Results for the Year Ended 31 December 2023
28 May 2024
Baron Oil Plc
("Baron Oil", "Baron", the "Company", or the "Group")
Final Results for the Year Ended 31 December 2023
Baron Oil Plc (AIM: BOIL) is pleased to announce its audited financial results for the year ended 31 December 2023. In conjunction with this announcement, the Company will also release an 'Operational Update'.
Operational Highlights for 2023
· Considerable progress with Chuditch asset in Timor-Leste, moving from evaluation into the drilling preparation phase.
· Competent Person's Report ("CPR") published assessing gross Pmean Contingent Resources of Chuditch-1 discovery as 1.16 Tcf of gas with an additional 1.56 Tcf of gross Pmean Prospective Resources.
· Senior well engineering personnel appointed as detailed drilling preparations commenced.
· Farm-up agreed with TIMOR GAP (completed post-period), increasing their working interest from 25% to 40%, resulting in TIMOR GAP being responsible for 20% of PSC costs.
· Extension granted for UK Offshore Licence P2478, but owing to ongoing wind farm construction in the area, seismic operations were unable to be conducted and the licence was relinquished post-period end, with all commitments having been fulfilled.
Financial Highlights for 2023
· Cash reserves at 31 December 2023 were £3.76m (31 December 2022: £5.81m).
· Loss after taxation of £1.71m (2022: £1.39m).
· Post-period Placing, Subscription and WRAP Retail Offer (February 2024), raising £3.26m (gross).
Commenting on the results, Gerry Aherne, Non-Executive Chairman, said:
"I am pleased to report that Baron made significant progress in its work on the Chuditch PSC during 2023, a year when foundations were placed for the exciting appraisal drilling for which the Company is preparing. Having recently joined the Board, I've been impressed by both the quality of the Timor-Leste asset and the capabilities and professionalism of Baron's personnel. The Company is thus in a strong position for the rest of 2024 and beyond as reinforces its focus on the energy hungry markets of SE Asia.
"We are grateful for the ongoing support of our shareholders and other stakeholders, and I would like to particularly thank our team for their hard work and dedication."
Posting of Annual Report and Notice of AGM
The Company's Annual Report and Financial Statements for the year ended 31 December 2023 will be available for download from the Company's website (https://www.baronoilplc.com/) later today and will be despatched by post shortly to those shareholders that have requested a hard copy.
The Company will hold its Annual General Meeting at 11 a.m. BST on 21 June 2024 at Riverbank House, 2 Swan Lane, London, EC4R 3TT and the Notice of Annual General Meeting to that effect will be sent to shareholders shortly and will be available on the Company's website.
For further information, please contact:
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Baron Oil Plc |
+44 (0) 20 7117 2849 |
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Dr Andy Butler, Chief Executive Officer |
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Allenby Capital Limited |
+44 (0) 20 3328 5656 |
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Nominated Adviser and Joint Broker |
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Nick Athanas, Nick Harriss, George Payne (Corporate Finance) |
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Kelly Gardiner, Stefano Aquilino (Sales and Corporate Broking) |
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Cavendish Capital Markets Limited |
+44 (0) 131 220 6939 / +44 (0) 207 397 8900 |
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Joint Broker |
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Neil McDonald, Pearl Kellie (Corporate Finance) |
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Leif Powis (Sales) |
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IFC Advisory Limited |
+44 (0) 20 3934 6630 |
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Financial PR and IR |
baronoil@investor-focus.co.uk |
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Tim Metcalfe, Florence Chandler |
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Qualified Person's Statement
Pursuant to the requirements of the AIM Rules - Note for Mining and Oil and Gas Companies, the technical information and resource reporting contained in this announcement has been reviewed by Dr Andrew Butler, Fellow of the Geological Society of London and member of the Society of Petroleum Engineers. Dr Butler has more than 27 years' experience as a petroleum geologist. He has compiled, read and approved the technical disclosure in this regulatory announcement and indicated where it does not comply with the Society of Petroleum Engineers' standard.
CHAIRMAN'S STATEMENT & OPERATIONS REPORT
Financial Review
The net result for the year was a loss both before and after taxation of £1,712,000 (2022: loss of £1,387,000), which is wholly attributable to Baron Oil shareholders, representing a loss of 0.009p per share (2022: loss of 0.01p).
The Group generated no revenue during the period but focused on exploring and developing assets that the Board believes will generate revenue for the Group in the future.
Exploration and evaluation expenditure incurred included in the Income Statement amounted to £121,000 (2022: £213,000). A provision for Impairment has been made in respect of UK Offshore Licence P2478 amounting to £187,000 as the prospect of the project being taken to a successful conclusion had significantly diminished by 31 December 2023, and indeed the licence was relinquished by the joint venture partners in March 2024. The Directors judged that no other exploration assets required impairment.
Administration expenses for the year were £1,455,000 (2022: £1,191,000), an overall increase on the preceding year of £264,000. Administration costs arising in SundaGas (Timor-Leste Sahul) Pte.Ltd. ("TLS") have increased from £441,000 previously to £568,000 this year as the operation in Dili continues to gear up for the next phase of the Chuditch development. Directors and UK staff salaries and related costs increased by £120,000 to £467,000 in the year, details of which are contained in the Report of the Directors in the Annual Report. Professional adviser fees increased from £157,000 previously to £227,000, mainly due to higher broker costs.
At the end of the financial year, cash reserves of the Group had decreased to £3,760,000 from a level at the preceding year end of £5,807,000 as the Group absorbed cash in its continuing development operations. The Group's investment in exploration and evaluation assets in the UK and Timor-Leste amounted to £381,000 in the period, and there was a general operating cash outflow amounting to £1,830,000. As a result of higher cash balances and increased interest rates, the Company achieved interest receivable of £152,000.
There were no share issuances during 2023, other than the exercise by a former director in February 2023 of 62,500,000 options. Following the end of the reporting period, in February 2024 the Company raised £2,993,000 net of costs from the issue of new share capital by way of a placing and subscription.
The Group continues to take a conservative view of its asset impairment policy, giving it a statement of financial position that consists of significant net current assets and what the Board considers to be a realistic value for its exploration assets. The Board will continue to take a prudent approach in entering into new capital expenditures beyond those expected to be committed to existing ventures.
Report On Operations
Southeast Asia: Timor-Leste TL-SO-19-16 PSC ("Chuditch PSC" or "PSC") (Baron 60% interest - since February 2024)
Background
The Chuditch PSC is located approximately 185 kilometres south of Timor-Leste, 100 kilometres east of the producing Bayu-Undan field, 50 kilometres south of the potential Greater Sunrise development and covers approximately 3,571 km2 in water depths of 40-120 metres. The Chuditch-1 discovery well, drilled by Shell in 1998 in 64 metres water depth, encountered a 25 metre net gas column in Jurassic Plover Formation sandstone reservoirs at a depth of around 2,900 metres on the flank of a large faulted structure. The discovery and neighbouring prospects are largely covered by a 3D seismic survey acquired in 2012 and subsequently reprocessed by Baron.
Throughout 2023, Baron held a 75% working interest and operated the PSC through its wholly owned subsidiary SundaGas Banda Unipessoal Lda. ("SundaGas"), with the remaining 25% held by TIMOR GAP Chuditch Unipessoal Lda. ("TIMOR GAP"), a subsidiary of the state-owned national oil company, whose share of PSC expenditure is carried until first production. In February 2024, the Group completed a transaction in which its working interest dropped to 60%, following a partial transfer of its interest to TIMOR GAP. This transaction is described in further detail below.
The technical work programme obligations in the first two years of the initial three-year term of the PSC include the reprocessing of legacy seismic data, aimed at addressing reservoir imaging issues caused by sea-bed topography and shallow geological features, and for which a US$1 million Bank Guarantee is in place. The commitment within the PSC for Contract Year 3 is for the drilling of one appraisal well to the Plover Formation, subject to the seismic reprocessing having supported the presence of a significant structure associated with the Chuditch discovery. The successful conclusion of the 3D seismic reprocessing project, and subsequent interpretation of those data along with other studies, has definitively removed this subjectivity through clear imaging of the Chuditch structure.
2023 and subsequent activities
The reprocessed 3D seismic data was delivered during 2022 and its evaluation, in tandem with a number of geological and engineering studies, was completed during 2023.
Consultancy group ERC Equipoise Ltd ("ERCE") was engaged to prepare a Competent Person's Report ("CPR") to provide an independent assessment of the Chuditch resource to a SPE PRMS compliant standard. The CPR was released on 28 February 2023. For the Chuditch-1 discovery, ERCE assessed gross Pmean Contingent Resources of 1.16 Tcf of gas. The recognition of the resources as being Contingent, rather than Prospective, was a major milestone and reflected the significant improvement in understanding of the discovered resources through the seismic reprocessing and other studies carried out on Chuditch. Baron believes that the Chuditch-1 Contingent Resources are potentially sufficiently large to be economically viable to be developed standalone or in parallel with other developments in the region.
In addition, aggregated gross Pmean Prospective Resources attributable to the licence according to the CPR amounted to 1,562 Bcf gas across three prospects, Chuditch SW, Chuditch NE and Quokka. Geological Chances of Success ("GCOS") for these prospects range from 52% to 26%, providing substantial follow on, low risk exploration potential to any Chuditch-1 development. It is notable that Baron's in-house probabilistic estimates of aggregated gross Prospective Resources for these prospects, at 2,128 Bcf of gas, are higher than ERCE's estimates. This arises mainly through the Company's preferred use of the latest reprocessed seismic data velocity model to define the extent of the prospects.
Detailed tabulations of the resources assessed within the Chuditch PSC and further commentary can be accessed via the Company's RNS announcement of 28 February 2023 and the full CPR document which is available on Baron's corporate website (www.baronoilplc.com).
There continues to be an excellent working relationship between SundaGas, the Government Ministry of Petroleum and Mineral Resources ("MPM"), Autoridade Nacional do Petróleo ("ANP"), the Government regulatory authority for petroleum, and TIMOR GAP. The Company meets regularly with all of these bodies and provides detailed updates around our activities, plans and timelines on the PSC. The Company appreciates the support that it receives from these various state entities and will continue to work on maintaining these close relationships.
On 2 June 2023 and again on 5 December 2023, the Company announced two six-month extensions to Contract Year Two of the Chuditch PSC. These extensions were granted to provide additional time to complete detailed further technical studies on the Chuditch field and to have sufficient time to prepare for appraisal drilling. Contract Year 2 of the PSC now has an expiry date of 18 June 2024.
On entry into Contract Year 3 of the PSC, the commitment will be to drill an appraisal well within a 12-month period. Planning for this appraisal drilling is ongoing, with a well expected to be drilled to a total depth of around 3,000 metres and to include a production test.
In anticipation of the drilling of an appraisal well on the Chuditch field during Contract Year 3 of the PSC, organisational and technical preparations for operational activities commenced in the second half of 2023. A highly experienced Well Operations Manager was hired to lead this effort, subsequently joined by Well Engineering, HSE (Health Safety & Environment), Procurement and Well Testing professionals. Detailed and regular workshops were initiated with ANP and TIMOR GAP, and discussions commenced with providers of drilling services, including owners of drilling rigs. These preparations have continued in earnest into 2024, including the completion of a site survey at the planned drilling location in two phases between February and April 2024. The Company currently anticipates that drilling operations will commence in Q1 2025.
