Interim Results

RNS Number : 5106A

Predator Oil & Gas Holdings PLC

30 September 2020

 

FOR IMMEDIATE RELEASE

30 September 2020

Predator Oil & Gas Holdings Plc / Index: LSE / Epic: PRD / Sector: Oil & Gas

Predator Oil & Gas Holdings Plc

  ("Predator" or the "Company" and together with its subsidiaries "the Group")

  Report and Interim Financial Statements for the 6 months to 30 June 2020

Financial highlights:

· Loss from operations of £0.784 million (2019: full year Loss of £1.279 million).

· Cash balance, at period end of £2.098 million (2019 year end: £0.109 million).

· A further £1.221 million (US$1.5 million) held as restricted cash and £0.396 million by way of a loan to FRAM Exploration Trinidad Ltd. for the investment in the Pilot CO2 EOR Project.

· Fully-funded for Morocco drilling programme and Pilot CO2 EOR Trinidad

· £4.008 million (before expenses) raised through two over-subscribed Placings

· 4,450,000 warrants issued exercisable at £0.04 before 27 February 2023.

· Redemption in full of outstanding principal balance of £746,000 Arato Convertible Loan

Operational highlights

·   Phases 1 and 2 of Pilot CO2 EOR Project successfully executed

·   Exercised rig option with Star Valley drilling without entering into any financial liabilities

·   Bids received for MOU-1 well services and logistical support

·   Additional high-impact MOU-4 Prospect identified with over 1 TCF of additional potential 

  prospective gas resources (management estimates)

·   Predator LNG Ireland formed, and LNG Business Plan initiated

  Post reporting date:

·   99% increase in pre-injection primary production rate for CO2 EOR monitoring well

·   Company calculates 1,047 barrels of enhanced oil production has accumulated for its 

  account under the terms of the Well Participation Agreement with FRAM Exploration Trinidad

·   Competent Persons Report on the MOU-4 Prospect commissioned

·   T imeline for commissioning of offshore LNG import facility projects H1 2024 start-up

·   Louis Castro appointed as non-executive director

Predator Oil & Gas Holdings Plc

Report and Interim Financial Statements

For the 6 months to 30 June 2020

Predator Oil & Gas Holdings Plc ('the Company' or 'The Group'), the Jersey-based Company listed on the Standard Listing segment of the Official List on the Main Market of the London Stock Exchange and with operations in Trinidad, Morocco, and Ireland that include CO2 sequestration, gas exploration and LNG project development, announces its unaudited interim results for the six month period ended 30 June 2020.

Chief Executive Officer's Report

Dear Shareholder,

2020 has been an exciting year for the Company thus far despite the challenges created by the COVID-19 pandemic as we continue to build our core onshore businesses focussed on high impact exploration for gas in Morocco and anthropogenic CO2 injection in Trinidad.

I am pleased to report to shareholders on a number of significant developments that have taken place both during and following  the reporting period to 30 June 2020, including significant milestones  being achieved in relation to the Company's Pilot Enhanced Oil Recovery onshore Trinidad using injected carbon dioxide ("Pilot CO2 EOR")

Operational overview

Trinidad

On the 27 January 2020, a significant milestone was reached with the first injection of CO2 into the Inniss-Trinity field, proving the CO2 delivery system design concept developed by the Company.

By 31 March 2020 more CO2 had been injected into AT-5X in preparation for initiating Phase 2 of the CO2 EOR pilot project and encouraging downhole pressure build-up was observed, validating the Company's downhole well completion design.

Despite COVID-19 restrictions, 380 metric tonnes of CO2 were injected from May 18 until June 18 2020 into the AT-5X well in the AT-4 Block to reach another important milestone to fulfil Phases 1 and 2 of the Pilot CO2 EOR Project.

At the successful conclusion of Phases 1 and 2 of the Pilot CO2 EOR Project on 18 June 2020, the Company has taken all necessary operational steps to prepare to implement Phase 3 of the CO2 EOR Project Plan agreed with FRAM, Heritage Petroleum Ltd. and the Ministry of Energy and Energy Industries ("MEEI"). The first operational step is to re-establish AT-5X as an oil producer. Production data from this well may or may not result in a refinement of the Phase 3 Pilot CO2 EOR Project injection strategy to increase operational efficiencies to give shorter-term incremental production.

Morocco

An important regulatory milestone was achieved when the Environmental Impact Assessment ("EIA") for the Guercif drilling programme was ratified by the Ministry of Energy and Mines and Environment. It is valid for 5 years from the effective date of issue of 29 January 2020. The EIA covers the MOU-1 drilling location and the potential for two follow-up wells on separate prospects, which is important as it facilitates additional potential drilling as an immediate follow-up to MOU-1.

The MOU-1 well design and geological programme was developed and a site visit to the drilling location was made by the Company and the drilling contractor for the purposes of logistical and operational planning.

The Drilling Project Manager, with appropriate experience of drilling wells in the analogous Rharb Basin for SDX Energy in 2018, was contracted and a drilling management team was identified.

The Company achieved another milestone when it exercised, without entering into any financial obligations, on 19 February 2020 its rig option with Star Valley Drilling Ltd. ("Star"), a Canadian drilling company undertaking an extensive drilling programme for SDX Energy Plc in the Rharb Basin west of the Guercif using its Rig No. 101. Rig mobilisation was anticipated to occur within a window commencing 15 March 2020 and ending 30 April 2020, unless otherwise agreed by mutual consent of the Company and Star.

During March 2020 bids were received and evaluated for third party services: principally mud engineering, cementing, wireline logging, directional drilling services, transport and base camp and intangibles including bits. Mud, cement and casing requirements were identified as being present and available in Morocco.

Following the outbreak of the COVID-19 pandemic in March, all contract negotiations were suspended and all operational activities, with the exception of essential desk-top studies, were postponed, reducing costs and preserving capital. Rig 101 remains stacked in Morocco. No costs are currently being incurred by the Company.

