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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Europa Oil & Gas (holdings) Plc | LSE:EOG | London | Ordinary Share | GB00B03CJS30 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.05 | -5.56% | 0.85 | 0.80 | 0.90 | 0.90 | 0.85 | 0.90 | 2,150,681 | 13:16:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Oil And Gas Field Expl Svcs | 6.65M | -852k | -0.0009 | -9.44 | 8.14M |
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Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas
15 April 2020
Europa Oil & Gas (Holdings) plc ("Europa" or "the Company")
Interim Results
Europa Oil & Gas (Holdings) plc, the AIM traded Ireland, Morocco and UK focused
oil and gas exploration, development and production company, announces its
interim results for the six month period ended 31 January 2020.
Operational highlights
Onshore UK
* Wressle Development granted planning consent on appeal
* 90bopd produced from Europa's three producing UK onshore fields during H1 -
matches H1 2019 and FY 2019 performance
* Net production on course to more than double to over 200bopd when the
Wressle oil field comes on stream later this year at an expected initial
rate of 500bopd
Offshore Ireland
* Refocus of portfolio towards the proven gas play in the Slyne Basin -
follows the Irish Government's recognition of gas' key role in the
country's transition to renewable energy and its intention to phase out oil
exploration
* Discussions ongoing with prospective partners to farm-out 100%-owned FEL4/
19, which is home to the 1.5tcf Inishkea prospect
* See post period reporting events below
Offshore Morocco
* Awarded large Inezgane licence covering 11,192 square km in the Agadir
Basin offshore Morocco in September 2019
* Shell, ENI, Repsol, Hunt and Genel currently active in the area
* Data tapes received from ONHYM in preparation for seismic reprocessing
* Large prospects with resource estimates in excess of 250mmbbls have already
been identified in the Lower Cretaceous fan sand play, a prolific producer
in West Africa
* Licence attracting interest from a number of operators looking to farm-in
COVID-19
* At the reporting date of 31 January 2020 there was no impact from
coronavirus
Financial performance
* Revenue GBP0.8 million (H1 2019: GBP0.9 million)
* Pre-tax loss before exploration write-off / write-back GBP0.5 million (H1
2019: GBP0.4 million)
* Pre-tax loss of GBP3.5 million including write-offs taken following
relinquishment of Irish licences (see post period reporting events below)
(H1 2019: pre-tax loss GBP0.4 million)
* Net cash used in operating activities GBP0.4 million (H1 2019: GBP0.3 million)
* Cash balance at 31 January 2020: GBP1.5 million (31 July 2019: GBP2.9 million)
Post reporting period events
* COVID-19. Directors, London based staff and consultants have been home
based since 16 March, and agreed a temporary salary/rate cut of 20% since 1
April. Operations continue at the three production sites.
* Updated economic model confirms production at Wressle would be economically
robust in the current low oil price environment - estimated break-even oil
price (excluding Europa's corporate overheads) of US$17.62 per barrel
* Applications submitted for the relinquishment of three licences offshore
Ireland where primary prospectivity is oil - LO16/19, LO16/22, FEL 2/13 -
total non-cash write-off of GBP1.7 million
* Application submitted for a 2 year extension and merger of FELs 3/13 and 1/
17- should the merger not be granted then FEL 3/13 will be relinquished,
and the Company has elected to write-off the GBP1.3 million intangible asset
in these accounts
* Appointment of Stephen Williams as independent Non-Executive director
replacing Roderick Corrie
Simon Oddie, Interim CEO and Executive Chairman of Europa, said: "The standout
corporate events of the six month review period were the granting of planning
consent for the development of Wressle and the award of the Inezgane permit
offshore Morocco. Expected to come on stream at a rate of 500bopd in the
second half, Wressle will transform Europa's net production and revenue
profile. Together with measures we have taken to reduce our already low cost
base and, following the repositioning of our portfolio towards gas, we believe
Europa will be well placed to withstand a sustained period of oil price
volatility and weakness.
"While the ongoing COVID-19 pandemic may impact activity on the ground, there
is much we are still able to get on with, notably working towards the farm-out
of our strategic position in the Slyne Basin and continuing desktop work and
launching the farm-out of our licence offshore Morocco. With gas set to play a
key role in Ireland's energy mix and our licences located in a gas play proven
by the producing Corrib field, Inishkea represents a compelling investment
opportunity with an attractive risk / reward profile. While offshore Morocco
is at an earlier stage, we are already talking to a number of parties who
expressed an interest in our Inezgane licence, even before we had identified
multiple targets with up to 250mmbls of prospective resources.
