Preliminary results for year

RNS Number : 3626U

Europa Oil & Gas (Holdings) PLC

14 October 2010

 



Europa Oil and Gas (Holdings) plc

Unaudited preliminary final information for the year ended 31 July 2010

 

Highlights

Operational highlights

·     Drilled Voitinel Gas Discovery - up to 415bcf gas-in-place on-block (Europa interest 28.75%)

·     Seismic 3D dataset being used to define high impact Berenx well - up to 1.5TCF in-place (Europa interest 100%)

·     Production site and reserves upgrade at West Firsby

·     Drilled Hykeham exploration well

·     Acquired 200km of new 2D seismic data in Romania in thrust belt oil play

·     Crude oil sales of 64,968 barrels, a decrease of 16% on 2009

Financial performance

·      Revenue of £3.1 million (2009: £2.9 million)

·      Two fundraisings raised £2,636,000 net of broker commission.

·      Relinquished licence in Egypt and took write-off cost of £738,000

·      Other exploration write-downs totaled £270,000

·      Impairment charge for Crosby Warren wellsite £1,012,000

For further information, please contact:

Europa Oil & Gas
Philip Greenhalgh / Paul Barrett	Tel: [phone]
finnCap
Sarah Wharry, Corporate Finance	Tel: [phone]
Henrik Persson, Corporate Finance	Tel: [phone]
Joanna Weaving, Corporate Broking	Tel: [phone]

Chairman's statement

Dear Shareholders,

In the year to 31st July 2010, the Company participated in two exploration wells.  A notable success was our participation in the Voitinel discovery in Romania, where dry gas flowed at commercial rates. This discovery opens up an exciting gas play in the Carpathians where two wells on neighbouring licences achieved good sustained flow rates. The detail of this discovery is contained in the Operational Review with the operator estimating a gas in place figure of up to 415 billion cubic feet (Europa interest 28.75%) leading to appraisal drilling in 2011.  In addition, 200km of new 2D seismic has been acquired in the promising Romanian thrust belt oil play.

Work continues on the very prospective Berenx area in France (Europa interest 100%) which has discovered gas accumulations. The Company acquired an existing 3D seismic volume which is being incorporated into our modeling in order to finalise resource numbers prior to securing a drilling partner. The structure, which has a 500m gas column encountered in a 1969 well, has the potential for reserves in excess of one trillion cubic feet.

Turning to the UK, the year saw average daily production of 178 barrels, a decline of 16% on the previous period. Lost production, due to unscheduled well shut-ins at the producing sites, was the main reason for the decline. This is being addressed together with a major upgrade of surface facilities at West Firsby. Workovers on several wells have been undertaken and present daily production is averaging around 200 barrels. The Company's producing assets provided a revenue stream of £3.1 million in the year.

The exploration well at Hykeham in Lincolnshire is currently suspended, having encountered live oil but not having produced commercial quantities. It is thought to have suffered formation damage and the most likely forward plan is to plug and abandon the well whilst further work is undertaken on the remainder of the PEDL150 licence area.

In contrast, a thorough technical review of the West Firsby field has led to an upgrade in 2P reserves of one million barrels, a 250% increase. The drilling of three development wells on the field would lead to a significant increase in production if successful. The first of these wells is planned to be drilled in late 2010 and enables the Company to maintain its production target of 500 barrels of oil per day.

There has been a significant increase in activity in Continental Europe by the oil majors with regard to unconventional resources. Much of this activity has focused on gas shales and extensive prospective acreage has now been licenced. It is clear that the Early Namurian black shales are becoming an interesting focus for UK shale gas potential. The Humber basin, where Europa has a large acreage position, is an area that could hold considerable potential. During 2011 the Company will examine its commercial options in relation to this potential.

The Company acquired 2 licences to investigate Underground Coal Gasification along the UK East coast near to our conventional assets. This exciting technology has the potential to release up to 80% of the energy contained in the coal and can be made virtually carbon neutral. Again, the Company will be examining its commercial options during 2011.

