28 March 2024
88 ENERGY
LIMITED
LODGEMENT OF ANNUAL
REPORT
88 Energy Limited (ASX:88E; AIM:88E)
("88 Energy" or
"Company") advises that a
copy of the Company's Annual Report for the year ended 31 December
2023 (the "Annual Report") has been lodged on the ASX along with
the Company's 2023 year-end Corporate Governance Statement and
Appendix 4G.
The Annual Report, which was sent to
shareholders today, is available on the Company's website at
www.88energy.com
along with copies of each of these other
documents.
Set out below is the Chairman's
Statement as included in the Annual Report.
Also, set out below is a summary of
the Company's audited financial information for the year ended 31
December 2023 as extracted from the Annual Report,
being:
·
Consolidated Statement of Comprehensive
Income;
·
Consolidated Statement of Financial
Position;
·
Consolidated Statement of Changes in Equity;
and
·
Consolidated Statement of Cash Flows.
Media and Investor Relations:
88
Energy Ltd
Ashley Gilbert, Managing
Director
Tel: +61 8 9485 0990
Email:investor-relations@88energy.com
Fivemark Partners, Investor and
Media
Relations
Michael
Vaughan
Tel: +61 422 602 720
EurozHartleys Ltd
Dale
Bryan
Tel: +61 8 9268 2829
Cavendish Capital Markets
Limited
Tel: +44 (0) 207 220 0500
Derrick
Lee
Tel: +44 (0) 131 220 6939
Pearl
Kellie
Tel: +44 (0) 131 220 9775
CHAIRMAN'S STATEMENT
Dear Shareholders,
It is my pleasure to present 88
Energy's Annual Report, outlining our exploration and appraisal
activities, operations, and financial position for the financial
year 2023.
It has been another eventful year in
the oil and gas market, with volatile prices and supply constraints
arising from persisting geopolitical tensions, macroeconomic
uncertainties, and the increasing role of renewable energy in the
global energy mix. However, as greater focus is placed on the clean
energy transition, governments and major utilities are beginning to
realise more than ever that maintaining a reliable, secure supply
of traditional energy is crucial to meeting future energy
demands.
To successfully leverage these
challenges and opportunities requires an openness to change and a
high degree of flexibility, which I believe are part of 88 Energy's
core strengths. Over the past two years, we have evolved our
strategy to enhance shareholder value through identifying new and
exciting opportunities across the oil and gas lifecycle. Our
evolved strategy is evidenced through our ongoing exploration and
appraisal agenda and portfolio balancing activities that we
achieved during the year. This included divesting our interests in
the non-core Yukon acreage and commencing activities to identify
farm-in partners to augment future exploration and appraisal of our
high-impact Alaskan assets. Also, expanding our footprint at
Project Longhorn by gaining access to cost-effective work-over
opportunities to increase production and cashflow, and new-country
entry into Namibia which represents one of the last frontier oil
and gas jurisdictions capable of delivering multi-billion-barrel
discoveries, as evidenced by the recent offshore light oil
discoveries.
The Hickory-1 exploration well at
Project Phoenix was successfully completed in April 2023 with very
positive results from the wireline logging suite and sidewall
coring program. Hickory-1 was subsequently cased and suspended as
planned, to carefully design the flow test and stimulation program
in conjunction with industry experts, utilising available offset
information and Hickory-1 data to provide the best possible outcome
during the flow test operations that are now underway. Hickory-1
pre-drill expectations were met or exceeded on reservoir quality
and thickness, with oil shows and net log pay calculated across all
primary and secondary reservoirs and identified a new reservoir,
the Upper Slope Fan System (Upper
SFS), which had not been previously tested by 88 Energy or
other nearby-operators. The Upper SFS had the best oil shows across
all reservoirs intersected in the Hickory-1 well and the mapping of
the Upper SFS demonstrated a reservoir zone more laterally
extensive than previously considered.
