TIDMEME
RNS Number : 9302J
Empyrean Energy PLC
26 August 2021
This announcement contains inside information
Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil &
Gas
26 August 2021
Empyrean Energy PLC ('Empyrean' or 'the Company')
Final Results
Empyrean Energy is pleased to announce its final results for the
year ended 31 March 2021. The full Report and Accounts will be made
available on the Company's website in the coming days.
Highlights
Block 29/11, Pearl River Mouth Basin, China (EME 100% reverting
to 49% upon commercial discovery)
Reporting period
-- Seismic inversion project has validated the interpreted
presence of an excellent quality carbonate reservoir at the Jade
and Topaz prospects, with potential porosities in the highly
favourable range of 20-30%; and
-- 12-month extension for first phase of exploration at Block 29/11 secured until June 2022.
Post-Reporting period
-- Internal Geological Chance of Success Assessment has been
upgraded for Jade and Topaz prospects. Jade is now 41% and Topaz
35%;
-- Well design for Jade prospect finalised by AGR following
comprehensive review of drilling data from nearby offset wells;
-- Initial Drill Program targeted to commence at Jade Prospect for late 2021; and
-- Empyrean is in advanced negotiations with regards to
finalising an integrated drilling contract for the Jade
Prospect.
Duyung PSC Project, Indonesia (EME 8.5%)
Reporting period
-- Following the drilling program an independent resource audit
by Gaffney, Cline and Associates ("GCA") confirmed a significant
resource upgrade of the Mako gas field including:
o Mako gas discovery has been confirmed as one of the largest
gas fields ever discovered in West Natuna Basin;
o GCA audited 2C contingent resource estimate of 495 BcF, a 79%
increase from previous GCA estimate; and
o GCA audited 3C contingent resource estimate of 817 BcF, a 108%
increase from previous GCA estimate.
-- Updated Plan of Development completed which included uplifted
Gas in Place ("GIIP") estimates as follows:
GROSS (100%) GIIP (Bscf) Updated
Reservoir Low Best High
---------- ------------ -----------
Upper Sand 358 525 687
---------- ------------ -----------
Lower Sand 26 41 78
---------- ------------ -----------
Total 384 566 766
---------- ------------ -----------
-- Improved market conditions throughout 2021 have allowed for
the operator to re-engage and advance Gas Sales Agreement ("GSA")
negotiations with multiple interested parties.
Sacramento Basin, California USA (EME 25-30%)
-- Empyrean elected not to participate in Borba drilling program
which was conducted during the reporting period.
Corporate
Reporting period
-- Subscription to raise US$0.509 million (GBP0.411 million) completed in April 2020;
-- Open Offer raised US$0.511 million (GBP0.415 million) in May 2020; and
-- Placements to raise US$1.074 million (GBP0.845 million) completed in September 2020.
Post-Reporting period
-- Placements to raise US$6.92 million (GBP5.02 million) for
China drill preparation activities completed in July 2021.
Empyrean CEO Tom Kelly said , "Empyrean's focus during the year
was largely to complete the critical de-risking work required ahead
of the planned drill campaign in China, which is now on track to
commence during 2021 with the drilling of the Jade prospect. In
addition, following the exploration and appraisal success achieved
in Indonesia in late 2019 the operator Conrad and the joint venture
partners are working through all of the practical steps to put this
exciting project into production, including conclusion of a gas
sales agreement. In this regard, most of 2020 saw extremely
challenging market conditions due to COVID-19 and the global
collapse in energy prices. These were made even more challenging by
lockdowns and travel restrictions. 2021 has seen a general
improvement in market conditions and some lifting of restrictions,
enabling commencement of re-engagement and renewed enthusiasm to
complete negotiations.
The Company completed some key activities at Block 29/11 in
China during the year, in preparation for the drilling of an
initial exploration well at Jade under the PSC terms. In May 2020,
the Company completed seismic inversion work which confirmed the
potential for excellent carbonate reservoir quality at both Jade
and Topaz. This followed independent validation of the resource
base at Block 29/11 and comprehensive 3D seismic data analysis
which allowed for a positive oil migration study and confirmed the
presence of well-defined low reflectivity zones ('gas clouds'). The
significant level of de-risking work and rigorous 3D seismic
analysis has added further confidence to the technical merits of
the project and Gaffney, Cline and Associates estimate close to a 1
in 3 chance of geological success at Jade and Topaz, which is very
exciting.
In June 2020, Empyrean secured a 12-month extension from the
China National Offshore Oil Corporation ("CNOOC") from June 2021 to
June 2022 for the first phase of exploration on Block 29/11 and,
following finalisation of the well design at Jade, and supported by
the recent successful capital raise, preparations to safely drill
the large scale Jade prospect are underway.
At the Duyung PSC in Indonesia, following the completion of the
highly-successful appraisal of the Mako gas discovery (comprising
the Tambak-1 and Tambak-2 wells) by the operator Conrad Petroleum,
Gaffney, Cline and Associates were commissioned to update its view
of the Mako field. The results of this audit were released in April
2020 and not only confirmed a significant resource upgrade but also
confirmed the Mako field as one of the largest gas fields ever
discovered in the West Natuna Basin and one of the largest
undeveloped gas resources in the immediate region. The conclusion
of GSA negotiations will mark a further important step toward the
final investment decision ("FID") to develop and commercialise the
field and Conrad and the joint venture partners are working
diligently through all of the practical steps to put this exciting
project into production.
In California, during the reporting period Sacgasco conducted a
drilling program at the Borba prospect, which Empyrean elected not
to participate in. Empyrean will conduct its own technical and
commercial review in conjunction with its JV partners on future
targets proposed to be drilled at the project before electing
whether to participate in the future but its primary focus over the
next six months will be the drill program in China.
In September 2020 Empyrean completed placements at 5p per share
to raise GBP840,500, the majority to Long State Investment Limited
and clients of First Equity Limited to raise working capital.
Recently in July 2021 the Company raised GBP5,021,910 at 6p per
share which will primarily fund the securing of a suitable drilling
rig and order long lead items as Empyrean prepares to drill the
Jade prospect, and for working capital. Warrants attached to the
placement shares, if exercised, will be used for drilling
preparation activities and drilling of the Jade prospect and
working capital.
As always, the Company continually assesses other financing and
strategic alternatives to provide the Company with additional
working capital as and when required, including through the sale or
partial sale of existing assets, through joint ventures of existing
assets or through further equity or debt funding.
Overall, the activities completed during the year have
positioned the Company to realise the significant and potentially
game changing upside potential of its Chinese assets, and we look
forward to the drilling program that is set to commence at Jade at
the end of the calendar year. We look forward to providing further
updates on our portfolio of projects as they come to hand."
Chairman's Statement
Further advancements were made by Empyrean on its portfolio of
exploration projects during the year, primarily in China and
Indonesia.
In China, de-risking activity has been completed and drilling
preparations have commenced for drilling of the Jade Prospect in
2021. The Company's recent placement completes the first step
towards funding this activity. We also expect that there will be
further progress in Indonesia with GSA negotiations underway as the
joint venture moves towards the final investment decision
there.
The world and the United Kingdom are still actively managing the
COVID-19 pandemic. Given Empyrean has Executive Directors and
Management based in Australia and there are various travel
restrictions still being imposed globally, those Directors and
Management will be unable to attend the Annual General Meeting in
person. Therefore shareholders are strongly encouraged not to
attend this year's Annual General Meeting in person but we will
again be inviting shareholders to submit questions in advance and
will endeavour to answer all questions at that time. I'd like to
extend the Board's thanks to our shareholders for their support,
particularly in these volatile markets.
Finally, I would like to thank the Board, management and staff
for their efforts during the year, and we look forward to some
exciting developments going forward, in particular the planned
drilling campaign in China.
Patrick Cross
Non-Executive Chairman
26 August 2021
Operational Review
The 2021 financial year has seen significant progress for
Empyrean, particularly in China and Indonesia, and the Company is
now on the verge of drilling its potentially transformational
prospect in Block 29/11, offshore China, at the end of this
calendar year. The Company's stated corporate objective is to build
a significant asset portfolio across the Asian region. With near
term drilling in China, the successful appraisal drilling campaign
at the Mako gas field in Indonesia in 2019 (and the resultant
significant independent resource upgrade) this objective is
starting to take shape.
Methodical, targeted technical evaluation and de-risking
activities continued during the year at the Company's 100% working
interest in Block 29/11, offshore China, with two matured
drill-ready, high impact prospects now awaiting drilling operations
in late 2021. The first of these that has been identified for
drilling is the Jade prospect.
In Duyung PSC in offshore Indonesia, the highly successful
appraisal program (comprising the Tambak-1 and Tambak-2 appraisal
wells) was completed in late 2019. Subsequently, an independent
resource audit by GCA confirmed a significant resource upgrade and
also confirmed Mako field as one of the largest undeveloped gas
fields in West Natuna Basin, Indonesia.
Empyrean also has a 25-30% working interest in a package of gas
projects in the Sacramento Basin, onshore California. On the basis
of our own internal technical assessment, the Company elected not
to participate in the Borba well during early 2021. However, it
remains an active joint venture partner and looks forward to
assessing the technical and commercial merits of other prospects in
the near future.
Empyrean has retained an interest in the Riverbend Project (10%
WI) located in the Tyler and Jasper counties, onshore Texas and a
58.084% WI in the Eagle Oil Pool Development Project, located in
the prolific San Joaquin Basin onshore, Southern California. No
technical work has been undertaken on these projects during the
year.
China Block 29/11 Project (100% WI)
Background
Block 29/11 is located in the prolific Pearl River Mouth Basin,
offshore China approximately 200km Southeast of Hong Kong. The
acquisition of this block heralded a new phase for Empyrean when it
became an operator with 100% of the exploration rights of the
permit during the exploration phase of the project. In the event of
a commercial discovery, CNOOC will have a back in right to 51% of
the permit.
