Europa Oil & Gas (Holdings) PLC Final Results for the year to 31 July 2016

 
TIDMEOG 
 
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas 
 
3 October 2016 
 
          Europa Oil & Gas (Holdings) plc ('Europa' or 'the Company') 
 
                  Final Results for the year to 31 July 2016 
 
Europa Oil & Gas (Holdings) plc, the AIM listed oil and gas exploration, 
development and production company focused on Europe, announces its final 
results for the 12 month period ended 31 July 2016. 
 
The full Annual Report and Accounts will be available today on the Company's 
website at www.europaoil.com and will be mailed to those shareholders who have 
requested a paper copy later this month. 
 
Operational highlights 
 
  * Proceeding with development of Wressle discovery in North Lincolnshire with 
    production expected to commence early 2017 
  * Three new UK onshore awards in 14th Round (one subsequently declined) 
  * Five new Licensing Options ('LOs') awarded offshore Ireland 
  * Europa estimates 2.1 billion barrels of oil equivalent ('boe') and 1.5 tcf 
    gas gross mean unrisked prospective and indicative resources on new Irish 
    LOs 
  * 100% interest and operatorship secured for FEL 2/13 and FEL 3/13 offshore 
    Ireland following transfer from Kosmos 
  * Mean unrisked NPV10 of US$7 billion for 100% interest in three prospects 
    with 1.5 billion boe in FEL 3/13 provided by ERC Equipoise 
  * Positive Holmwood planning decision, preparatory work for drilling in 2017 
    underway 
  * Farmout of 7.5% of PEDL143; Europa has 32.5% interest, paying 25% of the 
    cost of the Holmwood exploration well up to a gross cost of GBP3.2m 
  * 123 boepd produced from UK onshore (2015: 141 boepd) 
 
      Financial performance 
 
  * Group revenue of GBP1.3m (2015: GBP2.2m) 
  * 33% reduction in cost of sales from lower operating costs 
  * 39% reduction in administrative expenses from non-recurring 2015 items and 
    other savings 
  * Pre-tax loss excluding exploration write-off and impairment of GBP0.7m (2015: 
    loss GBP0.8m) 
  * Pre-tax loss of GBP1.9m after GBP1.2m exploration write-off in Béarn des Gaves 
    (2015: loss GBP4.1m after GBP2.2m exploration write-off in PEDL181 and GBP1.1m 
    impairment against the West Firsby field) 
  * Post-tax loss for the year GBP1.6m (2015: loss GBP1.8m) 
  * Cash used in operating activities GBP0.3m (2015: cash used GBP0.3m) 
  * Net cash balance as at 31 July 2016 GBP1.7m (31 July 2015: GBP3.2m) 
 
Post reporting date events 
 
  * Extension of phase 1 of FEL 2/13 and FEL 3/13 licences to 4 July 2017 
  * Acquisition of Shale Petroleum (UK) Limited (renamed as "Europa Oil & Gas 
    (UK) Limited") increasing Europa's interest in PEDL299 (including the 
    Hardstoft oil field) to 33.32% and in PEDL343 (containing the Cloughton gas 
    discovery) to 45% 
  * Elected not to accept the award of PEDL286 in the southern Cleveland basin 
  * Wressle and Broughton North CPR published 
  * Sold 3.34% interest in PEDL180 (Wressle) and PEDL182 (Broughton North) to 
    Union Jack Oil plc for GBP0.6m cash 
 
Europa's CEO, Hugh Mackay said, "In the face of difficult market conditions for 
the oil and gas sector we have delivered strong performance. We have reduced 
costs by one third, our UK production is set to double, we are preparing to 
drill a high impact well onshore UK at Holmwood, we have delivered three deals, 
landed seven new licences in the UK and Ireland and perhaps most importantly 
built a leading position in Atlantic Ireland. The tide is turning in Atlantic 
Ireland: the 2015 Licensing Round was the most successful licensing round ever 
in Ireland. Major oil companies are back and have already begun substantive 
work programmes. This is a remarkable outcome given sub $50 oil prices and in 
due course we expect that this activity will likely result in exploration 
drilling. We will continue to mature our Irish portfolio with the intention of 
delivering half a dozen drill-ready prospects - any one of which has the 
potential to be a company maker for Europa." 
 
This announcement contains inside information for the purposes of Article 7 of 
Regulation (EU) No 596/2014. 
 
For further information please visit www.europaoil.com or contact: 
 
Hugh Mackay       Europa                        + 44 (0) 20 7224 
                                                3770 
 
Phil Greenhalgh   Europa                        + 44 (0) 20 7224 
                                                3770 
 
Matt Goode        finnCap Ltd                   + 44 (0) 20 7220 
                                                0500 
 
Simon Hicks       finnCap Ltd                   + 44 (0) 20 7220 
                                                0500 
 
Frank Buhagiar    St Brides Partners Ltd        + 44 (0) 20 7236 
                                                1177 
 
Susie Geliher     St Brides Partners Ltd        + 44 (0) 20 7236 
                                                1177 
 
Chairman's statement 
 
With the low oil price environment seen in the 12 months to 31 July 2016, we 
have been concentrating on reducing our cost base through a number of 
operational efficiencies and voluntary temporary salary reductions amongst head 
office staff.  These changes have resulted in a year on year 33% reduction in 
our cost of sales and a 39% reduction in our administrative expenses.  Despite 
this reduction in costs, Hugh and the team have continued with our programme of 
selectively expanding Europa's portfolio and maturing its assets. 
 
