REG - Reabold Resources - Full Year Results for the year ended 31 Dec 2021
27/05/2022 07:00
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RNS Number : 0050N Reabold Resources PLC 27 May 2022
27 May 2022
Reabold Resources plc
("Reabold" or the "Company")
Full Year Results for the year ended 31 December 2021
Posting of Annual Report
Reabold, the AIM quoted investing company, which focuses on investments in
upstream oil and gas projects, is pleased to announce its audited results for
the year ended 31 December 2021.
The Company's Annual report and Financial Statements for the same period are
now also available on the Company's website:
https://reabold.com/investor-relations/reports-and-presentations/
(https://reabold.com/investor-relations/reports-and-presentations/) .
Reporting period highlights
West Newton
· During H2 2021, West Newton B-1Z and A-2 completion and testing
operations commenced, evaluating the hydrocarbons in the conventional Kirkham
Abbey Formation reservoir, which is key for the future development of the West
Newton licence (PEDL183) and, in particular, for informing the optimal
location for the drilling of the horizontal B-2 development well.
· With both gas and liquid hydrocarbons recovered to surface, the test
programme provided further evidence that there is a substantial hydrocarbon
column and resource in place. The updated Most Likely Median Case of in-place
hydrocarbons over PEDL183 was estimated to be 412.3 mmbbl of oil and 183.5 bcf
of gas.
Corallian
· A further investment of £1.0 million into Corallian Energy Limited
("Corallian") was made by way of a Convertible Loan to fund the submission of
a draft Field Development Plan ("FDP") for the Victory gas field, which was
submitted at the end of 2021. The Company sold 50% of its Convertible Loan for
net proceeds of £0.5 million to a group of strategic investors.
· Reabold acquired an additional 13.12% of Corallian shares from existing
Corallian shareholders, in exchange for 468,994,086 new Reabold shares,
resulting in the Company owning 49.99% of Corallian, thereby increasing its
interest in the Victory gas discovery, wholly owned by Corallian.
· Completion of Environmental Baseline Survey, which was a key element in
the submission of the Environmental Statement ("ES") for Victory.
· A CPR for the Victory project was completed, calculating a gross
2C recoverable resource of 179 bcf. The Victory development plan is relatively
simple because, inter alia, it is adjacent to significant gas infrastructure.
Corallian's 2C economic valuation (NPV10) of Victory, based on a historical
average gas price of 50p/therm, is £193 million. Victory is an important
resource and could contribute meaningfully to the UK's energy needs.
Reabold California
· Reabold entered into a conditional equity exchange agreement with
Daybreak Oil and Gas Inc. ("Daybreak"), a US over-the-counter ("OTC") traded
oil and gas operator with assets in California, whereby Reabold will acquire
up to 46.5% of Daybreak via the issuance of new Daybreak shares to Reabold, in
exchange for Daybreak acquiring Reabold California LLC, Reabold's subsidiary,
which holds, inter alia, Reabold's licence interests in California.
Corporate and Other Activities
· The 18 month extension of the Parta Exploration Licence in Romania,
held 100% by Danube Petroleum Limited, in which Reabold has a 50.8% equity
interest, for the current exploration phase until 3 December 2022.
· Oversubscribed placing and subscription at a premium to the prevailing
market price to raise gross proceeds of £7.5 million, supported by key
existing and new institutional investors.
Post reporting period highlights
· On 26 May 2022, Reabold announced the completion of the equity
exchange agreement with Daybreak. Reabold California LLC, Reabold's subsidiary
which holds, inter alia, Reabold's licence interests in California, has now
become a wholly owned subsidiary of Daybreak, which, in exchange, has issued
160,964,489 new Daybreak shares to Gaelic Resources Limited, a wholly owned
subsidiary of Reabold. Reabold now indirectly owns 42%of Daybreak's share
capital, as enlarged by the completion of the transaction.
· On 4 May 2022, Reabold announced that Corallian had received a
non-binding, conditional offer from a credible party for the acquisition of
its entire issued share capital (the "Potential Sale"). Corallian's board
considers the Potential Sale to be sufficiently attractive to seek to conclude
a sale process and is progressing negotiations with the potential purchaser.
· As part of the Potential Sale process, Reabold announced that it had
entered into a conditional sale and purchase agreement ("SPA") to acquire
Corallian's working interest in all the non-Victory licences within the
Corallian portfolio for a cash consideration of £250,000. The licences that
will be acquired by Reabold are P2396, P2464, P2493, P2504 and P2605 (all at
100% working interest) and P2478 (36% working interest), which the Board
believes have significant prospective potential.
· RPS Group ("RPS") estimated that a horizontal optimised well drilled
at West Newton could deliver an initial production rate of ca 35.6 mmcf/d of
gas over the first month of production.
· East Riding of Yorkshire Council Planning committee approved planning
applications for drilling and production at Rathlin's West Newton A site as
well as a time extension to allow for further drilling at the West Newton B
site, paving the way for the next phase of activity at West Newton towards
development.
For further information, contact:
Reabold Resources plc c/o Camarco
Sachin Oza +44 (0) 20 3757 4980
Stephen Williams
Strand Hanson Limited - Nomad & Financial Adviser +44 (0) 20 7409 3494
James Spinney
Rory Murphy
James Dance
Stifel Nicolaus Europe Limited - Joint Broker +44 (0) 20 7710 7600
Callum Stewart
Simon Mensley
Ashton Clanfield
Panmure Gordon - Joint Broker +44 (0) 207 886 2733
Hugh Rich
Camarco +44 (0) 20 3757 4980
James Crothers
Rebecca Waterworth
Billy Clegg
Notes to Editors
Reabold Resources plc is an investing company investing in the exploration and
production ("E&P") sector. The Company's investing policy is to acquire
direct and indirect interests in exploration and producing projects and assets
in the natural resources sector, and consideration is currently given to
investment opportunities anywhere in the world.
As an investor in upstream oil & gas projects, Reabold aims to create
value from each project by investing in undervalued, low-risk, near-term
upstream oil & gas projects and by identifying a clear exit plan prior to
investment.
Reabold's long term strategy is to re-invest capital made through its
investments into larger projects in order to grow the Company. Reabold aims to
gain exposure to assets with limited downside and high potential upside,
capitalising on the value created between the entry stage and exit point of
its projects. The Company invests in projects that have limited correlation to
the oil price.
Reabold has a highly-experienced management team, who possess the necessary
background, knowledge and contacts to carry out the Company's strategy.
Chairman's statement
The year ended 31 December 2021 and the subsequent post period-end has seen
significant increases in energy prices driven by strong global economic growth
and dramatic geopolitical events. Against this backdrop, the Company is
positioned for a transformative period ahead for its investment portfolio,
particularly in respect of the Victory and West Newton projects.
The submission of a draft FDP for Victory was a significant milestone for this
gas field, in which the Company has an indirect 49.99% interest. Victory is in
shallow water, close to pre-existing subsea infrastructure, allowing a
cost-effective tie-back solution. It is fully appraised and requires no
additional pre-development drilling. The updated independent CPR has ascribed
recoverable 2C resources of 179 bcf of dry gas to the field, which is situated
in an area of significant infrastructure, meaning its development is expected
to be straightforward, whilst providing a meaningful gas resource to the UK
energy supply.
The strategic review of Corallian that commenced in Q4 2021 has resulted in a
non-binding, conditional offer from a credible party for the acquisition of
its entire issued share capital. At the time of writing, the potential sale
has not yet reached completion, however this is potentially a major milestone
for the Company in demonstrating the execution of its strategy by way of
monetising its investment.
The Company is well funded, following the placing in January 2021, whereby it
raised £7.5 million in gross proceeds by way of an oversubscribed placing of
890,909,093 new ordinary shares in the capital of the Company ("Ordinary
Shares") to new and existing institutional investors, and a total of
472,727,270 new Ordinary Shares being subscribed to certain Directors and
institutional investors, at a price of 0.55 pence per new Ordinary Share, a
2.8% premium to the then prevailing share price.
We were delighted to secure this funding required to finance activity across
our asset base, including further drilling and testing at West Newton, adding
value across the wider PEDL183 licence, and providing available funding to
move the Victory gas development towards FDP.
In October 2021, Reabold announced the signing of a conditional equity
exchange agreement between Daybreak Oil and Gas Inc. ("Daybreak"), a US OTC
traded oil and gas operator with assets in California (the "Equity Exchange
Agreement"), which will result in Reabold becoming a major shareholder of
Daybreak via the issuance of new Daybreak shares to Reabold, in exchange for
Daybreak acquiring Reabold California LLC ("Reabold California").
As per the terms of the Equity Exchange Agreement, Reabold California will
become a wholly-owned subsidiary of Daybreak, which, in exchange, will issue
160,964,489 Daybreak shares to Gaelic Resources Limited, a wholly-owned
subsidiary of Reabold.
Post Reporting Period
Corallian
In May 2022, as described on page 2, we announced that Corallian had received
a non-binding, conditional offer to acquire the Victory Project held by
Corallian, by way of the acquisition of 100% of the issued capital of
Corallian. As part of the sale process, Reabold announced that it had entered
into a conditional SPA to acquire Corallian's working interest in all the
non-Victory licences within the Corallian portfolio for a cash consideration
of £250,000.
West Newton
On 17 January 2022, the Company announced initial results of analysis of the
West Newton Extended Well Test ("EWT") programme carried out in the second
half of 2021 by RPS and the results of analysis carried out on fluids produced
to surface:
• Independent study by RPS indicates potential
for initial production rates of 35.6 mmcf/d (5,900 boe/d from an optimised
horizontally drilled well situated in the gas zone, based on the data from the
West Newton A-2 well.
• Study also indicates potential initial
production rates of 1,000 bbls/d from a horizontally drilled well situated in
the oil zone, based on well data from West Newton A-2.
On 17 March 2022, the Company announced that, at an East Riding of Yorkshire
Council Planning committee, planning applications for drilling and production
at Rathlin's West Newton A site as well as a time extension to allow for
further exploratory drilling at the West Newton B site were approved. These
approvals pave the way for the next phase of activity at West Newton as the
partnership continues to move the project forward towards development.
Reabold California
On 26 May 2022, Reabold announced the completion of the equity exchange
agreement with Daybreak. Reabold California LLC, Reabold's subsidiary which
holds, inter alia, Reabold's licence interests in California, has now become
a wholly owned subsidiary of Daybreak, which, in exchange, has issued
160,964,489 new Daybreak shares to Gaelic Resources Limited, a wholly owned
subsidiary of Reabold. Reabold now owns 42%of Daybreak's share capital, as
enlarged by the completion of the transaction.
Outlook
The Company's current financial position is strong and funding is in place for
the key 2022 work programmes to drive what the Board expects to be a
transformative value driving year ahead.
We look forward to reporting further in due course on the progression of our
investee companies and take this opportunity to thank our shareholders for
their continued support.
This report was approved by the Board and signed on its behalf:
Jeremy Edelman
Chairman
26 May 2022
Strategic report
Strategy and business model
Reabold invests in the E&P sector. The Company's investing policy is to
acquire direct and indirect interests in exploration and producing projects
and assets in the natural resources sector, and consideration is currently
given to investment opportunities anywhere in the world.
As an investor in upstream oil and gas projects, Reabold aims to create value
from each asset by investing in undervalued, low-risk opportunities with
near-term activity and by identifying potential monetisation plans prior to
investment.
Reabold's long-term strategy is to re-invest capital generated through
monetisation of its investments into new projects in order to grow the Company
and create value for its shareholders. Reabold aims to gain exposure to assets
with limited downside and high potential upside, capitalising on the value
created between the entry stage and exit point of its projects. The value
realisation of a project is determined by monetising the asset (putting it
into production or selling it). The value increase of an asset from the
acquisition entry point to monetisation is achieved through successful
appraisal and/or development drilling.
Reabold's non-operator model helps to keep costs low and allows the Company to
manage a diversified portfolio.
Reabold has a specific strategy to fund other operators' appraisal wells where
the Company has assessed such opportunities to be high quality, high return
projects from previous drilling activity that has de-risked the asset. The
projects targeted have relatively quick cycle times to monetisation as the
projects are in areas with access to infrastructure and services.
In order to maximise the return profile, identifying the optimal time to exit
a project is critical to Reabold's strategy. Doing so effectively will allow
the Company to scale and attract more capital over time thereby creating value
for the Company's shareholders. Monetisation of investments is determined by,
amongst other factors, the extent of successful activity in the project area
and industry and capital market conditions. Pathways to monetisation
include:
i) an asset sale or IPO; and/or
ii) putting the asset into production.
