Europa Oil & Gas (Holdings) plc /
Index: AIM / Epic: EOG / Sector: Oil & Gas
04 April 2017
Europa Oil &
Gas (Holdings) plc (“Europa” or “the Company”)
Interim
Results
Europa Oil & Gas (Holdings) plc, the AIM traded Ireland and UK focused oil and gas
exploration, development and production company, announces its
interim results for the six month period ended 31 January 2017.
Operational highlights
-
Extension of phase 1 of Irish South Porcupine Basin licences FEL
2/13 and FEL 3/13 to 4 July 2017 to
enable existing prospects to be matured and detailed mapping
performed of all potential prospective levels
-
Constructive discussions with a number of large oil companies in
respect of farm-out of Europa’s Irish acreage – discussions are
ongoing with a number of parties and the Company has concluded one
farm-out to Cairn Energy plc, as detailed below
-
Sale of 3.34% interest in PEDL180 & 182 (Wressle) to Union
Jack Oil plc (“Union Jack”) for £0.6 million in cash
-
Agreed sale (conditional on planning approval) of 10% interest
in PEDL180 & 182 (Wressle) to Upland Resources (UK Onshore)
Limited (“Upland”) for up to £1.85 million - £1.3 million in cash,
£0.3 million in Upland shares and a contingent consideration of
£0.25 million in Upland shares
-
Acquisition of Shale Petroleum (UK) Limited (“Shale Petroleum”),
increasing Europa’s interest in PEDL299 (Hardstoft) and PEDL343
(Cloughton)
-
Wressle planning decision has delayed the start of production
pending appeal
Post reporting period events
-
Farm-out of 70% interest in LO 16/19 in the South Porcupine Basin offshore Ireland to Cairn Energy plc which will fully
fund a US$6 million work programme in
summer 2017 including 3D seismic acquisition
-
Farm-out of 12.5% interest in PEDL143 (Holmwood) to Angus Energy
– Europa retains 20% interest and is carried on well costs up to a
cap of £3.2 million
Financial performance
-
Revenue £0.8 million (H1 2016: £0.6 million)
-
Pre-tax loss of £0.2 million, (H1 2016: pre-tax tax loss of £0.6
million)
-
Net cash used in operating activities £0.3 million (H1 2016:
cash used £0.5 million)
-
Reduction in administrative expenses to £218,000 (H1 2016:
£355,000)
-
Cash balance at 31 January 2017
£1.4 million (31 July 2016: £1.7
million)
Europa’s CEO, Hugh Mackay said,
“Since the beginning of the financial year, a number of farm-outs
and sales have been signed across our licence base raising
non-dilutive capital for Europa. The remainder of 2017 will see
Europa participate in high impact development and exploration
projects for which our share of the costs is now funded.
“Offshore Ireland, following our farm-out, 3D seismic will be
acquired and funded by Cairn on LO 16/19 in the Irish Atlantic
Margin. With drilling set to commence in the region this summer, we
are well placed to benefit from any positive results due to a
potential de-risking of 4 billon boe of prospective resources in
Europa’s licences in the Porcupine. We have landed one farm-out in
Ireland and I am confident we will
close out more in our other six licences offshore Ireland, as we look to maintain the momentum
behind our strategy to monetise our asset base, manage risk and
generate value for our shareholders.
“In the UK, we are carried on a potentially transformational
well targeting the conventional Holmwood prospect, which neighbours
the Horse Hill discovery and Brockham oil field in the Weald Basin.
With a 20% interest, we are materially exposed to considerable
upside without having to put any of the Company’s capital at risk
drilling the well. Still in the UK and, subject to planning consent
being granted, we expect our existing production to almost double
to around 220 bopd if the Wressle discovery is brought online
following our planning appeal.”
For further information please visit www.europaoil.com or
contact:
Hugh Mackay / Phil Greenhalgh |
Europa |
+44 (0) 20 7224 3770 |
Matt Goode / Simon Hicks |
finnCap Ltd |
+44 (0) 20 7220 0500 |
Frank Buhagiar / Susie Geliher |
St Brides Partners Ltd |
+44 (0) 20 7236 1177 |
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Chairman’s Statement
Europa has been very active in the six months under review,
managing its portfolio, use of capital and exposure to risk and has
completed:
-
transactions in the UK with Shale Petroleum, Upland and Union
Jack
-
farm-outs in the UK with Union Jack and post period end, Angus
Energy
-
a farm-out in Ireland to Cairn
(post period end)
We note that after a four year farm-out hiatus for all companies
in Atlantic Ireland three farm-outs were announced during
March 2017 by Europa, Providence and Faroe and we are confident that
more Irish farm-outs are in the pipeline. We have demonstrated an
ability and willingness to execute deals and we will not hesitate
to act where we can see value for Europa shareholders.
The oil price and exchange rates are working in our favour. Our
existing oil production of 110 bopd would cover cash required for
operating activities at an oil price of $55. Once Wressle comes on line, our production
is expected to almost double to 210 bopd and will cover cash
required for operating activities at $35 oil. In the UK we have potential to add
further oil production from the greater Wressle area, from success
at the Holmwood exploration well in PEDL143 and from rejuvenation
of the Hardstoft oil field in PEDL299.
