TIDMBOIL

RNS Number : 9588Z

Baron Oil PLC

27 May 2021

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (which forms part of domestic UK law pursuant to the European Union (withdrawal) act 2018) until the release of this announcement.

27 May 2021

Baron Oil Plc

("Baron" or "the Company")

Final Results for the Year Ended 31 December 2020

Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration company with projects in SE Asia, Latin America and the UK, is pleased to announce its audited financial results for the year ended 31 December 2020.

Highlights

-- Material milestone in March 2020 with the funding of the initial 25% effective interest in the TL-SO-19-16 production sharing contract, offshore Timor-Leste ("Chuditch"); subsequently increased to 63.75%.

-- Strategic intent to acquire significant working interests in potentially large oil & gas prospects signalled following board changes in October.

   --    During first half 2021, considerable progress made on Chuditch: 

o One year extension to Contract Year 1 of the production sharing contract granted;

o Significant upgrade in non-SPE PRMS compliant volumes;

o Successful raise of GBP3m (gross) via a placing and subscription to support funding an Earn In agreement which increased effective interest in the PSC to 63.75%;

o Baron's net share of estimated Mean prospective resources increased to 2,248 BCF (375 MMBOE);

o Execution of a 3D seismic licensing and reprocessing contract.

   --    UK offshore licence P2478 (15% interest) 

o Technical studies, delivered in early 2021, confirmed Dunrobin prospect as a potentially attractive and substantial opportunity;

o Activity set to increase once technical studies results incorporated

   --    Relinquishment of all other interests in United Kingdom licences. 
   --    Peru onshore Block XXI (100% interest) 

o Ongoing COVID-19 restrictions throughout Peru prevented tangible progress;

o Decision on drilling the El Barco-3X well expected during the second half of 2021

Financials

   --    Net result for the year was a loss before taxation of GBP920,000 (2019: loss of GBP1,674,000) 
   --    Loss after taxation attributable to shareholders was GBP920,000 (2019: loss of GBP1,674,000) 
   --    Exploration and evaluation expenditure of GBP145,000 (2019: GBP1,207,000) 
   --    IFRS6 intangible asset impairment charge of GBPnil (2019: GBP1,108,000) 

-- Administration expenditure for the year was GBP710,000 (2019: GBP442,000), largely reflecting share-based charges and the temporary reduction in directors' contracted salaries in 2019

   --    The end of year free cash balance was GBP1,190,000 (2019: GBP347,000) 

The Company will hold its Annual General Meeting on 23 June 2021 and the Notice of Annual General Meeting to that effect will be sent to Shareholders shortly.

Qualified Person's Statement

Pursuant to the requirements of the AIM Rules - Note for Mining and Oil and Gas Companies, the technical information and resource reporting contained in this announcement has been reviewed by Jon Ford BSc, Fellow of the Geological Society, Technical Director of the Company. Mr Ford has more than 39 years' experience as a petroleum geoscientist. He has compiled, read and approved the technical disclosure in this regulatory announcement and indicated where it does not comply with the Society of Petroleum Engineers' standard.

Commenting on the results, John Wakefield, Non-executive Chairman, said:

"Over the next 12 months our focus will be on driving the Chuditch PSC forward. Through the operator SundaGas Banda we have already engaged TGS and will be working with them to undertake the critical 3D seismic reprocessing project. The acceleration in Timor-Leste's oil & gas activity is expected to continue and the Chuditch PSC, with its potential Mean gross prospective resources of 3,527 BCF (580 MMBOE) is sufficiently large to attract interest from the major regional gas players and other potential partners.

"In the UK, we anticipate renewed activity on the Dunrobin prospect P2478 later in the year once the results of the regional technical work have been incorporated; Peru is likely to remain subdued. Elsewhere, the Company continues to screen new opportunities which are consistent with its new asset strategy."

"On a personal note, I would like to thank my colleagues and partners for their warm welcome and hard work in ensuring that Baron is well-placed to evaluate the potential of its Chuditch asset during the current year as well as consider opportunities for our other and future assets in due course."

"As for the next twelve months, our current commitments are funded and we look forward to executing on our ambitious plans."

The Company's Annual Report and Financial Statements for the year ended 31 December 2020 will shortly be available for download from the Company's website ( https://www.baronoilplc.com/ ) and will be despatched by post shortly to those shareholders that have requested a hard copy.

For further information, please contact:

 
Baron Oil Plc                                          +44 (0)20 7117 2849 
Andy Yeo, Chief Executive 
Jon Ford, Technical Director 
 
Allenby Capital Limited                                +44 (0)20 3328 5656 
Nominated Adviser and Joint Broker 
Alex Brearley, Nick Harriss, Nick Athanas (Corporate 
 Finance) 
 Kelly Gardiner (Sales and Corporate Broking) 
 
Turner Pope Investments (TPI) Limited                  +44 (0)20 3657 0050 
Joint Broker 
Andy Thacker 
 

CHAIRMAN'S STATEMENT & OPERATIONS REPORT

Financial and Financial Results

The net result for the year was a loss before taxation of GBP920,000, which compares to a loss of GBP1,674,000 for the preceding financial year; the loss after taxation attributable to Baron Oil shareholders was GBP920,000, compared to a loss of GBP1,674,000 in the preceding year.

Turnover for the year was GBPnil (2019: GBPnil), there being no sales activity during the period.

Exploration and evaluation expenditure written off included in the Income Statement amounts to GBP145,000. This arises from expenditure of GBP114,000 in Peru on Block XXI, GBP29,000 in technical consultancy costs and GBP2,000 relating to the relinquished P2470 licence.

Shortly after the period end on 31 January 2021, licence P1918 (Colter) and the nearby onshore licences PEDL330 and PEDL345 were relinquished. All expenditure on these licences was written off in the year, however as these prospects had already been fully impaired in 2019, there was no impact on the Income Statement. Impairment provisions in respect of Peru Block XXI were reduced by GBP133,000, this being attributable to exchange rate fluctuations on the translation of US Dollar based Peruvian assets. The directors judged that no other exploration assets required impairment.