Highlights during this period have included: 
 
*   The addition of two new licences onshore UK, which contain hydrocarbon 
discoveries and where gas and oil appraisal opportunities have been identified. 
 
*   The addition of five new Licensing Options offshore Ireland, including the 
strategically important exploration block LO 16/2 adjacent to our FEL 3/13 
licence in the Porcupine basin. This acreage was awarded in the first phase of 
the recent Atlantic Margin Licensing Round, which was a highly competitive 
process, with awards being granted to a number of major international oil 
companies, including Eni, ExxonMobil, Nexen, Statoil, Woodside and BP. The 
other LOs awarded in the second phase cover acreage near the Corrib gasfield; 
near our existing FEL 2/13 licence in the South Porcupine basin; and in the 
Padraig basin. 
 
*   Europa has already identified significant potential resources across the 
new licences totalling 2.1 billion boe and 1.5 tcf gas (gross mean unrisked 
prospective and indicative resources). Work continues on the farmout process 
for our Irish acreage where we have seen considerable interest from major oil 
companies. 
 
*   The transfer of interest from Kosmos such that Europa now holds 100% and is 
operator of FEL 2/13 and FEL 3/13 offshore Ireland with a further 2.1 billion 
boe gross mean unrisked prospective and indicative resources. 
 
*   Work continues on the development of Wressle with first production expected 
early in 2017. 
 
*   Successful planning approval was obtained for an exploration well at 
Holmwood, which is a conventional prospect with gross mean unrisked prospective 
resources of 5.6 million boe. Located in the Weald basin, near the recent 
drilling success at Horse Hill, Holmwood is a very exciting prospect for Europa 
and its partners. Following the farmout Europa retains a 32.5% interest in the 
PEDL143 licence and will pay 25% of the Holmwood well up to a gross cost of GBP 
3.2 million. Work continues on well planning and we anticipate drilling in 
2017. 
 
These activities are part of our ongoing programme to mature and grow our 
portfolio of prospects and leads and most importantly prove these up via the 
drill bit. We also continue to evaluate potential corporate transactions to 
follow on from the farmout of Holmwood, the post year end acquisition of Shale 
Petroleum (UK) Limited and sale of interest in PEDL180 and PEDL182. 
 
All of this has been against a backdrop of continued low oil prices which has 
seen the price achieved for sales during the 12 months to end July 2016 average 
US$41.5 per barrel (2015: US$68.2).  Europa's board continues to work hard to 
maximise efficiencies and to avoid incurring debt for its activities, 
preferring to farmout exploration obligations and/or monetise assets wherever 
possible. Our focus in the last year has been on managing our cost and asset 
base to ensure we remain fully funded for future operations and this strategy 
will continue in 2017. 
 
Financials 
 
The fall in oil price has a direct effect on our revenues and the average of 
123 boepd recovered from our UK onshore fields generated GBP1.3 million in 
revenues (2015: 141 boepd and GBP2.2 million). Net cash spent on operations was GBP 
0.3 million (2015: cash spent GBP0.3 million). Our cash balance at the end of 
July 2016 was GBP1.7 million (31 July 2015: GBP3.2 million). 
 
If Wressle were to produce at the expected initial flowrate of 500 bopd gross, 
even at today's sub US$50 per barrel oil price, Europa will return to a 
positive operating cashflow. It should be noted that following the March 2016 
UK Budget which halved the Supplementary Charge with effect from 1 January 
2016, Europa's future profits would be taxed at 40% (previously 50%). 
 
Oil and gas exploration onshore France is frustrated by the French Government's 
lack of support for the industry. This is demonstrated by the continuing delay, 
since February 2015, in approving Europa's farmout of the Tarbes val d'Adour 
permit interest to Vermillion. In fact no onshore France permits have been 
issued or renewed in the past 12 months. Europa will continue to progress its 
operations in France, but has taken the decision to write down the carrying 
value of the Béarn des Gaves permit to nil - resulting in an exploration 
write-off in the current period of GBP1.2 million (2015: Exploration write-off GBP 
2.2 million for the Kiln Lane well and impairment of the producing West Firsby 
field GBP1.1 million). 
 
Outlook 
 
The continuing low oil price presents challenges for all E&P companies, but I 

am confident that through a combination of cost efficiencies and sound asset 
management Europa is now well poised to deliver growth by maturing its diverse 
portfolio of assets. Through the recent awards in Ireland and the UK, Hugh and 
the team have developed a pipeline of licence interests at various stages of 
maturity, which will provide cashflow to cover corporate overheads and, in some 
cases, have the exploration potential to be company makers. I am very excited 
by the Irish acreage position we have put in place and the arrival of the 
majors and supermajors in the last licensing round indicates that the basin is 
seen as having strong potential. This bodes well for our ongoing farmout 
discussions. 
 
