Final Results
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas
6 October 2014
Europa Oil & Gas (Holdings) plc (`Europa' or `the Company')
Final Results for the year to 31 July 2014
Europa Oil & Gas (Holdings) plc, the AIM listed oil and gas exploration,
development and production company focused on Europe, announces its final
results for the 12 month period ended 31 July 2014.
The full Annual Report and Accounts will be available today on the Company's
website at www.europaoil.com and will be mailed to those shareholders who have
requested a paper copy in October 2014.
Operational highlights
* Produced 165 boepd from three UK onshore fields
* Completed 3-D seismic acquisition programme offshore Ireland, completed
seismic processing and commenced prospect mapping
* Received a favourable judgment at the Court of Appeal for Holmwood planning
* Spudded the Wressle well on 19 July 2014
* Extended PEDL181 licence to 30 June 2015, obtained drill site and submitted
planning application for Kiln Lane well
* Renewed Béarn des Gaves permit to 22 March 2017
* Renewed Tarbes val d'Adour permit to 18 January 2015
* Raised £3.7 million net proceeds via a placing and oversubscribed open
offer
* Disposed of Romanian subsidiary for a nominal sum
Financial performance
* Group revenue of £3.9 million (2013: £4.5 million)
* Pre-tax profit from continuing operations excluding exploration write-off
and impairment of £0.5 million (2013: £0.7 million)
* Pre-tax loss from continuing operations of £0.7 million (2013: profit £0.5
million), after a £1.2 million impairment against the West Firsby field
* Post-tax profit for the year £0.6 million (2013: loss £0.1 million)
* Cash generated from continuing operations £1.4 million (2013: £1.7 million)
* Net cash balance as at 31 July 2014 £4.5 million (31 July 2013: £0.7
million)
Post reporting date events
* Kiln Lane well submitted for EA permitting, main well contracts being
awarded
* Announced that the Wressle well found 30 metres of potential hydrocarbon
pay, production testing to commence later in 2014
* Application submitted to extend the Tarbes val d'Adour permit to at least
2018
Europa's CEO, Hugh Mackay said, "The next six months are going to be very
exciting for Europa. We will be production testing the Wressle well, drilling
the Kiln Lane exploration well and hopefully finding 2.9 mmbo of oil, and
perhaps most importantly getting the prospect inventory for our Irish licences
and issuing a CPR. In parallel we are working to add new prospects and projects
to the portfolio through corporate activity and participation in licensing
rounds including the 14th UK onshore, the Irish Atlantic and others around
Europe. In due course we will get greater clarity on Irish drilling plans. We
are focused on generating significant value for our shareholders and I look
forward to providing updates on our progress in the year ahead"
Chairman's statement
Europa is an exploration and production company with a portfolio of multi-stage
projects in three core areas: onshore UK; offshore Ireland; and onshore France.
The year under review saw Europa commence a multi-well programme focused on
proving up our prospect inventory via the drill bit. We have embarked on an
exciting phase in the development of our Company, one which, subject to the
results, could see us deliver on our objective to build a top quartile AIM
company in terms of market capitalisation.
Our drilling campaign got off to a good start in July with the Wressle-1
exploration well in East Lincolnshire, which was targeting a 2.1 mmbo
conventional oil prospect, finding hydrocarbons. The stratigraphy encountered
during drilling were in line with our pre-drill geological forecast and
formation evaluation from log data indicated the presence of reservoirs that
may contain hydrocarbons with sufficient porosity and permeability to flow at
commercial rates. In all, over 30 metres of potential hydrocarbon pay have been
identified in three main intervals. Testing is now required to determine if we
have made a commercial discovery and this is scheduled to commence later this
year.
Wressle will be followed by the drilling of the 2.9 mmbo Kiln Lane prospect on
the neighbouring PEDL181 licence. Kiln Lane is a larger prospect than Wressle
and a discovery on this previously undrilled licence would open up a new
conventional oil and gas play and significantly de-risk additional leads
identified on the licence. These additional leads would then become strong
candidates for follow-up drilling. Furthermore, despite being a conventional
oil exploration well, Kiln Lane may also provide information with which to
assess any unconventional hydrocarbon prospectivity elsewhere in this large 540
km2 licence.
