TIDMEDR
RNS Number : 2803J
Egdon Resources PLC
26 April 2022
26 April 2022
EGDON RESOURCES PLC
("Egdon" or "the Group" or "the Company")
Interim Results for the Six Months Ended 31 January 2022
Egdon Resources plc (AIM: EDR), a UK focused energy company,
today announces its unaudited results for the six months ended 31
January 2022 ("the period").
Overview and Highlights
Operational and Corporate
-- Production during the period increased by 156% to 43,420
barrels of oil equivalent ("boe") equating to 205 boe per day
("boepd") (H1 2021: 16,928 boe and 92 boepd)
-- Wressle production has significantly exceeded the original
500 barrels of oil per day ("bopd") expectation and is currently
producing at permit constrained rates of 760-800 bopd following
upgrades to the production facilities
-- Egdon has assumed the operatorship, increased its equity to
40% and agreed an extension to 20 March 2024 in PEDL343 which
contains the Cloughton gas discovery
-- Planning permission was refused for the drilling of a
side-track well, testing and long-term production at the
Biscathorpe project
Financial Performance
-- Oil and gas revenues increased by 500% during the period to
GBP2.551 million (H1 2021: GBP0.424 million) as a result of
significantly increased production and strengthening commodity
prices
-- Profit before impairments/write backs of GBP0.715 million (H1
2021: loss of GBP0.763 million)
-- Overall profit for the period of GBP1.222 million including
GBP0.507 million write-back (H1 2021: loss of GBP1.039 million
including GBP0.276 million of impairments)
-- Cash and cash equivalents of GBP2.084 million (H1 2021:
GBP2.422 million and 31 July 2021: GBP1.96 million).
-- Net current assets as at 31 January 2022 of GBP1.165 million,
which includes UJO debt of GBP1.07 million and GBP0.417 million
deferred consideration for Wressle (31 January 2021: net current
liability of GBP0.126 million, which includes liability for
GBP0.962 million convertible loan and GBP0.417 million deferred
consideration for Wressle)
Subsequent Events
-- On 10 March 2022 a revised incentive package was put in place
for all employees through the issue of new share options and the
cancellation of all historical share options
-- On 14 March 2022, planning permission was refused to extend
the existing consents to drill the North Kelsey-1 exploration well
and will be appealed during H2 2022
-- On 5 April 2022 the Government announced that it had
commissioned the British Geological Survey to advise on the latest
scientific evidence around shale gas extraction
-- An appeal against the refusal of planning for the Biscathorpe
project was submitted on 12 April 2022
-- During April 2022, Shell advised Egdon and the North Sea
Transition Authority ("NSTA") of its intention to withdraw from
licences P1929 and P2304, containing the Resolution and Endeavour
gas discoveries. Egdon is considering its options, including its
ongoing commitment to the licences and will discuss these options
with the NSTA.
Outlook
-- Post-period end production and revenues have continued to be
strong with February and March revenues of GBP0.480 million and
GBP0.953 million respectively
-- The Company is funded for all near-term committed activity
including the loan repayment of GBP1.07 million due in May 2022
Our key operational focus for the coming period will be:
-- Continuing to optimise oil and gas production from the
Ashover Grit reservoir at Wressle, building on the strong
performance to date
-- Progressing gas monetisation at Wressle
-- Finalising plans for development of the material Contingent
Resources in the Penistone Flags at Wressle
-- Progressing drilling plans to target incremental oil
production / near field exploration opportunities at the Keddington
oil field and the field redevelopment at Waddock Cross
-- Securing planning consent via appeal for the Biscathorpe and North Kelsey projects
-- Further developing the Company's energy transition
opportunities including repurposing of the Dukes Wood-1 well for
geothermal heat
Online Presentation and audiocast
A webcast of the interim results presentation will be available
from 07.00 through the following link:
https://webcasting.buchanan.uk.com/broadcast/62458a79893940516d342a2a
Commenting on the results, Philip Stephens, Chairman of Egdon
said;
" The period has been has been an exceptional one for the
Company. Revenues have increased fivefold and this has resulted in
a return to profit after the challenges of recent years.
Significantly increased commodity prices and increased production
have made this possible. The Wressle field continues to exceed our
expectations and the Ceres gas field is providing a late life
renaissance.
