LODGEMENT OF ANNUAL REPORT

88 Energy Limited

28 March 2024

 

28 March 2024

88 ENERGY LIMITED

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 2023 (the "Annual Report") has been lodged on the ASX along with the Company's 2023 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 2023 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: [phone]

Email:[e-mail]

Fivemark Partners, Investor and Media Relations                 

Michael Vaughan                                                                     Tel: [phone]

EurozHartleys Ltd

Dale Bryan                                                                               Tel: [phone]

Cavendish Capital Markets Limited                                     Tel: [phone]      

Derrick Lee                                                                              Tel: [phone]

Pearl Kellie                                                                              Tel: [phone]

CHAIRMAN'S STATEMENT

Dear Shareholders,

It is my pleasure to present 88 Energy's Annual Report, outlining our exploration and appraisal activities, operations, and financial position for the financial year 2023.

It has been another eventful year in the oil and gas market, with volatile prices and supply constraints arising from persisting geopolitical tensions, macroeconomic uncertainties, and the increasing role of renewable energy in the global energy mix. However, as greater focus is placed on the clean energy transition, governments and major utilities are beginning to realise more than ever that maintaining a reliable, secure supply of traditional energy is crucial to meeting future energy demands.

To successfully leverage these challenges and opportunities requires an openness to change and a high degree of flexibility, which I believe are part of 88 Energy's core strengths. Over the past two years, we have evolved our strategy to enhance shareholder value through identifying new and exciting opportunities across the oil and gas lifecycle. Our evolved strategy is evidenced through our ongoing exploration and appraisal agenda and portfolio balancing activities that we achieved during the year. This included divesting our interests in the non-core Yukon acreage and commencing activities to identify farm-in partners to augment future exploration and appraisal of our high-impact Alaskan assets. Also, expanding our footprint at Project Longhorn by gaining access to cost-effective work-over opportunities to increase production and cashflow, and new-country entry into Namibia which represents one of the last frontier oil and gas jurisdictions capable of delivering multi-billion-barrel discoveries, as evidenced by the recent offshore light oil discoveries.

The Hickory-1 exploration well at Project Phoenix was successfully completed in April 2023 with very positive results from the wireline logging suite and sidewall coring program. Hickory-1 was subsequently cased and suspended as planned, to carefully design the flow test and stimulation program in conjunction with industry experts, utilising available offset information and Hickory-1 data to provide the best possible outcome during the flow test operations that are now underway. Hickory-1 pre-drill expectations were met or exceeded on reservoir quality and thickness, with oil shows and net log pay calculated across all primary and secondary reservoirs and identified a new reservoir, the Upper Slope Fan System (Upper SFS), which had not been previously tested by 88 Energy or other nearby-operators. The Upper SFS had the best oil shows across all reservoirs intersected in the Hickory-1 well and the mapping of the Upper SFS demonstrated a reservoir zone more laterally extensive than previously considered.

We released an Independently certified Contingent Resource estimate for Project Phoenix of 250 million barrels of oil equivalent from the Basin Floor Fan (BFF) which is the deepest reservoir encountered in Hickory-1. The Contingent Resource was achieved by demonstrating reservoir continuity through seismic and well data to nearby third-party wells with successful flow tests in the BFF. The Contingent Resource confirmation at the BFF enabled Hickory-1 to be classified as a discovery, but more importantly, bodes well for the shallower and less thermally mature (more oil prone) Slope Fan System (SFS) and Shelf Margin Delta (SMD) reservoirs, which are the focus for the Hickory-1 flow test.

Our ongoing assessment of Icewine West identified a series of SMD prospects, the majority of which have yet to be drilled. Following recent exploration success with the SMD reservoir at Hickory-1, we intend to investigate these prospects to add to an already extensive Icewine West prospective resource portfolio.

Further North, at our Leonis Project, work progressed at pace with the reprocessing and interpretation of 3D seismic as well as a review of regional well data providing additional support for significant resource potential in the Upper Schrader Bluff (USB). We remain on track to delineate an independent, Certified Resource Estimate in 1H24, before commencing a formal farm-out program. 

In mid-year, we released an independent Prospective Resource update for Project Peregrine. The certification resulted in two new prospects (N12 and N13) being identified in the prolific Nanushuk Formation. The assessment also indicated that up to three independent prospects could be assessed from a single ice pad via a sidetrack from the Harrier-1 well pad, resulting in significantly lower exploration costs. While we remain committed to Project Peregrine, due to the proposed new regulations presented in September, governing the management of subsurface resources in the National Petroleum Reserve-A (NPR-A), we worked with the Bureau of Land Management Alaska (BLM) in the fourth quarter and received approval to suspend Project Peregrine leases for 12 months to 30 November 2024. The suspension provides relief from A$0.5 million of lease rentals and allows us to continue with refining internal geological and geophysical models and interpretation at minimum cost.

Through its investment in the Bighorn Energy LLC Joint Venture, the Company has acquired an expanded footprint in our producing Permian Basin assets at Project Longhorn. These acquisitions provide multiple development opportunities and additional production to enhance our current output of ~360 BOE/day. Project Longhorn has performed solidly since it was added to the portfolio in 2022 and supplements our core exploration and appraisal activities.

