REG - Predator O&G Hldgs - Report and Interim Financial Statements
20/09/2022 07:00
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RNS Number : 9056Z Predator Oil & Gas Holdings PLC 20 September 2022
FOR IMMEDIATE RELEASE
20 September 2022
Predator Oil & Gas
Holdings Plc / Index: LSE / Epic: PRD / Sector: Oil & Gas
Predator Oil & Gas Holdings Plc
("Predator" or the "Company" and together with its subsidiaries "the Group")
Report and Interim Financial Statements for the 6 months to 30 June 2022
Financial highlights:
· Loss from operations for the 6 months period is
£599,789 (2021: full year Loss of £1,398,821).
· Cash balance, at period end of £1,549,434 (2021 year
end: £1,523,035).
· A further £1,235,107 (US$1,500,000) held as restricted
cash and £654,073 by way of a loan to FRAM Exploration Trinidad Ltd. for the
investment in the Pilot CO2 EOR Project.
· £1,035,000 (before expenses) raised through one
Placing.
· 8,855,486 share options issued exercisable at £0.0566.
· No debt.
Operational highlights:
· Geological desk-top studies for MOU-1 confirm potential
for unconsolidated sandstone reservoirs.
· MOU-1 perforating programme revised to include new shallow
gas interval.
· Potential for biogenic in addition to thermogenic gas
established.
· Integration of MOU-1 drilling results with post-well
seismic mapping defines the "Moulouya Fan" covering over 30km².
· MOU-2 drilling location finalised.
· Environmental Impact Assessment for up to three new well
locations received regulatory approval.
· Exclusivity over surplus liquid CO2 supply in Trinidad
maintained until 2023.
· Discussions advanced with Trinidadian operator for an
investment in the CO2 EOR business.
· Mag Mell Floating Storage and Regassification Project
("FSRU") for the import of LNG from non-fracked gas presented at Ireland's
National Energy Summit and in the form of a "White Paper" for circulation
within the Irish Government as a contribution to the security of energy supply
debate.
· Directorate changes resulted in Dr. Stephen Staley
(Chairman) and Mr. Louis Castro stepping down from
the Board and Mr. Tom Evans and Mr. Alistar Jury being
appointed as Non-executive directors. Mr. Paul Griffiths moved to Executive
Chairman and Mr. Lonny Baumgardner to Managing Director.
Post reporting date:
· On the 12 July 2022, Novum Securities Limited ("Novum")
exercised the 24 May 2018 (which had the expiry date extended to 24 May 2023)
and 17 February 2020 warrants issued by the Company, whereby by the Company
have allotted and issued a total of 4,149,210 new ordinary shares following
the receipt of £143,253 relating to the subscription price.
· On the 17 August 2022 £3,300,000 (before expenses)
raised through one Placing with the issue of 60,0000 Ordinary Shares of 5.5
pence each. 15 million existing shares along with voting rights were loaned to
the Company by a director Paul Griffiths under a Stock Lending Agreement. The
Company did not have sufficient headroom to enable the issue and admission of
all of the 60,000,000 Placing Shares which are required to be issued pursuant
to the Placing without the production of an FCA approved prospectus. The Stock
Lending Agreement ensured that the Company is fully funded for its near-term
Moroccan drilling programme and can meet its proposed drilling schedule.
· In connection with the fundraising, 3,600,000 warrants,
exercisable at 5.5p per new ordinary share with a 3 year expiry from Admission
were issued to Novum Securities Limited or their nominees.
· MOU-2 drilling programme progressed through the placing
of orders for long-lead well inventory and surveying of the drilling location.
· Preliminary MOU-2 drilling prognosis completed for well
planning purposes.
· Potential for up to 168 metres of gross reservoir section
identified at the MOU-2 drilling location.
Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas
Company ("Predator" or "the Company") focussed on near-term, high impact
drilling for gas in Morocco is pleased to announce its unaudited interim
results for the six-month period ended 30 June 2022.
Executive Chairman's Report
Dear Shareholder,
The first six months of 2022 has continued to be a busy period for the Company
as we concentrate the vast majority of our resources on the high impact
drilling for gas in Morocco to extend the MOU-1 gas structure that we
successfully established in 2021 with our first-ever operated well in Morocco.
2022 thus far has been dominated by the ramifications of the Ukraine -Russia
crisis which, in addition to the indefensible and devastating humanitarian
impact, has created an Energy Crisis of epic proportions not seen ever before.
As a result, reduction in CO2 emissions to address climate change concerns
have suffered a set-back as several economies return to burning
carbon-intensive fuels such as coal and oil as gas supply is reduced and/or
re-directed through infrastructure location and capacity that was never
intended for its current purpose.
The security of gas supplies has been highlighted for many years yet, due to
failure to recognise the importance of an Energy Transition focussed on
"greener gas" and investing in infrastructure, gas storage and the development
of secure indigenous gas and LNG entry points to provide diversity of supply
at times of high winter demand, policy makers and governments have erroneously
chosen to treat gas as another "dirty" fossil fuel and obstruct investment in
the natural gas business. Whilst this has achieved short-term political
advantage in addressing climate change concerns it has created a previously
unimaginable cost of living crisis which will negatively impact hundreds of
millions of people. Let's make no mistake this is not due to the
Ukraine-Russia crisis but rather had its origins in a poor, ill-informed
understanding of the requirement for gas as the fuel of choice for the Energy
Transition to allow time for the roll-out of renewables to totally fulfil the
seasonal demand for energy and for unplanned shocks created by global market
forces and geopolitics.
Through its long-established activities the Company is well positioned to help
contribute to ameliorating the near-term impact of the Energy Crisis in
Morocco and Ireland.
In Morocco we have matured our plans for drilling MOU-2 to appraise the
Moulouya Fan, the distal edge of which was penetrated by MOU-1 in 2021. Timing
of drilling is coincidental with the sharp rise in European wholesale gas
prices. The option to develop Compressed Natural Gas ("CNG") is ideally suited
to the scattered nature of the Moroccan industrial gas market, which lends
itself to deliveries by truck rather than fixed gas pipelines. Low development
costs, high gas prices and low taxation combined with potentially large gas
resources in the Moulouya Fan has the potential to accelerate "First Gas" and
to provide a sustainable and secure indigenous source of gas. This will create
excellent profit margins whilst maintaining an affordable price for industry
that allows Moroccan industrial products to compete in the export market
represented by the European Union, where energy costs have risen dramatically.
