REG - Orcadian Energy PLC - Final Results
18/12/2023 07:00
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RNS Number : 0672X Orcadian Energy PLC 18 December 2023
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION
(EU) NO. 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW PURSUANT TO THE EUROPEAN
UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
18 December 2023
Orcadian Energy plc
("Orcadian Energy", "Orcadian" or the "Company")
Results for the Year ended 30 June 2023
Orcadian Energy (AIM:ORCA), the low-emissions North Sea oil and gas
development company, is pleased to announce its audited results for the twelve
months ended 30 June 2023.
Highlights:
· Three licence applications made in the 33(rd) Round with results
expected soon.
· Since the end of the period under review:
o Execution of a conditional Sale and Purchase Agreement ("SPA") with Ping
Petroleum UK plc ("Ping") for an 81.25% interest in Licence P2244, leaving
Orcadian with a carried 18.75% interest in the Licence to first oil;
o Two year extension to the Second Term of the P2244 (Pilot) licence,
subject to completion of the above transaction by end 1Q 2024
o Identified significant upside appraisal opportunities in Elke and Narwhal
supported by seismic attribute analysis undertaken by TGS
o Requested an out of round process in partnership with Ping to apply for
the area of Licence P2320 which was relinquished in May 2023
Steve Brown, Orcadian's CEO, said:
"We close the calendar year of 2023 with real satisfaction that we have signed
an SPA with Ping and we look forward to progressing this deal in 1Q 2024, with
shareholder approval, and to potentially taking the Pilot project forward
under their new leadership. The Elke and Narwhal asset definition has been
much enhanced by recent seismic work which we intend to build upon to maximise
value from these assets.
"We are also looking forward to the potential award of up to three new
licences as a result of the applications we made in January 2023. We are
excited that, if granted, the new awards will enable us to bring forward new
innovative projects that can contribute to both energy security and the
Government's Net Zero target."
Report and Accounts and Annual General Meeting
A copy of the annual report and accounts for the year ended 30 June 2023 will
be available on the Company's website (https://orcadian.energy
(https://orcadian.energy/) ) with effect from today. The Company will be
posting its annual report and accounts and notice of Annual General Meeting
("AGM") to its shareholders on 19 December 2023.
The AGM will be held at the offices of Shakespeare Martineau, 60 Gracechurch
Street, London, EC3V 0HR at 10:30am on the 17(th) January 2024.
For further information on the Company please visit the Company's website:
https://orcadian.energy (https://orcadian.energy)
Contact:
Orcadian Energy plc + 44 20 7920 3150
Steve Brown, CEO
Alan Hume, CFO
WH Ireland (Nomad and Broker) +44 20 7220 1666
Katy Mitchell / Andrew de Andrade (Nomad)
Harry Ansell / Fraser Marshall (Corporate Broking)
Tavistock (PR) + 44 20 7920 3150
Nick Elwes / Simon Hudson orcadian@tavistock.co.uk (mailto:orcadian@tavistock.co.uk)
About Orcadian Energy
Orcadian is a North Sea focused, low emissions, oil and gas development
company. In planning its Pilot development, Orcadian has selected wind power
to transform oil production into a cleaner and greener process. The Pilot
project is moving towards approval and will be amongst the lowest carbon
emitting oil production facilities in the world, despite being a viscous
crude. Orcadian may be a small operator, but it is also nimble, and the
Directors believe it has grasped opportunities that have eluded some of the
much bigger companies. As we strike a balance between Net Zero and a
sustainable energy supply, Orcadian intends to play its part to minimise the
cost of Net Zero and to deliver reliable energy to the UK.
Orcadian Energy (CNS) Ltd, Orcadian's operating subsidiary, was founded in
2014 and is the sole licensee of P2244, which contains 78.0 MMbbl of 2P
Reserves in the Pilot discovery, and of P2482, which contain a further 52.2
MMbbl of 2C Contingent Resources in the Elke and Narwhal discoveries (as
audited by Sproule, with both numbers modified to take into account the TGS
royalty, see the CPR in the Company's Admission Document for more details).
Within these licences there are also 118 MMbbl of unrisked Prospective
Resources (modified for TGS royalty). These licences are in blocks 21/27a,
28/2a and 28/3a, and lie 150 kms due East of Aberdeen.
Pilot, which is the field with the largest reserves in Orcadian's portfolio,
was discovered by PetroFina in 1989 and has been well appraised. In total five
wells and two sidetracks were drilled on Pilot, including a relatively short
horizontal well which produced over 1,800 bbls/day on test. Orcadian's
proposed low emissions, field development plan for Pilot is based upon a
Floating Production Storage and Offloading vessel (FPSO), with over thirty
wells to be drilled by a Jack-up rig and provision of power from a floating
wind turbine.
Orcadian has entered into a conditional sale and purchase agreement with Ping
Petroleum UK plc ("Ping") which details the terms under which Ping will
farm-in to the Pilot development project. Upon conclusion of this deal
Orcadian would have an 18.75% stake in the Pilot development with all
pre-first oil development costs paid by Ping.
Emissions per barrel produced are expected to be about a tenth of the 2021
North Sea average, and less than half of the lowest emitting oil facility
currently operating on the UKCS. On a global basis this places the Pilot field
emissions at the low end of the lowest 5% of global oil production.
Chairman and CEO's Statement
Writing this statement in December 2023, and reviewing financial year
2022-2023, we can look back at eighteen months of activity which have
culminated in the signature of a conditional Sale and Purchase agreement
("SPA") with Ping Petroleum UK PLC ("Ping") for our Pilot Licence. We believe
this sets the Company on a path towards production from one of the most
exciting oil development projects on the United Kingdom Continental Shelf ("
UKCS").
This has been our objective since we founded Orcadian Energy (CNS) Ltd in
2014. We set the Company up to apply for the Pilot licence and bringing in a
new operator and partner to develop the field has been our objective from the
outset of our business. It has been a long process with many twists and turns,
and, as we endured the slings and arrows of outrageous fortune, we did wonder
if we would achieve our goal. Now, having been able to announce the
conditional agreement to farm-out an interest in Pilot, we believe that it was
all worth it.
We believe we started the process from a good place. When we first licensed
Pilot in 2014 we were of the opinion we had great rocks. Great rocks make for
great oil and gas projects and Pilot can be one of those projects. The only
challenge with Pilot was that the oil was a tad viscous. At first we thought
that steam could be the answer, indeed our subsidiary was originally called
"The Steam Oil Production Company Limited". Steam would work very well on
Pilot, Sproule, our reserve auditors, thought we could recover 113 MMbbl with
a steam to oil ratio of three. But there were two issues with this approach,
the first is that CO(2) emissions from a steam flood are very high - a steam
oil ratio of three typically equates to emissions of about 90kgCO(2)/bbl and
without CO(2) capture and storage that approach would not have been acceptable
to our regulator; but the second issue is the volatility in gas prices which
can rapidly render uneconomic a steam based approach.
Fortunately in 2019 when we started the Concept Select process we had followed
the success of Chevron's polymer flood pilot on Captain which was published in
a landmark paper in 2018 (Poulsen, 2018). The efficacy of the polymer flood
approach in the trial, which had concluded in 2013, was astonishing. Pilot and
Captain share many characteristics, principal among them being that both
fields have great rocks. We had much to learn from the success of the Captain
trial and we believed we had chosen the right path for Pilot when we attended
an SNF hosted polymer conference in Aberdeen in February of 2023. Ithaca, who
now operate Captain, reported "consistent success [applying polymer flood]
across the Captain field".
It does not appear that the trial had been a fluke, nor a special case, rather
we consider it had been the harbinger of great performance on the rest of the
Captain field. This has been further confirmed when the Captain phase 2
polymer flood got approval from the North Sea Transition Authority ("NSTA") in
October of 2023. Establishing that polymer flood works on viscous oil
offshore, as well as in models and in the laboratory, is really important for
two reasons:
· Firstly, in our view, polymer flood significantly reduces fluid
handling requirements, indeed generally the higher the concentration of
polymer the lower the total fluid handling requirement. By injecting a more
viscous kind of water, breakthrough of water is postponed, and the oil can be
produced with a more piston-like flood. This typically means that the scale of
the production facilities can be much smaller than for a conventional water
flood.