Once COVID-19 restrictions are sufficiently relaxed, operations on the ground can be re-started and contract negotiations completed. A period of time will be required to assess the impact of any re-mobilisation of some specific services such as wireline logging and cement should personnel and equipment need to be mobilised from outside of Morocco. COVID-19 has also meant that normal business with ONHYM has inevitably been disrupted and therefore any consents and regulatory approvals required to begin drilling operations will depend on the restoration of normal business procedures. 

During COVID-19 restrictions we have had the opportunity to complete important desk-top studies that have significantly enhanced the prospectivity and materiality of potential prospective resources in the area adjoining the MOU-1 Prospect.

NuTech completed for the Company a modern petrophysical analysis of the GRF-1 well drilled by Elf Aquitaine in 1972. The gross interval between 1,386 and 1,413 metres TVD KB (27 metres) has interpreted gas saturations in the range 37 to 51%, whilst a gross interval between 1,635 and 1,925 metres TVD KB (290 metres) has gas saturations ranging from 30 to 72%. The new petrophysical analysis supports the presence of a gas charge and is consistent with thermogenic gas shows (mainly methane, but with traces of ethane and propane) recorded on the GRF-1 mud logs and the small volume of gas recovered on a Formation Interval Test at the time of drilling and historical soil sampling around the GRF-1 well location, which also demonstrated the presence of thermogenic gas in the soils.

The NuTech analysis has also identified the upper part of the interval between 1,386 and 1,413 metres TVD KB in GRF-1 as a new additional gas target for the MOU-1 well. As a result, the well will present an opportunity to evaluate the western extremity of a newly interpreted mid-Tortonian fan complex, the "MOU-4" Prospect, covering an area of approximately 50 km². A successful drilling result would de-risk the MOU-4 Prospect for follow-up drilling. Management estimates of additional MOU-4 potential resources to the MOU-1 Prospect are greater than one TCF.

Identification of additional prospectivity and running room for cost-effective follow-up drilling, whilst a drilling rig and well services are mobilised, is being used by the Company as the catalyst for potentially attracting joint venture partners for additional drilling after the completion of the MOU-1 well. The opportunity to monetise a substantive gas discovery early can only be realised through additional back-to-back drilling to confirm the volumes of any discovered gas resources.

Gas marketing studies by the Company indicate that the prospective gas resources being targeted by drilling in the Guercif Basin are suitable for both the gas-to-power market, being situated less than 10 kilometres from the Maghreb gas pipeline and along which Morocco's existing gas-fired power plants are located, and for Morocco's industrial market to be supplied by compressed natural gas via the railroad link at Guercif that connects with Morocco's major industrial centres.

Low onshore development costs, cheap drilling and a clear route to adjacent infrastructure and markets creates a compelling near-term material commercial proposition for a potential suitor.

In June 2020 ConocoPhillips were awarded a licence adjoining to the west and on trend with the Company's Guercif Licence.  The Company regards this as a significant milestone and a clear expression of intent in the context of validating the prospectivity and materiality of the geological trends being targeted in the Guercif Licence.  The Company was right to target Guercif before others in 2019.

Ireland

In the period up to 30 June 2020 the Company has continued to develop an offshore LNG import project for Ireland based on non-shale gas LNG feedstock compatible with the European Commission sustainable energy security package announced on 16 February 2016, which included a non-legislative EU strategy for LNG and gas storage.

The change in government during this period has shifted the focus away from traditional and historical offshore oil and gas exploration in favour of a reliance on a renewable energy strategy. The Kinsale gas field has now ceased production, whilst the Corrib gas field is showing an increasing rate of depletion relative to forward projections made prior to commissioning of the field. With the change in government policy, no new gas fields are likely to be developed offshore Ireland in the foreseeable future. Ultimately and inexorably Ireland will be wholly dependent on gas through the UK interconnectors for security of gas supply. Any interruption to supply whether political, operational or through a form of natural disaster would result in an inability to supply flexible "on demand" energy.

We have made excellent progress with regulatory authorities, gas infrastructure owners, gas buyers and a provider of a Floating Regasification and Storage Unit vessel ("FRSU") to establish an offshore LNG opportunity for Ireland to import LNG that does not use shale gas as a LNG feedstock. The rapid and proactive engagement of all the key stakeholders demonstrates the potential significance of LNG as a contributor to Ireland's security and diversification of energy supply during the transition to renewable energy dominance and a potential post-Brexit over-reliance on gas imported through the interconnectors with the United Kingdom.

We have been focussed on desk-top development of the project from the perspective of regulatory and environmental requirements and the scope of any upgrade in the existing onshore infrastructure required to accept a new entrant to the onshore gas grid. Discussions with our potential provider of a Floating Regasification and Storage Unit vessel ("FRSU") are ongoing to establish scoping capital investment required, daily re-gasification off-take, leasing costs and operating conditions for the Celtic Sea.

Based on the above discussions and desk-top studies, the Company is developing a Project Timeline for first deliveries of gas from offshore LNG re-gasification subject to successfully securing an LNG import licence.

This is an exciting development for the Company as we have moved quickly to establish a niche position and have developed relationships with significant global players in the LNG industry. LNG is a key component for the future global energy mix. The Company has ownership of the LNG Business Plan and is applying for an LNG import licence. This is potentially a valuable asset for the Company and a catalyst for future M & A transactions at the appropriate time in the project development cycle.

Financial review

The Company reported an operating loss for the period to 30 June 2020 of £784,156 (£512,263 for the period to 30 June 2019). The increase in operating loss is largely attributable to an increase in finance expense to £211,909 (£39,990 for the period to 30 June 2019) as a result of expenses related to the conversion and repayment in full of the principal amount outstanding of the Arato Convertible Loan Notes.

