TIDMBCE
RNS Number : 5822M
Beacon Energy PLC
13 January 2023
13 January 2023
Beacon Energy plc
("Beacon Energy" or the "Company")
Interim Results
Beacon Energy plc (AIM: BCE) , the energy company seeking growth
through acquisition or farm-in to interests in discovered upstream
projects, announces its half-yearly report for the six months ended
31 October 2022.
Enquiries:
Beacon Energy plc
L arry Bottomley (CEO) +44 (0)1624 681 250
Strand Hanson Limited (Financial and Nominated Adviser)
Rory Murphy / James Bellman +44 (0)20 7409 3494
Buchanan (Public Relations)
Ben Romney / Jon Krinks +44 (0)20 7466 5000
Tennyson Securities Limited (Joint Broker)
Peter Krens / Ed Haig-Thomas +44 (0)20 7186 9030
Optiva Securities Limited (Joint Broker)
Christian Dennis +44 (0)20 3411 1881
The Interim Report will be available from the Company's website
www.beaconenergyplc.com
Chairman's Statement
Dear fellow shareholders,
I am delighted to present the following statement in support of
the interim results for the six months ended 30 October 2022.
Following the disappointing outcome on the Buffalo well
announced in January 2022, the Board has refocused the strategy for
the Company and substantially reduced its cost base in order to
preserve cash on behalf of shareholders and assess the next
steps.
In this context, the Company's strategy, which is to create a
self-funding oil and gas production company taking advantage of
growth opportunities being generated as industry players reshape
their portfolios to manage the energy transition to net-zero
emissions, remains both appropriate and compelling.
To implement this strategy, on 26 July 2022 the Company
successfully raised GBP425,000 from new and existing shareholders,
including GBP80,000 from Directors of the Company, to support the
pursuit of value enhancing acquisition opportunities. The Board
appreciates the continued support shown by shareholders during this
fund raise.
On 9 September 2022, the Company announced that it had entered
into a non-binding Heads of Terms ("HoT") with the majority owner
of a European oil and gas company. Under the HoT, the Company would
acquire the European company for a combination of new shares in the
Company and an earn out based on oil production (the "Potential
Acquisition"). The HoT included standard conditions, including an
exclusivity period and the completion of satisfactory due
diligence.
Subsequently, and in anticipation of the Potential Acquisition,
the Company sought approval from shareholders to change the
Company's name to Beacon Energy plc. The change of name was to
reflect an exciting new chapter in the Company's story and the
rebrand process was delivered in a highly cost effective
manner.
On 16 December 2022, the Company was delighted to announce that
it had entered into a conditional Share Purchase Agreement ("SPA")
with Tulip Oil Holding B.V. ("Tulip") and Deutsche Rohstoff A.G.
("DRAG") (collectively, the "Sellers") relating to the purchase of
the entire issued and to be issued share capital of Rhein Petroleum
GmbH ("Rhein Petroleum"), (the "Proposed Transaction").
The Board of Beacon Energy ("Board") considers the Proposed
Transaction to represent a transformational, value enhancing
transaction for shareholders, which is fully aligned with Beacon
Energy's growth strategy.
The Board believes the Proposed Transaction will deliver:
-- A full-cycle portfolio of largely operated production,
development, appraisal and exploration assets located onshore
Germany, a low political risk jurisdiction
-- A near-term active work programme designed to enhance production and cash flow
-- An experienced operating team in Rhein Petroleum that has a
track record of exploration, appraisal, development and production
operations
-- Strong HSE record and a firm commitment to environmentally
responsible hydrocarbon production
-- A well-understood existing production base, generating immediate revenue
-- A material 2P net reserve base of 3.85 mmbbl and a 2C net
contingent resource base of 22.96 mmbbl, located across four core
assets as assessed by SGS Nederland B.V, and included in a
Competent Person's Report ("CPR"), which will form part of the
Admission Document to be sent to shareholders in due course
-- A commercially attractive programme with the economic results
of the CPR describing an NPV10 valuation of EUR52.8 million from
the development and production of the 2P reserve base, assuming,
inter alia, capex of EUR15.7 million for a 3 well programme and
facilities upgrade and utilising forward oil pricing as at 14
November 2022
-- Access to a built-in growth pipeline of onshore, material,
high-margin, low-risk and near-term development and appraisal
opportunities
The Proposed Transaction is considered a reverse transaction
under the AIM Rules for Companies and is therefore subject, inter
alia, to the issue of a new AIM Admission Document and obtaining
shareholder approval for the Proposed Transaction.
