Results for the year ended 31 December 2019

RNS Number : 1271R

Lansdowne Oil & Gas plc

26 June 2020

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Steve Boldy, the Chief Executive Officer of the Company (responsible for arranging release of this announcement).

26 June 2020

Lansdowne Oil & Gas plc

("Lansdowne" or "the Company")

Audited results for the year ended 31 December 2019

Lansdowne Oil & Gas ("Lansdowne" or "the Company") is pleased to announce its audited results, for the year ended 31 December 2019. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and the Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.

Lord Torrington, Independent Non-Executive Chairman, commented :

"2019 has proved another challenging year for the Company, however, the Board remains steadfast in its belief of the significant potential of Barryroe and is focused on unlocking its inherent value. The Board has been encouraged by the new Farm-Out campaign initiated in the fourth quarter of 2019 that has received a positive response from industry and we are now in detailed discussions with a potential counterparty that has been given a period of exclusivity in order to agree an appraisal work programme and develop commercial terms with the aim of concluding a binding Farm-Out agreement.

In addition to the challenges the Company already faced, the onset of the Coronavirus pandemic has impacted the entire global economy, resulting in a dramatic reduction in oil and gas consumption and a collapse in their prices.

In time the world will need to go back to work and oil and gas demand, and prices, will recover and this process is already underway.

We believe Barryroe remains an attractive opportunity, with substantial established oil and gas resources, in shallow water, close to existing infrastructure and with a low break-even price, estimated by the operator Providence to be c. $26/bbl.

The environmental concerns regarding oil and gas will not go away, but the evaluation of Carbon Capture and Storage options to accompany Barryroe development offers a responsible way to take the project forward whilst minimizing the carbon footprint.

Ireland will require diverse, cost effective and secure energy supplies as it rebuilds its economy and Barryroe can play an important role in this.

I would like to thank all our existing shareholders for the support and patience they have shown in 2019 and following the extraordinary events in 1H 2020. The Board believes Barryroe is a compelling appraisal asset with existing net 2C resources of 69MMboe (plus additional exploration potential), the Company is trading at a valuation of around US$0.11 per contingent resource barrel and, accordingly, we continue to believe there is the scope for a significant re-rating of the Company valuation upon announcement of a binding Farm-Out agreement and on future operational developments. Lansdowne is currently funded through to the end of 2020 and we look forward to updating shareholders on developments. "

Operational highlights

· Barryroe Oil Field (SEL 1/11)

o  Termination of the Farm-Out Agreement following the failure of APEC to fulfil the terms

Financial highlights  

· On 25 June 2019, the Company secured debt funding of £150,000 from LC Capital and £150,000 from Brandon Hill Capital Limited, both existing significant shareholders in the Company (the "Shareholder Loans").

· Cash balances at 31 December 2019 of £0.02 million (2018: £0.16 million).

· Operating expenses for the year were £0.1 million (2018: £0.2 million).

· Loss for the year after tax of £0.2 million (2018: loss £0.3 million).

· Diluted loss per share of 0.03 pence (2018: loss 0.05 pence).

Post-balance sheet events

Operational

· Barryroe Oil Field (SEL1/11)

o  The process of reassignment of equity back to Providence/EXOLA and Lansdowne from APEC progressed with the Department of Communications Climate Action and the Environment (DCCAE)

o  New farm-out process led to the signing of a term-sheet with SpotOn Energy Limited and granting of exclusivity through to 31 October 2020 with a view to concluding a binding farm-out

Financial

· In February 2020, the Company placed 83,333,333 new ordinary shares of 0.1 pence each ("Ordinary Shares") at a placing price of 0.6 pence a share to raise £500,000 before costs (the "Placing").

· At the same time, the Shareholder Loans entered into with Brandon Hill Capital Ltd. and LC Capital in June 2019, were converted into new Ordinary Shares at the Placing Price. 

· In connection with the Placing and the conversion of the Shareholder Loans, the Company also granted a total of 139,368,491 warrants, on a one warrant per Placing or Loan Share basis, to subscribe for new Ordinary shares in the Company at a price of 1.2 pence per share, with an expiry of 31 December 2020. 

