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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Lgo Energy | LSE:LGO | London | Ordinary Share | GB00BDGJ2R22 | ORD 0.05P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.05 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMLGO
RNS Number : 2610E
LGO Energy PLC
05 May 2017
For immediate release 5 May 2017
LGO Energy plc
("LGO" or "the Company")
Annual Report and Accounts 2016
LGO announces that the Company's audited Annual Report and Accounts for the year ended 31 December 2016 is being posted to shareholders and will be available from the Company's website, www.lgo-energy.com and extracts are set out below.
Chairman and Chief Executive's Review
Financial year 2016 was a transitional period whilst the Company addressed a number of restrictions on the Company's growth while it remained steadfastly focussed on its production operations and options in Trinidad. In 2016 we were highly constrained by the BNP Paribas ("BNPP") loan default and unable to deploy capital to Goudron operations and as a result saw production materially reduced. The Company's licence to operate and its reputation have, however, been preserved through careful management of relationships and the Company has successfully addressed the financial pressures that resulted from the loan covenant default in late 2015. The Company's focus in 2016 was on restructuring and improving its liquidity through the reduction of costs, renegotiation of the terms of its banking facility and through making payments to major creditors by way of LGO shares and through equity placements. In December 2016, the outstanding balance of the loan owed to BNPP was refinanced with Lind Partners LLP ("Lind") in the form of a convertible security agreement with repayment terms affordable from existing production cashflow and robust to oil price volatility.
Post period, LGO entered 2017 with renewed optimism and believes that restored financial stability, higher oil prices and the recommencement of development drilling operations at the Goudron Field will move the Company back on a trajectory to profitability. The new drilling campaign, targeting the underexploited Mayaro Sandstone interval, commenced in March 2017 with the drilling and successful completion of two new wells, GY-682 and GY-683.
Preparatory work for the enhanced oil recovery ("EOR") pilot scheme at Goudron is now also well advanced and will lead over time to the Company's ability to recover a higher proportion of the very large oil in place that is now independently certified in Goudron and to which contingent resources of up to 65 million barrels are assigned in two independent competent person's reports.
In the South West Peninsula of Trinidad ("SWP"), where LGO holds several exciting opportunities, the Company has continued to advance its lease holding towards drilling and has extended the exclusivity over certain leases in order to seek private petroleum licences. In March 2017 work started on assimilating the Bonasse Field operations into the Company's operations with the first oil having been successfully delivered at the beginning of May 2017. As 2017 progresses it is intended to finalise all lease acquisitions and to progress towards a full independent verification of the Company's previous prospect generation work with a view to seeking a partner for future drilling.
2016 Highlights
OPERATIONAL
-- Production from the Goudron Field was materially affected by the slow-down in activity resulting from the BNPP loan default, however, Group oil sales of 464 bopd were achieved on average through 2016.
-- Operational, environmental and safety standards were maintained, despite the lack of capital available to invest in the field and, as a result, no incidents occurred at Goudron during the year.
-- Group oil sales in the 12-month period were 169,702 barrels net to LGO (2015: 323,080 barrels).
-- A new updated resource assessment issued in July 2016 for the Goudron Field has increased gross reserves in all categories; proven (1.58 mmbbls), probable (11.79 mmbbls) and possible (25.60 mmbbls), and also increased contingent resources and oil in place.
-- Lower royalty rates have been negotiated to support the Goudron production at oil prices below US$50/barrel, reducing the overriding royalty rate on the majority of barrels produced to below 10%, effective from 1 February 2016.
-- Production operations were maintained uninterrupted throughout 2016 at the Ayoluengo Field in northern Spain.
-- Despite a continuous dialogue and the submission of a comprehensive legal and technical application to extend the La Lora concession, granted in 1967, it formally expired at the end of January 2017 at which time the field had been suspended pending the granting of a new concession which is hoped to occur during 2017.
CORPORATE
-- In the 12 months ending 31 December 2016, the Company raised a gross amount of GBP8.56 million through the issue of 5.10 billion ordinary shares at an average price of 0.17p (pre-consolidation equivalent of 3.4p post-consolidation). Of this total, 1.15 billion shares were issued to suppliers for settlement of creditor balances.
-- On 9 December 2016, the balance of the BNPP facility was refinanced by means of a new facility from Lind Partners LLP, of which US$1.825 million were drawn-down to make a payment to BNPP and to remove the previous loan from default.
-- In order to reduce the cash costs in the business the Directors deferred a substantial portion of their fees in 2016 and converted these deferred fees to shares at a 20% premium to the market price in early March 2017.
-- The Board composition was revised in early 2017 to further reduce long-term operating costs with the roles of Chairman and Chief Executive being combined and a new Non-executive director being appointed.
FINANCIAL
-- Revenue for period of GBP4.55 million (2015 GBP9.48 million). -- Gross profit for period was a loss of GBP0.15 million (2015 a profit of GBP0.33 million). -- Pre-tax Group loss for period of GBP11.89 million (2015 loss of GBP11.47 million).
Notes
All figures are net to LGO unless otherwise stated.
Enquiries:
Hot Features
Premium
+44 (0) 203 794
LGO Energy plc 9230
Neil Ritson/Fergus Jenkins
+44(0) 20 7628
Beaumont Cornish Limited 3396
Nomad and Joint Broker
Rosalind Hill Abrahams/Roland Cornish
+44 (0) 20 3005
VSA Capital 5000
Joint Broker
Andrew Monk/Andrew Raca
+44 (0) 20 3757
Camarco 4983
Public and Investor Relations
Gordon Poole/Billy Clegg
Chairman and Chief Executive's Review (continued)
Corporate
The Board spent a significant amount of time in 2016 on activities aimed at resolving the banking default and large trade creditor liability that was created following the GY-678 stuck-pipe incident in late 2015. Strenuous efforts were made to reduce cash outlays with selective staff cuts and the suspension of payments of Directors fees being implemented, along with a drastic reduction of discretional spend in such areas as advisors and travel. The overall objective was to maintain the underlying value of the asset portfolio and preserve the Company's licence to operate in Trinidad and Spain.
A strategic review initiated in late 2015 was pursued, including a formal sale process which commenced in December 2015, and which was ultimately terminated in March 2016.
Negotiations with BNPP continued throughout the year and various agreements were made to defer larger loan repayments in favour of smaller, affordable payments that allowed the steady reduction of the liability outstanding to BNPP under the terms of the defaulted 2015 pre-paid swap. Several trade creditors from the 2015 drilling campaign at the Goudron Field accepted equity in LGO as payment of their accrued remuneration. Following a General Meeting on 18 April 2016, the Company carried out several placements to raise working capital, which was deployed to reduce the trade creditors.
In December 2016 a new facility, a convertible security agreement, was signed with Lind Partners, LLP ("Lind") and the remaining balance due to BNPP was discharged in the form of a one off payment of US$1.75 million and a deferred payment of US$0.25 million, falling due in three years. The new agreement with Lind was for a headline limit of US$8.6 million with an initial draw-down of US$1.825 million in December 2016 to support the repayment to BNPP. The new facility which, was specifically designed to be affordable from the cashflow from Goudron, even at low oil prices, is repayable over 24 months. The facility has a combination of Company selectable conversion arrangements and a Lind call agreement to convert the outstanding balance at a fixed price of 3p per share (post-consolidation), though the first five payments were made in cash and the Company intends to make all payments in cash throughout the life of the facility. To date, no shares have been issued to Lind.
The new funding arrangements with Lind resulted in the elimination of all defaults and allowed the Trinidad business to pay all remaining historical trade creditors and to immediately commit to the drilling of two new Mayaro infill wells at the Goudron Field, through the use of cash in Trinidad, access to which had been previously restricted.
The Board was simplified in January 2017 by the combination of the Chairman and Chief Executives roles and the costs were further reduced by the Chief Executive and the Non-executive Directors reducing their fees to improve the sustainability of the Company. Gordon Stein, a chartered accountant and experienced Chief Financial Officer, was appointed as a new Non-executive Director and Chairman of the Audit Committee of the Company on 10 January 2017. To complement the new programme of value creation, VSA Capital were appointed as joint broker and Camarco as investor and public relations advisors.
With the balance sheet restored the Company called a further General Meeting in March 2017 to gain approvals to allot further shares, to consolidate the outstanding shares by 20 to 1 and to reaffirm the Board's commitment to future investment in Trinidad. All resolutions put to that General Meeting were passed.
Trinidad & Tobago
Strategically the Company remains focussed on Trinidad, which represents the majority of near-term activity and significant long-term growth potential within existing assets. The Company holds interests in three producing oil fields; Goudron, Icacos and Bonasse, and in a number of private petroleum leases where production has yet to be established.
Trinidad, with its long history of oil and gas operations and the significant remaining potential identified by the Trinidadian authorities and major international companies such as BP, Shell and BHP, continues to offer attractive investment opportunities. To date onshore Trinidad has produced over 3 billion barrels of oil and is estimated to contain a further 1 to 3 billion in new exploration and secondary recovery from known accumulations. A mature and competitive service sector supports further development where the key missing ingredient for growth is new investment.
The Company has assessed the potential for profitable growth within its existing assets, and in additional assets that would be acquired through third-party arrangements or directly from the Trinidad and Tobago government, and re-affirmed at its General Meeting held on 7 March 2017 that its investment strategy will remain Trinidad-focussed.
Goudron Field
LGO acquired the rights to the Goudron Field, by way of an Incremental Production Service Contract ("IPSC"), through its wholly owned subsidiary, Goudron E&P Limited ("GEPL"), in October 2012. The Goudron Field lies in the Eastern Fields Area in south eastern onshore Trinidad. Under the terms of the IPSC the Company acts as a service contractor to the Petroleum Company of Trinidad & Tobago ("Petrotrin") who reimburse LGO on the basis of the oil sales and oil price.
The Goudron Field contains two separate reservoir packages; the shallow Mayaro (formally referred to as Goudron) Sandstones and the deeper Grose Morne and Cruse equivalent C-sands. During drilling in 2014 and 2015 a deeper, pre-Cruse, interval of turbidite sands was penetrated and evaluated and this has added an additional, previously unexplored, deep resource for future exploitation.
The Company's plans for the development of the Goudron Field conceived at the time of purchase and still being pursued today included four distinct phases:
Phase 1: reactivation of existing wells and the repair and replacement of infrastructure
Phase 2: drilling of the deep C-sand reservoir to further raise production and establish the basis for an EOR project
Phase 3: infill drilling of the shallow Mayaro Sandstone reservoir and the simultaneous carrying out of a pilot waterflood project in the C-sands
Phase 4: a full-field EOR project depending on results of the pilot scheme
Phases 1 and 2 have been completed and work on Phase 3 is now underway in 2017.
Phase 3 consists of an infill programme of up to 70 Mayaro Sandstone wells designed to recover an estimated 4 mmbbls of incremental oil reserves from the shallow formations. Plans are in place for the first 10 locations and the Company already holds existing regulatory approval for 45 further wells. The average Mayaro Sandstone well will be drilled to a depth between 1,000 and 1,750 feet at an estimated cost of less than US$500,000 per well. The first two wells in this
programme, GY-682 and GY-683, were drilled in March and April 2017 and are now on production. Following the successful drilling and completion of the first two wells, GY-682 and 683, the Company now plans to embark on drilling two further wells once new drilling contracts have been negotiated. A number of additional well locations have been permitted and further wells are planned for 2017 should results justify and funding allow up to an overall 10 well programme.
In parallel with the Mayaro Sandstone infill drilling programme, and as part of Phase 3 of the development, a water injection pilot project has been designed using existing C-sand wells (using three injectors and up to six producers). Permitting of the Pilot EOR is expected to be complete in 2017 at which time, subject to funding, the project will commence. The results of the Phase 3 EOR Pilot will determine the detailed form of the Phase 4 development.
In July 2016 LGO issued a new updated resource assessment for the Goudron Field. The previous work by LR Senergy in 2015 was integrated with the ongoing studies by the Company and the data from the seven new wells acquired in 2015. The analysis was independently audited by Deloitte's Resource Evaluation & Advisory team in Alberta, Canada ("Deloitte"). As announced on 18 July 2016, volumes in all reserves categories, proven, probable and possible, have increased, as well as the estimated oil in place within the field which has risen by over 20 percent. Estimated oil initially in place ("STOIIP") within the field has increased since the 2015 independent review and is now reported to be up to 975 mmbbls. The majority of the 21% increase relates to a thickening of the C-sand and pre-Cruse reservoir unit which is observed in logs of wells drilled during the 2015 campaign, notably well GY-678.
