Europa Oil & Gas (Holdings) plc /
Index: AIM / Epic: EOG / Sector: Oil & Gas
12 April 2019
Europa Oil &
Gas (Holdings) plc (“Europa” or “the Company”)
Interim
Results
Europa Oil & Gas (Holdings) plc, the AIM traded Ireland and UK focused oil and gas
exploration, development and production company, announces its
interim results for the six month period ended 31 January 2019.
Operational highlights
- Ongoing negotiations regarding farm-in agreements to three
Irish licences (LO 16/20, FEL 1/17 and FEL 3/13) with a major
international oil company:
- expect Europa to be fully carried on a well on each
licence
- expect Europa to retain a material interest in each
licence
- the Board is confident of concluding the farm-ins in the coming
months however, there can be no guarantee that the current
negotiations will lead to completed agreements
- final investment decision awaited from the major’s head
office
- Site surveys for wells at Inishkea, Kiely East and Edgeworth – targeting summer
2019, are under application subject to regulatory approval
- Successfully executing strategy to manage the decline in
production at onshore UK fields
- workover of the WF6 well at West Firsby utilising a drain hole
jetting technique - WF6 is currently producing 6 boepd net to
Europa having previously produced zero oil
- 90 boepd produced in H1 2019 (H1 2018 97 boepd)
- Final phase of discussions with the National Office of
Hydrocarbons and Mines (“ONHYM”), in respect of securing a
petroleum agreement in Morocco
Financial performance
- Revenue £0.9 million (H1 2018: £0.8 million)
- Pre-tax loss of £0.4 million, (H1 2018: pre-tax tax loss of
£0.5 million)
- Net cash used in operating activities £0.3 million (H1 2018:
cash from operating activities £16k)
- Cash balance at 31 January 2019:
£4.4 million (31 July 2018: £1.8
million)
- Successfully raised £4.3 million (before expenses) from
existing and new shareholders including BGF Investment Management
Limited, a wholly owned subsidiary of the Business Growth Fund
(“BGF”)
- approximately 33% of the shares in the Company now owned by
institutions,
- a further 9.5% are held by the Board
Post reporting period events
- Wressle planning appeal submitted to Planning Inspectorate on
5 February 2019 and draft bespoke
programme issued by the Inspectorate on 13 February
- Gross un-risked prospective resources at the Inishkea gas
prospect in LO 16/20 confirmed as 1.5 tcf with one in three chance
of success (RNS 26 February
2019)
- Transferred operatorship of PEDL143 to UK Oil & Gas PLC as
announced on 14 March 2019
Europa's CEO, Hugh Mackay,
said: “The last six months have been a highly active period for
Europa, not just in terms of the progress we are making to advance
our industry-leading licence position offshore Ireland, which to date has estimated gross
prospective resources of 6.4 billion barrels of oil and 1.5 tcf of
gas and where negotiations are ongoing for a farm-in for three
licences with a major international oil and gas company. In
addition, we completed a £4.3 million fund raising, which increased
the institutional representation on our shareholder register to
over one third. We also restored production at the WF6 well at West
Firsby and moved closer towards landing a high impact new venture
in Morocco.
“The momentum behind the Company has continued post period end
with the completion of a major piece of exploration work at our
flagship Inishkea gas project. I look forward to providing further
updates on our progress during the second half, a period which will
see the resumption of drilling activity in the South Porcupine Basin at CNOOC International’s
Iolar prospect. Success here would be a value trigger event
for Europa, as it would significantly de-risk our drill-ready
prospects in the basin, specifically, the 280mmboe Kiely East and 225mmboe Edgeworth targets.”
For further information please visit www.europaoil.com or
contact:
Hugh Mackay / Phil Greenhalgh |
Europa |
+44 (0) 20 7224 3770 |
Matt Goode |
finnCap Ltd |
+44 (0) 20 7220 0500 |
Simon Hicks |
finnCap Ltd |
+44 (0) 20 7220 0500 |
Camille Gochez |
finnCap Ltd |
+44 (0) 20 7220 0500 |
Frank Buhagiar / Susie Geliher |
St Brides Partners Ltd |
+44 (0) 20 7236 1177 |
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Chairman’s Statement
Our objective is to create a significant liquidity event for our
shareholders through successful drilling of our high impact
exploration portfolio in Atlantic Ireland. I am pleased to
report that the six months under review has seen us take
significant steps towards presenting our shareholders with a series
of potential liquidity events. On 20
November 2018, we announced that we were negotiating farm-in
agreements with a major international oil and gas company in
respect of Licensing Option (‘LO’) 16/20 in the Slyne Basin and
Frontier Exploration Licences (‘FEL’) 1/17 and 3/13 in the
South Porcupine Basin.
We continue to have positive engagement with the
potential farminee and remain confident of the completion of these
agreements or similar ones with other potential farminees who are
active in our virtual and physical data rooms. We believe that the
political environment in Ireland,
in particular the Climate Emergency Measures Bill, may be causing
potential investors, including farminees, to slow down their
investment decisions.
The Climate Emergency Measures Bill (the “Bill”) is a proposal
to limit future oil and gas exploration in Ireland which is progressing through the Irish
legislature. If put into law this Bill would stop the issuance of
any new licences for the exploration of fossil fuels. The Bill is
opposed by the Irish Government. We do not know if it will pass
into law and should it do so when that might be, and in what form.
