Europa Oil & Gas (Holdings) plc /
Index: AIM / Epic: EOG / Sector: Oil & Gas
04 April 2018
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 2018.
Operational highlights
-
Delivering on strategy to map and de-risk prospects across
portfolio of offshore Ireland
licences - discussions ongoing with major operators regarding
farm-outs
-
Six prospects with combined potential of 2.5 trillion cubic feet
(tcf) of Gas Initially In Place (“GIIP”) mapped on LO 16/20 in the
Slyne basin, adjacent to the producing Corrib gas field
-
Prospective resources therefore expected to be significantly
higher than the 1 tcfpreviously mapped on the licence
-
Inishkea prospects upgraded to flagship asset status with
follow-up work being prioritised
-
Completed reprocessing of 1,548km2 3D seismic
covering FEL 1/17 and FEL 3/13 in the South Porcupine:
-
Dramatically improved the character, continuity and position of
pre-rift fault blocks on FEL 1/17
-
New insights for the Cretaceous fan prospects in FEL 3/13
including the best evidence yet of hydrocarbons including evidence
of an updip pinchout, a gas/oil contact and conformance to
structure
-
Interpretation work will lead to a revised prospect inventory
later in2018
-
Completed 3D seismic survey over Cairn Energy operated LO 16/19
in the South Porcupine in which
Europa has a 30% carried interest:
-
Evaluation of several new venture opportunities at various
stages in the asset lifecycle to add a third area of activity
alongside onshore UK and offshore Ireland
Financial performance
-
Revenue £0.8 million (H1 2017: £0.8 million)
-
Pre-tax loss of £0.5 million, (H1 2017: pre-tax tax loss of £0.2
million)
-
Net cash from operating activities £16k (H1 2017: cash used £0.3
million)
-
Cash balance at 31 January 2018:
£2.3 million (31 July 2017: £3.6
million)
Post reporting period events
-
Board restructuring, with the appointment of Simon Oddie, a highly experienced petroleum
engineer, technical consultant, manager and investment adviser in
the upstream oil and gas sector, as Non-Executive Chairman
-
Also appointed Brian O'Cathain, a geologist and petroleum
engineer with over 30 years’ experience in senior technical and
commercial roles in upstream oil and gas exploration and production
companies, as a Non-Executive Director
-
Environment Agency “minded to award” a bespoke environmental
permit for drilling and testing the Holmwood exploration well in
PEDL143 in the Weald Basin, Surrey
Europa’s CEO, Hugh Mackay
said, “Technical work across our offshore Ireland licences is progressing on schedule
and most importantly the 3D seismic PSDM reprocessing projects are
producing the uplift in data quality we were looking for. In
the Slyne Basin next to the Corrib gas field we have been impressed
with the results to date and are therefore fast tracking further
work on our Inishkea prospects in LO 16/20 so that we are in a
position to drill a well targeting “company-making” gas resources
in a proven play close to existing infrastructure as early as 2019.
In the South Porcupine, improved
mapping on reprocessed 3D seismic will lower geological risk for
several prospects that make up the 2 billion barrels of oil
equivalent (“boe”) of audited prospective resources and 2.2 billion
boe of prospective in-house resources that have already been
mapped. An updated prospect inventory for three of our
South Porcupine licences will be
released in 2018, which will coincide with the relaunch of the
farm-out process as we look to secure partners to drill wells.
“Onshore UK, we continue to believe the case for developing the
Wressle discovery in North Lincolnshire is strong and that the
Holmwood prospect in the Weald Basin represents one of the best
onshore UK drilling opportunities on a risk/reward basis. We
will be working hard with our partners to satisfy all outstanding
matters so that both projects can be advanced. Outside our
existing portfolio, we are actively looking to add a third core
area of interest and are evaluating several opportunities at
various stages of development. With their considerable
experience and extensive network of contacts within the sector,
recent Board appointments Simon
Oddie and Brian O'Cathain, are already making valuable
contributions to this process. I am excited for Europa’s
future and I look forward to updating the market on our
progress.”
For further information please visit www.europaoil.com or
contact:
Hugh Mackay / Phil Greenhalgh |
Europa |
+44 (0) 20 7224 3770 |
Matt Goode (corporate finance) |
finnCap Ltd |
+44 (0) 20 7220 0500 |
Simon Hicks (corporate finance) |
finnCap Ltd |
+44 (0) 20 7220 0500 |
Emily Morris (corporate
broking) |
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
This is my first Chairman’s Statement since joining Europa post
period end. The activity undertaken and the progress made during
the half year period serve to underline the reasons why I was
delighted to take over the Chairmanship of the Company. In
terms of the quality of its asset base, Europa punches well above
its weight: offshore Ireland, the
Company has an industry leading licence position in a region that
in the last few years has seen the entry of blue-chip operators
targeting a diverse range of plays; onshore UK, it is the third
largest producer of oil with a portfolio of multi-stage licences
including development, appraisal and exploration projects. Together
with a first-rate management and technical team that in my view any
of the majors would be proud to have, I believe the building blocks
are in place for Europa to generate significant value for
shareholders.