· Secondly, by significantly reducing fluid handling requirements we can
reduce the energy consumed in pumping production wells and in re-injecting
water back into the reservoir. Reducing energy consumption reduces emissions,
and the key to securing NSTA & Offshore Petroleum Regulator for
Environment and Decommissioning ("OPRED") approval of our Pilot field
development plan is to minimise emissions.
As announced on 7 December 2023 (the "Announcement"), we have now signed a
conditional Sale and Purchase Agreement ("SPA") with Ping, which details the
terms of a potential farm-out of the Pilot development project. Signing the
SPA enabled us to request NSTA approval for the assignment of an 81.25%
interest in the licence to Ping and to request that NSTA approve the
appointment of Ping as the operator of the licence. We believe this satisfies
the first condition in the licence extension offered by NSTA, however to
secure an extension until November 2025 the assignment to Ping has to complete
by end March 2024. The details of the deal are set out in the Announcement,
and the transaction is conditional on a number of matters including Orcadian
shareholder approval, but we would draw to your attention that if approved we
are not required to finance the pre-first oil development costs for our
remaining 18.75% interest in the Pilot project.
So, we end calendar year 2023 on a high note, ready to progress with Ping and
looking forward to the approval of the Pilot development project.
During the year NSTA declined to further extend the P2320 licence. That was a
disappointment to us as we had identified significant prospectivity on that
licence. In our interim results, announced on 30 March 2023, we wrote
extensively on the seismic derivative parameter which we have found so useful
in this area. The parameter is relative extended elastic impedance, or rEEI,
and it effectively discriminates gas sands, oil sands and brine sands. At
shallow depths which apply to most of our prospects, the parameter cannot
distinguish between brine sands and shales, but we don't believe that matters.
Together with Ping, we have requested an out-of-round licensing process for
the acreage formerly covered by P2320 as we remain excited by the potential of
this acreage and we believe the best way to manage associated gas produced
with the Pilot oil is to use the gas cap on the Feugh reservoir, which was in
P2320.
We also made a number of licence applications in the 33(rd) Round, as we write
we await the results of that process. We made three licence applications, two
in partnership with other companies and one on its own. One of the
applications builds upon Orcadian's viscous oil experience whilst the other
two applications are focused on gas opportunities, including a potential
gas-to-wire project on an appraised discovery, with integrated carbon capture,
which could deliver baseload electricity with minimal emissions. Early stage
indications suggest that, net to Orcadian, the P50 sales gas resource applied
for, across the two gas focused applications, could amount to 114 bcf (billion
cubic feet) in a discovery, 153 bcf in a near drill-ready prospect and 377 bcf
in leads and less mature prospects. These are management estimates of
resources, are based upon seismic and well log data, are as presented to the
NSTA in the Licence Applications, and are provided here for guidance purposes
only.
We were pleased to hear that the government intend to run licence rounds on an
annual basis, we think that will help deliver the twin objectives of
maximising economic recovery and achieving net zero emissions by 2050.
Financial Results
The Group incurred a loss for the year to 30 June 2023 of £1,184,954 (30 June
2022 - loss of £1,586,727).
The loss mainly arose from salaries, consulting and professional fees along
with general administration expenses, the impairment of intangible assets and
new business development. The loss for the year to 30 June 2023 is below that
of the previous year largely due to a foreign exchange gain of £42,000 in
2023 compared to a foreign exchange loss of £156,000 in 2022, and a reduction
in expenditure in consultants and advisors in 2023.
Cash used in operations totalled £598,159 (30 June 2022 - £1,323,836). As
at 30 June 2023, the Group had a cash balance of £109,705 (30 June 2022 -
£271,439). At the date of this announcement, the Group's cash balance was
£112,098.
Oil Price Outlook
From the beginning of July 2022 to the end of June 2023 the oil price fell
from over $119/bbl to just over $74/bbl(1). That was a dramatic fall, some
37%, but we believe an oil price of $74/bbl is still a good price for the
industry. Since then, prices and volatility have risen as geopolitical
tensions rise. Would that those tensions would evaporate and that peace could
break out. We would all trade whatever political risk premium there is in the
price of oil, for an end to the violence that has gripped the Middle East and
Ukraine.
(1)www.eia.gov
We consider that in the long run the fundamental question for the oil market
is when will the peak in production pass and whether decline from that peak is
demand driven or supply driven. We believe global action on emissions
reduction will surely impact demand, but probably a lot slower than those most
concerned about climate would like; ultimately though we believe, geology will
out and maintaining supply will become just as hard as growing supply once
was.
If that happens, then we believe the world will become much more dependent on
OPEC and Russian supply. In that environment we believe that prices will be
robust and that investment in projects such as Pilot, if it was to progress,
will enjoy strong returns, at least on a pre-tax basis.
UK Oil and Gas Sector
We consider the most pressing issue for the UK oil and gas sector is clarity
on what the tax rate will be. In 2022, we believe the UK went from having one
of the most competitive fiscal regimes in the world, appropriate for a
maturing basin, to the worst. The UK may not have the highest tax rate, but
with the Energy Profits Levy having been introduced as a temporary measure,
which on the face of it had some merits, we believe its extension and increase
in November 2022 confirmed that volatility in the fiscal regime would add to
the volatility in commodity prices which oil and gas investors are inured to.
The irony is that we believe we need some more changes to the fiscal regime to
fix the problem of uncertainty in the fiscal regime. We gave evidence to the
Treasury review of the oil and gas fiscal regime and we are hopeful that a
better fiscal framework will emerge.
We welcomed the announcement of annual licensing rounds in the King's Speech.
Licensing rounds are the raw material that we work with to generate new
projects. We made three licence applications in the 33(rd) round and, if
granted, we are keen to get to work on those licences to see if there are
drilling or project opportunities worthy of marketing to the industry.
Financial Condition
Clearly the Company needs to raise additional funds in the near term for
working capital and to repay the STASCO loan which is currently due for
repayment on 13 March 2024. We can confirm that we are in active discussions,
both with Shell in respect of the loan, and with a number of financing
counterparties in respect of these requirements. We will update shareholders
as these discussions progress.
Business Outlook
The most important activity for the group in 2024 will be the progressing of
the deal we signed with Ping in November 2023. If it completes, it will secure
a two-year extension to the licence and define the terms under which we will
participate in the Pilot project. Importantly we can achieve first oil on
Pilot without having to pay for our share of the pre-first oil costs. We have
huge confidence in the Pilot reservoir, the recovery mechanism proposed and in
the potential of the surrounding acreage on the Western Platform.
We also look forward to securing some additional licences in the 33(rd) Round,
we have innovative development concepts in mind and look forward to being able
to conceive attractive projects and compelling prospects.
Joseph Darby, Chairman, and Stephen Brown, CEO
18 December 2023
Works Cited
Poulsen, A. S. (2018). Results of the UK Captain Field Interwell EOR Pilot.
SPE Improved Oil Recovery Conference. Tulsa, Oklahoma, US.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ORCADIAN ENERGY PLC
Opinion
We have audited the financial statements of Orcadian Energy plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 30 June 2023
which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Statements of Financial Position, the
Consolidated and Parent Company Statements of Changes in Equity, the
Consolidated and Parent Company Statements of Cash flows and notes to the
financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable
law and UK-adopted international accounting standards and as regards the
parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
· the financial statements give a true and fair view of the state of the
group's and of the parent company's affairs as at 30 June 2023 and of the
group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statements have been properly prepared in
accordance with UK-adopted international accounting standards and as applied
in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2.3 in the financial statements, which indicates
that the group incurred a net loss of £1,184,954 during the year ended 30
June 2023 and that the group and company are reliant on raising finance within
the 12 months following the date of approval of these financial statements in
order to fund forecasted expenditure over this period. As stated in note 2.3,
these events or conditions, along with the other matters as set forth that
note, indicate that a material uncertainty exists that may cast significant
doubt on the group and parent company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group and company's ability to continue to adopt the going
concern basis of accounting included:
· Reviewing the accuracy of historical forecasts by comparison to the
actual results in the year to assess the accuracy of management's forecasting
process;
· Assessing and challenging the key inputs and assumptions in the
underlying cashflow forecasts prepared by management covering the going
concern period; and
· Discussing strategies regarding future availability of funding and
assessing the likelihood of the required funds being successfully raised by
considering the funds required and the group's and company's ability to raise
such funds.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The
quantitative and qualitative thresholds for materiality determine the scope of
our audit and the nature, timing and extent of our audit procedures. We also
determine a level of performance materiality which we use to assess the extent
of testing needed to reduce to an appropriately low level the probability that
the aggregate of uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole. In determining our overall audit
strategy, we assessed the level of uncorrected misstatements that would be
material for the financial statements as a whole.