· With low corporate overhead costs, following the February 2020 capital raise, Lansdowne has sufficient working capital to the end of 2020.

· The Company has net 2C Resources of 69 MMboe and is trading at a valuation of around $0.11 per contingent resource barrel.

For further information please contact:
Lansdowne Oil & Gas plc	[phone]
Steve Boldy
SP Angel Corporate Finance LLP	[phone]
Nominated Adviser and Joint Broker
Stuart Gledhill
Richard Hail
Brandon Hill Capital Limited	[phone]
Joint Broker
Oliver Stansfield

Notes to editors:

About Lansdowne

Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focused, oil and gas exploration and appraisal company quoted on the AIM market and head quartered in Dublin.

For more information on Lansdowne, please refer to www.lansdowneoilandgas.com

 

Results for the year ended 31 December 2019

Chairman's Statement

Introduction

2019 has proved another challenging year for the Company, however, the Board remains steadfast in its belief of the significant potential of Barryroe and is focused on unlocking its inherent value. The Board has been encouraged by the new Farm-Out campaign initiated in the fourth quarter of 2019 that has received a positive response from industry and we are now in detailed discussions with a potential counterparty that has been given a period of exclusivity in order to agree an appraisal work programme and develop commercial terms with the aim of concluding a binding Farm-Out agreement.

Prior to the new Farm-Out campaign, and despite being granted a number of extensions, APEC Energy Enterprise Limited ("APEC") failed to deliver funds to EXOLA (a wholly owned subsidiary of Providence Resources plc) as called for under the terms of the Farm-Out Agreement entered into in 2018 with respect to Standard Exploration Licence (SEL) 1/11, containing the Barryroe Field.

A final deadline was set for 30th September 2019, but funds did not arrive by that date, following which EXOLA advised APEC that it would commence with the licence reversion process of APEC's 50% working interest in SEL 1/11 to EXOLA and Lansdowne on a 40% and 10% basis, respectively.

The failure of APEC to deliver on the Barryroe Farm-Out Agreement was a bitter blow after such a long period of dialogue and planning.

The oil and gas industry in Ireland also faced regulatory and policy headwinds in 2019, culminating in the announcement in September 2019, that there would be no new licences granted for offshore oil exploration.

The Irish Department of Communications, Climate Action and Environment issued a Policy Statement in December 2019 that further clarified the position. This statement confirmed that all existing applications and authorisations in place before 23 September 2019 (such as SEL 1/11 containing Barryroe and the Helvick Lease Undertaking) can progress through the standard lifecycle stages for exploration, extraction and production of natural gas and/or oil.

Financial Results

With the delay and uncertainty regarding the Barryroe Farmout, on 25 June 2019 the Company entered into a Loan Agreement for GBP 300,000 (the "Loan") with two major shareholders - Lampe Conway & Co LLC and Brandon Hill Capital Limited (collectively the "Major Shareholders").

Under the Agreement, split equally between the Major Shareholders, Lansdowne was able to draw down funds at its discretion in part or in full.

The Group recorded an after tax loss of £0.2 million for the year ended 31 December 2019 compared to a loss of £0.3 million for the year ended 31 December 2018.

Group operating expenses for the year were £0.1 million, compared to £0.2 million in 2018.

Net finance expense for the year was £57,000 (2018:£100,000).

Cash balances of £0.02 million (2018: £0.16 million) were held at the end of the financial year

Total equity attributable to the ordinary shareholders of the Group was £13.6 million as at 31 December 2019 (£13.7 million as at 31 December 2018).

Post Balance Sheet Events

In February 2020, Providence confirmed that the regulatory process to transfer equity back to Exola and Lansdowne was progressing and that upon conclusion the licence interests would revert back to Exola DAC 80% and Lansdowne Celtic Sea Limited 20%.

In February 2020, it was also confirmed that a number of parties were reviewing the Barryroe opportunity, under the new Farm-Out initiative.