The increased STOIIP is especially important in the context of a waterflood EORproject at Goudron which is currently at a planning stage. The present Deloitte report includes a gross 3C estimate of 63.4 mmbbls, which is very close to the 2012 estimate and again confirms the significant potential of the planned EOR phase of the field development.
Proved (1P) gross oil reserves in the Mayaro Sandstone and C-sand reservoirs has increased by 3% to 1.58 mmbbls, which when adjusted for the oil produced in the period (240,000 barrels), represents a 22% increase in proven reserves when compared to the June 2015 resource report. The gross proven and probable reserves (2P) have increased by 4% to 11.79 mmbbls. Proved, probable and possible reserves (3P) have increased by 9% to 25.60 mmbbls.
Table 1: Goudron Reserves and Contingent Resources (mmbbls)
Reserves Contingent Resources
------- ----------------------------------- ---------------------------------------------
Proved Proved Proved + Low Estimate Best Estimate High Estimate
+ probable probable
+ possible
------- ------- ------------ ------------ ------------- -------------- --------------
Total
Oil 1.58 11.79 25.60 3.15 22.20 63.40
------- ------- ------------ ------------ ------------- -------------- --------------
Deloitte CPR, April 2016
The Company was severely constrained as to the deployment of capital in the field following the loss of GY-678 and the oil price collapse in late 2015, and until April 2016 production levels dropped across all well types, old and new. From mid-2016 onwards the Company was able to deploy restricted amounts of capital to the maintenance of production and a number of wells were selected for additional perforating. Six wells; GY-50, GY-277, GY-288, GY-668, GY-671 and GY-673, were recompleted and placed on pumped production.
The Company was also able to negotiate a significant reduction in the overriding royalty charged by Petrotrin at lower oil prices, further improving the margin to support operations in the Goudron Field.
As noted above the drilling of the first of the Mayaro Sandstone infill targets has commenced, representing the start of the originally planned Phase 3 development, with GY-682 spudded on 4 March 2017 and GY-683 spudded on 31 March 2017. Both wells were placed on initial production at levels exceeding the anticipated average of 45 bopd which is encouraging for the programme as a whole.
South West Peninsula
Through its local subsidiary, Leni Trinidad Limited ("LTL"), LGO holds a 50% interest in the producing Icacos Oil Field in the South West Peninsula ("SWP") where production has been maintained in 2016 at roughly 25 bopd gross. LTL also holds a 25% shareholding in Beach Oilfield Limited ("BOLT") acquired in October 2015. BOLT operates the Bonasse Field where production remains low pending further work. LTL holds an exclusivity agreement with BOLT on acquiring the balance of the issued share capital in BOLT and thereby securing all BOLT's subsurface rights. Exclusivity has been extended by mutual agreement. Timeline to completion is linked to the award by the Trinidad and Tobago Ministry of Energy and Energy Industries ("MEEI") of a renewal of the relevant private petroleum licence ("PPL").
Operations in 2016 were restricted to routine well maintenance at the Icacos Field in order to maintain production at current levels. An application to the MEEI for a new PPL has been made for the Icacos Field and is a pre-requisite for further development work to commence. An extension of the PPL covering the Bonasse leases has also been applied for with the MEEI prior to commencing additional work, including drilling additional wells, to raise production levels. However, as a shareholder of BOLT, and under the existing licences, LTL commenced operations to reactivate the existing wells at Bonasse in early second quarter 2017 and commenced oil deliveries in May.
LGO also holds, through LTL, a number of 100% owned private petroleum leases totalling approximately 1,750 acres, and the Company is in the process of obtaining a PPL from the MEEI in order to finalise ongoing field survey activities with a view to drilling exploration wells at some point in the future.
A number of significant prospects for oil and gas have been identified in the SWP acreage using a combination of data acquired from BOLT and integrated with a proprietary soil geochemistry survey as well as the LTL sponsored Full Tensor Gravity airborne survey acquired in 2015. Future drilling of the various shallow and deep prospects now depends on completion of the licensing process currently with the MEEI for consideration.
Taken together LGO's involvement in the underexplored but highly prospective SWP provides the Company with a number of attractive opportunities over the coming months. The reactivation of production from Bonasse with the first oil having been successfully delivered at the beginning of May 2017, is the first step in a programme of activity that will involve well reactivations, the drilling of new shallow wells and the farming-out of deep drilling to a partner so that the large potential seen to exist in multiple Cruse and Herrera Sandstone plays can be fully exploited. The Board of LGO are excited by the potential in the SWP, which has already created significant interest and are confident that it will attract third-party involvement and capital.
Spain
Until the end of January 2017 LGO held 100% ownership in the La Lora Production Concession ("La Lora") through its wholly owned subsidiary, Compañia Petrolifera de Sedano S.L.U. ("CPS"). La Lora in northern Spain contains the Ayoluengo Oilfield. An application for the production of oil from the nearby Hontomin discovery within the Huermeces permit was made some time ago and is pending award. The award of an economically viable production concession at the Hontomin Field is dependent on the Ayoluengo oil field facilities remaining in place.
In August 2015 LGO made an application for La Lora to be extended for a further two 10-year periods from its expiry at the end of January 2017. In the application the initial post-renewal work plans included the side-tracking of a number of existing wells into areas of the reservoir believed to contain unswept oil, based on extensive studies of the well and 3D seismic data. The combination of new well bores into areas of unswept oil is anticipated to provide significant production uplift.
In anticipation of a successful extension the Company maintained a regular well intervention programme using a combination of hot oil, xylene and acid, which continued to provide improvements in production of these mature, active wells. These interventions, using the Company owned Cardwell work-over rig, continued throughout 2016 to optimise production whilst limiting operating costs.
Oil sales averaged 86 bopd in 2016 were made exclusively to the previously Saint-Gobain owned glass factory in the Burgos area of Northern Spain. Oil stocks were built up in periods of lower oil prices and released for sale in late 2016.
Due to a lack of access in some areas covered by national parks and a reduced interest in exploration, CPS completed a process, started in 2015, of relinquishing the exploration permits held in Northern Spain. Various performance bonds and other payments were returned by the Spanish authorities.
Despite the comprehensive application and strong engagement with the Spanish authorities, CPS's application for the extension of La Lora was unfortunately rejected by the Spanish authorities on legal grounds and, despite all other renewal criteria having been met, La Lora was formally terminated on 31 January 2017 by Royal Decree issued on 28 January 2017. Under European Union and Spanish legislation, the offer of a new concession requires a process of public tender in which the previous concession holder has preferential treatment. CPS has formally requested such a tender is initiated at the earliest possible opportunity in 2017. In the interim CPS has suspended all operations and the majority of staff contracts and is working to minimise ongoing costs whilst a new concession is sought.
Outlook
Key targets for 2017 include:
-- The drilling and completion of further Mayaro Sandstone infill production wells in the Goudron Field
-- Filing a comprehensive plan and technical justification for the first phase of a waterflood EOR project at the Goudron Field
-- Completion of all leasing arrangements in the SWP of Trinidad and the issue of a Competent Persons Report covering the Company's assets
-- Submitting a competitive application for a new 30-year concession at the Ayoluengo Field in Spain.
The Company continues to focus on the long-term value of the significant potential in its portfolio, most notably at Goudron and in the SWP of Trinidad, whilst continuing to maintain short-term capital discipline.
Production operations have been successfully maintained through the period of extreme capital constraint in 2016 and production has returned to a growth trajectory in 2017 as the drilling of new infill wells to the Mayaro Sandstone have commenced, with two wells GY-682 and 683, being completed before the issue of this report and approvals granted for four further wells, with two wells to commence once new drilling contracts have been negotiated. New infill drilling is anticipated to arrest underlying decline and to deliver approximately 45 bopd of growth in Goudron production per well. Depending on the number of new wells that are drilled, and their timing, production is projected to double within 12 months.
As noted above, the SWP assets represent a very significant medium term growth opportunity for the Company and will be pursued vigorously to ensure that the value they represent is delivered as soon as practical. Production operations are expected to be underway in Bonasse by mid-year and further development of the shallow (less than 2,000 feet) Bonasse will follow the updating of the private petroleum licence currently before the Ministry of Energy and Energy Affairs for final consideration and issue. The compilation of an independent Competent Persons Report ("CPR") for the SWP is expected to be completed in 2017 and will then provide the required support to a farm-out of the deep (greater than 12,000 feet) exploration wells.
To date, LGO has paid the capital and interest on the drawn balance of the funding agreement with Lind in cash derived from operations at Goudron and expects to continue to do so for the remaining life of the facility. The facility has significant undrawn capacity and this will be evaluated in any funding decisions made to support the Company's ongoing operations and growth options.
Safe and environmentally sound onshore production operations where there are proven reserves will remain central to the Company's long-term growth proposition.
The Board's firm view is that the assets owned and controlled by the Company in Trinidad, and the additional opportunities available in that market, provide significant value to LGO's shareholders and that that value will be best realised through the continued exploitation of those assets. After a very difficult 18 month period, the Company has re-established a platform for growth and is gaining momentum in its recovery, thereby creating a positive outlook for investors.
Neil Ritson
Chairman and Chief Executive Officer
4 May 2017
Qualified Person's statement:
The information contained in this document has been reviewed and approved by Neil Ritson, Chairman and Executive Director for LGO Energy plc. Mr Ritson is a member of the Society of Petroleum Engineers, a Fellow of the Geological Society and an Active Member of the American Association of Petroleum Geologists. Mr Ritson has over 38 years of relevant experience in the oil industry.
Finance Review
Results for the year
Trinidad and Corporate
The oil and gas industry experienced another difficult year in 2016, however, it also provided a turning point for LGO. With oil price sentiment eventually improving and with LGO refinancing its banking facility and settling the outstanding creditors, the Company was well positioned for a return to growth.
LGO started the year with US$10.9 million of bank debt and US$6.5 million of trade creditors from the drilling programme of 2015. It actively sought long term investors to refinance the bank debt, pay key creditors and allow the Company to restart investment, however, this process was impacted by the uncertain oil price environment and full resolution of the banking default was only completed late in Q4 2016, later than originally hoped.
Through discussions and negotiations with creditors, LGO was able to find the means to gradually pay down the outstanding balances, through the use of internally generated cashflow and through the issuance of share capital. This process, whilst successfully allowing the Company to restore itself, resulted in significant dilution to shareholders with shares in issue increasing over 150% in 2016 and the share price falling 59% in the year.
The process was supported by managing costs, including cost reductions and deferrals of UK corporate overheads, which fell 14% in the year and with the continuation of the deferral of Directors' fees which totalled GBP397,000, a process started in 2015. The focus on cost reduction continued into 2017 where significant savings have continued to be made and further reductions are planned.
By Q3 2016, most of the trade creditors had been repaid and the bank loan was at a much more manageable level. The improvement in oil price sentiment resulted in an increase in the number of potential investors interested in refinancing the defaulted bank loan and LGO actively focused on selecting and closing the best solution for the Company.
In December 2016, LGO announced that it had come to an agreement with BNPP to refinance its loan facility (then US$2.6 million outstanding) through the signing of a convertible facility with Lind, drawing down US$1.825 million from a facility with a face value total US$8.6 million. This successfully took LGO out of banking default and freed it to utilise its own local cash reserves in Trinidad to commence the preparation for further drilling.
Spain
Throughout 2016, the Company awaited the Spanish authorities' decision on the application for the extension of the Ayoluengo concession that was due to expire on 31 January 2017. No confirmation had arrived at the end of December 2016 and it was only in the last week of January 2017 that the Company was officially advised that the renewal would not be granted. The Company therefore ceased to operate the field on 31 January 2017.
A new tender is expected for the award of the Ayoluengo concession and whilst the Company is optimistic of winning the resulting bidding process, in light of the uncertainty of that result, the Company has decided to impair the Company's current book value of the concession. This has led to an impairment charge of GBP7.94m. All or part of this may be written back to the balance sheet in the event that concession is successfully re-awarded to the Company.
