Europa Oil & Gas (Holdings) plc /
Index: AIM / Epic: EOG / Sector: Oil & Gas
15 April 2020
Europa Oil &
Gas (Holdings) plc (“Europa” or “the Company”)
Interim
Results
Europa Oil & Gas (Holdings) plc, the AIM traded Ireland, Morocco and UK focused oil and gas
exploration, development and production company, announces its
interim results for the six month period ended 31 January
2020.
Operational highlights
Onshore UK
- Wressle Development granted planning consent on appeal
- 90bopd produced from Europa’s three producing UK onshore fields
during H1 – matches H1 2019 and FY 2019 performance
- Net production on course to more than double to over 200bopd
when the Wressle oil field comes on stream later this year at an
expected initial rate of 500bopd
Offshore Ireland
- Refocus of portfolio towards the proven gas play in the Slyne
Basin - follows the Irish Government’s recognition of gas’ key role
in the country’s transition to renewable energy and its intention
to phase out oil exploration
- Discussions ongoing with prospective partners to farm-out
100%-owned FEL4/19, which is home to the 1.5tcf Inishkea
prospect
- See post period reporting events below
Offshore Morocco
- Awarded large Inezgane licence covering 11,192 square km in the
Agadir Basin offshore Morocco in
September 2019
- Shell, ENI, Repsol, Hunt and Genel currently active in the
area
- Data tapes received from ONHYM in preparation for seismic
reprocessing
- Large prospects with resource estimates in excess of 250mmbbls
have already been identified in the Lower Cretaceous fan sand play,
a prolific producer in West
Africa
- Licence attracting interest from a number of operators looking
to farm-in
COVID-19
- At the reporting date of 31 January
2020 there was no impact from coronavirus
Financial performance
- Revenue £0.8 million (H1 2019: £0.9 million)
- Pre-tax loss before exploration write-off / write-back £0.5
million (H1 2019: £0.4 million)
- Pre-tax loss of £3.5 million including write-offs taken
following relinquishment of Irish licences (see post period
reporting events below) (H1 2019: pre-tax loss £0.4 million)
- Net cash used in operating activities £0.4 million (H1 2019:
£0.3 million)
- Cash balance at 31 January 2020:
£1.5 million (31 July 2019: £2.9
million)
Post reporting period events
- COVID-19. Directors, London
based staff and consultants have been home based since 16 March,
and agreed a temporary salary/rate cut of 20% since 1 April.
Operations continue at the three production sites.
- Updated economic model confirms production at Wressle would be
economically robust in the current low oil price environment -
estimated break-even oil price (excluding Europa’s corporate
overheads) of US$17.62 per
barrel
- Applications submitted for the relinquishment of three licences
offshore Ireland where primary
prospectivity is oil - LO16/19, LO16/22, FEL 2/13 - total non-cash
write-off of £1.7 million
- Application submitted for a 2 year extension and merger of FELs
3/13 and 1/17- should the merger not be granted then FEL 3/13 will
be relinquished, and the Company has elected to write-off the £1.3
million intangible asset in these accounts
- Appointment of Stephen Williams
as independent Non-Executive director replacing Roderick Corrie
Simon Oddie, Interim CEO and
Executive Chairman of Europa, said: “The standout corporate
events of the six month review period were the granting of planning
consent for the development of Wressle and the award of the
Inezgane permit offshore Morocco. Expected to come on stream
at a rate of 500bopd in the second half, Wressle will transform
Europa’s net production and revenue profile. Together with
measures we have taken to reduce our already low cost base and,
following the repositioning of our portfolio towards gas, we
believe Europa will be well placed to withstand a sustained period
of oil price volatility and weakness.
“While the ongoing COVID-19 pandemic may impact activity on the
ground, there is much we are still able to get on with, notably
working towards the farm-out of our strategic position in the Slyne
Basin and continuing desktop work and launching the farm-out of our
licence offshore Morocco. With gas set to play a key role in
Ireland’s energy mix and our licences located in a gas play proven
by the producing Corrib field, Inishkea represents a compelling
investment opportunity with an attractive risk / reward
profile. While offshore Morocco is at an earlier stage, we are already
talking to a number of parties who expressed an interest in our
Inezgane licence, even before we had identified multiple targets
with up to 250mmbls of prospective resources.
“These are clearly challenging times for everyone and our
priority has to be to ensure the health and safety of all our
employees and stakeholders. With this in mind, we will
continue to follow the latest government advice and as a result,
timescales for certain activities and milestones, including our
efforts to add a third leg to our business by securing a late stage
appraisal project, may well need to be lengthened.
Importantly, the roadmap we have to increase our onshore UK
production and to expose our shareholders to potentially value
creating events offshore Ireland
and Morocco remains in
place.”