Offshore Ireland
Across our portfolio of seven offshore Ireland licences, which cover an area of
5,818km2, we have already identified 4.7 billion boe of
Gross Mean Un-risked Prospective Resources (“GMUPR”) and 2.5 tcf
GIIP. 2 billion boe of the oil resources have been audited by a
Competent Person. Volumetrics of this quantum are enough to
move the needle of major oil companies let alone a company of
Europa’s size, and help explain the presence of ExxonMobil,
Statoil, Total, Nexen, ENI, and Woodside in the region.
Furthermore, our licences are not dependent on success at one
play. Instead they are exposed to all six play types
currently being targeted by the majors. These include the
Cretaceous Fan play, which has proved to be so prolific offshore
West Africa, the Cretaceous shelf,
which has yielded impressive results offshore Senegal, and the syn-rift play, which opened
up offshore Newfoundland. In
addition to these, Europa holds two licences in the Slyne basin, LO
16/20 and LO 16/21 which, thanks to being located close to the
Corrib gas field, are part of a proven hydrocarbon play in
comparatively shallow water and are therefore lower risk and lower
cost than other Atlantic Ireland basins.
During the period technical work was carried out by our team to
further de-risk the existing prospect inventory and at the same
time map additional targets across our licence base. We are
particularly excited by the progress made at LO 16/20. Analysis of
recently released well data taken from the 18/20-7 exploration
well, which was drilled in 2010 by Shell 7km from the Corrib gas
field onto the Corrib North structure, has revealed the well
encountered a 70m gas column in the
same Triassic sandstone reservoir as the Corrib field. As
drilling was terminated in the reservoir, we believe the full gas
column could be up to 170m while the
surface area of the structure could extend to 5.75km2.
The presence of a gas reservoir substantially de-risks not just
Corrib North but other prospects on the licence and, taken
together, we estimate LO 16/20 may contain 2.5 tcf GIIP. Based on
the ~80% recovery factor at Corrib, proximity to existing
infrastructure, and the growing role of gas in Ireland’s energy
mix, work on LO 16/20 and the Inishkea prospects in particular is
being prioritised as we look to mature the prospects to drillable
status and, subject to meeting technical and commercial criteria,
identify a firm drilling target for a well in 2019 or 2020.
The post-period end appointment of Brian O’Cathain as a
Non-Executive Director is a major positive for our ambitions in the
Greater Corrib Area. As well as providing us with the benefit
of his over thirty years’ experience in senior technical and
commercial roles in upstream oil and gas exploration and production
companies, including Shell, Enterprise Oil and Tullow Oil, as
Managing Director of Enterprise Oil Ireland, Brian advanced
the Corrib Gas Field to consent to plan of development. His
intimate knowledge of Corrib and the Slyne basin will therefore
prove invaluable as we continue to de-risk the Inishkea prospects
we have identified on LO 16/20.
Our strategy for all our licences in Ireland is to build a prospect inventory based
on 3D seismic, de-risk prospects to the point that they are
drill-ready and secure a partner for drilling. Following last
year’s farm-out of a 70% interest in LO 16/19 in the South Porcupine basin to Cairn Energy, we have
six licences that we will be looking to farm-out. Based on
the results to date, we are confident the technical work programmes
we are currently running, which are focused on delivering six
potentially company-making drill ready prospects by the end of
2018, will result in additional farm-outs being secured.
Onshore UK
Our three producing fields in the East
Midlands petroleum province recovered an average of 97 boepd
during the period, generating sufficient revenues to cover our
operating expenses, another differentiator between Europa and many
of our peers. There is a readymade opportunity in our
portfolio to more than double our existing production to over 200
barrels of oil per day (“bopd”) this year by bringing the Wressle
discovery on line. Following two unsuccessful applications for
planning consent in 2017 (despite being recommended by North
Lincolnshire Council’s own planning officers) the operator, Egdon
Resources, is currently preparing two new planning applications for
submission to the Council in order to gain consent for Wressle to
be developed.
Elsewhere in the UK, we have been working with the relevant
authorities to discharge the planning conditions ahead of
commencing drilling operations to test the 5.6 million barrel
Holmwood prospect on PEDL143, which lies close to the Horse Hill
discovery and Brockham field in the Weald Basin, Surrey. To
date 22 of the 23 conditions have been discharged. A decision
for the remaining Condition 19 (Construction Transport Management
Plan) was recommended for approval by Surrey County Council
planning officers but the decision has been deferred twice by the
planning committee. As well as resubmitting the CTMP to Surrey
County Council, we have submitted an appeal to the Planning
Inspectorate. We remain hopeful that Holmwood will be drilled in
2018 and under the terms of farm-outs secured with Angus Energy and
Union Jack Oil, Europa’s 20% share of drilling costs at Holmwood
are carried.