Following the completion and interpretation of the 3D seismic
data acquired on Block 29/11, the prospective resources (un-risked)
of all three prospects on the Block (Jade, Topaz and Pearl) were
independently validated, by GCA, who completed an audit of the
Company's oil in place estimates in November 2018. Total mean oil
in place estimates on the three prospects are 884 MMbbl on an
un-risked basis.
Oil in place (MMbbl) audited by GCA
Prospect P90 P50 P10 Mean GCoS
Jade 93 187 395 225 32%
---- ---- ---- ----- -----
Topaz 211 434 891 506 30%
---- ---- ---- ----- -----
Pearl 38 121 302 153 15%
---- ---- ---- ----- -----
In addition, GCA estimated close to a 1 in 3 chance of
geological success at Jade and Topaz, which is particularly
pleasing. Exploration risk has been further mitigated by the
completion of an oil migration study during June 2018 which
established oil migration pathways into all three prospects.
Furthermore, in May 2019 the Company further solidified the
technical merits of the project by confirming the presence of
well-defined gas clouds over the Jade and Topaz prospects.
Empyrean's independent analysis of 3D seismic data over four
large CNOOC oil discoveries located close to Block 29/11 confirmed
the presence of similar gas clouds in the overburden. At the same
time, three dry wells drilled by CNOOC in proximity to the
discoveries, outside Block 29/11, have been analysed, and the 3D
seismic data over these wells confirms the lack of any gas clouds.
Similar technical work was carried out over two dry wells in Block
29/11. These wells were drilled prior to Empyrean's involvement and
without any 3D seismic data. Both wells confirm the lack of any gas
clouds in overburden.
As a result, the Company's internal assessment of the GCoS for
the Jade prospect now stands at 41%, and for the Topaz prospect it
stands at 35%.
It is Empyrean's interpretation that the presence of
well-defined gas clouds in the overburden on both the Jade and
Topaz structures mitigates the exploration risk on these prospects
significantly. The Pearl prospect does not have 100% coverage with
3D seismic to enable the same comprehensive analysis and assessment
at this point in time.
Reservoir Quality Assessment - Post Stack Seismic Inversion
Project
During the reporting period Empyrean completed crucial technical
work aimed at addressing the quality of reservoir at Jade and Topaz
prospects. Whilst geological studies completed earlier confirmed
the potential of an excellent quality reservoir at Jade and Topaz
prospects, the Company decided to undertake a Post Stack Seismic
Inversion Project to quantitatively assess the reservoir quality at
high-graded prospects.
The main aim of the seismic inversion project was comprehensive
reservoir characterisation, with particular focus on the Jade and
Topaz prospects, by combining existing well log data with 3D
seismic data to generate an acoustic impedance dataset. Analysis of
this nature has been used to successfully interpret the physical
rock properties of reservoirs globally, in particular lithology,
porosity and thickness of reservoir.
In order to achieve the most comprehensive and robust result
from the Seismic Inversion Project, the Company requested access
from CNOOC to the log data of a crucial well, LH-23-1-1d, located
approximately 12 km southwest of the Jade prospect in a permit
operated by CNOOC. CNOOC agreed to provide the data, resulting in
increased technical confidence in the results of the seismic
inversion project. The LH-23-1-1d well intersected both carbonate
and sandstone reservoirs with oil pay.
In order to combine well log data with the 3D seismic data, the
Company worked closely with the COSL team. During this process well
data from the LH-23-1-1d well proved crucial in establishing the
close relationship of impedance data extracted from the seismic
data to the lithology, porosity and thickness of reservoir in
existing wells.
Comprehensive and systematic analysis of the acoustic impedance
dataset resulted in separating the target reservoir (Zhujiang
carbonate facies) from the underlying Zhuhai sandstones facies. In
addition, the lateral distribution of the high-quality carbonate
reservoir has been mapped. This more detailed work validates the
earlier interpretation from seismic thickness analysis and supports
the interpreted presence of a thick carbonate reservoir with
porosities in a range of 20-30% at the Jade and Topaz
prospects.
12-Month Extension for First Phase Exploration Drilling.
Drilling set to commence in late 2021
Due to the COVID-19 situation and the resultant global control
policies, the Company proactively engaged with CNOOC and applied
for a 12-month extension to the first phase of the exploration
period for the PSC. The first phase of the contract is for 2.5
years with a commitment to drill one exploration well to a depth of
2,500m or to the Basement Formation. In June 2020 Empyrean
announced that CNOOC had granted the 12-month extension as
requested. As a result, the first phase of the exploration period
for the PSC has been extended to 12 June 2022. The Company has
subsequently commenced preparations to commence drilling at the
Jade Prospect in late 2021.
As announced to the market, the placement funds raised in July
2021 will enable the securing of a suitable drilling rig and the
ordering of long lead items for the planned drilling program at the
Jade Prospect which is targeted for late 2021, however the Company
requires additional short term funding for final drilling
preparation activities and the drilling (and testing) programs. The
Company is optimistic that the full funding commitments for the
Jade well will be met, having successfully raised equity funding in
July ahead of the drill rig being secured. It is the belief of the
Board that there are several near-term share price catalysts
leading up to drilling - being the drill rig being secured, the
site survey conducted and the confirmation of the spud date for the
Jade well, which will be conducive to it to securing the remaining
funding for the well, either through the exercise of existing
warrants, the entering of joint venture arrangements or further
direct equity funding, or a combination of these alternatives.
Under the PSC terms, Empyrean has the option of entering the
second phase of exploration after drilling the first exploration
well and subsequently relinquishing 25% of the current area. The
second phase has a commitment to drill one additional exploration
well to a depth of 2,500m or to the Basement Formation within a
further 2 years.
Jade prospect well design and well engineering project
In April 2021, Empyrean announced that the Company had commenced
comprehensive planning for the drilling of the Jade prospect in
order to ensure a safe and secure drilling campaign and had awarded
a contract to AGR's team in Australia to assist with well planning.
In May 2021 the Company announced that AGR had completed the well
design and engineering project, including a comprehensive review of
offset wells in the vicinity of the Jade prospect, which includes
four CNOOC wells.
Two well design options were identified, including a
three-string (casing) design and a four-string (casing) design in a
success case. AGR has recommended the four-string design as it
provides a more robust well design with reduced exposure to
potential unplanned events and associated costs.
Key benefits of the four-string design include:
-- the surface casing shoe can be set shallower to provide
sufficient kick tolerance reducing the risk of surface hole
problems, or requirement for a pump and dump mud and associated
costs;
-- reduced risk of hole problems while drilling the final hole
section that can lead to difficulties evaluating target formations
and / or results in a contingency casing string across the
reservoir in the success case. Planning for contingent testing
equipment for this scenario would be required, reducing the cost
benefits associated with string elimination; and
-- reduced risk of complications during abandonment operations
due to failure to achieve sufficient annular cement if the
production string is run/cemented.
Based on AGR analysis and recommendation, EME management has
decided to plan for a four-string design for the Jade prospect
well.
Cautionary Statement: The volumes presented in this announcement
are STOIIP estimates only. A recovery factor needs to be applied to
the undiscovered STOIIP estimates based on the application of a
future development project. The subsequent estimates, post the
application of a recovery factor, will have both an associated risk
of discovery and a risk of development. Further exploration,
appraisal and evaluation is required to determine the existence of
a significant quantity of potentially movable hydrocarbons.
Duyung PSC, Indonesia (8.5% WI)
Background
In April 2017, Empyrean acquired a 10% shareholding in WNEL from
Conrad Petroleum, which held a 100% Participating Interest in the
Duyung Production Sharing Contract (" Duyung PSC") in offshore
Indonesia and is the operator of the Duyung PSC.
In early 2019, both the operator, Conrad Petroleum, and Empyrean
divested part of their interest in the Duyung PSC to AIM-listed
Coro Energy Plc. Following the transaction, Empyrean's interest
reduced from 10% to 8.5% interest in May 2020, having received cash
and shares from Coro. As part of this completion process WNEL made
a direct transfer of its interest in the Duyung PSC to Empyrean and
the other owners, who now hold their interest in the Duyung PSC
directly.
The Duyung PSC covers an offshore permit of approximately
1,100km2 in the prolific West Natuna Basin. The main asset in the
permit is the Mako shallow gas field that was discovered in 2017,
and comprehensively appraised in 2019.
Duyung PSC Drilling Programme
Following receipt of the approved the Plan of Development
("POD") for the Mako Gas Field in March 2019, which secured tenure
until 2037 and was required ahead of the drilling programme at the
Duyung PSC, Conrad Empyrean and Coro finalised a comprehensive
drilling programme comprising two appraisal wells. One appraisal
well was designed to appraise the discovery in the SW part of the
field. In addition, this well was designed to test the potential of
the deeper Gabus reservoir in the Tambak prospect beneath the
central area of the Mako Gas Field. The other appraisal well was
designed to appraise the intra-Muda sandstone reservoir in the
northern area of the Mako field.
During October and November 2019, a highly successful appraisal
drilling campaign was conducted in the Duyung PSC. The appraisal
wells confirmed the field-wide presence of excellent quality gas in
the intra-Muda reservoir sands of the Mako Gas Field. However,
testing of the deeper Tambak prospect in the Lower Gabus interval
found these sandstones to have low gas saturations and attempts to
collect fluid samples and pressure data demonstrated low
permeabilities.
Mako Resource Audit Confirms Significant Upgrade
Following on from the highly successful appraisal drilling
campaign, Conrad engaged GCA to complete an independent resource
audit for the Mako Gas Field.
GCA's audit (" 2020 GCA Audit") confirmed a significant resource
upgrade for the Mako Gas Field compared to its previous resource
assessment released in January 2019 (" 2019 GCA Audit"). 2C
(contingent) recoverable resource estimates have been increased to
495 Bcf, an increase of approximately 79% compared with the 2019
GCA Audit and confirming the work completed by the operator and
partners. In the upside case, the 3C (contingent) resources have
increased by approximately 108% compared with the 2019 GCA Audit
and GCA's assessment is also significantly higher than the 3C
estimate made by the Operator and partners in April 2020.