The impact on existing exploration licences is also not clear.
Europa has honoured its work commitments and obligations to the
Irish Government and naturally we hope that our investment will be
recognised and honoured. Europa is an active member of the
Irish Offshore Operators’ Association (“IOOA” www.iooa.ie). IOOA
believes that in order to shape a coherent, realistic, fully-costed
and structured national policy and plan to transition to a low
carbon future, that a new and informed energy conversation needs to
begin. IOOA is actively engaged in this matter and further
information can be found at
https://www.iooa.ie/value-of-the-indigenous-oil-and-gas-industry-to-ireland/
Offshore Ireland
Our industry-leading licence position offshore Ireland is comprised of six licences covering
an area of 4,985 km2 and encompassing all the play types
and basins being targeted by the major operators who have already
entered the region, such as Exxon, CNOOC International, Equinor,
TOTAL, Woodside and Cairn Energy. To date, we have identified
over 30 prospects across our licences which, potentially hold
combined Gross Mean Un-risked Prospective Resources (“GMUPR”) of
over 6.4 billion barrels of oil equivalent and 1.5 tcf of gas.
Following completion of technical work programmes, we are now
focused on securing partners with whom we can drill wells to prove
up this ‘company-making’ prospectivity.
The volumetrics involved and the quality of the work we have
undertaken have generated considerable interest among the blue-chip
operators as evidenced by their activity in our data rooms.
As mentioned earlier, we are currently negotiating farm-in
agreements with a major international oil and gas company in
respect of LO 16/20, FEL 1/17 and FEL 3/13. A final
investment decision is awaited from the major’s head office.
Meanwhile, we continue to run data rooms and market the
opportunities to others. We have submitted applications to the
relevant authorities for three site surveys in Atlantic Ireland for
our flagship Inishkea prospect, Kiely
East and Edgeworth. Our aim is to be in a position to
drill all three prospects from 2020 onwards, subject to funding and
the regulatory approval process.
Post period end on 26 February
2019, we announced a new prospect inventory for LO 16/20
including gross mean un-risked prospective dry gas resources of 1.5
tcf and a 1 in 3 chance of success for the Inishkea prospect.
Together with a location in a play that has been proven by the
nearby Corrib gas field, proximity to existing gas infrastructure,
comparatively shallow water and lying in a country that needs more
gas, the volumetrics are the final piece in the jigsaw which
confirms Inishkea’s status as Europa’s flagship
project.
Onshore UK
Our UK production assets in the East Midlands continue to
generate a valuable revenue stream for the Company. First
half production averaged 90 boepd generating revenue of £0.9
million, 12% higher than H1 2018’s £0.8 million thanks to higher
oil prices and initiatives we undertook to manage the decline at
the West Firsby oil field. These included the successful
workover of the WF6 well where we, in conjunction with a third
party, pioneered the use of a drain hole jetting technique onshore
UK. WF6 is currently producing 6 bopd net to Europa having
previously produced zero oil. Based on the technical success
of the workover we intend to evaluate additional suitable
opportunities to use this technology in other wells leading to
higher oil rates than would otherwise have been possible.
We are keen to grow our production incrementally - via workovers
such as WF6, and by bringing new discoveries on line. Wressle in
North Lincolnshire, with an initial targeted gross rate of 500
bopd, would more than double Europa’s existing net production to
over 200 bopd. The planning appeal process formally commenced
post period end on 13 February 2019
and a planning inquiry date will be announced in due course when a
Planning Inspector will consider the partners’ new proposals for
the development. Other proposals have previously been recommended
for approval by the Council’s Planning Officer and supported by
expert third party review undertaken on behalf of the Council.
New Ventures
A Strategic Review was completed during the review period. This
identified areas and basins where the expertise of our
technical team could be applied to replicate the excellent work
carried out in our offshore Ireland licences. In line with this,
over the course of the half year under review we have been in
discussions with the National Office of Hydrocarbons and Mines
(ONHYM) to secure a petroleum agreement in Morocco. These
discussions are nearing completion and we are confident we will
soon be in a position to provide further details on what we believe
is an exciting opportunity to acquire acreage which, in terms of
‘company-making’ potential, is similar in scale to our offshore
Ireland portfolio. We have also
established a new Board Strategy Committee, to review and approve
value-accretive new venture opportunities within our areas of
interest.
Corporate
During the period, we successfully raised £4.3million from
existing and new shareholders. Following the fundraise, BGF
are the largest shareholder in Europa, with an equity share close
to 15%. One third of the Company’s shares are now held by
institutions and the Board holds a further 9.5%. This is a
significant increase in institutional representation in Europa’s
shareholder register and we view this as an endorsement of our
asset base, strategy to monetise our assets, and finally the
efforts of our excellent team.
Outlook
As at 31 January 2019, Europa’s
cash balances stood at £4.4 million (31 July
2018: £1.8 million). Our UK production, which averaged 90
boepd over the course of the half year period, generated £0.9
million in revenues. In Ireland,
we have mapped combined gross mean un-risked prospective resources
of 6.4 billion barrels oil equivalent and 1.5 tcf gas across our
six licences. We estimate our Inishkea prospect, which lies
close to the producing Corrib gas field, has a 1 in 3 chance of
success.
Compare all the above with our current market capitalisation and
the value case for Europa, in our view, speaks for itself.
