Annual Financial Report
The directors of Europa Oil & Gas (Holdings) plc are pleased to announce the
financial results of the company for the 12 months to 31st July 2011. The full
Annual Report and Accounts are available today on the Company website
www.europaoil.com and will be mailed to shareholders early in November.
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 July 2011 or 2010, but is derived
from those accounts. The auditors have reported on those accounts; their report
was unqualified however the auditors drew attention, by way of emphasis to Note
1 below regarding the Group's ability to fund its licence commitments.
It is further announced that Paul Barrett has resigned from the board with effect
from 21 October 2011.
Operational highlights
* Drilled West Firsby-9 and Barchiz-1 wells
* Assumed operatorship of Brates concession
* Remapped Berenx structure using controlled beam migration processed 3D
seismic
* Gained interest in PEDL182 containing the Broughton prospect through deal
with Egdon & Celtique
* Participated in seismic acquisition in 3 Romanian concessions
Financial performance
* Revenue of £3.8m (2010: £3.1m)
* Pre-tax profit from continuing operations £0.3m (2010: loss of £1.7m)
* Net cash £1.9m (2010: debt of £0.5m)
Post reporting date events
* HGD Mackay was appointed as a director on 6 September 2011, and as
CEO on 10 October 2011
* Horodnic-1 well spudded on 11 October 2011
* Award of two licensing options over acreage in the 2011 Irish Atlantic
Margin Round 17 October 2011
* PA Barrett resigned as a director effective 21 October 2011
Chairman's statement
Dear Shareholders,
The Company has been active in all of its core areas during the year. Activities
concentrated around development drilling in the UK, exploration drilling in
Romania and planning seismic work in France designed to drive a high impact
future drilling campaign. Compared with the prior period, financial performance
improved in terms of revenue, profitability and cash. The appointment of
finnCap as broker and nomad at the start of the year assisted the Directors in
raising a total of £5.9m of equity. The last of these fundraisings took place
in June 2011, during a period of difficult market conditions. The availability
of less cash than anticipated led to a decision to put the SEDA and SEDA backed
loan in place to give the directors more flexibility going forward.
In the UK the drilling of WF9 was completed in February 2011 and we have spent
considerable time and effort in determining the optimum production scheme for
the well. Despite an excellent result in terms of well placement, reservoir
quality and thickness, to date the well has underperformed in terms of
production and has now settled at a level of 30 bopd. Remedial well work also
took place at the same time, rehabilitating WF7 and completing WF3 as a water
injector, providing the necessary water disposal capability for future
production operations.
At Crosby Warren we had included a repeat frac of CW1 in our work plans. However,
a significant increase in the projected cost of the work as well as adverse tax
changes have led the board to ask for a review of the commerciality of the
project and a decision will be taken following that review on whether to proceed.
The local authority planning committee decision to refuse permission to drill an
exploration well at Holmwood was in contrast to the planning officers' support
for the project. We have decided, along with our partners, to appeal the
decision and are confident that our arguments will be looked at favourably by
the appointed inspector.
The exploration well on the Barchiz oil prospect in Romania was spudded in
October 2010. For technical reasons it failed to reach its original target
although encouragingly, oil was present in a shallow reservoir. The operator MND
has since elected to withdraw from the licence. We currently have a 100% working
interest and are discussing with prospective partners the programme of deepening
the well to reach the original target.
In the Romanian concession at Brodina, the Voitinel discovery is being appraised
by the drilling of a well, Horodnic-1, which spudded on 11 October 2011. This is
an important well and a good test will confirm the commercial viability of the
discovery.
During the period, we participated in the 2011 Irish Atlantic Margin Licensing Round
and on 17 October 2011 were awarded two Licensing Options covering approximately
2,000km2 of the Porcupine Basin. Previous drilling in the basin led to the discovery
of Connemara, Spanish Point and Burren oil and gas fields, thus proving a viable
petroleum system. The focus is now on the potential for large stratigraphic traps
similar to those that have been highly successful elsewhere along the Atlantic Margins.
Consequently, we are excited by this award and are looking forward to developing
drillable prospects in these areas.
In September 2011 we were advised that Romanian VAT had been assessed on a previous
transaction. The cash involved is £0.6 million consisting of principal and interest.