Production continues at a high level and the resultant positive
cash flow supported by continuing high commodity prices enables us
to be confident that we will be able fully to fund our current
plans."
For further information please contact:
Egdon Resources plc
Mark Abbott, Martin Durham 01256 702 292
Buchanan
Ben Romney, Jon Krinks 020 7466 5000
Nominated Adviser & Joint Broker - WH Ireland Limited
Chris Hardie, Megan Liddell 0207 220 1666
Joint Broker - VSA Capital Limited
Andrew Monk (Corporate Broking) 020 3005 5000
Andrew Raca (Corporate Finance)
About Egdon
Egdon Resources plc (LSE: EDR) is an established UK-based energy
company focused on onshore exploration and production in the
UK.
Egdon holds interests in 37 licences in the UK and has an active
programme of exploration, appraisal and development within its
portfolio of oil and gas assets. Egdon is an approved operator in
the UK. Egdon was formed in 1997 and listed on AIM in December
2004.
Qualified Person Review
In accordance with the AIM Rules - Note for Mining and Oil and
Gas Companies, this release has been reviewed by Mark Abbott,
Managing Director of Egdon, who is a geoscientist with over 30
years' experience and is a member of the Petroleum Exploration
Society of Great Britain and a Fellow of the Geological Society. Mr
Abbott has consented to the inclusion of the technical information
in this release in the form and context in which it appears.
Evaluation of hydrocarbon volumes has been assessed in
accordance with the 2018 Petroleum Resources Management System
(PRMS) prepared by the Oil and Gas Reserves Committee of the
Society of Petroleum Engineers (SPE) and reviewed and jointly
sponsored by the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), the Society of
Petroleum Evaluation Engineers (SPEE), the Society of Exploration
Geophysicists (SEG), the Society of Petrophysicists and Well Log
Analysts (SPWLA) and the European Association of Geoscientists
& Engineers (EAGE).
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
Chairman's Statement
I am pleased to report on the results for the six months ended
31 January 2022 and provide an update on our business.
Financial and Statutory Information
The period has seen a significant strengthening of the financial
position of the Company driven by a 500% increase in oil and gas
revenues during the period to GBP2.551 million (H1 2021: GBP0.424
million) as a result of significantly increased production and
strengthening commodity prices. The average realised price per
barrel of oil equivalent was 135% higher at $79.32/boe (H1 2021:
$33.81/boe).
Profit before impairments or write-backs was GBP0.715 million
(H1 2021: loss of GBP0.763 million).
The overall profit for the period was GBP1.222 million including
GBP0.507 million of write-backs in relation to Ceres as a result of
an improved revenue profile (H1 2021: loss of GBP1.039 million
including GBP0.276 million of impairments).
Cash and cash equivalents as at 31 January 2022 were GBP2.084
million (H1 2021: GBP2.422 million and at 31 July 2021: GBP1.96
million).
Net current assets as at 31 January 2022 stood at GBP1.165
million, which included debt of GBP1.07 million and GBP0.417
million deferred consideration for Wressle (31 January 2021: net
current liability of GBP0.126 million, which includes liability for
GBP0.962 million convertible loan and GBP0.417 million deferred
consideration for Wressle). The deferred consideration for Wressle
was paid post period end in March 2022.
The Group had net assets at 31 January 2022 of GBP28.641 million
(H1 2021: GBP25.658 million).
Post-period end production and revenues have continued to be
strong with February and March revenues of GBP0.480 million and
GBP0.953 million respectively. The Company is funded for all
near-term committed activity including the loan repayment of
GBP1.07 million due in May 2022.
Strategy
The Company's strategy takes account of the opportunities and
challenges presented by the wider economic and political
environment and the UK's move to Net Zero carbon emissions by
2050.
1) Maintain geographical focus on the UK
2) Focus on growth in production and revenue through
conventional production, appraisal and exploration projects
3) A near term focus on developing low carbon energy transition
projects utilising Egdon's existing assets, knowledge of the UK's
onshore geology and core technical skills and operating
experience
4) Maintain our significant portfolio of unconventional
resources assets whilst working to address the moratorium
ESG
Egdon wishes to build value through developing sustainable
long-term relationships with partners and the community and is
committed to the highest standards of health, safety and
environmental protection; these aspects command equal prominence
with other business considerations. The Board recognise the need to
minimise emissions from our operations and are committed to using a
"best available techniques" approach to achieve this and to monitor
and report performance. We expect to be able report progress during
the coming period in quantifying and verifying our current
emissions and developing firm plans to minimise and reduce these
thorough a defined plan of action.
