TIDM88E
RNS Number : 2443M
88 Energy Limited
13 September 2019
88 Energy Limited
Interim Report
88 Energy Limited (ASX: 88E; AIM: 88E) ("88 Energy" or "the
Company") is pleased to announce its interim results for the half
year ended 30 June 2019.
A copy of the Company's Interim Report, extracts from which are
set out below, has been lodged on the ASX and is also available on
the Company's website at www.88energy.com.
Media and Investor relations:
88 Energy Ltd Email: admin@88energy.com
Dave Wall, Managing Director Tel: +61 8 9485 0990
Finlay Thomson, Investor Relations Tel: +44 7976 248471
Hartleys Ltd
Dale Bryan Tel: +61 8 9268 2829
Cenkos Securities plc
Neil McDonald Tel: +44 131 220 9771
Derrick Lee Tel: +44 131 220 9100
OPERATING AND FINANCIAL REVIEW
During the period, the Group has continued its principal
activities in Alaska. A summary of significant activities is
below:
Highlights for the first half of 2019:
Project Icewine
-- Project Icewine Conventional;
o The Conventional farm-out campaign continued in the half-year,
with the deadline for bids extended to end January 2019 due to
demand from multiple parties;
o After consideration, a preferred bidder was selected by the
Company in March 2019 with the third-party due diligence process
and negotiation of terms and conditions completed in Q2 2019;
o Farminee internal approvals were complete prior to the end of
June 2019 for the proposed conventional portfolio farm-out deal;
and
o Subsequent to period end an Exclusivity Agreement was executed
with the preferred bidder to facilitate near term operational
activity whilst final terms were agreed on the proposed farmout
agreement, with execution of the Farm-out completed and announced
on 23 August 2019.
-- Project Icewine Unconventional;
o Advanced FIB-SEM and HAWK analysis was undertaken in the
half-year which significantly advanced the understanding of the HRZ
shale play, with the following noted;
o The majority of acreage remains within revised prospectivity
fairway;
o Additional application of FIB-SEM underway to validate fairway
revision; and
o Franklin Bluffs (Icewine#2 location) considered to be
marginally outside revised fairway.
Yukon Acreage
-- Processing of the Yukon 3D interpretation and resource
evaluation on the inversion product was completed in the half-year;
and
-- Discussions were underway with nearby resource owners to
optimise monetisation strategy to the acreage.
Western Blocks
-- Winx-1 Exploration well;
o The Permit to Drill for the Winx-1 exploration well was
approved by the Alaska Oil and Gas Conservation Commission (AOGCC)
in January, with the Winx-1 exploration well spudded on schedule on
15th February;
o Total Depth of 6,800' was reached on the 3rd March 2019,
having intersected all targets, including the primary Nanushuk
Formation Topset objective;
o Petrophysical analysis of the wireline logging program
indicated low oil saturations in both the primary Nanushuk Topset
objectives and the Torok objective, with testing and fluid sampling
indicating that reservoir quality and fluid mobility at this
location are considered insufficient to warrant production testing;
and
o The Winx-1 well was successfully plugged and abandoned on the
18th March, 2019, with the Nordic#3 rig and associated services
were fully demobilised prior to the end of Q1 2019. Drilling
operations were completed on time and without incident, and under
budget.
PROJECT ICEWINE
Project Icewine Conventional
A fast track farm-out campaign commenced in August 2018, whilst
processing of newly acquired 3D seismic (March 2018) was still
underway. Processing was finalised in October 2018, including
inversion, marking the first time that potential farminees could
comprehensively assess the mapped conventional resource potential
on the Western Play Fairway at Project Icewine. Consequently,
requests were made by potential farminees for more time to evaluate
the opportunity, which the Company granted.
The farm-out process progressed to the next stage at the end of
Q1 2019 with a preferred bidder selected and negotiations and
indicative terms agreed and due diligence completed in Q2 2019. The
Company was advised by the preferred bidder in June 2019 that Board
approval and other required internal approvals had been secured.
The Company advised at half-year that the parties will quickly move
to agree to document and finalise terms and close the transaction
in July 2019. Subsequent to half-year 2019, the Company advised
that it had executed an Exclusivity Agreement executed with the
preferred bidder to facilitate near term operational activity
whilst final terms are agreed on the proposed farmout agreement,
with the Company announcing execution of the Farm-out Agreement
with Premier Oil Plc of the United Kingdom on 22 August 2019, with
the farm-in to occur over multiple stages beginning with Premier
acquiring a 60% interest in return for the drilling of 1
exploration well in Area A of Project Icewine in the first quarter
of 2020.
