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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Columbus Energy Resources Plc | LSE:CERP | 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% | 1.825 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMCERP
RNS Number : 8387A
Columbus Energy Resources PLC
03 June 2019
3 June 2019
Columbus Energy Resources Plc
("Columbus", "CERP" or the "Company")
Annual Report and Accounts 2018 and Notice of Annual General Meeting
Columbus, the oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America, is pleased to announce that the Company's audited Annual Report and Accounts (the "Annual Report and Accounts") for the year ended 31 December 2018 are being posted to shareholders and will be available later today on the Company's website, www.columbus-erp.com. Extracts are set out below.
The Company also announces that the Company's Annual General Meeting ("AGM") will take place on 27 June 2019 at 11.00 am and will be held at the offices of the Company's solicitors, Kerman & Co LLP, whose address is 200 Strand, London WC2R 1DJ. The documentation relating to the AGM, including the Annual Report and Accounts, Notice of AGM and the Form of Proxy, are being sent to shareholders today. The documents will also be available on the Company's website.
Enquiries:
Columbus Energy Resources Plc +44 (0) 207 203 2039 Leo Koot / Gordon Stein / Tony Hawkins Beaumont Cornish Limited +44 (0) 20 7628 3396 Nomad and Joint Broker Roland Cornish / Rosalind Hill Abrahams VSA Capital +44 (0) 20 3005 5000 Joint Broker Andrew Monk / Andrew Raca
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014
Highlights
For the Year ended 31 December 2018
FINANCIAL
-- Sales Revenues: GBP7.57 million (2017: GBP4.79 million), an increase of 58.0% -- Gross Profit: GBP1.45 million (2017: GBP0.08m) -- Average realised sales price: US$59.71 per barrel (2017: US$48.58 per barrel) -- Company maintained its cashflow positive position from Trinidad operations in 2018 -- Pre-tax Group loss for the period of GBP2.70 million (2017: loss of GBP5.02 million) -- Cash in hand: GBP1.71 million (2017: GBP4.0 million) -- Debt: GBP0.67 million (2017: GBP1.21 million) -- G&A savings:
o Management continued to receive 50% of their salaries in shares throughout 2018; and
o Company downsized London office (August 2018)
-- Material exceptional payments in 2018:
o Legacy costs in Spain of GBP0.91 million, including one-off redundancy costs of GBP0.47 million, and
o Full repayment of GBP1.09 million loan inherited as part of Steeldrum transaction
OPERATIONS
-- Average Production: 541 bopd (2017: 368 bopd), an increase of 47.0% -- Peak production: 1,021 bopd (2017: 561 bopd) -- Appraisal: Snowcap-1 & Snowcap-2 wells on the Cory Moruga block (December 2018). -- Water injection: Commencement of Goudron Waterflood Pilot "A" (June 2018). -- HSE: No Lost Time Incidents
-- Heritage: Transfer of Company's agreements with Petrotrin to Heritage during second half of 2018
-- Steeldrum: Integration of the Steeldrum assets and personnel completed Q4 2018.
CORPORATE
-- Trinidad
o Restructuring of BOLT Transaction and new Agreement for Lease for Bonasse Licence Area in the South West Peninsula (March 2018)
o Cory Moruga Licence extension until 2032 (September 2018)
o Completion of Steeldrum transaction (October 2018)
o Completion of purchase of a 50% interest in the Icacos field from Primera Oil and Gas Limited (December 2018)
-- Spain:
o Formal termination of the La Lora Concession (March 2018)
o Completion of Collective Dismissal Procedure (March 2018)
o Spanish Government decision not to re-tender the La Lora Concession (November 2018)
-- General:
o Capital raise of GBP2.5m (before expenses, November 2018)
POST YEAR
-- Trinidad: Grant of Bonasse Private Petroleum Licence (May 2019) -- Company fully funded for planned 2019 work programme
Executive Chairman's Review
2018 was a year in which the Company made significant progress in transforming the business in Trinidad. We completed the agreements that will allow us to explore the South West Peninsula under far better commercial terms than previously, we completed the Steeldrum and Icacos transactions, we also reached peak production of 1,021 bopd and our sales revenues increased by some 58% (+GBP2.78 million). This was an excellent achievement involving management and staff across the business.
It was also a year where we faced a number of challenges, including lower than expected average production growth, an oil price consistently sitting in a range where Special Petroleum Tax ("SPT") had a disproportionate impact on our cashflows and the unexpected decision by the Spanish authorities in late 2018 not to re-tender the La Lora Concession in Spain.
In order to improve our financial position for 2019 and beyond, we also took some hard decisions to address some legacy issues which impacted on our 2018 cashflows.
We also commenced an extensive programme of activities to spread our wings into other South American countries through further M&A opportunities, a programme which resulted in a number of bids being made and our announcement (in April 2019) of a planned new country entry. We are excited about the possibilities this opportunity will bring, as well as allowing us to spread our business risks across a far wider portfolio than existed in early 2018.
The Company, therefore, entered 2019 in a much stronger position than we did at the start of 2018 and whilst we need to continue to address certain challenges, I remain confident that we can do so and build a sustainable business in Trinidad and beyond.
Operational
In 2017, I spoke about the "Good, the Bad and the Ugly". In 2018, it was sometimes "Tales of the Unexpected", with the Company overcoming a number of obstacles throughout the year. For example, we achieved peak production of 1,000 bopd but average production was less than we had hoped due to a variety of factors.
The Company spent a significant amount of time in the latter half of 2018 refining our operations so that we can maximise revenue from these varying production levels. This has not always been an easy process and one we will continue to work on. The Company will remain focussed on optimising profits, we will not seek to grow production if that production is not profitable. This change in strategy was introduced as a direct result of operational learnings and lower international oil prices over the course of 2018.
The acquisition of Steeldrum, which brought three new assets, as well as the transaction to take full ownership and operatorship of Icacos, has provided Columbus with a far broader production base to play with going forward.
Deciding where we can best achieve "bang for our buck" is now a key part of our day to day operational decision-making processes and we no longer need to rely on Goudron as being our main source of revenue. Again, I believe this demonstrates stronger risk mitigation processes than we have seen in the past.
Financial
The Company recorded a significant improvement in sales revenues with GBP7.57 million being achieved in 2018, some GBP2.78 million greater than the GBP4.79 million recorded in 2017 (+58.0%). The was due to a mix of increased average production over the course of the year and higher average oil prices for much of 2018. The WTI oil price in 2018 started the year just under US$60 per barrel and stayed in the US$60 - US$70 range for the majority of the first three quarters of the year, before falling sharply in the fourth quarter, to a low of US$47 near year end. This had a knock-on effect to the Company's revenue in late 2018, but the Company ended the year with GBP1.71 million cash and has minimal debt after making debt repayments of GBP1.63 million in 2018. Of those debt repayments, the Company chose to repay GBP1.09 million which we inherited from the Steeldrum acquisition in order to improve our financial position moving into 2019. The Company could have continued to service that debt but the decision to repay earlier was considered to be a prudent one for the future.
In 2018, the Company incurred significant costs that will not be repeated in 2019 and beyond, for example the redundancy costs associated with the termination of the La Lora Concession in Spain, additional decommissioning contributions in Trinidad and integration costs associated with the Steeldrum transaction. Again, we believe these prudent actions provide us with a stronger financial base going forward.
We continue to reduce our cost base across the Group wherever possible, for example in a move of our London office in August 2018 to far smaller premises, achieving savings in excess of GBP0.11 million per annum. I continue to challenge the management team on our cost base, seeking to make sure it is appropriate for what we are seeking to deliver.
The Company undertook a capital raise in November 2018, that allowed the Company to deal with some of the integration costs associated with the Steeldrum transaction. We thank our shareholders for their support during this process.
Corporate
The Company made significant progress during 2018 in consolidating its position in Trinidad. In the first quarter, we successfully renegotiated the BOLT transaction and entered into the lease agreements that would later form the foundation of the Bonasse Private Petroleum Licence (issued in May 2019). In the third quarter, we competed the Steeldrum transaction. This deal makes our business substantially stronger, reducing our reliance on just one producing field and significantly strengthening our operational capabilities. We finished the year by completing the Icacos transaction, adding another field to our operating asset portfolio. All of these activities involved extensive work "behind the scenes" by staff across the business with a view to establishing a far stronger foundation for the future.
Outlook
The Company remains committed to our strategy of using the free cash flow from production to fund profitable production enhancements, exploration in the South West Peninsula and M&A activity. In particular, the Company is looking forward to commencing our exciting drilling campaign in the SWP during the second half of 2019. The Company has established a world-class economic and regulatory framework to exploit any oil and gas in the SWP and is confident that even a modest discovery in the SWP has the potential to transform the Company.
I would like to thank our shareholders and counterparties for their support during 2018 and also and all of our management and staff for their hard work and diligence.
Financial Review
The key financial highlights for 2018 were as follows:
-- Sales Revenues: GBP7.57 million (2017: GBP4.79 million), an increase of 58.0% -- Gross Profit: GBP1.46 million (2017: GBP0.08m) -- Average realised sales price: US$59.71 per barrel (2017: US$48.58 per barrel) -- Company maintained its cashflow positive position from Trinidad operations in 2018
-- Pre-tax Group loss for period of GBP2.64 million (2017: loss of GBP5.02 million)(2016 loss of GBP11.89 million), partially reflecting various legacy costs in 2018 which will not recur in 2019 and increased depreciation charges
-- Cash in hand: GBP1.71 million (2017: GBP4.0 million) -- Company fully funded for planned 2019 work programme -- Successful GBP2.5 million (gross) capital raise (November 2018)
-- Debt: GBP0.67 million (2017: GBP1.21 million), (2016: GBP1.87 million). Additionally, Company fully repaid GBP1.09 million to North Energy Capital AS (inherited as part of the Steeldrum transaction) in Q4 2018
-- Administrative costs (excluding extraordinary costs): GBP3.33 million (2017: GBP2.72 million (increase largely due to additional staff arising from the Steeldrum acquisition)
-- Spain legacy costs: GBP0.91 million, including a redundancy process costing GBP0.47 million.
Other items to note
-- Employee numbers increased across the Group from 26 in 2017 to 57 on 31 December 2018, largely due to the acquisition of Steeldrum in 2H 2018 and the need to improve the Company's operational capabilities across its wider portfolio.
-- Headcount in London reduced from 6 Full Time Equivalent (FTE) people in December 2017 to 4.5 FTE in December 2018
-- All members of the leadership team continuing to take 50% of their fees in shares in their second year of employment, calculated at a share price of 5.1p per share, aligning themselves to the Company's shareholders
-- Acquisition of Steeldrum was announced in July 2018 and completed in October 2018. Production and revenues from Steeldrum licences were incorporated into the Company's accounts with effect from 1 October 2018 in accordance with IFRS requirements.