Administrative expenses for the period to 30 June 2020 were £572,247 (£472,272 for the period to 30 June 2019) and include £100,451 (£nil for the period to 30 June 2019) fair value adjustment to warrants. Executive directors' fees have been reduced to £85,262 (£103,830 for the period to 30 June 2020). Despite the significant increase in the Company's activities in the period to 30 June 2020, administrative expenses not attributable to finance expense have been prudently managed.

The Company is finishing the reporting period with cash reserves of £2,098,177 (£728,767 for the period to 30 June 2019) and restricted cash of £1,221,200 (£1,183,058 for the period ended 30 June 2019) in the form of the security deposit for the Guercif Bank Guarantee in favour of ONHYM. The balance outstanding of the loan by the Company to FRAM Exploration Trinidad Ltd. for the investment in the Pilot CO2 EOR Project was £396,136 (£ nil for the period to 30 June 2019) at the end of the period.

During the period to 30 June 2020 we have completed two over-subscribed Placings to raise £4.008 million (before expenses) and have issued shares to repay the outstanding principal balance on the Arato Convertible Loan Notes. As a result of these transactions 131,506,348 new shares have been issued and the issued share capital increased to 239,678,517 by the end of the period to 30 June 2020. 4,450,000 warrants were issued exercisable at £0.04 before 27 February 2023.

Some Placing funds were used for redemption in full of the outstanding principal balance on the Arato Convertible Loan Notes of £746,000£ nil for the period to 30 June 2019) and the remainder of the Placing funds are to provide the working capital to fully fund the Company's planned operations in Morocco and Trinidad.

As a result of the transactions successfully concluded during the period under review, the Company is well-capitalised to fund its drilling and production activities in Morocco and Trinidad, is free of debt and can deploy prudent levels of administrative expenditure focussed on enhancing and promoting the potential of the Company's value creating M & A strategy.

COVID-19

The Company has taken all appropriate steps to minimise capital expenditures and reduce operating costs whilst COVID-19 restrictions continue to impact the industry's business operations.

Adequate cash reserves, production from CO2 EOR in Trinidad, a high impact risk-reward proposition in Morocco and a mature portfolio of separate and diverse businesses focussed on climate change awareness creates alignment with current industry trends reflecting an increased appetite for M & A transactions. 

Board changes

At the Company's AGM held on 29 June 2020, our interim chairman Carl Kindinger retired from the Board. Dr Stephen Staley was appointed non-executive Chairman.

Post period

Board changes

On 14 July 2020, Louis Castro was appointed as a non-executive director. Louis has 30 years' experience in the industry and the City and has worked in corporate finance and the capital markets to execute complex M & A transactions, in line with the Company's strategic objective of pursuing an M & A strategy.

Operations

Morocco

Post period, the Company has commissioned SLR Consulting Ireland Ltd. a Competent Persons Report for the MOU-4 Prospect in the Guercif Licence onshore Morocco.

Trinidad

From the onset of CO2 injection into the AT-4 Block up to 18 July 2020, average oil production for one of the CO2 EOR monitoring wells was 21.8 bopd, excluding downtime. During the period 19 July to 31 August 2020 average oil production increased significantly to 43.4 bopd, excluding downtime, without any decline in surface tubing pressure. CO2 injection into AT-5X eliminated the observed decline in surface tubing pressure recorded in the above CO2 EOR monitoring well prior to CO2 injection on 18 May 2020.

A key milestone has been reached whereby enhanced oil production, in response to CO2 injection at AT-5X, in the above CO2 EOR monitoring well during the period 19 July to 31 August 2020 represented an increase of 99% on pre-injection primary production rates. Up until 10 September 2020 the Company has determined that a total of 1,047 barrels of enhanced oil production has accumulated for the Predator Oil & Gas Trinidad Ltd account under the terms of the Well Participation Agreement ("WPA") with FRAM Exploration Trinidad Ltd. ("FRAM"). No evidence of CO2 leakage to the atmosphere has been recorded by the CO2 surface monitors.

A second CO2 EOR monitoring well, where no production had been recorded for over 2 years, flowed 17 barrels of oil, under natural flow conditions and with no water cut, in 19 hours and with a surface tubing pressure drop during that time of 4.4 psi. Surface tubing pressure in the AT-5X injection well had increased to 357 psi by 31 August 2020 due to the effects of CO2 injection.

Post reporting date, the parent company of FRAM Exploration Trinidad Ltd has been merged with Bahamas Petroleum Company Plc. Following the completion of the merger, the Company has requested that FRAM now progress the approvals required to restore AT-5X to production without further delay.

The successful execution of Phases 1 and 2 of the Pilot CO2 EOR Project, with enhanced oil production, has created opportunities to joint venture with companies in Trinidad wishing to utilise the Company's proven CO2 EOR expertise. This is consistent with the Company's M & A strategy to monetise its assets as and when an attractive commercial opportunity arises. A number of opportunities are at an early stage of review. Over the coming months these will be further assessed and ranked based on, first and foremost, the suitability of the commercial proposition in attributing value to the Company's CO2 EOR expertise, experience and existing contractual arrangements for CO2 supply, and thereafter on both the track record of the operator of any new opportunity in delivering regulatory approvals in a timely manner and the technical merits and materiality, including scalability, of each opportunity.

On 14 July 2020 we served written notice of our intent to exercise our option under our Well Participation Agreement with FRAM Exploration Trinidad Ltd. ("FRAM")  to make an offer to enter into a Share Purchase Agreement to acquire the entire outstanding issued share capital of FRAM for a cash consideration of one million seven hundred and fifty thousand United States Dollars (US$ 1,750,000).