With the latest upgrade, Mako has been confirmed to be one of
the largest undeveloped gas fields in the West Natuna Basin and is
currently by far the largest undeveloped resource in the immediate
area.
Results of the Updated Resource Audit
The revised estimates of gross (full field) recoverable dry gas
audited in the 2020 GCA Audit are:
Contingent 2019 GCA 2020 GCA Increase
Resource Audit Audit
Estimates
Bcf Bcf %
--------- --------- ---------
1C (Low
Case) 184 287 56
--------- --------- ---------
2C (Mid
Case) 276 495 79
--------- --------- ---------
3C (High
Case) 392 817 108
--------- --------- ---------
The full field resources above are classified in the 2020 GCA
Audit as contingent. Gas volumes are expected to be upgraded to
reserves when certain commercial milestones are achieved, including
execution of a Gas Sale Agreement ("GSA") and a final investment
decision ("FID").
As announced in December 2020, further work was completed to
update the Plan of Development in respect of the Mako Gas Field
(the " Mako POD"), specifically by incorporating extensive data
collected during the appraisal drilling program.
SKK Migas (the Indonesian regulator) has accepted the
significantly uplifted estimates of GIIP, which are broadly in line
with the independent resource audit by GCA, and that these volumes
will form part of the updated Mako POD.
SKK Migas Accepted Mako Gas in Place for updated Mako POD
GROSS (100%) GIIP (BSCF) Updated
Reservoir Low Best High
---------- ------------ -----------
Upper Sand 358 525 687
---------- ------------ -----------
Lower Sand 26 41 78
---------- ------------ -----------
Total 384 566 766
---------- ------------ -----------
3C (High Case) 392 817 108
---------- ------------ -----------
The Mako Gas Field is located close to the West Natuna pipeline
system and gas from the field can be marketed to buyers in both
Indonesia and in Singapore. A Heads-of-Agreement with a gas buyer
in Singapore is already in place. The operator has made significant
progress in securing a GSA, and the conclusion of GSA negotiations
will mark a further important step toward the FID to develop and
commercialise the field.
Multi Project Farm-in in Sacramento Basin, California (25%-30%
WI)
Background
In May 2017, Empyrean agreed to farm-in to a package of
opportunities including the Dempsey and Alvares prospects in the
Northern Sacramento Basin, onshore California. The rationale for
participating in this potentially significant gas opportunity was a
chance to discover large quantities of gas in a relatively 'gas
hungry' market. Another attractive component of the deal was the
ability to commercialise a potential gas discovery using existing
gas facilities that are owned by the operator.
Following on from the Dempsey drilling campaign in 2018, the
joint venture integrated the subsurface data with regional geology
and seismic data to evaluate additional more attractive targets in
thicker reservoir units for future drilling along the "Dempsey
trend", in which Empyrean will earn a 30% interest.
In the previous reporting period the drilling application for
the Borba Prospect was approved by the County and the final
approval from California Department of Geological and Geothermal
Resources was received. However, with the outbreak of COVID-19, the
travel restrictions and the uncertainty of being able to execute a
drilling campaign safely and without interruption, there was a
delay to the drilling at Borba until the United States situation
normalised.
In October 2020 Empyrean notified Sacgasco that it would not be
participating in the proposed drilling of the Borba prospect under
the timeframes and terms currently proposed by Sacgasco. The
Company however will work with its joint venture partners in
reviewing and assessing the technical and commercial merits of
other prospects at the Californian project before deciding whether
to participate in future wells.
Riverbend Project (10%)
Located in Jasper County, Texas, USA, the Cartwright No.1
re-entry well produces gas and condensate from the arenaceous
Wilcox Formation.
The Cartwright No.1 well is currently virtually suspended
producing only nominal amounts of gas condensate.
Little or no work has been completed on the project in the year
and no budget has been prepared for 2021/22 whilst the Company
focuses on other projects. The Company fully impaired the carrying
value of the asset at 31 March 2017 and any subsequent expenditure,
mainly for license fees, has been expensed through the profit and
loss statement.
Eagle Oil Pool Development Project (58.084% WI)
The Eagle Oil Pool Development Projects is located in the
prolific San Joaquin Basin onshore, southern California.
No appraisal operations were carried out during this period. It
is anticipated that, should there be a sustained improvement in the
oil price, a vertical well test of the primary objective, the
Eocene Gatchell Sand, followed by a horizontal appraisal well,
would be the most likely scenario.
Little or no work has been completed on the project in the year
and no budget has been prepared for 2021/22 whilst the Company
focuses on other projects. The Company fully impaired the carrying
value of the asset at 31 March 2017 and any subsequent expenditure,
mainly for license fees, has been expensed through the profit and
loss statement.
The information contained in this report was completed and
reviewed by the Company's Executive Director (Technical), Mr
Gajendra (Gaz) Bisht, who has over 30 years' experience as a
petroleum geoscientist.
Definitions
2C: Contingent resources are quantities of petroleum estimated,
as of a given date, to be potentially recoverable from known
accumulations by application of development projects, but which are
not currently considered to be commercially recoverable. The range
of uncertainty is expressed as 1C (low), 2C (best) and 3C
(high).
Bcf: Billions of cubic feet
MMbbl : Million Barrels of Oil
*Cautionary Statement: The estimated quantities of oil that may
potentially be recovered by the application of a future development
project relates to undiscovered accumulations. These estimates have
both an associated risk of discovery and a risk of development.
Further exploration, appraisal and evaluation is required to
determine the existence of a significant quantity of potentially
movable hydrocarbons.
Gajendra (Gaz) Bisht M.Sc. (Tech) in Applied Geology
Executive Director (Technical)
26 August 2021
Going Concern
The Company's principal activity during the year has been the
acquisition and development of its exploration projects. At the
year end the Company had a cash balance of US$0.15m (2020:
US$0.19m) and made a loss after income tax of US$0.95m (2020: loss
of US$0.28m).
The Directors have prepared cash flow forecasts for the Company
covering the period to 31 August 2022 and these demonstrate that
the Company will require further funding within the next 12 months.
Principally the Company has a commitment to drill an exploration
well on the Jade prospect in China, by 12 June 2022. In July 2021
US$6.92m was raised through an equity placement to help fund
initial long lead items and to secure a drill rig. In order to meet
the well commitment, the Company is required to raise further
funding and as at the date of this report the necessary funds are
not in place.
The Directors are optimistic that the full funding commitments
for the Jade well will be met, having successfully raised equity
funding in July ahead of the drill rig being secured. It is the
belief of the Board that there are several near-term share price
catalysts leading up to drilling - being the drill rig being
secured, the site survey conducted and the confirmation of the spud
date for the Jade well, which will be conducive to it to securing
the remaining funding for the well, either through the exercise of
existing warrants, the entering of joint venture arrangements or
further direct equity funding, or a combination of these
alternatives. The Directors note that if the well commitment is not
met then either a renegotiation of the commitment timing will be
required or the licence could be relinquished.
The Directors also note that the equity facility agreement with
Long State Investment Limited will also provide a funding facility
to support future working capital requirements alongside the drill
commitment funding.
The Directors have therefore concluded that it is appropriate to
prepare the Company's financial statements on a going concern
basis, however, in the absence of additional funding being in place
at the date of this report, these conditions indicate the existence
of a material uncertainty which may cast significant doubt over the
Company's ability to continue as a going concern and, therefore,
that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial statements do not include the adjustments that
would result if the Company was unable to continue as a going
concern.
Post Reporting Date Events
Significant events post reporting date were as follows:
In April 2021, Empyrean announced that the Company had commenced
comprehensive planning for the drilling of the Jade prospect and
had awarded a contract to AGR's team in Australia to assist with
well planning. In May 2021 the Company announced that AGR had
completed the well design and engineering project for the Jade
prospect.
In July 2021 the Company completed a Placing to raise US$6.92
million (GBP5.02 million) with funds raised under this Placing to
primarily be used to secure a suitable drilling rig, order long
lead items and for the Company's general working capital
requirements as it prepares to drill the Jade prospect in 2021.
No other matters or circumstances have arisen since the end of
the financial year which significantly affected or could
significantly affect the operations of the Company, the results of
those operations, or the state of affairs of the Company in future
financial years.
Strategic Report
The Company has chosen, in accordance with Section 414C of the
Companies Act 2006, to set out the likely future developments in
the business of the Company which would otherwise be required to be
contained in the report of the Directors within the Strategic
Report on pages 7 to 13.
Statement of Comprehensive Income
For the Year Ended 31 March 2021
2021 2020
Notes US$'000 US$'000
Revenue - -
------------- -------------
Administrative expenditure
Administrative expenses (338) (326)
Compliance fees (225) (214)
Directors' remuneration (400) (388)
Foreign exchange differences 20 (34)
Total administrative expenditure (943) (962)
Operating loss 4 (943) (962)
Finance (expense)/income (7) 43
Impairment of oil and gas properties 8 (3) (47)
Loss on sale of investment 9 - (29)
------------- -------------
Loss from continuing operations before
taxation (953) (995)
Tax benefit in current year 6 - 716
------------- -------------
Loss from continuing operations after
taxation (953) (279)
------------- -------------
Total comprehensive loss for the year (953) (279)
============= =============
Loss per share from continuing operations
(expressed in cents)
- Basic 7 (0.20)c (0.06)c
- Diluted (0.20)c (0.06)c
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Financial Position
As at 31 March 2021
Company Number: 05387837 *Restated
2021 2020
Notes US$'000 US$'000
Assets
Non-Current Assets
Oil and gas properties: exploration and
evaluation 8 14,643 9,850
Investments 9 - 4,404
--------- ----------
Total non-current assets 14,643 14,254
Current Assets
Trade and other receivables 10 36 35
Corporation tax receivable 6 358 358
Cash and cash equivalents 150 189
--------- ----------
Total current assets 544 582
Liabilities
Current Liabilities
Trade and other payables 11 667 1,434
Provisions 111 78
Total current liabilities 778 1,512
Net Current Liabilities (234) (930)
--------- ----------
Net Assets 14,409 13,324
========= ==========
Shareholders' Equity
Share capital 13 1,398 1,291
Share premium reserve 29,408 27,811
Warrant and share-based payment reserve 488 153
Retained losses (16,885) (15,931)
--------- ----------
Total Equity 14,409 13,324
========= ==========
*Refer to Note 3 for further information on changes to
comparatives.