Reabold has a highly-experienced management team, which possesses the
necessary background, knowledge and contacts to carry out the Company's
strategy. The biographies of the Board are summarised on pages 20-21.
Management believes that distress in the oil and gas industry over several
years presents an opportune time to deploy capital in undervalued assets with
huge potential.
Reabold portfolio and operational annual summary
Rathlin Energy (UK) Limited / PEDL183
2021 was an extremely important year for Reabold's involvement in the West
Newton project, as well as the broader Zechstein play in the PEDL183 licence
area. During the year, extensive testing was carried out at both the B-1Z
and A-2 discovery wells, which is leading to a significant increase in our
understanding of the Kirkham Abbey formation in the West Newton field. We
continue to formulate optimised drilling and completion techniques for the
future West Newton production wells, and thoughts are moving on to development
planning.
Reabold holds a c. 56% economic interest in West Newton via its c. 59%
shareholding in Rathlin, which, in turn, has a 66.67% interest in PEDL183. In
addition, Reabold has a 16.665% direct licence interest in PEDL183.
West Newton B-1Z testing:
On 20 March 2021, Reabold announced that Rathlin had received a draft of the
permit variation from the Environmental Agency that was needed to accommodate
completion, well clean-up and EWT operations. The first phase of the
evaluation would commence in April 2021 and initially consist of a customised
cased hole logging programme and vertical seismic profiling survey, before
moving onto the main EWT operations. On 20 April 2021, Reabold announced
that the first phase was complete and that the EWT phase would commence during
May with an anticipated four week duration, and on 25 May 2021 it was
announced that equipment had been mobilised to site. Reabold also announced on
20 April 2021 that thin section images obtained from core plugs taken from
West Newton B-1Z showed porosity throughout the core including samples of
between 12% and 15% porosity.
On 21 July 2021, Reabold announced that well testing operations had commenced
on 7 June, with an initial focus on the lower portion of the Kirkham Abbey pay
zone. Significant inflow of completion fluids into and subsequently out of
the reservoir indicated a functioning permeability system, and liquids and gas
were recovered to surface. Gas analyses exhibited a strong similarity to
analyses obtained from the West Newton A site wells with samples showing
approximately 90% methane and no native H(2)S. An additional 19 metre pay
zone in the upper Kirkham Abbey formation was identified for perforation and
flow testing.
On 31 August 2021, Reabold announced a further update to the test programme at
B-1Z. Testing of the well had yielded significant information to help
understand the West Newton field, with both gas and liquid hydrocarbons
recovered to surface, which is consistent with information gathered from the A
site wells and further evidence that we have a substantial hydrocarbon column
and resource in place. As expected, the reservoir demonstrated a dual
permeability system, with natural fractures alongside a lower permeability
matrix. Completion fluids were injected into the formation at a rate
constrained by the pumps on site at 5.7 barrels per minute (8,208 barrels per
day).
However, the Kirkham Abbey reservoir appeared to be sensitive to the drilling
and completion fluids. We saw clear signs of reservoir damage in near
wellbore areas. This was probably preventing more significant flow at that
time. Testing to date had not yet returned all the completion fluids injected
into the formation and a measurable flow of hydrocarbons had not yet been
achieved.
The B-1Z well was therefore suspended with pressure gauges monitoring pressure
build up in the well bore, with a view to further potential testing following
the results at the A-2 well.
West Newton A-2 testing:
On 13 October 2021, following the conclusion of testing at the A-2 well,
Reabold provided a further update in respect of the overall testing operations
at West Newton.
The results of the EWT confirmed that the WNA-1, WNA-2 and WNB-1z wells are
substantial hydrocarbon discoveries. Gas and light oil/condensate were
recovered to surface from the WNA-2 and WNB-1z wells, although sustained
flow rates were not achieved, and multiple samples were gathered for
geochemical analysis.
The large suite of data accumulated during the EWTs including downhole logs,
pressure data, geochemical and core analysis are being used to progress a
reservoir modelling study to determine the optimum production design for the
Kirkham Abbey reservoir.
A number of external studies, utilising the knowledge of specialist carbonate
reservoir modelling consultants are being conducted, encompassing a wide range
of potential reservoir stimulation treatments, the results of which could be
applied to the West Newton series of wells, in order to achieve optimum flow
rates.
The "Greater West Newton" area has been confirmed to contain material
resources. The method by which to produce this known accumulation of
hydrocarbons is still being assessed.
This data will be used to inform the drilling of the next well on the West
Newton field, which will be designed to deliver an optimal flow rate from the
Kirkham Abbey formation.
West Newton Site Planning:
On 22 January 2021, Rathlin received a Screening Opinion from the East Riding
of Yorkshire Council in response to its screening request for the proposed
West Newton A site extension. The proposed extension of the existing WNA
wellsite and associated work programme would provide for testing, appraisal
and production from the two existing wells (WNA-1 and WNA-2) and the potential
for drilling, testing, appraisal and production from up to six new wells on
the WNA site over a 25-year period. The East Riding of Yorkshire Council's
Screening Opinion considered that the proposed development would not require
an environmental impact assessment. On 22 March 2021, Reabold announced that
Rathlin was carrying out a public consultation regarding the development of
the WNA site.
On 1 October 2021, Rathlin's planning application for the West Newton A well
site expansion was refused by a narrow margin by The East Riding of
Yorkshire Council Planning Committee, despite it being recommended for
approval by The East Riding of Yorkshire Council's own planning
officers. On 26 November, Rathlin noted an intention to submit a new
application, taking into account the concerns associated with the earlier
application.
On 17 March 2022, at an East Riding of Yorkshire Council Planning committee,
planning applications for drilling and production at Rathlin's West Newton A
site as well as a time extension to allow for further exploratory drilling at
the West Newton B site were approved. These approvals pave the way for the
next phase of activity at West Newton as the partnership continues to move the
project forward towards development.
West Newton CPR
On 10 May 2021, Reabold announced that Gaffney, Cline & Associates
Limited, an international energy consultancy, had been appointed to prepare a
Competent Person's Report in respect of PEDL183, to be executed following the
testing of the B-1Z and A-2 wells. Given the ambiguity associated with
potential flow rates immediately following the testing operations, the
execution of the CPR was put on hold whilst additional analysis was carried
out.
Reabold California
Following an active five well drilling campaign in 2018-2019, the last two
years focused on maintaining cash generative production throughout and beyond
the oil price downturn.
Most importantly, the decision was taken to explore ways in which Reabold
could participate in ongoing growth of its business in California, by
accessing external capital to facilitate additional drilling, without calling
on Reabold's own cash resources, which are currently focused on other areas of
the Reabold portfolio.
This led to the agreement to merge Reabold California with Daybreak, a US OTC
listed E&P business with producing assets in California. This creates a
California focused upstream entity with a larger footprint, significant
running room across both sets of licences, and the ability to use its listing
to raise capital to achieve growth.
On 21 October 2021, Reabold announced the signing of a conditional equity
exchange agreement with Daybreak, which would result in Reabold becoming a
major shareholder of Daybreak via the issuance of new Daybreak shares to
Reabold, in exchange for Daybreak acquiring Reabold California, Reabold's
subsidiary which holds, inter alia, Reabold's licence interests
in California.
Per the conditions of the Equity Exchange Agreement, prior to completion of
the transaction, Daybreak is required to raise a minimum of US$2.5
million via an equity raise; the proceeds of which will be used to grow
production across Daybreak's enhanced portfolio. In addition, Daybreak will be
required to complete a conversion of certain of its debt into equity. On 20
May 2022, at a Special Shareholder Meeting for Daybreak, shareholders voted to
approve the Equity Exchange Agreement. On 26 May 2022, Reabold announced the
completion of the equity exchange agreement with Daybreak. Reabold California
LLC, Reabold's subsidiary which holds, inter alia, Reabold's licence
interests in California, has now become a wholly owned subsidiary of Daybreak,
which, in exchange, has issued 160,964,489 new Daybreak shares to Gaelic
Resources Limited, a wholly owned subsidiary of Reabold. Reabold now owns 42%
of Daybreak's share capital, as enlarged by the completion of the transaction.
Transaction Rationale:
· Creates a self-funded, OTC traded, Californian oil and gas
operator, with a strong balance sheet, in which Reabold will have a major
shareholding
· Daybreak will utilise its existing in-state management team and
expertise to grow the portfolio through development of existing licences as
well as considering strategic acquisition opportunities
o Daybreak's management team have 12 years' experience operating
in California
o Daybreak is led by James F. Westmoreland
· With a clear focus in California, Daybreak can utilise
significant market opportunities for consolidation in the state, creating
further opportunities for synergistic growth
· As a result of the transaction, Reabold's interests
in California will be exchanged for shares of an OTC traded entity, creating
flexibility and funding opportunities going forward
Reserves:
The proved reserves attributable to the California business, net to Reabold,
are shown below:
Oil Gas Total oil and gas
bbl mcf boe*
1P reserves as at 1 April 2021 606,860 36,790 612,992
* Total gas reserves at 1 April 2021 have been converted to barrels of oil
equivalent using a factor of 6.0 mcf per boe for reporting purposes.
Proved reserves at 1 April 2021 shown here have been extracted from an
independent report prepared by Petrotech Resources Company Inc. ("Petrotech")
in accordance with the reserve definitions guidelines defined in the Society
of Petroleum Engineers (SPE) Petroleum Resources Management System 2007.
Operational update and production:
Production (net to Reabold) 2021 2020
Crude Oil (boe) 23,518 31,035
Natural gas (boe) 1,029 2,855
Total hydrocarbons (boe) 24,457 33,890
Average realizations
Total hydrocarbons ($/bbl) 65.4 38.4
Total hydrocarbons (net of royalties) ($/bbl) 52.3 30.7
Corallian Energy Limited
Reabold has a 49.99% equity holding in Corallian, a private UK oil and gas
exploration and appraisal company, with an experienced in-house team to
execute its programmes. In addition to the Victory project, Corallian's
project portfolio, includes the West of Shetland (Laxford discovery and
Scourie prospect in Licence P2605, and the Sandvoe prospect in Licence P2493),
the Viking Graben (Unst and Quoys prospects in Licence P2464, and the Oulton
discovery in Licence P2504), the Inner Moray Firth (Dunrobin and Golspie
prospects in Licence P2478) and in the Central Graben (Curlew-A discovery in
Licence P2396).
Victory Development Project
We believe Victory to be a straightforward, low-risk gas development which has
been fully appraised and requires no additional pre-development drilling.
Victory is located near to existing local infrastructure, with the development
of Victory expected to be via a single-well sub-sea tieback. The licence was
originally offered to Texaco in 1972 and it drilled a discovery well in 1977
that flowed at circa 9 mmcf/d from 200 feet (circa 60.6 metres) of net gas pay
in Lower Cretaceous sandstones, proving reservoir commerciality.
On 25 June 2021, Reabold announced the completion of the environmental
baseline survey (EBS) at Victory. Data acquisition for the Victory EBS was
successfully completed on 23 June 2021, with the survey completed within the
budget estimate and with zero health and safety incidents. Data acquired
included side-scan sonar, multibeam echosounder, seabed sediment samples, and
video and camera stills over the proposed project sites. This data was used to
complete an Environmental Impact Assessment and ultimately an Environmental
Statement for the Victory project.
On 20 October 2021, Reabold announced that a CPR had recently been completed
by RPS, following the finalisation of both static and dynamic modelling,
together with well / network optimisation studies for the development. RPS
estimates a total Victory field 2C or best / mid
case technically recoverable resource of 179 bcf dry gas. This estimate
represents a 14% increase over the previous interim CPR completed by SLR
Consulting in December 2020 of 157 bcf of technically recoverable gas.
On 23 December 2021, Corallian confirmed that it had submitted a draft FDP for
the Victory gas field to the Oil and Gas Authority, now known as the North Sea
Transition Authority.
Further investment in Corallian
Reabold continued to invest in Corallian in 2021 mainly to support progression
of the Victory project. On 22 February 2021, Reabold announced that it had
entered into a conditional convertible loan instrument (the "Instrument")
with Corallian pursuant to which Reabold would advance £1 million to
Corallian (the "Convertible Loan"). The completion of the transaction was
announced on 24 February 2021.
Corallian intended to utilise the proceeds of the Convertible Loan to support
workstreams related to the submission of a draft FDP for the Victory gas
field, which Corallian had aimed to do before the end of 2021, and for general
working capital purposes.
