TIDMEOG
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas
5 October 2015
Europa Oil & Gas (Holdings) plc ('Europa' or 'the Company')
Final Results for the year to 31 July 2015
Europa Oil & Gas (Holdings) plc, the AIM listed oil and gas exploration,
development and production company focused on Europe, announces its final
results for the 12 month period ended 31 July 2015.
The Company will be holding a conference call for analysts and investors later
today at 10:30 BST. To participate, please dial 0808 109 0701, or +44 (0) 20
3003 2701 if calling from outside of the UK, using access code 7796336#. Please
note that all lines will be muted with the exception of the Europa Oil & Gas
management. However the Company invites shareholders to submit questions to its
public relations advisers, St Brides Partners Ltd, ahead of the call via email
to shareholderenquiries@stbridespartners.co.uk. The management team will
strive to answer as many questions as possible during the course of the call.
To view a copy of the presentation online, please go to www.meetingzone.com/
presenter?partCEC=7796336 using 7796336 as the participant pin. On the right
hand side of the screen you will find an option to submit questions during the
call. The presentation and the Q&A will only be made live once the call has
commenced. Unfortunately the online presenter programme is not compatible with
iPads and iPhones but if you are listening to the call and would like to send
questions during this time, please email them to
shareholderenquiries@stbridespartners.co.uk referencing 'Europa Oil & Gas' in
the subject line and these will be passed onto the Company for you. If you
have any problems accessing the call, please contact St Brides Partners Ltd on
shareholderenquiries@stbridespartners.co.uk or on the telephone number +44 (0)
20 7236 1177.
The full Annual Report and Accounts will be available today on the Company's
website at www.europaoil.com and will be mailed to those shareholders who have
requested a paper copy later this month.
Operational highlights
* 141 boepd produced from four UK onshore fields (2014: 165 boepd from three
fields)
* Competent Persons Report ("CPR") produced by ERC Equipoise ("ERCE")
estimated gross mean unrisked Prospective Resources of 1.5 billion boe in
FEL 3/13 offshore Ireland
* 15% carried interest in FEL 3/13 assigned a net mean unrisked NPV10 of
US$1.6 billion by ERCE
* Discovered oil at Wressle in PEDL180, Lincolnshire, with aggregate
production from all payzones of 710 boepd during initial testing operations
* Prepared and submitted new licence applications in 14th Onshore Licensing
Round UK, award outcome expected Q4 2015
* Farmed out Tarbes val d'Adour permit in onshore France to Vermillion for a
100% carry on a EUR4.65 million work programme
* Drilled an exploration well at Kiln Lane on PEDL181 East Lincolnshire
* Awarded block 41/24 licence in southern North Sea
* Raised GBP2.2 million net proceeds via a placing and open offer
* Bill Adamson retired from the Board and Colin Bousfield, an existing
Director, was appointed Chairman
Financial performance
* Group revenue of GBP2.2 million (2014: GBP3.9 million)
* Pre-tax loss excluding exploration write-off and impairment of GBP0.8 million
(2014: profit GBP0.5 million)
* Pre-tax loss of GBP4.1 million after GBP2.2 million exploration write-off in
PEDL181 and GBP1.1 million impairment against the West Firsby field (2014:
loss GBP0.7 million after a GBP1.2 million impairment against the West Firsby
field)
* Post-tax loss for the year GBP1.8 million (2014: profit GBP0.6 million)
* Cash used in continuing operations GBP0.3 million (2014: cash generated GBP1.4
million)
* Net cash balance as at 31 July 2015 GBP3.2 million (31 July 2014: GBP4.5
million)
Post reporting date events
* Planning permission for the Holmwood exploration well surface site granted
in August 2015 following a Planning Inquiry in April and June 2015 with
planning permission for the underground well path granted in September 2015
* Wressle EWT completed at Penistone Flags oil zone with positive
implications for reservoir volumes
* Prepared and submitted multiple new licence applications for the Irish 2015
Atlantic Margin Licensing Round, award outcome anticipated in H1 2016
* Kosmos Energy decided to exercise its option to withdraw from both Irish
offshore licences, Europa has applied to assume 100% interest and
operatorship
Europa's CEO, Hugh Mackay said, "Drilling wells, issuing CPRs, farming out
licences, these are key value drivers for an oil and gas company. The year
under review has seen Europa participate in all of these high impact
activities: two wells drilled onshore UK; discovery in East Lincolnshire;
farm-out secured for one of our licences onshore France with Vermillion Energy;
and CPR issued estimating 1.5 billion barrels for one of our Irish Licences.
Equally importantly we have cash, we have revenue from production and we have
the opportunity to increase revenue through the Wressle development.
"The year ahead promises more high impact activity: we will look to bring the
Wressle discovery into production and in the process increase our revenues;
issue a CPR for Wressle which will significantly boost our reserves; advance
plans to drill the 5.6 mmboe Holmwood prospect, which we believe is one of the
best undrilled conventional prospects onshore UK; commence the farm-out of
Holmwood and our Irish licences and continue ongoing discussions with potential
partners for our Bearn des Gaves permit. We are also looking to add to our
exploration portfolio having participated in the latest onshore UK and Irish
Altantic Margin licensing rounds. We are working hard to generate value for
shareholders and look forward to the year ahead."
Chairman's Statement
Europa is an exploration and production company with a portfolio of multi-stage
projects in three areas: onshore UK; offshore Ireland; and onshore France. The
year under review has seen Europa:
* Participate in two wells drilled onshore UK as part of a multi-well
programme focused on proving up our prospect inventory via the drill bit;
* Receive planning approval for the Holmwood well, which is in an area of the
Weald Basin which has seen much press coverage in recent months for its
high prospectivity;
* Undertake a thorough review of our Irish licences, resulting in the
completion of a CPR over FEL 3/13 indicating a total of 1.5 billion barrels
of gross unrisked mean Prospective Resources with a net unrisked NPV10 (for
the equity and carry arrangements applicable at the time) of US$1.6
billion;
* Manage its exploration licences in France with completion of a farm-out of
our Tarbes licence to Vermillion and a continuation of the programme to
farm-out our Berenx licence;
* Continue our programme of adding to the licence inventory with new licence
applications in both the UK 14th onshore round and the Irish offshore
round. In addition we have been awarded block 41/24 offshore UK in the
southern North Sea. This is part of our continuing strategy to work up our
existing assets, whilst selectively adding new opportunities in locations
where we believe we have a good understanding of the geology, fiscal and
political risks and where we feel we can add value to the Company;
* Work towards delivering on our objective to build a top quartile AIM oil &
gas company in terms of market capitalisation. When this ojective was set
Europa was in the fourth quartile of the AIM oil & gas sector. As at 31
August 2015 we were ranked in the second quartile and are showing continued
progress towards our goal.