Our job is to realise the huge potential of our asset base, while
at all times managing risk. Drilling offshore Ireland alongside heavyweight partners is how
we intend to achieve this. With favourable terms under
negotiation with a major operator that could lead to the funding of
up to three high impact wells, we are confident we are on course to
offer our shareholders the series of potential liquidity
events.
Simon Oddie
Chairman
11 April 2019
Operational review
Offshore Ireland: Exploration
Europa holds six licences in Atlantic Ireland which, in
aggregate, cover an area of over 4,985 km2, include six
play types in three basins and contain over 30 prospects and leads
that potentially hold gross mean un-risked prospective resources of
6.4 billion barrels oil equivalent and 1.5 tcf gas.
To date six prospects have been de-risked to drill-ready status
including the Inishkea gas project in LO 16/20 in the Slyne Basin;
Kiely East in FEL 2/13 and Edgeworth
in FEL 1/17 in the South Porcupine
Basin. Inishkea is regarded by Europa as its flagship project
due to its location in a play that has been proven by the Corrib
gas field, its potential to be larger than Corrib, its proximity to
existing processing facilities, and Ireland’s need for more gas
supplies.
Activity during the half year period has been centred on
securing farm-out partners to fund drilling activity. As announced
in November 2018, Europa is currently
negotiating farm-in agreements with a major international oil and
gas company in respect of LO 16/20, FEL 1/17 and FEL 3/13. A
final investment decision from the major’s head office is
awaited. Subject to a positive outcome, the terms agreed
would see Europa hold material interests in up to three
wells. To ensure wells can be drilled at the earliest
opportunity, Europa has submitted applications for three site
surveys in summer 2019 for the Inishkea, Kiely East and Edgeworth prospects. Subject to
successful conclusion of this work and finalisation of funding, all
three prospects could be drilled from 2020 onwards.
Drilling activity in the region is due to recommence in summer
2019 with a well targeting the Iolar prospect in FEL 3/18 in the
Porcupine basin operated by CNOOC International, together with its
partner ExxonMobil. Exploration success at Iolar potentially
de-risks 1 billion boe in five prospects in Europa's Porcupine
portfolio including Kiely East (280
mmboe) and Edgeworth (225 mmboe).
Slyne Basin: LO 16/20
LO 16/20 is located next to the producing Corrib gas field in
the Slyne Basin and contains the Corrib North gas discovery. LO
16/20 represents low risk exploration in a proven gas play.
During the half year, technical work was undertaken to further
de-risk Inishkea and calculate prospective resources for
Inishkea. This work included Pre-Stack Depth Migration
(“PSDM”) reprocessing of 770 km2 of 3D seismic data over
Inishkea and the Corrib gas field. The geophysical interpretation
arising from the PSDM data has been benchmarked and calibrated
against newly released Ocean Bottom Cable 3D seismic data over the
Corrib gas field. Post period end in February 2019, the Company announced prospective
resources for Inishkea, the details of which are provided in the
table below:
Licence |
Prospect |
Play |
Gross Un-risked Prospective Resources
(billion cubic feet) |
Low |
Best |
High |
Mean |
LO 16/20 |
Inishkea |
Triassic gas |
244 |
968 |
3,606 |
1,528 |
Inishkea is a large fault bounded Triassic structure that lies
11km to the northwest of the Corrib gas field. The reservoir is
Triassic age sandstone sourced from the underlying Carboniferous.
The trap is provided by a combination of Triassic Uilleann Halite
top seal and fault seal. Engineering studies demonstrate strong
positive economics for a range of porosity outcomes, including
outcomes significantly poorer than Corrib. Europa’s view of
porosity at Inishkea is supported by velocity data from new PSDM
data. Given the Company’s confidence in trap and reservoir quality
and the nearby producing Corrib gas field, the Company has assigned
a one in three chance of success to Inishkea based on in-house
technical work.
A drilling location for a first exploration well on Inishkea
(18/20-H) has been identified. There is a robust, low risk tie on
seismic data for the Corrib Sandstone reservoir back to the Corrib
gas field. Europa intends to acquire a site survey in summer
2019 (subject to regulatory consent), which would enable a well to
be drilled at this location in 2020 (subject to funding and
regulatory consents). Operations planning for both the site survey
and engineering design of the exploration is in progress.