Outlook
For a junior oil and gas company to succeed, the quality of the
assets and the management / technical teams working them are
key. Europa ranks highly on both counts. Our portfolio
of projects includes Holmwood, which we regard as the best
undrilled conventional prospect onshore UK. Our
industry-leading licence position offshore Ireland includes our flagship Inishkea
prospects on LO 16/20 in the Greater Corrib Area which, subject to
drilling success, have the potential to be not only a game-changer
for Europa but also for Ireland’s medium-term energy needs as
production from the Corrib field declines.
The strength of our asset base is down to the work of our
technical team which continues to make a valuable contribution not
only towards de-risking our own prospect inventory but also
advancing the region’s status as an emerging hydrocarbon
hotspot. We are keen to fully capitalise on our team’s proven
track record and, it is with this in mind, that we are actively
evaluating new ventures. I am excited to be a part of the
Europa story and I look forward to reporting on our progress going
forward, as we look to build a leading oil and gas company on
AIM.
Simon Oddie
Chairman
3 April 2018
Operational review
Offshore Ireland: Exploration
Europa’s industry leading licence position offshore Ireland is comprised of seven licences
covering 5,818 km2, six play types, and three
basins. To date over 30 prospects and leads have been mapped
on 3D seismic across the portfolio which potentially hold GMUPR of
4.7 billion boe and GIIP of 2.5 tcf (Europa estimates).
Four licences are located in the South
Porcupine Basin: FELs 2/13, 3/13, and 1/17 (all 100% held)
and LO 16/19 (30% following the 2017 farm-out of a 70% interest in
Cairn Energy). All are exposed to a variety of different play
types including the Cretaceous Fan play, the Cretaceous Shelf,
pre-rift and syn-rift plays. LO 16/20 and LO 16/21 are
located in the Greater Corrib area of the Slyne basin close to the
producing Corrib gas field. These two licences are targeting
the Triassic gas play. The Company’s seventh licence is located in
the Padraig basin, a remnant Jurassic basin on the eastern margin
of the Rockall Trough, which is exposed to the conjugate margin
syn-rift and pre-rift plays analogous to the Flemish Pass play
offshore Newfoundland.
During the half year period under review, work programmes have
been advancing across all seven licences in line with the Company’s
objective to increase the number of drill-ready prospects in its
portfolio to six from the current two (Wilde and Beckett in FEL
3/13) by the end of 2018.
Based on the results of technical work carried out during the
period, together with its proximity to existing infrastructure at
the Corrib gas field, LO 16/20 in the Slyne basin is regarded by
the Company as its flagship project in Ireland. Further work
on LO 16/20 is to be fast tracked with a view to delivering a new
prospect inventory in early 2019 and, subject to meeting technical
and commercial criteria, identifying a firm drilling target for an
exploration well in 2019 or 2020.
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 adjacent to the producing Corrib gas field. Corrib
delivers gas via pipeline to the Bellanaboy processing plant which
has a gross plant capacity of approximately 350 million cubic feet
of gas per day. Corrib currently provides approximately 60% of
Ireland's natural gas consumption
and constitutes approximately 95% of Ireland's gas production. Unlike licences in
the Porcupine Basin, LO 16/20 and 16/21 are targeting a low risk
infrastructure-led play in the Greater Corrib area and represent
exploration in a proven basin comprised of Triassic sandstone
reservoirs in tilted fault block structures with gas generated from
Carboniferous source rocks.
Europa has to date identified on historic 3D and 2D seismic 2.5
tcf GIIP in six prospects and leads in the Triassic Gas hydrocarbon
play on LO 16/20 (see table below):
Prospect |
GIIP bcf |
Corrib North discovery |
40 |
Inishkea |
1,098 |
Inishkea NW |
1,094 |
Inishkea W |
212 |
Corrib NW |
26 |
Bofin lead |
69 |
Total bcf |
2,539 |
Assuming an estimated 80% recovery factor at the Corrib gas
field, 2.5 tcf GIIP would translate into commercially significant
prospective resources. Thanks to the nearby Corrib gas field,
not only is the Triassic Gas hydrocarbon play proven to work both
technically and commercially in the Slyne basin, but existing gas
infrastructure potentially offers a fast track route to
commercialisation. Relatively shallow water depths of
(400-600m) will lead to much lower
drilling costs than in other deeper water Atlantic Ireland
basins. Using a prevailing rig rate of US$120,000 per day, we estimate costs for a well
on the Inishkea prospect would be US$28
million. As a result of the lower risk (compared to
other Atlantic Ireland basins where play risk has yet to be
conclusively proven by a commercially successful exploration
discovery), lower drill costs, potential access to existing
production infrastructure and the increasing role of gas in
Ireland’s energy mix, further work on LO 16/20 is being fast
tracked.