Our drilling campaign got off to a good start in July 2014 with the Wressle-1
exploration well in East Lincolnshire, which was targeting a 2.1 mmbo
conventional oil prospect, finding hydrocarbons. We saw aggregate production
from all payzones of 710 boepd during testing operations. This was followed up
by an Extended Well Test ("EWT") which will aid the partners in determining the
optimal development scheme ahead of a formal application to the Oil and Gas
Authority ("OGA").
Wressle was followed by the drilling of the Kiln Lane prospect on the
neighbouring PEDL181 licence. The well was targeting a 2.9 mmboe prospect and
was the first well drilled on the licence. Whilst operations ran to budget and
timetable and there was evidence of hydrocarbons being present during drilling,
unfortunately the well was found to be water wet. The data recovered will
assist the further evaluation of the block ahead of any further activity.
We were delighted that our efforts to obtain planning approval in relation to
drilling a temporary exploratory well at the Holmwood prospect on the PEDL143
licence resulted in approval in September 2015. PEDL143 is located in the Weald
Basin, Surrey and with mean gross un-risked Prospective Resources of 5.6 mmbo,
as estimated in a CPR published in June 2012, and with a one in three chance of
success we rate Holmwood as being one of the best undrilled conventional
prospects onshore in the UK.
We see the UK as an excellent area in which to operate and we will be looking
to add to our existing production through development of Wressle and further
exploration activity. To underline this we have participated in the 14th
Onshore (Landward) Oil and Gas Licensing Round and await announcement of the
awards on the areas we have applied for.
Whilst the UK portfolio has seen most activity over the last 12 months, we
believe that there is significant potential value in Europa's Irish acreage.
Kosmos Energy Ireland, delivered a new prospect inventory based on a 2,650 km2
3D seismic acquisition programme in Q4 2014. We are particularly pleased that
(MORE TO FOLLOW) Dow Jones Newswires
October 05, 2015 02:00 ET (06:00 GMT)
the analysis of the state of the art 3D seismic shot in late 2013 confirmed the
presence of significant prospects, reducing risk prior to drilling decisions
being made. We have undertaken a thorough review of our Irish licences,
identifying a number of prospects leading to the issue of a CPR by ERCE which
indicated a total of 1.5 billion barrels of gross unrisked mean Prospective
Resources with a net unrisked NPV10 of US$1.6 billion based on the Kosmos carry
arrangements and Europa's 15% interest prevailing at that time. Since the
preparation of the CPR, Kosmos have informed Europa of their decision to
withdraw from Ireland which is expected to result in Europa assuming a 100%
interest. The Prospective Resources remain unchanged at 1.5 billion barrels,
but the value to Europa will need to be adjusted to reflect any new farm-in
arrangements. Europa intends to seek a new partner for each licence following
the announcement of the results of the 2015 Atlantic Margin Licensing Round
that closed on 16 September 2015.
In France, work continued to farm-out both of our onshore licences as a means
of funding exploration activity. Europa held 100% interests in the Béarn des
Gaves ('Béarn') and Tarbes val d'Adour ('Tarbes') permits, located in the
proven Aquitaine Basin. In February, we were able to announce that Vermillion
had agreed to join the Tarbes permit, taking an 80% interest in return for up
to EUR4.65m of exploration expenditure. In the current oil price environment it
has been challenging to find quality farm-in partners, but we are delighted
that Vermillion, as the leading operator onshore France, has seen the potential
of the Tarbes licence and we await their detailed plans for the licence with
interest.
Béarn holds two potential company making prospects: the Berenx Shallow gas
prospect and the Berenx Deep gas appraisal prospect. We continue to seek a
farm-in partner with an intention to drill the Shallow prospect and talks are
on-going with a number of interested parties, but the current economic climate
in the oil and gas sector has led to a reduction in appetite for farm-in
opportunities.
Outlook
The year under review has been particularly difficult for the oil and gas
sector with oil prices falling significantly from US$104.8/bbl on 1 August 2014
to US$52.2/bbl on 31 July 2015. We have seen many of our peers struggle at low
oil prices and overall exploration and development activity levels have dropped
off. A number of companies have seen their market capitalisation reduce
significantly as their finances have come under strain and I would like to
acknowledge the support we have received from shareholders through the placing
and open offer during the course of the year.
The CPR for offshore Ireland, which confirmed the company-making potential of
our licences both in terms of prospective resource and value, indicates that
the Company has the potential to see very material growth in its market
capitalisation in the near term. This is one example of the activities
management are pursuing to provide shareholders with tangible evidence of value
creation.
We are well positioned, through the combination of existing production, near
term development at Wressle and exploration opportunities at Holmwood in the UK
and in Ireland and France. We hope to build on our existing portfolio through
participation in the UK and Irish licensing rounds, and we will continue to
evaluate new projects and ventures that match our investment criteria. This is
a challenging time but shareholders can be assured that the Board and I will be
working hard to manage our resources carefully and maximise value from our
portfolio.
During the course of the year I took over the role of Chairman from Bill
Adamson, when he stepped down from the Board to enable him to concentrate on
his work in the voluntary sector. Bill had been Chairman for just under five
years, during which time he presided over a period of transition for the
Company, including the appointment of Hugh Mackay as Chief Executive. The
Board and I would like to thank Bill for his efforts during this period.
I would like to thank the management, operational teams, my fellow Board
members and our advisers for their hard work over the year.
Finally I would like to reiterate my thanks to our shareholders for their
continued support during what has been a challenging year for all of the oil
and gas sector, but particularly small exploration and production companies.
Colin Bousfield, Chairman
2 October 2015
Strategic report - Operations
Ireland
Exploration - Porcupine Basin Frontier Exploration Licences ("FELs") 2/13 and 3
/13 - Europa (15%); Kosmos (85% and operator). (Note that on 22 September 2015,
Europa announced that Kosmos intends to withdraw from the two licences. Europa
has applied to the Irish Authorities to assume 100% equity and operatorship).
The exploration model for these licences is the Cretaceous stratigraphic play:
comprising Early Cretaceous turbidite sandstone reservoirs; charged by mature
Late Jurassic and Early Cretaceous source rocks and contained in stratigraphic
traps with elements of structural closure. The Cretaceous play in Ireland is
essentially undrilled and is considered to be analogous to the same play in the
equatorial Atlantic Margin province that has delivered the Jubilee and Mahogany
oil fields.