Operating performance for the year has been impacted by the £1 million impairment write down and £1 million exploration write-off. This arose from the decision to write down the carrying value of the Crosby Warren field and write-off exploration costs incurred primarily in Egypt. At Crosby Warren, the relatively low incremental production that the CW2 well has produced since its drilling in 2007 has been a disappointment. Despite several attempts to stimulate the well it has continued to underperform and for this reason the Board decided to take the write down. The venture into Egypt was a higher risk/reward play than our other investments. Though we saw some potential, ultimately lack of time, resources and influence within the Egyptian General Petroleum Corporation (EGPC) meant that Europa was unwilling to enter the second phase of the concession and we relinquished the licence. I believe that the exiting of Egypt is a positive step for Europa as it ensures a better focus on the assets in UK, France and Romania.

The lower than expected production and cost of the well workovers has strained our cash resources and puts a degree of uncertainty over our ability to fund the 2011 work programme. It is anticipated that this will lead to an "Emphasis of Matter - going concern" comment in the auditor's report of the 2010 Annual Report and Accounts. Based on latest cash projections and efforts which Europa is making to raise additional funds, the Directors consider that the Group will remain a going concern for the foreseeable future.

In April, Sir Michael Oliver retired as Chairman. Dr Erika Syba, co-founder of the Company, resigned as Operations Director with effect from the end of August 2010. I thank both of them for their contributions to the Company and wish them well in their future endeavours.

Bill Adamson

Chairman

Operational review

Europa's strategy is to develop a wide range of assets - from production through to high impact exploration, within the EU.  Current core areas are the UK, France and Romania.  Europa operates the majority of its joint ventures from its headquarters near Oxford, UK.  Having acquired three seismic surveys and drilled as operator some 6 wells to date, the Company has an excellent safety and environmental record. 

Europa holds a varied asset portfolio across three EU jurisdictions and the Western Sahara.  These range from oil producing assets, through exciting discoveries at the appraisal stage to exploration projects in established oil and gas plays: 

Country	Area	Licence	Field/ Prospect	Operator	Equity	Status
UK	East Midlands	DL003	West Firsby	Europa	100%	Production
		DL001	Crosby Warren	Europa	100%	Production
		PL199/215	Whisby-4	BPEL	65%	Production
		PEDL150	W. Whisby	Europa	75%	Exploration
		PEDL180	Wressle	Europa	50%	Exploration
		PEDL222		Valhalla	50%	Exploration
		PEDL181	Caister	Europa	50%	Exploration
	Weald	PEDL143	Holmwood	Europa	40%	Exploration
	North Sea	Holderness	Offshore UCG	Europa	90%	Exploration
		Humber South	Offshore UCG	Europa	90%	Exploration
France	Aquitaine	Béarn des Gaves	Berenx	Europa	100%	Exploration/Appraisal
		Tarbes V.d'Adour	Osmets/Jacque	Europa	100%	Exploration/Appraisal
Romania	Carpathians	EIII-1 Brodina	Voitinel	Aurelian	28.75%	Exploration/Appraisal
		EIII-3 Cuejdiu		Aurelian	17.50%	Exploration
		EIII-4 Bacau		Aurelian	19%	Exploration
		EPI-3 Brates	Barchiz	MND	20%	Exploration
Western Sahara	Tindouf	Bir Lehlou		Europa	100%	Exploration
	Aaiuun	Hagounia		Europa	100%	Exploration

UK

The core of Europa's portfolio in the UK is in the East Midlands, a basin with a long history of successful oil exploration and production with potential for additional reserves and vast unconventional resources.