Attention was also drawn to the fact that Barryroe contains substantial amounts of gas, along with the identified oil resources. One of the uncertainties that is required to be addressed through the appraisal drilling is the exact split of oil versus gas and whether Barryroe is a large oil field with a gas cap, or a large gas field surrounded by an oil rim.

In April 2020, Providence announced that a non-binding term sheet had been signed with SpotOn Energy Limited ("SpotOn"). SpotOn is a Norwegian company working with a consortium of world leading service providers to deliver cost effective offshore oil and gas developments.

Providence announced that a period of exclusivity had been granted to SpotOn, through to 31 October 2020, during which the objective is to agree an appraisal work programme and commercial terms and conclude a binding farm-out agreement.

In February 2020, the Company announced that it had placed 83,333,333 new ordinary shares at a placing price of 0.6 pence a share to raise £500,000 before costs.

In addition, the loans entered into with Brandon Hill Capital Ltd. ("BHC") and LC Capital Targeted Opportunities Fund ("LCCTOF") in June 2019, which had been fully drawn down, were converted into new ordinary shares at the Placing Price. This resulted in the issuing of 25,934,246 new ordinary shares to each of BHC and LCCTOF.

In connection with the Placing and the conversion of the Shareholder Loans, the Company also granted a total of 139,368,491 warrants, on a one warrant per Placing or Loan Share basis, to subscribe for new ordinary shares in the Company at a price of 1.2 pence per share, with an expiry of 31 December 2020.

The placing shares and the majority of the loan conversion shares were issued under the existing shareholder authorities, with the remainder of the loan conversion shares and the warrants being formally approved by shareholders at a General Meeting of the Company held in March 2020.

The proceeds of the Placing are expected to be sufficient to fund the Company's share of costs on the Barryroe Licence and for on-going working capital requirements to the end of 2020.

Outlook

In addition to the challenges the Company already faced, the onset of the Coronavirus pandemic has impacted the entire global economy, resulting in a dramatic reduction in oil and gas consumption and a collapse in their prices.

Despite all of this, we believe Barryroe remains an attractive opportunity, with substantial established oil and gas resources, in shallow water, close to existing infrastructure and with a low break-even price, estimated by the operator Providence to be c. $26/bbl.

In time, the world will need to go back to work and oil and gas demand, and prices, will recover.

The environmental concerns regarding oil and gas will not go away, but the evaluation of Carbon Capture and Storage options to accompany Barryroe development offers a responsible way to take the project forward whilst minimizing the carbon footprint.

Ireland will require diverse, cost effective and secure energy supplies as it rebuilds its economy and Barryroe can play an important role in this.

One of our Non-Executive Directors, John Aldersey-Williams, has decided not to stand for re-election at the forthcoming Annual General Meeting. John joined the Lansdowne Board in 2012, when he was CEO of Sea Energy PLC, at that time a significant shareholder in Lansdowne. John has made a wide contribution to Lansdowne and we thank him for all his efforts and wish him well as he moves to focus his work in the zero-carbon energy sector. John will continue as a Director until the Annual General Meeting when he will stand down.

I would like to thank all our existing shareholders for their support and patience they have shown in 2019 and following the extraordinary events in 1H 2020. The Board believes Barryroe is a compelling appraisal asset with existing net 2C resources of 69MMboe (plus additional exploration potential), the Company is trading at a valuation of around US$0.11 per contingent resource barrel and, accordingly, we continue to believe there is the scope for a significant re-rating of the Company valuation upon announcement of a binding Farm-Out agreement and on future operational developments. Lansdowne is currently funded through to the end of 2020 and we look forward to updating shareholders on developments.

