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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| 88 Energy Limited | LSE:88E | London | Ordinary Share | AU00000088E2 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.005 | 2.38% | 0.215 | 0.21 | 0.22 | 0.22 | 0.205 | 0.21 | 124,723,786 | 14:52:50 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Crude Petroleum & Natural Gs | 0 | -14.44M | -0.0006 | 0.00 | 0 |
From Apr 2021 to Apr 2024
TIDM88E
RNS Number : 2266I
88 Energy Limited
11 August 2021
This announcement contains inside information
11 August 2021
88 Energy Limited
Half Year Financials Release
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) ( 88 Energy or the Company ) is pleased to advise of the release of its financial results for the half-year ending 30 June 2021.
Highlights
-- Successful drilling of Merlin-1 well at Project Peregrine in March 2021. -- Encouraging results from the Merlin-1 post well testing program received during half year.
-- Acquisition of the Umiat oil field in January 2021, which is located adjacent to Project Peregrine.
-- Acquisition of residual 50% working interest in Project Peregrine in June 2021. -- Sale of Alaskan Tax Credits for US$18.7M cash in June 2021, enabling full repayment of debt. -- Adoption of World Economic Forum (WEF) principles, the global standard for ESG reporting.
-- At balance date, 88 Energy held A$14.8M cash and zero debt (excluding typical trade creditors).
-- Subsequent to half end, received final cash call receipt on Merlin-1 of US$5.0M. -- Strengthened Board and management team in early August. -- Comprehensive Merlin-1 well results and interpretation to be released imminently.
A copy of the Company's Interim Report, extracts from which are set out below, has been lodged on the ASX and is also available on the Company's website at www.88energy.com .
Media and Investor Relations:
88 Energy Ltd Ashley Gilbert, Managing Director Tel: +61 8 9485 0990 Email:investor-relations@88energy.com Finlay Thomson , Investor Relations Tel: +44 7976 248471 Fivemark Partners , Investor and Tel: +61 410 276 744 Media Relations Tel: +61 422 602 720 Andrew Edge / Michael Vaughan EurozHartleys Ltd Tel: + 61 8 9268 2829 Dale Bryan Cenkos Securities Tel: + 44 131 220 6939 Neil McDonald / Derrick Lee
OPERATING AND FINANCIAL REVIEW
During the period, the Group has continued its principal activities in Alaska. A summary of significant activities is below:
Highlights for the first half of 2021:
Project Peregrine
-- Rig commissioning and mobilisation of snow road construction equipment to the Merlin-1 drill site commenced in early January 2021;
-- The Merlin-1 exploration well spudded on 10 March 2021 and drilled to a Total Depth of 5,267';
-- In April 2021 the Project Peregrine Joint Venture announced the completion of the Merlin-1 drilling program, as it was too late in the season to initiate flow testing operations;
-- Initial petrophysical interpretation of wireline logs indicated several potential pay zones in the Merlin-1 well and side wall cores obtained from the well confirmed presence of oil;
-- Following completion of the drilling program, the post well testing program commenced on sidewall cores, cuttings, mud gas and fluid samples from Merlin-1;
-- Geochemical analysis of fluid extracts from selected core samples definitively demonstrated presence of hydrocarbons;
-- Initial mapping of additional prospective zones encountered in Merlin-1 delivers upside potential; and
-- On 7th June 2021, the company announced that it had entered into an agreement with Alaska Peregrine Development Company, LLC ("APDC") to acquire a 50% working interest from APDC in Project Peregrine in exchange for a US$14 million in shares plus 1.5% ORRI and additional bonus payments (as disclosed in Note 15). As at 30 June 235,454,781 shares had been issued to APDC, with the remaining shares issued post June as per Note 14.
Umiat Oil Field
-- In Q1 2021, 88 Energy, via its wholly owned subsidiary Emerald House LLC, entered into a Sale and Purchase Agreement with Malamute Energy, Inc and Renaissance Umiat LLC to acquire the Umiat Oil Field ("Umiat");
-- In March 2021 the Company completed the abandonment of two historic wells, which was a condition of the acquisition;
-- Further studies conducted in conjunction with the Merlin-1 post well testing and analysis have identified additional upside at the Umiat oil field; and
-- Subsequent to Half Year period end, approval from the Bureau of Land Management was received to defer Umiat Year 2 Unit well commitment by 24 months to 31 August 2023.