The Corrib North structure containing the 18/20-7 gas discovery
well drilled by Shell in 2010 may be upgraded to contingent
resources pending further engineering evaluation. Based on the
interpretation of historic 3D and 2D seismic, discovered Gas
Initially In Place (“GIIP”) is provided in the table below:
Licence |
Prospect |
Play |
Gross discovered GIIP
(billion cubic feet) |
Low |
Best |
High |
|
LO 16/20 |
Corrib North |
Triassic gas |
5 |
41 |
208 |
|
South
Porcupine Basin: FELs 1/17, 2/13 and 3/13
Europa operates three licences in the South Porcupine Basin, FELs 1/17, 2/13 and
3/13. An aggregate of 4.3 billion barrels of oil equivalent
(boe) of gross mean un-risked prospective resources have been
estimated across nine priority prospects on these three licences
based on the results of reprocessed PSDM 3D seismic data originally
acquired in 2013. These include firm drilling targets Edgeworth in
FEL 1/17, Wilde in 3/13 and Kiely
East in 2/13. The table below summarises the Gross
Un-risked Prospective Resources (“GMUPR”) across selected prospects
in FELs 1/17, 2/13 and 3/13 in the South Porcupine
Basin:
Licence |
Prospect |
Play |
Gross
Un-risked Prospective Resources |
|
mmboe* |
|
Low |
Best |
High |
Mean |
|
FEL 1/17 |
Ervine |
Pre-rift |
63 |
159 |
363 |
192 |
|
FEL 1/17 |
Edgeworth |
Pre-rift |
49 |
156 |
476 |
225 |
|
FEL 1/17 |
Egerton |
Syn-rift |
59 |
148 |
301 |
167 |
|
|
|
|
|
|
|
|
|
FEL 3/13 |
Beckett |
mid-Cretaceous
Fan |
111 |
758 |
4229 |
1719 |
|
FEL 3/13 |
Shaw+ |
mid-Cretaceous
Fan |
20 |
196 |
1726 |
747 |
|
FEL 3/13 |
Wilde |
Early Cretaceous
Fan |
45 |
241 |
1082 |
462 |
|
|
|
|
|
|
|
|
|
FEL 2/13 |
Kiely East + |
Pre-rift |
52 |
187 |
612 |
280 |
|
FEL 2/13 |
Kiely West + |
Pre-rift |
23 |
123 |
534 |
225 |
|
FEL 2/13 |
Kilroy+ |
Cret. Slope Apron |
37 |
177 |
734 |
312 |
|
|
|
|
|
|
|
|
|
Total |
4,329 |
|
*million barrels of oil equivalent. The hydrocarbon system is
considered an oil play and mmboe is used to take account of
associated gas. However, due to the significant uncertainties
in the available geological information, there is a possibility of
gas charge.
+ on block
Following the completion of the PSDM programme and release of
the new prospect inventory, Europa opened a virtual data room for
prospective farminees for its three operated South Porcupine licences in July 2018. As mentioned previously, Europa is
negotiating with a major international oil and gas company in
respect of FEL 1/17 and FEL 3/13.
The 2019 CNOOC International well in FEL 3/18 will drill the
Iolar prospect, which the Company understands is a pre-rift play.
Europa has five pre-rift prospects in FEL 2/13 and FEL 1/17 with
combined GMUPR of just over 1 billion boe. If Iolar is successful
there may be positive technical and commercial read across
resulting in a de-risking of Europa’s prospects.
South
Porcupine Basin: LO 16/19
LO 16/19 is located on the west side of the South Porcupine basin. A farm-out
agreement for LO 16/19 was secured with Cairn Energy in
April 2017, as a result of which
Cairn was assigned operatorship of and acquired a 70% interest in
the licence in exchange for funding a work programme worth up to
US$6 million. This included the
acquisition of 3D seismic in 2017. The final processed
dataset was delivered in Q4 2018 and a prospect inventory based on
this is expected to be published in 2019.
Padraig Basin: LO 16/22
LO16/22 is located in the Padraig Basin on the eastern margin of
the Rockall Trough. Padraig is a remnant Jurassic basin. Based on
Europa’s restoration of the conjugate margin prior to the spreading
of the Atlantic seafloor, the most relevant analogue is the
conjugate margin play offshore Newfoundland in the Flemish Pass basin and
which hosts the 300 million barrel Bay du Nord oil discovery.
Structures of significant size have been mapped on 2D seismic
acquired in 1998, along with multiple leads in Triassic gas,
pre-rift and syn-rift hydrocarbon plays. Gross mean un-risked
indicative resources are estimated to be approximately 500 million
boe for the syn-rift oil play and potentially 5tcf of GIIP in the
Triassic gas play. Work is underway to mature the leads, which lie
in water depths ranging from 800m to
2,000m, to prospect status.
UK - Onshore Production
East Midlands: West Firsby; Crosby
Warren; Whisby-4
Europa produces from three oilfields in the East Midlands: West
Firsby (100% working interest); Crosby Warren (100%); and the
Whisby-4 well (65%). During the six months to 31 January 2019, an aggregate 90 boepd were
recovered from the three fields (H1 2018: 97 boepd) with all the
oil transported by road to the Immingham refinery.
During the period, initiatives were undertaken to manage the
decline at the West Firsby oil field including a workover of the
WF6 well utilising a drain hole jetting technique for the
first-time onshore UK. The workover involved jetting sixteen
90m length drain holes. Having
previously produced zero oil, WF6 is currently producing 6 bopd net
to Europa.
UK - Development
East Midlands: PEDL180 (Wressle);
PEDL182 (Broughton North)
The Wressle conventional oil field on PEDL180 was discovered by
the Wressle-1 well in 2014. During production testing in
2015, Wressle-1 flowed oil and gas at a combined flowrate of 710
boepd from three separate reservoirs: the Ashover Grit, the
Wingfield Flags and the Penistone Flags. In September 2016, a Competent Person’s Report
provided independent estimates of Reserves and Contingent and
Prospective oil and gas resources for the Wressle discovery of 2.15
million stock tank barrels classified as discovered (2P+2C).
Reservoir engineering analyses indicate an initial production flow
rate of 500 bopd gross from the Ashover Grit interval at Wressle.
At this rate, Europa's existing production would be over 200 bopd
and would generate significant cash flows for the
Company.
Following the Planning Inspectorate’s decision to reject an
appeal by the partnership against North Lincolnshire Council
Planning Committee’s decision to refuse planning permission for the
Wressle oil development in January
2018, the operator Egdon Resources submitted a new planning
application for the development of Wressle in July 2018. Despite being recommended for approval
by North Lincolnshire Council’s planning officers, the application
was rejected by the Council’s Planning Committee in November 2018.