The key activity during the year has been interpretation of more than 2,500 km2
of 3D seismic data over FEL 2/13 and 3/13. The data was acquired in H2 2013,
the final processed data set was delivered in Q2 2014 and the operator Kosmos
delivered a prospect inventory in Q4 2014 (see RNS of 8 December 2014).
Europa followed on from this work by Kosmos and conducted its own independent
prospect mapping over both licences. This mapping provided the basis for a CPR
by ERCE on the prospects and risks in FEL 3/13. A summary of the CPR is
tabulated below and was provided to the market in an RNS dated 12 May 2015.
The CPR identifies gross mean un-risked Prospective Resources of approximately
1.5 billion barrels of oil equivalent ("boe") across three prospects in FEL 3/
13 and gross mean risked Prospective Resources of 235 million boe.
FEL 3/13 Gross Prospective Resources mmboe*
Prospect Un-risked Mean Chance 1 in Gross mean
of Risked
Success
Low Best High
Wilde 61 239 952 428 19% 5.3 81
Beckett 109 424 1661 749 15% 6.7 112
Shaw 57 198 681 315 13% 7.7 41
Total 277 861 3,294 1,492 235
*million barrels of oil equivalent, using a conversion factor of 6 mscf per
stb. The hydrocarbon system is considered an oil play. However, due to
significant uncertainties in the available geological information, there is a
possibility of a gas charge.
Note: the Total row is a deterministic sum.
The three prospects Beckett, Wilde and Shaw have Cretaceous submarine fan
sandstone reservoirs and are part of the Cretaceous submarine fan hydrocarbon
play. These new prospects replaced the Kiernan prospect previously identified
by Europa on historic 2D seismic data (see RNS dated 16 January 2013). As a
consequence of its detailed work in preparation for the CPR, Europa has
identified both a prospect and shotpoint location for what would be a
play-opening first well in FEL 3/13.
The CPR represents the culmination of substantial work by three very
experienced technical teams: Kosmos, Europa and ERCE. The work has been
subjected to robust and in-depth technical challenge. Europa has utmost
confidence in the quality of the work and the Prospective Resources and risks
derived from the work. These are very significant volumes of hydrocarbons.
Europa considers the prospects to be at drillable prospect status. The CPR
provides a strong endorsement to Europa's long held view that the Porcupine
Basin has the potential to become a major new North Atlantic hydrocarbon
province.
In addition to the CPR Europa also commissioned ERCE to complete an independent
assessment of the value of its interests in FEL 3/13. Although it is
comparatively unusual for junior oil companies to commission such third party
valuation work at this early stage in the exploration cycle, in view of the
very large potential Prospective Resources Europa feels it is important that
investors are provided with an independent and credible valuation. As with the
CPR, the valuation has been subjected to rigorous technical challenge and
scrutiny by ERCE.
The results of the study were released to the market in an RNS on 16 June 2015
and ERCE estimated a mean Unrisked Net Present Value at a 10% discount
("NPV10") of approximately US$1.6 billion to Europa's 15% net interest in three
prospects; Wilde, Beckett and Shaw. On a risked basis the results of this study
estimate a mean risked NPV10 of US$251 million. These prospects are at the
pre-drill stage and realisation of this potential value will require the
drilling of exploration wells. Note that the valuation was based on the Kosmos
carry arrangements and Europa's 15% interest prevailing at the time. Since the
preparation of the CPR, Kosmos have informed Europa of their decision to
withdraw from Ireland which is expected to result in Europa assuming 100%
interest. The Gross Un-risked Prospective Resources remain unchanged at 1.5
billion barrels, but the value to Europa will need to be adjusted to reflect
any new farm-in arrangements. Nevertheless the work remains valid and the
Directors believe that it provides a valid benchmark for what a 15% carried
interest could be worth. The NPV10 of a 15% carried interest as at 1 January
2015 for the Low, Best and High estimates of Prospective Resources are
tabulated below:
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Gross Prospective Net Un-risked NPV10 (US$ Chance Net Risked
Resources million) Of NPV10 (US$
mmboe* Success million)
Prospect Low Best High Low Best High Mean (%) Mean
Wilde 61 239 952 -10 109 1,227 408 19% 78
Beckett 109 424 1661 -10 400 2,366 867 15% 130
Shaw 57 198 681 -10 110 970 332 13% 43
Total 1,607 251
Notes:
1. The discounted cash flow analysis has been carried out assuming exploration
drilling results in discovery of oil. However, due to the significant
uncertainties in the available geological information, there is the possibility
that exploration drilling will result in the discovery of gas.
2. mmboe means millions of barrels of oil plus gas converted to oil using a
conversion rate of six thousand cubic feet of gas for each barrel of oil.
3. "Gross Oil and Gas Unrisked Prospective Resources" are 100% of the volumes
estimated to be recoverable from an undrilled prospect before applying the
geological chance of success ("COS").
4. The COS is an estimate of the probability that drilling the prospect would
result in a discovery.
5. Prospective Resources are "Unrisked" in that the volumes have not been
multiplied by the COS.
6. Net Unrisked NPV10 means the NPV10 at 10% discount rate as at 1 January 2015
attributable to Europa's assumed 15% working interest in the Prospect before
multiplying by the COS.
7. Net Risked NPV10 means the NPV10 at 10% discount rate as at 1 January 2015
attributable to Europa's assumed 15% working interest in the prospect after
multiplying by the COS; as under the Kosmos carry arrangements Europa did not
incur the cost of the exploration well, the Net Risked NPV10 is equal to the
Expected Monetary Value ("EMV").
8. The analysis for the Best and High cases assumes the successful drilling of
an exploration well on each prospect in 2017 followed in each case by appraisal
drilling and then development.
9. The Low estimates of NPV10 for each prospect comprise the net cost to Europa
of an exploration and appraisal well, after allowing for Europa's carry under
the terms of the Kosmos farm-in; this is because discounted cash flow modelling
of each of the Low cases resulted in a more negative NPV10.
10. The Mean estimate of the NPV10 for each prospect has been calculated by
adding the Low, Best and High estimates of NPV10 weighted by 0.3, 0.4 and 0.3
respectively (the Swanson's Mean).
11. The NPV10 estimates form an integral part of fair market value estimations;
without consideration for the exploration risk factor (COS) and other economic
criteria, including market perception of risk, they are not to be construed as
opinions of fair market value.
