TIDMPXOG
RNS Number : 6848N
Prospex Oil and Gas PLC
22 May 2020
Prospex Oil and Gas Plc / Index: AIM / Epic: PXOG / Sector: Oil
and Gas
Prospex Oil and Gas Plc ('Prospex' or the 'Company')
2019 Final Results
Prospex Oil and Gas Plc, the AIM quoted investment company, is
pleased to announce its audited annual results for the year ended
31 December 2019.
Advancing a portfolio of late stage, onshore European gas
projects focused on the foredeep play
Portfolio Overview
-- Podere Gallina Exploration Permit, onshore Italy - first
production at Selva gas field ('Selva') at an initial rate of up to
150,000 scm/day expected early 2021
o Preliminary award of production concession from the Italian
Government in January 2019
o Post period end, formal technical environmental approval for
the development of Selva from the Italian Environment Ministry
o Awaiting final sign off by Ministerial decree, the issuing of
the required INTESA (intergovernmental agreement) and the final
grant of a production concession from Italy's Economic Development
Ministry
o Expect early discussions regarding non equity funding of
Prospex's c. EUR400,000 share of Selva development costs to mature
as permitting process progresses
o Updated CPR confirming reserves and additional contingent
resources at Selva's North and South flanks provides significant
follow-up development opportunities
-- EIV-1 Suceava Concession, onshore Romania - revenue at Bainet field in line with expectations
o Revenue in line with 2019 budgeting - higher prices offset
slightly lower than expected average production of 14,000m3 per
day
o Enlargement of Suceava Exploration Concession to 984 sq.km
o Bainet-2 well targeting Bainet West, a lookalike Bainet gas
prospect, drilled at all in cost of EUR260,000 net to Prospex - no
commercial hydrocarbons encountered
o Ongoing evaluation of the concession's gas prospectivity to
determine licence extension and next drilling targets
-- Tesorillo Gas Project, onshore Spain - de-risking up to 830
billion cubic feet ('Bcf') of gas (Best Estimate) of gross
un-risked prospective resources
o Multiple potential gas traps identified following reprocessing
and interpretation of historic 2D seismic data
o Four promising leads identified in the northern half of the
concession following integration of new structural maps and cross
sections with well reinterpretation and satellite images
o Working towards decision to drill and increase stake to 49.9%
from current 15%
-- El Romeral, onshore Spain - integrated gas and power project
o Acquisition of 49.9% interest in El Romeral for net
consideration of EUR375,000 includes existing gas production,
multiple development opportunities, and operational power
station
o Significant potential to increase gas production via two
development locations with 5 Bcf of gross contingent resources and
11 prospects with 90 Bcf of gross, unrisked prospective resources
with high Chance of Success of >70% (in most cases)
o Power plant currently constrained to operating at c. 22%
capacity due to current wells' tail production - offers significant
upside potential from future discoveries
Financial Overview
-- Total Assets of GBP6,341,890 as at 31 December, providing significant asset backing
-- Administrative expenses, slightly down to GBP1,091,871 (2018:
GBP1,103,279), other operating income GBP198,528 (2018
GBP99,729)
-- GBP800,000 raised via placing of 400,000,000 new ordinary
shares to fund the Company's share of costs for the 2019 Suceava
work programme, including drilling Bainet-2 well
-- Post period end, GBP720,000 raised via an oversubscribed
placing of 600,000,000 new ordinary shares to help fund the
Company's acquisition of a 49.9% indirect stake in El Romeral
o Certain Directors acquired new shares in the Company with an
aggregate value of GBP140,000 as part of the Placing
Edward Dawson, Managing Director of Prospex, said, "The
acquisition of a 49.9% interest in a fourth core asset, the
integrated El Romeral gas and power project in Spain; the
participation in the drilling of a fourth well, Bainet-2 in
Romania; the assignment of maiden 2P reserves, which today stand at
2.97 bcf of gas - the momentum behind the Company that has been
building in recent years was maintained during the year under
review. Thanks to the progress made, a roadmap setting out a clear
path towards a step-up in Prospex's net gas production and
internally generated revenues is in place and as a result, 2020 has
the potential to be another year of major progress.