Materiality for the consolidated financial statements was set as £80,000
(2022: £73,000) based upon gross assets. Materiality has been based upon
gross assets due to the group still being in the exploration phase and thus
the key balance of interest is the capitalised exploration costs. Performance
materiality and the triviality threshold for the consolidated financial
statements were set at £56,000 (2022: £51,100) and £4,000 (2022: £3,650),
respectively, due to our accumulated knowledge in respect of the group and the
assessed level of risk.
Materiality for the parent company was set as £79,000 (2022: £72,000) based
upon gross assets. Gross assets was considered to be an appropriate basis due
to the fact that the most significant balance within the parent company is the
investment in the subsidiary and incurred no expenditure in the year.
Performance materiality and the triviality threshold for the company were set
at £55,300 (2022: £50,400) and £3,950 (2022: £3,600), respectively, due to
our accumulated knowledge in respect of the Company and the assessed level of
risk.
Component materiality applied to the subsidiary undertaking was £79,000
(2022: £72,000) based upon gross assets. We believe assets to be the main
drive of the business as the subsidiary is in the exploration stage and no
revenues are currently being generated. Performance materiality and the
triviality threshold were set at £55,300 (2022: £50,400) and £3,950 (2022:
£3,600), respectively, for the same reasons as for the parent company.
We also agreed to report any other differences below that threshold that we
believe warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of
material misstatement in the financial statements. In particular we looked at
areas involving significant accounting estimates and judgements by the
directors and considered future events that are inherently uncertain, such as
the recoverable value of the capitalised exploration expenditure within the
group and the recoverable value of the parent company's investment in the
subsidiary. We also addressed the risk of management override of internal
controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to
fraud.
A full scope audit was performed on the complete financial information of both
components of the group by us.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section we have
determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How our scope addressed this matter
Carrying value and recoverability of intangible assets (refer to Notes 3 and
13)
As at 30 June 2023 and 30 June 2022 the carrying value of intangible assets Our work in this area included:
totalled £3,871,362 and £3,303,400, respectively within the Consolidated
Statement of Financial Position. The intangible assets relate to capitalised
exploration and evaluation costs.
· Testing a sample of additions to ensure costs have been capitalised in
accordance with IFRS 6;
These capitalised costs fall within the scope of IFRS 6 Exploration for and
evaluation of mineral resources and there is a risk that items have not been
capitalised during the year in accordance with this Standard, and with the · Obtaining confirmation that the group has good title to the applicable
group's accounting policy. given the materiality of the overall balance and exploration licences, including any new licences or renewals obtained during
the judgement required in respect of their capitalisation. the year;
The carrying value of these assets is considered to be a key audit matter due · Reviewing management's assessment of impairment and considering
to the level of management estimation and judgement required in assessing whether there are any indicators of impairment as per IFRS 6;
whether or not these material assets are recoverable.
· Reviewing the calculation of the impairment charge recorded during the
During the current year, the renewal of licence P2320 has been denied and, as year, and understanding the circumstances leading to the impairment. Ensuring
a result, the group recognised an impairment charge amounting to £356,532 to this has been recorded at an appropriate amount; and
bring the carrying value of the license to nil.
· Reviewing disclosures in the financial statements to ensure that they
are in line with IFRS 6.
Carrying value of investment in the subsidiary (refer to Note 16)
As at 30 June 2023 and 30 June 2022 the carrying value of investment in the Our work in this area included:
subsidiary totalled £5,404,044 and £3,968,844, respectively within the
Parent Company Statement of Financial Position. The investment in the · Verifying ownership of investment held;
subsidiary relates to the initial cost of investment and subsequent amounts
advanced to the subsidiary that have been capitalised.
There is a risk that the investment in the subsidiary is materially misstated · Obtaining a list of additions in the year. Vouching all additions to
as additions in the year may have been inappropriately capitalised. bank and considering whether these advances are appropriate for
capitalisation;
The carrying value of the investment is considered to be a key audit matter
due to the material nature of the balance and the level of management
estimation and judgement required in assessing whether the investment is
impaired. · Obtaining and reviewing the impairment assessment prepared by
management and challenging all key inputs and estimates included therein; and
· Considering whether there is evidence of impairment in accordance with
IAS 36 Impairment of Assets, through reference to internal and external
indicators. Considering the results of procedures performed in respect of the
carrying value of exploration and evaluation assets as detailed above, given
that these are the underlying assets from which the company hopes to recover
the value of its investment.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns adequate
for our audit have not been received from branches not visited by us; or
· the financial statements are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Responsibilities of directors
As explained more fully in the Statement of directors' responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the company and the sector in which it
operates to identify laws and regulations that could reasonably be expected to
have a direct effect on the financial statements. We obtained our
understanding in this regard through discussions with management, industry
research, application of cumulative audit knowledge and experience of the
sector.
· We determined the principal laws and regulations relevant to the
company in this regard to be those arising from UK Company Law, local
environmental laws, rules applicable to issuers of the AIM Market and
UK-adopted international accounting standards.
· We designed our audit procedures to ensure the audit team considered
whether there were any indications of non-compliance by the company with those
laws and regulations. These procedures included, but were not limited to:
o Discussion with management regarding compliance with laws and regulations by
the parent company and its subsidiary;
o Reviewing board minutes;
o A review of legal expenses incurred in the year; and
o Review of regulatory news announcements during the year.
· We also identified the risks of material misstatement of the financial
statements due to fraud. We considered, in addition to the non-rebuttable
presumption of a risk of fraud arising from management override of controls,
that that the recoverable value of the capitalised exploration expenditure and
the investment in subsidiaries were areas susceptible to fraud and we
addressed this by challenging the assumptions and judgements made by
management when auditing these significant accounting estimates.
· As in all of our audits, we addressed the risk of fraud arising from
management override of controls by performing audit procedures which included,
but were not limited to: the testing of journals; reviewing accounting
estimates for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of
business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
Imogen Massey (Senior Statutory Auditor) 15 West ferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
18 December 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED 30 JUNE 2023
2023 2022
Note £ £
Revenue - -
Administrative expenses 5 (671,327) (1,694,576)
Pre-acquisition licence expenses (129,867) -
Impairment of intangible assets 13 (356,532) -
Operating Loss (1,157,726) (1,694,576)
Finance costs 9 (77,228) (41,869)
Other income 7 50,000 466,667
Listing costs - (316,949)
Loss before tax (1,184,954) (1,586,727)
Taxation 10 - -
Loss for the year (1,184,954) (1,586,727)
Other comprehensive income:
Items that will or may be reclassified to profit or loss:
Other comprehensive income - -
Total comprehensive income (1,184,954) (1,586,727)
Earnings per share (basic and diluted) - pence 11
(1.72) (2.51)
All operations are continuing.