The judgement was contradictory to the strong expert opinion that we had received
from KPMG and we will be reviewing the further options open to us.
In France we are in the process of securing licence extensions with the regulatory
authority in order to execute our ambitious plan to explore in two areas over the
next 18 months. The directors are considering funding options for the various
exploration activities in France and Romania.
More detail about the exploration activities of the company can be found in the
Operational review.
In April 2011 Paul Barrett notified the Company of his resignation. He is a
co-founder of Europa and has been instrumental in assembling the assets that we
have today. On behalf of the board I would like to thank him for his efforts and
to wish him well in his future ventures.
On 10 October 2011, Hugh Mackay was appointed as Chief Executive Officer. He comes
to Europa with an impressive background in oil and minerals and I believe he will
provide the impetus to create value through the development of our existing assets
and making additions to the Europa portfolio.
It is worth mentioning here the recent changes to the oil and gas landscape,
notably in the US, but now also in Europe. Europa's portfolio has been built up
over many years on the basis of conventional oil and gas potential, though it is
clear that areas prone to conventional hydrocarbons generally have potential for
unconventionals too. Recent activity in the UK, where Cuadrilla have assessed the
potential for up to 200 tcf of gas in their Namurian shale acreage in Northern
England, has highlighted the huge potential for this resource. Europa's Humber
Basin acreage, situated in a similar Namurian rift basin to Cuadrilla's acreage,
is a prime example of where unconventional potential could be a significant adjunct
to conventional hydrocarbons. Consequently, Europa will be monitoring the progress
of shale gas developments very closely.
Europa's solid portfolio has much to offer - continued production, undeveloped
discoveries, quality exploration prospects and the prospect of unconventional
hydrocarbons.
Operational review
Europa's business comprises three core strands: production, appraisal and
exploration and these activities take place in three European jurisdictions: UK,
France and Romania and one in the North African territory of Western Sahara. In
October 2011, Europa was additionally awarded acreage in a fourth EU jurisdiction
in the Irish Atlantic Margin Licensing Round.
The Company continues to evaluate new venture opportunities in the European and
North African region to strengthen its asset base. The current licence portfolio
is summarised in the table:
Country Area Licence Field/prospect Operator Equity Status
UK East DL003 West Firsby Europa 100% Prodn
Midlands DL001 Crosby Warren Europa 100% Prodn
PL199/215 Whisby-4 BPEL 65% Prodn
PEDL150 Hykeham/W. Whisby Europa 75% Expln
PEDL180 Wressle Egdon 33% Expln
PEDL181 Caister Europa 50% Expln
PEDL182 Broughton Egdon 33% Expln
Weald PEDL143 Holmwood Europa 40% Expln
North sea Holderness Offshore UCG Europa 90% Expln
Humber south Offshore UCG Europa 90% Expln
Ireland Porcupine LO-11-7 Western margin Europa 100% Expln
LO-11-8 Eastern margin Europa 100% Expln
France Aquitaine Béarn des Gaves Berenx Europa 100% Apprl
Tarbes V.d'Adour Osmets/Jacque Europa 100% Apprl
Romania Carpathians EIII-1/Brodina Voitinel/Horodnic Aurelian 28.75% Appl
EIII-3/Cuejdiu Aurelian 17.50% Expln
EIII-4/Bacau Raffles 19% Expln
EPI-3/Brates Barchiz deepening Europa 100% Expln
Western Tindouf Bir Lehlou Europa 100% Expln
Sahara Aaiun Hagounia Europa 100% Expln
During the financial year to 31 July 2011, Europa drilled an oil production well
at West Firsby (WF9) and participated in an exploration well at Barchiz, in Romania.
The Company also participated in seismic programmes in Romania to pave the way for
drilling in late 2011 and into 2012.
The WF9 well was completed in February 2011 and put on production. It has since
contributed to an average daily production increase on the site of 40% from the
first to second half of the reporting period. Production operations continue at
Europa's two other UK sites, combining to generate an average daily production
volume over the year of 167bopd, and a fourth quarter average of 216bopd.