We have seen the results of the initial technical work on our Porcupine basin 
interests translated into prospective resources confirmed by a Competent 
Persons Report ('CPR') on FEL 3/13 with Europa exposed to 1.5 billion boe of 
gross mean unrisked prospective resources with a mean risked NPV10 of US$7 
billion. This excludes the recently awarded LO 16/2 with a further 895 million 
boe and FEL 2/13 with 595 million boe of gross mean unrisked prospective 
resources. 
 
In the UK, with Wressle moving from discovery to producer, we are poised to see 
an increase in production, revenue and cashflow, which should coincide with 
work preparing for the exploration well at Holmwood. 
 
I would like to thank the management, operational teams, my fellow Board 
members and our advisers for their hard work over the year. 
 
Finally I would like to reiterate my thanks to our shareholders for their 
continued support during what has been a challenging year for all of the oil 
and gas sector, but particularly small exploration and production companies 
like Europa. 
 
Colin Bousfield 
 
Non executive Chairman 
 
30 September 2016 
 
Our portfolio 
 
Country     Area    Licence     Field/       Operator    Equity  Status 
                                Prospect 
 
Ireland  South      FEL 2/13    Doyle A/B/C, Europa         100% Exploration 
         Porcupine              Heaney 
 
                    FEL 3/13    Beckett,     Europa         100% Exploration 
                                Wilde, Shaw 
 
                    LO 16/2     3 prospects  Europa         100% Exploration 
 
                    LO 16/19    2 leads      Europa         100% Exploration 
 
         Slyne      LO 16/20    2 leads      Europa         100% Exploration 
         basin 
                    LO 16/21    4 leads      Europa         100% Exploration 
 
         Padraig    LO 16/22    6 leads      Europa         100% Exploration 
         basin 
 
UK       East       DL 003      West Firsby  Europa         100% Production 
         Midlands 
                    DL 001      Crosby       Europa         100% Production 
                                Warren 
 
                    PL 199/215  Whisby-4     BPEL            65% Production 
 
                    PEDL180     Wressle      Egdon          30%1 Development 
 
                    PEDL181                  Europa          50% Exploration 
 
                    PEDL182     Broughton    Egdon          30%1 Exploration 
                                North 
 
                    PEDL299     Hardstoft    Ineos         33.3% Field rejuvenation 
 
                    PEDL343     Cloughton    Third           45% Appraisal 
                                             Energy 
 
         Weald      PEDL143     Holmwood     Europa        32.5% Exploration 
 
         SNS        Block 41/24 Maxwell      Europa          50% Promote 
 
France   Aquitaine  Béarn des   Berenx       Europa         100% Exploration 
                    Gaves 
 
                    Tarbes val               Vermilion       20% Exploration 
                    d'Adour 
 
[1] Following the post year end sale to Union Jack Oil plc and assuming OGA 
approval 
 
Strategic report - Operations 
 
Exploration - Ireland 
 
Europa is now a leading operator in Irish exploration. We are ranked top for 
net operated area under licence (5,818 km2), equal top for number of operated 
licences (seven) and we were awarded more licences in the 2015 Atlantic Margin 
Licensing Round than any other operator (five). 
 
South Porcupine / FEL 2/13; FEL 3/13; LO 16/2; LO 16/19 
 
In June 2016 we announced the receipt of consent from Ireland's Minister for 
Communications, Climate Action and the Environmentfor the transfer of interest 
in FEL 2/13 and FEL 3/13 from Kosmos Energy Ireland. Following the transfer, 
Europa has 100% interest in, and operatorship of both licences. 
 
In February and May 2016 two additional LOs in the South Porcupine were awarded 
to Europa: LO 16/2 and LO 16/19. 
 
In August 2016, we announced that phase 1 of FEL 2/13 and FEL 3/13 had been 
extended by one year to 4 July 2017. This extension allows us to mature 
existing prospects and perform detailed mapping of all potential prospective 
levels on both licences, including the pre-rift, syn-rift and post-rift plays, 
whilst continuing to seek a farmout partner for drilling. 
 
Europa now has four licences in the South Porcupine basin, these can be 
considered as two licence pairs: 
 
FEL 3/13 and LO 16/2 on the east flank of the basin 
 
Europa identified three new pre-rift prospects in LO 16/2 which have combined 
gross mean unrisked prospective resources of 895 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. 
 
The three new prospects were mapped on Europa's proprietary 3D seismic which 
was acquired in 2013 and covers both FEL 3/13 and LO 16/2. 
 
The Cretaceous fan play is developed in FEL 3/13. A CPR by ERC Equipoise 
confirmed gross mean unrisked prospective resources of 1.5 billion boe and 
unrisked NPV10 of US$7 billion across three Cretaceous fan prospects on the 
licence: prospects Wilde, Beckett and Shaw. Prospect Wilde is considered drill 
ready. Wilde has a geological chance of success of 1 in 5, gross mean unrisked 
prospective resources are 428 million boe and the drill costs are estimated to 
be US$37 million excluding mobilisation and demobilisation. 
 