Project Icewine Unconventional
Baker Hughes and the United States Geological Society (USGS)
continue to apply advanced evaluation techniques to the HRZ shale
play, including additional tests on both core and cuttings obtained
from the drilling of the Icewine-1 and Icewine-2 wells.
Finalisation of advanced analysis using state-of-the-art
technology has significantly advanced the Joint Venture
understanding of the nature of the HRZ play. This analysis has
confirmed that the HRZ is an excellent source rock with good
potential as an economic shale play.
The nature of the dominant kerogen in the HRZ has been
demonstrated to be prone to more rapid transformation into
hydrocarbons than other shales initially used for comparison. This
means that the thermal maturity window for volatile oil in the HRZ
is at lower temperature than that typically seen in other plays. As
a result, the Franklin Bluffs location (where both Icewine wells
were drilled) is considered to be just outside the fairway. The
kerogen in the HRZ at Franklin Bluffs has been converted largely to
solid bitumen, with sub optimal intraparticle porosity and
connectivity. The total porosity of the formation remains excellent
- the effective kerogen porosity (pathways between the particles
that contain the hydrocarbon); however, is lower than ideal. At
slightly lower thermal maturity, it is prognosed that
porosity/connectivity will be significantly improved.
The expansive leasing strategy employed by the Joint Venture
means that the majority of the revised fairway for the play remains
captured within the Project Icewine leasehold, with greater than
50% of the acres under lease considered prospective.
The forward program consists of accessing material from regional
wells in order to conduct additional FIB-SEM analysis to confirm
improved effective porosity and connectivity. Consequently, the
formal farm-out process will be deferred until 2H 2019 to allow for
this work to be completed. The Joint Venture continues to field
unsolicited third party interest in the HRZ shale play and an
informal farm-out process is underway.
The Company continues to receive third party interest in the HRZ
shale project and anticipates being able to integrate the data from
the current evaluation into a dataroom by mid-2019 in order to
commence a formal farm-out process.
Purchase of Outstanding Tax Credits and an Additional Tax Credit
Certificate Granted
On the 9th of January 2019 the Alaskan Department of Revenue
("DoR") informed the Company of the purchase of US$1.57m (A$2.2m)
in tax credits, with the funds received directly applied against
the Brevet debt facility. Debt outstanding at half-year ended 30
June 2019 totalled US$15.5 m (A$22.3m). Further, on the 26 March
2019, the Company was informed by the Alaska DoR that it had issued
a Credit Certificate to Accumulate Energy Alaska Inc., (100% owned
subsidiary of 88 Energy Ltd), for US$2.35m (A$3.4m) related to
CY2016 2D seismic expenditure. The total expected cashable credits
owed by the State to 88E at quarter end was US$19.1 m (A$27.3m),
which is far in excess of debt outstanding of US$15.5m
(A$22.3m).
YUKON LEASES
The Yukon 3D interpretation and resource evaluation was
completed in the half-year on the inversion product.
Discussions have been initiated by the Company with nearby lease
owners to optimise the monetisation strategy for existing
discovered resources located in the vicinity of the Yukon Leases.
The Yukon Leases contain the 86 million barrel Cascade Prospect#,
which was intersected peripherally by Yukon Gold 1, drilled in
1994, and classified as an historic oil discovery. 88 Energy
recently acquired 3D seismic (2018) over Cascade and, on final
processing and interpretation, high-graded it from a lead to a
drillable prospect. The Yukon Leases are located adjacent to ANWR
and in close proximity to recently commissioned infrastructure.
# Refer announcement 7th November 2018
Cautionary Statement: The estimated quantities of petroleum that
may be potentially recovered by the application of a future
development project relate to undiscovered accumulations. These
estimates have both an associated risk of discovery and a risk of
development. Further exploration, appraisal and evaluation are
required to determine the existence of a significant quantity of
potentially movable hydrocarbons..
WESTERN BLOCKS
Winx-1 Exploration Well
The Permit to Drill for the Winx-1 exploration well was approved
by the Alaska Oil and Gas Conservation Commission (AOGCC) on the
16th January 2019, and with the completion of the construction of
the 11 mile ice road in late January the Nordic#3 rig was mobilised
and arrived at the drill site location as planned on the 7th
February. Spud of the Winx-1 exploration well occurred on schedule
on 15th February 2019, with the well intersecting all the of the
pre-drill targets safely and efficiently. Total Depth of 6,800' was
reached on the 3rd March 2019, with multiple potential pay zones
identified in the Nanushuk Formation Topset Play (primary targets)
and Torok Formation (secondary targets).