On 18 December 2023, the Company announced that it had agreed that TIMOR GAP would increase its participation in the PSC from a 25% to a 40% working interest. A Farm-Up Agreement to this effect was entered into on 23 January 2024 and the transaction completed on 7 February 2024 following approval by ANP. Accordingly, the SundaGas 60% share is now responsible for 80% of the costs of the Chuditch project and TIMOR GAP pays a 20% share. TIMOR GAP subsequently paid approximately US$1 million to cover its share of prior costs since the signing of the PSC.
During 2023, the Company held discussions with a number of other potential partners in the PSC that expressed interest in participating in the Chuditch project, including the drilling of the planned appraisal well, a process that is still ongoing.
As part of our in-country activities, including the efforts of our local Dili offices, we are also undertaking various initiatives to develop the capabilities of the Timorese geological community, through relationships with local universities, welcoming student interns and sponsoring and giving presentations to the Timor-Leste Student Chapter of the Society of Petroleum Engineers.
More generally in Timor-Leste, increased E&P activity was seen both onshore and offshore. During the year Timor Resources completed its initial onshore drilling campaign, the first in 50 years, with a number of reported oil and gas discoveries. In addition, the Greater Sunrise project continued to move towards development with negotiations between its many stakeholders. In December 2023, following the Second Licencing Round that closed in 2022, a new PSC was signed by a subsidiary of the Italian major ENI, in the area known as Block P, which sits between the Chuditch PSC and the Greater Sunrise gas fields to the north of Chuditch. It is expected that 3D seismic acquisition will commence over this new PSC area during late 2024.
United Kingdom Offshore Licence P2478 (relinquished 31 March 2024)
Innovate Licence P2478 was awarded in September 2019 and was held through 2023 by a joint venture comprising Reabold North Sea Limited ("Reabold", Licence Administrator, interest 36%), Baron (32%), and Upland Resources (UK Onshore) Limited (32%). The licence covered blocks 12/27c, 17/5, 18/1 and 18/2 in the Inner Moray Firth area of the North Sea, containing the Dunrobin and Golspie prospects.
The work commitments on the P2478 Licence were to undertake reprocessing of legacy 3D and 2D seismic data and perform other studies, in order to better understand the subsurface risks, reduce the range of volumetric uncertainty, as well as providing drilling location candidates ahead of making a decision whether to proceed beyond the end of the Phase A evaluation stage of the licence on 14 July 2023.
The key technical work components of the Phase A commitments - those of seismic reprocessing plus geochemical studies - were delivered during second half of 2022 on time and on budget. Detailed seismic attribute analysis followed in early 2023 and in March 2023, the UK's North Sea Transition Authority ("NSTA") confirmed that the obligation work programme was fully complete.
Towards the end of 2022, consultancy group RPS was engaged by the joint operation to prepare a CPR to provide an independent validation of resource estimates to a SPE PRMS compliant standard. The CPR was announced and published on Baron's website on 16 February 2023.
On 12 July 2023, the Company announced that the joint venture for Licence P2478 had been granted a two-year extension to Phase A of the licence by the UK North Sea Transition Authority ("NSTA"). A 'Drill or Drop' decision was required on or before 14 July 2025. The extension further required an additional commitment to acquire a minimum of 30 square kilometres of 3D seismic data. However, following unavoidable and significant delays to the acquisition of 3D seismic data, Licence P2478 was surrendered to the NSTA on 31 March 2024. The delays largely result from the continuous wind farm construction activities in the area. All Phase A commitments had been fulfilled and there remain no further obligations beyond the statutory submission of a relinquishment report, which Reabold is currently preparing. The Company had a high degree of expectation of this outcome at the end of the financial period and determined that the carrying value of the asset should be impaired in full in the 2023 Financial Statements.
Block XXI, Peru
In April 2022, Baron requested the relinquishment of Licence Block XXI in Peru, a legacy asset dating from an earlier, Latin-America focused strategy. Licence Block XXI had been largely under Force Majeure for a variety of reasons since 2017. The Bank Guarantee of US$160,000 was released in full to Baron in June 2022. Baron continues to work with the Peruvian authorities to establish and file an Abandonment Plan. Ongoing costs are minimal, and we expect to complete our withdrawal from Peru during 2024.
New Ventures
In January 2023, the Company announced that, as a joint venture non-operating partner, it had submitted an application in the UK offshore 33rd Round of licensing, conducted by the UK North Sea Transition Authority. On 3 May 2024, the Company was informed that its application, as a joint venture non-operating partner, had not been successful for a new licence. Consequently, Baron no longer has any upstream assets in the United Kingdom. Further potential new ventures are under consideration, with a focus on gas opportunities in SE Asia, in line with the Company's revised strategy.
Corporate update
Subsequent to the reporting period, in February 2024, the Company completed a Placing, Subscription and WRAP Retail Offer of new ordinary shares at 0.05p to raise £3.26 million (gross). The monies are being applied to support the Chuditch PSC (Timor-Leste) as it moves towards the key appraisal drilling milestone.
On 1 July 2023, Dr Andy Butler was appointed to the Board as Director Asia-Pacific, bringing his knowledge and involvement in the Timor-Leste asset directly to the Board.
Subsequent to the reporting period, on 15 March 2024, Andy Butler took on the role of Chief Executive replacing Andy Yeo, who left the Company on 1 April 2024. On 22 April 2024, John Wakefield stepped down as Non-Executive Chairman and I was appointed in his place. In addition, on that date, it was announced that Dr John Chessher had been appointed as an Independent Non-executive Director and Rob Collins had been appointed as non-Board Chief Financial Officer. On 30 April 2024, Jon Ford stepped down from the Board, although he has been retained by the Company in a part-time consultancy role. Information on the backgrounds of the new directors are provided in the Report of the Directors in the Annual Report.
Conclusions
I am pleased to report that Baron made significant progress in its work on the Chuditch PSC during 2023, moving from completion of the subsurface evaluation (and publication of a CPR) through to extensive preparations towards the drilling of an appraisal well. This is an asset that has considerable and potentially transformative value for the Company and its shareholders.
The recent relinquishment of UK licence P2478, together with the previously announced results of the UK 33rd Licencing Round, means that the Company has now fully withdrawn from the UK. Baron will now focus all its attentions on its core business in SE Asia, where the Company has an exciting and valuable asset in Timor-Leste, a highly experienced operating team and a pipeline of material new venture opportunities across the region.
The decision by TIMOR GAP to increase their participation in the Chuditch project was a particular highlight for the year, confirming the Timor-Leste government's strong support for the Company's efforts and their belief in the development potential of the field. We look forward to updating shareholders on progress regarding other potential funding partners for the Chuditch project as soon as it is appropriate to do so.
The recent refreshment of the Board, including the appointment of Dr Andy Butler to the Chief Executive role, highlights Baron's strategic pivot towards SE Asia, and in particular gas projects in that region. The Company enjoys a an excellent reputation in the region, where many of our team of experts are located. New independent non-executive director Dr John Chessher further strengthens Baron's SE Asia capabilities, with his extensive experience and networks in capital markets in the region.
SE Asia continues to see robust growth in energy demand and the Company recognises considerable opportunity for value creation in this arena, commencing with the Chuditch project. Our proposed change of Company name to Sunda Energy Plc encapsulates the change of emphasis towards the Orient.
I extend my thanks to all stakeholders of the Company, including my fellow directors, our employees and consultants, joint venture partners and governments, for their strong support of the Company's efforts. We are especially grateful for the support of our investors, including through the funding event in early 2024. As a result, we have a well-funded balance sheet covering our current activities and commitments. As at 31 December 2023 we had cash reserves of £3.8 million (2022: £5.8 million), and the cash balance stood at £5.5 million at 22 May 2024.
Gerry Aherne
Non-executive Chairman
24 May 2024
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CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2023 |
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Notes |
2023 |
2022 |
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£'000 |
£'000 |
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Revenue |
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- |
- |
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Cost of sales |
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- |
- |
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Gross profit |
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- |
- |
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Exploration and evaluation expenditure |
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3 |
(121) |
(213) |
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Intangible asset impairment |
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10 |
(187) |
- |
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Property, plant and equipment impairment and depreciation |
9 |
(37) |
(33) |
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Peru closure costs |
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(26) |
- |
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Administration expenses |
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3 |
(1,455) |
(1,191) |
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(Loss)/gain on exchange |
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3 |
(32) |
43 |
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Operating loss |
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3 |
(1,858) |
(1,394) |
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Finance cost |
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6 |
(6) |
(5) |
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Finance income |
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6 |
152 |
12 |
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Loss on ordinary activities |
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before taxation |
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(1,712) |
(1,387) |
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Income tax expense |
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7 |
- |
- |
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Loss for the year |
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(1,712) |
(1,387) |
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Loss on ordinary activities |
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after taxation attributable to: |
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Equity shareholders |
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(1,712) |
(1,387) |
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(1,712) |
(1,387) |
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Earnings per ordinary share - continuing |
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Basic |
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8 |
(0.009p) |
(0.010p) |
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Diluted |
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(0.009p) |
(0.010p) |
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE |
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YEAR ENDED 31 DECEMBER 2023 |
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2023 |
2022 |
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£'000 |
£'000 |
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Loss on ordinary activities after taxation attributable to owners of the parent |
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(1,712) |
(1,387) |
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Other comprehensive income: items which may subsequently be reclassified to profit and loss |
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(Loss)/gain on translating foreign operations |
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(172) |
174 |
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Total comprehensive loss for the year |
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(1,884) |
(1,213) |
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Total comprehensive loss attributable to |
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Owners of the parent |
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(1,884) |
(1,213) |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2023 |
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Restated |
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Notes |
2023 |
2022 |
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£'000 |
£'000 |
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Assets |
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Non-current assets |
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Property plant and equipment |
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9 |
41 |
78 |
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Intangible fixed assets |
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10 |
3,781 |
3,696 |
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Goodwill |
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11 |
- |
- |
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3,822 |
3,774 |
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Current assets |
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Trade and other receivables |
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13 |
91 |
101 |
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Performance bond guarantee deposit |
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14 |
786 |
827 |
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Cash and cash equivalents |
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15 |
3,760 |
5,807 |
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4,637 |
6,735 |
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Total assets |
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8,459 |
10,509 |
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Equity and liabilities |
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Capital and reserves attributable to owners of the parent |
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Share capital |
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18 |
4,746 |
4,730 |
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Share premium account |
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19 |
38,881 |
38,846 |
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Share option reserve |
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19 |
319 |
332 |
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Foreign exchange translation reserve |