Background
The Company entered 2018 in a stronger financial position than it had seen for a number of years after the new leadership team implemented a major shift in strategy and business activities in mid-2017. This strategy continued into 2018 with the key financial objectives for the year being as follows:
-- Continue to deliver increased cashflow from operations in Trinidad by optimising production and, as a result, growing revenues: The focus was to increase the cashflow positive position from operations by optimising the existing wellstock through a campaign of continual well workover and stimulation activities involving a number of rigs, rather than through the drilling of new infill wells at far greater cost. Maintaining a positive cashflow position would help fund and progress other planned business activities in 2018 and beyond.
-- Increase the Company's asset portfolio in Trinidad: It was recognised that maintaining dependency on the Goudron field for most of the Company's operational cashflows and profits left the Company at risk in the event of any negative operational or other issues arising in that field. Increasing the number of producing assets onshore Trinidad would spread risks, reduce dependency on Goudron and enable the Company to determine where to secure the best cashflow returns from the various competing assets (given differing licence arrangements, etc).
-- Re-structure the BOLT transaction to secure the SWP leases/licence on far more favourable terms and lower up-front costs: This acquisition had been in progress since 2013 under commercial terms which were no longer beneficial for the economics of the potentially transformational SWP opportunity. A new structure was required to allow the SWP opportunity to commence in 2019.
-- Progress other M&A opportunities in Trinidad and elsewhere in South America: As well as reducing the Company's dependency on Trinidad, the Company had stated a wish to spread its wings into other countries in South America, thereby increasing its opportunity base and spreading risks across a wider portfolio. An active programme of pursuing new M&A deals in other countries would be progressed, led by the new Legal & M&A Director who had been appointed on 1 January 2018 (Tony Hawkins).
-- Seek to minimise legacy costs in Spain: Ongoing costs in Spain to maintain the suspended Ayoluengo concession were a drain on the Company's cash resources and needed to be minimised. The Company planned to participate in a new tender for the concession in 2018, which the Spanish authorities indicated would take place in Q3 2018, providing the conditions for such a tender were commercially viable.
-- Continue to reduce corporate running costs: The Company had commenced a cost reduction process for its corporate costs in 2017 and an objective was to continue to reduce costs in 2018, in particular moving technical and other support activities to Trinidad where possible, focusing resources on other value-adding opportunities.
It was recognised this would result in some short-term legacy costs.
-- Reduce Company's debt position: Continue to pay down the Lind debt through monthly payments in cash and help strengthen the balance sheet.
-- Share Register: Continue to increase the percentage of institutional investors who have a medium to long-term investment horizon on the Company's share register.
-- Raise new funds when the opportunity arose: This would allow further growth opportunities to be progressed but the leadership confirmed this would only be undertaken in a manner they considered accretive manner for our shareholders.
Oil Price Environment
The international oil price sentiment in 2018 was mixed with WTI commencing the year at around US$58 per barrel and increasing in price to around $70 per barrel by mid-year before dropping suddenly to US$47.98 per barrel between October 2018 and December 2018. This compared to a WTI oil price of around US$45 in mid-2017 (and as low as US$42.53 in February 2017). Columbus, alongside other operators in Trinidad, who until late 2018 sold their oil into the Pointe-a-Pierre refinery on the island, receive a monthly sales price from Heritage (the successor to Petrotrin) which is usually at a price lower than WTI. The range of discounts to WTI averaged 8.0% in 2018 (7.4% in 2017) with this discount ranging between 2.0%-12.4% over the course of 2018. As a result, the oil prices received by Columbus from Heritage in 2017 and 2018 were as follows:
Hot Features
Premium
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
WTI Average US$ 54.22 US$ 49.88 US$ 49.53 US$ 55.48 US$ 62.29 US$ 67.79 US$ 69.56 US$ 58.73
Price
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Average Price US$ 47.60 US$ 44.89 US$ 46.86 US$ 54.39 US$ 58.43 US$ 60.00 US$ 60.90 US$ 57.58
achieved
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Discount US$ 6.62 US$ 4.99 US$ 2.67 US$ 1.09 US$ 3.86 US$ 7.79 US$ 8.66 US$ 1.15
to WTI
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Average %
Discount 12.2% 10.0% 5.4% 2.0% 6.2% 11.5% 12.4% 2.0%
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
The Trinidad Government decided to close the Pointe-a-Pierre refinery in late Q3 2018 and since then Columbus has sold its oil to Heritage who on-sell the crude into the international market. It is envisaged that Columbus and other operators will receive a reduced discount (or even a premium) from Heritage now that the Pointe-a-Pierre refinery is no longer involved in the oil sale chain and this was borne fruit in Q1 2019 where Columbus realised an average sale price of US$55.67 and peaking at $58.17 in March 2018 with this delivering a premium of 1.5% against average WTI for the month (US$54.83). It is not known if such premiums will continue in 2019 or whether this was a short-term oil price situation.
The international oil price environment has continued to improve in Q2 2019 with WTI recovering to reach approximately US$70 per barrel at one point and sitting in a range of US$60-US$65 per barrel. Columbus envisages receiving oil prices in 2019 of between US$55-US$65 per barrel as long as international market conditions remain as per late Q1 2019.
Special Petroleum Tax - impact on value
SPT is payable for onshore oilfields in Trinidad at a rate of 18% at the end of each quarter as and when the sales price received during that period exceeded an average price of US$50.01 per barrel. The SPT calculation also takes account of allowable capex spent by the producer during that period, with deductions being applied in the SPT calculations accordingly (eg. 20% of capex spent during that quarter can be offset against the SPT amount due and any brought forward offsets from previous quarters can also be applied). This can sometimes mean that no SPT is payable by a company for a quarter if the capex spend offsets are greater than the SPT payments due for that period on sales. During periods of high capex spend, SPT may not be payable in cash from one quarter to another.
The "sweet spot" for profits depends on various factors, including the level of current and past allowable capex spend, as referred to above. Likewise, it can be difficult to confirm the oil price at which a company would be better-off above US$49.95 given capex offsets. However, as a general rule of thumb, an oil price received around US$61.00/barrel would be required to obtain the same level of profits from sales at US$49.95 if capex spend is zero for that period.
Columbus regularly meets with Trinidad Government representatives and also liaises with other oil & gas companies operating in Trinidad with a view to improving the tax environment for oil companies operating in-country, in particular with a view to amending the SPT regime to soften the impact on companies once the oil price received exceeds US$50.01/barrel. This is an ongoing dialogue but like most taxation considerations, there are various other commercial, social and political issues in play which Governments and their advisers need to consider. This generally means that the pace of any changes can be slow. The Company will provide relevant updates via RNS if there are any changes to the current SPT arrangements in Trinidad.
2018 Results
The Company announced on 13 July 2018 that it had signed a Sale and Purchase Agreement to acquire Steeldrum Oil Company Inc ("Steeldrum") and confirmed on 8 October 2018 that it had completed the purchase. Steeldrum is the parent company for the West Indian Energy Group Ltd and is the owner of the licences for the Innis-Trinity field, South Erin field and the Cory Moruga development project.
The Steeldrum transaction added production of approximately 200-250 bopd to the Company's portfolio and reduced the reliance on Goudron as being the main source of cashflow. In accordance with IFRS and the Company's accounting policies, the production and revenues from the Steeldrum licences were incorporated into the Company's accounts with effect from 1 October 2018, the beginning of the month when Columbus took over full effective control.
Sales Revenues
Sales revenues in 2018 showed a significant increase of nearly 58% when compared to 2017, impacted by an increase in Trinidad production levels, a reduction in Spain revenues and an increased average realised oil price in 2018 (as described above). Production peaked in Trinidad at 1,021 bopd during December 2018 and totalled 197,315 barrels over the year (average of 541 bopd), an increase of 47.0% on the 134,320 barrels produced in Trinidad in 2017 (average of 368 bopd).
The table below shows the additional sales revenues arising from the Steeldrum acquisition in 2018 with sales revenues being booked from 1 October 2018 (as described above). The last oil sales in Spain were made in February 2017 after the termination of the La Lora concession in late January 2017:
2018 2017 Increase/(Decrease) Increase/(Decrease)
Entity GBP'000 GBP'000 GBP'000 %
-------- -------- -------------------- --------------------
Columbus Trinidad 7,046 4,501 2,545 56.5%
-------- -------- -------------------- --------------------
Columbus Spain 0 293 (293) N/A
-------- -------- -------------------- --------------------
Steeldrum
Trinidad 527 0 527 N/A
-------- -------- -------------------- --------------------
Total 7,573 4,794 2,779 58.0%
-------- -------- -------------------- --------------------
Cost of Sales
The costs of operating the Company's fields in Trinidad are largely fixed with limited variable costs, with the exception of workovers and well stimulation activities which involve the use of rigs and other equipment. Although sales revenues increased by some 58% in 2018, the cost of sales only increased by 0.8%; GBP2.40 million in 2017 to GBP2.42 million in 2018. Well maintenance and stimulation activities are largely discretionary with the Company incurring some GBP1.35 million in 2018 (around 56% of total cost of sales).
Gross Profit
After taking account of increased depreciation of oil & gas assets (due to increased production in 2018), Columbus posted a gross profit of GBP1.46 million in 2018, compared to a profit of GBP0.08 million in 2017. Excluding the depreciation charge, Net Revenues totalled GBP2.97 million in 2018 (GBP1.23 million in 2017).
SPT
The imposition of SPT once oil prices exceeded US$50.01 per barrel resulted in charges of GBP0.68 million in 2018 (2017: GBPNil).
Capex
Total capex spend in 2018 amounted to GBP1.53 million (2017: GBP1.38 million), made up of GBP0.72 million on tangible assets (mainly Goudron) and GBP0.82 million in Intangible Assets (mainly BOLT transaction).
Administrative Expenses
During 2018, the Company continued to take action to reduce administrative costs across the Group where possible. Like 2017, the Company had to take action to address some legacy issues which were unavoidable but added a continuing drain on the Company's cash resources. The table below highlights the breakdown of costs in 2018 and 2017:
2018 2017 Variation
Activity GBP'000 GBP'000 GBP'000 Comments
-------- -------- ---------- --------------------------------------------------
Columbus admin. 2,873 2,723 +150 Includes fully built-up (100%) costs of
expenses director fees/management salaries in 2018
- GBP0.44m of management fees not paid
in cash in 2018, to be paid in shares (see
further details below)
-------- -------- ---------- --------------------------------------------------
Steeldrum admin 454 0 +454 Additional management, finance & admin
expenses staff inherited as part of Steeldrum transaction
-------- -------- ---------- --------------------------------------------------
Spain - ongoing 433 348 +85 All care & maintenance costs for the Ayoluengo
costs field now charged to administration since
licence suspended. Included technical studies
carried out by third parties in 2018, required
by the Spanish authorities to terminate
the licence.