"These are clearly challenging times for everyone and our priority has to be to
ensure the health and safety of all our employees and stakeholders. With this
in mind, we will continue to follow the latest government advice and as a
result, timescales for certain activities and milestones, including our efforts
to add a third leg to our business by securing a late stage appraisal project,
may well need to be lengthened. Importantly, the roadmap we have to increase
our onshore UK production and to expose our shareholders to potentially value
creating events offshore Ireland and Morocco remains in place."
For further information please visit www.europaoil.com or contact:
Simon Oddie / Phil Greenhalgh Europa +44 (0) 20 7009 2010
Christopher Raggett / Simon finnCap Ltd +44 (0) 20 7220 0500
Hicks / Camille Gochez
Frank Buhagiar / Megan St Brides Partners Ltd +44 (0) 20 7236 1177
Dennison
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Chairman's Statement
Financial results such as this latest half yearly report are by their nature
backward-looking. They provide an opportunity for companies to comment on
progress made, milestones achieved and strategic goals set. In Europa's case,
the objective is to build a portfolio of multistage licences, advance these up
the development curve, attract partners to fund exploration/development
activity, including drilling, and expose shareholders to potentially value
creating events while minimising risk. With this in mind, the six months under
review has seen a new project added to the portfolio - the large Inezgane
licence offshore Morocco; the award of a 15-year Frontier Exploration Licence
('FEL') 4/19 for our flagship prospect, Inishkea - a near field gas exploration
project offshore Ireland with 1.5 trillion cubic feet ('TCF') gross mean
un-risked prospective gas resources; and the granting of planning consent for
the development of the Wressle oil field, which is expected to more than double
Europa's UK onshore production to over 200bopd when it comes on stream later
this year.
Of course, statements such as this Chairman's Report allow financial results to
be forward-looking too, providing companies with an opportunity to update
shareholders on upcoming activity and expected timescales. It goes without
saying that this is a more challenging exercise this time round due to the
COVID-19 virus and the unprecedented efforts being taken around the world to
curb the pandemic. With so many unknowns outstanding at the time of writing
including infection rates, breadth and depth of the outbreak and how long
extreme measures, such as lockdowns, will need to be in place, the situation on
the ground is fluid. The health and safety of all our employees and
stakeholders are always paramount and, with this in mind, we will at all times
continue to follow the latest advice of the relevant authorities. As of today,
we continue to produce oil from the three UK sites. However, timings of
upcoming activity across our assets onshore UK, offshore Ireland and offshore
Morocco may be impacted.
Onshore UK
One key area of planned activity in the second half is the development of the
Wressle field in North Lincolnshire. The granting of planning consent during
the period under review was a milestone event that has given the partners the
green light to bring this discovery online at an initial rate of 500bopd. With
a 30% working interest in the field, Europa's net share would equate to
150bopd, which would in turn more than double our existing UK onshore
production to well over 200bopd. Importantly with the current low oil price
environment in mind, production at Wressle would be economically robust. This
follows a recent exercise to update the field's economic model to reflect
today's lower oil prices, the results of which estimate the project has a
break-even oil price of US$17.62 per barrel excluding Europa's corporate
overheads.
With numbers like the above, we are keen to bring Wressle into production at
the earliest opportunity. In line with this, work is underway. In March 2020,
we reported that first oil at Wressle is envisaged during the second half of
2020 and this remains the case.
Offshore Ireland
Even before the outbreak of COVID-19, oil and gas companies operating offshore
Ireland faced a number of headwinds. Chief among these was the Irish
Government's intention, announced in September 2019, to phase out future
licensing for oil exploration, but not gas exploration. Subsequently, it was
confirmed that all existing exploration licences for both oil and gas remain
valid. The evolving regulatory landscape and the acknowledgement by the Irish
authorities that natural gas, as the cleanest fossil fuel in terms of carbon
emissions, has a key role to play in the country's transition towards becoming
carbon neutral, prompted an internal re-evaluation at Europa and subsequent
re-positioning of our offshore Ireland licence portfolio. This has seen us
exit all but one of our licences in Ireland where the identified prospectivity
was primarily oil.
Our focus in Ireland remains our flagship 1.5tcf Inishkea prospect on FEL4/19.
Located near Corrib and the field's gas processing infrastructure, we believe
this provides us with a strategic position in a proven gas play in a
jurisdiction where gas is increasingly viewed as a key transition fuel. With
this in mind, we remain confident that our ongoing discussions with potential
partners to fund drilling activity will prove to be successful.