Full details of the terms and conditions of the Proposed
Transaction are available on the Company's website, and in
particular the Company's announcement dated 16 December 2022.
In addition to the Proposed Transaction, the Company was
delighted to announce that Interim CEO Larry Bottomley has agreed
to become CEO on a permanent basis. Larry's appointment will
provide certainty and continuity for the Company as we progress the
Proposed Transaction, and Larry's transition into the permanent
role reflects the focused determination that he has delivered
through this year and his significant experience and expertise in
leadership roles of this kind.
It only remains for me to thank our shareholders for their
ongoing support for the Company, management team and our strategy.
We are very excited about the Proposed Transaction which, if
successful, will underpin your Company with cash flow, proven
Reserves and Resources, and an active work programme designed to
create long-term value for Beacon's shareholders. We very much see
the Proposed Transaction as a first step in our strategy to build a
material international upstream oil and gas business with a focus
on cash generative assets and those with the potential to add
significant value in the short to medium term. We look forward to
providing updates on our progress as we move through the rest of
the year.
Mark Rollins
Non-Executive Chairman
13 January 2023
Interim Consolidated Statement of Comprehensive Income
Unaudited Unaudited
Six months Six months
ended Audited ended
31 Oct Year ended 31 Oct
2022 30 Apr 2022 2021
Notes $'000 $'000 $'000
------------------------------------ ------ ------------ ------------- ------------------
Investment loss:
Impairment - (23,885) -
------------------------------------ ------ ------------ ------------- ------------------
(23,885)
Asset evaluation and operating
expenses 4 (19) (60) (50)
Other administrative expenses 4 (877) (2,818) (2,258)
Net loss before Finance Costs
and Taxation (896) (26,763) (2,308)
Finance costs (55) (198) (49)
Share of net losses of associate
accounted for using the equity
method - (428) (149)
Loss before tax (951) (27,389) (2,506)
------------------------------------ ------ ------------ ------------- ------------------
Tax expense - - -
------------------------------------ ------ ------------ ------------- ------------------
Loss after tax attributable to
owners of the parent (951) (27,398) (2,506)
------------------------------------ ------ ------------ ------------- ------------------
Total comprehensive loss for
the year attributable to owners
of the parent (951) (27,398) (2,506)
------------------------------------ ------ ------------ ------------- ------------------
Basic and diluted loss per share
attributable to owners of the
parent during the year
(expressed in US cents per share) 6 (0.07) (2.67) (0.24)
------------------------------------ ------ ------------ ------------- ------------------
The accompanying notes from an integral part of these
consolidated financial statements.