-------- -------- ---------- --------------------------------------------------
Spain - exceptional 472 0 +472 One-off costs of legal redundancy process
costs for Collective undertaken due to closure of the La Lora
Dismissal Procedure concession and need to cut ongoing costs.
(CDP)
-------- -------- ---------- --------------------------------------------------
Previous Director
Contractual
& Termination
Costs 108 352 -244 Costs all completed by May 2018.
-------- -------- ---------- --------------------------------------------------
As noted above, all members of leadership team continued to take 50% of their fees in shares in their second year of employment, calculated at a share price of 5.1p per share, aligning themselves to the Company's shareholders. The financial accounts for 2018 include the fully built-up (100%) costs for all members of the leadership team; if the cash value of the fees which are payable in shares were deducted from the Columbus admin expenses, the total Columbus administrative expenses amount paid in cash would be reduced to GBP2.43 million, some 10.4% lower than the GBP2.72 million costs incurred in 2017.
The Company also made various other cost savings in 2018, including a move to a smaller London office in early August 2018, reducing costs by around GBP0.11 million per annum. In addition, staff numbers in the corporate office were reduced from 6 Full-Time Equivalent (FTE) people in December 2017 to 4.5 FTE in December 2018.
Corporate
Debt reduction: In 2018, the Company continued with its strategy of reducing debt on the balance sheet by making repayments in cash. Total debt outstanding stood at GBP0.67 million at 31 December 2018, a reduction of GBP0.53 million on the total of GBP1.21 million on 31 December 2017. Details of the various loans are highlighted in Note 16 to the Accounts and specific issues to note are as follows:
-- Lind Loans: The amount outstanding on the loans taken out from Lind in December 2016 and October 2017, totalling GBP2.35 million, had reduced to GBP0.29 million at 31 December 2018. This debt will be fully repaid by September 2019. With one monthly exception, loan repayments, with associated interest, have been made to Lind monthly in cash and the security held over certain assets of Columbus was released by Lind in October 2018 once the outstanding debt fell below US$0.5 million (GBP0.38 million).
-- New Steeldrum loans: The Company inherited outstanding loans totalling GBP1.13 million upon the acquisition of Steeldrum and, in order to release the security over certain Steeldrum assets, the Company fully repaid a GBP1.09 million loan to North Energy Capital AS in November 2018. The repayment has provided the Company with greater operational flexibility going forward and also improved the Company's balance sheet.
-- New Lind Loan Facility: Upon the announcement of the Steeldrum acquisition in July 2018, the Company also announced the establishment of a new loan facility from Lind of up to US$3.25 million to provide Columbus with access to additional funds, should they be required in 2H 2018, to support the integration of Steeldrum and accelerate certain operational activities. This facility, which was available for drawdown at the Company's exclusive option for up to six months, was in effect a "financial insurance policy" to allow the Company to deal with any unexpected financial issues arising from the Steeldrum acquisition. This facility was never drawn-down and was allowed to lapse in early January 2019.
Equity raise: The Company undertook a placing in Q4 2018 with new and existing shareholders including Schroder Investment Management Limited, Michael Joseph and Burggraben Holding AG at a price of 3.5 pence per share to raise approximately GBP2.5 million (before expenses). This placing was approved at a General Meeting on 2 November 2018 and was raised to repay the North Energy loan referred to above, establish and implement a multi-well drilling campaign on the Steeldrum assets and in the SWP, to upgrade facilities in the SWP, particularly at Bonasse and Icacos, to speed up oil production growth and sales and also allow for early sales from any exploration success at the SWP in 2019.
Legacy Costs: Spain
As Columbus entered 2018, the Company was led to believe that it was the intention of the Spanish authorities to re-tender the La Lora concession (the "Concession") in Q3 2018. The Company's subsidiary, Compañía Petrolifera de Sedano S.L.U. ("CPS"), had suspended the employment of 14 of its employees in Spain in early 2017, following the termination of the Concession in late January 2017. This action was taken to reduce costs given that the Ayoluengo was no longer on production. However, it became clear in early 2018 that the duration of the tendering process was still uncertain and, as such, the Company was not prepared to un-necessarily continue to bear the ongoing costs of the employee suspensions which needed formal renewal in late February 2018 for a further year. CPS therefore undertook the Collective Dismissal Procedure (CDP) in Q1 2018 affecting our employees in Burgos, Spain. The redundancy plan, which was approved by the vast majority of the 14 affected employees and was also formally approved by the Trade Union, was completed in late March 2018.
The CDP process cost the Company approximately GBP0.47 million, a cost which was unavoidable and a clear drain on the Company's cash resources. The total costs incurred in Spain in 2018 of GBP0.91 million also had a material effect on the Company's financial accounts, increasing the pre-tax Group loss by this amount accordingly at a time when actions were being taken in Trinidad to improve profitability.
The actions taken in early 2018 significantly reduced ongoing running costs for the Company in Spain. Whilst two employees were retained by CPS to manage ongoing "care and maintenance" activities on the old Ayoluengo production field, the Spanish authorities informed CPS in November 2018 that they had decided not to re-tender the Concession and confirmed that CPS was now required to decommission the Ayoluengo field and all facilities, etc. This decision was un-expected and a change of policy by the Spanish Government. A de-commissioning plan was subsequently prepared and submitted by CPS and approved by the Spanish authorities in late Q1 2019 and work commenced on implementing this plan in Q2 2019, initially consisting of removal of above-ground facilities. The costs are expected to be met from sale of equipment and scrap and the de-commissioning will take approximately 2-3 years at no material cost to the Group.
The Company is also taking action to seek compensation from the Spanish authorities for the significant costs incurred by CPS between the announcement of the termination of the licence in late January 2017 and their decision not to re-tender the Concession in November 2018; a period of some 22 months. CPS has taken appropriate legal advice and will be commencing action in the near future with a target compensation amount in mind.
Cashflow Summary
The Company has made progress on a number of fronts as it focuses on profitability across the Group. It has, however, been constrained by ongoing legacy issues and the cash in hand position has also been affected by the aggressive repayment of debt (totalling some GBP1.62 million in 2018) and the pursuit of new M&A activities to grow the business. On looking at the loss from operations in the Income Statement, a further breakdown shows the following:
Income Statement 2018 (GBP'000)
Loss from operations (3,743)
---------------
Add back:
---------------
Legacy costs - Spain 905
---------------
Legacy costs - Previous Director
Contractual & Termination Costs 108
---------------
Management salaries paid in shares
(not cash) 435
---------------
Depreciation of oil & gas assets 1,529
---------------
Amortisation and depreciation 750
---------------
Share Based payments 98
---------------
Adjusted Profit from operations 82
---------------
The above analysis indicates that by deducting unavoidable legacy costs which the Company has faced, together with depreciation and non-cash charges from the GBP3.74 million loss from operations, the Company breakeven point is around 540 bopd at the oil prices obtained in 2018 and under the current commercial arrangements. The focus of the Company in 2019 will continue to be to optimise profit as opposed to chasing more and more production, whilst seeking to improve the commercial terms of the licences with Heritage and other parties. Such discussions are ongoing at the time of drafting this report.
Financial Statements
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2018
Year ended Year ended
31 December 2018 31 December 2017
Note GBP 000's GBP 000's
Net Petroleum Sales 2 7,573 4,794
Royalties (2,177) (1,157)
5,396 3,637
Cost of sales (2,422) (2,403)
Depreciation of oil and gas assets 3 (1,529) (1,156)
----------------- -----------------
Gross profit/(loss) 1,445 78
Administrative expenses (2,873) (2,723)
Steeldrum Administration costs (post acquisition) (454) -
Spanish operations (ongoing administration costs) (433) (348)
Spanish operations (redundancy costs) (472) -
Previous Director contractual & termination costs (108) (352)
Amortisation and depreciation 3 (750) (617)
Share based payments (98) (234)
Loss from operations (3,743) (4,196)
Gain on bargain purchase (Steeldrum acquisition) 1,295 -
Impairment charge (132) -
Finance (charges)/income 9 (123) (824)
Loss before taxation (2,703) (5,020)
Income tax expense 5 (348) (12)
----------------- -----------------
Loss for the year attributable to equity holders of the parent (3,051) (5,032)
----------------- -----------------
Other comprehensive income
Exchange differences on translation of foreign operations 395 (1,586)
Other comprehensive income for the year net of taxation 395 (1,586)
----------------- -----------------
Total comprehensive income for the year attributable to equity
holders of the parent (2,656) (6,618)
----------------- -----------------
Loss per share (pence)
Basic and diluted 8 (0.45) (0.94)
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 2017
As at 31 December As at 31 December
2018 2017
Note GBP 000's GBP 000's
Assets
Non-current assets
Intangible evaluation assets 10 5,026 4,327
Oil and gas assets 11 16,379 13,865
Property, plant and equipment 11 2,724 1,588
Investment in associate 12 37 35
Escrow and abandonment funds 14 601 -
Deferred tax asset 5 2,072 -
Total non-current assets 26,839 19,815
Current assets
Trade and other receivables 14 2,808 1,459
Inventories 15 655 192
Cash and cash equivalents 21 1,712 4,002
Total current assets 5,175 5,653
------------------ ------------------
Total assets 32,014 25,468
------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 16 (4,616) (1,931)
Borrowings 17 (542) (837)
Taxation 5 (11) (12)
Deferred consideration 16 (120) (120)
Total current liabilities (5,289) (2,900)
Non-current liabilities
Borrowings 17 (132) (370)
Provisions 18 (1,913) (1,257)
Deferred tax liability 5 (45) -
------------------ ------------------
Total non-current liabilities (2,090) (1,627)
------------------ ------------------
Total liabilities (7,379) (4,527)
------------------ ------------------
Net assets 24,635 20,941
================== ==================
Shareholders' equity
Called-up share capital 19 4,390 4,299
Share premium 75,582 69,421
Share based payments reserve 20 1,610 1,525
Retained earnings (61,406) (58,617)
Revaluation surplus 2,673 2,922
Foreign exchange reserve 1,786 1,391
------------------
Total equity attributable to equity
holders of the parent 24,635 20,941
================== ==================
The accompanying accounting policies and notes form an integral part of
these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
As at 31 December As at 31 December
2018 2017
Note GBP 000's GBP 000's
Assets
Non-current assets
Intangible assets 10 16 49
Property, plant and equipment 11 2 6
Investment in subsidiaries 12 1 1
Trade and other receivables 14 47,349 39,849
------------------ ------------------
Total non-current assets 47,368 39,905
Current assets
Trade and other receivables 14 182 253
Cash and cash equivalents 1,176 3,820
------------------ ------------------
Total current assets 1,358 4,073
------------------ ------------------
Total assets 48,726 43,978
------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 16 (707) (422)
Borrowings 17 (291) (612)
Deferred consideration 16 (120) (120)
Total current liabilities (1,118) (1,154)
Non-current liabilities
Borrowings 17 - (232)
Total non-current liabilities - (232)
------------------ ------------------
Total liabilities (1,118) (1,386)
------------------ ------------------
Net assets 47,608 42,592
================== ==================
Shareholders' equity
Called-up share capital 19 4,390 4,299
Share premium 75,582 69,421
Share based payments reserve 20 1,610 1,525
Retained earnings 25 (33,974) (32,653)
------------------ ------------------
Total equity attributable to equity
holders of the parent 47,608 42,592
================== ==================
The accompanying accounting policies and notes form an integral part of
these financial statements.