12. Assumes an oil price of US$60 bbl in 2015 rising to US$92 bbl by 2018 and
inflated at 2% thereafter.
The Beckett, Wilde and Shaw prospects are located SW of Ireland, approximately
125 km from shore. Due to water depths in excess of 1,000m each prospect would
be developed by a Floating, Production, Storage and Offloading unit ("FPSO") in
the event of successful exploration drilling. The prospects are located in
challenging environmental conditions, where high wave heights must be accounted
for in FPSO design. This in turn limits throughput rates. Discovery size will
also alter facility design, particularly with respect to produced gas
handling. ERCE has accounted for these aspects in its forecasting work. ERCE
conducted an independent review of the production, operating expenditure,
capital and abandonment expenditure and associated discounted cash flow
analysis of two Prospects; Beckett and Wilde and used that analysis to derive
value for the Shaw Prospect.
Europa notes that costs used in the NPV10 calculation reflect the US$100/bbl
oil price prevailing over much of the last five years. The Company hopes that
a continued period of lower oil prices might be reflected in lower costs.
Sensitivity analysis suggests that a 20% decrease in capital expenditure might
increase the net NPV10 by approximately 10-15%. Whilst it is too early in the
current low oil price cycle to provide direct evidence of lower costs for
development capital expenditure there has been an immediate reduction in day
rates for drilling rigs. For example, while the valuation assumed a rig rate of
US$600,000 per day, currently rigs capable of drilling offshore Ireland are
available for around US$300,000 per day.
During the course of its independent mapping of FEL 2/13, Europa has identified
new prospects and leads at additional stratigraphic levels. These are in
addition to the Doyle A and Doyle B prospects previously identified on the
licence in the RNS of 8 December 2014 and with gross mean unrisked Prospective
Resources of 123 mmbo for Doyle A and 69 mmbo for Doyle B.
The First Phase of both licences was for three years and is scheduled to end in
July 2016. The work programme obligation for Phase 1 has been fulfilled with
the acquisition of the 2013 3D seismic survey. The Second Phase would be for a
four year term from July 2016 until July 2020 and the work programme for each
licence would include drilling a commitment well. Europa is required to advise
the Irish Authorities of its intentions in April 2016.
The full CPR was not released into the public domain for reasons of
confidentiality arising from the 2015 Atlantic Margin Licensing Round that
closed in September 2015 and for which awards are anticipated during H1 2016.
Subsequent to the reporting period end Kosmos elected to withdraw from FEL 2/13
and 3/13 and to exit from Ireland. Subject to Irish Government approval Kosmos'
85% equity and operatorship will be returned to Europa bringing our interest to
100% in both licences. Europa will seek new partners with whom to take the
licences forward. As a consequence of the substantial independent proprietary
work already invested, Europa is fully prepared to take over operatorship and
to resume farm-out of these licences.
2015 Atlantic Margin Licensing Round
Europa has made multiple applications in the 2015 Atlantic Margin Licensing
Round. Europa has been actively working Atlantic Margin basins since 2011 and
we firmly believe in the technical and commercial case for exploration in this
basin. Our applications represent the culmination of all the technical and
commercial knowledge accumulated during this period. We have benefited from our
previous purchase of over 12,000 km of legacy 2D seismic data and of critical
importance are insights derived from our interpretation of over 2,500 km2 of 3D
seismic data acquired over FEL 2/13 and 3/13.
Our performance in the 2011 Atlantic Margin round was strong: within two years
of award of two Licensing Options we farmed out, converted to Frontier
Exploration Licences and acquired the biggest ever 3D survey offshore Ireland.
As a consequence of the very strong technical work supporting our 2015
applications we are confident that were we to be awarded any new Licensing
Options we would be able to rapidly progress and exceed our 2011 performance.
The round closed on 16 September 2015 and the Irish Authorities reported they
have received 43 applications from major, mid cap and small companies, the
largest number of applications ever received in any Irish offshore licensing
round. Given the record number of applications in the round, and the
significant values demonstrated by the CPR, the Board is confident there will
be interest in partnering with Europa in both our existing licences in the
Porcupine and any new awards.
France
Tarbes val d'Adour - Europa (20%), Vermilion (80% and operator)
In February 2015 Europa announced a farm-out of the Tarbes val d'Adour permit
('Tarbes'), to Vermilion REP SAS, a wholly owned subsidiary of Vermilion Energy
Inc (`Vermilion') a Calgary based international oil and gas producer. Post
farm-out, Europa holds a 20% interest in Tarbes, which is located in the
Aquitaine Basin, onshore France.
Under the terms of the farm-out, Vermilion acquires an 80% interest in, and
operatorship of, Tarbes with Europa holding the remaining 20% interest.
Vermilion will assume 100% of the cost of a work programme, which may include
seismic acquisition/reprocessing and drilling operations up to a total of EUR4.65
million. Once costs above this level are incurred, Europa will be responsible
for its 20% share of future costs.
The farm-out is subject to the relevant approvals being granted by the French
authorities - for the transfer of equity and operatorship to Vermilion and
obtaining an extension for the permit. Both these approval processes started in
H2 2014 and it is hoped that approvals will be granted during H1 2016.
Vermilion have commenced technical work beginning with review and compilation
of all existing seismic and well data into a consolidated database. Work will
proceed with seismic reprocessing and seismic interpretation leading to
delivery of a new prospect inventory in H2 2016. Further work will be
programmed according to the content of the prospect inventory and may include
drilling.
Tarbes contains several oil accumulations that were previously licensed by Elf
but were abandoned in 1985 due to a combination of technical issues and low oil
prices. Two fields, Jacque and Osmets, were drilled using vertical wells and
generated modest production.
Vermilion is the leading exploration and production company currently active in
France with net production of approximately 12,500 boepd. They have an
excellent technical and operational track record with specific experience of
workovers, infill drilling, and secondary recovery opportunities. They are the
ideal partner for us on this permit.
Béarn des Gaves 100%
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Europa holds a 100% interest in the onshore Béarn des Gaves permit in the
Aquitaine basin. The permit contains two prospects: Berenx Deep and Berenx
Shallow. Berenx Deep is an appraisal project having previously been explored
and drilled by EssoRep with two wells, Berenx-1 (1969) and Berenx-2 (1972),
both encountering strong gas shows over a 500m thick gas bearing zone. In 1975
Berenx-2 was re-entered, drill stem tested and flowed gas to surface from the
same carbonate reservoir that delivered 9 tcf and 2 tcf from nearby fields at
Lacq and Meillon.
