Final Results
2 June 2023
Nostra Terra Oil and Gas Company Plc
("Nostra Terra" or "the Company")
2022 Audited Annual Results
Notice of AGM
Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA, is pleased to announce its final results for the year ended 31 December 2022 (the "Results"). A copy of the Results, along with a Notice of AGM, is being posted to Shareholders and is available on the Company's website, www.ntog.co.uk. The AGM will be held at at the offices of Druces LLP at Salisbury House, London Wall, London EC2M 5PS at 11.00 a.m. on 30 June 2023. Extracts from the Results are set out below.
This announcement contains information for the purposes of Article 7 of the EU Regulation 596/2014.
For further information, contact:
|
Nostra Terra Oil and Gas Company plc Matt Lofgran, CEO
|
Email: |
+1 480 993 8933 |
|
Beaumont Cornish Limited (Nominated Adviser) James Biddle/ Roland Cornish
|
Tel: |
+44 (0) 20 7628 3396 |
|
Novum Securities Limited (Broker) Jon Belliss
|
Tel:
|
+44 (0) 207 399 9425
|
Extracts of the Results are set out below:
Chairman's Report
2022 - Good progress in line with strategy
I am pleased to present Nostra Terra Oil & Gas Company PLC's annual report for the year ending 31 December 2022.
The past year saw the start, but sadly not the end, of the Russian invasion of Ukraine. The sanctions and boycotts on Russian oil and the end of most covid-related restrictions on travel and work meant high oil prices in early 2022 and for much of the year. However, the continuing Chinese lockdowns served to act as something of a damper on the global demand for goods, in turn reducing demand and hence the price of hydrocarbons. At the end of 2022, the WTI spot benchmark stood at around $79.
As planned, Nostra Terra took advantage of the generally strong oil prices during the year to consolidate production and to invest further into our existing acreage. Strong cash flows meant that we were able to drill both the Fouke #2 (East Texas) and the Grant East #1 (Permian Basin) wells without diluting existing shareholders. The Fouke well has been a good producer, though the Grant East well suffered from completion problems.
Also, in line with our strategy for 2022, further workovers on existing wells took place during the year. These have supported our production volumes and our revenues.
All in all, 2022 provided the Company with the highest production and revenues since it was founded.
Toward the close of the year, this was a contributing factor to the increase in the borrowing base of the senior facility provided to Nostra Terra by WAFD from $3,350,000 to $4,350,000, though increases in interest rates globally also led to an increase in the interest rate associated with this facility.
After the year-end, and at the time of writing, we await the outcome of the Texas Railroad Commission's Field Allowable Hearing on the Fouke Wells in the Pine Mills Field, East Texas. Our request to allow production at significantly higher daily rates from these wells was unopposed; success would mean we can continue to benefit from the full achievable flow rates of these prolific wells.
In March 2023, we replaced Jeffrey Henry LLP with MAH, Chartered Accountants as the Company's auditors. Jeffrey Henry LLP no longer had sufficient capacity to service Nostra Terra and a number of others of its clients' needs and so had to withdraw from providing audit services to several companies.
As always, Nostra Terra continues to actively seek out and assess new opportunities both in the US and further afield. Thank you for your continuing support throughout the last year.
Dr Stephen Staley
Non-Executive Chairman
1 June 2023
Chief Executive Officer's Report
2022 was a record year of production and revenue for Nostra Terra, while keeping costs relatively flat, resulting in a significant increase in gross profit. The Company remained focused on growth without any dilution to shareholders.
At the beginning of the year, we brought on a new well in Pine Mills (32.5% working interest). Following this, the Company drilled a new well on the newly acquired Grant East Lease (100% working interest). Both of these were funded from existing resources.
Revenues for the year were $4,021,000, an increase of 76% from $2,282,000 in 2021, reflecting a combination of a 19% increase in production sales and an improving commodity price environment (average $91.17 per barrel sold in 2022 compared to $61.45 in 2021). Gross profit before non-cash items (depreciation, depletion, and amortization) was $2,242,000, vastly improved from a gross loss of $574,000 in 2021.
The Board continues to focus on its stated aim of increasing cashflow and reserves for the year ended 2023.
United States
All of Nostra Terra's operations in the US target conventional reservoirs (i.e., not shale), typically with lower lifting costs and longer-life reserves than unconventional ones.
|
Area |
2022 Production (Barrels sold) |
Percentage of Portfolio by sales |
|
East Texas |
37,341 |
84.4% |
|
West Texas |
3,681 |
8.4% |
|
South Texas |
3,076 |
7.2% |
East Texas (33- 100% WI)
Nostra Terra's core asset is the Pine Mills field (100% WI) providing stable production. In 2022 production from the area accounted for 84% of the Company's sales (50-75% WI). Production remained stable throughout the year from the core producing wells, while the Company's focus was on growing production in the new farmout area.
At the beginning of 2022, the Fouke 2 (32.5% WI) well was drilled and put into production. The well was then tested and flowed at a rate of 145 bopd over a 24-hour period with a 0% watercut and placed into continuous production. This production rate exceeded that of the offset Fouke 1 well by 77% because the Fouke 1 had been limited by field rules ("allowable") to 82 bopd per well. As a result of the past performance of the Fouke 1 and the test rate of the Fouke 2, the operator requested a substantial increase in the field allowable rate so that both wells can be produced at higher and more efficient rates. The hearing took place in April of 2023 and a decision is expected to be handed down during Q3 2023. Until a decision by the Texas Railroad Commission is made the operator continues to produce both wells above the current allowable cap, to obtain sufficient technical information to support the increased field allowable.
West Texas (50 - 100% WI)
In 2022 production from the area accounted for 8.4% of the Company's sales (50-75% WI). In April 2022, the Company announced the Grant East lease acquisition (100% WI) and preparations to drill. Drilling took place in May 2022. The well encountered 24 feet of gross reservoir section in the Upper Clear Fork and 108 feet of gross reservoir section in the Lower Clear Fork, which compares favourably with the NTOG-operated wells on an adjoining lease. However, during the completion operations the fracture stimulation propagated out of zone and intersected a deeper water bearing horizon that produced at high water rates, rendering the well uneconomic to produce. The Company has completed a technical study of the completion operations and this information will be used in future operations to improve the completion results. The well was funded from existing resources, thus avoiding dilution to shareholders.
South Texas (100% WI)
In 2020 the Company acquired the Caballos Creek asset, comprising two leases. There are no current plans for expansion in this area. Production from this area accounted for 7.2% of Company sales.
Senior Lending Facility
In December 2022, the Company completed a redetermination of its Senior Lending Facility, resulting in a significant increase in the Borrowing Base. The Borrowing Base was increased from $2,350,000 at the end of 2021 to US$4,350,000 based upon a combination of increased production volumes, reserves, pricing and subsequent cashflows. The size of the Facility and Borrowing Base will continue to be reassessed at least twice yearly. The interest rate ending December 2022 was 6.5%
The Facility is not restricted to any geographical region. Nostra Terra can deploy funds from the Facility for operational purposes and acquisitions in its current areas of operation or in other areas of the world, should the opportunity arise.
Outlook
The Company enjoyed a record year for revenue and cashflow. Two wells were drilled during the year using existing resources, while debt levels were reduced. The Company plans to continue to pursue opportunities both within and outside the existing asset portfolio where we believe value can be created for shareholders.
We're grateful for the support of our shareholders throughout the year. On behalf of the entire team at Nostra Terra, we thank you and look forward to continued success in the future.