A number of potential liabilities exist as a result of the historical operatorship. Firstly, the cost to abandon the field is estimated at GBP0.81 million and the possibility of having to release all the staff that are currently suspended is estimated to be GBP0.33 million. These costs will not be paid by the Company at all if another bidder wins the tender or in the event that the Company successfully regains the right to operate. Any decommissioning costs associated with the new concession would be delayed until the end of the new concession period.
Oil price environment
At the start of 2016, the oil and gas supply and demand dynamic continued to be weak, with the lower global demand and the ongoing oversupply, continuing to dominate price sentiment.
In 2016 the oil price continued its fall reaching a low of US$26.19/bbl (WTI) in February 2016, before steadily recovering to reach a high of US$54.01/bbl (WTI) in December 2016, and closing the year at US$53.75/bbl (WTI), an increase of US$27.56/bbl or 105% on the year's earlier low. The oil price stabilised in a trading range of US$43-54/bbl and maintained that for the last 4 months of the year.
In the first four months of 2017, the oil price (WTI) trading range has narrowed to US$47-54/bbl and the medium term oil price sentiment looks to be more positive. The Company continues to monitor price, as well as those related commodities and markets that could impact the Company's future project and operational development plans.
Cashflow
Cash outflow from operating activities in 2016 after movements in working capital amounted to GBP4.29 million (2015: outflow of GBP2.80 million). Net cash inflow from financing activities was GBP1.44 million (2015: GBP13.42 million). Net cash outflow from investing activities was GBP0.31 million (2015: GBP8.07 million).
Net cash position
Net cash at 31 December 2016 was GBP1.83 million (2015: GBP4.13 million).
Outlook
The Company has made significant progress in resolving all the outstanding creditor issues dating back to 2015. The Company continues to target costs reduction and has already significantly cut costs in 2017 through Board simplification and is planning additional reductions throughout the remainder of 2017. The Company has successfully returned to drilling with encouraging results from the first two wells completed to date.
Looking further ahead and the Company's return to growth, the following will form key elements of the Company's delivery:
-- Continue the programme of lower risk Mayaro Sandstone wells -- Progressing the Goudron EOR scheme -- Rapidly progress and de-risk the interests in the SWP, and. -- Submit the Company's bid for Ayoluengo
With the Company freed from the restrictions experienced over most of 2016, with the oil price stable and having already drilled two new wells at the start of 2017, the Company is now able to focus on accelerating the growth agenda.
James Thadchanamoorthy
Chief Financial Officer
4 May 2017
Independent Auditors Report to the Shareholders of LGO Energy plc
We have audited the financial statements of LGO Energy plc for the year ended 31 December 2016 which comprise the Group Statement of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Cash Flows, the Group and Parent Company Statements of Changes in Equity and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set out within the Directors' report, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2016 and of the Group's and the Parent Company's losses for the year then ended;
-- the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
-- the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
-- adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the Parent Company financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or -- we have not received all the information and explanations we require for our audit.
We have nothing to report by exception.
Rowan J. Palmer (Senior Statutory Auditor)
for and on behalf of Chapman Davis LLP
Chartered Accountants and Statutory Auditors
London, United Kingdom, 4 May 2017
GLOSSARY & NOTES
1P proved reserves
2P proved plus probable reserves
3P proved plus probable plus possible reserves
AIM London Stock Exchange Alternative Investment Market
barrel or bbl 45 US gallons
bbls barrels of oil
best estimate or P50 the most likely estimate of a parameter based on all available data, also often termed the
P50 (or the value of a probability distribution of outcomes at the 50% confidence level)
BNPP BNP Paribas
BOLT Beach Oilfield Limited
bopd barrels of oil per day
contingent resources those quantities of petroleum estimated, as of a given date, to be potentially recoverable
from known accumulations, but the applied project(s) are not yet considered mature enough
for commercial development due to one or more contingencies. Contingent Resources may
include,
for example, projects for which there are currently no viable markets, or where commercial
recovery is dependent on technology under development, or where evaluation of the
accumulation
is insufficient to clearly assess commerciality
C-sand sandstone reservoirs below the pre-Mayaro unconformity and above the pre-Lower Cruse
unconformity
encompassing sandstones of equivalent age to both the Gros Morne and the Lower Cruse
formations
CESL Columbus Energy Services Limited
CPR Competent Persons Report
CPS Compañia Petrolifera de Sedano
EOR enhanced oil recovery
FTG Full Tensor Gravity Gradiometry. Full tensor gradiometers measure the rate of change of the
gravity vector in all three perpendicular directions
GEPL Goudron E&P Limited
Goudron Sandstone reservoir sands above the pre-Mayaro unconformity, also known as the Mayaro Sandstone
IPSC incremental production service contract, the form of contract under which the Goudron Field
is operated on behalf of Petrotrin
La Lora La Lora Production Concession in Spain
LTL Leni Trinidad Limited
Mayaro Sandstone reservoir sands above the pre-Mayaro unconformity, also known as the Goudron Sandstone
MEEI Trinidad and Tobago Ministry of Energy and Energy Industries (formally the Ministry of
Energy
and Energy Affairs, MEEA)
m thousand
mm million
mmbbls million barrels of oil
Petrotrin The Petroleum Company of Trinidad and Tobago Limited
PPL private petroleum rights license
pre-Cruse early to mid-Miocene sandstone reservoir below the pre-Cruse unconformity
proved reserves those quantities of petroleum, which, by analysis of geoscience and
engineering data, can be estimated with reasonable certainty to be commercially recoverable
(1P), from a given date forward, from known reservoirs and under defined economic
conditions,
operating methods, and government regulations
probable reserves those additional reserves which analysis of geoscience and engineering data indicate are
less
likely to be recovered than Proved Reserves but more certain to be recovered than Possible
Reserves. It is equally likely that actual remaining quantities recovered will be greater
than or less than the sum of the estimated Proved plus Probable Reserves (2P)
possible reserves those additional reserves which analysis of geoscience and engineering data suggest are less
likely to be recoverable than Probable Reserves. The total quantities ultimately recovered
from the project have a low probability to exceed the sum of Proved plus Probable plus
Possible
(3P) Reserves, which is equivalent to the high estimate scenario
PRMS Petroleum Resources Management System
reserves those quantities of petroleum anticipated to be commercially recovered by application of
development
projects to known accumulations from a given date forward under defined conditions
Saint-Gobain Saint-Gobain Vicasa SA
STOIIP or oil in place stock tank oil initially in place, those quantities of oil that are estimated to be in known
reservoirs prior to production commencing
side-track an additional or replacement well bore created from an existing well bore at a depth below
the surface casing
SWP South West Peninsula of Trinidad
WTI West Texas Intermediate; oil price marker crude
The estimates provided in this statement are based on the Petroleum Resources Management System ("PRMS") published by the Society of Petroleum Engineers ("SPE") and are reported consistent with the SPE's 2011 guidelines. All definitions used in the announcement have the meaning given to them in the PRMS.
Financial Statements
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2016
Year ended Year ended
31 December 31 December
2016 2015
Note GBP 000's GBP 000's
Revenue 2 4,545 9,475
Cost of sales (4,693) (9,808)
------------ ------------
Gross loss (148) (333)
Administrative expenses 3 (3,157) (4,196)
Amortisation and depreciation 3 (1,150) (1,732)
Exceptional item 3 466 (2,515)
------------ ------------
Loss from operations (3,989) (8,776)
Finance income/(charges) 9 43 (240)
10 &
Impairment charge 11 (7,940) (2,457)
------------ ------------
Loss before taxation (11,886) (11,473)
Income tax (expense)/credit 5 (33) 930
------------ ------------
Loss for the year attributable
to equity holders of the
parent (11,919) (10,543)
------------ ------------
Other comprehensive income
Exchange differences on translation
of foreign operations 2,426 23
Other comprehensive income
for the year net of taxation 2,426 23
------------ ------------
Total comprehensive income
for the year attributable
to equity holders of the
parent (9,493) (10,520)
------------ ------------
Loss per share (pence)
Basic 8 (0.21) (0.35)
Diluted 8 (0.21) (0.35)
Post capital reorganisation 8 (4.26) (6.93)
All operations are considered
to be continuing (see note
2).
The accompanying accounting policies and notes form an integral part of these financial statements.
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
As at 31 December As at 31
2016 December
2015
Note GBP 000's GBP 000's
Assets
Non-current assets
Intangible evaluation assets 10 4,998 11,477
Goodwill 10 - -
Oil and gas assets 11 14,958 14,754
Property, plant and equipment 11 1,839 2,690
Investment in associate 12 38 34
Total non-current assets 21,833 28,955
Current assets
Inventories 14 457 309
Trade and other receivables 13 1,076 2,475
Cash and cash equivalents 20 1,827 4,127
Total current assets 3,360 6,911
------------------ ----------
Total assets 25,193 35,866
------------------ ----------
Liabilities
Current liabilities
Trade and other payables 15 (2,100) (6,212)
Borrowings 16 (682) (7,006)
Taxation 5 (23) (20)
Deferred consideration 15 (120) (120)
Total current liabilities (2,925) (13,358)
Non-current liabilities
Borrowings 16 (1,180) (246)
Provisions 17 (1,188) (1,011)
------------------ ----------
Total non-current liabilities (2,368) (1,257)
------------------ ----------
Total liabilities (5,293) (14,615)
------------------ ----------
Net assets 19,900 21,251
================== ==========
Shareholders' equity
Called-up share capital 18 4,184 1,632
Share premium 62,122 56,564
Share based payments reserve 19 1,341 1,309
Retained earnings (53,846) (42,156)
Revaluation surplus 3,122 3,351
Foreign exchange reserve 2,977 551
------------------
Total equity attributable
to equity holders of the
parent 19,900 21,251
================== ==========
The accompanying accounting policies and notes form
an integral part of these financial statements.
These financial statements were approved by the Board
of Directors on 4 May 2017 and signed on its behalf
by:
Neil Ritson James Thadchanamoorthy
Chief Executive Officer Chief Financial Officer
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
As at 31 December As at 31 December
2016 2015
Note GBP 000's GBP 000's
Assets
Non-current assets
Property, plant and equipment 11 61 210
Intangible assets 10 82 115
Investment in subsidiaries 12 1 1
Trade and other receivables 13 38,151 29,928
------------------ ------------------
Total non-current assets 38,295 30,254
Current assets
Trade and other receivables 13 460 437
Cash and cash equivalents 20 600 406
------------------ ------------------
Total current assets 1,060 843
------------------ ------------------
Total assets 39,355 31,097
------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 15 (718) (450)
Borrowings 16 (682) -
Deferred consideration 15 (120) (120)
Total current liabilities (1,520) (570)
Non-current liabilities
Borrowings 16 (739) -
Total non-current liabilities (739) -
------------------ ------------------
Total liabilities (2,259) (570)
------------------ ------------------
Net assets 37,096 30,527
================== ==================
Shareholders' equity
Called-up share capital 18 4,184 1,632
Share premium 62,122 56,564
Share based payments reserve 19 1,341 1,309
Retained earnings 24 (30,551) (28,978)
------------------ ------------------
Total equity attributable
to equity holders of the parent 37,096 30,527
================== ==================
The accompanying accounting policies and notes form an
integral part of these financial statements.