Needless to say, we are keen to drill more wells onshore UK and, subject to the
results of Wressle and Kiln Lane, 2015 could see us undertake further drilling
on already identified prospects on these licences. In addition, we will be
participating in the upcoming 14th Onshore (Landward) Oil and Gas Licensing
Round. Still in the UK, following favourable rulings by both the Court of
Appeal and the High Court in relation to drilling a temporary exploratory well
at the Holmwood prospect on the PEDL143 licence, we remain hopeful that we may
be in a position to drill within the next 12 months, subject to a favourable
determination by the Planning Inspectorate at a planning inquiry and available
funding. PEDL143 is located in the Weald Basin, Surrey and with mean gross
un-risked prospective resources of 5.6 mmbo, as estimated in a CPR published in
June 2012, and with a one in three chance of success we rate Holmwood as being
one of the best undrilled conventional prospects onshore in the UK.
While a discovery in the UK would result in a significant increase in our
production generated revenues, our offshore Ireland and onshore France licences
are the potential company-makers in our portfolio due to the size of the
prospectivity identified. Here too considerable progress has been and continues
to be made with regards to drilling these large prospects. In the South
Porcupine Basin Offshore Ireland, where we previously mapped billion barrel
prospects using historic 2D data, a 1,500 km2 3D seismic acquisition programme
over our two licences was completed by the operator, Kosmos Energy, in October
2013. Kosmos are due to deliver a new prospect inventory based on this new data
in Q4 2014. Upon receipt, Europa will commission an independent Competent
Person's Report covering our Irish licences. Whilst Kosmos have made no
commitment to drill yet they have begun preparatory work to enable them to use
the Atwood Achiever drillship in Ireland and subject to the quality of the
prospect inventory could elect to drill a first well offshore Ireland in 2016.
Under the terms of our farm-out agreement, Europa's share of drilling costs for
a first exploration well on each licence would be funded by Kosmos subject to a
cap of either US$90 million in FEL 2/13 and or US$110 million in FEL 3/13. In
our view an election to drill on our licences offshore Ireland is a
value-trigger event. We estimate the minimum economic prospect size to be 100±
20 mmbbls so if Kosmos do elect to drill, Europa will have a carried 15%
interest targeting company-making volumetrics.
In France, both our onshore licences were successfully renewed during the year
under review. Europa holds 100% interests in the Béarn des Gaves (`Béarn') and
Tarbes val d'Adour (`Tarbes') permits, located in the proven Aquitaine Basin.
Of the two, Béarn is the potential company-maker thanks to the 107 bcf Berenx
Shallow gas prospect and the 500+ bcf Berenx Deep gas appraisal project. Since
the permit was renewed in October 2013 we have continued to obtain and
reprocess seismic and enhance our geological model which has further refined
the shallow and deep prospectivity. Whilst the mean unrisked resources of the
shallow prospect are now 107 bcf, the resultant prospect is more robust and has
enhanced technical credibility. Having augmented our model and upgraded the
prospectivity, we have re-engaged with interested parties. In tandem with this
process, we continue to advance well planning and permitting to drill the
shallow prospect so that drilling operations can commence at the earliest
opportunity. We have submitted an application to extend the Tarbes permit and
discussions with a potential partner are on-going.
During the period we exited the UK PEDL150 licence, and disposed of our
Romanian subsidiary for a nominal sum.
For the third consecutive year, our three UK onshore fields hit their twelve
month production target, this year producing an average of 165 boepd and
generating £3.9 million in revenues (2013: 182 boepd and £4.5 million). As
these are mature fields, production is in long-term decline but thanks to our
active field management programme we have improved operational performance,
resulting in lower costs. Cash generated from continuing operations for the
year was £1.4 million (2013: £1.7 million).
In January, we completed a placing of shares and an oversubscribed open offer
to existing shareholders which together raised £3.7 million after expenses. We
also collected a £0.3 million cash payment from Kosmos in connection with their
farm-in to our Ireland licences. In total our cash balances at the period end
stood at £4.5 million (2013: £0.7 million).
We have recorded a £1.2 million (2013: nil) impairment of the West Firsby field
which arises from the lower assumed production rates used in the cash flow
model.
The sale of our Romanian subsidiary allowed the write-back of a £0.6 million
VAT creditor.
We have one well in the UK about to undergo production testing, another well on
course to commence in Q4 2014, and anticipate a new prospect inventory and CPR
for offshore Ireland, which we expect will confirm the company-making potential
of our licences. In addition, we are working to secure a farm-out for our 100%
owned French permits. We will be participating in the upcoming UK and Irish
licensing rounds, and we will continue to evaluate new projects and ventures
that match our investment criteria. With all this activity in mind,
shareholders can look forward to an exciting year ahead; one which we are
confident will result in significant value creation, as we focus on monetising
and growing our high quality asset base.
