REG - Predator O&G Hldgs - Financial Statements Year ended 31 December 2021
29/06/2022 07:00
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RNS Number : 5411Q Predator Oil & Gas Holdings PLC 29 June 2022
FOR IMMEDIATE RELEASE
29 June 2022
Predator Oil & Gas Holdings Plc / Index: LSE / Epic: PRD / Sector: Oil
& Gas
LEI 213800L7QXFURBFLDS54
Predator Oil & Gas Holdings Plc
("Predator" or the "Company" and together with its subsidiaries "the Group")
Financial Statements for the Year Ended 31 December
2021
Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas
Company with operations in Trinidad, Morocco and Ireland is pleased to
announce its audited financial statements for the year ended 31 December 2021,
extracts of which are set out below.
The Company's Annual Report is available to shareholders to download from the
Company's website at www.predatoroilandgas.com
(http://www.predatoroilandgas.com/) . In line with ESG best practice no hard
copies of the Annual Report will be printed.
In addition, a copy of the 2021 Annual Report will be uploaded to the National
Storage Mechanism and will be available for viewing at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
The financial information set out below does not constitute the Company's
statutory accounts for the year ending 31 December 2021.
Highlights of Financial Results for 2021
· Reduced loss from operations of £1,398,821 (2020: Re-stated loss
of £1,589,070).
· Reduced administrative expenses of £1,398,802 (2020: Re-stated
£1,363,711)
· Increased cash balance at period end of 2021 £1,523,035 (2020:
£1,325,751).
· Additional, restricted cash of USD1,500,000 (USD1,500,000 for the
period ended 31 December 2020).
· Placed 53,000,000 new ordinary shares of no par value in the
Company to raise £4,585,000 (before expenses).
· Issued warrants to brokers to subscribe for 1,020,000 new shares
exercisable at £0.105 before 12 March 2025 and 600,000 new shares exercisable
at £0.150 before 18 June 2025
· Debt-free and fully-funded for current commitments
Highlights of key Operational Activities in 2021
· In Morocco MOU-1 was successfully drilled in 15.18 days on budget
and within pre-drill budget guidance.
· Pre-drill seismic amplitude "bright spot" and primary target
validated by drilling results.
· Formation gas shows whilst drilling and wireline NuTech log
interpretation identified intervals within the primary target for rigless
testing.
· MOU-1 therefore suspended and completed for rigless testing.
· Primary target confirmed as covering approximately 32 km² and
supporting pre-drill CPR Prospective Gas Resources of 295 BCF net to the
Company
· EIA for follow-up wells MOU-4, MOU-5 and MOU-NE commissioned.
· New MOU-NE Jurassic structure covering 102 km²identified.
· Decommissioning of the CO2 EOR surface facilities and down-hole
equipment at Inniss-Trinity commenced.
· Planning with Lease Operators Ltd. for new CO2 EOR project in the
PS1 field progresses with submission of an application for Certificate of
Environmental Clearance.
· FSRU LNG Project in Ireland secures collaboration agreement with
supplier of gas, LPG and LNG in the UK and Ireland.
· Successor authorisations to the Licensing Options 16/26 (Corrib
South) and 16/30 (Ram Head) under active review by the Geoscience Regulation
Office in Ireland.
· Proposal submitted to evaluate the potential for the conversion
of the undeveloped Ardmore gas field (Ram Head) to gas storage.
Highlights of Directorate Changes
· Board strengthened with appointment of Lonny Baumgardner, with
extensive Moroccan drilling and gas marketing experience, as Chief Operating
Officer.
Post Period End:
· 295 BCF of Contingent Gas Resources likely to be commercially
viable supported by independent CPR.
· EIA approval for MOU-4, MOU-5 and MOU-NE received.
· Civil works contract awarded for the construction of the MOU-4
well pad.
· Source of long-lead well inventory items identified and purchase
orders being prepared.
· Confidentiality agreements executed with potential partners for
follow-up drilling and potential gas development in Morocco.
· Discussions opened with FRAM Exploration Trinidad Ltd. regarding
a settlement to the dispute surrounding the premature termination of the
Inniss-Trinity CO2 EOR project contrary to the terms of the Well Participation
Agreement.
· Final information submitted to GSRO to enable a decision on the
Corrib South and Ram Head successor authorisations to be made.
· Potential green hydrogen acquisition being evaluated.
· Placed 11,500,000 new ordinary shares of no par value in the
Company to raise £1,035,000 (before expenses).
· Appointed Tom Evans and Alistair Jury as Non-executive Directors
to replace Dr. Stephen Staley and Louis Castro.
· Issued warrants to brokers to subscribe for 690,000 new shares
exercisable at £0.09 before 17 March 2025.
Paul Griffiths, Executive Chairman of Predator Oil & Gas Holdings Plc
commented:
"We are pleased to have reduced operating losses and administrative expenses
in 2021 whilst increasing cash balances at the end of the period and
maintaining a debt-free status. This has been achieved despite a significant
increase in both operational activity and corporate strategic planning and
execution.
Successful drilling and the completion of MOU-1 for rigless testing was a
milestone achievement for the Company in that it established the Company as a
highly competent operator whilst also unlocking the gas potential of a vast
licence area in northern Morocco, linked via infrastructure to Europe,
covering 7,269km².
Whilst disappointed with the manner in which the Inniss-Trinity CO2 EOR
project was unilaterally and unexpectedly terminated by our joint venture
partner, we are pleased that the project established "Proof of Concept" for
CO2 EOR operations in Trinidad. This has allowed us to move forward quickly
with a new CO2 EOR project better suited to our commercial guidelines for
business development in Trinidad. We remain a niche provider of CO2 EOR
services with unique practical operational experience and subsurface technical
understanding of CO2 sequestration.
In Ireland we have maintained progressed on our applications for successor
authorisations and towards gaining recognition of an FSRU LNG import facility
as an important contributor to Ireland's security of energy supply. We alone
in Ireland have taken ownership of the FSRU concept based on management's long
experience and understanding of the vital role of the Kinsale offshore
pipeline and the importance of the Inch entry point to the gas grid.
The next stage of the Company's development will be challenging as we seek to
take our various projects to the next level of financing which is why we have
taken the opportunity to refresh the Board with Non-executive Directors with
the necessary experience to encourage and oversee this critical next step.
Maintaining undiluted project equity has been a priority of the Company during
the last 3 years as we juggle and develop our niche positions in three diverse
geographies. With the focus now firmly on near-term security of energy supply
we are now well placed to potentially trade our project equity for access to
financial backing to take projects to development and cash flow as we
understand and can navigate our way through the regulatory and environmental
processes that would delay new start-up projects of a similar scale to ours.
We thank our shareholders for their continued support. The Company could not
have achieved the progress it has made without our supportive shareholders. We
will continue to apply our management philosophy and experience to the further
development of our assets over the next 12 months. We are a small,
cost-effective team that proportional to our size delivers operational success
and strategic opportunities for potential project partners on a much larger
scale."
This announcement contains inside information for the purposes of Article 7 of
the Regulation (EU) No 596/2014 on market abuse
For more information please visit the Company's website
at www.predatoroilandgas.com (http://www.predatoroilandgas.com/) :
Enquiries:
Predator Oil & Gas Holdings Plc Tel: +44 (0) 1534 834 600
Paul Griffiths Executive Chairman Info@predatoroilandgas.com (mailto:Info@predatoroilandgas.com)
Lonny Baumgardner Managing Director
Novum Securities Limited Tel: +44 (0) 207 399 9425
Jon Belliss
Optiva Securities Limited Tel: +44 (0) 203 137 1902
Christian Dennis
Peterhouse Capital Limited Tel: +44 (0) 207 220 9791
Charles Goodfellow
Flagstaff Strategic and Investor Communications Tel: +44 (0) 207 129 1474
Tim Thompson predator@flagstaffcomms.com (mailto:predator@flagstaffcomms.com)
Mark Edwards
Fergus Mellon
Notes to Editors:
Predator is operator of the Guercif Petroleum Agreement onshore Morocco which
is prospective for Tertiary gas in prospects less than 10 kilometres from the
Maghreb gas pipeline. The MOU-1 well has been completed and a follow-up
testing programme is being developed and a further drilling programme is under
review.
Predator is seeking to further develop the remaining oil reserves of
Trinidad's mature onshore oil fields through the application of CO2 EOR
techniques and by sequestrating anthropogenic carbon dioxide to produce
"greener" oil.
