Final Results
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas
11 October 2013
Europa Oil & Gas (Holdings) plc (`Europa' or `the Company')
Final Results for the year to 31 July 2013
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 2013.
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 paper copy in early November.
Operational highlights
* Farm-in secured with Kosmos Energy Ireland (`Kosmos') for two blocks
offshore Ireland
* Converted two Irish Licence Options to Frontier Exploration Licences
(`FEL')
* Commenced 3D seismic acquisition programme offshore Ireland
* Identified large shallow gas prospects on Béarn des Gaves permit onshore
France
* Wrote down the Tarbes val d'Adour intangible asset onshore France
* Acquired 77 km of 2D seismic and identified four new conventional
hydrocarbon leads in North East Lincolnshire (PEDL181)
* Favourable judgment at High Court for UK Holmwood planning appeal
* 182 boepd recovered from three UK onshore fields - ahead of forecast
Financial performance
* Group revenue £4.5 million (2012: £5.1 million)
* Pre tax profit £0.4 million (2012: loss £12.1 million)
* Pre tax profit excluding exploration write-off and impairment £0.6 million
(2012: £1.2 million)
* Cash generated from operations £1.6 million (2012: £2.1 million)
* Net cash balances as at 31 July 2013 £0.7 million (31 July 2012: £0.2
million)
Post reporting date events
* Renewed Béarn des Gaves permit until 23 March 2017
* Received £0.3 million from Kosmos in respect of costs on the two Irish
licence options
* 3D seismic acquisition in Ireland on-going, FEL 3/13 is completed
* Two new subsidiary companies established for Irish licence interests
* Leith Hill Action Group announced its intention to appeal against Europa's
successful High Court challenge regarding the Holmwood prospect
* Underground Coal Gasification licences allowed to lapse
Europa's CEO, Hugh Mackay said, "Significant milestones have been met at two of
our most highly prospective projects, each of which has company-making
potential. In Ireland, not only did Kosmos agree to farm-in to our two offshore
licences, but has effectively brought forward the 3D seismic acquisition
programme by a year to July 2013. This demonstrates both their ambition and
resources and ensures the momentum generated will continue into the winter, as
the new data is processed and interpreted. Meanwhile in France, the
identification of a large shallow gas prospect at Béarn des Gaves with mean
un-risked resources of 416 bcf and the recent renewal of the permit, allows us
to press ahead with well permitting and to reopen the data room for potential
farm-in partners.
"In the UK, the final quarter of the year will see us participate in the
drilling of the Wressle prospect which we rate as having a 1 in 3 chance of
materially adding to our existing production. While on the nearby licence
PEDL181, we will be completing technical work on both newly acquired and
existing seismic data, and delivering drillable prospects. We are also
evaluating a number of new ventures where we can apply our expertise and add
value. This is an exciting period for Europa and in particular I look forward
to providing updates as we advance our two company-making projects in Ireland
and France."
Chairman's statement
At our Annual General Meeting in December 2012 we stated our objective to
become an upper quartile exploration and production company on AIM by 2017. I
am pleased to report that we have taken a very significant step towards
achieving that objective with our farm-out in Ireland.
Our Irish licences contain prospects that may hold very large volumes of oil.
Exploration success at these prospects would be utterly transformational for
Europa. In April 2013 we were delighted to announce a farm-in agreement with
Kosmos Energy Ltd (`Kosmos'), a leading independent oil and gas exploration and
production company. They have immediately moved us into an accelerated
exploration programme. Kosmos pioneered the Cretaceous stratigraphic play that
has resulted in significant exploration success in the Atlantic margin basins.
With such a pedigree, we view Kosmos' participation in our Irish blocks as a
vote of confidence in the technical work we carried out. Today, Europa has a
15% free carry on potentially two high impact wells operated by a leading
frontier explorer in an emerging hydrocarbon hotspot. We have now moved from
talk to action. Should the state of the art 3D seismic we acquired this summer
confirm the prospectivity then by the summer of 2014 we could be committing to
drill a playmaker exploration well in 2015. This is fast track deepwater
frontier exploration and we are already a year ahead of the competition.