Matt Lofgran
Chief Executive Officer
1 June 2023
Consolidated Income Statement
For the year ended 31 December 2022
|
|
|
2022 |
2021 |
|
|
Notes |
$'000 |
$'000 |
|
Continuing operations |
|
|
|
|
|
|
|
|
|
REVENUE |
|
4,021 |
2,282 |
|
COST OF SALES |
|
|
|
|
Production costs |
|
(1,779) |
(1,708) |
|
Exploration |
|
- |
- |
|
Well impairment |
|
(897) |
- |
|
Depletion, depreciation, amortisation |
|
(539) |
(400) |
|
Total cost of sales |
|
(3,215) |
(2,108) |
|
|
|
|
|
|
GROSS PROFIT |
|
806 |
174 |
|
|
|
|
|
|
Share based payment |
|
(156) |
(68) |
|
Administrative expenses |
|
(1,074) |
(908) |
|
Foreign exchange gain/(loss) |
|
26 |
(130) |
|
|
|
|
|
|
OPERATING LOSS |
7 |
(398) |
(932) |
|
|
|
|
|
|
Finance costs |
5 |
(199) |
(175) |
|
Other income/(charges) |
6 |
51 |
19 |
|
|
|
|
|
|
LOSS BEFORE TAX |
|
(546) |
(1,088) |
|
|
|
|
|
|
Income tax |
8 |
- |
- |
|
|
|
|
|
|
LOSS FOR THE YEAR |
|
(546) |
(1,088) |
|
ATTRIBUTABLE TO: |
|
|
|
|
Owners of the company |
|
(546) |
(1,088) |
|
|
|
|
|
|
EARNINGS PER SHARE |
|
|
|
|
Continued operations |
|
|
|
|
Basic & diluted (cents per share) |
10 |
(0.07) |
(0.16) |
The accompanying accounting policies and notes are an integral part of these financial statements
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
|
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
LOSS FOR THE PERIOD |
(546) |
(1,088) |
|
|
|
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
|
|
|
Currency translation differences |
- |
- |
|
Total comprehensive income for the year |
(546) |
(1,088) |
|
|
|
|
|
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO: |
|
|
|
Owners of the company |
(546) |
(1,088) |
|
|
|
|
The accompanying accounting policies and notes are an integral part of these financial statements
Consolidated Statement of Financial Position
As at 31 December 2022
|
|
|
2022 |
2021 |
|
|
Notes |
$'000 |
$'000 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
Intangible assets |
11 |
2,224 |
2,014 |
|
Property, plant and equipment, Oil and gas assets |
12 |
1,308 |
918 |
|
Total non-current assets |
|
3,532 |
2,932 |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Trade and other receivables |
15 |
558 |
348 |
|
Deposits and prepayments |
|
66 |
16 |
|
Other assets |
|
- |
- |
|
Cash and cash equivalents |
16 |
132 |
45 |
|
Total current assets |
|
756 |
409 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Trade and other payables |
17 |
1,051 |
948 |
|
Borrowings |
18 |
94 |
518 |
|
Lease liabilities |
13 |
- |
- |
|
Total current liabilities |
|
1,145 |
1,466 |
|
|
|
|
|
|
NET CURRENT LIABILITIES |
|
(389) |
(1,057) |
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
Decommissioning liabilities |
17 |
340 |
302 |
|
Borrowings |
18 |
3,886 |
2,459 |
|
Lease liabilities |
13 |
- |
- |
|
Total non-current liabilities |
|
4,226 |
2,761 |
|
|
|
|
|
|
NET LIABILITIES |
|
(1,083) |
(886) |
|
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital |
19 |
8,142 |
8,087 |
|
Share premium |
|
22,115 |
21,976 |
|
Share based payment reserve |
|
423 |
306 |
|
Translation reserve |
|
(676) |
(676) |
|
Retained losses |
|
(31,087) |
(30,579) |
|
Total equity |
|
(1,083) |
(886) |
The financial statements were approved and authorised for issue by the Board of Directors on 1 June 2023 and were signed on its behalf by:
M B Lofgran
Director
Company registration number: 05338258
The accompanying accounting policies and notes are an integral part of these financial statements
Company Statement of Financial Position
As at 31 December 2022
|
|
|
2022 |
2021 |
|
|
Notes |
$'000 |
$'000 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
Fixed asset investments |
14 |
- |
- |
|
Intangible assets |
11 |
305 |
345 |
|
Property, plant and equipment, Oil and gas assets |
12 |
144 |
112 |
|
Total non-current assets |
|
449 |
457 |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Trade and other receivables |
15 |
22 |
9 |
|
Cash and cash equivalents |
16 |
17 |
16 |
|
Total current assets |
|
39 |
25 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Trade and other payables |
17 |
2,842 |
1,262 |
|
Borrowings |
18 |
94 |
518 |
|
Total current liabilities |
|
2,936 |
1,780 |
|
|
|
|
|
|
NET CURRENT LIABILITIES |
|
(2,897) |
(1,755) |
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
Decommissioning liabilities |
17 |
22 |
13 |
|
Borrowings |
18 |
130 |
396 |
|
Total non-current liabilities |
|
152 |
409 |
|
|
|
|
|
|
NET LIABILITIES |
|
(2,600) |
(1,707) |
|
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital |
19 |
8,142 |
8,087 |
|
Share premium |
|
22,115 |
21,976 |
|
Share based payment reserve |
|
423 |
306 |
|
Translation reserve |
|
(676) |
(676) |
|
Retained losses |
|
(32,604) |
(31,400) |
|
Total equity |
|
(2,600) |
(1,707) |
The parent company's loss for the financial year was $1,242,000 (2021: $1,310,000).
The financial statements were approved and authorised for issue by the Board of Directors on 1 June 2023 and were signed on its behalf by:
M B Lofgran
Director
Company registration number: 05338258
The accompanying accounting policies and notes are an integral part of these financial statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
|
|
Share capital |
Deferred shares |
Share premium |
Share option reserve |
Translation reserve |
Retained losses |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
As at 1 January 2021 |
1,369 |
6,549 |
21,508 |
142 |
(676) |
(29,491) |
(599) |
|
Loss for the year |
- |
- |
- |
- |
- |
(1,088) |
(1,088) |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
(1,088) |
(1,088) |
|
Shares issued |
169 |
- |
529 |
- |
- |
- |
698 |
|
Cost of shares issued |
- |
- |
(61) |
- |
- |
- |
(61) |
|
Exercise of warrants |
- |
- |
- |
- |
- |
- |
- |
|
Share based payments |
- |
- |
- |
164 |
- |
- |
164 |
|
As at 31 December 2021 |
1,538 |
6,549 |
21,976 |
306 |
(676) |
(30,579) |
(886) |
|
Loss for the year |
- |
- |
- |
- |
- |
(546) |
(546) |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
(546) |
(546) |
|
Shares issued |
55 |
- |
139 |
- |
- |
- |
194 |
|
Cost of shares issued |
- |
- |
- |
- |
- |
- |
- |
|
Expired options & warrants |
- |
- |
- |
(38) |
- |
38 |
- |
|
Share based payments |
- |
- |
- |
155 |
- |
- |
155 |
|
As at 31 December 2022 |
1,593 |
6,549 |
22,115 |
423 |
(676) |
(31,087) |
(1,083) |
The accompanying accounting policies and notes are an integral part of these financial statements.
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of those shares net of share issue expenses. Share issue expenses in the year comprise costs incurred in respect of the issue of new shares.
Share based payment reserve is a reserve used to recognize the cost and equity associated with the fair value of issues of share options and warrants.
Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of a prior accounting period.
Retained loss represents the cumulative losses of the company attributable to owners of the company.