For further information please visit www.europaoil.com or
contact:
Simon Oddie / Phil Greenhalgh |
Europa |
+44 (0) 20 7009 2010 |
Christopher Raggett / Simon Hicks /
Camille Gochez |
finnCap Ltd |
+44 (0) 20 7220 0500 |
Frank Buhagiar / Megan Dennison |
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
Financial results such as this latest half yearly report are by
their nature backward-looking. They provide an opportunity for
companies to comment on progress made, milestones achieved and
strategic goals set. In Europa’s case, the objective is to
build a portfolio of multistage licences, advance these up the
development curve, attract partners to fund exploration/development
activity, including drilling, and expose shareholders to
potentially value creating events while minimising risk. With
this in mind, the six months under review has seen a new project
added to the portfolio – the large Inezgane licence offshore
Morocco; the award of a 15-year
Frontier Exploration Licence (‘FEL’) 4/19 for our flagship
prospect, Inishkea – a near field gas exploration project offshore
Ireland with 1.5 trillion cubic
feet (‘TCF’) gross mean un-risked prospective gas resources; and
the granting of planning consent for the development of the Wressle
oil field, which is expected to more than double Europa’s UK
onshore production to over 200bopd when it comes on stream later
this year.
Of course, statements such as this Chairman’s Report allow
financial results to be forward-looking too, providing companies
with an opportunity to update shareholders on upcoming activity and
expected timescales. It goes without saying that this is a
more challenging exercise this time round due to the COVID-19 virus
and the unprecedented efforts being taken around the world to curb
the pandemic. With so many unknowns outstanding at the time of
writing including infection rates, breadth and depth of the
outbreak and how long extreme measures, such as lockdowns, will
need to be in place, the situation on the ground is fluid.
The health and safety of all our employees and stakeholders are
always paramount and, with this in mind, we will at all times
continue to follow the latest advice of the relevant authorities.
As of today, we continue to produce oil from the three UK sites.
However, timings of upcoming activity across our assets onshore UK,
offshore Ireland and offshore
Morocco may be impacted.
Onshore UK
One key area of planned activity in the second half is the
development of the Wressle field in North Lincolnshire. The
granting of planning consent during the period under review was a
milestone event that has given the partners the green light to
bring this discovery online at an initial rate of 500bopd.
With a 30% working interest in the field, Europa’s net share would
equate to 150bopd, which would in turn more than double our
existing UK onshore production to well over 200bopd.
Importantly with the current low oil price environment in mind,
production at Wressle would be economically robust. This
follows a recent exercise to update the field’s economic model to
reflect today’s lower oil prices, the results of which estimate the
project has a break-even oil price of US$17.62 per barrel excluding Europa’s corporate
overheads.
With numbers like the above, we are keen to bring Wressle into
production at the earliest opportunity. In line with this,
work is underway. In March
2020, we reported that first oil at Wressle is envisaged
during the second half of 2020 and this remains the case.
Offshore Ireland
Even before the outbreak of COVID-19, oil and gas companies
operating offshore Ireland faced a
number of headwinds. Chief among these was the Irish
Government’s intention, announced in September 2019, to phase out future licensing for
oil exploration, but not gas exploration. Subsequently, it
was confirmed that all existing exploration licences for both oil
and gas remain valid. The evolving regulatory landscape and
the acknowledgement by the Irish authorities that natural gas, as
the cleanest fossil fuel in terms of carbon emissions, has a key
role to play in the country’s transition towards becoming carbon
neutral, prompted an internal re-evaluation at Europa and
subsequent re-positioning of our offshore Ireland licence portfolio. This has seen
us exit all but one of our licences in Ireland where the identified prospectivity was
primarily oil.
Our focus in Ireland remains
our flagship 1.5tcf Inishkea prospect on FEL4/19. Located near
Corrib and the field’s gas processing infrastructure, we believe
this provides us with a strategic position in a proven gas play in
a jurisdiction where gas is increasingly viewed as a key transition
fuel. With this in mind, we remain confident that our ongoing
discussions with potential partners to fund drilling activity will
prove to be successful.
Offshore Morocco
In September 2019, we announced
the award of the Inezgane licence offshore Morocco. Inezgane
covers a large area in an underexplored basin where we have
identified that all the key elements of a working hydrocarbon
system in the Lower Cretaceous are present. Together with
Morocco’s active oil and gas industry, a supportive Government, and
majors such as ENI exploring just to the south of Inezgane, the
licence represents an excellent opportunity for us to deploy our
technical expertise. As with offshore Ireland, the forward plan for Inezgane is to
build a prospect inventory based on reprocessing and interpreting
3D seismic and, subject to the results, secure partner(s) to drill
a well, thereby exposing our shareholders to a potentially
value-creating event. As part of the initial two-year phase of the
licence data tapes have been received from ONHYM in preparation for
seismic reprocessing. Large prospects with resource estimates in
excess of 250mmbbls in the Lower Cretaceous fan sand play, a
prolific producer in West Africa,
have already been mapped. Encouragingly, the award of the
licence has already attracted serious industry interest.