At the reporting date we have £1.4 million cash, we are carried
for our 20% interest in the Holmwood exploration well in 2017, we
are carried on our 30% interest in 3D seismic acquisition in summer
2017 in LO 16/19 in Ireland. Once
Wressle planning permission is granted we will secure £1.1 million
cash and £0.3 million paper with completion of the Upland
transaction. We are managing the cost, geological and commercial
risk in our business prudently.
Most importantly, in Ireland
the team are working hard to land further farm-outs in the
Porcupine basin, Padraig basin and greater Corrib area. An
important well is being drilled in the Porcupine basin by
Providence Resources during summer 2017.A successful outcome from
this well would de-risk 4 billion barrels in Europa’s four
Porcupine licences. We believe that Atlantic Ireland is about to
enter a phase of exploration drilling led by the majors. Europa has
a very strong portfolio with exposure to all the hydrocarbon plays
and we are ideally positioned to benefit from exploration success
anywhere in Atlantic Ireland. Over the next two years we will be
maturing more drillable prospects, our target is six, each one will
be a potential company maker.
These are very exciting times for Europa.
Colin Bousfield
Chairman
3 April 2017
Operational review
Europa operates exploration, production and appraisal assets
across three EU countries: Ireland, the UK and France.
Ireland
Europa is a leading operator in Irish exploration. After the
Company was awarded more licences in the 2015 Atlantic Margin
Licensing Round than any other operator (five), Europa is currently
ranked top for number of operated licences and second top for net
operated area under licence (5,818km2).
Four of the licences are in the South
Porcupine basin, targeting prospectivity on multiple levels
including the Cretaceous Fan; Cretaceous Shelf; Pre-rift and
Syn-rift plays. A further two are located in the Greater Corrib
area of the Slyne basin in the vicinity of the producing Corrib gas
field and targeting the Triassic gas play. Europa’s seventh licence
lies in the Padraig basin, a remnant Jurassic basin on the eastern
margin of the Rockall Trough, which provides the Company with
exposure to the conjugate margin Syn-rift and Pre-rift plays and
analogous to the Flemish Pass play offshore Newfoundland.
The Cretaceous Fan play comprises 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 considered to be analogous to the
equatorial Atlantic Margin province that has delivered the Jubilee
and Mahogany oil fields.
Recent discoveries in other Atlantic basins have opened up the
potential for additional plays to be targeted in the Irish Atlantic
Margin. In the Flemish Pass basin offshore Newfoundland, Statoil has pioneered the
Syn-rift play with its Bay du Nord discovery. Offshore Senegal, Cairn’s SNE discovery has opened up
the potential for a Cretaceous Shelf play in the Porcupine. In
addition a Brent province style Pre-rift play is also present in
the basin.
All of these plays are capable of containing very large volumes
of hydrocarbons. This is why major oil companies such as
ExxonMobil, Statoil, ENI, BP, Nexen and Woodside are active in the
basin. Exploration activity is increasing, more 3D is being
acquired and we believe this will lead to up to a dozen wells being
drilled over the next five or six years. In particular Providence’s
Drombeg well that will be drilled in summer could de-risk 4 billion
barrels of oil in Europa’s Porcupine licences.
Farm-out activity has suddenly increased; after a four year
hiatus in Atlantic Ireland three farm-outs were completed during
March 2017 by Europa, Providence and Faroe. Europa has more
farm-outs in the pipeline and we are working hard to deliver
them.
South
Porcupine Basin: FEL 3/13 (Wilde, Beckett & Shaw)
The Cretaceous Fan play is developed in FEL 3/13 which is
located on the east flank of the Porcupine basin. A Competent
Persons Report (“CPR”) by ERC Equipoise confirmed gross mean
unrisked prospective resources of 1,492 million boe and unrisked
NPV10 of US$7 billion across three
Cretaceous fan prospects on the licence: prospects Wilde (gross
mean unrisked prospective resources 428 million boe), Beckett (749
million boe) and Shaw (315 million boe). Prospect Wilde is
considered drill ready with a geological chance of success of 1 in
5. Drill costs are estimated to be US$37
million excluding mobilisation and demobilisation.
There is clear technical and commercial synergy between FEL 3/13
and LO 16/2 and the one year extension to the first phase of FEL
3/13 to 4 July 2017 will enable
completion of technical work and integration with LO 16/2. In
addition to this Europa will continue to mature existing prospects
and perform detailed mapping of all potential prospective levels on
the licence, including the Pre-rift, Syn-rift and Cretaceous plays,
whilst continuing to seek a farm-out partner for drilling.
South
Porcupine Basin: LO 16/2
LO 16/2 covers approximately 522km2 of ground and
adjoins the eastern boundary of FEL 3/13. Europa has identified
three new Pre-rift prospects in the licence on its proprietary 3D
seismic which was acquired in 2013 and covers both LO 16/2 and FEL
3/13. These prospects have combined gross mean unrisked prospective
resources of 1,010 million boe. The Pre-rift play has proved very
successful in the Flemish Pass basin offshore Newfoundland and it is believed that this play
may also be developed in the South
Porcupine basin in addition to the Cretaceous fan play. A
CPR is in draft for two of three prospects in LO 16/2.