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
2023 2022
Note £ £
Non-current assets
Property, plant and equipment 12 2,508 3,414
Intangible assets 13 3,871,362 3,303,400
3,873,870 3,306,814
Current assets
Trade and other receivables 14 48,828 1,055,829
Cash and cash equivalents 15 109,705 271,439
158,533 1,327,268
Total assets 4,032,403 4,634,082
Non-current liabilities
Borrowings 17 - (956,184)
- (956,184)
Current liabilities
Trade and other payables 18 (567,629) (553,509)
Borrowings 17 (991,339) -
(1,558,968) (553,509)
Total liabilities (1,558,968) (1,509,693)
Net assets / (liabilities) 2,473,435 3,124,389
19 72,512 63,755
Equity
Ordinary share capital
Share premium reserve 19 5,316,532 3,890,089
Share warrants reserve 19 15,000 15,000
Shares to be issued 20 - 901,200
Other reserve 4 (38,848) (38,848)
Retained earnings (2,891,761) (1,706,807)
Total equity 2,473,435 3,124,389
The consolidated Financial Statements of Orcadian Energy PLC were approved by
the Board of Directors and authorised for issue on 18 December 2023.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
The notes below form part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023 2023 2022
Note £ £
Non-current assets
Investment in subsidiary 16 5,404,044 3,968,844
5,404,044 3,968,844
Current assets
Trade and other receivables 14 - 1,000,000
Cash and cash equivalents 15 2,779 -
- -
Total assets 5,406,823 4,968,844
Non-current liabilities
Borrowings 17 - -
- -
Current liabilities
Trade and other payables 18 - 98,800
- 98,800
Total liabilities - -
Net assets 5,406,823 4,870,044
19 72,512 63,755
Equity
Ordinary share capital
Share premium reserve 19 5,316,532 3,890,089
Share warrants reserve 19 15,000 15,000
Shares to be issued 20 - 901,200
Retained earnings 2,779 -
Total equity 5,406,823 4,870,044
Orcadian Energy PLC, company number 13298968, has used the exemption granted
under s408 of the Companies Act 2006 that allows for the non-disclosure of the
Income Statement of the parent company. The after-tax profit attributable to
Orcadian Energy PLC for the year to 30 June 2023 was £2,779 which is
attributable to bank interest income (2022: £nil), as all costs within the
group are borne by the subsidiary.
The Financial Statements were approved by the Board of Directors and
authorised for issue on 18 December 2023.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Ordinary Share capital Share premium Share warrants reserve Other reserve Retained earnings Total
reserve Shares to be issued
Note £ £ £ £ £ £ £
Balance as at 1 July 2021 52,202 - - - (38,848) (120,080) (106,726)
Loss for the year and total comprehensive income - - (1,586,727) (1,586,727)
- - -
Issue of shares 19 7,625 3,042,375 - - - - 3,050,000
Conversion of loans 17 3,928 1,096,072 - 1,100,000
Shares to be issued - 30 June 2022 placing 20 - - - 901,200
- 901,200 -
Issue of warrants 19 - (15,000) 15,000 - - - -
Share issue costs 19 - (233,358) - - - - (233,358)
Total transactions with owners 11,553 3,890,089 15,000 901,200 - - 4,817,842
Balance as at 30 June 2022 63,755 3,890,089 15,000 901,200 (38,848) (1,706,807) 3,124,389
Loss for the year and total comprehensive income - - (1,184,954) (1,184,954)
- - -
Issue of shares 19 8,757 1,581,243 - (1,000,000) - - 590,000
Share issue costs 19 - (154,800) - 98,800 - - (56,000)
Total transactions with owners 8,757 1,426,443 (901,200) - - 534,000
Balance as at 30 June 2023 72,512 5,316,532 15,000 - (38,848) (2,891,761) 2,473,435
Refer to note 19 for a description of the nature and purpose of each reserve
within equity.
The notes below form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Ordinary Share capital Share premium Share warrants reserve Retained earnings Total
reserve Shares to be issued
Note £ £ £ £ £ £
Balance as at 30 June 2021 52,202 - - - - 52,202
Loss for the period and total comprehensive income - - - -
- -
Issue of shares 19 7,625 3,042,375 - - - 3,050,000
Conversion of loans 17 3,928 1,096,072 - 1,100,000
Shares to be issued - 30 June 2022 placing 20 - - - 901,200
- 901,200
Issue of warrants 19 - (15,000) 15,000 - - -
Share issue costs 19 - (233,358) - - - (233,358)
Total transactions with owners 11,553 3,890,089 15,000 901,200 - 4,817,842
Balance as at 30 June 2022 63,755 3,890,089 15,000 901,200 - 4,870,044
profit for the year and total comprehensive income - - 2,779 2,779
- -
Issue of shares 19 8,757 1,581,243 - (1,000,000) - 590,000
Share issue costs 19 - (154,800) - 98,800 - (56,000)
Total transactions with owners 8,757 1,426,443 - (901,200) - 534,000
Balance as at 30 June 2023 72,512 5,316,532 15,000 - 2,779 5,406,823
Refer to note 19 for a description of the nature and purpose of each reserve
within equity.
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
2023 2022
Note £ £
Cash flows from operating activities
Loss before tax for the year (1,184,954) (1,586,727)
Adjustments for:
Depreciation 12 1,822 674
Unrealised foreign exchange (gain) / loss 5 (44,852) 151,629
Impairment of intangible assets 13 356,532 -
Interest received 9 (2,779) -
Finance costs in the year 9 80,007 41,869
Decrease trade and other receivables 14 7,001 32,720
Increase in trade and other payables 18 189,064 36,000
Cash generated from operations (598,159) (1,323,836)
Income taxes received - -
Net cash flows from operating activities (598,159) (1,323,836)
Investing activities
Interest received 9 2,779 -
Purchases of property, plant and equipment 12 (916) (2,246)
Purchases of exploration and evaluation assets 13 (1,000,638) (1,348,677)
Net cash used in investing activities (998,775) (1,350,923)
Financing activities
Proceeds from issue of ordinary share capital 19 1,590,000 3,000,000
Share issue costs paid 19 (154,800) (233,358)
Proceeds from issue of convertible loan notes 17 - -
Repayment of convertible loan notes 17 - -
Interest paid - -
Net cash provided by financing activities 1,435,200 2,766,642
Net increase in cash and cash equivalents (161,734) 91,883
Cash and cash equivalents at beginning of period 15 271,439 179,556
Cash and cash equivalents and end of period 15 109,705 271,439
There were no significant non-cash transactions in the year to 30 June 2023.
The notes below form part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
2023 2022
Note £ £
Cash flows from operating activities
Profit for the year 2,779 -
Adjustments for:
Depreciation 12 - -
Interest received (2,779) -
Decrease in trade and other receivables 4 - -
Increase in trade and other payables 18 - -
Cash generated from operations - -
Income taxes paid - -
Net cash flows from operating activities - -
Investing activities
Interest received 2,779 -
Funds advanced to subsidiary 16 (1,435,200) (2,776,642)
Purchases of exploration and evaluation assets 13 - -
Net cash used in investing activities (1,432,421) (2,776,642)
Financing activities
Proceeds from issue of ordinary share capital 19 1,590,000 3,000,000
Share issue costs paid 19 (154,800) (233,358)
Net cash provided by financing activities 1,435,200 2,776,642
Net increase in cash and cash equivalents 2,779 -
Cash and cash equivalents at beginning of period 15 - -
Cash and cash equivalents and end of period 15 2,779 -
There were no significant non-cash transactions in the year to 30 June 2023.
The notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Orcadian Energy PLC (the "Company") is a public limited company which is
domiciled and incorporated in England and Wales under the Companies Act 2006
with the registered number 13298968. The Company's registered office is 6(th)
floor, 60 Gracechurch Street, London, EC3V 0HR, and its ordinary shares are
admitted to trading on AIM, a market of the London Stock Exchange.
The principal activity of the Group is managing oil and gas assets and the
Group holds a 100% interest in, and is licence administrator for, UKCS Seaward
Licences P2244, which contains the Pilot and Harbour heavy oil discoveries and
P2482 which contains the Elke and Narwhal discoveries. The Group also had a
50% working interest in P2516, which contains a small part of the Fynn
discoveries. P2516 was administered by the Parkmead Group and covers blocks
14/20g and 15/16g, which lie midway between the Piper and Claymore fields.
P2516 expired in November 2023.
The financial statements presented for Group are for the year ended 30 June
2023 and these have are shown alongside figures for the year ended 30 June
2022 for comparative purposes.
2. Summary of significant accounting policies
The principal accounting principles applied in the preparation of these
financial statements are set out below. These principles have been
consistently applied to all years presented, unless otherwise stated.
2.1. Basis of preparation
The financial statements have been prepared on a going concern basis using the
historical cost convention and in accordance with the UK-Adopted International
Accounting Standards, and in accordance with the provisions of the Companies
Act 2006.
The financial statements have been prepared under the historical cost
convention unless otherwise stated.