Offshore Morocco
In September 2019, we announced the award of the Inezgane licence offshore
Morocco. Inezgane covers a large area in an underexplored basin where we have
identified that all the key elements of a working hydrocarbon system in the
Lower Cretaceous are present. Together with Morocco's active oil and gas
industry, a supportive Government, and majors such as ENI exploring just to the
south of Inezgane, the licence represents an excellent opportunity for us to
deploy our technical expertise. As with offshore Ireland, the forward plan for
Inezgane is to build a prospect inventory based on reprocessing and
interpreting 3D seismic and, subject to the results, secure partner(s) to drill
a well, thereby exposing our shareholders to a potentially value-creating
event. As part of the initial two-year phase of the licence data tapes have
been received from ONHYM in preparation for seismic reprocessing. Large
prospects with resource estimates in excess of 250mmbbls in the Lower
Cretaceous fan sand play, a prolific producer in West Africa, have already been
mapped. Encouragingly, the award of the licence has already attracted serious
industry interest.
UK - Production
Matching the rate reported in H1 2019, production across our three UK onshore
fields averaged 90bopd during the six months under review. Recording a
zero-decline rate for the period is a creditable performance and testament to
the professionalism and expertise of the team on the ground. As mentioned
above, Europa's production is set to more than double to over 200bopd once the
Wressle field comes online later this year.
Board Changes
During the period and post period end there have been a number of changes to
the composition of the Board. In November 2019, Hugh Mackay stepped down from
both the Board and his role as Chief Executive Officer, a position he had held
since 2011. As well as overseeing Europa's onshore UK exploration, development
and production, during his tenure Hugh spearheaded high impact exploration
offshore Ireland and was instrumental in securing the award of the Inezgane
licence. We wish him well for the future. With regards to Hugh's CEO duties, I
moved from the role of Non-Executive Chairman to Interim CEO and Executive
Chairman. In light of volatile markets and the ongoing COVID-19 pandemic, the
Board has decided to suspend the process of appointing a permanent CEO.
Post period end in March 2020, we announced the appointment of Stephen
Williams, Co-CEO of Reabold Resources plc (AIM: RBD), to the Board as an
independent Non-Executive Director. Stephen replaces Roderick Corrie, who is
stepping down after 12 years. Following this, Brian O'Cathain, who has been an
independent Non-Executive Director of the Company since January 2018, has been
appointed Senior Independent Non-Executive Director.
Conclusions
Our focus for the second half of the year is to bring the Wressle field into
production, showcase our strategic position in the proven gas play of the Slyne
Basin offshore Ireland to prospective partners, and continue the work that is
underway offshore Morocco to build a robust prospect inventory and seek farm-in
partners. In parallel with this we continue to evaluate new ventures,
specifically late stage appraisal opportunities, to add a third leg to our
portfolio and complete our exposure to all stages of the oil and gas cycle.
Of course, we cannot ignore the COVID-19 pandemic and also recent moves in the
oil market. Both will likely determine the pace of progress made. While we
cannot control either of these, we are focused on matters we can control. A
comprehensive review of our cost profile has been undertaken and as part of
this all the executive team, Board and consultants have agreed to a temporary
20% reduction in salaries, while the search for a permanent CEO has been put on
hold. Together with our existing UK onshore production and the prospect of
this more than doubling when Wressle comes on stream later this year, we
believe Europa is well placed, not just to weather the current challenging
conditions, but also to continue working towards our strategic goal: to expose
our shareholders to value creating events while minimising risk.
Finally, on behalf of the Board I would like to thank the management, employees
and consultants for their hard work over the period, and also our shareholders
for their support and patience as we navigate through these difficult times.
Simon Oddie
Interim CEO and Executive Chairman
15 April 2020
Operational review
UK Production - East Midlands
Europa produces oil from three UK onshore fields: West Firsby; Crosby Warren;
Whisby-4. During the period under review, an average of 90bopd were recovered
from the three fields, which matches the performance over full year 2019. This
follows the Company's active management of the fields to maximise production.
UK Development - Wressle Oil Field
During the period, planning consent for the development of Wressle in North
Lincolnshire, in which Europa holds a 30% working interest, was granted on 17
January 2020. Under the development plan, Wressle is expected to commence
production at an initial gross rate of 500bopd from the Ashover Grit formation,
which would more than double Europa's existing UK onshore production to over
200bopd.
Following the award of planning consent, the operator, Egdon Resources, carried
out a stress test of the economic model in light of the current low oil price
environment. The result of this exercise demonstrated the development plan for
the field is economically robust at today's oil price levels and that the
project has an estimated break-even oil price of US$17.62 per barrel excluding
Europa's corporate overheads.
The forward plan for the Wressle development, which lies on licences PEDL180 &
182 ('the Licences'), comprises the following key stages:
1. Discharging the planning conditions, finalising detailed designs, tendering
and procurement of materials, equipment and services and finalising all HSE
documentation and procedures
2. Installation of the ground water monitoring boreholes and establishment of
baseline conditions through monitoring
3. Reconfiguration of the site
4. Installation and commissioning of surface facilities
5. Sub-surface operations
6. Commencement of production
Work to date has concentrated on detailed planning of the enabling works
highlighted in point 1 above. The initial work on site will be the
installation of the groundwater monitoring boreholes with the main site
operations occurring in the last months of the work stream. On current plans,
first oil at Wressle is envisaged during the second half of 2020.