Political and Regulatory
The UK is committed by law to reaching Net Zero carbon emissions
by 2050. The public narrative around this during the lead up to and
following COP26 was a demonisation of oil and gas. However, it is a
fact that in the period to 2050, the UK cannot rely on renewables
alone for all its energy needs and that there will be a continuing
need for oil and gas. On most projections, the UK will have a
significant import dependency for oil and particularly gas in the
period to 2050 and beyond. The national and local benefits of
indigenous oil and gas supplies are clear and even more compelling
in the context of the current energy crisis. The recently announced
Government energy review has belatedly recognised the importance of
UK oil and gas production and has begun to reconsider the potential
role for UK shale-gas. Indigenous hydrocarbons have a positive
impact on energy security, balance of payments, tax, business
rates, employment and importantly also have material pre-combustion
emissions savings. Without indigenous oil and gas, the UK will
simply 'offshore' its emissions, employment, and fiscal benefits
and be at the mercy of international energy markets.
Oil and Gas
Egdon holds interests in 37 licences in the UK (H1 2021: 41
licences) with exposure to the full cycle of opportunities from
exploration through to development and production. Egdon's website
( www.egdon-resources.com ) provides further details of the
Company's assets and operations.
Highlighted below are key changes to our licence portfolio
during the period and post-period end.
Licence Changes
PEDL343 Licence extended to 20 March 2024, Egdon assumed
operatorship and increased interest to 40%
PEDL209 Egdon increased interest to 100% due to withdrawal
of other JV parties (note not yet completed)
PEDL202 Interest in licence relinquished during August 2021
PEDL's 339, 258 Licences relinquished between 1 February 2021 and
and 259 31 July 2021
Production
Production during the period was 205 boepd (H1 2021: 92 boepd)
being primarily from Wressle and Ceres as well as contributions
from Keddington and Fiskerton Airfield. This production was
achieved despite Wressle only recommencing flow on 19 August and
the Ceres field being shut-in for annual maintenance for 20 days
during September.
Wressle (Egdon 30%) quickly exceeded our pre-production
expectations of 500 bopd on resumption of production following the
successful proppant-squeeze and coiled-tubing operation on the 19
August 2021. Instantaneous rates of over 1,000 bopd have been
achieved. Early restrictions to production have been successfully
addressed through upgrades and modifications to the site
facilities, including installation of a secondary separator and
progressive upgrades to the gas incineration system which have
culminated in the installation of a larger capacity enclosed
incineration unit. Production is currently limited by the 10 tonnes
per day gas incineration limit imposed by the Environmental Permit
to between 760-800 bopd (228-240 bopd net). Once the gas
monetisation development is complete, this production limitation
will be removed and the production rate is expected to be increased
significantly. Pressure test analysis has indicated potential flow
rates for Wressle-1 of between approximately 1,200 and 1,500
bopd.
Since production commenced at Wressle-1 in January 2021, the
cumulative production has exceeded 150,000 barrels of oil with no
formation water produced to date.
A revised Field Development Plan was submitted to the NSTA
during April 2022.
The likely preferred gas monetisation approach will be to export
the gas via a short pipeline (approximately 600m) into the local
gas distribution network. This will require regulatory consents
(Planning and EA) and it is hoped to be completed in time for gas
sales during the coming winter. This export route will also be
available in the longer term for the development of the Penistone
Flags reservoir where detailed work is underway to produce the
gross Mid-case Contingent Resources of 1.53 million barrels of oil
and 2 billion cubic feet of gas.
Environmental monitoring throughout the operations has shown no
measurable impact on surface or groundwater quality, no related
seismicity and that noise levels have been within the permitted
levels.
In the coming period we will:
a) Complete the installation of the remaining permanent production facilities
b) Progress planning and permitting and implement the gas
monetisation plan, reduce gas flaring and remove the limitations on
oil production
c) Advance the development plan and consenting process to enable
production from the Penistone Flags reservoir
The Ceres gas field (Egdon 10%) is undergoing a late-life
renaissance for the Company contributing material revenues and cash
flow. During the period, Ceres net production averaged 54 boepd
with gas prices averaging 184 p/therm or $123.5/boe (H1 2021:
24p/therm or $29.2/boe). A reassessment of the life of field
economics has led to the reversal of a previous impairment of
GBP0.507 million.