Project Icewine
-- The nearby Talitha-A well drilled by Patheon Resources showed encouraging results with the potential for the Theta West and the prospective sands of the Kuparuk formation extending onto the Icewine acreage. The internal geoscience team are to reassess the potential across the acreage following these results.
Yukon Acreage
-- Tract 29 was awarded during the half-year as part of the 2021 Coastal Lease Sale; -- Discussions continue to advance with nearby lease owners for a joint development area; and
-- Planning for potential future exploration drilling ongoing subject to farm-out and other discussions.
Corporate
-- David Wall resigned as managing director during the half-year, Ashley Gilbert appointed Managing Director and Sarah Smith appointed Company Secretary;
-- Sale of Alaskan Oil and Gas Tax Credits for US$18.7M; proceeds applied towards full repayment of outstanding 88E debt (US$16.1M); and
-- Cash as at 30 June 2021 of A$14.8M and zero debt.
PROJECT PEREGRINE
Merlin - 1 Exploration Well
The Merlin-1 well was spudded in March 2021 and was drilled to a Total Depth of 5,267', with drilling operations completed in April 2021. The post well testing program on the samples and data obtained during the drilling of the Merlin-1 well commencing shortly thereafter, with key results up to half year as follows;
-- Initial petrophysical interpretation of wireline logs indicated several potential pay zones in the Merlin-1 well and side wall cores obtained from the well confirmed the presence of oil;
-- The sidewall cores taken in the Merlin-1 well were analysed at surface prior to being sent to the laboratory for further testing with fluorescence and cut observed over several key horizons;
-- Phase one geochemical results were received for the original 18 specifically selected trims from the Merlin-1 side wall cores with 7 of these 18 trims confirming the presence of hydrocarbons which were at depths that were among the most prospective zones noted during drilling and also correspond with depths where good oil shows were noted during drilling, including petroliferous odour, fluorescence and cut. A further 10 trims were sent for analysis subsequent to half-year end also;
-- High resolution gas chromatography analysis from a selection of the trims also showed evidence of hydrocarbons.
-- Phase two of the geochemical analysis program on the sidewall core trims had commenced prior to half year, which included quantitative extraction, SARA, isotopes and biomarkers analysis;
-- Geochemical analysis of fluid extracts from selected core samples has definitively demonstrated presence of hydrocarbons; and
-- Initial mapping of additional prospective zones encountered in Merlin-1 delivers upside potential.
Costs associated with the Merlin-1 well have been finalized, with 88 Energy's net share of well costs approximately US$9 million, inclusive of wireline costs and additional costs associated with operational issues during the wireline program.
Acquisition of APDC 50% interest in Project Peregrine
On 7 June 2021, 88 Energy announced that it had entered into an agreement to acquire the 50% working interest in Project Peregrine held by Alaska Peregrine Development Company, LLC (APDC) in exchange for consideration of:
-- US$14 million, payable in new 88 Energy shares, to be issued in several tranches and subject to a final reconciliation mechanism;
-- 1.5% overriding royalty interest on future production from the Project Peregrine licences;
-- US$10m cash payment on the achievement of gross 2P reserves of 100 million barrels within 36 months;
-- Cash payments of US$2.5m per 50 million barrels on the achievement of gross 2P reserves added over 100 million barrels within 36 months (capped at 5 additional cash payments); and
-- 10% of the gross sale proceeds in respect of an assignment of greater than 49% of Project Peregrine within 24 months, excluding a bona fide farm-out.
Final settlement in relation to the acquisition occurred post period end with all consideration shares being received by APDC. 88 Energy now holds a 100% working interest in Project Peregrine.
PROJECT ICEWINE
During the half-year, 88 Energy closely monitored activity nearby to the northern border of its Project Icewine acreage, where a flow of light oil from the Kuparuk has been reported from the Talitha-A well. (See Pantheon Resources AIM:PANR press release dated 19th April 2021).
Additional insights into the wettability of the Kuparuk formation have also been highlighted as part of the results from Talitha-A, which may have positive ramifications for 88 Energy's previous interpretation of this horizon.
All three wells drilled by 88 Energy at Project Icewine have encountered good quality reservoir in the Kuparuk formation, with indications of hydrocarbons. These had previously been interpreted as likely gas condensate or residual oil with no mapped targets being identified, as this was not a pursuing play by 88 Energy.