Europa's in-house technical work indicates that the Berenx deep appraisal
prospect could hold in excess of 500 bcf of recoverable gas resources. In a CPR
dated 31 May 2012, ERC Equipoise estimated gross mean un-risked resources of
277 bcf for the Berenx deep gas play. The difference between Europa's and ERC's
assessment of resources reflects the confidence of each party in mapping in a
geologically complex terrain. Europa was able to map a larger area of closure
and as a consequence larger resources.
Thorough re-evaluation and interpretation of existing seismic and well data on
the permit has resulted in the definition of a new shallow gas prospect, Berenx
Shallow with potential gross mean un-risked resources of 107 bcf. Scoping
economics suggests a value of US$11.5/boe and NPV10 of US$170 million.
The Company's strategy for Béarn des Gaves is to farm-out, drill a well on
Berenx Shallow with the aim of delivering a commercial flow rate and, on the
back of commercial success, to further appraise the shallow prospectivity and
undertake work to de-risk the Berenx Deep appraisal prospect. The Berenx
Shallow prospect can be tested with a comparatively simple exploration well
with an anticipated total depth of 2,500m.
The permit has been renewed for a period of five years from 22 March 2012 and
carries an expenditure commitment of approximately EUR2.5 million. A farm-out
process for the permit is currently underway in tandem with well planning and
permitting for a well location on Berenx Shallow ahead of drilling in the next
18 months. A wellsite has been identified and a lease has been prepared.
United Kingdom
NE Lincolnshire - PEDL180 33.3% (Wressle)
Following a partial relinquishment under the terms of the licence, in June
2015, PEDL180 covers an area of 40 km2 of the East Midlands Petroleum Province
5 km southeast of the Europa operated Crosby Warren field which has been
producing oil for 29 years. Europa has a 33.3% working interest in the block
with its partners Egdon Resources (operator, 25%), Celtique Energie Petroleum
Ltd (33.3%) and Union Jack Oil (8.3%).
The Wressle-1 exploration well was spudded in July 2014 and targeted a
conventional oil prospect, estimated by the operator to hold mean gross
un-risked recoverable resources of 2.1 mmbo. The well reached a total depth of
2,240 metres (1,814 metres TVDSS) in August 2014.
Both the stratigraphy and reservoir horizons encountered by the well were in
accordance with the pre-drill geological forecast which was based on 49 km2 of
3D seismic acquisition acquired in 2012. Petro-physical evaluation indicated
over 30 metres measured thickness of potential hydrocarbon pay in three main
intervals: Penistone Flags with up to 19.8 metres measured thickness (15.9
metres vertical thickness) of potential hydrocarbon pay; Wingfield Flags with
up to 5.6 metres measured thickness (5.1 metres vertical thickness) of
potential hydrocarbon pay; and Ashover Grit with up to 6.1 metres measured
thickness (5.8 metres vertical thickness) of potential hydrocarbon pay.
Wressle was production tested with a dedicated test rig during Q1 2015 and
achieved the following results:
* 710 boepd aggregate from 4 tests in three sandstone reservoirs
* Ashover Grit - 80 bopd and 47 mcfd, free flow
* Wingfield Flags - up to 182 bopd and 0.456 mmcfd, free flow
* Zone 3 Penistone Flags - up to 1.7 mmcfd and up to 12 bopd, free
flow
* Zone 3a Penistone Flags - 77 bopd, swabbed
During June 2015 Extended Well Test ("EWT") operations commenced. The Penistone
Flags Zone 3A interval was pumped for a period of time and achieved average
rates over a three day period of 131 barrels of oil per day ("bopd") and
222,000 cubic feet of gas, equating to 168 boepd. The average producing gas oil
ratio ("GOR") was 1,700 cubic feet of gas per barrel of oil ("scf/stb"). Due to
increasing gas rates the pump was stopped and the well allowed to naturally
flow to surface on a series of decreasing choke sizes from 12/64" down to 8/64"
(being the smallest available). Average rates over a two day period on the 8/
64" choke were 105 bopd with 465,000 cubic feet of gas per day, equating to 182
boepd with an average producing GOR of 4,450 scf/stb. During the course of this
flow testing no associated formation water was produced. The gas production
rate increased to the point where it approached the limits allowed under the
environmental permit and production from the interval was now been halted.
During initial testing in Q1 2015, the Ashover Grit interval achieved free
flowing oil production rates equivalent to 80 bopd and 47 thousand cubic feet
("mcf") of gas per day during a 16 hour main flow period. Analysis of the well
test data indicates that the flow rates were impaired due to a high 'Skin
Factor' and therefore were not representative of the flow rates that could be
attained from this interval when 'cleaned up'. Unfortunately it was not
possible to re-establish flow rates from the Ashover Grit interval during the
EWT, due to either a mechanical problem with the down-hole completion, an
annular blockage, or an impairment of the perforations caused by the well
completion operation. . The partners are examining options that could be
implemented to reduce the Skin Factor and increase production.
In parallel with this activity the partnership is reprocessing the 3D to enable
more detailed geophysical evaluation of the producing horizons. This work will
help inform both a new CPR for the Wressle discovery and the Field Development
Plan. Subject to favourable outcomes to this work the intention is to commence
early production from Wressle.
NE Lincolnshire - PEDL182 33.3% (Broughton)
Following a partial relinquishment under the terms of the licence, in June
2015, PEDL182 covers an area of 19 km2. The Broughton prospect was previously
drilled by BP and flowed oil. Broughton is located on structural trend with
the producing Crosby Warren oil field and the Wressle prospect on PEDL180. The
partnership is reprocessing the 2012 3D survey and will be remapping the Crosby
Warren-Wressle trend. Interpretation of the 3D together with the results of the
Wressle discovery may result in new drillable propects being matured on this
trend.
NE Lincolnshire - PEDL181 50% (Kiln Lane)
Europa has a 50% interest in and is the operator of the PEDL181 licence, with
Egdon Resources UK Limited and Celtique Energie Petroleum Ltd, each holding a
25% interest. PEDL181 is located in the Carboniferous petroleum play and
covers an area of over 540 km2 in the Humber Basin.
Following acquisition of 2D seismic in 2013 and subsequent interpretation and
mapping, a conventional exploration well was drilled at the Kiln Lane prospect
in February 2015 and reached a total depth of 2,291m in March 2015. Whilst
Carboniferous sandstone reservoirs were penetrated in accordance with the
pre-drill geological forecast these proved to be water wet. The well was
plugged and abandoned and the site has now been restored and returned to
agriculture. Whilst a disappointing outcome, the well was drilled safely, on
schedule, on budget and demonstrated fast-track performance in terms of
navigating the planning and permissions process.