We released an Independently
certified Contingent Resource estimate for Project Phoenix of 250
million barrels of oil equivalent from the Basin Floor Fan
(BFF) which is the deepest
reservoir encountered in Hickory-1. The Contingent Resource was
achieved by demonstrating reservoir continuity through seismic and
well data to nearby third-party wells with successful flow tests in
the BFF. The Contingent Resource confirmation at the BFF enabled
Hickory-1 to be classified as a discovery, but more importantly,
bodes well for the shallower and less thermally mature (more oil
prone) Slope Fan System (SFS) and Shelf Margin Delta
(SMD) reservoirs, which are
the focus for the Hickory-1 flow test.
Our ongoing assessment of Icewine
West identified a series of SMD prospects, the majority of which
have yet to be drilled. Following recent exploration success with
the SMD reservoir at Hickory-1, we intend to investigate these
prospects to add to an already extensive Icewine West prospective
resource portfolio.
Further North, at our Leonis
Project, work progressed at pace with the reprocessing and
interpretation of 3D seismic as well as a review of regional well
data providing additional support for significant resource
potential in the Upper Schrader Bluff (USB). We remain on track to delineate
an independent, Certified Resource Estimate in 1H24, before
commencing a formal farm-out program.
In mid-year, we released an
independent Prospective Resource update for Project Peregrine. The
certification resulted in two new prospects (N12 and N13) being
identified in the prolific Nanushuk Formation. The assessment also
indicated that up to three independent prospects could be assessed
from a single ice pad via a sidetrack from the Harrier-1 well pad,
resulting in significantly lower exploration costs. While we remain
committed to Project Peregrine, due to the proposed new regulations
presented in September, governing the management of subsurface
resources in the National Petroleum Reserve-A (NPR-A), we worked with the Bureau of
Land Management Alaska (BLM) in the fourth quarter and received
approval to suspend Project Peregrine leases for 12 months to 30
November 2024. The suspension provides relief from A$0.5 million of
lease rentals and allows us to continue with refining internal
geological and geophysical models and interpretation at minimum
cost.
Through its investment in the
Bighorn Energy LLC Joint Venture, the Company has acquired an
expanded footprint in our producing Permian Basin assets at Project
Longhorn. These acquisitions provide multiple development
opportunities and additional production to enhance our current
output of ~360 BOE/day. Project Longhorn has performed solidly
since it was added to the portfolio in 2022 and supplements our
core exploration and appraisal activities.
Finally, we executed a three-stage
farm-in agreement for up to a 45% non-operated working interest in
an onshore Petroleum Exploration Licence (PEL 93) covering a vast 18,500 km2
acreage position in the Owambo Basin of Namibia. This farm-in
provides us with a fantastic opportunity to earn a significant
working interest in a very large scale, highly prospective,
under-explored acreage position. The forward work-program is
scheduled to commence in Q2 2024, starting with a low impact 2D
seismic program focusing on confirming the structural closures of
the 10 independent leads previously identified and will be used to
obtain a Maiden Prospective Resource Estimate and define potential
drilling locations.
I wish to thank our small but
dedicated team for their efforts in delivering key milestones over
the past year, delineating future avenues of growth, and
identifying value drivers in such a dynamic market
environment.
The path to value recognition is not
always linear, and I wish to express my gratitude to you, our
shareholders, for your continuing dedication through the 88 Energy
journey. Our Company is very well placed to unlock the huge
potential value residing in our balanced exploration, appraisal,
and production portfolio.
On behalf of the 88 Energy team, I
wish you all a healthy and prosperous year ahead.