"Of course, there is no way of knowing what the true impact will
be of the ongoing Covid-19 pandemic on the global economy and how
long it will take for societies to recover. Timeframes for the
development of certain of our projects may well therefore have to
be extended. Since the turn of year Prospex has been in discussions
with the various project operators who are adjusting to the current
environment and taking a cautious approach to discretionary
expenditure. Prospex itself has cut costs to its general and
administrative since the start of March. This has been helped by a
one third deferment of salaries from April to last during COVID-19
lockdown. Importantly the COVID-19 situation appears to be
improving in Italy and Spain and reassuringly operators report
continued dialogue and progress with regulators throughout the
various lock down periods.
"Subject to final award of a production concession, the roadmap
to a significant step-up in production and revenues is expected to
start with the Selva gas field in Italy coming online early next
year at an initial rate of up to 150,000 scm/day. As the final
permitting process progresses, we will look to secure our
cEUR400,000 share of the capital expenditure. The ambition,
believed possible thanks to the low capital cost, the short payback
from production, even in a depressed price environment, and Selva's
booked reserves, is to access non equity funding for the project,
in line with common industry practice. If achievable on reasonable
terms this would be a good option for all stakeholders.
"Once this milestone has been achieved, and following the
acquisition of a 49.9% interest in El Romeral, Prospex's portfolio
of producing wells will stand at five which, combined, have the
potential to produce over 7,800,000 scm net to Prospex in 2021.
This in turn would generate material revenues which we would then
look to deploy to fund further growth opportunities across our
portfolio including the drilling of additional gas wells at El
Romeral to bring electricity generation at the power plant closer
to its 100% capacity. Together with multiple follow-up targets
identified in Italy and Romania and potentially up to 830 Bcf of
un-risked prospective gas resources to go for at Tesorillo in
Spain, our existing portfolio offers much run room to grow the
Company further. What gives us considerable confidence is that we
now have a clear path to build a highly cash flow generative
platform with which to capitalise on these opportunities."
* *S * *
For further information visit www.prospexoilandgas.com or
contact the following:
Edward Dawson Prospex Oil and Gas Plc Tel: +44 (0) 20 3948
1619
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Jack Botros
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
Jon Belliss 9427
Duncan Vasey Peterhouse Corporate Finance Tel: +44 (0) 20 7469
0932
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
Cosima Akerman 1177
Chairman's Report
12 months ago, Prospex Oil & Gas had a portfolio of three
core onshore European projects; a 50% interest in one producing gas
well on the Suceava Concession in Romania; a 17% interest in the
Selva gas discovery onshore Italy; and significant development
potential in the form of net 2C resources / prospective resources
of 2.40 Bcf / 15.56 Bcf in Italy and 830 Bcf gross prospective gas
resources at the Tesorillo Project onshore Spain. Thanks to the
progress made during the year under review, notably the acquisition
of a 49.9% indirect stake in El Romeral, an integrated gas and
power project in southern Spain, today, Prospex is on course to
have a portfolio of four core onshore European projects; an
interest in four producing gas wells and an operational 8.1 MW
power station; net 2P reserves of 3.0 Bcf; and multiple low cost
development opportunities, not just reflected in the increase in
net contingent and prospective resources to 4.9 bcf and 475.5 bcf
respectively, but also the potential to materially increase
electricity generation at the El Romeral power plant.
Of course, it is not just Prospex that has undergone substantial
change over the last 12 months; the world today is a far different
place to what it was a year ago. The global COVID-19 pandemic has
led to measures, unprecedented during peacetime, being taken by
governments all over the world to stem the spread of the virus.