The results at Talitha-A are highly encouraging for the Kuparuk region Formation, including across Project Icewine. In light of these results, the 88 Energy internal geoscience team will reassess the potential across the acreage in the second half of 2021 ahead of a planned farm-out.
YUKON LEASES
The Yukon Leases contain the 86-million-barrel Cascade Prospect, which was intersected peripherally by Yukon Gold-1, drilled in 1994, and classified as an historic oil discovery.
In the half year Regenerate Alaska, a wholly owned subsidiary of 88 Energy, was awarded Tract 29 as part of the 2021 Coastal Lease Sale. In addition, the Company advanced discussions and negotiations with nearby lease owners to aggregate discovered resources located in the vicinity of the Yukon Leases as part of a joint development of the area.
* Refer announcement 7 November 2018
Cautionary Statement: The estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially movable hydrocarbons.
UMIAT OIL FIELD
In January 2021, 88 Energy, via its wholly owned subsidiary Emerald House LLC, entered into a Sale and Purchase Agreement with Malamute Energy, Inc and Renaissance Umiat LLC to acquire the Umiat Oil Field ("Umiat"), and in late March 2021 the Company completed the abandonment of two historic wells, which was a condition of the acquisition.
During the half-year, studies commenced to review the historical Umiat oil field development plans prepared by Linc Energy, which formed the basis of the Ryder Scott 2015 reserves report. Initial results of the internal review and studies have identified potential cost savings on planned development CAPEX, as well as alternative potential routes to market for the crude. This could include a potential tie-in to the Willow oil field development to the north of the acreage.
Subsequent to half year end, 88 Energy received notification from the Bureau of Land Management for approval of its request to a 24-month extension to the Year 2 Unit Obligations, and corresponding extensions for the Unit obligations in Years 3, 4 and 5.
The 24-month extension to the Year 2 Unit Obligations allows 88 Energy to optimise a full field development plan, which will include evaluating potential synergies with plans associated with the Project Peregrine acreage. It will also enable 88 Energy to use the knowledge gained from drilling the Merlin-1 well to plan an efficient operational program to optimize the potential for success at Umiat. Any discovery at Project Peregrine would contribute significant value to any development of the Umiat oil field.
CORPORATE
Following the resignation of Mr David Wall during the half year, the Company announced on 10 May 2021 that Mr Ashley Gilbert was appointed to the role of Managing Director and Ms. Sarah Smith to the role of Company Secretary.
Following the retirement of Chairman Michael Evans, the Company announced on the 2nd August the appointment Philip Byrne as Non-Executive Chairman. Joanne Kendrick was also appointed as a Non - Executive Director.
On 21st June 2021 the Company announced that it had entered into an agreement that would facilitate the sale of all the Alaskan Oil and Gas Tax Credits which were held by Accumulate Energy Alaska, Inc. ("Accumulate"), a 100% owned subsidiary of 88 Energy. The sale price of the Tax Credits was US$18.7 million cash, payable upon completion of the sale and transfer of the outstanding tax certificates. The deal accelerates the timeframe of Accumulate Energy Alaska's value realisation from the Tax Credits, which under current estimates would not have been fully paid out by the Alaskan state until 2026. The majority of the proceeds from the sale of the tax credits have been applied towards full repayment of 88 Energy's current outstanding debt of US$16.1 million with FCS Advisors, LLC (d/b/a Brevet Capital Advisors) ("FCS"), which was due to mature on 30 December 2022. The residual sale consideration of US$2.6m is to be receipted by Accumulate Energy Alaska, which will then be applied towards working capital requirements.
On 30th June 2021, 88 Energy Limited and its subsidiaries advised its shareholders and stakeholders that it will adopt the Environmental, Social and Governance (ESG) framework developed by the World Economic Forum (WEF). This framework is regarded as the global standard for ESG reporting and encompasses 21 core metrics and disclosures. The Company has engaged independent impact monitoring technology provider, Socialsuite, to assist with measuring, monitoring and reporting of these core ESG metrics.
FINANCIAL
For the period ended 30 June 2021 the Company recorded a profit of $445,446 (30 June 2020: $4.020 million loss). The profit was largely attributable to the sale of tax credits above their Fair Value.
No dividends were paid or declared by the Company during the period.