There is clear technical and commercial synergy between the two licences. The 
one year extension for FEL 3/13 phase 1 will enable completion of technical 
work and integration with LO 16/2. The combined audited and unaudited gross 
mean unrisked prospective resource of the two licences is almost 2.4 billion 
boe. 
 
FEL 2/13 and LO 16/19 on the west flank of the basin 
 
Europa has a 100% interest in FEL 2/13 and LO 16/19. FEL 2/13 contains a number 
of Cretaceous submarine channels mapped on Europa's proprietary 948 km2 3D 
seismic survey which cross the licence from west to east feeding 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 in LO 16/19.  In addition, 
there is evidence of gas escape features on seismic and sea bed pock marks 
suggesting the presence of an active source rock.  BP well 43/13-1 drilled in 
1998 approximately 20 km from LO 16/19 saw oil shows and encountered source 
rocks. 
 
Four prospects (Doyle A, B, C and Heaney) were mapped on 3D seismic in FEL 2/13 
with gross mean unrisked prospective resources of 595 million boe. There is 
potential for several Cretaceous submarine fans with a range of 300 million to 
1 billion boe gross mean unrisked prospective resources in LO 16/19. 
 
During the period of the LO Europa will further mature the prospect inventory 
and will seek a farmin partner with which to convert to an FEL, acquire a 3D 
seismic survey and in due course drill an exploration well (subject to a 
positive technical and commercial outcome from the 3D seismic programme). The 
one year extension for FEL 2/13 phase 1 will enable completion of technical 
work and integration with LO 16/19. 
 
Europa's experience in the basin leads the directors to believe that 3D seismic 
over LO 16/19 will profoundly change the prospect inventory and a positive 
outcome may not only provide greater clarity on prospect mapping and 
volumetrics, but may also substantially de-risk the prospects.  Other operators 
are exploring for Cretaceous fans in the basin and any exploration drilling 
success in the Cretaceous fan play has the potential to further de-risk the 
prospects in all of Europa's South Porcupine licences. 
 
Slyne basin / LO 16/20; LO 16/21 
 
Not everything offshore west Ireland is high risk, deepwater, frontier 
exploration. LO 16/20 and 16/21 in the Greater Corrib area of the Slyne basin 
represent exploration in a proven play, in the vicinity of the Corrib gas field 
that is newly on production and with substantial gas infrastructure already in 
place. The Greater Corrib play comprises Triassic sandstone reservoirs in 
tilted fault block structures with hydrocarbons generated from Carboniferous 
source rocks. Water depths range from 300 to 2,000 metres and the licences are 
partially covered by historic 3D seismic data as well as extensive 2D seismic. 
 
Our strategy is to expedite exploration by reprocessing historic 3D seismic 
over LO 16/20 and LO 16/21, maturing leads to drillable prospect status and 
securing a farmin partner with which to drill a low-cost, low-risk exploration 
well. 
 
Gross mean unrisked prospective and indicative resources: 
 
  * LO 16/20 1.0 tcf gas 
  * LO 16/21 0.5 tcf gas 
 
Clearly we are at a very early stage in the exploration cycle, however, equally 
clearly we have a well-defined work programme to de-risk the play.  In 
particular it is hoped that successful reprocessing of historic 3D seismic 
might allow us to mature existing leads to drillable prospect status without 
the need to acquire new seismic data. 
 
Prospect TR1 in LO 16/20 lies 16 km to the northwest of Corrib in water depths 
of 500 metres. Were the prospect to achieve drillable status it is expected 

that the geological chance of success will be high, drill costs will be low 
(reflecting the comparatively shallow water depth) and the proximity to gas 
infrastructure is potentially a very favourable factor. 
 
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 is the conjugate margin play 
offshore Newfoundland in the Flemish Pass basin. Good quality 1998 2D seismic 
suggest structures of significant size and multiple leads have been mapped in 
water depths ranging from 800 to 2,000 metres in both pre-rift and syn-rift 
hydrocarbon plays. 
 
Gross mean unrisked indicative resources are estimated to be in the range of 
300 to 600 million boe. 
 
Our strategy is to expedite exploration by utilising the historic 2D seismic 
and wealth of high quality technical work previously performed by major oil 
companies to mature leads to drillable prospect status and secure a farmin 
partner with which to drill an exploration well. 
 
Following Statoil's exploration success at the play-opening Bay du Nord oil 
discovery in the Flemish Pass basin offshore Newfoundland, there is 
considerable industry interest in analogues offshore west Ireland.  Whilst most 
of the industry is currently focused on exploring for this play in the South 
Porcupine basin our restoration of the conjugate margin prior to Atlantic 
seafloor spreading suggests the possibility that the Padraig basin may be a 
better fit with the Flemish Pass basin. 
 