Countries across Europe including Italy, home to the Podere Gallina
licence, and Spain, where the Tesorillo and El Romeral Projects are
located, have been subject to enforced lockdowns. How long the
extreme measures will be in place, what percentage of the
respective populations will be infected and over what timescale,
plus what damage will be inflicted on the global economy are just a
few of the many unknowns at this point in time. What we can say is
that we, along with our partners across our asset base, take the
health and safety of all our employees and also the local
communities in which we operate seriously and will at all times
endeavour to follow the latest advice of the relevant government
authorities. With this in mind, the situation on the ground across
our licences will undoubtedly be fluid and as a result, the
impact on the timescales of the work programmes we have planned
across our asset base for the year ahead and beyond is, at this
stage, not clear.
In Italy the focus is very much on monetising the 13.3 Bcf (2P)
gross gas reserves at the Selva Malvezzi Gas-Field ('Selva') by
bringing the field back into production at the earliest opportunity
- between 1960 and 1984 Selva produced 83 Bcf of gas. Based on an
initial daily production rate of up to 150,000 cubic metres (5.3
mmscf/d) from two gas-bearing reservoirs of the Porto Garibaldi
formation, Selva has the potential to generate substantial annual
revenues net to Prospex's 17% economic interest in the 331km Podere
Gallina Exploration Permit, even in the current low gas price
environment.
Post period end in January 2020, a major milestone was achieved
with the award of formal technical environmental approval for the
development of Selva from the Italian Environment Ministry.
Environmental approval is a precursor to final sign off by
Ministerial decree, the issuing of the required INTESA
(intergovernmental agreement) and the final grant of a production
concession from Italy's Economic Development Ministry. This latest
milestone follows last year's preliminary award of a production
concession for Selva by the Italian Government (see announcement of
15 January 2019 for further details).
We, along with our partners in the licence, had hoped that all
would be in place to commence production at Selva later this year.
The severity of the COVID-19 outbreak in Italy, the measures taken
to suppress the virus, and the decision by the partners to defer
capital expenditure, have combined to push out expectations of
first gas at the field to early 2021. Under the proposed
development plans for Selva, which have an estimated cost of
EUR400,000 net to Prospex, a fully automated gas plant will
initially be installed at the location of the successful Podere
Maiar 1dir well, along with a one-kilometre long pipeline to
connect the well with the nearby Italian National Gas Grid.
Importantly, the planned Selva development has a small footprint of
less than half a hectare and will result in zero emissions arising
from any future gas production.
Once the Selva field is brought into production, there is much
more to go for across the licence. In addition, to reserves
assigned to the Selva field, a CPR produced by geophysical services
consultancy, CGG Services (UK) Limited ('CGG') estimates Selva's
two historic gas producing North Flank and South Flank reservoirs
have a 60% - 70% chance of holding gross contingent resources
('2C') of 14.1 Bcf. There are also four large prospects (East
Selva, Fondo Perino, Cembalina, and Riccardina) which are estimated
to hold aggregate gross prospective resources (best estimate) of
91.5 Bcf. Crucially, the additional targets would fall under the
production concession for the Selva field, which could potentially
speed up any future permitting process.
Once on stream, Selva is expected to generate free cash that can
help fund the exploration and development of targets not just at
Podere Gallina but across Prospex's wider portfolio including the
recently acquired El Romeral project. Here, the major area of focus
is to increase gas production and, in turn, electricity generation.
El Romeral is comprised of three production licences on which three
wells supply gas to a Project-owned 8.1 MW power station. The
plant, which was constructed in 2001-2002 at a cost of c. EUR10
million, is currently limited to operating at c. 22% of capacity
due to the maximum gas productivity of the existing late life
wells. Electricity is sold to the Spanish electricity grid.