South
Porcupine Basin: FEL 2/13 (Doyle A,B,C & Heaney)
Europa has identified a number of Cretaceous submarine channels
on FEL 2/13, which cross the licence from west to east on its
proprietary 948km2 3D seismic survey. Four prospects
with gross mean unrisked prospective resources of 595 million boe
were mapped on 3D seismic. A one year extension of phase 1 was
obtained to enable completion of technical work. A new prospect
inventory is in preparation.
Licence |
Gross mean
unrisked prospective resources million boe |
Source |
FEL 3/13 |
1,492 |
ERCE CPR |
LO 16/2 |
1,010 |
Europa in-house |
FEL 2/13 |
595 |
Europa in-house |
LO 16/19 |
700 |
Europa in-house |
Total |
3,797 |
|
South
Porcupine Basin: LO 16/19
The channels identified in FEL 2/13 feed submarine fans
developed in LO 16/19. The seismic architecture of the channels in
FEL 2/13 contain features consistent with sandstone deposition and
Europa believes that these sandstones are also deposited in the
fans identified on LO 16/19. There is potential for several
Cretaceous submarine fans with gross mean unrisked prospective
resources of 700 million boe. In addition, evidence of gas escape
features on seismic and sea bed pock marks suggest the presence of
an active source rock. Well 43/13-1, which was drilled by BP in
1998 approximately 20km from LO 16/19, saw oil shows and
encountered source rocks.
On 8 March 2017, Europa announced
the farm-out of a 70% interest in LO 16/19 to leading independent
Cairn Energy plc. Under the terms of the farm-out Cairn will fully
fund a US$6 million work programme
including a 3D seismic survey over LO 16/19 to further mature the
prospect inventory towards drillable
status.
Slyne Basin: LO 16/20 and LO 16/21
LO 16/20 and 16/21 are located in the Greater Corrib area of the
Slyne basin in the vicinity of the producing Corrib gas field where
substantial gas infrastructure is already in place. As a result,
unlike licences in the Porcupine, LO 16/20 and 16/21 represent
exploration in a proven basin. The Greater Corrib play comprises
Triassic sandstone reservoirs in tilted fault block structures with
hydrocarbons generated from Carboniferous source rocks. The
licences are partially covered by 3D and extensive 2D historic
seismic. Water depths range from 300 to 2,000 metres.
Europa has identified a number of prospects and leads on both
licences with estimated gross mean unrisked prospective and
indicative resources of 1.0 tcf gas on LO 16/20 and 0.5 tcf gas on
LO 16/21. We are focused on maturing the leads to drillable
prospect status by reprocessing the historic 3D seismic over the
licences and securing a farm-in partner with which to drill a
low-cost, low-risk exploration well. Nexen recently farmed into
Faroe’s adjacent LO 16/23, demonstrating the interest in the
Triassic gas play amongst major oil companies, and this bodes well
for Europa’s farm-out activity.
Were these leads and prospects to be matured to drillable
status, it is expected that the geological chance of success would
be high, drill costs low (reflecting the comparatively shallow
water depth) while the proximity to gas infrastructure is
potentially another highly favourable factor. For example, prospect
TR1 in LO 16/20 lies 16km to the northwest of Corrib in water depth
of 500 metres.
Padraig Basin: LO 16/22
The Padraig is a remnant Jurassic basin on the eastern margin of
the Rockall Trough. The most relevant analogue for the Padraig is
the conjugate margin play offshore Newfoundland in the Flemish Pass basin which
was opened up by Statoil’s Bay du Nord oil discovery. Most industry
efforts are concentrated on exploring for this play in the
South Porcupine basin, but
Europa’s restoration of the conjugate margin prior to Atlantic
seafloor spreading suggests the possibility that the Padraig could
be a better fit with the Flemish Pass basin.
Good quality 2D seismic acquired in 1998 suggests the presence
of structures of significant size. In addition, multiple leads in
both Pre-rift and Syn-rift hydrocarbon plays have been mapped in
water depths ranging from 800 to 2,000 metres. Gross mean unrisked
indicative resources are estimated to be in the range of 300 to 600
million boe.
Europa is currently focused on maturing the leads to drillable
prospect status by utilising the historic 2D seismic and wealth of
high quality technical work previously carried out by major oil
companies. A farm-in partner will be sought with whom to drill an
exploration well.
UK Onshore Production
East Midlands: West Firsby; Crosby
Warren; Whisby-4
The Company produces from three oilfields in the East Midlands:
a 100% working interest in both the West Firsby and Crosby Warren
fields and a 65% non-operated interest in the Whisby-4 well.
Production from the three fields declined in line with
expectations. During the six month period to 31 January 2017, 115 boepd were recovered (H1
2016: 124 boepd). All of the oil is transported by road to the
Immingham refinery.
UK - Development
East Midlands: PEDL180 (Wressle);
PEDL182 (Broughton North)
PEDL180 holds the Wressle oil discovery which lies 5km southeast
of, and along the same structural trend as, Europa’s producing
Crosby Warren field. Wressle was discovered by the Wressle-1
conventional exploration well which was drilled to a total depth of
2,240m (1,814m TVDSS) on 23 August
2014. Petro-physical evaluation of MWD (measurement whilst
drilling) log data indicated over 30m measured thickness of
potential hydrocarbon pay in three main intervals: Ashover Grit;
Wingfield Flags; and Penistone Flags. A CPR issued on 26 September 2016 identified gross 2P reserves on
the structure of 0.65 million boe in the Ashover and Wingfield
Flags and gross 2C contingent resources of 1.86 million boe in the
Penistone Flags.