GROUP STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018
Year ended Year ended
31 December 2018 31 December 2017
GBP 000's GBP 000's
Cash outflow from operating activities
Operating loss (3,743) (4,196)
(Increase)/decrease in trade and other receivables (137) (384)
(Decrease) in trade and other payables 675 (108)
Decrease/(increase) in inventories (462) 265
Depreciation 1,904 1,504
Amortisation 342 269
Impairment 132 -
Share based payments 98 234
Income tax paid (278) (12)
-----------------
Net cash (outflow) from operating activities (1,469) (2,428)
----------------- -----------------
Cash flows from investing activities
Payments to acquire intangible assets (815) (21)
Payments to acquire tangible assets (718) (1,355)
Cash acquired from business combination 337 -
Net cash outflow from investing activities (1,196) (1,376)
----------------- -----------------
Cash flows from financing activities
Issue of ordinary share capital 2,556 7,806
Share issue costs (125) (392)
Finance income/(charges) paid (124) (626)
Repayment of borrowings (1,539) (1,274)
Proceeds of borrowings - 569
Net cash inflow from financing activities 768 6,083
----------------- -----------------
Net increase/(decrease) in cash and cash
equivalents (1,897) 2,279
Foreign exchange differences on translation (393) (104)
Cash and cash equivalents at beginning of
year 4,002 1,827
----------------- -----------------
Cash and cash equivalents at end of year 1,712 4,002
----------------- -----------------
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018
Year ended Year ended
31 December 2018 31 December 2017
GBP 000's GBP 000's
Cash outflow from operating activities
Operating loss (1,090) (1,352)
Decrease/(increase) in trade and other receivables (2,779) 207
(Decrease)/increase in trade and other payables 285 (296)
Depreciation 4 56
Amortisation 33 33
Impairments 132 -
Share based payments 98 234
Net cash outflow from operating activities (3,317) (1,118)
----------------- -----------------
Cash flows from investing activities
Loans granted to subsidiaries (1,094) (1,698)
Payments to acquire intangible assets - -
Payments to acquire tangible assets - (1)
Net cash outflow from investing activities (1,094) (1,699)
----------------- -----------------
Cash flows from financing activities
Issue of ordinary share capital 2,556 7,806
Share issue costs (125) (392)
Finance charges paid (109) (615)
Repayments of borrowings (553) (1,235)
Proceeds of borrowings - 569
----------------- -----------------
Net cash inflow from financing activities 1,769 6,133
----------------- -----------------
Net increase/(decrease) in cash and cash
equivalents (2,642) 3,316
Foreign exchange differences on borrowings (2) (96)
Cash and cash equivalents at beginning of
year 3,820 600
----------------- -----------------
Cash and cash equivalents at end of year 1,176 3,820
----------------- -----------------
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2018
Called Share Share Retained Foreign Revaluation Total
up share premium based earnings exchange surplus Equity
capital reserve payments reserve
reserve
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Group
As at 31 December 2016 4,184 62,122 1,341 (53,846) 2,977 3,122 19,900
Loss for the year - - - (5,032) - - (5,032)
Revaluation surplus
amortisation - - - 200 - (200) -
Lapsing of warrants - - (61) 61 - - -
Currency translation
differences - - - - (1,586) - (1,586)
---------- ------------ ------------ ------------ ---------- ------------ ------------
Total comprehensive
income - - (61) (4,771) (1,586) (200) (6,618)
Share capital issued 115 7,691 - - - - 7,806
Cost of share issue - (392) - - - - (392)
Share based payments - - 245 - - - 245
Total contributions
by and distributions
to owners of the
Company 115 7,299 245 - - - 7,659
As at 31 December 2017 4,299 69,421 1,525 (58,617) 1,391 2,922 20,941
---------- ------------ ------------ ------------ ---------- ------------ ------------
Loss for the year - - - (3,051) - - (3,051)
Revaluation surplus
amortisation - - - 249 - (249) -
Lapsing of warrants - - (13) 13 - - -
Currency translation
differences - - - - 395 - 395
---------- ------------ ------------ ------------ ---------- ------------ ------------
Total comprehensive
income - - (13) (2,789) 395 (249) (2,656)
Share capital issued 91 6,286 - - - - 6,377
Cost of share issue - (125) - - - - (125)
Share based payments - - 98 - - - 98
Total contributions
by and distributions
to owners of the
Company 91 6,161 98 - - - 6,350
As at 31 December 2018 4,390 75,582 1,610 (61,406) 1,786 2,673 24,635
---------- ------------ ------------ ------------ ---------- ------------ ------------
Company
As at 31 December 2016 4,184 62,122 1,341 (30,551) - - 37,096
Loss for the year - - - (2,163) - - (2,163)
Lapsing of warrants - - (61) 61 -
-------- --------- -------- ----------- ---- ---- ----------
Total comprehensive
income - - (61) (2,102) - - (2,163)
Share capital issued 115 7,691 - - - - 7,806
Cost of share issue - (392) - - - - (392)
Share based payments - - 245 - - - 245
-------- --------- -------- ----------- ---- ---- ----------
Total contributions
by and distributions
to owners of the Company 115 7,299 245 - - - 7,659
-------- --------- -------- ----------- ---- ---- ----------
As at 31 December 2017 4,299 69,421 1,525 (32,653) - - 42,592
-------- --------- -------- ----------- ---- ---- ----------
Loss for the year - - - (1,334) - - (1,334)
Lapsing of warrants - - (13) 13 - - -
Total comprehensive
income - - (13) (1,321) - - (1,334)
Share capital issued 91 6,286 - - - - 6,377
Cost of share issue - (125) - - - - (125)
Share based payments - - 98 - - - 98
-------- --------- -------- ----------- ---- ---- ----------
Total contributions
by and distributions
to owners of the Company 91 6,161 98 - - - 6,350
-------- --------- -------- ----------- ---- ---- ----------
As at 31 December 2018 4,390 75,582 1,610 (33,974) - - 47,608
-------- --------- -------- ----------- ---- ---- ----------
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018
1 Summary of significant accounting policies
1.01 General information and authorisation of financial statements
Columbus Energy Resources Plc is a public limited company registered
in the United Kingdom under the Companies Act 2006. The address of
its registered office is Suite 114, 90 Long Acre, London, WC2E 9RA.
The Company's Ordinary shares are traded on the AIM Market operated
by the London Stock Exchange. The Group financial statements of Columbus
Energy Resources Plc for the year ended 31 December 2018 were approved
for issue by the Board on 30 May 2019 and the balance sheets signed
on the Board's behalf by Mr. Leo Koot and Mr. Gordon Stein.
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
The Group has applied the following standards and amendments for the
first time for their annual reporting period commencing 1 January 2018:
* IFRS 9 Financial Instruments
* IFRS 15 Revenue from Contracts with Customers
No retrospective adjustments were required following the adoption of
IFRS 9 and IFRS 15.
On 1 January 2018 (the date of initial application of IFRS 9), the
Group's management assessed which business models apply to the financial
assets held by the Group and classified its financial instruments into
the appropriate IFRS 9 categories. No reclassifications were required.
At the date of authorisation of these financial statements, the following
Standards and Interpretations which have not been applied in these
financial statements, were in issue but not yet effective for the year
presented:
* IFRS 16 in respect of Leases which will be effective
for accounting periods beginning on or after 1
January 2019.
* IFRS 17 Insurance Contracts (effective date 1 January
2021).
There are no other IFRSs or IFRIC interpretations that are not yet
effective that would be expected to have a material impact on the Group.
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's internal cashflow forecasts monitor both the short and
long term timelines, factoring in the known risks and uncertainties.
These forecasts are regularly updated and demonstrate that with the
current cash reserves and forecasted future revenue, the Company is
able to continue in operation for at least the next 12 months. The
Group financial statements have therefore been prepared on a going
concern basis.
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 Business combinations
On the acquisition of a subsidiary, the business combination is accounted
for using the acquisition method. The cost of an acquisition is measured
as the aggregated amount of the consideration transferred, measured
at the date of acquisition. The consideration paid is allocated to
the assets acquired and liabilities assumed on the basis of fair values
at the date of acquisition. Acquisition costs are expensed when incurred
and included in general and administrative expenses.
If the cost of acquisition exceeds the identifiable net assets attributable
to the Group, the difference is considered as purchased goodwill, which
is not amortised but annually reviewed for impairment. In the case
that the identifiable net assets attributable to the Group exceed the
cost of acquisition, the difference is recognised in profit and loss
as a gain on bargain purchase.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018
If the initial accounting for a business combination cannot be completed
by the end of the reporting period in which the combination occurs,
only provisional amounts are reported, which can be adjusted during
the measurement period of 12 months after acquisition date.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
1.06 Intangible assets
Intangible assets are recorded at cost less eventual amortisation and
provision for impairment in value.
1.07 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.
1.08 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.
1.09 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.
1.10 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.
1.11 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.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
1.12 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.
1.13 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.
1.14 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.
1.15 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.
1.16 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.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
1.17 Finance costs
Borrowing costs are recognised as an expense when incurred.
1.18 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.
1.19 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.
1.20 Dividends
Dividends are reported as a movement in equity in the period in which
they are approved by the shareholders.
1.21 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.
1.22 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.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
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 on 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.
1.23 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 Columbus Energy Resources 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.
1.24 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 Board has determined there is a single operating segment: oil and
gas exploration, development and production however, there are six
geographical segments: Trinidad & Tobago, Spain and Cyprus, St Lucia,
the U.S.A. & the U.K., four of which are non-operating.
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 management
entity and is reported on as a separate segment. 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.
1.25 Share issue expenses and share premium account
Costs of share issues are written off against the premium arising on
the issues of share capital.
1.26 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.
1.27 Revaluation surplus Reserve
This reserve is used to record the increase on revaluation of assets,
in particular of oil and gas properties.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
1.28 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.
1.29 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 post-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.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
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 operating segment: oil and
gas exploration, development and production however, there are six
geographical segments: Trinidad & Tobago, Spain and Cyprus, St Lucia,
the U.S.A. & the U.K., five of which are non-operating.
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 management
entity and is reported on as a separate segment. The entities in Cyprus,
St Lucia and the U.S.A. are non-operating in that they either hold
investments or are dormant. Their results are consolidated and reported
on together as a single segment.