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19 |
715 |
887 |
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Retained earnings |
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19 |
(36,406) |
(34,707) |
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Total equity |
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8,255 |
10,088 |
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Current liabilities |
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Trade and other payables |
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16 |
185 |
377 |
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Taxes payable |
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16 |
15 |
14 |
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200 |
391 |
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Non-current liabilities |
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Lease finance |
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16/17 |
4 |
30 |
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Total equity and liabilities |
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8,459 |
10,509 |
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The financial statements were approved and authorised for issue by the Board of Directors on 24 May 2024 and were signed on its behalf by: |
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G Aherne |
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A Butler |
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Director |
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Director |
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Company number: 05098776 |
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COMPANY STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2023 |
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Restated |
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|
Notes |
2023 |
2022 |
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|
|
|
|
£'000 |
£'000 |
|
Assets |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Property plant and equipment |
|
|
9 |
9 |
21 |
|
Intangible fixed assets |
|
|
10 |
- |
159 |
|
Investments |
|
|
12 |
5,865 |
5,002 |
|
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|
|
|
|
|
|
|
|
|
|
5,874 |
5,182 |
|
Current assets |
|
|
|
|
|
|
Trade and other receivables |
|
|
13 |
56 |
61 |
|
Cash and cash equivalents |
|
|
15 |
3,652 |
5,625 |
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|
|
|
|
|
|
|
|
|
|
|
3,708 |
5,686 |
|
|
|
|
|
|
|
|
Total assets |
|
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|
9,582 |
10,868 |
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|
|
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Equity and liabilities |
|
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|
|
|
|
Capital and reserves attributable to owners of the parent |
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Share capital |
|
|
18 |
4,746 |
4,730 |
|
Share premium account |
|
|
19 |
38,881 |
38,846 |
|
Share option reserve |
|
|
19 |
319 |
332 |
|
Foreign exchange translation reserve |
|
19 |
- |
- |
|
|
Retained earnings |
|
|
19 |
(34,479) |
(33,248) |
|
|
|
|
|
|
|
|
Total equity |
|
|
|
9,467 |
10,660 |
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|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
|
16 |
100 |
185 |
|
Taxes payable |
|
|
16 |
15 |
14 |
|
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|
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|
115 |
199 |
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Non-current liabilities |
|
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|
|
|
|
Lease finance |
|
|
16/17 |
- |
9 |
|
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|
|
|
|
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Total equity and liabilities |
|
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|
9,582 |
10,868 |
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As permitted by section 408 of the Companies Act 2006, the Company's income statement has not been included in these financial statements. The loss of the Company for the year was £1,244,000 (2022: loss of £555,000). |
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The financial statements were approved and authorised for issue by the Board of Directors on 24 May 2024 and were signed on its behalf by: |
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G Aherne |
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A Butler |
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Director |
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Director |
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Company number: 05098776 |
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CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 |
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Foreign |
|
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|
Share |
Share |
Retained |
Share option |
exchange |
Total |
|
|
capital |
premium |
earnings |
reserve |
translation |
equity |
|
Group |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
As at 1 January 2022 (restated) |
2,896 |
34,061 |
(33,376) |
388 |
713 |
4,682 |
|
|
|
|
|
|
|
|
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Shares issued |
1,834 |
4,785 |
- |
- |
- |
6,619 |
|
Transactions with owners |
1,834 |
4,785 |
- |
- |
- |
6,619 |
|
Loss for the year attributable to equity shareholders |
- |
- |
(1,387) |
- |
- |
(1,387) |
|
Share option reserve released |
- |
- |
56 |
(56) |
- |
- |
|
Foreign exchange translation adjustments |
- |
- |
- |
- |
174 |
174 |
|
Total comprehensive income for the period |
- |
- |
(1,331) |
(56) |
174 |
(1,213) |
|
As at 1 January 2023 |
4,730 |
38,846 |
(34,707) |
332 |
887 |
10,088 |
|
|
|
|
|
|
|
|
|
Shares issued |
16 |
35 |
- |
- |
- |
51 |
|
Transactions with owners |
16 |
35 |
- |
- |
- |
51 |
|
Loss for the year attributable to equity shareholders |
- |
- |
(1,712) |
- |
- |
(1,712) |
|
Share option reserve released |
- |
- |
13 |
(13) |
- |
- |
|
Foreign exchange translation adjustments |
- |
- |
- |
- |
(172) |
(172) |
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Total comprehensive income for the period |
- |
- |
(1,699) |
(13) |
(172) |
(1,884) |
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|
|
|
|
|
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As at 31 December 2023 |
4,746 |
38,881 |
(36,406) |
319 |
715 |
8,255 |
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CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 - continued |
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Foreign |
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|
Share |
Share |
Retained |
Share option |
exchange |
Total |
|
|
capital |
premium |
earnings |
reserve |
translation |
equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Company |
|
|
|
|
|
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As at 1 January 2022 (restated) |
2,896 |
34,061 |
(32,749) |
388 |
- |
4,596 |
|
Shares issued |
1,834 |
4,785 |
- |
- |
- |
6,619 |
|
Transactions with owners |
1,834 |
4,785 |
- |
- |
- |
6,619 |
|
|
|
|
|
|
|
|
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Loss for the year |
- |
- |
(555) |
- |
- |
(555) |
|
Share option reserve released |
- |
- |
56 |
(56) |
- |
- |
|
Total comprehensive income for the period |
- |
- |
(499) |
(56) |
- |
(555) |
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|
|
|
|
|
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As at 1 January 2023 |
4,730 |
38,846 |
(33,248) |
332 |
- |
10,660 |
|
|
|
|
|
|
|
|
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Shares issued |
16 |
35 |
- |
- |
- |
51 |
|
Transactions with owners |
16 |
35 |
- |
- |
- |
51 |
|
Loss for the year |
- |
- |
(1,244) |
- |
- |
(1,244) |
|
Share option reserve released |
- |
- |
13 |
(13) |
- |
- |
|
Total comprehensive income for the period |
- |
- |
(1,231) |
(13) |
- |
(1,244) |
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|
|
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As at 31 December 2023 |
4,746 |
38,881 |
(34,479) |
319 |
- |
9,467 |
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Share capital is the amount subscribed for shares at nominal value. |
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Share premium represents the excess of the amount subscribed for share capital over the nominal value of those shares net of share issue expenses. |
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Retained earnings represents the cumulative loss of the Group attributable to equity shareholders. |
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Share option reserve represents the accumulated value of share-based payments charged to the Income Statement on outstanding share options (see note 20). |
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Foreign exchange translation occurs on consolidation of the translation of the branch or subsidiaries' balance sheets at the closing rate of exchange and their income statements at the average rate. |
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CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS FOR THE |
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YEAR ENDED 31 DECEMBER 2023 |
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Group |
Company |
Group |
Company |
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2023 |
2023 |
2022 |
2022 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Operating activities |
|
(1,830) |
(1,084) |
(1,750) |
(582) |
|
|
|
|
|
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|
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Investing activities |
|
|
|
|
|
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Interest received |
152 |
149 |
12 |
11 |
|
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Advances to subsidiaries |
- |
(1,050) |
- |
(1,848) |
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Performance bond guarantee deposit returned |
- |
- |
128 |
- |
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Additions to exploration and evaluation assets |
(381) |
(28) |
(806) |
(91) |
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Acquisition of tangible assets |
(2) |
- |
(17) |
- |
|
|
|
|
|
|
|
|
|
|
|
(231) |
(929) |
(683) |
(1,928) |
|
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|
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Financing activities |
|
|
|
|
|
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Net proceeds from issue of share capital |
51 |
51 |
6,619 |
6,619 |
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Lease financing |
(37) |
(11) |
(29) |
(11) |
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|
|
|
14 |
40 |
6,590 |
6,608 |
|
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|
|
|
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Net cash (outflow)/ inflow |
|
(2,047) |
(1,973) |
4,157 |
4,098 |
|
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|
|
|
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Cash and cash equivalents at the beginning of the year |
5,807 |
5,625 |
1,650 |
1,527 |
|
|
|
|
|
|
|
|
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Cash and cash equivalents at the end of the year |
3,760 |
3,652 |
5,807 |
5,625 |
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|
|
|
|
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CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023 - continued |
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Note to the Consolidated and Company Statement of Cash Flow |
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Group |
Company |
Group |
Company |
|
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2023 |
2023 |
2022 |
2022 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Operating activities |
|
|
|
|
|
|
Loss for the year attributable to controlling interests |
|
(1,712) |
(1,244) |
(1,387) |
(555) |
|
Depreciation, amortisation and impairment charges |
224 |
161 |
33 |
55 |
|
|
Finance income shown as an investing activity |
(152) |
(149) |
(12) |
(11) |
|
|
Interest on lease liability |
6 |
1 |
4 |
1 |
|
|
Foreign exchange translation |
|
(20) |
225 |
(74) |
(205) |
|
|
|
|
|
|
|
|
Operating cash outflows before movements in working capital |
(1,654) |
(1,006) |
(1,436) |
(715) |
|
|
|
|
|
|
|
|
|
Decrease/(increase) in receivables |
10 |
5 |
(47) |
22 |
|
|
(Decrease)/increase in payables |
(186) |
(83) |
(267) |
111 |
|
|
|
|
|
|
|
|
|
Net cash outflows from operating activities |
(1,830) |
(1,084) |
(1,750) |
(582) |
|
|
|
|
|
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NOTES TO THE FINANCIAL STATEMENTS
General Information
Baron Oil Plc is a public limited 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 page 2 of the financial statements. The principal activity of the Group is described in the Strategic Report in section 4.
(1) Significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
Going concern basis
The Directors have prepared a cash flow forecast covering the period to 30 June 2025 which contains certain assumptions about the development and strategy of the business. The Directors are aware of the risks and uncertainties facing the business but the assumptions used are the Directors' best estimate of its future development. The Group is intending to drill the Chuditch-2 appraisal well as part of the work program for Year 3 of the PSC, which is scheduled to expire on 18 June 2025. In the event that the entirety of drill funding is not secured in adequate time to enable this activity to conclude in the period, then the Directors would seek an extension to Year 3, as they were granted in Year 1 and Year 2.
After considering the forecasts and the risks, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.
Basis of preparation
The financial statements have been prepared in accordance with UK adopted International Accounting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) 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 principal accounting policies adopted are set out below.
Changes in accounting policies and disclosures
Adoption of new and revised standards
a) The impact of new IFRSs adopted during the year
During the current year, the Group adopted all new and revised standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee and that are endorsed by the UK that are effective for annual accounting periods beginning on 1 January 2023. None of them had a material impact on the group financial statements.
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- |
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) |
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The amendments to IAS 1 require companies to disclose their material accounting policy information rather than their significant accounting policies. |
|
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- |
Definition of Accounting Estimates (Amendments to IAS 8) |
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The amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. That distinction is important because changes in accounting estimates are applied prospectively only to future transactions and other future events, but changes in accounting policies are generally also applied retrospectively to past transactions and other past events. |
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- |
Deferred Tax Relating to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) |
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IAS 12 specifies how a company accounts for income tax, including deferred tax, which represents tax payable or recoverable in the future. In specified circumstances, companies are exempt from recognising deferred tax when they recognise assets or liabilities for the first time. The amendments clarify that the exemption does not apply and that companies are required to recognise deferred tax on such transactions. |
b) New standards, interpretations and amendments not yet effective
The following IFRSs and amendments have been issued by the IASB but are not effective until a future period.