2.2. Consolidation and acquisitions
The financial statements consolidate the financial information of the Group
and companies controlled by the Group (its subsidiaries) at each reporting
date. Control is achieved where the Company has the power to govern the
financial and operating policies of an investee entity, has the rights to
variable returns from its involvement with the investee and has the ability to
use its power to affect its returns. The results of subsidiaries acquired or
sold are included in the financial information from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the results of acquired subsidiaries to
bring their accounting policies into line with those used by the Group. All
intra-Group transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are adjusted,
where necessary, to ensure the use of consistent accounting policies.
The Company's shares were admitted to trading on AIM, a market operated by the
London Stock Exchange, on 15 July 2021. In connection with the admission to
AIM, in the financial year to 30 June 2021, the Group undertook a Group
reorganisation of its corporate structure which resulted in the Company
becoming the ultimate holding company of the Group. Prior to the
reorganisation there was no ultimate holding company as Orcadian Energy (CNS)
Ltd ("CNS") was a standalone entity. The transaction was accounted for as a
capital reorganisation rather than a reverse acquisition since it did not meet
the definition of a business combination under IFRS 3. In a capital
reorganisation, the consolidated financial statements of the Group reflect the
predecessor carrying amounts of CNS with comparative information of CNS
presented for all periods since no substantive economic changes have occurred.
The difference arising on acquisition has been accounted for with the
recognition of a merger reserve on the balance sheet following the
reorganisation of the share capital of the Group at the point of completion of
the transaction.
2.3. Going concern
The financial statements have been prepared on a going concern basis. The
Group is not yet revenue generating and an operating loss has been reported.
The Group has historically been reliant on raising finance, both debt and
equity, to enable it to meet its obligations as they fall due.
The Directors have reviewed a detailed forecast based on the funds expected to
be raised and forecasted expenditure, including all required spend to meet
licence requirements. This forecast has been stress tested by management in
reaching their going concern conclusion. Having made due and careful enquiry,
the Directors acknowledge that funds will need to be raised within the next 12
months to enable the Group to meets its obligations as they fall due, however,
the Directors are confident that the required funds will successfully be
raised through the equity market to fund its operations over the next 12
months.
The Directors, therefore, have made an informed judgement, at the time of
approving financial statements, that the Group is a going concern but they
acknowledge that the dependence on raising further funds during the next 12
months represents a material uncertainty.
2.4. Changes in accounting policies
2.4.1. New standards, amendments to standards and interpretations
i) New and amended standards adopted by the Group
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. A number of amendments and revisions were applicable for the
period ended 30 June 2023 but did not result in any material changes to the
financial statements of the Group.
Of the other IFRS and IFRIC amendments, none are expected to have a material
effect on the future Group Financial Statements.
ii) New and amended standards not yet adopted by the Group
The Directors do not believe that the implementation of new standards, amended
standards and interpretations issued but not yet effective will have a
material impact once implemented in future periods.
2.5. Foreign currency
2.5.1. Functional and presentation currency
Items in the company's financial statements are measured in the currency of
the primary economic environment in which the entity operates (functional
currency). Τhe functional currency of the Group and Company is Pounds
sterling (£), which is also the presentation currency for these financial
statements.
Monetary amounts in these financial statements are rounded to the nearest £.
2.5.2.Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses that
relate to borrowings and cash and cash equivalents are presented in the income
statement within 'finance income or costs.' All other foreign exchange gains
and losses are presented in the income statement within 'Other
(losses)/gains.'
Translation differences on non-monetary financial assets and liabilities such
as equities held at fair value through profit or loss are recognised in profit
or loss as part of the fair value gain or loss. Translation differences on
non-monetary financial assets measure at fair value are included in other
comprehensive income.
2.6. Other income
Grants are accounted for under the accruals model. Grants of a revenue nature
are recognised in the Consolidated Statement of Comprehensive Income in the
same period as the related expenditure, in accordance with the attached
conditions.
2.7. Taxation
Tax currently payable is based on taxable profit for the period. Taxable
profit differs from profit as reported in the income statement because it
excludes items of income and expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted for using
the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises
from initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. The carrying amount of deferred tax assets
is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all
or part of the asset to be recovered. Deferred tax is calculated at the tax
rates that are expected to apply in the period when the liability is settled,
or the asset realised. Deferred tax is charged or credited to profit or loss,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity. Deferred tax assets
and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
2.8. Leases
The Group assesses whether a contract is or contains a lease at the inception
of the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of
12 months or less) and leases of low value assets (such as tablets and
personal computers, small items of office furniture and telephones). For these
leases, the Group recognises the lease payments as an administrative expense
on a straight-line basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which economic benefits
from the leased assets are consumed.
2.9. Intangible assets
Exploration and evaluation expenditures (E&E)
The Group applies the successful efforts method of accounting for oil and gas
assets, having regard to the requirements of IFRS 6 'Exploration for and
Evaluation of Mineral Resources'. Costs incurred prior to obtaining the legal
rights to explore an area are expensed immediately to the Statement of
Comprehensive Income.
All licence acquisitions, exploration and evaluation costs are capitalised, a
share of administration costs is capitalised insofar as they relate to
exploration, evaluation and development activities. These costs are written
off to the Consolidated Statement of Comprehensive Loss unless commercial
reserves have been established or the determination process has not been
completed and there are no indications of impairment. If a project is deemed
commercial all of the attributable costs are transferred into Property, Plant
and Equipment. These costs will then be depreciated from the commencement of
production on a unit of production basis.
2.10. Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. This includes consideration of the IFRS 6 impairment
indicators for any intangible exploration and evaluation assets capitalised as
intangible costs, and investment in the subsidiary. If any such indication
exists, or when annual impairment testing for an asset is required, the Group
makes an estimate of the asset's recoverable amount.
An asset's recoverable amount is the higher of its fair value less costs to
sell and its value in use. This is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those
from other assets or Groups of assets, and the asset's value in use cannot be
estimated to be close to its fair value. In such cases, the asset is tested
for impairment as part of the cash-generating unit to which it belongs. When
the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, it is considered impaired and is written down to its
recoverable amount.
In assessing value in use, estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset, unless
the asset is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease). An assessment is also made at each
reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If
such indication exists, the recoverable amount is estimated.
A previously recognised impairment loss is reversed only if there has been a
change in the estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case, the carrying
amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in the Statement of Comprehensive Income
unless the asset is carried at revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal, the depreciation
charge is adjusted in future periods to allocate the asset's revised carrying
amount, less any residual value, on a systematic basis over its remaining
useful life.
2.11. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and any accumulated impairment losses. Depreciation is provided on all
property, plant and equipment to write off the cost less estimated residual
value of each asset over its expected useful economic life on a straight-line
basis at the following annual rates:
· Property, plant and equipment - 3 years straight line.
All assets are subject to annual impairment reviews.
2.12. Financial Instruments
2.12.1 Initial recognition
A financial asset or financial liability is recognised in the statement of
financial position of the Group when it arises or when the Group becomes part
of the contractual terms of the financial instrument.
2.12.2 Classification
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following
conditions are met:
(1) the asset is held within a business model whose objective is to collect
contractual cash flows; and
(2) the contractual terms of the financial asset generating cash flows at
specified dates only pertain to capital and interest payments on the balance
of the initial capital.
Financial assets which are measured at amortised cost, are measured using the
Effective Interest Rate Method (EIR) and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is derecognised,
modified or impaired.
There were no financial assets measured at fair value as at 30 June 2023, or
30 June 2022.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the effective interest
rate method include current borrowings and trade and other payables that are
short term in nature. Financial liabilities are derecognised if the Group's
obligations specified in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective
interest rate ("EIR"). The EIR amortisation is included as finance costs in
profit or loss. Trade payables other payables are non-interest bearing and are
stated at amortised cost using the effective interest method.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. Gains or losses on liabilities held for trading
are recognised in the statement of profit or loss and other comprehensive
income.
2.12.3. Derecognition
A financial asset is derecognised when:
(1) the rights to receive cash flows from the asset have expired, or
(2) the Group has transferred its rights to receive cash flows from the
asset or has undertaken the commitment to fully pay the cash flows received
without significant delay to a third party under an arrangement and has either
(a) transferred substantially all the risks and the assets of the asset or (b)
has neither transferred nor held substantially all the risks and estimates of
the asset but has transferred the control of the asset.