Administration expenditure for the year was GBP710,000, compared to GBP442,000 in the preceding year, excluding the effects of exchange rate movements. Directors and employee costs (less GBP81,000 of share based charges) amounted to GBP374,000; listing, compliance and other professional fees were GBP198,000; and other overheads GBP55,000. The increase in Directors and employee cash costs are largely due to a temporary reduction in directors' contracted salaries in 2019.

During 2020, the Pound Sterling/US Dollar exchange rate was highly volatile, but a strengthening of the Pound towards the end of the year gave rise to an overall exchange gain of GBP157,000 (loss of GBP41,000 in 2019) on the Group's holding of US Dollar assets.

At the end of the financial year, free cash reserves of the Group had increased to GBP1,190,000 from a level at the preceding year end of GBP347,000. The proceeds of new share issues in the year amounting to GBP2,500,000 gross (GBP2,295,000 net of costs) bolstered the Company's cash reserves; excluding this, the overall cash outflow amounted to GBP1,452,000, consisting of GBP518,000 of investment in SundaGas (Timor-Leste Sahul) Pte.Ltd, exploration and evaluation activity of GBP145,000, and GBP789,000 of operating cash outflow. During March and April 2021, the Company undertook a further capital raise with a new ordinary share Placing and Subscription of GBP3,000,000 gross (GBP2,768,000 net).

The Group continues to take a conservative view of its asset impairment policy, giving it a Statement of Financial Position that consists largely of net current assets and what the Board considers to be a realistic value for its exploration assets. Given limited cash resources, the Board will take a prudent approach in entering into new capital expenditures beyond those expected to be committed to existing ventures.

Report On Operations

Introduction

It is hard to believe that we have now lived with the consequences of the COVID-19 pandemic for more than 18 months. We were fortunate enough to enter 2020 without any immediate drilling commitments and instead were able to focus on desktop studies to advance our projects whilst maintaining control over costs.

The funding of the Chuditch Carry Agreement was a key milestone in March 2020 as it not only secured a substantial asset but was achieved in the early stages of the pandemic.

A number of board changes were announced in October 2020, triggered by the retirement of Executive Chairman, Dr Malcolm Butler. John Wakefield was appointed as Independent Non-executive Chairman, Jon Ford changed his role to Technical Director, and Andrew Yeo became Chief Executive of the Company.

Southeast Asia: Timor-Leste Tl-S0-19-16 PSC ("Chuditch PSC" or "PSC")

(Baron 25% effective interest, rising to 63.75% post-reporting period)

During 2020 Baron acquired a 33.33% interest in the shares of SundaGas Timor-Leste (Sahul) Pte. Ltd. ("TLS"), the parent company of the Timor-Leste subsidiary, SundaGas Banda Unipessoal Lda. ("Banda"), which is the Operator of and 75% interest holder in the offshore Timor-Leste TL-SO-19-16 PSC. Banda had put in place the required US$1 million Bank Guarantee (Baron assuming its share of US$0.333 million) against the initial work commitment, which included the reprocessing of legacy seismic data for the first two years of the Initial Term of the PSC. Subject to satisfactory results from the reprocessing and other technical work, the subsequent commitment is for a well to be drilled in the third year of the Initial Term.

The Chuditch PSC is located approximately 185 kilometres south of Timor-Leste, 100 kilometres east of the producing Bayu-Undan field, 50 kilometres south of the Greater Sunrise potential development, and covers approximately 3,571km(2) in water depths of 50-100 metres. The Shell operated Chuditch-1 discovery in 1998, which was drilled in 64 metres water depth in a total of 25 days for around US$8 million, encountered a 25 metre gas column in Jurassic Plover Formation reservoir sandstones on the flank of what is interpreted to be a large faulted structure. The Chuditch area was largely covered by part of a regional 3D survey which was acquired by a previous operator in 2012.

The initial work programme is designed to extract the maximum information from existing seismic data, utilising the technical expertise of the TLS team and incorporating a training programme for Timor-Leste nationals. There are issues with sea-bed topography and shallow geological features that impact the existing seismic image at the reservoir level local to the Chuditch area and a pre-stack depth migration ("PSDM") processing routine, tailored to resolve these issues, is necessary. Although the work carried out previously by Shell determined that there were low reservoir, seal and hydrocarbon charge risks, such modern processing is necessary to define the size and shape of the accumulation, which impacts the gas volumes in place and the location of potential future wells. In particular, new advances in seismic processing technology enable a considerably enhanced subsurface image to be achieved in areas with complex seabeds and shallow geology. Accessing the original raw acquisition data for the existing seismic volumes was therefore critical for this programme. A combination of COVID-19 lockdowns and data access issues meant that at the 2020 year end TLS had yet to receive these key data for either 3D or 2D seismic. Despite this, the TLS team was able to perform baseline geological and geophysical studies and establish an initial presence in Dili, the capital of Timor-Leste.

Since the beginning of 2021 we are pleased to report that considerable progress has been made on the Chuditch PSC project, building on the background work carried out during 2020:

-- in January 2021, we announced a significant upgrade in TLS's non-SPE PRMS compliant gross volumes, based on the interpretation of legacy 2D (unreprocessed) seismic, well and regional data:

o Mean gas initially in place volumes to 4,703 BCF (from 2,320 BCF)

o Mean prospective resources to 3,527 BCF (from 1,508 BCF)

o Inclusion of a significant new lead within the licence area, Chuditch North East;

-- in February 2021, Autoridade Nacional do PetrĂ³leo e Minerais ("ANPM", the Timor-Leste state oil and gas regulatory authority) granted a year's extension to Contract Year 1 of the PSC to enable the timely completion of the committed work programme, in particular the seismic reprocessing project;

-- in April 2021, we announced the completion of an earn in and executed a seismic licensing and reprocessing contract:

o increasing our interest in TLS from 33.33% to 85%, thereby increasing Baron's effective interest in the Chuditch PSC from 25% to 63.75%;

o net share of non-SPE PRMS compliant mean prospective resources increased from 882 BCF to 2,248 BCF (375 MMBOE);

o Baron agreed to fund the remainder of the Chuditch PSC work programme to November 2022, estimated to be US$3.5 million. we successfully raised gross proceeds of GBP3 million by the issue of new shares to enable us to commit to this programme;

o Spectrum Geo Australia Pty Ltd., a wholly owned subsidiary of TGS-NOPEC Geophysical Company ASA ("TGS"), was engaged for the licensing and reprocessing of 1,270km(2) of 3D seismic data covering the Chuditch-1 discovery and adjacent prospects.