Company Statement of Changes in Equity
For the year ended 31 December 2022
|
|
Share capital |
Deferred shares |
Share premium |
Share option reserve |
Translation reserve |
Retained losses |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
As at 1 January 2021 |
1,369 |
6,549 |
21,508 |
142 |
(676) |
(30,090) |
(1,198) |
|
Loss for the year |
- |
- |
- |
- |
- |
(1,310) |
(1,310) |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
(1,310) |
(1,310) |
|
Shares issued |
169 |
- |
529 |
- |
- |
- |
698 |
|
Cost of shares issued |
- |
- |
(61) |
- |
- |
- |
(61) |
|
Exercise of warrants |
- |
- |
- |
- |
- |
- |
- |
|
Share based payments |
- |
- |
- |
164 |
- |
- |
164 |
|
As at 31 December 2021 |
1,538 |
6,549 |
21,976 |
306 |
(676) |
(31,400) |
(1,707) |
|
Loss for the year |
- |
- |
- |
- |
- |
(1,242) |
(1,242) |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
(1,242) |
(1,242) |
|
Shares issued |
55 |
- |
139 |
- |
- |
- |
194 |
|
Cost of shares issued |
- |
- |
- |
- |
- |
- |
- |
|
Expired options & warrants |
- |
- |
- |
(38) |
- |
38 |
- |
|
Share based payments |
- |
- |
- |
155 |
- |
- |
155 |
|
As at 31 December 2022 |
1,593 |
6,549 |
22,115 |
423 |
(676) |
(32,604) |
(2,600) |
The accompanying accounting policies and notes are an integral part of these financial statements.
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of those shares net of share issue expenses. Share issue expenses in the year comprise costs incurred in respect of the issue of new shares.
Share based payment reserve is a reserve used to recognize the cost and equity associated with the fair value of issues of share options and warrants.
Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of a prior accounting period.
Retained loss represents the cumulative losses of the company attributable to owners of the company.
Consolidated and Company Statement of Cash Flows
For the year ended 31 December 2022
|
|
GROUP |
|
COMPANY |
||
|
|
2022 |
2021 |
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
$'000 |
$'000 |
|
|
|
|
|
|
|
|
LOSS FOR THE YEAR |
(546) |
(1,088) |
|
(1,242) |
(1,310) |
|
ADJUSTMENTS FOR: |
|
|
|
|
|
|
Depreciation |
299 |
208 |
|
18 |
13 |
|
Amortisation |
202 |
173 |
|
40 |
40 |
|
Depletion |
38 |
38 |
|
8 |
- |
|
Well impairment |
897 |
- |
|
- |
- |
|
Foreign exchange |
26 |
- |
|
28 |
- |
|
Share based payments |
156 |
68 |
|
156 |
68 |
|
Other income |
(51) |
(21) |
|
- |
- |
|
Operating cash flows |
1,021 |
(622) |
|
(992) |
(1,189) |
|
|
|
|
|
|
|
|
Decrease/(increase) in receivables |
(211) |
66 |
|
(13) |
98 |
|
(Increase)/decrease in other assets |
- |
- |
|
- |
- |
|
(Decrease)/increase in payables |
105 |
285 |
|
1,543 |
852 |
|
(Increase)/decrease in deposits & prepayments |
(50) |
26 |
|
- |
- |
|
Interest paid |
199 |
175 |
|
26 |
110 |
|
|
|
|
|
|
|
|
Net cash generated / (used) in operating activities |
846 |
(70) |
|
564 |
(129) |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Purchase of plant and equipment |
(719) |
(346) |
|
(50) |
(49) |
|
Purchase of intangibles |
(1,318) |
(160) |
|
- |
- |
|
Disposals |
40 |
- |
|
- |
- |
|
Increase in decommissioning liabilities |
38 |
36 |
|
9 |
9 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
(1,959) |
(470) |
|
(41) |
(40) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Shares issued |
194 |
794 |
|
194 |
794 |
|
Costs of shares issued |
- |
(61) |
|
- |
(61) |
|
Net borrowing |
1,003 |
(29) |
|
(690) |
(452) |
|
Finance costs |
(199) |
(175) |
|
(26) |
(110) |
|
Lease payments |
(16) |
(16) |
|
- |
- |
|
|
|
|
|
|
|
|
Net cash from / (used) in financing activities |
982 |
513 |
|
(522) |
171 |
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
87 |
(27) |
|
1 |
2 |
|
Cash and cash equivalents at the beginning of the year |
45 |
72 |
|
16 |
14 |
|
Cash and cash equivalents at the end of the year |
132 |
45 |
|
17 |
16 |
The accompanying accounting policies and notes are an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 31 December 2022
General Information
Nostra Terra Oil and Gas Company plc (Nostra Terra) is a company incorporated in England and Wales and quoted on the AIM market of the London Stock Exchange. The address of the registered office is disclosed on the company information page of this annual report. The principal activity of the group is described in the directors' report.
1. Summary of significant accounting policies
The financial statements are presented in United States Dollars, rounded to the nearest $'000, as that is the currency of the primary environment in which the Group operates.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with UK adopted International Financial Reporting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) (IFRS) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.
Going concern
The financial statements have been prepared on the assumption that the group is a going concern. When assessing the foreseeable future, the directors have looked at a period of 12 months from the date of approval of this report.
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive Officer's report and Directors' report. In addition, note 20 to the financial statements includes the group's objectives, policies and processes for managing its capital, its financial risk management objectives and its exposures to credit risk and liquidity risk.
The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the group should be able to operate within the level of its current cash resources, however a material uncertainty exists in relation to the Group's ability to repay its liabilities as they become due. We note that as at the balance sheet date, the group has net current liabilities of $389k and net liabilities of $1,083k.
After making enquiries, the directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future. They continue to adopt the going concern basis in preparing the annual report and financial statements, however as noted above a material uncertainty exists which may cast significant doubt on the Group's ability to continue operating as a going concern.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
New standards, amendments and interpretations adopted by the Group and Company
The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 January 2022. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements:
|
Standards /interpretations |
Application |
|
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 |
Interest rate benchmark reform |
|
IFRS 3 amendments |
Business Combinations |
|
IAS 16 amendments |
Property, Plant and Equipment
|
|
IAS 37 Amendments |
Provisions, Contingent Liabilities and Contingent Assets |
|
N/A |
Annual Improvements to IFRS Standards 2018-2020 Cycle |
New standards, amendments and interpretations not yet adopted
|
Standards /interpretations |
Application |
|
IAS 1 amendments |
Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current and Non-Current Liabilities with Covenants Date: Effective 1 January 2024 |
|
IAS 1 amendments |
Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies: Effective 1 January 2023 |
|
IAS 8 amendments |
Changes in Accounting Estimates and Errors: Definition of Accounting estimates: Effective 1 January 2023 |
|
IAS 12 amendments |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction: Effective 1 January 2023 |
|
IFRS 16 amendments |
Lease Liability in a Sale and Leaseback: Effective 1 January 2024 |
|
IFRS 17 |
Insurance Contracts: Effective 01 January 2023 |
There are no IFRS's or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group.
Basis of consolidation
Where the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Subsidiaries
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the group's share of the net identifiable assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The group allocates goodwill to each business segment in each country in which it operates.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimated of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried art a revalued amount in which case the reversal of impairment loss is treated a revaluation increase.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Property, plant and equipment
Tangible non-current assets are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:
Plant and machinery - over 7 years
The assets' residual values and useful economic lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable value. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other (losses) or gains in the income statement. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.
Investments
Investments are stated at cost less provision for any impairment value.
Cash and cash equivalents
Included in the statement of financial position comprise cash at bank and in hand and other short-term highly liquid investments with original maturities of three months or less.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the year of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Functional currency translation
(i) Functional and presentation currency
Items included in the financial statements of the group are measured using the currency of the primary economic environment in which the entity operates (the functional currency), which is mainly United States Dollars (US$). The financial statements are presented in United States Dollars (US$), which is the group's presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the presentational currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
(iii) Group Companies
All consolidated entities are presented in US$ and so no translation is required on consolidation.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differed from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The entity's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary arises from goodwill or from the initial recognition) other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited directly to equity; in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are initially classified as measured at amortised cost, fair value through other comprehensive income, or fair value through profit and loss when the group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows expire, or the group no longer retains the significant risks or rewards of ownership of the financial asset. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.