Production - West Firsby and Crosby Warren (100%), Whisby-4 (65%)

The Company holds interests in three producing oilfields in the East Midlands.  The main operating base is at the West Firsby Field, 15km north of Lincoln. The production is tankered by road to the refinery at Immingham in North East Lincolnshire.  Current 2P reserves are 1.4 mmbo, having recently been increased due to the identification of additional Zone 1 reserves at West Firsby.  This resulted from a thorough review of the seismic and well data to calculate revised oil-in-place figures and a detailed review of production history to conclude that significant oil remains in the upper Zone 1 reservoir.

West Firsby produces from two wells on a jet pump system at combined rates of up to 105bopd.  A programme of site improvements and production optimisation is nearing completion and a new Zone 1 production well is expected to be drilled in late 2010. 

At Crosby Warren, in the grounds of the Scunthorpe steelworks, the two production wells operate on traditional beam pumps or nodding donkeys, producing up to 40bopd.  All producing and exploration assets are tested annually for possible impairment. In the case of Crosby Warren, the CW2 well, drilled in 2007 has continued to produce relatively small quantities of oil. This led to an overall carrying value for the site which was not supported by the expected future cash flows from existing oil production. As a result, the Board took the decision to write down the book value of the Crosby Warren site from £2,694,000 to £1,682,000, an impairment charge in the Statement of Comprehensive Income of £1,012,000.

At Whisby, just to the west of Lincoln, a well drilled by Europa in early 2003 remains on steady production, currently producing around 88bopd gross (55 bopd net to Europa) on beam pump. 

Exploration - NE Lincolnshire (PEDL 180/181 - 50%), Lincoln area (PEDL 150 - 75%), Dorking area (PEDL 143 - 40%)

Europa operates a number of exploration licences in the UK, some with 'ready-to-drill' prospects. 

In NE Lincolnshire, PEDL180 and PEDL181 licences contain two prospective areas: the Wressle Prospect and the Caister Horst.  The seismic database over these two areas, comprising a mixed 2D/3D vintage dataset, has been reprocessed and work is ongoing to develop drilling locations.  Prospect size is in the region of 5 to 8 mmbo recoverable.

Within the PEDL150 concession, the Hykeham well was drilled in the year. Despite encountering oil pay, the well has failed to flow oil to date, thought to be principally as a result of formation damage incurred during drilling. Though the likely forward plan is to plug and abandon the well, the investment has not been written off as prospectivity within the rest of the block, which includes the West Whisby feature, is believed to be good. Lessons learnt at Hykeham will be applied in the drilling of other prospects in the same reservoir interval.

The PEDL222 licence (50%), situated to the north of the Whisby Field, does not contain any prospects large enough to warrant drilling.  The modest investment to date has been written off and for the remainder of the licence term Europa will assume operatorship to assess resource potential.

In PEDL 143 in the Weald Basin, Europa and its partners continue to work to securing planning permission to drill the Holmwood-1 exploration well, south of Dorking.  It is hoped permission will be granted late in 2010.

Unconventional Resources - Underground Coal Gasification and Shale Gas

Europa has been awarded two licences (90%) by the UK Coal Authority to investigate underground coal gasification of virgin coals along the eastern coast of England.  These licences are situated in areas with deep coal measures with little structural complexity and a proximity to existing gas and utility infrastructure.

Underground Coal Gasification (UCG) is a developing technology that recovers up to 80% of the calorific value of in situ coal by a process of controlled combustion.  UCG, when combined with CO₂ storage in the depleted coal seams, creates a source of energy which rivals nuclear for low emissions and has lower unit costs than conventional gas-fired power stations.

With only 30% utilisation rate for the coals, the estimated potential UCG energy resource in these two licence areas is 36x10¹⁵ Joules or 6 billion barrels of oil equivalent.

In addition, the Company's large holding of over 600km² of the Humber Basin, has potential for significant shale gas resources from Carboniferous basinal shales.  Whilst this is being evaluated, activities in shale gas exploration elsewhere in the UK Carboniferous basins are being monitored with interest.

France

Europa holds two exclusive licence in the Aquitaine Basin, adjacent to the world-class Lacq-Meillon gas developments. 