Yours faithfully,
Philip Byrne
Non-Executive Chairman
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31
DECEMBER 2023
|
Note
|
2023
|
2022
|
|
|
$
|
$
|
|
|
|
|
Other income
|
3(a)
|
500,927
|
21,760
|
Share of profit/(loss) from equity
accounted investment
|
11
|
1,665,442
|
3,317,877
|
|
|
|
|
Administrative expenses
|
3(b)
|
(2,690,171)
|
(2,778,962)
|
Occupancy expenses
|
|
(34,992)
|
(51,142)
|
Employee benefit expenses
|
3(c)
|
(2,911,375)
|
(2,335,914)
|
Share-based payment
expense
|
18
|
(879,455)
|
(658,111)
|
Depreciation and amortisation
expense
|
|
(64,228)
|
(60,307)
|
Finance cost
|
|
(8,544)
|
(8,583)
|
Other expenses
|
|
(478,961)
|
(12,869)
|
Foreign exchange (loss) /
gain
|
|
(49,514)
|
493,647
|
Exploration & Evaluation
Impairment/Expense
|
3(d)
|
(9,488,362)
|
(68,649,314)
|
Loss before income tax
|
|
(14,439,233)
|
(70,721,918)
|
Income tax expense
|
4
|
-
|
-
|
Loss after income tax for the year
|
|
(14,439,233)
|
(70,721,918)
|
|
|
|
|
Other comprehensive income / (loss) for the
year
Items that may be reclassified to profit or
loss
|
|
|
|
Exchange differences on translation
of foreign operations
|
|
(1,627,093)
|
6,378,972
|
Other comprehensive income / (loss) for the year, net of
tax
|
|
(1,627,093)
|
(64,342,946)
|
|
|
|
|
Total comprehensive income / (loss) for the year attributable
to members of 88 Energy Limited
|
|
(16,066,326)
|
(64,342,946)
|
|
|
|
|
Loss per share for the year attributable to the members of 88
Energy Limited:
|
|
|
|
Basic and diluted loss per
share
|
5
|
(0.0005)
|
(0.0042)
|
The notes to the financial
Consolidated Statement of Profit or Loss and Other Comprehensive
Income should be read in conjunction with the
statements.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 31 DECEMBER 2023
|
Note
|
2023
|
2022
|
|
|
$
|
$
|
ASSETS
|
|
|
|
Current Assets
|
|
|
|
Cash and cash equivalents
|
6
(a)
|
18,182,727
|
14,123,731
|
Trade and other
receivables
|
7
|
3,973,934
|
1,549,816
|
Total Current Assets
|
|
22,156,661
|
15,673,547
|
|
|
|
|
Non-Current Assets
|
|
|
|
Plant and equipment
|
8
|
22,348
|
20,337
|
Exploration and evaluation
expenditure
|
9
|
110,588,395
|
96,422,918
|
Other Assets
|
10
|
506,817
|
940,424
|
Equity accounted
investments
|
11
|
23,251,219
|
19,968,658
|
Total Non-Current Assets
|
|
134,368,779
|
117,352,337
|
|
|
|
|
TOTAL ASSETS
|
|
156,525,440
|
133,025,884
|
|
|
|
|
LIABILITIES
|
|
|
|
Current Liabilities
|
|
|
|
Trade and other payables
|
12
|
556,544
|
1,105,132
|
Provisions
|
13
|
283,497
|
244,736
|
Total Current Liabilities
|
|
840,041
|
1,349,868
|
|
|
|
|
TOTAL LIABILITIES
|
|
840,041
|
1,349,868
|
|
|
|
|
NET
ASSETS
|
|
155,685,399
|
131,676,016
|
|
|
|
|
EQUITY
|
|
|
|
Contributed equity
|
14
|
379,917,222
|
340,972,669
|
Reserves
|
15
|
29,972,652
|
30,468,589
|
Accumulated losses
|
|
(254,204,475)
|
(239,765,242)
|
TOTAL EQUITY
|
|
155,685,399
|
131,676,016
|
The Consolidated Statement of
Financial Position should be read in conjunction with the notes to
the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
|
Issued
Capital
|
Reserves
|
Accumulated
Losses
|
Total
|
|
$
|