The concession in Spain was classified as operating and this remained
the case in 2017 as Spanish authorities had notified the company that
it intended to hold a re-tender process for a new concession, a process
the Company planned to participate in. The Company was informed in
November 2018 that the Spanish authorities no longer plan to re-tender
and from this date is no longer classified as operating.
Year ended 31 December Management Non-Producing Operating Non-operating Total
2018
UK (*) Spain Trinidad Cyprus,
St Lucia
& USA
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating profit/(loss)
by geographical
area
Sales revenue (**) - - 7,573 - 7,573
----------- -------------- ---------- -------------- --------
Operating profit/(loss) (1,090) (1,017) (1,611) (25) (3,743)
Finance (charges)/income (109) - (14) - (123)
Impairment of non-current
assets (132) - - - (132)
Gain on bargain
purchase - - - 1,295 1,295
Profit/(loss) before
taxation (1,331) (1,017) (1,625) 1,270 (2,703)
----------- -------------- ---------- -------------- --------
Other information
Depreciation and
amortisation (37) (31) (2,211) - (2,279)
Capital additions 1 - 1,532 - 1,533
----------- -------------- ---------- -------------- --------
Segment assets
Non-current assets 18 106 26,715 - 26,839
Trade and other
receivables 182 7 2,619 - 2,808
Inventories - - 655 - 655
Cash 1,176 4 529 3 1,712
----------- -------------- ---------- -------------- --------
Consolidated total
assets 1,376 117 30,518 3 32,014
----------- -------------- ---------- -------------- --------
Segment liabilities
Trade and other
payables (707) (18) (3,875) (16) (4,616)
Taxation - - - (11) (11)
Borrowings (291) - (383) - (674)
Deferred tax liability - - (45) - (45)
Deferred consideration (120) - - - (120)
Provisions - (860) (1,053) - (1,913)
----------- -------------- ---------- -------------- --------
Consolidated total
liabilities (1,118) (878) (5,356) (27) (7,379)
----------- -------------- ---------- -------------- --------
(*) Intercompany balances and transactions between Group entities have
been eliminated.
(**) Sales revenues were derived from a single customer within each
of these operating countries.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
2 Turnover and segmental analysis (continued)
Year ended 31 December Management Operating Operating Non-operating Total
2017
UK (*) Spain Trinidad Cyprus,
St Lucia
& USA
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating profit/(loss)
by geographical
area
Revenue (**) - 293 4,501 - 4,794
----------- ---------- ---------- ----------------------------- --------
Operating profit/(loss) (1,352) (766) (2,053) (25) (4,196)
Finance (charges)/income (813) - (11) - (824)
Profit/(loss) before
taxation (2,165) (766) (2,064) (25) (5,020)
----------- ---------- ---------- ----------------------------- --------
Other information
Depreciation and
amortisation (89) (33) (1,651) - (1,773)
Capital additions 1 - 1,375 - 1,376
----------- ---------- ---------- ----------------------------- --------
Segment assets
Non-current assets 56 136 19,623 - 19,815
Trade and other
receivables 253 19 1,187 - 1,459
Inventories - - 192 - 192
Cash 3,820 42 138 2 4,002
----------- ---------- ---------- ----------------------------- --------
Consolidated total
assets 4,129 197 21,140 2 25,468
----------- ---------- ---------- ----------------------------- --------
Segment liabilities
Trade and other
payables (422) (36) (1,458) (15) (1,931)
Taxation - - - (12) (12)
Borrowings (844) - (363) - (1,207)
Deferred consideration (120) - - - (120)
Provisions - (847) (410) - (1,257)
----------- ---------- ---------- ----------------------------- --------
Consolidated total
liabilities (1,386) (883) (2,231) (27) (4,527)
----------- ---------- ---------- ----------------------------- --------
(*) Intercompany balances and transactions between Group entities have been eliminated.
(**) Sales revenues were derived from a single customer within each of these operating countries.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
3 Operating loss 2018 2017
----------------------------------------------------- ----------- ----------
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 37 37
-audit related assurance services 2 2
Directors' emoluments - fees and benefits (*) 683 1,152
Depreciation (**) 1,904 1,504
Amortisation 375 269
(*) See note 7 for further details.
(**) Depreciation of certain oil and gas assets of GBP1,529,000 (2017:
GBP1,156,000) has been recognised within cost of sales.
4 Employee information (excluding Directors') 2018 2017
---------------------------------------------- ---------- ----------
GBP 000's GBP 000's
Staff costs:
Wages and salaries 2,245 1,173
Employer NIC's 121 254
---------- ----------
Total 2,366 1,427
---------- ----------
Number Number
The average number of employees working on a
full time equivalent basis:
Administration 17 8
Operations 38 18
---------- ----------
Total 55 26
---------- ----------
5 Taxation 2018 2017
---------------------------------------------------- ------------ -------------
GBP 000's GBP 000's
Analysis of tax charge in the year
Tax charge/(income) on ordinary activities 348 12
------------ -------------
Factors affecting the tax charge for the year:
Loss on ordinary activities before tax 2,703 5,020
Standard rate of corporation tax in the UK 19% 20%/19%
Loss on ordinary activities multiplied by the
standard rate of corporation tax 513 966
Effects of:
Non-deductible expenses (52) (50)
Special petroleum tax 679 -
Overseas tax on profits 11 12
Overseas deferred tax credit (377) -
foreign exchange difference 36 -
Future tax benefit not brought to account (462) (916)
------------ -------------
Current tax charge/(income) for the year 348 12
------------ -------------
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31
DECEMBER 2018 (CONTINUED)
Deferred tax:
The net deferred tax balances solely relates to the Company's Trinidad
operations. The components of the liability for the years ended December
31, 2018 and 2017 were as follows:
Steeldrum acquisition balances:
Losses carried forward 3,134
Property and equipment (1,484) -
Net deferred tax asset recognised at acquisition
(note 13) 1,650
Post-acquisition losses carried forward 348 -
Adjustment to Property and equipment 74 -
Deferred tax asset 2,072 -
Property and equipment (non Steeldrum) (45) -
Deferred tax liability (45) -
6 Dividends
---------------------------------------------------------------------------------
During the year, no dividends were paid or proposed by the Directors
(2017: nil).
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
7 Directors' remuneration
-----------------------------------------------------
2018 2017
GBP 000's GBP 000's
Directors' remuneration 683 1,152
---------- ----------
Pension
and Contractual and
Directors medical Employer termination Share-settled
fees benefits NIC's benefits payments Total
--------------------- ------------- ------------ ------------- -------------------- ---------------- ---------
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
2018
Executive Directors
Leo Koot 150 16 20 - 150 336
Gordon Stein 98 8 12 - 95 213
Neil Ritson - - - 85 - 85
Fergus Jenkins - - - 6 - 6
James
Thadchanamoorthy - - - 17 - 17
Non-Executive
Directors
Michael Douglas 24 - 2 - - 26
Gordon Stein - - - - - -
Stephen Horton - - - - - -
------------- ------------ ------------- -------------------- ---------------- ---------
272 24 34 108 245 683
------------- ------------ ------------- -------------------- ---------------- ---------
The Executive Directors being Leo Koot and Gordon Stein, and the new Executive Management
Members being Stewart Ahmed and Anthony Hawkins (together the "Leadership Team"), agreed to
receive 50% of their fees for the first year of their employment in Company shares, implemented
by way of nil cost options (see the Directors' Report for further details). The Leadership
Team all agreed to continue to take 50% of their fees in their second year of employment with
the number of share options awarded for these fees being calculated and accrued monthly. Alternatively,
each member of the Leadership Team is entitled to receive 100% of their fees in cash by giving
the Company one month's notice of this request in writing. The Company share price used to
calculate the number of shares to be awarded via share options for the second year of employment
for all members of the Leadership team is 5.1p. The figures above include accruals for the
fees to be settled by the issue of share options as at 31 December 2018. At the year-end,
Leo Koot was owed GBP243,750 and Gordon Stein was owed GBP146,458 in fees, payable via nil
cost share options as referred to above (see note 20).
Pension
and Contractual and
Directors medical Employer termination Share-settled
fees benefits NIC's benefits payments Total
--------------------- ------------- ------------ ------------- -------------------- ---------------- ---------
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
2017
Executive Directors
Leo Koot 193 6 26 - 65 290
Gordon Stein 104 3 14 - 65 186
Neil Ritson 75 4 21 131 - 231
Fergus Jenkins 58 6 8 25 - 97
James
Thadchanamoorthy 69 8 20 141 - 238
Non-Executive
Directors
Michael Douglas 24 - 1 - 15 40
Gordon Stein 10 - 1 - - 11
Stephen Horton - - 4 55 - 59
------------- ------------ ------------- -------------------- ---------------- ---------
533 27 95 352 145 1,152
------------- ------------ ------------- -------------------- ---------------- ---------
Stephen Horton retired from the Board of Directors on 10 January 2017. Gordon Stein joined as a Non-Executive Director on 10 January 2017 then later was appointed Chief Financial Officer on 15 June 2017, replacing James Thadchanamoorthy. Leo Koot was appointed Executive Chairman on 10 May 2017, replacing Neil Ritson. Fergus Jenkins stepped down from the Board on 1 August 2017. One-off contractual and termination payments due to the previous Executive Directors, Neil Ritson, Fergus Jenkins and James Thadchanamoorthy, are shown separately above.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
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:
2018 2017
--------- ---------
Loss after taxation (GBP000's) (3,051) (5,032)
Weighted average number of ordinary shares used
in calculating basic loss per share (millions) 685 534
Weighted average number of ordinary shares used
in calculating diluted loss per share (millions) 802 597
Basic loss per share (expressed in pence) (0.45) (0.94)
Diluted loss per share (expressed in pence) (0.45) (0.94)
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.
9 Finance charges/(income) 2018 2017
GBP 000's GBP 000's
Loan interest payable 123 250
Loan facility fees - 574
Realised (gain)/loss on loan maturity - -
---------- -------------
Total 123 824
---------- -------------
Loan facility fees include the fair value of the options issued in
connection with the second convertible security from Lind Partners
LLC (Lind) (see note 19) and the fair value of the shares issued in
connection with the re-negotiation of the Convertible Security Funding
Agreement with Lind, as announced by the Company on 11 September 2017.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
10 Intangible assets 2018
--------------------------------------------- ----------------------------- --------- ---------
Intangible evaluation assets Software Total
GBP000's GBP000's GBP000's
Cost
As at 1 January 2018 15,800 133 15,933
Additions 815 - 815
Foreign exchange difference on translation 466 - 466
----------------------------- --------- ---------
As at 31 December 2018 17,081 133 17,214
----------------------------- --------- ---------
Amortisation and Impairment
As at 1 January 2018 11,522 84 11,606
Amortisation 342 33 375
Foreign exchange difference on translation 207 - 207
----------------------------- --------- ---------
As at 31 December 2018 12,071 117 12,188
----------------------------- --------- ---------
Net book value
As at 31 December 2018 5,010 16 5,026
----------------------------- --------- ---------
As at 31 December 2017 4,278 49 4,327
----------------------------- --------- ---------
Impairment review
The Directors carried out an impairment review of the intangible assets and concluded that
a write-down was not required.