The Company decided to maintain control of its operations in Morocco by not
farming out before the drilling of MOU-2 and funding its proposed drilling
operations itself. Farming out would have delayed the timing of drilling
operations and would have resulted in a disproportionate loss of potential
shareholder value as potential farminees used funding the well as leverage to
secure better commercial terms for themselves.
Ireland has been left particularly exposed by the developing Energy Crisis.
The country has no gas storage facilities; declining indigenous gas production
with a ban on new licences for gas exploration; no LNG import terminal; and a
reliance on one source of imported gas through interconnectors with the United
Kingdom. For security of gas supply Ireland is now reliant on the generosity
of the United Kingdom Government placing it alongside the requirements of its
own population in an emergency where shortages of winter gas may occur.
During the six months to date the Company has promoted its options to address
security of gas supply in Ireland by presenting and sponsoring the National
Energy Summit and through the issue of a "White Paper" on the FSRUP LNG import
option of non-fracked gas ("Mag Mell Project") which has been circulated to
Government Coalition Ministers, Gas Networks Ireland, EirGrid and the
Commission for the Regulation of Utilities amongst others at national and
local level. The Minister for the Department of the Environment, Climate and
Communications ("DECC") has acknowledged receipt of the Mag Mell Project.
Government Policy relates to the import of fracked gas and does not mention
non-fracked gas.
The Company has satisfied all requirements to advance the development of its
Corrib South and Ram Head assets offshore Ireland, which include an
undeveloped gas field, discovered gas and a potential gas storage facility, to
demonstrate that there are no reasons why the successor authorisations cannot
be awarded now.
Furthermore, the Mag Mell Project has been shown to be a viable LNG import
option that could be delivered in the near-term to alleviate security of gas
supply by using the existing Kinsale gas pipeline to shore. The Company is
liaising with Hoegh LNG on technical solutions for Mag Mell and its downstream
gas buyer to better understand potential seasonal market volumes. It would be
an act of reckless ideological vandalism to decommission the Kinsale pipeline
to shore at this time of national energy emergency. The Company continues to
progress the regulatory process to advance the Mag Mell Project through a
cautious deployment of minimal cash resources and personnel time. The Company
takes the view that the DECC criteria and rationale for delaying these
projects any further is fundamentally flawed and, in some cases, based on
misinformation. As a result of the potential consequences of this the Company
will clearly maintain its visibility in Ireland to be in a position to take
advantage of any action other operators may or may not consider.
In Trinidad, the Company has focussed on seeking a local in-country operator
for an investment in its CO2 EOR expertise and know-how. We are still the only
company in Trinidad capable of initiating CO2 EOR projects at this time. There
is a recognition that well productivity can be increased in mature onshore oil
fields by injecting CO2, as was the case for the Inniss-Trinity Pilot CO2 EOR
Project. The burden however of operating in Trinidad needs to be shared with a
local company to ensure an alignment of commercial interests.
We await the publication of FRAM Exploration Trinidad Ltd.'s parent company
2021 Audited Accounts to provide further due diligence input into the
background to the parent company's rationale for prematurely terminating the
Inniss-Trinity Pilot CO2 EOR Project. The comments of their auditors in
respect of how this event is described and treated in the published audited
accounts for 2021 will be extremely helpful.
Operational overview
Morocco
Following an assessment of the 2021 MOU-1 drilling results SLR Consulting
(Ireland) Ltd. ("SLR") provided a new Competent Persons Report ("CPR"). The
CPR comprises of an independent re-assessment and valuation of the "Guercif
MOU-4 Prospect" which is now designated the Moulouya Fan. The distal edge of
the Moulouya Fan was penetrated by MOU-1 and now the proposed MOU-2 well will
test the core area of the fan where a gross reservoir section of up to 168
metres is potentially developed.
The gross Best Estimate resources, based on a conservative 66% gas recovery
over 13 years, is 393 BCF (295 BCF net attributable to Predator's 75%
interest). SLR indicate a High Estimate of 708 BCF net attributable to
Predator's 75% interest based on a higher GIIP estimate for thicker reservoirs
potentially to be encountered at the MOU-2 well location.
The CPR has moved the pre-drill Prospective Resources to Contingent Resources
and defines the Best Estimate of 295 BCF net to the Company's 75% interest to
be "potentially recoverable from a known accumulation by the application of a
development project".
The definition of Contingent Resources has resulted in an ENPV of US$148
million based on 25% of the 295 BCF (74 BCF) of the net resources attributable
to the Company's 75% interest. The 25% chance of proceeding to development
reflects the remaining production, transport, legal, contractual and
environmental issues relating to a large-scale gas-to-power development.
Unrisked ENPV is US$592 million. The CPR states that "the chance of
commerciality for a pilot Compressed Natural Gas ("CNG") development supplying
lower volumes of gas to industrial markets is likely to be considerably
higher", based on a higher reported average gas price to the Moroccan industry
of US$11.40/mcf in 2021.
Post-MOU-1 geological studies have now been completed. These have helped
calibrate and understand better the conventional wireline logs acquired at the
time of drilling MOU-1, which were influenced by poor borehole conditions, and
the NuTech higher resolution petrophysical logs interpreted at a later date.
The potential for excellent reservoir quality in thinly laminated,
unconsolidated sands has been recognised. A previously over-looked shallow
section in MOU-1 has been interpreted as probably gas-bearing and will now be
included in the MOU-1 perforating and testing programme.
Geochemical analysis of MOU-1 well cuttings have established a thermogenic gas
source but also a potential additional biogenic gas source.
Post-well evaluation of the MOU-1 data has been important for re-evaluating
the MOU-1 drilling programme to revise the drilling mud system to be used for
MOU-2 to minimise the effect on unconsolidated sands and reduce the impact of
high mud weights to control higher than anticipated formation pressures.
Potentially these are related to the presence of a significant gas column in
over-pressured reservoirs.
Integrating the desk top studies with the MOU-1 well results has created a
high degree of confidence in delineating the extent of the Moulouya Fan over
an area of at least 30km². As a result, the combination of the gas flow rates
to be potentially confirmed by the MOU-1 testing programme and a possible
MOU-2 testing programme should be sufficient to initiate a pilot CNG
development to supply gas by road to the Moroccan industrial centres.
Ireland
During the period under review the Company has mainly focussed on raising the
public and Irish Government's awareness of the Mag Mell FSRUP LNG gas import
option. This was to demonstrate how Mag Mell could address Ireland's security
of gas supply.