Keddington (Egdon 45%) continued to contribute tangible revenues
during this time of high oil prices. A subsurface review of the
field has highlighted a viable drilling location in the east of the
field targeting up to 180,000 barrels of incremental production.
With planning consent already in place, this presents an
opportunity to increase production via a development side-track
from one of the existing wells. In addition, a near-field
exploration opportunity exists at Keddington South (Mean
Prospective Resources of 635,000 barrels of oil) and the Louth
Prospect (Mean Prospective Resources of 600,000 barrels of
oil).
Fiskerton Airfield (Egdon 80%) continued production during the
period. Our focus remains on maximising production from the
existing wells and managing costs. Longer term, there is potential
for the site to be used to manage any produced water from other
Egdon sites through the existing water injection well and for
potential geothermal repurposing.
Other key near-term projects identified to increase production
levels are summarised below.
Waddock Cross (Egdon 55%) is currently shut-in. Given the large
in-place oil volume (gross Mean oil in place of c. 57 million
barrels of oil) this asset has been high graded by the Company.
Egdon's assessment has shown that redevelopment of the field is
technically and economically viable and despite the JV partners
seeing the asset as non-core, Egdon will progress planning and
permitting work with a view to securing regulatory consents by end
2022 ahead of a drilling programme in 2023.
The Kirkleatham gas field (Egdon 68%) remains shut-in. Potential
exists for a side-track to access a volume of gas in the attic of
the structure with additional upside in the underlying
Carboniferous sequences. We are currently in advanced discussions
regarding a potential farm-out and hope to be able to update
shareholders in the near future.
Planning consent was granted on appeal to reinstate production
from the Avington oil field (Egdon 28%) and the operator is
currently finalising plans to reinstate one or more wells on the
field.
Exploration/Appraisal
Egdon has assumed the operatorship of PEDL343, increasing its
interest to 40% and agreeing an extension of the initial term of
the licence with the OGA (now North Sea Transition Authority
"NSTA") to 20 March 2024 along with an associated retention area
work programme. The licence contains the Cloughton tight gas
discovery, which flowed gas from a number of different reservoirs
when flow tested in 1984. Egdon and its joint venture partners plan
to undertake an assessment of both the conventional and
unconventional resource potential of the licence area.
On 1 November 2021 planning consent was refused for the drilling
of a side-track well, testing and long-term oil production at
Biscathorpe (Egdon 35.8%). The application had been recommended for
approval by Lincolnshire County Council's ("LCC") planning
officers. Post period-end, on 12 April 2022, Egdon submitted a
comprehensive statement of case in support of its appeal against
the decision. We will update shareholders as the appeal process
progresses. The proposed side-track would target gross Mean
Prospective Resources of 6.50 million barrels of oil as estimated
by Egdon.
The application to extend the existing planning permission to
drill the North Kelsey-1 exploration well was refused by LCC's
planning committee on 14 March 2022. The decision was disappointing
given the compelling case presented and the positive recommendation
of LCC's Planning Officer. Given this, we will bring forward an
appeal against this decision during H2 2022. The North Kelsey
Prospect (PEDL241: Egdon 50%) is considered an analogue to the
Wressle field and has gross Mean Prospective Resources of 6.47
million barrels of oil in multiple reservoirs.
During April 2022, Shell advised Egdon and the NSTA of its
decision to withdraw from licences P1929 and P2304, containing the
Resolution and Endeavour gas discoveries. Egdon is considering its
options, including its ongoing commitment to the licences and will
discuss these options with the NSTA ,. Wewill update shareholders
our preferred option and the NSTA position is known.
Shale-Gas
The Group's shale-gas acreage position in Northern England is
164,280 net acres (664km(2) net). This remains a significant and
potentially highly valuable position with Egdon estimating Mean
volumes of undiscovered gas in place of 47.6 trillion cubic feet of
gas (independently assessed by ERCE in 2016). Our core area is the
Gainsborough Trough of Nottinghamshire, Lincolnshire and Yorkshire
where the Group holds interests in 71,361 net acres (2021: 71,361
net acres). The geology of each basin and site is different. The
Gainsborough Trough, is characterised by its simple structure and
limited faulting. The results from the 2019 Springs Road-1 well
(Egdon 14.5%) compare favourably with some of the best US
commercial shale operations and highlight a potentially world class
resource in the prospective Gainsborough Shale. Activity is
currently on pause due to the moratorium on hydraulic fracturing
for shale-gas introduced in November 2019.