10 Intangible assets 2018
-------------------------------------------- ---------
Company
Software
GBP000's
Cost
As at 1 January 2018 133
Additions -
Foreign exchange difference on translation -
---------
As at 31 December 2018 133
---------
Amortisation and Impairment
As at 1 January 2018 84
Amortisation 33
Foreign exchange difference on translation -
---------
As at 31 December 2018 117
---------
Net book value
As at 31 December 2018 16
---------
As at 31 December 2017 49
---------
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
10 Intangible assets 2017
------------------------------------------ ------------------------- --------------- -----------------
Intangible evaluation assets Software Total
GBP000's GBP000's GBP000's
Cost
As at 1 January 2017 16,302 133 16,435
Additions 21 - 21
Foreign exchange difference on
translation (523) - (523)
------------------------------- -------------- ------------
As at 31 December 2017 15,800 133 15,933
------------------------------- -------------- ------------
Amortisation and Impairment
As at 1 January 2017 11,386 51 11,437
Amortisation 236 33 269
Foreign exchange difference on
translation (100) - (100)
------------------------------- -------------- ------------
As at 31 December 2017 11,522 84 11,606
------------------------------- -------------- ------------
Net book value
As at 31 December 2017 4,278 49 4,327
------------------------------- -------------- ------------
As at 31 December 2016 4,916 82 4,998
------------------------------- -------------- ------------
10 Intangible assets 2017
-------------------------------------------------------------------------------------------- -----------
Company
Software
GBP000's
Cost
As at 1 January 2017 133
Additions -
Foreign exchange difference on translation -
-----------
As at 31 December 2017 133
-----------
Amortisation and Impairment
As at 1 January 2017 51
Amortisation 33
Foreign exchange difference on translation -
-----------
As at 31 December 2017 84
-----------
Net book value
As at 31 December 2017 49
-----------
As at 31 December 2016 82
-----------
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
11 Tangible assets 2018
------------------------------------------------------ -------------------------------------------------
Group Company
Oil and Property, Decommissioning Total Property,
gas assets plant and costs plant and
equipment equipment
(*) (*)
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Cost or Valuation
As at 1 January 2018 22,042 3,366 1,160 26,568 26
Additions 269 384 - 653 1
Acquisition of Steeldrum 3,165 1,110 - 4,275 -
Disposals - (45) - (45) -
Foreign exchange difference
on translation 1,100 211 (7) 1,304 -
------------ ------------- ---------------- ---------- ---------------
As at 31 December 2018 26,576 5,026 1,153 32,755 27
------------ ------------- ---------------- ---------- ---------------
Depreciation and Impairment
As at 1 January 2018 8,177 2,087 851 11,115 20
Depreciation 1,529 339 36 1,904 5
Disposals - - - - -
Foreign exchange difference
on translation 491 137 5 633 -
------------ ------------- ---------------- ---------- ---------------
As at 31 December 2018 10,197 2,563 892 13,652 25
------------ ------------- ---------------- ---------- ---------------
Net book value
As at 31 December 2018 16,379 2,463 261 19,103 2
------------ ------------- ---------------- ---------- ---------------
As at 31 December 2017 13,865 1,279 309 15,453 6
------------ ------------- ---------------- ---------- ---------------
(*) Property, plant and equipment includes leasehold improvements.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
11 Tangible assets 2017
------------------------------------------------------ -------------------------------------------------
Group Company
Oil and Property, Decommissioning Total Property,
gas assets plant and costs plant and
equipment equipment
(*) (*)
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Cost or Valuation
As at 1 January 2017 22,597 3,594 1,134 27,325 258
Additions 1,123 172 60 1,355 1
Disposals - (233) - (233) (233)
------------ ------------- ---------------- ---------- ---------------
Foreign exchange difference
on translation (1,678) (167) (34) (1,879) -
------------ ------------- ---------------- ---------- ---------------
As at 31 December 2017 22,042 3,366 1,160 26,568 26
------------ ------------- ---------------- ---------- ---------------
Depreciation and Impairment
As at 1 January 2017 7,639 2,064 825 10,528 197
Depreciation 1,156 316 32 1,504 56
Disposals - (233) - (233) (233)
Foreign exchange difference
on translation (618) (60) (6) (684) -
------------ ------------- ---------------- ---------- ---------------
As at 31 December 2017 8,177 2,087 851 11,115 20
------------ ------------- ---------------- ---------- ---------------
Net book value
As at 31 December 2017 13,865 1,279 309 15,453 6
------------ ------------- ---------------- ---------- ---------------
As at 31 December 2016 14,958 1,530 309 16,797 61
------------ ------------- ---------------- ---------- ---------------
(*) Property, plant and equipment includes leasehold improvements.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
12 Investment in associate 2018 2017
-------------------------------------------------------------- -------------- --------------
Group GBP 000's GBP 000's
Cost
As at 1 January 35 38
Additions - -
Foreign exchange difference on translation 2 (3)
-------------- --------------
As at 31 December 37 35
-------------- --------------
Columbus Energy Resources Plc, the parent company of the Group, holds
25% of the share capital of the following company:
Company Country of registration Proportion held Nature of business
------------------- ------------------------- ------------------------ -------------------------
Indirect
Via Leni Trinidad
Ltd
Beach Oilfield Trinidad & Tobago 25% Oil and Gas Production
Limited and Exploration
Company
12 Investment in subsidiaries 2018 2017
-------------------------------------------------------------------- ----------- -------------
Company GBP 000's GBP 000's
Cost
As at 1 January 1 1
Additions - -
Disposals - -
----------- -------------
As at 31 December 1 1
----------- -------------
Columbus Energy Resources Plc, the parent company of the Group, holds
100% of the share capital of the following companies:
Company Country of Proportion Nature of business
registration held
----------------------------- --------------- ------------ ---------------------------------------
Direct
Columbus Energy Holdings Cyprus 100% Holding Company
Ltd
Indirect
Via Columbus Energy
Holdings Ltd
Columbus Energy CPS Cyprus 100% Investment Company
(Cyprus) Ltd
Columbus Energy Byron Cyprus 100% Investment Company
Ltd
Columbus Energy (Cyprus) Cyprus 100% Investment Company
Ltd
Columbus Energy Investments Cyprus 100% Investment Company
Ltd
Via Columbus Energy
CPS (Cyprus) Ltd
Compañia Petrolifera Spain 100% Oil and Gas Production and
de Sedano S.L.U. Exploration Company
Via Columbus Energy
Byron Ltd
Leni Gas and Oil US United States 100% Dormant Company
Inc.
Via Columbus Energy
(Cyprus) Ltd
Columbus Energy (St St Lucia 100% Investment Company
Lucia) Ltd
Via Columbus Energy
(St Lucia) Ltd
Leni Trinidad Ltd Trinidad & 100% Oil and Gas Production and
Tobago Exploration Company
Columbus Energy Services Trinidad & 100% Oil and Gas Services Company
Ltd Tobago
Goudron E&P Ltd Trinidad & 100% Oil and Gas Production and
Tobago Exploration Company
Caribbean Rex Ltd St Lucia 100% Investment Company
Steeldrum Oil Company St Lucia 100% Investment Company
Inc
Steeldrum Petroleum Trinidad & 100% Investment Company
Group Ltd Tobago
FRAM Exploration (Trinidad) Trinidad & 100% Oil and Gas Production and
Ltd Tobago Exploration Company
Jasmin Oil & Gas Ltd Trinidad & 100% Oil and Gas Production and
Tobago Exploration Company
Cory Moruga Holdings Trinidad & 100% Oil and Gas Production and
Ltd Tobago Exploration Company
West Indian Energy Trinidad & 100% Oil and Gas Services Company
Group Ltd Tobago
T-REX Resources (Trinidad) Trinidad & 100% Oil and Gas Production and
Ltd Tobago Exploration Company
The names of the subsidiaries in Cyprus and St Lucia changed in 2018.
13 Business combination
---------------------
Acquisition in 2018
On 13 July 2018, Columbus Energy Resources PLC (CERP) announced they
had signed a Sale and Purchase Agreement ("SPA") to acquire Steeldrum
Oil Company Inc ("Steeldrum"). Upon completion of the Steeldrum acquisition,
the Company issued 109,166,209 shares to the sellers of Steeldrum. This
consisted of 92,743,775 shares (the "Base Consideration Shares") and
16,422,434 shares for the licence extension of the Cory Moruga Block
(Contingent Consideration Shares). The Cory Moruga licence extension
was granted on the 9th September 2018 and following the completion of
the transaction on 10 October 2018 these shares were issued.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of the Steeldrum
Group as at the date of acquisition were:
Fair value recognised on acquisition
Assets GBP 000's
Cash and cash equivalents 337
Trade and other receivables 2,072
Inventories 455
Deferred Tax Asset (note 5) 1,650
Property, plant and equipment (note 11) 4,275
-------------------------------------
8,789
-------------------------------------
Liabilities
Trade and other payables (2,294)
Provisions (Note 18) (373)
Borrowings (1,006)
-------------------------------------
(3,673)
-------------------------------------
Total identifiable net assets at fair value 5,116
-------------------------------------
Gain on bargain purchase (included in statement of comprehensive income) (1,295)
Purchase consideration transferred (shares issued at fair value) 3,821
Analysis of cash flows on acquisition
Net cash acquired with the subsidiary (included in cash flows from investing
activities) 337
Net cash flow on acquisition 337
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
14 Trade and other receivables 2018 2017
-------------------------------- ---------------------------- ---------------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Current trade and other
receivables
Trade receivables 1,348 - 605 -
VAT receivable 900 34 387 46
Taxation receivable 36 - 62 -
Other receivables 436 114 304 132
Prepayments 88 34 101 75
----------- ----------- ------------ -----------------
Total 2,808 182 1,459 253
----------- ----------- ------------ -----------------
Non-current trade and
other receivables
Escrow and Abandonment 601 - - -
funds (*)
Loans due from subsidiaries
(**) - 47,349 - 39,849
----------- ----------- ------------ -----------------
Total 601 47,349 - 39,849
----------- ----------- ------------ -----------------
(*) Pursuant to certain production and exploration licences, the Company
is obligated to remit payments into an Escrow Fund and a separate Abandonment
fund based on production, amounts paid vary by licence. The Company
remits US$0.25 per barrel of crude oil sold (Escrow fund), and between
US$0.28 to US$1.00 (varying by licence) to an abandonment fund. per
barrel for and the funds will be used for the future abandonment of
wells in the related licenced area. As at December 31, 2018, the Company
classified GBP601,000 of accrued or paid fund contributions as long-term
abandonment fund assets (2017: Nil).
(**) The loans due from subsidiaries are interest free, have no fixed
repayment date and are denominated in GBP.
