For immediate release: 07:00hrs Tuesday 25th April 2006
Europa Oil & Gas (Holdings) plc
(`Europa')
Growth in Profit and on Track to Meet Production Targets
Interim results for the six months ended 31 January 2006
Europa Oil & Gas (Holdings) plc, (AIM:EOG), the independent oil & gas
exploration and production group with assets in the UK, Romania, Ukraine,
Poland and Western Sahara today announces its interim results for the six
months ended 31 January 2006.
Financial
* Profit after tax of �0.419m, up 159% (6 months to 31 January 2005 �0.162m)
* Earnings per share of 0.69p, up 109% (0.33p at 31 January 2005)
* Turnover of �1.477m, up 25% (6 months to 31 January 2005 �1.178m)
* Operating profit of �0.511m, up 23% (6 months to 31 January 2005 �0.415m)
* Cash of �1.03 million (�3.35m at 31 January 2005)
* Net assets of �9.03 million (�8.09m at 31 January 2005)
Operational
* Production from the UK and Ukraine during the period averaged 266 barrels
of oil equivalent per day (boepd).
UK
* Approved as a UK Offshore Operator and secured 2 year extension of Southern
North Sea licence P1131 UKCS, Blocks 41/24 & 41/24 (Quad 41)
* Farmed out an interest in the UK onshore Doddington (Whisby) Exploration
Area (licence PEDL150)
* Reached payback of Whsiby-4 well costs
Romania
* Costisa-1, located in Block EPI-3 Romania, drilled and suspended for future
testing
* Secured development approval for Bilca Gas Development
* Award of contract and start of construction of Bilca Gas Development
Recent Events
UK
* Quad 41 appraisal well planning underway with Peak Group
* Reprocessing of Doddington Exploration Area seismic data nearing completion
Romania
* Production set to rise significantly in 2006 when the Bilca Gas Development
comes onstream
* Acquisition of 300 km of seismic across three licences in Romania which
commenced at the beginning of March 2006
* Planning for Costisa-1 well re-entry and testing of gas shows encountered
in the sandstones between 1,034 and 1,059 metres
Ukraine
* Increasing gas prices in the Ukraine
New Ventures
* Recent award of two very large, high quality blocks in Western Sahara
Further information:
Paul Barrett
Managing Director, Europa Oil & Gas (Holdings) plc +33 5 63 33 18 97
Jonathan Wright / Parimal Kumar
Seymour Pierce Limited +44 20 7107 8000
Jade Mamarbachi / Toby Hall
gth media relations +44 20 7153 8035/8039
Chairman's Statement
The six months to 31 January 2006 have seen significant progress on a number of
projects. Continued high oil prices have helped increase operating profits from
Europa's UK onshore operations, whilst work has continued on increasing the net
production stream by the end of 2006.
Europa stands out from many in its peer group of AIM-listed junior E&P
companies by virtue of its healthy production revenues resulting from a
successful drilling programme over the last few years. This, combined with
Europa's rigorous policy of overhead cost containment has ensured financial
growth and positive operational cash flow. At the same time, Europa has funded
a substantial capital expenditure programme and new venture activities.
Compared with the same period last year, Operating Profit and Turnover has
increased by a strong 23% and 25%, respectively and Post-Tax Profit by an
impressive 159%. The resulting earnings per share have risen to 0.69p - a
notable increase of over 100%.
In addition to the current production, Europa will see a substantial increase
in production during 2006 year when the Bilca Gas Development comes on stream.
Europa is looking for further increases in production, most significantly on
its Southern North Sea Quad 41 gas condensate project, where it plans to drill
an appraisal well in 2007.
Europa is a true E&P company and balances its production with development,
appraisal and exploration. Europa recognises the need for high reward prospects
but also the necessity for a solid production platform. Europa's approach is to
increase near term production through appraisal and low risk exploration
drilling whilst incorporating high impact exploration into its portfolio.
Europa has an 86% success rate in finding commercial hydrocarbons and holds an
excellent portfolio in proven hydrocarbon basins. I believe this combination
will continue to deliver strong financial growth.
Operations Review
UK
Production from the Group's two UK onshore oilfields in the East Midlands has
averaged 106 net barrels of oil per day (bopd) from the Whisby-4 oil well and
119 bopd from the West Firsby Oilfield. Payback of costs associated with
drilling the Whisby-4 well was reached during this period. Both oilfields have
a low oil production decline rate and ensure that production volumes should
remain high for the foreseeable future. Oil revenue during this period was 25%
higher when compared to the previous six- month period and provided the Company
with an increasing revenue stream.