The Financial Statements were approved by the Board of Directors
on 26 August 2021 and were signed on its behalf by:
Patrick Cross Thomas Kelly
Chairman Chief Executive Officer
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Cash Flows
For the Year Ended 31 March 2021
2021 2020
Notes US$'000 US$'000
Operating Activities
Payments for operating activities (831) (579)
Receipt of corporation tax - 358
-------- --------
Net cash outflow for operating activities 12 (831) (221)
Investing Activities
P ayments for exploration and evaluation (1,159) (557)
Payments for investments - (953)
Proceeds from disposal of investments - 276
Net cash outflow for investing activities (1,159) (1,234)
Financing Activities
Issue of ordinary share capital 2,094 1,375
Payment of equity issue costs (163) (29)
-------- --------
Net cash inflow from financing activities 1,931 1,346
Net decrease in cash and cash equivalents (59) (109)
Cash and cash equivalents at the start
of the year 189 332
Forex gain/(loss) on cash held 20 (34)
-------- --------
Cash And Cash Equivalents At The End Of
The Year 150 189
======== ========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Changes in Equity
For the Year Ended 31 March 2021
Share Share Premium Warrant Retained Total
Capital Reserve & Share- Loss Equity
Based
Payment
Reserve
Notes US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 April
2019 1,232 26,524 69 (16,958) 10,867
========= ============== ========== ========= ========
Loss after tax for
the year - - - (279) (279)
Total comprehensive
loss for the year - - - (279) (279)
--------- -------------- ---------- --------- --------
Contributions by
and distributions
to owners
Shares issued in
the period 13 59 1,316 - - 1,375
Equity issue costs - (29) - - (29)
Share-based payment
expense - - 84 - 84
Derivative settlement - - - 1,306 1,306
--------- -------------- ---------- --------- --------
Total contributions
by and distributions
to owners 59 1,287 84 1,306 2,736
--------- -------------- ---------- --------- --------
Balance at 1 April
2020 1,291 27,811 153 (15,931) 13,324
========= ============== ========== ========= ========
Loss after tax for
the year - - - (953) (953)
Total comprehensive
loss for the year - - - (953) (953)
--------- -------------- ---------- --------- --------
Contributions by
and distributions
to owners
Shares issued in
the period 13 107 1,760 227 - 2,094
Equity issue costs - (163) - - (163)
Share-based payment
expense - - 100 - 100
Finance expense
(share-based) - - 7 - 7
Total contributions
by and distributions
to owners 107 1,597 334 - 2,038
Balance at 31 March
2021 1,398 29,408 487 (16,884) 14,409
========= ============== ========== ========= ========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Notes to the Financial Statements
For the Year Ended 31 March 2021
Note 1. Statement of Significant Accounting Policies
Basis of preparation
The Company's financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the United Kingdom and Companies Act 2006.
The principal accounting policies are summarised below. The
financial report is presented in the functional currency, US
dollars and all values are shown in thousands of US dollars
(US$'000).
The preparation of financial statements in compliance with
adopted IFRS requires the use of certain critical accounting
estimates. It also requires Company management to exercise judgment
in applying the Company's accounting policies. The areas where
significant judgments and estimates have been made in preparing the
financial statements and their effect are disclosed below.
Basis of measurement
The financial statements have been prepared on a historical cost
basis, except for the following items (refer to individual
accounting policies for details):
- Investments
Nature of business
The Company is a public limited company incorporated and
domiciled in England and Wales. The address of the registered
office is 200 Strand, London, WC2R 1DJ. The Company is in the
business of financing the exploration, development and production
of energy resource projects in regions with energy hungry markets
close to existing infrastructure. The Company has typically focused
on non-operating working interest positions in projects that have
drill ready targets that substantially short cut the life-cycle of
hydrocarbon projects by entering the project after exploration
concept, initial exploration and drill target identification work
has largely been completed.
Going concern
The Company's principal activity during the year has been the
acquisition and development of its exploration projects. At the
year end the Company had a cash balance of US$0.15m (2020:
US$0.19m) and made a loss after income tax of US$0.95m (2020: loss
of US$0.28m).
The Directors have prepared cash flow forecasts for the Company
covering the period to 31 August 2022 and these demonstrate that
the Company will require further funding within the next 12 months.
Principally the Company has a commitment to drill an exploration
well on the Jade prospect in China, by 12 June 2022. In July 2021
US$6.92m was raised through an equity placement to help fund
initial long lead items and to secure a drill rig. In order to meet
the well commitment the Company is required to raise further
funding and as at the date of this report the necessary funds are
not in place.
The Directors are optimistic that the full funding commitments
for the Jade well will be met, having successfully raised equity
funding in July ahead of the drill rig being secured. It is the
belief of the Board that there are several near-term share price
catalysts leading up to drilling - being the drill rig being
secured, the site survey conducted and the confirmation of the spud
date for the Jade well, which will be conducive to it to securing
the remaining funding for the well, either through the exercise of
existing warrants, the entering of joint venture arrangements or
further direct equity funding, or a combination of these
alternatives. The directors note that if the well commitment is not
met then either a renegotiation of the commitment timing will be
required or the licence could be relinquished.
The Directors also note that the equity facility agreement with
Long State Investment Limited will also provide a funding facility
to support future working capital requirements alongside the drill
commitment funding.
The Directors have therefore concluded that it is appropriate to
prepare the Company's financial statements on a going concern
basis, however, in the absence of additional funding being in place
at the date of this report, these conditions indicate the existence
of a material uncertainty which may cast significant doubt over the
Company's ability to continue as a going concern and, therefore,
that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial statements do not include the adjustments that
would result if the Company was unable to continue as a going
concern.
Adoption of new and revised standards
(a) New and amended standards adopted by the Company:
There were no new standards effective for the first time for
periods beginning on or after 1 April 2020 that have had a
significant effect on the Company's financial statements.
(b) Standards, amendments and interpretations that are not yet
effective and have not been early adopted:
Any standards and interpretations that have been issued but are
not yet effective, and that are available for early application,
have not been applied by the Company in these financial statements.
International Financial Reporting Standards that have recently been
issued or amended but are not yet effective have not been adopted
for the annual reporting period ended 31 March 2021.
Tax
The major components of tax on profit or loss include current
and deferred tax. Current tax is based on the profit or loss
adjusted for items that are non-assessable or disallowed and is
calculated using tax rates that have been enacted or substantively
enacted by the reporting date. Tax is charged to the income
statement, except when the tax relates to items credited or charged
directly to equity, in which case the tax is also dealt with in
equity.
(a) Deferred tax
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the statement of
financial position differs to its tax base. Recognition of deferred
tax assets is restricted to those instances where it is probable
that taxable profit will be available, against which the difference
can be utilised. The amount of the asset or liability is determined
using tax rates that have been enacted or substantively enacted by
the reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered). The Company has
considered whether to recognise a deferred tax asset in relation to
carried-forward losses and has determined that this is not
appropriate in line with IAS 12 as the conditions for recognition
are not satisfied.
Foreign currency translation
Transactions denominated in foreign currencies are translated
into US dollars at contracted rates or, where no contract exists,
at average monthly rates. Monetary assets and liabilities
denominated in foreign currencies which are held at the year-end
are translated into US dollars at year-end exchange rates. Exchange
differences on monetary items are taken to the Statement of
Comprehensive Income. Items included in the financial statements
are measured using the currency of the primary economic environment
in which the Company operates (the functional currency).
Oil and gas assets: exploration and evaluation
The Company applies the full cost method of accounting for
Exploration and Evaluation ("E&E") costs, having regard to the
requirements of IFRS 6 'Exploration for and Evaluation of Mineral
Resources'. Under the full cost method of accounting, costs of
exploring for and evaluating oil and gas properties are accumulated
and capitalised by reference to appropriate cash generating units
("CGUs"). Such CGUs are based on geographic areas such as a
concession and are not larger than a segment. E&E costs are
initially capitalised within oil and gas properties: exploration
and evaluation. Such E&E costs may include costs of license
acquisition, third party technical services and studies, seismic
acquisition, exploration drilling and testing, but do not include
costs incurred prior to having obtained the legal rights to explore
an area, which are expensed directly to the income statement as
they are incurred, or costs incurred after the technical
feasibility and commercial viability of extracting a mineral
resource are demonstrable, which are reclassified as development
and production assets.
Property, Plant and Equipment ("PPE") acquired for use in
E&E activities are classified as property, plant and equipment.
However, to the extent that such PPE is consumed in developing an
intangible E&E asset, the amount reflecting that consumption is
recorded as part of the cost of the intangible E&E asset.
Intangible E&E assets related to exploration licenses are not
depreciated and are carried forward until the existence (or
otherwise) of commercial reserves has been determined. The
Company's definition of commercial reserves for such purpose is
proven and probable reserves on an entitlement basis.