In addition, Predator also owns and operates exploration and appraisal assets
in licensing options offshore Ireland, for which successor authorisations have
been applied for, adjoining Vermilion's Corrib gas field in the Slyne Basin on
the Atlantic Margin and east of the decommissioned Kinsale gas field in the
Celtic Sea.
Predator has developed a Floating Storage and Regasification Project ("FSRUP")
for the import of LNG and its regassification for Ireland and is also
developing gas storage concepts to address security of gas supply and
volatility in gas prices during times of peak gas demand.
The Company has a highly experienced management team with a proven track
record in operations in the oil and gas industry.
Consolidated statement of comprehensive income
For the year ended 31 December 2021
01.01.2021 to 31.12.2021 01.01.2020 to 31.12.2020
£
Notes £ (restated)*
Administrative expenses 4 (1,398,802) (1,363,711)
Operating loss (1,398,802) (1,363,711)
Finance expense 5 (19) (225,359)
Loss for the year before taxation (1,398,821) (1,589,070)
Taxation 6 - -
Loss for the year after taxation (1,398,821) (1,589,070)
Comprehensive income - -
Total comprehensive loss for the year attributable to the (1,398,821) (1,589,070)
owner of the parent
Earnings per share basic and diluted (pence) 8 (0.5) (0.8)
* For further information on the restatement, please refer to note 27 on page
31 of these financial statements
The accompanying accounting policies and notes on pages 9 to 31 form an
integral part of these financial statements.
All items in the above statement derive from continuing
operations.
Consolidated statement of financial position
As at 31 December 2021
31.12.2020
31.12.2021 £
Notes £ (restated)*
Non-current assets
Tangible fixed assets 11 5,884 5,592
Intangible asset 10 2,687,026 -
2,692,910 5,592
Current assets
Trade and other receivables 13 1,737,258 1,577,858
Cash and cash equivalents 14 1,523,035 1,325,751
3,260,293 2,903,609
Total assets 5,953,203 2,909,201
Equity attributable to the owner of the parent
Share capital 17 11,425,061 6,832,564
Reconstruction reserve 2,386,321 2,797,421
Warrants 19 (376,820) (208,887)
issuance cost
Share based payments reserve 19 729,700 458,840
Retained deficit (8,456,078) (7,054,229)
Total equity 5,708,184 2,825,709
Current liabilities
Trade and other payables 15 245,019 83,492
Total liabilities 245,019 83,492
Total liabilities and equity 5,953,203 2,909,201
* For further information on the restatement, please refer to note 27 on page
31 of these financial statements
The accompanying accounting policies and notes on pages 9 to 31 form an
integral part of these financial statements.
The Company has adopted the exemption under Companies (Jersey) Law 1991
Article 105 (11) not to prepare separate accounts. The Group reported a loss
after taxation for the year of £1.28 million (2020: £1.59 million loss). The
financial statements on pages 65 to 91 were approved and authorised for issue
by the Board of Directors on 28 June 2022 and were signed on its behalf by:
Paul Griffiths
Director
Consolidated statement of changes in equity
For the year ended 31 December 2021
Attributable to owner of the parent
Share Capital Reconstruction reserve Warrants issuance cost reserve Share based payments reserve Retained deficit Total
£ £
£ £ (restated)* £ £ (restated)*
Balance at 31 December 2019 2,346,336 3,270,648 (108,436) 256,416 (5,465,159) 299,805
-
Issue of ordinary share capital 4,486,228 - - - - 4,486,228
Issue of warrants - - - 100,451 - 100,451
Fair value of share options - - - 101,973 - 101,973
Loan note conversion premium - (473,227) - - - (473,227)
Reallocation of warrants issuance costs * - - (100,451) - - (100,451)
Total contributions by and distributions to owners of the parent recognised 6,832,564 2,797,421 (208,887) 458,840 (5,465,159) 4,414,779
directly in equity
Loss for the year - - - - (1,589,070) (1,589,070)
Total comprehensive income for the year - - - - (1,589,070) (1,589,070)
Balance at 31 December 2020 6,832,564 2,797,421 (208,887) 458,840 (7,054,229) 2,825,709
Issue of ordinary share capital 4,585,000 - - - - 4,585,000
Issue of warrants - - - 195,327 - 195,327
Fair value of share options - - - 75,533 - 75,533
Transaction costs (411,100) - - - (411,100)
Exercised warrants 7,497 - 3,028 - (3,028) 7,497
Warrants issuance costs - - (170,961) - - (170,961)
Total contributions by and distributions to owners of the parent recognised 11,425,061 2,386,321 (376,820) 729,700 (7,057,257) 7,107,005
directly in equity
Loss for the year - - - - (1,398,821) (1,398,821)
Total comprehensive income for the year - - - - (1,398,821) (1,398,821)
Balance at 31 December 2021 11,425,061 2,386,321 (376,820) 729,700 (8,456,078) 5,708,184
* For further information on the restatement, please refer to note 27 on page
31 of these financial statements.
The accompanying accounting policies and notes on pages 9 to 31 form an
integral part of these financial statements.
Consolidated statement of cash flows
For the year ended 31 December 2021
01.01.2021 to 31.12.2021 01.01.2020 to 31.12.2020
£
Notes £ (restated)*
Cash flows from operating activities
Loss for the period before taxation (1,398,821) (1,589,070)
Adjustments for:
Issue of share options 20 75,534 101,973
Finance expense 5 19 128,765
Share issue costs - 195,000
Fair value of warrants 24,366 -
Amortisation of transaction costs 5 - 96,594
Depreciation 2,338 1,642
Foreign exchange (244,281) 252,867
(Increase)/decrease in trade and other receivables (6,059) 25,919
Increase/(decrease) in trade and other payables 161,527 (196,346)
Net cash used in operating activities (1,385,377) (982,656)
Cash flow from investing activities
Loan advances (115,881) (290,419)
Purchase of computer equipment 11 (2,629) (842)
Capitalised costs - Project Guercif - Morocco 10 (2,687,026) -
Disposal of computer equipment 11 - 767
Net cash used in investing activities (2,805,536) (290,494)
Cash flows from financing activities
Proceeds from issuance of shares, net of issue costs 4,173,900 3,535,550
Proceeds from issue of convertible loan notes, net of issue costs 7,497 -
Redemption of convertible loan notes - (746,000)
Finance expense paid (19) (115,315)
Net cash generated from financing activities 4,181,378 2,674,235
Effect of exchange rates on cash 206,819 (185,049)
Net increase in cash and cash equivalents 197,284 1,216,035
Cash and cash equivalents at the beginning of the year 1,325,751 109,716
Cash and cash equivalents at the end of the year 1,523,035 1,325,751
* For further information on the restatement, please refer to note 27 on page
31 of these financial statements
The accompanying accounting policies and notes on pages 9 to 31 form an
integral part of these financial statements.
Statement of accounting policies
For the year ended 31 December 2021
General information
Predator Oil & Gas Holdings Plc ("the Company") and its subsidiaries
(together "the Group") are engaged principally in the operation of an oil and
gas development business in the Republic of Trinidad and Tobago and an
exploration and appraisal portfolio in Ireland and Morocco. The Company's
ordinary shares are on the Official List of the UK Listing Authority in the
standard listing section of the London Stock Exchange.
Predator Oil & Gas Holdings plc was incorporated in 2017 as a public
limited company under Companies (Jersey) Law 1991 with registered number
125419. It is domiciled and registered at IFC5, 3rd Floor, Castle Street, St
Helier, Jersey, JE2 3BY from 28 February 2022.
Basis of preparation and going concern assessment
The principal accounting policies adopted in the preparation of the financial
information are set out below. The policies have been consistently applied
throughout the current year and prior year, unless otherwise stated. These
financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the
International Accounting Standards Board (IASB) as adopted by the European
Union and with those parts of the Companies (Jersey) Law, 1991 applicable to
companies preparing their accounts under IFRS. The Company has adopted the
exemption under Companies (Jersey) Law 1991 Article 105 (11) not to prepare
separate accounts.
The consolidated financial statements incorporate the results of Predator Oil
& Gas Holdings Plc and its subsidiary undertakings as at 31 December 2021.
The financial statements are prepared under the historical cost convention on
a going concern basis. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using consistent
accounting policies. All intra-group balances, transactions, income and
expenses and profits and losses resulting from intra-group transactions that
are recognised in assets, are eliminated in full. Subsidiaries are fully
consolidated from the date of acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date that such
control ceases.