UK - Production
Matching the rate reported in H1 2019, production across our
three UK onshore fields averaged 90bopd during the six months under
review. Recording a zero-decline rate for the period is a
creditable performance and testament to the professionalism and
expertise of the team on the ground. As mentioned above,
Europa’s production is set to more than double to over 200bopd once
the Wressle field comes online later this year.
Board Changes
During the period and post period end there have been a number
of changes to the composition of the Board. In November 2019, Hugh
Mackay stepped down from both the Board and his role as
Chief Executive Officer, a position he had held since 2011. As well
as overseeing Europa’s onshore UK exploration, development and
production, during his tenure Hugh spearheaded high impact
exploration offshore Ireland and
was instrumental in securing the award of the Inezgane licence. We
wish him well for the future. With regards to Hugh’s CEO
duties, I moved from the role of Non-Executive Chairman to Interim
CEO and Executive Chairman. In light of volatile markets and
the ongoing COVID-19 pandemic, the Board has decided to suspend the
process of appointing a permanent CEO.
Post period end in March 2020, we
announced the appointment of Stephen
Williams, Co-CEO of Reabold Resources plc (AIM: RBD), to the
Board as an independent Non-Executive Director. Stephen
replaces Roderick Corrie, who is
stepping down after 12 years. Following this, Brian O’Cathain, who
has been an independent Non-Executive Director of the Company since
January 2018, has been appointed
Senior Independent Non-Executive Director.
Conclusions
Our focus for the second half of the year is to bring the
Wressle field into production, showcase our strategic position in
the proven gas play of the Slyne Basin offshore Ireland to prospective partners, and continue
the work that is underway offshore Morocco to build a robust prospect inventory
and seek farm-in partners. In parallel with this we continue
to evaluate new ventures, specifically late stage appraisal
opportunities, to add a third leg to our portfolio and complete our
exposure to all stages of the oil and gas cycle.
Of course, we cannot ignore the COVID-19 pandemic and also
recent moves in the oil market. Both will likely determine
the pace of progress made. While we cannot control either of
these, we are focused on matters we can control. A comprehensive
review of our cost profile has been undertaken and as part of this
all the executive team, Board and consultants have agreed to a
temporary 20% reduction in salaries, while the search for a
permanent CEO has been put on hold. Together with our
existing UK onshore production and the prospect of this more than
doubling when Wressle comes on stream later this year, we believe
Europa is well placed, not just to weather the current challenging
conditions, but also to continue working towards our strategic
goal: to expose our shareholders to value creating events while
minimising risk.
Finally, on behalf of the Board I would like to thank the
management, employees and consultants for their hard work over the
period, and also our shareholders for their support and patience as
we navigate through these difficult times.
Simon Oddie
Interim CEO and Executive Chairman
15 April 2020
Operational review
UK Production - East Midlands
Europa produces oil from three UK onshore fields: West Firsby;
Crosby Warren; Whisby-4. During the period under review, an
average of 90bopd were recovered from the three fields, which
matches the performance over full year 2019. This follows the
Company’s active management of the fields to maximise
production.
UK Development – Wressle Oil
Field
During the period, planning consent for the development of
Wressle in North Lincolnshire, in
which Europa holds a 30% working interest, was granted on 17
January 2020. Under the development plan, Wressle is expected
to commence production at an initial gross rate of 500bopd from the
Ashover Grit formation, which would more than double Europa’s
existing UK onshore production to over 200bopd.
Following the award of planning consent, the operator, Egdon
Resources, carried out a stress test of the economic model in light
of the current low oil price environment. The result of this
exercise demonstrated the development plan for the field is
economically robust at today’s oil price levels and that the
project has an estimated break-even oil price of US$17.62 per barrel excluding Europa’s corporate
overheads.
The forward plan for the Wressle development, which lies on
licences PEDL180 & 182 (‘the Licences’), comprises the
following key stages:
- Discharging the planning conditions, finalising detailed
designs, tendering and procurement of materials, equipment and
services and finalising all HSE documentation and procedures
- Installation of the ground water monitoring boreholes and
establishment of baseline conditions through monitoring
- Reconfiguration of the site
- Installation and commissioning of surface facilities
- Sub-surface operations
- Commencement of production
Work to date has concentrated on detailed planning of the
enabling works highlighted in point 1 above. The initial work
on site will be the installation of the groundwater monitoring
boreholes with the main site operations occurring in the last
months of the work stream. On current plans, first oil at
Wressle is envisaged during the second half of 2020.