These financial statements were approved by the Board
of Directors on 4 May 2017 and signed on its behalf by:
Neil Ritson James Thadchanamoorthy
Chief Executive Officer Chief Financial Officer
GROUP STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2016
Year ended Year ended
31 December 31 December
2016 2015
GBP 000's GBP 000's
Cash outflow from operating activities
Operating loss (3,989) (8,776)
Decrease/(increase) in trade and
other receivables 1,398 (279)
(Decrease)/increase in trade and
other payables (4,070) 1,057
Increase in inventories (148) (6)
Depreciation 2,119 4,496
Amortisation 420 710
Income tax paid (20) -
------------
Net cash (outflow) from operating
activities (4,290) (2,798)
------------ ------------
Cash flows from investing activities
Proceeds from equity swap arrangement - -
Payment to acquire associate - (34)
Payments to acquire intangible
assets (1) (833)
Payments to acquire tangible assets (309) (7,202)
Net cash outflow from investing
activities (310) (8,069)
------------ ------------
Cash flows from financing activities
Issue of ordinary share capital 8,560 9,853
Share issue costs (450) (458)
Finance income/(charges) paid 86 (262)
Repayment of borrowings (8,199) (4,224)
Proceeds of borrowings 1,445 8,511
Net cash inflow from financing
activities 1,442 13,420
------------ ------------
Net increase/(decrease) in cash
and cash equivalents (3,158) 2,553
Foreign exchange differences on
translation 858 (9)
Cash and cash equivalents at beginning
of year 4,127 1,583
------------ ------------
Cash and cash equivalents at end
of year 1,827 4,127
------------ ------------
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2016
Year ended Year ended
31 December 31 December
2016 2015
GBP 000's GBP 000's
Cash outflow from operating activities
Operating loss (1,384) (1,380)
Increase in trade and other receivables (23) (320)
Increase/(decrease) in trade and
other payables 269 (717)
Depreciation 149 39
Amortisation 33 18
Net cash outflow from operating
activities (956) (2,360)
------------ ------------
Cash flows from investing activities
Proceeds from equity swap arrangement - -
Loans granted to subsidiaries (8,223) (3,707)
Payments to acquire intangible
assets - (133)
Payments to acquire tangible assets - (248)
Net cash outflow from investing
activities (8,223) (4,088)
------------ ------------
Cash flows from financing activities
Issue of ordinary share capital 8,560 9,853
Share issue costs (450) (458)
Finance charges paid (146) (131)
Repayments of borrowings (75) (3,553)
Proceeds of borrowings 1,445 660
------------ ------------
Net cash inflow from financing
activities 9,334 6,371
------------ ------------
Net increase/(decrease) in cash
and cash equivalents 155 (77)
Foreign exchange differences on 39 -
borrowings
Cash and cash equivalents at beginning
of year 406 483
------------ ------------
Cash and cash equivalents at end
of year 600 406
------------ ------------
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2016
Called Share Share Retained Foreign Revaluation Total
up share premium based earnings exchange surplus Equity
capital reserve payments reserve
reserve
GBP GBP GBP GBP GBP GBP GBP
000's 000's 000's 000's 000's 000's 000's
Group
As at 31 December
2014 1,364 47,437 1,296 (32,169) 528 3,907 22,363
Loss for the year - - - (10,543) - - (10,543)
Revaluation surplus
amortisation 556 (556) -
Currency translation
differences - - - - 23 - 23
---------- --------- ---------- ----------- ---------- ------------ -----------
Total comprehensive
income - - - (9,987) 23 (556) (10,520)
Share capital
issued 268 9,585 - - - - 9,853
Cost of share
issue - (458) - - - - (458)
Share based payments - - 13 - - - 13
Total contributions
by and distributions
to owners of the
Company 268 9,127 13 - - - 9,408
As at 31 December
2015 1,632 56,564 1,309 (42,156) 551 3,351 21,251
---------- --------- ---------- ----------- ---------- ------------ -----------
Loss for the year - - - (11,919) - - (11,919)
Revaluation surplus
amortisation - - - 229 - (229) -
Currency translation
differences - - - - 2,426 - 2,426
---------- --------- ---------- ----------- ---------- ------------ -----------
Total comprehensive
income - - - (11,690) 2,426 (229) (9,493)
Share capital
issued 2,552 6,008 - - - - 8,560
Cost of share
issue - (450) - - - - (450)
Share based payments - - 32 - - - 32
Total contributions
by and distributions
to owners of the
Company 2,552 5,558 32 - - - 8,142
As at 31 December
2016 4,184 62,122 1,341 (53,846) 2,977 3,122 19,900
---------- --------- ---------- ----------- ---------- ------------ -----------
Company
As at 31 December
2014 1,364 47,437 1,296 (27,475) - - 22,622
Loss for the year - - - (1,503) - - (1,503)
-------- --------- -------- ----------- ---- ---- ----------
Total comprehensive
income - - - (1,503) - - (1,503)
Share capital
issued 268 9,585 - - - - 9,853
Cost of share
issue - (458) - - - - (458)
Share based payments - - 13 - - - 13
-------- --------- -------- ----------- ---- ---- ----------
Total contributions
by and distributions
to owners of the
Company 268 9,127 13 - - - 9,408
-------- --------- -------- ----------- ---- ---- ----------
As at 31 December
2015 1,632 56,564 1,309 (28,978) - - 30,527
-------- --------- -------- ----------- ---- ---- ----------
Loss for the year - - - (1,573) - - (1,573)
-------- --------- -------- ----------- ---- ---- ----------
Total comprehensive
income - - - (1,573) - - (1,573)
Share capital
issued 2,552 6,008 - - - - 8,560
Cost of share
issue - (450) - - - - (450)
Share based payments - - 32 - - - 32
-------- --------- -------- ----------- ---- ---- ----------
Total contributions
by and distributions
to owners of the
Company 2,552 5,558 32 - - - 8,142
-------- --------- -------- ----------- ---- ---- ----------
As at 31 December
2016 4,184 62,122 1,341 (30,551) - - 37,096
-------- --------- -------- ----------- ---- ---- ----------
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2016
1 Summary of significant accounting policies
1.01 General information and authorisation of financial
statements
LGO Energy plc is a public limited company registered
in the United Kingdom under the Companies Act 2006.
The address of its registered office is Suite 4B,
Princes House, 38 Jermyn Street, London SW1Y 6DN.
The Company's Ordinary shares are traded on the AIM
Market operated by the London Stock Exchange. The
Group financial statements of LGO Energy plc for the
year ended 31 December 2016 were authorised for issue
by the Board on 4 May 2017 and the balance sheets
signed on the Board's behalf by Mr. Neil Ritson and
Mr. James Thadchanamoorthy.
1.02 Statement of compliance with IFRS
The Group's financial statements have been prepared
in accordance with International Financial Reporting
Standards (IFRS). The Company's financial statements
have been prepared in accordance with IFRS as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006. The
principal accounting policies adopted by the Group
and Company are set out below.
New and revised standards and interpretations not
applied
At the date of authorisation of these Financial Statements,
the following Standards and Interpretations were in
issue but not yet effective (and in some cases had
not yet been adopted by the EU):
IFRS 2 Share-based Payment (effective date 1 January
2018)
IFRS 9 Financial Instruments (effective date 1 January
2018)
IFRS 15 Revenue from Contracts with Customers (effective
date 1 January 2018)
IFRS 16 Leases (effective date 1 January 2019)
The Directors do not expect that the adoption of the
Standards and Interpretations listed above will have
a material impact on the financial statements of the
Group in future periods however, it is not practicable
to provide a reasonable estimate of the effect of
these standards until a detailed review has been completed.
1.03 Basis of preparation
The consolidated financial statements have been prepared
on the historical cost basis, except for the measurement
to fair value of assets and financial instruments
as described in the accounting policies below, and
on a going concern basis.
The Company spent much of 2016 repaying its creditors
created by the loan default in late 2015. By December
2016, the Company had refinanced the bank loan through
the signing of a new facility, had raised additional
funds and was planning for growth.
As well as the new facility signed in December 2016,
the Company has additional capacity to raise funds
and historically, it has both gained approval from
shareholders to issue shares and actually raised the
funds in the market.
The Company's internal cashflow forecasts monitor
both the short and long term timelines, factoring
in the known risks and uncertainties. These forecasts
are updated regularly and demonstrate that, with the
current cash reserves and the continued fund raising
capacity, the Company is able to continue operating
and making all bank and trade creditor payments over
the next 12 month period.
The Directors believe that despite the uncertainty
in the market, the Company is now on a clear path
to growth. The Directors are of the opinion that on-going
evaluations of the Company's interests indicate that
preparation of the Group's accounts on a going concern
basis is appropriate.
The financial report is presented in Pound Sterling
(GBP) and all values are rounded to the nearest thousand
pounds (GBP'000) unless otherwise stated.
1.04 Basis of consolidation
The consolidated financial information incorporates
the results of the Company and its subsidiaries ("the
Group") using the purchase method. In the consolidated
balance sheet, the acquiree's identifiable assets,
liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired
operations are included in the consolidated income
statement from the date on which control is obtained.
Inter-company transactions and balances between Group
companies are eliminated in full.
The investment in associate has been recorded at cost
and has not been adjusted to reflect the Group's 25%
share of the net profits/losses and assets/liabilities
of the associate from the date of acquisition to the
balance sheet date as it was deemed immaterial.
1.05 Goodwill and intangible assets
Intangible assets are recorded at cost less eventual
amortisation and provision for impairment in value.
Goodwill on consolidation is capitalised and shown
within non-current assets. Positive goodwill is subject
to an annual impairment review, and negative goodwill
is immediately written-off to the income statement
when it arises.
1.06 Oil and gas exploration assets and development/producing
assets
The Group applies the successful efforts method of
accounting for oil and gas assets, having regard to
the requirements of IFRS 6 'Exploration for and Evaluation
of Mineral Resources'.
All licence acquisition, exploration and evaluation
costs are initially capitalised as intangible fixed
assets in cost centres by field or by exploration
area, as appropriate, pending determination of commerciality
of the relevant property. Directly attributable administration
costs are capitalised insofar as they relate to specific
exploration activities, as are finance costs to the
extent they are directly attributable to financing
development projects. Pre-licence costs and general
exploration costs not specific to any particular licence
or prospect are expensed as incurred.
If prospects are deemed to be impaired ('unsuccessful')
on completion of the evaluation, the associated costs
are charged to the income statement. If the field
is determined to be commercially viable, the attributable
costs are transferred to development/production assets
within property, plant and equipment in single field
cost centres.
Subsequent expenditure is capitalised only where it
either enhances the economic benefits of the development/producing
asset or replaces part of the existing development/producing
asset.
Increases in the carrying amount arising on revaluation
of oil and gas properties are credited to other comprehensive
income and shown as revaluation surplus reserve in
shareholders' equity. Decreases that offset previous
increases of the same asset are charged in other comprehensive
income and debited against revaluation surplus reserve
directly in equity; all other decreases are charged
to the income statement. Each year the difference
between depreciation based on the revalued carrying
amount of the asset charged to the income statement,
and depreciation based on the asset's original cost
is transferred from 'revaluation surplus reserve'
to 'retained earnings.
Net proceeds from any disposal of an exploration asset
are initially credited against the previously capitalised
costs. Any surplus proceeds are credited to the income
statement. Net proceeds from any disposal of development/producing
assets are credited against the previously capitalised
cost. A gain or loss on disposal of a development/producing
asset is recognised in the income statement to the
extent that the net proceeds exceed or are less than
the appropriate portion of the net capitalised costs
of the asset.
1.07 Commercial reserves
Commercial reserves are proven and probable oil and
gas reserves, which are defined as the estimated quantities
of crude oil, natural gas and natural gas liquids
which geological, geophysical and engineering data
demonstrate with a specified degree of certainty to
be recoverable in future years from known reservoirs
and which are considered commercially producible.
There should be a 50 per cent statistical probability
that the actual quantity of recoverable reserves will
be more than the amount estimated as a proven and
probable reserves and a 50 per cent statistical probability
that it will be less.
1.08 Depletion and amortisation
All expenditure carried within each field is amortised
from the commencement of production on a unit of production
basis, which is the ratio of oil and gas production
in the period to the estimated quantities of commercial
reserves at the end of the period plus the production
in the period, generally on a field by field basis.
In certain circumstances, fields within a single development
area may be combined for depletion purposes. Costs
used in the unit of production calculation comprise
the net book value of capitalised costs plus the estimated
future field development costs necessary to bring
the reserves into production. Changes in the estimates
of commercial reserves or future field development
costs are dealt with prospectively.
1.09 Decommissioning
Where a material liability for the removal of production
facilities and site restoration at the end of the
productive life of a field exists, a provision for
decommissioning is recognised. The amount recognised
is the present value of estimated future expenditure
determined in accordance with local conditions and
requirements. The cost of the relevant tangible fixed
asset is increased with an amount equivalent to the
provision and depreciated on a unit of production
basis. Changes in estimates are recognised prospectively,
with corresponding adjustments to the provision and
the associated fixed asset.