The revenues that El Romeral can generate without any further
discoveries are of course welcome, but the real attraction of the
asset lies in the 5 Bcf gross contingent resources and 90 Bcf gross
prospective gas resources that have been identified at two
development locations and 11 very-low risk prospects. These provide
considerable scope to increase electricity generation at the plant
towards its full capacity, which we believe could be achieved with
the successful drilling of just one new well. As elsewhere in
Europe, electricity prices in Spain have fallen as a result of the
COVID-19 induced downturn. Subject to pricing returning to the
historic average electricity price in Spain of EUR70 per MWh
(including subsidy) and assuming an electricity generation rate of
c. 60,000 MWh gross per annum, we estimate the power station
operating at full capacity has the potential to deliver annual
revenues and profit before tax of EUR4.2 million and EUR2.4 million
respectively (EUR1.8 million profit after tax). With numbers like
these, we are keen to commence the planning and permitting process
for a three-well campaign at the earliest opportunity. Low cost
preparatory work is already underway in tandem with ongoing
discussions with the regulator regarding the transfer of the asset
to our Spanish affiliate, Tarba Energia ('Tarba'). Due to the
severity of the COVID-19 outbreak in Spain, the transfer is likely
to be delayed but Tarba has been in frequent dialogue with the
authorities throughout the lockdown period and is confident this
process will be completed as soon as it is practicable to do
so.
Even before any new drilling campaign, the acquisition of a
49.9% interest in El Romeral and its three existing gas wells will
lead to a step-up in Prospex's production profile to four producing
wells which, once Selva is brought online, will increase to five.
We calculate these five wells have the potential to produce over
7,800,000 scm net to Prospex in 2021. We are confident we can build
on this considerably thanks to the above development opportunities
at Podere Gallina and El Romeral, and also the potential that has
been identified at our two remaining projects, Suceava in Romania
and Tesorillo in Spain.
In Romania, over the course of the year under review, the Bainet
field, which was discovered in 2017/2018, generated revenues from
the production of gas in line with assumptions made for budgetary
purposes. We, along with our partner Raffles Energy S.R.L, are keen
to add to the Bainet discovery and build a hub of small producing
gas fields on the Suceava Concession, which lies in an area of
multiple historic discoveries and production. With this in mind, in
March 2019 we were granted an enlargement of the Exploration
Concession which in turn added a lookalike Bainet prospect, Bainet
West, to our existing inventory of targets. Thanks to the highly
efficient permitting process in Romania, we were able to drill the
Bainet-2 well to test Bainet West as early as the summer of 2019.
While the well, which had an all-in cost of EUR260,000 net to
Prospex, failed to encounter commercial volumes of hydrocarbons,
the technical data gained from the drilling operation is informing
an ongoing evaluation of the Concession's gas prospectivity to
determine follow-up drilling targets. In addition to holding
multiple prospects, Suceava also holds the Granicesti-SE1
discovery, which we can also look to bring on stream.
Despite holding historic discoveries, including the 1957
Almarchal-1 discovery well, the 38,000ha Tesorillo Project in
southern Spain is at an earlier stage of development when compared
with our other assets. In 2015, a report by Netherland Sewell and
Associates estimated Tesorillo could hold gross un-risked
Prospective Resources of 830 Bcf of gas (Best Estimate), with
upside in excess of 2 Tcf. These are company-making resources and
combined with a location in a proven hydrocarbon region warrant
serious investigation. Our ongoing work programme at Tesorillo is
focused on identifying and de-risking high grade targets for
drilling ahead of taking them through the permitting process.
To date results of technical and field activity, which has
included reprocessing and interpreting historic 2D seismic data,
have increased our confidence about the subsurface geometry of the
exploration target - the Aljibe sandstone in the Lowermost Miocene.