Exploration - UK 
 
East Midlands / PEDL181 
 
In July 2016, Europa announced entry into the second phase of the licence - 
having fulfilled phase 1 work obligations by the drilling of the Kiln Lane well 
in 2015. Following analysis of seismic and geological data, together with the 
results of the Kiln Lane well, Europa elected to relinquish 380 km2 of the 
licence. An area of 160 km2 in the southeast of the licence was retained. The 
retained area provides exposure to the conventional and unconventional 
hydrocarbon potential of the Humber basin.  It has technical synergy with the 
adjacent licence PEDL334 which was awarded to an Egdon led group in the 14th 
Round for the purpose of conventional and unconventional exploration. 
 
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 reservoir. A CPR on Hardstoft, issued by joint venture 
partner Upland Resources, 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 and our hope is that commercial oil flowrates can be obtained. 
 
As a consequence of our acquisition of Shale Petroleum (UK) Limited post year 
end we have increased our equity from 16.66% to 33.32%. Europa's interest in 
PEDL299 is restricted to the conventional prospectivity, and Ineos are 
operator. 
 
East Midlands / PEDL343 (Cloughton) 
 
PEDL343 (initially granted as PEDL348) was our top ranked block out of our 
three 14th Onshore Licensing Round applications. PEDL343 is operated by Third 
Energy and contains the Cloughton gas discovery made by Bow Valley. The 1986 
exploration well flowed a small amount of gas to surface on production test 
from Carboniferous sandstone reservoirs. We regard 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 
(UK) Limited post year end increased our equity in the licence from 22.5% to 
45%. 
 
Weald / PEDL143 (Holmwood) 
 
PEDL143 contains the Holmwood conventional oil prospect. Europa regards this as 
one of the best undrilled prospects in onshore UK. Following the farmout to 
Union Jack Oil plc, we remain as operator with a 32.5% interest in the licence 
and have a partial carry on our share of the exploration well costs up to a cap 
of GBP3.2 million. The well is currently being planned for drilling in 2017. 
 
The results of the Horse Hill well 12 km to the east of the Holmwood prospect 
in PEDL137 are relevant. Horse Hill is along-strike from Holmwood in a very 
similar geological structure. Correlation of seismic data indicates that the 
Holmwood well will penetrate a similar stratigraphic section to that at Horse 
Hill. Whilst we cannot guarantee that Holmwood will encounter similar 
hydrocarbons to Horse Hill the results are encouraging. 
 
In addition to producing oil from Portland sandstone reservoirs Horse Hill also 
produced oil from micritic limestone formations in the Kimmeridge section. This 
is an interesting development. One of the peculiarities of limestone reservoir 
rocks (compared with sandstones) is that typically there are no, or very weak, 
direct hydrocarbon shows whilst drilling and often only inconclusive 
indications of hydrocarbons on electric logs. It is therefore encouraging that 
perseverance at Horse Hill yielded 1,365 bopd aggregate flowrate from two 
limestone intervals. It is possible that the micritic limestone may be a 
"missed pay" in the Weald basin. 
 
Whilst the results of Horse Hill are encouraging our estimate of geological 
chance of success is unchanged at 1 in 3 and our guidance for gross mean 
prospective resources remains at 5.6 million boe with a range of 1 to 11 
million barrels. At 5.6 million boe Holmwood would be the fifth largest onshore 
field in UK history. 
 
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 Petroleum Limited. 
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. 
 
Development - UK 
 
East Midlands / PEDL180 (Wressle); PEDL182 (Broughton North) 
 
The operator Egdon continues to bring the Wressle oil discovery forward to 
development. Reservoir engineering analyses indicate an initial production flow 
rate of 500 bopd gross from the Ashover Grit interval, which even at sub US$50 
per barrel oil prices, will return Europa to a positive operating cashflow.  An 
application for planning permission and applications for Environment Agency 
permits were submitted in June 2016. The Field Development Plan ('FDP') was 
submitted on 8 September 2016 and a CPR issued on 26 September. On 27 September 
Europa announced the sale of 3.34% interest in PEDL180 and PEDL182 to Union 
Jack Oil plc for a cash consideration of GBP600,000. The transaction implies a 
mark to market value of GBP5.4 million for Europa's remaining 30% interest in the 
licences. The CPR identifies gross 2P reserves of 0.65 mmboe in the Ashover and 
Wingfield Flags and  gross 2C contingent resources of 1.86 million boe in the 
Penistone Flags on the Wressle structure; and gross mean unrisked prospective 
resources of 0.6 million boe at the Broughton North exploration prospect. 
 
Production - UK 
 
East Midlands / West Firsby; Crosby Warren; Whisby-4 
 
Production from the three fields declined in line with expectations. In the 
year 123 boepd were recovered, down from 141 boepd in 2015. The change to beam 
pumps (nodding donkeys) away from jet pumps at West Firsby and successful 
rateable value appeals were the main drivers of the 33% reduction in cost of 
sales which was achieved. The pump change enabled savings in utility costs, 
chemicals and the need for interventions in order to keep the field producing. 
 