New technical work in the Béarn des Gaves permit in the Aquitaine Basin,
onshore France has substantially upgraded the gas resources at the Berenx
shallow prospect to more than 400 bcf. Exploration success would be a company
maker. Having only just received notification of the renewal of the permit we
have initiated drilling planning and will immediately look to restart the
farm-out process with a view to drilling a shallow well within the next 18
months.
Europa will continue to pursue new ground floor exploration ventures with
minimal entry costs. The technical insights that we are acquiring in Ireland
provide us with a competitive edge that we will seek to exploit through
participation in the next Irish Atlantic margin licensing round. We are also
investigating other ground floor exploration opportunities in the North
Atlantic and Mediterranean as well as further afield.
We continue to work up our onshore UK portfolio. The Wressle well in PEDL180
will be spudded towards the end of the year. We acquired new seismic in PEDL181
and are working up new prospects that may become candidates for drilling next
year. We continue to seek planning approval for the Holmwood well in PEDL143.
In parallel with this exploration activity we are seeking opportunities to
acquire production either from actively producing fields or more brownfield
activity. We are also reviewing consolidation opportunities. The Europa team is
actively in the deal flow and announcements will be made as and when
significant events occur.
Europa is not just an oil and gas explorer but also a producer. For the second
consecutive year, our production from three UK onshore fields has hit our
forecast. This year we produced 182 boepd which generated revenues of £4.5
million over the period, a lower figure than the previous year's average of 200
boepd due to the anticipated natural decline in production. We have completed
an integrated reservoir and production engineering study that will provide the
technical basis for the future management of the West Firsby field. After
taking into account the cost of two work-overs on the West Firsby well in H1
2013 and costs associated with reservoir studies undertaken in H2 2013, profit
before tax (before exploration write-offs) for the year was £0.6 million (2012:
£1.2 million). Costs were higher over the period, predominantly as a result of
additional spend on the work-overs, and exaggerated by administrative costs in
the prior period having benefitted from a credit from the disposal of the
Ukraine business.
Cash as at 31 July 2013 stood at £0.7 million (2012: £0.2 million). With an
additional £0.3 million received from Kosmos in August 2013 in respect of Irish
back costs, we can fully fund our share of drilling the Wressle prospect on
PEDL180 later this year.
Largely as a result of the progress made during the 12 months under review, the
year ahead promises to be a highly active period for Europa including drilling
Wressle, completing 3D seismic acquisition offshore Ireland with subsequent
processing, interpretation and prospect generation; generating drillable
prospects in PEDL181. In addition, following the recent renewal of the Béarn
des Gaves permit, we intend to commence the permitting process required to
drill a well in the 416 bcf Berenx shallow prospect, in conjunction with
reopening a data room for potential partners. Following the favourable High
Court judgment in July 2013 regarding our application to drill a temporary
exploration well on the Holmwood prospect in the Weald Basin, we are hopeful
that we will eventually be in a position to drill what we believe to be one of
the best undrilled prospects onshore UK.
Outside our existing portfolio, having proved our low cost exploration model
generates value, we are actively looking to acquire new licences around the
world which match our criteria and where we can replicate the success we
achieved offshore Ireland. We are working hard to close the gap which has
opened up between our current share price and the value of our risked and
diluted net resources and production. With a team in place that has already
achieved much success, as evidenced by Kosmos' decision to farm-in to our Irish
licences, I believe we are well placed to become an upper quartile oil and gas
company on AIM and in the process generate significant value for shareholders.
Finally, I would like to thank the management team, directors and advisers for
their hard work during the year and also to our shareholders for their
continued support over the period.
WH Adamson
Chairman
Operational review
Europa operates exploration, production and appraisal assets across three core
EU countries.
Ireland - Exploration - Porcupine Basin Frontier Exploration Licences (`FELs')
2/13 and 3/13- Europa (15%); Kosmos (85% and operator)
In November 2011 Europa was awarded two Licence Options (`LO') in the South
Porcupine Basin offshore southwest Ireland; LO 11/7 and LO 11/8. The South
Porcupine Basin is underexplored and had been overlooked by the mainstream oil
and gas industry. The exploration model for the licences involves a new play,
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 considered to be analogous to the
Cretaceous play in the equatorial Atlantic Margin province that has delivered
the Jubilee and Mahogany oil fields. Previous drilling offshore West Ireland
during the 1970s and 1980s focused on a North Sea style Jurassic play and
failed to find commercial hydrocarbons. We believe that the new Cretaceous
play, enabled by modern 3D seismic and deepwater drilling technology, has the
potential to deliver commercial hydrocarbon discoveries.