I was delighted to announce the appointment of Colin Bousfield to the Board in
February. His extensive track record in securing debt and equity finance for
oil and gas operating companies of all sizes, as well as his successful tenure
as CFO for Composite Energy, makes Colin a valuable addition to our team.
Finally, I would like to thank the management, operational teams, the Board and
advisers for their hard work and also our shareholders for their continued
support over the year.
WH Adamson, Chairman
Operational review
Ireland - Porcupine Basin Frontier Exploration Licences (`FELs') 2/13 and 3/13
- Europa (15%); Kosmos (85% and operator)
The exploration model for these licences is the Cretaceous stratigraphic play:
comprising Early Cretaceous turbidite sandstone reservoirs; charged by mature
Late Jurassic and Early Cretaceous source rocks and contained in stratigraphic
traps with elements of structural closure. The Cretaceous play in Ireland is
essentially undrilled and is considered to be analogous to the same play in the
equatorial Atlantic Margin province that has delivered the Jubilee and Mahogany
oil fields.
Europa's interpretation of pre-existing 2D seismic identified two previously
unknown prospects in the Lower Cretaceous stratigraphic play: Mullen in FEL 2/
13 and Kiernan in FEL 3/13. The Company estimates these to have gross mean
un-risked indicative resources of 482 million barrels of oil and 1.6 billion
barrels of oil equivalent respectively (see press releases dated 6 November
2012 and 16 January 2013 for further information).
Under the terms of the farm-in, Kosmos fully funded the costs of a 3D seismic
programme over both FELs and for which acquisition was completed in October
2013 and final processed data delivered in April 2014. Kosmos has advised that
a new prospect inventory based on the interpretation and mapping of the 3D data
will be completed and delivered to Europa in Q4 2014. Upon receipt of this,
Europa will commission a CPR to provide a third party assessment of the
prospectivity of the two licence blocks. The 3D seismic is a highly significant
first step towards realising the hydrocarbon potential of the basin and has the
potential to substantially de-risk the prospects, particularly if features like
conformance, flat events and AVO anomalies are observed on the data.
It is anticipated that the indicative resources previously provided to the
market will change according to the vastly improved prospect mapping arising
from the state of the art 3D data now available over the licences. We
nevertheless expect that the prospect sizes will remain large to very large and
the quantum of resources is likely to be hundreds of millions of barrels. We
also anticipate that the geological risk will be significantly reduced from the
1 in 10 previously assigned based on the historic 2D seismic as we mature
prospects to drillable status with the new 3D data.
Subject to the results of the prospect inventory, Kosmos may elect to drill a
well as early as 2016 and in which Europa will have a 15% carried interest.
Under the terms of the farm-out, Kosmos will incur 100% of the costs of the
first exploration well on each licence. The first exploration wells on FEL 2/13
and FEL 3/13 have investment caps of US$90 million and US$110 million
respectively. Costs in excess of the investment cap would be shared between
Kosmos (85%) and Europa (15%).
The technical insights that Europa continues to gain from its work in the South
Porcupine Basin provides a competitive edge that the directors will seek to
exploit through participation in the 2015 Atlantic Margin Licensing Round that
opened in June 2014.
France - Béarn des Gaves 100%
Europa holds a 100% interest in the onshore Béarn des Gaves permit in the
Aquitaine basin, the heartland of the French oil industry. The permit contains
two prospects: Berenx Deep and Berenx Shallow. Berenx Deep is an appraisal
project having previously been explored and drilled by EssoRep with two wells,
Berenx-1 (1969) and Berenx-2 (1972), both encountering strong gas shows over a
500 metre thick gas bearing zone. In 1975 Berenx-2 was re-entered, drill stem
tested and flowed gas to surface from the same carbonate reservoir that
delivered 9 tcf and 2 tcf from nearby fields at Lacq and Meillon.
Europa's in-house technical work indicates that the Berenx deep appraisal
prospect could hold in excess of 500 bcf of recoverable gas resources. In a CPR
dated 31 May 2012, ERC Equipoise estimated gross mean un-risked resources of
277 bcf for the Berenx deep gas play. The difference between Europa's and ERC's
assessment of resources reflects the confidence of each party in mapping in a
geologically complex terrain. Europa was able to map a larger area of closure
and as a consequence larger resources.