Finally, we executed a three-stage farm-in agreement for up to a 45% non-operated working interest in an onshore Petroleum Exploration Licence (PEL 93) covering a vast 18,500 km2 acreage position in the Owambo Basin of Namibia. This farm-in provides us with a fantastic opportunity to earn a significant working interest in a very large scale, highly prospective, under-explored acreage position. The forward work-program is scheduled to commence in Q2 2024, starting with a low impact 2D seismic program focusing on confirming the structural closures of the 10 independent leads previously identified and will be used to obtain a Maiden Prospective Resource Estimate and define potential drilling locations.

I wish to thank our small but dedicated team for their efforts in delivering key milestones over the past year, delineating future avenues of growth, and identifying value drivers in such a dynamic market environment.

The path to value recognition is not always linear, and I wish to express my gratitude to you, our shareholders, for your continuing dedication through the 88 Energy journey. Our Company is very well placed to unlock the huge potential value residing in our balanced exploration, appraisal, and production portfolio.

On behalf of the 88 Energy team, I wish you all a healthy and prosperous year ahead.

Yours faithfully,

Philip Byrne
Non-Executive Chairman

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

	Note	2023	2022
		$	$
Other income	3(a)	500,927	21,760
Share of profit/(loss) from equity accounted investment	11	1,665,442	3,317,877
Administrative expenses	3(b)	(2,690,171)	(2,778,962)
Occupancy expenses		(34,992)	(51,142)
Employee benefit expenses	3(c)	(2,911,375)	(2,335,914)
Share-based payment expense	18	(879,455)	(658,111)
Depreciation and amortisation expense		(64,228)	(60,307)
Finance cost		(8,544)	(8,583)
Other expenses		(478,961)	(12,869)
Foreign exchange (loss) / gain		(49,514)	493,647
Exploration & Evaluation Impairment/Expense	3(d)	(9,488,362)	(68,649,314)
Loss before income tax		(14,439,233)	(70,721,918)
Income tax expense	4	-	-
Loss after income tax for the year		(14,439,233)	(70,721,918)
Other comprehensive income / (loss) for the year Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations		(1,627,093)	6,378,972
Other comprehensive income / (loss) for the year, net of tax		(1,627,093)	(64,342,946)
Total comprehensive income / (loss) for the year attributable to members of 88 Energy Limited		(16,066,326)	(64,342,946)
Loss per share for the year attributable to the members of 88 Energy Limited:
Basic and diluted loss per share	5	(0.0005)	(0.0042)

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 2023

	Note	2023	2022
		$	$
ASSETS
Current Assets
Cash and cash equivalents	6 (a)	18,182,727	14,123,731
Trade and other receivables	7	3,973,934	1,549,816
Total Current Assets		22,156,661	15,673,547
Non-Current Assets
Plant and equipment	8	22,348	20,337
Exploration and evaluation expenditure	9	110,588,395	96,422,918
Other Assets	10	506,817	940,424
Equity accounted investments	11	23,251,219	19,968,658
Total Non-Current Assets		134,368,779	117,352,337
TOTAL ASSETS		156,525,440	133,025,884
LIABILITIES
Current Liabilities
Trade and other payables	12	556,544	1,105,132
Provisions	13	283,497	244,736
Total Current Liabilities		840,041	1,349,868
TOTAL LIABILITIES		840,041	1,349,868
NET ASSETS		155,685,399	131,676,016
EQUITY
Contributed equity	14	379,917,222	340,972,669
Reserves	15	29,972,652	30,468,589
Accumulated losses		(254,204,475)	(239,765,242)
TOTAL EQUITY		155,685,399	131,676,016

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 DECEMBER 2023

	Issued Capital	Reserves	Accumulated Losses	Total
	$	$	$	$
At 1 January 2023	340,972,669	30,468,589	(239,765,242)	131,676,016
Loss for the year	-	-	(14,439,233)	(14,439,233)
Other comprehensive income	-	(1,627,093)	-	(1,627,093)
Total comprehensive income/(loss) for the year after tax	-	(1,627,093)	(14,439,233)	(16,066,326)
Transactions with owners in their capacity as owners:
Issue of share capital	41,429,821	-	-	41,429,821
Issue of Options	-	251,701	-	251,701
Settlement of vested PR's	-	-	-	-
Share-based payments	-	879,455	-	879,455
Share issue costs	(2,485,268)	-	-	(2,485,268)
Balance at 31 December 2023	379,917,222	29,972,652	(254,204,475)	155,685,399
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

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 DECEMBER 2023

	Note	2023	2022
		$	$
Cash flows from operating activities
Payment to suppliers and employees		(5,442,176)	(4,907,742)
Interest and other income received		60,646	20,126
Net cash flows used in operating activities	6 (b)	(5,381,530)	(4,887,616)
Cash flows from investing activities
Payments for equity accounted investments		(873,975)	(10,693,565)
Payments for exploration and evaluation activities		(29,903,780)	(52,644,427)
Contribution from Joint Operation Partners in relation to Exploration		4,515,460	1,078,866
Proceeds (payment) for Bonds		584,840	137,930
Distribution from Equity Accounted Investments		2,010,345	4,281,910
Net cash flows generated from/used in investing activities		(23,667,110)	(57,839,286)
Cash flows from financing activities
Proceeds from issue of shares	14	35,414,713	47,052,778
Share issue costs		(2,322,029)	(3,149,329)
Net cash flows from financing activities		33,092,684	43,903,449
Net increase/(decrease) in cash and cash equivalents		4,044,045	(18,823,453)
Cash and cash equivalents at the beginning of the year		14,123,731	32,317,887
Effect of exchange rate fluctuations on cash held		14,951	629,297
Cash and cash equivalents at end of year	6(a)	18,182,727	14,123,731

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

 

END