REG - Petrel Resources PLC - Preliminary Results for Year Ended 31st Dec 2020
4th June 2021
Petrel Resources plc
("Petrel" or "the Company")
Preliminary Results for the Year Ended 31st December 2020
Petrel announces its results for the year ended 31st December 2020.
A copy of the Company's Annual Report and Accounts for 2020 will be mailed shortly only to those shareholders who have elected to receive it. Otherwise shareholders will be notified that the Annual Report will be available on the website at www.petrelresources.com. Copies of the Annual Report will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland.
The Company's Annual General Meeting will be held on 27th July 2021 in the Hotel Riu Plaza The Gresham, 23 O'Connell Street Upper, Dublin 1, D01 C3W7 at 10.00 am.
We are closely monitoring the Coronavirus (COVID-19) situation. The Board takes its responsibility to safeguard the health of its shareholders, stakeholders and employees very seriously and so certain measures will be put in place for the AGM in response to the COVID-19 pandemic. Details of these measures will be provided in a letter that will be attached to the Notice of AGM.
ENDS
For further information please visit http://www.petrelresources.com/ or contact:
Enquiries:
Petrel Resources
John Teeling, Chairman
+353 (0) 1 833 2833
David Horgan, Director
Nominated Adviser and Broker
Beaumont Cornish - Nominated Adviser
Roland CornishFelicity Geidt
+44 (0) 020 7628 3396Novum Securities Limited - Broker
Colin Rowbury
+44 (0) 20 399 9400
Blytheweigh - PR
Megan Ray
Madeleine Gordon-Foxwell+44 (0) 207 138 3206
+44 (0) 207 138 3553
+44 (0) 207 138 3208
Teneo
Luke Hogg
Alan Tyrrell
Ciara Wylie
+353 (0) 1 661 4055
+353 (0) 1 661 4055
+353 (0) 1 661 4055
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). The person who arranged for the release of this announcement on behalf of the Company was Jim Finn, Director.
Statement Accompanying the Preliminary Results
It's very difficult to write a chairman's report fifteen months into an effective world lockdown of exploration activities. International travel has ceased, obtaining visas is difficult as embassies are not staffed, attempts to gain meetings with authorities are stymied as officials work remotely. Nevertheless work goes on and deals are worked out over zoom calls.
The stalemate continues over the ownership of 32 million Petrel shares. These shares are subject to a high court injunction on their sale. Despite numerous and ongoing discussions with the original buyers of the shares no progress has been made. The original buyers, a French based group very experienced in resources, are either unwilling or unable to clarify ownership and to give the undertaking necessary to lift the injunction. The company is committed to and actively involved in attempting to find a solution. Proposals to date lack clarity on title and funding and do not address the ownership of 32 million shares.
Petrel has ongoing interest in Iraq and Ghana. The Irish offshore exploration ground was dropped in the face of an offshore oil exploration ban on all new licences and in the event of a discovery on existing licences, the likelihood of years of opposition to any development. Ireland is now a no-go area for native fossil fuel development, instead relying on imported oil, gas and electricity. Within a few years our only indigenous gas supplier, the Corrib feed will be depleted, so we will be 100% dependent on supplies of gas from Russia, though UK interconnectors, and electricity from France, most likely generated by nuclear power.
Renewables are the future but they are years if not decades away from being able to supply consistent, stable, cost effective power to boil a kettle, drive a car or run a manufacturing operation. Those of us active in the natural resources sector in Ireland have failed to persuade politicians and the media of the inherent dangers to supply. I hope I am wrong.
Meanwhile Petrel continues to push its interest in Iraq and Ghana. For the foreseeable future oil will play a major part in world economic development. Iraq has some of the best oil deposits in the world. In a stable era Iraqi oil production would be 2 or 3 times the current under 4 million barrels a day. For more than 20 years Petrel has been in Iraq. Activities have languished in year past but the addition of an Iraqi director, Riadh Mahomud Hameed and the contact of French investors led to a re-opening of contacts. It has been, and remains a difficult and dangerous place to explore. Led by Riadh we are putting exploration proposals to the authorities. We are particularly keen to revisit the Merjan field where we earlier produced development proposals.
Ghana, where Petrel holds a 30% interest (Clontarf 60%, local interest 10%) in offshore block Tano 2A continues to frustrate. Covid has played a significant role in recent delays. Meetings expected to take place in Europe in spring 2020 were cancelled and have not yet been reinstated. This 12 year saga shows no sign of being finalised.
Future
While we continue to engage with the French group and respect and admire their experience and contacts, we have to move on. Our focus in the immediate future will be Iraq.
At the same time we will open discussions with groups in other jurisdictions who might see Petrel as a way to monetise their oil and gas assets.