The Convertible Loan, including interest at a rate of 15% per annum (accruing
daily), will convert into new ordinary shares in Corallian ("Corallian
Shares") within 21 months from the date of the Instrument. If, during this
period, Corallian is acquired, undertakes a material disposal of assets, an
initial public offering or a reverse takeover, where the relevant valuation
(each, a "Corporate Action") is greater than £3.20 per share, the
Convertible Loan will convert at £3.20 per share. If the relevant valuation
is below £3.20 per share, then the Convertible Loan will convert at a price
equal to the relevant valuation. If no such Corporate Action has taken place
within 21 months, the Convertible Loan will automatically convert at a price
of £1.50 per share.
On 3 March 2021, Reabold announced that it had initiated the sale of a portion
of the convertible loan notes in Corallian with a principal value
of £500,000, to a group of strategic investors (the "Strategic Investors"),
in exchange for cash proceeds of £500,000. Reabold will
retain £500,000 principal value of the CLN.
The Strategic Investors had indicated their support of an initial public
offering, reverse takeover or similar for Corallian, which is in line with
Reabold's strategy of clearly identifying monetisation opportunities across
its portfolio. The strategic investors also signalled their intention to
support Reabold in facilitating further potential strategic value creation
opportunities across the wider Reabold portfolio.
On 27 April 2021, Reabold announced a conditional offer to acquire up to an
additional 13.12% of Corallian, at a ratio of 474 Reabold shares for 1
Corallian share, potentially increasing Reabold's shareholding in Corallian to
a maximum of 49.99%.
By increasing its position in Corallian, Reabold increased its economic
interest in the 100% Corallian-owned Victory Gas Discovery, West of Shetland,
in which Reabold management sees significant value.
On 10 May 2021, Reabold announced that the offer had been oversubscribed and
all conditions precedent fulfilled. As such, Reabold acquired 989,439
Corallian shares, equivalent to 13.12% of Corallian, and issued 468,994,086
Reabold shares.
Corallian Strategic Review
On 20 October 2021, Reabold announced that Corallian had decided to conduct a
formal review of the various strategic options available to maximise value for
all of its shareholders. In May 2022, as noted in the Chairman's Statement, we
announced that Corallian had received a non-binding, conditional offer to
acquire the Victory Project held by Corallian, by way of the acquisition of
100% of the issued capital of Corallian. As part of the sale process, Reabold
announced that it had entered into a conditional SPA to acquire Corallian's
working interest in all the non-Victory licences within the Corallian
portfolio for a cash consideration of £250,000.
Danube Petroleum Limited
Reabold has a 50.8% equity interest in Danube, with ASX listed ADX Energy Ltd
("ADX") holding the remaining 49.2%. Danube is active in Romania through its
ownership of the Parta Licence. Danube has a 100% interest in the Parta
licence as well as the Iecea Mare production licence which includes the IMIC-1
discovery drilled in 2019.
A planned 3D seismic work programme is designed to target appraisal
opportunities within the Iecea Mare production licence as well as both
exploration and appraisal targets in the large Parta exploration licence.
The Parta 3D seismic programme was deferred in September 2020 following the
default by ASK listed Tamaska Oil & Gas Limited pursuant to a farm-in
agreement to fund a 100 km(2) 3D seismic program.
On 21 June 2021, Reabold and ADX announced that the Romanian National Agency
for Mineral Resources had approved an 18-month work programme extension of the
current phase 1 (exploration phase) for the Parta exploration licence. The
extension was granted without additional work programme obligations.
Funding
During the reporting period, Reabold carried out an equity capital raise in
January 2021, raising gross proceeds of £7.5 million. Such fundraise was
completed at a price of 0.55 pence per new Ordinary Share, representing a 2.8%
premium to the mid-market closing price on 27 January 2021, being the last
practicable closing price prior to the announcement of the fundraise.
The net proceeds of the fundraise were to be used, alongside existing cash
resources, to provide incremental capital to fund the Company's share of:
i) additional appraisal and development activity at the Company's landmark
West Newton project, potentially one of the largest oil and gas discoveries
onshore UK, notably drilling and testing of the B-2 well;
ii) activity to assess and define the prospectivity of the wider PEDL183
licence, which includes West Newton, including a seismic programme and
exploration work to identify additional future drilling opportunities;
iii) potential costs associated with the fully appraised Victory gas
development, which was recently awarded to investee company, Corallian Energy,
including an environmental assessment in order to move the development towards
FDP; and
iv) additional contingency to provide capital flexibility across the Company's
investment portfolio and working capital.
Section 172(1) statement
In accordance with the requirements of Section 172 of the Companies Act 2006,
the directors consider that, during the financial year ended 31 December 2021,
they have acted in a way that they consider, in good faith, would most likely
promote the success of the company for the benefit of the members as a whole,
having regard to the likely consequences of any decision in the long term and
the broader interests of other stakeholders, as required by the Act. The board
delegates day-to-day management of the business of the company to the Co-CEOs,
save for those matters which are reserved for the board's approval. More
information on how the board has regard to the Section 172 factors are
outlined below.
S172(1) (A) "The likely consequences of any decision in the long term"
The Board of Directors is collectively responsible for the decisions made
towards the long-term success of the Company and the way in which the
strategic, operational and risk management decisions have been implemented
throughout the business is detailed in our Strategy and business model on page
5 and throughout the Strategic Report.
S172(1) (B) "The interests of the company's employees"
During 2021, the only employees of the Company were three Executive Directors.
In March 2022, the company hired its first employee, who is not a director.
The Board recognises that Reabold employees, currently principally its
executives, are fundamental and core to our business and delivery of our
strategic ambitions. The success of our business depends on attracting,
retaining and motivating employees. From ensuring that we remain a responsible
employer, from pay and benefits to our health, safety and workplace
environment, the Directors factor the implications of decisions on employees
and the wider workforce, where relevant and feasible. The Board ensures that:
· It has meaningful and regular dialogue with the workforce to
capture key insights and to bring the employee voice into the boardroom.
· Annual pay and benefit reviews are carried out to determine
whether all levels of employees are benefitting fairly and to retain and
encourage skills vital for the business.
· Employees are informed of the results and important business
decisions and are encouraged to feel engaged and to improve their potential.
· Working conditions are favourable.
S172(1) (C) "The need to foster the company's business relationships with
suppliers, customers and others"
Delivering our strategy requires strong mutually beneficial relationships with
suppliers, customers, governments, and joint-venture partners. We aim to have
a positive and enduring impact on the communities in which we operate, through
partnering with national and local suppliers, and through payments to
governments in taxes and other fees. The Group values all of its suppliers
and aims to build strong positive relationships through open communication and
adherence to trade terms. The Group is committed to being a responsible
entity and doing the right thing for its customers, suppliers and business
partners. The Board upholds ethical business behaviour across all of the
Company's activities and encourages management to seek comparable business
practices from all suppliers and customers doing business with the Company. We
value the feedback we receive from our stakeholders and we take every
opportunity to ensure that where possible their wishes are duly
considered.
Ultimately, Board decisions are taken against the backdrop of what it
considers to be in the best interest of the long-term financial success of the
Group and its stakeholders, including shareholders, employees, the community
and environment, our suppliers and customers. We value our customer
relationships and aim to work closely with our customers to develop and
maintain strong relationships, and understand their evolving needs so that we
can improve and adapt to meet them.
More information on this can be found below within our Environmental, Social
and Governance (ESG) Statement.
S172(1) (D) "The impact of the company's operations on the community and the
environment"
This aspect is inherent in our strategic ambitions, most notably on our
ambitions to thrive through the energy transition and to sustain a strong
societal licence to operate. As such, the Board receives information on these
topics to both provide relevant information for specific Board decisions.
Executive Directors conducted site visits of various investee company
operations and held external stakeholder engagements, where feasible.
Given the tragic events in Ukraine, the need to supply our own energy is more
important than ever. As outlined by the Secretary of State for Business,
Energy and Industrial Strategy, those calling for an immediate end to domestic
oil and gas ignore the fact that this would simply make the UK more reliant on
foreign imports - it would not, in fact, lead to greater decarbonisation
globally. Producing more of our own energy will protect us into the future to
ensure greater energy independence.
More information on this can be found below within our Environmental, Social
and Governance (ESG) Statement.
S172(1) (E) "The desirability of the company maintaining a reputation for high
standards of business conduct"
The Company is incorporated in the UK and governed by the Companies Act 2006.
The Company has adopted the Quoted Companies Alliance Corporate Governance
Code 2018 (the "QCA Code") and the Board recognises the importance of
maintaining a good level of corporate governance, which together with the
requirements to comply with the AIM Rules ensures that the interests of the
Company's stakeholders are safeguarded.
Reabold aims to achieve the production of hydrocarbons that meet the world's
growing need for energy solutions in ways which are economically,
environmentally and socially responsible. The Board periodically reviews and
approves clear frameworks, such as Reabold's Code of Conduct, and specific
Ethics & Compliance policies, to ensure that its high standards are
maintained both within Reabold and the business relationships we maintain.
This, complemented by the various ways the Board is informed and monitors
compliance with relevant governance standards, help ensure its decisions are
taken and that Reabold investee companies act in ways that promote high
standards of business conduct.
S172(1) (F) "The need to act fairly as between members of the company"
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. The Company has close ongoing
relationships with its private shareholders. Institutional shareholders and
analysts have the opportunity to discuss issues and provide feedback at
meetings with the Company. All shareholders are encouraged to attend the
Company's Annual General Meeting and any general meetings held by the Company,
subject to any COVID-19 restrictions.
The primary communication tool with our shareholders is through the Regulatory
News Serviced ("RNS") on regulatory matters and matters of material substance.
The Company's website provides details of the business, investor presentations
and details of the Board and Board Committees, changes to major shareholder
information and QCA Code disclosure updates under AIM Rule 26. Changes are
promptly published on the website to enable the shareholders to be kept
abreast of Company's affairs. The Company's Annual Report and Notice of Annual
General Meetings are available to all shareholders. The Interim Report and
investor presentations are also available on our website.
Culture
Whilst Reabold currently comprises a small team of people, the Board
recognises that it has an important role in assessing and monitoring that our
desired culture is embedded in the values, attitudes and behaviours we
demonstrate, including in our activities and stakeholder relationships. The
Board has established honesty, integrity and respect for people as Reabold's
core values.
Principal decisions
We outline some of the principal decisions made by the Board over the year,
and how directors have performed their duty under Section 172.
Additional investment in Corallian
The Board approved to acquire an additional 13.12% in Corallian. The decision
was made with due regard to Reabold's financial framework and it was
determined that this could add further value to shareholders.
Creation of Enhanced California E&P Company
The Board approved the equity exchange agreement with Daybreak resulting in
Reabold becoming a major shareholder in Daybreak in exchange for Daybreak
acquiring Reabold California. The decision was made to create a self-funded
Californian operator that can utilise significant market opportunities for
consolidation in the state, creating further opportunities for synergistic
growth, offering potential upside for the Group and its shareholders.
Environmental, Social and Governance (ESG) Statement
Reabold is committed to preserving and protecting our natural environment for
future generations. We conduct our business in a manner that respects the
environment and addresses climate challenges. Our focus is on minimising our
emissions and footprint whilst continuing to contribute positively to the
growing demand for energy and products that require hydrocarbons in the supply
chain.
While the pace of transition to a lower carbon economy is uncertain, oil and
natural gas demand is expected to remain a key element of the energy mix for
many years based on stated policies, commitments and announced pledges to
reduce emissions. The challenge is to meet the world's energy needs
sustainably, which requires managing and reducing harmful emissions. Reabold
actively encourages and expects its investee companies / operators of its oil
and gas interests to respond to this by continuously striving to minimise the
potential environmental impact of operations by:
o Implementing controls to identify and prevent potential environmental
risks
o Implementing controls during operations to avoid accidental spills, or
leaks of polluting materials
o Managing water with due consideration
o Targeting high energy efficiency levels in drilling and other
activities
o Limiting unnecessary wastage
o Handling waste products in an environmentally responsible manner
o Regularly assessing the environmental consequences of operations
The operators have developed systems, controls and processes to integrate
climate related considerations, in order to meet these objectives. Reabold
complies with the applicable standards of the international oil industry,
environmental laws and regulations. We recognise and support the basis of the
Paris Agreement to strengthen the global response to the threat of climate
change. Furthermore, extraction activities at sites in which Reabold is
invested are significantly lower in carbon intensity than the industry
average.
Our growth strategy consists of expanding our existing asset base and to
developing the world's limited but proven reserves of hydrocarbon fuels in the
most efficient and sustainable manner possible.