In line with our M & A strategy of identifying suitable commercial propositions that attribute value to the Company's CO2 EOR expertise, experience and existing contractual arrangements for CO2 supply, the cash consideration for an acquisition of FRAM would have been financed by a local Trinidadian company in return for it being assigned  operatorship and certain rights as defined in the Incremental Production Services Contract for the Inniss-Trinity field, subject to consent from the MEEI and Heritage for any  proposed Change of Control of FRAM. The Company would retain the profits from its Pilot Enhanced Oil Recovery in the AT-4 Block using injected Carbon Dioxide ("Pilot CO2 EOR"), on terms similar to those defined in the current WPA.  The deadline for acceptance by FRAM of the offer expired on 22 July 2020.

The exclusive option to acquire FRAM remains available to the Company until 30 September 2020, such date may be extended by mutual agreement between the Company and FRAM.

The Company retains exclusivity over Trinidad's surplus liquid CO2 supply.

Ireland

A timeline for the commissioning of an offshore LNG import facility has been completed based on projecting first deliveries of gas from an offshore FRSU operation to occur in the first half of 2024. This will now form the basis of finalising the collaboration agreement with the FRSU vessel provider.

Summary

During the period, and in the post period, despite the COVID-19 restrictions, we have successfully achieved key milestones in Trinidad through delivering enhanced oil recovery in our Pilot CO2 EOR Project. We will continue to accumulate enhanced oil production from certain CO2 EOR monitoring wells in the AT-4 Block whilst we await approvals to restore AT-5X to production.

In Morocco we have successfully maintained a drill-ready status for the MOU-1 Prospect at Guercif and can re-instate the operational planning and execution once COVID-19 restrictions are lifted. An additional high-impact prospect, MOU-4, has been added to the portfolio, which increases the potential for a transaction to drill follow-up wells to MOU-1 whilst a rig and well services are mobilised at the MOU-1 drilling location. This in turn increases the potential for an M & A transaction in the event of a successful and material gas discovery. In June 2020 ConocoPhillips acquired a licence adjoining the Guercif Licence.

We have rapidly advanced the offshore LNG import project for Ireland from a conceptual idea to a stage where we are engaged with regulators and significant global players in the LNG industry to provide an FSRU solution to address Ireland's security of energy supply.

On behalf of the Board, I would like to thank our shareholders for their continued support of the Company through the COVID-19 crisis and the resulting personal hardships this has caused to many. I look forward over the next 12 months to continue to make progress to mature the Company's portfolio of businesses to realise the opportunity for M & A transactions that properly reflect the enterprise value being progressively created in these businesses. 

Paul Griffiths

Chief Executive Officer

30 September, 2020

Paul Griffiths, Chief Executive of Predator, commented:

"Against a COVID-19 background, the Company has secured working capital and has eliminated debt to ensure it has the financial resources and projects not just to weather the COVID-19 pandemic but also to continue to mature each of its operating businesses to a stage whereby they can be potentially monetised through M & A transactions. In this respect an important milestone has been reached in Trinidad with the success to date of the Pilot CO2 EOR Project. The addition of another high-impact prospect, MOU-4, to the Guercif prospect inventory creates an opportunity for follow-up drilling whilst the rig is mobilised for the MOU-1 drill. Timelines for drilling will be updated as soon as the relaxation of COVID-19 restrictions enables operational planning and execution to resume on the ground in Morocco. ConocoPhillips entry into Morocco adjoining Guercif is an exciting development and a testament to the growing recognition of northern Morocco's potential prospective hydrocarbon resources adjacent to infrastructure which we will test in Guercif."

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 on market abuse

For more information please visit the Company's website at  www.predatoroilandgas.com : 

Enquiries:

Predator Oil & Gas Holdings Plc Dr. Stephen Staley Non-executive Chairman Paul Griffiths  Chief Executive Officer	Tel: [phone] [e-mail]
Novum Securities Limited Jon Belliss Optiva Securities Limited Christian Dennis	Tel: [phone] Tel: [phone]
Flagstaff Strategic and Investor Communications Tim Thompson  Mark Edwards Fergus Mellon	Tel: [phone] [e-mail]

Notes to Editors:

Predator is an oil and gas exploration company with the objective of participating with FRAM Exploration Trinidad Ltd. in further developing the remaining oil reserves in the producing Inniss Trinity oil field onshore Trinidad, primarily through the application of C02 EOR technology. Potential for cash flow exists by executing a Pilot Enhanced Oil Recovery project using locally sourced liquid carbon dioxide for injection into the oil reservoirs ("C02 EOR"). Near-term expansion and growth potential is focussed on upscaling the C02 EOR operations in the Inniss-Trinity oil field and potential acquisitions of assets suitable for C02 EOR development, subject to all necessary approvals. 

In addition, Predator also owns and operates exploration and appraisal assets in current licensing options offshore Ireland, for which Successor Authorisations have been applied for, adjoining Shell's Corrib gas field in the Slyne Basin on the Atlantic Margin and east of the Kinsale gas field and Barryroe oil field in the Celtic Sea.

Predator is operator of the Guercif Petroleum Agreement onshore Morocco which is initially prospective for Tertiary gas in prospects less than 10 kilometres from the Maghreb gas pipeline.

The Company has a highly experienced management team with a proven track record in the oil and gas industry.

The interim management report and interim results are set out in the following pages.

The Directors present their report and the unaudited consolidated financial statements together with related notes, of Predator Oil & Gas Holdings Plc and its subsidiaries ("the Group") for the six months ended 30 June 2020. The statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at the year ended 31 December 2019.  The results for the period ended 30 June 2020 are unaudited. These statements are in agreement with accounting records which have been properly kept in accordance with Section 103 of the Companies (Jersey) Law 1991.

Responsibility Statement

We confirm that to the best of our knowledge:

-  The Interim Report has been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU;

-  Gives a true and fair value of the assets, liabilities, financial position and Loss of the Group;

-  The Interim Report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year and

-  The Interim Report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.