The Wressle Oil Field, which was discovered by the Wressle-1
well in 2014, has additional development potential. During
testing, a total of 710 barrels of oil equivalent per day were
recovered from three separate reservoirs: the Ashover Grit; the
Wingfield Flags; and the Penistone Flags. In September 2016, a Competent Person’s Report
provided independent estimates of reserves and contingent and
prospective oil and gas resources for the Wressle discovery of 2.15
million stock tank barrels classified as discovered (2P+2C). In
addition, the CPR assigned gross mean un-risked prospective
resources of 0.6 million boe and a geological chance of success of
50% to Broughton North, a historic
discovery that is located on PEDL 180. Further development of the
Wressle field, including producing additional reserves existing in
the Penistone Flags formation, is expected in the future.
In addition to granting planning consent for the development of
the Wressle field, the Planning Inspector also allowed an
application for costs against North Lincolnshire Council (‘NLC’)
and this has subsequently been submitted to NLC.
Europa holds a 30% working interest in the Licences alongside
Egdon Resources (operator, 30%), Union Jack Oil (27.5%), and Humber
Oil & Gas Limited (12.5%).
Exploration: Offshore Ireland
Following the Irish Government’s announcement in September 2019 to phase out oil but not gas
exploration, the Company undertook a review of its licence position
offshore Ireland. For some time the Company’s flagship
project offshore Ireland has been
the 1.5tcf Inishkea gas prospect in the Slyne Basin, and this,
along with the changing regulatory landscape, lies behind
management’s decision to rebalance the Company’s exposure in favour
of gas, specifically the proven gas play in the Slyne Basin which
is home to the producing Corrib gas field. In tandem with
this, it was decided to reduce the Company’s position in more early
stage and prospective areas of the Irish Atlantic Margin where the
primary target is oil.
Post period end the Company announced the relinquishment of four
offshore Ireland licences, three
of which are in the South Porcupine Basin where the primary target
is oil. As well as relinquishing LO16/19 (as announced
5 February 2020), Europa will also be
relinquishing LO16/22 and FEL2/13. Europa has proposed the merger
of FEL 3/13 and FEL 1/17. Should this be approved, Europa will
retain the one licence in the Porcupine, which holds Edgeworth, a
firm drilling target with gross mean unrisked prospective resources
of 225mmbbl. Should the merger not be approved FEL 3/13 will be
relinquished and FEL 1/17 retained. Following these changes,
Europa’s Irish portfolio consists of three FELs with combined gross
prospective resources of 3,857mmbbl oil and 1.5tcf of
gas.
The forward plan for Ireland is
to continue discussions with several parties regarding the farm-out
of the Company’s licence position in the Slyne Basin. In tandem
with ongoing farm-out discussions, the approval of the drilling
location site survey at Inishkea continues.
Further to the relinquishment of licences LO16/22, FEL2/13, and
the pending merger of FEL 3/13 and FEL 1/17 the Company is writing
off the value of these intangible assets, resulting in a non-cash
charge to income of £2,911,000.
Exploration: Offshore Morocco
Europa has been awarded the Inezgane Offshore licence covering
an area of 11,192 km2 in the deepwater Agadir Basin, offshore
Morocco which commenced in
November 2019. Europa has 75% equity
and is operator and its partner ONHYM (Office National des
Hydrocarbures et des Mines) holds the remaining 25% interest in the
licence. ONHYM also acts as the regulator with a reputation for
both speed and efficiency. There are a number of mid-caps and
majors currently active in this area of Morocco, notably ENI, Hunt, Genel, Shell and
Repsol.
Europa’s focus in the Inezgane licence is on the Lower
Cretaceous fan sand play which is a prolific play in West Africa. Europa recognises that key
elements of source (including the world class Cenomanian-Turonian
source rock), reservoir and seal are all present within the
Inezgane licence. Only 10 wells have been drilled in
deepwater Morocco to date of which
only three have penetrated a complete Lower Cretaceous section.
Given the deepwater basins extend for some 1,800 kilometres
offshore Morocco, it is clear that
the play is highly under-explored. Water depths in the Inezgane
Permit are between 600 and 2,000m.
Results of our initial work, based on extensive 3D seismic data,
well data and onshore geology, have to date been encouraging.
Europa has identified several large prospects, with potential for
stacked reservoirs, some of which have initial resource estimates
in excess of 250mmbbls. The Company has also developed some new
ideas of reservoir and source rock presence. In addition, examples
of shallow gas anomalies have been seen on seismic data which is a
positive indication of a working petroleum system operating in the
basin.
The Inezgane Permit is of 8-years duration comprising three
phases of which the Initial Phase of the licence comprises 2-years.
During the Initial Phase, Europa will carry out a work programme
including 3D seismic reprocessing as well as other technical
studies. At the end of the Initial Phase, Europa has the option to
commit to drilling an exploration well in the Second Phase of the
licence or to relinquish the licence.
The farm-out campaign will be formally launched in Q3 2020
although it is worth noting that the Company has already received
unsolicited interest from three companies which are being followed
up. The objective is to mature prospects to drillable status with a
view to attracting farminees to drill an exploration well in the
Second Phase of the licence. If the Lower Cretaceous play can be
successfully unlocked enormous upside lies within the rest of the
Permit.