The Company presented its alternative gas import option at the National Energy
Summit in Dublin in April 2022. A "White Paper" was issued and circulated to
politicians and all significant stakeholders in the energy sector in Ireland.
It demonstrated how gas was needed to seasonally support the national
electricity grid when renewable energy was curtailed by weather conditions.
This was followed up by lobbying members of the Irish Dail in a series of
one-to-one meetings.
No further responses have been received from the DECC regarding the Company's
applications for successor authorisations for Corrib South and Ram Head. The
Company has satisfied all regulatory requirements for the award of the
successor authorisations.
The Company continues to make submissions to the DECC to delay the
decommissioning of the Kinsale gas pipeline to shore. Currently the Minister
for the DECC has not signed off on the decommissioning of this vital piece of
gas infrastructure, which if decommissioned would further weaken Ireland's
security of energy supply. The Company's proposed Ram Head gas storage
facility would be dependent upon the Kinsale gas pipeline to shore remaining
in place to advance the date for the commissioning of such a storage facility.
Ireland has no gas storage facility and is clearly not contributing at present
to the wider energy security of the European Union despite having the
infrastructure and facilities to help with ameliorating the Energy Crisis.
Trinidad
During the period under review the Company has focussed on collecting and
analysing data for a mature onshore producing oil field and an undeveloped oil
field with a view to assessing their suitability for CO2 EOR operations.
A commercial proposal has been submitted to one local operator for CO2 EOR
operations in one of their fields involving an investment into the Company's
CO2 EOR business.
Separately, the Company has made a proposal to the Ministry of Energy and
Energy Industries ("MEEI") to develop miscible CO2 EOR if awarded a production
licence over an undeveloped oil field. It is likely that this particular asset
will be the subject of a Bid Round in 2023. The Company will be well-placed to
succeed in the Bid Round as CO2 EOR forms an important consideration for
future agreed work programmes with the MEEI. The preference is to joint
venture with a local in-country operator to apply in a 2023 Bid Round.
The Company's strategy in Trinidad is to defer any potential participation in
new projects until after the Moroccan drilling programme has been successfully
completed and the wells tested to establish potential gas flow rates. At that
time, the Company will have numerous options to further develop its business
supported by potential near-term cash flow from a pilot CNG development. One
particularly attractive opportunity has been identified in Trinidad and may be
pursued through the MEEI if it becomes available after the completion of
Moroccan drilling.
Financial review
The Company reported an operating loss for the period to 30 June 2022 of
£599,789 (£758,128 for the period to 30 June 2021). The decrease in
operating loss is mostly attributable to a positive foreign exchange movement
for the period to 30 June 2022 which was £243,530 (loss on foreign exchange
rate of £61,826 for the period to 30 June 2021).
Administrative expenses for the period to 30 June 2022 also included £131,297
(£86,730 for the period to 30 June 2021) fair value adjustment to warrants
and share options.
The Company is finishing the reporting period with cash reserves of
£1,549,434 (£1,523,035 for the period to 30 June 2021) and restricted cash
of £1,235,107 (£1,083,298 for the period ended 30 June 2021) in the form of
the security deposit for the Guercif Bank Guarantee in favour of ONHYM. The
balance outstanding of the loan by the Company to FRAM for the investment in
the Pilot CO2 EOR Project was £654,073 (£487,477 for the period to 30 June
2021) at the end of the period to 30 June 2022.
During the period to 30 June 2022, we have completed one Placing to raise
£1,035,000 (before expenses). As a result of these transactions 11,500,000
new shares have been issued and the issued share capital increased to
304,446,267 by the end of the period to 30 June 2022. Also, during the period,
the Company received an exercise notice from Novum in respect of warrants
whereby Novum was exercising the warrants issued on 24 May 2018 (which had the
expiry date extended to 24 May 2023) and 17 February 2020. On the 12 July
2022, following this notice, the Company allotted and issued the total of
4,149,210 New Ordinary Shares following receipt of the aggregate £143,253
subscription price from Novum.
Placing funds were to provide the working capital to fully fund the Company's
well planning operations in Morocco.
As a result of the transactions successfully concluded during the period under
review, the Company is well-capitalised, free of debt and is in a position to
deploy prudent levels of administrative expenditure focussed on enhancing and
promoting the potential of the Company's portfolio.
COVID pandemic and Energy Crisis
The Company took all commensurate steps during the period under review to
minimise unnecessary capital expenditures and operating costs in the event
that COVID restrictions might be re-imposed at some future date. The Energy
Crisis is impacting the industry's business operations worldwide as a result
of rising inflation and rising costs in respect of well services and well
inventory. The Company's management has managed this situation through
continuing to apply negotiating skills to reduce costs and by eliminating
unnecessary expenditures.
Maintaining adequate cash reserves and delivering a high impact drilling
programme in Morocco focussed on the opportunity to supply gas to the Moroccan
industrial market is a prudent risk-reward proposition for our shareholders.
Reducing expenditures in the short-term in Trinidad and Ireland is also
prudent in order to focus resources on delivering this key value proposition
in Morocco for shareholders. This does not reduce the Company's strategic and
competitive advantages in Trinidad for CO2 EOR operations, where exclusivity
of liquid surplus CO2 supply has been maintained, nor Ireland, where the
Company currently offers a viable gas storage project and a FSRU LNG gas
import option. Continuing with demonstrating the capability of delivering CO2
sequestration using CO2 EOR technology in Trinidad is an important
contribution to helping to reduce CO2 emissions during the Energy Transition.
These strategic objectives are allowing the Company to demonstrate to
potential partners and investors its ability to perform and create exciting
business development opportunities compatible with the requirements for an
effective Energy Transition. This is even more important to demonstrate now
during the onset of the Energy Crisis and the realisation of the practical
requirement for a planned Energy Transition.
Summary
During the period under review, the Company has successfully achieved key well
planning progress in Morocco within our strict budget guidelines to maintain
the ability to drill a high value drilling target for gas in 2022.
De-risking the gas potential of the Guercif Basin in 2021 after 35 years
without drilling activity, has set up a timely opportunity in the context of
the Energy Crisis to appraise, develop and deliver gas to the Moroccan
industrial gas market on very favourable commercial terms and with manageable
capital requirements for a Company with our current market capitalisation.
Partnering with downstream off-takers of gas is a sensible solution to
reducing our financial requirements for developing and scaling up our proposed
CNG business model. The overriding objective of the Company in 2022 is to
deliver the MOU-2 drilling programme and the perforating and testing of MOU-1
and MOU-2. Successful gas flow rates at even a modest level from both wells
would be sufficient to initiate a pilot CNG project with the potential to
deliver operating revenues within 12 months of project inception.