On 5 April 2022 the Government announced that it had
commissioned the British Geological Survey to advise on the latest
scientific evidence around shale gas extraction and that it would
report in around three months. This review is a logical and welcome
move by the Government and we await the findings of the report with
interest . Gas heats over 80% of our homes and generates around 40%
of our electricity and will continue to be an important part of our
energy mix out to 2050 and beyond. UK shale gas could be a
strategically important national resource with the potential to
reduce the UK's growing reliance on gas imports, whilst reducing
gas prices, improving our balance of payments, increasing tax
revenues and creating skilled jobs whilst importantly also reducing
the carbon footprint of the gas we all use. On this last point, the
forecast pre-combustion carbon footprint of UK shale gas is around
a quarter of that of liquified natural gas, which is currently
being landed in the UK in large volumes.
The industry stands ready to move quickly to establish and
ramp-up indigenous gas production should the moratorium be lifted
and planning timelines be addressed.
Geothermal, Energy Storage, Hydrogen and Renewables
Egdon has focused on energy transition opportunities which
utilise the Company's core skills, knowledge, and operating
experience.
Our initial focus has been on the geothermal potential within
our existing wells and fields. A programme to plug and abandon the
existing Dukes Wood-1 oil well and recomplete it for geothermal
heat production has been developed and submitted to the NSTA. It is
anticipated that subject to regulatory approval, this work, which
is a proof of concept, will commence during 2022. Egdon is working
with Creative Geothermal Solutions Limited (CGS) on this and other
geothermal opportunities.
Egdon is also currently reviewing a number of opportunities in
energy storage, hydrogen and renewable generation and hopes to make
progress in relation to these in the coming period.
Outlook
Production guidance for the full financial year 2021-22 is 240
boepd with production during H2 2022 guided at 275-285 boepd.
Operationally, in the short-term we will continue to focus on
the key highlighted projects within our conventional portfolio,
whilst maintaining our substantial acreage position in the nascent
shale-gas play and working with our Industry partners and peers to
demonstrate to the regulators that we can operate safely to deliver
lower emission UK shale-gas to support the energy transition and
provide energy security.
Our key activities and focus for the coming year will be:
-- Continuing to optimise oil and gas production from the
Ashover Grit reservoir at Wressle, building on the strong
performance to date
-- Progressing gas monetisation at Wressle
-- Finalising plans for development of the material Contingent
Resources in the Penistone Flags at Wressle
-- Progressing drilling plans to target incremental oil
production / near field exploration opportunities at the Keddington
oil field and field redevelopment at Waddock Cross
-- Securing planning consent via appeal for the Biscathorpe and North Kelsey projects
-- Further developing the Company's energy transition
opportunities including repurposing of the Dukes Wood-1 well for
geothermal heat
As always, I would like to thank our shareholders for their
continued support and the unwavering effort of the Egdon team on
behalf of shareholders. With both Wressle and Ceres contributing
significant cash flow and the recognition by Government of the
important role of indigenous oil and gas as part of the energy
transition and for security of supply we can look forward with
renewed confidence to the future.