Interim Consolidated Statement of Financial Position
Unaudited Audited Unaudited
31 Oct 30 Apr 31 Oct
2022 2022 2021
Notes $'000 $'000 $'000
--------------------------------- ------ ---------- --------- ----------
Non-current assets
Property, plant & equipment - - 3
Other investments 7 - - 20,113
- - 20,116
--------------------------------- ------ ---------- --------- ----------
Current assets
Other receivables 408 89 153
Cash and cash equivalents 616 662 5,861
1,024 751 6,014
--------------------------------- ------ ---------- --------- ----------
Total assets 1,024 751 26,130
--------------------------------- ------ ---------- --------- ----------
Current liabilities
Trade and other payables 8 (493) (304) (418)
--------------------------------- ------ ---------- --------- ----------
Total liabilities (493) (304) (418)
--------------------------------- ------ ---------- --------- ----------
Net assets 531 447 25,712
--------------------------------- ------ ---------- --------- ----------
Equity attributable to equity holders
of the company
Share premium 48,128 47,656 47,656
Share reserve 2,008 1,445 1,827
Accumulated deficit (49,605) (48,654) (23,771)
--------------------------------- ------ ---------- --------- ----------
Total shareholder funds 531 447 25,712
--------------------------------- ------ ---------- --------- ----------
The accompanying notes from an integral part of these
consolidated financial statements
Interim Consolidated Statement of Changes in Equity
Share premium Share Accumulated Total
reserve deficit equity
$'000s $'000 $'000s $'000s
Balance at 1 May 2021 47,656 1,039 (21,265) 27,430
Loss for the period to 31 October
2021 (unaudited) - - (2,506) (2,506)
---------------------------------------- --------------- --------- ------------ ---------
Total comprehensive loss - - (2,506) (2,506)
Transactions with equity shareholders
of the parent:
Share based payments - 788 - 788
Balance at 31 October 2021 (unaudited) 47,656 1,827 (23,771) 25,712
Loss for the period to 30 April
2022 - - (24,883) (24,883)
---------------------------------------- --------------- --------- ------------ ---------
Total comprehensive loss - - (24,883) (24,883)
Transactions with equity shareholders
of the parent:
Share based payments - (382) - (382)
Balance at 30 April 2022 (audited) 47,656 1,445 (48,654) 447
---------------------------------------- --------------- --------- ------------ ---------
Loss for the period to 31 October
2022 (unaudited) - - (951) (951)
---------------------------------------- --------------- --------- ------------ ---------
Total comprehensive loss - - (951) (951)
Transactions with equity shareholders
of the parent:
Share based payments - 563 - 563
Proceeds from shares issued 490 - - 490
Cost of share issue (18) - - (18)
Balance at 31 October 2022 (unaudited) 48,128 2,008 (49,605) 531
---------------------------------------- --------------- --------- ------------ ---------
The accompanying notes from an integral part of these
consolidated financial statements.
Interim Consolidated Cash Flow Statement
Unaudited Audited Unaudited
31 Oct 30 Apr 31 Oct
2022 2022 2021
Notes $'000 $'000 $'000
--------------------------------------- -------- ---------- --------- ----------
Cash flows from operating activities:
Loss before tax (951) (27,389) (2,506)
Adjustments for:
Share of net loss of associate - 428 149
Share-based payment 563 406 788
Impairment of investment - 23,885 -
Change in working capital items:
Movement in other receivables (319) 114 50
Movement in trade and other payables 189 (834) (720)
------------------------------------------------- ---------- --------- ----------
Net cash used in operations (518) (3,390) (2,239)
------------------------------------------------- ---------- --------- ----------
Cash flows from investing activities
Investment in associate - (4,051) -
Other investments - - -
Purchase of property, plant &
equipment - - (3)
Net cash flows from investing
activities - (4,051) (3)
------------------------------------------------- ---------- --------- ----------
Cash flows from financing activities
Proceeds from issue of share
capital 490 - -
Share issue costs (18) - -
Net cash flows from financing
activities 472 - -
--------------------------------------- -------- ---------- --------- ----------
Net (decrease)/increase in cash
and cash equivalents (46) (7,441) (2,242)
------------------------------------------------- ---------- --------- ----------
Effect of exchange rate changes - - -
Cash and cash equivalents at
beginning of period 662 8,103 8,103
------------------------------------------------- ---------- --------- ----------
Cash and cash equivalents at
end of period 616 662 5,861
------------------------------------------------- ---------- --------- ----------
The accompanying notes from an integral part of these
consolidated financial statements.
Notes to the Interim Consolidated Financial Statements
1 Reporting entity
Beacon Energy plc (the "Company") is domiciled in the Isle of
Man. The Company's registered office is at 55 Athol Street,
Douglas, Isle of Man IM1 1LA. These consolidated financial
statements comprise the Company and its subsidiaries (together
referred to as the "Group"). The Group is primarily involved in the
E&P business and on 16 December 2022 announced the proposed
acquisition of Rhein Petroleum GmbH, an upstream oil and gas
business operating in Germany. The Company's shares were suspended
from trading on AIM on 9 September 2022.
2 Basis of accounting
These interim consolidated financial statements have been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting". These interim consolidated financial
statements do not include all the information and disclosures
required in the annual financial statements and should be read in
conjunction with the Group's annual financial statements for the
year ended 30 April 2022, which were prepared in accordance with
IFRSs as adopted by the United Kingdom. However, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates. The significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those disclosed in the
Group's statutory financial statements for the year ended 30 April
2022.