In Trinidad we are firmly established as the country's only CO2 EOR services
provider following the technical and operational success of the Inniss-Trinity
pilot CO2 EOR project and the important lessons that have been learnt. The
establishment by the Government of Trinidad and Tobago of the Steering
Committee for Carbon Capture and CO2 EOR supports our efforts to partner with
indigenous, well-financed, onshore producers to provide ESG support and
credentials through CO2 sequestration and to provide secondary recovery
technology, expertise, and experience to increase profits from mature fields.
Our services will need to be funded by the producers either with profit
sharing arrangements or, preferably, through a direct investment in our CO2
EOR business.
In Ireland we have an environmentally aware technical and commercial solution
to Ireland's lack of security and diversity of gas supply. Regulators are
aware of what the Mag Mell FSRU project has to offer Ireland. Sentiment is
being forced to adapt to the realities of the Energy Crisis, spiralling energy
costs and the seasonal volatility in energy markets. The requirement for gas
in Ireland is a necessity for years to come and the Company is well-positioned
to seek partnerships with indigenous companies in the Irish energy sector
where our assets, expertise and specific Irish offshore experience can be
traded for a strong balance sheet that allows us to close out opportunities
with multi-nationals to develop our niche strategic position in Ireland. This
position has been nurtured through unfashionable times to a point where the
"Energy Crisis" makes gas fashionable again. There is however no guarantee
that the current Minister for the DECC in Ireland will address the current
Energy Crisis in a pragmatic way and in the public interest, preferring to
make the case for greener renewable energy that currently and in the near-term
cannot resolve the Energy Crisis.
During the period under review we have taken the opportunity, when possible
and advisable to do so, to raise funds in the public markets. This is
necessary for us to maintain our projects in good standing and to strengthen
our hand in commercial negotiations with well services and well inventory
suppliers and with potential end users of gas in Morocco. Our management is
under-valued in the public markets based on what it has achieved with limited
financial resources. We have three strategically important projects on three
continents, managed by a small team of experienced professionals. Post period,
on 14 September 2022 the Company was trading at a 190% premium to its original
IPO share price despite COVID, Brexit, the Energy Crisis and financial market
volatility and after investing prudently in value-creating projects and
operations.
On behalf of the Board, I would like to thank our shareholders for their
patience and continued support of the Company through what has been a
turbulent period dominated by the emerging "Energy Crisis". We look forward
over the next 6 months to continue to make positive progress in Morocco
towards realising our objective of executing high impact/high value drilling
for gas and early monetisation through an innovative pilot CNG development to
supply gas to Morocco's industrial users.
Paul Griffiths
Executive Chairman
Paul Griffiths, Executive Chairman of Predator, commented:
"As we have predicted for several years, security of energy supply,
particularly in relation to gas and its requirement for a smooth and fair
"Energy Transition", has become a critical strategic issue for governments
around the World as a consequence of the Ukraine-Russia crisis. We had
therefore built our asset portfolio primarily based on "greener" gas in the
knowledge that pragmatism and practical realisation of the role of gas in
supporting the roll-out of renewable energy during the Energy Transition would
eventually prevail. Therefore, it comes as no surprise to us that fossil fuels
are back at the forefront of helping to address the Energy Crisis. What is
disappointing is that many governments have turned back to carbon intensive
fuels such as coal and oil because the investment in additional gas
infrastructure and indigenous gas production was actively discouraged.
We are excited to be progressing drilling for more gas in Morocco to establish
a near-term CNG development case. Revenue generation will create the
opportunity to upscale our proposed CNG project with organically sourced
funding from cash flow. The anticipated high profit margins will give us
flexibility and a balance sheet to maintain our strategic presence in Ireland
and Trinidad and to expand to acquire other gas assets where we may be able to
add significant value by applying our same management philosophy that we have
applied to date."
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
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 finalised to coordinate with a further drilling
programme beginning in 2022.
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.
The interim management report and interim results are set out in the following
pages.
The Directors present their report and the unaudited consolidated financial
statements together with related notes, of Predator Oil & Gas Holdings Plc
and its subsidiaries ("the Group") for the six months ended 30 June 2022. The
statements have been prepared in accordance with IAS 34 Interim Financial
Reporting. They do not include all the information required for a complete set
of IFRS financial statements. However, selected explanatory notes are included
to explain events and transactions that are significant to an understanding of
the changes in the Group's financial position and performance since the last
annual consolidated financial statements as at the year ended 31 December
2021. The results for the period ended 30 June 2022 are unaudited. These
statements are in agreement with accounting records which have been properly
kept in accordance with Article 103 of the Companies (Jersey) Law 1991.
Responsibility Statement
We confirm that to the best of our knowledge:
- The Interim Report has been prepared in accordance with
International Accounting Standards 34, Interim Financial Reporting, as adopted
by the EU and applicable law
- The condensed set of financial statements, which has been
prepared in accordance with the applicable set of accounting standards, gives
a true and fair view of the assets, liabilities, financial position and profit
or loss of the issuer, or the undertakings included in the consolidation as a
whole as required by DTR 4.2.10
- The Interim Report includes a fair review of the information
required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the set of interim financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year and
- The Interim Report includes a fair review of the information
required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the
information required on related party transactions.
The Interim Report was approved by the Board of Directors and the above
responsibility statement was signed on its behalf by
Executive Chairman
COVID statement, Energy Crisis and global outlook
The six-month period ended 30 June 2022, has seen a significant relaxation of
COVID restrictions to the extent that they are no longer having the same
impact on travel, restrictions on operations, commodity prices, financial
markets and overall investment sentiment. We must however remain vigilant in
the event that there is a further outbreak of COVID in the future. Businesses
have learnt now how to adapt to any potential COVID restrictions in order to
navigate through the challenges it poses.
The Energy Crisis has created new challenges in the form of rising demand for
services and equipment from the fossil fuel industry after a period of COVID
constrictions and down-sizing and in response to climate change concerns and
the Ukraine-Russia crisis. This has led to acute cost inflation as the pool of
services and equipment has contracted. Supply chain delays for key well
equipment are to be expected as manufacturing output has been curtailed by the
loss of steel-making plants in Russia, through sanctions, and in the Ukraine,
through war and surplus inventory being used up. Maintenance of key equipment
is likely to have been postponed and time will be required to make such
equipment fully operational again.