The Winx-1 well was plugged and abandoned on the 18th March
2019, with the rig and associated services fully demobilised prior
to the end of the quarter. Drilling operations were completed on
time and without incident, and under budget
Petrophysical interpretation of the LWD data at Winx-1 indicated
elevated resistivities associated with increased mud gas ratios (C1
- C5) in the distinctive Nanushuk Topset sequence, comparable with
other successful neighbouring wells in the Nanushuk play fairway.
Early indications were encouraging and, on this basis, a
comprehensive wireline program was undertaken to further evaluate
the interval of interest.
The wireline program was designed to fully evaluate and quantify
the reservoir potential and associated shows in the Nanushuk
Topsets. The suite comprised specialist logging tools capable of
quantifying laminated pay zones, including nuclear magnetic
resonance; a triaxial induction tool that measures both horizontal
and vertical resistivity, and an MDT program to determine pressure
gradients and sample fluids from the zones of interest.
Wireline results indicate low oil saturations in the Nanushuk
Topsets not conducive to successfully flowing the formation, as
borne out by the MDT sampling results, which did not retrieve
hydrocarbon samples. Reservoir properties appear to be compromised
by dispersed clay in the matrix at Winx-1. This clay is often
present in other successful Nanushuk wells but in discrete
laminations with decent quality, high resistivity, oil saturated
sandstones in between. The dispersed clay in the Nanushuk at Winx
impacts both fluid mobility and oil saturations. The clay serves to
bind much of the fluid present in place so that it cannot flow. It
also occupies pore space within the formation, resulting in a lower
relative hydrocarbon saturation. This means that, whilst oil is
present in the reservoir, there is less of it and it is not mobile.
Further evaluation will be undertaken post drill to fully
understand the implications of the petrophysical results
The reservoir performance in the Torok Channel Sequence was
better than the Nanushuk in the Winx-1 well, as evidenced by
relatively faster influx of fluid during MDT sampling. On
completion of the wireline logging program it is apparent that the
oil saturations in the Torok zone of interest are also low and not
conducive to hydrocarbon flow. The oil saturations are evidence of
an active petroleum system / charge and further work is required to
determine whether there is an effective trapping mechanism at this
location or elsewhere on the leases.
Performance Bond
In consideration for acquiring a working interest from Great
Bear Petroleum in the Western Blocks the Company, and Consortium
partners, provided a US$3.0 million (A$4.2 million) Performance
Bond to the State of Alaska in July 2018 as part of the commitment
to drilling an exploration well by 31 May 2019.
On satisfying the requirement of drilling an exploration well on
the acreage 88 Energy have earnt the rights to a 36% working
interest on the acreage. Well data was submitted to the Department
of Natural Resources, Division of Oil and Gas in March 2019 to
initiate the release of the US$3.0 million (A$4.2
million)performance bond, (US$1.2 million (A$1.7 million) net to
88E), which was refunded in full in May 2019.
Forward Plan
The forward plan is to further evaluate and integrate the
valuable data acquired at Winx-1, reprocess the Nanuq 3D seismic
(2004) in order to evaluate the remaining prospectivity on the
Western Leases including the Nanushuk Fairway potential.
FINANCIAL
For the period ended 30 June 2019 the Company recorded a loss of
$29.325 million (30 June 2018: $3.198 million loss). The loss was
largely attributable to the impairment of the Winx-1, Icewine-1 and
Icewine-2 exploration wells during the half-year, together with
general and administrative costs, finance costs and employee
benefits expense.
No dividends were paid or declared by the Company during the
period.