The results show this consists of several folds and thrust ramps of
3km to 5km length, which could be potential gas traps. In addition,
work to integrate new structural maps and cross sections with well
reinterpretation and satellite images has led to the identification
of four very promising leads in the northern half of the
concession. Further studies are required to enable the better
imaging of the subsurface, but the initial results have been
encouraging. The results of the work programme will inform our
decision to take up the option to increase Prospex's interest in
Tesorillo from 15% to 49.9%, though this does not have to be made
until after a new location is ready for drilling.
In light of volatile markets, specifically the sharp fall in
global crude prices seen in recent weeks, it is worth pointing out
that all of our projects are gas focused. This is significant as
historically gas prices have been less volatile than oil
benchmarks, which has proved to be the case in today's markets. The
relative outperformance of gas is partly down to the fuel typically
being sold to local markets at prices agreed in multi-year
contracts, providing a degree of visibility to revenues. In
addition, as the cleanest hydrocarbon in terms of carbon emissions
when combusted, gas is increasingly viewed as an important
transition fuel as the world moves towards net zero emissions. In
view of our focus on gas, it is intended that a resolution will be
put forward to shareholders at the forthcoming AGM to change the
Company's name to Prospex Energy. The Board believes the new name
better reflects Prospex's focus on gas production, gas being the
European transition fuel of choice, our desire to be increasingly
aware of Environmental, Social and Governance issues on behalf of
shareholders and, once the transfer of the El Romeral asset has
been completed, electricity generation.
Financial Review
The Company is reporting Total Assets of GBP6,341,890 (2018:
GBP6,847,881), a reduction of 7% for the year ended 31 December
2019. This movement includes revaluations of the Company's
investments ('the Investments') and movements (repayments and
advances) on loans receivable from those investments.
Unrealised losses arising on revaluation of Investments at fair
value totalled GBP270,220 (2018: gains - GBP1,710,418).
As at the 31 December 2019, the bulk of the Investments is
comprised of the Company's investment in PXOG Marshall Ltd, the
vehicle for the Company's Italian assets. In determining year end
valuations, the Company takes a number of criteria into account at
both a macro and micro level. At the macro level Europe short-dated
energy prices have been volatile and decreased to a varying degree
over the period. Whilst long-dated energy prices have decreased,
the fall has been significantly less than spot and near-dated
contracts. Marking to market has resulted in a write down of an
Italian unit of gas by c.5%. This drop has been more than offset by
the inclusion of Selva's additional Contingent Resources that were
attributed to the permit for the first time during the year in the
CPR.
Aside from the nominal cost of equity shares for the Company's
Romanian and Spanish investments, which are included in
Investments, as at 31 December 2019 the bulk of the carrying value
of these assets is represented within loans made by the Company to
the respective investment vehicles for the Romanian and Spanish
assets and other receivables.
In Romania, the failure of the Bainet-2 well to find commercial
gas prompted a significant, but prudent, write down of the
investment in, and partial write down of loan, to the Company's
investment vehicle for the Romanian asset - PXOG Massey Ltd. This
investment had been written up in 2018, largely based on the low
risk and prospective nature of the opportunity. PXOG Massey
continues to repay the loan provided by the Company, for the
successful Bainet-1 well, out of the net proceeds of gas sales.
As at 31 December 2019, the fair value of the Company's
investments stood at GBP3,998,388 (2018: GBP4,307,617), with a
further GBP2,218,326 (2018: GBP2,248,898) of loans to investee
companies expected to be repaid in due course. The latter is after
a provision of GBP203,705 (2018: GBPnil). The combined value of
these equity investments and current and non-current loans is
GBP6,216,714 (2018: GBP6,556,515). The Company continues to have
significant asset backing relative to its market
capitalisation.
Administrative expenses for the year totalled GBP1,091,871
(2018: GBP1,103,279), highlighting the success of management's
ongoing strategy to keep a tight rein on the Company's cost base.