John Teeling
Chairman
3rd June 2021
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
2020
2019
€
€
Administrative expenses
(399,133)
(345,508)
Impairment of exploration and evaluation assets
(51,552)
(1,613,591)
OPERATING LOSS
(450,685)
(1,959,099)
LOSS BEFORE TAXATION
(450,685)
(1,959,099)
Income tax expense
-
-
LOSS FOR THE FINANCIAL YEAR: all attributable
to equity holders of the parent
(450,685)
(1,959,099)
Other comprehensive income
-
-
Items that are or may be reclassified
subsequently to profit or loss
-
-
Exchange differences
-
(119,048)
TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR
(450,685)
(2,078,147)
Loss per share - basic and diluted
(0.29c)
(1.50c)
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020
2020
2019
€
€
Assets
Non-Current Assets
Intangible assets
931,967
983,969
931,967
983,969
Current Assets
Trade and other receivables
34,994
38,036
Cash and cash equivalents
333,900
367,777
368,894
405,813
Current Liabilities
Trade and other payables
(710,541)
(629,885)
Net Current Liabilities
(341,647)
(224,072)
NET ASSETS
590,320
759,897
Equity
Called-up share capital
1,962,981
1,866,827
Capital conversion reserve fund
7,694
7,694
Capital redemption reserve
209,342
209,342
Share premium
21,786,011
21,601,057
Share based payment reserve
26,871
26,871
Translation reserve
-
376,154
Retained deficit
(23,402,579)
(23,328,048)
TOTAL EQUITY
590,320
759,897
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
Share
Capital
€
Share
Premium
€
Capital
Redemption
Reserve
€
Capital
Conversion
Reserve
fund
€
Share
Based
Payment
Reserve
€
Translation
Reserve
€
Retained
Deficit
€
Total
€
At 31 December 2018
1,306,966
21,601,057
209,342
7,694
26,871
495,202
(21,368,949)
2,278,183
Shares issued
559,861
-
-
-
-
-
-
559,861
Total comprehensive income for the financial year
-
-
-
-
-
(119,048)
(1,959,099)
(2,078,147)
At 31 December 2019
1,866,827
21,601,057
209,342
7,694
26,871
376,154
(23,328,048)
759,897
Shares issued
96,154
184,954
-
-
-
-
-
281,108
Total comprehensive income for the financial year
-
-
-
-
-
-
(450,685)
(450,685)
Transfer of reserves
(376,154)
376.154
-
At 31 December 2020
1,962,981
21,786,011
209,342
7,694
26,871
-
(23,402,579)
590,320
Share premium
Share premium reserve comprises of a premium arising on the issue of shares. Share issue expenses are expensed through the statement of comprehensive income when incurred.
Capital redemption reserve
On 25 July 2018 the shareholders approved the buy back and cancellation of 16,747,368 shares for nominal consideration from Amira Petroleum N.V., Amira International Holdings Limited and their advisors. These shares were immediately cancelled upon their repurchase and the nominal value of these shares were transferred into the capital redemption reserve.
Capital conversion reserve fund
The ordinary shares of the company were renominalised from €0.0126774 each to €0.0125 each in 2001 and the amount by which the issued share capital of the company was reduced was transferred to the capital conversion reserve fund.
Share based payment reserve
The share based payment reserve arises on the grant of share options under the share option plan.
Translation Reserve
The translation reserve arises from the translation of foreign operations. A transfer from the translation reserve to retained deficit occurred during the year as a result of the impairment of the related intangible assets.
Retained deficit
Retained deficit comprises of losses incurred in the current and prior years.
PETREL RESOURCES PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
2020
2019
€
€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the financial year
(450,685)
(1,959,099)
Impairment charge
51,552
1,613,591
Foreign exchange
4,623
-
OPERATING CASHFLOW BEFORE
MOVEMENTS IN WORKING CAPITAL
(394,510)
(345,508)
Movements in working capital:
Increase/(Decrease) in trade and other payables
80,656
(47,730)
Decrease in trade and other receivables
3,042
19,980
CASH USED IN OPERATIONS
(310,812)
(373,258)
NET CASH USED IN OPERATING ACTIVITIES
(310,812)
(373,258)
INVESTING ACTIVITIES
Receipts/(Payments) for exploration and evaluation assets
450
(150,870)
NET CASH USED IN INVESTING ACTIVITIES
450
(150,870)
FINANCING ACTIVITIES
Shares issued
281,108
559,861
NET CASH GENERATED FROM FINANCING ACTIVITIES
281,108
559,861
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
(29,254)
35,733
Cash and cash equivalents at beginning of financial year
367,777
329,503
Effect of exchange rate changes on cash held in
foreign currencies
(4,623)
2,541
Cash and cash equivalents at end of financial year
333,900
367,777
NOTES:
1. ACCOUNTING POLICIES
There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2019. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
2. LOSS PER SHARE
2020
2019
€
€
Loss per share - basic and diluted
(0.29c)
(1.50c)
Basic loss per share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
2020
2019
€
€
Loss for the financial year attributable to equity holders
(450,685)
(1,959,099)
2020
2019
Number
Number
Weighted average number of ordinary shares for the
purpose of basic earnings per share
153,961,544
130,647,568
Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.