The Wressle Oil Field, which was discovered by the Wressle-1 well in 2014, has
additional development potential. During testing, a total of 710 barrels of
oil equivalent per day were recovered from three separate reservoirs: the
Ashover Grit; the Wingfield Flags; and the Penistone Flags. In September 2016,
a Competent Person's Report provided independent estimates of reserves and
contingent and prospective oil and gas resources for the Wressle discovery of
2.15 million stock tank barrels classified as discovered (2P+2C). In addition,
the CPR assigned gross mean un-risked prospective resources of 0.6 million boe
and a geological chance of success of 50% to Broughton North, a historic
discovery that is located on PEDL 180. Further development of the Wressle
field, including producing additional reserves existing in the Penistone Flags
formation, is expected in the future.
In addition to granting planning consent for the development of the Wressle
field, the Planning Inspector also allowed an application for costs against
North Lincolnshire Council ('NLC') and this has subsequently been submitted to
NLC.
Europa holds a 30% working interest in the Licences alongside Egdon Resources
(operator, 30%), Union Jack Oil (27.5%), and Humber Oil & Gas Limited (12.5%).
Exploration: Offshore Ireland
Following the Irish Government's announcement in September 2019 to phase out
oil but not gas exploration, the Company undertook a review of its licence
position offshore Ireland. For some time the Company's flagship project
offshore Ireland has been the 1.5tcf Inishkea gas prospect in the Slyne Basin,
and this, along with the changing regulatory landscape, lies behind
management's decision to rebalance the Company's exposure in favour of gas,
specifically the proven gas play in the Slyne Basin which is home to the
producing Corrib gas field. In tandem with this, it was decided to reduce the
Company's position in more early stage and prospective areas of the Irish
Atlantic Margin where the primary target is oil.
Post period end the Company announced the relinquishment of four offshore
Ireland licences, three of which are in the South Porcupine Basin where the
primary target is oil. As well as relinquishing LO16/19 (as announced 5
February 2020), Europa will also be relinquishing LO16/22 and FEL2/13. Europa
has proposed the merger of FEL 3/13 and FEL 1/17. Should this be approved,
Europa will retain the one licence in the Porcupine, which holds Edgeworth, a
firm drilling target with gross mean unrisked prospective resources of
225mmbbl. Should the merger not be approved FEL 3/13 will be relinquished and
FEL 1/17 retained. Following these changes, Europa's Irish portfolio consists
of three FELs with combined gross prospective resources of 3,857mmbbl oil and
1.5tcf of gas.
The forward plan for Ireland is to continue discussions with several parties
regarding the farm-out of the Company's licence position in the Slyne Basin. In
tandem with ongoing farm-out discussions, the approval of the drilling location
site survey at Inishkea continues.
Further to the relinquishment of licences LO16/22, FEL2/13, and the pending
merger of FEL 3/13 and FEL 1/17 the Company is writing off the value of these
intangible assets, resulting in a non-cash charge to income of GBP2,911,000.
Exploration: Offshore Morocco
Europa has been awarded the Inezgane Offshore licence covering an area of
11,192 km2 in the deepwater Agadir Basin, offshore Morocco which commenced in
November 2019. Europa has 75% equity and is operator and its partner ONHYM
(Office National des Hydrocarbures et des Mines) holds the remaining 25%
interest in the licence. ONHYM also acts as the regulator with a reputation for
both speed and efficiency. There are a number of mid-caps and majors currently
active in this area of Morocco, notably ENI, Hunt, Genel, Shell and Repsol.
Europa's focus in the Inezgane licence is on the Lower Cretaceous fan sand play
which is a prolific play in West Africa. Europa recognises that key elements of
source (including the world class Cenomanian-Turonian source rock), reservoir
and seal are all present within the Inezgane licence. Only 10 wells have been
drilled in deepwater Morocco to date of which only three have penetrated a
complete Lower Cretaceous section. Given the deepwater basins extend for some
1,800 kilometres offshore Morocco, it is clear that the play is highly
under-explored. Water depths in the Inezgane Permit are between 600 and 2,000m.
Results of our initial work, based on extensive 3D seismic data, well data and
onshore geology, have to date been encouraging. Europa has identified several
large prospects, with potential for stacked reservoirs, some of which have
initial resource estimates in excess of 250mmbbls. The Company has also
developed some new ideas of reservoir and source rock presence. In addition,
examples of shallow gas anomalies have been seen on seismic data which is a
positive indication of a working petroleum system operating in the basin.