With respect to Europa's strong appraisal project portfolio, work continued on
better understanding the Berenx gas resource, with a 3D seismic survey, processed
by CGG Veritas, greatly adding to the structural understanding of the reservoir.
Further 3D seismic data will be acquired ahead of finalizing the location of an
appraisal well due for 2013.
The exploration arm of the portfolio continues to be active, with the drilling of
the Barchiz exploration well in late 2010. The well did not reach the main target,
due in part to a decision to test oil shows in shallower zones. A programme to
deepen the well an anticipated 600-1,000m to test the main objective is planned.
The Company's strong presence in Romania is underlined by the ongoing exploration
seismic programmes, coupled with the recent spudding of the second well on the
Voitinel gas discovery - Horodnic-1. This well is designed to prove a minimum
commercial volume for the development and, if successful, will be followed by a
further well in 2012.
United Kingdom
The core of Europa's portfolio in the UK is in the East Midlands, a basin with a
long history of successful oil exploration and production with potential for
additional reserves and vast unconventional resources.
Activity in 2011 focused on drilling a further production well on the West Firsby
Field and this was completed as a reservoir zone 1 and zone 2 oil producer in
February. A facilities upgrade at the site is now complete and work continues to
optimise production. Production continued at Crosby Warren and Whisby fields,
contributing to a total annual production of 61,000 bbls across the three sites.
In May 2011, Surrey County Council Planning Committee narrowly voted against
the approval of permission to drill an exploration well on licence PEDL143. This
well, to test the Holmwood Prospect, was supported in the planning officers'
report and the Company intends to pursue an appeal in the coming months in order
to drill the well in 2012.
Following a cross-assignment of interests between Europa-operated PEDL180 and
Egdon-operated PEDL182, Europa is now a 33% interest holder in a swathe of
acreage running southeast from the Crosby Warren Oilfield, containing the
Broughton oil discovery and the adjacent Wressle Prospect. In order to plan
2012 drilling on these projects, a 3D seismic survey is being acquired in
late 2011.
Europa holds two inshore licences for underground coal gasification, a large
resource at the early research phase in the UK. In addition, Europa has been
monitoring the developments in Lancashire with Cuadrilla's shale gas project,
which have implications for the large licence area held in northeast Lincolnshire.
Similar geology in Europa's Humber Basin acreage to that of the Bowland Trough
points to future potential for unconventional if the Cuadrilla Project goes
forward.
Exploration - NE Lincolnshire (PEDL 180 - 33%; PEDL 181 - 50%; PEDL 182 - 33%),
Lincoln area (PEDL 150 - 75%), Dorking area (PEDL 143 - 40%)
In June 2011, Europa reached agreement with Egdon Resources Limited and Celtique
Energie Petroleum Limited to equalise interests across the contiguous licences
PEDL 180 and PEDL 182. Europa reduced working interest in PEDL 180 from 50% to 33%
and in return gained a 33% interest in PEDL 182 - the licence containing the
Broughton oil discovery. A joint 3D seismic survey over 45 km2 of the combined
blocks is being acquired in November 2011.
Within the PEDL150 concession, the Hykeham well was drilled in 2010. Despite
encountering oil pay, the well failed to flow oil, thought to be principally as
a result of formation damage incurred during drilling. Though the likely
forward plan is to plug and abandon the well, the investment has not been
written off as prospectivity within the rest of the block, which includes the
West Whisby feature, is believed to be good based on other information in the
Group's possession. Lessons learnt at Hykeham will be applied in the drilling
of other prospects in the same reservoir interval.
The PEDL 222 licence (50%), situated to the north of the Whisby Field, did not
contain any prospects large enough to warrant drilling. The modest investment
was written off in 2010 and in June 2011 the licence was formally relinquished.
Production - West Firsby and Crosby Warren (100%), Whisby-4 (65%)
All three production sites were affected by the severe UK weather in late
December 2010. With temperatures reaching 17 degrees below freezing, and
several feet of snow, production was shut down for between one and two weeks.
At West Firsby the WF9 well spudded on 18 November 2010 and reached TD of 7,633
ft on 17 February 2011. The well was put on production on 1 March 2011 and
trials were conducted on two producing zones using both beam pump and jet pump
systems. After initial higher rates, production has settled at around 30 bopd.