Public awareness of climate change concerns and unsustainable accelerating
levels of CO2 emissions is now fully developed. The fossil fuel industry has
been the primary focus of attention during this time, given its high-profile
current and historical contribution to generating CO2 emissions through use
by, largely, third parties of its products. This has created a difficult
environment for attracting equity and debt finance as banks and institutions
react to pressure to disassociate themselves from fossil fuel investments.
This has resulted in reduced investment in fossil fuel infrastructure, field
development and exploration drilling (needed to replace declining reserves).
However, the Energy Crisis created by the Ukraine-Russia tensions has changed
this landscape in the near-term with the result that investor sentiment for
the fossil fuel sector is returning as gas price rises dominate the energy
market. The Company is protected as it may potentially become a near-term gas
producer.
The Energy Transition has a key role to play in navigating the way to lowering
of CO2 emissions by gas replacing coal and oil. The wind does not always blow,
the sun does not always shine and large amounts of electricity cannot yet be
stored! It is therefore inevitable that gas will be required for years to come
as a back-up energy supply when renewables cannot meet the demand. The fossil
fuel industry produces gas. The fossil fuel industry has the knowledge and
expertise to develop indigenous gas resources, LNG import options, and the
underground reservoirs for CO2 sequestration and gas storage. Investment
should be focussed on these aspects of the industry to address the "Energy
Crisis" and the Energy Transition.
The Energy Crisis has created volatility in the foreign exchange markets with
notably a significant depreciation of the value of sterling versus the United
States Dollar. The Company is required to minimise as far as possible its
exposure to spending United States Dollars until revenues are established.
This exposure will be unavoidable for the Moroccan drilling programme and the
Company has allowed for this in its drilling and testing budgets.
Predator Oil & Gas Holdings Plc
Condensed consolidated statement of comprehensive income
For the 6 months to 30 June 2022
01.01.2022 to 30.06.2022 01.01.2021 to 30.06.2021 01.01.2021 to 31.12.2021
(unaudited) (unaudited) (audited)
Notes £ £ £
Administrative expenses 3 (599,789) (758,109) (1,398,802)
Operating loss (599,789) (758,109) (1,398,802)
Finance expense - (19) (19)
Loss for the period before taxation (599,789) (758,128) (1,398,821)
Taxation - - -
Loss for the period after taxation (599,789) (758,128) (1,398,821)
Other comprehensive income - - -
Total comprehensive loss for the period attributable to the owner of the (599,789) (758,128) (1,398,821)
parent
Loss per share basic and diluted (pence) 4 (0.2) (0.3) (0.5)
Condensed consolidated statement of financial position
As at 30 June 2022
30.06.2022 31.12.2021
(unaudited) (audited)
Notes £ £
Non-current assets
Tangible fixed assets 6 4,666 5,884
Intangible asset 5 2,857,991 2,687,026
2,862,657 2,692,910
Current assets
Trade and other receivables 7 1,905,811 1,737,258
Cash and cash equivalents 8 1,549,434 1,523,035
3,455,245 3,260,293
Total assets 6,317,902 5,953,203
Equity attributable to the owner of the parent
Share capital 9 12,460,061 11,425,061
Reconstruction reserve 2,302,522 2,386,321
Warrants issuance cost (376,820) (376,820)
Share based payments reserve 860,997 729,700
Retained deficit (9,055,867) (8,456,078)
Total equity 6,190,893 5,708,184
Current liabilities
Trade and other payables 10 127,009 245,019
Total liabilities 127,009 245,019
Total liabilities and equity 6,317,902 5,953,203
Condensed consolidated statement of changes in equity
For the 6 months to 30 June 2022
Attributable to owner of the parent
Share Capital Reconstruction reserve Warrants issuance cost reserve Share based payments Retained deficit Total
£ £ £ £ £ £
(restated)* (restated)*
Balance at 31 December 2020 6,832,564 2,797,421 (208,887) 458,840 (7,054,229) 2,825,709
Loss for the period - - - - (758,128) (758,128)
Total comprehensive loss for the period - - - - (758,128) (758,128)
Issue of ordinary share capital 3,292,497 - - - - 3,292,497
Fair value movement of share options - - - 62,364 - 62,364
Fair value of warrants - - - 195,327 - 195,327
Warrants issuance costs - - (170,961) - - (170,961)
Listing costs capitalised - (229,100) - - - (229,100)
Total transactions with owners 3,292,497 (229,100) (170,961) 257,691 - 3,150,127
Balance at 30 June 2021 10,125,061 2,568,321 (379,848) 716,531 (7,812,357) 5,217,708
Loss for the period - - - - (640,693) (640,693)
Total comprehensive loss for the period - - - (640,693) (640,693)
Issue of ordinary share capital 1,292,503 - - - - 1,292,503
Listing costs capitalised - (182,000) - - - (182,000)
Fair value of share options - - 13,169 - 13,169
Exercised warrants 7,497 - 3,028 - (3,028) 7,497
Total transactions with owners 1,300,000 (182,000) 3,028 13,169 (3,028) 1,131,169
Balance at 31 December 2021 11,425,061 2,386,321 (376,820) 729,700 (8,456,078) 5,708,184
Loss for the period - - - (599,789) (599,789)
Total comprehensive loss for the period - - - - (599,789) (599,789)
Issue of ordinary share capital 1,035,000 - - - - 1,035,000
Fair value movement of share options - - - 131,297 - 131,297
Listing costs capitalised - (83,799) - - - (83,799)
Total transactions with owners 1,035,000 (83,799) - 131,297 - 1,082,498
Balance at 30 June 2022 12,460,061 2,302,522 (376,820) 860,997 (9,055,867) 6,190,893
Condensed consolidated statement of cash flows
For the 6 months to 30 June 2022
01.01.2022 to 30.06.2022 01.01.2021 to 30.06.2021 01.01.2021 to 31.12.2021
(unaudited) (unaudited) (audited)
(restated)*
£ £ £
Cash flows from operating activities
Loss for the period before taxation (599,789) (758,128) (1,398,821)
Adjustments for:
Fair value of share options 131,297 62,364 75,534
Fair value of warrants - 24,366 24,366
Finance expense - 19 19
Depreciation 1,218 1,118 2,338
Foreign exchange (295,419) 318,285 (244,281)
Decrease/(increase) in trade and other receivables 18,450 (29,523) (6,059)
(Decrease)/increase in trade and other payables (118,010) 239,488 161,527
Net cash used in operating activities (862,253) (142,011) (1,385,377)
Cash flow from investing activities
Loan advances - (25,940) (115,881)
Capitalised costs - Project Guercif - Morocco (170,965) (1,672,671) (2,687,026)
Purchase of computer equipment - (2,629) (2,629)
Net cash used in investing activities (170,965) (1,701,240) (2,805,536)
Cash flows from financing activities
Proceeds from issuance of shares, net of issue costs 951,200 3,055,900 4,173,900
Proceeds from issue of convertible loan notes, net of issue costs - 7,497 7,497
Finance expense paid - (19) (19)
Net cash generated from financing activities 951,200 3,063,378 4,181,378
Effect of exchange rates on cash 108,417 (287,311) 206,819
Net increase in cash and cash equivalents 26,399 932,816 197,284
Cash and cash equivalents at the beginning of the period 1,523,035 1,325,751 1,325,751
Cash and cash equivalents at the end of the period 1,549,434 2,258,567 1,523,035
Notes to the condensed consolidated interim financial statements
For the 6 months to 30 June 2022
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 Morocco and Ireland. 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.