The Inezgane Permit is of 8-years duration comprising three phases of which the
Initial Phase of the licence comprises 2-years. During the Initial Phase,
Europa will carry out a work programme including 3D seismic reprocessing as
well as other technical studies. At the end of the Initial Phase, Europa has
the option to commit to drilling an exploration well in the Second Phase of the
licence or to relinquish the licence.
The farm-out campaign will be formally launched in Q3 2020 although it is worth
noting that the Company has already received unsolicited interest from three
companies which are being followed up. The objective is to mature prospects to
drillable status with a view to attracting farminees to drill an exploration
well in the Second Phase of the licence. If the Lower Cretaceous play can be
successfully unlocked enormous upside lies within the rest of the Permit.
Morocco is a stable country with a transparent and efficient business
environment which offers excellent fiscal terms and low political and
regulatory risk. From a technical, commercial and strategic perspective Morocco
represents an obvious new country entry for Europa complementing our
well-established positions in Ireland and the UK.
Financials
Average daily H1 2020 production was 90 boepd unchanged from H1 2019.
There was a 9% decrease in average realised oil price to US$61.4 per barrel (H1
2019: US$67.7). Foreign exchange movements had a minor positive impact on
revenues as US Dollar sales converted to Sterling at US$1.28 (H1 2019: US$1.29)
The Group's cash flow forecast up to 31 December 2020 considers the continuing
and forecast cash inflow from the Group's producing assets, the cash held by
the Group at the reporting date, less administrative expenses and planned
capital expenditure. Based on that forecast, the Directors have concluded that
the Group will be able to continue as a going concern and meet its obligations
as and when they fall due. The critical assumption in reaching that conclusion
is that Wressle production commences at the forecasted rate in the second half
of 2020. In the absence of incremental production from Wressle in 2020 then
additional funding would be required. If this was not available there is a risk
that commitments could not be fulfilled, and assets would be relinquished.
Conclusion and Outlook
Following the granting of planning consent for the development of Wressle,
Europa has a defined route to doubling production to over 200bopd later this
year when the oil field is due to commence production. In the second half we
expect to receive approval for the Inishkea site survey which will assist the
farm-out of our position in the Slyne Basin. Located in a proven gas play and
close to the producing Corrib field and associated infrastructure, the Inishkea
prospect has been assigned a relatively high chance of success of one in
three. Meanwhile, in Morocco, where we have already identified several large
prospects, some of which potentially hold in excess of 250mmbbls, we will
continue discussions with the three companies that have expressed an interest
in the licence and formally launch a farmout campaign.
Timescales relating to the above activity may be lengthened due to the COVID-19
pandemic and current weak oil markets. Measures, such as salary cuts for the
executive team, have been taken to ensure all planned activity can be funded at
today's oil prices without the need for additional external funding.
Simon Oddie
Interim CEO and Executive Chairman
15 April 2020
Qualified Person Review
This release has been reviewed by Rowland Thomas, geophysical advisor to
Europa, who is a geophysicist with over 39 years' experience in petroleum
exploration and a member of the Society of Exploration Geophysicists, European
Association of Geoscientists and Engineers and the Petroleum Exploration
Society of Great Britain, and has consented to the inclusion of the technical
information in this release in the form and context in which it appears.
Licence Interests Table
Country Area Licence Field/ Operator Equity Status
Prospect
South FEL 1/17 & Ervine, Europa 100% Exploration
Ireland Porcupine 3/13[1] Edgeworth,
Egerton, Beckett,
Wilde, Shaw
Slyne Basin FEL 4/19 Inishkea, Corrib Europa 100% Exploration
North
UK East Midlands DL 003 West Firsby Europa 100% Production
DL 001 Crosby Warren Europa 100% Production
PL 199/215 Whisby-4 BPEL 65% Production
PEDL180 Wressle Egdon 30% Development
PEDL181 Europa 50% Exploration
PEDL182 Broughton North Egdon 30% Exploration
PEDL299 Hardstoft Ineos 25% Field
rejuvenation
PEDL343 Cloughton Third 35% Appraisal
Energy
Morocco Agadir Basin Inezgane Europa 75% Exploration
Financials
Unaudited consolidated statement of comprehensive income
6 months to 6 months to Year to 31
31 January 20 31 January July 2019
20 2019 (audited)
GBP000 GBP000 GBP000
Revenue 778 859 1,713
Cost of sales (701) (855) (1,682)
Exploration (write-off)/write back (note 5) (3,005) - 270
-------- -------- --------
Gross profit (2,928) 4 301
Administrative expenses (456) (375) (811)
Finance income 5 27 43
Finance expense (130) (93) (187)
-------- -------- --------
Loss before taxation (3,509) (437) (654)
Taxation - - -
-------- -------- --------
Loss for the period (3,509) (437) (654)
Other comprehensive income
Items that will not be reclassified to
profit/(loss)
Loss on investment revaluation (66) - (59)