As at 30 June 2021, the Group had cash on hand of $14.762 million (31 December 2020: $14,845 million). Net assets totalled A$94.465 million (31 December 2020: $58.911 million), with the significant increase in net assets being largely due to the repayment of debt (31 Dec 2020 A$20.782 million) and shares to be issued in relation to the APDC transaction which were classified as liability (30 June 2021 A$13.441 million).
EVENTS AFTER THE PERIOD
The following events occurred subsequent to the period end;
-- The Company issued the following shares:
- 1.7.2021 - 235,454,781 @ $0.022 to APDC as part of the Peregrine purchase agreement;
- 6.7.2021 - 152,137,532 @ $0.035 to APDC as part of the Peregrine purchase agreement; and
- 12.7.2021 - 42,230,000 @ $0.032 to APDC as part of the Peregrine purchase agreement.
-- On 2 August 2021, the Company announced the retirement of Michael Evans from the Board, and the appointment of Philip Byrne as Non-Executive Chairman and Joanne Kendrick as a Non-Executive Director.
-- On 4 August the Company announced the approval from the BLM to defer Umiat Year 2 Unit well commitment by 24 months to 31 August 2023. Refer to ASX Announcement for further details.
There were no other subsequent events.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF YEARED 30 JUNE 2021
Hot Features
Premium
Note
30 June 30 June
2021 2020
$ $
Income 3(a) 4,331,646 75,860
Administration expenses 3(b) (1,794,435) (522,909)
Occupancy expenses (37,408) (22,101)
Employee benefit expenses 3(c) (704,958) (742,005)
Share based payment expense 13 (153,747) (52,861)
Depreciation and amortisation expense (55,606) (41,765)
Finance cost (1,160,411) (1,483,612)
Realised/unrealised gain on foreign exchange (11,295) 43,428
Other income /(expenses) 3(d) 31,660 (1,274,345)
Profit/(loss) before income tax 445,446 (4,020,311)
Income tax benefit/(expense) - -
Net profit/(loss) attributable to members of
the parent 445,446 (4,020,311)
Other comprehensive income for the period
Other comprehensive income that may be recycled
to profit or loss in subsequent periods:
Exchange differences on translation of foreign
operations 2,061,695 1,155,379
Total comprehensive profit/(loss) for the period 2,507,141 (2,864,932)
Basic and diluted profit/(loss) per share 0.00003 (0,0004)
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Note
30 June 31 December
2021 2020
$ $
ASSETS
Current Assets
Cash and cash equivalents 5 14,762,499 14,845,347
Other receivables 6 7,833,085 5,079,630
Total Current Assets 22,595,584 19,924,977
Non-Current Assets
Plant and equipment 2,134 4,641
Exploration and evaluation expenditure 7 93,688,369 48,213,290
Other assets 8 935,128 17,216,644
Total Non-Current Assets 94,625,631 65,434,576
TOTAL ASSETS 117,221,215 85,359,552
LIABILITIES
Current Liabilities
Provisions 105,412 339,199
Trade and other payables 9 22,650,749 5,326,634
Total Current Liabilities 22,756,161 6,309,010
Non-Current Liabilities
Borrowings 10 - 20,782,366
Total Non-Current Liabilities - 20,782,366
TOTAL LIABILITIES 22,756,161 26,448,199
NET ASSETS 94,465,054 58,911,353
EQUITY
Issued and fully paid shares 11(a) 241,856,327 208,963,513
Reserves 11(b) 18,796,417 16,580,975
Accumulated losses (166,187,690) (166,633,135)
TOTAL EQUITY 94,465,054 58,911,353
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEARED 30 JUNE 2021
Issued and Reserves Accumulated Non-Controlling Total
fully paid $ losses Interest equity
shares $ $ $
$
Balance at 1 January
2020 185,619,885 23,578,127 (144,599,502) - 64,598,510
Loss for the period - - (4,020,311) - (4,020,311)
Other comprehensive income - 1,155,379 - - 1,155,379
Total comprehensive loss
for the period, net of
tax - 1,155,379 (4,020,311) - (2,864,932)
Shares issued during
the period 13,024,297 - - - 13,024,297
Non-controlling interests
on acquisition of subsidiary - - - 1,342,715 1,342,715
Shares committed and
unissued 140,000 - - - 140,000
Equity raising costs (352,136) - - - (352,136)
Share based payments - 52,861 - - 53,924
Balance at 30 June 2020 198,432,045 24,786,367 (148,619,813) 1,342,715 75,941,315
Balance at 1 January
2021 208,963,513 16,580,975 (166,633,135) - 58,911,353
Profit for the period - - 445,446 - 445,446
Other comprehensive income - 2,061,695 - 2,061,695
Total comprehensive profit
for the period, net of
tax - 2,061,695 445,446 - 2,507,141
Shares issued during
the period 33,683,839 - - - 33,683,839
Equity raising costs (791,025) - - - (791,025)