The CPR also assigned gross mean unrisked prospective resources
of 0.6 million boe at the Broughton North exploration prospect on
PEDL182 which lies adjacent and north of PEDL180. A well at
Broughton was drilled by BP in 1984 and discovered oil. ERCE
Equipoise in its capacity as a Competent Person has assigned a
geological chance of success of 50% to the prospect.
Reservoir engineering analyses indicate an initial production
flow rate of 500 bopd gross from the Ashover Grit interval at
Wressle. On 27 September 2016 Europa
announced the sale of 3.34% interest in PEDL180 & 182 to Union
Jack Oil for a cash consideration of £600,000. On 24 November 2016, Europa agreed the sale of a 10%
interest in PEDL180 & 182 to Upland for a total consideration
of up to £1.85 million. The transaction implies a value of up to
£3.7 million for Europa’s remaining 20% interest in the
licences.
Completion of the sale to Upland is subject to planning, EA and
Field Development Plan (“FDP”) approvals. The FDP was submitted to
the OGA on 8 September 2016.
Following Lincolnshire County Council’s refusal to grant planning
consent for the Wressle development in January 2017, the partners have announced their
intention to appeal and at the same time file a new application
which will include more detailed information to address the
specific concerns outlined by the Council. The partners remain
confident that planning consent will be granted and that Wressle
will be brought into production later in 2017. The other partners
in PEDL180 & 182 are Egdon Resources (operator) 25%, Celtique
Energie 33.3% and Union Jack 11.7%.
UK – Exploration
Weald Basin: PEDL143 (Holmwood)
In Surrey, south of Dorking,
PEDL143 contains the Holmwood conventional oil prospect. Holmwood
is predicted to have the same conventional Jurassic sandstone and
limestone reservoirs which are proven to be productive at the
nearby Brockham oil field and at the Horse Hill oil discovery.
Holmwood has been assigned gross mean prospective resources of 5.6
million boe with a range of 1 to 11 million boe. Were it to come in
at 5.6 million boe, Holmwood would become the fifth largest onshore
oil field in the UK.
Planning permission has been granted to drill a temporary
exploratory borehole to a depth of 1,400m. The well is being
planned for drilling in 2017 and has been assigned a geological
chance of success by Europa of 1 in 3. Following the post period
end farm-out of a 12.5% interest in PEDL143 to Angus Energy, Europa
will be fully carried on its remaining 20% share of the exploration
well costs up to a cap of £3.2 million.
The Horse Hill discovery in PEDL137 lies 8km to the east of and
along-strike in a very similar geological structure to the Holmwood
prospect. Correlation of seismic data indicates that the Holmwood
well will penetrate a similar stratigraphic section to Horse Hill
which in addition to producing 323 bopd from Portland sandstone reservoirs, also produced
oil from micritic limestone formations in the Kimmeridge section.
It is encouraging that Horse Hill yielded 1,365 bopd aggregate
flowrate from two limestone intervals, suggesting it is possible
that the micritic limestone may be a “missed pay” in the Weald
basin.
Europa has a 20% working interest in the licence along with UK
Oil & Gas Investments plc 30%, Egdon Resources 18.4%, Angus
Energy 12.5%, Warwick Energy 10%, Union Jack Oil 7.5% and Altwood
Petroleum 1.6%.
East Midlands: PEDL299 (Hardstoft)
PEDL299 contains the Hardstoft oil field. This was discovered in
1919 by the UK’s first ever exploration well and produced 26,000
barrels of oil from Carboniferous limestone reservoirs. A CPR on
Hardstoft, issued by joint venture partner Upland, identified gross
2C contingent resources of 3.1 million boe and gross 3C contingent
resources of 18.5 million boe in PEDL299. Production testing
methodologies for carbonate reservoirs have evolved since 1919
which it is hoped will lead to commercial oil flowrates being
achieved.
During the period, Europa acquired Shale Petroleum which
resulted in the Company’s interest in the licence increasing from
16.66% to 33.33%. This has subsequently been reduced following the
reassignment of an 8.33% interest in the licence to existing
partner Upland. As a result, Europa’s interest in PEDL299, which is
restricted to the conventional prospectivity, now stands at 25%,
alongside Upland 25% and INEOS, the operator, 50%.
Cleveland Basin: PEDL343 (Cloughton)
PEDL343 is operated by Third Energy and contains the Cloughton
gas discovery made by Bow Valley. An exploration well was drilled
in 1986 and flowed a small amount of gas to surface on production
test from Carboniferous sandstone reservoirs. Europa regards
Cloughton as a gas appraisal opportunity with the critical
challenge being to obtain commercial flowrates from future
production testing operations.
The acquisition of Shale Petroleum increased our equity in the
licence to 45% from 22.5%. This has subsequently been reduced to
35% following a post period end assignment of 10% to existing
partner Arenite Petroleum Limited (“Arenite”). Licence interests
are: Europa 35%; Arenite 15%, Third Energy 20%, Egdon Resources
17.5% and Petrichor Energy 12.5%.