Financial assets are classified dependent on the group's business model for managing the financial and the cash flow characteristics of the asset. Financial liabilities are classified and measured at amortised cost except for trading liabilities, or where designated at original recognition to achieve more relevant presentation. The group classifies its financial assets and liabilities into the following categories:
Financial assets at amortised cost
The group's financial assets at amortised cost comprise trade and other receivables. These represent debt instruments with fixed or determinable payments that represent principal or interest and where the intention is to hold to collect these contractual cash flows. They are initially recognised at fair value, included in current and non-current assets, depending on the nature of the transaction, and are subsequently measured at amortised cost using the effective interest method less any provision for impairment.
Impairment of trade and other receivables
In accordance with IFRS 9 an expected loss provisioning model is used to calculate an impairment provision. We have implemented the IFRS 9 simplified approach to measuring expected credit losses arising from trade and other receivables, being a lifetime expected credit loss. This is calculated based on an evaluation of our historic experience plus an adjustment based on our judgement of whether this historic experience is likely reflective of our view of the future at the balance sheet date. In the previous year the incurred loss model is used to calculate the impairment provision.
Financial liabilities at amortised cost
Financial liabilities at amortised cost comprise finance lease obligations and trade and other payables. They are classified as current and non-current liabilities depending on the nature of the transaction, are subsequently measured at amortised cost using the effective interest method.
Financial assets at fair value through profit and loss
The group holds a derivative against the price of oil held for operation purposes. These are recognised and measured at fair value using the most recent available market price with gains and losses recognised immediately in the profit and loss.
The fair value measurement of the group's financial and non- financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy').
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Financial assets at fair value through profit and loss (continued)
Level 1 Quoted prices in active markets
Level 2 Observable direct or indirect inputs other than Level 1 inputs
Level 3 Inputs that are not based on observable market data
The group measures financial instruments relating to platform holdings at fair value using Level 1.
The company provides financial guarantees to licensed banks for credit facilities extended to a subsidiary company. The fair value of such financial guarantees is not expected to be significantly different as the probability of the subsidiary company defaulting on the credit lines is remote.
Oil and gas assets
The group applies the successful efforts method of accounting for oil and gas assets and has adopted IFRS 6 Exploration for and evaluation of mineral resources.
Exploration and evaluation ("E&E") assets
Under the successful efforts method of accounting, all licence acquisition, exploration and appraisal costs are initially capitalised in well, field or specific exploration cost centres as appropriate, pending determination. Expenditure incurred during the various exploration and appraisal phases is then written off unless commercial reserves have been established or the determination process has not been completed.
Pre-licence costs
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income statement as they are incurred.
Exploration and evaluation ("E&E") costs
Costs of E&E are initially capitalised as E&E assets. Payments to acquire the legal right to explore, together with the directly related costs of technical services and studies, seismic acquisition, exploratory drilling and testing are capitalised as intangible E&E assets.
Tangible assets used in E&E activities (such as the group's drilling rigs, seismic equipment and other property, plant and equipment used by the company's exploration function) are classified as property, plant and equipment. However, to the extent that such a tangible asset is consumed in developing an intangible E&E asset, the amount reflecting that consumption is recorded as part of the cost of the intangible asset. Such intangible costs include directly attributable overheads, including the depreciation of property, plant and equipment utilised in E&E activities, together with the cost of other materials consumed during the exploration and evaluation phases.
E&E costs are not amortised prior to the conclusion of appraisal activities.
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets relating to each exploration licence/prospect are carried forward until the existence (or otherwise) of commercial reserves has been determined, subject to certain limitations including review for indications of impairment. If commercial reserves are discovered the carrying value, after any impairment loss of the relevant E&E assets, is then reclassified as development and production assets. If, however, commercial reserves are not found, the capitalised costs are charged to expense after conclusion of appraisal activities.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Development and production assets
Development and production assets are accumulated generally on a field-by-field basis and represent the cost of developing the commercial reserves discovered and bringing them into production, together with the E&E expenditures incurred in finding commercial reserves transferred from intangible E&E assets as outlined above.
The cost of development and production assets also includes the cost of acquisitions and purchases of such assets, directly attributable overheads and the cost of recognising provisions for future restoration and decommissioning.
Decommissioning liability
Where a material liability for the removal of production facilities and site restoration at the end of the productive life of the assets exist, a provision for decommissioning liability is recognised. The amount recognised is the present value of estimated future expenditure determined in accordance with local conditions and requirements. An intangible asset of an amount equivalent to the provision is recognised and depreciated on a unit production basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and the associated intangible asset. Period changes in the present value arising from discounting are included in depletion, depreciation and amortisation cost in cost of sales.
Commercial reserves
Commercial reserves are proven and probable oil and gas reserves, which are defined as the estimated quantities of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially producible.
Depletion, amortisation and impairment of oil and gas assets
All expenditure carried within each field is amortised from the commencement of production on a unit of production basis, which is the ratio of oil and gas production in the period to the estimated quantities of commercial reserves at the end of the period plus the production in the period, on a field-by-field basis. Costs used in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field development costs to access the related commercial reserves. Changes in the estimates of commercial reserves or future field development costs are dealt with prospectively.
Where there has been a change in economic conditions that indicates a possible impairment in an oil and gas asset, the recoverability of the net book value relating to that field is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future oil and gas prices and future costs. Any impairment identified is charged to the income statement as additional depletion and amortisation. Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Depletion, amortisation and impairment of oil and gas assets
All expenditure carried within each field is amortised from the commencement of production on a unit of production basis, which is the ratio of oil and gas production in the period to the estimated quantities of commercial reserves at the end of the period plus the production in the period, on a field-by-field basis. Costs used in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field development costs to access the related commercial reserves. Changes in the estimates of commercial reserves or future field development costs are dealt with prospectively.
Where there has been a change in economic conditions that indicates a possible impairment in an oil and gas asset, the recoverability of the net book value relating to that field is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future oil and gas prices and future costs. Any impairment identified is charged to the income statement as additional depletion and amortisation. Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.
Share-based compensation
The fair value of the employee and suppliers' services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting year is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets).
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each statement of financial position date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
The fair value of share-based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour and is selected based on past experience, future expectations and benchmarks against peer companies in the industry.
The Group does not operate any cash-settled share-based payments and as such are not affected by the amendments to IFRS 2 - Share-based payments.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable in relation to the proceeds by the prospects which the company has a working interest in. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the group. Revenue is recognised when the oil and gas produced is despatched and received by the customers. The directors consider this the point when the Company's performance obligation is satisfied.
The directors consider that revenue generation is exclusively for oil production in the US and so no further segmentation is required.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Leased assets
The Group as a lessee
A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'.
To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:
· the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group
· the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract
· the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in trade and other payables.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
2. Critical accounting estimates and judgements
The preparation of consolidated financial statements requires the group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below:
Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is determined based on value in use calculations prepared on the basis of management's assumptions and estimates.
Recoverability of exploration and evaluation costs
E&E assets are assessed for impairment when circumstances suggest that the carrying amount may exceed its recoverable value including decommissioning costs. This assessment involves judgment as to (i) the likely future commerciality of the asset and when such commerciality should be determined, and (ii) future revenues and costs pertaining to the asset in question, and the discount rate to be applied to such revenues and costs for the purpose of deriving a recoverable value.
Share-based payments
Note 1 sets out the group's accounting policy on share-based payments, specifically in relation to the share options and warrants that the company has granted. The key assumptions underlying the fair value of such share-based payments are discussed in note 23. The fair value amounts used by the group have been derived by external consultants using standard recognised valuation techniques.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
3. Segmental analysis
In the opinion of the directors, the group has one class of business, being the exploitation of hydrocarbon resources.
The group's primary reporting format is determined by geographical segment according to the location of the hydrocarbon assets. The group's reportable segments under IFRS 8 in the year are as follows:
United Kingdom - being the location of the head office.