If commercial reserves have been discovered, the related E&E
assets are assessed for impairment on a CGU basis as set out below
and any impairment loss is recognised in the income statement. The
carrying value, after any impairment loss, of the relevant E&E
assets is then reclassified as development and production assets
within property, plant and equipment and are amortised on a unit of
production basis over the life of the commercial reserves of the
pool to which they relate. Intangible E&E assets that relate to
E&E activities that are not yet determined to have resulted in
the discovery of commercial reserves remain capitalised as
intangible E&E assets at cost, subject to meeting impairment
tests as set out below. E&E assets are assessed for impairment
when facts and circumstances suggest that the carrying amount may
exceed its recoverable amount. Such indicators include the point at
which a determination is made as to whether or not commercial
reserves exist. Where the E&E assets concerned fall within the
scope of an established CGU, the E&E assets are tested for
impairment together with all development and production assets
associated with that CGU, as a single cash generating unit. The
aggregate carrying value is compared against the expected
recoverable amount of the pool. The recoverable amount is the
higher of value in use and the fair value less costs to sell. Value
in use is assessed generally by reference to the present value of
the future net cash flows expected to be derived from production of
commercial reserves. Where the E&E assets to be tested fall
outside the scope of any established CGU, there will generally be
no commercial reserves and the E&E assets concerned will
generally be written off in full. Any impairment loss is recognised
in the income statement.
Investments
Under IFRS 9, all investments in equities are required to be
measured at fair value. In prior financial years, the Company's
interest in the Duyung PSC was classified under IFRS 9 as a
financial asset at fair value through profit or loss, due to the
Company's 8.5% shareholding and lack of significant influence over
operations. Financial assets designated as fair value through the
profit or loss are measured at fair value through profit or loss at
the point of initial recognition and subsequently revalued at each
reporting date. The purchase agreement detailed in Note 8(b) formed
the basis for the fair value assessment at 31 March 2020, including
costs capitalised since the agreement was entered into. In May 2020
the final Indonesian regulatory approvals for the transfer of title
of the 15% direct interest in the Duyung PSC to Coro were received.
As part of this completion process WNEL made a direct transfer of
its interest in the Duyung PSC to Empyrean and the other owners,
who now hold their interest in the Duyung PSC directly. As a result
of this direct ownership, the Company's interest in the Duyung PSC
is no longer classified under IFRS 9 as a financial asset at fair
value through profit or loss and now falls under IFRS 6
(Exploration for and Evaluation of Mineral Resources).
Joint operations
Joint arrangements represent the contractual sharing of control
between parties in a business venture where unanimous decisions
about relevant activities are required. Joint venture operations
represent arrangements whereby joint operators maintain direct
interests in each asset and exposure to each liability of the
arrangement. The Company's interests in the assets, liabilities,
revenue and expenses of joint operations are included in the
respective line items of the financial statements.
Financial instruments
Financial assets and liabilities are recognised in the statement
of financial position when the Company becomes party to the
contractual provision of the instrument.
(a) Financial assets
The Company's financial assets consist of financial assets at
amortised cost (trade and other receivables, excluding prepayments,
and cash and cash equivalents) and financial assets classified as
fair value through profit or loss. Financial assets at amortised
cost are initially measured at fair value and subsequently at
amortised cost and attributable transaction costs are included in
the initial carrying value. Financial assets designated as fair
value through the profit or loss are measured at fair value through
the profit or loss at the point of initial recognition and
subsequently revalued at each reporting date. Attributable
transactions costs are recognised in profit or loss as incurred.
Movements in the fair value of derivative financial assets are
recognised in the profit or loss in the period in which they
occur.
(b) Financial liabilities
All financial liabilities are classified as fair value through
the profit and loss or financial liabilities at amortised cost. The
Company's financial liabilities at amortised cost include trade and
other payables and its financial liabilities at fair value through
the profit or loss include the derivative financial liabilities.
Financial liabilities at amortised cost, are initially stated at
their fair value and subsequently at amortised cost. Interest and
other borrowing costs are recognised on a time-proportion basis
using the effective interest method and expensed as part of
financing costs in the statement of comprehensive income.
Derivative financial liabilities are initially recognised at fair
value of the date a derivative contract is entered into and
subsequently re-measured at each reporting date. The method of
recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged. The Company has not designated any
derivatives as hedges as at 31 March 2019 or 31 March 2020.
(c) Impairment for financial instruments measured at amortised
cost
Impairment provisions for financial instruments are recognised
based on a forward looking expected credit loss model in accordance
with IFRS 9. The methodology used to determine the amount of the
provision is based on whether there has been a significant increase
in credit risk since initial recognition of the financial asset.
For those where the credit risk has not increased significantly
since initial recognition of the financial asset, twelve month
expected credit losses along with gross interest income are
recognised. For those for which credit risk has increased
significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to be
credit impaired, lifetime expected credit losses along with
interest income on a net basis are recognised.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Share-based payments
The Company issues equity-settled share-based payments to
certain employees. Equity-settled share-based payments are measured
at fair value at the date of grant. The fair value determined at
the grant date of the equity-settled share-based payments is
expensed over the vesting period, based on the Company's estimate
of shares that will eventually vest. The fair value of options is
ascertained using a Black-Scholes pricing model which incorporates
all market vesting conditions. Where equity instruments are granted
to persons other than employees, the income statement is charged
with the fair value of goods and services received.
Critical accounting estimates and judgements
The Company makes judgements and assumptions concerning the
future that impact the application of policies and reported
amounts. The resulting accounting estimates calculated using these
judgements and assumptions will, by definition, seldom equal the
related actual results but are based on historical experience and
expectations of future events. The judgements and key sources of
estimation uncertainty that have a significant effect on the
amounts recognised in the financial statements are discussed
below.
Critical estimates and judgements
The following are the critical estimates and judgements that
management has made in the process of applying the entity's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
(a) Carrying value of exploration and evaluation assets
(judgement)
The Company monitors internal and external indicators of
impairment relating to its exploration and evaluation assets.
Management has considered whether any indicators of impairment have
arisen over certain assets relating to the Company's exploration
licenses. Management consider the exploration results to date and
assess whether, with the information available, there is any
suggestion that a commercial operation is unlikely to proceed. In
addition, management have considered the likely success of renewing
the licences, the impact of any instances of non-compliance with
license terms and are continuing with the exploration and
evaluation of the sites. After considering all relevant factors,
management were of the opinion that no impairment was required in
relation to the costs capitalised to exploration and evaluation
assets except for the below:
In light of current market conditions, little or no work has
been completed on the Riverbend or Eagle Oil projects in the year
and no substantial project work is forecast for either project in
2021/22 whilst the Company focuses on other projects. Whilst the
Company maintains legal title it has continued to fully impair the
carrying value of the asset at 31 March 2021.
(b) Investments (judgement and estimate)
The Company's interest in the Duyung PSC was classified under
IFRS 9 at 31 March 2020 as a financial asset at Under IFRS 9, all
investments in equities are required to be measured at fair value.
In prior financial years, the Company's interest in the Duyung PSC
was classified under IFRS 9 as a financial asset at fair value
through profit or loss, due to the Company's 8.5% shareholding and
lack of significant influence over operations. Financial assets
designated as fair value through the profit or loss are measured at
fair value through profit or loss at the point of initial
recognition and subsequently revalued at each reporting date. The
purchase agreement detailed in Note 8(b) formed the basis for the
fair value assessment at 31 March 2020, including costs capitalised
since the agreement was entered into. In May 2020 the final
Indonesian regulatory approvals for the transfer of title of the
15% direct interest in the Duyung PSC to Coro were received. As
part of this completion process WNEL made a direct transfer of its
interest in the Duyung PSC to Empyrean and the other owners, who
now hold their interest in the Duyung PSC directly. As a result of
this direct ownership, the Company's interest in the Duyung PSC is
no longer classified under IFRS 9 as a financial asset at fair
value through profit or loss. The carrying value post-disposal of
US$3.95 million at May 2020 has been transferred to Note 8 - Oil
and Gas Properties: Exploration and Evaluation. The fair value of
the project was assessed at transfer date with no change from the
assessment made at 31 March 2020 and now falls under IFRS 6
(Exploration for and Evaluation of Mineral Resources).
Note 2. Segmental Analysis
The Directors consider the Company to have three geographical
segments, being China (Block 29/11 project), Indonesia (Duyung
PSC project) and North America (Sacramento Basin project),
which are all currently in the exploration and evaluation phase.
Corporate costs relate to the administration and financing
costs of the Company and are not directly attributable to the
individual projects. The Company's registered office is located
in the United Kingdom.
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
31 March 2021
Revenue from continued - - - - -
operations
Segment result - - - - -
Unallocated corporate expenses (943) (943)
-------- ---------- -------- ---------- --------
Operating loss - - - (943) (943)
Finance expense - - - (7) (7)
Impairment of oil and gas
properties - - (3) - (3)
Loss before taxation - - (3) (950) (953)
Tax benefit in current - - - - -
year
-------- ---------- -------- ---------- --------
Loss after taxation - - (3) (950) (953)
-------- ---------- -------- ---------- --------
Total comprehensive loss
for the financial year - - (3) (950) (953)
======== ========== ======== ========== ========
Segment assets 6,537 4,052 4,054 - 14,643
Unallocated corporate assets - - - 544 544
-------- ---------- -------- ---------- --------
Total assets 6,537 4,052 4,054 544 15,187
======== ========== ======== ========== ========
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 778 778
-------- ---------- -------- ---------- --------
Total liabilities - - - 778 778
======== ========== ======== ========== ========
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
31 March 2020
Revenue from continued - - - - -
operations
Segment result - - - - -
Unallocated corporate expenses - - - (962) (962)
-------- ---------- -------- ---------- --------
Operating loss - - - (962) (962)
Finance income - - - 43 43
Impairment of oil and gas
properties - - (47) - (47)
Loss on sale of investment - (29) - - (29)
-------- ---------- -------- ---------- --------
Loss before taxation - (29) (47) (919) (995)
Tax benefit in current
year - - - 716 716
-------- ---------- -------- ---------- --------
Loss after taxation - (29) (47) (203) (279)
-------- ---------- -------- ---------- --------
Total comprehensive loss
for the financial year - (29) (47) (203) (279)
======== ========== ======== ========== ========
Segment assets 5,912 4,404 3,938 - 14,254
Unallocated corporate assets - - - 582 582
-------- ---------- -------- ---------- --------
Total assets 5,912 4,404 3,938 582 14,836
======== ========== ======== ========== ========
Segment liabilities - 480 - - 480
Unallocated corporate liabilities - - - 1,032 1,032
-------- ---------- -------- ---------- --------
Total liabilities - 480 - 1,032 1,512
======== ========== ======== ========== ========
Note 3. Restatement of Prior Period
During preparation of the financial statements for the year
ending 31 March 2021, the Company identified a prior period error.