Europa's interpretation of pre-existing 2D seismic identified two previously
unknown prospects in the Lower Cretaceous stratigraphic play: Mullen in LO 11/7
and Kiernan in LO 11/8. The Company estimates these to have gross mean
un-risked indicative resources of 482 million barrels of oil and 1.612 billion
barrels of oil equivalent respectively. Information about the Mullen and
Kiernan prospects were provided to the markets in press releases dated 6
November 2012 and 16 January 2013.
Europa launched its farm-out of both Licence Options in November 2012 and
opened a data room to prospective farminees in January 2013. There was
significant interest from large and mid-cap oil companies and on 18 April 2013
Europa announced it had successfully farmed out both LO 11/7 and LO 11/8 to
Kosmos.
Kosmos agreed to farm-in to each Licence Option, earning an 85% interest in,
and operatorship of, each licence. The transfer of interest and operatorship
was approved by the Irish Government on 8 May 2013 and Kosmos, as operator,
undertook to accelerate the conversion of LOs 11/07 and 11/08 into Frontier
Exploration Licences (`FELs'). FELs were granted by the Irish Government
commencing on 5 July 2013. Following the mandatory 25% relinquishment, LO 11/7
became FEL 2/13 and LO 11/8 became FEL 3/13. Each FEL lasts for a period of 15
years and is broken down into a maximum of four phases. The first phase of
three years includes a commitment to acquire 740 km2 of 3D seismic on each
licence. The second phase lasts four years and has a commitment to drill an
exploration well on each licence.
Under the terms of the farm-in Kosmos will fully fund the costs of a 3D seismic
programme in the first phase of each FEL. Contingent upon an election of the
companies to enter into the second phase of the FEL, which carries a drilling
commitment, Kosmos will incur 100% of the costs of the first exploration well
on each FEL. 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%).
In parallel with the FEL application process Kosmos secured a seismic vessel
and obtained the appropriate permits from the relevant departments of the Irish
Government to enable 3D seismic acquisition during the summer 2013 season. The
MV Polarcus Amani started acquisition on 5 July 2013. The early conversion to
an FEL in July 2013 means that seismic has been obtained a year earlier than
would have been had we followed the conventional timetable and converted in
November. FEL 3/13 has been completed and the first phase work commitment on
this licence is already fulfilled. Seismic acquisition is on-going over FEL 2/
13.
The 3D seismic being acquired over the licences is a very significant first
step towards realising the hydrocarbon potential of the basin. Based on the
historic 2D seismic, Europa estimates geological risk to be around 1 in 10 for
both the Kiernan and Mullen prospects. 3D has the potential to substantially
de-risk these prospects. Particularly if features like conformance, flat events
and AVO anomalies are observed on the 3D seismic 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 currently being acquired. The prospect sizes will likely remain
large and the quantum of resources is likely to be hundreds of millions of
barrels.
In July 2013 ExxonMobil completed drilling the Dunquin exploration well in
licence FEL 3/04 which lies in the South Porcupine basin between FEL 2/13 and 3
/13. The well targeted a very different hydrocarbon play comprising carbonate
reef reservoir on a volcanic ridge in the middle of the basin and proved to be
water bearing with no commercially recoverable hydrocarbons. This result is
irrelevant to the Cretaceous turbidite sandstone stratigraphic play being
pursued in FEL 2/13 and 3/13 since we are pursuing a completely different
reservoir and trap on the flanks of the basin. Of more relevance is the report
that oil shows were present in sidewall cores over the upper 44m section of the
Dunquin reservoir, suggesting the presence of a possible residual oil column.
If correct this indicates that an oil prone source rock is present in the basin
and may de-risk the source rock component of the Cretaceous stratigraphic play.