US Mid-Continent properties at year end included the following:
· East Texas: 100% working interest in the Pine Mills oilfield
· East Texas: 32.5% working interest in the Cypress farmout area of Pine Mills
· West Texas: 50-100% working interest leases located in the Permian Basin
· South Texas: 100% working interest in the Caballos Creek oilfield
The chief operating decision maker's internal report for the year ended 31 December 2022 is based on the location of the oil properties as disclosed in the below table:
|
SEGMENTAL RESULTS |
US mid-continent 2022 $'000 |
Head office 2022 $'000 |
Total 2022 $'000 |
|
Revenue |
4,021 |
- |
4,021 |
|
Operating profit (loss) before depreciation, well impairment, share-based payment charges, restructuring costs and gain (loss) on sale of assets and foreign exchange: |
2,217 |
(1,087) |
1,130 |
|
Depreciation of tangibles |
(299) |
- |
(299) |
|
Amortisation of intangibles |
(202) |
- |
(202) |
|
Exploration |
- |
- |
- |
|
Well impairment |
(897) |
- |
(897) |
|
Share based payments |
- |
(156) |
(156) |
|
|
|
|
|
|
Realised exchange loss |
(2) |
28 |
26 |
|
Operating profit/ (loss) |
817 |
(1,215) |
(398) |
|
|
|
|
|
|
Finance expense |
(172) |
(27) |
(199) |
|
Other income (expense) |
51 |
- |
51 |
|
Profit/ (loss) before taxation |
696 |
(1,242) |
(546) |
|
|
|
|
|
|
SEGMENTAL ASSETS |
|
|
|
|
Property, plant and equipment |
1,308 |
- |
1,308 |
|
Intangible assets |
2,224 |
- |
2,224 |
|
Cash and cash equivalents |
115 |
17 |
132 |
|
Trade and other receivables |
602 |
22 |
624 |
|
|
4,249 |
39 |
4,288 |
|
|
|
|
|
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
3. Segmental analysis (continued)
The chief operating decision maker's internal report for the year ended 31 December 2021 is based on the location of the oil properties as disclosed in the below table (restated):
|
SEGMENTAL RESULTS |
US mid-continent 2021 $'000 |
Head office 2021 $'000 |
Total 2021 $'000 |
|
Revenue |
2,282 |
- |
2,282 |
|
Operating profit (loss) before depreciation, well impairment, share-based payment charges, restructuring costs and gain (loss) on sale of assets and foreign exchange: |
616 |
(970) |
(354) |
|
Depreciation of tangibles |
(209) |
- |
(209) |
|
Amortisation of intangibles |
(173) |
- |
(173) |
|
Exploration |
- |
- |
- |
|
Well impairment |
- |
- |
- |
|
Share based payments |
- |
(68) |
(68) |
|
|
|
|
|
|
Realised exchange loss |
(2) |
(128) |
(130) |
|
Operating profit/ (loss) |
232 |
(1,166) |
(934) |
|
|
|
|
|
|
Finance expense |
(65) |
(110) |
(175) |
|
Other income (expense) |
- |
21 |
21 |
|
Profit/ (loss) before taxation |
167 |
(1,255) |
(1,088) |
|
|
|
|
|
|
SEGMENTAL ASSETS |
|
|
|
|
Property, plant and equipment |
2,014 |
- |
2,014 |
|
Intangible assets |
918 |
- |
918 |
|
Cash and cash equivalents |
9 |
36 |
45 |
|
Trade and other receivables |
355 |
9 |
364 |
|
|
3,296 |
45 |
3,341 |
|
|
|
|
|
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
4. Employees and Directors
|
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
|
|
|
|
Directors' fees |
127 |
110 |
|
Directors' remuneration |
275 |
219 |
|
Social security costs |
14 |
19 |
|
|
416 |
348 |
|
|
2022 |
2021 |
|
|
Number |
Number |
|
The average monthly number of employees (including directors) |
|
|
|
during the year was as follows: |
|
|
|
Directors |
4 |
3 |
|
|
|
|
|
|
|
|
Directors' remuneration
Other than the directors, the group had no other employees. Total remuneration paid to directors during the year was as listed above.
The director's emoluments and other benefits for the year ended 31 December 2022 is as follows:
|
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
|
|
|
|
M B Lofgran |
275 |
219 |
|
|
|
|
5. Finance expense
|
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
|
|
|
|
Finance expense |
199 |
175 |
|
|
|
|
Finance expense relates to interest charged on borrowings. Further details for which can be found in note 18.
6. Other income
|
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
|
|
|
|
Other income/ (charge) |
51 |
19 |
|
|
51 |
19 |
Other income relates to sundry income received from operating oil wells in addition to the oil sales.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
7. Operating loss
|
|
2022 |
Restated 2021 |
|
|
$'000 |
$'000 |
|
The operating loss the year ended 31 December is stated after |
|
|
|
after charging/ (crediting) |
|
|
|
Depreciation of property, plant and equipment |
299 |
209 |
|
Amortisation of intangibles |
202 |
173 |
|
Well impairment |
897 |
- |
|
|
|
|
|
The analysis of administrative expenses in the consolidated income statement by nature of expense: |
|
|
|
|
|
|
|
Directors' remuneration |
275 |
219 |
|
Depreciation on ROU asset |
- |
16 |
|
Social security costs |
14 |
19 |
|
Directors' fees |
127 |
110 |
|
Travelling and entertainment |
23 |
35 |
|
Accountancy fees |
81 |
44 |
|
Legal and professional fees |
218 |
183 |
|
Auditors' remuneration |
27 |
6 |
|
Bad debt costs |
- |
- |
|
Other expenses |
309 |
276 |
|
|
1,074 |
908 |
8. Income tax
The income tax charge for the year was as follows:
|
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
|
|
|
|
Current tax |
- |
- |
|
Corporation tax |
- |
- |
|
Overseas corporation tax |
- |
- |
|
TOTAL |
- |
- |
|
|
|
|
|
Loss before tax |
(546) |
(1,088) |
|
|
|
|
|
Loss on ordinary activities before taxation multiplied by the |
|
|
|
standard rate of UK corporation tax of 19% (2021:19%) |
(104) |
(207) |
|
|
|
|
|
Effects of: |
|
|
|
Non-deductible expenses |
30 |
- |
|
Other tax adjustments |
74 |
207 |
|
Foreign tax |
- |
- |
|
CURRENT TAX CHARGE |
- |
- |
At 31 December 2022, the Company had an estimated excess management expenses to carry forward of $5,942,883 (2021: $5,552,821). The deferred tax asset at 19% (2021: 19%) on these tax losses of $1,129,000 (2021: $1,055,000) has not been recognised due to the uncertainty of recovery. The current US corporate tax rate is 21%.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
9. Loss of Parent Company
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was $1,242,000 (2021: $1,310,000).
10. Earnings per share
The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The group had two classes of dilutive potential ordinary shares, being those share options granted to employees and suppliers where the exercise price is less than the average market price of the group's ordinary shares during the year, and warrants granted to directors and one former adviser.
Details of the adjusted earnings per share are set out below:
|
|
2022 |
2021 |
|
GROUP |
|
|
|
|
|
|
|
Loss attributable to ordinary shareholders ($'000) |
(546) |
(1,088) |
|
|
|
|
|
Weighted average number of shares |
732,742,452 |
692,287,657 |
|
|
|
|
|
CONTINUED OPERATIONS: BASIC AND DILUTED EPS - LOSS (cents) |
(0.07) |
(0.16) |
The diluted loss per share is the same as the basic loss per share as the loss for the year has an antidilutive effect.