Reabold's assets are primarily small to medium sized, proven oil and gas
fields at relatively shallow depth. As such, the intensity of drilling
required is considered low relative to industry standards and we do not
conduct energy intensive prospecting activities, reducing the impact on the
environment. We continue to seek the most energy efficient drilling methods
are utilised by the operators of our interests and as the energy mix evolves
towards a higher percentage of renewables in the countries in which we operate
(e.g. increasing wind power in the UK and Romania, solar in California), we
anticipate a greater share of the energy consumption will be purchased from
green sources.
United Kingdom
Our investee company sites in the United Kingdom are located close to areas
with a high demand for energy. Consequently, we expect that hydrocarbons
produced locally and consumed locally will displace imported hydrocarbons
thereby resulting in lower carbon emissions overall. This will provide
security of supply to the UK under a strict regulatory environment as well as
providing jobs and supporting UK industry, compared to the alternative of
importing fuel. The COVID-19 pandemic highlighted the importance of our
critical national infrastructure and this has become even more apparent in
recent times with the war in Ukraine.
We believe that natural gas has an important role to play in the energy
transition, bridging the gap on the journey from fossil fuels to a renewable,
zero-carbon future and helping to supply stable and affordable energy to UK
homes and businesses as part of a lower-carbon energy supply mix. To that end,
we continue to explore ways to invest in gas projects such as the Victory
project.
Reabold is committed to being part of the overall reduction in carbon
intensity in the UK. As part of this objective, in a significant environmental
milestone for West Newton, we were very pleased with the West Newton
development plan being given an AA rating by GaffneyCline in 2020 for carbon
intensity, the best possible grade for low carbon emissions from potential
upstream crude oil production. The study stated that the West Newton field
has carbon intensities "significantly lower than the UK average and also
compared to onshore analogues". Based on the study, GaffneyCline estimated
that West Newton could produce the equivalent of just 5 grams of CO(2) per
megajoule of energy created ("gCO(2)eq./MJ"). The study did not include the
review of any carbon offsetting measures, which could further limit West
Newton's net carbon emissions. The study also highlighted that this number
could be further reduced to just 3.5 gCO(2)eq./MJ by applying, inter alia, gas
to grid technologies. The study used specific West Newton reservoir and fluid
parameters, notional development plans and analogous field development plans.
The result of this study was benchmarked against other field analogues using
the Global field database. Reabold intends that the development at West Newton
will seek to utilise the best fit for purpose technologies, including gas to
grid technologies, and tight leak-rate specifications to minimise any venting,
flaring or fugitive emissions.
California, USA
Reabold's investee company's US production sites are located in California, a
state with very high renewable energy generation which feeds into the energy
required for hydrocarbon extraction. By industry standards, our oil and gas
activities require a very low level of energy to extract the hydrocarbons,
ensuring it is one of the most energy efficient of its type in California.
Romania
Romania is in the midst of creating a more sustainable energy mix by
transitioning away from coal fired generation and ageing nuclear plants
towards renewable energy sources. However, during this transition period, the
country needs indigenously sourced natural gas as a fuel to ensure the
security of supply of energy. By developing and producing gas from the Parta
site, Danube Petroleum Limited is able to contribute to the country's efforts
to implement this energy strategy.
Managing our environmental footprint and reducing our emissions are important
objectives for Reabold Resources. We regularly review and revise our policies,
as necessary.
Key performance indicators (KPIs)
The Group's main business is to invest in direct and indirect interests in
exploration and producing projects. Reabold's long-term strategy is to
re-invest capital generated through monetisation of its investments into new
projects in order to grow the Company and create value for its
shareholders. The Company tracks its new business development objectives
through the building of a risk-balanced portfolio of assets. The company
reviews its KPIs on an ongoing basis as it moves through the lifecycle of its
strategy to ensure they continue to serve as a useful measure of our strategic
performance.
Changes to KPIs
We have removed the commercial production KPI as it does not reflect the
current position of the company in the lifecycle of its strategy. Reabold in
an investor in E&P projects and therefore growth in net assets and total
Shareholder Return serve as more useful measures of our strategic performance.
The retention of key management KPI has also been removed as this is seen as a
business risk rather than a performance indicator. See principal risks and
uncertainties on pages 16-17.
The KPIs are:
KPI Definition Performance Attainment
KPI 1 Grow value through material investments, project delivery and commercial · Acquired an additional 13.12% equity interest in Corallian Achieved
discoveries bringing Reabold's total equity interest in Corallian to 49.99% increasing
Reabold's position in the low-risk, high potential Victory Gas Discovery.
· Draft FDP submitted by Corallian for the Victory gas field.
KPI 2 Being adequately resourced for all corporate and JV-related financial matters · Oversubscribed placing and subscription at a premium to the Achieved
sufficient for advancement of investment strategy market to raise £7.5m at 0.55p per share, supported by key existing and new
institutional investors to support the Company's investment strategy.
· Reabold continues to have a healthy cash position and is fully
funded for all intended activities and commitments in 2022.
KPI 3 Growth in total net assets over the prior year · Net assets increased by £7.6 million from £38.9 million at the Achieved
end of 2020 to £46.5 million at the end of 2021.
KPI 4 Total shareholder return over a calendar year · The share price was down by 0.48p in the 2021 calendar year. Not achieved
· The share price rebounded in Q1 2022, increasing by 97% as at 31
March 2022.
KPI 5 Compliance with legal and regulatory requirements · The company successfully met all licence commitments relating to Achieved
the company's asset portfolio during the year, maintained effective
relationships at all levels with JV partners in compliance with Joint
Operating Agreements (JOAs), operated within appropriate governance and HR
policies, ensuring the Company had adequate in-house capability to manage its
operations and third-party providers, and ensured all corporate legal
obligations were met.
Principal risks and uncertainties
The Company continuously monitors its risk exposures and reports to the board
of directors (the "Board") on a regular basis. The Board reviews these risks
and focuses on ensuring effective systems of internal financial and
non-financial controls are in place and maintained.
Risks Mitigation Magnitude & likelihood
Strategic and Commercial risks
Investment Returns: Stock market support may be eroded lowering investor · Management regularly communicates its strategy to shareholders. Potential impact - High
appetite and obstructing fundraising if we fail to scale our business at pace,
make poor investment choices or fail to sustain and develop a high-quality · Focus is placed on building a diverse and resilient asset Likelihood - Medium
portfolio of assets. portfolio capable of offering prospectivity throughout the business cycle. The
Group continually reviews its portfolio of assets to identify internal growth
opportunities.
· The Company seeks to limit its financial dependence on any one
single asset by holding a diversified portfolio and re-investing capital
generated through monetisation of its investments into new projects in order
to grow the Company and create value for its shareholders.
· The Group engages with a range of advisers and active competitor
monitoring to provide a range of opportunities for screening.
· The Group also engages third-party assurance experts to review,
challenge and, where appropriate, make recommendations to improve the
processes for project management, cost control and governance of projects.
Prices and Markets: Decreases in oil and gas prices could have an adverse · Contingency is built into the evaluation, planning and budgeting Potential impact - Medium
effect on revenue, margins, profitability and cash flows. If these reductions process to allow for the downside movements in commodity prices.
are significant or for a prolonged period, we may have to write down assets
Likelihood - Medium
and investments and reassess the viability of certain projects, which may · The Reabold business model is to invest in undervalued oil and
impact future cash flows, profit, capital expenditure, the ability to work gas assets that would be able to deliver profitably under any reasonable
within our financial frame and maintain our investment programme. oil/gas price assumptions, are at the lower end of the industry cost curve and
will be competitive against other sources of hydrocarbons.
· The Group may consider it appropriate in the future to hedge a
proportion of its production, particularly if the Group is reliant on the
production to service debt.
Accessing and progressing hydrocarbons: Inability to access and progress · The Group and its investee companies undertake extensive analysis Potential impact - High
hydrocarbon resources could adversely affect delivery of our strategy. of available technical information to determine work programmes.
Likelihood - Medium
· Appraisal programmes are designed to de-risk the overall field
development. Well and seismic data is continually reviewed to best allocate
capital and make drilling decisions.
· Downside risk can be reduced by entering into risk sharing
arrangements.
Liquidity, financial capacity and financial exposure: insufficient liquidity · Management has a clear strategy for value realisation and Potential impact - High
and funding capacity of the Group and its investee companies could adversely creation as evidenced by the conditional offer for Corallian in May 2022.
impact the implementation of the Group's strategy and restrict work programmes
Likelihood - Medium
due to lack of capital. · The Group maintains a strong balance sheet by maximising cash to
ensure sufficient liquidity within the business. The Group has no debt.
· Cash forecasts are monitored including considering multiple
scenarios.
· The Company demonstrated it can raise incremental capital if
needed as it successfully raised new equity in Q1 2021.
· The Group continually monitors its capital allocation and will
only pursue programs that are of appropriate size and risk relative to the
Group's capital resources.
Joint arrangements: Varying levels of control over the standards, operations · The Group continually engages with its operating partners and Potential impact - Medium
and compliance of our partners could result in legal liability and closely monitors the operation of its assets.
reputational damage.
Likelihood - Low
· The Group completes thorough due diligence reviews before
entering future partnerships to ensure that their strategic and operational
objectives are aligned with those of the Group.
Climate change: A global transition to alternative energy sources could have · Management looks for opportunities to deliver low carbon Potential impact - High
an adverse impact on demand for oil and gas, commodity prices and/or the intensity production into the UK market by using low carbon intensity
Group's access to and cost of capital. facilities, including potential re-use of existing infrastructure. Likelihood - Medium
· The Group's "investment horizon" is considered to fall within
time frames too short to be materially affected by the Paris Agreement 2(O)C
scenario.
Talent and capability: Inability to attract, develop and retain people with · Recruitment and retention of key staff through providing Potential impact - High
necessary skills and capabilities could negatively impact delivery of our competitive remuneration packages and stimulating and safe working
strategy environment. Balancing salary with longer term incentive plans. Likelihood - Low
Production risk: hydrocarbons are not able to be produced in the projected · The Group and investee companies undertake extensive analysis of Magnitude - High
quantities by the operators/investee companies (as applicable) or cannot be the available technical information towards improving the understanding of the
produced economically. reservoir. Likelihood - Medium
Geopolitical: Exposure to a range of political developments and consequent · Management maintains regular communication with regulatory Potential impact - Medium
changes to the operating and regulatory environment (including the continued authorities.
impact of COVID-19 and events relating to the Russia-Ukraine conflict) could
Likelihood - Medium
cause business disruption. · The Company aligns its standards and objectives with government
policies as closely as possible
· Reabold demonstrates a flexible approach to working from home
whilst supporting appropriate working practices in London office spaces.
· The Group does not consider it has a material adverse exposure to
the geopolitical situation with respect to the sanctions imposed on Russia,
although recognises the evolving situation is causing price volatility. The
Group will continue to monitor its position to ensure it remains compliant
with any sanctions in place.
Compliance and control risks
Regulation: planning, environmental, licensing and other permitting risks · The Group and its investee companies have to date been successful Potential impact - High
associated with the Group and its investee companies' operations particularly in obtaining the required permits to operate. Such risks are mitigated through
with exploration drilling operations. compliance with regulations, proactive engagement with regulators, communities Likelihood - Medium
and the expertise and experience of the management teams of the Group and
investee companies.
Financial review
Group Income Statement
The loss for the year ended 31 December 2021 was £2.6million (2020: loss of
£2.7 million).
Production on a working interest basis from our California assets was
24,457boe (2020: 33,890boe), delivering total revenues of £1.2 million (2020:
£1.0 million). The lower production was primarily due to workover of wells
and bringing enhanced storage infrastructure online. The realised sales price
was 65.4 $/bbl (2020: 38.4 $/bbl).
The gross loss for 2021 was £152,000 compared to a gross profit of £4,000 in
2020. Overall cost of sales of £1.3 million compared to £1.0 million for
2020. This comprised £0.7 million of production costs (2020: £0.5 million),
royalties of £0.2 million (2020: £0.2 million) and £0.4 million of non-cash
depletion charges (2020: £0.3 million).
Administrative expenses were broadly in line with prior year at £1.7 million
(2020: £1.6 million)
Group Balance Sheet
The Group retained a strong balance sheet during the year allowing it to
sustain its capital investment programme. An increase in exploration and
evaluation assets from £7.6 million in 2020 to £9.1 million at 31 December
2021 reflected appraisal work at West Newton during the year.
Total investment in associates increased from £25.3 million at year end 2020
to £27.7 million at 31 December 2021. Additions were related to the increased
investment in Corallian of £3.2 million offset by combined total losses from
associates of £0.8 million.