1.10 Property, plant and equipment
Property, plant and equipment is stated in the Balance
Sheet at cost less accumulated depreciation and any
recognised impairment loss. Depreciation on property,
plant and equipment other than exploration and production
assets, is provided at rates calculated to write off
the cost less estimated residual value of each asset
on a straight-line basis over its expected useful
economic life of between one and five years.
Leasehold improvements are classified as property,
plant and equipment and are depreciated on a straight-line
basis over the period of the lease.
1.11 Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost is determined by the weighted
average cost formula, where cost is determined from
the weighted average of the cost at the beginning
of the period and the cost of purchases during the
period. Net realisable value represents the estimated
selling price less all estimated costs of completion
and costs to be incurred in marketing, selling and
distribution.
1.12 Revenue recognition
Revenue represents amounts invoiced in respect of
sales of oil and gas exclusive of indirect taxes and
excise duties and is recognised on delivery of product.
Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective
rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected
life of the financial asset to that asset's net carrying
amount.
1.13 Foreign currencies
Transactions in foreign currencies are translated
at the exchange rate ruling at the date of each transaction.
Foreign currency monetary assets and liabilities are
retranslated using the exchange rates at the balance
sheet date. Gains and losses arising from changes
in exchange rates after the date of the transaction
are recognised in the income statement. Non--monetary
assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated
at the exchange rate at the date of the original transaction.
In the consolidated financial statements, the net
assets of the Company are translated into its presentation
currency at the rate of exchange at the balance sheet
date. Income and expense items are translated at the
average rates for the period. The resulting exchange
differences are recognised in equity and included
in the translation reserve.
1.14 Operating leases
The costs of all operating leases are charged against
operating profit on a straight-line basis at existing
rental levels. Incentives to sign operating leases
are recognised in the income statement in equal instalments
over the term of the lease.
1.15 Financial instruments
Financial assets and financial liabilities are recognised
on the Group's balance sheet when the Group becomes
a party to the contractual provisions of the instrument.
The particular recognition and measurement methods
adopted are disclosed below:
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and
demand deposits and other short-term highly liquid
investments that are readily convertible to a known
amount of cash and are subject to an insignificant
risk of changes in value.
(ii) Trade receivables
Trade receivables do not carry any interest and are
stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts.
(iii) Trade payables
Trade payables are not interest-bearing and are stated
at their nominal value.
(iv) Investments
Investments in subsidiaries are stated at cost and
reviewed for impairment if there are indications that
the carrying value may not be recoverable. The investment
in associate has been recorded at cost and has not
been adjusted to reflect the Group's 25% share of
the net profits/losses and assets/liabilities of the
associate from the date of acquisition to the balance
sheet date as it was deemed immaterial.
(v) Equity instruments
Equity instruments issued by the Company and the Group
are recorded at the proceeds received, net of direct
issue costs.
(vi) Derivative instruments
Derivative instruments are recorded at cost, and adjusted
for their market value as applicable. They are assessed
for any equity and debt component which is subsequently
accounted for in accordance with IFRS's.
1.16 Finance costs
Borrowing costs are recognised as an expense when
incurred.
1.17 Borrowings
Borrowings are recognised initially at fair value,
net of any applicable transaction costs incurred.
Borrowings are subsequently carried at amortised cost;
any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the
income statement over the period of the borrowings
using the effective interest method (if applicable).
Interest on borrowings is accrued as applicable to
that class of borrowing.
1.18 Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made
of the amount of the obligation.
When the Group expects some or all of a provision
to be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset
but only when the reimbursement is virtually certain.
The expense relating to any provision is presented
in the income statement net of any reimbursement.
1.19 Dividends
Dividends are reported as a movement in equity in
the period in which they are approved by the shareholders.
1.20 Taxation
The tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax, including UK corporation and overseas
tax, is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have
been enacted or substantially enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts
of assets and liabilities in the financial information
and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary
differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits
will be available against which deductible temporary
differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other
than in a business combination) of other assets and
liabilities in a transaction that affects neither
the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in subsidiaries
and associates, and interests in joint ventures, except
where the Group is able to control the reversal of
the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed
at each balance sheet date and adjusted to the extent
that it is probable that sufficient taxable profits
will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability
is settled or the asset is realised. Deferred tax
is charged or credited in the income statement, except
when it relates to items charged or credited directly
to equity, in which case the deferred tax is also
dealt with in equity.
1.21 Impairment of assets
At each balance sheet date, the Group assesses whether
there is any indication that its property, plant and
equipment and intangible assets have been impaired.
Evaluation, pursuit and exploration assets are also
tested for impairment when reclassified to oil and
natural gas assets. If any such indication exists,
the recoverable amount of the asset is estimated in
order to determine the extent of the impairment, if
any. If it is not possible to estimate the recoverable
amount of the individual asset, the recoverable amount
of the cash--generating unit to which the asset belongs
is determined.
The recoverable amount of an asset or a cash--generating
unit is the higher of its fair value less costs to
sell and its value in use. The value in use is the
present value of the future cash flows expected to
be derived from an asset or cash--generating unit.
This present value is discounted using a pre--tax
rate that reflects current market assessments of the
time value of money and of the risks specific to the
asset, for which future cash flow estimates have not
been adjusted. If the recoverable amount of an asset
is less than its carrying amount, the carrying amount
of the asset is reduced to its recoverable amount.
That reduction is recognised as an impairment loss.
The Group's impairment policy is to recognise a loss
relating to assets carried at cost less any accumulated
depreciation or amortisation immediately in the income
statement.
Goodwill acquired in a business combination is, from
the acquisition date, allocated to each of the cash--generating
units, or groups of cash--generating units, that are
expected to benefit from the synergies of the combination.
Goodwill is tested for impairment at least annually,
and whenever there is an indication that the asset
may be impaired. An impairment loss is recognised
or cash--generating units, if the recoverable amount
of the unit is less than the carrying amount of the
unit. The impairment loss is allocated to reduce the
carrying amount of the assets of the unit by first
reducing the carrying amount of any goodwill allocated
to the cash--generating unit, and then reducing the
other assets of the unit, pro rata on the basis of
the carrying amount of each asset in the unit.
If an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate
of its recoverable amount but limited to the carrying
amount that would have been determined had no impairment
loss been recognised in prior years. A reversal of
an impairment loss is recognised in the income statement.
Impairment losses on goodwill are not subsequently
reversed.
1.22 Share based payments
Equity settled transactions:
The Group provides benefits to employees (including
senior executives) of the Group in the form of share-based
payments, whereby employees render services in exchange
for shares or rights over shares (equity-settled transactions).
The cost of these equity-settled transactions with
employees is measured by reference to the fair value
of the equity instruments at the date at which they
are granted. The fair value is determined by using
a Black-Scholes model.
In valuing equity-settled transactions, no account
is taken of any performance conditions, other than
conditions linked to the price of the shares of LGO
Energy plc (market conditions) if applicable. The
cumulative expense recognised for equity-settled transactions
at each reporting date until vesting date reflects
(i) the extent to which the vesting period has expired
and (ii) the Group's best estimate of the number of
equity instruments that will ultimately vest. The
Income Statement charge or credit for a period represents
the movement in cumulative expense recognised as at
the beginning and end of that period.
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity,
over the period in which the performance and/or service
conditions are fulfilled, ending on the date on which
the relevant employees become fully entitled to the
award (the vesting date).
No expense is ultimately recognised for awards that
do not vest.
If the terms of an equity-settled award are modified,
as a minimum an expense is recognised as if the terms
had not been modified. In addition, an expense is
recognised for any modification that increases the
total fair value of the share-based payment arrangement,
or is otherwise beneficial to the employee, as measured
at the date of modification.
The dilutive effect, if any, of outstanding options
is reflected as additional share dilution in the computation
of earnings per share.
1.23 Segmental reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker,
who is responsible for allocating resources and assessing
performance of the operating segments, has been identified
as the Board of Directors that makes strategic decisions.
The Group has a single business segment: oil and gas
exploration, development and production. The business
segment can be split into six geographical segments:
Spain, USA, Trinidad & Tobago, St. Lucia, Cyprus and
UK.
Spain and Trinidad & Tobago, have been reported as
the Group's direct oil and gas producing entities
and are the Group's only third party revenue generating
operations. The UK is the Group's parent and administrative
entity and is reported on accordingly. The entities
in Cyprus, St Lucia and the U.S. are non-operating
in that they are either hold investments or are dormant.
Their results are consolidated and reported on together
as a single segment.
1.24 Share issue expenses and share premium account
Costs of share issues are written off against the
premium arising on the issues of share capital.
1.25 Share based payments reserve
This reserve is used to record the value of equity
benefits provided to employees and Directors as part
of their remuneration and provided to consultants
and advisors hired by the Group from time to time
as part of the consideration paid.
1.26 Revaluation Surplus Reserve
This reserve is used to record the increase on revaluation
of assets, in particular of oil and gas properties.
1.27 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning
the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results.
The estimates and assumptions that have a risk of
causing material adjustment to the carrying amounts
of assets and liabilities within the next financial
year are discussed below.
(i) Recoverability of intangible oil and gas costs
Costs capitalised as intangible assets are assessed
for impairment when circumstances suggest that the
carrying value may exceed its recoverable value. This
assessment involves judgement as to the likely commerciality
of the asset, the future revenues and costs pertaining
and the discount rate to be applied for the purposes
of deriving a recoverable value.
(ii) Decommissioning
The Group has decommissioning obligations in respect
of its Spanish and Trinidadian assets. The full extent
to which the provision is required depends on the
legal requirements at the time of decommissioning,
the costs and timing of any decommissioning works
and the discount rate applied to such costs.
(iii) Share-based payment transactions
The Group measures the cost of equity-settled transactions
with employees by reference to the fair value of the
equity instruments at the date at which they are granted.
The fair value is determined using a Black-Scholes
model.
1.28 Earnings per share
Basic earnings per share is calculated as net profit
attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than
dividends) and preference share dividends, divided
by the weighted average number of ordinary shares,
adjusted for any bonus element.
Diluted earnings per share is calculated as net profit
attributable to members of the parent, adjusted for:
(i) Costs of servicing equity (other than dividends) and
preference share dividends;
(ii) The after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have
been recognised as expenses; and
(iii) Other non-discretionary changes in revenues or expenses
during the period that would result from the dilution
of potential ordinary shares; divided by the weighted
average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
2 Turnover and segmental analysis
Management has determined the operating segments based
on the reports reviewed by the Board of Directors
that are used to make strategic decisions.
The Board has determined there is a single business
segment: oil and gas exploration, development and
production. The business segment can be further split
into six geographical segments: Trinidad & Tobago,
Spain, Cyprus, St Lucia, USA and UK.
Spain and Trinidad & Tobago, have been reported as
the Group's direct oil and gas producing entities
and are the Group's only third party revenue generating
operations. The UK is the Group's parent and administrative
entity and is reported on accordingly. The entities
in Cyprus, St Lucia and the U.S. are non-operating
in that they either hold investments or are dormant.
Their results are consolidated and reported on together
as a single segment.
Year ended 31 Corporate Operating Operating Non-operating Total
December 2016
UK (*) Spain Trinidad
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating profit/(loss)
by geographical
area
Revenue (**) - 920 3,625 - 4,545
---------- ---------- ---------- ----------------------------- ---------
Operating profit/(loss) (1,384) (465) (2,113) (27) (3,989)
Asset impairment
(***) - (7,940) - - (7,940)
Finance (charges)/income (189) - 232 - 43
Profit/(loss)
before taxation (1,573) (8,405) (1,881) (27) (11,886)
---------- ---------- ---------- ----------------------------- ---------
Other information
Depreciation
and amortisation (183) (204) (2,152) - (2,539)
Capital additions - 10 300 - 310
---------- ---------- ---------- ----------------------------- ---------
Segment assets
Non-current
assets 143 160 21,529 - 21,833
Trade and other
receivables 460 125 490 1 1,076
Inventories - 252 206 - 457
Cash 600 14 1,210 3 1,827
---------- ---------- ---------- ----------------------------- ---------
Consolidated
total assets 1,203 551 23,435 4 25,193
---------- ---------- ---------- ----------------------------- ---------
Segment liabilities
Trade and other
payables (718) (218) (1,155) (9) (2,100)
Taxation - - - (23) (23)
Borrowings (1,421) - (442) - (1,862)
Deferred consideration (120) - - - (120)
Provisions - (813) (374) - (1,188)
---------- ---------- ---------- ----------------------------- ---------
Consolidated
total liabilities (2,259) (1,031) (1,971) (32) (5,293)
---------- ---------- ---------- ----------------------------- ---------
(*) Intercompany balances and transactions between
Group entities have been eliminated.