Appraisal - The Berenx Structure (Béarn des Gaves Permit - 100%)

The main focus for Europa is the appraisal of the Berenx gas wells, where a high pressure high temperature well encountered 500m of gross gas shows and mud gas kicks in a similar reservoir to the nearby 5TCF Lacq Field.   In mid-2010, Europa took delivery of a reprocessed 3D seismic dataset covering the area between Berenx and Lacq.  The initial mapping indicates that the Berenx wells were drilled on the western edge of a sizeable structure which could reservoir in excess of 1 trillion cubic feet of recoverable gas reserve.  The proximity (20km) to the Lacq Field creates a straightforward export route, allowing the gas to be processed in an existing facility with spare capacity.

The forward programme is for detailed mapping of the structure by experienced Aquitaine geoscientists followed by securing joint venture partner(s) for the drilling of an appraisal well for 2011/2012.

Field Re-development and associated Exploration - Tarbes Val d'Adour Licence (100%)

This licence contains several oil accumulations, previously produced by Elf but abandoned in 1985 in times of low oil price.  Europa commissioned the French Geological Survey to map the potential field re-development area of Osmets and Jacque from a reprocessed 2D data set and this work is now complete.

It is hoped that, with a partner, a re-development well can be drilled on one of these fields in 2011.

Romania

Europa holds interests in 4 Romanian exploration licences, with non-operated working interests varying from 17.5 to 28.75%.  The work programme is moving to a phase of appraisal of a 2009 gas discovery and exploration in the oil play.

Appraisal - The Voitinel Discovery (EPI-1 Brodina Licence - 28.75%)

The 2009 Voitinel-1 exploration well encountered gas in two sandstone intervals at around 1400 and 1650m depth.  The deeper of these tested dry gas at flow rates of 3 mmscfpd, but appeared to be close to a reservoir boundary, limiting the ability to maintain flow for long periods.  A fracture stimulation was undertaken which increased the volume of gas accessed by the well.  The Operator, Aurelian, has assessed that approximately 6bcf will be producible from each conventional vertical well in this reservoir. 

The Voitinel well was drilled close to the northern edge of the structural trend. However, the play extends far to the south of the well, having been proven by recent wells drilled by Romgaz at Paltinu.  One well sustained gas flow rates of 5mmscfpd for one week, indicating that the reservoir in the southern part of the play could be better quality than in the discovery well.

The current resource estimates for the 'Greater Voitinel' play, including the yet undrilled Solca structure, is that up to 290bcf is recoverable (84 bcf net) from gross gas-in-place of 415bcf.  It is anticipated that two appraisal wells will be drilled in 2011.

Exploration - the Carpathian Thrust Belt Oil Play

The exploration strategy in the Romanian portfolio is moving away from the small shallow gas play in the eastern part of the licences to explore in the thrust belt oil play that is developed in the western part of all four of Europa's Romanian licences.  The US Geological Survey estimates mean undiscovered potential reserves of over  2.9 billion barrels equivalent in the play and Europa's first well targeting this play - Barchiz - is due to be spudded in October 2010.

Barchiz (20%) is situated in the Brates Licence, immediately north of and along trend from the Geamana oilfield (50 mmbo reserves).  It is a relatively shallow target with a depth of 1,400m and potential for up to 30 mmbo gross reserves.   A further highly prospective area in the same licence, underneath the existing Tazlaul Mare gas condensate field, is anticipated to be matured for drilling in 2011/12.

In 2010, new seismic data acquisition was undertaken in three of Europa's four licences and the results from this work will drive the exploration activity into 2011 and beyond.

Other Areas

Egypt

In December 2009, the Company relinquished its interest in the West Darag concession, onshore Egypt. The decision, driven by the lack of identified drill-ready prospects needed to commit to phase two of the concession, resulted in a write-off of the £738,000 investment in Egypt. 