The next steps involve reprocessing the historic 3D seismic data
to Pre-Stack Depth Migration (“PSDM”) which is expected to
significantly improve clarity and definition of the existing
prospects and enable some of these to be upgraded to drillable
status during 2019. In addition, a further legacy 3D seismic
dataset over the Corrib field will become available in the public
domain in May and December 2018 which
we understand provides much improved definition of the Corrib field
and also LO 16/20’s Corrib North gas discovery. In tandem
with the above work, OPC, a specialist subsurface and production
engineering group, is working on porosity and permeability
modelling, development scenarios and costs.
South
Porcupine Basin
Europa’s four licences in the South
Porcupine Basin are estimated to hold 2 billion boe of
audited prospective resources across five prospects and a further
2.2 billion boe of prospective in-house resources across 12
prospects and leads. Below is a table summarising the GMUPR
across Europa’s four licences in the South Porcupine Basin:
Licence
mmboe
Source
FEL 3/13
1,492 ERCE
Competent Persons Report (“CPR”)
FEL 1/17
898 ERCE CPR
553mmboe + Europa in-house 345mmboe
FEL 2/13
1,124 Europa
in-house
LO 16/19
700 Europa
in-house
Total
4,214
The above licences are all covered by 3D seismic. A major
programme of 3D seismic PSDM reprocessing is underway. To date,
PSDM reprocessing over FEL 3/13 and 1/17 has been completed and the
results, which have had a positive impact on prospect mapping, will
be released in 2018. PSDM reprocessing over FEL 2/13 is
nearing completion and an updated prospect inventory will also be
released in 2018. The major improvement in prospect mapping
and resulting reduction in geological risk arising from the new
reprocessed data will serve as the trigger for a relaunch of the
farm-out process for our South
Porcupine licences in Q2 2018.
Europa also has a 30% interest in the Cairn-operated LO 16/19 on
the west side of the South
Porcupine. 3D seismic was acquired in mid-2017 and delivery
of a final processed product is expected in Q4 2018 leading to a
prospect inventory in 2019. As a result of the successful farm-out
announced in April 2017, Europa is
carried on this work programme.
FEL 3/13 (Wilde, Beckett &
Shaw)
A CPR by ERC Equipoise confirmed GMUPR of 1,492 million boe and
un-risked NPV10 of US$7 billion
across three Cretaceous fan prospects on FEL 3/13: prospects Wilde
(gross mean un-risked 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.
Further technical work is being carried out on the licence to
mature existing prospects and leads, particularly in the pre-rift
and syn-rift plays, to drill ready status. The work, which includes
PSDM of 3D seismic data acquired in 2013. New insights for the
Cretaceous fan prospects include the best evidence yet of
hydrocarbons including updip pinchout, a gas/oil contact and
conformance to structure
FEL 1/17 (Ervine, Edgeworth, PR3)
FEL 1/17 covers an area of 522 km2 and adjoins the
eastern boundary of FEL 3/13. Europa has identified three
pre-rift prospects in the licence with combined GMUPR of 898
million boe based on its proprietary 3D seismic. The pre-rift play
comprises Jurassic reservoirs in tilted fault block structures; the
analogue is the North Sea Brent Province. Europa has
completed a 3D PSDM reprocessing project to de-risk the pre-rift
prospects in the licence. The results will be published later in
2018.
FEL 2/13 (Doyle: A west; A centre; A
east; B; C, Kilroy, Keane, Kiely, Lead F) and LO 16/19 (2
leads)
Europa has identified nine prospects in the pre-rift, syn-rift
Cretaceous apron and Cretaceous slope plays on FEL 2/13 with
combined GMUPR of 1,124 million boe. In addition, Cretaceous
submarine channels have been identified on FEL 2/13, which cross
the licence from west to east. These channels 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. The licence has the potential to hold
several Cretaceous submarine fans with GMUPR of 700 million
boe. In addition, evidence of gas escape features on seismic
and sea bed pock marks over FEL 2/13 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. A 3D PSDM reprocessing project on FEL
2/13 commenced in October 2017 and is
scheduled for completion in Q2 2018.
Padraig Basin: LO 16/22
The Padraig Basin 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. Recent geochemical
studies on light oil recovered from seabed cores show the presence
of the bisnorhopane biomarker and indicates an affinity with Late
Jurassic sourced oil similar to the Dooish discovery in Rockall and
West of Shetland oil fields.