The Interim Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by

Dr. Stephen Staley

Chairman

30 September 2020

COVID-19 statement and global outlook

The six month period ended 30 June 2020, has been dominated by the COVID-19 pandemic and the resulting impact on the timely receipt of regulatory approvals to execute upstream operations; commodity prices; financial markets; overall investment sentiment; and the slowdown of the global economy. COVID-19 will continue to exert a negative influence on the efficiency of business operations for some time to come. The exact timescale cannot currently be predicted and therefore businesses must learn to adapt to the prevailing circumstances in order to weather the challenges and maintain robust foundations necessary for future business growth as and when circumstances allow.

The impact of COVID-19 has also been a catalyst to reinforce the public awareness of climate change concerns and unsustainable accelerating levels of CO2 emissions. The fossil fuel industry has been the primary focus of attention during this time, given its high-profile current and historical contribution to generating CO2 emissions through use by largely third parties of its products.

Reducing the extrapolated CO2 emissions path to even a constant emissions path based on current levels of CO2 emissions requires integrated effort combining fuel efficiency, fuel switching, carbon capture and storage, nuclear power, wind and wave power, solar power, biomass, changes in agriculture and natural sinks (re-afforestation) acting in unison on a globally co-ordinated scale in an inevitably extended transition period of several decades.

COVID-19 has been an instantaneous event that is having an immediate and long-lasting impact on world economies. Managing the transition to greener energy economies should not be a similar instantaneous event. Without mitigating measures there would exist the potential for comparable damaging economic implications. Our industry can contribute positively to effecting a pragmatic solution through focussing on gas as the preferred fossil fuel of choice for the transition period and developing subsurface CO2 storage facilities by using our industry's long-established understanding of the geological reservoir attributes required to safely retain gas underground. 

It is inevitable that our industry will contract under these circumstances and that M & A transactions will be the prime focus of corporate activity whilst COVID-19 restricts field operations, particularly in the onshore environment.

COVID-19 and climate change concerns, with the implications for the fossil fuel industry, will create significant challenges for the foreseeable future. Our business strategy since incorporation has always been based on adapting to climate change concerns. Our businesses have been matured despite challenges posed by COVID-19 restrictions. Predator has established itself early at the forefront of embracing change and at the appropriate time this will serve us well when negotiating M & A transactions to move our businesses on to the next level to substantive entities seeking growth businesses more aligned with the changing energy focus and the requirement to help mitigate against climate change.

Predator Oil & Gas Holdings Plc
Consolidated statement of comprehensive income
For the 6 months to 30 June 2020
		01.01.2020 to 30.06.2020		01.01.2019 to 30.06.2019		01.01.2019 to 31.12.2019
		(unaudited)		(unaudited)		(audited)
	Notes	£				£
Administrative expenses	3	(572,247)		(472,273)		(1,204,464)
Operating loss		(572,247)		(472,273)		(1,204,464)
Finance income		-		-		12
Finance expense		(211,909)		(39,990)		(74,791)
Loss for the period before taxation		(784,156)		(512,263)		(1,279,243)
Taxation		-		-		-
Loss for the period after taxation		(784,156)		(512,263)		(1,279,243)
Other comprehensive income		-		-		-
Total comprehensive loss for the period attributable to the owner of the parent		(784,156)		(512,263)		(1,279,243)
Loss per share (in pence)	4	(0.4)		(0.5)		(1.2)

Condensed consolidated statement of financial position
As at 30 June 2020
		30.06.2020		31.12.2019
		(unaudited)		(audited)
	Notes	£		£
Non-current assets
Tangible fixed assets		6,287		7,158
		6,287		7,158
Current assets
Trade and other receivables	5	1,623,416		1,381,175
Cash and cash equivalents	6	2,098,177		109,716
		3,721,593		1,490,891
Total assets		3,727,880		1,498,049
Equity attributable to the owner of the parent
Share capital	7	6,832,563		2,346,336
Reconstruction reserve		2,783,971		3,270,648
Other reserves		403,597		250,964
Retained deficit		(6,357,751)		(5,568,143)
Total equity		3,662,380		299,805
Non-current liabilities
Convertible loan notes	8	-		918,406
Current liabilities
Trade and other payables	9	65,500		279,838
Total liabilities		65,500		1,198,244
Total liabilities and equity		3,727,880		1,498,049

Condensed consolidated statement of changes in equity
For the 6 months to 30 June 2020
	Attributable to owner of the parent
	Share Capital	Share premium	Share based payments	Retained deficit	Total
	£	£	£	£	£
Balance at 31 December 2018	1,837,086	3,294,898	81,570	(4,294,352)	919,202
Loss for the period	-	-	-	(512,263)	(512,263)
Total comprehensive income for the period	-	-	-	(512,263)	(512,263)
Issue of ordinary share capital	367,500	-	-	-	367,500
Fair value of warrants	-	-	81,384	-	81,384
Loan note conversion premium	-	(17,500)	-	-	(17,500)
Total transactions with owners	367,500	(17,500)	81,384	-	431,384
Balance at 30 June 2019	2,204,586	3,277,398	162,954	(4,806,615)	838,323
Loss for the period	-	-	-	(766,980)	(766,980)
Total comprehensive income for the period	-	-	-	(766,980)	(766,980)
Issue of ordinary share capital	141,750	-	-	-	141,750
Fair value of warrants	-	-	-	-	-
Fair value of share options	-	-	93,462	-	93,462
Loan note conversion premium	-	(6,750)	-	-	(6,750)
Total transactions with owners	141,750	(6,750)	93,462	-	228,462
Balance at 31 December 2019	2,346,336	3,270,648	256,416	(5,573,595)	299,805
Loss for the period	-	-	-	(784,156)	(784,156)
Total comprehensive income for the period	-	-	-	(784,156)	(784,156)
Issue of ordinary share capital	4,486,227	-	-	-	4,486,227
Fair value movement of share options	-	-	46,730	-	46,730
Fair value of warrants	-	-	100,451	-	100,451
Listing costs capitalised	-	(473,227)	-	-	(473,227)
Loan note conversion premium	-	(13,450)	-	-	(13,450)
Total transactions with owners	4,486,227	(486,677)	147,181	-	4,146,731
Balance at 30 June 2020	6,832,563	2,783,971	403,597	(6,357,751)	3,662,380