The interim conciliated financial statements are presented in US
Dollars unless otherwise indicated.
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial period beginning on or after 1
May 2022 that would be expected to have a material impact on the
Group.
The consolidated financial statements of the Group as at and for
the year ended 30 April 2022 are available upon request from the
Company's registered office at 55 Athol Street, Douglas, Isle of
Man or the Company's website www.beaconenergyplc.com
These interim consolidated financial statements have been
approved and authorised for issue by the Company's Board of
directors on 13 January 2023.
3 Going concern
The financial statements have been prepared on a going concern
basis. The Group did not earn any revenues during the period and
currently holds no material oil and gas interest. The operations of
the Group are currently financed from funds raised from
shareholders. In common with many pre-production entities, the
Group may need to raise further funds in order to progress its
projects into the production of revenues.
The Group monitors its cash position, cash forecasts and
liquidity on a regular basis and takes a conservative approach to
cash management. Following the GBP425,000 equity fund raise
completed in July 2022, as at 31 October 2022, the Group had cash
resources of US$616,000.
On 16 December 2022, the Group announced the proposed
acquisition of Rhein Petroleum GmbH, an upstream oil and gas
business operating in Germany. The Company has incurred due
diligence and other transaction costs associated with the proposed
acquisition, and expects to incur further such costs.
Notes to the Interim Consolidated Financial Statements
(continued)
Management's base case is that the potential acquisition will
complete in February 2023 and that, as part of the acquisition the
Company will seek to raise additional equity funding.
Management have also considered a number of downside scenarios,
including scenarios where the potential acquisition does not
complete, or where completion is delayed beyond February 2023.
Under the base case forecast, the Group will have sufficient
financial headroom to meet forecast cash requirements for the 12
months from the date of approval of these consolidated financial
statements. However, in the downside scenarios, in the absence of
any mitigating actions, the Group may have insufficient funds to
meet its forecast cash requirements. Potential mitigants include
deferral of expenditure and raising additional equity.
Accordingly, after making enquiries and considering the risks
described above, the Directors have assessed that following the
closing of the proposed acquisition the cash balance provides the
Group with adequate headroom over the forecast expenditure for the
following 12 months - as a result, the Directors are of the opinion
that the Group is able to operate as a going concern for at least
the next twelve months from the date of approval of these financial
statements.
Nonetheless, these conditions indicate the existence of a
material uncertainty which may cast doubt on the Group's ability to
continue as a going concern. The financial statements do not
include the adjustments that would be required if the Group were
unable to continue as a going concern.
4 Expenses
Administration fees and expenses consist of the following:
Unaudited Audited Unaudited
Six months Six months
ended Year ended ended
31 Oct 2022 30 Apr 2022 31 Oct 2021
$'000 $'000 $'000
-------------- -------------- --------------
Corporate overheads:
* Directors' fees 292 1,396 1,266
* Professional fees 129 1,178 708
* Audit fees 2 45 27
* Administration costs 29 104 55
* Share based payments-warrants 425 - -
* Employee costs - 95 202
877 2,818 2,258
-------------- -------------- --------------
Asset evaluation and operating
expenses:
* Office costs 19 60 30
* Travel and accommodation - - 20
-------------- -------------- --------------
19 60 50
-------------- -------------- --------------
Total expenses 896 2,878 2,308
-------------- -------------- --------------
Notes to the Interim Consolidated Financial Statements
(continued)
5 Directors' remuneration
The remuneration of those in office during the period ended 31
October 2022 was as follows:
Unaudited Unaudited
Six months Audited Six months
ended ended
31 Oct 2022 Year ended 31 Oct 2021
$'000 30 Apr 2022 $'000
$'000
------------- -------------- --------------
Salaries paid in cash 88 1,133 582
Salary deferrals 66 - -
Accrued entitlement to shares
and warrants 138 247 673
Directors' health insurance - 16 11
292 1,396 1,266
------------- -------------- --------------
Mark Rollins (Chairman), and Larry Bottomley (Chief Executive
Officer), are entitled to a fixed monthly fee of $5,000 each
payable in cash. The Non-executive directors, Ross Warner and
Stephen Whyte are entitled to a fixed monthly fee of $2,500 each
payable in cash. All the directors have agreed to a salary deferral
equal to their monthly fixed fees from August 2022 to January
2023.These deferred salaries will be paid once there is excess
funding available.