Morocco is a stable country
with a transparent and efficient business environment which offers
excellent fiscal terms and low political and regulatory risk. From
a technical, commercial and strategic perspective Morocco represents an obvious new country
entry for Europa complementing our well-established positions in
Ireland and the UK.
Financials
Average daily H1 2020 production was 90 boepd unchanged from H1
2019.
There was a 9% decrease in average realised oil price to
US$61.4 per barrel (H1 2019:
US$67.7). Foreign exchange movements
had a minor positive impact on revenues as US Dollar sales
converted to Sterling at US$1.28 (H1
2019: US$1.29)
The Group’s cash flow forecast up to 31
December 2020 considers the continuing and forecast cash
inflow from the Group’s producing assets, the cash held by the
Group at the reporting date, less administrative expenses and
planned capital expenditure. Based on that forecast, the Directors
have concluded that the Group will be able to continue as a going
concern and meet its obligations as and when they fall due. The
critical assumption in reaching that conclusion is that Wressle
production commences at the forecasted rate in the second half of
2020. In the absence of incremental production from Wressle in 2020
then additional funding would be required. If this was not
available there is a risk that commitments could not be fulfilled,
and assets would be relinquished.
Conclusion and Outlook
Following the granting of planning consent for the development
of Wressle, Europa has a defined route to doubling production to
over 200bopd later this year when the oil field is due to commence
production. In the second half we expect to receive approval
for the Inishkea site survey which will assist the farm-out of our
position in the Slyne Basin. Located in a proven gas play and
close to the producing Corrib field and associated infrastructure,
the Inishkea prospect has been assigned a relatively high chance of
success of one in three. Meanwhile, in Morocco, where we have already identified
several large prospects, some of which potentially hold in excess
of 250mmbbls, we will continue discussions with the three companies
that have expressed an interest in the licence and formally launch
a farmout campaign.
Timescales relating to the above activity may be lengthened due
to the COVID-19 pandemic and current weak oil markets.
Measures, such as salary cuts for the executive team, have been
taken to ensure all planned activity can be funded at today’s oil
prices without the need for additional external funding.
Simon Oddie
Interim CEO and Executive Chairman
15 April 2020
Qualified Person Review
This release has been reviewed by Rowland Thomas, geophysical advisor to Europa,
who is a geophysicist with over 39 years' experience in petroleum
exploration and a member of the Society of Exploration
Geophysicists, European Association of Geoscientists and Engineers
and the Petroleum Exploration Society of Great Britain, and 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 |
Ireland |
South
Porcupine |
FEL 1/17
& 3/13[1] |
Ervine,
Edgeworth, Egerton, Beckett, Wilde, Shaw |
Europa |
100% |
Exploration |
Slyne
Basin |
FEL
4/19 |
Inishkea, Corrib North |
Europa |
100% |
Exploration |
UK |
East Midlands |
DL
003 |
West
Firsby |
Europa |
100% |
Production |
DL
001 |
Crosby
Warren |
Europa |
100% |
Production |
PL
199/215 |
Whisby-4 |
BPEL |
65% |
Production |
PEDL180 |
Wressle |
Egdon |
30% |
Development |
PEDL181 |
|
Europa |
50% |
Exploration |
PEDL182 |
Broughton North |
Egdon |
30% |
Exploration |
PEDL299 |
Hardstoft |
Ineos |
25% |
Field
rejuvenation |
PEDL343 |
Cloughton |
Third
Energy |
35% |
Appraisal |
Morocco |
Agadir
Basin |
Inezgane |
|
Europa |
75% |
Exploration |
Financials
Unaudited consolidated statement of
comprehensive income
|
6 months to 31
January 2020 |
6 months to 31 January
2019 |
Year to 31 July
2019
(audited) |
|
£000 |
£000 |
£000 |
|
|
|
|
Revenue |
778 |
859 |
1,713 |
Cost of sales |
(701) |
(855) |
(1,682) |
Exploration (write-off)/write back
(note 5) |
(3,005) |
- |
270 |
|
-------- |
-------- |
-------- |
Gross profit |
(2,928) |
4 |
301 |
|
|
|
|
Administrative expenses |
(456) |
(375) |
(811) |
Finance income |
5 |
27 |
43 |
Finance expense |
(130) |
(93) |
(187) |
|
-------- |
-------- |
-------- |
Loss before