2.12.4 Impairment of financial assets
The Group recognises a provision for impairment for expected credit losses
regarding all financial assets. Expected credit losses are based on the
balance between all the payable contractual cash flows and all discounted cash
flows that the Group expects to receive. Regarding trade receivables, the
Group applies the IFRS 9 simplified approach in order to calculate expected
credit losses. Therefore, at every reporting date, provision for losses
regarding a financial instrument is measured at an amount equal to the
expected credit losses over its lifetime without monitoring changes in credit
risk. To measure expected credit losses, trade receivables and contract assets
have been Grouped based on shared risk characteristics.
2.13. Trade and other receivables
Trade and other receivables are initially recognised at fair value when
related amounts are invoiced then carried at this amount less any allowances
for doubtful debts or provision made for impairment of these receivables.
2.14. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and are subject to
an insignificant risk of changes in value.
2.15. Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
2.16. Share premium
Share premium account represents the excess of the issue price over the par
value on shares issued. Incremental costs directly attributable to the issue
of new ordinary shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
2.17. Shares to be issued
Shares to be issued qualifies as equity as it satisfies the requirements under
IAS 32, whereby subscription agreements for Ordinary shares ("the Obligation")
represents a contract that will be settled by the Company delivering a fixed
number of its Ordinary shares in exchange for a fixed amount of cash. When the
Obligation arises the net value of share subscriptions to be received is
recognised as an equity reserve, net of costs, with a corresponding receivable
being recognised as an asset, and costs recorded as an accrued expense. Upon
issue of the Ordinary shares, the Shares to be issued reserve is transferred
to Share capital and Share premium. The receivable is discharged upon receipt
of cash subscriptions from shareholders, and the accrued expense discharged
upon payment to third party suppliers.
2.18. Trade payables
These financial liabilities are all non-interest bearing and are initially
recognised at the fair value of the consideration payable.
2.19. Convertible loan notes and borrowings
Convertible loan notes classified as financial liabilities and borrowings are
recognised initially at fair value, net of transaction costs incurred. After
initial recognition, loans are measured at the amortised cost using the
effective interest rate method. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the income
statement over the period of the borrowings using the effective interest rate
method.
2.20. Finance income and finance costs
Finance income comprises interest income on bank funds. Interest income is
recognised as it accrues in profit or loss, using the effective interest
method. Finance costs comprise interest expense on borrowings. Borrowing costs
are recognised in profit or loss in the year in which they are incurred.
2.21. Earnings per share
Basic Earnings per share is calculated as profit attributable to equity
holders of the parent for the period, adjusted to exclude any costs of
servicing equity (other than dividends), divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
2.22. Operating segments
The Chief Operating Decision Maker (CODM) is considered to be the Board of
Directors. They consider that the Group operates in a single segment, that of
oil and gas exploration, appraisal and development, in a single geographical
location, the North Sea of the United Kingdom. As a result, the financial
information of the single segment is the same as set out in the statement of
comprehensive income, statement of financial position, statement of Changes in
Equity and Statement of Cashflows.
2.23. Investment in subsidiaries
The consolidated financial statements incorporate the financial statements of
the company and entities controlled by the Group (its subsidiaries). Control
is achieved where the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are
included in total comprehensive income from the effective date of acquisition
and up to the effective date of disposal, as appropriate using accounting
policies consistent with those of the parent. All intra-group transactions,
balances, income and expenses are eliminated in full on consolidation.
Investments in subsidiaries are accounted for at cost less impairment in the
individual financial statements. Advances that are made to the subsidiary that
are not expected to be repaid in the short term are capitalised by the
Company. All advances made for the year have been capitalised.
2.24. Share-based payments
The fair value of services received in exchange for the grant of share
warrants is recognised as an expense in share premium or profit or loss, in
accordance with the nature of the service provided. A corresponding increase
is recognised in equity.
3. Significant accounting estimates and judgements, estimates and
assumptions
The preparation of financial statements using accounting policies consistent
with IFRS requires the Directors to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of income and expenses. The
preparation of financial statements also requires the Directors to exercise
judgement in the process of applying the accounting policies. Changes in
estimates, assumptions and judgements can have a significant impact on the
financial statements.
Recoverable value of intangible assets (refer to note 13)
As at 30 June 2023, the Group held oil and gas exploration and evaluation
intangible assets of £3,871,362 (2022: £3,303,400). The carrying values of
intangible assets are assessed for indications of impairment, as set out in
IFRS 6, on an annual basis. As part of this impairment assessment, the
recoverable value of the intangible assets is required to be estimated.
When estimating the recoverable value of the intangibles Management consider
the proved, probable and potential resources per the latest CPR
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), likely production costs and the forecasted oil prices.
The Group held 100% interest in UKCS Seaward Licence P2320 ("the Licence"),
which contains the Blakeney, Feugh, Dandy & Crinan discoveries. The
Licence had Phase A work commitments that were due to be completed by 14 May
2023. The Group applied to the North Sea Transition Authority ("NSTA") for an
extension to completion time of Phase A work commitment. The NSTA declined the
request for extension and the Licence determined on 14 May 2023. The Group has
impaired the full value of the Licence recognised as an Intangible Asset on
the Consolidated Statement of Financial Position with an impairment charge of
£356,532 being charged to the Consolidated Statement of Comprehensive Loss.
As a result of the budget exploration costs, the licenses being valid and the
assessed recoverable value of the intangibles being in excess of the carrying
value, Management do not consider that any further impairment of intangible
assets are impaired as at 30 June 2023, with the exception of the impairment
charge detailed above.
These estimates and assumptions are subject to risk and uncertainty and
therefore a possibility that changes in circumstances will impact the
assessment of impairment indicators.
There was only one critical judgement identified, apart from those involving
estimations (which are dealt with separately above) that the Directors have
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in the financial
statements.
4. Group reorganisation under common control
The acquisition in the year ended 30 June 2021 met the definition of a group
reorganisation due to the Company and the subsidiary being under common
control at the date of acquisition. As a result, and since Orcadian Energy Plc
did not meet the definition of a business per IFRS 3, the acquisition fell
outside of the scope of IFRS 3 and the predecessor value method was used to
account for the acquisition.
These consolidated financial statements represent a continuation of the
consolidated financial statements of Orcadian Energy (CNS) Ltd and include:
a. The assets and liabilities of Orcadian Energy (CNS) Ltd at their
pre-acquisition carrying amounts and the results for both periods; and
b. The assets and liabilities of the Company as at 11 May 2021 and its
results from 11 May to 30 June 2021.
On 11 May 2021, the Company issued 52,201,601 shares entire issued share
capital of Orcadian Energy (CNS) Ltd.
The net assets of Orcadian Energy (CNS) Ltd at the date of acquisition was as
follows:
£
Property Plant & Equipment 1,357
Intangible Assets 1,719,292
Current Assets 447,425
Current Liabilities (284,745)
Non-Current Liabilities (1,869,975)
Net assets 13,354
The reserve that arose from the acquisition is made up as follows:
Year ended 30 June 2021
£
As at start of year -
Cost of the investment in Orcadian Energy (CNS) Ltd 52,202
Less: net assets of Orcadian Energy (CNS) Ltd at acquisition (13,354)
As at end of year 38,848
5. Administrative expenses
2023 2022
£ £
Office costs, rates and services 22,610 21,925
Wages and salaries* 293,403 384,750
Consultants and advisers 254,452 783,454
Audit fees (note 6) 32,250 27,500
Insurance 2,256 33,504
Other expenses 39,432 181,402
National Insurance 67,091 105,241
Foreign Exchange (41,989) 156,126
Depreciation 1,822 674
671,327 1,694,576
*refer to note 13 for details on wages and salaries capitalised to intangible
assets.