Obtaining a material interest in a very large potential asset and getting the seismic reprocessing back on track is judicious as we are seeing a convergence of events which together have the potential to make the Chuditch PSC an outstanding asset for the Company:

-- an acceleration in Timor-Leste regional hydrocarbon exploitation, including drilling activity and planned extensions of existing infrastructure;

-- exposure to the SE Asia liquid natural gas ("LNG") market, where future demand is forecast to exceed supply;

-- a sufficient level of prospective resources to attract the interest of major regional gas players and other potential funding partners.

The seismic reprocessing results are likely to be delivered across the period from 4(th) quarter 2021 to 2(nd) quarter 2022. Seismic data interpretation, geological and other studies will occur in parallel ahead of a decision by Q4 2022 on whether to enter the drilling phase, with the potential for a high impact drilling programme in 2023.

The recent uptick in oil & gas activity in Timor-Leste follows the Santos US$1.25 billion acquisition of ConocoPhillips' northern Australia and Timor-Leste assets, completed in May 2020. This package delivered Santos operatorship of a portfolio of natural gas assets (Bayu-Undan and Barossa), partnerships with some of SE Asia's largest LNG players, power generators and utility companies, and a strategic holding in LNG infrastructure of pipelines and the Darwin LNG plant located at Wickham Point, Northern Territories, Australia. This interconnected system, centred on Bayu-Undan (the only producing field currently in Timor-Leste), is key to the evacuation and monetisation of gas from the Timor Sea area. The Chuditch PSC lies only 100 kilometres east of these facilities.

Santos and its partners have so far committed to expenditure of more than US$4.5 billion to extend the life of existing fields and pipelines, bring new fields onstream, and increase capacity at the Darwin LNG plant from around 4 million tonnes per annum (mtpa) to 10mtpa. There are also moves being made by ENI (operator of the Evans Shoal and Blackwood gas fields) and Santos to cooperate in offshore developments in northern Australia and Timor-Leste, the sharing of infrastructure, and CO(2) capture and storage with a Joint Memorandum of Understanding being announced in May 2021.

In the context of these ongoing activities, the Chuditch PSC is well placed to benefit from these activities, in terms of future operational synergies and commercial development of gas in the event of drilling success at Chuditch.

Peru: Block XXI, Onshore Licence (Baron 100%)

Baron has a 100% operated interest in onshore Block XXI, in the Sechura Desert of northern Peru. As indicated in March 2021, the Company intends to make a decision on the drilling of the El Barco-3X project during the second half of 2021. We maintain a preference for bringing in a drilling partner with operator capabilities as we believe this represents the best way to develop and monetise any discovery. However, strict COVID restrictions remain in place throughout Peru, which prevents any progress in relation to the drilling project, and it is unclear when and how quickly oil and gas exploration activity will be allowed to recommence. Currently the licence remains in Force Majeure.

Our application for a three year extension option to the licence, a prerequisite for attracting a drilling partner, given that we currently have only six months to drill and evaluate well results once Force Majeure is lifted, is currently being assessed by Perupetro, the Peru state regulatory authority. Once approved, this will trigger a prescribed Government process which, if successful, should allow a way forward for the project. In the Piura area where the proposed well is situated, we are required to undertake workshops with the local communities of Belisario and El Barco ahead of any drilling authorisation.

United Kingdom Offshore Licence P2478 (Baron 15%)

Innovate Licence P2478, awarded in September 2019, is held by Corallian Energy Limited (Operator, 45%), Upland Resources (UK Onshore) Limited (40%) and Baron (15%). The licence's current modest work commitment is to undertake reprocessing of legacy 2D and 3D seismic data and perform other studies in order to reduce risk and refine volumetric estimates ahead of making a "drill or drop" decision before the end of Phase A of the licence period in July 2023.

Covering blocks 12/27c, 17/5, 18/1 and 18/2 in the Inner Moray Firth area of the North Sea, the licence contains the Dunrobin prospect which consists of large shallow rotated fault blocks which are mapped mostly on 3D seismic data including Direct Hydrocarbon Indicators. The prospect is understood to be one of the few remaining targets with Pmean prospective resources of the order of 100 MMBOE yet to be drilled in the North Sea.

In April 2020, the joint venture partners signed a Work Sharing and Confidentiality Agreement with a large European E&P Company ("Interested Party") for licence P2478. Under the terms of the agreement the Interested Party completed its own regional technical work and shared its data and interpretations over the area with Corallian and its partners in February 2021. The technical studies delivered by the Interested Party confirmed and enhanced our geological understanding and corroborated our view of Dunrobin as a potentially attractive and substantial target. The results are being incorporated into the ongoing work programme which includes preparations for the seismic reprocessing in order to reduce further the pre-drill risk on the prospect.

Other United Kingdom Licences

In keeping with its revised strategy to focus on high potential impact projects, and by way of the normal course of portfolio management, Baron has relinquished its interests in all other United Kingdom Licences.

Conclusions

Over the next 12 months our focus - both operational and financial - will be on driving the Chuditch PSC forward. Through the operator SundaGas Banda we have already engaged TGS, and will be working with them to undertake the critical 3D seismic reprocessing which will provide an up-to-date assessment of the true potential of the Chuditch discovery and offset prospects.