Additional well intervention work took place at West Firsby, with the
completion of WF3 as a water injector and the replacement of the WF7 bottom
hole assembly.
Crosby Warren continues to produce from two wells. A re-frac of the existing
CW1 producer is currently under review as the original cost assumptions have
changed.
At Whisby, just to the west of Lincoln, a well drilled by Europa in early 2003
remains on steady production, currently producing around 50 bopd net to Europa
on beam pump.
Unconventional Resources - Underground Coal Gasification and Shale Gas
Europa has a 90% interest in two licences awarded by the UK Coal Authority to
investigate underground coal gasification of virgin coals along the eastern
coast of England. These licences are situated in areas with deep coal measures
with little structural complexity and a proximity to existing gas and utility
infrastructure.
Underground coal gasification (UCG) is a developing technology that recovers up
to 80% of the calorific value of in situ coal by a process of controlled
combustion. UCG, when combined with CO2 storage in the depleted coal seams,
creates a source of energy which rivals nuclear for low emissions and has lower
unit costs than conventional gas-fired power stations.
With only 30% utilisation rate for the coals, the estimated potential UCG
energy resource in these two licence areas is 36x10^15 Joules or 6 billion
barrels of oil equivalent.
In addition, the Company's large holding of over 600km2 of the Humber Basin,
has potential for significant shale gas resources from Carboniferous basinal
shales. Whilst this is being evaluated, activities in shale gas exploration
elsewhere in the UK Carboniferous basins are being monitored with interest.
France
Europa holds two exclusive licences in the Aquitaine Basin, adjacent to the
world-class Lacq-Meillon gas fields. There are two clear plays in
Europa's acreage - large deep HPHT gas similar to the Lacq field in the Béarn
des Gaves permit and oilfield re-development opportunities in the Tarbes Val
d'Adour permit. The large gas play, Berenx, is the focus of attention, recently
reprocessed 3D seismic gives a much clearer image of the target zone and
additional 3D will now be acquired over the western part of the feature prior
to finalizing a well location.
Appraisal - The Berenx Structure (Béarn des Gaves Permit - 100%)
The main focus for Europa is the appraisal of the Berenx gas wells, where a
high pressure high temperature well encountered 500m of gross gas shows and mud
gas kicks in similar reservoir to the nearby 5 tcf Lacq Field. In mid-2010,
Europa took delivery of a reprocessed 3D seismic dataset covering the area
between Berenx and Lacq. The proximity (20km) to the Lacq Field creates a
straightforward export route, allowing the gas to be processed in an existing
facility with spare capacity.
The initial mapping indicates that the Berenx wells were drilled on the western
edge of a sizeable structure which could reservoir in excess of 1.5 tcf of
recoverable gas reserve. However, the quality of the seismic data was still not
optimal and it was decided to utilise the new technique of Controlled Beam
Migration to improve the subsurface image. This was highly successful and paves
the way for further acquisition across the area. The forward programme is for
the acquisition of additional seismic data in the next 6-12 months followed by
securing joint venture partner(s) for the drilling of an appraisal well in
2013.
Field re-development and associated exploration - Tarbes Val d'Adour Licence
(100%)
This licence contains several oil accumulations, previously produced by Elf but
abandoned in 1985 in times of low oil price. Europa commissioned the French
Geological Survey to map the potential field re-development area of Osmets and
Jacque from a reprocessed 2D data set and this work is now complete. It
demonstrates that there is significant upside potential in a stratigraphically
trapped Meillon dolomite oil (proven in Osmets-1) below the proven Early
Cretaceous oil in Osmets-2.
It is hoped that, with a partner, an appraisal/production well can be drilled
on Osmets in 2012.
Romania
Europa holds interests in 4 Romanian exploration licences, with non-operated
working interests varying from 17.5% to 28.75%. Europa has participated in 11
wells over the last 7 years in Romania. Of those, 4 were gas wells, a further 2
sub-commercial gas wells and the remainder unsuccessful, a technical success
rate of just over 50%.
Exploration in the licences has moved into a new and exciting phase, where the
primary target is the oil-prone thrust belt in the western part of the area.