-------- -------- --------
Total comprehensive loss for the period (3,575)
attributed to the equity shareholders of (437) (713)
the parent
======== ======== ========
Pence per Pence per Pence per
share share share
Earnings per share (EPS) attributable
to the equity shareholders of the parent
Attributable to the equity shareholders of
the
Basic and diluted EPS (note 3) (0.79)p (0.13)p (0.17)p
Unaudited consolidated statement of financial position
31 January 31 January 31 July
2020 2019 2019
(audited)
GBP000 GBP000 GBP000
Assets
Non-current assets
Intangible assets 5,439 6,759 7,818
Property, plant and equipment 626 621 575
Right of use assets 270 - -
-------- -------- --------
Total non-current assets 6,335 7,380 8,393
-------- -------- --------
Current assets
Investments 175 - 241
Inventories 27 26 19
Trade and other receivables 340 300 315
Restricted cash 251 - 251
Cash and cash equivalents 1,489 4,435 2,905
-------- -------- --------
2,282 4,761 3,731
-------- -------- --------
Total assets 8,617 12,141 12,124
======== ======== ========
Liabilities
Current liabilities
Trade and other payables (791) (918) (1,086)
Lease liabilities (110) - -
-------- -------- --------
Total current liabilities (901) (918) (1,086)
-------- -------- --------
Non-current liabilities
Lease liabilities (130) - -
Long-term provisions (3,040) (2,826) (2,917)
-------- -------- --------
Total non-current liabilities (3,170) (2,826) (2,917)
-------- -------- --------
Total liabilities (4,071) (3,744) (4,003)
-------- -------- --------
Net assets 4,546 8,397 8,121
======== ======== ========
Capital and reserves attributable to equity
holders of the parent
Share capital (note 6) 4,447 4,447 4,447
Share premium 21,010 21,010 21,010
Merger reserve 2,868 2,868 2,868
Retained deficit (23,779) (19,928) (20,204)
-------- -------- --------
Total equity 4,546 8,397 8,121
========= ======== ========
Unaudited consolidated statement of changes in equity
Share Share Merger Retained Total
capital premium reserve deficit equity
GBP000 GBP000 GBP000 GBP000 GBP000
Unaudited
Balance at 1 August 2018 3,014 18,481 2,868 (19,508) 4,855
Total comprehensive loss - - - (437) (437)
for the period
Issue of share capital 1,433 2,546 - - 3,979
Issue of share options - (17) - 17 -
-------- -------- -------- -------- --------
Balance at 31 January 4,447 21,010 2,868 (19,928) 8,397
2019
======== ======== ======== ======== ========
Audited
Balance at 1 August 2018 3,014 18,481 2,868 (19,508) 4,855
Loss for the year - - - (654) (654)
attributable to the
equity shareholders of
the parent
Other comprehensive loss - - - (59) (59)
attributable to the
equity shareholders of
the parent
Issue of share capital 1,433 2,546 - - 3,979
Issue of share options - (17) - 17 -
-------- -------- -------- --------
--------
Balance at 31 July 2019 4,447 21,010 2,868 (20,204) 8,121
======== ======== ======== ======== ========
Unaudited
Balance at 1 August 2019 4,447 21,010 2,868 (20,204) 8,121
Total comprehensive loss - - - (3,509) (3,509)
for the period
Other comprehensive loss - - - (66) (66)
attributable to the
equity shareholders of
the parent
-------- -------- -------- -------- --------
Balance at 31 January 4,447 21,010 2,868 (23,779) 4,546
2020
======== ======== ======== ======== ========
Unaudited consolidated statement of cash flows
6 months to 6 months to Year to
31 January 31 January 31 July
2020 2019 2019
(audited)
GBP000 GBP000 GBP000
Cash flows used in operating activities
Loss after taxation (3,509) (437) (654)
Adjustments for:
Depreciation 47 47 94
Amortisation on right to use assets 55 - -
Exploration write off/(write back) 3,005 - (270)
Finance income (5) (27) (43)
Finance expense 130 93 187
(Increase)/decrease in trade and other (42) 22 7
receivables
(Increase)/decrease in inventories (8) (6) 1
(Decrease)/increase in trade and other (105) (35) 17
payables
-------- -------- --------
Net cash used in operating activities (432) (343) (661)
======== ======== ========
Cash flows used in investing activities
Purchase of property, plant & equipment (99) - (1)
Purchase of intangibles (790) (1,002) (1,973)
Cash guarantee re Morocco - - (251)
Sale of part interest in licence - associated - - (8)
costs
Interest received 5 5 16
-------- -------- --------
Net cash used in investing activities (884) (997) (2,217)
======== ======== ========
Cash flows (used in)/from financing activities
Proceeds from the issue of share capital - 3,961 4,299
Costs incurred on issue of share capital - - (320)
Increase in payables relating to share capital - 14 -
issue costs
Option based equity movement on share issue - 18 -
Repayment of leasing liabilities (69) - -
Finance costs (4) (2) (5)
-------- -------- --------
Net cash (used in)/from financing activities (73) 3,991 3,974
======== ======== ========
Net (decrease)/increase in cash and cash (1,389) 2,651 1,096
equivalents
Exchange (loss)/gain on cash and cash (27) 13 38
equivalents
Cash and cash equivalents at beginning of 2,905 1,771 1,771
period
-------- -------- --------
Cash and cash equivalents at end of period 1,489 4,435 2,905
======== ======== ========
Notes to the consolidated interim statement
1 Nature of operations and general information
Europa Oil & Gas (Holdings) plc ("Europa Oil & Gas") and subsidiaries' ("the
Group") principal activities consist of investment in oil and gas exploration,
development and production.