The pioneering work in the Porcupine basin by the participants in the 2011
Atlantic Margin Licensing Round has been endorsed by the entry of mid-cap and
large oil companies during the first half of 2013. At the same time as farming
into Europa's licences Kosmos also farmed into Antrim's licence FEL 1/13. On 7
May 2013 Cairn Energy announced a farm-in to Chrysaor operated FELs 2/04 and 4/
08 and LO 11/2. On 28 June 2013 Woodside Petroleum announced a farm-in to
Petrel's LO 11/4 and 11/6 and Bluestack's LO 11/3.
The earliest feasible drill date in our licences is 2015. The operator Kosmos
has a new build, 6th generation, ultra-deepwater drillship, Atwood Achiever
scheduled for delivery in mid 2014 for a three year contract. With a maximum
water depth capability of 3,650m the drillship can work in the 1,000-2,000m
water depths in our licences. Further announcements will be made in due course
and following prospect mapping with the new seismic in H1 2014.
We are excited by the potential of a new play in an underexplored and
overlooked basin. We are at the forefront of exploration of this play. The
technical insights that Europa has, and will gain, from its work in the South
Porcupine Basin provides a competitive edge that we will seek to exploit
through participation in future licensing rounds in Ireland.
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 500m 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 possesses all data connected to both wells. Good quality 2D seismic data
exists for the licence as well as a reprocessed 3D seismic dataset covering the
area between Berenx and Lacq. 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 better definition of a shallow gas prospect,
Berenx Shallow. Previous exploration on the concession had focused only on the
deep lying gas prospectivity. A comprehensive review of historic well results,
re-interpretation of structure and better understanding of proven hydrocarbon
bearing reservoir distribution in the shallow Cretaceous and Late Jurassic
carbonate sediments by Europa has upgraded the Berenx Shallow gas prospectivity
and suggests potential gross mean un-risked resources of 416 bcf.
Gross un-risked resources bcf
Reservoir P90 P50 P10 mean
Neocomian 126 240 402 254
Kimmeridgian 66 156 261 162
Total 416
The Company's strategy for Béarn des Gaves is to first target the shallow gas
play, drill a well to deliver a commercial flow rate and, on the back of
success, to further appraise shallow prospectivity and undertake work to
de-risk the Berenx Deep appraisal project. The anticipated total depth of the
Berenx Shallow well is approximately 2,500m.
Europa submitted its application for the renewal of Béarn des Gaves in November
2011 and the renewal process formally started on 22 March 2012. Post-period end
on 3 October 2013, the Company was informed by the French authorities that the
permit has been successfully renewed. This next phase covers a period of five
years from 22 March 2012 and carries an expenditure commitment of approximately
€2.5 million. The Directors intend to immediately commence a farm-out process
for the permit in tandem with well planning and permitting for a well location
on Berenx Shallow ahead of drilling in the next 18 months.
The permit benefits from being located only 20 km from the Lacq Field, which
potentially provides a straightforward export route, allowing gas to be
processed in an existing facility with spare capacity.
France - Tarbes val d'Adour 100%
As announced in July, the Tarbes Val d'Adour permit has not yet been renewed by
the French authorities. Under the terms of the agreement, if notification of
renewal has not been received by the expiry date then the permits are deemed to
have lapsed.
Europa has submitted an appeal to the relevant French authorities. Further
updates with respect to the appeal process will be provided by the Company as
and when it is appropriate to do so. Total aggregate exploration costs of £0.2
million previously incurred on the permit by Europa has been written off in the
current financial period.
UK - NE Lincolnshire - PEDL180 33.3% (Wressle)
PEDL180 covers an area of 100 km2 of the East Midlands Petroleum Province south
of the Crosby Warren field. 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%). 49 km2 of 3D seismic acquisition
covering PEDL180 and PEDL182 was acquired in Q1 2012 and has been processed and
interpreted. The operator estimates the Wressle prospect to hold mean gross
un-risked recoverable resources of 2.1 mmbo. Drilling at Wressle is planned to
take place towards the end of 2013.
UK - NE Lincolnshire - PEDL182 33.3% (Broughton)
To the north, PEDL182 is an area of 40 km2 with the same equity structure as
that of PEDL180. 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.