Condensed consolidated statement of cash flows
For the 6 months to 30 June 2020
			01.01.2020 to 30.06.2020		01.01.2019 to 30.06.2019		01.01.2019 to 31.12.2019
			(unaudited)		(unaudited)		(audited)
			£		£		£
Cash flows from operating activities
Loss for the period before taxation		(784,156)			(512,263)		(1,279,243)
Adjustments for:
Issue of share options		46,730			-		93,461
Fair value of warrants		100,451			-		-
Finance expense		115,315			39,990		-
Share issue costs		195,000			-		-
Finance income		-			-		(12)
Amortisation of transaction costs		96,594			-		74,791
Depreciation		871			-		1,158
Foreign exchange		417,803			31,109		-
Decrease/(Increase) in trade and other receivables		29,941			(1,208,410)		(1,167,848)
(Decrease)/Increase in trade and other payables		(214,338)			(686)		209,568
Net cash used in operating activities		4,211			(1,650,260)		(2,068,125)
Cash flow from investing activities
Loan advances		(177,323)			(3,574)		(201,077)
Purchase of computer equipment		-			(999)		(4,694)
Net cash used from investing activities		(177,323)			(4,573)		(205,771)
Cash flows from financing activities
Proceeds from issuance of shares, net of issue costs		3,535,550			-		-
Proceeds from issue of convertible loan notes, net of issue costs		-			1,410,000		1,410,000
Redemption of convertible loan notes		(746,000)			-		-
Finance expense paid		(115,315)			-		-
Finance income received		-			-		12
Net cash generated from financing activities		2,674,235			1,410,000		1,410,012
Effect of exchange rates on cash		(512,662)			-		-
Net increase in cash and cash equivalents		1,988,461			(244,833)		(863,884)
Cash and cash equivalents at the beginning of the period		109,716			973,600		973,600
Cash and cash equivalents at the end of the period		2,098,177			728,767		109,716