Europa is completing post-well analysis of the Kiln Lane-1 well, in particular
the impact of the well result on the remaining prospectivity in the licence.
The partnership will make a decision regarding its continued activity in the
licence during the upcoming year.
Dorking area - PEDL143 40% (Holmwood)
The PEDL143 licence covers an area of 92 km2 of the Weald Basin, Surrey. Europa
is the operator and has a 40% working interest in the licence with partners
Warwick Energy (20%), UK Oil & Gas (20% subject to approval), Egdon Resources
(18.4%), and Altwood Petroleum (1.6%).
The Holmwood prospect is a conventional Jurassic sandstone reservoir with a low
geological risk. The May 2012 CPR estimated Holmwood to hold gross mean
recoverable resources of 5.64 mmbo. Europa considers Holmwood to be one of the
best undrilled conventional exploration prospects in the UK.
The prospect lies south of Dorking within the Surrey Hills Area of Outstanding
Natural Beauty. An application to construct a temporary exploration well on the
site was originally made in 2008. This application was refused in 2011 by
Surrey County Council contrary to their planning officer's recommendation to
approve. An appeal to overturn the decision was heard at a public inquiry in
July 2012. The appeal was dismissed on 26 September 2012.
Europa, along with its partners, applied for an order to quash the decision of
the Secretary of State for Communities and Local Government's appointed
Inspector to dismiss the appeal. On 25 July 2013, the Royal Courts of Justice
gave judgment in favour of Europa and quashed the Inspector's decision. An
appeal was submitted to the Court of Appeal which was subsequently dismissed by
the Court on 19 June 2014. As a result, Europa's appeal against Surrey County
Council's refusal to grant planning permission to drill one exploratory
borehole and undertake a short-term test for conventional hydrocarbons at the
Holmwood prospect was remitted to the Planning Inspectorate for
redetermination. A further planning inquiry was conducted in April and June
2015 and the Planning Inspectorate issued a decision to allow the appeal on 7
August 2015.
(MORE TO FOLLOW) Dow Jones Newswires
October 05, 2015 02:00 ET (06:00 GMT)
The intended Holmwood exploration well is a deviated well and as a consequence
of changes in regulations since submitting the original planning application in
2008 planning permission is also required for the underground well path. A
planning application for the underground well path only was submitted in May
2014 and was heard by the planning committee on 23 September 2015 who approved
the application.
Europa and its joint venture partners will now commence detailed well planning
with the intent of conducting drilling operations in 2016/17. Europa and
Warwick Energy will jointly farm-out some of their combined 60% interest in the
licence. This process has already started.
Production (West Firsby 100%; Crosby Warren 100%; Whisby W4 well 65%)
The three UK fields, plus a small contribution from Wressle, produced an
average of 141 boepd (2014: 165 boepd) during the year under review. The fields
are in decline and whilst we are maximizing opportunities to reduce downtime
and decrease cost we feel the best way to access more production is through the
exploration drill bit. The Wressle discovery offers an opportunity to increase
production.
14th Landward Licensing Round
Europa has submitted bids in the 14th Landward Licensing Round in onshore UK.
None of Europa's applications were for blocks awarded in Tranche 1 and
announced in August 2015. We understand that Tranche 2 will be announced later
in 2015 and we hope that we will be successful.
Southern North Sea - block 41/24 50%
Europa bid with Arenite Petroleum Limited (50%) a private Scottish company in
the 28th Seaward Licensing Round and was conditionally awarded a Promote
Licence on block 41/24 in the Southern North Sea in July 2015. The block lies
immediately offshore the town of Scarborough on the Yorkshire coast. Block 41/
24 was previously partly licensed to Europa Oil & Gas (100%) as a Traditional
Licence (P.1131) in the 21st Round. The licence was relinquished at the end of
the Initial Term as the Zechstein discoveries were assessed as being small and
sub-economic. The focus of work during the Promote Licence phase is to
investigate the potential of the Carboniferous sequence which has largely been
overlooked as a viable target to date within block 41/24 but there are numerous
hydrocarbon accumulations in the onshore extension of the Cleveland Basin and
further south in the East Midlands.
Financials
With a small contribution from Wressle our production this year averaged 141
boepd and generated GBP2.2 million in revenues (2014: 165 boepd and GBP3.9
million). The average oil price achieved in the year was $68.2/bbl (2014:
$107.7/bbl) with the second half of the year $58.3/bbl (H1 $77.8/bbl) which we
believe is more representative of what we might expect next year.
As announced in January 2015, the West Firsby 9 production well requires a
recompletion, but at the prevailing oil price it remains uneconomic to work the
well over for an incremental 8 bopd. While most of the costs associated with
our production are fixed in nature we have implemented various cost saving
measures to help mitigate the effect of the falling oil price and cost of sales
excluding exploration write-off and impairment was GBP1.9 million (2014: GBP2.3
million). We will continue to review and implement cost saving initiatives
across our whole business over the coming year.
Administrative expenses of GBP977,000 (2014: GBP832,000) included: GBP267,000 of
expenditure on new licence applications in the UK 14th Landward Licensing Round
and the Irish Atlantic Margin Licensing Round (2014: GBP97,000); and GBP106,000 of
costs associated with the Tarbes farm-out.
Cash used in continuing operations for the year was GBP0.3 million (2014: cash
generated GBP1.4 million).
In July 2015, we completed a placing of shares and an open offer to existing
shareholders which together raised GBP2.2 million after expenses. Our cash
balance at the period end stood at GBP3.2 million (2014: GBP4.5 million).
We recorded a GBP1.1 million (2014: GBP1.2 million) impairment of the West Firsby
field which arises from lower assumed oil prices and lower recoverable reserves
used in the cash flow model.
We also recorded a GBP2.2 million (2014: nil) write-off of exploration
expenditure associated with the Kiln Lane exploration well on PEDL181.
Results for the year
The Group loss for the year after taxation from continuing activities was GBP
1,784,000 (2014 loss: GBP368,000, with a profit from discontinued operations of GBP
933,000).