Thorough re-evaluation and interpretation of existing seismic and well data on
the permit has resulted in the definition of a new shallow gas prospect, Berenx
Shallow. Previous exploration on the concession had focused only on the deep
gas prospectivity. A comprehensive review of historic well results, the recent
discovery of previously missing seismic data by the French authorities,
together with a substantial seismic reprocessing project has delivered a
re-interpretation of structure and better understanding of proven hydrocarbon
bearing reservoir distribution in the shallow Cretaceous and Late Jurassic
carbonate sediments. This has resulted in a stronger technical interpretation
and the resultant prospect is more robust and has enhanced technical
credibility Europa has confirmed the Berenx Shallow gas prospectivity and
suggests potential gross mean un-risked resources of 107 bcf.
The Company's strategy for Béarn des Gaves is to first target the shallow gas
play, drill a well with the aim of delivering a commercial flow rate and, on
the back of commercial success, to further appraise the shallow prospectivity
and undertake work to de-risk the Berenx Deep appraisal prospect. The shallow
prospect can be tested with a comparatively simple exploration well with an
anticipated total depth of 2,500 metres.
On 3 October 2013, the permit was successfully renewed for a period of five
years from 22 March 2012 and carries an expenditure commitment of approximately
€2.5 million. A farm-out process for the permit is currently underway in tandem
with well planning and permitting for a well location on Berenx Shallow ahead
of drilling in the next 18 months. A wellsite has been identified and a lease
has been prepared. Scoping economics suggests a value of US$11.5 boe and NPV10
of US$170 million therefore the Directors believe that exploration success at
Berenx Shallow would be a company maker for Europa.
France - Tarbes val d'Adour 100%
Europa holds a 100% interest in the Tarbes val d'Adour permit (`Tarbes'), in
the proven Aquitaine Basin, onshore France. We received notification during the
reporting period that the permit was extended for three years from 18 January
2012 until 18 January 2015. Tarbes contains several oil accumulations that were
previously licensed by Elf but were abandoned in 1985 due to a combination of
technical issues and low oil prices. Two fields, Jacque and Osmets, were
drilled using vertical wells which generated modest production levels and as a
result Tarbes is classified as an appraisal project. A farm-out process has
been launched, discussions with a potential partner are ongoing and an
application to extend the permit to at least 2018 has been submitted to the
French authorities.
UK - NE Lincolnshire - PEDL180 33.3% (Wressle)
PEDL180 covers an area of 100 km2 of the East Midlands Petroleum Province 5 km
southeast of the Europa operated Crosby Warren field which has been producing
oil for 28 years. Europa has a 33.3% working interest in the block with its
partners Egdon Resources (operator, 25%), Celtique Energie Petroleum Ltd
(33.3%) and Union Jack Oil (8.3%).
The Wressle-1 conventional exploration well spudded on 19 July 2014 targeting a
conventional prospect estimated by the operator to hold mean gross un-risked
recoverable resources of 2.1 mmbo. The well reached a total depth of 2,240
metres (1,814 metres TVDSS) on 23 August 2014.
Both the stratigraphy and reservoir horizons encountered by the well were in
accordance with the pre-drill geological forecast which was based on 49 km2 of
3D seismic acquisition acquired in 2012. Preliminary petro-physical evaluation
of MWD (measurement whilst drilling) log data has indicated that hydrocarbons
with sufficient porosity and permeability to flow at commercial rates are
present. In all, over 30 metres measured thickness of potential hydrocarbon pay
has been identified in three main intervals: Penistone Flags with up to 19.8
metres measured thickness (15.9 metres vertical thickness) of potential
hydrocarbon pay; Wingfield Flags with up to 5.6 metres measured thickness (5.1
metres vertical thickness) of potential hydrocarbon pay; and Ashover Grit with
up to 6.1 metres measured thickness (5.8 metres vertical thickness) of
potential hydrocarbon pay. Elevated mud gas readings were observed over large
parts of the interval from the top of the Penistone Flags reservoir target
(1,831 metres MD) to TD.
The three reservoirs will be further evaluated by well testing to define fluid
type(s), reservoir properties, production rates and commerciality. The well has
been completed with a 4 ½" liner to enable selective and sequential testing of
the intervals as part of an extended well test, for which planning consent is
already in place. Test operations using a work-over rig are expected to
commence later this year.