Share options and warrants with a value of $138,000 were issued
to employees accrued during the 6- month period to 31 October 2022.
In the year to 30 April 2022, the warrants issued to employees and
advisors accrued with a value of $247,000.
6 Earnings per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Unaudited Audited Unaudited
Outstanding Outstanding Outstanding
at 31 Oct at 30 Apr at 31 Oct
2022 2022 2021
Loss attributable to owners
of the Group
(USD thousands) (951) (27,389) (2,506)
Weighted average number of
ordinary shares in issue (thousands) 1,291,201 1,027,614 1,027,614
Loss per share (US cents) (0.07) (2.67) (0.24)
In accordance with International Accounting Standard 33
'Earnings per share', no diluted earnings per share is presented as
the Group is loss making.
Notes to the Interim Consolidated Financial Statements
(continued)
7 Other investments
Unaudited Audited Unaudited
Outstanding Outstanding Total at
at 31 Oct at 30 Apr 31 Oct 2021
2022 2022 US$'000
US$'000 US$'000
Buffalo Project - - 20,113
- - 20,113
-------------- -------------------------------- -------------
8 Trade and other payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method.
Unaudited Audited Unaudited
Outstanding Outstanding Outstanding
at 31 Oct at 30 Apr at 31 Oct
2022 2022 2021
US$'000 US$'000 US$'000
Trade payables 151 51 166
Accruals and other payables 342 253 252
------------- ------------- -------------
493 304 418
------------- ------------- -------------
Notes to the Interim Consolidated Financial Statements
(continued)
9 Shares in issue
The number of shares in issue at the beginning of the period was
1,027,613,961. The number of options and warrants on issue at the
start of the period was 118,259,511. On 26 July 2022 there was an
issue of 500,000,000 ordinary shares for GBP0.085 which included
one warrant per share and as a result the number of shares in issue
at the end of the period was 1,527,613,961 and the number of
options and warrants increased to 618,259,511. The warrants were
issued at a valuation of 0.07p each, resulting in an increase to
the share reserve of US$425,000 and a corresponding expense as
shown in Note 4.
Options and warrants in issue:
Outstanding Issued/(Expired) Outstanding
at 30 April during the at 31 October
2022 period 2022
------------- ----------------- ---------------
Options
* Issued Pre 1/2/2020 450,000 - 450,000
* Issued 1/2/2020 13,750,000 - 13,750,000
* Issued 8/7/2020 2,500,000 - 2,500,000
* Issued 19/4/2021 83,710,000 - 83,710,000
* Cancelled options FY 2022 (66,600,000) - (66,600,000)
* Issued during FY 2022 30,000,000 - 30,000,000
63,810,000 - 63,810,000
------------- ----------------- ---------------
Warrants
* Issued pre 1/2/2020 11,390,680 - 11,390,680
* Issued 10/12/2020 54,545 - 54,545
* Issued during 19/04/2021 - employee 3,851,159 - 3,851,159
* Issued during 19/04/2021-advisor 45,553,120 - 45,553,120
* Issued warrants 26/07/2022 - 500,000,000 500,000,000
* Expired warrants FY 2022 (6,399,993) - (6,399,993)
54,449,511 500,000,000 554,449,511
------------- ----------------- ---------------
Total options and warrants 118,259,511 500,000,000 618,259,511
------------- ----------------- ---------------
10 Commitments and contingencies
There were no capital commitments authorised by the Directors or
contracted other than those provided for in these financial
statements as at 31 October 2022 (30 April 2022: None).
11 Subsequent events
On 17 November 2022 Advance Energy Plc changed its name to
Beacon Energy Plc.
On 16 December 2022 the Company announced that it had entered
into a conditional share purchase agreement in respect of the
proposed acquisition of Rhein Petroleum GmbH, an upstream oil and
gas business operating in Germany.
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