As at 30 June 2019, the Group had cash on hand of $6.7 million
(31 December 2018: $21.7 million) which includes A$0.4 million in
restricted cash held which is for JV operations, net assets of $65
million (31 December 2018: $94.1 million). The significant decrease
in net assets is largely due to the impairment of the exploration
wells noted above.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE
INCOME
Note
30 June 30 June
2019 2018
$ $
Income 3(a) 2,058,773 552,980
Administration expenses 3(b) (78,550) (832,391)
Occupancy expenses (21,430) (24,553)
Employee benefit expenses 3(c) (843,745) (987,631)
Share based payment expense 13 (53,924) -
Depreciation and amortisation expense (28,618) (23,322)
Finance cost (1,544,969) (2,110,118)
Realised/unrealised gain on foreign
exchange 15,028 340,029
Other expenses 3(d) (28,827,806) (113,189)
Loss before income tax (29,325,241) (3,198,195)
Income tax benefit/(expense) - -
------------- ------------
Net loss attributable to members of
the parent (29,325,241) (3,198,195)
============= ============
Other comprehensive income for the
period
Other comprehensive income that may
be recycled to profit or loss in subsequent
periods:
Exchange differences on translation
of foreign operations 172,919 2,987,322
------------- ------------
Total comprehensive loss for the period (29,152,322) (210,873)
============= ============
Basic and diluted loss per share (0.005) (0.001)
The consolidated statement of profit or loss and other
comprehensive income should be read in conjunction with the
accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note
30 June 31 December
2019 2018
$ $
ASSETS
Current Assets
Cash and cash equivalents 5 6,674,076 21,722,211
Other receivables 6 326,480 2,101,501
------------- -------------
Total Current Assets 7,000,556 23,823,712
============= =============
Non-Current Assets
Plant and equipment 11,658 11,172
Exploration and evaluation expenditure 7 60,678,988 76,983,981
Other assets 8 26,231,771 22,977,103
Total Non-Current Assets 86,922,417 99,972,256
------------- -------------
TOTAL ASSETS 93,922,973 123,795,968
============= =============
LIABILITIES
Current Liabilities
Provisions 10 527,681 255,353
Trade and other payables 9 6,072,895 6,001,949
Total Current Liabilities 6,600,576 6,257,302
------------- -------------
Non-Current Liabilities
Borrowings 11 22,306,600 23,424,471
Total Non-Current Liabilities 22,306,600 23,424,471
------------- -------------
TOTAL LIABILITIES 28,907,176 29,681,773
------------- -------------
NET ASSETS 65,015,797 94,114,195
============= =============
EQUITY
Contributed Equity 12(a) 179,304,850 179,304,850
Reserves 12(b) 22,855,233 22,628,390
Accumulated losses (137,144,286) (107,819,045)
------------- -------------
TOTAL EQUITY 65,015,797 94,114,195
============= =============
The consolidated statement of financial position should be read
in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Contributed Accumulated Total
Equity Reserves losses equity
$ $ $ $
Balance at 1 January 2018 141,711,466 15,645,286 (101,825,452) 55,531,300
Loss for the period - - (3,198,195) (3,198,195)
Other comprehensive income - 2,987,322 - 2,987,322
---------------- ---------- ------------- ------------
Total comprehensive loss for
the period, net of tax 2,987,322 (3,198,195) (210,873)
Shares issued during the period 25,772,805 - - 25,772,805
Equity raising costs (1,477,973) - - (1,477,973)
Balance at 30 June 2018 166,006,298 18,632,608 (105,023,647) 79,615,262
================ ========== ============= ============
Balance at 1 January 2019 179,304,850 22,628,390 (107,819,045) 94,114,195
Loss for the period - - (29,325,241) (29,325,241)
Other comprehensive income - 172,919 - 172,919
---------------- ---------- ------------- ------------
Total comprehensive loss for
the period, net of tax - 172,919 (29,325,241) (29,152,322)
Share based payments - 53,924 - 53,924
Balance at 30 June 2019 179,304,850 22,855,233 (137,144,286) 65,015,797
================ ========== ============= ============
The consolidated statement of changes in equity should be read
in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF CASH FLOWS
Note
30 June 30 June
2019 2018
$ $
Cash flows from operating activities
Interest 19,532 6,000
Interest Paid (1,198,562) (1,037,869)
Payments to suppliers and employees (1,369,467) (2,201,692)
Net cash outflows used in operating activities (2,548,497) (3,233,561)
------------- ------------
Cash flows from investing activities
Payments for exploration and evaluation activities (21,147,306) (20,847,096)
Contributions from JV Partners in relation to
Exploration 8,600,245 1,592,488
Net cash outflows used in investing activities (12,547,061) (19,254,608)
------------- ------------
Cash flows from financing activities
Proceeds from issue of shares - 25,772,793
Share issue costs - (1,496,000)
Payment of borrowing costs - (1,126,456)
Net cash inflows from financing activities - 23,150,337
------------- ------------
Net increase/(decrease) in cash and cash equivalents (15,095,557) 662,168
Net foreign exchange differences 47,422 415,085
Cash and cash equivalents at beginning of period 21,722,211 14,014,422
Cash and cash equivalents at end of period 5 6,674,076 15,091,675
============= ============
The consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
NOTES
1. CORPORATE INFORMATION
The consolidated financial statements of the Company for the six
months ended 30 June 2019 were authorised for issue in accordance
with a resolution of the Directors on 13 September 2019.
