ASX LODGEMENT OF ANNUAL REPORT

RNS Number : 1684S
88 Energy Limited
08 March 2023
 

88 ENERGY LIMITED

ASX LODGEMENT OF ANNUAL REPORT

88 Energy Limited (ASX:88E; AIM:88E) ("88 Energy" or "Company") advises that a copy of the Company's Annual Report for the year ended 31 December 2022 (the "Annual Report") has been lodged on the ASX along with the Company's 2022 year-end Corporate Governance Statement and Appendix 4G.

The Annual Report, which was sent to shareholders today, is available on the Company's website at www.88energy.com along with copies of each of these other documents.

 

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

 

Also, set out below is a summary of the Company's audited financial information for the year ended 31 December 2022 as extracted from the Annual Report, being:

 

· Consolidated Statement of Comprehensive Income;

· Consolidated Statement of Financial Position;

· Consolidated Statement of Changes in Equity; and

· Consolidated Statement of Cash Flows.

 

Media and Investor Relations:

 

88 Energy Ltd

Ashley Gilbert, Managing Director 


Tel: +61 8 9485 0990

Email: investor-relations@88energy.com




Fivemark Partners, Investor and Media Relations


Andrew Edge

Tel: +61 410 276 744

Michael Vaughan

Tel: +61 422 602 720



EurozHartleys Ltd


Dale Bryan

Tel: + 61 8 9268 2829



Cenkos Securities Plc 

Tel: +44 (0)20 7397 8900

Derrick Lee 

Tel: +44 (0)131 220 6939

Pearl Kellie

Tel: +44 (0)131 220 9775

 

CHAIRMAN'S STATEMENT

Dear Shareholders,

It is with pleasure that I present 88 Energy's Annual Report, which contains details of our exploration activities, operations, and financial position as of 31 December 2022.

The global oil and gas market has undergone several significant changes since I first joined the 88 Energy Board. Throughout the year, the world has transitioned from the initial uncertainty caused by the COVID-19 pandemic to a period of geopolitical instability with the war in Ukraine causing disruptions to energy trade in Europe and beyond. At the same time, global attitudes and changing market sentiment in relation to the clean energy transition and decarbonisation initiatives have led to volatility in the oil and gas market.

This uncertainty has resulted in ongoing tightness in investment in the oil and gas industry. However, I firmly believe that the prevailing macroeconomic, political, and social factors that have contributed to the current global energy challenges demonstrate that hydrocarbons will have a significant role in global energy demand for the foreseeable future.

Within this context, 88 Energy is strategically placed to capitalise on investment opportunities that the oil and gas industry will continue to offer. Our combination of large acreage position, infrastructure-led exploration and ongoing capital discipline is, and will continue to be, attractive.

During the year, we acquired a ~73% working interest in Project Longhorn, a suite of quality oil and gas assets in the proven Texan Permian Basin. To date, the production of oil from these wells has resulted in net cash flow returns of more than A$4 million. Further opportunities exist to grow output and returns from these assets over the coming years.

In August 2022, we announced the decision to separate Project Icewine into two independent prospective resource estimates, Icewine West and Icewine East. Going forward, we are set to focus on Icewine East, renamed Project Phoenix, to reflect our refreshed exploration strategy for the acreage. As a measure of our conviction in the prospectivity of Project Phoenix, in the same month as the announcement of the maiden independent Prospective Resource Estimate for Phoenix, we raised gross proceeds of A$14.9 million to further advance planned exploration well activities on this acreage.

Through third quarter of 2022, we completed an interpretation of the previously licensed Franklin Bluffs 3D seismic survey data on Project Phoenix. Results from the analysis were used to define 'sweet spots' for the Shelf Margin Delta (SMD), Slope Fan System (SFS), Basin Floor Fan (BFF) and Kuparuk (KUP) play fairways. This critical analysis has informed our planned 2023 exploration activities and proposed drilling location, Hickory-1, which is designed to intersect and test up to six stacked conventional reservoirs. In December, we executed a contract with Nordic Calista for their Rig-2 to drill the Hickory-1 exploration well, with targeted spud in early March 2023.

In November 2022, the Company was announced as the winning bidder for select acreage offered as part of the North Slope Areawide 2022W Oil and Gas lease sale. The new acreage, known as Project Leonis, is another fantastic addition to our highly prospective Alaskan asset base.  Comprising 10 leases covering approximately 25,600 contiguous acres, Leonis is an attractive exploration proposition, which the Company is eager to progress. Further studies will be conducted to properly understand the regional setting and faulting of the area before making any definitive commitment to a future program of work.

I wish to thank all 88 Energy personnel and contractors for their efforts over the past year. We have a first-class team of truly committed professionals, dedicated to maximising the potential of our projects. We will continue to progress and refine the 88 Energy business model through furthering exploration activities in our core project areas, targeting large-scale hydrocarbon deposition and seeking out new venture opportunities.

As always, I would also like to thank you, our shareholders, for your support and dedication to our Company.  On behalf of the 88 Energy team, I wish to reaffirm our commitment to unlocking the huge potential value residing in our world-class Alaskan acreage.  I wish you all a wonderful and prosperous year ahead. Stay safe and well.