UK - NE Lincolnshire - PEDL181 50%
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 this play 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, an analogous
trend to the west of Caistor anticline. Europa's existing oil production at the
Crosby Warren field lies at the westernmost end of the anticline. Technical
evaluation has confirmed several conventional prospects/leads on PEDL181. Four
of these in the southern part of the licence, all with reservoirs of
Carboniferous age, 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 has been performed together with processing of the new data.
Interpretation of the integrated dataset is being performed with the objective
of maturing the four leads and defining drillable prospects. This work is due
to be completed later this year, at which point the results will be released
along with a forward plan for the licence.
In addition to the conventional prospectivity the licence may also contain
shale gas potential in the South Humber basin. Interpretation of the new
seismic data suggests that this basin may contain a much thicker sequence of
Namurian age sediments than was previously thought. To date this sedimentary
package has not been drilled in the South Humber basin. The Namurian section in
the Gainsborough Trough basin, 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 South
Humber basin may contain a Bowland Shale equivalent with similar potential for
shale gas.
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 Jurassic sandstone project 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 exploration prospects in the UK onshore.
The prospect lies south of Dorking within the Surrey Hills Area of Outstanding
Natural Beauty and 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.
As announced on 1 November 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
in the Royal Courts of Justice the judge, Mr Justice Ouseley, gave judgment in
favour of quashing the Inspector's decision. The judge also granted the Leith
Hill Action Group (`LHAG') leave to appeal to the Court of Appeal against his
judgment. On 19 September 2013, LHAG submitted an appeal to the Court of
Appeal. The hearing is expected to be of one day duration and to take place
between February and May 2014. If the Court rules in favour of Europa, the
appeal will be remitted to the Planning Inspectorate for redetermination, which
may involve a further planning inquiry, for the exploratory drill site at
Holmwood.
UK - Production (West Firsby 100%; Crosby Warren 100%; Whisby W4 well 65%)
The three UK fields produced 182 boepd in line with management expectations.
During the period, workovers were successfully completed on the West Firsby
wells which are now back on production. Detailed production and reservoir
engineering studies have been conducted and the results implemented with the
aim of maximising recovery rates at the producing fields.
Proven and probable (`2P') producing reserves of the three producing fields was
estimated at 0.65 mmbo by the CPR (as at 31 December 2011).
UK - Unconventional resources - Underground Coal Gasification (UCG) 90%
Europa (90%) and Oxford Energy Consulting Limited (10%) acquired two UCG
licences on the 22 September 2010 from the Coal Authority, using powers
conferred on it by the Coal Industry Act 1994; one being the Holderness
Offshore Area (CA11/UCG/0015/S) and the other the South Humber Offshore Area
(CA11/UCG/0016/S).
Following a technical evaluation, Europa concluded there is at present no
commercial means of exploiting the coal using UCG at the depth at which the
coal occurs and taking into account thickness of the individual coal seams. As
a result, these licences were allowed to lapse on the 22 September 2013.
UK - Unconventional resources - Shale Gas
As previously noted PEDL181 has some potential for shale gas.
Romania
The Company continues to hold interests in two exploration licences in Romania:
Brates (100%) and Bacau (19%). Both licences are in the process of being
relinquished. The assets were fully written down in the year ended 31 July
2012.
Conclusion
Thanks to the success of the in-house technical work undertaken over the course
of the year we have two potential company makers in our portfolio offshore
Ireland and onshore France. Ireland is funded and we have begun an exploration
programme that could lead to realisation of this potential by drilling in 2015.
Plenty of work remains to be done on our existing projects and on new ventures
in the year ahead. We are delighted with the pace that Kosmos has set in
advancing the Irish licences since taking over operatorship. By acquiring 3D
seismic in summer 2013, the partnership has gained a year and we can focus on
processing and interpreting the seismic during the winter months to further
define the prospectivity and identify possible drilling targets. Having secured
the renewal of Béarn des Gaves, we will target securing a farm-in partner with
a view to drilling a well at Berenx Shallow in the next 18 months. In the UK,
we are close to identifying drillable prospects on PEDL181 while on PEDL180 we
expect to drill Wressle towards the end of 2013. I am excited about the year
ahead and look forward to making further significant progress on all our
projects and particularly our two company makers.