The group does not have any significant liabilities.
Overall net assets have increased from £38.9 million at year end 2020 to
£46.5 million at 31 December 2021.
Group cash flow statement
Cash used in operating activities for the year ended 31 December 2021 was
£1.8 million, £0.7 million lower than in 2020 reflecting favourable working
capital movements.
Net cash used in investing activities for the year ended 31 December 2021
decreased by £1.9 million compared with 2020. The decrease reflected lower
capital expenditure on exploration and evaluation rights.
Net cash provided by financing activities for the year ended 31 December 2021
was £6.9 million (2020: £0 million). Financing cash flows in 2021 reflect
the issuance of 1,363,636,363 new ordinary shares at 0.55 pence per share, for
gross proceeds of £7.5 million (£6.9 million net of issuance costs). The
proceeds were primarily used to fund additional appraisal activity at West
Newton as well as to provide additional contingency across the Group's
investment portfolio.
Liquidity
Cash balances increased from £1.1 million at 31 December 2020 to £4.9
million. The Group has no debt.
Commitments
There are no significant commitments contracted for in 2022. Reabold's share
of authorised capital expenditure for West Newton in 2022 is £0.4 million.
Our people
Our people are a key element in our success and the Company aims to attract,
develop and retain talented people and to create a diverse and inclusive
working environment, where everyone is accepted, valued and treated equally
without discrimination, taking into account the current size of the
Company.
As at 31 December 2021, the Company comprises 6 directors and no other
employees, with the workforce by gender summarised below:
As at 31 December 2021 Male Female Female %
Executive Directors 3 - -%
Non-Executive Directors 3 - -%
Other employees - - -%
All employees 6 - -%
COVID-19 virus
At the time of writing, the world is still experiencing the effects of
COVID-19. The pandemic has continued to disrupt work programmes in 2021,
however the Reabold business model is designed to be robust, and it has not
fundamentally affected our strategy.
Outlook
The energy markets are being impacted by the military action in Ukraine, which
is adding significant upside pressure to prices. As an investor in the E&P
sector, Reabold is clearly exposed to the updside, however there remains, at
this point in time, uncertainty. 2022 will be a pivotal year for Reabold and
we look forward to delivering further phases of growth in 2022 and over the
years ahead.
Sachin Oza and Stephen Williams
Co-Chief Executive Officers
26 May 2022
Board of Directors
Jeremy Edelman - Non-Executive Chairman
Jeremy Edelman holds Bachelor degrees in Commerce and Law together with a
Master's degree in Applied Finance. Jeremy is admitted as a solicitor to the
Supreme Courts of Western Australia and New South Wales. Jeremy subsequently
worked for some of the world's leading investment banks, including Bankers
Trust and UBS Warburg in debt and acquisition finance. He has held consulting
and director positions in listed companies in the UK and Australia, such as Mt
Grace Resources NL, with a focus on resource exploration and development,
including investment companies established with the specific objective of
investing in resources projects. He also has corporate finance experience,
having been responsible for co-coordinating a number of companies in making
acquisitions in a variety of resource sectors, including oil and gas, uranium,
molybdenum, base metals and coal. He has worked in various regions of the
world, including the Republic of Kazakhstan, Russia, South Africa and
Australia. Jeremy served as a Non-Executive Director of Leni Gas Cuba Limited
until 12 July 2016, a Director of Altona Energy Plc (also known as Altona
Resources Plc) until 4 July 2006, Executive Director of Leni Gas & Oil PLC
from August 2006 to December 2010 and Director of Braemore Resources Plc until
27 July 2005.
Sachin Oza - Executive Director and Co-Chief Executive
Sachin Oza has 19 years' investment experience, including 15 years' covering
the energy sector. He joined Guinness Asset Management in April 2016, having
previously worked as an investment analyst at M&G Investments for 13
years, where he covered the Utility, Transport, Mining and Oil & Gas
sectors on a global basis. Sachin has also held investment analyst roles at
Tokyo Mitsubishi Asset Management and JP Morgan Asset Management.
Stephen Williams - Executive Director and Co-Chief Executive
Stephen Williams has 17 years' experience in the energy sector. He joined
Guinness Asset Management in April 2016, having previously worked as an
investment analyst at M&G between 2010 and 2016, where he focussed on
energy and resources. Prior to this, Stephen worked as an energy investment
analyst for Simmons & Company International between 2005 and 2010 and from
2003 to 2005 he worked as an analyst at ExxonMobil.
Marcos Mozetic - Non-Executive Director
Marcos Mozetic, an exploration geologist, brings over 43 years of
international technical experience in the oil and gas industry to the Company.
His most recent experience was in designing, implementing and leading Repsol
S.A's exploration strategy between 2004 and 2016. During this period, Repsol
become a leader in reserve replacement and participated in some of the most
exciting discoveries worldwide. Previous to this, Marcos worked as a
development geologist in 1975 with Bridas, before moving into the exploration
department, which he later led. Following this, Marcos worked for BHP
Petroleum and BHP Minerals as Chief Geologist for Argentina and later Country
Leader. Marcos holds a BSc and Post-Graduate degree in Petroleum Geology
from the University of Buenos Aires.
Mike Felton - Non-Executive Director
Mike Felton is an experienced fund manager in the City and brings over 30
years of financial expertise to the Company. Mike previously served as Head
of UK Retail Equities at M&G Investments and was Manager of the M&G UK
Select Fund, growing the fund's assets from £110m to circa £550m at its
peak. Mike has also previously served as Joint Head of Equities at ISIS
Asset Management and Manager of ISIS UK Prime Fund, as well as Chief
Investment Officer at Lumin Wealth, a position he still retains part-time.
Mr Felton sits on the International Tennis Federation's Investment Advisory
Panel and is a Business Ambassador for Anthony Nolan, the UK's blood cancer
charity and bone marrow register.
Anthony Samaha - Executive Director
Anthony Samaha is a Chartered Accountant who has over 30 years' experience in
accounting and corporate finance, including resources development. Anthony
worked for over 10 years with international accounting firms, including Ernst
& Young, principally in corporate finance, gaining significant experience
in valuations, IPOs, independent expert reports, and mergers and acquisitions.
He has extensive experience in the listing and management of AIM and TSX
quoted companies, including fund raisings, project development and mergers and
acquisitions. Anthony has been involved in acquisitions and resource
projects in various regions of the world, including Australia, South Africa,
West Africa, North America, Kazakhstan and the People's Republic of China. He
holds Bachelor of Commerce and Bachelor of Economics degrees from the
University of Western Australia, and is a Fellow of the Chartered Accountants
Australia and New Zealand and an Associate of the Financial Services Institute
of Australasia.
Directors' report for the year ended 31 December 2021
The Directors submit their report and the audited financial statements of the
Group and Company for the year ended 31 December 2021.
Principal activities
The principal activity of the Group and Company is investment in pre-cash flow
upstream oil and gas projects, primarily as significant interests in unlisted
oil and gas companies or majority interests in unlisted oil and gas companies
with non-operating positions on licences.
Results and dividends
The results of the Group are shown on page 37. The Company has not declared
any dividends during the year (2020: £nil). The Directors do not propose the
payment of a final dividend.
Post balance sheet events
Details of post reporting date events are disclosed in Note 30 of the
financial statements.
Financial Risk Management
The Group's financial risk management objectives and policies are discussed in
note 29.
Directors and their interests
The names of the Directors who held office during the year and their
shareholdings are shown below.
Director At 31 December 2021 At 1 January 2021
Jeremy Edelman * 173,545,454 169,000,000
Sachin Oza 36,551,821 16,637,058
Stephen Williams 29,643,953 12,222,111
Marcos Mozetic 4,545,454 -
Michael Felton 25,240,599 8,386,431
Anthony Samaha 7,818,182 1,000,000
* including 173,545,454 shares held by Saltwind Enterprises Ltd, a company
connected with Jeremy Edelman.
The total options held by directors as at 31 December 2021 was 325,000,000.
Sachin Oza and Stephen Williams each held 150,000,000 options and Anthony
Samaha held 25,000,000 options. See note 25 for further details.
Directors' indemnity
The Company maintains a directors' and officers' liability policy on normal
commercial terms which includes third party indemnity provisions.
Going concern
The financial statements have been prepared on the going concern basis. The
Directors have prepared cash flow forecasts for the period ending 30 June 2023
which take account of the current cost and operational structure of the Group,
as well as the current investment agreements and budgeted capital expenditure
commitments.
The Group's production assets are characterised by relatively low operating
costs and are budgeted to be cash generative at oil and gas prices
significantly below the current forward rates.
The Directors have assessed in the cash flow forecasts the impacts of
increased overhead and operating costs, lower oil and gas prices and increased
capital expenditure costs.
These forecasts demonstrate that the Group has sufficient cash funds available
to allow it to continue in business for a period of at least 12 months from
the date of approval of these financial statements. Accordingly, the financial
statements have been prepared on a going concern basis.
Outlook and future developments
A review of the business and the future developments of the Group is presented
in the Strategic Report (including a Review of Operations and Financial Review
from the Co-Chief Executive Officers) and Chairman's Statement (all of which,
together with the Corporate Governance Statement, are incorporated by
reference into this Directors' Report).
Political and charitable contributions
The Company made no contributions to charitable or political bodies during the
year (2020: £Nil).
Significant shareholders
As at 8 May 2022, the significant shareholders in the Company were:
Holder No. of shares * %
Premier Fund Managers Limited 911,009,907 10.20
Ruffer Investment Management 560,000,000 6.27
Chelverton Asset Management 461,576,116 5.17
Fidelity International Limited 421,413,644 4.72
Notes:
* taken from third party share register analysis as at 8 May 2022.
Corporate governance
The Board is committed to ensuring good standards of corporate governance in
so far as practicable for a company of this size. The Company adopts the QCA
Code which it believes to be the most appropriate recognised corporate
governance code for the Company. The Company has adopted and operates a
share dealing code for Directors and senior employees on substantially the
same terms as the Model Code appended to the Listing Rules of the UK Listing
Authority. Information in relation to the Corporate Governance of the Group is
contained within the Corporate Governance Report.
Employment policies and remuneration
The Company is committed to promoting policies which ensure that high calibre
employees are attracted, retained and motivated, to ensure ongoing success for
the business. Employees and those who seek to work with the Company are to be
treated equally regardless of sex, marital status, creed, age, colour, race or
ethnic origin.
The Company remunerates the Directors at a level commensurate with the size of
the Company and the experience of its Directors. The Board has reviewed the
Directors' remuneration and believes it upholds the objectives of the Company
with regard to this issue. Details of Directors' emoluments and payments made
for professional services rendered are set out in Note 9 to the financial
statements.
Environmental policies
The Group's operations are, and will be, subject to environmental regulation
(with regular environmental impact assessments and evaluation of operations
required before any permits are granted to the Group) in the jurisdiction in
which it operates. Although the Group intends to be in compliance with all
applicable environmental laws and regulations, there are certain risks
inherent to its activities, such as accidental spills, leakages or other
circumstances, which could subject the Group to extensive liability. Further,
the Group may fail to obtain the required approval from the relevant
authorities necessary for it to undertake activities which are likely to
impact the environment. The Group is unable to predict the effect of
additional environmental laws and regulations which may be adopted in the
future, including whether any such laws or regulations would materially
increase the Group's cost of doing business or affect its operations in any
area. No environmental breaches have been notified by any governmental
agency as at the date of this report.
Energy and carbon report
The Group is not required to report energy and emissions information under The
Companies (Directors' Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018, given its size. The Group will review
providing voluntary disclosures in future reporting periods, where it
continues to be below the reporting thresholds.
Board of Directors
The Board meets regularly to determine the policy and business strategy of the
Company and has adopted a schedule of those matters that are reserved as the
responsibility of the Board. The Directors who held office during the year
and up to the date of this report are given below:
Jeremy Edelman (Non-Executive Chairman)
Sachin Oza (Executive Director and Co-CEO)
Stephen Williams (Executive Director and Co-CEO)
Anthony Samaha (Executive Director)
Marcos Mozetic (Non-Executive Director)
Michael Felton (Non-Executive Director)
Board committees
The Board has an Audit Committee and a Remuneration Committee.
Corporate and social responsibility
The Company maintains high, ethical standards in its business activities. We
act responsibly, promoting accountability as individuals and as a company. We
operate with ethics and fairness and comply with all required rules and
regulations.