88 Energy Limited is a for-profit, limited company incorporated
and domiciled in Australia whose shares are publicly traded. The
principal activities of the company and its subsidiaries (the
Company) are oil and gas exploration with a portfolio of
exploration interests in Alaska.
2. BASIS OF PREPARATION AND CHANGES TO THE COMPANY'S ACCOUNTING POLICIES
(a) Basis of Preparation
The half year financial report for the six months ended 30 June
2019 is a general purpose financial report prepared in accordance
with requirements of the Corporations Act 2001 and Australian
Accounting Standard AASB 134: Interim Financial Reporting.
The half year financial report has been prepared on a historical
cost basis, except for available for sale assets, which have been
measured at fair value. Unless otherwise noted, the carrying value
of financial assets and liabilities as disclosed in the half year
financial report approximates their fair value. The company is
domiciled in Australia and all amounts are presented in Australian
dollars, unless otherwise noted.
For the purpose of preparing the half year financial report, the
half-year has been treated as a discrete reporting period.
The accounting policies adopted in the preparation of the half
year financial report are consistent with those followed in the
preparation of the Company's annual financial report for the year
ended 31 December 2018.
The half year financial report does not include all the
information and disclosures required in the annual financial
statements, and should be read in conjunction with the Company's
annual financial statements as at 31 December 2018, together with
any public announcements made during the period.
(b) Adoption of new and revised accounting standards
In the prior period, the directors adopted all the new and
revised Standards and Interpretations issued by the AASB that are
relevant to its operations and effective from 1 January 2018.
-- AASB 9 Financial Instruments.
-- AASB 15 Revenue from Contracts.
-- AASB 16 Leases.
(c) Significant Judgements and Estimates - AASB 9 Impairment of Financial Assets
In addition to significant estimates and judgements disclosed in
the 2018 annual report, we note the following;
As at 30 June 2019, the Group had a tax credit receivable of
US$19.1 million (A$27.3 million) from the State of Alaska, which
has a fair value in the Statement of Financial Position of A$25.7
million. As at the reporting date, management have considered
whether there is any objective evidence as to whether there are any
indicators of impairment in accordance with AASB 9 Financial
Instruments and believe this amount will be recoverable from the
Alaskan DOR as a cash rebate in full based on the current
legislative arrangements in Alaska. The timing and extent of
payments is expected to vary however it is anticipated that all
amounts will be received on or before 2021. The accretion of the
receivable will be recognised as finance income.
(d) Going concern
As at 30 June 2019, the Group had working capital of ($399,980)
(current assets less current liabilities) with cash on hand of
$6,674,076 and a comprehensive net loss of ($29,152,322) with cash
out flow from operating activities for the half-year of
($2,548,497).
The Directors are confident of the ability of the Group to
manage its working capital requirements, or raise funding through
various other alternatives including:
-Raising funds through issue of new shares;
-Sale of Alaskan Tax Credits to a third party which would lower
debt and interest commitments; and
-Managing the Company's working capital requirements.
These circumstances led to management assessing the entity's
ability to continue as a going concern. See Note 14 for further
information supporting this position.
The Directors are satisfied the Group is a going concern and
therefore have prepared the financial statements on the basis the
Group will continue to meet its commitments and can therefore
continue normal business activities and realise its assets and
settle liabilities in the normal course of business.