Hugh Mackay
CEO
The financial information set out below does not constitute the company's
statutory accounts for 2013 or 2012. 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 2012. Statutory accounts for the years
ended 31 July 2013 and 31 July 2012 have been reported on by the Independent
Auditors.
The Independent Auditors' Report on the Annual Report and Financial Statements
for 2013 was 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.
The Independent Auditors' Report on the Annual Report and Financial Statements
for 2012 was unqualified, did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006 but drew attention by way of emphasis to matters
concerning the renewal of the French exploration permits.
Statutory accounts for the year ended 31 July 2012 have been filed with the
Registrar of Companies. The statutory accounts for the year ended 31 July 2013
will be delivered to the Registrar in due course.
Consolidated statement of comprehensive income
For the year ended 31 July 2013 2012
Note £000 £000
Revenue 4,503 5,080
Other cost of sales (2,954) (2,692)
Exploration write-off 1 (231) (12,451)
Impairment of producing fields - (785)
Total cost of sales (3,185) (15,928)
--------- ---------
Gross profit/ (loss) 1,318 (10,848)
Administrative expenses (718) (755)
Finance income 15 -
Finance expense (208) (452)
--------- ---------
Profit/(loss) before taxation 407 (12,055)
Taxation (charge)/credit (508) 739
--------- ---------
Loss for the year attributable to the equity (101) (11,316)
shareholders of the parent
--------- ---------
Other comprehensive income / (loss)
Those that may be reclassified to profit and loss
Exchange gain / (loss) arising on translation of 37 (36)
foreign operations
--------- ---------
Total comprehensive loss for the year attributable (64) (11,352)
to the equity shareholders of the parent
========= =========
Loss per share (LPS) attributable to the Pence per share Pence per share
equity
shareholders of the parent
Basic and diluted LPS (0.07)p (8.33)p
Consolidated statement of financial position
As at 31 July 2013 2012
Note £000 £000
Assets
Non-current assets
Intangible assets 1 2,446 2,127
Property, plant and equipment 4,383 4,959
Deferred tax asset - 14
--------- ---------
Total non-current assets 6,829 7,100
--------- ---------
Current assets
Inventories 33 56
Trade and other receivables 928 1,250
Cash and cash equivalents 672 230
--------- ---------
1,633 1,536
--------- ---------
Other current assets 338 338
Assets classified as held for sale
--------- ---------
Total assets 8,800 8,974
========= =========
Liabilities
Current liabilities
Trade and other payables (1,227) (1,880)
Current tax liabilities (541) (87)
Derivative (48) (64)
Short-term borrowings (208) (230)
Short-term provisions (290) -
--------- ---------
Total current liabilities (2,314) (2,261)
--------- ---------
Non-current liabilities
Deferred tax liabilities (2,902) (2,948)
Long-term provisions (1,681) (1,950)
--------- ---------
Total non-current liabilities (4,583) (4,898)
--------- ---------
Total liabilities (6,897) (7,159)
--------- ---------
Net assets 1,903 1,815
========= =========
Capital and reserves attributable to equity
holders
of the parent
Share capital 1,379 1,379
Share premium 13,160 13,160
Merger reserve 2,868 2,868
Foreign exchange reserve 417 380
Retained deficit (15,921) (15,972)
--------- ---------
Total equity 1,903 1,815
========= =========
Consolidated statement of changes in equity
Attributable to the equity holders of the parent
Foreign
Share Share Merger exchange Retained Total
capital premium reserve reserve deficit equity
£000 £000 £000 £000 £000 £000
Balance at 1 August 1,301 12,573 2,868 416 (4,719) 12,439
2011
Total comprehensive - - - (36) (11,316) (11,352)
loss for the year
Share based payment - - - - 63 63
Issue of share 78 587 - - - 665
capital (net of
issue costs)
--------- --------- --------- --------- --------- ---------
Balance at 31 July 1,379 13,160 2,868 380 (15,972) 1,815
2012
========= ========= ========= ========= ========= =========
£000 £000 £000 £000 £000 £000
Balance at 1 August 1,379 13,160 2,868 380 (15,972) 1,815
2012
Total comprehensive - - - 37 (101) (64)
loss for the year
Share based payment - - - - 152 152
--------- --------- --------- --------- --------- ---------
Balance at 31 July 1,379 13,160 2,868 417 (15,921) 1,903
2013
========= ========= ========= ========= ========= =========
Consolidated statement of cash flows