Conclusion
This has been an active year. In the UK we have participated in two exploration
wells, made one oil discovery and obtained planning permission for the Holmwood
exploration well. We have successfully farmed out our Tarbes permit in France
and are working to farm-out the Bearn des Gaves permit. We have completed
substantial work on our Irish licences leading to a CPR for FEL 3/13 with gross
mean un-risked Prospective Resources of 1.5 billion boe and for which a 15%
carried interest was ascribed a net mean un-risked NPV10 of US$1.6 billion by
ERCE. Further information will emerge over the coming months as we progress our
application to assume 100% interest and operatorship and commence farm-out
activities. Europa is determined to expand its position in Ireland and has
submitted multiple applications in the 2015 Atlantic Margin licensing Round
with the intention of building a strategic position. Irish awards are
anticipated in H1 2016. Europa has submitted several applications in the 14th
Landward Licensing Round onshore UK with award anticipated in Q4 2015. We are
evaluating plans for the commercialization of the Wressle oil discovery. We are
commencing well planning for the Holmwood prospect. Together with our recently
awarded promote licence in Block 41/24 2016 promises to be an exciting year as
we realise the potential in our existing licences and build our portfolio
through new licence awards. In parallel with this we will continue to actively
review consolidation opportunities and we will not hesitate to act provided
this makes a valid investment proposition for Europa shareholders.
Hugh Mackay, CEO
2 October 2015
The financial information set out below does not constitute the company's
statutory accounts for 2015 or 2014. The financial information has been
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union on a basis that is consistent with the
accounting policies applied by the group in its audited consolidated financial
statements for the year ended 31 July 2015. Statutory accounts for the years
ended 31 July 2015 and 31 July 2014 have been reported on by the Independent
Auditors.
The Independent Auditors' Report on the Annual Report and Financial Statements
for 2015 and 2014 were unqualified, did not draw attention to any matters by
way of emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
Statutory accounts for the year ended 31 July 2014 have been filed with the
Registrar of Companies. The statutory accounts for the year ended 31 July 2015
will be delivered to the Registrar in due course.
Consolidated statement of comprehensive income
For the year ended 31 July 2015 2014
Note GBP000 GBP000
Revenue 2,205 3,878
Other cost of sales (1,900) (2,301)
Exploration write-off 1 (2,205) -
Impairment of producing fields 2 (1,100) (1,203)
Total cost of sales (5,205) (3,504)
------------- -------------
Gross (loss)/ profit (3,000) 374
Administrative expenses (977) (832)
Finance income 55 20
Finance expense (208) (244)
------------- -------------
Loss before taxation (4,130) (682)
Taxation credit 2,346 314
------------ -------------
Loss for the year from continuing operations (1,784) (368)
------------- -------------
Discontinued operations
Profit for the year from discontinued operations - 933
------------- -------------
(Loss)/profit for the year attributable to the (1,784) 565
equity shareholders of the parent
Other comprehensive loss
Those that may be reclassified to profit and
loss:
Recycling of foreign currency translation reserve - (417)
on disposal of operations
-------------- -------------
Total comprehensive (loss)/income for the year (1,784) 148
attributable to the equity shareholders of the
parent
========== ==========
(Loss)/earnings per share (LPS/EPS) attributable Note Pence per Pence per
to the equity shareholders of the parent share share
Basic and diluted LPS from continuing operations (0.86)p (0.21)p
Basic and diluted EPS from discontinued operations - 0.53p
Basic and diluted (LPS)/EPS from continuing and (0.86)p 0.32p
discontinued operations
(MORE TO FOLLOW) Dow Jones Newswires
October 05, 2015 02:00 ET (06:00 GMT)
Consolidated statement of financial position
As at 31 July 2015 2014
Note GBP000 GBP000
Assets
Non-current assets
Intangible assets 1 4,839 3,553
Property, plant and equipment 2 1,562 3,046
------------- -------------
Total non-current assets 6,401 6,599
------------- -------------
Current assets
Inventories 13 32
Trade and other receivables 374 456
Cash and cash equivalents 3,151 4,501
------------- -------------
3,538 4,989
------------- -------------
Total assets 9,939 11,588
========== ==========
Liabilities
Current liabilities
Trade and other payables (1,043) (970)
Current tax liabilities (141) (220)
Derivative (32) (35)
Short-term borrowings (23) (22)
Short-term provisions - (4)
------------- -------------
Total current liabilities (1,239) (1,251)
------------- -------------
Non-current liabilities
Long-term borrowings (141) (164)
Deferred tax liabilities (109) (2,371)
Long-term provisions (2,143) (1,959)
------------- -------------
Total non-current liabilities (2,393) (4,494)
------------- -------------
Total liabilities (3,632) (5,745)
------------- -------------
Net assets 6,307 5,843
========== ==========
Capital and reserves attributable to equity
holders
of the parent
Share capital 3 2,449 2,049
Share premium 15,901 14,080
Merger reserve 2,868 2,868
Retained deficit (14,911) (13,154)
------------- -------------
Total equity 6,307 5,843
========== ==========
These financial statements were approved by the Board of Directors and
authorised for issue on 2 October 2015 and signed on its behalf by:
P Greenhalgh, Finance Director
Company registration number 5217946
Consolidated statement of changes in equity
Attributable to the equity holders of the parent
Share Share premium Merger Foreign Retained Total
capital reserve exchange deficit equity
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 August 1,379 13,160 2,868 417 (15,921) 1,903
2013
Issue of share 670 920 - - 2,120 3,710
capital (net of
costs, note 20)
Profit for the year - - - - 565 565
attributable to the
equity shareholders
of the parent
Other comprehensive -
loss for the year - - (417) - (417)
Share based payment - - - - 82 82
(note 21)
------------- ------------- ------------- ------------- ------------- -------------
Balance at 31 July 2,049 14,080 2,868 - (13,154) 5,843
2014
========== ========== ========== ========== ========== ==========
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 August 2,049 14,080 2,868 - (13,154) 5,843
2014
Issue of share 400 1,821 - - - 2,221
capital (net of
costs, note 20)
Loss for the year - - - - (1,784) (1,784)
attributable to the
equity shareholders
of the parent
Share based payment - - - - 27 27
(note 21)
------------- ------------- ------------- ------------- ------------- -------------
Balance at 31 July 2,449 15,901 2,868 - (14,911) 6,307
2015
========== ========== ========== ========== ========== ==========
Consolidated statement of cash flows