UK - NE Lincolnshire - PEDL182 33.3% (Broughton)
PEDL182 covers an area of 40 km2. The Broughton prospect was previously drilled
by BP and flowed oil. The May 2012 Competent Person's Report (`CPR') estimated
the Broughton prospect to hold mean gross un-risked recoverable resources of
1.85 mmbo. Broughton is located on trend with the producing Crosby Warren oil
field and the Wressle prospect on PEDL180. Subject to the results of the
planned production test of the Wressle-1 exploration well, the partners may
elect to drill the Broughton prospect.
UK - NE Lincolnshire - PEDL181 50% (Kiln Lane)
Europa has a 50% interest in and is the operator of the PEDL181 licence, with
Egdon Resources UK Limited and Celtique Energie Petroleum Ltd, each holding a
25% interest. PEDL181 is located in the Carboniferous petroleum play and covers
an area of over 540 km2 in the Humber Basin.
The licence has good potential for conventional oil and gas and unusually for
the East Midlands Petroleum Province has never been previously drilled. The
licence is located in a working hydrocarbon system where a number of
discoveries have been made along the Brigg-Broughton anticline, including
Europa's existing oil production at the Crosby Warren field at the westernmost
end of the anticline.
Technical evaluation has confirmed several conventional prospects and leads in
PEDL181. Four of these in the southern part of the licence were the focus of a
78 km 2D seismic acquisition programme that was completed in April 2013.
Reprocessing of 150 km2 of existing 3D seismic data together with processing of
the new data resulted in the maturing of a drill ready prospect, Kiln Lane,
with gross un-risked prospective resources of 2.9 mmboe. In January 2014 a one
year extension to the licence to June 2015 was secured and that will enable an
exploration well to be drilled at Kiln Lane later this year. A drillsite has
been leased and both the planning and EA Mining Waste Permit applications have
been submitted and are being processed by the relevant authorities.
In addition to the conventional prospectivity the Humber basin may also have
unconventional hydrocarbon potential. Interpretation of the new seismic data
suggests that this basin may contain a much thicker sequence of Namurian age
sediments than was previously thought. The content of this sedimentary package
in the Humber basin is not known. The Namurian section in the Gainsborough
Trough, located some 25 km to the west of PEDL181 has been drilled and is known
to host the Bowland Shale which has well-documented potential for shale gas. It
is possible that the Namurian section in the Humber basin may contain a Bowland
Shale equivalent with similar potential to be both the source rock for the
conventional hydrocarbons in the licence area, and perhaps also have some
potential for unconventional hydrocarbons.
UK - Dorking area - PEDL143 40% (Holmwood)
The PEDL143 licence covers an area of 92 km2 of the Weald Basin, Surrey. Europa
is the operator and has a 40% working interest in the licence with partners
Egdon Resources (38.4%), Altwood Petroleum (1.6%), and Warwick Energy (20%).
The Holmwood prospect is a conventional Jurassic sandstone reservoir with a low
geological risk. The May 2012 CPR estimated Holmwood to hold gross mean
recoverable resources of 5.64 mmbo. Europa considers Holmwood to be one of the
best undrilled conventional exploration prospects in the UK.
The prospect lies south of Dorking within the Surrey Hills Area of Outstanding
Natural Beauty. An application to construct a temporary exploration well on the
site was originally made in 2008. This application was refused in 2011 by
Surrey County Council contrary to their planning officer's recommendation to
approve. An appeal to overturn the decision was heard at a public inquiry in
July 2012. The appeal was dismissed on 26 September 2012.
Europa, along with its partners, applied for an order to quash the decision of
the Secretary of State for Communities and Local Government's appointed
Inspector to dismiss the appeal. On 25 July 2013, the Royal Courts of Justice
gave judgment in favour of Europa and quashed the Inspector's decision. An
appeal was submitted to the Court of Appeal which was subsequently dismissed by
the Court on 19 June 2014. As a result, Europa's appeal against Surrey County
Council's refusal to grant planning permission to drill one exploratory
borehole and undertake a short-term test for conventional hydrocarbons at the
Holmwood prospect has been remitted to the Planning Inspectorate for
redetermination. This will involve a further planning inquiry in the first half
of 2015.
UK - Lincolnshire area - PEDL150 100% (Hykeham)
During the year the Group completed the abandonment of the Hykeham well and
relinquished the licence.