6. Auditor's Remuneration
During the year, the Company obtained the following services from the
Company's auditors and its associates:
2023 2022
£ £
Audit of the financial statements 32,250 27,500
Transaction services - 15,000
Informal interim review - 1,750
32,250 44,250
7. Other Income
2023 2022
£ £
33(rd) licencing round income 50,000 -
OGA grant - 466,667
Other Income 50,000 466,667
In January 2023 the Company applied for certain licences in the 33(rd) Seward
licencing round. One of the applications was in partnership with Triangle
Energy Pty. To enter into the joint application Triangle Energy Pty paid the
Company £50,000.
In December 2021 Orcadian was awarded a grant of £466,667 by the OGA (now
NSTA) to evaluate an alternative concept for the electrification of key
producing oil and gas fields in the Central Graben area of the North Sea. All
attached conditions in respect of the grant were met during the year and
therefore this income has been recognised in full as the underlying costs have
been incurred in the year.
8. Staff numbers and costs
Group Group
2023 2022
Staff costs (including directors) £ £
Wages and salaries 599,375 790,000
Social security costs 67,091 105,241
666,466 895,241
Refer to the Directors Remuneration Report for further information on Director
wages and salaries.
Wages and salaries includes £305,972 that was capitalised to the value of the
intangible asset (2022: £405,250) (refer to note 13).
No pension benefits are provided for any Directors (2022: £nil).
The average number of persons (including directors) employed by the Company
during the year was:
Group and Company 2023 2022
Management and Administration 5 6
5 6
9. Finance costs
2023 2022
£ £
Interest received (2,779) -
Interest expense 80,007 41,869
77,228 41,869
10. Taxation
Analysis of charge for the year:
2023 2022
£ £
Current income tax charge - -
R&D tax credits - -
Deferred tax charge - -
Total taxation credit/(charge) - -
Taxation reconciliation
The below table reconciles the tax charge for the year to the theoretical
charge based on the result for the year and the corporation tax rate.
2023 2022
£
£
Loss before income tax (1,184,954) (1,586,727)
Tax at the applicable rate of 19% (2022: 19%) (225,141) (301,478)
Effects of:
R&D tax credits - -
Expenses not deducted for tax purposes 68,172 1,333
Unutilised tax losses 156,969 300,145
Total income tax credit / (expense) - -
As at 30 June 2023, the Group had potential deferred tax assets not recognised
in respect of unused tax losses of £560,656 (2022: £439,912) which is due to
uncertainty over the availability of future taxable profits to offset these
losses against.
11. Earnings per share
The calculation of the basic and diluted earnings per share is calculated by
dividing the loss for the year for continuing operations for the Company by
the weighted average number of ordinary shares in issue during the year.
There is no difference between the basic and diluted earnings per share as the
Group recorded a loss for the year, and where a loss is recorded the basic and
diluted loss is the same. Refer to note 19 for details on details of warrants
on issue as at 30 June 2023 that would have a dilutive effect on earnings per
share.
2023 2022
£
£
Loss for the purposes of basic earnings per share being net loss attributable (1,184,954) (1,586,727)
to the owners
Weighted average number of Ordinary Shares 68,876,857 63,278,315
Loss per share - pence (1.72p) (2.51p)
12. Property, plant and equipment
IT hardware & software Office equipment Total
£ £ £
Cost
As at 30 June 2021 4,794 202 4,996
Additions 2,246 - 2,246
As at 30 June 2022 7,040 202 7,242
Additions 916 - 916
As at 30 June 2023 7,956 202 8,158
IT hardware & software Office equipment Total
£ £ £
Depreciation
As at 30 June 2021 2,952 202 3,154
Charged in the year 674 - 674
As at 30 June 2022 3,626 202 3,828
Charged in the year 1,822 - 1,822
As at 30 June 2023 5,448 202 5,650
Net book value as at 30 June 2023 2,508 - 2,508
Net book value as at 30 June 2022 3,414 - 3,414
The depreciation expense is recognised in administrative expenses as set out
in note 5.
13. Intangible assets
Oil and gas exploration assets
£
Cost
As at 30 June 2021 1,814,615
Additions 1,488,785
As at 30 June 2022 3,303,400
Additions 924,494
Impairment (356,532)
As at 30 June 2023 3,871,362
Wages and salaries totalling £305,972 (2022: £405,250) were capitalised
during the year (refer to note 8).
The carrying value of the prospecting and exploration rights is supported by
the estimated resource and current market values as contained in the Competent
Person's Report date 1 April 2021 which was prepared by Sproule B.V.
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(https://orcadian.energy/wp-content/uploads/2021/07/110650.Orcadian.FinalReport.pdf)
Refer to Note 3 for details of impairment charge.
14. Trade and other receivables
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
VAT receivable 47,440 55,829 - -
Other receivables 1,388 1,000,000 - 1,000,000
Prepayments relating to the issue of equity - - - -
Prepayments other - - - -
48,828 1,055,829 - 1,000,000
Other receivables of £1,000,000 in the year to 30 June 2022 represented the
gross value of share subscriptions receivable as at reporting date pursuant to
a share placement that was announced on 30 June 2022 but for which shares were
not formally issued until post-reporting date, in July 2022. There were
£98,800 of share issue costs which were accrued for as at 30 June 2022 in
respect of this placing. (Refer to notes 2.17 and 20).
The fair value of other receivables is the same as their carrying values as
stated above.
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivable mentioned above. The Company does not hold
any collateral as security.
15. Cash and cash equivalents
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
Cash at bank and in hand 109,705 271,439 2,779 -
There is no material difference between the fair value of cash and cash
equivalents and their book value.
16. Investment in subsidiary
Name Address of the registered office Nature of business Proportion of ordinary shares held directly by parent (%)
Orcadian Energy (CNS) Ltd 6(th) floor, 60 Gracechurch Street, London, EC3V 0HR Managing oil and gas assets 100
The acquisition of Orcadian Energy (CNS) Ltd took place on 11 May 2021. Refer
to note 4 for further details.
£
As at 30 June 2022 3,968,844
Additions 1,435,200
As at 30 June 2023 5,404,044
The additions during the year were advances to enable the subsidiary to
continue work on the oil and gas exploration assets owned directly by the
subsidiary. These costs have been capitalised rather than treated as an
intercompany loan as they represent capital contributions and hence increase
in value of the parent's investment.
17. Borrowings
2023
STASCO Loan
£
As at 30 June 2022 956,184
Interest accrued 80,007
Effect of foreign exchange (44,852)
As at 30 June 2023 991,339
The STASCO loan was entered in to on 22 July 2019. The total loan facility was
US$1,000,000 which has been fully drawn down. The term of the loan facility is
4 years and is subject to interest at LIBOR plus 5% which is accrued
quarterly. The total interest charge for the year was US$98,427 £80,007
(2022: $57,118 (£41,869)), and a £44,852 unrealised foreign exchange gain
(2022: loss of £151,629) was incurred in the year in respect of this loan.
The loan is due to be repaid by 13 March 2024 (Refer to note 26 for further
detail).
2022
Convertible loan note 2020 Convertible loan note 2021
£ £ STASCO Loan
£ Total
£
As at 30 June 2021 380,000 720,000 762,686 1,862,686
Conversion in to ordinary shares (380,000) (720,000) - (1,100,000)
Interest accrued - - 41,869 41,869
Effect of foreign exchange - - 151,629 151,629
As at 30 June 2022 - - 956,184 956,184
On 15 July 2021, all Convertible Loan Notes ("CLNs") were converted in to
ordinary shares at a price of 28 pence each, which was a 30% discount to the
fundraise price. In total 3,928,572 ordinary shares were issued in full
discharge of the CLNs. No interest was paid on the CLNs as they were converted
in to ordinary shares.
On 15 July 2021, all CLNs were converted in to ordinary shares at a price of
28 pence each, which was a 30% discount to the fundraise price. In total
3,928,572 ordinary shares were issued in full discharge of the CLNs. No
interest was paid on the CLNs as they were converted in to ordinary shares.
18. Trade and other payables - due within one year
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
Trade payables 196,354 184,636 - -
Accruals 371,275 334,631 - 98,800
Other creditor - 34,242 - -
567,629 553,509 - 98,800
The carrying values of trade and other payables are considered to be a
reasonable approximation of the fair value and are considered by the Directors
as payable within one year.