15 Inventories 2018 2017
------------------------ ------------------------ -------------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Crude Oil 117 - 20 -
Consumables 538 - 172 -
---------- ------------ ----------- ------------
Total 655 - 192 -
---------- ------------ ----------- ------------
16 Trade and other payables 2018 2017
-------------------------- ----------------------- ---------------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Current trade and other payables
Trade and other payables 3,368 49 1,286 47
Accruals 1,248 658 645 375
---------- ---------- ---------- ----------------
Sub total 4,616 707 1,931 422
Deferred consideration
payable 120 120 120 120
Taxation payable 11 - 12 -
Total 4,747 827 2,063 542
---------- ---------- ---------- ----------------
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
17 Borrowings 2018 2017
----------------------------------- ------------------------ ----------------------
Group Company Group Company
GBP 000's GBP 000's GBP 000's GBP 000's
Current borrowings
Secured loan 1 - - 334 334
Unsecured loan 2 291 291 278 278
Secured loan 3 41 - 39 -
Unsecured loan 4 196 - 186 -
Secured loan 5 14 - - -
Total 542 291 837 612
----------- ----------- ---------- ----------
Non-current borrowings
Secured loan 1 - - - -
Unsecured loan 2 - - 232 232
Secured loan 3 105 - 138 -
Unsecured loan 4 - - - -
Secured loan 5 27 - - -
Total 132 - 370 232
----------- ----------- ---------- ----------
1 In December 2016, the Company signed a US$8.6m Convertible Security
Funding Agreement with Lind and drew down $1.825m in order to refinance
and retire the outstanding BNP Paribas loan. Repayments were over 2
years with 24 monthly payments of $94,500. Lind were able to convert
the outstanding balance at a conversion price of 4.5 pence, subject
to restrictions. The loan was denominated in US Dollars.
The final loan repayment was made in June 2018 and no conversion was
requested by Lind during the period the loan was outstanding.
2 In October 2017, the Company drew down US$0.75m under the Convertible
Security Funding Agreement. Repayments are over 2 years with 24 monthly
payments of $38,719. Lind are able to convert the outstanding balance
at a conversion price of 4.5 pence, subject to restrictions. The loan
is denominated in US Dollars. Whilst the loan was initially a secured
loan, the security fell away in September 2018 when loan repayments
reduced the amount outstanding to less than US$500,000. The charge
on that loan was therefore released by Lind on 1 October 2018 and the
final monthly payment on this loan is forecast for September 2019.
3 The loan was issued by RBC Royal Bank Limited in April 2015. Repayments
are over 7 years and the loan is denominated in Trinidad Dollars.
4 The loan was issued by BNP Paribas in 2015. In December 2016, the
outstanding balance of US$2.6m was refinanced and retired, and all
security was removed, leaving a final unsecured payment of US$0.25m
due on 31 December 2019. The loan is denominated in US Dollars.
5 The loan was issued by Ansa Merchant Bank Limited in May 2018 and
was inherited by Columbus as part of the Steeldrum acquisition. Repayments
are over 4 years and the loan is denominated in Trinidad Dollars.
In addition, the Company inherited a secured loan of GBP1.09 million
from North Energy Capital AS upon completion of the Steeldrum acquisition
in October 2018. That loan was issued in May 2017 and was fully repaid
by the Company in November 2018 in order to release the security held
on that loan over certain Steeldrum assets. The security was subsequently
released by the lender.
The carrying amounts of all the borrowings approximate to their fair
value.
18 Provisions 2018 2017
----------------------------------- ------------------------ ----------------------
Provisions for decommissioning Group Company Group Company
costs
GBP 000's GBP 000's GBP 000's GBP 000's
At 1 January 1,257 - 1,188 -
Additions 231 - 72 -
Acquisition of Steeldrum 373 - - -
Foreign exchange difference
on translation 52 - (3) -
At 31 December 1,913 - 1,257 -
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.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
19 Share capital
----------------------------------------------------------------------------------------
Called up, allotted, issued and fully paid ordinary Number of Nominal value
shares of 0.05p each shares
GBP 000's
As at 31 December 2016 - before capital reorganisation 8,367,599,626 4,184
As at 31 December 2016 - after capital reorganisation 418,379,981 4,184
9 March 2017 consideration at 2.38p per share 7,181,147 4
31 March 2017 cash at 2.20p per share 113,636,374 57
19 September 2017 consideration at 3.00p per
share 20,300,000 10
9 October 2017 cash at 5.00p per share 60,000,000 30
9 October 2017 cash at 5.00p per share 2,000,000 1
10 October 2017 consideration at 4.50p per share 2,512,333 1
2 November 2017 cash at 5.00p per share 20,129,349 10
8 November 2017 consideration at 4.50p per share 5,067,242 2
-------------- --------------
As at 31 December 2017 649,206,426 4,299
-------------- --------------
13 August 2018 consideration at average price
of 4.15p per share 1,079,986 1
11 October 2018 consideration at 3.50p per share 92,743,775 46
11 October 2018 consideration at 3.50p per share 16,422,434 8
31 October 2018 cash at 3.50p per share 71,428,571 36
As at 31 December 2018 830,881,192 4,390
-------------- --------------
During the year, 181.7 million shares were issued (2017: 230.8 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 nominal
value of each ordinary share remained unchanged at 0.05p.
At the end of 2018, the number of shares in issue comprised 412.5 million
ordinary shares and 418.4 million deferred shares.
Total share options in issue
As at 31 December 2018 the options in issue were:
Exercise price Vesting criteria Expiry date Options in issue
20p - 31 Dec 2020 2,800,000
20p 500 bopd 31 Dec 2020 2,466,667
20p 600 bopd 31 Dec 2020 2,466,667
20p 700 bopd 31 Dec 2020 2,466,667
80p 1250 bopd 31 Dec 2020 812,500
80p 1500 bopd 31 Dec 2020 2,250,000
80p 1750 bopd 31 Dec 2020 812,500
3p - 8 Apr 2020 19,721,077
3p - 14 Jul 2020 4,163,231
8.7p - 22 Feb 2021 4,893,596
2.2-10.0p 4.0-20.0p 9 May 2022 15,000,000
2.2-10.0p 4.0-20.0p 14 Jun 2022 10,000,000
8.1p - 12 Jul 2022 5,472,136
2.2-10.0p 4.0-20.0p 20 Aug 2022 18,800,000
5.0-12.0p 8.0-24.0p 31 Dec 2022 10,000,000
5.0-12.0p 8.0-24.0p 29 Jun 2023 3,000,000
Zero cost (*) - Various 2025 23,628,937
-----------------------
As at 31 December 2018 128,753,978
-----------------------
During the year, 42.1 million options were issued (2017: 56.1 million). No options lapsed
during the year (2017: nil), no options were cancelled in the year (2016: nil), and no options
were exercised during the year (2017: nil). The number of share options in issue as at the
date of the capital reorganisation were divided by 20 and the exercise prices were multiplied
by 20. (*) See Note 20 for explanation of zero cost options.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
19 Share capital (continued)
---------------------------------------------------------
Total warrants in issue
As at 31 December 2018 the warrants in issue were:
Exercise price Expiry date Warrants in issue
6.5p 12 Oct 2020 2,460,000
As at 31 December 2018 2,460,000
------------------
During the year, no warrants were issued (2017: 2.46 million). 0.38
million warrants lapsed during the year (2017: 0.51 million), no warrants
were cancelled during the year (2017: nil), and no warrants were exercised
during the year (2017: nil). The number of warrants in issue as at
the date of the capital reorganisation in early 2017 were divided by
20 and the exercise prices were multiplied by 20.
20 Share based payments
-----------------------------------------------------------------------------------------------------------------
Share options
The Company has established share option plans 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 5 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 2018 the unexpired
share options were:
Name Date granted Vesting Number Exercise Expiry Share Fair value
date /criteria (*) price date price after
(pence) at grant discount
(*) date (pence) (pence)
(**)
(**)
------------------ -------------- --------------- ------------ --------- ------- ------------- -----------
1 Jul 1 Jul 31 Dec
Neil Ritson 2013 2013 1,250,000 20 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Neil Ritson 2013 2014 1,250,000 20 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Neil Ritson 2013 2014 1,250,000 20 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Neil Ritson 2013 2014 1,250,000 20 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Steve Horton 2013 2013 250,000 20 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Steve Horton 2013 2014 166,667 20 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Steve Horton 2013 2014 166,667 20 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Steve Horton 2013 2014 166,667 20 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Fergus Jenkins 2013 2013 500,000 20 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Fergus Jenkins 2013 2014 375,000 20 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Fergus Jenkins 2013 2014 375,000 20 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Fergus Jenkins 2013 2014 375,000 20 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Management 2013 2013 500,000 20 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Management 2013 2014 375,000 20 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Management 2013 2014 375,000 20 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Management 2013 2014 375,000 20 2020 0.73 0.20
1 Jul 1 Jul 31 Dec
Consultants 2013 2013 300,000 20 2020 0.73 0.51
1 Jul 31 Aug 31 Dec
Consultants 2013 2014 300,000 20 2020 0.73 0.20
1 Jul 31 Aug 31 Dec
Consultants 2013 2014 300,000 20 2020 0.73 0.20
1 Jul 30 Sep 31 Dec
Consultants 2013 2014 300,000 20 2020 0.73 0.20
1 Dec 31 Dec 31 Dec
Steve Horton 2014 2014 750,000 80 2020 3.675 0.59
1 Dec 31 Dec 31 Dec
Iain Patrick 2014 2014 750,000 80 2020 3.675 0.59
1 Dec 31 Dec 31 Dec
Michael Douglas 2014 2014 750,000 80 2020 3.675 0.59
James 1 Dec 31 Dec 31 Dec
Thadchanamoorthy 2014 2014 812,500 80 2020 3.675 1.79
James 1 Dec 31 Dec 31 Dec
Thadchanamoorthy 2014 2014 812,500 80 2020 3.675 0.59
Lind Partners 9 Dec 9 Dec 8 Apr
LLC 2016 2016 19,721,077 3 2020 0.13 0.13
Lind Partners 15 Mar 15 Mar 14 Jul
LLC 2017 2017 4,163,231 3 2020 3.68 0.13
21 Aug 20 Aug
Leo Koot 2017 4p 3,000,000 2.2 2022 2.28 1.52
21 Aug 20 Aug
Leo Koot 2017 8p 3,000,000 4 2022 2.28 0.64
21 Aug 20 Aug
Leo Koot 2017 12p 3,000,000 6 2022 2.28 -
21 Aug 20 Aug
Leo Koot 2017 16p 3,000,000 8 2022 2.28 -
21 Aug 20 Aug
Leo Koot 2017 20p 3,000,000 10 2022 2.28 -
21 Aug 20 Aug
Gordon Stein 2017 4p 2,000,000 2.2 2022 2.28 2.29
21 Aug 20 Aug
Gordon Stein 2017 8p 2,000,000 4 2022 2.28 1.00
21 Aug 20 Aug
Gordon Stein 2017 12p 2,000,000 6 2022 2.28 -
21 Aug 20 Aug
Gordon Stein 2017 16p 2,000,000 8 2022 2.28 -
21 Aug 20 Aug
Gordon Stein 2017 20p 2,000,000 10 2022 2.28 -
21 Aug 20 Aug
Michael Douglas 2017 4p 600,000 2.2 2022 2.28 1.64
21 Aug 20 Aug
Michael Douglas 2017 8p 600,000 4 2022 2.28 0.71
21 Aug 20 Aug
Michael Douglas 2017 12p 600,000 6 2022 2.28 -
21 Aug 20 Aug
Michael Douglas 2017 16p 600,000 8 2022 2.28 -
21 Aug 20 Aug
Michael Douglas 2017 20p 600,000 10 2022 2.28 -
21 Aug 20 Aug
Management 2017 4p 3,800,000 2.2 2022 2.28 1.64
21 Aug 20 Aug