East Midlands: PEDL181
The licence provides exposure to the hydrocarbon potential of
the Humber basin. It has technical synergy with the adjacent
PEDL334 which was awarded to an Egdon Resources led group in the
14th Round for the purpose of conventional and
unconventional exploration.
Southern North Sea: Block 41/24
This is a promote licence awarded in July
2015 over Block 41/24 in the Southern North Sea to a joint
venture comprising Europa and Arenite. The licence was awarded as
part of the 28th Seaward Licensing Round. Block 41/24 adjoins the
Yorkshire coast and contains the
Maxwell gasfield which was discovered in Permian Zechstein
carbonates by Total with the drilling of offshore well 41/24a-1 in
1969. Two follow-up appraisal wells: 41/24a-2 drilled by Total
(1981) and 41/24-3 by Conoco (1992) targeted this fractured
Zechstein carbonate reservoir and flowed gas and condensate. The
exploration emphasis of the licence is to address the Carboniferous
prospectivity in the Namurian and Dinantian sequences. The
adjoining onshore extension of the Cleveland basin contains a number of gas
fields and discoveries including Kirby Misperton, Ebberstone Moor
and Cloughton.
The promote licence is for two years’ duration and requires
financial, technical and environmental capacity to be in place and
a firm drilling (or agreed equivalent substantive activities)
commitment to have been made by the end of the second year.
France
Tarbes Val d’Adour
On 16 February 2015, Europa
announced a farmout of an 80% interest in the licence to Vermilion
Energy. The farmout agreement is subject to the relevant approvals
from the French authorities for the transfer of equity and
operatorship to Vermilion and the granting of an extension to the
permit. The approvals processes started in 2014. The Company
continues to try to progress the necessary approvals, but believes
that it is prudent at this stage to assume that the relevant
approvals will not be forthcoming.
Béarn des Gaves
The permit expired in March 2017.
The carrying value of the permit was written off by the Company in
the previous financial year.
Financials
An improving oil price, together with favourable exchange rates,
offset the natural decline in our production in the period. The
average oil price achieved was US$48.2/bbl (H1 2016: US$41.7/bbl and the average Sterling exchange
rate was $1.26 (H1 2016: $1.51). An average of 115 boepd were recovered
from our three UK onshore fields in the period which generated £0.8
million in revenue (H1 2016: 124 boepd and £0.6 million).
Stringent cost controls continue to be implemented. Cost of
sales were reduced to £721,000 (H1 2016: £765,000) despite spending
£45,000 on renewal of EA permits for the operated production
sites.
Administrative expenses of £218,000 were significantly reduced
(H1 2016: £355,000) as a result of the continuing temporary salary
reduction agreed with head office staff and non-recurrence of
expenditure on Irish licence applications.
Net cash spent on operating activities was £0.3 million (H1
2016: cash spent £0.5 million).
Purchase of intangible fixed assets of £0.8 million (H1 2016:
£0.9 million) was largely offset by receipts following the sale of
interest in PEDL180/182 to Union Jack Oil and Upland Resources. As
a result of the delay in receipt of planning consent for the
Wressle development, only £160,000 of the £1.3 million cash
expected from Upland was received in the period.
Our cash balance at 31 January
2017 was £1.4 million (31 July
2016: £1.7 million).
Conclusion and Outlook
In the last financial year we significantly expanded our licence
base with the award of five licensing options in the Irish Atlantic
Margin and two licences onshore UK. The six months under review saw
a series of corporate actions in line with our ongoing strategy to
actively manage our portfolio and maximise value.
Offshore Ireland, Europa has
unrivalled exposure to all the various play types being targeted.
With activity in the region set to step up with the drilling of the
first of an expected series of new wells this summer, we are in a
strong position to benefit from any exploration success. In the
meantime, we remain focused on advancing all our offshore
Ireland licences by carrying out
further in-house technical work on existing seismic data as well as
securing farm-out partners. We are confident that the post period
end farm-out of LO 16/19 to Cairn will be followed by similar
agreements elsewhere in our Irish portfolio. In exchange for
funding a US$6 million work programme
including the acquisition of 3D seismic in summer 2017, Cairn will
earn a 70% interest in LO 16/19 and as a result, we look forward to
the commencement of operations on the licence in the next few
months.
Onshore UK, we acquired Shale Petroleum, sold two separate
interests in the Wressle discovery; and post period end we
farmed-out a 12.5% interest in Holmwood. As a result, we are fully
funded to pay for our share of the costs required to bring the
Wressle discovery into production (subject to planning consent
being granted), while we also have a carry on an exciting
exploration well targeting the Holmwood prospect in the Weald
Basin. I expect aggregate production from the West Firsby, Crosby
Warren fields and the Whisby-4 well of around 110 boepd in H2.
Excellent progress is being made across our licences and I look
forward to providing further updates in due course.
Hugh Mackay
CEO
3 April 2017
Qualified Person Review
This release has been reviewed by Hugh
Mackay, Chief Executive of Europa, who is a petroleum
geologist with over 30 years' experience in petroleum exploration
and a member of the Petroleum Exploration Society of Great Britain, American Association of
Petroleum Geologists and Fellow of the Geological Society. Mr
Mackay has consented to the inclusion of the technical information
in this release in the form and context in which it appears.
