ASX Lodgement of Annual Report

RNS Number : 8357Q

88 Energy Limited

02 March 2016

 

88 Energy Limited

ASX Lodgement of Annual Report

88 Energy Limited (ASX:88E; AIM:88E) ("88 Energy" or the "Company") advises that a copy of the Company's Annual Report for the year ended 31 December 2015 has been lodged on the ASX and is also available on the Company's website at www.88energy.com. The Annual Report was sent to shareholders today.

Set out below is the Chairman's Statement as included in the Company's Annual

Report.

Also set out below is a summary of the Company's audited financial information

for the year ended 31 December 2015 as extracted from the Annual Report, being:

Consolidated Statement of Profit or Loss and other Comprehensive Income;

Consolidated Statement of Financial Position;

Consolidated Statement of Changes in Equity; and

Consolidated Statement of Cash Flows.

Chairman's Statement

Dear Shareholders

It is a pleasure to present my Chairman's Report for the 2015 year.

Against a backdrop of uncertain capital markets and commodity prices, 88 Energy (88E) has put in a stellar performance during 2015 with significant share price appreciation on the back of an astutely managed exploration program on the Alaskan North Slope.

The turnaround in the Company's fortunes has been nothing short of astounding. Little over one year ago 88E was faced with the difficult task of re-inventing itself following an unsuccessful program offshore Morocco. 

The net was cast far and wide in search of a project that could make a meaningful difference; one which would capture investor attention with significant upside. Several projects were reviewed; some with existing production both in Australia and internationally.

Up stepped a project originator in the form of Houston based geoscientist Paul Basinski, with an enviable track record in unconventional oil exploration.  His proposition was that Alaska could host vast undiscovered potential in an unconventional play known as the HRZ shale play.  88E was quick to capitalise on this opportunity which ironically became available due to the poor investment climate that prevailed. 88E have since forged a strong and successful joint venture partnership with Basinski's company Burgundy Xploration.

Project Icewine, as it became known, was an ambitious step towards rebuilding the Company. Project Icewine ticks three of our key boxes for a start-up project: funding flexibility, ground floor entry and huge upside potential.

Alaska is a regime that encouraged exploration offering rebates up to 85 percent for every dollar spent; an incentive that was not only attractive to 88 Energy but one that could be taken all the way to the Bank of America (BOA).  BOA were willing to effectively advance the value of the rebate thereby enabling 88E to maintain leverage without the larger equity dilution normally associated with funding a well.

Being a first mover in a new shale play, 88E was able to assemble a meaningful acreage position, now aggregating some 272,422 gross acres (212,489 net) targeting the HRZ Shale which shares a common source rock with the Giant Prudhoe Bay oil field, the largest conventional field ever discovered in North America.  The Project is located in a prolific oil producing region.

Clearly the Americans were astute when they went out on a limb and purchased Alaska (the largest state by area in the United States) from the Russian Empire in 1867 for the princely sum of US$7.2 million or 2 cents per acre.  Our purchase price must also be seen as opportunistic with 88E gaining a significant first mover advantage and assembling a land bank that would befit an oil major, many of whom are already engaged in conventional oil exploration in Alaska.

The leverage from this acreage position is further enhanced due to the proximity of the all-weather Dalton Highway and the ability to connect into the trans-Alaska pipeline that can handle up to 2.1 million barrels per day and has considerable spare capacity.

The funding and drilling of our first well, Icewine #1, was executed by our Managing Director, David Wall, with the assistance of a small dedicated team including our Exploration Manager Elizabeth Pattillo, our Alaskan based Operations Manager, Erik Opstad and the full support of my fellow Directors To date the results speak for themselves and back up the early prognosis that formed the basis of the investment decision.  Full details are set out in David's Operations Review.

The process of evaluation is ongoing and not without risk; however we look to the future with considerable optimism as we unlock both the conventional and unconventional potential of our Alaskan exploration acreage.  One only needs to compare this program with better known shale plays in Texas, like the Eagle Ford and Barnett, to gain an appreciation of the impact successful exploration can have on 88E as oil prices recover.

Before closing I would like to thank the Department of Natural Resources, the Alaska Oil and Gas Conservation Commission; the North Slope Borough and other regulatory agencies that have facilitated our exploration effort in the State.

My fellow Directors and I acknowledge David and his staff for their sterling efforts in managing 88E's exciting Alaskan program on a tight budget and timeframe. Their efforts have resulted in 88E turning in possibly the best performance of a junior oil explorer on the ASX in 2015. 

In turn this result would not be possible without your support as shareholders in what has been a challenging environment.  Our dual listing on both ASX and AIM has garnered a wide investor base and we have been ably supported by our brokers advisers including Hartleys, Cenkos, Patersons and APP Securities.

Icewine, like crude itself, can be sweet and may this prove to be the case as we embark upon our exciting 2016 program.

Michael Evans
Non-Executive Chairman

Consolidated Statement of Profit or Loss and other Comprehensive Income

	Note	2015 $	2014 $
Revenue from continuing operations
Other income	3(a)	108,852	175,848
Administrative expenses	3(b)	(2,921,653)	(2,858,366)
Occupancy expenses		(164,629)	(1,028,345)
Employee benefit expenses	3(c)	(491,828)	(1,179,662)
Share-based payment expense	18	(1,723,534)	(1,716,426)
Depreciation and amortisation expense		(15,038)	(25,654)
Exploration expenditure expensed as incurred	10	-	(400,717)
Exploration expenditure written off	10	-	(20,229,361)
Loss on sale of available-for-sale investments		-	(14,216)
Interest expense		(2)	(89)
Finance cost		(689,501)	-
Other expenses		(407,379)	-
Foreign exchange losses		-	(436,117)
Loss before income tax		(6,304,712)	(27,713,105)
Income tax expense	4	-	-
Loss after income tax for the year		(6,304,712)	(27,713,105)
Other comprehensive income for the year Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations		383,900	-
Change in fair value of available-for-sale investments (net of tax)		-	(60,061)
Total comprehensive income/(loss) for the year (net of tax)		383,900	(60,061)
Total comprehensive loss for the year attributable to owners of 88 Energy Limited		(5,920,812)	(27,773,166)
Loss per share for the year attributable to the members of 88 Energy Limited
Basic and diluted loss per share (cents)	5	(0.002)	(9.65)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes which are set out in the Annual Report.