Notwithstanding the expected benefits of global economic recovery as normality gradually returns, SE Asia gas prices are already ahead of pre-COVID levels. An acceleration in Timor-Leste's oil & gas activity is expected and the Chuditch PSC with its potential Mean gross prospective resources of 3,527 BCF of gas is sufficient to get noticed. The Earn In increased Baron's net share of estimated non-SPE PRMS compliant Mean gas prospective resources to 2,248BCF (equivalent to 375MMBOE).

Activity in Peru is likely to remain subdued in the short term.

In the UK, we expect to see activity on P2478 once the results of the regional technical work have been incorporated into the ongoing work programme. Whilst we only have a modest 15% interest, it remains a significant opportunity.

The Company continues to screen opportunities for acquiring significant equity interests in high potential impact exploration and appraisal activity at low entry costs.

As for the next twelve months, our current commitments are fully funded and we look forward to executing on our ambitious plans.

I would like to thank my colleagues and partners for their warm welcome and hard work in ensuring that Baron is well-placed to evaluate the potential of its Chuditch asset during the current year as well as consider opportunities for our other and future assets in due course.

John Wakefield

Non-executive Chairman

26 May 2021

 
 CONSOLIDATED INCOME STATEMENT FOR THE YEARED 31 DECEMBER 2020 
 
 
 
                                               Notes                 2020                     2019 
                                                                  GBP'000                  GBP'000 
 
 Revenue                                                                -                        - 
 
 Cost of sales                                                          -                        - 
 
 Gross profit                                                           -                        - 
 
 Exploration and evaluation expenditure                             (145)                    (160) 
 Intangible asset impairment                      10                   59                  (1,047) 
 Property, plant and equipment impairment 
  and depreciation                                 9                  (2)                        - 
 Receivables and inventory impairment              3                   74                       16 
 Administration expenses                                            (710)                    (442) 
 Loss on exchange                                  3                (157)                     (41) 
 
 Operating loss                                    3                (881)                  (1,674) 
 
 Loss from associated 
  undertaking                                     12                 (44)                        - 
 
 Loss before interest 
  and taxation                                                      (925)                  (1,674) 
 
 Finance cost                                      5                    -                      (1) 
 Finance income                                    5                    5                        1 
 
 Loss on ordinary activities 
    before taxation                                                 (920)                  (1,674) 
 
 Income tax expense                                6                    -                        - 
 
 Loss on ordinary activities 
    after taxation                                                  (920)                  (1,674) 
 
 Dividends                                                              -                        - 
 
 Loss for the year                                                  (920)                  (1,674) 
--------------------------------------------  ------  -------------------  ----------------------- 
 
 Loss on ordinary activities 
    after taxation is attributable to: 
 Equity shareholders                                                (920)                  (1,674) 
 Non-controlling interests                                              -                        - 
 
                                                                    (920)                  (1,674) 
  ------------------------------------------  ------  -------------------  ----------------------- 
 
 Earnings per ordinary share - continuing          8 
   Basic                                                         (0.023p)                 (0.099p) 
   Diluted                                                       (0.023p)                 (0.099p) 
 
 
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE 
 YEARED 31 DECEMBER 2020 
 
 
                                                 Notes                  2020                  2019 
                                                                     GBP'000               GBP'000 
 
 Loss on ordinary activities after taxation 
  attributable to the parent                                           (920)               (1,674) 
 
 Other comprehensive income: 
 Release of option reserve                                                41                     - 
 Exchange difference on translating foreign 
  operations                                                           (115)                  (69) 
 
 Total comprehensive loss for the year                                 (994)               (1,743) 
---------------------------------------------   -------  -------------------  -------------------- 
 
 Total comprehensive loss attributable 
  to 
  owners of the parent                                                 (994)               (1,743) 
-------------------------------------------------------  -------------------  -------------------- 
 
 
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
  AT 31 DECEMBER 2020 
                                                        Notes                2020          2019 
                                                                          GBP'000       GBP'000 
 Assets 
 
 Non current assets 
 Property plant and equipment 
 --- oil and gas assets                                 9                       -             - 
 --- others                                             9                      43             - 
 Intangibles                                            10                     18             5 
 Goodwill                                                                       -             - 
 Associated undertaking                                 12                    151             - 
 
                                                                              212             5 
  ------------------------------------------------  ---------  ------------------  ------------ 
 Current assets 
 Trade and other receivables                                                  376            49 
 Cash and cash equivalents                                                  1,311           472 
 
                                                                            1,687           521 
  ------------------------------------------------  ---------  ------------------  ------------ 
 
 Total assets                                                               1,899           526 
--------------------------------------------------  ---------  ------------------  ------------ 
 
 Equity and liabilities 
 
 Capital and reserves attributable to 
  owners of the parent 
 Share capital                                                              1,107           482 
 Share premium account                                                     32,156        30,507 
 Share option reserve                                                         135            74 
 Foreign exchange translation 
  reserve                                                                   1,528         1,643 
 Retained earnings                                                       (33,130)      (32,251) 
 
 Total equity                                                               1,796           455 
--------------------------------------------------  ---------  ------------------  ------------ 
 
 Current liabilities 
 Trade and other payables                                                      58            64 
 Taxes payable                                                                 16             7 
 
                                                                               74            71 
  ------------------------------------------------  ---------  ------------------  ------------ 
 
 Non-current liabilities 
 Lease finance                                                                 29             - 
------------------------------  --------------      ---------  ------------------  ------------ 
 
 Total equity and liabilities                                               1,899           526 
--------------------------------------------------  ---------  ------------------  ------------ 
 
 The financial statements were approved and authorised for issue 
  by the Board of Directors on 26 May 2021 and were signed on 
  its behalf by: 
 
 
 
 John Wakefield                                      Andrew Yeo 
 Director                                            Director 
 
 Company number: 05098776 
 
 
 
 COMPANY STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2020 
                                           Notes                   2020                    2019 
                                                                GBP'000                 GBP'000 
 Assets 
 Non current assets 
 Property plant and equipment 
 --- oil and gas 
  assets                                                              -                       - 
 --- others                                  9                       43                       - 
 Intangibles                                10                       18                       5 
 Investments                                                        195                      25 
 