Structures of significant size have been identified on 2D
seismic acquired in 1998. 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 un-risked
indicative resources are estimated to be approximately 500 million
boe. Work is underway to mature the leads to drillable
prospect status using historic 2D seismic and high quality
technical work previously conducted by major oil companies.
UK - Onshore Production
East
Midlands: West Firsby; Crosby Warren; Whisby-4
Europa produces from three oilfields in the East Midlands: West Firsby (100% working
interest); Crosby Warren (100% working interest); and the Whisby-4
well (65% non-operated interest). During the six months to
31 January 2018, 97 boepd were
recovered (H1 2017: 115 boepd). All 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 in August
2014. Production testing in 2015 delivered a combined
flowrate of over 700 boepd from three reservoir intervals: Ashover
Grit; Wingfield Flags; and Penistone Flags. Reservoir engineering
analyses indicate an initial production flow rate of 500 bopd gross
from the Ashover Grit interval at Wressle.
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
was undertaken by ERCE Equipoise, which at the same time assigned
gross mean un-risked prospective resources of 0.6 million boe and a
geological chance of success of 50% to the Broughton North
exploration prospect on PEDL182 which lies adjacent and north of
PEDL180. In 1984, a well drilled by BP discovered oil at
Broughton.
Europa holds a 30% working interest in PEDLs 180 & 182. On
24 November 2016, Europa agreed the
sale of a 10% interest in the two licences to Upland Resources.
Completion of the sale was subject to planning and Field
Development Plan (“FDP”) approvals. Following the decision by the
Planning Inspector in January 2018 to
reject the appeals by the operator Egdon against the two planning
refusals by North Lincolnshire County Council’s Planning Committee,
Upland elected to withdraw from the sale agreement and Europa has
repaid the £160,000 deposit to Upland in the period.
The partners continue to believe Wressle represents an excellent
development opportunity. Two new planning applications are
currently being prepared ahead of submission to North Lincolnshire
Council.
UK – Exploration
Weald Basin: PEDL143 (Holmwood)
PEDL143 is located in the Weald Basin, Surrey and contains the Holmwood conventional
oil prospect. In a CPR dated June
2012, ERCE Equipoise assigned Holmwood gross mean
prospective resources of 5.6 million boe with a range of 1 to 11
million boe. At 5.6 million boe, Holmwood would become the
fifth largest onshore oil field in the UK. Following the
exploration success at Horse Hill 8km to the East, Europa rates the
geological chance of success at Holmwood as 1 in 2.
Planning permission has been granted to drill a temporary
exploratory borehole to a depth of 1,400 metres. 22 of the 23
planning conditions have been discharged. A decision for the
one remaining condition, a Construction Transport Management Plan
(“CTMP”) was recommended for approval by Surrey County Council
planning officers, but a final decision has been deferred by the
planning committee on two occasions. In addition to resubmitting
the CTMP to Surrey County Council, Europa has submitted an appeal
to the Planning Inspectorate. Subject to the CTMP condition being
discharged we will look to drill Holmwood in late 2018.
In March 2017 we announced the
farmout of a 12.5% interest in PEDL143 to Angus leaving Europa with a 20% interest.
Together with a 2016 farmout to Union Jack, Europa has a carry on
well costs up to a cap of £3.2 million. In addition to
targeting the established Portland
sandstone reservoirs, which produced at a rate of 323 bopd over an
8.5 hour period at Horse Hill, the Holmwood well will also test the
Kimmeridge Limestone, an emerging play in the Weald Basin.
Horse Hill produced a combined 1,365 bopd from two limestones in
the Kimmeridge Clay Formation over a period of up to 7.5 hours.
East
Midlands: PEDL299 (Hardstoft)
The Hardstoft oil field 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 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
at Hardstoft. Production testing methodologies for carbonate
reservoirs have evolved since 1919, which it is hoped will lead to
commercial oil flowrates being achieved. Europa’s interest in
PEDL299, which is restricted to the conventional prospectivity, is
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. Europa holds a 35% interest in
PEDL343 alongside Arenite 15%, Third Energy 20%, Egdon Resources
17.5% and Petrichor Energy 12.5%.
Southern North Sea: Block 41/24
During the period, Europa announced the sale of its 50% interest
in Promote Licence P2304 (UKCS Block 41/24) to Egdon along with
joint venture partner Arenite Petroleum Limited (“Arenite”) which
also sold its 50% interest to Egdon as part of the same
transaction. P2304 is located to the immediate south of Egdon’s
100% owned licence P1929 (UKCS Blocks 41/18 and 41/19) offshore
North Yorkshire. £46,000 spent on
the licence was written off in the period.
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.