The preparation of the financial statements requires an assessment on the
validity of the going concern assumption. At the date of these financial
statements the Directors expect that the Group will require further funding
for the Group's longer term corporate overheads; an award of either or both of
the Group's successor authorisations in the Republic of Ireland; the execution
of a discretionary drilling programme in the Guercif Licence in Morocco and
entry into the First Extension Period of the Guercif Petroleum Agreement; and
for the development of new CO2 EOR projects in the Republic of Trinidad and
Tobago for which there are currently no commitments to finance. The Directors
are confident that existing funds are adequate to meet the Group's firm
commitments over the next 18 months allowing for a reduction of the Group's
corporate overheads to conserve cash if and when required. The Directors are
confident, based on their previous track record, that the Group will be able
to raise further funds as it considers appropriate to meet requirements for
discretionary work programme options and ensuing commitments if exercised over
the next 24 months, in cash, joint venture or farminee partner equity, share
issue, debt finance or otherwise. Failing the success of the fund-raising
activities the Directors will be prepared not to enter into any discretionary
work programmes or new commitments and liabilities. Under these circumstances
the Directors would continue to focus on the return of the US$1,500,000 bank
guarantee in favour of ONHYM in respect of the Initial Period of the Guercif
Petroleum Agreement and on amicably resolving the dispute with FRAM
Exploration Trinidad Ltd. whereby the Group can potentially receive value for
its investment in the Inniss-Trinity pilot CO2 EOR Project and its loan
advanced to Fram Exploration Trinidad Ltd.
Change in Accounting Policies
At the date of approval of these financial statements, certain new standards,
amendments and interpretations have been published by the International
Accounting Standards Board but are not as yet effective and have not been
adopted early by the Group. All relevant standards, amendments and
interpretations will be adopted in the Group's accounting policies in the
first period beginning on or after the effective date of the relevant
pronouncement.
At the date of authorisation of these financial statements, a number of
Standards and Interpretations were in issue but were not yet effective. The
Directors do not anticipate that the adoption of these standards and
interpretations, or any of the amendments made to existing standards as a
result of the annual improvements cycle, will have a material effect on the
financial statements in the year of initial application.
Standards and amendments to existing standards effective 1 January 2022
- Amendment to IFRS 16 Leases - COVID-19 related rent concessions Extension of
the practical expedient
- Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 - Annual Improvements to
IFRS Standards 2018-2020
- Amendments to IAS 1 - Presentation of financial statements on classification
of liabilities
- Amendment to IAS 12 - deferred tax related to assets and liabilities arising
from a single transaction
- Amendment to IFRS 17 - Insurance contracts
New Standards, amendments and interpretations effective after 1 January 2020
and have not been early adopted
The Group does not believe that the standards not yet effective, will have a
material impact on the consolidated financial statements.
Areas of estimates and judgement
The preparation of the group financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of current
events and actions, actual results may ultimately differ from those estimates.
The Group commenced operations in 2018 and did not enter into material
operational transactions requiring significant estimates and assumptions to be
effected in preparation of financial statements for the reporting period. The
critical accounting estimates and judgements made are in line with those made
in the audited financial statements for the year ended 31 December 2018, with
the exception of IFRS 6 - Exploration and evaluation costs of mineral
resources being introduced in this year. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities in the financial year are discussed below:
(a) Going Concern and Inter-company loan recovery
The Group's cash flow projections indicate that the Group should have
sufficient resources to continue as a going concern.
The recoverability of the inter-company loans advanced by the Company to
subsidiaries depends also on the subsidiaries realising their cash flow
projections. In the case of Predator Oil & Gas Trinidad Ltd. ("POGT") this
cannot now be achieved through profits from production revenues from the
Inniss-Trinity CO2 EOR Project, which was unilaterally terminated for no
reason by FRAM Exploration Trinidad Ltd. in breach of the terms of the
Inniss-Trinity Well Participation Agreement.
In the case of Predator Gas Ventures Ltd., recovery of inter-company loans is
dependent on the Guercif drilling programme (executed in 2021 and with
discretionary follow-up drilling proposed for 2022) successfully recovering
commercial quantities of gas that can be developed and brought to market based
on a pilot Compressed Natural Gas development option. The Moroccan industrial
gas market is commercially attractive and even relatively low volumes of
discovered gas at a scoping production rate of 5 mm cfgpd (or even less with
the rise in oil and gas commodity prices) are very likely to be economic
taking into account also Morocco's benign petroleum tax regime. MOU-1
successfully encountered gas and was suspended and completed for rigless
testing in 2022. Until gas test rates are confirmed the commerciality of the
well cannot be determined. The Company has appointed SLR Consulting Ireland
Ltd. to update the Company's Moroccan CPR and it is likely its gas resources
attributed to the MOU-1 drilling target will be re-categorised as Contingent
Resources pending development from the pre-drill status of Prospective
Resources. Re-categorising the gas resources will potentially assist with a
partial sale of equity in the discovered gas to fund a pilot CNG development.
In the case of Predator Oil and Gas Ventures Ltd. and Mag Mell Energy Ireland
Ltd., the quantum of inter-company loans remain relatively small and no
substantive non-discretionary expenditures are anticipated going forward. The
change in business strategy to focus on an FSRU LNG gas import option and gas
storage is timely. The Directors believe that the business strategy for
Ireland, focussed on security of energy supply and gas, is attractive to
potential joint venture partners and investors in gas infrastructure. This
is demonstrated by the execution at the end of the year under review of a
collaboration agreement in the area of gas marketing with one of Ireland's
leading company's in the field of the marketing of petroleum products. The
Company believes that given its unique position in Ireland as having the
potential to realise a diverse portfolio of gas assets covering LNG import,
gas storage, gas field development and gas exploration gives it the
opportunity to promote a number of different business development options to
include commercial propositions that would recover the modest level of
investment in its projects represented by the inter-company loans. All of the
Company's projects are being actively reviewed by the Irish regulatory
authorities.
Management have also assessed that the carrying value and recoverability of
the investment, including inter-company receivables, is ultimately dependent
on the carrying value of the underlying assets of the Group. Further
evidence of its realisable value can also be obtained by reference to the
market capitalisation of the Group on the London Stock exchange at the date of
this report which can be used as a guide and to provide further assurance of
its carrying value subsequent to the year end.
b) Recoverability of Loan
The Group entered into an agreement (the "Loan Agreement") with FRAM
Exploration Trinidad Ltd. ("FRAM"), a wholly owned subsidiary of Challenger
Energy Group Plc, who are listed on AIM.
Since the unilateral termination for no reason by FRAM of the Inniss-Trinity
CO2 EOR Project in breach of the terms of the Inniss-Trinity Well
Participation Agreement, the Directors have sought to engage with FRAM to seek
to settle the dispute. The Directors are of the opinion that there is a
willingness on the part of FRAM Exploration Trinidad Ltd. to find a mechanism
to amicably settle the dispute. The Directors do not believe that this will
result in a cash settlement in favour of the Company but rather a settlement
in kind involving the acquisition of an asset and/or the creation of a
business opportunity that would have a resulting value that could be offset to
eliminate the liabilities created by FRAM Exploration Trinidad Ltd. under the
Well Participation Agreement, which has not been formally terminated. Until
commercial negotiations are either successfully or unsuccessfully concluded
the Directors are of the opinion that the investment made by POGT in the
Inniss-Trinity CO2 EOR Project may be recoverable in some form.
On 7 June 2022 the Company announced an update on the Company's position with
regard to the loan receivable (the "FRAM Loan") from FRAM Exploration Trinidad
Ltd. ("FRAM"), a wholly owned subsidiary of Challenger Energy Group Plc
("Challenger"), in respect of the Inniss-Trinity CO2 EOR Project (the "CO2 EOR
Project"). The CO2 EOR Project was prematurely and unilaterally terminated by
Challenger on 1 August 2021.
In the absence of receiving a response to the Company's correspondence to
Challenger dated 23 March 2022, and subsequent follow-up correspondence
proposing the terms for a potential commercial settlement, receipt of which
was acknowledged by Challenger, and in the light of FRAM and Challenger's
refusal in writing to comply with a request for information from the Company
via its auditors that was necessary for its financial reporting of the FRAM
Loan, the Company has elected to initiate a legal process to initially
prioritise the recovery of the FRAM Loan.
Pending the outcome of commercial negotiations with FRAM Management to settle
the dispute management have concluded that there is no impairment required at
the reporting date. Should negotiations not reach a satisfactory conclusion
for the Company then management consider that the FRAM Loan cannot be
recovered and an impairment of £591,065 would be required.