taxation |
(3,509) |
(437) |
(654) |
Taxation |
- |
- |
- |
|
-------- |
-------- |
-------- |
Loss for the
period |
(3,509) |
(437) |
(654) |
Other comprehensive
income |
|
|
|
Items that will not be
reclassified to profit/(loss) |
|
|
|
Loss on investment
revaluation |
(66) |
- |
(59) |
|
-------- |
-------- |
-------- |
Total comprehensive
loss for the period attributed to the equity shareholders of the
parent |
(3,575) |
(437) |
(713) |
|
======== |
======== |
======== |
|
|
|
|
|
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 3) |
(0.79)p |
(0.13)p |
(0.17)p |
Unaudited consolidated statement of financial position
|
31 January
2020 |
31 January
2019 |
31 July
2019
(audited) |
|
£000 |
£000 |
£000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Intangible assets |
5,439 |
6,759 |
7,818 |
Property, plant and equipment |
626 |
621 |
575 |
Right of use assets |
270 |
- |
- |
|
-------- |
-------- |
-------- |
Total non-current assets |
6,335 |
7,380 |
8,393 |
|
-------- |
-------- |
-------- |
Current assets |
|
|
|
Investments |
175 |
- |
241 |
Inventories |
27 |
26 |
19 |
Trade and other receivables |
340 |
300 |
315 |
Restricted cash |
251 |
- |
251 |
Cash and cash equivalents |
1,489 |
4,435 |
2,905 |
|
-------- |
-------- |
-------- |
|
2,282 |
4,761 |
3,731 |
|
-------- |
-------- |
-------- |
|
|
|
|
Total assets |
8,617 |
12,141 |
12,124 |
|
======== |
======== |
======== |
|
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
(791) |
(918) |
(1,086) |
Lease liabilities |
(110) |
- |
- |
|
-------- |
-------- |
-------- |
Total current liabilities |
(901) |
(918) |
(1,086) |
|
-------- |
-------- |
-------- |
Non-current liabilities |
|
|
|
Lease liabilities |
(130) |
- |
- |
Long-term provisions |
(3,040) |
(2,826) |
(2,917) |
|
-------- |
-------- |
-------- |
Total non-current
liabilities |
(3,170) |
(2,826) |
(2,917) |
|
-------- |
-------- |
-------- |
Total liabilities |
(4,071) |
(3,744) |
(4,003) |
|
-------- |
-------- |
-------- |
Net assets |
4,546 |
8,397 |
8,121 |
|
======== |
======== |
======== |
Capital and reserves attributable
to equity holders of the parent |
|
|
|
Share capital (note 6) |
4,447 |
4,447 |
4,447 |
Share premium |
21,010 |
21,010 |
21,010 |
Merger reserve |
2,868 |
2,868 |
2,868 |
Retained deficit |
(23,779) |
(19,928) |
(20,204) |
|
-------- |
-------- |
-------- |
Total equity |
4,546 |
8,397 |
8,121 |
|
========= |
======== |
======== |
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 2018 |
3,014 |
18,481 |
2,868 |
(19,508) |
4,855 |
Total comprehensive loss for the
period |
- |
- |
- |
(437) |
(437) |
Issue of share capital |
1,433 |
2,546 |
- |
- |
3,979 |
Issue of share options |
- |
(17) |
- |
17 |
- |
|
-------- |
-------- |
-------- |
-------- |
-------- |
Balance at 31 January
2019 |
4,447 |
21,010 |
2,868 |
(19,928) |
8,397 |
|
======== |
======== |
======== |
======== |
======== |
|
|
|
|
|
|
Audited |
|
|
|
|
|
Balance at 1 August 2018 |
3,014 |
18,481 |
2,868 |
(19,508) |
4,855 |
Loss for the year attributable to
the equity shareholders of the parent |
- |
- |
- |
(654) |
(654) |
Other comprehensive loss
attributable to the equity shareholders of the parent |
- |
- |
- |
(59) |
(59) |
Issue of share capital |
1,433 |
2,546 |
- |
- |
3,979 |
Issue of share options |
- |
(17) |
- |
17 |
- |
|
-------- |
-------- |
-------- |
-------- |
-------- |
Balance at 31 July
2019 |
4,447 |
21,010 |
2,868 |
(20,204) |
8,121 |
|
======== |
======== |
======== |
======== |
======== |
Unaudited |
|
|
|
|
|
Balance at 1 August 2019 |
4,447 |
21,010 |
2,868 |
(20,204) |
8,121 |
Total comprehensive loss for the
period |
- |
- |
- |
(3,509) |
(3,509) |
Other comprehensive loss
attributable to the equity shareholders of the parent |
- |
- |
- |
(66) |
(66) |
|
-------- |
-------- |
-------- |
-------- |
-------- |
Balance at 31 January
2020 |
4,447 |
21,010 |
2,868 |
(23,779) |
4,546 |
|
======== |
======== |
======== |
======== |
======== |
Unaudited consolidated statement of cash flows
|
6
months to
31 January 2020
|
6 months
to
31 January 2019
|
Year
to
31 July
2019
(audited) |
|
£000 |
£000 |
£000 |
Cash flows used in operating
activities |
|
|
|
Loss after taxation |
(3,509) |
(437) |
(654) |
Adjustments for: |
|
|
|
Depreciation |
47 |
47 |
94 |
Amortisation on right to use
assets |
55 |
- |
- |
Exploration write