Due to invoicing delays, exploration expenditure relating to the
year ended 31 March 2020 had not been recognised in that
period.
This resulted in a restatement of the following line items for
the year ended 31 March 2020:
-- Exploration and evaluation expenditure: increased by US$264,000
-- Trade and other payables: increased by US$264,000
There is no impact on the Statement of Comprehensive Income for
the years ended 31 March 2021 or 31 March 2020. The above
adjustment had the following impact on the 31 March 2020 Statement
of Financial Position:
Statement of Financial Position Extract
As at 31 March 2020
Financial Report Line Item/ As Previously Adjustment As Restated
Stated
Balance Affected US$'000 US$'000 US$'000
Non-Current Assets
Exploration and evaluation
expenditure 9,586 264 9,850
Total Non-Current Assets 13,990 264 14,254
-------------- ----------- ------------
Total Assets 14,572 264 14,836
-------------- ----------- ------------
Current Liabilities
Trade and other payables 1,170 264 1,434
-------------- ----------- ------------
Total Current Liabilities 1,248 264 1,512
-------------- ----------- ------------
Total Liabilities 1,248 264 1,512
-------------- ----------- ------------
Net Assets 13,324 - 13,324
============== =========== ============
Note 4. Operating Loss
2021 2020
US$'000 US$'000
The operating loss is stated after charging:
Audit and tax fees (97) (84)
Total operating loss (97) (84)
======== ========
Auditor's Remuneration
Amounts paid to BDO LLP and their associates in respect of
both audit and non-audit services:
Fees payable to the Company's auditor
for the audit of the Company annual accounts 45 42
Fees payable to the Company's auditor
and its associates in respect of:
- Other services relating to taxation 14 12
-------- --------
Total auditor's remuneration 59 54
Note 5. Directors' Emoluments
Fees and Salary Bonus Payment Social Security Contributions Short-Term Employment
Benefits (Total)
2021 2020 2021 2020 2021 2020 2021 2020
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Non-Executive
Directors:
Patrick Cross 24 23 - - 2 2 26 25
John Laycock 14 14 - - 1 1 15 15
Executive
Directors:
Thomas
Kelly(a) 291 283 - - - - 291 283
Gajendra
Bisht(b) 220 220 - - - - 220 220
549 540 - - 3 3 552 543
======== ======== ======== ======== ============== ============== ============= ==============
(a) Services provided by Apnea Holdings Pty Ltd, of which Mr
Kelly is a Director. In addition to the Director fees above, Apnea
Holdings Pty Ltd was paid US$51,000 for capital raising services
for the September 2019 and January 2020 Placements which raised
US$1.02 million in the prior financial year. Mr Kelly has not sold
any shares during the reporting period.
(b) Services provided by Topaz Energy Pty Ltd, of which Mr Bisht
is a Director. 75% of Mr Bisht's fees are capitalised to
exploration and evaluation expenditure (Note 8).
The average number of Directors was 4 during 2021 and 2020. The
highest paid director received US$291,000 (2020: US$283,000).
Note 6. Taxation
2021 2020
US$'000 US$'000
Opening balance (358) -
US corporation tax benefit at 21% - (716)
AMT Federal Credit received during year - 358
-------- --------
Total corporation tax receivable (358) (358)
======== ========
Factors Affecting The Tax Charge For
The Year
Loss from continuing operations (953) (995)
-------- --------
Loss on ordinary activities before tax (953) (995)
Loss on ordinary activities at US rate
of 21% (2020: 21%) (200) (209)
Non-deductible expenses 23 19
Movement in provisions 7 5
Over provision in prior year - (716)
Deferred tax assets not recognised 170 185
- (716)
Analysed as:
Tax benefit on continuing operations - (716)
-------- --------
Tax benefit in current year - (716)
======== ========
Deferred Tax Liabilities
Temporary differences - exploration 1,657 1,628
Temporary differences - other 4 393
-------- --------
1,661 2,021
Offset of deferred tax assets (1,661) (2,021)
-------- --------
Net deferred tax liabilities recognised - -
======== ========
Unrecognised Deferred Tax Assets
Tax losses(a) 3,555 3,468
Temporary differences - exploration 2,946 2,940
Temporary differences - other 824 1,075
-------- --------
7,325 7,483
Offset of deferred tax liabilities (1,661) (2,021)
-------- --------
Net deferred tax assets not brought
to account 5,664 5,462
======== ========
(a) If not utilised, carried forward tax losses of approximately
US$9.63 million (2020: $9.32 million) begin to expire in the year
2033.
Deferred tax assets and deferred tax liabilities are offset only
if applicable criteria to set off is met.
Note 7. Loss Per Share
The basic loss per share is derived by dividing the loss
after taxation for the year attributable to ordinary shareholders
by the weighted average number of shares on issue being 479,537,844
(2020: 438,014,668).
2021 2020
Loss per share from continuing operations
Loss after taxation from continuing US$(953,000) US$(279,000)
operations
Loss per share - basic (0.20)c (0.06)c
Loss after taxation from continuing
operations adjusted for dilutive effects US$(953,000) US$(279,000)
Loss per share - diluted (0.20)c (0.06)c
For the current and prior financial years the exercise of
the options is anti-dilutive and as such the diluted loss
per share is the same as the basic loss per share. Details
of the potentially issuable shares that could dilute earnings
per share in future periods are set out in Note 13.
Note 8. Oil and Gas Properties: Exploration and Evaluation
Restated
2021 2020
US$'000 US$'000
Balance brought forward 9,850 9,075
Additions(a) 847 822
Transfers(b) 3,949 -
Impairment(c) (3) (47)
Net book value 14,643 9,850
======== =========
(a) The Company was awarded its permit in China in December
2016. Block 29/11 is located in the Pearl River Mouth Basin,
offshore China. Empyrean is operator with 100% of the exploration
right of the Permit during the exploration phase of the project. In
May 2017 the Company acquired a working interest in the Sacramento
Basin, California. Empyrean entered into a joint project with
ASX-listed Sacgasco Limited, to test a group of projects in the
Sacramento Basin, California, including two mature, multi-TcF gas
prospects in Dempsey (EME 30%) and Alvares (EME 25%) and also
further identified follow up prospects along the Dempsey trend (EME
30%). Please refer to the Operational Review for further
information on exploration and evaluation performed during the
year.
(b) In February 2019 Empyrean announced that it had entered into
a binding, conditional purchase agreement (the Agreement) pursuant
to which AIM listed Coro would acquire a 15% interest in the Duyung
PSC from WNEL for aggregate consideration in cash and Coro shares
of US$4.8 million (of which Empyrean received US$295,000 in cash
and 6,090,504 Coro shares) and the contribution of US$10.5 million
by Coro toward the 2019 drilling campaign at the Mako gas field.
The cash and share component of the consideration was paid pro rata
to the existing owners of WNEL, being Empyrean, which currently had
a 10% effective interest in the Duyung PSC, and Conrad Petroleum
Ltd, which currently had a 90% effective interest in the Duyung
PSC, each through shareholding in WNEL.
The consideration paid comprised US$2.95 million in cash and
US$1.85 million in the form of 60,905,037 new ordinary shares in
Coro. Empyrean received cash consideration of US$295,000 and
Consideration Shares with a value of US$185,000 for the transfer to
Coro of 1.5% of its current 10% interest in the Duyung PSC,
reducing its interest to 8.5%.
In May 2020 the final Indonesian regulatory approvals for the
transfer of title of the 15% direct interest in the Duyung PSC to
Coro were received. As part of this completion process WNEL made a
direct transfer of its interest in the Duyung PSC to Empyrean and
the other owners, who now hold their interest in the Duyung PSC
directly. As a result of this direct ownership, the Company's
interest in the Duyung PSC is no longer classified under IFRS 9 as
a financial asset at fair value through profit or loss and now
falls under IFRS 6 (Exploration for and Evaluation of Mineral
Resources). The carrying value post-disposal of US$3.95 million at
May 2020 has been transferred to Note 8 - Oil and Gas Properties:
Exploration and Evaluation. Please refer to Note 9 - Investments
for details on the fair value assessment of the project at transfer
date.
(c) In light of current market conditions, little or no work has
been completed on the Riverbend or Eagle Oil projects in the year
and no substantial project work is forecast for either project in
2021/22 whilst the Company focuses on other projects. Whilst the
Company maintains legal title it has continued to fully impair the
carrying value of the asset at 31 March 2021.
Restated
Project Operator Working 2021 2020
Interest Carrying Carrying Value
Value US$'000
US$'000
Exploration and
evaluation
China Block 29/11 Empyrean Energy 100%(1) 6,537 5,912
Sacramento Basin Sacgasco 25-30% 4,054 3,938
Duyung PSC Conrad Petroleum 8.5% 4,052 -
Riverbend Huff Energy 10% - -
Eagle Oil Pool Strata-X 58.084% - -
Development
----------- ----------------
14,643 9,850
=========== ================
1. In the event of a commercial discovery, and subject to the
Company entering PSC, CNOOC Limited will have a back in right
to 51% of the permit. As at the date of these financial statements
no commercial discovery has been made.
