Annual Financial Report
30 March 2015
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 2014 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 2014 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.
CHAIRMAN'S STATEMENT
Dear Shareholders
It has been a landmark year. The Moroccan project provided a significant
challenge for our new MD who rose to the occasion and steered the Company
through the ensuing turbulence.
Thanks to David's endeavours we have emerged with a new name, 88 Energy
Limited; a new project in Alaska and a recapitalised entity complimented by a
Board with in excess of 100 years of oil and gas experience. We look forward
with enthusiasm to the future that lies ahead.
The newly acquired Project Icewine on the North Slope of Alaska is a highly
leveraged opportunity into which 88 Energy has first mover advantage with
ground floor entry and operatorship. It's the type of opportunity a small
explorer should identify with if it desires to get on the front foot and make a
difference.
The North Slope of Alaska is a mature oil producing region, hosting the largest
onshore field in North America. Significant infrastructure is in place
including an all year round access road, the Dalton Highway, and the
TransAlaska Pipeline System (TAPS), both of which run through our newly
acquired Project Icewine.
Significantly, Project Icewine contains two play types that are considered
highly prospective with considerable upside. The conventional oil play is
ranked number 1 by the US Geological Survey for onshore exploration potential
in North America and the unconventional play has an independently estimated
gross unrisked mean prospective resource of 492 million barrels of recoverable
oil (being up to ~431 million barrels net to the Company based on an 87.5%
interest) from 8 billion barrels estimated oil in place. Project Icewine's
location on the only year round access road, adjacent to the TransAlaska
pipeline, means that any success we may have can be quickly monetised.
Frontier exploration by its very nature is characterised by high risk and high
rewards. There are no guarantees of success, however your Board is committed to
managing 88 Energy with competence and integrity in a way that maximises the
opportunity for shareholders to participate in the economic benefits of prudent
exploration and development.
On behalf of the Board, I welcome those new shareholders who participated in
the recent successful capital raising and thank our existing shareholders for
your continued support of the Company.
Yours faithfully,
Michael Evans
Non-Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Note 2014 2013
$ $
Income 3(a) 175,848 505,937
Administrative expenses 3(b) (2,858,366) (2,549,059)
Occupancy expenses (1,028,345) (616,565)
Employee benefit expenses 3(c) (1,179,662) (1,022,062)
Share-based payment expense 17 (1,716,426) (604,843)
Depreciation and amortisation expense (25,654) (24,933)
Exploration expenditure expensed as (400,717) (172,818)
incurred
Exploration expenditure written off 10 (20,229,361) (2,112,508)
Impairment of available-for-sale - (230,782)
investments
Loss on available-for-sale investments (14,216) (63,120)
Interest expense (89) (827)
Foreign exchange losses (436,117) -
Loss before income tax (27,713,105) (6,891,580)
Income tax expense 4 - -
Net loss attributable to members of the (27,713,105) (6,891,580)
parent
Other comprehensive income for the year
Other comprehensive to be recycled to
profit or loss in subsequent periods:
Change in fair value of (60,061) 60,061
available-for-sale investments (net of
tax)
Total comprehensive income for the year (27,773,166) (6,831,519)
Basic and diluted loss per share 5 (9.65) (3.85)*
(cents)
* The loss per share calculations for all periods prior to 31 December 2014
have been adjusted by factors of 1.138 to reflect the bonus element of the 18
February 2015 share placement where placement participants received one free
attaching listed option for every two placement shares.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Note 2014 2013
$ $
ASSETS
Current Assets
Cash and cash equivalents 6 805,210 6,089,313
Other receivables 7 266,284 121,212
Total Current Assets 1,071,494 6,210,525
Non-Current Assets
Plant and equipment 8 23,590 49,243