Share based payments - 153,747 - - 153,747
Balance at 30 June 2021 241,856,327 18,796,417 (166,187,690) - 94,465,054
C ONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEARED 30 JUNE 2021
30 June
2021 30 June 2020
Cash flows from operating activities
Interest - 2,634
Interest Paid (1,052,616) (1,187,657)
Payments to suppliers and employees (2,364,182) (1,224,781)
Other Income - 24,000
Exploration Expenditure Expensed - (87,749)
Net cash outflows used in operating activities (3,416,798) (2,473,552)
Cash flows from investing activities
Cash acquired from acquisition of XCD Energy - 434,091
Payments for exploration and evaluation activities (31,218,286) (35,467,951)
Contributions from JV Partners in relation to Exploration 13,675,903 23,506,461
Payments for bonds (387,270) -
Proceeds sale of tax credits 24,233,263 -
Net cash outflows used in investing activities 6,303,610 (11,527,399)
Cash flows from financing activities
Proceeds from issue of shares 18,557,500 5,000,000
Share issue costs (884,143) (362,000)
Payment of borrowings (20,909,692) -
Net cash inflows from financing activities (3,236,335) 4,638,000
Net increase/(decrease) in cash and cash equivalents (349,523) (9,362,951)
Net foreign exchange differences 266,675 734,481
Cash and cash equivalents at beginning of period 14,845,347 15,903,113
Cash and cash equivalents at end of period 14,762,499 7,274,643
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF YEARED 30 JUNE 2021
1. CORPORATE INFORMATION
The consolidated financial statements of the Company for the six months ended 30 June 2021 were authorised for issue in accordance with a resolution of the Directors on 11 August 2021.
88 Energy Limited is a for-profit, limited company incorporated and domiciled in Australia whose shares are publicly traded. The principal activities of the company and its subsidiaries (the Company) are oil and gas exploration with a portfolio of exploration interests in Alaska.
2. BASIS OF PREPARATION AND CHANGES TO THE COMPANY'S ACCOUNTING POLICIES (a) Basis of Preparation
The half year financial report for the six months ended 30 June 2021 is a general-purpose financial report prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting.
The half year financial report has been prepared on a historical cost basis, except for available for sale assets, which have been measured at fair value. Unless otherwise noted, the carrying value of financial assets and liabilities as disclosed in the half year financial report approximates their fair value. The company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted.
For the purpose of preparing the half year financial report, the half-year has been treated as a discrete reporting period.
The accounting policies adopted in the preparation of the half year financial report are consistent with those followed in the preparation of the Company's annual financial report for the year ended 31 December 2020.
The half year financial report does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company's annual financial statements as at 31 December 2020, together with any public announcements made during the period.
(b) Adoption of new and revised accounting standards
The half yearly reports have not adopted any new or revised accounting standards which have a material impact on the Company.
30 June 30 June
2021 2020
$ $
3. INCOME AND EXPENSES
(a) Other Income
Interest Income 795 1,860
Other finance income* 4,330,851 -
Other Income - 74,000
*Sale of tax credit receivable 4,331,646 75,860
=============== =========
(b) Corporate & Administrative expenses
Consultancy and professional fees 587,045 98,966
Legal fees 55,702 16,115
General and administration expenses 1,123,633 371,186
Travel 28,055 36,642
1,794,435 522,909
=============== =========
(c) Employee benefit expenses
Wages and salaries 584,751 622,286
Superannuation 50,477 40,914
Annual leave expense 51,424 61,031
Other employee expenses 18,306 17,774
704,958 742,005
=============== =========
(d) Other (income)/expenses
Impairment expense - Icewine (2019) & Western
Blocks (2020) - 1,266,729
Other (income)/expenses (31,660) 7,616
--------------- ---------
(31,660) 1,274,345
=============== =========
4. SEGMENT INFORMATION
Identification of reportable segments
For management purposes during the period ended 30 June 2021 the Company was organised into the following strategic unit:
-- Oil and Gas exploration in Alaska, USA.