New Ventures
We are actively evaluating high impact new venture opportunities
outside of our core areas in Ireland and the UK. This has included
North Africa, Western Europe, Central Europe and east Atlantic seaboard.
Methodologies applied include both pro-active country selection and
opportunity screening and selection as well as reacting to
opportunities as they are presented. Opportunities evaluated
include greenfield exploration through to brownfield
re-development. Key criteria include technical and commercial
merits of the opportunity, cost strategic fit and political,
security and regulatory risk. We are seeking opportunities that
will lead to operational activity and that will create value for
Europa shareholders rather than seeking to simply bank and hold
licences.
Financials
An improving oil price offset the decline in production and
unfavourable exchange rates during the period. The average oil
price achieved was US$59.2 bbl (H1
2017: US$48.2/bbl) and the average
Sterling exchange rate was US$1.35
(H1 2017: US$1.26). An average of 97
boepd (H1 2017: 115) was recovered from our three UK onshore
fields, down as a result of natural decline and the need for a
workover of the West Firsby 6 well. Revenue was £0.8 million (H1
2017: £0.8 million). Work aimed at restoring production from West
Firsby 6 is ongoing.
Increased activity on new ventures led to administrative
expenses in the period being up at £429,000 (H1 2017: £218,000).
Despite this, strict cash management and a focus on maximising
efficiencies caused cash from operating activities to be a positive
£16,000 during the first half (H1 2017: a draw on cash resources of
£337,000). As at 31 January 2018, our
cash balance stood at £2.3 million (31 July
2017: £3.6 million) following the purchase of intangible
fixed assets of £1.1 million (H1 2017: £0.8 million).
Conclusion and Outlook
Technical work has been focused on further de-risking the
multiple prospects and company-making volumetrics that have to date
been identified across our offshore Ireland licences. The results have been
highly encouraging and have led to the post period end upgrading of
LO 16/20 to flagship status. Thanks to having substantial
structures with potentially over 2.5 tcf GIIP; its proximity to the
producing Corrib gas field, which de-risks the Triassic play being
targeted; the accelerated route to commercialisation potentially
offered by the presence of existing infrastructure; relatively low
drilling costs due to shallower water depths; and gas’ growing
importance to Ireland’s energy supplies, the decision to fast track
further work on LO 16/20 with a view to targeting a well as early
as 2019 was an easy one.
Elsewhere, initial results from the 3D seismic reprocessing
programme covering our South
Porcupine licences have led to a major improvement in
prospect mapping and a reduction in geological risk. We will
shortly be issuing an updated prospect inventory for our 100% owned
FELs 2/13, 3/13, and 1/17, which are currently estimated to hold in
excess of 2 billion boe of audited prospective resources across
five prospects. This will serve as the trigger for a relaunch
of the farm-out process for our South
Porcupine licences in Q2 2018. Together with ongoing
efforts onshore UK to commence production at the Wressle discovery
and drill an exploration well at Holmwood in the Weald Basin, we
have multiple opportunities across our asset base to generate
significant value and I look forward to providing further updates
on our progress.
Hugh Mackay
CEO
3 April 2018
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% |
Development |
PEDL181 |
|
Europa |
50% |
Exploration |
PEDL182 |
North Broughton |
Egdon |
30% |
Exploration |
PEDL299 |
Hardstoft |
INEOS |
25% |
Exploration |
PEDL343 |
Cloughton |
Third Energy |
35% |
Exploration |
Weald |
PEDL143 |
Holmwood |
Europa |
20% |
Exploration |
|
|
|
|
|
|
|
Ireland |
South Porcupine |
FEL 2/13 |
Doyle: Aw/Ac/Ae/B/C,
Kilroy, Keane, Kealey, Lead F |
Europa |
100% |
Exploration |
FEL 3/13 |
Beckett,
Wilde
Shaw |
Europa |
100% |
Exploration |
FEL 1/17 |
Ervine, Edgeworth,
PR3 |
Europa |
100% |
Exploration |
|
|
LO 16/19 |
2 leads |
Cairn |
30% |
Exploration |
|
Slyne |
LO 16/20 |
Corrib North
discovery, Inishkea, Inishkea NW, Inishkea W, Corrib NW, Bofin
(lead) |
Europa |
100% |
Exploration |
|
|
LO 16/21 |
4 leads |
Europa |
100% |
Exploration |
|
Padraig |
LO 16/22 |
6 leads |
Europa |
100% |
Exploration |
|
|
|
|
|
|
|
Financials
Unaudited consolidated statement of
comprehensive income
|
6 months to 31
January 2018 |
6 months to 31 January 2017 |