The Company requires that in respect to any of its investee's exploration and
development, there runs alongside this a comprehensive community engagement
plan. It is vital that our investee companies engage, listen and communicate
effectively with local communities, particularly when they begin the process
of planning new developments. Whilst the Company is cognisant of its
corporate social responsibilities, the Company considers that it is not of the
size to warrant a formal policy as the issues that are relevant to this policy
are mostly the responsibility of the operators of the wells with which the
Company has agreements.
Controlling party
In the opinion of the Directors, there is no controlling party.
Statement of disclosure to auditor
So far as the Directors are aware, there is no relevant audit information of
which the Company's auditor is unaware, and they have taken all the steps that
they ought to have taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the Company's auditor is
aware of that information.
Matters covered in the Strategic Report
As permitted by Paragraph 1A of schedule 7 to the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008 certain matters
which are required to be disclosed in the Directors' report have been omitted
as they are included in the Strategic Report instead. These matters relate to
the Business review.
Bribery Act
The Company is cognisant of its responsibilities under the Bribery Act and has
implemented an Anti-Bribery policy.
UK City Code on Takeovers and Mergers
The Company is subject to the UK City Code on Takeovers and Mergers.
Market Abuse Regime
The Company has adopted and operates a share dealing code for Directors and
senior employees on substantially the same terms as the Model Code and MAR
appended to the Listing Rules of the UKLA.
Auditor
In accordance with section 489 of the Companies Act 2006, a resolution to
reappoint Mazars LLP was put to the Annual General Meeting held on 28 July
2021 and was approved. The auditor, Mazars LLP, will be proposed for
reappointment in accordance with Section 485 of the Companies Act 2006.
Mazars LLP has signified its willingness to continue in office as auditor.
Annual General Meeting
Notice of the forthcoming Annual General Meeting will be enclosed separately.
By order of the Board, 26 May 2022
A Samaha
Registered Office:
20 Primrose Street
London, EC2A 2EW
Corporate governance report
The Company adopts the QCA Code which it believes to be the most appropriate
recognised corporate governance code for the Company. The Board recognises the
principles of the QCA Code, which focus on the creation of medium to long-term
value for shareholders without stifling the entrepreneurial spirit in which
small to medium sized companies, such as Reabold, have been created. The
Company sets out below its annual update on its compliance with the QCA Code.
The QCA Code sets out 10 principles that should be applied. These are listed
below together with a short explanation of how the Company applies each of the
principles:
1) Principle One: Establish a strategy and business model
which promote long-term value for shareholders
The Board has concluded that the highest medium and long term value can be
delivered to its shareholders by the adoption of a single strategy for the
Company.
The investing policy of the Company is to acquire direct and indirect
interests in exploration and producing projects and assets in the natural
resources sector, and consideration is given to investment opportunities
globally. However, under that policy, the Board is focused on investments in
pre-cash flow upstream oil and gas projects. Those projects are primarily in
the form of significant interests in unlisted oil and gas companies or
majority interests in unlisted oil and gas companies with non-operating
positions on licences with low-cost drilling opportunities that can provide
medium term production and hence cash flow.
The Company is an investor in upstream oil and gas projects globally with an
aim to create value from each project by investing in undervalued, low-risk,
near-term upstream oil and gas projects and by identifying realistic potential
exit plans prior to investment.
The Company's long term strategy is to re-invest capital made through its
investments into larger projects in order to grow the Company. The Company
aims to gain exposure to assets with limited downside and high potential
upside, capitalising on the value created between the entry stage and exit
point of its projects. The Company invests in projects that have limited
correlation to the oil price.
The Company only invests in projects which meet its stringent requirements.
The Company may be both an active and a passive investor depending on the
nature of the individual investments.
Although the Company intends to be a medium to long-term investor, the Company
will place no minimum or maximum limit on the length of time that any
investment may be held and therefore shorter term disposal of any investments
cannot be ruled out. The Company intends there to be no limit on the number of
projects into which the Company may invest, and the Company's financial
resources may be invested in a number of propositions or in just one
investment, which may be deemed to be a reverse takeover pursuant to Rule 14
of the AIM Rules for Companies. The investing policy will allow investments to
be in all types of assets and there will be no investment restrictions.
The Company may offer new Ordinary Shares by way of consideration as well as
cash, thereby helping to preserve the Company's cash resources for working
capital. The Company may, in appropriate circumstances, issue debt securities
or otherwise borrow money to complete an investment.
The Company provides shareholders with a discussion of corporate strategy
within this Annual Report, specifically the Chairman's Statement and the
Strategic Report sections. Key business challenges and how they may be
mitigated are detailed in the Strategic Report.
2) Principle Two: Seek to understand and meet shareholder
needs and expectations
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. The Company has close ongoing
relationships with its private shareholders. Institutional shareholders and
analysts have the opportunity to discuss issues and provide feedback at
meetings with the Company.
All shareholders are encouraged to attend the Company's Annual General Meeting
and any general meetings held by the Company.
Investors also have access to current information on the Company through its
website, www.reabold.com, and through Sachin Oza and Stephen Williams, the
Co-Chief Executive Directors, who are available to answer investor relations
enquiries. The Company disseminates all regulatory updates via a Regulatory
Information Service before doing so elsewhere.
3) Principle Three: Take into account wider stakeholder and
social responsibilities and their implications for long-term success
The Board recognises that the long term success of the Company is reliant upon
the efforts of the employees of the Company and its contractors, suppliers,
regulators and other stakeholders. The Board has put in place a range of
processes and systems to ensure that there is close oversight and contact with
its key resources and relationships. The Company has close ongoing
relationships with a broad range of its stakeholders and provides them with
the opportunity to raise issues and provide feedback to the Company. A
description of how the Group considers key stakeholders in its decision-making
is included in the section 172 statement on page 11.
4) Principle Four: Embed effective risk management,
considering both opportunities and threats, throughout the organisation
The Board ensures that procedures are in place and such procedures are being
implemented effectively to identify, evaluate and manage the significant risks
faced by the Company. Key business challenges and risks are detailed in the
Strategic Report on pages 16-17 including the impact and how these are
mitigated.
The Executive Directors have regular conference calls with the Company's
Nominated Adviser and, when relevant, the Company's corporate communications
advisers to discuss - amongst other items - operations, key risks, and other
relevant matters. Additionally, the Group also has structured weekly
operational and management conference calls with its JV partners to identify
and discuss key business challenges and risk areas. The Board believes that
this regular program of internal communications provides an effective
opportunity for potential or real-time risks to be identified, considered and
- where necessary - addressed in a timely manner. Given the Company's current
size, the Board considers that the Executive Management team-with oversight
from the Non-Executive Board of Directors and relevant advisers are sufficient
to identify risks applicable to the Company and its operations and to
implement an appropriate system of controls. Accepting that no systems of
control can provide absolute assurance against material misstatement or loss,
the Directors believe that the established systems for internal control within
the Group are appropriate to the size and cost structure of the business. An
internal audit function is not considered necessary or practical due to the
size of the Company and the close day to day control exercised by the
Executive Directors. However, the Board will continue to monitor the need
for an internal audit function. The Board has established appropriate
reporting and control mechanisms to ensure the effectiveness of its control
systems.
5) Principle Five: Maintain the board as a well-functioning,
balanced team led by the chair
As at the date of publication, the Board comprised of Jeremy Edelman as the
Non-Executive Chairman, Marcos Mozetic and Michael Felton as Non-Executive
Directors and Sachin Oza and Stephen Williams, the Co-Chief Executive
Directors, and Anthony Samaha as Executive Director. Biographical details of
the current Directors are set out on pages 20-21 of this Annual Report.
The Executive and Non-Executive Directors are subject to re-election at the
second annual general meeting of the Company after their last appointment or
reappointment, if not before.
The Co-Chief Executive Officers are considered to be full time employees.
Anthony Samaha, whilst an Executive Director is not a full time employee.
The Non-Executive Directors are considered to be part time but are expected to
provide as much time to the Company as is required.
The Board elects a Chairman to chair every meeting. The Board meets at least
six times per annum. The Board has agreed that appointments to the Board are
made by the Board as a whole and so has not yet created a Nominations
Committee.
The Non-Executive Directors, Michael Felton and Marcos Mozetic are considered
to be Independent Directors. The Board notes that the QCA recommends a balance
between executive and non-executive Directors and recommends that there be two
independent non-executives. The Board will review further appointments as
scale and complexity grows.
The role of the Chairman is to provide leadership of the Board and ensure its
effectiveness on all aspects of its remit to maintain control of the Company.
In addition, the Chairman is responsible for the implementation and practice
of sound corporate governance. The Chairman is considered to have adequate
separation from the day-to-day running of the Company.
Attendance at Board and Committee Meetings
In order to be efficient, the Board meets formally and informally both in
person and by telephone. To date there have been at least bimonthly meetings
of the Board, and the volume and frequency of such meetings is expected to
continue at least at this rate. The Company had 11 Board meetings during the
year and reports below on the number of Board and committee meetings attended
by Directors.
Board Audit Committee Remuneration Committee
(out of total possible) (out of total possible) (out of total possible)
Jeremy Edelman 8/11 1/1 1/1
Sachin Oza 11/11 - -
Stephen Williams 11/11 - -
Anthony Samaha 10/11 - -
Marcos Mozetic 8/11 - 1/1
Michael Felton 7/11 1/1 1/1
The Board has two committees as explained below.
Audit Committee
The Audit Committee consists of Michael Felton as Chairman, and Jeremy
Edelman. This Committee provides a forum through which the Group's finance
functions and auditors, report to the non-executive Directors. Meetings may be
attended, by invitation, by the Company's Nominated Adviser, Company
Secretary, other directors and the Company's auditors. The principal duties
and responsibilities of the Audit Committee include:
· overseeing the Group's financial reporting disclosure process; this
includes the choice of appropriate accounting policies;
· monitoring the Group's internal financial controls and assess their
adequacy;
· reviewing key estimates, judgements and assumptions applied by
management in preparing published financial statements;
· annually assessing the auditor's independence and objectivity; and
· making recommendations in relation to the appointment, re-appointment
and removal of the Company's external auditor.
Remuneration Committee
The Remuneration Committee consists of Marcos Mozetic as Chairman, Jeremy
Edelman, and Michael Felton. The Committee meets as and when required. The
principal duties and responsibilities of the Remuneration Committee include:
· setting the remuneration policy for all Executive Directors;
· recommending and monitoring the level and structure of remuneration
for senior management;
· approving the design of, and determining targets for, performance
related pay schemes operated by the Company and approve the total annual
payments made under such schemes; and
· reviewing the design of all share incentive plans for approval by the
Board and shareholders.
The Board will implement a Nomination committee at the appropriate time in
line with changes to the structure, size and composition of the Board.
6) Principle Six: Ensure that between them the directors have
the necessary up-to-date experience, skills and capabilities
The Board currently consists of six Directors. In addition to holding office
as an Executive Director, Anthony Samaha also currently holds the office of
Company Secretary. The Company believes that the current balance of skills in
the Board as a whole, reflects a very broad range of commercial and
professional skills across geographies and industry sectors. The complementary
skills and experience of our Board are included on pages 20-21. If the Company
identifies an area where additional skills are required, the Company will
often contract an appropriately qualified third party to advise as required.
The Board recognises that it currently has a limited diversity, including a
lack of gender balance, and this will form a part of any future recruitment
consideration if the Board concludes that replacement or additional directors
are required.
The Board shall review annually the appropriateness and opportunity for
continuing professional development whether formal or informal. The Company
Secretary supports the Chairman and Executives in addressing the training and
development needs of Directors, and their membership of appropriate
professional and industry associations. These professional associations have
ongoing professional development requirements, which the Company supports.
The Board during the reporting period consulted with its legal advisers and
nominated adviser on specific matters in respect of the application of QCA
Code and the AIM Rules.
7) Principle Seven: Evaluate board performance based on clear
and relevant objectives, seeking continuous improvement
Internal evaluation of the Board and individual Directors is undertaken on an
annual basis in the form of peer appraisal and discussions to determine the
effectiveness and performance in various applicable areas to their role as
well as the Directors' continued independence.
The results and recommendations that come out of the appraisals for the
Directors shall identify the key corporate and financial targets that are
relevant to each Director and their personal targets in terms of career
development and training. Progress against previous targets shall also be
assessed where relevant.
During the reporting period, the Board undertook a performance evaluation of
the Executive Directors. The salaries were benchmarked to market and the
committee considered the delivery of our strategic goals. Please see note 9 of
the financial statements for details of
Directors' remuneration. In February 2022, the Remuneration Committee also
took the decision to extend the expiry dates of certain existing options held
by the Executive Directors due to the significant constraints the COVID-19
pandemic has had on the Company's ability to successfully implement its
medium-term strategy. Please see note 30 post balance sheet events for further
details.