                                                                    256                      30 
  --------------------------------------  ------  ---------------------  ---------------------- 
 Current assets 
 Trade and other 
  receivables                                                       375                      46 
 Cash and cash equivalents                                        1,183                     336 
 
                                                                  1,558                     382 
  --------------------------------------  ------  ---------------------  ---------------------- 
 
 Total assets                                                     1,814                     412 
----------------------------------------  ------  ---------------------  ---------------------- 
 
 Equity and liabilities 
 Capital and reserves attributable 
  to owners of the parent 
 Share capital                                                    1,107                     482 
 Share premium account                                           32,156                  30,507 
 Share option reserve                                               135                      74 
 Foreign exchange translation reserve                             (163)                   (163) 
 Retained earnings                                             (31,523)                (32,261) 
 
 Total equity                                                     1,712                 (1,361) 
----------------------------------------  ------  ---------------------  ---------------------- 
 
 Current liabilities 
 Trade and other 
  payables                                                           58                   1,766 
 Taxes payable                                                       15                       7 
 
                                                                     73                   1,773 
  --------------------------------------  ------  ---------------------  ---------------------- 
 
 Non-current liabilities 
 Lease finance                                                       29                       - 
--------------------------------------    ------  ---------------------  ---------------------- 
 
 Total equity and 
  liabilities                                                     1,814                     412 
----------------------------------------  ------  ---------------------  ---------------------- 
 
 The financial statements were approved and authorised for issue 
  by the Board of Directors on 26 May 2021 and were signed on its 
  behalf by: 
 
 
 
 
 
 John Wakefield        Andrew Yeo 
 Director              Director 
 
 Company number: 
  05098776 
 
 
 CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY 
  FOR THE YEARED 31 DECEMBER 2020 
                                                                                                                                                                            Foreign 
                                                      Share                        Share                     Retained                 Share option                         exchange               Total 
                                                    capital                      premium                     earnings                      reserve                      translation              equity 
 Group                                              GBP'000                      GBP'000                      GBP'000                      GBP'000                          GBP'000             GBP'000 
 As at 1 
  January 
  2019                                                  344                       30,237                     (30,577)                           74                            1,712               1,790 
---------------  ------------------------------------------  ---------------------------  ---------------------------  ---------------------------  -------------------------------  ------------------ 
 Shares issued                                          138                          270                            -                            -                                -                 408 
---------------                                                                                                                                                                      ------------------ 
 Transactions 
  with 
  owners                                                138                          270                            -                            -                                -                 408 
---------------  ------------------------------------------  ---------------------------  ---------------------------  ---------------------------  -------------------------------  ------------------ 
 Loss for the 
  year 
  attributable 
  to 
  equity 
  shareholders                                            -                            -                      (1,674)                                                             -             (1,674) 
 Foreign 
  exchange 
  translation 
  adjustments                                             -                            -                            -                            -                             (69)                (69) 
---------------                                                                                                        ---------------------------                                   ------------------ 
 Total 
  comprehensive 
  income for 
  the period                                              -                            -                      (1,674)                            -                             (69)             (1,743) 
---------------  ------------------------------------------  ---------------------------  ---------------------------  ---------------------------  -------------------------------  ------------------ 
 
 As at 1 
  January 
  2020                                                  482                       30,507                     (32,251)                           74                            1,643                 455 
---------------  ------------------------------------------  ---------------------------  ---------------------------  ---------------------------  -------------------------------  ------------------ 
 
 Shares issued                                          625                        1,670                            -                            -                                -               2,295 
---------------                                                                                                                                                                      ------------------ 
 Transactions 
  with 
  owners                                                625                        1,670                            -                            -                                -               2,295 
---------------  ------------------------------------------  ---------------------------  ---------------------------  ---------------------------  -------------------------------  ------------------ 
 Loss for the 
  year 
  attributable 
  to 
  equity 
  shareholders                                            -                            -                        (920)                                                             -               (920) 
 Share based 
  payments                                                -                         (21)                            -                          102                                -                  81 
 Share option 
  reserve 
  released                                                -                            -                           41                         (41)                                -                   - 
 Foreign 
  exchange 
  translation 
  adjustments                                             -                            -                            -                            -                            (115)               (115) 
---------------                                                                                                        ---------------------------                                   ------------------ 
 Total 
  comprehensive 
  income for 
  the period                                              -                         (21)                        (879)                           61                            (115)               (954) 
                 ------------------------------------------  ---------------------------  ---------------------------  ---------------------------  -------------------------------  ------------------ 
 As at 31 
  December 
  2020                                                1,107                       32,156                     (33,130)                          135                            1,528               1,796 
---------------  ------------------------------------------  ---------------------------  ---------------------------  ---------------------------  -------------------------------  ------------------ 
 
 
 CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY FOR 
  THE YEARED 31 DECEMBER 2020 - continued 
                                                                                                                                                                             Foreign 
                                                        Share                        Share                  Retained                 Share option                           exchange                    Total 
                                                      capital                      premium                  earnings                      reserve                        translation                   equity 
                                                      GBP'000                      GBP'000                   GBP'000                      GBP'000                            GBP'000                  GBP'000 
 Company 
 As at 1 
  January 
  2019                                                    344                       30,237                  (30,510)                           74                              (163)                     (18) 
---------------  --------------------------------------------  ---------------------------  ------------------------  ---------------------------  ---------------------------------  ----------------------- 
 Shares issued                                            138                          270                         -                            -                                  -                      408 
--------------- 
 Transactions 
  with 
  owners                                                  138                          270                         -                            -                                  -                      408 
---------------  --------------------------------------------  ---------------------------  ------------------------  ---------------------------  ---------------------------------  ----------------------- 
 
 Loss for the 
  year                                                      -                            -                   (1,751)                            -                                  -                  (1,751) 
 Total 
  comprehensive 
  income for 
  the period                                                -                            -                   (1,751)                            -                                  -                  (1,751) 
---------------  --------------------------------------------  ---------------------------  ------------------------  ---------------------------  ---------------------------------  ----------------------- 
 