$
|
$
|
$
|
At 1
January 2023
|
340,972,669
|
30,468,589
|
(239,765,242)
|
131,676,016
|
Loss for the year
|
-
|
-
|
(14,439,233)
|
(14,439,233)
|
Other comprehensive income
|
-
|
(1,627,093)
|
-
|
(1,627,093)
|
Total comprehensive income/(loss) for the year after
tax
|
-
|
(1,627,093)
|
(14,439,233)
|
(16,066,326)
|
|
|
|
|
|
Transactions with owners in their capacity as
owners:
|
|
|
|
|
Issue of share capital
|
41,429,821
|
-
|
-
|
41,429,821
|
Issue of Options
|
-
|
251,701
|
-
|
251,701
|
Settlement of vested PR's
|
-
|
-
|
-
|
-
|
Share-based payments
|
-
|
879,455
|
-
|
879,455
|
Share issue costs
|
(2,485,268)
|
-
|
-
|
(2,485,268)
|
Balance at 31 December 2023
|
379,917,222
|
29,972,652
|
(254,204,475)
|
155,685,399
|
|
|
|
|
|
At 1
January 2022
|
285,809,214
|
23,074,244
|
(169,043,324)
|
139,840,134
|
Loss for the year
|
-
|
-
|
(70,721,918)
|
(70,721,918)
|
Other comprehensive income
|
-
|
6,378,972
|
-
|
6,378,972
|
Total comprehensive income/(loss) for the year after
tax
|
-
|
6,378,972
|
(70,721,918)
|
(64,342,946)
|
|
|
|
|
|
Transactions with owners in their capacity as
owners:
|
|
|
|
|
Issue of share capital
|
58,524,106
|
-
|
-
|
58,524,106
|
Issue of Options
|
-
|
360,260
|
-
|
360,260
|
Settlement of vested PR's
|
-
|
(2,998)
|
-
|
(2,998)
|
Share-based payments
|
-
|
658,111
|
-
|
658,111
|
Share issue costs
|
(3,360,651)
|
-
|
-
|
(3,360,651)
|
Balance at 31 December 2022
|
340,972,669
|
30,468,589
|
(239,765,242)
|
131,676,016
|
The Consolidated Statement of
Changes in Equity should be read in conjunction with the notes to
the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
|
Note
|
2023
|
2022
|
|
|
$
|
$
|
Cash
flows from operating activities
|
|
|
|
Payment to suppliers and
employees
|
|
(5,442,176)
|
(4,907,742)
|
Interest and other income
received
|
|
60,646
|
20,126
|
Net
cash flows used in operating activities
|
6
(b)
|
(5,381,530)
|
(4,887,616)
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Payments for equity accounted
investments
|
|
(873,975)
|
(10,693,565)
|
Payments for exploration and
evaluation activities
|
|
(29,903,780)
|
(52,644,427)
|
Contribution from Joint Operation
Partners in relation to Exploration
|
|
4,515,460
|
1,078,866
|
Proceeds (payment) for
Bonds
|
|
584,840
|
137,930
|
Distribution from Equity Accounted
Investments
|
|
2,010,345
|
4,281,910
|
Net
cash flows generated from/used in investing
activities
|
|
(23,667,110)
|
(57,839,286)
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Proceeds from issue of
shares
|
14
|
35,414,713
|
47,052,778
|
Share issue costs
|
|
(2,322,029)
|
(3,149,329)
|
Net
cash flows from financing activities
|
|
33,092,684
|
43,903,449
|
|
|
|
|
Net increase/(decrease) in cash and
cash equivalents
|
|
4,044,045
|
(18,823,453)
|
|
|
|
|
Cash
and cash equivalents at the beginning of the year
|
|
14,123,731
|
32,317,887
|
Effect of exchange rate fluctuations
on cash held
|
|
14,951
|
629,297
|
Cash
and cash equivalents at end of year
|
6(a)
|
18,182,727
|
14,123,731
|
The Consolidated Statement of Cash
Flows should be read in conjunction with the notes to the financial
statements.