Philip Stephens
Chairman
25 April 2022
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 January 2022
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31-Jan-22 31-Jan-21 31-July-21
GBP'000 GBP'000 GBP'000
Revenue 2,551 424 1,093
Cost of sales - exploration costs written-off
and pre-licence costs (19) (63) (206)
Cost of sales - impairments of intangible
fixed assets - (276) (276)
Cost of sales - impairment reversals
of property, plant and equipment 507 - -
Cost of sales - depreciation, excluding
impairments (526) (61) (85)
Cost of sales - amortisation of right-of-use
asset (40) (56) (99)
Cost of sales - direct production costs (613) (473) (919)
Cost of sales - other, including shut-in
fields (94) (69) (191)
Total cost of sales (785) (998) (1,776)
Gross profit/(loss) 1,766 (574) (683)
Administrative expenses (477) (469) (862)
Other operating income 52 100 157
1,341 (943) (1,388)
Finance income - net investment in sub-lease 23 25 50
Finance costs - convertible loans - (4) (84)
Finance costs (55) (20) (75)
Finance costs - unwinding of decommissioning
discount (33) (30) (60)
Finance costs - lease liability charge (54) (67) (125)
Profit/(loss) before taxation 1,222 (1,039) (1,682)
Taxation - - -
Profit/(loss) for the period 1,222 (1039) (1,682)
Other comprehensive income for the period - - -
Total comprehensive income for the period
attributable to equity holders of the
parent 1,222 (1,039) (1,682)
Profit/(loss) per share - note 3
Basic profit/(loss) per share 0.24p (0.32)p (0.51)p
Diluted profit/(loss) loss per share 0.24p (0.32)p (0.51)p
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 January 2022
Unaudited Unaudited Audited
31-Jan-22 31-Jan-21 31-Jul-21
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 2 21,240 21,127 21,241
Property, plant and equipment 8,932 8,330 8,719
Right-of-use asset 567 671 618
Net investment in sub-lease 382 426 385
Total non-current assets 31,121 30,554 30,963
Current assets
Inventory - - -
Trade and other receivables 1,388 719 1,085
Cash and cash equivalents 4 2,084 2,422 1,960
Total current assets 3,472 3,141 3,045
Current liabilities
Trade and other payables (1,174) (2,170) (1,772)
Loans and borrowings 5 (1,007) (962) (1,008)
Lease liability within
one year (126) (135) (128)
Total current liabilities (2,307) (3,267) (2,908)
Net current assets/(liabilities) 1,165 (126) 137
Total assets less current
liabilities 32,286 30,428 31,100
Non-current liabilities
Lease liability after one
year (987) (1,112) (1,013)
Loans and borrowings 5 - (1,020) -
Provisions (2,658) (2,638) (2,669)
Total non-current liabilities (3,645) (4,770) (3,682)
Net assets 28,641 25,658 27,418
Equity
Share capital 17,118 15,234 17,118
Share premium 27,513 26,967 27,513
Share-based payment reserve 123 123 123
Convertible debt option
reserve - 27 -
Retained deficit (16,113) (16,693) (17,336)
28,641 25,658 27,418
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 January 2022
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31-Jan-22 31-Jan-21 31-Jul-21
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) before tax 1,222 (1,039) (1,682)
Adjustments for:
Depreciation and impairments of non-current
assets 576 404 594
Impairment reversal of non-current assets (507) - -
Increase in decommissioning provision
written off to cost of sales 32 6 29
Onerous contract provision written off
to cost of sales - 119 -
Foreign exchange loss 1 - 5
Decrease in inventory - 5 5
(Increase)/decrease in trade and other
receivables (356) 1,106 697
Decrease in trade and other payables (546) (698) (1,057)
Finance costs 142 121 344
Finance income (23) (25) (50)
Discount of decommissioning provision 101 - -
Net cash generated from/(used in) operating
activities 642 (1) (1,115)
Investing activities
Payments for exploration and evaluation
assets (175) (164) (385)
Proceeds from sale of exploration and
evaluation assets - 212 210
Purchase of property, plant and equipment (231) (400) (719)
Redemption of redeemable preference shares - - 50
Net cash flow used in capital expenditure
and financial investment (406) (352) (844)
Financing activities
Issue of shares - - 1,440
Costs associated with issue of shares - - (78)
Proceeds on issue of convertible loan
notes-equity element - 28 -
Costs associated with issue of convertible
loan notes-equity element - (1) -
Proceeds on issue of convertible loan
notes-debt element - 1,023 1,051
Costs associated with issue of convertible
loan notes-debt element - (65) (67)
Loan drawdown - 1,000 1,000
Interest paid on loan (56) - (67)
Redemption of redeemable preference shares - - (50)
Principal paid on lease liabilities (24) (15) (77)
Interest paid on lease liabilities (31) (42) (75)
Net cash flow (used in)/generated from
financing (111) 1,928 (3,077)
Net increase in cash and cash equivalents 125 1,575 1,118
Cash and cash equivalents at the start
of the period 1,960 847 847
Effects of exchange rate changes on the
balance of cash held in foreign currencies (1) - (5)
Cash and cash equivalents at the end
of the period 2,084 2,422 1,960
In the period to 31 January 2022, significant non-cash
transactions included the reversal of the impairment to Ceres of
GBP507,000. In the year to 31 July 2021 significant non-cash
transactions included the recognition of the decommissioning