30 June 30 June
2019 2018
$ $
3. INCOME AND EXPENSES
(a) Other Income
Interest Income 16,638 5,858
Other finance income* 2,042,135 547,122
*Unwinding of the effect of present value
discounting of tax receivable 2,058,773 552,980
=============== ==============
(b) Corporate & Administrative expenses
Consultancy and professional fees 125,861 267,440
Legal fees 7,062 48,379
General and administration expenses (95,036) 499,292
Travel 40,663 17,280
78,550 832,391
=============== ==============
(c) Employee benefit expenses
Wages and salaries 718,609 932,932
Superannuation 45,417 51,222
Annual leave expense 50,873 14,751
Other employee expenses 28,846 (11,274)
843,745 987,631
=============== ==============
(d) Other expenses
Impairment expense - Icewine & Winx 28,767,174 -
Other expenses 60,632 113,189
--------------- --------------
28,827,806 113,189
=============== ==============
4. SEGMENT INFORMATION
Identification of reportable segments
For management purposes during the period ended 30 June 2019 the
Company was organised into the following strategic unit:
-- Oil and Gas exploration in Alaska, USA.
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors.
The Board of Directors review internal management reports on a
periodic basis that is consistent with the information provided in
the statement of profit or loss and other comprehensive income,
statement of financial position and statement of cash flows. As a
result no reconciliation is required, because the information as
presented is used by the Board to make strategic decisions.
Management has determined, based on the reports reviewed by the
Board of Directors and used to make strategic decisions, that the
Group has one reportable segment being Oil & Gas Exploration in
Alaska, USA. Such structural organisation is determined by the
nature of risks and returns associated with each business segment
and define the management structure as well as the internal
reporting system.
30 June 31 December
2019 2018
$ $
5. RECONCILIATION OF CASH
For the purposes of the statement of cash
flows, cash and cash equivalents comprise
the following:
Cash at bank and in hand (i) 6,674,076 21,722,211
6,674,076 21,722,211
=================== =====================
(i) As per the Directors' Report $0.4m
is restricted for the JV Operations.
6. OTHER RECEIVABLES
Goods and Services Tax (GST) receivable 26,400 116,249
Other deposits and receivables 300,080 1,985,252
------------------- ---------------------
326,480 2,101,501
=================== =====================
(a) Allowance for expected credit loss
Receivables past due but not considered impaired are nil (2018:
Nil).
7. EXPLORATION & EVALUATION EXPITURE
Capitalised expenditure at the beginning
of the period 76,983,981 46,934,162
Additions 15,161,364 24,093,718
Less Impairment - Icewine & WINX (28,545,718) -
Tax credit receivable (i) (3,351,469) 899,716
Foreign currency translation 430,831 5,056,385
Closing balance 60,678,988 76,983,981
=================== =====================
(i) Movement in 2019 relates to the approval of an Alaskan tax credit
receivable (s43.55.025).
30 June 2019 31 December 2018
$ $ .
8. OTHER NON-CURRENT ASSETS
ROU Asset - Lease 5 Ord St 30,388 56,434
North Slope Bid Round Deposit 29,909 29,743
Tax credit receivable (i) 25,743,697 22,464,515
Investments 427,777 425,411
------------------- ---------------------
26,231,771 22,977,103
=================== =====================
(i) The Alaskan Government has approved tax credits of A$27.3 million
as at 30 June 2019 (US$19.1 million). This amount has been fair
valued as at 30 June 2019 to A$25.7 million and recognised as an
offset against Exploration & Evaluation capitalised and recognised
above within Other Non-Current Assets. The amount paid will be directly
applied against the outstanding loan with Brevet. Refer to Significant
Judgements & Estimates (2c) above.
9. TRADE AND OTHER PAYABLES
Trade payables 1,091,301 403,935
Other payables 4,981,594 5,598,014
------------------- ---------------------
6,072,895 6,001,949
=================== =====================
10. PROVISIONS
Annual Leave 270,458 226,584
Long Service Leave 35,768 28,769
Provision for Abandonment 221,455 -
527,681 255,353
=================== =====================
11. BORROWINGS
Non-Current
Bank Facility (i) 22,306,600 23,424,471
------------------- ---------------------
22,306,600 23,424,471
=================== =====================
(i) On 23 March 2018, 88 Energy Limited refinanced the Facility
and entered into a credit agreement with FCS Advisors, LLC (d/b/a
Brevet Capital Advisors). The Facility expires Dec 2022. The Facility
contains financial covenants which have been met. As at 30 June
2019, US$15.5 (A$22.3) million was outstanding under the Facility.
Borrowings are secured by available Production Tax Credits and Accumulate
and Burgundy acreage.