(**) Revenues were derived from a single customer
within each of these operating countries.
(***) Non-current assets in relation to Spain were
impaired due to non-renewal of the licence. Operations
in Spain have only been temporarily suspended pending
a new application for a new licence hence, is still
classified as an operating entity.
Corporate Operating Operating Non-operating Total
Year ended 31 UK Spain Trinidad
December 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating profit/(loss)
by geographical
area
Revenue - 1,112 8,363 - 9,475
---------- ---------- ---------- -------------- ---------
Operating profit/(loss) (1,380) (1,093) (6,158) (145) (8,776)
Asset impairment (1,850) - (607) - (2,457)
Finance charges (123) - (117) - (240)
Profit/(loss)
before taxation (3,353) (1,093) (6,882) (145) (11,473)
---------- ---------- ---------- -------------- ---------
Other information
Depreciation
and amortisation (57) (582) (4,567) - (5,206)
Capital additions 381 220 7,434 - 8,035
---------- ---------- ---------- -------------- ---------
Segment assets
Non-current
assets 325 7,631 20,999 - 28,955
Trade and other
receivables 437 96 1,942 - 2,475
Inventories - 135 174 - 309
Cash 406 159 3,554 8 4,127
---------- ---------- ---------- -------------- ---------
Consolidated
total assets 1,168 8,021 26,669 8 35,866
---------- ---------- ---------- -------------- ---------
Segment liabilities
Trade and other
payables (450) (270) (5,480) (12) (6,212)
Taxation - - - (20) (20)
Borrowings - - (7,252) - (7,252)
Deferred consideration (120) - - - (120)
Provisions - (703) (308) - (1,011)
---------- ---------- ---------- -------------- ---------
Consolidated
total liabilities (570) (973) (13,040) (32) (14,615)
---------- ---------- ---------- -------------- ---------
3 Operating loss 2016 2015
----------------------------------------- ---------- ----------
GBP 000's GBP 000's
Operating loss is arrived at after
charging:
Fees payable to the Company's auditor
for:
-the audit of the Company and Group
accounts 39 45
-audit related assurance services 2 3
Directors' emoluments - fees and
benefits 803 879
Depreciation (*) 2,119 4,496
Amortisation 420 710
Exceptional item (**) (466) 2,515
---------- ----------
(*) Depreciation of certain oil and gas assets of
GBP1,389,000 (2015: GBP3,474,000) has been recognised
within cost of sales.
(**) (Cost reduction)/costs in relation to an abandoned
well and lost downhole equipment have been disclosed
separately as an exceptional item.
4 Employee information (excluding Directors') 2016 2015
--------------------------------------------- ---------- ----------
GBP 000's GBP 000's
Staff costs:
Wages and salaries 1,554 1,537
Employer NIC's 236 230
---------- ----------
Total 1,789 1,767
---------- ----------
The average number of employees working on a full
time equivalent basis:
Number Number
Administration 13 15
Operations 24 27
---------- ----------
Total 37 42
---------- ----------
5 Taxation 2016 2015
-------------------------------------------- ---------- ----------
GBP 000's GBP 000's
Analysis of tax charge in the year
Tax charge/(income) on ordinary activities 33 (930)
---------- ----------
Factors affecting the tax charge
for the year:
Loss on ordinary activities before
tax 11,886 11,473
Standard rate of corporation tax
in the UK 20% 20%/21%
Loss on ordinary activities multiplied
by the standard rate of corporation
tax 2,377 2,323
Effects of:
Non-deductible expenses (8) (377)
Overseas tax on profits 33 20
Overseas deferred tax expense - (950)
Future tax benefit not brought to
account (2,369) (1,946)
---------- ----------
Current tax charge/(income) for the
year 33 (930)
---------- ----------
No deferred tax asset has been recognised in the Group
because there is uncertainty in the timing of suitable
future profits against which the accumulated losses
can be offset.
6 Dividends
--- --------------------------------------------------------------------
No dividends were paid or proposed by the Directors
(2015: nil).
7 Directors' emoluments
-----------------------------------------------------
2016 2015
GBP 000's GBP 000's
Directors' remuneration 803 879
---------- ----------
Directors fees Pension and medical Employer NIC's Consultancy fees Total
benefits
------------------------ ---------------- ---------------------- ---------------- ------------------ ---------
GBP000's GBP000's GBP000's GBP000's GBP000's
2016
Executive Directors
Neil Ritson 240 10 33 - 283
Fergus Jenkins 150 17 20 - 187
James Thadchanamoorthy 150 17 20 - 187
Non-Executive Directors
Steve Horton (*) 80 - 10 - 90
Michael Douglas 50 - 6 - 56
---------------- ---------------------- ---------------- ------------------ ---------
670 44 89 - 803
---------------- ---------------------- ---------------- ------------------ ---------
2015
Executive Directors
Neil Ritson 240 8 35 - 283
Fergus Jenkins 150 18 20 - 188
James Thadchanamoorthy 150 18 20 - 188
Non-Executive Directors
Steve Horton 80 - 13 30 123
Iain Patrick 37 - 6 - 43
Michael Douglas 50 - 6 - 56
---------------- ---------------------- ---------------- ------------------ ---------
707 44 98 30 879
---------------- ---------------------- ---------------- ------------------ ---------
(*) Steve Horton resigned on 10 January 2017.
These accounts have been prepared on an accruals basis and therefore, include amounts paid
and unpaid at the year-end. At the year-end, Neil Ritson was owed GBP239,000, Fergus Jenkins
was owed GBP63,000, James Thadchanamoorthy was owed GBP51,000, Steve Horton was owed GBP70,000
and Michael Douglas was owed GBP44,000. In March 2017, these unpaid amounts were settled by
issuing new ordinary shares in the Company, to the Directors (excluding Steve Horton) (see
note 22).
8 Loss per share
----------------------------------------------------------------------------------------------------------
The calculation of loss per share is based on the loss after taxation divided by the weighted
average number of shares in issue during the year:
2016 2015
--------- ---------
Net loss after taxation (GBP000's) (11,919) (10,543)
Weighted average number of ordinary shares used in calculating basic loss per share
(millions) 5,592 3,044
Weighted average number of ordinary shares used in calculating diluted loss per
share (millions) 5,915 3,343
Basic loss per share (expressed in pence) (0.21) (0.35)
Diluted loss per share (expressed in pence) (0.21) (0.35)
As the inclusion of potentially issuable ordinary shares would result in a decrease in the
loss per share, they are considered to be anti-dilutive and as such, a diluted loss per share
is not included.
In March 2017, the Company reorganised its share capital and reduced the number of ordinary
shares in issue by a ratio of 20:1. The weighted average number of ordinary shares used in
calculating the basic and diluted loss per share post the capital reorganisation were 280
million and 296 million respectively. The basic loss per share post the capital reorganisation
would be 4.26p (2015: 6.93p).
9 Finance (income)/charges 2016 2015
GBP 000's GBP 000's
Loan interest payable 178 161
Loan facility fees 174 79
Realised (gain)/loss on loan maturity (395) -
----------- ----------
Total (43) 240
----------- ----------
Loan facility fees include the fair value of options
issued in connection with the loan from Lind Partners
LLC (Lind) (see note 19).
10 Intangible assets 2016
------------------------------------------------------------------------------------------------- ---------
Group
Intangible evaluation assets Software Goodwill Total
GBP000's GBP000's GBP000's GBP000's
Cost
As at 1 January 2016 14,423 133 1,850 16,406
Additions 1 - - 1
Foreign exchange difference on translation 1,878 - - 1,878
----------------------------- --------- --------- ---------
As at 31 December 2016 16,302 133 1,850 18,285
----------------------------- --------- --------- ---------
Amortisation and Impairment
As at 1 January 2016 3,061 18 1,850 4,929
Amortisation 387 33 - 420
Impairment 7,252 - - 7,252
Foreign exchange difference on translation 686 - - 686
----------------------------- --------- --------- ---------
As at 31 December 2016 11,386 51 1,850 13,287
----------------------------- --------- --------- ---------
Net book value
As at 31 December 2016 4,916 82 - 4,998
----------------------------- --------- --------- ---------
As at 31 December 2015 11,362 115 - 11,477
----------------------------- --------- --------- ---------
Impairment review
Intangible evaluation assets in relation to the Group entity in Spain, were written down due
to non-renewal of the operating licence.
10 Intangible assets 2016
-------------------------------------------- ---------
Company
Software
GBP000's
Cost
As at 1 January 2016 133
Additions -
Foreign exchange difference on translation -
---------
As at 31 December 2016 133
---------
Amortisation and Impairment
As at 1 January 2016 18
Amortisation 33
Foreign exchange difference on translation -
---------
As at 31 December 2016 51
---------
Net book value
As at 31 December 2016 82
---------
As at 31 December 2015 115
---------
10 Intangible assets 2015
---------------------------------------------------------------------------------------------- ---------
Group
Intangible evaluation assets Software Goodwill Total
GBP000's GBP000's GBP000's GBP000's
Cost
As at 1 January 2015 14,047 - 3,083 17,130
Adjustment - - (1,233) (1,233)
Additions 700 133 - 833
Foreign exchange difference on
translation (324) - - (324)
----------------------------- --------- --------- ---------
As at 31 December 2015 14,423 133 1,850 16,406
----------------------------- --------- --------- ---------
Amortisation and Impairment
As at 1 January 2015 2,461 - - 2,461
Amortisation 692 18 - 710
Impairment - - 1,850 1,850
Foreign exchange difference on
translation (92) - - (92)
----------------------------- --------- --------- ---------
As at 31 December 2015 3,061 18 1,850 4,929
----------------------------- --------- --------- ---------
Net book value
As at 31 December 2015 11,362 115 - 11,477
----------------------------- --------- --------- ---------
As at 31 December 2014 11,586 - 3,083 14,669
----------------------------- --------- --------- ---------
10 Intangible assets 2015
----------------------------------------------------------------------------------------------- ---------
Company
Software
GBP000's
Cost
As at 1 January 2015 -
Additions 133
Foreign exchange difference on translation -
---------
As at 31 December 2015 133
---------
Amortisation and Impairment
As at 1 January 2015 -
Amortisation 18
Foreign exchange difference on translation -
---------
As at 31 December 2015 18
---------
Net book value
As at 31 December 2015 115
---------
As at 31 December 2014 -
---------
11 Tangible assets 2016
------------------------------------- -----------------------------------------------------------------
Group Company
Oil and Property, Decommissioning Total Property,
gas assets plant costs plant
and equipment and equipment
(*) (*)
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Cost or Valuation
As at 1 January
2016 20,054 3,122 1,011 24,187 258
Additions 287 22 309 -
Foreign exchange
difference on translation 2,256 450 123 2,829 -
------------ --------------- ---------------- ---------- ------------------
As at 31 December
2016 22,597 3,594 1,134 27,325 258
------------ --------------- ---------------- ---------- ------------------
Depreciation and
Impairment
As at 1 January
2016 5,300 1,353 90 6,743 48
Depreciation 1,619 464 36 2,119 149
Impairment - - 688 688 -
Foreign exchange
difference on translation 720 247 11 978 -
------------ --------------- ---------------- ---------- ------------------
As at 31 December
2016 7,639 2,064 825 10,528 197
------------ --------------- ---------------- ---------- ------------------
Net book value
As at 31 December
2016 14,958 1,530 309 16,797 61
------------ --------------- ---------------- ---------- ------------------
As at 31 December
2015 14,754 1,769 921 17,444 210
------------ --------------- ---------------- ---------- ------------------
(*) Property, plant and equipment includes leasehold
improvements.