The Barchiz well did not reach the seismic horizon representing the target and
will be deepened. In addition, appraisal drilling of the Voitinel discovery is
now taking place. This well, Horodnic-1, is designed to prove up a minimum
volume for initial development, but there is significant upside potential in
the play which a third well is anticipated to test in 2012.
In 2011, 2D seismic data were acquired in three of the four concessions,
concentrating on understanding the thrustbelt oil play. These data will serve
to drive the 2012 drilling programme.
Appraisal - The Voitinel Discovery (EPI-1 Brodina Licence - 28.75%)
The 2009 Voitinel-1 exploration well encountered gas in two sandstone intervals
at around 1,400m and 1,650m depth. The deeper of these tested dry gas at flow
rates of 3 mmscfpd, but appeared to be close to a reservoir boundary, limiting
the ability to maintain flow for long periods. A fracture stimulation was
undertaken which increased the volume of gas accessed by the well. The
operator, Aurelian, has assessed that approximately 6bcf will be producible
from each conventional vertical well in this reservoir.
Appraisal - The Voitinel Discovery (EPI-1 Brodina Licence - 28.75%) (continued)
The Voitinel well was drilled close to the northern edge of the structural
trend. However, the play extends far to the south of the well, having been
proven by recent wells drilled by Romgaz at Paltinu. One well sustained gas
flow rates of 5 mmscfpd for one week, indicating that the reservoir in the
southern part of the play could be better quality than in the discovery well. A
first appraisal well Horodnic-1 is currently drilling.
Exploration - the Carpathian Thrust Belt Oil Play
The exploration strategy in the Romanian portfolio is moving away from the
small but nonetheless successful shallow gas play in the eastern part of the
licences to explore in the thrust belt oil play that is developed in the
western part of all four of Europa's Romanian licences. The US Geological
Survey estimates mean undiscovered potential reserves of over 2.9 billion
barrels equivalent in the play.
Barchiz is situated in the Brates Licence, immediately north of and along trend
from the Geamana oilfield (50 mmbo reserves). The Barchiz-1 well was drilled in
late 2010, but due to a poor cement bond it was not possible to deepen the well
beyond 1,450m and at the same time test the shallow Oligocene oil-bearing
sequence. Following logging the well, it was clear the well had not reached its
primary target, which still lay beneath the 1,450m total depth of the well. It
was decided to test the shallow oil sands encountered in the well. These tests
recovered modest amounts of 20API oil which was close to its pour point in the
shallow reservoir, preventing it from flowing freely. However, it proved the
hydrocarbon system and gives encouragement that there will be hydrocarbons
reservoired in the main target. Consequently, it was decided to deepen the
well.
The withdrawal of MND from the licence provides an opportunity to bring in a
new partner, which is being progressed. The licence term has been extended to
May 2013 and a further highly prospective area in the same licence, underneath
the existing Tazlaul Mare gas condensate field, is anticipated to be matured
for drilling in 2012.
Ireland
LO-11-7 and LO-11-8 (100%) Porcupine Basin
In October 2011, Europa was awarded Licensing Options over two four-block areas
in the Irish Porcupine Basin. These blocks lie on the margins of the basin,
where there is potential for stratigraphic traps in Cretaceous and Early
Tertiary submarine fan systems, similar to similar highly successful plays
elsewhere on the Atlantic Margin.
The Porcupine Basin has a proven hydrocarbon system, with several discoveries
to date in predominantly structural traps. Greater potential exists for
stratigraphic traps and Europa's work programme will be designed to define this
upside prior to a decision to enter into the drilling phase with a Frontier
Exploration Licence after 2 years.
North Africa
Western Sahara (100%) - Tindouf Basin and Aaiun Basin Licences
Europa holds interests in Western Sahara licenced by the Sahrawi Arab
Democratic Republic (SADR) covering almost 80,000km2 of exciting exploration
acreage. The Tindouf licence has great potential for both conventional and
unconventional gas resources, being geologically similar to the prolific
Algerian Palaeozoic basins. The Aaiun Basin is an Atlantic margin basin similar
to that developed along the West African margin.
In 2010, with the license areas remaining in force majeure throughout the year,
the Board decided to write-down the intangible asset to nil value. Though the
investment has been written down, Europa retains its 100% interest in the 2
blocks.