In January 2019, an application to
extend the existing planning consent for the Wressle site by a
year, was approved by the Planning Inspector on appeal after the
original application for an extension was refused by North
Lincolnshire Council’s Planning Committee in August 2018.
This was despite having been recommended for approval by the
Council’s Planning Officer. The extension to the existing
planning consent to 24 January 2020
is expected to allow sufficient time for the Planning Inspector to
determine an appeal against the Council’s rejection of the Wressle
development application. Following this, post period end, the
operator submitted the relevant appeal documentation. A draft
bespoke timetable for the appeal process, which will involve a
planning inquiry, was issued on 13 February by the Planning
Inspectorate.
Europa has a 30% working interest in licence PEDL180 in the East
Midlands which holds the Wressle oil discovery, alongside Egdon
(operator, 30%), Union Jack Oil (27.5%), and Humber Oil & Gas
Limited (12.5%).
The Broughton North exploration prospect on PEDL182 lies
adjacent and north of PEDL180. In 1984, a well drilled by BP
discovered oil at Broughton. In the CPR, Broughton North was
assigned gross mean un-risked prospective resources of 0.6 million
boe and a geological chance of success of 50%.
UK – Exploration
Weald Basin: PEDL143 (Holmwood)
In September 2018, the
Secretary of State for the Environment, Food and Rural Affairs,
refused an application to extend the site lease. Acting on behalf
of the partnership, Europa withdrew its application to extend
planning permission to drill the Holmwood exploration well from the
Bury Hill Wood site, which has since been re-instated. The
remaining prospectivity of PEDL143 is now being evaluated which, in
addition to the established Portland sandstone reservoirs, includes the
Kimmeridge Limestone, an emerging play in the Weald Basin. On
14 March Europa announced that it was in the process of
transferring operatorship to UK Oil & Gas PLC. Regulatory
consent has been obtained.
East Midlands: PEDL299
(Hardstoft)
PEDL299 contains the Hardstoft oil field which was discovered in
1919 by the UK’s first ever exploration well. Hardstoft
produced 26,000 barrels of oil from Carboniferous limestone
reservoirs in the 1920s. Gross 2C contingent resources of 3.1
million boe and gross 3C contingent resources of 18.5 million boe
in the Hardstoft structure were identified in a CPR issued by joint
venture partner Upland Resources. The application of modern
production testing and drilling methodologies could lead to
commercial oil flowrates being achieved. Europa’s interest in
PEDL299, which is restricted to the conventional prospectivity
including Hardstoft, is 25%, alongside Upland 25% and INEOS, the
operator, 50%.
Cleveland Basin: PEDL343 (Cloughton)
PEDL343 contains the Cloughton gas discovery, which was
successfully drilled by Bow Valley in 1986 and flowed a small
amount of gas to surface on production test from conventional
Carboniferous sandstone reservoirs. Europa regards Cloughton as a
gas appraisal opportunity with the critical challenge being to
obtain commercial flowrates from future production testing
operations. Europa holds a 35% interest in PEDL343 alongside
Arenite 15%, Third Energy 20% (operator), Egdon Resources 17.5% and
Petrichor Energy 12.5%.
East Midlands: PEDL181
PEDL181 is exposed to the hydrocarbon potential of the Humber
basin. The licence has technical synergy with the adjacent PEDL334
which was awarded to an Egdon Resources-led group in the 14th Round
for the purpose of conventional and unconventional exploration.
New Ventures
As announced in January 2019,
Europa is in the final phase of discussions with The National
Office of Hydrocarbons and Mines (‘ONHYM’) regarding securing a
petroleum agreement in Morocco.
The Company continues to evaluate new ventures within its
established areas of interest which include greenfield exploration
and brownfield re-development projects in North Africa, Western Europe, and Central Europe.
Financials
Average daily H1 2019 production was 90 boepd compared to 97
boepd in H1 2018 following:
- Natural decline at three production sites
- Incremental production added from the West Firsby 6 workover
starting in January 2019 which is
currently producing 6 bopd net to Europa
There was a 14% increase in average realised oil price to
US$67.7 per barrel (H1 2018:
US$59.2). Foreign exchange movements
positively impacted revenues by 5% as US Dollar sales converted to
Sterling at US$1.29 (H1 2018:
US$1.35)
Conclusion and Outlook
Our objective is to drill-up our portfolio of high impact
prospects in Atlantic Ireland at the earliest opportunity.
Several workstreams are being advanced concurrently to ensure we
are in a position to achieve this, including securing partners for
our South Porcupine and Slyne
Basin licences, and undertaking site surveys in summer 2019 for our
drill-ready prospects Inishkea in the Slyne Basin, and Kiely East and Edgeworth in the South Porcupine
Basin. Much progress has been made. Notably with an
offer received from the NW European division of a major
international oil and gas company to farm-in to three
licences. Subject to final negotiation and an investment
decision awaited from the major’s head office, Europa will be
funded for up to three high impact wells including one targeting
1.5 tcf of gas at Inishkea next to the Corrib field.
Furthermore, this is not all high-risk wildcat exploration.
We rank Inishkea as having a one in three chance of success. We
also note that other companies are active in the South Porcupine: CNOOC International intend to
drill the Iolar prospect in summer 2019 and ENI have applied for
consent to acquire a site survey on Dunquin South in summer 2019.