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- |
IFRS 16 Leases (Amendments) (Effective from the year ending 31 December 2024) |
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The amendments affect only the subsequent measurement of lease liabilities arising from a sale and leaseback transaction with variable lease payments, which occurred from the date of initial application of IFRS 16 and for which the seller-lessee's accounting policy differs from the requirements specified in these amendments. |
|
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|
- |
IAS 1 Presentation of Financial Statements (Amendments to Classification of Liabilities as Current or Non-current) (Effective from the year ending 31 December 2024) |
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|
The amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date. The amendment also clarifies what IAS 1 means when it refers to the 'settlement' of a liability. |
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- |
IAS 1 Presentation of Financial Statements (Amendment to Non-current liabilities with covenants). (Effective from the year ending 31 December 2024) |
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The amendments improved the information an entity provides when its right to defer settlement of a liability for at least 12 months is subject to compliance with covenants. |
The Board are currently assessing the impact of these new amendments on the group's financial reporting for future periods. However, the Board does not expect any of the above to have a material impact on future reported results.
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries using the acquisition method of accounting.
Subsidiaries
Subsidiaries are all entities over which Baron Oil Plc has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights, or where Baron Oil Plc exercises effective operational control. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.
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.
Impairment of non-financial assets
At each statement of financial position date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate 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 periods. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Intangible Assets
Oil and gas assets: exploration and evaluation
The Group has continued to apply the 'successful efforts' method of accounting for Exploration and Evaluation ("E&E") costs, having regard to the requirements of IFRS 6 'Exploration for the Evaluation of Mineral Resources'.
The successful efforts method means that only the costs which relate directly to the discovery and development of specific oil and gas reserves are capitalised. Such costs may include costs of licence acquisition, technical services and studies, seismic acquisition; exploration drilling and testing but do not include costs incurred prior to having obtained the legal rights to explore the area. Under successful efforts accounting, exploration expenditure which is general in nature is charged directly to the income statement and that which relates to unsuccessful drilling operations, though initially capitalised pending determination, is subsequently written off. Only costs which relate directly to the discovery and development of specific commercial oil and gas reserves will remain capitalised and to be depreciated over the lives of these reserves. The success or failure of each exploration effort will be judged on a well-by-well basis as each potentially hydrocarbon-bearing structure is identified and tested. Exploration and evaluation costs are capitalised within intangible assets. Capital expenditure on producing assets is accounted for in accordance with SORP 'Accounting for Oil and Gas Exploration'. Costs incurred prior to obtaining legal rights to explore are expensed immediately to the income statement.
All lease and licence acquisition costs, geological and geophysical costs and other direct costs of exploration, evaluation and development are capitalised as intangible or property, plant and equipment according to their nature. Intangible assets comprise costs relating to the exploration and evaluation of properties which the Directors consider to be unevaluated until reserves are appraised as commercial, at which time they are transferred to tangible assets as 'Developed oil and gas assets' following an impairment review and depreciated accordingly. Where properties are appraised to have no commercial value, the associated costs are treated as an impairment loss in the period in which the determination is made.
Costs are amortised on a field by field unit of production method based on commercial proven and probable reserves, or to the expiry of the licence, whichever is earlier.
The calculation of the 'unit of production' amortisation takes account of the estimated future development costs and is based on the current period and un-escalated price levels. Changes in reserves and cost estimates are recognised prospectively.
E&E costs are not amortised prior to the conclusion of appraisal activities.
Property, plant and equipment
Non oil and gas assets
Non oil and gas assets are stated at cost of acquisition less accumulated depreciation and impairment losses. Depreciation is provided on a straight-line basis at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful economic life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful life.
Buildings, plant and equipment unrelated to production are depreciated using the straight-line method based on estimated useful lives.
The annual rate of depreciation for each class of depreciable asset is:
Equipment and machinery 4-10 years
The carrying value of tangible fixed assets is assessed annually and any impairment is charged to the income statement.
Investments
Investments are stated at cost less provision for any impairment in value.
Financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transactions costs, except as described below. Subsequent to initial recognition non-derivative financial instruments are measured as described below.
A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.
Trade and other 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.
Cash and cash equivalents
Cash and cash equivalents in the Statement of Cash Flows include cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.
Taxation
Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit or loss for the year. Taxable profit or loss differs from profit or loss as reported in the same income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Company'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 difference 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 to income statement, except when it relates to items 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.
Trade and other payables
Trade payables are not interest bearing and are stated at their nominal value. Trade and other payables are initially recognised at fair value. They are subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.
Fair values
The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the statement of financial position date approximated their fair values, due to the relatively short term nature of these financial instruments.
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 period 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.
Share based payments (Note 20)
The fair value of share-based payments recognised in the income statement 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 benchmarked against peer companies in the industry.
Equity instruments
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 proceeds.
Lease accounting
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.
Interest payable and similar charges include interest payable, finance charges on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the profit and loss account.
On the statement of financial position, lease liabilities have been included in current and non-current liabilities
Foreign currencies
|
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 Pounds Sterling (£). The financial statements are presented in Pounds Sterling (£), 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 period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. |
|
iii) |
Group companies |
|
|
The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: |
|
(a) |
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; |
|
(b) |
income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and |
|
(c) |
all resulting exchange differences are recognised as a separate component of equity. |
|
|
|
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders' equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.
Management of capital
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to raise new equity finance and debt sufficient to meet the next phase of exploration and where relevant development expenditure.
The Board receives cash flow projections on a regular basis as well as information on cash balances. The Board will not commit to material expenditure in respect of its ongoing appraisal work prior to being satisfied that sufficient funding is available to the Group to finance the planned programmes.
Dividends cannot be issued until there are sufficient reserves available.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements requires management to make estimates and assumptions concerning the future that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The resulting accounting estimates will, by definition, differ from the related actual results.
Carrying value of intangible exploration and evaluation assets
Valuation of oil and gas properties: judgements regarding timing of regulatory approval, the general economic environment, and the ability to finance future activities has an impact on the impairment analysis of intangible exploration and evaluation assets. All these factors may impact the viability of future commercial production from unproved properties, and therefore may be a need to recognise an impairment. The timing of an impairment review and the judgement of when there could be a significant change affecting the carrying value of the intangible exploration and evaluation asset is a critical accounting judgement in itself.
The Board also assesses potential impairment of the Company's net investment in subsidiaries by reference to the same judgements around the circumstances of the Group's oil and gas exploration projects. At year end the Group's exploration assets which the board reviewed for impairment were carried at £3.7m and the Company's net investment in subsidiaries was held at £5.0m. Further details are given in Notes 10 and 13 respectively.
Commercial reserves estimates
Oil and gas reserve estimates: estimation of recoverable reserves include assumptions regarding commodity prices, exchange rates, discount rates, production and transportation costs all of which impact future cashflows. It also requires the interpretation of complex geological and geophysical models in order to make an assessment of the size, shape, depth and quality of reservoirs and their anticipated recoveries. The economic, geological and technical factors used to estimate reserves may change from period to period. Changes in estimated reserves can impact developed and undeveloped property carrying values, asset retirement costs and the recognition of income tax assets, due to changes in expected future cash flows.
|
2. Segmental information |
|
|
|
|
|
|