Basis of preparation
The condensed consolidated interim financial statements are prepared under the
historical cost convention and on a going concern basis and in accordance with
International Financial Reporting Standards and IFRIC interpretations adopted
for use in the United Kingdom ("IFRS").
The condensed consolidated interim financial statements contained in this
document do not constitute statutory accounts under Companies (Jersey) Law
1991. In the opinion of the directors, the condensed consolidated interim
financial statements for this period fairly presents the financial position,
result of operations and cash flows for this period.
The condensed consolidated interim financial statements have not been audited,
however, they have been reviewed by the Company's auditors in accordance with
the International Standard on Review Engagements 2410 issued by the Auditing
Practices Board.
Statutory financial statements for the year ended 31 December 2021 were
approved by the Board of Directors on 28 June 2022. The report of the auditors
on those financial statements was unqualified, however, it contained an
emphasis of matter paragraph in respect of the recoverability of the loan
receivable from FRAM (note 7) and the capitalisation of exploration costs.
The Board of Directors approved this Interim Financial Report on 20 September
2022.
Statement of compliance
The Interim Report includes the consolidated interim financial statements
which have been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting'. The condensed interim financial statements
should be read in conjunction with the annual financial statements for the
year ended 31 December 2021, which have been prepared in accordance with IFRS
as adopted by the United Kingdom.
Going Concern
Notwithstanding the operating loss incurred during the period under review and
following a successful placing to raise a total of £1,035,000 before expenses
and a further successful placing post the reporting period to raise
£3,300,000 before expenses, the Directors have a reasonable expectation that
the Group will not need to raise funds to continue with its operational
commitments and to meet all of its current contractual liabilities for the
foreseeable future.
The planned major initiative for 2022 is the drilling of the MOU-2 well in
Morocco. The costs for this well are currently based on the final MOU-1 well
costs. Whilst the cost of well services and equipment has gone up and the
United States Dollar has strengthened significantly against sterling this has
been largely offset against savings made in the drilling programme based on
the MOU-1 learning curve. Furthermore MOU-1 drilling costs included a large
element of VAT that cannot now be recovered until production is established.
Sufficient time exists prior to the execution of the MOU-2 drilling programme
to ensure that all VAT exemption claims are processed before contracts are
executed, unlike for MOU-1 where there was a very short lead time to
mobilising the Start Valley Rig 101 from the Rharb Basin. A negotiation with
ONHYM is to take place with respect to the timing of the return of
US$1,000,000 of the US$1,500,000 Bank Guarantee versus entry into the First
Exploration Period of the Guercif Petroleum Agreement.
The Company is planning a discretionary drilling programme in Guercif in 2022
which is subject to funding potentially at the project level via a farmin or
other form of financial arrangement for project equity. If successful, the
Company will enter the next phase of the Guercif Licence at which time the
discretionary work programme completed in 2022 will contribute towards the
work programme agreed for the next phase of the Guercif Licence and the Bank
Guarantee may be rolled over too.
CO2 EOR in Trinidad has not required any additional working capital other than
a small allotment of funds for care and maintenance. The Operator of the
Inniss-Trinity Incremental Production Services Contract ("IPSC"), FRAM,
unilaterally elected to terminate the Inniss-Trinity CO2 EOR Pilot Project
without informing the licence holder Heritage Petroleum Trinidad Ltd.
("Heritage"). As a result, no further funds are being invested in the project
and there are no residual liabilities to be incurred by the Company. The Well
Participation Agreement ("WPA") with FRAM and all accrued entitlements due to
the Company arising from the WPA up until the time the project was
unilaterally terminated by FRAM's parent company currently remain due, as does
the Loan advanced to FRAM, which is repayable from the profits of the sale of
enhanced oil production. Negotiations with FRAM and its parent company to
amicably find a solution to the situation based on the proposal submitted
previously to the parent company by the Company did not elicit a response.
Given the uncertain financial status of the parent company of FRAM, the
Directors have made provisions in the Going Concern forecast that the Loan may
never be recovered and no profits from enhanced oil production in
Inniss-Trinity will be forthcoming. This provision was only reflected in the
Going Concern forecast to ensure that the Company had sufficient resources to
continue operating for the foreseeable future even on a worst-case scenario.
It was decided by the Directors that the loan was not to be provided for until
legal advice, which has been sought by the Company, has been reviewed
following the publication of the parent company's 2021 Audited Accounts by
30(th) September 2022. At this time the preferred legal option to exercise may
be implemented taking into account the parent company's auditors' description
of the dispute with the Company and the ability of the parent company to pay
any potential compensation claim.
For the Going Concern if there were to be a projected working capital
shortfall within the next 12 months, then the directors will institute a
programme of cuts to directors' and consultant's remuneration and other
third-party corporate costs until such time as US$500,000 of the Guercif Bank
Guarantee is returned after delivering to ONHYM the data from the seismic
reprocessing and desk-top studies. This would be extended to include the
return of the US$1,000,000 of the Guercif Bank Guarantee. If either or both of
these events were delayed then the Directors would seek to raise additional
funds in the equity markets, assuming that no farmout of project equity had
occurred by such time as additional working capital was required.
The Company has no debt.