|
|
2022 |
Restated 2021 |
|
|
$'000 |
$'000 |
|
Gross profit/(loss) before depreciation, depletion, amortisation and impairment |
2,242 |
574 |
|
EPS on gross profit before depreciation, depletion, amortisation and impairment (cents) |
0.30 |
0.08 |
|
|
|
|
|
RECONCILIATION FROM GROSS LOSS TO GROSS PROFIT BEFORE DEPLETION, DEPRECIATION, AMORTISATION AND IMPAIRMENT |
|
|
|
|
|
|
|
Gross profit/(loss) |
806 |
174 |
|
ADD BACK: |
|
|
|
Exploration |
- |
- |
|
Well impairment |
897 |
- |
|
Depletion, depreciation and amortisation |
539 |
400 |
|
|
|
|
|
Gross profit before depletion, depreciation, amortisation and impairment |
2,242 |
574 |
|
|
|
|
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
11. Intangible assets
|
GROUP |
Licences $'000 |
Exploration & evaluation assets $'000 |
Development & production assets $'000 |
Total $'000 |
|
COST |
|
|
|
|
|
At 1 January 2021 |
524 |
1,939 |
2,823 |
5,286 |
|
Additions |
- |
10 |
150 |
160 |
|
Disposals |
- |
- |
- |
- |
|
|
|
|
|
|
|
At 31 December 2021 |
524 |
1,949 |
2,973 |
5,446 |
|
Additions |
- |
- |
1,319 |
1,319 |
|
Disposals |
- |
(10) |
- |
(10) |
|
|
524 |
1,939 |
4,292 |
6,755 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
|
|
PROVISON |
|
|
|
|
|
At 1 January 2021 |
524 |
1,939 |
796 |
3,259 |
|
Charge for the year |
- |
- |
173 |
173 |
|
Impairment |
- |
- |
- |
- |
|
Disposals |
- |
- |
- |
- |
|
|
|
|
|
|
|
At 31 December 2021 |
524 |
1,939 |
969 |
3,432 |
|
Charge for the year |
- |
- |
202 |
202 |
|
Impairment |
- |
- |
897 |
897 |
|
Disposals |
- |
- |
- |
- |
|
|
524 |
1,939 |
2,068 |
4,531 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
|
|
CARRYING VALUE |
|
|
|
|
|
At 31 December 2022 |
- |
- |
2,224 |
2,224 |
|
|
|
|
|
|
|
At 31 December 2021 |
- |
10 |
2,004 |
2,014 |
The Group assesses at each reporting date whether there is an indication that the intangible assets may be impaired, by considering the net present value of discounted cash flows forecasts. If an indication exists an impairment review is carried out by reference to available engineering information. At the year-end, $897,000 (2021: $nil) was provided for the well at Grant East #1.
Amortisation, impairment charges and any profit or loss on disposal of the capitalised intangible costs is included within cost of sales in the consolidated income statement.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
11. Intangible assets (continued)
|
COMPANY |
|
|
Development & production assets $'000 |
Total $'000 |
|
COST |
|
|
|
|
|
At 1 January 2021 |
|
|
398 |
398 |
|
Additions |
|
|
- |
- |
|
Disposals |
|
|
- |
- |
|
|
|
|
|
|
|
At 31 December 2021 |
|
|
398 |
398 |
|
Additions |
|
|
- |
- |
|
Disposals |
|
|
- |
- |
|
|
|
|
398 |
398 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
|
|
PROVISON |
|
|
|
|
|
At 1 January 2021 |
|
|
13 |
13 |
|
Charge for the year |
|
|
40 |
40 |
|
Impairment |
|
|
- |
- |
|
Disposals |
|
|
- |
- |
|
|
|
|
|
|
|
At 31 December 2021 |
|
|
53 |
53 |
|
Charge for the year |
|
|
40 |
40 |
|
Impairment |
|
|
- |
- |
|
Disposals |
|
|
- |
- |
|
|
|
|
93 |
93 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
|
|
CARRYING VALUE |
|
|
|
|
|
At 31 December 2022 |
|
|
305 |
305 |
|
|
|
|
|
|
|
At 31 December 2021 |
|
|
345 |
345 |
The Company assesses at each reporting date whether there is an indication that the intangible assets may be impaired, by considering the net present value of discounted cash flows forecasts. If an indication exists an impairment review is carried out by reference to available engineering information. At the year-end, $nil (2021: $nil) was provided.
Amortisation, impairment charges and any profit or loss on disposal of the capitalised intangible costs is included within cost of sales in the consolidated income statement.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
12. Property, plant and equipment
|
GROUP |
Office space - right of use $'000 |
Plant & equipment - oil and gas assets $'000 |
Total $'000 |
|
COST |
|
|
|
|
At 1 January 2021 |
48 |
1,222 |
1,270 |
|
Additions |
- |
346 |
346 |
|
Adjustment on translation to IFRS 16 |
- |
- |
- |
|
Disposals |
- |
- |
- |
|
|
|
|
|
|
At 31 December 2021 |
48 |
1,568 |
1,616 |
|
Additions |
- |
719 |
719 |
|
Disposals |
- |
(30) |
(30) |
|
|
48 |
2,257 |
2,305 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
DEPRECIATION |
|
|
|
|
At 1 January 2021 |
32 |
458 |
490 |
|
Charge for the year |
16 |
192 |
208 |
|
Disposals |
- |
- |
- |
|
|
|
|
|
|
At 31 December 2021 |
48 |
650 |
698 |
|
Charge for the year |
- |
299 |
299 |
|
Disposals |
- |
- |
- |
|
|
|
|
|
|
At 31 December 2022 |
48 |
949 |
997 |
|
|
|
|
|
|
CARRYING VALUE |
|
|
|
|
At 31 December 2022 |
- |
1,308 |
1,308 |
|
|
|
|
|
|
At 31 December 2021 |
- |
918 |
918 |
Depreciation charges are included within cost of sales in the Consolidated Income Statement.
In addition, the directors are of the opinion that no impairment should be provided.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
12. Property, plant and equipment (continued)
|
COMPANY |
|
Plant & equipment - oil and gas assets $'000 |
Total $'000 |
|
COST |
|
|
|
|
At 1 January 2021 |
|
79 |
79 |
|
Additions |
|
49 |
49 |
|
Adjustment on translation to IFRS 16 |
|
- |
- |
|
Disposals |
|
- |
- |
|
|
|
|
|
|
At 31 December 2021 |
|
128 |
128 |
|
Additions |
|
50 |
50 |
|
Disposals |
|
- |
- |
|
|
|
178 |
178 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
DEPRECIATION |
|
|
|
|
At 1 January 2021 |
|
3 |
3 |
|
Charge for the year |
|
13 |
13 |
|
Disposals |
|
- |
- |
|
|
|
|
|
|
At 31 December 2021 |
|
16 |
16 |
|
Charge for the year |
|
18 |
18 |
|
Disposals |
|
- |
- |
|
|
|
34 |
34 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
CARRYING VALUE |
|
|
|
|
At 31 December 2022 |
|
144 |
144 |
|
|
|
|
|
|
At 31 December 2021 |
|
112 |
112 |
Depreciation charges are included within cost of sales in the Consolidated Income Statement.
In addition, the directors are of the opinion that no impairment should be provided.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
13. Leases
Lease liabilities are presented in the statement of financial position as follows:
|
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
|
|
|
|
Current - within 1 year |
- |
- |
|
|
|
|
|
Non-current - within 1 - 2 years |
- |
- |
|
|
- |
- |
The Group has a lease for the office space in Dallas, Texas, USA. The lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Group classifies its right-of-use assets in a consistent manner to its property, plant and equipment (see Note 12). The lease term ended on 31 December 2021. The company has entered into a new short term lease effective from 1 January 2022. Included within the interest expense is $nil (2021: $1k) which relates to the unwinding on the lease liability. The Group does not hold any other office leases.
14. Fixed Asset Investments
|
COMPANY |
Investment in subsidiaries $'000 |
Loans to subsidiaries $'000 |
Total $'000 |
|
COST |
|
|
|
|
At 1 January 2021 |
1 |
15,434 |
15,435 |
|
Additions |
- |
- |
- |
|
Reductions |
- |
- |
- |
|
|
|
|
|
|
At 31 December 2021 |
1 |
15,434 |
15,435 |
|
Additions |
|
|
|
|
Disposals |
|
|
|
|
|
1 |
15,434 |
15,435 |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
PROVISON |
|
|
|
|
At 1 January 2021 |
1 |
(15,434) |
(15,435) |
|
Charge for the year |
- |
- |
- |
|
Reductions |
- |
- |
- |
|
|
|
|
|
|
At 31 December 2021 |
1 |
(15,434) |
(15,435) |
|
Charge for the year |
|
|
|
|
|
1 |
(15,434) |
(15,435) |
|
At 31 December 2022 |
|
|
|
|
|
|
|
|
|
CARRYING VALUE |
|
|
|
|
At 31 December 2022 |
- |
- |
- |
|
|
|
|
|
|
At 31 December 2021 |
- |
- |
- |
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
14. Fixed Asset Investments (continued)
In the opinion of the directors, the aggregate value of the company's investment in subsidiary undertakings is not less than the amount included in the statement of financial position.