The UK Department of Trade and Industry approved Europa as a North Sea Offshore
Exploration Operator and the Quad 41 Southern Gas Basin licence has been
extended for a further two years. The licence includes the 41/24 and 41/25
discoveries, which flowed on test at rates between 2,500 and 6,500 boepd from
the fractured Zechstein. A similar reservoir has been successfully developed in
the Hewett Field in the Southern North Sea. A number of engineering studies
were completed on the project during the period and have enhanced the viability
of the project. Europa is committed to drilling an appraisal well, 41/24-D, on
the project within the current two year licence extension.
In October 2005, Europa entered into a farm-in agreement with Valhalla Oil &
Gas Ltd. covering the Doddington (Whisby) Exploration Area (PEDL150). Valhalla
agreed to reprocess the existing seismic dataset and acquire a further 40 km of
new 2D seismic to earn a 25% interest in the block. Valhalla, then, has the
option to earn a further 25% by funding 75% of the cost of an exploration well.
I am pleased to say that the reprocessing of the existing seismic began during
the period and the results show a major improvement. This will lead to a better
definition of the prospects on the licence.
On the PEDL143 licence, which contains the Holmwood prospect, work is
continuing to secure planning permission.
Romania
Development consent was granted on the Bilca Gas Project in August 2005. This
was closely followed by the award of the construction contract in October 2005.
Construction of the gas processing facilities and export pipeline route to the
existing gas pipeline began soon after. Following completion of the facilities,
the three wells drilled in late 2004 and early 2005, Bilca-1, Bilca-2 and
Fratauti-1 (which flowed at rates over 2,000 boepd), will be placed onstream by
summer 2006.
The Costisa-1 well reached its final total depth of 4,350 metres in December
2005. Whilst the primary sub-thrust target was absent, a significant sandstone
unit between 1,034 and 1,059 metres depth gave very strong gas shows during
drilling and appears to be gas-saturated. Due to the length of time the
sandstone was exposed to drilling fluids, the damaged borehole provided poor
wireline log data and prevented drill stem testing. Although the quality of the
data was poor, there are positive hydrocarbon indications. Thus, the well was
suspended for further re-entry to test this sandstone. Europa and JV partner
MND have requested an extension to the licence to undertake this work, along
with further exploration activity on the block.
There are indications of at least two further anomalies on trend with Costisa-1
and will become very attractive drilling targets should the test be successful.
Potential for early development exists as the Romanian national gas grid
pipeline is less than 1km from the well site.
Recent Events and Current Outlook
UK
Planning is underway for the Southern North Sea Quad 41 appraisal well. The
Company is working on the design of the 41/24-D well with the Peak Group, a
company that is a global provider of well construction services and has
recently completed drilling wells for Century and DNO in the North Sea and is
planning a further five North Sea wells.
In the UK, the reprocessing of the existing seismic database over the
Doddington Exploration Area is nearing completion and the quality of the
reprocessed seismic is far superior and will result in a significantly improved
understanding of the petroleum system. The Doddington Area lies adjacent to the
Whisby Oilfield and has several strong geochemical anomalies on the acreage,
identified as a result of a 2005 survey. The Company is currently interpreting
the reprocessed seismic, focussing on the areas with geochemical anomalies,
with the aim to define a drillable prospect location.
Romania
In Romania, Europa has interests in 4 blocks in under-explored areas of the
Carpathian Oil & Gas Province, a province that has produced 5 billion barrels
of oil and 2 trillion cubic feet of gas to date. The licences lie near to or on
trend to giant oil and gas fields, e.g. the giant Roman Gasfield which has
produced over 850 bcf (c. 140 mmboe).
The near term exploration programme comprises the acquisition of 300 Km of 2D
seismic on the Brodina, Cuejdui and Bacau Blocks. In the Brodina Block, which
contains the Bilca Gas Development, the seismic programme is targeting the
additional potential between the Bilca development and the Todiresti Gasfield,
in an area currently lacking any seismic data. Any discoveries could be tied in
to the nearby pipeline system. The smaller Cuejdui and Bacau seismic programmes
have been designed to mature previously identified leads, primarily in the same
Bilca play, to drillable status. The seismic acquisition is scheduled for
completion in May 2006 and we are confident that robust prospects suitable for
drilling will be identified.