The Directors do not believe that either a resurgence of COVID or Brexit will
adversely influence the Group's business development strategy. Operations in
Morocco can be maintained if that were to occur based on the operating
practices established for the drilling of MOU-1. Brexit will only create more
uncertainty for Ireland's security of gas supply, thereby enhancing the
Company's LNG import project for Ireland by creating an alternative source of
gas not tied to the UK-Ireland gas transmission infrastructure.
Relaxation of COVID restrictions may create more opportunities for the Company
to divest assets if required to do so as the appetite for gas assets and ESG
credentials increases as a result of the "Energy Crisis" and investors'
concerns regarding aligning investment with ESG credibility.
The directors having made do and careful enquiry, are of the opinion that the
Group has adequate working capital to execute its operational commitments over
the next 12 months given that current spending commitments will prevail. The
Group will therefore continue to adopt the going concern basis in preparing
the Interim Report and Financial Statements.
Cyclicality
The interim results for the six months ended 30 June 2022 are not necessarily
indicative of the results to be expected for the full year ending 31 December
2022. Due to the nature of the entity, the operations are not affected by
seasonal variations at this stage.
New Standards adopted at 1 January 2022
There are no accounting pronouncements which have become effective from 1
January 2022 that have a significant impact on the Group's interim condensed
consolidated financial statements.
Significant accounting policies
The accounting policies applied by the Group in these half-yearly results are
the same as those applied by the Group in its consolidated financial
information in its 2021 Annual Report and Accounts.
Areas of estimates and judgement
When preparing the Group's consolidated interim financial statements,
management undertakes a number of judgements, estimates and assumptions about
recognition and measurement of assets, liabilities, income and expenses. The
actual results may differ from the judgements, estimates and assumptions made
by management, and will seldom equal the estimated results.
The judgements, estimates and assumptions applied in the Group's consolidated
interim financial statements, including the key sources of estimation
uncertainty, were the same as those applied in the Group's last annual
financial statements for the year ended 31 December 2021.
Foreign currencies
The functional currency of the Group and all of its subsidiaries is the
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.
1 Financial risk management
The Board continually assesses and monitors the key risks of the business.
The key risks that could affect the Group's medium-term performance and the
factors that mitigate those risks have not substantially changed from those
set out in the Group's 2021 Annual Report and Financial Statements, a copy of
which is available from the Group's website: www.predatoroilandgas.com. The
key financial risks are market risk (including cash flow interest rate risk
and foreign currency risk), credit risk and liquidity.
2 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.
Operating segments are disclosed below on the basis of the split between
exploration and development and administration and corporate.
Europe Caribbean Africa Corporate
£ £ £ £
Gross Loss
Administrative and overhead expenses (118,621) (40,945) (420,341) (19,882)
Share option and warrant expense - - - -
Finance expense - - - -
Loss for the year from continuing operations (118,621) (40,945) (420,341) (19,882)
Addition to intangible assets
Total reportable segment assets 2,717 659,621 4,103,413 1,552,151
Total reportable segment liabilities (7,191) - (28,129) (91,689)
There are no non-current assets held in the Group's country of domicile, being
Jersey, Channel Islands (2021: £nil).
30.06.2021
30.06.2022 (unaudited) 31.12.2021
(unaudited) £ (audited)
3 Administrative expenses £ (restated) £
Technical Consultancy fees 64,504 70,524 360,484
Listing costs 56,971 78,255 303,281
AIM listing costs 40,488 - -
Project costs 23,472 12,467 -
Directors' fees 182,699 222,460 229,165
Share based payments - options 131,297 62,364 75,533
Share based payments - warrants - 24,366 24,366
Administration fees 55,946 42,732 84,957
Bank charges 26,224 36,035 49,263
Legal and professional fees 69,722 22,820 52,197
Travel expenses 76,166 32,502 41,137
Non-executive director fees 60,830 44,998 89,996
Computer/system costs/IT support 2,130 3,904 4,249
Design, publishing, presentation and printing fees - 1,036 1,036
Insurance 33,415 19,373 58,545
Sundry expenses 1,369 2,539 3,817
Annual return fee 665 669 1,125
Depreciation 1,218 1,118 2,338
Website costs 2,203 2,371 4,117
Foreign exchange (243,530) 61,826 (14,304)
Audit fee 14,000 15,750 27,500
599,789 758,109 1,398,802
30.06.2021
30.06.2022 (unaudited) 31.12.2021
4 Loss per share (unaudited) (restated) (audited)
Weighted average number of shares 272,377,468 244,534,481 266,433,024
Loss attributable to ordinary equity holders of the company (599,789) (758,128) (1,398,821)
Total basic and diluted loss per share attributable to the ordinary equity (0.2) (0.3) (0.5)
holders (pence)
Diluted loss per Ordinary share equals basic loss per ordinary share as, due
the losses incurred in 2022 and 2021, there is no dilutive effect from the
subsisting share options.
5 Intangible asset Project Guercif Total
Gross carrying amount
Balance at 1 January 2022 2,687,026 2,687,026
Additions, separately acquired 170,965 170,965
Balance at 30 June 2022 2,857,991 2,857,991
Depreciation and impairment
Balance at 1 January 2022 - -
Depreciation - -
Balance at 30 June 2022 - -
Carrying amount 30 June 2022 2,857,991 2,857,991
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.
6 Property, plant and equipment Computer equipment Total
Gross carrying amount
Balance at 1 January 2022 11,181 11,181
Additions - -
Balance at 30 June 2022 11,181 11,181
Depreciation and impairment
Balance at 1 January 2022 (5,297) (5,297)
Depreciation (1,218) (1,218)
Balance at 30 June 2022 (6,515) (6,515)
Carrying amount 31 December 2021 5,884 5,884
Carrying amount 30 June 2022 4,666 4,666
30.06.2021 30.06.2021 31.12.2021
(unaudited) (unaudited) (audited)
7 Trade and other receivables £ £ £
Current
Security deposit (US$1,500,000) 1,235,107 1,083,298 1,111,111
Loans receivable (i) 654,073 487,477 591,066
Prepayments and other receivables 16,631 31,571 35,081
1,905,811 1,602,346 1,737,258
The Company's subsidiary, Predator Gas Ventures Limited, on 19 March 2019,
provided a bank guarantee of US$1.5 million to Office National des
Hydrocarbures et des Mines, who act for the Moroccan State, as a condition of
being granted the Guercif exploration licence. Predator Gas Ventures Limited
was required to lodge a security deposit of US$1.5 million with Barclays Bank
Plc to secure the guarantee facility. The restricted access cash balance of
£1,235,107 represents the aforesaid security deposit and is denominated in US
Dollars. 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. All other receivables are denominated in Pound Sterling.