Notes to the condensed consolidated interim financial statements
For the 6 months to 30 June 2020
General information
Predator Oil & Gas Holdings Plc ("the Company") and its subsidiaries (together "the Group") are engaged principally in the operation of an oil and gas development business in the Republic of Trinidad and Tobago and an exploration and appraisal portfolio in Ireland and Morocco. The Company's ordinary shares are on the Official List of the UK Listing Authority in the standard listing section of the London Stock Exchange.
Predator Oil & Gas Holdings plc was incorporated in 2017 as a public limited company under Companies (Jersey)  Law 1991 with registered number 125419. It is domiciled and registered at 3rd Floor, Standard Bank House, 47-49 La Motte Street, Jersey, JE2 4SZ, Channel Islands.
Basis of preparation
The condensed consolidated interim financial statements are prepared under the historical cost convention and on a going concern basis and in accordance with International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS").
The condensed consolidated interim financial statements contained in this document do not constitute statutory accounts under Companies (Jersey) Law 1991.  In the opinion of the directors, the condensed consolidated interim financial statements for this period fairly presents the financial position, result of operations and cash flows for this period.
The condensed consolidated interim financial statements have not been audited, nor have they been reviewed by the Company's auditors in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board.
Statutory financial statements for the year ended 31 December 2019 were approved by the Board of Directors on 1 May 2020. The report of the auditors on those financial statements was unqualified with an Emphasis of Matter in relation to the impact of COVID-19 in the going concern.
The Board of Directors approved this Interim Financial Report on 30 September 2020.
Statement of compliance
The Interim Report includes the consolidated interim financial statements which have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'.  The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with IFRS as adopted by the European Union.
Going concern
Notwithstanding the loss incurred during the period under review and following two successful oversubscribed Placings to raise £4.008 million gross (before expenses) and the repayment in full of the outstanding principal balance of £857,900, the Directors have a reasonable expectation that the Group will not need to raise funds to continue operations for the foreseeable future. This expectation is reinforced by the achievement of a performance milestone post period as a result of enhanced oil production from the Pilot CO2 EOR Project for the Company's credit.
The Directors do not believe that either COVID-19 or Brexit will adversely influence the Group's business development strategy. Operations in Trinidad have been maintained throughout the COVID-19 crisis and Brexit will only create more uncertainty for Ireland's security of gas supply, thereby enhancing the Company's LNG import project for Ireland by creating an alternative source of gas not tied to the UK-Ireland gas transmission infrastructure.
Drilling activity at Guercif onshore Morocco will be delayed until such time as COVID-19 restrictions are relaxed. ONHYM have indicated that COVID-19 is a force majeure event and that an additional period of time will be allowed to fulfill the Guercif drilling commitment required under the Petroleum Agreement. This gives the Company increased flexibility in terms of when to execute the drilling programme and an extended period of time to attract joint venture partners to preserve working capital if required to do so in the future. ConocoPhillips entry into Morocco in June 2020 directly adjoining the Guercif Licence increases the perceived prospectivity of the area and enhances the ability to attract drilling partners.
In the case of Covid-19 the potential impact and mitigation thereof is being addressed by eliminating unnecessary administrative costs; delaying capital expenditures until COVID-19 restrictions are sufficiently relaxed; and focusing on production activities in Trinidad. COVID-19 enhances the opportunities for M & A transactions as the industry seeks to consolidate. The Company has three separate and diverse businesses at various stages of maturity that during the next 12 months are suitable for a divestment if required and if attractive commercial terms can be negotiated.
In the event that the Group will require funds to be raised in the foreseeable future and if directors' endeavours to raise fresh funds fail, they will institute a programme of cuts to directors' and consultant's remuneration.
The directors having made due and careful enquiry, are of the opinion that the Group has adequate working capital to execute its operations over the next 12 months given that current spending commitments will prevail. The Group will therefore continue to adopt the going concern basis in preparing these Interim Annual Financial Statements.
Cyclicality
The interim results for the six months ended 30 June 2020 are not necessarily indicative of the results to be expected for the full year ending 31 December 2020. Due to the nature of the entity, the operations are not affected by seasonal variations at this stage.
Accounting policies
The accounting policies applied by the Group in these half-yearly results are the same as those applied by the Group in its consolidated financial information in its 2019 Annual Report and Accounts, with the exception of the new standards the Group adopted as of 1 January 2020, included below.
Changes in accounting policy and disclosures
Standards and amendments to existing standards effective 1 January 2020
- Amendments to References to the Conceptual Framework in IFRS Standards - effective 1 January 2020.
- Amendments to IAS 1 and IAS 8: Definition of Material - effective 1 January 2020.
These amendments do not have a material effect on the financial statements of the Group.
New Standards, amendments and interpretations effective after 1 January 2020 and have not been early adopted
- Amendments to IFRS 3: Business Combinations Amendments to IAS 1: Classification of Liabilities as Current or Non-Current
The amendment is not expected to have a material effect on the financial statements of the Group.
Areas of estimates and judgement
The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. The critical accounting estimates and judgements made are in line with those made in the audited financial statements for the year ended 31 December 2019.
1 Financial risk management
The Board continually assesses and monitors the key risks of the business.  The key risks that could affect the Group's medium-term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2018 Annual Report and Financial Statements, a copy of which is available from the Group's website: www.predatoroilandgas.com.  The key financial risks are market risk (including cash flow interest rate risk and foreign currency risk), credit risk and liquidity.
2 Segmental analysis
The Group operates in one business segment, the exploration, appraisal and development of oil and gas assets. The Group has interests in three geographical segments being Africa (Morocco), Europe (Ireland) and the Caribbean (Trinidad and Tobago).
The Group's operations are reviewed by the Board (which is considered to be the Chief Operating Decision Maker ('CODM')) and split between oil and gas exploration and development and administration and corporate costs.
Operating segments are disclosed below on the basis of the split between exploration and development and administration and corporate.
	Europe		Caribbean		Africa		Corporate
	£		£		£		£
Gross Profit/(Loss)
Administrative and overhead expenses	(28,707)		(103,680)		(190,330)		(102,349)
Share option and warrant expense	-		-		-		(147,181)
Finance expense	-		-		-		(211,909)
Profit/(Loss) for the year from continuing operations
	(28,707)		(103,680)		(190,330)		(461,439)
Total assets	11,887		416,035		1,228,048		2,071,910
Total liabilities	(169)		(32,799)		(5,550)		(26,982)
There are no non-current assets held in the Group's country of domicile, being Jersey, Channel Islands (2019: £nil).
			30.06.2020		30.06.2019		31.12.2019
			(unaudited)		(unaudited)		(audited)
3 Administrative expenses			£		£		£
Technical Consultancy fees			128,137		103,656		261,615
Listing costs			109,601		53,692		251,556