provision of GBP80,000 and the convertible loan which was
subsequently converted to equity
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 January 2022
Share
based Convertible
Share payment debt option Retained
Share capital premium reserve reserve earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
31 July 2020 15,234 26,967 123 - (15,654) 26,670
Total comprehensive
income for the
period - - - - (1,039) (1,039)
Issue of convertible
loans - - - 27 - 27
Balance as at
31 January 2021 15,234 26,967 123 27 (16,693) 25,658
Total comprehensive
income for the
period - - - - (642) (642)
Issue of shares 1,152 288 - - - 1,440
Share issue
costs - (78) - - - (78)
Transfer on
conversion of
loan notes to
equity - debt
element 732 374 - - - 1,106
Issue costs
of convertible
loan notes - (65) - - - (65)
Transfer on
conversion of
loan notes to
equity - equity
element - 27 - (27) - -
Balance as at
31 July 2021 17,118 27,513 123 - (17,335) 27,419
Total comprehensive
income for the
period 1,222 1,222
Balance as at
31 January 2022 17,118 27,513 123 - (16,113) 28,641
1. General information
Egdon Resources plc ('the Company' and ultimate parent of the
Group) is a public limited company listed on the AIM market of the
London Stock Exchange plc (AIM) and incorporated in England. The
registered office is The Wheat House, 98 High Street, Odiham,
Hampshire, RG29 1LP.
This interim report was authorised for issue by the Directors on
25 April 2022.
Basis of preparation
The financial information set out in this interim report has
been prepared in accordance with UK adopted international
accounting standards in conformity with the requirements of the
Companies Act 2006.
Adoption of new and revised standards
New standards, interpretations and amendments
New standards impacting the Group that have been adopted in the
interim financial statements for the six months ended 31 January
2022, but have not had a significant effect on the Group are as
follows:
-- Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9, IAS 39 and IFRS 7);
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
-- References to Conceptual Framework (Amendments to IFRS 3).
New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided
not to adopt early.
The following amendments are effective for the reporting period
beginning 1 August 2023
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
-- Definition of Accounting Estimates (Amendments to IAS 8); and
-- Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
Non-statutory accounts
The financial information set out in this interim report does
not constitute the Group's statutory financial statements for that
period within the meaning of Section 434 of the Companies Act 2006.
The statutory financial statements for the year ended 31 July 2021
have been delivered to the Registrar of Companies. The auditors
reported on those financial statements; their report was
unqualified and did not contain a statement under either Section
498 (2) or Section 498 (3) of the Companies Act 2006. However, in
their report on the statutory financial statements for the year
ended 31 July 2021, the auditor drew attention, by way of emphasis
of matter paragraph, to material uncertainties related to the
carrying value of the unconventional assets and the impact of the
moratorium on hydraulic fracturing for shale-gas in England.
The financial information for the six months ended 31 January
2022 and 31 January 2021 is unaudited.
Accounting policies
The condensed financial statements have been prepared under the
historical cost convention, except for the inclusion of certain
financial instruments at fair value.
The same accounting policies, presentation and methods of
computation are followed in these condensed financial statements as
were applied in preparation of the Group's financial statements for
the year ended 31 July 2021.
Going concern
The Directors have prepared the financial statements on the
going concern basis, which assumes that the Group and the Company
will continue in operational existence without significant
curtailment of its activities for the foreseeable future.
Forward cash flows necessarily make assumptions as to the timing
and value of cash flows from production at the Group's producing
sites. Whilst there is currently no evidence that the timing or
value of these revenues is unrealistic, the Directors acknowledge
that volatility in both oil and gas prices, well performance
uncertainties and realising of amounts invoiced to joint venture
partners, give some level of uncertainty in respect of the timing
of future cash flows.
The Group also retains options to access additional sources of
funding via debt and/or equity to fund certain future activities.
Whilst, after having made enquiries of our advisors, there is a
high expectation on the part of the Directors that such debt and/or
equity will be available in the market as and when required, a
level of uncertainty exists in relation to this.
The Group has flexibility in relation to the timing and quantum
of future expenditures and will continue to look to balance
financial exposure and risk by minimising its exposure to future
cash expenditure on existing projects during the coming period.