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.
The Board of Directors review internal management reports on a periodic basis that is consistent with the information provided in the statement of profit or loss and other comprehensive income, statement of financial position and statement of cash flows. As a result, no reconciliation is required, because the information as presented is used by the Board to make strategic decisions.
Management has determined, based on the reports reviewed by the Board of Directors and used to make strategic decisions, that the Group has one reportable segment being Oil & Gas Exploration in Alaska, USA. Such structural organisation is determined by the nature of risks and returns associated with each business segment and define the management structure as well as the internal reporting system.
30 June 31 December
2021 2020
$ $
5. RECONCILIATION OF CASH
For the purposes of the
statement of cash
flows, cash and cash equivalents
comprise
the following:
Cash at bank and in hand 14,762,499 14,845,347
14,762,499 14,845,347
========================= ==========================
6. OTHER RECEIVABLES
Other deposits and receivables
(i) 7,833,085 5,079,630
========================= ==========================
7,833,085 5,079,630
========================= ==========================
(i) A$6,650,705 (US$5,000,000) relates to cash calls receivable
from APDC as per the acquisition of APDC agreement. The full US$5,000,000
was received in July 2021.
30 June 31 December
2021 2020
$ $
7. EXPLORATION EXPITURE
Capitalised expenditure at the
beginning
of the period 48,213,290 52,928,315
Additions 42,017,705 45,560,030
Acquisition of 50% interest in APDC (i) 18,621,974 -
Acquisition of XCD Energy Limited Exploration
Assets - (34,063,751)
JV Contributions (ii) (16,188,417) -
Less Impairment (iii) - (11,384,288)
Foreign Currency translation 1,023,817 (4,827,016)
Closing balance 93,688,369 48,213,290
========================= ==========================
(i) 88 Energy entered into an agreement with Alaska Peregrine Development
Company, LLC (APDC) to acquire 50% working interest from APDC in
Project Peregrine in exchange for US14 million in shares plus 1.5%
ORRI and additional bonus payments. Refer Note 15 for details regarding
the Contingent Liabilities associated with the transaction.
(ii) JV Contributions received in 2020/21 from APDC for expenditure
to be incurred in relation to the Merlin - 1 well in 2021.
(iii) Impairment of the Icewine-2, Winx-1 exploration wells which
were plugged and abandoned in 2019, and Western blocks exploration
expenditure impaired following relinquishment of the leases. No
impairment or impairment indicators were identified for the period
ended 30 June 2021.
8. OTHER NON-CURRENT ASSETS
ROU Asset - Lease 5 Ord St 137,043 170,461
Emerald House Bond 399,042 389,509
Tax credit receivable (i) - 16,226,055
XCD Acquisition Other Non-Current Assets - 41,110
Investments in Jade 399,042 389,509
935,128 17,216,644
========================= ==========================
(i) The company announced on 21st June 2021 that it had entered
into an agreement that would facilitate the sale of all the Alaskan
Oil and Gas Tax Credits totalling US$18.7M which were held by Accumulate
Energy Alaska, Inc. ("Accumulate"), a 100% owned subsidiary of 88
Energy.
9. TRADE AND OTHER PAYABLES
Trade payables 4,589,486 590,397
Other payables 4,619,294 4,736,237
Shares to be Issued (i) 13,441,969 -
========================= ==========================
22,650,749 5,326,634
========================= ==========================
(i) Outstanding shares to be issued in relation to the APDC transaction
as at 30 June 2021 (refer Note 7).
30 June 31 December
2021 2020
$ $
10. BORROWINGS
Non-Current
Bank Facility (i) - 20,782,366
========================= ==========================
- 20,782,366
========================= ==========================
(i) On 21(st) June the company entered into an agreement that would
facilitate the sale of all the Alaskan Oil and Gas Tax Credits totalling
US$18.7M which were held by Accumulate Energy Alaska, Inc. ("Accumulate"),
a 100% owned subsidiary of 88 Energy. With proceeds of the sale
of tax credits applied towards full repayment of Accumulate Energy
Alaska's outstanding debt of US$16.1 million. The 88 Energy group
is now debt free.