These are exciting times for Atlantic Ireland.
Outside Ireland, we will
continue to support the operator’s efforts to gain approval to
develop the Wressle oil field. If successful, Wressle will
more than double our existing production to over 200 bopd which, at
current oil prices, would generate a valuable revenue stream for
the Company. Elsewhere we are close to finalising a petroleum
agreement in Morocco in line with
our strategy to diversify our portfolio, and where we can deploy
the same technical skillset and expertise..
Hugh Mackay
CEO
11 April 2019
Qualified Person Review
This release has been reviewed by Hugh
Mackay, Chief Executive of Europa, who is a petroleum
geologist with over 30 years' experience in petroleum exploration
and a member of the Petroleum Exploration Society of Great Britain, American Association of
Petroleum Geologists and Fellow of the Geological Society. Mr
Mackay has consented to the inclusion of the technical information
in this release in the form and context in which it appears.
Licence Interests Table
Country |
Area |
Licence |
Field/
Prospect |
Operator |
Equity |
Status |
|
|
|
|
|
|
|
UK |
East Midlands |
DL003 |
West Firsby |
Europa |
100% |
Production |
DL001 |
Crosby Warren |
Europa |
100% |
Production |
PL199/215 |
Whisby-4 |
BPEL |
65% |
Production |
PEDL180 |
Wressle |
Egdon |
30% |
Development |
PEDL181 |
|
Europa |
50% |
Exploration |
PEDL182 |
North Broughton |
Egdon |
30% |
Exploration |
PEDL299 |
Hardstoft |
INEOS |
25% |
Exploration |
PEDL343 |
Cloughton |
Third Energy |
35% |
Exploration |
Weald |
PEDL143 |
Holmwood |
UKOG |
20% |
Exploration |
|
|
|
|
|
|
|
Ireland |
South Porcupine |
FEL 2/13 |
Doyle: Aw/Ac/Ae/B/C,
Kilroy, Keane, Kiely East, Kiely West , Lead F |
Europa |
100% |
Exploration |
FEL 3/13 |
Beckett,
Wilde
Shaw |
Europa |
100% |
Exploration |
FEL 1/17 |
Ervine, Edgeworth,
Egerton,PR3 |
Europa |
100% |
Exploration |
|
|
LO 16/19 |
2 leads |
Cairn |
30% |
Exploration |
|
Slyne |
LO 16/20 |
Corrib North
discovery, Inishkea |
Europa |
100% |
Exploration |
|
Padraig |
LO 16/22 |
6 leads |
Europa |
100% |
Exploration |
|
|
|
|
|
|
|
Financials
Unaudited consolidated statement of
comprehensive income
|
6 months to
31 January 2019 |
6 months to
31 January
2018 |
Year to
31 July 2018
(audited) |
|
£000 |
£000 |
£000 |
|
|
|
|
Revenue |
859 |
778 |
1,634 |
Cost of sales |
(855) |
(670) |
(1,365) |
Impairment of producing fields |
- |
- |
(142) |
Exploration write-off |
- |
(46) |
(1,289) |
|
------ |
------ |
------ |
Gross profit |
4 |
62 |
(1,162) |
|
|
|
|
Administrative expenses |
(375) |
(429) |
(967) |
Finance income |
27 |
6 |
10 |
Finance expense |
(93) |
(136) |
(171) |
|
------ |
------ |
------ |
Loss before
taxation |
(437) |
(497) |
(2,290) |
Taxation
credit/(charge) |
- |
168 |
(341) |
|
------ |
------ |
------ |
Total comprehensive
loss for the period attributed to the equity shareholders of the
parent |
(437) |
(329) |
(2,631) |
|
====== |
====== |
====== |
|
|
|
|
|
Pence
per share |
Pence
per
share |
Pence
per
share |
Earnings per share (EPS) attributable
to the equity shareholders of the parent
Attributable to the equity shareholders of the |
|
|
|
Basic and diluted EPS
(note 4) |
(0.13)p |
(0.11)p |
(0.87)p |
Unaudited consolidated statement of
financial position
|
31 January
2019 |
31 January
2018 |
31 July
2018
(audited) |
|
£000 |
£000 |
£000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Intangible assets |
6,759 |
6,534 |
5,959 |
Property, plant and equipment |
621 |
813 |
668 |
Deferred tax asset |
- |
508 |
- |
|
------ |
------ |
------ |
Total non-current assets |
7,380 |
7,855 |
6,627 |
|
------ |
------ |
------ |
Current assets |
|
|
|
Inventories |
26 |
19 |
20 |
Trade and other receivables |
300 |
512 |
471 |
Cash and cash equivalents |
4,435 |
2,306 |
1,771 |
|
------ |
------ |
------ |
|
4,761 |
2,837 |
2,262 |
|
------ |
------ |
------ |
|
|
|
|
Total assets |
12,141 |
10,692 |
8,889 |
|
====== |
====== |
====== |
|
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
(918) |
(883) |
(1,299) |
|
------ |
------ |
------ |
Total current liabilities |
(918) |
(883) |
(1,299) |
|
------ |
------ |
------ |
Non-current liabilities |
|
|
|
Long-term provisions |
(2,826) |
(2,652) |
(2,735) |
|
------ |
------ |
------ |