Management 2017 8p 3,000,000 4 2022 2.28 0.71
21 Aug 20 Aug
Management 2017 12p 3,000,000 6 2022 2.28 -
21 Aug 20 Aug
Management 2017 16p 3,000,000 8 2022 2.28 -
21 Aug 20 Aug
Management 2017 20p 3,000,000 10 2022 2.28 -
Lind Partners 23 Oct 23 Oct 22 Feb
LLC 2017 2017 4,893,596 8.7 2021 6.00 0.23
1 Jan 31 Dec
Management 2018 8p 2,000,000 5 2022 5.00 4.00
1 Jan 31 Dec
Management 2018 12p 2,000,000 6 2022 5.00 -
1 Jan 31 Dec
Management 2018 16p 2,000,000 8 2022 5.00 -
1 Jan 31 Dec
Management 2018 20p 2,000,000 10 2022 5.00 -
1 Jan 31 Dec
Management 2018 24p 2,000,000 12 2022 5.00 -
29 Jun 29 Jun
Michael Douglas 2018 8p 600,000 5 2023 5.00 3.00
29 Jun 29 Jun
Michael Douglas 2018 12p 600,000 6 2023 5.00 -
29 Jun 29 Jun
Michael Douglas 2018 16p 600,000 8 2023 5.00 -
29 Jun 29 Jun
Michael Douglas 2018 20p 600,000 10 2023 5.00 -
29 Jun 29 Jun
Michael Douglas 2018 24p 600,000 12 2023 5.00 -
Lind Partners 12 Jul 12 Jul 12 Jul
LLC 2018 2018 5,472,136 8.1 2022 5.15 -
9 May Zero 9 May
Leo Koot 2018 (***) 8,656,417 cost 2025 5.25 -
14 Jun Zero 14 Jun
Gordon Stein 2018 (***) 5,327,169 cost 2025 4.70 -
15 Jun Zero 15 Jun
Management 2018 (***) 5,327,169 cost 2025 4.70 -
31 Dec Zero 31 Dec
Management 2018 (***) 4,318,182 cost 2025 2.90 -
As at 31 December
2018 128,753,978
---------------------------------- --- --------------- ------------ --------- ------- ------------- -----------
(*) The number of share options in issue as at the date of the capital
reorganisation were divided by 20 and the exercise prices were multiplied
by 20.
(**) The share prices at the grant dates and the fair value after discount
figures prior to the capital reorganisation in March 2017 have not been
restated.
(***) The Executive Directors being Leo Koot and Gordon Stein, and the
new Executive Management Members being Stewart Ahmed and Anthony Hawkins
(together the "Leadership Team"), agreed to receive 50% of their fees for
the first year of their employment in Company shares, implemented by way
of nil cost options (see the Directors' Report for further details). The
Leadership Team all agreed to continue to take 50% of their fees in their
second year of employment with the number of share options awarded for
these fees being calculated and accrued monthly. Alternatively, each member
of the Leadership Team is entitled to receive 100% of their fees in cash
by giving the Company one month's notice of this request in writing. The
Company share price used to calculate the number of shares to be awarded
via share options for the second year of employment for all members of
the Leadership team is 5.1p. The figures above include accruals for the
fees to be settled by the issue of share options as at 31 December 2018.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
20 Share based payments (continued)
---------------------------------
The fair value of the options vested during the year was GBP98,000
(2017: GBP234,000). 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 15 March 2017 and 23 October 2017 were in connection
with loans and therefore the related share based payment expense of
GBP11,000 (2016: GBP32,000) has been recognised within finance charges
(see note 9).
Warrants
As at 31 December 2018 the unexpired warrants were:
Date Vesting Number Exercise Expiry date Share price Fair value
granted date price at grant (pence)
(pence) date (pence)
--- ----------- ----------------- ----------- ----------- -------------- --------------- ---------------
12 Oct
2017 12 Oct 2017 2,460,000 6.5 12 Oct 2020 6.9 -
----------- ----------------- ----------- ----------- -------------- --------------- ---------------
As at 31 December 2018 2,460,000
----------------------------------- ----------- ----------- -------------- --------------- ---------------
The charge for the fair value of the warrants that were granted and
vested during the year was nil (2017: nil) because the warrants were
issued in lieu of share issue costs and lapsed during the year was
GBP12,722 (2017: GBP61,000). 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.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
21 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, short-term debt and
sales revenue from operations to finance its business activities. 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 2018 2017
------------- --------------
GBP 000's GBP 000's
Sterling 1,159 3,578
Euros 8 46
US Dollars 455 249
Trinidad Dollars 90 129
------------- --------------
Total 1,712 4,002
------------- --------------
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.
The spot prices per barrel of both benchmarks are shown below:
2018 2017
-------------------------------------------- -----------------------------------
Low Average High Low Average High
US$ US$ US$ US$ US$ US$
WTI 42.53 64.59 76.41 42.48 50.80 60.46
Brent 49.93 71.69 84.98 43.98 54.12 66.80
The below shows the Group's 2018 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 5,301 6,058 6,816 7,573 8,330 9,088 9,845
Total 5,301 6,058 6,816 7,573 8,330 9,088 9,845
---------- ---------- ---------- ---------- ---------- ---------- ----------
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
21 Financial instruments (continued)
--------------------------------------------------------------------------------------------------------
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 92 (113) 69 (84)
US Dollar - - - -
Trinidad Dollar 148 (180) (3,092) 1,813
------------------ --------------------- --------------------- ------------------
Total 240 (293) (3,023) 1,729
------------------ --------------------- --------------------- ------------------
Rates of exchange to GBP1 used in the financial statements were as
follows:
As at 31 December Average for As at 31 December Average for
2018 the relevant 2017 the relevant
consolidated consolidated
year to 31 year to 31 December
December 2017
2018
Euro 1.110 1.131 1.126 1.141
US Dollar 1.269 1.334 1.349 1.288
Trinidad Dollar 8.642 8.957 9.132 8.674
------------------ ----------------- -------------------- -----------------------
22 Commitments and contingencies
--------------------------------------------------------------------------------
As at 31 December 2018, the Company had the following material commitments:
In Goudron E&P Ltd, under the Incremental Production Service Contract,
there are capital commitments relating to exploration activity to be
completed by November 2019, that are not expected to have a material
cost to the Company.
In FRAM Exploration (Trinidad) Limited, under the Incremental Production
Service Contract, there are capital commitments relating to exploration
activity to be completed by January 2020, that are not expected to
have a material cost to the Company.
In Jasmin Oil & Gas Ltd, under the Farmout Agreement, there are capital
commitments relating to exploration activity to be completed by December
2021, that are not expected to have a material cost to the Company.
On 19 March 2018, the Company announced the renegotiation of the Beach
Oilfield Limited ("BOLT") transaction. Completion of the BOLT transaction
is not expected until the end of 2019, at an estimated cost of US$395,000
during the course of 2019.
On 20 December 2018, the Company completed the purchase of 50% of the
Icacos oil field from Primera Oil & Gas Limited ("Primera"). The consideration
for the transaction was USD$500,000 (the "Minimum Payment"). The Company
did not pay any upfront consideration for the purchase but will pay
the consideration over time until 1 January 2021 through Primera receiving
the net revenue it would have received had it retained its interest.
Primera will also receive, in the event of increased production, 25%
of any net revenue above the set baseline. Should these cumulative
payments not exceed the Minimum Payment, the Company will pay the difference
between the amount received and the Minimum Payment. The Company does
not expect there to be a material payment to Primera due at 1 January
2021.
The Company's loan with BNP Paribas (taken out in 2015) has one final
unsecured payment of US$0.25 million due on 31 December 2019.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2018 (CONTINUED)
23 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 outlined
below.
Remuneration of Key Management Personnel
The Directors of the Company are considered to be the Key Management
Personnel. Details of the remuneration of the Directors of the Company
are disclosed below, by each of the categories specified in IAS24 Related
Party Disclosures.
2018 2017
------------- --------------
GBP 000's GBP 000's
Short-term employee benefits 330 902
Termination benefits 108 105
Share-based payments 245 145
Total 683 1,152
------------- --------------
See note 7 for further details of the Directors' remuneration and note
20 for details of the Directors' share-based payment benefits.
24 Events after the reporting period
----------------------------------
Not applicable.
25 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 GBP1,331,708
(2017: GBP2,163,000).
Qualified Person's statement:
The information contained in this document has been reviewed and approved by Stewart Ahmed, Chief Technical Officer for Columbus Energy Resources plc. Mr Ahmed has a BSc in Mining and Petroleum Engineering and is a member of the Society of Petroleum Engineers. Mr Ahmed has over 32 years of relevant experience in the oil industry. 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. Definitions used in the announcement have the meaning given to them in the PRMS.
Glossary and 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 42 US gallons of oil
-------------------- --------------------------------------------------------------
bbls barrels of oil
-------------------- --------------------------------------------------------------
best estimate or the most likely estimate of a parameter based on all
P50 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
-------------------- --------------------------------------------------------------
bwpd barrels of water 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
-------------------- --------------------------------------------------------------
Heritage Heritage Petroleum Company Limited (previously known
at Petrotrin)
-------------------- --------------------------------------------------------------
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
-------------------- --------------------------------------------------------------
Lind Lind Partners, LLC
-------------------- --------------------------------------------------------------
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
-------------------- --------------------------------------------------------------
Schroders Schroders Investment Management Limited
-------------------- --------------------------------------------------------------
STOIIP or oil in stock tank oil initially in place, those quantities
place 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
-------------------- --------------------------------------------------------------
Note to the announcement
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2018 or 2017. The financial information for the year ended 31 December 2017 is derived from the statutory accounts for that year. The audit of statutory accounts for the year ended 31 December 2018 is complete and auditors have provided an unqualified report.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR BRGDUXSXBGCB
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