Lord Torrington

Chairman

24 June 2020

Lansdowne Oil & Gas plc

Consolidated Statement of Financial Position

As at 31 December 2019

		2019	2018
	Note	£'000	£'000
Assets
Non- current assets
Intangible assets	4	15,543	15,311
Current Assets
Trade and other receivables		20	47
Cash and cash equivalents		16	159
		36	206
Total Assets		15,579	15,517
Equity and Liabilities
Shareholders' Equity
Share capital	5	11,722	11,718
Share premium	5	26,864	26,833
Currency translation reserve		59	59
Share-based payment reserve		923	923
Accumulated deficit		(26,005)	(25,826)
Total Equity		13,563	13,707
Non-Current Liabilities
Provisions Current Liabilities Shareholder loan Trade and other payables		316 1,305 395	316 1,046 448
Total Liabilities		2,016	1,810
Total Equity and Liabilities		15,579	15,517

 

Lansdowne Oil & Gas plc

Consolidated Income Statement

For the year ended 31 December 2019

		2019	2018
	Note	£'000	£'000
Administrative expenses		(122)	(193)
Operating loss		(122)	(193)
Finance costs		(57)	(100)
Loss for the year before tax		(179)	(293)
Income tax		-	-
Loss for the year		(179)	(293)
Loss per share (pence):
Basic loss per ordinary share	3	(0.03p)	(0.05p)
Diluted loss per ordinary share	3	(0.03p)	(0.05p)

The results for the year all arise on continuing operations. The group has no other comprehensive income or expense in the current or prior year.

Lansdowne Oil & Gas plc

Consolidated Statement of Changes in Equity

For the year ended 31 December 2019

	Share capital £'000	Share premium £'000	Share based payment Reserve £'000	Currency translation reserves £'000	Accumulated deficit £'000	Total equity £'000
Balance at 1 January 2018	11,571	25,126	923	59	(25,533)	12,146
Loss for the financial year	-	-	-	-	(293)	(293)
Total comprehensive loss for the year	-	-	-	-	(293)	(293)
Issue of new shares - gross consideration	147	1,810	-	-	-	1,957
Cost of share issues	-	(103)	-	-	-	(103)
Balance at 31 December 2018	11,718	26,833	923	59	(25,826)	13,707
Balance at 1 January 2019	11,718	26,833	923	59	(25,826)	13,707
Loss for the financial year	-	-	-	-	(179)	(179)
Total comprehensive loss for the year	-	-	-	-	(179)	(179)
Issue of new shares - gross consideration (note 5)	4	31	-	-	-	35
Balance at 31 December 2019	11,722	26,864	923	59	(26,005)	13,563

 

Lansdowne Oil & Gas plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2019

		2019	2018
	Note	£'000	£'000
Cash flows from operating activities
Loss for the year		(179)	(293)
Adjustment for:
Interest payable and similar charges		58	98
(Increase)/decrease in trade and other receivables		28	(24)
Increase in trade and other payables		(53)	80
Net cash used in operating activities		(146)	(139)
Cash flows from investing activities
Acquisition of intangible exploration assets	4	(232)	(639)
Net cash used in investing activities		(232)	(639)
Cash flows from financing activities
Proceeds from the issue of share capital		35	1,025
Cost of raising shares		-	(103)
Proceeds from new loan		200	-
Net cash from financing activities		235	922
Net increase/(decrease) in cash and cash equivalents		(143)	144
Cash and cash equivalents at 1 January		159	15
Cash and cash equivalents at 31 December		16	159

 

Lansdowne Oil & Gas plc

Notes to the Financial Information

For the year ended 31 December 2019

1.  Basis of presentation

The consolidated financial statements are presented in Sterling, the Company's functional currency, and all values are rounded to the nearest thousand (£'000) except where otherwise indicated.

The Directors have prepared the financial statements on the going concern basis which assumes that Group and company will continue in operational existence for at least twelve months from the date of the approval of these financial statements.

The Directors have carried out a detailed assessment of the Group's ability to continue as a going concern including assessing its current and prospective exploration activity, its relationship with the holder of its loan note and preparing cash flow projections for the period to 30 June 2021.

In February 2020, the Company raised £500,000 before costs by placing 83,333,333 new ordinary shares with new and existing investors. On 25 June 2019, LC Capital Targeted Opportunities Fund, L.P. and Brandon Hill Capital Limited both entered into shareholder loan agreements in the aggregate of £300,000 with Lansdowne, following which all facilities under the loan agreements were fully drawn by Lansdowne. As part of the equity fundraising event in February 2020, both LC Capital and Brandon Hill also agreed to convert the full amount of the outstanding liabilities on their respective shareholder loans into new ordinary shares in the Company.