Total non-current
liabilities |
(2,826) |
(2,652) |
(2,735) |
|
------ |
------ |
------ |
Total liabilities |
(3,744) |
(3,535) |
(4,034) |
|
------ |
------ |
------ |
Net assets |
8,397 |
7,157 |
4,855 |
|
====== |
====== |
====== |
Capital and reserves attributable
to equity holders of the parent |
|
|
|
Share capital (note 3) |
4,447 |
3,014 |
3,014 |
Share premium |
21,009 |
18,481 |
18,481 |
Merger reserve |
2,868 |
2,868 |
2,868 |
Retained deficit |
(19,927) |
(17,206) |
(19,508) |
|
------ |
------ |
------ |
Total equity |
8,397 |
7,157 |
4,855 |
|
====== |
====== |
====== |
Unaudited consolidated statement of
changes in equity
|
Share
capital |
Share
premium |
Merger
reserve |
Retained
deficit |
Total
equity |
|
£000 |
£000 |
£000 |
£000 |
£000 |
Unaudited |
|
|
|
|
|
Balance at 1 August 2017 |
3,014 |
18,481 |
2,868 |
(16,888) |
7,475 |
Total comprehensive loss for the
period |
- |
- |
- |
(329) |
(329) |
Share based payments |
- |
- |
- |
11 |
11 |
|
------ |
------ |
------ |
------ |
------ |
Balance at 31 January
2018 |
3,014 |
18,481 |
2,868 |
(17,206) |
7,157 |
|
====== |
====== |
====== |
====== |
====== |
|
|
|
|
|
|
Audited |
|
|
|
|
|
Balance at 1 August 2017 |
3,014 |
18,481 |
2,868 |
(16,888) |
7,475 |
Loss for the year attributable to
the equity shareholders of the parent |
- |
- |
- |
(2,631) |
(2,631) |
Share based payments |
- |
- |
- |
11 |
11 |
|
------ |
------ |
------ |
------ |
------ |
Balance at 31 July
2018 |
3,014 |
18,481 |
2,868 |
(19,508) |
4,855 |
|
====== |
====== |
====== |
====== |
====== |
Unaudited |
|
|
|
|
|
Balance at 1 August 2018 |
3,014 |
18,481 |
2,868 |
(19,508) |
4,855 |
Total comprehensive loss for the
period |
- |
- |
- |
(437) |
(437) |
Issue of share capital |
1,433 |
2,546 |
- |
- |
3,979 |
Issue of share options |
- |
(18) |
- |
18 |
- |
Share based payments |
- |
- |
- |
- |
- |
|
------ |
------ |
------ |
------ |
------ |
Balance at 31 January
2019 |
4,447 |
21,009 |
2,868 |
(19,927) |
8,397 |
|
====== |
====== |
====== |
====== |
====== |
Unaudited consolidated statement of
cash flows
|
6
months to
31 January 2019 |
6 months
to
31 January
2018 |
Year
to
31 July 2018
(audited) |
|
£000 |
£000 |
£000 |
Cash flows (used in)/from
operating activities |
|
|
|
Loss after taxation |
(437) |
(329) |
(2,631) |
Adjustments for: |
|
|
|
Share based payments |
- |
11 |
11 |
Depreciation |
47 |
69 |
72 |
Impairment of producing field |
- |
- |
142 |
Exploration write-off |
- |
46 |
1,289 |
Finance income |
(27) |
(6) |
(10) |
Finance expense |
93 |
136 |
171 |
Taxation charge/(credit) |
- |
(168) |
341 |
Decrease in trade and other
receivables |
22 |
101 |
69 |
Increase in inventories |
(6) |
(5) |
(6) |
(Decrease)/increase in trade and
other payables |
(35) |
161 |
73 |
|
------ |
------ |
------ |
Net cash (used in)/from operating
activities |
(343) |
16 |
(479) |
|
====== |
====== |
====== |
|
|
|
|
Cash flows used in
investing activities |
|
|
|
Purchase of
intangibles |
(1,002) |
(1,081) |
(1,336) |
Buy back of part
interest in licence |
- |
(160) |
- |
Interest received |
5 |
6 |
10 |
|
------ |
------ |
------ |
Net cash used in investing
activities |
(997) |
(1,235) |
(1,326) |
|
====== |
====== |
====== |
Cash flows
from/(used in) financing activities |
|
|
|
Proceeds from the issue of share
capital |
3,961 |
- |
- |
Increase/(decrease) in payables
relating to share capital issue costs |
14 |
(16) |
(16) |
Option based equity movement on
share issue |
18 |
- |
- |
Finance costs |
(2) |
(2) |
(3) |
|
------ |
------ |
------ |
Net cash from/(used
in) financing activities |
3,991 |
(18) |
(19) |
|
====== |
====== |
====== |
Net increase/(decrease) in cash
and cash equivalents |
2,651 |
(1,237) |
(1,824) |
|
|
|
|
Exchange gain/ (loss) on cash and
cash equivalents |
13 |
(48) |
4 |
Cash and cash equivalents at
beginning of period |
1,771 |
3,591 |
3,591 |
|
------ |
------ |
------ |
Cash and cash equivalents at end
of period |
4,435 |
2,306 |
1,771 |
|
====== |
====== |
====== |
Notes to the consolidated interim
statement
1 Nature of
operations and general information
Europa Oil & Gas (Holdings) plc (“Europa Oil & Gas”) and
subsidiaries' (“the Group”) principal activities consist of
investment in oil and gas exploration, development and
production.