Ukraine
The Company continues to produce and sell gas in the Ukraine and averaged 41
boepd over the interim period. Domestic gas prices in the Ukraine have risen
sharply in recent months and the realised sales price is now 89% higher than in
the interim period.
New Ventures
In March 2006, the Company was awarded two very large blocks in Western Sahara,
West Africa, totalling over 80,000 sq km, equivalent to roughly half the
licensed areas of the UK Central and Northern North Sea. The two blocks are in
geologically contrasting areas but both have thick sedimentary sequences with
similarities to world class, proven basins in Northern Africa. The acreage has
seen very little exploration and, due to clear analogues with producing basins
in Algeria and Mauritania, we believe that company-making prospects will emerge
on these blocks.
Conclusion
The Company now holds interests in 13 projects in five countries throughout
Europe and North Africa. The balanced portfolio includes production,
development, appraisal and exploration. The Company has shown throughout its
life as a public company steady financial growth and continued acquisition of
quality exploration acreage. The directors are very pleased with the financial
results and are confident that shareholder value will continue to grow.
Sir Michael Oliver
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six month period ended 31 January 2006
6 6 12
Months Months Months
Ended 31 Ended 31 Ended 31
January January July
2006 2005 2005
� � �
Turnover 1,447,086 1,177,682 2,399,014
Cost of sales
* Operating costs (348,878) (249,580) (504,908)
* Depletion and amortisation (417,033) (323,778) (754,441)
(765,911) (573,358) (1,259,349)
Gross profit 681,175 604,324 1,139,665
Administrative expenses (170,598) (189,278) (297,337)
Operating profit 510,577 415,046 842,328
Interest receivable and similar income 33,131 120,742 179,809
Interest payable and similar charges (124,770) (372,375) (666,011)
Profit on ordinary activities before 418,938 163,413 356,126
taxation
Tax on profit on ordinary activities - (1,416) (2,226)
Retained profit for the financial 418,938 161,997 353,900
period/year
Basic Earnings per share 0.69p 0.33p 0.64p
Diluted Earnings per share 0.69p 0.33p 0.64p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six month period ended 31 January 2006
6 6 12
Months Ended Months Months
31 January Ended 31 Ended 31
January July
2006
2005 2005
� � �
Profit on ordinary activities after 418,938 161,997 353,900
taxation
Currency translation difference on foreign - 8,005 18,233
currency net investment
Total recognised gains and losses relating 418,938 170,002 372,133
to the period/year
CONSOLIDATED BALANCE SHEET as at 31 January 2006
6 6 12
Months Ended Months Ended Months
31 January 31 January Ended 31
July
2006 2005
2005
� � �
Fixed assets
Intangible assets 4,249,761 3,329,177 4,478,852
Tangible assets 4,829,551 2,823,699 3,256,512
9,079,312 6,152,876 7,735,364
Current assets
Stock 38,654 33,542 51,431
Debtors 485,016 313,933 528,787
Cash at bank and in hand 1,034,063 3,347,651 1,977,117
1,557,733 3,695,126 2,557,335
Creditors: amounts falling due within one (448,568) (287,736) (525,037)
year
Net current assets/(liabilities) 1,109,165 3,407,390 2.032,298
Total assets less current liabilities 10,188,477 9,560,266 9,767,662
Creditors: amounts falling due after more (879,337) (1,203,513) (883,906)
than one year
Provision for liabilities and charges (275,876) (263,286) (269,430)
Net assets 9,033,264 8,093,467 8,614,326
Capital and reserves
Called up share capital 610,650 600,000 610,650
Share premium 4,406,560 4,098,482 4,406,560
Merger reserve 2,868,033 2,868,033 2,868,033
Profit and loss account 1,148,021 526,952 729,083
Shareholders' funds 9,033,264 8,093,467 8,614,326
CONSOLIDATED CASH FLOW STATEMENT
For the period ended 31 January 2006
6 6 12 Months
Ended 31
Months Months July
Ended 31 Ended 31
January January 2005
2006 2005
� � �
Net cash inflow from operating activities 964,758 249,201 953,631
(a)
Returns on investments and servicing of
finance
Interest received 30,157 120,743 88,003