UK - Production (West Firsby 100%; Crosby Warren 100%; Whisby W4 well 65%)
The three UK fields produced an average of 165 boepd (2013: 182 boepd) during
the year under review, the third consecutive year the full year production
target was met. We recorded a £1.2 million impairment of the West Firsby field
arising from lower production rates used in the cash flow projections and in
accordance with the predicted decline forecast for the field.
UK - Unconventional resources - Shale Gas
As previously noted PEDL181 may have some potential for shale gas.
Romania
In July 2014, the Company announced the completion of the sale of its entire
holding in the issued share capital of the Romanian subsidiary Europa Oil & Gas
SRL for a nominal sum. The subsidiary held interests in onshore concessions in
Romania which had been relinquished, or were in the process of receiving
government approval for such relinquishment. The assets were written down to
nil value in the Group's financial statements for the year to 31 July 2012. The
sale marks the termination of the Company's involvement in Romania.
Results for the year
The Group loss for the year after taxation from continuing activities was £
368,000 (2013 loss: £54,000). The profit on discontinued activities was £
933,000 (2013: loss £47,000).
Conclusion
Having commenced our drilling programme in July with the Wressle well, we are
working hard to build and maintain a pipeline of drilling activity across our
asset base. We are already funded to drill the Kiln Lane prospect in Q4 2014
and, subject to an election to drill by Kosmos, we have a free carry for two
high impact wells, one on each of our licences offshore Ireland, the first of
which could be drilled as early as 2016. On-going farm-out discussions for our
two 100% owned French licences could lead to further drilling and in
anticipation of this we are already progressing with well permitting and
planning for the 107 bcf Shallow gas prospect on Béarn des Gaves and are
extending the Tarbes val d'Adour permit. A number of potential follow-up
prospects have been identified across our licences and success with the drill
bit could lead to several of these being fast tracked for drilling. In the
meantime we continue to look to acquire new licences and projects either
through ground floor licensing rounds or corporate activity. I look forward to
providing updates on our progress.
Hugh Mackay, CEO
The financial information set out below does not constitute the company's
statutory accounts for 2014 or 2013. The financial information has been
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union on a basis that is consistent with the
accounting policies applied by the group in its audited consolidated financial
statements for the year ended 31 July 2014. Statutory accounts for the years
ended 31 July 2014 and 31 July 2013 have been reported on by the Independent
Auditors.
The Independent Auditors' Report on the Annual Report and Financial Statements
for 2014 and 2013 were unqualified, did not draw attention to any matters by
way of emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
Statutory accounts for the year ended 31 July 2013 have been filed with the
Registrar of Companies. The statutory accounts for the year ended 31 July 2014
will be delivered to the Registrar in due course.
Consolidated statement of comprehensive income
For the year ended 31 July 2014 2013
Note £000 £000
Revenue 3,878 4,503
Other cost of sales (2,301) (2,954)
Exploration write-off 1 - (231)
Impairment of producing fields 2 (1,203) -
Total cost of sales (3,504) (3,185)
---------------------------------- ----------------------------------
Gross profit 374 1,318
Administrative expenses (832) (671)
Finance income 20 15
Finance expense (244) (208)
------------------------------------ ------------------------------------
(Loss)/profit before taxation (682) 454
Taxation credit /(charge) 314 (508)
------------------------------------ ------------------------------------
Loss for the year from continuing (368) (54)
operations
------------------------------------ ------------------------------------
Discontinued operations
Profit/(loss) for the year from 933 (47)
discontinued operations
------ ------
Profit/(loss) for the year 565 (101)
attributable to the equity
shareholders of the parent
Other comprehensive (loss)/income
Those that may be reclassified to
profit and loss:
Recycling of foreign currency (417) -
translation reserve
on disposal of operations
Exchange gain arising on translation - 37
of foreign operations
------------------------------------ ------------------------------------
Total comprehensive income/(loss) 148 (64)
for the year
attributable to the equity
shareholders of the parent
==================================== ====================================
= =
Earnings/(Loss) per share (EPS/LPS) attributable to Pence per Pence per
the share share
equity shareholders of the parent
Basic and diluted LPS from continuing operations (0.21)p (0.04)p
Basic and diluted EPS/ (LPS) from discontinued 0.53p (0.03)p
operations
Basic and diluted EPS/(LPS) from continuing and 0.32p (0.07)p
discontinued operations
Consolidated statement of financial position
As at 31 July 2014 2013
Note £000 £000
Assets
Non-current assets
Intangible assets 1 3,553 2,446
Property, plant and equipment 2 3,046 4,383
---------------------------------- ----------------------------------
Total non-current assets 6,599 6,829
---------------------------------- ----------------------------------