The Board performance evaluation is to be undertaken annually and includes an
assessment of achievement of KPIs by Executive Directors. The Remuneration
Committee undertakes a review of the remuneration of Executive Directors at
least annually and may consult with external consultants to assist in the
evaluation and determination of appropriate compensation and incentivisation
schemes to ensure the Company remains competitive in retaining management.
The Board is to consider periodically a succession plan. Executive Directors
are to have sufficient length of notice periods to ensure the appointment of
new personnel and ensure sufficient time to handover responsibilities.
8) Principle Eight: Promote a corporate culture that is based
on ethical values and behaviours
The Board recognises that their decisions regarding strategy and risk will
impact the corporate culture of the Company as a whole and that this will
impact the performance of the Company.
The Board is very aware that the tone and culture set by the Board will
greatly impact all aspects of the Company as a whole and the way that
employees behave. The corporate governance arrangements that the Board has
adopted are designed to ensure that the Company delivers long term value to
its shareholders and that shareholders have the opportunity to express their
views and expectations for the Company in a manner that encourages open
dialogue with the Board. A large part of the Company's activities is centred
upon what needs to be an open and respectful dialogue with employees, clients
and other stakeholders. Therefore, the importance of sound ethical values
and behaviours is crucial to the ability of the Company to successfully
achieve its corporate objectives. The Board places great importance on this
aspect of corporate life and seeks to ensure that this flows through all that
the Company does.
The Board consider that at present the Company has an open culture
facilitating comprehensive dialogue and feedback and enabling positive and
constructive challenge. The Company has adopted, with effect from the date
on which its shares were admitted to AIM, a code for Directors' and employees'
dealings in securities which is appropriate for a company whose securities are
traded on AIM and is in accordance with the requirements of the Market Abuse
Regulation which came into effect in 2016, and which is a major part of how
the Company determines that ethical values and behaviours are recognised and
respected.
9) Principle Nine: Maintain governance structures and
processes that are fit for purpose and support good decision-making by the
board
Ultimate authority for all aspects of the Company's activities rests with the
Board with the respective responsibilities of the Chairman and the Executive
Directors arising as a consequence of delegation by the Board. The Board has
adopted appropriate delegations of authority which set out matters which are
reserved to the Board. The Chairman is responsible for the effectiveness of
the Board, while management of the Company's business and primary contact with
shareholders has been delegated by the Board to the Co-Chief Executive
Directors.
The Board has adopted guidelines for the appointment of Non-Executive
Directors which have been in place and which have been observed throughout the
year. These provide for the orderly and constructive succession and rotation
of the Chairman and Non-Executive directors.
In accordance with the Companies Act 2006, the Board complies with: a duty to
act within their powers; a duty to promote the success of the Company; a duty
to exercise independent judgement; a duty to exercise reasonable care, skill
and diligence; a duty to avoid conflicts of interest; a duty not to accept
benefits from third parties and a duty to declare any interest in a proposed
transaction or arrangement.
The role of the Chairman is to provide leadership of the Board and ensure its
effectiveness on all aspects of its remit to maintain control of the Company.
In addition, the Chairman is responsible for the implementation and practice
of sound corporate governance. The Chairman is considered to have adequate
separation from the day-to-day running of the Company.
Details of the Audit Committee and the Remuneration Committee are provided
under principle 5.
The Board of Directors is responsible for the success of the Group, but given
the size and complexity of its operations the day-to-day operations of the
Group are managed on a delegated basis by the Executive Directors. The
schedule of matters reserved for the Board include:
· approval of the Group's strategic plan, oversight of the Group's
operations and review of performance in the view of the Group's strategy,
objectives, business plans and budgets, and ensuring that any necessary
corrective action is taken;
· ultimate oversight of risk, including determining the Group's risk
profile and risk appetite;
· culture and succession planning;
· investments, acquisitions, divestments and other transactions outside
delegated limits;
· financial reporting and controls, including approval of the half-year
interim results, full-year results, approval of the Annual Report and
Financial Statements, approval of any significant changes in accounting
policies or practices and ensuring maintenance of appropriate internal control
and risk management systems;
· ensuring the Annual Report and Financial Statements present a fair,
balanced and understandable assessment of the Group's position and prospects;
· assessment of the Group's ability to continue as a going concern;
· capital expenditure, including the annual approval of the capital
expenditure budgets and any material changes to them in line with the
Group-wide policy on capital expenditure;
· dividend policy, including the annual review of the dividend policy
and recommendation and declaration of any dividend;
· appointment of Directors;
· shareholder documentation, including approval of resolutions and
corresponding documentation to be put to shareholders and approval of all
material press releases concerning matters decided by the Board;
· terms of reference of Board committees and appointment of members to
the committees; and
· key business policies, including approval of remuneration policies.
The Board considers its current governance structures and processes to be in
line and appropriate for its current size and complexity, as well as its
current capacity, appetite and tolerance for risk. The Board will continue
to monitor the appropriateness of its governance structures and processed
towards their evolution over time in parallel with the Group's objectives,
strategy and business model to reflect the development of the Group.
10) Principle Ten: Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders and other relevant
stakeholders
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. The Company has close ongoing
relationships with its private shareholders. Institutional shareholders and
analysts have the opportunity to discuss issues and provide feedback at
meetings with the Company. Page 11 of this Annual Report provides a section
172 statement which discusses how the Group considers the interests of
shareholders and other relevant stakeholders in its decision making.
The Board has not published an audit committee or remuneration committee
report, which the Board considers to be appropriate given the size and stage
of development of the Company.
All shareholders are encouraged to attend the Company's Annual General Meeting
and any general meetings held by the Company, subject to any COVID-19
restrictions. Where COVID-19 restrictions are imposed on such meetings,
shareholders are provided the opportunity to submit questions to the Board in
advance of the meeting, with responses to the questions made available on the
Company's website following the conclusion of the meeting.
Historical annual reports and other governance related material, including
notices of all general meetings of the Company over the last five years are
available through the Company's website, www.reabold.com
(http://www.reabold.com) .
Investors also have access to current information on the Company through its
website, www.reabold.com, and through Sachin Oza and Stephen Williams, the
Co-Chief Executive Directors, who are available to answer investor relations
enquiries.
At the time of adoption of the QCA Code from 28 September 2018, the Company
established an Audit Committee and Remuneration Committee.
Jeremy Edelman
Chairman
26 May 2022
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic report, the
Directors' report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare
financial statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006. Under company
law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group for that period.
The directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for companies trading
securities on AIM.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgments and accounting estimates that are reasonable
and prudent;
· state whether the financial statements comply with
international accounting standards in conformity with the requirements of the
Companies Act 2006; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are
published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of
the Directors. The Directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Independent auditor's report to the members of Reabold Resources Plc
Opinion
We have audited the financial statements of Reabold Resources Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 31 December
2021 which comprise the Group Statement of Comprehensive Income, the Group
Statement of Financial Position, the Company Statement of Financial Position,
the Group Statement of Cash Flows, the Company Statement of Cash Flows, the
Group Statement of Changes in Equity, the Company Statement of Changes in
Equity and notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in their preparation
is applicable law and UK-adopted international accounting standards and, as
regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
In our opinion, the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006 and:
· give a true and fair view of the state of the group's and of the
parent company's affairs as at 31 December 2021 and of the group's loss for
the year then ended; and
· have been properly prepared in accordance with UK-adopted
international accounting standards and, as regards the parent company
financial statements, as applied in accordance with the provisions of the
Companies Act 2006; and
· have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the "Auditor's responsibilities for the
audit of the financial statements" section of our report. We are independent
of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our audit procedures to evaluate the directors' assessment of the group's and
the parent company's ability to continue to adopt the going concern basis of
accounting included but were not limited to:
· Undertaking an initial assessment at the planning stage of the audit
to identify events or conditions that may cast significant doubt on the
group's and the parent company's ability to continue as a going concern;
· Obtaining and reviewing the directors' going concern assessment;
· Evaluating the key assumptions used and judgements applied by the
directors in forming their conclusions on going concern; and
· Reviewing the appropriateness of the directors' disclosures in the
financial statements.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's and the parent
company's ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Carrying value of exploration & evaluation (E&E) assets and oil & Our procedures included, but were not limited to, the following:
gas assets (group and parent company risk)
· Reviewing the accounting policies of subsidiaries and associates and
assessing whether the point at which exploration and evaluation assets are
recognised is in accordance with the group's accounting policy and IFRS 6;
Group carrying value £9,123k (2020: £7,586k), and parent company carrying
value £5,968k (2020: £4,556k). · Obtaining and evaluating management's assessments as to whether there
were indicators of impairment;
· Assessing whether other indicators of impairment or under-performing
The group's accounting policy in respect of this area is set out in the sites may exist through reviewing board minutes, RNS Announcements and
accounting policy notes on page 48-49. externally available information;
· Obtaining supporting evidence of additions and recalculating the
depreciation, in line with the Group's policy, of the assets held directly by
The group is involved in the extraction of oil and gas and holds significant the parent company and subsidiary.
exploration & evaluation assets and oil & gas assets.
· Directing the work of component auditors in respect of their work on
E&E and oil & gas assets through the issuance of instructions;
Due to the significance of the carrying value of these assets and the · Holding discussions with component auditors and reviewing their work
judgements involved in assessing for capitalisation criteria and indicators of to ensure appropriate and sufficient audit evidence had been obtained around
impairment, this is considered a key audit matter. the carrying value of oil & gas assets held by associated undertakings;
and
· Evaluating management's assessment of the directly held exploration
and evaluation assets and testing for impairment.
Our observations
On the basis of our audit procedures, we are satisfied that the judgements
applied by management in their capitalisation criteria and impairment
assessment of exploration & evaluation assets and oil & gas assets are
reasonable.
Valuation of convertible loan notes (group and parent company risk) Our procedures included, but were not limited to, the following:
· Obtaining the independent valuation carried out by management's
valuation expert as at the year-end;
Group and parent company carrying value £555k (2020: £nil).
· Engaging the Mazars internal expert valuation team to review and
challenge the assumptions used in the valuation; and
The group's accounting policy in respect of this area is set out in the · Comparing the results of management's valuation expert to that of our
accounting policy notes on page 51-52. own expert to assess whether the assumptions used were reasonable.
The convertible loan notes are held at fair value through profit or loss. Our observations
On the basis of our audit procedures, we are satisfied that the judgements
applied by management in their valuation of the convertible loan notes are
Due to the significance of the judgement required in the assumptions needed to reasonable.
prepare the valuation of the convertible loan notes, in addition to the gross
value acquired in the year being material, this is considered a key audit
matter.
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Overall materiality Group: £711,000
Parent company: £694,300
How we determined it This has been calculated with reference to total assets, of which it
represents approximately 1.5% for the group and parent company.
Rationale for benchmark applied Total assets have been identified as the principal benchmark within the
financial statements as it is considered to be the focus of the shareholders
due to the investments, namely the subsidiaries and associated entities, being
at an early stage of revenue generation.
1.5% has been chosen to reflect the level of understanding of the stakeholders
of the group in relation to the inherent uncertainties around accounting
estimates and judgements.
Performance materiality Group: £568,800
Parent company: £555,500
Performance materiality is set to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements in
the financial statements exceeds materiality for the financial statements as a
whole.
Performance materiality represents 80% of overall materiality for the group
and the parent company. This percentage was applied due to the experience we
have in auditing the group and the parent company, our assessment of the
group's and the parent company's control environment, and the volume of
transactions.
Reporting threshold We agreed with the directors that we would report to them misstatements
identified during our audit above £21,300 (group) and £20,800 (parent
company), as well as misstatements below these amounts that, in our view,
warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we assessed the risk of material misstatement
in the financial statements, whether due to fraud or error, and then designed
and performed audit procedures responsive to those risks. In particular, we
looked at where the directors made subjective judgements, such as assumptions
on significant accounting estimates.
We tailored the scope of our audit to ensure that we performed sufficient work
to be able to give an opinion on the financial statements as a whole. We used
the outputs of our risk assessment, our understanding of the group and the
parent company, their environment, controls, and critical business processes,
to consider qualitative factors to ensure that we obtained sufficient coverage
across all financial statement line items.