Impairment review
Decommissioning assets in relation to the Group entity
in Spain, were written down due to non-renewal of
the operating licence.
11 Tangible assets 2015
----------------------------------- --------------------------------------------------------------
Group Company
Oil and Property, Decommissioning Total Property,
gas assets plant costs plant
and equipment and equipment
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Cost or
Valuation
As at 1 January
2015 13,348 2,403 905 16,656 10
Additions 6,355 706 141 7,202 248
Foreign exchange
difference on
translation 351 13 (35) 329
---------------- --------------- ---------------- ---------- ---------------
As at 31
December
2015 20,054 3,122 1,011 24,187 258
---------------- --------------- ---------------- ---------- ---------------
Depreciation and
Impairment
As at 1 January
2015 1,175 945 41 2,161 9
Depreciation (*) 4,030 415 51 4,496 39
Foreign exchange
difference on
translation 95 (7) (2) 86
---------------- --------------- ---------------- ---------- ---------------
As at 31
December
2015 5,300 1,353 90 6,743 48
---------------- --------------- ---------------- ---------- ---------------
Net book value
As at 31
December
2015 14,754 1,769 921 17,444 210
---------------- --------------- ---------------- ---------- ---------------
As at 31
December
2014 12,173 1,458 864 14,495 1
---------------- --------------- ---------------- ---------- ---------------
12 Investment in associate 2016 2015
----------------------------------------------------- ---------------------------- ---------------
Group GBP 000's GBP 000's
Cost
As at 1 January 34 -
Additions - 34
Foreign exchange difference on translation 4 -
---------------------------- ---------------
As at 31 December 38 34
---------------------------- ---------------
LGO Energy plc, the parent company of the Group, holds
25% of the share capital of the following company:
Company Country of Proportion Nature of business
registration held
----------------- ---------------------- --------------------------------- ---------------------------
Indirect
Via Leni
Trinidad
Ltd
Beach Oilfield Oil and Gas
Limited Production
Trinidad & and Exploration
Tobago 25% Company
12 Investment in subsidiaries 2016 2015
-------------------------------------------------- ---------------- -------------------
Company GBP 000's GBP 000's
Cost
As at 1 January 1 1
Additions - -
Disposals - -
---------------- -------------------
As at 31 December 1 1
---------------- -------------------
LGO Energy plc, the parent company of the Group, holds
100% of the share capital of the following companies:
Company Country of registration Proportion held Nature of business
---------------------- ------------------------- ---------------------- -------------------
Direct
Leni Gas & Oil Cyprus 100% Holding Company
Holdings Ltd
Indirect
Via Leni Gas
& Oil Holdings
Ltd
Leni Gas & Oil Cyprus 100% Investment
Investments Company
Ltd
Leni Investments Cyprus 100% Investment
Cps Ltd Company
Leni Investments Cyprus 100% Investment
Byron Ltd Company
Leni Investments Cyprus 100% Investment
Trinidad Ltd Company
Via Leni Investments
Cps Ltd
Compañia Spain 100% Oil and Gas
Petrolifera Production
de Sedano S.L. and Exploration
Company
Via Leni Investments
Byron Ltd
Leni Gas and United States 100% Oil and Gas
Oil US Inc. Production
and Exploration
Company
Via Leni Investments
Trinidad Ltd
LGO Trinidad St Lucia 100% Investment
Holdings Limited Company
Via LGO Trinidad
Holdings Limited
Leni Trinidad Trinidad & Tobago 100% Oil and Gas
Ltd Production
and Exploration
Company
Columbus Energy Trinidad & Tobago 100% Oil and Gas
Services Ltd Services Company
Goudron E&P Trinidad & Tobago 100% Oil and Gas
Ltd Production
and Exploration
Company
13 Trade and other 2016 2015
receivables
-------------------------- ----------------------- ----------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Current trade and
other receivables
Trade receivables 366 - 357 -
VAT receivable 167 26 1,648 55
Taxation receivable 68 - 59 -
Other receivables 182 182 132 132
Prepayments 292 252 279 250
----------- ---------- ---------- ----------
Total 1,076 460 2,475 437
----------- ---------- ---------- ----------
Non-current trade
and other receivables
Loans due from
subsidiaries (*) - 38,151 - 29,928
----------- ---------- ---------- ----------
Total - 38,151 - 29,928
----------- ---------- ---------- ----------
(*) The loans due from subsidiaries are interest free,
have no fixed repayment date and are denominated in
GBP. At the year-end, loans to the Group entity in
Spain and to two non-operating entities, were impaired
due to irrecoverability.
14 Inventories 2016 2015
------------- ---------------------- ----------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Crude Oil 267 - 143 -
Consumables 190 - 166 -
---------- ---------- ---------- ----------
Total 457 - 309 -
---------- ---------- ---------- ----------
15 Trade and other 2016 2015
payables
------------------------ ---------------------- ----------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Current trade and other payables
Trade payables 717 118 5,081 187
Accruals 1,383 600 1,131 263
---------- ---------- ---------- ----------
Sub total 2,100 718 6,212 450
Deferred consideration
payable 120 120 120 120
Taxation payable 23 - 20 -
Total 2,243 838 6,352 570
---------- ---------- ---------- ----------
Non-current trade and other payables
Deferred consideration - - - -
payable
Deferred taxation - - - -
Total - - - -
---------- ---------- ---------- ----------
16 Borrowings 2016 2015
---------------------------- ---------------------- ----------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Current borrowings
Secured loan 1 682 682 - -
Secured loan 2 - - 7,006 -
---------- ---------- ---------- ----------
Total 682 682 7,006 -
---------- ---------- ---------- ----------
Non-current borrowings
Secured loan 1 739 739
Unsecured loan
2 203 - - -
Secured loan 3 238 - 246 -
Total 1,180 739 246 -
---------- ---------- ---------- ----------
1 In December 2016, LGO signed a US$8.6m Convertible
Security facility with Lind. LGO drew down $1.825m
in order to refinance and retire the outstanding BNP
Paribas loan. Repayments are over 2 years with 24
monthly payments of $94,500. Lind are able to convert
the outstanding balance at a fixed conversion price,
subject to restrictions. The loan is denominated in
US Dollars.
2 The loan was issued by BNP Paribas in 2015. Loan
repayments were made throughout the year and in December
2016, the outstanding balance of US$2.6m was refinanced,
leaving a final, unsecured payment of US$0.25m due
in December 2018. All security related to the BNP
loan was removed in December 2016. The loan is denominated
in US Dollars.
3 The loan was issued by RBC Royal Bank Limited in
2015. Repayments are over 7 years and the loan is
denominated in Trinidad Dollars.
The carrying amounts of all the borrowings approximate
to their fair value.
17 Provisions 2016 2015
---------------------------- ---------------------- ----------------------
Provisions for Group Company Group Company
decommissioning
costs
GBP 000's GBP 000's GBP 000's GBP 000's
At 1 January 1,011 - 906 -
Additions 22 - 141 -
Foreign exchange
difference on translation 155 - (36) -
At 31 December 1,188 - 1,011 -
The provisions relate to the estimated costs of the
removal of the Spanish and Trinidadian production
facilities and site restoration at the end of the
production lives of the facilities.
18 Share capital
------------------------------------------------------------------------------------------------
Called up, allotted, issued and fully Number Nominal
paid ordinary shares of 0.05p each of shares value
GBP 000's
As at 31 December 2014 2,728,840,849 1,364
15 January 2015 cash at 3.00p per
share 33,333,333 17
15 January 2015 cash at 3.00p per
share 19,166,667 10
23 February 2015 cash at 2.50p per
share 96,062,500 48
24 February 2015 cash at 2.50p per
share 172,760,000 85
9 July 2015 consideration at 3.30p
per share 3,889,697 2
5 October 2015 cash at 0.90p per
share 111,111,110 56
12 October 2015 consideration at
0.90p per share 14,679,556 7
8 December 2015 consideration at
0.43p per share 41,487,776 21
14 December 2015 consideration at
0.28p per share 43,668,470 22
-------------- ------------
As at 31 December 2015 3,264,999,958 1,632
22 January 2016 consideration at
0.23p per share 28,848,519 14
16 March 2016 cash at 0.25p per share 424,209,334 212
16 March 2016 consideration at 0.25p
per share 235,995,235 118
18 April 2016 cash at 0.25p per share 120,000,000 60
4 May 2016 cash at 0.20p per share 1,625,000,000 813
9 June 2016 consideration at 0.19p
per share 161,068,992 81
18 August 2016 consideration at 0.15p
per share 727,877,588 364
23 September 2016 consideration at
0.10p per share 795,000,000 398
13 December 2016 consideration at
0.12p per share 984,600,000 492
-------------- ------------
As at 31 December 2016 8,367,599,626 4,184
-------------- ------------
During the year, 5.1 billion shares
were issued (2015: 536.2 million).
In March 2017, the Company reorganised its share capital
and reduced the number of ordinary shares in issue
by a ratio of 20:1. The number of shares in issue
as at 31 December 2016 post the capital reorganisation
would be 418,379,981. The nominal value of each ordinary
share remains unchanged at 0.05p.
Total share options in issue
As at 31 December 2016 the options in issue were:
Exercise price Vesting criteria Expiry date Options in
issue
1p - 31 Dec 2020 56,000,000
1p 500 bopd 31 Dec 2020 49,333,333
1p 600 bopd 31 Dec 2020 49,333,333
1p 700 bopd 31 Dec 2020 49,333,334
4p 1250 bopd 31 Dec 2020 16,250,000
4p 1500 bopd 31 Dec 2020 45,000,000
4p 1750 bopd 31 Dec 2020 16,250,000
0.15p - 8 Apr 2020 394,421,542
------------
As at 31 December
2016 675,921,542
------------
During the year, 394.4 million options were issued
(2015: nil). No options lapsed during the year (2015:
nil), no options were cancelled in the year (2015:
nil), and no options were exercised during the year
(2015: nil). The number of share options in issue
as at 31 December 2016 post the capital reorganisation
would be 33,796,077 and the exercise prices as disclosed
above should be multiplied by 20.
Total warrants in issue
As at 31 December 2016 the warrants in issue were:
Exercise price Expiry date Warrants in issue
4.5p 25 Jun 2017 4,081,802
6.2p 15 Oct 2017 2,158,692
5.1p 22 Dec 2017 3,931,838
4.2p 16 Jan 2018 4,915,084
2.5p 23 Feb 2018 2,688,225
As at 31 December
2016 17,775,641
----------------------------
During the year, no warrants were issued (2015: 7.6
million). No warrants lapsed during the year (2015:
nil), no warrants were cancelled during the year (2015:
nil), and no warrants were exercised during the year
(2015: nil). The number of warrants in issue as at
31 December 2016 post the capital reorganisation would
be 888,782 and the exercise prices as disclosed above
should be multiplied by 20.
19 Share based payments
---------------------------------------------------------------------------------------------------------
Share options
The Company has established an employee share option
plan to enable the issue of options as part of remuneration
of key management personnel and Directors. Options
were granted under the plan for no consideration.
Options were granted for between a 6 and 7.5 year
period. There are vesting conditions associated with
the options. Options granted under the plan carry
no dividend or voting rights.