Exploration - France 
 
Aquitaine / Tarbes val d'Adour 
 
Europa announced a farmout to Vermilion Energy on 16 February 2015. The farmout 
agreement being 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. 
 
We continue to try to progress the necessary approvals, but we believe that it 
is prudent at this stage to assume that the relevant approvals will not be 
forthcoming. 
 
Aquitaine / Béarn des Gaves / Berenx 
 
The current phase of the permit expires in March 2017. Although we successfully 
obtained a farmin partner for Tarbes Val d'Adour we have been unable to find a 
partner for Béarn des Gaves. It is unlikely that we will be able to conclude a 
farmin in the time remaining, and even if we did, it is unlikely that we could 
obtain the necessary approvals and extension from the French authorities. We 
have therefore decided to write-off the carrying value of the permit in the 
current year. 
 
Financials 
 
With a small contribution from the Wressle testing our production this year 
averaged 123 boepd and generated GBP1.3 million in revenues (2015: 141 boepd and 
GBP2.2 million). The average oil price achieved in the year was US$41.5 per 
barrel (2015: US$68.2). 
 
As announced last year, while most of the costs associated with our production 
are fixed in nature we implemented various cost saving measures to help 
mitigate the effect of the falling oil price and as a result we have reduced 

cost of sales to GBP1.3 million (2015: GBP1.9 million). The cost of sales savings 
arise partly from lower production rates, successful appeals against property 
rateable values, and from the switch to nodding donkeys, as opposed to jet 
pumps, at West Firsby. 
 
Administrative expenses also showed a significant reduction at GBP0.6 million 
(2015: GBP1.0 million). Some of the saving occurred as a result of the 
non-recurrence of 2015 costs associated with licence applications and the 
Tarbes farmout. Material savings arose from a voluntary, temporary, salary 
reduction agreed with head office staff. There were further savings generated 
from the sublet, and eventual sale, of the Abingdon property. 
 
Our cash balance at 31 July 2016 stood at GBP1.7 million (31 July 2015: GBP3.2 
million). 
 
Result for the year 
 
The Group loss for the year after taxation from continuing activities was GBP 
1,638,000 (2015: GBP1,784,000). 
 
The financial information set out below does not constitute the company's 
statutory accounts for 2016 or 2015. The financial information has been 
prepared in accordance with International Financial Reporting Standards (IFRS) 
as adopted by the European Union on a basis that is consistent with the 
accounting policies applied by the group in its audited consolidated financial 
statements for the year ended 31 July 2016. Statutory accounts for the years 
ended 31 July 2016 and 31 July 2015 have been reported on by the Independent 
Auditors. 
 
The Independent Auditors' Report on the Annual Report and Financial Statements 
for 2016 and 2015 were unqualified, did not draw attention to any matters by 
way of emphasis, and did not contain a statement under 498(2) or 498(3) of the 
Companies Act 2006. 
 
Statutory accounts for the year ended 31 July 2015 have been filed with the 
Registrar of Companies. The statutory accounts for the year ended 31 July 2016 
will be delivered to the Registrar in due course. 
 
                                   **S** 
 
Consolidated statement of comprehensive income 
 
For the year ended 31 July                                   2016       2015 
 
                                                  Note       GBP000       GBP000 
 
Revenue                                                     1,269      2,205 
 
Cost of sales                                             (1,282)    (1,900) 
 
Exploration write-off                              1      (1,162)    (2,205) 
 
Impairment of producing fields                     2            -    (1,100) 
 
Total cost of sales                                       (2,444)    (5,205) 
 
                                                           ------     ------ 
 
Gross loss                                                (1,175)    (3,000) 
 
Administrative expenses                                     (593)      (975) 
 
Profit/(loss) on fixed asset disposal                          28        (2) 
 
Finance income                                                 64         55 
 
Finance expense                                             (228)      (208) 
 
                                                           ------     ------ 
 
Loss before taxation                                      (1,904)    (4,130) 
 
Taxation credit                                               266      2,346 
 
                                                           ------     ------ 
 
Total comprehensive loss for the year                     (1,638)    (1,784) 
attributable to the equity shareholders of the 
parent 
 
                                                           ======     ====== 
 
 
 
 
Earnings per share (EPS) attributable to the             Pence per  Pence per 
equity shareholders of the parent                            share      share 
 
Basic and diluted EPS                                      (0.67)p    (0.86)p 
 
Consolidated statement of financial position 
 
As at 31 July                                                 2016       2015 
 
                                                   Note       GBP000       GBP000 
 
Assets 
 
Non-current assets 
 
Intangible assets                                   1        4,453      4,839 
 
Property, plant and equipment                       2        1,060      1,562 
 
Deferred tax asset                                             157          - 
 
                                                           -------    ------- 
 
Total non-current assets                                     5,670      6,401 
 
                                                           -------    ------- 
 
Current assets 
 
Inventories                                                     23         13 
 
Trade and other receivables                                    210        374 
 
Cash and cash equivalents                                    1,718      3,151 
 
                                                           -------    ------- 
 
                                                             1,951      3,538 
 
                                                           -------    ------- 
 
Total assets                                                 7,621      9,939 
 
                                                            ======     ====== 
 
Liabilities 
 
Current liabilities 
 
Trade and other payables                                     (444)    (1,043) 
 