Western Sahara (100%) - Tindouf Basin and Aiuun Basin Licences

Europa holds interests in Western Sahara through SADR covering almost 80,000km² of exciting exploration acreage.  The Tindouf licence has great potential for both conventional and unconventional gas resources, being geologically similar to the prolific Algerian Palaeozoic basins.  The Aiuun Basin is an Atlantic margin basin similar to that developed along the West African margin.

As these license areas remained in force majeure throughout the year, the Board decided to write-down the intangible asset to nil value. Though the investment has been written down, Europa retains its 100% interest in the 2 blocks.

Conclusion

The Company's broad asset base in the EU and is a perfect platform for growth - two projects with Company-making potential will lift off in 2011 and the management intend to additionally develop a strong exploration-focused new venture strategy to take the Company to the next level.

Paul Barrett

Managing Director

Unaudited consolidated statement of comprehensive income for the year ended 31 July 2010 

		2010	2009
	Note	£000	£000
Revenue		3,091	2,936
Other cost of sales		(1,836)	(1,694)
Exploration write-off	2	(1,008)	(297)
Impairment of producing fields	3	(1,012)	-
Total cost of sales		(3,856)	(1,991)
Gross (loss) / profit		(765)	945
Administrative expenses		(709)	(545)
Finance income		37	224
Finance expense		(262)	(248)
(Loss) / profit before taxation		(1,699)	376
Taxation		(263)	(356)
(Loss) / profit for the year attributable to equity shareholders of the parent		(1,962)	20
Other comprehensive income
Exchange gains arising on translation of foreign operations		56	373
Total comprehensive (loss) / income for the period attributable to the equity shareholders of the parent		(1,906)	393

	Note	Pence per share	Pence per share
(Loss) / earnings per share (eps) attributable to equity shareholders of the parent
Basic eps	4	(2.60)p	0.03p
Diluted eps	4	(2.60)p	0.03p

Unaudited consolidated statement of financial position as at 31 July 2010

		2010	2009
		£000	£000
Assets
Non-current assets
Intangible assets		9,751	7,473
Property, plant and equipment		4,504	5,554
		--------------------	--------------------
Total non-current assets		14,255	13,027
		--------------------	--------------------
Current assets
Inventories		38	15
Trade and other receivables		587	469
Current tax asset		335	-
Cash and cash equivalents		4	4
		--------------------	--------------------
Total current assets		964	488
		--------------------	--------------------
Total assets		15,219	13,515
		=====================	=====================
Liabilities
Current liabilities
Trade and other payables		(1,797)	(900)
Current tax liabilities		(2)	(588)
Derivative		(55)	(40)
Short-term borrowings		(900)	(767)
		--------------------	--------------------
Total current liabilities		(2,754)	(2,295)
		--------------------	--------------------
Non-current liabilities
Long-term borrowings		(352)	(772)
Deferred tax liabilities		(3,240)	(2,651)
Long-term provisions		(1,395)	(1,137)
		--------------------	--------------------
Total non-current liabilities		(4,987)	(4,560)
		--------------------	--------------------
Total liabilities		(7,741)	(6,855)
		--------------------	--------------------
Net assets		7,478	6,660
		===================	===================
Capital and reserves attributable to equity holders of the parent
Share capital		822	626
Share premium		7,132	4,692
Merger reserve		2,868	2,868
Foreign exchange reserve		408	352
Retained deficit		(3,752)	(1,878)
		--------------------	--------------------
Total equity		7,478	6,660
		==================	==================

Unaudited consolidated statement of changes in equity for the year ended 31 July 2010

Attributable to the equity holders of the parent

	Share capital	Share premium	Merger  reserve	Foreign exchange reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000
Balance at 1 August 2008	626	4,692	2,868	(21)	(1,994)	6,171
Total comprehensive income for the year	-	-	-	373	20	393
Share based payment	-	-	-	-	96	96
	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------
Balance at 31 July 2009	626	4,692	2,868	352	(1,878)	6,660
	===================	=================	=================	=================	==================	==================