off/(write back) |
3,005 |
- |
(270) |
Finance income |
(5) |
(27) |
(43) |
Finance expense |
130 |
93 |
187 |
(Increase)/decrease in trade and
other receivables |
(42) |
22 |
7 |
(Increase)/decrease in
inventories |
(8) |
(6) |
1 |
(Decrease)/increase in trade and
other payables |
(105) |
(35) |
17 |
|
-------- |
-------- |
-------- |
Net cash used in operating
activities |
(432) |
(343) |
(661) |
|
======== |
======== |
======== |
|
|
|
|
Cash flows used in
investing activities |
|
|
|
Purchase of property,
plant & equipment |
(99) |
- |
(1) |
Purchase of
intangibles |
(790) |
(1,002) |
(1,973) |
Cash guarantee re
Morocco |
- |
- |
(251) |
Sale of part interest
in licence – associated costs |
- |
- |
(8) |
Interest received |
5 |
5 |
16 |
|
-------- |
-------- |
-------- |
Net cash used in investing
activities |
(884) |
(997) |
(2,217) |
|
======== |
======== |
======== |
Cash flows (used
in)/from financing activities |
|
|
|
Proceeds from the issue of share
capital |
- |
3,961 |
4,299 |
Costs incurred on issue of share
capital |
- |
- |
(320) |
Increase in payables relating to
share capital issue costs |
- |
14 |
- |
Option based equity movement on
share issue |
- |
18 |
- |
Repayment of leasing
liabilities |
(69) |
- |
- |
Finance costs |
(4) |
(2) |
(5) |
|
-------- |
-------- |
-------- |
Net cash (used
in)/from financing activities |
(73) |
3,991 |
3,974 |
|
======== |
======== |
======== |
Net (decrease)/increase in cash
and cash equivalents |
(1,389) |
2,651 |
1,096 |
|
|
|
|
Exchange (loss)/gain on cash and
cash equivalents |
(27) |
13 |
38 |
Cash and cash equivalents at
beginning of period |
2,905 |
1,771 |
1,771 |
|
-------- |
-------- |
-------- |
Cash and cash equivalents at end
of period |
1,489 |
4,435 |
2,905 |
|
======== |
======== |
======== |
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 14
April 2020.
The consolidated interim financial information for the period
1 August 2019 to 31 January 2020 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 2018 to 31 January 2019
and the audited financial year to 31 July
2019.
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 2019.
The comparatives for the full year ended 31 July 2019 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. If there
is a further drop in oil prices, or the Wressle development is
delayed as a result of COVID-19, then it is possible that further
funding would be required.
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 2020.
Adoption of IFRS 16 has resulted in the Group recognising
right-of-use assets and lease liabilities for all contracts that
are, or contain, a lease. For leases previously classified as
operating leases, under previous accounting requirements the Group
did not recognise related assets or liabilities, and instead spread
the lease payments on a straight-line basis over the lease term,
disclosing in its annual financial statements the total
commitment.
The Board has decided it will apply the modified retrospective
adoption method in IFRS 16, and, therefore, has only recognised
leases on the balance sheet as at 1 August
2019. In addition, it has decided to measure right-of-use
assets by reference to the measurement of the lease liability on
that date. This will ensure there is no immediate impact to net
assets on that date.
Instead of recognising an operating expense for its operating
lease payments, the Group has instead recognised interest on its
lease liabilities and amortisation on its right-of-use assets.
3 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 2.30p which
was below the exercise price of all 23,453,458 outstanding share
options (H1 2019: 3.51p which was below the exercise price of all
25,637,898 outstanding share options).
The calculation of the basic and diluted earnings per share is
based on the following:
|
6
months to
31 January 2020 |
6 months
to
31 January
2019 |
Year
to
31 July
2019
(audited) |
|
£000 |
£000 |
£000 |
Losses |
|
|
|
Loss for the period attributable to
the equity shareholders of the parent |
(3,509) |
(437) |
(654) |
|
======== |
======== |
======== |
Number of shares |
|
|
|
Weighted average number of ordinary
shares for the purposes of basic and diluted EPS |
444,691,599 |
342,665,937 |
393,259,484 |
|
======== |
======== |
======== |
4
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.