Historically, loans to participating interests are reported as in increase in the Company's investment in the joint venture, but have been provided for. As the Group acquired 100% shareholding in the joint venture in 2017 this balance had been transferred to loan to subsidiaries.
The details of the subsidiaries held at 31 December 2022 are as set out below:
|
|
Shareholding |
Country of incorporation |
Nature of business |
|
New Horizon Energy 1 LLC (NHE) |
100% |
USA |
Oil & gas exploration |
|
Buccaneer Operating, LLC (Buccaneer) |
100% |
USA |
Oil & gas exploration |
15. Trade and other receivables
|
|
GROUP |
|
COMPANY |
||
|
|
2022 |
2021 |
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
$'000 |
$'000 |
|
CURRENT |
|
|
|
|
|
|
Trade and other receivables |
52 |
271 |
|
- |
- |
|
Other taxes and receivables |
506 |
77 |
|
22 |
9 |
|
|
558 |
348 |
|
22 |
9 |
The directors consider the carrying value of the receivables to approximate their fair value.
16. Cash and cash equivalents
|
|
GROUP |
|
COMPANY |
||
|
|
2022 |
2021 |
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
$'000 |
$'000 |
|
|
|
|
|
|
|
|
Bank current accounts |
132 |
45 |
|
17 |
16 |
|
|
|
|
|
|
|
17. Trade and other payables
|
|
GROUP |
|
COMPANY |
||
|
|
2022 |
2021 |
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
$'000 |
$'000 |
|
CURRENT |
|
|
|
|
|
|
Trade payables |
777 |
783 |
|
2,771 |
1,243 |
|
Accruals and deferred income |
273 |
146 |
|
70 |
- |
|
Other taxes payables |
1 |
19 |
|
1 |
19 |
|
|
1,051 |
948 |
|
2,842 |
1,262 |
|
|
|
|
|
|
|
|
Decommissioning liability |
340 |
302 |
|
22 |
13 |
Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going expenses. The directors consider that the carrying amount of trade and other payables approximates their fair value.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
17. Trade and other payables (continued)
Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going expenses. The directors consider that the carrying amount of trade and other payables approximates their fair value.
Included in trade payables is the decommissioning liability, this has been calculated at a discount rate of 10% and an inflation factor of 3%. This is comparable to the Group's options at the time of the well in-service dates.
18. Financial liabilities - borrowing
|
|
GROUP |
|
COMPANY |
||
|
Maturity of the borrowings is as follows: |
2022 |
2021 |
|
2022 |
2021 |
|
|
$'000 |
$'000 |
|
$'000 |
$'000 |
|
Repayable within one year |
|
|
|
|
|
|
Bank loan |
- |
202 |
|
- |
202 |
|
Other loans |
94 |
316 |
|
94 |
316 |
|
Repayable after one year |
|
|
|
|
|
|
Bank loan |
3,756 |
2,459 |
|
- |
396 |
|
Other loans |
130 |
- |
|
130 |
- |
|
|
3,980 |
2,977 |
|
224 |
914 |
Borrowings include a facility where the loans are secured against the group's interest in its assets. At the year end the outstanding balance was $3,756k (2021: $2,459k). Interest is currently charged for any day per annum at 6.50%. In September 2021 the facility was extended by three years to 29 January 2025 and the nominal facility size was increased to $10 million. The Borrowing Base has been increased to US$4,350,000 based on improved production and cashflow during 2022. The size of the Facility and Borrowing Base will be reassessed at least twice yearly. The Board anticipates the Facility and Borrowing Base will increase as the Company's production and reserves increase.
Borrowings also include an unsecured loan with a balance at year-end of $Nil (2021: $202k). Interest is charged at 12% per annum and loan is fully repayable within the year.
The group also has a loan agreement in place with related parties, with a total outstanding balance as at the year-end of $224k (2021: $316k). Further details can be found in Note 22.
19. Share capital
|
Number |
Class |
Nominal value |
2022 $'000 |
2021 $'000 |
|
|
|
|
|
|
|
746 million (2021: 703 million restated) |
Ordinary |
0.1 |
1,593 |
1,538 |
|
|
|
|
|
|
|
4,110 million (2021: 4,110 million) |
Deferred |
0.098p |
6,549 |
6,549 |
During the year there were a number of share issues:
· 1 April 2022 - 24,000,000 new ordinary shares issued at 0.35p per share in respect of exercise of warrants.
· 1 June 2022 - 19,000,000 new ordinary shares issued at 0.35p per share in respect of exercise of warrants.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
20. Risk and sensitivity analysis
The group's activities expose it to a variety of financial risks: interest rate risk, liquidity risk, foreign currency risk, capital risk and credit risk. The group's activities also expose it to non-financial risks: market, legal and environment risk. The group's overall risk management programme focuses on unpredictability and seeks to minimise the potential adverse effects on the group's financial performance. The board, on a regular basis, reviews key risks and, where appropriate, actions are taken to mitigate the key risks identified.
Capital risk
The group's objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
Market risk
The group also faces risks in conducting operations in US mid-continent, which include but are not limited to:
· Fluctuations in the global economy could disrupt the group's ability to operate its business in the US Mid-Continent and could discourage foreign and local investment and spending, which could adversely affect its production.
Environmental risk
The group faces environmental risks in conducting operations in the US Mid-Continent which include but are not limited to:
· If the group is found not to be in compliance with applicable laws or regulations, it could be exposed to additional costs, which might hinder the group's ability to operate its business.
Credit risk
The group's principal financial assets are bank balances and cash, trade and other receivables. The group's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.
Volatility of crude oil prices
A material part of the group's revenue will be derived from the sale of oil that it expects to produce. A substantial or extended decline in prices for crude oil and refined products could adversely affect the group's revenues, cash flows, profitability and ability to finance its planned capital expenditure. West Texas Intermediate ("WTI") oil prices ranged from $73.17 to $120.93 in 2022 and $47.20 to $85.39 in 2021. The group had no hedging activity during 2022.
Interest rate risk
The group does not hedge this risk. At 31 December 2022, the group had borrowings of $3,980 (2021: $2,977k), with total interest for the year of $199k (2021: $175k). A 100-basis point change in the rates will increase finance costs by $38k.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
20. Risk and sensitivity analysis (continued)
Liquidity risk
The group expects to fund its exploration and development programme, as well as its administrative and operating expenses throughout 2022, principally using existing working capital and expected proceeds from the sale of future crude oil production. The group had a bank balance of approximately $132,000 at 31 December 2022 (2021: $45,000).
Cash flow risk
The group expects to have sufficient working capital to continue operations and to remain cash flow positive through 2022. This will be continuously monitored and reviewed by the directors through the inclusion of regular cash flow forecasts in management reports.
21. Financial commitments
Capital commitments
The group had no material capital commitments at the year-end.
22. Related party transactions
Group
No related party transactions other than those highlighted below.
Company
At the year end, the Company owed its subsidiaries $2,246,000 (2021: $727,000) in respect of intercompany loans that are unsecured and interest-free.
The Company has the following loans outstanding with related parties:
Discovery Energy Ltd
Discovery Energy Ltd previously had a common director with the Company, E Ainsworth. At the year end, the balance outstanding owed to Discover Energy Limited was $224k (2021: $316k). Interest charged in the year was $17k (2021: $27k). The loan is unsecured, bears interest at the rate of 8% per annum.