Our group audit scope included an audit of the group and the parent company
financial statements of Reabold Resources Plc. Based on our risk assessment,
all entities within the group, except for Reabold Resources Limited and Gaelic
Resources Limited (which are holding companies with no impact on the
consolidated financial statements) were subject to full scope audit, which was
performed by the group audit team. Two of the group's associated undertakings
were subject to audit procedures by component auditors. Group instructions
were sent to these component auditors by the group audit team. Discussions
were held with the component auditors and specific component audit working
papers were reviewed by senior members of the group audit team to assess the
sufficiency and appropriateness of their audit procedures for the purposes of
the group audit opinion. Audit procedures in relation to the other associated
undertaking was completed by the group engagement team.
At the parent company level, the group audit team also tested the
consolidation process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material misstatement of
the aggregated financial information.
Other information
The other information comprises the information included in the Annual Report
and Financial Statements, other than the financial statements and our
auditor's report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic Report and the Directors'
Report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the Strategic Report and the Directors' Report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the Strategic Report or the Directors'
Report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement with
the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the directors' responsibilities statement set out
on page 31, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and the parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud.
Based on our understanding of the group and the parent company and their
industry, we considered that non-compliance with the following laws and
regulations might have a material effect on the financial statements:
employment regulation, health and safety regulation, anti-money laundering
regulation, GDPR regulations, and the AIM Rules.
To help us identify instances of non-compliance with these laws and
regulations, and in identifying and assessing the risks of material
misstatement in respect to non-compliance, our procedures included, but were
not limited to:
· Inquiring of management and, where appropriate, those charged with
governance, as to whether the group and the parent company is in compliance
with laws and regulations, and discussing their policies and procedures
regarding compliance with laws and regulations;
· Inspecting correspondence, if any, with relevant licensing or
regulatory authorities;
· Communicating identified laws and regulations to the engagement team
and remaining alert to any indications of non-compliance throughout our audit;
and
· Considering the risk of acts by the group and the parent company
which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the
preparation of the financial statements, such as tax legislation and the
Companies Act 2006.
In addition, we evaluated the directors' and management's incentives and
opportunities for fraudulent manipulation of the financial statements,
including the risk of management override of controls, and determined that the
principal risks related to posting manual journal entries to manipulate
financial performance, management bias through judgements and assumptions in
significant accounting estimates, in particular in relation to the carrying
value of exploration and evaluation and oil & gas assets, the fair value
of convertible loan notes, revenue recognition (which we pinpointed to the cut
off assertion), and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
· Making enquiries of the directors and management on whether they had
knowledge of any actual, suspected or alleged fraud;
· Gaining an understanding of the internal controls established to
mitigate risks related to fraud;
· Discussing amongst the engagement team the risks of fraud; and
· Addressing the risks of fraud through management override of controls
by performing journal entry testing.
Our audit procedures in relation to fraud through revenue recognition,
specific to cut-off included, but were not limited to:
· Reviewing 100% of the group's share of revenue in the year based
on the contractual terms of the production sharing contract and each monthly
third-party oil statement; and
· Reviewing the January 2022 oil statement and ensuring the group's
share had been posted in the appropriate period.
There are inherent limitations in the audit procedures described above and the
primary responsibility for the prevention and detection of irregularities
including fraud rests with both those charged with governance and management.
As with any audit, there remained a risk of non-detection of irregularities,
as these may involve collusion, forgery, intentional omissions,
misrepresentations or the override of internal controls.
The risks of material misstatement that had the greatest effect on our audit
are discussed in the "Key audit matters" section of this report.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of the audit report
This report is made solely to the company's members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body for our audit work, for this report, or for the opinions we have formed.
Stephen Brown (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
United Kingdom
Date: 26 May 2022
Group statement of comprehensive income for the year ended 31 December 2021
_____________________________________________________________________________________
Notes 2021 2020
£'000 £'000
Revenue 5 1,160 1,035
Cost of sales 6 (1,312) (1,031)
Gross (loss)/profit (152) 4
Other income 51 60
Net gain on financial assets measured at fair value through profit or loss 7 55 -
Impairment of property, plant & equipment 18 - (239)
Administration expenses (1,663) (1,621)
Share based payments expense 25 (152) -
Loss on ordinary activities (1,861) (1,796)
Share of losses of associates 14 (801) (878)
Finance costs - unwinding of discount on decommissioning provisions 23 (14) (7)
Finance income 1 13
Loss before tax for the period (2,675) (2,668)
Taxation 10 - -
Loss for the financial year (2,675) (2,668)
Other comprehensive loss
Foreign exchange gain/(loss) on translation of foreign subsidiaries 48 (39)
Other comprehensive loss 48 (39)
Total comprehensive loss for the financial year (2,627) (2,707)
Attributable to:
Equity holders (2,627) (2,707)
(2,627) (2,707)
Loss per share
Basic and fully diluted loss per share (pence) 11 (0.03) (0.04)
All amounts relate to continuing operations.
Group statement of financial position as at 31 December
2021 Company no.
3542727
_____________________________________________________________________________________
Notes 2021 2020
£'000 £'000
ASSETS
Non-current assets
Exploration & evaluation assets 17 9,123 7,586
Property, plant & equipment 18 4,303 4,569
Investments in associates 14 27,716 25,335
Goodwill on acquisition 12 329 329
Other investments 13 570 15
42,041 37,834
Current assets
Inventory 20 34
Prepayments 79 85
Trade and other receivables 19 172 379
Restricted cash 20 211 208
Cash and cash equivalents 4,883 1,139
5,365 1,845
Total assets 47,406 39,679
EQUITY
Capital and reserves
Share capital 24 9,044 7,211
Share premium account 26 29,033 20,819
Capital redemption reserve 200 200
Share based payment reserve 1,898 1,746
Foreign currency translation reserve 9 (39)
Retained 6,308 8,983
earnings
Total shareholders' funds 46,492 38,920
LIABILITIES
Current liabilities
Trade and other payables 21 314 192
Accruals 21 83 65
397 257
Non-Current liabilities
Deferred tax liability 12 329 329
Provision for decommissioning 23 188 173
517 502
Total equity and liabilities 47,406 39,679
Approved by the Board of Directors on 26 May 2022
Signed on behalf of the board of directors:
Anthony
Samaha
Director
Company statement of financial position as at 31 December
2021 Company no. 3542727
_____________________________________________________________________________________
Notes 2021 2020
£'000 £'000
ASSETS
Non-current assets
Exploration & evaluation assets 17 5,968 4,556
Investments in associates 14 27,716 25,335
Subsidiaries 15 3,536 1,933
Other investments 13 570 15
37,790 31,839
Current assets
Loan to subsidiary 16 4,790 6,292
Prepayments 79 84
Trade and other receivables 19 52 253
Restricted cash 20 25 25
Cash and cash equivalents 4,622 1,060
9,568 7,714
Total assets 47,358 39,553
EQUITY
Capital and reserves
Share capital 24 9,044 7,211
Share premium account 26 29,033 20,819
Capital redemption reserve 200 200
Share based payment reserve 1,898 1,746
Retained earnings 6,938 9,368
Total shareholders' funds 47,113 39,344
LIABILITIES
Current liabilities
Trade and other payables 21 16 9
Accruals 21 83 65
99 74
Non-Current liabilities
Provision for decommissioning 23 146 135
146 135
Total equity and liabilities 47,358 39,553
As permitted by section 408 of the Companies Act 2006, the profit and loss
account of the parent company has not been separately presented in these
accounts. The parent company total comprehensive loss for the year was
£2,430,000 (2020: loss £2,281,000).
Approved by the Board of Directors on 26 May 2022
Signed on behalf of the board of directors:
Anthony
Samaha
Director
Group statement of cash flows for the year ended 31 December 2021
_____________________________________________________________________________________
Notes 2021 2020
£'000 £'000
Cash flows from operating activities
Loss for the financial year (2,675) (2,668)
Adjustments:
Net (gain) on financial assets at fair value through profit or loss 13 (55) -
Depreciation 18 358 326
Impairment 18 - 239
Net finance costs/(income) 13 (6)
Other non-cash movements - 100
Share based payments 25 152 -
Operating cash flows before movement in working capital (2,206) (2,009)
Decrease in receivables 19 207 478
Increase/(decrease) in payables and accruals 21 140 (776)
(Decrease) in provisions 22 - (299)
Increase in provision for decommissioning 23 - 106
Decrease/(increase) in prepayments 6 (28)
Decrease/(increase) in inventory 14 (15)
Cash used in operating activities (1,839) (2,543)
Share of losses of associates 14 801 878
Net cash used in operating activities (1,038) (1,665)
Cash flows from investing activities
Interest received 1 13
Investments in associates 14 (16) (600)
Expenditure on oil and gas property 18 (40) (398)
Expenditure on exploration & evaluation assets 17 (1,497) (1,683)
Acquisition of exploration & evaluation rights - (1,448)
Purchase of other investments 13 (1,000) -
Proceeds from sale of other investments 13 500 -
Additions to restricted cash - 132
Net cash used in investing activities (2,053) (3,984)
Cash flows from financing activities
Share placement net proceeds 6,881 -
Net cash generated from financing activities 6,881 -
Net increase/(decrease) in cash and cash equivalents 3,790 (5,649)
Net foreign exchange differences (46) 71
Cash and cash equivalents at the beginning of the period 1,139 6,717
Cash and cash equivalents at the end of the period 4,883 1,139
Cash and cash equivalents comprises:
Cash and cash equivalents 4,883 1,139
4,883 1,139
Company statement of cash flows for the year ended 31 December 2021
_____________________________________________________________________________________
Notes 2021 2020
£'000 £'000
Cash flows from operating activities
Loss for the financial year (2,430) (2,281)
Adjustments:
Net (gain) on financial assets at fair value through profit or loss 13 (55) -
Net finance costs 2 -
Other non-cash movements - 100
Share based payments 25 152 -
Operating cash flows before movement in working capital (2,331) (2,181)
Decrease/(increase) in receivables 19 200 (21)
Increase/(decrease) in payables and accruals 21 25 (68)
Decrease in provisions 22 - (299)
Decrease/(increase) in prepayments 5 (24)
Net cash used in operating activities (2,101) (2,593)
Share of losses of associates 14 801 878
Net cash used in operating activities (1,300) (1,715)
Cash flows from investing activities
Interest received 1 -
Investments in associates 14 (16) (600)
Loan to subsidiary (92) (263)
Expenditure on exploration & evaluation assets 17 (1,412) (1,573)
Acquisition of exploration & evaluation rights - (1,448)
Purchase of other investments 13 (1,000) -
Proceeds from sale of other investments 13 500 -
Additions to restricted cash - (25)
Net cash used in investing activities (2,019) (3,909)
Cash flows from financing activities
Net proceeds from issue of shares 6,881 -
Net cash generated from financing activities 6,881 -
Net increase/(decrease) in cash and cash equivalents 3,562 (5,624)
Cash and cash equivalents at the beginning of the period 1,060 6,684
Cash and cash equivalents at the end of the period 4,622 1,060
Cash and cash equivalents comprises:
Cash and cash equivalents 4,622 1,060
Overdraft and borrowings - -
4,622 1,060
Group statement of changes in equity for the year ended 31 December 2021
_____________________________________________________________________________________
Share capital Share premium account Capital redemption reserve Share based payments reserve Foreign currency translation reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2020 6,845 19,685 200 1,746 - 11,651 40,127
Loss for the year - - - - - (2,668) (2,668)
Other comprehensive income - - - - (39) - (39)
Total comprehensive income - - - - (39) (2,668) (2,707)
Issue of share capital 366 1,134 - - - - 1,500
At 31 December 2020 7,211 20,819 200 1,746 (39) 8,983 38,920
Loss for the - - - - - (2,675) (2,675)
year
Other comprehensive income - - - - 48 - 48
Total comprehensive income - - - - 48 (2,675) (2,627)
Share-based payments - - - 152 - - 152
Issue of share capital, net of direct issue costs 1,833 8,214 - - - - 10,047
At 31 December 2021 9,044 29,033 200 1,898 9 6,308 46,492
Company statement of changes in equity for the year ended 31 December 2021
_____________________________________________________________________________________
Share capital Share premium account Capital redemption reserve Share Retained earnings Total
based payments reserve
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2020 6,845 19,685 200 1,746 11,649 40,125
Loss for the year - - - - (2,281) (2,281)
Total comprehensive income - - - - (2,281) (2,281)
Issue of share capital 366 1,134 - - - 1,500
At 31 December 2020 7,211 20,819 200 1,746 9,368 39,344
Loss for the year - - - - (2,430) (2,430)
Total comprehensive income - - - - (2,430) (2,430)
Share-based payments - - - 152 - 152
Issue of share capital, net of direct issue costs 1,833 8,214 - - - 10,047
At 31 December 2021 9,044 29,033 200 1,898 6,938 47,113
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