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Europa Oil & Gas (Holdings) Plc Interim Results

15/04/2020 7:00am

UK Regulatory (RNS & others)


 
TIDMEOG 
 
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 
 

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