	Share capital	Share premium	Merger  reserve	Foreign exchange reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000
Balance at 1 August 2009	626	4,692	2,868	352	(1,878)	6,660
Total comprehensive income/(loss) for the year	-	-	-	56	(1,962)	(1,906)
Share based payment	-	-	-	-	88	88
Issue of share capital (net of issue costs)	196	2,440	-	-	-	2,636
	-------------------	-------------------	-------------------	-------------------	-------------------	-------------------
Balance at 31 July 2010	822	7,132	2,868	408	(3,752)	7,478
	==================	=================	=================	=================	===================	=================

Unaudited consolidated statement of cash flows for the year ended 31 July 2010

		2010	2009
		£000	£000
Cash flows from operating activities
(Loss) / profit after tax		(1,962)	20
Adjustments for:
Share based payments		73	96
Depreciation		498	576
Exploration write-off		1,008	297
Impairment of property, plant & equipment		1,012	-
Finance income		(37)	(224)
Finance expense		262	248
Taxation expense		263	356
(Increase)/decrease in trade and other receivables		(66)	187
(Increase)/decrease in inventories		(23)	1
Increase / (decrease) in trade and other payables		592	34
		--------------------	--------------------
Cash generated from operations		1,620	1,591
Income taxes paid		(597)	(180)
		--------------------	--------------------
Net cash from operating activities		1,023	1,411
		=====================	==========
Cash flows from investing activities
Purchase of property, plant and equipment		(222)	(191)
Purchase of intangible assets		(3,075)	(930)
		--------------------	--------------------
Net cash used in investing activities		(3,297)	(1,121)
		======================	=====================
Cash flows from financing activities
Proceeds from issue of share capital (net of issue costs)		2,653	-
Proceeds from long-term borrowings		-	1,000
Repayment of borrowings		(469)	(585)
Finance costs		(101)	(138)
		--------------------	--------------------
Net cash from financing activities		2,083	277
		=====================	====================
Net (decrease) /increase in cash and cash equivalents		(191)	567
Exchange gain on cash and cash equivalents		8	160
Cash and cash equivalents at beginning of year		(292)	(1,019)
		--------------------	--------------------
Cash and cash equivalents at end of year		(475)	(292)
		=====================	====================

Unaudited notes to the financial statements (continued)

1                 Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are will be set out in the Group's annual report. The policies have been consistently applied to all the years presented, unless otherwise stated. Both tThe parent company financial statements and the Group financial statements have will bebeen prepared and approved by the Directors in accordance with International Financial Reporting Standards IFRS's and IFRIC interpretations, issued by the International Accounting Standards Board (ISAB) as endorsed for use in the EU ("Endorsed IFRSs") and those parts of the Companies Act 2006 that are applicable to companies that prepare their financial statements under IFRS.

The unaudited financial information presented for the years ended 31 July 2010 and 31 July 2009 does not constitute statutory accounts as defined by section 435 of the Companies Act 2006 but is extracted from the unaudited accounts for the year ended 31 July 2010 and the audited accounts for the year ended 31 July 2009. The 31 July 2009 accounts have been delivered to the Registrar of Companies. The 31 July 2010 accounts will be delivered to Companies House within the statutory filing deadline. The auditors have yet to report on those accounts; their report is anticipated to be unqualified but contain an emphasis of matter paragraph in respect of the going concern basis of preparation of the financial information.

As described in the Chairman's statement, the Directors have considered the cash position of the Company, and based on latest cash projections and efforts which Europa is making to raise additional funds, they consider that the Group will remain a going concern for the foreseeable future.