Interest paid (103,108) (372,376) (542,077)
Net cash outflow from returns on (72,951) (251,633) (454,074)
investments and servicing of finance
Taxation
Tax paid - (2,023) (3,180)
Net cash outflow from taxation - (2,023) (3,180)
Capital expenditure
Purchase of fixed assets (1,716,267) (469,926) (2,492,947)
Net cash outflow from capital expenditure (1,716,267) (469,926) (2,492,947)
and
financial investment
Net cash outflow before financing (824,460) (474,381) (1,996,570)
Financing
Loans received - 160,802 160,802
Loans redeemed (118,594) (383,762) (436,768)
Issue of share capital - 4,298,483 4,503,144
Net cash (outflow)/inflow from financing (118,594) 4,075,523 4,227,178
(Decrease)/increase in cash in the period/ (943,054) 3,601,142 2,230,608
year (b)
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
For the period ended 31 January 2006
(a) Reconciliation of operating profit to net
cash inflow from operating activities
6 6 12
Months Months Months
Ended 31 Ended 31 Ended 31
January January July
2005 2005 2005
� � �
Operating 510,577 415,046 842,328
profit
Depreciation 417,766 325,324 754,441
Decrease/ 51,876 (63,045) (260,446)
(increase)
in debtors
Decrease in (15,461) (391,410) (339.833)
creditors
Decrease in - (36,714) (42,859)
provision
Net cash 964,758 249,201 953,631
inflow from
operating
activities
(b) Analysis of changes in At 31 July Cash Non Cash At 31
net debt January
2005 Flow Movement 2006
� � � �
Cash at bank and in hand 1,977,117 (943,054) - 1,034,063
Overdrafts 0 - - 0
1,977,117 (943,054) - 1,034,063
Loans due within one (238,696) 121,593 - (117,103)
year
Loans due after one year (883,906) 4,569 - (879,337)
(1,122,602) 126,162 - (996,440)
Net funds/(debt) 854,515 (816,892) - 37,623
(b) Analysis of changes in At 31 July Cash Non Cash At 31
net debt January
2004 Flow Movement 2005
� � � �
Cash at bank and in hand 48,789 3,298,862 - 3.347,651
Overdrafts (302,280) 302,280 - 0
(253,491) 3,601,142 - 3,347,651
Loans due within one (2,792,383) 165,833 2,584,974 (41,576)
year
Loans due after one year (1,191,158) (12,355) - (1,203,513)
(3,983,541) 153,478 2,584,974 (1,245,089)
Net funds/(debt) (4,237,032) 3,754,620 2,584,974 2,102,,562
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
For the period ended 31 January 2006
(b) Analysis of changes in At 31 July Cash Non Cash At 31 July
net debt
2004 Flow Movement 2005
� � � �
Cash at bank and in hand 48,789 1,928,328 - 1,977,117
Overdrafts (302,280) 302,280 - 0
(253,491) 2,230,608 - 1,977,117
Loans due within one year (2,792,383) (31,287) 2,584,974 (238,696)
Loans due after one year (1,191,158) 307,252 - (883,906)
(3,983,541) 275,965 2,584,974 (1,122,602)
Net funds/(debt) (4,237,032) 2,506,573 2,584,974 854,515
(c) Reconciliation of net cash flow to movement in net (debt) /funds
6 6 12
Months Months Months
Ended 31 Ended 31
Ended 31 January July
January
2005 2005
2005
� � �
(Decrease)/ increase in cash in the (943,054) 3,601,142 2,230,608
period
Cash inflow from changes in debt 126,162 153,478 275,965
Change in net funds resulting from cash (816,892) 3,754,620 2,506,573
flows
Non cash movement - 2,584,974 2,584,974
Net funds/ (debt) at start of period/ 854,515 (4,237,032) (4,237,032)
year
Net funds/ (debt) at end of period/ year 37,623 2,102,562 854,515
NOTES TO THE ACCOUNTS
For the period ended 31 January 2006
1. The results for the period are all derived from continuing operations.
2. The unaudited results have been prepared on the basis of the accounting
policies adopted in the annual accounts for the 12 month period ended 31
July 2005.
3. The interim report for the six months to 31 January 2006 was approved by
the Directors on the 24th April 2006.
4. The calculation of basic earnings per share is based on the weighted
average shares in issue throughout the six month period. The diluted
earnings per share include employee share options.
5. The interim results are unaudited and do not constitute statutory financial
statements as defined in section 240 of the Companies Act 1985.
Europa Oil & Gas (Holdings) plc Interim Report 2006
END
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