(i) As at the year ended 30 June 2022 £654,073 (2021: £487,477) comprises
of:
• USD$360,096 (2021: USD360,096) advanced as cash in line with a loan
agreement signed and dated 24 July 2019 and subsequent 5 addendums (2021: 5
addendums); and
• USD$402,120 and GBP26,461 (2021: USD402,120 GBP26,461) advanced as
equipment.
The loans are in place to provide FRAM with funds for the purpose of meeting
current and future expenses.
The loans balance are unsecured, interest free and repayable at the discretion
of Predator Oil & Gas Trinidad Limited provided not less than a notice of
7 working days is given.
On the 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.
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.
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
Pending the outcome of commercial negotiations to settle the dispute with FRAM
the aforesaid loan may or may not be recovered.
30.06.2022 30.06.2021 31.12.2021
(unaudited) (unaudited) (audited)
8 Cash and cash equivalents £ £ £
Pound Sterling 1,023,352 360,977 848,339
Euros 1,059 - 2,910
United States Dollar 516,162 1,842,736 631,522
Moroccan Dirham 8,861 54,854 40,265
1,549,434 2,258,567 1,523,035
9 Share capital Number of shares Nominal value
Issued and fully paid
Opening Balance 292,946,267 11,425,061
26 March 2021
Share issue 5,000,000 450,000
18 June 2021
Share issue 6,500,000 585,000
304,446,267 12,460,061
30.06.2022 30.06.2021 31.12.2021
(unaudited) (unaudited) (audited)
10 Trade and other payables £ £ £
Current
Trade payables 127,009 322,980 245,019
127,009 322,980 245,019
11 Share based payments
Share options
The Group operates a share option plan for directors. During the period the
below share options were issued:
On 31 January 2022 both Lonny Baumgardner and Louis Castro were granted share
options of 7,855,486 and 1,000,000, respectively. The share options granted
were exercisable at 5.66p each being the closing mid-marked price on 28
January 2022 and had a vesting period of 6 months ending 31 July 2022.
For the six months ended 30 June 2022, the Group has recognised £131,297 of
share-based payment expense in the statement of profit or loss (2021:
£62,364).
Warrants
During the period, the Company did not grant any warrants (2021: 1,620,000).
12 Investment in subsidiaries Principal activity Country of Ownership
incorporation interest
Predator Oil and Gas Ventures Limited Licence options in offshore Ireland Jersey 100%
Predator Oil and Gas Trinidad Limited Profit rights for production revenues from a CO2 enhanced oil recovery project Jersey 100%
Predator Gas Ventures Limited Exploration licence onshore Morocco Jersey 100%
Mag Mell Energy Ireland Ltd Licence application to import liquified natural gas Jersey 100%
13 Financial instruments
The Group's financial instruments comprise cash and items arising directly
from its operations such as trade receivables and trade payables.
30.06.2022
(unaudited)
Categorisation of financial instruments £
Financial assets measured at amortised cost:
Trade and other receivables 1,905,811
Financial assets that are debt instruments measured at amortised cost:
Cash and cash equivalents 1,549,434
3,455,245
Financial liabilities measured at amortised cost:
Trade and other payables (127,009)
(127,009)
14 Related party transactions
Transactions with key management personnel
Key management of the Group are the board of directors. Key management
personnel remuneration includes the following expenses:
30.06.2022 30.06.2021 31.12.2021
(unaudited) (unaudited) (audited)
£ £ £
Executive and non-executive directors including bonuses 243,529 267,458 545,853
Share option scheme 131,297 62,364 90,013
374,826 329,822 635,867
The average number of personnel (including directors) during the period was:
Management - (Executive Directors) 2 2 2
Non-management - (Non-executive Directors) 2 2 2
4 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
£107,350 (2021: £116,667). All individuals are engaged as service providers.
15 Subsequent events
On the 12 July 2022, the Company received an exercise notice from Novum
Securities Limited ("Novum") in respect of warrants issued to it pursuant to
warrant agreements with the Company:
· Dated 24 May 2018 (which had the expiry date extended to 24 May
2023) (in connection with the Placing carried out by the Company in May 2018
on admission of the Company to the Official List (standard listing segment) of
the London Stock Exchange's main market for listed securities) to subscribe
for 1,892,960 new shares of no par value each in the Company ("New Ordinary
Shares") at 2.8p per share, and
· Dated 17 February 2020 (in connection with the Placing carried
out by the Company in February 2020) to subscribe for 2,256,250 new shares of
no par value each in the Company ("New Ordinary Shares") at 4p per share.
The Company has therefore allotted and issued the total of 4,149,210 New
Ordinary Shares following receipt of the aggregate £143,253 subscription
price from Novum
· On the 17 August 2022 £3,300,000 (before expenses)
raised through one Placing with the issue of 60,0000 Ordinary Shares of 5.5
pence each. 15 million existing shares along with voting rights were loaned to
the Company by a director Paul Griffiths under a Stock Lending Agreement. The
Company did not have sufficient headroom to enable the issue and admission of
all of the 60,000,000 Placing Shares which are required to be issued pursuant
to the Placing without the production of an FCA approved prospectus. The Stock
Lending Agreement ensured that the Company is fully funded for its near-term
Moroccan drilling programme and can meet its proposed drilling schedule.
· In connection with the fundraising, 3,600,000 warrants,
exercisable at 5.5p per new ordinary share with a 3 year expiry from Admission
were issued to Novum Securities Limited or their nominees.
As at 31 July 2022, the share options issued to Lonny Baumgardner and Louis
Castro on 31 January 2022 have vested.
16 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.
17 Restatement of prior period
During the preparation of the financial statements for the year ended 31
December 2021, it was decided by the Directors that the Company was to restate
the warrant issue costs shown in prior periods.
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.
The impact on the prior interim financial statements is shown on the table
below:
Effect on period ended 30 June 2021 Effect on period ended 30 June 2020 Effect on period ended 30 June 2019
GBP GBP GBP
Loss for the year (929,089) (784,156) (512,263)
Reclassification of warrants issue costs 170,961 100,451 81,385
Restated total loss for the period (758,128) (683,705) (430,878)
Warrants issuance cost reserve balance brought forward (208,887) (108,436) (27,051)
Warrants issuance cost (170,961) (100,451) (81,385)
Restated Equity attributable to the owner of the parent (379,848) (208,887) (108,436)
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