5 Intangible
assets
|
31 Jan
2020 |
31 Jan 2019 |
31 July 2019 |
|
£000 |
£000 |
£000 |
At 1 August |
7,818 |
5,959 |
5,959 |
Additions |
626 |
800 |
1,869 |
Disposal |
- |
- |
(10) |
Exploration write-off |
(3,005) |
- |
- |
|
-------- |
-------- |
-------- |
At 31 July |
5,439 |
6,759 |
7,818 |
|
========= |
========= |
========= |
Intangible assets comprise the Group’s pre-production
expenditure on licence interests as follows:
|
31 Jan
2020 |
31 Jan 2019 |
31 July 2019 |
|
£000 |
£000 |
£000 |
Ireland FEL 2/13 (Doyle A, B, C,
Kilroy, Keane & Kiely) |
- |
893 |
1,280 |
Ireland FEL 3/13 (Beckett, Wilde,
Shaw) |
- |
1,184 |
1,255 |
Ireland FEL 1/17 |
796 |
553 |
636 |
Ireland LO 16/19 |
- |
75 |
89 |
Ireland FEL 4/19 (Inishkea) |
1,363 |
866 |
1,259 |
Ireland LO 16/22 |
- |
168 |
213 |
Morocco Inezgane |
104 |
- |
- |
UK PEDL143 (Holmwood) |
- |
10 |
- |
UK PEDL180 (Wressle) |
2,954 |
2,800 |
2,867 |
UK PEDL181 |
103 |
94 |
101 |
UK PEDL182 (Broughton North) |
29 |
27 |
29 |
UK PEDL299 (Hardstoft) |
12 |
12 |
12 |
UK PEDL343 (Cloughton) |
78 |
77 |
77 |
|
-------- |
-------- |
-------- |
Total |
5,439 |
6,759 |
7,818 |
|
======== |
======== |
======== |
Disposal |
|
|
|
UK PEDL143 (Holmwood) |
- |
- |
10 |
|
======== |
======== |
======== |
Exploration write-off |
|
|
|
Ireland FEL 2/13 |
1,387 |
- |
- |
Ireland FEL 3/13 |
1,284 |
- |
- |
Ireland LO 16/19 |
94 |
- |
- |
Ireland LO 16/22 |
240 |
- |
- |
|
-------- |
-------- |
-------- |
Total |
3,005 |
- |
- |
|
======== |
======== |
======== |
Exploration write-back
On 8 May 2019 the Group sold its
interest in PEDL143 (Holmwood) to UK Oil & Gas Plc (‘UKOG’) for
25,951,557 shares in UKOG at 1.156p per share.
|
31 Jan
2020 |
31 Jan 2019 |
31 July 2019 |
|
£000 |
£000 |
£000 |
Consideration for the PEDL143
interest |
- |
- |
300 |
Disposal costs |
- |
- |
(20) |
Book value of remaining
interest |
- |
- |
(10) |
|
-------- |
-------- |
-------- |
Exploration write-back |
- |
- |
270 |
|
========= |
========= |
========= |
6 Share
capital
|
6 months to 31
January 2020 |
6 months to 31 January
2019 |
Year to
31 July
2019
(audited) |
Allotted, called up
and fully paid ordinary shares of 1p |
Shares |
Shares |
Shares |
Start of period |
444,691,599 |
301,388,379 |
301,388,379 |
Issued in the
period |
- |
143,303,220 |
143,303,220 |
|
-------- |
-------- |
-------- |
End of period |
444,691,599 |
444,691,599 |
444,691,599 |
|
======== |
======== |
======== |
|
|
|
|
|
£000 |
£000 |
£000 |
Start of period |
4,447 |
3,014 |
3,014 |
Issued in the
period |
- |
1,433 |
1,433 |
|
-------- |
-------- |
-------- |
End of period |
4,447 |
4,447 |
4,447 |
|
======== |
======== |
======== |
|
|
|
|
|
|
|
|
Ordinary shares
issued
On 10 December 2018 at 3p issue price |
Number of
shares |
Raised
gross
£’000 |
Raised
net of costs
£000 |
Nominal
value
£000 |
Placing |
133,333,338 |
4,000 |
3,692 |
1,333 |
Open offer |
9,969,882 |
299 |
270 |
100 |
|
-------- |
-------- |
-------- |
-------- |
|
143,303,220 |
4,299 |
3,962 |
1,433 |
|
======== |
========= |
========= |
======== |
7 Post reporting date
- COVID-19. Directors, London
based staff and consultants have been home based since 16 March,
and agreed a temporary salary/rate cut of 20% since 1 April.
Operations continue at the three production sites.
- Updated economic model confirms production at Wressle would be
economically robust in the current low oil price environment -
estimated break-even oil price (excluding Europa’s corporate
overheads) of US$17.62 per
barrel
- Applications submitted for the relinquishment of three licences
offshore Ireland where primary
prospectivity is oil - LO16/19, LO16/22, FEL 2/13 - total non-cash
write-off of £1.7 million
- Application submitted for a 2 year extension and merger of
FEL's 3/13 and 1/17- should the merger not be granted then FEL 3/13
will be relinquished, and the Company has elected to write-off the
£1.3 million intangible asset in these accounts
- Appointment of Stephen Williams
as independent Non-Executive director replacing Roderick Corrie
[1] Assuming the 2 licences are merged