In the opinion of the Directors the Group has one class of business, being the exploration for, and appraisal of, oil and gas resources that can be commercially developed and produced, and other related activities. |
|||||
|
|
|
|
|
|
|
|
The Group's primary reporting format is determined to be the geographical segment according to the location of the oil and gas asset. There are currently three geographic reporting segments: South East Asia where production, development and exploration activity is being assessed, South America, which has previously been involved in production, development and exploration activity but is now being phased out, and the United Kingdom being the head office and where exploration activity was taking place up to and including the reporting period. |
|||||
|
|
|
|
|
|
|
|
Exploration and appraisal year ended 31 December 2023
|
|
||||
|
|
|
United |
South |
South East |
|
|
|
|
Kingdom |
America |
Asia |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue |
|
- |
- |
- |
- |
|
Cost of sales |
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Gross profit |
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Exploration and evaluation expenditure |
(75) |
- |
(46) |
(121) |
|
|
Intangible asset impairment |
(187) |
- |
- |
(187) |
|
|
Property, plant and equipment impairment and depreciation |
(12) |
- |
(25) |
(37) |
|
|
Peru closure costs |
|
- |
(26) |
- |
(26) |
|
Administration expenses |
|
(878) |
(9) |
(568) |
(1,455) |
|
Loss on exchange |
|
(32) |
- |
- |
(32) |
|
|
|
|
|
|
|
|
Operating loss |
(1,184) |
(35) |
(639) |
(1,858) |
|
|
|
|
|
|
|
|
|
Finance cost |
|
(1) |
- |
(5) |
(6) |
|
Finance income |
|
149 |
3 |
- |
152 |
|
|
|
|
|
|
|
|
Loss before taxation |
|
(1,036) |
(32) |
(644) |
(1,712) |
|
Income tax expense |
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Loss after taxation |
|
(1,036) |
(32) |
(644) |
(1,712) |
|
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
|
|
Segment assets |
|
65 |
- |
4,634 |
4,699 |
|
Cash and cash equivalents |
|
3,652 |
1 |
107 |
3,760 |
|
|
|
|
|
|
|
|
Total assets |
|
3,717 |
1 |
4,741 |
8,459 |
|
|
|
|
|
|
|
|
Segment liabilities |
|
102 |
- |
87 |
189 |
|
Current tax liabilities |
|
15 |
- |
- |
15 |
|
|
|
|
|
|
|
|
Total liabilities |
|
117 |
- |
87 |
204 |
|
|
|
|
|
|
|
|
Other segment items |
|
|
|
|
|
|
Capital expenditure |
|
28 |
- |
355 |
383 |
|
Depreciation, amortisation and impairment charges |
|
199 |
- |
25 |
224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Exploration and appraisal year ended 31 December 2022 |
|
||||
|
|
|
United |
South |
South East |
|
|
|
|
Kingdom |
America |
Asia |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue |
|
- |
- |
- |
- |
|
Cost of sales |
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Gross profit |
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Exploration and evaluation expenditure |
(67) |
(8) |
(138) |
(213) |
|
|
Property, plant and equipment impairment and depreciation |
(12) |
- |
(21) |
(33) |
|
|
Administration expenses |
|
(686) |
(64) |
(441) |
(1,191) |
|
Gain on exchange |
|
43 |
- |
- |
43 |
|
|
|
|
|
|
|
|
Operating loss |
(722) |
(72) |
(600) |
(1,394) |
|
|
|
|
|
|
|
|
|
Finance costs |
|
(1) |
- |
(4) |
(5) |
|
Finance income |
|
11 |
1 |
- |
12 |
|
|
|
|
|
|
|
|
Loss before taxation |
|
(712) |
(71) |
(604) |
(1,387) |
|
Income tax expense |
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Loss after taxation |
|
(712) |
(71) |
(604) |
(1,387) |
|
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
|
|
Segment assets |
|
298 |
1 |
4,403 |
4,702 |
|
Cash and cash equivalents |
|
5,625 |
5 |
177 |
5,807 |
|
|
|
|
|
|
|
|
Total assets |
|
5,923 |
6 |
4,580 |
10,509 |
|
|
|
|
|
|
|
|
Segment liabilities |
|
194 |
1 |
212 |
407 |
|
Current tax liabilities |
|
14 |
- |
- |
14 |
|
|
|
|
|
|
|
|
Total liabilities |
|
208 |
1 |
212 |
421 |
|
|
|
|
|
|
|
|
Other segment items |
|
|
|
|
|
|
Capital expenditure |
|
92 |
- |
794 |
886 |
|
Depreciation, amortisation and impairment charges |
|
12 |
- |
213 |
225 |
|
|
|
|
|
|
|
|
3. Operating loss |
|
|
|
2023 |
2022 |
|
|||
|
|
|
|
|
£'000 |
£'000 |
|
|||
|
The operating loss is stated after charging: |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||
|
Auditor's remuneration |
|
|
|
|
|
|
|||
|
Audit of group and company financial statements - current year |
|
30 |
29 |
|
|||||
|
Audit of group and company financial statements - prior year |
|
- |
4 |
|
|||||
|
Non-audit services: tax compliance |
|
|
2 |
2 |
|
||||
|
Non-audit services: other assurance services |
|
|
2 |
2 |
|
||||
|
Exploration and evaluation expenditure |
|
|
121 |
213 |
|
||||
|
Impairment of intangible assets |
|
|
|
187 |
- |
|
|||
|
Depreciation of property, plant and equipment |
|
|
37 |
33 |
|
||||
|
Loss/(gain) on exchange |
|
|
|
32 |
(43) |
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
The analysis of development and administrative expenses in the consolidated income statement by nature of expense is: |
|
||||||||
|
|
|
|
|
2023 |
2022 |
|
|||
|
|
|
|
|
£'000 |
£'000 |
|
|||
|
Employee benefit expense |
|
|
|
764 |
632 |
|
|||
|
Exploration and evaluation expenditure |
|
|
121 |
213 |
|
||||
|
Depreciation, amortisation and impairment charges |
|
|
224 |
33 |
|
||||
|
Legal and professional fees |
|
|
|
509 |
410 |
|
|||
|
Peru closure costs |
|
|
|
26 |
- |
|
|||
|
Loss/(gain) on exchange |
|
|
|
32 |
(43) |
|
|||
|
Other expenses |
|
|
|
182 |
149 |
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
1,858 |
1,394 |
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
4. Staff numbers and cost |
|
|
|
|
|
||||
|
The average number of persons employed by the Group (including directors) during the year, analysed by category, were as follows: |
|||||||||
|
|
|
2023 |
2022 |
||||||
|
|
|
Group |
Company |
Group |
Company |
||||
|
|
|
Number |
Number |
Number |
Number |
||||
|
|
|
|
|
|
|
||||
|
Directors |
|
4 |
4 |
3 |
3 |
||||
|
Technical and production |
|
4 |
- |
4 |
- |
||||
|
Administration |
|
2 |
1 |
2 |
1 |
||||
|
|
|
|
|
|
|
||||
|
Total |
|
10 |
5 |
9 |
4 |
||||
|
|
|
|
|
|
|
||||
|
The aggregate payroll costs of these persons were as follows: |
£'000 |
£'000 |
£'000 |
£'000 |
|||||
|
|
|
|
|
|
|
||||
|
Wages and salaries |
|
221 |
54 |
206 |
49 |
||||
|
Directors' fees, salaries and benefits |
483 |
483 |
390 |
390 |
|||||
|
Social security costs |
|
72 |
62 |
47 |
47 |
||||
|
|
|
|
|
|
|
||||
|
|
|
776 |
599 |
643 |
486 |
||||
|
5. Directors' emoluments |
|
|
|
|
|
|
|
|
|
|
2023 |
2022 |
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Directors' remuneration |
|
|
|
483 |
390 |
|
Compensation for loss of office |
|
|
|
- |
- |
|
Share based payments |
|
|
- |
- |
|
|
|
|
|
|
483 |
390 |
|
|
|
|
|
|
|
|
Management fees paid to an entity in which a director is a shareholder are disclosed in note 25 |
|||||
|
|
|||||
|
No directors benefitted from pension contributions in 2023 or 2022. |
|||||
|
|
|||||
|
Highest paid director emoluments and other benefits are as listed below. |
|
|
|
||
|
|
|
|
|
2023 |
2022 |
|
|
|
|
|
£'000 |
£'000 |
|
Remuneration |
|
|
|
280 |
214 |
|
Post termination benefits |
|
|
|
- |
17 |
|
Share based payments |
|
|
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
280 |
231 |
|
|
|
|
|
|
|
|
Total remuneration in respect of key management personnel amounted to £537,000 (2022: £432,000). Key management personnel remuneration consisted solely of short-term benefits in 2022 and 2023, other than £17,000 of post termination benefits recorded in 2022.
|
|||||
|
6. Finance income and expenses |
|
|
2023 |
2022 |
|
|
|
|
|
|
£'000 |
£'000 |
|
Bank and other interest received |
|
|
152 |
12 |
|
|
Interest on right of use asset finance |
|
|
(6) |
(4) |
|
|
Other finance cost |
|
|
|
- |
(1) |
|
|
|
|
|
|
|
|
Total |
|
|
|
146 |
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Income tax expense |
|
|
|
2023 |
2022 |
|
|
|
|
|
£'000 |
£'000 |
|
The tax charge on the loss on ordinary activities was:- |
|
|
|
||
|
|
|
|
|
|
|
|
UK Corporation Tax - current and deferred |
|
|
|
- |
- |
|
Foreign taxation |
|
|
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
- |
|
|
|
|
|
|
|
|
The total charge for the year can be reconciled to the accounting result as follows: |
|
|
|||
|
|
|
|
|
2023 |
2022 |
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Loss before tax |
|
|
|
(1,712) |
(1,387) |
|
|
|
|
|
|
|
|
Tax at composite group rate of 27.9% (2022: 18.6%) |
|
(478) |
(258) |
||
|
|
|
|
|
|
|
|
Effects of: |
|
|
|
|
|
|
Losses not subject to tax |
|
|
|
127 |
163 |
|
Movement on capital allowances |
|
|
(91) |
(76) |
|
|
Increase in tax losses |
|
|
|
442 |
171 |
|
|
|
|
|
|
|
|
Tax expense |
|
|
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2023, the Group had estimated tax losses of £38,022,000 (2022 - £36,011,000) to carry forward against future profits. The potential deferred tax asset on these tax losses at a composite group rate of 29.7% of £11,279,000 (2022: at 29.5%, 10,636,000) has not been recognised due to uncertainty over the timing and existence of future taxable profits. The current tax reconciliation has been prepared using a blended rate of 27.9% (2022: 18.6%) based on prevailing headline taxation rates as applied to the group's taxable entities in the year. The rate assessed for the unrecognised deferred tax asset reflects management's best estimate of the applicable rates which would apply to oil and gas revenues in the group's respective countries of operation |
|||||
|
8. Earnings per share |
|
|
|
|
|
|
|
|
|
|
2023 |
2022 |
|
Loss per ordinary share |
|
|
|
|
|
|
- Basic |
|
|
|
(0.009p) |
(0.010p) |
|
- Diluted |
|
|
|
(0.009p) |
(0.010p) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share is based on the Group's loss attributable to controlling interests for the year of £1,712,000 (2022: £1,387,000). |
|||||
|
The weighted average number of shares used in the calculation is the weighted average ordinary shares in issue during the year of 18,973,685,086 (2022: 13,784,079,264). |
|||||
|
|
|
|
|
|
|
|
Due to the Group's results, the diluted earnings per share was deemed to be the same as the basic earnings per share for that year. |
|||||
|
9. Property, plant and equipment |
|
|
|
|
|
||||
|
|
|
|
Equipment and |
Right of use |
|
|
|||
|
|
|
|
machinery |
assets |
Total |
|
|||
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|||
|
Group |
|
|
|
|
|
|
|||
|
Cost |
|
|
|
|
|
|
|||
|
At 1 January 2022 |
|
|
31 |
45 |
76 |
|
|||
|
Foreign exchange translation adjustment |
|
4 |
- |
4 |
|
||||
|
Additions |
|
|
17 |
62 |
79 |
|
|||
|
Disposals |
|
|
(34) |
- |
(34) |
|
|||
|
|
|
|
|
|
|
|
|||
|
At 1 January 2023 |
|
|
18 |
107 |
125 |
|
|||
|
Foreign exchange translation adjustment |
|
(1) |
(3) |
(4) |
|
||||
|
Additions |
|
|
2 |
- |
2 |
|
|||
|
|
|
|
|
|
|
|
|||
|
At 31 December 2023 |
|
|
19 |
104 |
123 |
|
|||
|
|
|
|
|
|
|
|
|||
|
Depreciation |
|
|
|
|
|
|
|||
|
At 1 January 2022 |
|
|
29 |
13 |
42 |
|
|||
|
Foreign exchange translation adjustment |
|
5 |
1 |
6 |
|
||||
|
Charge for the period |
|
|
5 |
28 |
33 |
|
|||
|
Disposals |
|
|
(34) |
- |
(34) |
|
|||
|
|
|
|
|
|
|
|
|||
|
At 1 January 2023 |
|
|
5 |
42 |
47 |
|
|||
|
Foreign exchange translation adjustment |
|
- |
(2) |
(2) |
|
||||
|
Charge for the period |
|
|
6 |
31 |
37 |
|
|||
|
|
|
|
|
|
|
|
|||
|
At 31 December 2023 |
|
|
11 |
71 |
82 |
|
|||
|
|
|
|
|
|
|
|
|||
|
Net book value |
|
|
|
|
|
|
|||
|
At 31 December 2023 |
|
|
8 |
33 |
41 |
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
At 31 December 2022 |
|
|
13 |
65 |
78 |
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
Right of Use assets of £33,000 (2022: £65,000) relate to a motor vehicle and an office lease.