Current tax liabilities                                      (148)      (141) 
 
Derivative                                                       -       (32) 
 
Short-term borrowings                                            -       (23) 
 
                                                           -------    ------- 
 
Total current liabilities                                    (592)    (1,239) 
 
                                                            ------     ------ 
 
Non-current liabilities 
 
Long-term borrowings                                             -      (141) 
 
Deferred tax liabilities                                         -      (109) 
 
Long-term provisions                                       (2,347)    (2,143) 
 
                                                           -------    ------- 
 
Total non-current liabilities                              (2,347)    (2,393) 
 
                                                           -------    ------- 
 
Total liabilities                                          (2,939)    (3,632) 
 
                                                           -------    ------- 
 
Net assets                                                   4,682      6,307 
 
                                                            ======     ====== 
 
Capital and reserves attributable to equity 
holders 
of the parent 
 
Share capital                                                2,449      2,449 
 
Share premium                                               15,901     15,901 
 
Merger reserve                                               2,868      2,868 
 
Retained deficit                                          (16,536)   (14,911) 
 
                                                           -------    ------- 
 
Total equity                                                 4,682      6,307 
 
                                                            ======     ====== 
 
 
These financial statements were approved by the Board of Directors and 
authorised for issue on 30 September 2016 and signed on its behalf by: 
 
Phil Greenhalgh, Finance Director 
 
Company registration number 5217946 
 
Consolidated statement of changes in equity 
 
Attributable to the equity holders of the parent 
 
                           Share      Share    Merger  Retained       Total 
                         capital    premium   reserve   deficit      equity 
 
                            GBP000       GBP000      GBP000      GBP000        GBP000 
 
Balance at 1 August        2,049     14,080     2,868  (13,154)       5,843 
2014 
 
Issue of share capital       400      1,821         -         -       2,221 
(net of costs) 
 
Loss for the year              -          -         -   (1,784)     (1,784) 
attributable to the 
equity shareholders of 
the parent 
 
Share based payment            -          -         -        27          27 
 
                          ------     ------    ------    ------      ------ 
 
Balance at 31 July 2015    2,449     15,901     2,868  (14,911)       6,307 
 
                          ======     ======    ======    ======      ====== 
 
 
 
                             GBP000      GBP000      GBP000      GBP000        GBP000 
 
Balance at 1 August         2,449    15,901     2,868  (14,911)       6,307 
2015 
 
Loss for the year               -         -         -   (1,638)     (1,638) 
attributable to the 
equity shareholders of 
the parent 
 
Share based payment             -         -         -        13          13 
 
                           ------    ------    ------    ------      ------ 
 
Balance at 31 July 2016     2,449    15,901     2,868  (16,536)       4,682 
 
                           ======    ======    ======    ======      ====== 
 
Consolidated statement of cash flows 
 
For the year ended 31 July                                   2016       2015 
 
                                                             GBP000       GBP000 
 
Cash flows used in operating activities 
 
Loss after tax from continuing operations                 (1,638)    (1,784) 
 
Adjustments for: 
 
Share based payments                                           13         27 
 
Depreciation                                                  195        386 
 
Exploration write-off                                       1,162      2,205 
 
Impairment of property, plant & equipment                       -      1,100 
 
Disposal of fixed asset                                      (28)          2 
 
Finance income                                               (64)       (55) 
 
Finance expense                                               228        208 
 
Taxation credit                                             (266)    (2,346) 
 

Decrease in trade and other receivables                       170         79 
 
(Increase)/decrease in inventories                           (10)         19 
 
Decrease in trade and other payables                         (84)      (102) 
 
                                                           ------     ------ 
 
Net cash used in operating activities                       (322)      (261) 
 
                                                           ======     ====== 
 
Cash flows used in investing activities 
 
Purchase of property, plant and equipment                     (1)        (4) 
 
Sale of property                                              338          - 
 
Purchase of intangible assets                             (1,224)    (3,394) 
 
Repayment of derivative                                      (30)          - 
 
Expenditure on well decommissioning                             -        (4) 
 
Interest received                                               4          7 
 
                                                           ------     ------ 
 
Net cash used in investing activities                       (913)    (3,395) 
 
                                                           ======     ====== 
 
Cash flows (used in)/from financing activities 
 
Proceeds from issue of share capital (net of                    -      2,221 
issue costs) 
 
(Decrease)/increase in payables relating to share            (71)         71 
capital issue costs 
 
Repayment of borrowings                                     (164)       (22) 
 
Finance costs                                                (17)       (18) 
 
                                                           ------     ------ 
 
Net cash (used in)/from financing activities                (252)      2,252 
 
                                                           ======     ====== 
 
Net decrease in cash and cash equivalents                 (1,487)    (1,404) 
 