19. Ordinary share capital and share premium
Group & Company
Issued Number of shares Ordinary share capital Share
£ premium
£
As at 30 June 2021 52,201,601 52,202 -
Issue of shares 7,625,000 7,625 3,042,375
Share issue costs - - (233,358)
Value of warrants issued - - (15,000)
Conversion of loans 3,928,572 3,928 1,096,072
As at 30 June 2022 63,755,174 63,755 3,890,089
Issue of shares 8,757,143 8,757 1,581,243
Share issue costs - - (154,800)
As at 30 June 2023 72,512,317 72,512 5,316,532
The ordinary shares confer the right to vote at general meetings of the
Company, to a repayment of capital in the event of liquidation or winding up
and certain other rights as set out in the Company's articles of association.
Share warrants
On 15 July 2021 the Company issued 75,000 broker warrants in connection with
the Raise. These warrants are fully vested, have an exercise price of 40p and
are exercisable for a period of three years.
The fair value of warrants is valued using the Black-Scholes pricing model. A
fair value charge of £15,000 has been applied as a direct deduction to the
Share Premium Reserve in the year to 30 June 2022.
The inputs into the Black-Scholes pricing model are as follows:
Grant date 15 Jul 2021
Exercise price 40.0 pence
Expected life 3 years
Expected volatility 77.32%
Risk free rate of interest 0.0242%
Dividend yield Nil
Fair value of option 20.0 pence
Volatility has been estimated based on the average historic volatility of the
share prices of a selection of three peer companies for a period equal to the
expected term from the grant date.
Nature and purpose of equity and reserves
Equity and Reserve Description and purpose
Ordinary share capital Represents the nominal value of shares issued
Share premium reserve Amount subscribed for share capital in excess of nominal value
Share warrants reserve Value of warrants issued
Shares to be issued Value of shares to be issued where share subscription agreements have been
executed and the share placement completing post-reporting date.
Other reserve Reserve created in accordance with the acquisition of Orcadian Energy (CNS)
Ltd on 11 May, 2021 (Refer to Note 4)
Cumulative net gains and losses recognised in the Consolidated Statement of
Retained earnings Comprehensive Income
20. Shares to be issued
As at 30 June 2022 the Shares to be issued represented the issue of 2,857,143
shares at 35 pence each that completed on 6 July 2022. The value of the Shares
to be issued reserve reflected the gross proceeds of the share placement of
£1,000,000, less £98,800 of share issue costs which were accrued for at 30
June 2022. Upon completion the value of Shares to be issued were re-allocated
to Share capital and Share premium (Refer to note 2.17 for the Group's
accounting policy for Shares to be issued).
21. Related parties
21.1 Transactions with related parties
The Company had the following related party transactions:
(1) The Company makes use of an office at 70 Claremont Road which is
currently provided to the Company by Mrs Julia Cane-Honeysett and Mr Stephen
Brown at a rental of £1,000 per calendar month. The company pays for the
services and business rates associated with the property.
21.3. Key management personnel
Directors of the Company are considered to be key management personnel. The
remuneration of the Directors has been set out in note 8.
22. Ultimate controlling party
The Directors consider Stephen Brown and Julia Cane-Honeysett to be the
ultimate controlling parties given their combined holding of 40.22% of the
issued capital of the Company.
23. Financial instruments
The Company holds the following financial instruments:
Financial assets
Group Group Company Company
2023 2022 2023 2022
Financial assets at amortised cost: £ £ £ £
Other receivables 1,500 1,000,000 - 1,000,000
Other financial assets at amortised cost - - - -
Cash and cash equivalents 109,705 271,439 2,779 -
111,205 1,271,439 2,779 1,000,000
The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of financial assets mentioned above.
Financial liabilities
Group
2023 2022
Financial liabilities at amortised cost: £ £
Trade payables 196,354 184,636
Borrowings - current 991,339 -
Borrowings - non-current - 956,184
1,187,693 1,140,820
24. Financial risk management
24.1 Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk,
credit risk and liquidity risk. The Group's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the executive management team.
a) Market risk
The Group is exposed to market risk, primarily relating to interest rate,
foreign exchange and commodity prices. The Group does not hedge against market
risks as the exposure is not deemed sufficient to enter into forward
contracts. The Group has not sensitised the figures for fluctuations in
interest rates, foreign exchange or commodity prices as the Directors are of
the opinion that these fluctuations would not have a significant impact on the
Financial Statements at the present time. The Directors will continue to
assess the effect of movements in market risks on the Group's financial
operations and initiate suitable risk management measures where necessary.
b) Credit risk
Credit risk arises from cash and cash equivalents as well as outstanding
receivables. To manage this risk, the Group periodically assesses the
financial reliability of customers and counterparties.
The amount of exposure to any individual counter party is subject to a limit,
which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk. The Group will only keep its holdings
of cash with institutions which have a minimum credit rating of 'A'.
c) Liquidity risk
The Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share capital or debt.
The Directors are reasonably confident that adequate funding will be
forthcoming with which to finance operations. Controls over expenditure are
carefully managed.
The following table summarizes the Group's significant remaining contractual
maturities for financial liabilities at 30 June 2023, and 30 June 2022.
Contractual maturity analysis as at 30 June 2023
Less than 12
Months 1 - 5 Total
£ Years £
£
Accounts payable 196,354 - 196,354
Accrued liabilities 371,275 - 371,275
Other creditor - - -
STASCO Loan 991,339 - 991,339
1,558,968 - 1,558,968
There were no contractual liabilities with maturity of greater than 5 years as
at 30 June 2023.
Contractual maturity analysis as at 30 June 2022
Less than 12 months
£ 1 - 5 years Total
£ £
Accounts payable 184,636 - 184,636
Accrued liabilities 334,631 - 334,631
Other creditor 34,242 - 34,242
STASCO Loan - 956,184 956,184
553,509 956,184 1,509,693
There were no contractual liabilities with maturity of greater than 5 years as
at 30 June 2022.
d) Foreign exchange risk
Foreign exchange risk arises where the Group has financial assets and
liabilities in a different currency to the functional currency of the Group.
Where this arises the Group will be exposed to gains and losses that arise on
movements in the base currency of the financial asset/liability and the
functional currency of the Group. For the year ended 30 June 2023, the Group's
borrowings were denominated in US Dollars and thus is exposed to gains and
losses arising on the value of the US Dollar relative to Pound Sterling (Refer
to note 17).
24.2 Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, in order to enable the Group to
continue its exploration and development of oil and gas resources. In order to
maintain or adjust the capital structure, the Group may adjust the issue of
shares or sell assets to reduce debts.
The Group defines capital based on the total equity and reserves of the Group.
The Group monitors its level of cash resources available against future
planned operational activities and may issue new shares in order to raise
further funds from time to time.
25. Commitments
The Group has the following non-cancellable ongoing commitments required in
order to maintain the Group's licences in good standing:
2023 2022
£ £
Due within one year 218,208 246,498
Later than one year but not later than five years 1,407,168 1,360,821
Total commitments 1,625,376 1,607,319
26. Events after the reporting period
On 23 August 2023, the Company announced that the US$1 million loan agreement
with STASCO (refer to note 17) was extended to 13 September 2023.
On 13 September 2023, the Company announced that the US$1 million loan
agreement with STASCO (refer to note 17) was extended to 13 March 2024.
On 18 September the Company announced that it had entered into a non-binding
Heads of Agreement to farm out a 81.25% interest in the Pilot field
development for a full carry to first oil and certain other payments.
On 2 October the Company announced that it had issued 2,916,666 ordinary
shares at 12p per share to raise new funds of £350,000.
On 30 November 2023 P2516 expired and an impairment adjustment of £144,971
has been made in respect of the costs capitalised relating to the expired
licence. As at reporting date the directors did not have sufficient reason to
believe that the licence would expire and applied judgement that the most
appropriate date to make the impairment was the date of expiry.
On 1 December 2023 the Company announced that it had submitted a request to
the NSTA to
1. consent to an assignment under, and in accordance with, clause 40(1) of
the Licence to the Operator; and
2. approval of appointment of the Operator as operator under, and in
accordance with, clause 24 of the P2244 Licence.
On 7 December 2023 the Company announced the signature of an SPA for the
disposal of an 81.25% interest in the Pilot field licence P2244 with Ping
Petroleum UK PLC.
-ends-
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