Europa Oil & Gas is the Group's ultimate parent Company. It is incorporated and
domiciled in England and Wales. The address of Europa Oil & Gas's registered
office head office is 6 Porter Street, London W1U 6DD. Europa Oil & Gas's
shares are listed on the London Stock Exchange AIM market.
The Group's consolidated interim financial information is presented in Pounds
Sterling (GBP), which is also the functional currency of the parent Company.
The consolidated interim financial information has been approved for issue by
the Board of Directors on 14 April 2020.
The consolidated interim financial information for the period 1 August 2019 to
31 January 2020 is unaudited. In the opinion of the Directors the condensed
interim financial information for the period presents fairly the financial
position, and results from operations and cash flows for the period in
conformity with the generally accepted accounting principles consistently
applied. The condensed interim financial information incorporates unaudited
comparative figures for the interim period 1 August 2018 to 31 January 2019 and
the audited financial year to 31 July 2019.
The financial information contained in this interim report does not constitute
statutory accounts as defined by section 435 of the Companies Act 2006. The
report should be read in conjunction with the consolidated financial statements
of the Group for the year ended 31 July 2019.
The comparatives for the full year ended 31 July 2019 are not the Company's
full statutory accounts for that year. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies. The auditors'
report on those accounts was unqualified and did not contain a statement under
section 498 (2) - (3) of the Companies Act 2006.
Given the current cash balance and cash inflow from the Group's producing
assets, the Directors have concluded, at the time of approving the consolidated
interim financial information, that there is a reasonable expectation, based on
the Group's cash flow forecasts, that the Group can continue in operational
existence for the foreseeable future, which is deemed to be at least 12 months
from the date of signing the consolidated financial information. Accordingly,
they continue to adopt the going concern basis in preparing the consolidated
interim financial information. If there is a further drop in oil prices, or the
Wressle development is delayed as a result of COVID-19, then it is possible
that further funding would be required.
2 Summary of significant accounting policies
The condensed interim financial information has been prepared using policies
based on International Financial Reporting Standards (IFRS and IFRIC
interpretations) issued by the International Accounting Standards Board
("IASB") as adopted for use in the EU. The condensed interim financial
information has been prepared using the accounting policies which will be
applied in the Group's statutory financial information for the year ended 31
July 2020.
Adoption of IFRS 16 has resulted in the Group recognising right-of-use assets
and lease liabilities for all contracts that are, or contain, a lease. For
leases previously classified as operating leases, under previous accounting
requirements the Group did not recognise related assets or liabilities, and
instead spread the lease payments on a straight-line basis over the lease term,
disclosing in its annual financial statements the total commitment.
The Board has decided it will apply the modified retrospective adoption method
in IFRS 16, and, therefore, has only recognised leases on the balance sheet as
at 1 August 2019. In addition, it has decided to measure right-of-use assets by
reference to the measurement of the lease liability on that date. This will
ensure there is no immediate impact to net assets on that date.
Instead of recognising an operating expense for its operating lease payments,
the Group has instead recognised interest on its lease liabilities and
amortisation on its right-of-use assets.
3 Earnings per share (EPS)
Basic EPS has been calculated on the loss after taxation divided by the
weighted average number of shares in issue during the period. Diluted EPS uses
an average number of shares adjusted to allow for the issue of shares, on the
assumed conversion of all in-the-money options.
The Company's average share price for the period was 2.30p which was below the
exercise price of all 23,453,458 outstanding share options (H1 2019: 3.51p
which was below the exercise price of all 25,637,898 outstanding share
options).