|
|
||||||||
|
|
|
|
Equipment and |
Right of use |
|
||||
|
|
|
|
machinery |
assets |
Total |
||||
|
|
|
|
£'000 |
£'000 |
£'000 |
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
Company |
|
|
|
|
|
||||
|
Cost |
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
At 1 January 2022, 31 January and 31 December 2023 |
|
1 |
45 |
46 |
|||||
|
|
|
|
|
|
|
||||
|
Depreciation |
|
|
|
|
|
||||
|
At 1 January 2022 |
|
|
- |
13 |
13 |
||||
|
Charge for the period |
|
|
- |
12 |
12 |
||||
|
|
|
|
|
|
|
||||
|
At 1 January 2023 |
|
|
- |
25 |
25 |
||||
|
Charge for the period |
|
|
- |
12 |
12 |
||||
|
|
|
|
|
|
|
||||
|
At 31 December 2023 |
|
|
- |
37 |
37 |
||||
|
|
|
|
|
|
|
||||
|
Net book value |
|
|
|
|
|
||||
|
At 31 December 2023 |
|
|
1 |
8 |
9 |
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
At 31 December 2022 |
|
|
1 |
20 |
21 |
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
Right of Use assets of £8,000 (2022: £20,000) relate to a motor vehicle. |
|||||||||
|
10. Intangible fixed assets |
|
|
|
Exploration |
|
|
|
|
|
|
and evaluation |
|
|
|
|
|
|
assets |
Total |
|
|
|
|
|
£'000 |
£'000 |
|
Group |
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
At 1 January 2022 |
|
|
|
5,054 |
5,054 |
|
Foreign exchange translation adjustment |
|
|
275 |
275 |
|
|
Additions |
|
|
|
806 |
806 |
|
Consolidation of single asset company |
|
|
(2,439) |
(2,439) |
|
|
At 1 January 2023 |
|
|
|
3,696 |
3,696 |
|
Foreign exchange translation adjustment |
|
|
(109) |
(109) |
|
|
Additions |
|
|
|
381 |
381 |
|
At 31 December 2023 |
|
|
|
3,968 |
3,968 |
|
|
|
|
|
|
|
|
Impairment |
|
|
|
|
|
|
At 1 January 2022 |
|
|
|
2,318 |
2,318 |
|
Foreign exchange translation adjustment |
|
|
121 |
121 |
|
|
Disposals |
|
|
|
(2,439) |
(2,439) |
|
At 1 January 2023 |
|
|
|
- |
- |
|
Charge for the period |
|
|
|
187 |
187 |
|
At 1 January and 31 December 2023 |
|
|
187 |
187 |
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 31 December 2023 |
|
|
|
3,781 |
3,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2022 |
|
|
|
3,696 |
3,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
|
|
|
|
|
|
and evaluation |
|
|
|
|
|
|
|
assets |
Total |
|
|
|
|
|
|
£'000 |
£'000 |
|
|
Company |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
|
At 1 January 2022 |
|
|
|
703 |
703 |
|
|
Additions |
|
|
|
91 |
91 |
|
|
Disposals |
|
|
|
(635) |
(635) |
|
|
At 1 January 2023 |
|
|
|
159 |
159 |
|
|
Expenditure |
|
|
|
28 |
28 |
|
|
At 31 December 2023 |
|
|
|
187 |
187 |
|
|
|
|
|
|
|
|
|
|
Impairment |
|
|
|
|
|
|
|
At 1 January 2022 |
|
|
|
635 |
635 |
|
|
Disposals |
|
|
|
(635) |
(635) |
|
|
At 1 January 2023 |
|
|
- |
- |
|
|
|
Charge for the year |
|
|
|
187 |
187 |
|
|
At 31 December 2023 |
|
|
|
187 |
187 |
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
At 31 December 2023 |
|
|
|
- |
- |
|
|
|
|
|
|
|
|
|
|
At 31 December 2022 |
|
|
|
159 |
159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets represent amounts capitalised in progressing the group's interest in licences for the exploration of oil and gas in the UK and Timor-Leste. |
||||||
|
The Directors have performed an assessment of impairment as at the balance sheet date in respect of exploration and evaluation assets, taking account of the facts and circumstances which existed at that date. Impairment reviews were performed at the Operating Segment level and therefore separate tests were performed for the Chuditch and UK Offshore Licence P2478 exploration assets. |
||||||
|
In relation to Chuditch, the Directors concluded that the facts did not give rise to an impairment and therefore no impairment charge has been reflected in 2023 (2022: £nil). |
||||||
|
In the case of the P2478 licence, the Directors concluded that, as a result of the increasing difficulty in pursuing the work programme due to factors that are beyond the Company's control, there was a strong possibility that the Company will not be able to pursue the development of the licence and judged that whole carrying value should be impaired. This results in an impairment charge of £187,000 (2022: nil). In the event, the Company and its joint venture relinquished its licence on 31 March 2024. The impairment is separately presented in the income statement and is attributed to the UK operating segment.
|
||||||
|
11. Goodwill |
|
|
|
|
Goodwill on |
|
|
|
|
|
|
|
consolidation |
|
|
|
|
|
|
|
of subsidiaries |
|
|
|
|
|
|
|
£'000 |
|
|
Group |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
|
At 1 January 2022 |
|
|
|
|
81 |
|
|
Goodwill written off |
|
|
|
|
(81) |
|
|
At 1 January and 31 December 2023 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Impairment |
|
|
|
|
|
|
|
At 1 January 2022 |
|
|
|
|
81 |
|
|
Adjustment on write off of goodwill |
|
|
|
(81) |
|
|
|
At 1 January and 31 December 2023 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
At 31 December 2023 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2022 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The carrying value of goodwill represents the purchase of shares in Gold Oil Peru SAC. This was written off in the preceding period as there is no prospect of recovery. |
||||||
|
12. Investments |
|
|
|
|
|
|
|
|
|
Loans to |
Shares in |
|
|
|
|
|
group |
group |
|
|
|
|
|
undertakings |
undertakings |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
Company |
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
At 1 January 2022 |
|
|
1,824 |
7,548 |
9,372 |
|
Exchange rate adjustment |
|
|
205 |
- |
205 |
|
Additions |
|
|
- |
- |
- |
|
Net loan movements |
|
|
1,811 |
- |
1,811 |
|
At 1 January 2023 |
|
|
3,840 |
7,548 |
11,388 |
|
Exchange rate adjustment |
|
|
(225) |
- |
(225) |
|
Net loan movements |
|
|
1,050 |
- |
1,050 |
|
At 31 December 2023 |
|
|
4,665 |
7,548 |
12,213 |
|
|
|
|
|
|
|
|
Impairment |
|
|
|
|
|
|
At 1 January 2022 |
|
|
899 |
5,444 |
6,343 |
|
Charge/(release) for the year |
|
|
43 |
- |
43 |
|
At 1 January 2023 |
|
|
942 |
5,444 |
6,386 |
|
Charge/(release) for the year |
|
|
(38) |
- |
(38) |
|
At 31 December 2023 |
|
|
904 |
5,444 |
6,348 |
|
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
|
|
At 31 December 2023 |
|
|
3,761 |
2,104 |
5,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2022 |
|
|
2,898 |
2,104 |
5,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company makes loans to its subsidiary operations as part of its longer term strategy of undertaking exploration activities. Whilst the loans are made on informal terms, the Board consider that such loans form part of the Company's net investment in its subsidiaries and therefore are presented within investments and treated as non-current. No interest is charged on intercompany loans. |
|||||
|
|
|
|
|
|
|
|
The Company has made provision on the investment in Gold Oil Peru S.A.C. of £6,348,000 (2022: £6,386,000). |
|||||
|
|
|
|
|
|
|
|
The Company's subsidiary undertakings at the year end were as follows: |
|
|
|||
|
Subsidiary |
|
Place of incorporation and operation |
Proportion of ownership interest |
Proportion of voting power held |
Nature of business |
|
|
|
|
% |
% |
|
|
SundaGas (Timor-Leste Sahul) Pte. Ltd. |
Singapore |
100 |
100 |
Exploration of oil and gas |
|
|
#02-01 Link (THM) Building |
|
|
|
|
|
|
Singapore 159637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
SundaGas Banda Unipessoal, Lda * |
Timor-Leste |
100 |
100 |
Exploration of oil and gas |
|
|
Av. President Nicolau Lobato |
|
|
|
|
|
|
20 de Setembro, Bebonuk, Dom Aleixo |
|
|
|
|
|
|
Dili, Timor-Leste |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold Oil Peru S.A.C |
Peru |
100 |
100 |
Exploration of oil and gas |
|
|
Miraflores, Lima-18, Peru |
|
|
|
|
|
|
All shareholdings are in ordinary, voting shares. |
|
|
|
|
|
|
* A direct subsidiary of SundaGas (Timor-Leste Sahul) Pte. Ltd. |
|
||||
|
13. Trade and other receivables |
2023 |
2022 |
|||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Trade receivables |
|
- |
- |
- |
- |
|
Other receivables |
|
27 |
23 |
24 |
24 |
|
Prepayments |
64 |
33 |
77 |
37 |
|
|
|
|
|
|
|
|
|
|
|
91 |
56 |
101 |
61 |
|
14. Bank guarantee bond |
|
2023 |
2022 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Bank guarantee bond at 31 December 2023 |
786 |
- |
827 |
- |
|
|
|
|
|
|
|
|
|
The Company's wholly-owned subsidiary, SundaGas Banda Unipessoal, Lda ("SundaGas"), had provided a performance guarantee to Autoridade Nacional do Petróleo ("ANP") in respect of the offshore Timor-Leste TL-SO-19-16 Production Sharing Contract ("PSC"). This performance guarantee was previously secured by a bank guarantee given by United Overseas Bank Limited of Singapore ("UOB") which required SundaGas to place a bond with UOB of US$1 million. This arrangement was originally put in place in December 2019 triggering the effective date at the outset of the PSC, was extended in November 2022, and expired on 1 August 2023. On expiry, a new bank guarantee given by Australia and New Zealand Banking Group Limited ("ANZ) was established which required SundaGas to place a new bond with ANZ for the same amount. ANZ are A-rated by all the main credit rating agencies and the exposure to credit risk is considered low. The bank guarantee will remain in place for the current phase of the PSC. |
|||||
|
|
|
|
|
|
|
|
The original bond was set up by SundaGas Pte. Ltd ("SGPL"), the former owners of SundaGas, and remained in their name beyond the acquisition of SundaGas by the Company, so as to not disrupt the contractual position of the PSC until the expiry of the UOB guarantee on 1 August 2023. At that time, the original bond was initially released to SGPL who accounted for the funds to SundaGas in accordance with the Relationship Agreement that exists between the parties. |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15. Cash and cash equivalents |
|
2023 |
2022 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Bank current accounts |
|
131 |
24 |
837 |
655 |
|
Bank deposit accounts |
|
3,629 |
3,628 |
4,970 |
4,970 |
|
|
|
|
|
|
|
|
|
|
3,760 |
3,652 |
5,807 |
5,625 |
|
|
|
|
|
|
|
|
Bank deposit accounts comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less and earn interest at respective short-term deposit rates. The carrying amount of these assets approximates to their fair value. |
|||||
|
16. Trade and other payables |
|
2023 |
2022 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Trade payables |
|
18 |
18 |
67 |
66 |
|
Accruals |
|
136 |
73 |
274 |
109 |
|
Lease finance liability due within 12 months |
31 |
9 |
36 |
10 |
|
|
Taxation |
|
15 |
15 |
14 |
14 |
|
|
|
|
|
|
|
|
|
|
200 |
115 |
391 |
199 |
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Lease finance liabilities due after 12 months |
4 |
- |
30 |
9 |
|
|
|
|
|
|
|
|
|
|
|||||
|
17. Lease finance |
|
|
|
|
|
|
Lease liabilities are presented in the statement of financial position as follows: |
|
|
|||
|
|
|
2023 |
2022 |
||
|
|
|
Group |
Company |
Group |
Company |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Current |
|
31 |
9 |
36 |
10 |
|
Non-current |
|
4 |
- |
30 |
9 |
|
|
|
|
|
|
|
|
|
|
35 |
9 |
66 |
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18. Share capital
|
|
|
|
2023 |
2022 |
|
|
|
|
|
£'000 |
£'000 |
|
Allotted, called up and fully paid |
|
|
|
|
|
|
18,982,760,428 (2022: 18,920,260,428) ordinary shares of £0.00025 each |
4,746 |
4,730 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
4,746 |
4,730 |
|
|
|
|
|
|
|
|
The Company issued 62,500,000 new ordinary shares of £0.00025 each at £0.001 per share on 20 February 2023 for cash resulting from the exercise of share options. |