Exchange gain on cash and cash equivalents                     54         54 
 
Cash and cash equivalents at beginning of year              3,151      4,501 
 
                                                           ------     ------ 
 
Cash and cash equivalents at end of year                    1,718      3,151 
 
                                                           ======     ====== 
 
Notes to the financial statements 
 
1              Intangible assets 
 
Intangible assets - Group                                    2016        2015 
 
                                                             GBP000        GBP000 
 
At 1 August                                                 4,839       3,553 
 
Additions                                                     776       3,491 
 
Exploration write-off                                     (1,162)     (2,205) 
 
                                                           ------      ------ 
 
At 31 July                                                  4,453       4,839 
 
                                                           ======      ====== 
 
Intangible assets comprise the Group's pre-production expenditure on licence 
interests as follows: 
 
                                                             2016        2015 
                                                             GBP000        GBP000 
 
France Béarn des Gaves                                          -       1,160 
 
Ireland FEL 2/13 (Doyle A/b/c, Heaney)                        224         149 
 
Ireland FEL 3/13 (Beckett, Wilde, Shaw)                       487         318 
 
Ireland LO 16/2                                                35           - 
 
Ireland LO 16/19-22                                             8           - 
 
UK PEDL143 (Holmwood)                                         721         681 
 
UK PEDL180 (Wressle)                                        2,672       2,270 
 
UK PEDL181                                                     47          43 
 
UK PEDL182 (Broughton North)                                  223         218 
 
UK PEDL299 (Hardstoft)                                          5           - 
 
UK Block 41/24 (Maxwell)                                       31           - 
 
                                                        ---------   --------- 
 
Total                                                       4,453       4,839 
 
                                                           ======      ====== 
 
Exploration write-off 
 
France (Béarn des Gaves)                                    1,162           - 
 
PEDL181 (Kiln Lane)                                             -       2,205 
 
                                                       ---------- ----------- 
 
Total                                                       1,162       2,205 
 
                                                            =====       ===== 
 
The UK PEDL143 exploration licence carries a well commitment by September 2018. 
If the Group elects to continue with this licence, it will need to fund the 
drilling of a well by raising funds or by farming down. If the Group is not 
able to raise funds, farmdown, or extend the PEDL143 licence; or elects not to 
continue in any other licence, then the impact on the financial statements will 
be the impairment of some or all of the intangible assets disclosed above. 
 
2              Property, plant and equipment 
 
                                   Furniture  Leasehold   Producing      Total 
                                           &   building      fields 
                                   computers 
 
                                        GBP000       GBP000        GBP000       GBP000 
 
Cost 
 
At 1 August 2014                          48        437      10,785     11,270 
 
Additions                                  4          -           -          4 
 
Disposal                                 (2)          -           -        (2) 
 
                                      ------     ------      ------     ------ 
 
At 31 July 2015                           50        437      10,785     11,272 
 
Additions                                  1          -           -          1 
 
Disposal                                   -      (437)           -      (437) 
 
                                      ------     ------      ------     ------ 
 
At 31 July 2016                           51          -      10,785     10,836 
 
                                      ======     ======      ======     ====== 
 
Depreciation, depletion and 
impairment 
 
At 1 August 2014                          40         99       8,085      8,224 
 
Charge for year                            4         23         359        386 
 
Impairment in year                         -          -       1,100      1,100 
 
                                      ------     ------      ------     ------ 
 
At 31 July 2015                           44        122       9,544      9,710 
 
Charge for year                            3          7         185        195 
 
Disposal                                   -      (129)           -      (129) 
 
                                      ------     ------      ------     ------ 
 
At 31 July 2016                           47          -       9,729      9,776 
 
                                      ======     ======      ======     ====== 
 
Net Book Value 
 
At 31 July 2014                            8        338       2,700      3,046 
 
                                      ======     ======      ======     ====== 
 
At 31 July 2015                            6        315       1,241      1,562 
 
                                      ======     ======      ======     ====== 
 
At 31 July 2016                            4          -       1,056      1,060 
 
                                      ======     ======      ======     ====== 
 
The producing fields referred to in the table above are the production assets 
of the Group, namely the oilfields at Crosby Warren and West Firsby, and the 
Group's interest in the Whisby W4 well, representing three of the Group's cash 
generating units. 
 
The carrying value of each producing field was tested for impairment by 
comparing the carrying value with the value in use. The value in use was 
calculated using a discounted cash flow model with production decline rates of 
7-8%, Brent crude prices rising from US$54 per barrel in 2017 to US$74 in 2020 
and a pre-tax discount rate of 18%. The pre-tax discount rate is derived from a 
post-tax rate of 10%, and is high because of the applicable rate of tax in the 
UK. Cash flows were projected over the expected life of the fields which is 
expected to be longer than 5 years. 
 
There was no impairment in the year (2015: GBP1,100,000 relating to the West 
Firsby site). 
 
The leasehold building at Abingdon was sold in the period. 
 
 
 
END 
 

(END) Dow Jones Newswires

October 03, 2016 02:00 ET (06:00 GMT)