Conclusion
Across the five jurisdictions where Europa operates, there remains a strong
asset inventory waiting to be unlocked: Oil exploration in the UK and Romania
as well as potential for large gas developments in the Aquitaine area of
France and the Romanian Carpathians. Ongoing and near-term drilling will
crystallize some of this value, but there remains a conveyor belt of
exploration work for the coming years, as demonstrated by the recent Irish
awards.
Paul Barrett, Managing Director
Consolidated statement of comprehensive income
2011 2010
£000 £000
Revenue 3,766 3,091
Other cost of sales (2,216) (1,836)
Exploration write-off - (1,008)
Impairment of producing fields (425) (1,012)
Total cost of sales (2,641) (3,856)
-------- --------
Gross profit/(loss) 1,125 (765)
Administrative expenses (646) (709)
Finance income 1 37
Finance expense (189) (262)
-------- --------
Profit /(loss) before taxation 291 (1,699)
Taxation (523) (263)
-------- --------
Loss for the year from continuing (232) (1,962)
operations
Discontinued operations
Loss for the year from (788) -
discontinued operations
Loss for the year attributable to (1,020) (1,962)
the equity shareholders of the
parent
-------- --------
Other comprehensive income
Exchange gains arising on 8 56
translation of foreign operations
-------- --------
Total comprehensive loss for the (1,012) (1,906)
period attributable to the equity
shareholders of the parent
======== ========
Pence Pence
per share per share
Loss per share (LPS) attributable
to the equity shareholders of the parent
Basic and diluted LPS (0.22)p (2.60)p
from continuingoperations
Basic and diluted LPS (0.74)p -
from discontinued operations
Basic and diluted LPS (0.96)p (2.60)p
from continuing and
discontinued operations
Consolidated statement of financial position
2011 2010
£000 £000
Assets
Non-current assets
Intangible assets 11,348 9,751
Property, plant and equipment 6,742 4,504
Deferred tax asset 930 -
-------- --------
Total non-current assets 19,020 14,255
-------- --------
Current assets
Inventories 43 38
Trade and other receivables 795 587
Current tax asset - 335
Cash and cash equivalents 1,876 4
-------- --------
Total current assets 2,714 964
-------- --------
Total assets 21,734 15,219
======== ========
Liabilities
Current liabilities
Trade and other payables (1,757) (1,797)
Current tax liabilities - (2)
Derivative (56) (55)
Short-term borrowings (996) (900)
-------- --------
Total current liabilities (2,809) (2,754)
-------- --------
Non-current liabilities
Long-term borrowings (230) (352)
Deferred tax liabilities (4,686) (3,240)
Long-term provisions (1,570) (1,395)
-------- --------
Total non-current liabilities (6,486) (4,987)
-------- --------
Total liabilities (9,295) (7,741)
-------- --------
Net assets 12,439 7,478
======== ========
Capital and reserves
attributable to equity holders
of the parent
Share capital 1,301 822
Share premium 12,573 7,132
Merger reserve 2,868 2,868
Foreign exchange reserve 416 408
Retained deficit (4,719) (3,752)
-------- --------
Total equity 12,439 7,478
======== ========
These financial statements were approved by the Board of directors and
authorised for issue on 20 October 2011 and signed on its behalf by:
P Greenhalgh, Finance Director
Company registration number 5217946
Consolidated statement of changes in equity
Attributable to the equity holders of the parent
Share Share Merger Foreign Retained Total
capital premium reserve exchange deficit equity
reserve
£000 £000 £000 £000 £000 £000
Balance at 1 August 2009 626 4,692 2,868 352 (1,878) 6,660
Total comprehensive income/
(loss) for the year - - - 56 (1,962) (1,906)
Share based payment - - - - 88 88
Issue of share capital
(net of issue costs) 196 2,440 - - - 2,636
------- ------- ------- ------- ------- -------
Balance at 31 July 2010 822 7,132 2,868 408 (3,752) 7,478
======= ======= ======= ======= ======= =======
Balance at 1 August 2010 822 7,132 2,868 408 (3,752) 7,478
Total comprehensive income
/(loss) for the year - - - 8 (1,020) (1,012)
Share based payment - - - - 53 53
Issue of share capital