Consolidated Statement of Financial Position

		Note	2015 $	2014 $
ASSETS
Current Assets
Cash and cash equivalents		6	9,604,249	805,210
Other receivables		7	463,601	266,284
Total Current Assets			10,067,850	1,071,494
Non-Current Assets
Plant and equipment		8	10,960	23,590
Other financial assets		9	-	42,726
Exploration and evaluation expenditure		10	25,403,611	-
Other assets		11	994,687	604,695
Total Non-Current Assets			26,409,258	671,011
TOTAL ASSETS			36,477,108	1,742,505
LIABILITIES
Current Liabilities
Trade and other payables		12	4,003,386	393,933
Provisions		13	55,388	-
Total Current Liabilities			4,058,774	393,933
Non-Current Liabilities
Borrowings		14	10,930,281	-
Total Non-Current Liabilities			10,930,281	-
TOTAL LIABILITIES			14,989,055	393,933
NET ASSETS			21,488,053	1,348,572
EQUITY
Contributed equity		15(a)	90,654,560	67,985,300
Shares reserved for share plans		15(b)	-	(1,667,500)
Reserves		15(c)	14,848,766	12,741,333
Accumulated losses			(84,015,273)	(77,710,561)
TOTAL EQUITY			21,488,053	1,348,572

The above consolidated statement of financial position should be read in conjunction with the accompanying notes which are set out in the Annual Report.

Consolidated Statement of Changes in Equity

Balance at 1 January 2014			Issued Capital $ 55,889,563		Shares reserved for share plan $ -		Reserves $ 10,701,195		Available for sale investments reserve $ 60,061		Accumulated losses $ (49,997,456)		Total equity $ 16,653,363
Loss for the year			-		-		-		-		(27,713,105)		(27,713,105)
Other comprehensive loss			-		-		-		(60,061)		-		(60,061)
Total comprehensive loss for the year, net of tax			-		-		-		(60,061)		(27,713,105)		(27,773,166)
Transactions with owners in their capacity as equity holders:
Shares issued during the year			14,412,255		(1,751,600)		-		-		-		12,660,655
Shares cancelled			(84,100)		84,100		-		-		-		-
Share-based payments			-		-		2,040,138		-		-		2,040,138
Equity raising costs			(2,232,418)		-		-		-		-		(2,232,418)
			12,095,737		(1,667,500)		2,040,138		-		-		12,468,375
Balance at 31 December 2014			67,985,300		(1,667,500)		12,741,333		-		(77,710,561)		1,348,572
Balance at 1 January 2015			67,985,300		(1,667,500)		12,741,333		-		(77,710,561)		1,348,572
Loss for the year			-		-		-		-		(6,304,712)		(6,304,712)
Foreign currency translation			-		-		383,900		-		-		383,900
Total comprehensive loss for the year, net of tax			-		-		383,900		-		(6,304,712)		(5,920,812)
Transactions with owners in their capacity as equity holders:
Shares issued during the year			24,538,797		-		-		-		-		24,538,797
Shares cancelled			-		1,667,500		-		-		-		1,667,500
Share-based payments			-		-		1,723,534		-		-		1,723,533
Equity raising costs			(1,869,537)		-		-		-		-		(1,869,537)
			22,669,260		1,667,500		1,723,534		-		-		26,060,293
Balance at 31 December 2015			90,654,560		-		14,848,766		-		(84,015,273)		21,488,053

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes which are set out in the Annual Report.

Consolidated Statement of Cash Flows
	Note	2015 $	2014 $
Cash flows from operating activities
Interest received		24,995	175,848
Payments to suppliers and employees		(4,082,521)	(6,386,643)
Finance costs		(599,501)	-
Net cash flows used in operating activities	6(b)	(4,657,027)	(6,210,795)
Cash flows from investing activities
Payments for exploration and evaluation activities		(21,941,810)	(9,300,344)
Project Icewine deposit		-	(604,695)
Purchase of property plant & equipment		(2,408)	-
Loans to other entities		-	(300,000)
Loans repaid by other entities		-	300,000
Proceeds from sale of available-for-sale investments		-	79,248
Net cash flows used in investing activities		(21,944,218)	(9,825,791)
Cash flows from financing activities
Proceeds from drawdown of facility		10,930,280	-
Proceeds from issue of shares		26,339,541	11,100,374
Share issue costs		(1,869,537)	(387,891)
Net cash flows from financing activities		35,400,284	10,752,483
Net increase/(decrease) in cash and cash equivalents		8,799,039	(5,284,103)
Effects of exchange rate changes on cash and cash  equivalents		-	-
Cash and cash equivalents at beginning of year		805,210	6,089,313
Cash and cash equivalents at end of year	6	9,604,249	805,210

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes which are set out in the Annual Report.

Media and Investor Relations:

Australia
88 Energy Ltd [e-mail] [phone] Hartleys Limited As Corporate Advisor Mr Dale Bryan [phone]
United Kingdom Cenkos Securities Plc As Nominated Adviser Mr Neil McDonald Mr Derrick Lee Tel: [phone] Tel: [phone]

 

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