The Company notes the Challenger RNS dated 8 June 2022 but does not accept its
conclusions. The Company will not elaborate further at this time so as not to
prejudice any future legal process
c) Share based payments
The Group has applied the requirements of IFRS 2 Share-based Payment for all
grants of equity instruments.
The Group operates an equity settled share option scheme for directors. The
increase in equity is measured by reference to the fair value of equity
instruments at the date of grant. The liabilities assumed under these
arrangements into shares in the parent company, under an option arrangement.
The fair value of the service received in exchange for the grant of options
and warrants is recognised as an expense. Equity-settled share-based payments
are measured at fair value (excluding the effect of non-market based vesting
conditions) at the date of grant. The fair value determined at the grant date
of equity-settled share-based payment is expensed on a graded vesting basis
over the vesting period, based on the Group's estimate of shares that will
eventually vest and adjusted for the effect of non-market based vesting
conditions.
During the year the Company issued warrants in lieu of fees to stockbrokers.
The warrant agreements do not contain vesting conditions and therefore the
full share-based payment charge, being the fair value of the warrants using
the Black-Scholes model, has been recorded immediately. The charge is
recognised within the statement of changes in equity. The valuation of these
warrants involves making a number of estimates relating to price volatility,
future dividend yields and continuous growth rates (see Note 20).
The fair value of the share options is estimated by using the Black Scholes
model on the date of grant based on certain assumptions. Those assumptions are
described in note 20 and include, among others, the expected volatility and
expected life of the options. The expected life used in the model has been
adjusted, based on management's best estimate, for the effects of
non-transferability exercise restrictions and behavioural considerations.
The market price used in the model is the issue price of the Company's shares
at the last placement of shares immediately preceding the calculation date.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to profit or loss over the remaining
vesting period.
Where equity instruments are granted to persons or entities other than staff,
the fair value of goods and services received is charged to profit or loss,
except where it is in respect to costs associated with the issue of shares, in
which case, it is charged to the share premium account.
The fair values calculated are inherently subjective and uncertain due to the
assumptions made and the limitation of the calculations used. Further details
of the specific amounts concerned are given in note 20.
d) Intangible assets - Project Guercif
All expenditure relating to oil and gas activities is capitalised in
accordance with the "successful efforts" method of accounting, as described in
IFRS 6 - "Exploration for and Evaluation of Mineral Resources". Under this
standard, the Group's exploration and appraisal activities are capitalised as
intangible assets.
The direct costs of exploration and appraisal are initially capitalised as
intangible assets, pending determination of the existence of commercial
reserves in the licence area. Such costs are classified as intangible
assets based on the nature of the underlying asset, which does not yet have
any proven physical substance. Exploration and appraisal costs are held,
un-depreciated, until such a time as the exploration phase on the licence area
is complete or commercial reserves have been discovered.
If no commercial reserves exist, then that particular exploration/appraisal
effort was "unsuccessful" and the costs are written off to the income
statement in the period in which the evaluation is made. The success or
failure of each exploration/appraisal effort is judged on a field-by-field
basis.
Net proceeds from any disposal of an exploration asset are initially credited
against the previously capitalised costs. Any surplus proceeds are credited to
the income statement. Net proceeds from any disposal of exploration assets are
credited against the previously capitalised cost. A gain or loss on disposal
of an exploration asset is recognised in the income statement to the extent
that the net proceeds exceed or are less than the appropriate portion of the
net capitalised costs of the asset.
Upon commencement of production, capitalised costs will be amortised on a unit
of production basis which is calculated to write off the expected cost of each
asset over its life in line with the depletion of proved and probable
reserves.
The Directors have assessed the value of Project Guercif and consider that the
fair value of the exploration asset is equal to the consideration paid to
date.
Basis of consolidation
Where the Group has control over an investee, it is classified as a
subsidiary. The Group controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and
its subsidiaries ("the Group") as if they formed a single entity.
Inter-company transactions and balances between Group companies are therefore
eliminated in full. Uniform accounting policies are applied across the Group.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial
position, the acquirer's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is obtained.
They are deconsolidated from the date on which control ceases.
Financial assets
The Financial assets currently held by the Group and Company are classified as
loans and receivables and cash and cash equivalents. These assets are
non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are initially recognised at fair value
plus transaction costs that are directly attributable to their acquisition or
issue, and are subsequently carried at amortised cost using the effective
interest rate method less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default
or significant delay in payment) that the Group will be unable to collect all
of the amounts due under the terms receivable, the amount of such a provision
being the difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired receivable. For
receivables, which are reported net, such provisions are recorded in a
separate allowance account with the loss being recognised within
administrative expenses in the statement of comprehensive income. On
confirmation that the receivable will not be collectable, the gross carrying
value of the asset is written off against the associated provision.
Cash and cash equivalents
These amounts comprise cash on hand and balances with banks. Cash equivalents
are short term, highly liquid accounts that are readily converted to known
amounts of cash. They include short-term bank deposits and short-term
investments.
Any cash or bank balances that are subject to any restrictive conditions, such
as cash held in escrow pending the conclusion of conditions precedent to
completion of a contract, are disclosed separately as "Restricted cash". The
security deposit is recognised within trade and other receivables in note
13.
There is no significant difference between the carrying value and fair value
of receivables.
Derecognition
The Group derecognises a financial asset when the contractual rights to the
cash flow from the asset expire, or it transfers the asset and substantially
all the risk and rewards of ownership of the asset to another entity.
Financial liabilities
The Group's financial liabilities consist of trade and other payables
(including short terms loans) and long term secured borrowings. These are
initially recognised at fair value and subsequently carried at amortised cost,
using the effective interest method. All interest and other borrowing costs
incurred in connection with the above are expensed as incurred and reported as
part of financing costs in profit or loss. Where any liability carries a right
to convertibility into shares in the Group, the fair value of the equity and
liability portions of the liability is determined at the date that the
convertible instrument is issued, by use of appropriate discount factors.
Derecognition
The Group derecognises a financial liability when the obligations are
discharged, cancelled or they expire.
Foreign currency
The parent company raises funds and most of its expenses paid are in in
British Pound Sterling. The same applies to its subsidiaries, where most of
its expenses paid are also in British Pound Sterling. This results in the
functional currency of the Group and all of its subsidiaries being the British
Pound Sterling. The Group's financial statements are therefore prepared in
British Pound Sterling.
Transactions entered into by the Group entities in a currency other than the
currency of the primary economic environment in which it operates (the
"functional currency") are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at the
rates ruling at the date of the statement of financial position. Exchange
differences arising on the retranslation of unsettled monetary assets and
liabilities are similarly recognised immediately in profit or loss, except for
foreign currency borrowings qualifying as a hedge of a net investment in a
foreign operation.
The exchange rates applied at each reporting date were as follows:
31 December 2021 £1: US$1.3846 and £1: Euro1.1633
31 December 2020 £1: US$1.3642 and £1: Euro1.1089
Investments in subsidiaries
The Group's investment in its subsidiaries are recorded at cost.
Plant and equipment
The only assets the Group currently has are personal computers.
Depreciation is provided on equipment so as to write off the carrying value of
items over their expected useful economic lives. It is applied at the
following rates:
Computer equipment 20% per annum, straight line
Share options and Equity Instruments
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to profit or loss over the remaining
vesting period. Where equity instruments are granted to persons other than
consultants, the fair value of goods and services received is charged to
profit or loss, except where it is in respect to costs associated with the
issue of shares, in which case, it is charged to the share capital or share
premium account.
Taxation
The Company and all subsidiaries ('the Group') are registered in Jersey,
Channel Islands and are taxed at the Jersey company standard rate of 0%.
However, the Group's projects are situated in jurisdictions where taxation may
become applicable to local operations.
The major components of income tax on the profit or loss include current and
deferred tax.
Current tax
Current tax is based on the profit or loss adjusted for items that are
non-assessable or disallowed and is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Tax is charged or credited to the statement of comprehensive income, except
when the tax relates to items credited or charged directly to equity, in which
case the tax is also dealt with in equity.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the statement of financial position differs to its
tax base, except for differences arising on:
• The initial recognition of an asset or liability in a transaction which is
not a business combination and at the
time of the transaction affects neither accounting or taxable profit;
and
• Investments in subsidiaries and jointly controlled entities where the
Group is able to control the timing of the
reversal of the difference and it is probable that the differences will
not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it
is probable that taxable profit will be available against which the difference
can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the reporting date and are expected
to apply when deferred tax liabilities/ (assets) are settled/ (recovered).