Current assets
Inventories 32 33
Trade and other receivables 456 928
Cash and cash equivalents 4,501 672
---------------------------------- ----------------------------------
4,989 1,633
---------------------------------- ----------------------------------
Other current assets - 338
Assets classified as held for sale
---------------------------------- ----------------------------------
Total assets 11,588 8,800
================================== ==================================
Liabilities
Current liabilities
Trade and other payables (970) (1,227)
Current tax liabilities (220) (541)
Derivative (35) (48)
Short-term borrowings (22) (208)
Short-term provisions (4) (290)
------------------------------------ ------------------------------------
Total current liabilities (1,251) (2,314)
------------------------------------ ------------------------------------
Non-current liabilities
Long-term borrowings (164) -
Deferred tax liabilities (2,371) (2,902)
Long-term provisions (1,959) (1,681)
--------------- ---------------
Total non-current liabilities (4,494) (4,583)
--------------- ---------------
Total liabilities (5,745) (6,897)
--------------- ---------------
Net assets 5,843 1,903
========= =========
Capital and reserves attributable
to equity holders
of the parent
Share capital 2,049 1,379
Share premium 14,080 13,160
Merger reserve 2,868 2,868
Foreign exchange reserve - 417
Retained deficit (13,154) (15,921)
--------------- ---------------
Total equity 5,843 1,903
========= =========
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 1,379 13,160 2,868 380 (15,972) 1,815
2012
Loss for the year - - - - (101) (101)
attributable to the
equity
shareholders of the
parent
Other comprehensive - - - 37 - 37
income for the year
Share based payment - - - - 152 152
-------------- -------------- -------------- -------------- -------------- --------------
Balance at 31 July 1,379 13,160 2,868 417 (15,921) 1,903
2013
======== ======== ======== ======== ======== ========
£000 £000 £000 £000 £000 £000
Balance at 1 August 1,379 13,160 2,868 417 (15,921) 1,903
2013
Issue of share capital 670 920 - - 2,120 3,710
Profit for the year - - - - 565 565
attributable to the
equity
shareholders of the
parent
Other comprehensive - - - (417) - (417)
loss for the year
Share based payment - - - - 82 82
-------------- -------------- -------------- -------------- -------------- --------------
Balance at 31 July 2,049 14,080 2,868 - (13,154) 5,843
2014
======== ======== ======== ======== ======== ========
Consolidated statement of cash flows
For the year ended 31 July 2014 2013
£000 £000
Cash flows from operating
activities
Loss after tax from continuing (368) (54)
operations
Adjustments for:
Share based payments 82 152
Depreciation 475 578
Exploration write-off - 231
Impairment of property, plant & 1,203 -
equipment
Finance income (20) (15)
Finance expense 244 208
Taxation (credit)/charge (314) 508
Decrease in trade and other 184 621
receivables
Decrease in inventories 1 23
Decrease in trade and other (60) (535)
payables
------ ------
Cash generated from continuing 1,427 1,717
operations
Profit /(loss) after taxation from 933 (47)
discontinued operations
Adjustments for:
Profit on disposal (1,034) -
------ ------
Cash used in discontinued (101) (47)
operations
Income tax payment (537) (84)
----- -----
Net cash from operating activities 789 1,586
Cash flows from investing
activities
Purchase of property, plant and (3) (5)
equipment
Purchase of intangible assets (514) (1,020)
Receipt of back costs in 300 -
connection with farm-in
Expenditure on well (363) (51)
decommissioning
Interest received 6 -
----------------------------------- -----------------------------------
Net cash used in investing (574) (1,076)
activities
=================================== ===================================
== ==
Cash flows from financing
activities
Proceeds from issue of share 3,710 -
capital (net of issue costs)
Repayment of borrowings (22) (22)
Finance costs (25) (34)
----------------------------------- -----------------------------------
Net cash from/(used in) financing 3,663 (56)
activities
=================================== ===================================
Net increase in cash and cash 3,878 454
equivalents
Exchange loss on cash and cash (49) (12)
equivalents
Cash and cash equivalents at 672 230
beginning of year
----------------------------------- -----------------------------------
Cash and cash equivalents at end 4,501 672
of year
=================================== ===================================
Note 1 - Intangible assets
2014 2013
£000 £000
At 1 August 2,446 2,127
Additions 1,107 550
Exploration write-off - (231)
At 31 July 3,553 2,446
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
2014 2013
£000 £000
France (Béarn des Gaves permit) 1,083 950
Ireland 165 78
UK PEDL143 519 463
UK PEDL180 842 315
UK PEDL181 729 429
UK PEDL182 215 211
-------------------------------- --------------------------------
Total 3,553 2,446
Exploration write-off
France (Tarbes val d'Adour - 231
permit)
-
Total - 231
Certain of the UK exploration licences carry well commitments in 2015. If the
Group elects to continue with these licences, it will need to fund the drilling
of wells by raising funds or by farming down. If the Group is not able to raise
funds or farm down, or elects not to continue in the licences, then the impact
on the financial statements will be the impairment of some or all of the
intangible assets disclosed above.