 As at 1 
  January 
  2020                                                    482                       30,507                  (32,261)                           74                              (163)                  (1,361) 
---------------  --------------------------------------------  ---------------------------  ------------------------  ---------------------------  ---------------------------------  ----------------------- 
 
 Shares issued                                            625                        1,670                         -                            -                                  -                    2,295 
--------------- 
 Transactions 
  with 
  owners                                                  625                        1,670                         -                            -                                  -                    2,295 
---------------  --------------------------------------------  ---------------------------  ------------------------  ---------------------------  ---------------------------------  ----------------------- 
 Profit for the 
  year                                                      -                            -                       697                            -                                  -                      697 
 Share based 
  payments                                                  -                         (21)                         -                          102                                  -                       81 
 Share option 
  reserve 
  released                                                  -                            -                        41                         (41)                                  -                        - 
 Total 
  comprehensive 
  income for 
  the period                                                -                         (21)                       738                           61                                  -                      778 
---------------  --------------------------------------------  ---------------------------  ------------------------  ---------------------------  ---------------------------------  ----------------------- 
 
 As at 31 
  December 
  2020                                                  1,107                       32,156                  (31,523)                          135                              (163)                    1,712 
---------------  --------------------------------------------  ---------------------------  ------------------------  ---------------------------  ---------------------------------  ----------------------- 
 
 Share capital is the amount subscribed for shares at nominal 
  value. 
 Share premium represents the excess of the amount subscribed 
  for share capital over the nominal value of those shares net 
  of share issue expenses. 
 Retained earnings represents the cumulative loss of the group 
  attributable to equity shareholders. 
 Foreign exchange translation occurs on consolidation of the 
  translation of the subsidiaries balance sheets at the closing 
  rate of exchange and their income statements at the average 
  rate. 
 
 
 CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS 
  FOR THE 
 YEARED 31 DECEMBER 2020 
 
                                                  Group             Company              Group            Company 
                                                   2020                2020               2019              2,019 
 ---------------------------------------  -------------  ------------------  -----------------  ----------------- 
                                                GBP'000             GBP'000            GBP'000            GBP'000 
 
 Operating activities                             (919)               (797)              (724)              (563) 
 
 Investing activities 
 Return from investment and servicing 
  of finance                                          5                   5                  1                  1 
 Advances to subsidiary and associated 
  undertakings                                    (323)               (441)                  -              (155) 
 Acquisition of intangible assets                  (14)                (14)            (1,047)            (1,047) 
 Investment in associated undertaking             (195)               (195)                  -                  - 
 
                                                  (527)               (645)            (1,046)            (1,201) 
 Financing activities 
 Proceeds from issue of share capital             2,295               2,295                408                408 
 Lease financing                                    (6)                 (6)                  -                  - 
 
 Net cash inflow                                    843                 847            (1,362)            (1,356) 
 
 Cash and cash equivalents 
  at the beginning of 
  the year                                          347                 336              1,709              1,692 
 
 Cash and cash equivalents 
  at the end of the year                          1,190               1,183                347                336 
----------------------------------------  -------------  ------------------  -----------------  ----------------- 
 
 Reconciliation to Consolidated 
  Statement of Financial Position 
 Cash not available for 
  use                                               121                   -                125                  - 
 
 Cash and cash equivalents as shown 
  in the Consolidated Statement 
  of Financial Position                           1,311               1,183                472                336 
----------------------------------------  -------------  ------------------  -----------------  ----------------- 
 
 
 CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS 
  FOR THE 
 YEARED 31 DECEMBER 2020 - 
  continued 
                                                  Group              Company               Group             Company 
                                                   2020                 2020                2019                2019 
----------------------------------   ------------------  -------------------  ------------------  ------------------ 
                                                GBP'000              GBP'000             GBP'000             GBP'000 
 Operating activities 
 Loss for the year 
  attributable to 
  controlling interests                           (920)                  697             (1,674)             (1,751) 
 Depreciation, amortisation and 
  impairment charges                               (57)                   90               1,047               1,240 
 Share based payments                                81                   81                   -                   - 
 Finance income shown as an 
  investing 
  activity                                          (5)                  (5)                 (1)                 (1) 
 Profit on disposal of subsidiary 
  undertaking                                         -              (1,679)                   -                   - 
 Income from associated undertaking                  44                    -                   -                   - 
 Foreign exchange translation                      (52)                   30                 (4)                  23 
 
 Operating cash outflows before 
  movements in working capital                    (909)                (786)               (632)               (489) 
-----------------------------------  ------------------  -------------------  ------------------  ------------------ 
 
 (Increase)/decrease in receivables                 (4)                  (5)                 454                 456 
 
 Tax paid                                             -                    -                   -                   - 
 Decrease in payables                               (6)                  (6)               (546)               (530) 
 
 Net cash outflows from operating 
  activities                                      (919)                (797)               (724)               (563) 
-----------------------------------  ------------------  -------------------  ------------------  ------------------ 
 
 

NOTES TO THE FINANCIAL STATEMENTS

 
 3. Operating Loss                                          2020                     2019 
                                             -------------------  ----------------------- 
                                                         GBP'000                  GBP'000 
 The loss on ordinary activities before 
  taxation is stated after charging: 
 
 Auditors' remuneration 
  Group - audit                                               32                       26 
  Company - audit                                             32                       21 
  Group - other non-audit services                             2                        5 
  Company - other non-audit services                           2                        5 
 Exploration and evaluation expenditure                      145                      160 
 Impairment of intangible assets                            (59)                    1,047 
 Depreciation of property, plant 
  and equipment                                                2                        - 
 Impairment of foreign tax receivables                      (74)                     (16) 
 (Gain)/loss on exchange                                     157                       41 
 