Deferred tax balances are not discounted.
The Group currently does not hold any deferred tax asset or liability.
Notes to the financial statements
For the year ended 31 December 2021
1 Segmental analysis
The Group operates in one business segment, the exploration, appraisal and
development of oil and gas assets. The Group has interests in three
geographical segments being Africa (Morocco), Europe (Ireland) and the
Caribbean (Trinidad and Tobago).
The Group's operations are reviewed by the Board (which is considered to be
the Chief Operating Decision Maker ('CODM')) and split between oil and gas
exploration and development and administration and corporate costs.
Exploration and development are reported to the CODM only on the basis of
those costs incurred directly on projects.
Administration and corporate costs are further reviewed on the basis of spend
across the Group.
Decisions are made about where to allocate cash resources based on the status
of each project and according to the Group's strategy to develop the
projects. Each project, if taken into commercial development, has the
potential to be a separate operating segment. Operating segments are
disclosed below on the basis of the split between exploration and development
and administration and corporate.
Year ended 31 December 2021 Europe Caribbean Africa Corporate
£'000 £'000 £'000 £'000
Gross loss
Administrative and overhead expenses (150) (141) (266) (841)
Share options and warrant expense - - - -
Finance expense - - - -
Loss for the year from continuing operations (150) (141) (266) (841)
Total reportable segment intangible assets - - 2,687 -
Total reportable segment non-current assets - - - 6
Total reportable segment current assets 4 595 1,173 1,488
Total reportable segment assets 4 595 3,860 1,494
Total reportable segment liabilities (10) (9) (81) (145)
Year ended 31 December 2020 Europe Caribbean Africa Corporate
*(restated) £'000 £'000 £'000 £'000
Gross Loss
Administrative and overhead expenses (128) (187) (235) (814)
Share options and warrant expense - - - -
Finance expense - - - (225)
Loss for the year from continuing operations (128) (187) (235) (1,039)
Total reportable segment non-current assets - - - 6
Total reportable segment current assets 2 512 1,108 1,282
Total reportable segment assets 2 512 1,108 1,288
Total reportable segment liabilities (1) (14) (3) (65)
2020
2021 Group
Group £'000
2 Group loss from operations £'000 (restated)*
Operating loss is stated after charging/(crediting):
Auditors' remuneration (note 3) 28 23
Depreciation 2 2
Share option expense - -
Foreign exchange (gain)/loss (14) 105
2021 2020
Group Group
3 Auditors remuneration £'000 £'000
Audit of the accounts of the Group 28 23
28 23
2020
2021 Group
Group £'000
4 Administration expenses £'000 (restated)*
Administration fees 85 81
Design, publishing, presentation and printing fees 1 15
Audit fee 28 23
Annual return fee 1 1
Non-executive director fees 90 74
Share based payments - options 76 102
Share based payments - warrants 24 -
Insurance 59 11
Legal and professional fees 52 86
Listing costs 303 155
Website costs 4 3
Directors' fees 229 161
Technical Consultancy fees 360 286
Project costs - 150
Travel expenses 41 37
Computer/system costs/IT support 4 23
Bank charges 49 42
Depreciation 2 2
Sundry expenses 4 1
Foreign exchange (14) 105
Formation costs - 3
Accountancy fees - 3
1,399 1,364
2021 2020
Group Group
5 Finance costs £'000 £'000
Loan interest paid - 17
Loan redemption fees - 112
Amortisation of transaction costs - 96
- 225
2021 2020
Group Group
6 Group taxation £'000 £'000
Loss on ordinary activities before tax (1,399) (1,589)
Loss on ordinary activities at Jersey standard 0% tax (2020: 0%) - -
Tax charge for the year - -
No charge to taxation arises due to the losses incurred.
Predator Gas Ventures Limited is subject to tax in its operating jurisdiction
of Morocco, however, the Company is loss making and has no taxable profits to
date.
No deferred tax asset has been recognised on accumulated tax losses because of
uncertainty over the timing of future taxable profits against which the losses
may be offset.
2021 2020
Group Group
7 Personnel £'000 £'000
Executive and non-executive directors including bonuses 546 521
Share option scheme 90 102
636 623
The average number of personnel (including directors) during the year was:
Management - (Executive directors) 2 2
Non-management - (Non-executive directors) 2 2
4 4
Four Directors at the end of the period have share options receivable under
long term incentive schemes. The highest paid Director received an amount of
£229,850 (2020: £178,200). The Group does not have employees. All personnel
are engaged as service providers.
2020
2021 Group
8 Earnings per share Group (restated)*
Weighted average number of shares 266,433,024 209,959,715
Loss for the year (£'000) (1,280) (1,589)
Earnings per share basic and diluted (pence) (0.5) (0.8)
Dilutive loss per Ordinary Share equals basic loss per Ordinary Share as, due
to the losses incurred in 2021 and 2020, there is no dilutive effect from the
subsisting share options.
9 Loss for the financial year
The Group has adopted the exemption in terms of Companies (Jersey) law 1991
and has not presented its own income statement in these financial statements.
10 Intangible asset Project Guercif £
Gross carrying amount
Balance at 1 January 2021 - -
Additions, separately acquired 2,687,026 2,687,026
At 31 December 2021 2,687,026 2,687,026
Depreciation and impairment
Balance at 1 January 2021 - -
Depreciation - -
Balance at 31 December 2021 - -
Carrying amount at 31 December 2021 2,687,026 2,687,026
On 18 March 2021, the Company announced scoping and development and operating
costs for a pilot Compressed Natural Gas ("CNG") Project at Guercif in Morocco
based on a 10mm cfgpd profile for 10 years, with net capital costs to the
Company of £8.2 to £8.6 million.
The Directors confirmed that on the 20 June 2021, MOU-1 well was spudded at
01:00 hours with drilling ahead in progress to the first planned 133/8" casing
point. The well is forecast to take up to 20 days to drill and to run wireline
logs.
The Directors announced on 6 July 2021 the completion of the drilling of
MOU-1, which is operated in a joint venture with the Office National des
Hydrocarbures et des Mines ("ONHYM") acting on behalf of the State (25%) on
schedule and within pre-drill budget estimates. On the basis of the occurrence
of formation gas shows at several levels and the results of the wireline
logging programme the well was suspended and completed for future rigless well
testing.
All costs relating to Project Guercif have been capitalised and will be
depreciated once gas discovery is declared commercial and a Plan of
Development has been approved.
· The Directors have undertaken an assessment of the following
areas and circumstances that could indicate the existence of impairment:
The Group's right to explore in an area has expired, or will expire in the
near future without renewal;
· No further exploration or evaluation is planned or budgeted for;
· A decision has been taken by the Board to discontinue exploration
and evaluation in an area due to the absence of a commercial level of
reserves; or
· Sufficient data exists to indicate that the book value will not
be fully recovered from future development and production.
Following their assessment, the Directors concluded that no impairment charge
was required at 31 December 2021.
£
11 Property, plant and equipment
Cost
At 31 December 2020 8,551
Additions 2,630
At 31 December 2021 11,181
Amortisation
At 31 December 2020 2,959
Charge for the year 2,338
At 31 December 2021 5,297
Carrying amount
At 31 December 2020 5,592
At 31 December 2021 5,884
2021 2020
Group Group
12 Investment in subsidiaries £'000 £'000
Cost at the beginning of the year 537 537
Additions - -
Disposals - -
537 537
The principal subsidiaries of Predator Oil and Gas Holdings Plc, all of which
are included in these consolidated Annual Financial Statements, are as
follows:
Country of registration Class Proportion held by Group Nature of business
Predator Oil and Gas Ventures Limited Jersey Ordinary 100% Licence options in offshore Ireland
Predator Oil and Gas Trinidad Limited Jersey Ordinary 100% Profit rights for production revenues from a CO2 enhanced oil recovery project
Predator Gas Ventures Limited Jersey Ordinary 100% Exploration licence onshore Morocco
Mag Mell Energy Ireland Ltd Jersey Ordinary 100% Licence application to import liquified natural gas
(Formerly Predator LNG Ireland Limited)
Since 28 February 2022, the registered address of all of the Group's companies
is at 3rd Floor, IFC5, Castle Street, St Helier, JE2 3BY, Channel Islands. The
previous registered address was 3rd Floor, Standard Bank House, 47-49 La Motte
Street, Jersey, JE2 4SZ, Channel Islands.