Note 2 - Property, plant and equipment
Furniture Leasehold Producing Total
& building fields
computers
£000 £000 £000 £000
Cost
At 1 August 2012 43 - 10,785 10,828
Additions 2 - - 2
--------------- --------------- ----------------- ---------------
At 31 July 2013 45 - 10,785 10,830
Additions 3 - - 3
Transfer from assets - 437 - 437
held for resale
--------------- --------------- ----------------- ---------------
At 31 July 2014 48 437 10,785 11,270
=============== =============== ================= ===============
Depreciation, depletion
and impairment
At 1 August 2012 21 - 5,848 5,869
Charge for year 10 - 568 578
--------------- -------------- ----------------- ---------------
At 31 July 2013 31 - 6,416 6,447
Charge for year 9 - 466 475
Impairment in year - - 1,203 1,203
Transfer from assets - 99 - 99
held for resale
--------------- --------------- ----------------- ---------------
At 31 July 2014 40 99 8,085 8,224
=============== =============== ================= ===============
Net Book Value
At 31 July 2012 22 - 4,937 4,959
=============== =============== ================= ===============
At 31 July 2013 14 - 4,369 4,383
=============== =============== ================= ===============
At 31 July 2014 8 338 2,700 3,046
=============== =============== ================= ===============
The producing fields referred to in the table above are the production assets
of the Group, namely the oilfields at Crosby Warren and West Firsby, and the
Group's interest in the Whisby W4 well, representing three of the Group's cash
generating units.
The carrying value of each producing field was tested for impairment by
comparing the carrying value with the value in use. The value in use was
calculated using a discounted cash flow model using a production decline rate
of 7%, Brent crude price of US$110 per barrel, an assumption of no future tax
losses being available and a discount rate of 10%. Cash flows were projected
over the expected life of the fields which is expected to be longer than 5
years.
There was an impairment of £1,203,000 relating to the West Firsby site but no
impairment at the Crosby Warren site or in respect of the Whisby W4 well (2013:
no impairments). The main reason for the impairment of the West Firsby site was
a lower assumed oil production rate.
* * ENDS * *
For further information please visit www.europaoil.com or contact:
Hugh Mackay Europa Oil & Gas (Holdings) plc +44 (0) 20 7224 3770
Phil Greenhalgh Europa Oil & Gas (Holdings) plc +44 (0) 20 7224 3770
Matt Goode finnCap Ltd +44 (0) 20 7600 1658
Henrik Persson finnCap Ltd +44 (0) 20 7600 1658
Frank Buhagiar St Brides Media and Finance Ltd +44 (0) 20 7236 1177
Lottie Brocklehurst St Brides Media and Finance Ltd +44 (0) 20 7236 1177
Notes
Europa Oil & Gas (Holdings) plc has a diversified portfolio of multi-stage
hydrocarbon assets that includes production, exploration and development
interests, in countries that are politically stable, have transparent licensing
processes, and offer attractive terms. The Company produced 165 boepd in the UK
during the 2013/2014 financial year, generating sufficient revenues to cover
corporate overheads and some exploration expenditure. Its highly prospective
exploration projects include the Wressle (recently drilled and scheduled for
testing) and Kiln Lane prospects (due to be drilled this year) in the UK; 100%
owned gas exploration prospect (107 bcf) and appraisal project (CPR 277 bcf) in
onshore France; and a joint venture with leading independent Kosmos to explore
two licences in offshore Ireland in which Europa had previously identified two
prospects with estimated gross mean un-risked indicative resources of 482
million barrels oil and 1.6 billion barrels oil respectively.
Qualified Person Review
This release has been reviewed by Hugh Mackay, Chief Executive of Europa, who
is a petroleum geologist with 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.
END
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