11. CONTRIBUTED EQUITY AND RESERVES
(a) Ordinary shares fully paid
Ordinary shares 13,146,545,212 241,856,327
============================================ ==========================
Number 30 June
of shares 2021
$
Balance at 1 January 2021 10,602,304,716 208,963,513
Issue of shares for Capital Raising
and
Option Conversion
Issue of shares to APDC Tranche 1
Issue of shares to Contractors and
Vendors
(i) 1,500,500,000 12,027,500
Issue of shares to Directors 235,454,781 5,180,005
Costs associated with share issues 796,619,048 16,406,334
Issued and fully paid shares at 30 11,666,667 70,000
June (791,025)
2021 13,146,545,212 241,856,327
============================================ ==========================
(i) Relates predominantly to Merlin - 1 operations.
(b) Reserves 30 June 2021 31 December 2020
$ $
Share-based payments 17,859,282 17,705,535
Foreign currency translation reserve 937,135 (1,124,560)
----------------- ---------------------------
18,796,417 16,580,975
----------------- ---------------------------
Movement reconciliation
Share-based payments reserve
Balance at the beginning of the half year 17,705,535 17,582,665
Equity settled share-based payment transactions 153,747 122,870
----------------- ---------------------------
Balance at the end of the half year 17,859,282 17,705,535
----------------- ---------------------------
Foreign currency translation reserve
Balance at the beginning of the half year (1,124,560) 5,995,462
Effect of translation of foreign currency
operations to group presentation 2,061,695 (7,120,022)
----------------- ---------------------------
Balance at the end of the half year 937,135 (1,124,560)
----------------- ---------------------------
Share-based payment reserve
The share-based payment reserve is used to record the value of share-based payments provided to outside parties, and share-based remuneration provided to employees and directors. Refer to Note 12 for further details.
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity.
12. SHARE BASED PAYMENTS
Share-based payment transactions recognised during the reporting period were as follows:
30 June 30 June
2021 2020
$ $
Options issued to Directors 52,073 21,781
Options issued to employees 101,674 31,080
153,747 52,861
======== ========
Options issued to Directors during 2021 - 48,700,000.
Options granted to Employees/Contractors during 2021 - 91,068,000.
During the period Energy entered into an agreement with Alaska Peregrine Development Company, LLC (APDC) to acquire 50% working interest from APDC in Project Peregrine in exchange for US14 million in shares plus 1.5% ORRI and additional bonus payments. Refer Note 7 and Note 9.
13. ACQUISITION OF XCD ENERGY LTD
The net effect of the adjustments made to the values of assets and liabilities, as included at 30 June 2020, on the acquisition of XCD Energy Ltd are as follows:
XCD assets and liabilities values 30 June
2020
$
Amounts settled in cash
Amounts settled in equity - 1,604,859,200
shares at $0.005 8,024,296
------------
Total 8,024,296
------------
Recognised amounts of Net assets
Cash and cash equivalents 434,091
Trade and other receivables 93,881
Total Current assets 527,972
Plant and Equipment 12,438
Exploration and evaluation expenditure 5,666,716
Other Assets & Receivables 477,404
------------
Total Non-Current Assets 6,156,558
------------
Trade and Other Payables (188,496)
Provisions (24,969)
------------
Total Current Liability (213,465)
------------
Lease Liability (22,857)
------------
Total Non - current liability (22,857)
------------
Total Net Assets 6,448,208
------------
Non - Controlling Interest (1,342,715)
Exploration & Evaluation on acquisition 2,918,803
------------
Net Assets Acquired 8,024,296
------------
14. EVENTS AFTER THE PERIOD
The following events occurred subsequent to the period end;
* The Company issued the following shares:
* 1.7.2021 - 235,454,781 @ $0.022 to APDC as part of
the Peregrine purchase agreement;
* 6.7.2021 - 152,137,532 @ $0.035 to APDC as part of
the Peregrine purchase agreement; and
* 12.7.2021 - 42,230,000 @ $0.032 to APDC as part of
the Peregrine purchase agreement.
* On 2 August 2021, the Company announced the
retirement of Michael Evans from the Board, and the
appointment of Philip Byrne as Non-Executive Chairman
and Joanne Kendrick as a Non-Executive Director.
* On 4 August the Company announced the approval from
the BLM to defer Umiat Year 2 Unit well commitment by
24 months to 31 August 2023. Refer to ASX
Announcement for further details.