2021 2020
Group Group
13 Trade and other receivables £'000 £'000
Current
Loans receivable 591 468
Security deposit (US$1,500,000) 1,111 1,100
Prepayments and other debtors 35 10
1,737 1,578
Loans receivable relates to a loan of £591,065 effected to FRAM Exploration
Trinidad Limited ('FRAM') in respect of the CO2 EOR project comprising
USD360,096 advanced as cash and USD402,120 and GBP26,461 advanced as
equipment. The loans are denominated in both US Dollars and British Pound
Sterling, which are unsecured, interest free and repayable at the discretion
of Predator Oil & Gas Trinidad Limited provided not less than one week's
notice is given. The CO2 EOR project has been unilaterally terminated by FRAM
in breach of the Well Participation Agreement with FRAM dated 17 November
2017. Pending the outcome of commercial negotiations to settle the dispute
with FRAM the aforesaid loan may or may not be recovered.
A security deposit of $1,500,000 is held by Barclays Bank in respect of a
guarantee provided to Office National des Hydrocarbures et des Mines (ONHYM)
as a condition of being granted the Guercif exploration licence. These funds
are refundable on the completion of the Minimum Work Programme set out in the
terms of the Guercif Petroleum Agreement and Association Contract.
Prepayments in are in respect of amounts paid in advance to the Financial
Conduct Authority, media service providers and an insurance premium.
There are no material differences between the fair value of trade and other
receivables and their carrying value at the year end.
Further information on the loans receivable from FRAM has been disclosed on
note 25.
2021 2020
Group Group
14 Cash and cash equivalents £'000 £'000
Royal Bank of Scotland International Limited 1,481 1,317
Barclays Bank Plc 2 9
Société Générale 40 -
1,523 1,326
2021 2020
Group Group
15 Trade and other payables £'000 £'000
Current
Trade payables 245 83
245 83
All payables are required to be settled within 30 days.
16 Financial instruments - risk management
Details of the significant accounting policies in respect of financial
instruments are disclosed on pages 70 to 73. The Group's financial instruments
comprise cash and items arising directly from its operations such as other
receivables, trade payables and loans.
Financial risk management
The Board seeks to minimise its exposure to financial risk by reviewing and
agreeing policies for managing each financial risk and monitoring them on a
regular basis. No formal policies have been put in place in order to hedge the
Group's activities to the exposure to currency risk or interest risk; however,
the Board will consider this periodically.
The Group is exposed through its operations to the following financial risks:
• Credit risk
• Market risk (includes cash flow interest rate risk and foreign currency
risk)
• Liquidity risk
The policy for each of the above risks is described in more detail below.
The principal financial instruments used by the Group, from which financial
instruments risk arises are as follows:
• Receivables
• Cash and cash equivalents
• Trade and other payables (excluding other taxes and social security)
• Loans: payable within one year and payable in more than one year
The table below sets out the carrying value of all financial instruments by
category and where applicable shows the valuation level used to determine the
fair value at each reporting date. The fair value of all financial assets
and financial liabilities is not materially different to the book value.
2021 2020
£'000 £'000
Cash and trade receivables
Cash and cash equivalents 1,523 1,326
Trade and other receivables 1,737 1,578
Other liabilities
Trade and other payables (excluding short term loans) 245 83
Credit risk
Financial assets, which potentially subject the Group to concentrations of
credit risk, consist principally of cash, short-term deposits and other
receivables. Cash balances are all held at recognised financial institutions.
Other receivables are presented net of allowances for doubtful receivables.
Other receivables currently form an insignificant part of the Group's business
and therefore the credit risks associated with them are also insignificant to
the Group as a whole.
The Group has a credit risk in respect of inter-company loans to subsidiaries.
The Company is owed £6,015,001 by its subsidiaries. The recoverability of
these balances is dependent on the commercial viability of the exploration
activities undertaken by the respective subsidiary companies. The credit risk
of these loans is managed as the directors constantly monitor and assess the
viability and quality of the respective subsidiary's investments in intangible
oil & gas assets.
Maximum to credit risk
The Group's maximum exposure to credit risk by category of financial
instrument is shown in the table below:
2021 2021 2020 2020
carrying maximum carrying maximum
value exposure value exposure
£'000 £'000 £'000 £'000
Cash and cash equivalents 1,523 4,009 1,326 3,327
Receivables 1,737 1,737 1,578 1,578
The holding company's maximum exposure to credit risk by class of financial
instrument is shown in the table below:
2021 2021 2020 2020
carrying maximum carrying maximum
value exposure value exposure
£'000 £'000 £'000 £'000
Cash and cash equivalents 1,473 3,893 1,271 3,272
Receivables 1,737 1,737 1,578 1,578
Loans to Group Companies 5,819 5,819 2,507 2,507
Market risk
Cash flow interest rate risk
The Group has adopted a non-speculative policy on managing interest rate
risk. Only approved financial institutions with sound capital bases are used
to borrow funds and for the investments of surplus funds.
The Group seeks to obtain a favourable interest rate on its cash balances
through the use of bank deposits. The Group's bank did not pay interest on
cash balances during the year, therefore the Group is not currently affected
by interest rate changes. At 31 December 2021, the Group had a cash balance of
£1.523 million (2020: £1.326 million) which was made up as follows:
2021 2020
£'000 £'000
Sterling 848 165
United States Dollar 632 1,161
Euro 3 -
Moroccan dirham 40 -
1,523 1,326
The Group had no interest bearing debts at the year end (2020: £nil).
Foreign currency risk
Foreign exchange risk is inherent in the Group's activities and is accepted as
such. The majority of the Group's expenses are denominated in Sterling and
therefore foreign currency exchange risk arises where any balance is held, or
costs incurred, in currencies other than Sterling. At 31 December 2021 and 31
December 2020, the currency exposure of the Group was as follows:
Sterling US Dollar Other Total
£'000 £'000 £'000 £'000
at 31 December 2021
Cash and cash equivalents 848 632 43 1,523
Trade and other receivables 1,173 565 - 1,737
Trade and other payables 163 43 38 245
at 31 December 2020
Cash and cash equivalents 165 1,161 - 1,326
Trade and other receivables 13 1,565 - 1,578
Trade and other payables 83 - - 83
Liquidity risk
Any borrowing facilities are negotiated with approved financial institutions
at acceptable interest rates. All assets and liabilities are at fixed and
floating interest rate. The Group seeks to manage its financial risk to ensure
that sufficient liquidity is available to meet the foreseeable needs both in
the short and long term. See also references to Going Concern disclosures in
the Strategic Report.
Capital
The objective of the directors is to maximise shareholder returns and minimise
risks by keeping a reasonable balance between debt and equity. At 31 December
2021 the Group had no debt (2020: £nil).
Number of shares Nominal value
17 Share capital
Issued and fully paid
Opening Balance 239,678,517 6,832,564
15 March 2021
Warrant option exercised 267,750 7,497
26 March 2021
Share issue 5,215,155 547,591
18 June 2021
Share issue 11,784,845 1,237,409
18 June 2021
Share issue 10,000,000 1,500,000
4 August 2021
Share issue 26,000,000 1,300,000
292,946,267 11,425,061
2021 2020
Group Group
18 Non-Current Liability £'000 £'000
Arato Global Opportunities LLC
Brought forward - 918
Redemptions - (1,015)
Amortisation of transaction costs - 97
- -
The Company entered into a Convertible Loan Note Instrument with Arato Global
Opportunities LLC on 15 February 2019 for £1,500,000, the nominal amount of
each note was £1.00 and could be increased to £1,750,000. The notes were
converted at 105% in multiples of £50,000 as a conversion price per ordinary
share being 90% of the VWAC for the 2 trading days preceding the conversion,
and to the extent not already redeemed or converted were to be redeemed in
full the earlier of 15 February 2021 or in the event of default.
The loan notes carried no coupon, and were repayable at a premium of 5%. A fee
of 10% of the principal amount applied if the loan notes were not converted
into equity prior to 15 February 2021. The lender was issued with 2,083,333
warrants at an exercise price of 12p with a vesting period of two years. Novum
Securities Limited, the arranger of the convertible loan notes, was issued
with 2,000,000 in warrants on the same terms.
The fair value of the 4,083,333 warrants were determined at £81,384.
Novum Securities Limited was paid a £90,000 placement fee in for the
Convertible Loan Note Instrument. The total transaction cost of £171,384 was
accounted for in terms of IFRS9 was offset against the carrying value of the
Convertible Loan Note and amortised according to the effective interest rate
method giving rise to a £96,594 charge to the income statement during the
year.