3. GOING CONCERN
The Group incurred a loss for the financial year of €450,685 (2019: loss of €1,959,099) and had net current liabilities of €341,647 (2019: €224,072) and a retained earnings deficit of €23,402,579 (2019 deficit of €23,328,048) at the balance sheet date. These conditions as well as those noted below, represent a material uncertainty that may cast significant doubt on the Group and Company's ability to continue as a going concern.
Included in current liabilities is an amount of €677,531 (2019: €587,531) owed to key management personnel in respect of remuneration due at the balance sheet date. Key management have confirmed that they will not seek settlement of these amounts in cash for a period of at least one year after the date of approval of the financial statements or until the Group has generated sufficient funds from its operations after paying its third party creditors.
The Group and Company had a cash balance of €333,900 (2019: €367,777) at the balance sheet date. The directors have prepared cashflow projections for a period of at least twelve months from the date of approval of these financial statements which indicate that additional finance may be required to fund working capital requirements and develop existing projects. The cashflow projections include any anticipated impacts of the Covid-19 pandemic on the Group and Company. As the Group is not revenue or cash generating it relies on raising capital from the public market. The Group completed capital raisings during the year.
As in previous years the Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements and believe the going concern basis is appropriate for these financial statements. The financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a going concern.
4. INTANGIBLE ASSETS
Exploration and evaluation assets:
2020
2019
€
€
Cost:
Opening balance
983,969
2,523,279
Additions
-
195,870
Disposals
(450)
-
Exchange translation adjustment
-
(121,589)
Impairment
(51,552)
(1,613,591)
Closing balance
931,967
983,969
Segmental Analysis
2020
2019
€
€
Ghana
931,967
931,967
Ireland
-
52,002
Iraq
-
-
931,967
983,969
Exploration and evaluation assets relate to expenditure incurred in exploration in Ireland and Ghana. The directors are aware that by its nature there is an inherent uncertainty in Exploration and evaluation assets and therefore inherent uncertainty in relation to the carrying value of capitalized exploration and evaluation assets.
Due to legislative uncertainty since 2017, exacerbated by the Taoiseach's public statements in September 2019 against the issue of new Atlantic oil exploration licenses, Petrel has discontinued farm-out discussions with a gas super-major. Also, the board reluctantly dropped our 100% owned and operated Frontier Exploration License (FEL) 3/14, despite multiple identified targets. Similarly, the board decided not to apply to convert our prospective Licensing Option (LO) 16/24 into a Frontier Exploration License. Accordingly, the directors have impaired in full all expenditure relating to the above mentioned licenses, resulting in an impairment charge of €51,552 in the current year and €1,613,591 in the prior year.
During 2018 the Group resolved the outstanding issues with the Ghana National Petroleum Company (GNPC) regarding a contract for the development of the Tano 2A Block. The Group has signed a Petroleum Agreement in relation to the block and this agreement awaits ratification by the Ghanian government.
Relating to the remaining exploration and evaluation assets at the financial year end, the directors believe there were no facts or circumstances indicating that the carrying value of the intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors. The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves and is subject to a number of significant potential risks, as set out below:
· Licence obligations;
· Funding requirements;
· Political and legal risks, including title to licence, profit sharing and taxation;
· Exchange note risk;
· Political risk;
· Financial risk management; and
· Geological and development risks.
Directors' remuneration of €Nil (2019: €30,000) and salaries of €Nil (2019: €15,000) were capitalised as exploration and evaluation expenditure during the financial year.
5. SHARE CAPITAL
2020
2019
€
€
Authorised:
800,000,000 ordinary shares of €0.0125
10,000,000
10,000,000
Allotted, called-up and fully paid:
Number
Share
Share
Capital
Premium
€
€
At 1 January 2019
104,557,246
1,306,966
21,601,057
Issued during the financial year
44,788,913
559,861
-
At 31 December 2019
149,346,159
1,866,827
21,601,057
At 1 January 2020
149,346,159
1,866,827
21,601,057
Issued during the financial year
7,692,308
96,154
184,954
At 31 December 2020
157,038,467
1,962,981
21,786,011
Movements in share capital
On 30 July 2019 a total of 44,788,913 shares were placed at a price of 1.25 cents per share. Proceeds were used to provide additional working capital and fund development costs.
On 26 May 2020 a total of 7,692,308 shares were placed at a price of 3.25 pence per share. Proceeds were used to provide additional working capital and fund development costs.
6. POST BALANCE SHEET EVENTS
There were no material post balance sheet events affecting the Company or Group.
7. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on 27th July 2021 in the Hotel Riu Plaza The Gresham, 23 O'Connell Street Upper, Dublin 1, D01 C3W7 at 10.00 am.
8. GENERAL INFORMATION
The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2020. The financial information for 2019 is derived from the financial statements for 2019 which have been delivered to the Companies Registration Office. The auditors have reported on 2019 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, investment in subsidiaries and amounts due by group undertakings. The financial statements for 2020 will be delivered to the Companies Registration Office.
A copy of the Company's Annual Report and Accounts for 2020 will be mailed shortly only to those shareholders who have elected to receive it. Otherwise shareholders will be notified that the Annual Report will be available on the website at www.petrelresources.com. Copies of the Annual Report will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland.
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