Licence Interests Table
Country |
Area |
Licence |
Field/
Prospect |
Operator |
Equity |
Status |
|
|
|
|
|
|
|
UK |
East Midlands |
DL003 |
West Firsby |
Europa |
100% |
Production |
DL001 |
Crosby Warren |
Europa |
100% |
Production |
PL199/215 |
Whisby-4 |
BPEL |
65% |
Production |
PEDL180 |
Wressle |
Egdon |
30%[1] |
Development |
PEDL181 |
|
Europa |
50% |
Exploration |
PEDL182 |
Broughton |
Egdon |
30%[2] |
Exploration |
PEDL299 |
Hardstoft |
INEOS |
25% |
Exploration |
PEDL343 |
Cloughton |
Third Energy |
35%[3] |
Exploration |
Weald |
PEDL143 |
Holmwood |
Europa |
20%[4] |
Exploration |
|
SNS |
Block 41/24 |
Maxwell |
Arenite |
50% |
Exploration |
|
|
|
|
|
|
|
Ireland |
South Porcupine |
FEL 2/13 |
Doyle A/B/C,
Heaney |
Europa |
100% |
Exploration |
FEL 3/13 |
Beckett,
Wilde
Shaw (lead) |
Europa |
100% |
Exploration |
LO 16/2 |
PR1, PR2. PR3 |
Europa |
100% |
Exploration |
|
|
LO 16/19 |
2 leads |
Cairn[5] |
30% |
Exploration |
|
Slyne
basin |
LO 16/20 |
2 leads |
Europa |
100% |
Exploration |
|
|
LO 16/21 |
4 leads |
Europa |
100% |
Exploration |
|
Padraig
basin |
LO 16/22 |
6 leads |
Europa |
100% |
Exploration |
|
|
|
|
|
|
|
France |
Aquitaine |
Tarbes val
d'Adour |
|
Vermilion |
20% |
Exploration/Appraisal |
Financials
Unaudited consolidated statement of
comprehensive income
|
6 months to
31 January
2017 |
6 months to
31 January
2016 |
Year to
31 July
2016
(audited) |
|
£000 |
£000 |
£000 |
|
|
|
|
Revenue |
811 |
624 |
1,269 |
Other cost of sales |
(721) |
(765) |
(1,282) |
Exploration write-off |
- |
- |
(1,162) |
Total cost of sales |
(721) |
(765) |
(2,444) |
|
---------------------- |
------------------------------ |
------------------------- |
Gross profit/(loss) |
90 |
(141) |
(1,175) |
|
|
|
|
Administrative expenses |
(218) |
(355) |
(593) |
Profit on fixed asset disposal |
- |
- |
28 |
Finance income |
30 |
34 |
64 |
Finance expense |
(109) |
(115) |
(228) |
|
----------------------- |
------------------------------ |
-------------------------- |
Loss before
taxation |
(207) |
(577) |
(1,904) |
Taxation credit |
68 |
209 |
266 |
|
----------------------- |
------------------------------ |
-------------------------- |
Total comprehensive
loss for the period attributed to the equity shareholders of the
parent |
(139) |
(368) |
(1,638) |
|
================== |
================== |
=================== |
|
|
|
|
|
Pence
per share |
Pence per
share |
Pence per
share |
Earnings per share (EPS) attributable
to the equity shareholders of the parent
Attributable to the equity shareholders of the |
|
|
|
Basic and diluted EPS
(note 4) |
(0.06)p |
(0.15)p |
(0.67)p |
Unaudited consolidated statement of
financial position
|
31 January
2017 |
31 January 2016 |
31 July
2016
(audited) |
|
£000 |
£000 |
£000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Intangible assets |
4,543 |
5,125 |
4,453 |
Property, plant and equipment |
970 |
1,463 |
1,060 |
Deferred tax asset |
225 |
101 |
157 |
|
----------------------- |
------------------------------ |
-------------------------- |
Total non-current assets |
5,738 |
6,689 |
5,670 |
|
----------------------- |
------------------------------ |
-------------------------- |
Current assets |
|
|
|
Inventories |
17 |
15 |
23 |
Trade and other receivables |
308 |
254 |
210 |
Cash and cash equivalents |
1,391 |
1,758 |
1,718 |
|
---------------------- |
------------------------------ |
------------------------- |
|
1,716 |
2,027 |
1,951 |
|
---------------------- |
------------------------------ |
------------------------- |
|
|
|
|
Total assets |
7,454 |
8,716 |
7,621 |
|
============== |
============= |
=================== |
|
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
(421) |
(200) |
(444) |
Current tax liability |
- |
(144) |
(148) |
Derivative |
- |
(29) |
- |
Short-term borrowings |
- |
(23) |
- |
|
--------------------- |
----------------------------- |
------------------------ |
Total current liabilities |
(421) |
(396) |
(592) |
|
-------------------- |
----------------------------- |
------------------------ |
Non-current liabilities |
|
|
|
Long-term borrowings |
- |
(129) |
- |
Long-term provisions |
(2,458) |
(2,245) |
(2,347) |
|
-------------------- |
------------------------------ |
------------------------ |
Total non-current
liabilities |
(2,458) |
(2,374) |
(2,347) |
|
--------------------- |
------------------------------ |
------------------------ |
Total liabilities |
(2,879) |
(2,770) |
(2,939) |
|
-------------------- |
------------------------- |
----------------------- |
Net assets |
4,575 |
5,946 |
4,682 |
|
============== |
============= |
================== |
Capital and reserves attributable
to equity holders of the parent |
|
|
|
Share capital |
2,449 |
2,449 |
2,449 |
Share premium |
15,901 |
15,901 |
15,901 |
Merger reserve |
2,868 |
2,868 |
2,868 |
Retained deficit |
(16,643) |
(15,272) |
(16,536) |
|