Yours faithfully,

Philip Byrne
Non-Executive Chairman

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022


Note

2022

2021

 

 

$

$

 

 

 


Other income

3(a)

21,760

4,448,699

Share of profit/(loss) from equity accounted investment

11

3,317,877

-



 


Administrative expenses

3(b)

(2,778,962)

(3,048,444)

Occupancy expenses


(51,142)

(86,765)

Employee benefit expenses

3(c)

(2,335,914)

(1,958,388)

Share-based payment expense

18

(658,111)

(738,965)

Depreciation and amortisation expense


(60,307)

(84,449)

Finance cost


(8,583)

(1,195,703)

Other expenses


(12,869)

(48,471)

Foreign exchange (loss) / gain


493,647

302,297

Exploration & Evaluation Impairment/Expense

3(d)

(68,649,314)

  - 

Loss before income tax


(70,721,918)

(2,410,189)

Income tax expense

4

-

-

Loss after income tax for the year


(70,721,918)

(2,410,189)

 


 


Other comprehensive income / (loss) for the year

Items that may be reclassified to profit or loss


 


Exchange differences on translation of foreign operations


6,378,972

4,855,236

Other comprehensive income / (loss) for the year, net of tax


(64,342,946)

4,855,236



 


Total comprehensive income / (loss) for the year attributable to members of 88 Energy Limited

 

(64,342,946)

2,445,047

 


 


Loss per share for the year attributable to the members of 88 Energy Limited:


 


Basic and diluted loss per share

5

(0.0042)

(0.0001)

The notes to the financial Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the statements .

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

 


Note

2022

2021

 


$

$

ASSETS




Current Assets


 


Cash and cash equivalents

6

14,123,731

32,317,887

Trade and other receivables

7

1,549,816

935,930

Other Current Asset

7

-

10,224,959

Total Current Assets


15,673,547

43,478,776

 


 


Non-Current Assets


 


Plant and equipment

8

20,337

9,675

Exploration and evaluation expenditure

9

96,422,918

101,357,767

Other Assets

10

940,424

936,536

Equity accounted investments

11

19,968,658

-

Total Non-Current Assets


117,352,337

102,303,978

 

 

 

 

TOTAL ASSETS


133,025,884

145,782,754

 

 

 

 

LIABILITIES


 


Current Liabilities


 


Trade and other payables

12

1,105,132

5,796,350

Provisions

13

244,736

146,270

Total Current Liabilities


1,349,868

5,942,620

 

 

 

 

TOTAL LIABILITIES


1,349,868

5,942,620

 

 

 

 

NET ASSETS


131,676,016

139,840,134

 

 

 

 

EQUITY


 


Contributed equity

14

340,972,669

285,809,214

Reserves

15

30,468,589

23,074,244

Accumulated losses


(239,765,242)

(169,043,324)

TOTAL EQUITY


131,676,016

139,840,134

The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECMEBER 2022

 

Issued Capital

Reserves

Accumulated Losses

Total

 

$

$

$

$

At 1 January 2022

285,809,214

23,074,244

(169,043,324)

139,840,134

Loss for the year

-

-

(70,721,918)

(70,721,918)

Other comprehensive income

-

6,378,972

-

6,378,972

Total comprehensive income/(loss) for the year after tax

-

6,378,972

(70,721,918)

(64,342,946)


 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

Issue of share capital

58,524,106

-

-

58,524,106

Issue of Options

-

360,260

-

360,260

Settlement of vested PR's

-

(2,998)

-

(2,998)

Share-based payments

-

658,111

-

658,111

Share issue costs

(3,360,651)

-

-

(3,360,651)

Balance at 31 December 2022

340,972,669

30,468,589

(239,765,242)

131,676,016






At 1 January 2021

208,963,513

16,580,975

(166,633,135)

58,911,353

 

Loss for the year

-

-

(2,410,189)

(2,410,189)

Other comprehensive income

-

4,855,236

-

4,855,236

Total comprehensive income/(loss) for the year after tax

-

4,855,236

(2,410,189)

2,445,047






Transactions with owners in their capacity as owners:





Issue of share capital

80,305,041

-

-

80,305,041

Issue of Options

-

1,072,790

-

1,072,790

Settlement of vested PR's


(173,722)


(173,722)

Share-based payments

-

738,965

-

738,965

Share issue costs

(3,459,340)

-

-

(3,459,340)

Balance at 31 December 2021

285,809,214

23,074,244

(169,043,324)

139,840,134






The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMEBR 2022


Note

2022

2021

 


$

$

Cash flows from operating activities




Payment to suppliers and employees

 

(4,907,742)

(4,594,024)

Interest and other income received


20,126

841

Interest & finance costs


-

(1,052,539)

Net cash flows used in operating activities

6(b)

(4,887,616)

(5,645,722)

 


 


Cash flows from investing activities


 


Payments for equity accounted investments


(10,693,565)

-

Payments for exploration and evaluation activities


(52,644,427)

(41,791,086)

Contribution from Joint Operation Partners in relation to Exploration


1,078,866

20,816,000

Proceeds (payment) for Bonds


137,930

(112,730)

Proceeds from Sale of tax credits


-

24,233,263

Distribution from Equity Accounted Investments


4,281,910

-

Net cash flows generated from/used in investing activities


(57,839,286)

3,145,447

 


 


Cash flows from financing activities


 


Proceeds from issue of shares

14

47,052,778

42,521,478

Share issue costs


(3,149,329)

(2,523,150)

Repayment of borrowings


-

(20,909,692)

Net cash flows from financing activities


43,903,449

19,088,636

 


 


Net increase/(decrease) in cash and cash equivalents


(18,823,453)

16,588,361



 


Cash and cash equivalents at the beginning of the year


32,317,887

14,845,347

Effect of exchange rate fluctuations on cash held


629,297

884,179

Cash and cash equivalents at end of year

6(a)

14,123,731

32,317,887

The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.

 

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