Europa Oil & Gas is the Group's ultimate parent Company. It
is incorporated and domiciled in England and Wales. The address of Europa Oil & Gas's
registered office head office is 6 Porter Street, London W1U 6DD. Europa Oil & Gas's shares
are listed on the London Stock Exchange AIM market.
The Group's consolidated interim financial information is
presented in Pounds Sterling (£), which is also the functional
currency of the parent Company.
The consolidated interim financial information has been approved
for issue by the Board of Directors on 11
April 2019.
The consolidated interim financial information for the period
1 August 2018 to 31 January 2019 is unaudited. In the opinion of
the Directors the condensed interim financial information for the
period presents fairly the financial position, and results from
operations and cash flows for the period in conformity with the
generally accepted accounting principles consistently applied. The
condensed interim financial information incorporates unaudited
comparative figures for the interim period 1
August 2017 to 31 January 2018
and the audited financial year to 31 July
2018.
The financial information contained in this interim report does
not constitute statutory accounts as defined by section 435 of the
Companies Act 2006. The report should be read in conjunction with
the consolidated financial statements of the Group for the year
ended 31 July 2018.
The comparatives for the full year ended 31 July 2018 are not the Company’s full statutory
accounts for that year. A copy of the statutory accounts for that
year has been delivered to the Registrar of Companies. The
auditors’ report on those accounts was unqualified and did not
contain a statement under section 498 (2) – (3) of the Companies
Act 2006.
Given the current cash balance and cash inflow from the Group’s
producing assets, the Directors have concluded, at the time of
approving the consolidated interim financial information, that
there is a reasonable expectation, based on the Group’s cash flow
forecasts, that the Group can continue in operational existence for
the foreseeable future, which is deemed to be at least 12 months
from the date of signing the consolidated financial information.
Accordingly, they continue to adopt the going concern basis in
preparing the consolidated interim financial information.
2 Summary of
significant accounting policies
The condensed interim financial information has been prepared
using policies based on International Financial Reporting Standards
(IFRS and IFRIC interpretations) issued by the International
Accounting Standards Board (“IASB”) as adopted for use in the EU.
The condensed interim financial information has been prepared using
the accounting policies which will be applied in the Group’s
statutory financial information for the year ended 31 July 2019.
This results in the adoption of various standards and
interpretations, none of which have had a material impact on the
interim report or are expected to have a material impact on the
financial statements for the full year.
3 Share
capital
|
6 months to 31
January 2019 |
6 months to
31 January 2018 |
Year to
31 July 2018
(audited) |
Allotted, called up and fully
paid ordinary shares of 1p |
Shares |
Shares |
Shares |
Start of period |
301,388,379 |
301,388,379 |
301,388,379 |
Issued in the period |
143,303,220 |
- |
- |
|
---------------- |
-------------- |
-------------- |
End of period |
444,691,599 |
301,388,379 |
301,388,379 |
|
========== |
========= |
========= |
|
|
|
|
|
£000 |
£000 |
£000 |
Start of period |
3,014 |
3,014 |
3,014 |
Issued in the period |
1,433 |
- |
- |
|
------ |
------ |
------ |
End of period |
4,447 |
3,014 |
3,014 |
|
====== |
====== |
======= |
|
|
|
|
Ordinary shares
issued
On 10 December 2018 at 6p issue price |
Number
of shares |
Raised
net of costs
£000 |
Nominal value
£000 |
Placing |
133,333,338 |
3,684 |
1,333 |
Open offer |
9,969,882 |
277 |
100 |
|
------ |
------ |
------ |
|
143,303,220 |
3,961 |
1,433 |
|
====== |
====== |
====== |
|
|
|
|
4 Earnings
per share (EPS)
Basic EPS has been calculated on the loss after taxation divided
by the weighted average number of shares in issue during the
period. Diluted EPS uses an average number of shares adjusted to
allow for the issue of shares, on the assumed conversion of all
in-the-money options.
The Company’s average share price for the period was 3.51p which
was below the exercise price of all 25,637,898 outstanding share
options (H1 2018: 5.74p which was below the exercise price of all
25,164,440 outstanding share options).
The calculation of the basic and diluted earnings per share is
based on the following:
|
6
months to
31 January 2019 |
6 months
to
31 January
2018 |
Year
to
31 July 2018
(audited) |
|
£000 |
£000 |
£000 |
Losses |
|
|
|
Loss for the period attributable to
the equity shareholders of the parent |
(437) |
(329) |
(2,631) |
|
====== |
====== |
====== |
Number of shares |
|
|
|
Weighted average number of ordinary
shares for the purposes of basic and diluted EPS |
342,665,937 |
301,388,379 |
301,388,379 |
|
====== |
====== |
====== |
5
Taxation
Consistent with the year-end treatment, current and deferred tax
assets and liabilities have been calculated at tax rates which were
expected to apply to their respective period of realisation at the
period end.
6 Post
reporting date
- Wressle planning appeal submitted to Planning Inspectorate on
5 February 2019 and draft bespoke
programme issued by the Inspectorate on 13 February
- Gross un-risked prospective resources at the Inishkea gas
prospect in LO 16/20 confirmed as 1.5 tcf with one in three chance
of success (RNS 26 February
2019)
- Transferred operatorship of PEDL143 to UK Oil & Gas PLC as
announced on14 March 2019