------------------- |
--------------------------- |
------------------------ |
Total equity |
4,575 |
5,946 |
4,682 |
|
=============== |
================= |
================== |
Unaudited consolidated statement of
changes in equity
|
Share
capital |
Share
premium |
Merger
reserve |
Retained
deficit |
Total
equity |
|
£000 |
£000 |
£000 |
£000 |
£000 |
Unaudited |
|
|
|
|
|
Balance at 1 August 2015 |
2,449 |
15,901 |
2,868 |
(14,911) |
6,307 |
Total comprehensive
loss for the period |
- |
- |
- |
(368) |
(368) |
Share based payments |
- |
- |
- |
7 |
7 |
|
----------------------------- |
----------------------------- |
----------------------------- |
----------------------------- |
----------------------------- |
Balance at 31 January
2016 |
2,449 |
15,901 |
2,868 |
(15,272) |
5,946 |
|
================= |
================= |
================= |
================= |
================= |
|
|
|
|
|
|
Audited |
|
|
|
|
|
Balance at 1 August 2015 |
2,449 |
15,901 |
2,868 |
(14,911) |
6,307 |
Loss for the year attributable to
the equity shareholders of the parent |
- |
- |
- |
(1,638) |
(1,638) |
Share based payments |
- |
- |
- |
13 |
13 |
|
----------------------------- |
----------------------------- |
----------------------------- |
----------------------------- |
----------------------------- |
Balance at 31 July
2016 |
2,449 |
15,901 |
2,868 |
(16,536) |
4,682 |
|
================= |
================= |
================= |
================= |
================= |
Unaudited |
|
|
|
|
|
Balance at 1 August 2016 |
2,449 |
15,901 |
2,868 |
(16,536) |
4,682 |
Total comprehensive loss for the
period |
- |
- |
- |
(139) |
(139) |
Share based payments |
- |
- |
- |
32 |
32 |
|
----------------------------- |
----------------------------- |
----------------------------- |
----------------------------- |
----------------------------- |
Balance at 31 January
2017 |
2,449 |
15,901 |
2,868 |
(16,643) |
4,575 |
|
================= |
================= |
================= |
================= |
================= |
Unaudited consolidated statement of
cash flows
|
6
months to
31 January 2017
|
6 months
to
31 January 2016 |
Year
to
31 July
2016
(audited) |
|
£000 |
£000 |
£000 |
Cash flows from operating
activities |
|
|
|
Loss after taxation |
(139) |
(368) |
(1,638) |
Adjustments for: |
|
|
|
Share based payments |
32 |
7 |
13 |
Depreciation |
90 |
99 |
195 |
Exploration write-off |
- |
- |
1,162 |
Disposal of fixed asset |
- |
- |
(28) |
Finance income |
(30) |
(34) |
(64) |
Finance expense |
109 |
115 |
228 |
Taxation credit |
(68) |
(209) |
(266) |
(Increase) /decrease in trade and
other receivables |
(100) |
120 |
170 |
Decrease / (increase) in
inventories |
6 |
(2) |
(10) |
Decrease in trade and other
payables |
(93) |
(209) |
(84) |
|
----------------------------- |
----------------------------- |
--------------------------- |
Cash used in operating
activities |
(193) |
(481) |
(322) |
|
|
|
|
Income taxes paid |
(144) |
- |
- |
|
----------------------------- |
----------------------------- |
--------------------------- |
Net cash used in operating
activities |
(337) |
(481) |
(322) |
|
================== |
================== |
================== |
|
|
|
|
Cash flows used in
investing activities |
|
|
|
Purchase of property, plant &
equipment |
- |
- |
(1) |
Sale of property |
- |
- |
338 |
Purchase of
intangibles |
(780) |
(915) |
(1,224) |
Receipt of back costs
from licence farm-ins |
760 |
- |
- |
Repayment of
derivative |
- |
- |
(30) |
Interest received |
- |
3 |
4 |
|
----------------------------- |
------------------------------- |
------------------------------- |
Net cash used in investing
activities |
(20) |
(912) |
(913) |
|
================== |
================== |
================== |
Cash flows from
financing activities |
|
|
|
Decrease in payables related to
share capital issue costs |
- |
- |
(71) |
Repayment of
borrowings |
- |
(12) |
(164) |
Finance costs |
(1) |
(10) |
(17) |
|
----------------------------- |
------------------------------- |
--------------------------- |
Net cash used in
financing activities |
(1) |
(22) |
(252) |
|
================== |
================== |
================== |
Net decrease in cash and cash
equivalents |
(358) |
(1,415) |
(1,487) |
|
|
|
|
Exchange gain on cash and cash
equivalents |
31 |
22 |
54 |
Cash and cash equivalents at
beginning of period |
1,718 |
3,151 |
3,151 |
|
----------------------------- |
------------------------------- |
--------------------------- |
Cash and cash equivalents at end
of period |
1,391 |
1,758 |
1,718 |
|
================== |
================== |
================== |
Notes to the consolidated interim
statement
1 Nature of
operations and general information
Europa Oil & Gas (Holdings) plc ("Europa Oil & Gas") and
subsidiaries' ("the Group") principal activities consist of
investment in oil and gas exploration, development and
production.