Project costs			96,144		-		-
Directors fees			85,262		103,830		144,540
Fair value adjustment share options			46,730		-		93,461
Fair value adjustment warrants			100,451		-		-
Administration fees			40,604		41,962		83,795
Bank charges			36,184		24,450		25,545
Legal and professional fees			35,200		39,174		80,773
Travel expenses			34,216		59,111		93,728
Non-executive director fees			27,498		32,500		70,396
Computer/system costs/IT support			10,733		1,811		2,992
Design, publishing, presentation and printing fees			7,621		9,836		9,835
Insurance			4,738		3,963		7,984
Formation costs			3,275		-		-
Accountancy fees			3,000		-		-
Sundry expenses			1,653		75		627
Annual return fee			940		840		840
Depreciation			871		-		1,159
Website costs			649		13,050		13,050
Foreign exchange			(201,260)		(20,557)		26,782
Audit fee			-		-		24,000
Licencing options			-		1,346		8,253
Conferences and exhibitions			-		2,453		2,453
ISE fee			-		1,080		1,080
			572,247		472,272		1,204,464
			30.06.2020		30.06.2019		31.12.2019
4 Earnings per share			(unaudited)		(unaudited)		(audited)
Weighted average number of shares			179,747,732		101,717,999		104,261,956
(Loss) attributable to ordinary equity holders of the company			(784,156)		(512,263)		(1,279,243)
Total basic earnings per share attributable to the ordinary equity holders (in pence)			(0.4)		(0.5)		(1.2)
			30.06.2020		30.06.2019		31.12.2019
			(unaudited)		(unaudited)		(audited)
5 Trade and other receivables			£		£		£
Current
Security deposit (US$1,500,000)			1,221,200		1,183,058		1,144,077
FRAM Exploration Trinidad Limited			396,136		-		201,077
Prepayments and other receivables			6,080		6,493		36,021
			1,623,416		1,189,551		1,381,175
The Company's subsidiary, Predator Gas Ventures Limited, on 19 March 2019, provided a bank guarantee of US$1.5 million to Office National des Hydrocarbures et des Mines, who act for the Moroccan State, as a condition of being granted the Guercif exploration licence.  Predator Gas Ventures Limited was required to lodge a security deposit of US$1.5 million with Barclays Bank Plc to secure the guarantee facility. The restricted access cash balance of £1,183,058 represents the aforesaid security deposit and is denominated in US Dollars. These funds are refundable on the completion of the Minimum Work Programme set out in the terms of the Guercif Petroleum Agreement and Association Contract. All other receivables are denominated in Pound Sterling.
The loan to FRAM Exploration Trinidad Limited is drawn down under an agreement dated 24 July 2019 and 3 addendums subsequent, the loan is unsecured, interest free and repayable at the discretion of Predator Oil & Gas Trinidad Limited provided not less than one weeks notice is given.
			30.06.2020		30.06.2019		31.12.2019
			(unaudited)		(unaudited)		(audited)
6 Cash balances			£		£		£
Sterling			597,845		298,259		85,183
United States Dollar			1,500,332		430,509		24,533
			2,098,177		728,768		109,716
7 Share capital					Number of shares		Nominal value
Issued and fully paid
Opening Balance					108,172,169		2,346,336
28 February 2020
Share issue					89,000,000		3,560,000
7 April 2020
Share issue					4,875,000		195,000
8 April 2020
Loan note conversion					5,267,118		73,500
13 May 2020
Loan note conversion					5,217,462		104,475
20 May 2020
Loan note conversion					4,707,926		104,475
29 May 2020
Share issue					22,438,842		448,777
					239,678,517		6,832,563
			30.06.2020		30.06.2019		31.12.2019
			(unaudited)		(unaudited)		(audited)
8 Loan notes			£		£		£
Arato Global Opportunities LLC
Brought forward			918,406		-		-
Drawdowns			-		1,500,000		1,500,000
Redemptions			(1,015,000)		(350,000)		(485,000)
Transaction costs			-		(131,395)		(96,594)
Amoritsation of transaction costs			96,594		-		-
Carried forward			-		1,018,605		918,406
The Company entered into a Convertible Loan Note Instrument with Arato Global Opportunities LLC on 15 February 2019 for £1,500,000, the nominal amount of each note was £1.00 and could be increased to £1,750,000.  The notes were converted at 105% in multiples of £50,000 as a conversion price per ordinary share being 90% of the VWAC for the 2 trading days preceding the conversion, and to the extent not already redeemed or converted  were to be redeemed in full the earlier of 15 February 2021 or in the event of default.
The loan notes carried no coupon, and were repayable at a premium of 5%. A fee of 10% of the principal amount applied if the loan notes were not converted into equity prior to 15 February 2021. The lender was issued with 2,083,333 warrants at an exercise price of 12p with a vesting period of two years. Novum Securities Limited, the arranger of the convertible loan notes, was issued with 2,000,000 in warrants on the same terms.
The fair value of the 4,083,333 warrants were determined at £81,384.
Novum Securities Limited was paid a £90,000 placement fee in for the Convertible Loan Note Instrument. The total transaction cost of £171,384 was accounted for in terms of IFRS9 was offset against the carrying value of the Convertible Loan Note and amortised according to the effective interest rate method giving rise to a £96,594 charge to the income statement during the period.
During the period loan notes with a value of £269,000 were converted to shares. The remaining balance of the loan of £746,000 was repaid on 15 May 2020.
			30.06.2020		30.06.2019		31.12.2019
			(unaudited)		(unaudited)		(audited)
9 Trade and other payables			£		£		£
Current
Loans payable			-		-		37,500
Trade payables			4,059		9,536		54,077
Accruals			61,441		60,048		188,261
			65,500		69,584		279,838
10 Share based payments Share options
The Group operates a share option plan for directors.  There were no options issued for the six months ended 30 June 2020. For the six months ended 30 June 2020, the Group has recognised £46,730 of share-based payment expense in the statement of profit or loss (30 June 2019: £nil). Warrants On 17 February 2020 the Company  granted 1,875,000 and 2,575,000 warrants respectively to Optiva Securities Limited and Novum Securities Limited. The warrants are exercisable at any time between the date of issue and 27 February 2023 at an exercise price of 4p per share.
The total number of warrants in issue at 30 June 2020 are :
1. 2,321,428 exercisable at 2.8p before 24 May 2021
2. 4,083,333 exercisable at 12p before 15 February 2021
3. 4,450,000 exercisable at 4p before 27 February 2023
The warrant agreements for the aforesaid 4,450,000 warrants issued on 17 February 2020 do not contain vesting conditions and therefore the full share based payment charge, being the fair value of the warrants using the Black-Scholes model, has been recorded immediately.
The valuation of these warrants involves making a number of estimates relating to price volatility, future dividend yields and continuous growth rates
The Black Scholes model has been used to fair value the options, the inputs into the model were as follows :
Grant date							17 February 2020
Share price							£0.043
Exercise price							£0.040
Term							3 years
Expected volatility							80%
Expected dividend yield							0%
Risk free rate							0.37%
Fair value per warrants							£0.023
Total fair value of the warrants							£100,451
11 Investment in subsidiaries	principal activity				country of		ownership
					incorporation		interest
Predator Oil and Gas Ventures Limited	Licence options in offshore Ireland				Jersey		100%
Predator Oil and Gas Trinidad Limited	Drilling rights for a CO2 pilot oil recovery project				Jersey		100%
Predator Gas Ventures Limited	Exploitation licence onshore Morocco				Jersey		100%
Predator LNG Ireland Limited	Licence to import liquified natural gas				Jersey		100%
12 Subsequent events
On 14 July 2020, Louis Castro was appointed as a non-executive director.
By 10 September 2020, the Company calculate that 1,047 barrels of enhanced oil production from the Pilot CO2 EOR Project had accrued to its account under the terms of the Well Participation Agreement with FRAM Exploration Trinidad Ltd.
On 14 July 2020 the Company served written notice of its intent to  exercise our option under the Well Participation Agreement with FRAM Exploration Trinidad Ltd. ("FRAM")  to make an offer (the "Offer") to enter into a Share Purchase Agreement to acquire the entire outstanding issued share capital of FRAM for a cash consideration of one million seven hundred and fifty thousand United States Dollars (US$ 1,750,000).
On 22 July 2020, the deadline for acceptance by FRAM Exploration Trinidad Ltd. of the Offer expired.

 

END

 

 

IR SEWESUESSEDU