Impact of the COVID-19 pandemic
The coronavirus pandemic has been a significant national and
international public health emergency. The roll-out of vaccinations
and advent of effective treatments has reduced the impact of the
disease, and all Government restrictions have now been removed.
although the virus remains at high levels of infection within the
population. Throughout the Period, the primary concern and focus
for the Company was the health and safety of our employees,
contractors and other stakeholders. Egdon's office-based employees
have largely worked from home throughout the Period and we have
established procedures and plans to ensure continued safe
operations at our sites. We will continue to monitor the situation
and act within all Government guidelines, but do not anticipate any
adverse impacts to our production operations in the coming
period.
2. Impairments
An impairment credit of GBP506,903 has been recognised in
relation to the licence held in Ceres (2021: impairment charge of
GBP276,362 in relation to licences PL161 and PL162). The impairment
credit arises due to the improved gas prices being achieved and the
impact this has on future forecasts in 2025.
3. Profit/(loss) per share
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31-Jul-21
31-Jan-22 31-Jan-21 p
p p
Basic 0.24 (0.32) (0.51)
Diluted 0.24 (0.32) (0.51)
The basic profit per share has been calculated on the profit on
ordinary activities after taxation of GBP1.222m (January 2021: loss
of GBP1.039m; July 2021: loss of GBP1.682m) divided by the weighted
average number of ordinary shares in issue of 516,777,031 (January
2021: 328,315,625; July 2021: 331,615,357). The diluted profit per
share has been calculated on the profit on ordinary activities
after taxation of GBP1.222m (January 2021: loss of GBP1.039m; July
2021: GBP1.682m) divided by the diluted weighted average number of
ordinary shares in issue of 516,777,031 (January 2021: 328,315,625;
July 2021: 331,615,357).
In all of the reported periods, all share options in issue were
excluded as their inclusion would have been anti-dilutive. At the
period end, the calculated average share price for the period is
lower than the exercise price of the warrants and share options in
issue and therefore these potential ordinary shares have not been
included for the purposes of calculating the diluted profit per
share.
The post year end cancellation and reissue of certain share
options has also been considered and is considered to have no
impact on the period end diluted profit per share calculation as
the option exercise price remains above the average market price of
the Company's shares for the period.
4. Cash and cash equivalents
Unaudited Unaudited Audited
31-Jan-22 31-Jan-21 31-Jul-21
GBP'000 GBP'000 GBP'000
Cash at bank at floating
interest rates 494 1,439 785
Non-interest bearing
cash at bank 1,590 983 1,174
2,084 2,422 1,960
Cash at bank at floating interest rates consisted of money
market deposits which earn interest at rates set in advance for
periods up to three months.
5. Loans and borrowings
Unaudited Unaudited Audited
31-Jan-22 31-Jan-21 31-Jul-21
GBP'000 GBP'000 GBP'000
Current
Other loans (1,007) (962) (1,008)
Non-current
Other loans - (1,020) -
(1,007) (1,982) (1,008)
The loan facility held with Union Jack Oil plc is GBP1,007k. The
loan drawn down on 25 November 2020 has an 18 month term with the
principal sum payable at the end of the term or in part or in full
at any earlier time at the borrower's discretion. Interest accrues
on a daily basis on the outstanding loan amount at an interest rate
of 11% per annum and is payable quarterly commencing on April 2021.
The loan is secured against an unencumbered 25% interest in the
Wressle Project (PEDL180, and PEDL182), including the Wressle
development project and associated infrastructure.
On 22 January 2021 Egdon announced it had issued GBP1.051
million of nominal 8% unsecured convertible loan notes with a
concert party of Petrichor Holdings BV. The principal amount of the
loan was repayable 12 months from the date of issue at its total
face value of GBP1.051 million or converted at any time into shares
at the holder's option at the conversion price of 1.55p per share.
On 20 July 2021, the convertible loan notes were converted to
73,233,406 New Ordinary 1p shares at an issue price of 1.55p.
6. Dividend
T he Directors do not recommend payment of a dividend.
7. Publication of the Interim Report
This interim report is available on the Company's website
www.egdon-resources.com .
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END
IR FLFLASAIEFIF
(END) Dow Jones Newswires
April 26, 2022 10:01 ET (14:01 GMT)
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