Note 9. Investments
2021 2020
US$'000 US$'000
Balance brought forward 4,404 3,200
Additions(a) 25 1,389
Disposals(b) (480) (185)
Transfers(b) (3,949) -
-------- --------
Total investments - 4,404
======== ========
(a) For further information on additional work performed on the
Duyung PSC during the period, please refer to the Operational
Review.
(b) In February 2019 Empyrean announced that it had entered into
a binding, conditional purchase agreement (the Agreement) pursuant
to which AIM listed Coro would acquire a 15% interest in the Duyung
PSC from WNEL for aggregate consideration in cash and Coro shares
of US$4.8 million (of which Empyrean received US$295,000 in cash
and 6,090,504 Coro shares) and the contribution of US$10.5 million
by Coro toward the 2019 drilling campaign at the Mako gas field.
The cash and share component of the consideration was paid pro rata
to the existing owners of WNEL, being Empyrean, which currently had
a 10% effective interest in the Duyung PSC, and Conrad Petroleum
Ltd, which currently had a 90% effective interest in the Duyung
PSC, each through shareholding in WNEL.
The consideration paid comprised US$2.95 million in cash and
US$1.85 million in the form of 60,905,037 new ordinary shares in
Coro. Empyrean received cash consideration of US$295,000 and
Consideration Shares with a value of US$185,000 for the transfer to
Coro of 1.5% of its current 10% interest in the Duyung PSC,
reducing its interest to 8.5%.
In May 2020 the final Indonesian regulatory approvals for the
transfer of title of the 15% direct interest in the Duyung PSC to
Coro were received. As part of this completion process WNEL made a
direct transfer of its interest in the Duyung PSC to Empyrean and
the other owners, who now hold their interest in the Duyung PSC
directly. As a result of this direct ownership, the Company's
interest in the Duyung PSC is no longer classified under IFRS 9 as
a financial asset at fair value through profit or loss and now
falls under IFRS 6 (Exploration for and Evaluation of Mineral
Resources).
The carrying value post-disposal of US$3.95 million at May 2020
has been transferred to Note 8 - Oil and Gas Properties:
Exploration and Evaluation. The fair value of the project has been
assessed at transfer date and there has been no change from the
assessment made at 31 March 2020, when the carrying value
pre-disposal of US$4.4 million was deemed to approximate fair value
based on the purchase agreement detailed above, including costs
capitalised since the agreement was entered into. While the
successful appraisal drilling program conducted during 2019/20
resulted in a substantial increase in the contingent resources of
Mako gas field, there are, in the Board's opinion, several
milestones required to be achieved before an updated fair value of
the project can be reliably and objectively assessed. These include
steps required for contingent resources to be converted to reserves
at final investment decision (FID) and also the steps required to
finalise a gas sales agreement, which has been delayed by the
current COVID-19 pandemic and resultant disruptions. Given COVID-19
and the current uncertainty and volatility in the energy markets,
attempting to model fair value at this point in time would be
intrinsically difficult and subject to a number of
contingencies.
Note 10. Trade and Other Receivables
2021 2020
US$'000 US$'000
Accrued revenue 30 30
VAT receivable 6 5
-------- --------
Total trade and other receivables 36 35
======== ========
Note 11. Trade and Other Payables
Restated
2021 2020
US$'000 US$'000
Trade payables 504 648
Accrued expenses 163 306
Prepayments received - proceeds from
disposal of investment - 480
-------- ---------
Total trade and other payables 667 1,434
======== =========
Note 12. Reconciliation of Net Loss
2021 2020
US$'000 US$'000
Loss before taxation (953) (995)
Finance expense/(income) 7 (43)
Forex (gain)/loss (20) 34
Impairment - oil and gas properties 3 47
Share-based payments 100 84
Decrease/(increase) in trade receivables
relating to operating activities (1) 2
Increase in trade payables relating
to operating activities - 268
Increase in provisions 33 24
-------- --------
Net cash outflow from operating activities
before taxation (831) (579)
-------- --------
Receipt of corporation tax - 358
-------- --------
Net cash outflow from operating activities (831) (221)
======== ========
Note 13. Share Capital
Issued and fully paid 2021 2020
US$'000 US$'000
489,430,615 (2020: 447,597,777) ordinary
shares of 0.2p each 1,398 1,291
-------- --------
Opening balance (2021 number: 447,597,777)
(2020 number: 424,275,110) 1,291 1,232
Subscription - 14 April 2020 (number: 30 -
11,741,429)
Open Offer/Subscription - 12 May 2020 30 -
(number: 11,858,275)
Placements - 11 Sep 2020 (number: 18,233,334) 47 -
Placements - prior year (number: 8,322,467) - 21
Exercise of options - prior year (number:
15,000,000) - 38
Closing balance (2021 number: 489,430,615)
(2020 number: 447,597,777) 1,398 1,291
======== ========
The Companies Act 2006 (as amended) abolishes the requirement
for a company to have an authorised share capital. Therefore the
Company has taken advantage of these provisions and has an
unlimited authorised share capital.
Each of the ordinary shares carries equal rights and entitles
the holder to voting and dividend rights and rights to participate
in the profits of the Company and in the event of a return of
capital equal rights to participate in any sum being returned to
the holders of the ordinary shares. There is no restriction,
imposed by the Company, on the ability of the holder of any
ordinary share to transfer the ownership, or any of the benefits of
ownership, to any other party.
Share options and warrants
The number and weighted average exercise prices of share
options and warrants are as follows:
Weighted Average Exercise Weighted Average Exercise
Price Number Price
of Options Number
& Warrants Of Options
2021 2021 2020 2020
Outstanding at the beginning of
the year GBP0.145 5,500,000 GBP0.042 17,500,000
Issued during the year(a)(b) GBP0.088 17,233,334 GBP0.125 3,000,000
Cancelled during the year(a) GBP0.170 (2,500,000) - -
Exercised during the year - - GBP0.020 (15,000,000)
--------------------------- ------------- ------------------------- ------------
Outstanding at the end of the
year GBP0.094 20,233,334 GBP0.145 5,500,000
=========================== ============= ========================= ============
(a) On 15 September 2020, 2,500,000 unlisted options were issued to the Company Secretary,
Jonathan Whyte. The options have an exercise price of GBP0.075, expire on 10 September 2023
and have a vesting date of 15 September 2021. 2,500,000 options held by My Whyte, expiring
in January 2021, were cancelled in lieu of the award of the new options. On 11 September 2020,
500,000 unlisted options were issued to Long State Investments as part of activating the GBP10
million equity placement facility. The options have an exercise price of GBP0.1014 and expire
on 17 September 2023. Options are being expensed over the life of the options, resulting in
a share-based payment expense of US$107,000 to 31 March 2021 (US$84,000 to 31 March 2020).
(b) 14,233,334 warrants were issued to subscribers of the Placement announced on 11 September
2020. The warrants have an exercise price of GBP0.09 and expire on 25 September 2022. The
warrants have been valued using a Black-Scholes model and the fair value of US$227,000 is
recorded in the warrant and share-based payment reserve.
Valuation and assumptions of options and warrants at 31 March 2021
Employee Employee Equity Equity Subscriber
Options Options Facility Facility Warrants
Options Options
Number of Options 2,500,000 2,500,000 500,000 500,000 14,233,334
Grant date 17 Sep 2019 15 Sep 2020 24 Dec 2019 11 Sep 2020 11 Sep 2020
Expiry date 30 Sep 2022 10 Sep 2023 24 Dec 2022 17 Sep 2023 25 Sep 2022
Share price GBP0.098 GBP0.05 GBP0.084 GBP0.047 GBP0.047
Exercise price GBP0.125 GBP0.075 GBP0.123 GBP0.1014 GBP0.09
Volatility 79% 81% 79% 81% 81%
Option life 3.00 3.00 3.00 3.00 2.00
Expected dividends - - - - -
Risk-free interest
rate (based on
national
government bonds) 0.49% 0.14% 0.52% 0.14% 0.14%
The options outstanding at 31 March 2021 have an exercise price in the range of GBP0.075 to
GBP0.125 (2020: GBP0.123 to GBP0.17) and a weighted average remaining contractual life of
1.64 years (2020: 1.77 years). None of the outstanding options at 31 March 2021 are exercisable
at year end.
Note 14. Reserves
Reserve Description and purpose
Share premium Amount subscribed for share capital in
excess of nominal value.
------------------------------------------------------
Warrant and share-based Records items recognised as expenses on
payment reserve valuation of employee share options and
subscriber warrants.
------------------------------------------------------
Retained losses All other net gains and losses and transactions
with owners not recognised elsewhere.
------------------------------------------------------
Note 15. Related Party Transactions
Directors are considered Key Management Personnel for the
purposes of related party disclosure.
Apnea Holdings Pty Ltd, a company wholly-owned by the Company's
CEO and Director, Thomas Kelly, purchased 205,103 ordinary
shares of 0.2p each in the Company ("Shares") on the market
on 18 September 2020 at a price 4.8475p per Share, bringing
Mr Kelly's interest in the Company to 88,888,888 Shares.
There were no other related party transactions during the
year ended 31 March 2021 other than those disclosed in Note
5.
Note 16. Financial Risk Management
The Company manages its exposure to credit risk, liquidity
risk, foreign exchange risk and a variety of financial risks
in accordance with Company policies. These policies are developed
in accordance with the Company's operational requirements.
The Company uses different methods to measure and manage
different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate and foreign
exchange risk and assessment of prevailing and forecast interest
rates and foreign exchange rates. Liquidity risk is managed
through the budgeting and forecasting process.
Credit Risk
Exposure to credit risk relating to financial assets arises from
the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to the Company.
Credit risk is managed through the maintenance of procedures
(such procedures include the utilisation of systems for approval,
granting and removal of credit limits, regular monitoring of
exposures against such limits and monitoring the financial
stability of significant customers and counterparties), ensuring to
the extent possible, that customers and counterparties to
transactions are of sound credit worthiness. Such monitoring is
used in assessing receivables for impairment. Credit terms are
generally 30 days from invoice date.
