows from financing activities
Proceeds from the issue of share capital
1,688
35
Cost of raising shares
(60)
-
Proceeds from new loan
-
200
Repayment of loan
(386)
-
Net cash from financing activities
1,242
235
Net increase/(decrease) in cash and cash equivalents
619
(143)
Cash and cash equivalents at 1 January
16
159
Cash and cash equivalents at 31 December
635
16
Lansdowne Oil & Gas plc
Notes to the Financial Information
For the year ended 31 December 2020
1. Basis of presentation
The consolidated financial statements are presented in Sterling, the Company's functional currency, and all values are rounded to the nearest thousand (£'000) except where otherwise indicated.
The Directors have prepared the financial statements on the going concern basis which assumes that Group and Company will continue in operational existence for at least twelve months from the date of the approval of these financial statements.
The Directors have carried out a detailed assessment of the Group's and Company's ability to continue as a going concern including assessing its current and prospective exploration activity, its relationship with the holder of its loan note and preparing cash flow projections for the period to 30 June 2022.
The cash flow projections indicate that the Group's and Company's ability to continue as a going concern is dependent on securing additional debt or equity funding.
The Directors anticipate that the Company will raise new funds, either from a further equity placing or via shareholder loans, upon award of a Lease Undertaking for Barryroe sufficient to fund the Company's share of costs on the Barryroe Licence together with on-going working capital requirements.
In addition, the Directors expect that the maturity date of shareholder loans which are due for repayment in December 2021 may be extended should this be requested by the Company.
The Directors have considered the various matters set out above and determined that these events and conditions constitute a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern and that they may therefore be unable to realise assets and discharge liabilities in the normal course of business. The Directors remain confident that the Group and Company will be in a position to secure such funding as may be required and will have sufficient cash resources available to meet their liabilities for at least 12 months from the date of approval of these financial statements.
On that basis, the directors consider it appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustment that would result from the going concern basis of preparation being inappropriate.
2. Segmental reporting
The Group has one reportable operating and geographic segment, which is the exploration for oil and gas reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the operating segment.
3. Loss per ordinary share
The loss for the year was wholly from continuing operations.
2020
2019
£'000
£'000
Loss for the year attributable to equity holders
(407)
(179)
Weighted average number of ordinary shares in issue - basic and diluted
789,385,913
665,071,764
Loss per share arising from continuing operations attributable to the equity holders of the Company - basic and diluted (in pence)
(0.05)
(0.03)
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one class of potential ordinary shares being share options. As a loss was recorded for both 2020 and 2019, potentially issuable shares would have been anti-dilutive. The number of potentially issuable shares at 31 December 2020 is 34,258,887 (2019: 146,685,452).
4. Intangible assets
Group
Exploration /
appraisal assets
£'000
Cost
At 1 January 2019
15,311
Additions
232
At 31 December 2019
15,543
At 1 January 2020
15,543
Additions
147
At 31 December 2020
15,690
Oil and gas project expenditures, all of which relate to Barryroe, including geological, geophysical and seismic costs, are accumulated as intangible assets prior to the determination of commercial reserves. The directors have assessed the current ongoing activities and future planned activities and are satisfied that the carrying value is appropriate. The directors recognise that the future realisation of the Group's appraisal assets are dependent on moving these forward to development and production.
Following the termination of the SpotOn FOA, the Barryroe Partners have retaken control of the project and Lansdowne will as a result retain its 20% original equity in the project, maintaining 69MM Boe net 2C resources.
At the time of initiating discussions with SpotOn the oil price had fallen to below $30/bbl as a result of the impact of Covid-19.
The oil price has recovered sharply since the autumn of 2020 and now stands at c.$70/bbl.
In April 2021, a revised Lease Undertaking work programme was submitted to the Department of the Environment, Climate and Communications, designed to move Barryroe to a declaration of commerciality, turning 2C resources into 2P reserves and subsequently seeking the award of a Petroleum Lease, prior to the commencement of production via the EDS.
Approval to proceed with a site survey over the K Location was granted in February 2021 and operations are expected to take place later this year, with the drilling of the K well expected in the second half of 2022.
5. Share capital - Group and Company
2020
2019
Authorised
873,618,337 ordinary shares at £0.01 pence each
873,618,337
665,349,846
Issued, called up and fully paid:
Number of
shares
Share
Capital
£'000
Share
premium
£'000
Total
£'000
At 1 January 2019
661,849,846
11,718
26,833
38,551
Issued in year
3,500,000
4
31
35
At 31 December 2019
665,349,846
11,722
26,864
38,586
Issued in year
208,268,491
208
1,480
1,688
Share issue costs
-
-
(60)
(60)
At 31 December 2020
873,618,337
11,930
28,284
40,214
6. Accounts
Copies of the annual accounts for the year ended 31 December 2020 will be sent to shareholders shortly and will be available from the Group's office at Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18 Ireland and the Group's website www.lansdowneoilandgas.com
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