Under IFRS 2 'Share Based Payments', the Company determines
the fair value of options issued to Directors and
Employees as remuneration and recognises the amount
as an expense in the income statement with a corresponding
increase in equity. As at 31 December 2016 the unexpired
share options were:
Name Date Vesting Number Exercise Expiry Share Fair
granted date price date price value
(pence) at grant after
date discount
(pence) (pence)
------------------------ ---------- --------- ------------ --------- ------- ---------- ----------
1 Jul 1 Jul 31 Dec
Neil Ritson 2013 2013 25,000,000 1 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Neil Ritson 2013 2014 25,000,000 1 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Neil Ritson 2013 2014 25,000,000 1 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Neil Ritson 2013 2014 25,000,000 1 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Steve Horton 2013 2013 5,000,000 1 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Steve Horton 2013 2014 3,333,333 1 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Steve Horton 2013 2014 3,333,333 1 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Steve Horton 2013 2014 3,333,334 1 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Fergus Jenkins 2013 2013 10,000,000 1 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Fergus Jenkins 2013 2014 7,500,000 1 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Fergus Jenkins 2013 2014 7,500,000 1 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Fergus Jenkins 2013 2014 7,500,000 1 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Staff 2013 2013 10,000,000 1 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Staff 2013 2014 7,500,000 1 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Staff 2013 2014 7,500,000 1 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Staff 2013 2014 7,500,000 1 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Consultants 2013 2013 6,000,000 1 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Consultants 2013 2014 6,000,000 1 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Consultants 2013 2014 6,000,000 1 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Consultants 2013 2014 6,000,000 1 2020 0.73 0.20
1 Dec 31 Dec 31 Dec
Steve Horton 2014 2014 15,000,000 4 2020 3.675 0.59
1 Dec 31 Dec 31 Dec
Iain Patrick 2014 2014 15,000,000 4 2020 3.675 0.59
1 Dec 31 Dec 31 Dec
Michael Douglas 2014 2014 15,000,000 4 2020 3.675 0.59
1 Dec 31 Dec 31 Dec
James Thadchanamoorthy 2014 2014 16,250,000 4 2020 3.675 1.79
1 Dec 31 Dec 31 Dec
James Thadchanamoorthy 2014 2014 16,250,000 4 2020 3.675 0.59
Lind Partners 9 Dec 9 Dec 8 Apr
LLC 2016 2016 394,421,542 0.15 2020 0.13 0.01
As at 31
December
2016 675,921,542
----------------------------------------------- ------------ --------- ------- ---------- ----------
The fair value of the options vested during the year
was GBP32,000 (2015: nil) and the fair value of the
options exercised during the year was nil (2015: nil).
The assessed fair value at grant date is determined
using the Black-Scholes Model which, takes into account
the exercise price, the term of the option, the share
price at grant date, the expected price volatility
of the underlying share, the expected dividend yield
and the risk-free interest rate for the term of the
option. The fair value is then discounted for the
probability of the options actually vesting. The expected
price volatility reflects the assumption that the
historical volatility is indicative of future trends
which, may not necessarily be the actual outcome.
If options are issued in connection with loans, the
assessed fair value at grant date is determined using
the estimated cash equivalent value. The options issued
on 9 December 2016 were in connection with a loan
and therefore the related share based payment expense
has been recognised within finance charges (see note
9).
Warrants
As at 31 December 2016 the unexpired warrants were:
Date granted Vesting Number Exercise Expiry Share Fair value
date price date price (pence)
(pence) at grant
date (pence)
--- ------------------- ---------- ----------- --------- ------- -------------- ------------------
24 Jun 24 Jun 25 Jun
2014 2014 4,081,802 4.5 2017 3.9 0.63
15 Oct 15 Oct 15 Oct
2014 2014 2,158,692 6.2 2017 3.7 1.01
22 Dec 22 Dec 22 Dec
2014 2014 3,931,838 5.1 2017 4.4 0.33
16 Jan 16 Jan 16 Jan
2015 2015 4,915,084 4.2 2018 3.3 0.26
24 Feb 24 Feb 23 Feb
2015 2015 2,688,225 2.5 2018 2.9 -
------------------- ---------- ----------- --------- ------- -------------- ------------------
As at
31 December
2016 17,775,641
------------------------------- ----------- --------- ------- -------------- ------------------
The fair value of the warrants vested during the year
was nil (2015: GBP13,000) and the fair value of the
warrants exercised during the year was nil (2015:
nil). The assessed fair value at grant date is determined
using the Black Scholes model or the estimated cash
equivalent value, if issued in connection with loans.
20 Financial instruments
------------------------------------------------------------------------------------------
The Group uses financial instruments comprising cash,
and debtors/creditors that arise from its operations.
The Group holds cash as a liquid resource to fund
the obligations of the Group. The Group's cash balances
are held in various currencies. The Group's strategy
for managing cash is to maximise interest income whilst
ensuring its availability to match the profile of
the Group's expenditure. This is achieved by regular
monitoring of interest rates and monthly review of
expenditure forecasts.
The Company has a policy of not hedging foreign exchange
and therefore takes market rates in respect of currency
risk; however it does review its currency exposures
on an ad hoc basis. Currency exposures relating to
monetary assets held by foreign operations are included
within the foreign exchange reserve in the Group Balance
Sheet.
The Group considers the credit ratings of banks in
which it holds funds in order to reduce exposure to
credit risk.
To date the Group has relied upon equity funding and
short-term debt to finance operations. The Directors
are confident that adequate cash resources exist to
finance operations to commercial exploitation but
controls over expenditure are carefully managed.
The net fair value of financial assets and liabilities
approximates the carrying values disclosed in the
financial statements. The currency and interest rate
profile of the financial assets is as follows:
The financial assets comprise cash balances in bank
accounts at call.
Cash and short term deposits 2016 2015
----------- -----------
GBP 000's GBP 000's
Sterling 558 250
Euros 14 159
US Dollars 183 3,456
Trinidad Dollars 1,072 262
----------- -----------
Total 1,827 4,127
----------- -----------
Oil Price
Risk
The Group is exposed to commodity price risk regarding
its sales of crude oil which is an internationally
traded commodity. The Group sales prices are based
on two benchmarks, West Texas Intermediate (WTI) for
sales in Trinidad and Brent Crude (Brent) for sales
in Spain.
The spot prices of both benchmarks are shown below:
2016 2015
--------------------------------------- --------------------------------------
Low Average High Low Average High
US$ US$ US$ US$ US$ US$
WTI 26.19 43.29 54.01 34.55 48.66 61.36
Brent 26.01 43.67 54.96 35.26 52.32 66.33
The below shows the Group's 2016 revenue sensitivity
to an average price that is up to 30% lower and up
to 30% higher than the average price for that year:
Decrease Current Increase
----------------------------------
30% 20% 10% 10% 20% 30%
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Trinidad 2,538 2,900 3,263 3,625 3,988 4,351 4,713
Spain 643 736 827 920 1,011 1,103 1,195
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total 3,181 3,636 4,090 4,545 4,999 5,454 5,908
---------- ---------- ---------- ---------- ---------- ---------- ----------
Foreign currency risk
The following table details the Group's sensitivity
to a 10% increase and decrease in the Pound Sterling
against the relevant foreign currencies of Euro, US
Dollar, and Trinidadian Dollar. 10% represents management's
assessment of the reasonably possible change in foreign
exchange rates.
The sensitivity analysis includes only outstanding
foreign currency denominated investments and other
financial assets and liabilities and adjusts their
translation at the year-end for a 10% change in foreign
currency rates. The table below sets out the potential
exposure, where the 10% increase or decrease refers
to a strengthening or weakening of the Pound Sterling:
Profit or loss sensitivity Equity sensitivity
10% increase 10% decrease 10% increase 10% decrease
GBP 000's GBP 000's GBP 000's GBP 000's
Euro 959 (959) (48) 48
US Dollar (1) 1 325 (325)
Trinidad
Dollar (166) 166 (961) 961
----------------------- -------------- ------------- ----------------------
Total 792 (792) (684) 684
----------------------- -------------- ------------- ----------------------
Rates of exchange to GBP1 used in the financial statements
were as follows:
As at 31 Average for As at 31 Average for
December the relevant December the relevant
2016 consolidated 2015 consolidated
year to 31 year to 31
December December
2016 2015
Euro 1.173 1.221 1.357 1.377
US Dollar 1.234 1.350 1.480 1.528
Trinidad
Dollar 8.321 8.963 9.504 9.715
----------------------- -------------- ------------- ----------------------
21 Commitments and contingencies
-----------------------------------------------------------
As at 31 December 2016, the Company had the following
material commitments:
Ongoing exploration expenditure is required to maintain
title to the Group's mineral exploration permits.
No provision has been made in the financial statements
for these amounts as the expenditure is expected to
be fulfilled in the normal course of the operations
of the Group.
As announced in August 2013, as part of the licence
extension and royalty reduction agreement, the Group
agreed to a new work programme of 10 new wells in
the next 10 years. Four by year 5, four by year 7
and two by year 10. By May 2017, a total of 16 wells
had been drilled.
Additionally the Group committed to conduct an Airborne
gravity survey by year 5 and drill one exploration
well by year 7. The survey was completed in early
2015.
On 27 November 2014, the Company announced that $2.1
million will be payable to Beach Oilfield Limited
subject to the effective transfer of deep petroleum
rights. This transaction is forecast to close in 2017,
at which point, the amount payable is estimated to
be US$1.4 million.
As at 31 December 2016, the Group had the following
material contingent liabilities:
Compañia Petrolifera de Sedano ("CPS"), the LGO
subsidiary, has suspended its workforce, pending the
re-awarding of the Ayoluengo concession that expired
in January 2017. The suspended staff will return to
work once the concession has been awarded, either
to CPS or to the new concession owner. In the event
that no concession is awarded, then CPS would be required
to make the staff redundant, at an estimated cost
of approximately GBP0.33 million. This eventuality
is seen as a low probability event.
22 Related party transactions
Transactions between the Company and its subsidiaries,
which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Transactions between other related parties are discussed
below.
Remuneration of Key Management Personnel
The remuneration of the Directors of the Company are
set out below in aggregate for each of the categories
specified in IAS24 Related party Disclosures.
2016 2015
GBP 000's GBP 000's
Short-term employee benefits 803 879
These accounts have been prepared on an accruals basis
and therefore, include amounts paid and unpaid at
the year-end. At the year-end, Neil Ritson was owed
GBP239,000, Fergus Jenkins was owed GBP63,000, James
Thadchanamoorthy was owed GBP51,000, Steve Horton
was owed GBP70,000 and Michael Douglas was owed GBP44,000.
In December 2016, it was agreed that the amounts outstanding
to the Directors (excluding Steve Horton) would be
paid in shares at a conversion price of 0.15p (or
3p after the share consolidation in 2017). In March
2017, these unpaid amounts were settled by issuing
new ordinary shares in the Company, to the Directors
(excluding Steve Horton whose amount owed was settled
in cash in April 2017) (see note 7).
23 Events after the reporting period
--------------------------------------------------------------
On 10 January 2017, Steve Horton retired as a Director,
Gordon Stein was appointed as a Director and Neil
Ritson assumed the role of Chairman in addition to
his existing role of Chief Executive Officer
On 30 January 2017, the extension of the La Lora concession,
which was operated by Compañia Petrolifera de
Sedano S.L., the Company's subsidiary in Spain, was
not approved by the Spanish Cabinet of Ministers.
As a result, field operations and staff members were
suspended.
On 9 February 2017, the Company formally notified
the Spanish Ministry of Energy, Tourism and Digital
Agenda that Compañia Petrolifera de Sedano S.L.
wishes to immediately commence the process of obtaining
a new 30 year production concession.
On 7 March 2017, the Company held a general meeting
and all the proposed resolutions were passed including
reorganising the Company's share capital and reducing
the number of ordinary shares in issue by a ratio
of 20:1 and, authorising the Directors to allot shares
up to an aggregate nominal amount of GBP96,100.
On 8 March 2017, the Company confirmed that the number
of ordinary shares in issue pursuant to the capital
reorganisation was 418,379,981 being, the previous
number of ordinary shares in issue of 8,367,599,626
divided by 20. The reorganisation process included
the creation of a new class of share; a deferred share,
which carries no voting rights or economic value.
As a result, the nominal value of each ordinary share
remains unchanged at 0.05p.
On 9 March 2017, the Company issued 7,181,147 new
ordinary shares to settle unpaid Directors' fees from
2015 and 2016, totalling GBP397,000.
On 31 March 2017, the Company issued 113,636,374 new
ordinary shares at a price of 2.2 pence per share
raising GBP2.5 million before expenses, through a
placing and a fully underwritten offer.
24 Profit and loss account of the parent company
As permitted by section 408 of the Companies Act 2006,
the profit and loss account of the parent company
has not been separately presented in these accounts.
The parent company loss for the year was GBP1,573,000
(2015: GBP1,503,000).
Note to the announcement:
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015. The financial information for the year ended 31 December 2015 is derived from the statutory accounts for that year. The audit of statutory accounts for the year ended 31 December 2016 is complete.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DMGGKRDMGNZM
(END) Dow Jones Newswires
May 05, 2017 02:01 ET (06:01 GMT)
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