Risk is also minimised by investing surplus funds in financial
institutions that maintain a high credit rating.
Credit risk related to balances with banks and other financial
institutions are managed in accordance with approved Board policy.
The Company's current investment policy is aimed at maximising the
return on surplus cash, with the aim of outperforming the benchmark
within acceptable levels of risk return exposure and to mitigate
the credit and liquidity risks that the Company is exposed to
through investment activities.
The following table provides information regarding the credit
risk relating to cash and money market securities based on Standard
and Poor's counterparty credit ratings.
2021 2020
US$'000 US$'000
Cash and cash equivalents
AA-rated 150 189
----------- -----------
Total cash and cash equivalents 150 189
=========== ===========
Liquidity risk
Liquidity risk arises from the possibility that the Company
might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Company manages liquidity risk by maintaining sufficient
cash or credit facilities to meet the operating requirements
of the business and investing excess funds in highly liquid
short-term investments. The Company's liquidity needs can
be met through a variety of sources, including the issue
of equity instruments and short or long-term borrowings.
Alternative sources of funding in the future could include
project debt financing and equity raisings, and future operating
cash flow. These alternatives will be evaluated to determine
the optimal mix of capital resources.
The following table details the Company's non-derivative
financial instruments according to their contractual maturities.
The amounts disclosed are based on contractual undiscounted
cash flows. Cash flows realised from financial assets reflect
management's expectation as to the timing of realisation.
Actual timing may therefore differ from that disclosed. The
timing of cash flows presented in the table to settle financial
liabilities reflects the earliest contractual settlement
dates.
Less than 6 months 1 to Total
6 months to 1 year 6 years
US$'000 US$'000 US$'000 US$'000
Trade and other payables (2021) 667 - - 667
---------- ----------- --------- --------
Trade and other payables (2020
- Restated) 954 - - 954
---------- ----------- --------- --------
Capital
In managing its capital, the Company's primary objective
is to maintain a sufficient funding base to enable the Company
to meet its working capital and strategic investment needs.
In making decisions to adjust its capital structure to achieve
these aims, through new share issues, the Company considers
not only its short-term position but also its long-term operational
and strategic objectives. The Company has a track record
of successfully securing additional funding as and when required
from equity capital markets.
Foreign exchange risk
The Company operates internationally and is exposed to foreign
exchange risk arising from various currency exposures. Foreign
exchange risk arises from future commitments, assets and
liabilities that are denominated in a currency that is not
the functional currency of the Company. The Company's deposits
are largely denominated in US dollars. Currently there are
no foreign exchange hedge programmes in place. However, the
Company treasury function manages the purchase of foreign
currency to meet operational requirements.
As at 31 March 2021 the Company's gross exposure to foreign
exchange risk was as follows:
2021 2020
US$'000 US$'000
Gross foreign currency financial assets
Cash and cash equivalents - GBP 133 40
---------- ---------
Total gross exposure 133 40
========== =========
The effect of a 10% strengthening of the USD against the
GBP at the reporting date on the GBP-denominated assets carried
within the USD functional currency entity would, all other
variables held constant, have resulted in an increase in
post-tax loss for the year and decrease in net assets of
US$13,300 (2020: US$4,000).
Fair value
Fair values are those amounts at which an asset could be
exchanged, or a liability settled, between knowledgeable, willing
parties in an arm's length transaction. Fair values may be based on
information that is estimated or subject to judgement, where
changes in assumptions may have a material impact on the amounts
estimated. Areas of judgement and the assumptions have been
detailed below.
Where possible, valuation information used to calculate fair
value is extracted from the market, with more reliable information
available from markets that are actively traded. In this regard,
fair values for listed securities are obtained from quoted market
prices. Where securities are unlisted and no market quotes are
available, fair value is obtained using discounted cash flow
analysis and other valuation techniques commonly used by market
participants.
The following methods and assumptions are used to determine the
net fair values of financial assets and liabilities:
-- Cash and short-term investments - the carrying amount
approximates fair value because of their short term to
maturity;
-- Trade receivables and trade creditors - the carrying amount
approximates fair value;
-- Derivative financial assets and liabilities - initially
recognised at fair value through profit and loss at the date the
contract is entered into and subsequently re-measured at each
reporting date the fair value of the derivative financial liability
options is calculated using a Black-Scholes Model. Measurement
inputs include share price on measurement date, exercise price of
the instrument, expected volatility (based on weighted average
historic volatility adjusted for changes expected due to publicly
available information), weighted average expected life of the
instruments (based on historical experience and general option
holder behaviour), expected dividends, and the risk-free interest
rate (based on government bonds); and
-- Investments - financial assets designated as fair value
through the profit or loss are measured at fair value through
profit or loss at the point of initial recognition and subsequently
revalued at each reporting date.
No financial assets and financial liabilities are readily traded
on organised markets in standardised form.
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the
statement of financial position have been analysed and classified
using a fair value hierarchy reflecting the significance of the
inputs used in making the measurements. The fair value hierarchy
consists of the following levels:
-- Quoted prices in active markets for identical assets or
liabilities (Level 1);
-- Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (Level 2); and
-- Inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (Level 3).
Financial instruments at fair value and methods used to estimate
the fair value are summarised below:
Financial Instruments at Fair Value 31 March 31 March
2021 2020
Fair Value Fair Value
US$'000 US$'000
Financial assets
Investments (Level 3)(a) - 4,404
--------------- --------------
Total financial assets - 4,404
=============== ==============
(a) The Company's interest in the Duyung PSC was previously
classified under IFRS 9 as a financial asset at fair value
through profit or loss. In May 2020 the final Indonesian
regulatory approvals for the transfer of title of the 15%
direct interest in the Duyung PSC to Coro were received.
As part of this completion process WNEL made a direct transfer
of its interest in the Duyung PSC to Empyrean and the other
owners, who now hold their interest in the Duyung PSC directly.
As a result of this direct ownership, the Company's interest
in the Duyung PSC is no longer classified under IFRS 9 as
a financial asset at fair value through profit or loss and
now falls under IFRS 6 (Exploration for and Evaluation of
Mineral Resources).
Financial instruments by category are summarised below:
Financial Instruments Fair Value Through Amortised Cost
by Category Profit or Loss
31 March 31 March 31 March 31 March
2021 2020 2021 2020
US$'000 US$'000 US$'000 US$'000
Financial assets
Cash and cash equivalents - - 150 189
Trade and other receivables - - 36 35
Investments - 4,404 - -
----------- --------- --------- ---------
Total financial assets - 4,404 186 224
=========== ========= ========= =========
Financial liabilities
Trade and other payables - - 504 648
Total financial liabilities - - 504 648
=========== ========= ========= =========
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial
Position comprise cash at bank and in hand and short-term deposits
with an original maturity of three months or less. For the purposes
of the Cash Flow Statement, cash and cash equivalents consist of
cash and cash equivalents as defined above and which are readily
convertible to a known amount of cash and are subject to an
insignificant risk of change in value.
Note 17. Events After the Reporting Date
Significant events post reporting date were as follows:
In April 2021, Empyrean announced that the Company had commenced
comprehensive planning for the drilling of the Jade prospect and
had awarded a contract to AGR's team in Australia to assist with
well planning. In May 2021 the Company announced that AGR had
completed the well design and engineering project for the Jade
prospect.
In July 2021 the Company completed a Placing to raise US$6.92
million (GBP5.02 million) with funds raised under this Placing to
primarily be used to secure a suitable drilling rig, order long
lead items and for the Company's general working capital
requirements as it prepares to drill the Jade prospect in 2021.
No other matters or circumstances have arisen since the end of
the financial year which significantly affected or could
significantly affect the operations of the Company, the results of
those operations, or the state of affairs of the Company in future
financial years.
Note 18. Committed Expenditure
The Company has met all commitments on all three key projects
during the current financial year.
Block 29/11 offshore China
The Company's committed work program for the GSA phase for Block
29/11 included acquisition, processing and interpretation of 500km2
for a 3D seismic survey, and a financial commitment of US$3.0
million. The Company exceeded the work program commitments during
the 2018 financial year.
Having successfully completed the committed work program for the
first phase GSA, the Company exercised its option to enter a PSC on
the Block, on pre-negotiated terms, with CNOOC on 30 September
2018, with the date of commencement of implementation of the PSC
being 13 December 2018. The first phase of the contract is for 2.5
years with a commitment to drill one exploration well to a depth of
2,500m or to the Basement Formation. The estimated commitment to
drill the Jade well is US$18.5 million on a dry hole basis prior to
testing. In June 2020 Empyrean announced that CNOOC had granted a
12-month extension for the first phase of the exploration
commitment for the PSC, extending it to 12 June 2022.
Additional commitments for the 2021/22 financial year consist of
an annual assistance fee to CNOOC of US$60,000, an annual personnel
representative fee to CNOOC of approximately US$234,000 and an
annual prospecting fee of US$128,000.
Duyung PSC offshore Indonesia
As reported the joint venture partners completed a successful
exploration and appraisal well program at the Duyung PSC during
2020. Empyrean have paid all cash calls associated with the program
with no further amounts due and payable.
Sacramento Basin assets onshore California
The Company earned a 30% interest in the Dempsey Prospect by
paying US$2,100,000 towards the costs of drilling the Dempsey 1-15
exploration well. These drilling costs had a promoted cap of
US$3,200,000 and the Company paid its share of additional costs at
Dempsey 1-15, including completion costs. At the time of this
report, the work plan, cost estimates and timing of further
expenditure for both the Borba and Alvares prospects have not been
finalised. The Company incurs quarterly cash calls of approximately
US$10,000 for overheads, geological and geophysical costs and
approximately US$48,000 for its share of associated lease
obligations annually.
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END
FR DKABKQBKDKFB
(END) Dow Jones Newswires
August 26, 2021 10:12 ET (14:12 GMT)
Empyrean Energy (LSE:EME)
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