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
23. Share-based payments
The group has a share-ownership compensation scheme for senior executives of the group whereby senior executives may be granted options to purchase ordinary shares in company. The group has previously issued warrants to senior executives as a welcome incentive and to third parties as consideration for their services. A share-based payment charge of $155,000 (2021: $68,287) for share options was expensed during the year.
|
Date of grant |
Restated At 31.12.21 |
Granted |
Exercised |
Expired |
At 31.12.22 |
Exercise price pence |
Exercise/ vesting date |
|
|
|
|
|
|
|
|
|
From |
To |
|
Warrants |
|
|
|
|
|
|
|
|
|
07/02/17 |
750,000 |
- |
- |
(750,000) |
- |
2.55 |
06/02/17 |
06/02/22 |
|
08/04/20 |
73,611,000 |
- |
- |
- |
73,611,000 |
0.60 |
08/04/20 |
08/04/23 |
|
02/09/20 |
3,000,000 |
- |
- |
(3,000,000) |
- |
0.60 |
02/09/20 |
02/09/22 |
|
25/09/20 |
196,000,000 |
- |
(43,000,000) |
(153,000,000) |
- |
0.35 |
25/09/20 |
25/09/22 |
|
08/01/21 |
108,000,000 |
- |
|
|
108,000,000 |
0.85 |
08/01/21 |
08/01/23 |
|
Options |
|
|
|
|
|
|
|
|
|
29/10/14 |
675,000 |
- |
- |
- |
675,000 |
0.4 |
29/10/14 |
28/10/24 |
|
21/07/17 |
2,666,666 |
- |
- |
(2,666,666) |
- |
3 |
21/07/17 |
21/07/22 |
|
21/07/17 |
2,666,667 |
- |
- |
(2,666,667) |
- |
4.5 |
21/07/17 |
21/07/22 |
|
21/07/17 |
2,666,667 |
- |
- |
(2,666,667) |
- |
6 |
21/07/17 |
21/07/22 |
|
04/06/18 |
9,500,000 |
- |
- |
- |
9,500,000 |
5 |
04/06/18 |
03/06/25 |
|
29/09/20 |
5,000,000 |
- |
- |
- |
5,000,000 |
0.5 |
29/09/20 |
29/09/27 |
|
29/09/20 |
5,000,000 |
- |
- |
- |
5,000,000 |
0.75 |
29/09/20 |
29/09/27 |
|
29/09/20 |
5,000,000 |
- |
- |
- |
5,000,000 |
1 |
29/09/20 |
29/09/27 |
|
29/09/20 |
733,333 |
- |
- |
- |
733,333 |
0.5 |
29/09/20 |
29/09/27 |
|
29/09/20 |
733,333 |
- |
- |
- |
733,333 |
0.75 |
29/09/20 |
29/09/27 |
|
29/09/20 |
733,334 |
- |
- |
- |
733,334 |
1 |
29/09/20 |
29/09/27 |
|
29/09/20 |
1,666,666 |
- |
- |
- |
1,666,666 |
0.5 |
29/09/20 |
29/09/27 |
|
29/09/20 |
1,666,667 |
- |
- |
- |
1,666,667 |
0.75 |
29/09/20 |
29/09/27 |
|
29/09/20 |
1,666,667 |
- |
- |
- |
1,666,667 |
1 |
29/09/20 |
29/09/27 |
|
29/09/20 |
1,333,333 |
- |
- |
- |
1,333,333 |
0.5 |
29/09/20 |
29/09/27 |
|
29/09/20 |
1,333,333 |
- |
- |
- |
1,333,333 |
0.75 |
29/09/20 |
29/09/27 |
|
29/09/20 |
1,333,334 |
- |
- |
- |
1,333,334 |
1 |
29/09/20 |
29/09/27 |
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
23. Share-based payments (continued)
The total number of options and warrants outstanding at 31 December 2022 and 31 December 2021 are as follows:
Total at 31 December 2022: 217,986,000
Total at 31 December 2021: 425,736,000 (restated)
The number of options and warrants outstanding to the directors at the year-end were as follows:
|
Director |
Warrants |
Options |
Total Warrants & Options |
|||
|
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
|
|
|
|
|
|
|
|
|
|
M Lofgran |
16,000,000 |
16,000,000 |
21,600,000 |
27,600,000 |
37,600,000 |
43,600,000 |
|
S Staley |
2,000,000 |
2,000,000 |
5,000,000 |
5,000,000 |
7,000,000 |
7,000,000 |
|
J Stafford |
- |
- |
5,500,000 |
5,500,000 |
5,500,000 |
5,500,000 |
|
Total |
18,000,000 |
1,800,000 |
38,100,000 |
38,100,000 |
50,100,000 |
56,100,000 |
The estimated fair value of the warrants issued in previous years was calculated by applying the Black-Scholes option pricing model. Volatility is based on historic share prices of the Company. The assumptions used in the calculation were as follows (the warrants issued on 8 April 2020 were to subscribers of shares in a fundraising and are not considered to be share based payments):
|
Warrants |
23 June 2015 |
7 Feb 2017 |
02 Sep 2020 |
25 Sep 2020 |
8 Jan 2021 |
|
Share price at grant date |
1.60p |
2.53p |
0.23p |
0.3p |
0.53p |
|
Exercise price |
8.77p |
2.55p |
0.6p |
0.35p |
0.85p |
|
Option life in years |
5 years |
5 years |
2 years |
2 years |
2 years |
|
Risk free rate |
1% |
1% |
1% |
1% |
0.5% |
|
Expected volatility |
50% |
50% |
50% |
50% |
50% |
|
Expected dividend yield |
0% |
0% |
0% |
0% |
0% |
|
Fair value of option/warrant |
0.24p |
1.08p |
0.01p |
0.07p |
0.07p |
|
Weighted average remaining life (years) |
- |
- |
- |
- |
- |
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
23. Share-based payments (continued)
|
Options |
28 Oct 2014 |
21 July 2017 |
21 July 2017 |
21 July 2017 |
4 June 2018 - Service providers |
|
Share price at grant date |
2.65p |
1.55p |
1.55p |
1.55p |
2.50p |
|
Exercise price |
0.4p |
3p |
4.5p |
6p |
5.p |
|
Option life in years |
10 years |
5 years |
5 years |
5 years |
2 years |
|
Risk free rate |
1% |
1% |
1% |
1% |
1% |
|
Expected volatility |
50% |
50% |
50% |
50% |
50% |
|
Expected dividend yield |
0% |
0% |
0% |
0% |
0% |
|
Fair value of option/warrant |
0.13p |
0.52p |
0.35p |
0.25p |
0.87p |
|
Weighted average remaining life (years) |
1.83 |
- |
- |
- |
- |
|
Options |
4 June 2018 - Directors |
29 Sep 2020 |
29 Sep 2020 |
29 Sep 2020 |
|
Share price at grant date |
2.50p |
0.38p |
0.38p |
0.38p |
|
Exercise price |
5.p |
0.5p |
0.75p |
1p |
|
Option life in years |
7 years |
7 years |
7 years |
7 years |
|
Risk free rate |
1% |
1% |
1% |
1% |
|
Expected volatility |
50% |
50% |
50% |
50% |
|
Expected dividend yield |
0% |
0% |
0% |
0% |
|
Fair value of option/warrant |
1.85p |
0.16p |
0.50p |
0.26p |
|
Weighted average remaining life (years) |
2.43 |
4.75 |
4.75 |
4.75 |
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
24. Contingent liabilities and guarantees
The Group has no contingent liabilities in respect of legal claims arising from the ordinary course of business and it is not anticipated that any material liabilities will arise from contingent liabilities other than those provided for.
25. Ultimate controlling party
The company is quoted on the AIM market of the London Stock Exchange. At the date of the annual report there was no one controlling party.
26. Events after the reporting period
There were no significant events.
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