There were no other subsequent events.
15. COMMITMENTS AND CONTINGENCIES
On 7 June 2021, 88 Energy announced that it had entered into an
agreement to acquire the 50% working interest in Project Peregrine
held by Alaska Peregrine Development Company, LLC (APDC) in exchange
for consideration of US$14 million, payable in new 88 Energy shares,
to be issued in several tranches and subject to a final reconciliation
mechanism, together with the following commitments;
1. 1.5% overriding royalty interest on future production from
the Project Peregrine licences;
2. US$10m cash payment on the achievement of gross 2P reserves
of 100 million barrels within 36 months;
3. Cash payments of US$2.5m per 50 million barrels on the achievement
of gross 2P reserves added over 100 million barrels within 36
months (capped at 5 additional cash payments); and
4. 10% of the gross sale proceeds in respect of an assignment
of greater than 49% of Project Peregrine within 24 months, excluding
a bona fide farm-out.
16. RELATED PARTY TRANSACTIONS
The terms and conditions of transactions with Directors and Executives
and their related entities were no more favourable than those
available, or which might reasonably be expected to be available,
on similar transactions to Non-Director related entities on an
arm's length basis.
Approval by shareholders at the AGM held on 21 May 2021 was given
for 11,200,000 Performance Rights (as per table below) to be issued
to the Managing Director as part of the remuneration package as
outlined below.
Directors and Tranche Tranche Tranche Tranche Total
Executives A B C D
Share Price Tenure
-------------------------------------
Grant Date* 21/05/2021 21/05/2021 21/05/2021 21/05/2021
Expiry Date 21/05/2022 21/05/2023 21/05/2024 21/05/2025
Fair Value per
Performance
Right $ 0.0110 0.015 0.019 0.027
Exercise Price Nil Nil Nil Nil
Performance
Rights (ii)
- A Gilbert 3,360,000 3,360,000 3,360,000 1,120,000 11,200,000
Number of Performance
Rights Vested - - - - -
% Vested - - - - -
Fair Value $;
- A Gilbert 36,960 50,400 63,840 30,240 181,440
----------- ----------- ----------- ----------- -----------
Total Fair Value
$ 36,960 50,400 63,840 30,240 181,440
----------- ----------- ----------- ----------- -----------
Employee Benefits
Expense $ (i);
- During the
period: A Gilbert 530 6,300 7,980 3,780 18,590
----------- ----------- ----------- ----------- -----------
Total $ 530 6,300 7,980 3,780 18,590
----------- ----------- ----------- ----------- -----------
Vesting Conditions (Tranche A, B and C)
Tranche A, B and C will be tested on each 12-month anniversary
of the Performances Rights issue, with Tranche A available for
testing on the first anniversary, Tranche B available for testing
on the second anniversary, and Tranche C available for testing
on the third anniversary. These tranches will vest on the test
date as follows:
Absolute share price Performance rights vesting
growth
<50% Nil
------------------------------------
50% 25%
------------------------------------
>50% and <100% Between 25% and 50%, on a straight
line basis
------------------------------------
100% 50%
------------------------------------
>100% and <150% Between 50% and 75%, on a straight
line basis
------------------------------------
150% 75%
------------------------------------
>150% and <200% Between 75% and 100%, on a straight
line basis
------------------------------------
200% 100%
------------------------------------
Vesting Conditions (Tranche D)
Tranche D performance rights will be tested against the tenure
with the Company, where the participant is employed by the Company
as at issue date up to and including the date that is three years
after that date, 100% of the performance rights will vest.
v Mr Ashley Gilbert - Managing Director
* Contract: Commenced on 10 May 2021.
* Salary & Director's Fee: $395,000 per annum plus
superannuation.
* Performance Based Bonuses: The Company may at any
time pay Mr Gilbert a performance based bonus over
and above his salary. In determining the extent of
any performance based bonus, the Company shall take
into consideration the key performance indicators of
Mr Gilbert and the Company.
* Termination by Company is with 6 months' notice or
payment in lieu thereof. Termination by Mr Gilbert is
with 3 months' notice.
Termination Benefit: Termination benefits to the extent permitted
under the ASX Listing Rules and Corporations Act are included
in the contract in the event of certain termination events
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END
IR URAARAWUWAUR
(END) Dow Jones Newswires
August 11, 2021 02:00 ET (06:00 GMT)
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