Notwithstanding the equity raised and conversion of shareholder loans into new ordinary shares, the cash flow projections indicate that the Group's and Company's ability to continue as a going concern is dependent on securing additional debt or equity funding.

The Directors have considered the various matters set out above and determined that these events and conditions constitute a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern and that they may therefore be unable to realise assets and discharge liabilities in the normal course of business. The Directors remain confident that the Group and company will be in a position to secure such funding as may be required and will have sufficient cash resources available to meet their liabilities for at least 12 months from the date of approval of these financial statements. On that basis, the directors consider it appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustment that would result from the going concern basis of preparation being inappropriate.

2.  Segmental reporting

The Group has one reportable operating and geographic segment, which is the exploration for oil and gas reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the operating segment.

3.  Loss per ordinary share

The loss for the year was wholly from continuing operations. 

	2019	2018
	£'000	£'000
Loss for the year attributable to equity holders	(179)	(293)
Weighted average number of ordinary shares in issue - basic and diluted	665,071,764	613,569,327
Loss per share arising from continuing operations attributable to the equity holders of the Company - basic and diluted (in pence)	(0.03)	(0.05)

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one class of potential ordinary shares being share options. As a loss was recorded for both 2019 and 2018, potentially issuable shares would have been anti-dilutive. The number of potentially issuable shares at 31 December 2019 is 146,685,452 (2018: 146,685,452).

4.  Intangible assets

Group	Exploration / appraisal assets £'000
Cost
At 1 January 2018	14,672
Additions	639
At 31 December 2018	15,311
At 1 January 2019	15,311
Additions	232
At 31 December 2019	15,543

Oil and gas project expenditures, all of which relate to Barryroe, including geological, geophysical and seismic costs, are accumulated as intangible assets prior to the determination of commercial reserves. The directors have assessed the current ongoing activities and future planned activities and are satisfied that the carrying value is appropriate. The directors recognise that the future realisation of the Group's exploration appraisal assets are dependent on further successful exploration activities.

During 2019, the Barryroe Partners (Providence and Lansdowne) agreed a series of amendments to the Updated FOA, which provided for extensions to the date by APEC of the initial loan advance US$ 9 million.

A final deadline was set at 30th September 2019, but the funds did not arrive from APEC. Following this non-performance by APEC of their obligations under the FOA, action was taken by the Barryroe Partners to commence the regulatory process required to transfer APEC's 50% equity in Standard Operating Licence 1/11, which contained the Barryroe field, back to Providence and Lansdowne, with their equity interest reverting back to 80% and 20% respectively. The necessary paperwork is advancing through the Department of Communications, Climate Action and Environment.

Subsequently the Barryroe Partners also commenced the remarketing of a Joint Venture interest in Operating Licence 1/11 leading to an announcement on 6th April that a Term Sheet had been signed with SpotOn Energy Limited for a potential Barryroe Farmout, thus demonstrating the potential value of the Barryroe project even in a low oil price environment.

5.  Share capital - Group and Company

	2019	2018
Authorised
665,349,846 ordinary shares at £0.01 pence each	665,349,846	661,849,846

Issued, called up and fully paid:
	Number of shares	Share Capital £'000	Share premium £'000	Total £'000
At 1 January 2018	510,164,394	11,571	25,126	36,697
Issued in year	151,685,452	147	1,810	1,957
Share issue costs	-	-	(103)	(103)
At 31 December 2018	661,849,846	11,718	26,833	38,551
Issued in year	3,500,000	4	31	35
Share issue costs	-	-	-	-
At 31 December 2019	665,349,846	11,722	26,864	38,586

6.   Accounts

Copies of the annual accounts for the year ended 31 December 2019 will be sent to shareholders shortly and will be available from the Group's office at Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18 Ireland and the Group's website www.lansdowneoilandgas.com.

 

END

 

 

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