Other financial assets 9 42,726 3,566,500
Exploration and evaluation expenditure 10 - 7,742,856
Other assets 11 604,695 -
Total Non-Current Assets 671,011 11,358,599
TOTAL ASSETS 1,742,505 17,569,124
LIABILITIES
Current Liabilities
Trade and other payables 12 393,933 915,761
Total Current Liabilities 393,933 915,761
TOTAL LIABILITIES 393,933 915,761
NET ASSETS 1,348,572 16,653,363
EQUITY
Contributed equity 13(a) 67,985,300 55,889,563
Shares reserved for share plans 13(a) (1,667,500) -
Reserves 13(b) 12,741,333 10,761,256
Accumulated losses (77,710,561) (49,997,456)
TOTAL EQUITY 1,348,572 16,653,363
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Issued Shares Share Available-for-sale Accumulated Total
reserved based investments losses
capital for share payment reserve equity
plans reserve $
$ $ $
$ $
Balance at 1 January 49,196,225 - 10,096,102 - (43,105,876) 16,186,451
2013
Loss for the year - - - - (6,891,580) (6,891,580)
Other comprehensive - - - 60,061 - 60,061
income/(loss)
Total comprehensive - - - 60,061 (6,891,580) (6,831,519)
loss for the year, net
of tax
Shares issued during 7,063,943 - - - - 7,063,943
the year
Share-based payments - - 605,093 - - 605,093
Equity raising costs (370,605) - - - - (370,605)
Balance at 31 December 55,889,563 - 10,701,195 60,061 (49,997,456) 16,653,363
2013
Balance at 1 January 55,889,563 - 10,701,195 60,061 (49,997,456) 16,653,363
2014
Loss for the year - - - - (27,713,105) (27,713,105)
Other comprehensive
income/(loss) - - - (60,061) - (60,061)
Total comprehensive - - - (60,061) (27,713,105) (27,773,166)
loss for the year, net
of tax
Shares issued during 14,412,255 (1,751,600) - - - 12,660,655
the year
Shares cancelled (84,100) 84,100 - - - -
Share-based payments - - 2,040,138 - - 2,040,138
Equity raising costs (2,232,418) - - - - (2,232,418)
Balance at 31 December 67,985,300 (1,667,500) 12,741,333 - (77,710,561) 1,348,572
2014
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
Note 2014 2013
$ $
Cash flows from operating activities
Interest received 175,848 69,331
Payments to suppliers and employees (6,386,643) (3,686,428)
Net cash flows used in operating 6 (6,210,795) (3,617,097)
activities
Cash flows from investing activities
Payments for exploration and evaluation (9,300,344) (707,045)
activities
Project Icewine deposit (604,695) -
Payments for plant and equipment - (30,467)
Loans to other entities (300,000) -
Loans repaid by other entities 300,000 -
Purchase of available-for-sale - (609,402)
investments
Proceeds from sale of available-for-sale 79,248 221,495
investments
Net cash flows used in investing (9,825,791) (1,125,419)
activities
Cash flows from financing activities
Proceeds from issue of shares 11,100,374 7,063,943
Share issue costs (347,891) (370,605)
Net cash flows from financing activities 10,752,483 6,693,338
Net increase/(decrease) in cash and cash (5,284,103) 1,950,822
equivalents
Effects of exchange rate changes on cash - (36,419)
and cash equivalents
Cash and cash equivalents at beginning 6,089,313 4,174,910
of year
Cash and cash equivalents at end of year 6 805,210 6,089,313
The above consolidated statements should be read in conjunction with the
accompanying notes
END
David Wall
Managing Director
88 Energy Limited
Level 2, 5 Ord Street
West Perth WA 6005, Australia
Ph: +61 8 9485 0990
www.88energy.com
Contacts
RFC Ambrian Limited
As Nominated Adviser
Mr Oliver Morse
+61 8 9480 2500
Refer to the Independent Resource Report in the most recent Prospectus on the
Company website for details. Adjusting for the risk of geological success, this
equates to a gross mean prospective resource of 200 million barrels of
recoverable oil for Project Icewine (~175 million barrels net to the Company
based on an 87.5% working interest). The estimates of quantities of petroleum
that may potentially be recovered by the application of future development
project(s) relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further exploration
appraisal and evaluation is required to determine the existence of a
significant quantity of potentially moveable hydrocarbons. Prospective resource
assessments were estimated using probabilistic methods in accordance with
SPE-PRMS standards.
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