 
 The analysis of development and administrative expenses in the 
  consolidated income statement by nature of expense is: 
                                                            2020                     2019 
----------------------------------------     -------------------  ----------------------- 
                                                         GBP'000                  GBP'000 
 Employee benefit 
  expense                                                    374                      258 
 Share based payments                                         81                        - 
 Exploration and evaluation expenditure                      145                      160 
 Depreciation, amortisation and 
  impairment charges                                       (131)                    1,031 
 Legal and professional 
  fees                                                       198                      133 
 Loss on exchange                                            157                       41 
 Other expenses                                               57                       51 
 
                                                             881                    1,674 
   ----------------------------------------  -------------------  ----------------------- 
 
 
 
  5. Finance income                                           2020                  2019 
-------------------------------------------     ------------------  -------------------- 
                                                           GBP'000               GBP'000 
 Bank and other interest received                                5                     1 
 Finance cost                                                    -                   (1) 
 
 Total                                                           5                     - 
 
 
 
 
 6. Income tax expense                                        2020                  2019 
-------------------------------------------     ------------------  -------------------- 
                                                           GBP'000               GBP'000 
 The tax charge on the loss on 
  ordinary activities was:- 
 
 UK Corporation Tax 
  - current                                                      -                     - 
 Foreign taxation                                                -                     - 
 
                                                                 -                     - 
-------------------------------------------     ------------------  -------------------- 
 
 The total charge for the year can be reconciled to the accounting 
  profit as follows: 
                                                              2020                  2019 
-------------------------------------------     ------------------  -------------------- 
                                                           GBP'000               GBP'000 
 Loss before tax 
 Continuing operations                                       (920)                 1,674 
 
 Tax at composite group rate of 19% (2019: 
  19%)                                                       (174)                 (318) 
 
 Effects of: 
 Losses not subject to tax                                     340                   221 
 Movement on capital allowances                              (126)                 (153) 
 Increase in tax 
  losses                                                      (40)                   250 
 Foreign taxation                                                -                     - 
 
 Tax expense                                                     -                     - 
----------------------------------------------  ------------------  -------------------- 
 
 At 31 December 2020, the Group has tax losses of GBP28,990,000 
  (2019 - GBP28,208,000) to carry forward against future profits. 
  The deferred tax asset on these tax losses at 19% of GBP5,508,000 
  (2019: at 19%, GBP5,359,000) has not been recognised due to 
  the uncertainty of the recovery. 
 
 
 8. Earnings per 
  share 
                                                              2020            2019 
-----------------------------------------------     --------------  -------------- 
 Loss per ordinary 
  share 
 - Basic                                                  (0.023p)        (0.099p) 
 - Diluted                                                (0.023p)        (0.099p) 
 
 
 Earnings per ordinary share is based on the Group's loss attributable 
  to controlling interests for the year of GBP920,000 (2019: 
  GBP1,674,000). 
 The weighted average number of shares used in the calculation 
  is the weighted average ordinary shares in issue during the 
  year. 
 
                                                              2020            2019 
                                                    --------------  -------------- 
                                                            Number          Number 
 Weighted average ordinary shares in issue 
  during the year                                    3,988,470,466   1,685,313,686 
 Weighted average potentially dilutive options 
  and warrants issued                                  373,396,517      82,150,685 
 
 Weighted average ordinary shares for 
  diluted earnings per share                         4,361,866,983   1,767,464,371 
-------------------------------------------------   --------------  -------------- 
 
 Due to the Group's results, the diluted earnings per share 
  was deemed to be the same as the basic earnings per share for 
  that year. 
 
 
 
 9. Property, 
 plant and 
 equipment 
                               Development                 Equipment                 Right for 
                                       and                       and                       use 
                                production                 machinery                     asset 
                                     costs                                                                       Total 
                                   GBP'000                   GBP'000                   GBP'000                 GBP'000 
 Group 
 Cost 
 At 1 January 
  2019                                   -                        34                         -                      34 
 Foreign 
  exchange 
  translation 
  adjustment                             -                       (4)                         -                     (4) 
 
 At 1 January 
  2020                                   -                        30                         -                      30 
 Foreign 
  exchange 
  translation 
  adjustment                             -                       (1)                         -                     (1) 
 Expenditure                             -                         -                        45                      45 
 
 At 31 December 
  2020                                   -                        29                        45                      74 
---------------   ------------------------  ------------------------  ------------------------  ---------------------- 
 
 Depreciation 
 At 1 January 
  2019                                   -                        34                         -                      34 
 Foreign 
  exchange 
  translation 
  adjustment                             -                       (4)                         -                     (4) 
 
 At 1 January 
  2020                                   -                        30                         -                      30 
 Foreign 
  exchange 
  translation 
  adjustment                             -                       (1)                         -                     (1) 
 Charge for the 
  period                                 -                         -                         2                       2 
 
 At 31 December 
  2020                                   -                        29                         2                      31 
---------------   ------------------------  ------------------------  ------------------------  ---------------------- 
 
 Net book 
 value 
 At 31 December 
  2020                                   -                         -                        43                      43 
 
 
 At 31 
 December 2019                           -                         -                         -                       - 
 
 
 Company 
 Cost 
 At 1 January                            -                         -                         -                       - 
 2019 
 and 2020 
 Expenditure                             -                         -                        45                      45 
 
 At 31 December 
  2020                                   -                         -                        45                      45 
---------------   ------------------------  ------------------------  ------------------------  ---------------------- 
 
 Depreciation 
 At 1 January                            -                         -                         -                       - 
 2019 
 and 2020 
 Charge for the 
  period                                 -                         -                         2                       2 
 
 At 31 December 
  2020                                   -                         -                         2                       2 
---------------   ------------------------  ------------------------  ------------------------  ---------------------- 
 
 Net book 
 value 
 At 31 December 
  2020                                   -                         -                        43                      43 
 
 
 At 31 December 
  2019                                   -                         -                         -                       - 
 
 

9. Property, plant and equipment (continued)

Included in the above line items is a right-of-use asset of GBP43,000 (2019: nil) in respect of a motor vehicle.

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date.

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

On the statement of financial position, right-of-use assets have been included in property, plant and equipment.