Europa Oil & Gas is the Group's ultimate parent Company. It
is incorporated and domiciled in England and Wales. The address of Europa Oil & Gas's
registered office head office is 6 Porter Street, London W1U 6DD. Europa Oil & Gas's shares
are listed on the London Stock Exchange AIM market.
The Group's consolidated interim financial information is
presented in Pounds Sterling (£), which is also the functional
currency of the parent Company.
The consolidated interim financial information has been approved
for issue by the Board of Directors on 3
April 2017
The consolidated interim financial information for the period
1 August 2016 to 31 January 2017 is unaudited. In the opinion of
the Directors the condensed interim financial information for the
period presents fairly the financial position, and results from
operations and cash flows for the period in conformity with the
generally accepted accounting principles consistently applied. The
condensed interim financial information incorporates unaudited
comparative figures for the interim period 1
August 2015 to 31 January 2016
and the audited financial year to 31 July
2016.
The financial information contained in this interim report does
not constitute statutory accounts as defined by section 435 of the
Companies Act 2006. The report should be read in conjunction with
the consolidated financial statements of the Group for the year
ended 31 July 2016.
The comparatives for the full year ended 31 July 2016 are not the Company’s full statutory
accounts for that year. A copy of the statutory accounts for that
year has been delivered to the Registrar of Companies. The
auditors’ report on those accounts was unqualified and did not
contain a statement under section 498 (2) – (3) of the Companies
Act 2006.
Given the cash inflow from the Group’s producing assets, and the
expectation of cash-flow from development assets including the
expected receipt of £1.1 million cash from Upland in connection
with the sale of interest in PEDL180 and 182, the Directors have
concluded, at the time of approving the consolidated interim
financial information, that there is a reasonable expectation,
based on the Group’s cash flow forecasts, that the Group can
continue in operational existence for the foreseeable future, which
is deemed to be at least 12 months from the date of signing the
consolidated financial information. Accordingly they continue to
adopt the going concern basis in preparing the consolidated interim
financial information.
2 Summary of
significant accounting policies
The condensed interim financial information has been prepared
using policies based on International Financial Reporting Standards
(IFRS and IFRIC interpretations) issued by the International
Accounting Standards Board (“IASB”) as adopted for use in the EU.
The condensed interim financial information has been prepared using
the accounting policies which will be applied in the Group’s
statutory financial information for the year ended 31 July 2017.
This results in the adoption of various standards and
interpretations, none of which have had a material impact on the
interim report or are expected to have a material impact on the
financial statements for the full year.
3 Share
capital
|
6 months to 31
January 2017 |
6 months to 31 January
2016 |
Year to
31 July
2016
(audited) |
Allotted, called up and fully
paid ordinary shares of 1p |
Shares |
Shares |
Shares |
Start and end of period |
244,888,011 |
244,888,011 |
244,888,011 |
|
|
|
|
|
£000 |
£000 |
£000 |
Start and end of period |
2,449 |
2,449 |
2,449 |
4 Earnings
per share (EPS)
Basic EPS has been calculated on the loss after taxation divided
by the weighted average number of shares in issue during the
period. Diluted EPS uses an average number of shares adjusted to
allow for the issue of shares, on the assumed conversion of all
in-the-money options.
The Company’s average share price for the period was 4.86p which
was below the exercise price of all 15,365,000 outstanding share
options (H1 2016: 3.69p which was below the exercise price of all
11,965,000 outstanding share options).
The calculation of the basic and diluted earnings per share is
based on the following:
|
6
months to
31 January 2017 |
6 months
to
31 January 2016 |
Year
to
31 July
2016
(audited) |
|
£000 |
£000 |
£000 |
Losses |
|
|
|
Loss for the period attributable to
the equity shareholders of the parent |
(139) |
(368) |
(1,638) |
|
============ |
============ |
============ |
Number of shares |
|
|
|
Weighted average number of ordinary
shares for the purposes of basic and diluted EPS |
244,888,011 |
244,888,011 |
244,888,011 |
5
Taxation
Consistent with the year-end treatment, current and deferred tax
assets and liabilities have been calculated at tax rates which were
expected to apply to their respective period of realisation at the
period end.
6 Post
reporting date
Farm-out of 12.5% interest in PEDL143 (Holmwood) to Angus Energy
- Europa retains 20% interest and is carried on well costs up to a
cap of £3.2 million.
Farm-out of 70% interest in LO 16/19 in the South Porcupine Basin offshore Ireland to Cairn Energy plc who will fully
fund a US$6 million work programme in
summer 2017 including 3D seismic acquisition.
[1] Reducing to 20% following the farm-out to Upland
[2] Reducing to 20% following the farm-out to Upland
[3] Following assignment to Arenite
[4] Following the farm-out to Angus Energy
[5] Following the farm-out to Cairn