For the year ended 31 July 2015 2014
Note GBP000 GBP000
Cash flows from operating activities
Loss after tax from continuing operations (1,784) (368)
Adjustments for:
Share based payments 27 82
Depreciation 386 475
Exploration write-off 1 2,205 -
Impairment of property, plant & equipment 2 1,100 1,203
Disposal of fixed asset 2 2 -
Finance income (55) (20)
Finance expense 208 244
Taxation credit (2,346) (314)
Decrease in trade and other receivables 79 184
Decrease in inventories 19 1
Decrease in trade and other payables (102) (60)
------------- -------------
Cash (used in)/generated from continuing (261) 1,427
operations
Profit after taxation from discontinued - 933
operations
Adjustments for:
Profit on disposal - (1,034)
------------- -------------
Cash used in discontinued operations - (101)
Income tax payment - (537)
------------- -------------
Net cash (used in)/from operating activities (261) 789
========== ==========
Cash flows from investing activities
Purchase of property, plant and equipment (4) (3)
Purchase of intangible assets (3,394) (514)
Receipt of back costs in connection with farm-in - 300
Expenditure on well decommissioning (4) (363)
Interest received 7 6
------------- -------------
Net cash used in investing activities (3,395) (574)
========== ==========
Cash flows from financing activities
Proceeds from issue of share capital (net of 3 2,221 3,710
issue costs)
Increase in payables relating to share capital 71 -
issue costs
Repayment of borrowings (22) (22)
Finance costs (18) (25)
------------- ------------
Net cash from financing activities 2,252 3,663
========== ==========
Net (decrease)/increase in cash and cash (1,404) 3,878
equivalents
(MORE TO FOLLOW) Dow Jones Newswires
October 05, 2015 02:00 ET (06:00 GMT)
Exchange gain/(loss) on cash and cash equivalents 54 (49)
Cash and cash equivalents at beginning of year 4,501 672
------------- -------------
Cash and cash equivalents at end of year 3,151 4,501
========== ==========
Notes
1 Intangible assets
Intangible assets - Group 2015 2014
GBP000 GBP000
At 1 August 3,553 2,446
Additions 3,491 1,107
Exploration write-off (2,205) -
------------- -------------
At 31 July 4,839 3,553
========== ==========
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
2015 2014
GBP000 GBP000
France (Béarn des Gaves permit) 1,160 1,083
Ireland (FEL 2/13) 149 59
Ireland (FEL 3/13) 318 106
UK PEDL143 (Holmwood) 681 519
UK PEDL180 (Wressle) 2,270 842
UK PEDL181 43 729
UK PEDL182 (Broughton) 218 215
------------- -------------
Total 4,839 3,553
========== ==========
Exploration write-off
PEDL181 (Kiln Lane) 2,205 -
- -------------
Total 2,205 -
========== ==========
The UK PEDL143 exploration licence carries a well commitment in 2016. If the
Group elects to continue with this licence, it will need to fund the drilling
of a well by raising funds or by farming down. If the Group is not able to
raise funds, farm-down, or extend the PEDL143 licence; or elects not to
continue in any other licence, then the impact on the financial statements will
be the impairment of some or all of the intangible assets disclosed above.
In PEDL181, the Kiln Lane exploration well spudded in February 2015 and reached
a total depth of 2,291m in March 2015. Sandstone reservoirs were penetrated in
accordance with the pre-drill geological forecast but these proved to be water
wet. The well was plugged and abandoned and the accumulated cost of seismic and
the well have been written off.
2 Property, plant and equipment
Property, plant & equipment - Group
Furniture & Leasehold Producing Total
computers building fields
GBP000 GBP000 GBP000 GBP000
Cost
At 1 August 2013 45 - 10,785 10,830
Additions 3 - - 3
Transfer from assets held for - 437 - 437
resale
------------- ------------- ------------- -------------
At 31 July 2014 48 437 10,785 11,270
Additions 4 - - 4
Disposal (2) - - (2)
------------- ------------- ------------- -------------
At 31 July 2015 50 437 10,785 11,272
========== ========== ========== ==========
Depreciation, depletion and
impairment
At 1 August 2013 31 - 6,416 6,447
Charge for year 9 - 466 475
Impairment in year - - 1,203 1,203
Transfer from assets held for - 99 - 99
resale
------------- ------------- ------------- -------------
At 31 July 2014 40 99 8,085 8,224
Charge for year 4 23 359 386
Impairment - - 1,100 1,100
------------- ------------- ------------- -------------
At 31 July 2015 44 122 9,544 9,710
========== ========== ========== ==========
Net Book Value
At 31 July 2013 14 - 4,369 4,383
========== ========== ========== ==========
At 31 July 2014 8 338 2,700 3,046
========== ========== ========== ==========
At 31 July 2015 6 315 1,241 1,562
========== ========== ========== ==========
The producing fields referred to in the table above are the production assets
of the Group, namely the oilfields at Crosby Warren and West Firsby, and the
Group's interest in the Whisby W4 well, representing three of the Group's cash
generating units.
The carrying value of each producing field was tested for impairment by
comparing the carrying value with the value in use. The value in use was
calculated using a discounted cash flow model with production decline rates of
7-10%, Brent crude prices rising from $65/bbl in 2016 to $110 in 2020 and a
pre-tax discount rate of 37%. The pre-tax discount rate is derived from a
post-tax rate of 10%, and is high because of the applicable rate of tax in the
UK. Cash flows were projected over the expected life of the fields which is
expected to be longer than 5 years.
There was an impairment of GBP1,100,000 (2014: GBP1,203,000) relating to the West
Firsby site but no impairment at the Crosby Warren site or in respect of the
Whisby W4 well. The main reason for the impairment of the West Firsby site was
lower assumed oil prices combined with reduced reserves and production rate.
Sensitivity to key assumption changes
Variations to the key assumptions used in the value in use calculation would
cause further impairment of the producing fields as follows:
Impairment of
producing
fields
GBP000
Production decline rate (current assumption 7-10%)
10% 112
15% 521
Brent crude price per barrel (current assumption
US$65/bbl in 2016 rising to US$110 in 2020)
10% reduction in the assumed forward price 275
20% reduction in the assumed forward price 617
3 Called up share capital
2015 2014
GBP000 GBP000
Allotted, called up and fully paid ordinary shares of
1p
At 1 August 204,883,024 shares (2014: 137,855,504) 2,049 1,379
Issued in the year 40,004,987 shares (2014: 400 670
67,027,520)
------------- -------------
At 31 July 244,888,011 shares (2014: 204,883,024) 2,449 2,049
========== ==========
Date Type of Number of Issue Raised Nominal
issue shares price net value
of costs
GBP000 GBP000
Ordinary shares issued 10 July 2015 Placing 20,000,000 6p 1,059 200
2015
24 July 2015 Placing 2,630,000 6p 150 26
24 July 2015 Open offer 17,374,987 6p 1,012 174
========== ========= =========
= =
40,004,987 2,221 400
========== ========= =========
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