 
 10. Intangible fixed 
  assets                                                                            Exploration 
                                                                                 and evaluation 
                                                                   Licence                costs     Total 
                                                                   GBP'000              GBP'000   GBP'000 
 Group 
 Cost 
 At 1 January 2019                                                       -                2,486     2,486 
 Foreign exchange translation adjustment                                 -                 (61)      (61) 
 Expenditure                                                             -                1,047     1,047 
------------------------------------------   -----------------------------  -------------------  -------- 
 At 1 January 2020                                                       -                3,472     3,472 
 Foreign exchange translation adjustment                                 -                 (59)      (59) 
 Expenditure                                                             -                   14        14 
 Disposals                                                               -              (1,108)   (1,108) 
 At 31 December 2020                                                     -                2,319     2,319 
------------------------------------------   -----------------------------  -------------------  -------- 
 
 Impairment 
 At 1 January 2019                                                       -                2,420     2,420 
 Charge for the period                                                   -                1,047     1,047 
------------------------------------------   -----------------------------  -------------------  -------- 
 At 1 January 2020                                                       -                3,467     3,467 
 Charge for the period                                                   -                 (59)      (59) 
 Disposals                                                               -              (1,107)   (1,107) 
 At 31 December 2020                                                     -                2,301     2,301 
------------------------------------------   -----------------------------  -------------------  -------- 
 
 Net book value 
 At 31 December 2020                                                     -                   18        18 
 
 
 At 31 December 2019                                                     -                    5         5 
 
 
 
 
 
 10. 
 Intangible 
 fixed assets 
 (continued)                                                               Exploration 
                                                                        and evaluation 
                                            Licence                              costs                              Total 
                                            GBP'000                            GBP'000                            GBP'000 
 Company 
 Cost 
 At 1 January 
  2019                                            -                                701                                701 
 Expenditure                                      -                              1,047                              1,047 
 At 1 January 
  2020                                            -                              1,748                              1,748 
 Expenditure                                      -                                 14                                 14 
 Disposals                                        -                            (1,109)                            (1,109) 
 At 31 December 
  2020                                            -                                653                                653 
---------------    --------------------------------  ---------------------------------  --------------------------------- 
 
 Impairment 
 At 1 January 
  2019                                            -                                635                                635 
 Charge for the 
  year                                            -                              1,108                              1,108 
 At 1 January 
  2020                                            -                              1,743                              1,743 
 Charge for                                                                          - 
 the year                                         -                                                                     - 
 Disposals                                                                     (1,108)                            (1,108) 
 At 31 December 
  2020                                            -                                635                                635 
---------------    --------------------------------  ---------------------------------  --------------------------------- 
 
 Net book 
 value 
 At 31 December 
  2020                                            -                                 18                                 18 
 
 At 31 December 
  2019                                            -                                  5                                  5 
 
 
 The exploration and evaluation costs above represent the cost 
  in acquiring, exploring and evaluating the company's and group's 
  assets. 
 The impairment of all intangible assets has been reviewed, giving 
  rise to the following impairment charges, or reduction in impairment 
  charges. 
 Block XXI Peru: this licence was fully impaired in 2018. 
 UK offshore block P1918 ("Colter"): the drilling of an exploration 
  well commenced on 6 February 2019 and was completed on 25 February 
  2019, with a further side-track well being drilled, completing 
  on 8 March 2019. This licence continued into the second term 
  with effect from 1 February 2020 but the Company has now written 
  off this asset against the impairment provision, as the licence, 
  along with related licences PEDL330 and PEDL 345, were relinquished 
  on 31 January 2021. 
 
 
 
 
 
 12. Associated undertaking 
                                                    Shares in 
                                                   associated 
                                                  undertaking                  Total 
                                                      GBP'000                GBP'000 
 Group 
 Gross investment 
  value 
 At 1 January 2019 
  and 2020                                                  -                      - 
 Additions                                                195                    195 
 Share of post acquisition net 
  result                                                 (44)                   (44) 
 At 31 December 2020                                      151                    151 
-----------------------------------  ------------------------  --------------------- 
 
 Impairment 
 At 1 January 2019 and 2020, and 
  31 December 2020                                          -                      - 
----------------------------------   ------------------------  --------------------- 
 
 Carrying value 
 At 31 December 2020                                      151                    151 
 
 
 At 31 December 2019                                        -                      - 
 
 

On 27 April 2020, the Group acquired a 33.33% interest in SundaGas (Timor-Leste Sahul) Pte. Ltd, incorporated in Singapore at a gross cost of GBP195,000. In accordance with IAS28, the Group accounts for its investment in this company using the equity method.

 
Glossary 
BCF                    Billion cubic feet. 
Mean                   Reflects a mid-case volume estimate of resource derived using probabilistic methodology. This 
                        is the mean of the probability distribution for the resource estimates and may be skewed by 
                        high resource numbers with relatively low probabilities. 
MMBOE                  Million barrels of oil equivalent. Volume derived by dividing the estimate of the volume of 
                       natural gas in billion cubic feet by six in order to convert it to an equivalent in million 
                       barrels of oil and, where relevant, adding this to an estimate of the volume of oil in millions 
                       of barrels. 
Prospective Resources  Quantities of petroleum that are estimated to exist originally in naturally occurring 
                       reservoirs, 
                       as of a given date. Crude oil in-place, natural gas in-place, and natural bitumen in-place 
                       are defined in the same manner. 
SPE PRMS               The Society of Petroleum Engineers' ("SPE") Petroleum Resources Management System ("PRMS"): 
                       a system developed for consistent and reliable definition, classification, and estimation 
                       of hydrocarbon resources prepared by the Oil and Gas Reserves Committee of SPE and approved 
                       by the SPE Board in June 2018 following input from six sponsoring societies: the World 
                       Petroleum 
                       Council, the American Association of Petroleum Geologists, the Society of Petroleum Evaluation 
                       Engineers, the Society of Exploration Geophysicists, the European Association of Geoscientists 
                       and Engineers, and the Society of Petrophysicists and Well Log Analysts. 
 
 

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