Year to 31 July
2017
(audited) |
|
£000 |
£000 |
£000 |
|
|
|
|
Revenue |
778 |
811 |
1,569 |
Cost of sales |
(670) |
(721) |
(1,459) |
Exploration write-off |
(46) |
- |
- |
|
---------------- |
------------- |
------------ |
Gross profit |
62 |
90 |
110 |
|
|
|
|
Administrative expenses |
(429) |
(218) |
(553) |
Finance income |
6 |
30 |
2 |
Finance expense |
(136) |
(109) |
(234) |
|
-------------- |
-------------- |
--------- |
Loss before
taxation |
(497) |
(207) |
(675) |
Taxation credit |
168 |
68 |
184 |
|
----------------- |
-------------- |
--------------- |
Total comprehensive
loss for the period attributed to the equity shareholders of the
parent |
(329) |
(139) |
(491) |
|
============ |
============ |
============ |
|
|
|
|
|
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) |
(0.11)p |
(0.06)p |
(0.19)p |
Unaudited consolidated statement of
financial position
|
31 January
2018 |
31 January 2017 |
31 July
2017
(audited) |
|
£000 |
£000 |
£000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Intangible assets |
6,534 |
4,543 |
5,276 |
Property, plant and equipment |
813 |
970 |
882 |
Deferred tax asset |
508 |
225 |
341 |
|
---------------- |
----------------- |
----------------- |
Total non-current assets |
7,855 |
5,738 |
6,499 |
|
------------------- |
------------------- |
-------------- |
Current assets |
|
|
|
Inventories |
19 |
17 |
14 |
Trade and other receivables |
512 |
308 |
886 |
Cash and cash equivalents |
2,306 |
1,391 |
3,591 |
|
------------------- |
------------------- |
--------------- |
|
2,837 |
1,716 |
4,491 |
|
------------------ |
----------------- |
-------------------- |
|
|
|
|
Total assets |
10,692 |
7,454 |
10,990 |
|
=========== |
========== |
========== |
|
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
(883) |
(421) |
(945) |
|
------------------ |
-------------------- |
-------------------- |
Total current liabilities |
(883) |
(421) |
(945) |
|
--------------------- |
----------------------- |
------------------- |
Non-current liabilities |
|
|
|
Long-term provisions |
(2,652) |
(2,458) |
(2,570) |
|
---------------------- |
--------------------- |
--------------------- |
Total non-current
liabilities |
(2,652) |
(2,458) |
(2,570) |
|
------------------ |
---------------- |
-------------- |
Total liabilities |
(3,535) |
(2,879) |
(3,515) |
|
---------------- |
--------------- |
-------------- |
Net assets |
7,157 |
4,575 |
7,475 |
|
======== |
========= |
========== |
Capital and reserves attributable
to equity holders of the parent |
|
|
|
Share capital |
3,014 |
2,449 |
3,014 |
Share premium |
18,481 |
15,901 |
18,481 |
Merger reserve |
2,868 |
2,868 |
2,868 |
Retained deficit |
(17,206) |
(16,643) |
(16,888) |
|
----------------- |
----------- |
--------------- |
Total equity |
7,157 |
4,575 |
7,475 |
|
=========== |
============ |
========== |
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 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 |
|
========== |
=========== |
========== |
======== |
========== |
|
|
|
|
|
|
Audited |
|
|
|
|
|
Balance at 1 August 2016 |
2,449 |
15,901 |
2,868 |
(16,536) |
4,682 |
Loss for the year attributable to
the equity shareholders of the parent |
- |
- |
- |
(491) |
(491) |
Issue of share capital |
565 |
2,603 |
- |
- |
3,168 |
Issue of share options |
- |
(23) |
- |
23 |
- |
Share based payments |
- |
- |
- |
116 |
116 |
|
------------------ |
--------------- |
-------------- |
---------------- |
--------------- |
Balance at 31 July
2017 |
3,014 |
18,481 |
2,868 |
(16,888) |
7,475 |
|
============ |
=========== |
============ |
=========== |
=========== |
Unaudited |
|
|
|
|
|
Balance at 1 August 2017 |
3,014 |
18,481 |
2,868 |
(16,888) |
7,475 |
Total comprehensive loss for the
period |
- |
- |
- |
(329) |
(329) |
Share based payments |
- |
- |
- |
11 |
11 |
|
----------------- |
------------------- |
---------------- |
------------------ |
-------------- |
Balance at 31 January
2018 |
3,014 |
18,481 |
2,868 |
(17,206) |
7,157 |
|
============ |
============= |
============ |
============= |
=========== |
Unaudited consolidated statement of
cash flows
|
6
months to
31 January 2018
|
6 months
to
31 January 2017 |
Year
to
31 July
2017
(audited) |
|
£000 |
£000 |
£000 |
Cash flows from operating
activities |
|
|
|
Loss after taxation |
(329) |
(139) |
(491) |
Adjustments for: |
|
|
|
Share based payments |
11 |
32 |
116 |
Depreciation |
69 |
90 |
184 |
Exploration write-off |
46 |
- |
- |
Finance income |
(6) |
(30) |
(2) |
Finance expense |
136 |
109 |
234 |
Taxation credit |
(168) |