|||||
|
|
|
|
|
|
|
|
Ordinary shares entitle the holder to full rights as to voting, dividends and any distribution upon winding up. |
|||||
|
|
19. Share premium and reserves |
|
|
Foreign |
|
|
||||||||
|
|
|
|
Share |
Share |
exchange |
Profit |
|
|||||||
|
|
|
|
premium |
option |
translation |
and loss |
|
|||||||
|
|
|
|
account |
reserve |
reserve |
account |
|
|||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|||||||
|
|
Group |
|
|
|
|
|
|
|||||||
|
|
At beginning of the year |
|
38,846 |
332 |
887 |
(34,707) |
|
|||||||
|
|
Loss for the year attributable to controlling interests |
- |
- |
- |
(1,712) |
|
||||||||
|
|
Issue of new shares |
|
47 |
- |
- |
- |
|
|||||||
|
|
Share issue costs |
|
(12) |
- |
- |
- |
|
|||||||
|
|
Share option reserve released |
|
- |
(13) |
- |
13 |
|
|||||||
|
|
Foreign exchange translation adjustments |
- |
- |
(172) |
- |
|
||||||||
|
|
|
|
38,881 |
319 |
715 |
(36,406) |
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Company |
|
|
|
|
|
|
|||||||
|
|
At beginning of the year |
|
38,846 |
332 |
- |
(33,248) |
|
|||||||
|
|
Loss for the year |
|
- |
- |
- |
(1,244) |
|
|||||||
|
|
Issue of new shares |
|
47 |
- |
- |
- |
|
|||||||
|
|
Share issue costs |
|
(12) |
- |
- |
- |
|
|||||||
|
|
Share option reserve released |
|
- |
(13) |
- |
13 |
|
|||||||
|
|
|
|
38,881 |
319 |
- |
(34,479) |
|
|||||||
|
Details of options and warrants issued, exercised and lapsed during the year together with options and warrants outstanding at 31 December 2023 are as follows: |
|
|
|
|||||||||||
|
|
|
Exercise |
1 January 2023 |
|
Exercised |
Lapsed or cancelled |
31 December 2023 |
|||||||
|
Issue date |
Final exercise date |
price |
Number |
Number |
Number |
Number |
Number |
|||||||
|
26 May 2020 |
26 May 2030 |
£0.00100 |
125,000,000 |
- |
(62,500,000) |
- |
62,500,000 |
|||||||
|
22 July 2021 |
22 July 2031 |
£0.00070 |
440,000,000 |
- |
- |
- |
440,000,000 |
|||||||
|
22 July 2021 |
31 December 2025 |
£0.00070 |
150,000,000 |
- |
- |
- |
150,000,000 |
|||||||
|
17 December 2021 |
17 December 2031 |
£0.00060 |
530,000,000 |
- |
- |
- |
530,000,000 |
|||||||
|
14 July 2022 |
14 July 2025 |
£0.00070 |
175,000,000 |
- |
- |
- |
175,000,000 |
|||||||
|
|
|
|
1,420,000,000 |
- |
(62,500,000) |
- |
1,357,500,000 |
|||||||
|
* These options have been granted to two external contractors who have been engaged by SundaGas (Timor-Leste Sahul) Pte. Ltd. |
|
|||||||||||||
|
Details of options and warrants issued, exercised and lapsed during the year together with options and warrants outstanding at 31 December 2022 are as follows: |
|
|
|
|||||||||||
|
|
|
|
1 January |
|
|
Lapsed or |
31 December |
|||||||
|
|
|
Exercise |
2022 |
New issue |
Exercised |
cancelled |
2022 |
|||||||
|
Issue date |
Final exercise date |
price |
Number |
Number |
Number |
Number |
Number |
|||||||
|
6 August 2019 |
6 August 2022 |
£0.00080 |
27,500,000 |
- |
- |
(27,500,000) |
- |
|||||||
|
26 March 2020 |
26 March 2023 |
£0.00100 |
117,125,001 |
- |
(117,125,001) |
- |
- |
|||||||
|
26 May 2020 * |
26 May 2030 |
£0.00100 |
290,000,000 |
- |
- |
(165,000,000) |
125,000,000 |
|||||||
|
10 November 2020 |
10 November 2030 |
£0.00100 |
75,000,000 |
- |
- |
(75,000,000) |
- |
|||||||
|
22 July 2021 |
22 July 2031 |
£0.00070 |
440,000,000 |
- |
- |
- |
440,000,000 |
|||||||
|
22 July 2021 |
31 December 2025 |
£0.00070 |
150,000,000 |
- |
- |
- |
150,000,000 |
|||||||
|
17 December 2021 |
17 December 2031 |
£0.00060 |
530,000,000 |
- |
- |
- |
530,000,000 |
|||||||
|
14 July 2022 |
14 July 2025 |
£0.00070 |
- |
175,000,000 |
- |
- |
175,000,000 |
|||||||
|
|
|
|
1,629,625,001 |
175,000,000 |
(117,125,001) |
(267,500,000) |
1,420,000,000 |
|||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
The number of share options which were exercisable at year end was 1,182,500,000 (2022: 1,245,000,000). The weighted average remaining life of share options at the year end was 7 years (2022: 7 years). The weighted average exercise price (in pence) applying to share options during the year was as follows: |
||||||
|
|
|
|
|
|
2023 |
2022 |
|
Opening |
|
|
|
|
0.07p |
0.08p |
|
Exercised |
|
|
|
|
0.10p |
0.10p |
|
Lapsed |
|
|
|
|
- |
0.08p |
|
Cancelled |
|
|
|
|
- |
0.10p |
|
Issued |
|
|
|
|
- |
0.07p |
|
Closing |
|
|
|
|
0.07p |
0.07p |
|
20. Share based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair values of the options and warrants granted have been calculated using Black--Scholes model assuming the inputs shown below: |
|
|
||||
|
Grant date |
|
14 July 2022 |
17 December 2021 |
22 July 2021 |
22 July 2021 |
26 May 2020 |
|
|
|
|
|
|
|
|
|
Number of options or warrants granted |
175,000,000 |
530,000,000 |
150,000,000 |
440,000,000 |
290,000,000 |
|
|
Share price at grant date |
|
0.07p |
0.06p |
0.07p |
0.07p |
0.05p |
|
Exercise price at grant date |
|
0.07p |
0.06p |
0.07p |
0.07p |
0.1p |
|
Option life |
|
3 years |
10 years |
3 years |
10 years |
10 years |
|
Risk free rate |
|
0.86% |
0.86% |
0.86% |
0.86% |
0.86% |
|
Expected volatility |
|
80% |
80% |
80% |
80% |
80% |
|
Expected dividend yield |
|
0% |
0% |
0% |
0% |
0% |
|
Fair value of option |
|
0.017p |
0.025p |
0.02p |
0.03p |
0.02p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The warrants and options will not normally be exercisable during a closed period, and furthermore can only be exercisable if the performance conditions are satisfied. Warrants and options, which have vested immediately before either the death of a participant or his ceasing to be an eligible employee by reason of injury, disability, redundancy or dismissal (otherwise than for good cause) shall remain, exercisable (to the extent vested) for 12 months after such cessation, and all non-vested options shall lapse. |
||||||
|
Volatility was determined by reference to the company's historical share price volatility over a suitable period.
|
||||||
|
On 14 July 2022, the company awarded 175,000,000 share options to a Dr A Butler, a director of the Company and also a director of both SundaGas (Timor-Leste Sahul) Pte. Ltd and SundaGas Banda Unipessoal Lda, the latter being the operator of the 'Chuditch' Timor-Leste TL-SO-19-16 PSC. The share options are exercisable at 0.07p, expire three years from grant date and will only vest upon Baron Oil making an announcement that the first appraisal well on the Chuditch PSC has spudded, or in certain limited circumstances such as a takeover event. SundaGas (Timor-Leste Sahul) Pte. Ltd and SundaGas Banda Unipessoal Lda are wholly owned subsidiaries of Baron Oil Plc. |
||||||
|
Given that vesting is contingent on the spudding of a well at the Chuditch project and that the occurrence of this event is dependent, inter alia, on events outside the control of the director, the Board considered that the current degree of certainty over vesting was such that no share-based payment charges were recorded in respect of these options during 2022 or 2023. A detailed summary of the current status and future plans for the Chuditch project are given in the Chairman's Statement & Operations Report. |
||||||
21. Financial instruments
The Group's and Company's activities expose them to a variety of financial risks: credit risk, cash flow interest rate risk, foreign currency risk, liquidity risk, price risk and capital risk. The Group's and Company's activities also expose them to non-financial risks: market risk. The Group's and Company'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.
Financial instruments - Risk Management
The Group and Company are exposed through their operations to the following risks:
|
Ø |
Credit risk |
|
Ø |
Cash flow interest rate risk |
|
Ø |
Foreign Exchange Risk |
|
Ø |
Liquidity risk |
|
Ø |
Price risk |
|
Ø |
Capital risk |
|
Ø |
Market risk |
In common with all other businesses, the Group and the Company are exposed to risks that arise from its use of financial instruments. This note describes the Group's and the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group's or the Company's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group and the Company, from which financial instrument risk arises are as follows:
|
Ø |
Loans and receivables |
|
Ø |
Trade and other receivables |
|
Ø |
Cash and cash equivalents |
|
Ø |
Trade and other payables |
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's and the Company's risk management objectives and policies and, whilst retaining responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The Board receives regular updates from the Executive Directors through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's and the Company's competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
The Group's and the Company's principal financial assets are bank balances and cash, the bank guarantee bond, and other receivables. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. The amounts presented in the statements of financial position are net of allowance for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experiences, is evidence of a reduction in the recoverability of the cash flows.
As at 31 December 2023 and 2022 there were no trade receivables.
Cash flow interest rate risk
The Group and the Company are exposed to cash flow interest rate risk from its deposits of cash and cash equivalents with banks.
The cash balances maintained by the Group and the Company are proactively managed in order to ensure that the maximum level of interest is received for the available funds but without affecting the working capital flexibility the Group requires.
The Group and the Company are not at present exposed to cash flow interest rate risk on borrowings as neither has no significant debt. No subsidiary company of the Group is permitted to enter into any borrowing facility or lease agreement without the prior consent of the Company.
Interest rates on financial assets
The Group's and the Company's financial assets consist of cash and cash equivalents, loans, trade and other receivables. The interest rate profile at period end of these assets was as follows:
|
31 December 2023
Group |
|
Financial assets on which interest earned |
Financial assets on which interest not earned |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
UK sterling |
|
2,509 |
33 |
2,542 |
|
US dollar (USD) |
|
1,120 |
906 |
2,026 |
|
Singapore Dollar (SGD) |
|
- |
3 |
3 |
|
Peruvian Nuevo Sol (PEN) |
|
- |
- |
- |
|
|
|
3,629 |
942 |
4,571 |
|
|
|
|
|
|
|
31 December 2022
Group |
|
Financial assets on which interest earned |
Financial assets on which interest not earned |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
UK sterling |
|
4,802 |
397 |
5,199 |
|
US dollar (USD) |
|
168 |
1,287 |
1,455 |
|
Peruvian Nuevo Sol (PEN) |
|
- |
4 |
4 |
|
|
|
4,970 |
1,688 |
6,658 |
|
31 December 2023
Company |
|
Financial assets on which interest earned |
Financial assets on which interest not earned |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
UK sterling |
|
2,509 |
11 |
2,520 |
|
US dollar (USD) |
|
1,120 |
13 |
1,133 |
|
|
|
3,629 |
24 |
3,653 |
|
|
|
|
|
|
|
31 December 2022
Company |
|
Financial assets on which interest earned |
Financial assets on which interest not earned |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
UK sterling |
|
4,802 |
373 |
5,175 |
|
US dollar (USD) |
|
168 |
282 |
450 |
|
|
|
4,970 |
655 |
5,625 |
The Group and the Company earned interest on its interest-bearing financial assets at rates between 2% and 5.5% (2022 1.5% and 4%) during the period.