The calculation of the basic and diluted earnings per share is based on the
following:
6 months to 6 months to Year to
31 January 31 January 31 July
2020 2019 2019
(audited)
GBP000 GBP000 GBP000
Losses
Loss for the period attributable to the (3,509) (437) (654)
equity shareholders of the parent
======== ======== ========
Number of shares
Weighted average number of ordinary 444,691,599 342,665,937 393,259,484
shares for the purposes of basic and
diluted EPS
======== ======== ========
4 Taxation
Consistent with the year-end treatment, current and deferred tax assets and
liabilities have been calculated at tax rates which were expected to apply to
their respective period of realisation at the period end.
5 Intangible assets
31 Jan 2020 31 Jan 2019 31 July 2019
GBP000 GBP000 GBP000
At 1 August 7,818 5,959 5,959
Additions 626 800 1,869
Disposal - - (10)
Exploration write-off (3,005) - -
-------- -------- --------
At 31 July 5,439 6,759 7,818
========= ========= =========
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
31 Jan 2020 31 Jan 2019 31 July 2019
GBP000 GBP000 GBP000
Ireland FEL 2/13 (Doyle A, B, C, Kilroy, - 893 1,280
Keane & Kiely)
Ireland FEL 3/13 (Beckett, Wilde, Shaw) - 1,184 1,255
Ireland FEL 1/17 796 553 636
Ireland LO 16/19 - 75 89
Ireland FEL 4/19 (Inishkea) 1,363 866 1,259
Ireland LO 16/22 - 168 213
Morocco Inezgane 104 - -
UK PEDL143 (Holmwood) - 10 -
UK PEDL180 (Wressle) 2,954 2,800 2,867
UK PEDL181 103 94 101
UK PEDL182 (Broughton North) 29 27 29
UK PEDL299 (Hardstoft) 12 12 12
UK PEDL343 (Cloughton) 78 77 77
-------- -------- --------
Total 5,439 6,759 7,818
======== ======== ========
Disposal
UK PEDL143 (Holmwood) - - 10
======== ======== ========
Exploration write-off
Ireland FEL 2/13 1,387 - -
Ireland FEL 3/13 1,284 - -
Ireland LO 16/19 94 - -
Ireland LO 16/22 240 - -
-------- -------- --------
Total 3,005 - -
======== ======== ========
Exploration write-back
On 8 May 2019 the Group sold its interest in PEDL143 (Holmwood) to UK Oil & Gas
Plc ('UKOG') for 25,951,557 shares in UKOG at 1.156p per share.
31 Jan 2020 31 Jan 31 July 2019
2019
GBP000 GBP000 GBP000
Consideration for the PEDL143 interest - - 300
Disposal costs - - (20)
Book value of remaining interest - - (10)
-------- -------- --------
Exploration write-back - - 270
========= ========= =========
6 Share capital
6 months to 6 months to Year to
31 January 31 January 31 July
2020 2019 2019
(audited)
Allotted, called up and fully paid ordinary Shares Shares Shares
shares of 1p
Start of period 444,691,599 301,388,379 301,388,379
Issued in the period - 143,303,220 143,303,220
-------- -------- --------
End of period 444,691,599 444,691,599 444,691,599
======== ======== ========
GBP000 GBP000 GBP000
Start of period 4,447 3,014 3,014
Issued in the period - 1,433 1,433
-------- -------- --------
End of period 4,447 4,447 4,447
======== ======== ========
Ordinary shares issued Number of Raised Raised Nominal
On 10 December 2018 at 3p issue shares gross net of value
price costs
GBP'000 GBP000
GBP000
Placing 133,333,338 4,000 3,692 1,333
Open offer 9,969,882 299 270 100
-------- -------- -------- --------
143,303,220 4,299 3,962 1,433
======== ========= ========= ========
7 Post reporting date
* COVID-19. Directors, London based staff and consultants have been home
based since 16 March, and agreed a temporary salary/rate cut of 20% since 1
April. Operations continue at the three production sites.
* Updated economic model confirms production at Wressle would be economically
robust in the current low oil price environment - estimated break-even oil
price (excluding Europa's corporate overheads) of US$17.62 per barrel
* Applications submitted for the relinquishment of three licences offshore
Ireland where primary prospectivity is oil - LO16/19, LO16/22, FEL 2/13 -
total non-cash write-off of GBP1.7 million
* Application submitted for a 2 year extension and merger of FEL's 3/13 and 1
/17- should the merger not be granted then FEL 3/13 will be relinquished,
and the Company has elected to write-off the GBP1.3 million intangible asset
in these accounts
* Appointment of Stephen Williams as independent Non-Executive director
replacing Roderick Corrie
[1] Assuming the 2 licences are merged
END
(END) Dow Jones Newswires
April 15, 2020 02:00 ET (06:00 GMT)
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