During the previous year loan notes with a value of £269,000 were converted
to shares. The remaining balance of the loan of £746,000 was repaid on 15 May
2020.
19 Other reserves
2020
2021 Group
Share based payments reserve Group £'000
£'000 (restated)*
Balance brought forward 459 256
Issue of warrants 171 101
Extension of warrants exercise date 24 -
Fair value movement of share options 76 102
Balance carried forward 730 459
2020
2021 Group
Warrants issuance cost reserve Group £'000
£'000 (restated)*
Balance brought forward (209) (108)
Issue of warrants (171) (101)
Exercised warrants at fair value 3 -
Balance carried forward (377) (209)
20 Share based payments
2020
Warrant and share option expense 2021 £'000
£'000 (restated)*
Warrant and share option expense:
- in respect of remuneration contracts 76 102
- in respect of financing arrangements - -
76 102
Share Options
The Group operates a share option plan for directors. Details of share
options granted are noted below:
On 24 May 2018 both Paul Griffiths and Ron Pilbeam were granted share options
each of 4,005,486 exercisable at £0.028 each and Steve Staley and Sarah Cope
were granted share options each of 1,001,370 exercisable at £0.028 each.
The options are subject to the following vesting conditions:
1/3 of the option shares 3,337,904 on gross production from the wells drilled
under the Well Participation Agreement Predator Oil and Gas Ventures Limited
and FRAM Exploration Trinidad Limited of 50 BOPD (measured over a consecutive
30 day period)
1/3 of the option shares 3,337,904 on incremental total gross production from
wells for which the Company receives revenues of 1,000 BOPD (measured over a
consecutive 30 day period)
Each option shall lapse 5 years after the date on which it vests, assuming it
is not exercised before then and no event occurs to cause it to lapse early.
On 27 October 2020 both Paul Griffiths and Ron Pilbeam were granted share
options each of 3,850,000 exercisable at £0.05 each and Steve Staley and
Louis Castro were granted share options each of 1,650,000 exercisable at
£0.05 each.
In February 2021 vesting requirements for all options held by Executive
Directors Paul Griffiths and Ronald Pilbeam became subject to any one of
certain targets being reached as follows:
Injection/sequestration of 600MT Liquid CO2 has been achieved for the CO2 EOR
Pilot Project under the Well Participation Agreement between Predator Oil
& Gas Trinidad Ltd and FRAM Exploration Trinidad Ltd dated 17 November
2017 and as amended from time to time; OR
A production test at AT-5X has flowed first oil; OR
An average daily increase of 75% in oil production at AT-12 has been achieved
over a consecutive period of 30 days when measured against historical AT-12
production over the period 1 January to 30 April 2020 immediately prior to the
commencement of CO2 injection in the AT-4 Block on 18 May 2020.
Vesting requirements for Non-executive Directors Steve Staley and Louis Castro
are subject to the expiration of six months from the date of grant.
The Board is not planning to consider any other components of director
remuneration during the year under review.
The Black Scholes model has been used to fair value the options, the inputs
into the model were as follows:
Grant date 2018 2020
Share price £0.028 £0.0325
Exercise price £0.028 £0.050
Term 5 years 7 years
Expected volatility 400% 400%
Expected dividend yield 0% 0%
Risk free rate 0.80% -0.09%
Fair value per option £0.028 £0.0325
Total fair value of the options £280,382 £357,500
During the year, the Company cancelled all share options issued to Ron Pilbeam
at the time of his resignation, which resulted in the removal of future
share option costs from the date of resignation. The total share option
reserve in respect of 2021 is £75,533 (2020: £101,973).
Warrants
During the year, the Company has granted the below warrants to Novum
Securities Limited ("Novum"):
• On 12 March 2021, 1,020,000 warrants were granted to Novum, which were
based on 6% of the total share placing of 17,000,000 shares. The Warrant
initially had an expiry date of 12 March 2024, however, Novum has requested
that the expiry date be extended by a further year to 12 March 2025;
• On 18 June 2021, 600,000 warrants were granted to Novum, which were based
on 6% of the total share placing of 10,000,000 shares. The Warrant initially
had an expiry date of 18 June 2024, however, Novum has requested that the
expiry date be extended by a further year to 18 June 2025;
As at the year ended 31 December 2021, the total number of warrants in issue
at are:
1. On 24 May 2018 2,321,428 warrants were issued exercisable at 2.8p with an
initial expiry date of 24 May 2021, with an option to extend the expiry date.
As at 31 December 2021, 267,750 warrants have been exercised, with the
outstanding exercisable warrants total being 2,053,678, which had their expiry
date extended by one year to 24 May 2022.
2. On 15 February 2019 4,083,333 warrants were issued exercisable at 12p with
an initial expiry date of 15 February 2021, with an option to extend the
expiry date by one year. Of the total, 2,083,333 warrants were issued to Arato
Global Opportunities LLP and expired on 15 February 2021 as the option to
extend was not actioned. The exercise date on the remainder 2,000,000 warrants
issued to Novum Securities Ltd was extended by one year to 15 February 2022
and as at 31 December 2021 remain outstanding.
3. On 17 February 2020 4,450,000 warrants were issued exercisable at 4p with
an initial expiry date of 27 February 2023. Of the total, 1,875,000 warrants
were issued to Optiva Securities Limited and the remainder 2,575,000 warrants
were issued to Novum Securities Limited. As at 31 December 2021, no warrants
have been exercised, with the outstanding exercisable warrants total being
4,450,000.
4. On 12 March 2021 1,020,000 warrants were issued to Novum Securities Limited
exercisable at 10.5p with an initial expiry date of 12 March 2024, which was
extended by a further year to 12 March 2025, following a request by the
holders, which was approved by the Directors. As at 31 December 2021, no
warrants have been exercised, with the outstanding exercisable warrants total
being 1,020,000.
5. On 18 June 2021 600,000 warrants were issued to Novum Securities Limited
exercisable at 15p with an initial expiry date of 18 June 2024, which was
extended by a further year to 18 June 2025, following a request by the
holders, which was approved by the Directors. As at 31 December 2021, no
warrants have been exercised, with the outstanding exercisable warrants total
being 600,000.
The total warrant agreements for the aforesaid 1,620,000 warrants issued on 11
March 2021 and 18 June 2021 do not contain vesting conditions and therefore
the full share based payment charge, being the fair value of the warrants
using the Black-Scholes model, has been recorded immediately.
The valuation of these warrants involves making a number of estimates relating
to price volatility, future dividend yields and continuous growth rates.
The Black Scholes model has been used to fair value the options, the inputs
into the model were as follows:
Grant date 12 March 2021 18 June 2021
Share price £0.120 £0.158
Exercise price £0.105 £0.150
Term 3 years 3 years
Expected volatility 80% 80%
Expected dividend yield 0% 0%
Risk free rate 0.25% 0.28%
Fair value per warrants £0.093 £0.125
Total fair value of the warrants £95,821 £75,140
In addition to the warrants fair value movement of £95,821 and £75,140, a
further £24,366 (2020: £nil) was recognised in the total fair value movement
for the year, reflecting the impact of the warrants extension mentioned on the
above note.
21 Reserves
Details of the nature and purpose of each reserve within owners' equity are
provided below:
• Share capital represents the nominal value each of the shares in issue.
• Share Based Payments Reserve are included in the Consolidated Statement of
Changes in Equity and in the Consolidated Statement of Financial Position and
represent the accumulated balance of share benefit charges recognised in
respect of share options and warrants granted by the Company, less transfers
to retained losses in respect of options exercised or lapsed.
• Warrants Issuance Cost Reserve are included in the Consolidated Statement
of Changes in Equity and in the Consolidated Statement of Financial Position
and represent the accumulated balance of charges recognised in respect of
warrants granted by the Company less transfers to retained losses in respect
of options exercised or lapsed.
• The Retained Deficit Reserve represents the cumulative net gains and
losses recognised in the Group's statement of comprehensive income.
• The Reconstruction Reserve arose through the acquisition of Predator Oil
& Gas Ventures Limited. This entity was under common control and therefore
merger accounting was adopted.
22 Related party transactions
Directors and key management emoluments are disclosed note 7.