A change in interest rates on the statement of financial position date would increase/(decrease) the equity and the anticipated annual income or loss by the theoretical amounts presented below. The analysis is made on the assumption that the rest of the variables remain constant. The analysis with respect to 31 December 2022 was prepared under the same assumptions.
|
Group and Company |
Change of 1.0% in the interest rate as of |
|||
|
|
31 December 2023 |
31 December 2022 |
||
|
|
Increase of 1.0% |
Decrease of 1.0% |
Increase of 1.0% |
Decrease of 1.0% |
|
Instruments bearing variable interest (£'000) |
36 |
(36) |
50 |
(50) |
It is considered that there have been no significant changes in cash flow interest rate risk at the reporting date compared to the previous period end and that therefore this risk has had no material impact on earnings or shareholders' equity.
Foreign exchange risk
Foreign exchange risk arises because the Group and the Company have operations located in various parts of the world whose functional currency is not the same as the functional currency in which other Group companies are operating. Although its geographical spread reduces the Group's and the Company's operation risk, the net assets arising from such overseas operations are exposed to currency risk resulting in gains and losses on retranslation into Sterling. Only in exceptional circumstances will the Group or the Company consider hedging its net investments in overseas operations, as generally it does not consider that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. It is the Group's policy to ensure that individual Group entities enter into local transactions in their functional currency wherever possible and that only surplus funds over and above working capital requirements should be transferred to the parent company treasury. The Group considers this policy minimises any unnecessary foreign exchange exposure.
In order to monitor the continuing effectiveness of this policy the Board, through its approval of both corporate and capital expenditure budgets and review of the currency profile of cash balances and management accounts, considers the effectiveness of the policy on an ongoing basis.
The following table discloses the major exchange rates of those currencies utilised by the Group:
|
Group and Company |
|
USD |
SGD |
PEN |
|
Average for year ended 31 December 2023 |
|
1.24 |
1.67 |
4.60 |
|
At 31 December 2023 |
|
1.27 |
1.68 |
4.63 |
|
Average for year ended 31 December 2022 |
|
1.24 |
1.71 |
4.73 |
|
At 31 December 2022 |
|
1.21 |
1.62 |
4.55 |
|
|
|
|
|
|
A change in exchange rates on the statement of financial position date would increase/(decrease) the equity and net asset position by the theoretical amounts presented below. The analysis is made on the assumption that the rest of the variables remain constant. The analysis with respect to 31 December 2022 was prepared under the same assumptions.
|
|
Change of 10.0% in the GBP/USD rate as of |
|||
|
|
31 December 2023 |
31 December 2022 |
||
|
|
Increase of 10.0% |
Decrease of 10.0% |
Increase of 10.0% |
Decrease of 10.0% |
|
Net assets (£'000) - Group |
(402) |
492 |
(319) |
390 |
|
Net assets (£'000) - Company |
(445) |
544 |
(135) |
165 |
It is considered that there have been no significant changes in exchange rate risk at the reporting date compared to the previous period end and that therefore this risk has had no material impact on earnings or shareholders' equity.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain readily available cash balances (or agreed facilities) to meet expected requirements for a period of at least 60 days. The Group currently has no long term borrowings.
All of the Group's and the Company's financial liabilities are due within one year other than undiscounted lease liabilities due after one year of £4,000.
Price risk
Potential oil and gas sales revenue is subject to energy market price risk.
Given that the Group and the Company currently do not have production, it is not considered appropriate for the Group or the Company to enter into any hedging activities or trade in any financial instruments, such as derivatives. This strategy will continue to be subject to regular review.
It is considered that price risk of the Group and the Company at the reporting date has not increased compared to the previous period end.
Volatility of oil and gas prices
A material part of the Group's revenue will be derived from the sale of oil and gas that it expects to produce. A future substantial or extended decline in prices for oil and gas and refined products could adversely affect the Group's future revenues, cash flows, profitability and ability to finance its planned capital expenditure. The movement of crude oil and natural gas prices is shown below:
|
|
|
|
||
|
|
|
31 December 2023 |
Average price 2023 |
31 December 2022 |
|
Crude oil - WTI |
|
|
|
|
|
Per barrel - US$ |
|
$72 |
$78 |
$81 |
|
Per barrel - £ |
|
£57 |
£63 |
£67 |
|
|
|
══════ |
══════ |
══════ |
|
Natural gas LNG Japan/Korea Marker (Platts) |
|
|
|
|
|
Per Million Btu - US$ |
|
$9 |
$12 |
$19 |
|
Per Million Btu - £ |
|
£7 |
£12 |
£15 |
|
|
|
══════ |
══════ |
══════ |
|
|
|
|
|
|
Oil and gas prices are dependent on a number of factors impacting world supply and demand. Due to these factors, prices may be subject to significant fluctuations from year to year. However, these prices had no effect on the Group's results for 2023, since it had no production.
Capital risk
The Group's and the Company's objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
22. Capital commitments
As of 31 December 2023, there were no capital commitments (2022: none).
23. Contingent Liabilities
The Company considers that there are no potential decommissioning costs in respect of abandoned fields.
24. Events after the reporting period
On 7 February 2024, the Company entered into a Farm-Up Agreement with TIMOR GAP, whereby TIMOR GAP would increase its participation in the Chuditch PSC from a 25% to a 40% working interest. The incremental 15% interest assigned included a share of the obligation to carry the costs of the initial TIMOR GAP 25% interest and accordingly the Group's 60% share is now responsible for 80% of the costs of the Chuditch project and TIMOR GAP pays a 20% share of the costs of the Chuditch project. Shortly after completion of the transaction, TIMOR GAP paid approximately US$ 1 million to cover its share of prior costs since the signing of the PSC.
On 29 February 2024, the Company issued 6,528,023,360 new ordinary shares of 0.025p each at an issue price of 0.05 pence per share, raising new capital of £3,264,000 gross, £2,993,000 net of costs.
On 15 March 2024, the Company announced that Dr Andy Butler (formally Director Asia-Pacific) had taken on the role of Chief Executive Officer of the Company and the Board's shift of priority to progress and realise the value in the Chuditch project in Timor-Leste
On 31 March 2024, the joint venture for UK Offshore Licence P2478 relinquished its licence following unavoidable and significant delays to the acquisition of 3D seismic data outside the control of the Company. All commitments under the licence have been fulfilled and there are no further financial obligations.
On 7 May 2024, the Company confirmed that its application as a joint venture non-operating partner, in the UK offshore 33rd Round of licensing, conducted by the UK North Sea Transition Authority was unsuccessful.
|
25. Related party transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
During the year, the Company advanced loans to its subsidiaries. The details of the transactions and the amount owed by the subsidiaries at the year end were. |
|||||
|
|
Year ended 31 December 2023 |
Year ended 31 December 2022 |
|||
|
|
|
Balance |
Loan advance |
Balance |
Loan advance/ (repayment) |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
SundaGas (Timor-Leste Sahul ) Pty. Ltd |
2,878 |
1,031 |
1,977 |
1,622 |
|
|
SundaGas Banda Unipessoal, Lda |
|
883 |
8 |
921 |
253 |
|
Gold Oil Peru S.A.C * |
|
904 |
10 |
941 |
(64) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The company has provided for an impairment of £904,000 (2022: £941,000) on the outstanding loans. |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group and company |
|
|
|
|
|
|
|
|
|
|
|
|
|
SundaGas (Timor-Leste Sahul) Pty. Ltd ("TLS"), a wholly-owned subsidiary paid fees amounting to US$315,000 (2022: US$285,000) to SundaGas Pte. Ltd, a company in which Dr. Andrew Butler, a director of the Company, held a significant interest. These fees are in respect of services to the group including management time and finance and accounting services. |
|||||
|
|
|
|
|
|
|
|
The directors' aggregate remuneration and any associated benefits in respect of qualifying services are disclosed in note 5. |
|||||
26. Restatement of comparative figures
The Directors have reviewed the constituent elements of the Foreign Exchange Translation Reserve and have concluded that such reserves amounting to £848,000 relating to subsidiaries disposed and branches closed in prior years should have been transferred to Retained Earnings. Therefore the comparative period has been restated to represent this reallocation.
None of the restatements impact on the Earnings Per Share as reported in 2022 or 2023. The only affected line items are Retained Earnings and the Foreign Exchange Translation Reserves.
Glossary of Technical Terms
|
Bcf |
Billion standard cubic feet of natural gas. |
|
|
|
|
|
|
Geological chance of success |
The estimated probability that exploration activities will confirm the existence of a significant accumulation of potentially recoverable petroleum. |
|
|
|
|
|
|
Contingent Resources |
Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more contingencies. |
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GIIP |
Volume of natural gas initially in-place in a reservoir. |
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High or 3U Estimate
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Denotes the high estimate qualifying as Prospective Resources. Reflects a volume estimate that there is a 10% probability that the quantities actually recovered will equal or exceed the estimate.
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Licence Operator or Administrator
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The Company nominated to carry out operational activities. In the context of the UK jurisdiction, during the initial Phase A of a licence the nominated Company is termed a licence administrator. |
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MMBBL
MMBOE, Oil equivalent |
Million barrels of oil or condensate.
Million barrels of oil equivalent. Volume derived by dividing the estimate of the volume of natural gas in billion cubic feet by six in order to convert it to an equivalent in million barrels of oil or condensate, and, where relevant, adding this to an estimate of the volume of oil in millions of barrels. |
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Prospective Resources |
Quantities of petroleum that are estimated to exist originally in naturally occurring reservoirs, as of a given date. Crude oil in-place, natural gas in-place, and natural bitumen in-place are defined in the same manner. |
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SPE PRMS 2018 |
The Society of Petroleum Engineers' ("SPE") Petroleum Resources Management System ("PRMS") is a system developed for consistent and reliable definition, classification, and estimation of hydrocarbon resources prepared by the Oil and Gas Reserves Committee of SPE and approved by the SPE Board in June 2018 following input from six sponsoring societies: the World Petroleum Council, the American Association of Petroleum Geologists, the Society of Petroleum Evaluation Engineers, the Society of Exploration Geophysicists, the European Association of Geoscientists and Engineers, and the Society of Petrophysicists and Well Log Analysts. |
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SPE PRMS Unrisked Prospective Resources |
Denotes the unrisked estimate qualifying as SPE PRMS 2018 Prospective Resources.
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Mean or Pmean |
Reflects an unrisked median or best-case volume estimate of resource derived using probabilistic methodology. This is the mean of the probability distribution for the resource estimates and is often not the same as 2U as the distribution can be skewed by high resource numbers with relatively low probabilities. |
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PSC |
Production Sharing Contract. |
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PSDM |
Pre-Stack Depth Migration version of processed seismic data. |
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Tcf |
Trillion standard cubic feet of gas |
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TGS-NOPEC |
TGS-NOPEC Geophysical Company. |
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