12. CONTRIBUTED EQUITY AND RESERVES
(a) Ordinary shares fully paid 30 June 2019 31 December
2018
Ordinary shares 179,304,850 179,304,850
=================== =====================
Number 30 June
of shares 2019
$
Balance at 1 January 2019 6,331,540,324 179,304,850
Issued and fully paid shares at 30 June
2019 6,331,540,324 179,304,850
=================== =====================
(b) Reserves 30 June 2019 31 December 2018
$ $
Share-based payments 17,541,313 17,487,389
Foreign currency translation reserve 5,313,920 5,141,001
---------- -----------
22,855,233 22,628,390
---------- -----------
Movement reconciliation
Share-based payments reserve
Balance at the beginning of the year 17,487,389 17,465,639
Equity settled share-based payment transactions
(Note 13) 53,924 21,750
---------- -----------
Balance at the end of the year 17,541,313 17,487,389
---------- -----------
Foreign currency translation reserve
Balance at the beginning of the year 5,141,001 (1,820,353)
Effect of translation of foreign currency operations
to group presentation 172,919 6,961,354
---------- -----------
Balance at the end of the year 5,313,920 5,141,001
---------- -----------
Share-based payment reserve
The share-based payment reserve is used to record the value of
share-based payments provided to outside parties, and share-based
remuneration provided to employees and directors. Refer to Note 13
for further details.
Foreign currency translation reserve
The translation reserve comprises all foreign exchange
differences arising from the translation of the financial
statements of foreign operations where their functional currency is
different to the presentation currency of the reporting entity.
13. SHARE BASED PAYMENTS
Share-based payment transactions recognised during the reporting
period were as follows:
30 June 30 June
2019 2018
$ $
Options issued to Directors 22,219 -
Options issued to employees 31,705 -
53,924 -
========== ========
No options were granted in the half-year ended 30 June 2019.
14. EVENTS AFTER THE PERIOD END
The following events occurred subsequent to the period end;
* On 6 August 2019 the Company announced the execution
of an Exclusivity Agreement with the preferred bidder
to facilitate near term operational activity whilst
final terms are agreed on the proposed farmout
agreement. Exclusivity was granted by the JV Parties
until 31 August 2019, with customary exclusivity
undertakings and a US$500,000 payment (the
"Exclusivity Fee") by the preferred bidder to the JV
Parties to facilitate incurring of initial agreed
costs associated with the 2020 drilling program. The
Exclusivity Fee was non-refundable unless the farmout
agreement is not finalised owing to an act or
omission of the JV Parties;
* On 22 August 2019 the Company announced execution of
the Farm-out Agreement with Premier Oil Plc of the
United Kingdom on 22 August 2019, with the farm-in to
occur over multiple stages beginning with Premier
acquiring a 60% interest in return for the drilling
of 1 exploration well in Area A of Project Icewine in
the first quarter of 2020; and
* On the 13 September 2019, the Company announced that
it had successfully completed a capital raise of
A$6.75 million (before costs), with the placement
made to domestic and international institutional and
sophisticated investors through the issue of
540,000,000 million ordinary shares at A$0.0125
(equivalent to GBP0.07) per New Ordinary Share.
There were no other subsequent events.
15. COMMITMENTS AND CONTINGENCIES
As at 30 June 2019 there have been no material changes to commitments
since 31 December 2018. There were no contingent liabilities
as at 30 June 2019.
16. RELATED PARTY TRANSACTIONS
The terms and conditions of transactions with Directors and Executives
and their related entities were no more favourable than those
available, or which might reasonably be expected to be available,
on similar transactions to Non-Director related entities on an
arm's length basis.
Related party transactions similar to those described in the 31
December 2018 Annual Report continued during the period.
17. FAIR VALUE MEASUREMENT
The management assessed that the carrying amount of financial
assets and financial liabilities recorded in the financial statements
represents their respective fair values largely due to the short-term
maturities of these instruments. The carrying amounts are determined
in accordance with accounting policies disclosed in Note 2.
AASB 13 requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
(i) Level 1 - the instrument has quoted prices (unadjusted) in
active markets for identical assets and liabilities;
(ii) Level 2 - a valuation technique using inputs other than quoted
prices within Level 1 that are observable for the financial instrument,
either directly (i.e. prices), or indirectly (i.e. derived from
prices); or
(iii) Level 3 - a valuation technique using inputs that are not
based on observable market data (unobservable inputs).
The Group has recorded the Tax Credit Receivable (in Note 8) at
Fair Value at a Level 1 measurement using a market interest rate.
The Group does not have any level 2 or 3 assets or liabilities.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UORVRKWAKARR
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September 13, 2019 02:00 ET (06:00 GMT)
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