For the year ended 31 July 2013 2012
£000 £000
Cash flows from operating activities
Loss after tax (101) (11,316)
Adjustments for:
Share based payments 152 63
Depreciation 578 673
Exploration write-off 231 12,451
Impairment of property, plant & equipment - 785
Finance income (15) -
Finance expense 208 452
Taxation expense /(credit) 508 (739)
Decrease/ (Increase) in trade and other 621 (647)
receivables
Decrease/ (Increase) in inventories 23 (13)
(Decrease) / Increase in trade and other payables (535) 350
--------- ---------
Cash generated from operations 1,670 2,059
Income tax payment (84) -
--------- ---------
Net cash from operating activities 1,586 2,059
========= =========
Cash flows from investing activities
Purchase of property, plant and equipment (5) (78)
Purchase of intangible assets (1,020) (2,955)
Expenditure on well decommissioning (51) -
--------- ---------
Net cash used in investing activities (1,076) (3,033)
========= =========
Cash flows from financing activities
Proceeds from issue of share capital (net of issue - 665
costs)
Decrease in payables related to the issue of share - (115)
capital
Repayment of borrowings (22) (1,025)
Finance costs (34) (289)
--------- ---------
Net cash used in financing activities (56) (764)
========= =========
Net increase / (decrease) in cash and cash 454 (1,738)
equivalents
Exchange (loss) /gain on cash and cash equivalents (12) 92
Cash and cash equivalents at beginning of year 230 1,876
--------- ---------
Cash and cash equivalents at end of year 672 230
========= =========
Note 1 - Intangible assets
Intangible assets - Group 2013 2012
£000 £000
At 1 August 2,127 11,348
Additions 550 3,230
Exploration write-off (231) (12,451)
--------- ---------
At 31 July 2,446 2,127
========= =========
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
2013 2012
£000 £000
France (Béarn des Gaves permit) 950 1,039
Ireland 78 66
UK PEDL143 (Holmwood) 463 437
UK PEDL180 (Wressle) 315 279
UK PEDL181 (Caistor) 429 113
UK PEDL182 (Broughton) 211 193
--------- ---------
Total 2,446 2,127
========= =========
2013 2012
£000 £000
Exploration write-off
France (Tarbes val d'Adour permit) 231 -
UK PEDL150 (Hykeham) - 2,057
Romania - 10,394
--------- ---------
Total 231 12,451
========= =========
The Tarbes Val d'Adour permit was not renewed by the French authorities within
the set timeframe of the renewal process. Under the terms of the agreement, if
notification of renewal has not been received by the expiry date then the
permit is deemed to have lapsed. While Europa has appealed against this
outcome, with this uncertainty, the intangible asset has been written off in
the period.
Certain of the UK exploration licences carry well commitments in 2014. If the
Group elects to continue with these licences, it will need to fund the drilling
of wells by raising finance or by farming down. If the Group is not able to
raise funding, 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 - Going Concern
In their assessment of going concern the directors note that the Group is
dependent on the existing bank facility in place. The current bank facility is
due to expire in January 2014. Based on correspondence with the Group's bankers
the directors have no reason to believe that the facility will not be renewed
on the same or similar acceptable terms in an appropriate timescale. Therefore
given this expectation and the continuing cash inflow from the Group's
producing assets the directors have concluded, at the time of approving the
financial statements, that there is a reasonable expectation, based on the
Group's cash flow forecasts, that the Group can continue in operational
existence for the foreseeable future, which is deemed to be at least 12 months
from the date of signing these financial statements. Accordingly they continue
to adopt the going concern basis in preparing the financial statements.
* * 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 currently produces
approximately 180 boepd in the UK, generating sufficient revenues to cover
corporate overheads. Its highly prospective exploration projects include the
Wressle prospect in the UK where a well is due to be drilled towards the end of
2013; and a joint venture with leading independent Kosmos Energy to explore two
licences in offshore Ireland in which Europa has 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.
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