2                 Intangible assets

	2010	2009
	£000	£000
At 1 August	7,473	7,241
Additions	3,286	529
Exploration write-off	(1,008)	(297)
	---------------------	--------------------
At 31 July	9,751	7,473
	====================	====================

	2010 £000	2009 £000
Romania	7,191	5,874
Egypt	-	434
France	308	139
Western Sahara	-	105
UK PEDL143 (Holmwood)	186	177
UK PEDL150 (SW Lincoln)	1,904	588
UK PEDL180 (NE Lincs)	63	52
UK PEDL181	99	63
UK PEDL222 (Torksey area)	-	41
	--------------------	-------------------
Total	9,751	7,473
	====================	===================

Intangible assets comprise the Group's pre-production expenditure on licence interests as follows:

	2010 £000	2009 £000
Exploration write-off
Egypt	738	-
Western Sahara	184	-
UK - PEDL222	55	-
UK - PEDL180/181 pre licence costs	31	-
UK - East Irish sea block 109/5	-	297
	----------------------	--------------------
At 31 July	1,008	297
	=====================	===================

In December 2009, the Company relinquished its interest in the West Darag concession, onshore Egypt. The decision, driven by the lack of identified drill-ready prospects needed to commit to phase 2 of the concession, resulted in a write-off of the investment in Egypt. 

As the license areas in Western Sahara remained in force majeure throughout the year, the Board decided to write-down the intangible asset to nil value.

With a lack of identified prospects in the PEDL222 concession, the Board also decided to write down the investment to nil value.

Within the PEDL150 concession, the Hykeham well was drilled in the year. Though the likely forward plan is to plug and abandon the well, the investment has not been written off as prospectivity within the rest of the concession area, which is considered as one cost pool, is good.

3                 Property, plant and equipment

	Furniture & computers	Leasehold building	Producing fields	Total
	£000	£000	£000	£000
Cost
At 1 August 2008	27	437	7,213	7,677
Additions	12	-	122	134
	----------------------	-----------------------	------------------------	------------------------
At 31 July 2009	39	437	7,335	7,811
Additions	16	-	444	460
Impairment	-	-	(1,331)	(1,331)
	-------------------------	-------------------------	-------------------------	-------------------------
At 31 July 2010	55	437	6,448	6,940
	========================	========================	=================== ===	========================
Depreciation and depletion
At 1 August 2008	6	52	1,623	1,681
Charge for year	9	25	542	576
	-------------------------	-------------------------	-------------------------	-------------------------
At 31 July 2009	15	77	2,165	2,257
Charge for year	10	8	480	498
Impairment	-	-	(319)	(319)
	------------------------	-------------------------	-------------------------	-------------------------
At 31 July 2010	25	85	2,326	2,436
	=========================	=========================	=======================	=========================
Net Book Value
At 31 July 2010	30	352	4,122	4,504
	==========================	========================	========================	========================
At 31 July 2009	24	360	5,170	5,554
	=========================	=========================	=========================	========================
At 31 July 2008	21	385	5,590	5,996
	========================	========================	=========================	========================

The producing fields referred to in the table above are the production assets of the Group, namely the oilfields at Crosby Warren and West Firsby, and the Group's interest in the Whisby W4 well.

The carrying value of each producing field was tested for impairment. As a result, the Board decided to write down value of the Crosby Warren field by £1,012,000 (gross cost of £1,331,000 and accumulated depreciation of £319,000).

4                 Earnings per share

Basic earnings per share (EPS) has been calculated on the loss or profit after taxation divided by the weighted average number of shares in issue during the period. Diluted EPS uses an average number of shares adjusted to allow for the issue of shares, on the assumed conversion of all in the money options.

The Company's average share price for the year to 31 July 2010 was 14.6p resulting in a dilution of 26,020 shares.

The Company's average share price for the year to 31 July 2009 was lower than the exercise price of the share options in issue. Therefore the share options in issue had no dilutive effect and there is no difference between the basic and diluted earnings per share.

The calculation of the basic and diluted (loss)/earnings per share is based on the following:

	2010	2009
	£000	£000
(Losses)/earnings
(Loss)/profit  after tax	(1,962)	20
Weighted average number of shares
for the purposes of basic eps	75,520,873	62,563,730
for the purposes of diluted eps	75,546,893	62,563,730

 

END

 

 

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