(net of issue costs) 479 5,441 - - - 5,920
------- ------- ------- ------- ------- -------
Balance at 31 July 2011 1,301 12,573 2,868 416 (4,719) 12,439
======= ======= ======= ======= ======= =======
Consolidated statement of cash flows
2011 2010
£000 £000
Cash flows from operating
activities
Loss after tax (232) (1,962)
Adjustments for:
Share based payments 53 73
Depreciation 354 498
Exploration write-off - 1,008
Impairment of property, plant & 425 1,012
equipment
Finance income (1) (37)
Finance expense 189 262
Taxation expense 523 263
(Increase)/decrease in trade and (412) (66)
other receivables
(Increase)/decrease in (5) (23)
inventories
Increase / (decrease) in trade (239) 592
and other payables
-------- --------
Cash generated from continuing 655 1,620
operations
Loss after taxation from (788) -
discontinued operations
Adjustments for:
Decrease in trade and other 193 -
receivables
Increase in trade payables 617 -
Non cash increase in intangible (22) -
assets
-------- --------
Cash used in discontinued - -
operations
Income taxes paid - (597)
Income taxes repayment received 330 -
-------- --------
Net cash from operating 985 1,023
activities
======== ========
Cash flows from investing
activities
Purchase of property, plant and (3,213) (222)
equipment
Purchase of intangible assets (1,809) (3,075)
Interest received 1 -
-------- --------
Net cash used in investing (5,021) (3,297)
activities ======== ========
Cash flows from financing
activities
Proceeds from issue of share 5,920 2,653
capital (net of issue costs)
Increase/(decrease) in payables 115 -
related to the issue of share
capital
Proceeds from short-term 1,065 -
borrowings
Repayment of borrowings (612) (469)
Finance costs (80) (101)
-------- --------
Net cash from financing 6,408 2,083
activities ======== ========
Net increase/ (decrease) in cash 2,372 (191)
and cash equivalents
Exchange (loss)/gain on cash and (21) 8
cash equivalents
Cash and cash equivalents at (475) (292)
beginning of year
-------- --------
Cash and cash equivalents at end 1,876 (475)
of year ======== ========
Cash and cash equivalents
comprise:
Cash 1,876 4
Multi-currency facility - (479)
-------- --------
Net cash and cash equivalents 1,876 (475)
======== ========
Note 1
Intangible assets
2011 2010
£000 £000
At 1 August 9,751 7,473
Additions 1,597 3,286
Exploration write-off - (1,008)
------- -------
At 31 July 11,348 9,751
======= =======
Intangible assets comprise the Group’s pre-production expenditure on licence
interests as follows:
2011 2010
£000 £000
Romania 8,433 7,191
France 523 308
UK PEDL143 (Holmwood) 199 186
UK PEDL150 (SW Lincoln) 2,020 1,904
UK PEDL180 (NE Lincs) 68 63
UK PEDL181 105 99
------- -------
Total 11,348 9,751
======= =======
2011 2010
£000 £000
Exploration write-off
Egypt - 738
Western Sahara - 184
UK - PEDL222 - 55
UK - PEDL180/181
pre licence costs - 31
------- -------
Total - 1,008
======= =======
In 2010 as the license areas in Western Sahara remained in force majeure
throughout the year, the Board decided to write-down the intangible asset to
nil value.
As there were no identified prospects in the PEDL222 concession, the Board
also decided to write down the investment to nil value. In 2011 the licence was
relinquished.
Within the PEDL150 concession, the Hykeham well was drilled in 2010. Though the
likely forward plan is to plug and abandon the well, the investment has not been
written off as prospectivity within the rest of the concession area, which is
considered as one cost pool, is good.
If it is not possible for the directors to secure adequate resources to fund
the Group’s ongoing liabilities, including the planned forward work programme,
the carrying value of the assets of the Group including intangible exploration
assets and the investment of the Company in its subsidiaries will require an
impairment review.
For further information contact:
Europa Oil & Gas (Holdings) plc - Hugh Mackay / Phil Greenhalgh 01235 553266
finnCap - Sarah Wharry / Henrick Persson / Joanna Weaving 020 7220 0500
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