Further to note 7, as per the Company's announcement of 12 March 2021, in
which Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas
Company with operations in Trinidad, Morocco and Ireland announced that it had
raised £1,785,000 (before expenses) in a Placing conducted by the Company's
broker Novum Securities Ltd, the Company provided the following update:
The Company did not have sufficient headroom to enable the issue and admission
of all of the 17,000,000 Placing Shares which are required to be issued
pursuant to the Placing without the production of an FCA approved
prospectus. The Company is therefore proposing to issue and admit 5,215,155
new ordinary shares (up to its existing headroom) (the Placing Shares) and for
a director, Paul Griffiths, to make up the shortfall with a transfer of
11,784,845 existing shares held by him to Novum Securities.
When the Company has the ability to issue further shares the Company intends
to issue Paul Griffiths 11,784,845 new Ordinary Shares and will take all
necessary steps required in order to such shares and make the necessary
listing and admission hearing applications. This will put Paul Griffiths
back into the position that existed, in terms of his aggregate shareholding in
the Company, had he not made the transfer of Ordinary Shares. For the
avoidance of doubt the transfer of shares to Novum Securities Ltd from Paul
Griffiths involves no consideration being paid to Paul Griffiths.
On 11 June 2021 the Company announced that it had the ability to issue
headroom shares and accordingly would issue 11,784,845 new Ordinary Shares of
no par value in the Company to Paul Griffiths.
23 Contingent liabilities and capital commitments
The Group had at the reporting date no capital commitments or contingent
liabilities.
24 Litigation
The Group is not involved in any litigation, other than the litigation
mentioned on note 25,
25 Events after the reporting date
On 31 January 2022, the Company issued a total of 8,855,486 share options
exercisable at 5.66p per share to two Board members, Lonny Baumgardner (CFO)
and Louis Castro (Non-executive Director). Lonny Baumgardner was awarded
7,855,486 and Louis Castro was awarded 1,000,000 options. Both options issued
have a vested period of 6 months.
On 28 February 2022, the registered office of the Company changed to IFC5, 3rd
Floor, Castle Street, St Helier, Jersey, JE2 3BY.
On 8 March 2022, the Company agreed to extend the below warrants exercise
date, as shown below:
- The warrants issued on 15 February 2019 granting the right to subscribe in
cash for 2,000,000 ordinary shares exercisable at a price per share equal to
the subscription price (12p per share) is being amended to allow the exercise
date of the warrants to be extended by one year to the fourth anniversary of
the date of the Warrant Instrument.
- The warrants issued on 24 May 2018 granting the right to subscribe in cash
for 2,053,678 ordinary shares exercisable at a price per share equal to the
subscription price (2.8p per share) is being amended to allow the exercise
date of the warrants to be extended by one year to the fifth anniversary of
the date of the Warrant Instrument
- The warrants issued on 24 May 2018 granting the right to subscribe in cash
for 160,714 ordinary shares exercisable at a price per share equal to the
subscription price (2.8p per share) is being amended to allow the exercise
date of the warrants to be extended by one year to the fifth anniversary of
the date of the Warrant Instrument.
On 12 May 2022, the Company appointed both Tom Evans and Alistair Jury as
Non-executive Directors. During the same meeting, it was noted that Louis
Castro would be stepping down from the Board with effect from 31 May 2022.
7 June 2022
The Company announced an update on the Company's position with regard to the
loan receivable (the "FRAM Loan") from FRAM Exploration Trinidad Ltd.
("FRAM"), a wholly owned subsidiary of Challenger Energy Group Plc
("Challenger"), in respect of the Inniss-Trinity CO2 EOR Project (the "CO2 EOR
Project"). The CO2 EOR Project was prematurely and unilaterally terminated by
Challenger on 1 August 2021.
In the absence of receiving a response to the Company's correspondence to
Challenger dated 23 March 2022 and in the light of FRAM and Challenger refusal
in writing to comply with a request for information from the Company via its
auditors that was necessary for its financial reporting of the FRAM Loan, the
Company has elected to initiate a litigation process.
The scope of the litigation process involves the Company seeking recompense in
relation to the following matters:
1. The FRAM Loan outstanding to the Company of £591,065 as of 31
December 2021.
2. The Company is seeking full repayment of its project costs (the
"Project Costs") invested in the CO2 EOR Project under the terms of the
Inniss-Trinity Well Participation Agreement (the "WPA"), which remains in
place.
Under the WPA the Company has invested the minimum required commitment of
US$1,500,000 (inclusive of the outstanding FRAM Loan).
3. The Company is seeking substantial consequential losses from
Challenger under the WPA and arising from Challenger's failure to facilitate
the execution of Phase 3 of the CO2 EOR Project as defined in the approved
Inniss-Trinity CO2 EOR Project Proposal PRD25092019.
Based on an average WTI spot price of US$100, the Company is attributing an
undiscounted value to the potential 853,000 barrels of oil resources in the
AT-4 Block to have potentially been developed under Phase 3 of the CO2 EOR
Project of US$30/barrel. The Company therefore determines that the potential
claim for estimated consequential losses against Challenger, based on 50% of
net profits under the WPA, could be up to US$12,800,000 but may be revised
upwards depending on forward oil price projections.
4. Phase 4 of the approved Inniss-Trinity CO2 EOR Project Proposal
PRD25092019 allows for the application of the CO2 EOR Pilot learnings to be
applied within new areas of the Inniss-Trinity field for upscaling CO2 EOR.
The SLR Consulting Ireland Ltd independent Competent Persons Report for the
Inniss-Trinity field published 19 February 2020 gives Best Estimate
recoverable CO2 EOR resources for the entire Inniss-Trinity field of 6.8
million barrels.
Based on 50% of net profits under the WPA and US$30/barrel this would amount
potentially to estimated undiscounted consequential losses of up to US$102
million but may be revised upwards depending on forward oil price projections.
26 Ultimate controlling party
In the opinion of the Directors there is no ultimate controlling party as no
one individual is deemed to satisfy this definition.
27 Restatement of prior period
During the year, it was decided by the Directors that the Company was to
restate prior years' warrant issue costs.
The restatement was implemented to bring prior years' warrant costs to be
aligned with IFRS 2 in the oil and gas industry, whereby any warrants issued
for services provided, are to be fully recognised with the equity section of
the Company.
Effect on year ended 31 December 2020 Effect on year ended 31 December 2019 Effect on year ended 31 December 2018
GBP GBP GBP
Loss for the year (1,689,521) (1,279,243) (792,461)
Reclassification of warrants issue costs 100,451 81,385 27,051
Restated total loss for the year (1,589,070) (1,197,858) (765,410)
Warrants issuance cost reserve balance brought forward (108,436) (27,051) -
Warrants issuance cost (100,451) (81,385) (27,051)
Restated Equity attributable to the owner of the parent (208,887) (108,436) (27,051)
Corporate information
Directors
Paul Stanard Griffiths (Executive Director - CEO) Ronald Pilbeam (Executive
Director) (resigned 27 July 2021)
Louis Castro (appointed 13 July 2020)
Dr George Henry Stephen Staley (Non-Executive Chairman) (resigned 8 March
2022)
Lonny Baumgardner (appointed 12 July 2021)
Company
Secretary
Oak Secretaries (Jersey) Limited
3rd Floor, IFC5
Castle Street
St. Helier
Jersey JE2 3BY
Registered
Office
3rd Floor, IFC5
Castle Street
St. Helier
Jersey JE2 3BY
Telephone+44 (0) 1534
834 600
Joint Broker and Placing
Agent
Novum Securities Limited
Lansdowne House
57 Berkeley Square
London W1J 6ER
Joint Broker and Placing
Agent
Optiva Securities Limited
49 Berkeley Square London W1J 5AZ
Auditors
PKF Littlejohn LLP
15 Westferry Circus Canary Wharf
London E14 4HD
Legal advisers to the Group as to English law
Charles Russell Speechlys LLP
5 Fleet Place
London EC4M 7RD
Legal advisers to the Group as to Jersey law
Pinel Advocates
One Library Place St. Helier
Jersey JE2 3NY
Competent
Person
SLR Consulting (Ireland) Ltd
7 Dundrum Business Park
Windy Arbour
Dublin 14, D14 N2Y7
Republic of Ireland
Registrar
Computershare Investor Services (Jersey) Limited
Queensway House
13 Castle Street
St. Helier
Jersey JE1 1ES
Financial
PR
Flagstaff Strategic and Investor Communications
1 King Street
London EC2V 8AU
Principal
Bankers
The Royal Bank of Scotland International Limited
P.O. Box 64
Royal Bank House 71 Bath Street
St. Helier
Jersey JE4 8PJ
Barclays Bank
Plc
13 Library Place
St. Helier
Jersey
JE4 8NE
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