(68) |
(184) |
Decrease/(increase) in trade and
other receivables |
101 |
(100) |
(108) |
(Increase)/decrease in
inventories |
(5) |
6 |
9 |
Increase/(decrease) in trade and
other payables |
161 |
(93) |
(13) |
|
------------------ |
---------------- |
--------------- |
Cash from/(used in) operating
activities |
16 |
(193) |
(255) |
|
|
|
|
Income taxes paid |
- |
(144) |
(144) |
|
------------------ |
------------------ |
----------------- |
Net cash from/(used in) operating
activities |
16 |
(337) |
(399) |
|
============ |
============== |
========== |
|
|
|
|
Cash flows used in
investing activities |
|
|
|
Purchase of property, plant &
equipment |
- |
- |
(6) |
Purchase of
intangibles |
(1,081) |
(780) |
(1,491) |
(Buy back)/sale of
part interest in licence |
(160) |
760 |
600 |
Interest received |
6 |
- |
2 |
|
------------------- |
----------- |
-------------------- |
Net cash used in investing
activities |
(1,235) |
(20) |
(895) |
|
============= |
============== |
========== |
Cash flows from
financing activities |
|
|
|
Proceeds from issue to share capital
issue costs |
- |
- |
3,145 |
(Decrease)/increase in payables
relating to share capital issue costs |
(16) |
|
16 |
Option based equity movement on
share issue |
- |
- |
23 |
Finance costs |
(2) |
(1) |
(3) |
|
------------------ |
------------------ |
---------------- |
Net cash (used
in)/from financing activities |
(18) |
(1) |
3,181 |
|
=========== |
============ |
============ |
Net (decrease)/increase in cash
and cash equivalents |
(1,237) |
(358) |
1,887 |
|
|
|
|
Exchange (loss)/gain on cash and
cash equivalents |
(48) |
31 |
(14) |
Cash and cash equivalents at
beginning of period |
3,591 |
1,718 |
1,718 |
|
--------------------- |
------------------ |
-------------- |
Cash and cash equivalents at end
of period |
2,306 |
1,391 |
3,591 |
|
============= |
============= |
============ |
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 2018.
The consolidated interim financial information for the period
1 August 2017 to 31 January 2018 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 2016 to 31 January 2017
and the audited financial year to 31 July
2017.
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 2017.
The comparatives for the full year ended 31 July 2017 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 current cash balance and cash inflow from the Group’s
producing assets, 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 2018.
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 2018 |
6 months to 31 January
2017 |
Year to
31 July
2017
(audited) |
Allotted, called up and fully
paid ordinary shares of 1p |
Shares |
Shares |
Shares |
Start of period |
301,388,379 |
244,888,011 |
244,888,011 |
Issued in the period |
- |
- |
56,500,368 |
|
------------------ |
---------------- |
---------- |
End of period |
301,388,379 |
244,888,011 |
301,388,379 |
|
========= |
============ |
============ |
|
|
|
|
|
£000 |
£000 |
£000 |
Start of period |
3,014 |
2,449 |
2,449 |
Issued in the period |
- |
- |
565 |
|
----------------- |
--------------- |
------------- |
End of period |
3,014 |
2,449 |
3,014 |
|
========== |
========= |
======= |
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 5.74p which
was below the exercise price of all 25,164,440 outstanding share
options (H1 2017: 4.86p which was below the exercise price of all
15,365,000 outstanding share options).
The calculation of the basic and diluted earnings per share is
based on the following:
|
6
months to
31 January 2018 |
6 months
to
31 January 2017 |
Year
to
31 July
2017
(audited) |
|
£000 |
£000 |
£000 |
Losses |
|
|
|
Loss for the period attributable to
the equity shareholders of the parent |
(329) |
(139) |
(491) |
|
======== |
======== |
======== |
Number of shares |
|
|
|
Weighted average number of ordinary
shares for the purposes of basic and diluted EPS |
301,388,379 |
244,888,011 |
252,472,992 |
|
========= |
========== |
============ |
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
-
Appointed Simon Oddie, a highly
experienced petroleum engineer, technical consultant, manager and
investment adviser in the upstream oil and gas sector, as
Non-Executive Chairman
-
Appointed Brian O'Cathain, a geologist and petroleum engineer
with over 30 years’ experience in senior technical and commercial
roles in upstream oil and gas exploration and production companies,
as a Non-Executive Director
-
Environment Agency “minded to award” a bespoke environmental
permit for drilling and testing the Holmwood exploration well in
PEDL143 in the Weald Basin, Surrey