These administrative costs include GBP95,416 (2018: GBPnil) paid to
third parties for work relating to future investments, including
evaluating the El Romeral opportunity, that are expensed and not
capitalised. The administrative expenses also include a bad debt
provision taken against amounts due from subsidiary undertakings of
GBP14,539 (2018: GBPnil). This relates to the final liquidation of
the Company's Polish interests. During the period other operating
income was GBP198,528 (2018: GBP99,729). This growing source of
income is predominantly comprised of recoveries of in-house
technical costs made from joint venture partners to the Company's
investments.
The Company is reporting a net loss after taxation from
continuing operations of GBP1,300,669 (2018: profit -
GBP779,904).
In March 2019, the Company raised GBP800,000 gross via an
oversubscribed placing of 400,000,000 new ordinary shares primarily
to fund the Company's share of costs for the 2019 work programme at
Suceava including the drilling of the Bainet-2 well. As at 31
December 2019, the Company held cash and cash equivalents of
GBP69,387 (2018: GBP233,138). Post period end in January 2020, the
Company raised GBP720,000 gross via an oversubscribed placing of
600,000,000 new ordinary shares to help fund the Company's
acquisition of a 49.9% indirect stake in El Romeral. Certain
Directors of the Company took part in the Placing, acquiring new
shares in the Company with an aggregate value of GBP140,000.
Outlook
Over the last few years, Prospex has been transformed into a
multi-project, asset-backed, gas focused investment company. While
not all our onshore European projects currently produce, all hold
multiple growth opportunities that have the potential, both
individually and collectively, to lead to a step-change in the
Company's revenue profile. A number of these opportunities,
specifically the development of Selva, are well advanced and low
cost. We are keen to realise the underlying potential of our
portfolio at the earliest opportunity and we remain confident Selva
can be brought online in early 2021, although clearly exact timings
will be determined by the course of the COVID-19 pandemic.
We will of course adhere to prevailing government advice to
ensure the safety of our employees. This may have an impact on
planned field work, however, with multiple projects in our
portfolio, there is much deskwork for us to be getting on with such
as mapping and de-risking prospectivity and, where appropriate,
commencing the permitting process for new drilling activity. Our
aim is to ensure that when it is safe to do so, we are in a
position to move quickly on multiple fronts to deliver the
step-change in our production and revenues that we are targeting,
and in the process generate substantial value for our
shareholders.
Finally, I would like to take this opportunity to thank the
Board and the management team for their continued hard work and
support over the course of the year. I look forward to providing
further updates on the Company's activities in the year ahead. In
the meantime, I wish all our shareholders and stakeholders well
during these unprecedented times.
Bill Smith
Non-executive Chairman
21 May 2020
Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 31 December 2019
2019 2018
GBP GBP
------------------------------------------- -------------------- ---------------------
CONTINUING OPERATIONS
Other operating income 198,528 99,729
Administrative expenses (1,091,871) (1,103,279)
-------------------------------------------- -------------------- ---------------------
OPERATING LOSS (893,343) (1,003,550)
(Loss)/gain on revaluation of investments (473,925) 1,710,418
Profit/(loss) on disposal of investment 40,462 (8,407)
-------------------------------------------- -------------------- ---------------------
(1,326,806) 698,461
Finance income 76,612 92,283
Finance costs (50,475) (10,840)
-------------------------------------------- -------------------- ---------------------
(LOSS)/PROFIT BEFORE INCOME TAX (1,300,669) 779,904
Income tax - -
------------------------------------------- -------------------- ---------------------
(LOSS)/PROFIT AFTER INCOME TAX (1,300,669) 779,904
OTHER COMPREHENSIVE INCOME - -
------------------------------------------- -------------------- ---------------------
TOTAL COMPREHENSIVE (LOSS)/PROFIT FOR
THE YEAR (1,300,669) 779,904
-------------------------------------------- -------------------- ---------------------
(LOSS)/EARNINGS PER SHARE - BASIC AND
DILUTED (0.08p) 0.06p
-------------------------------------------- -------------------- ---------------------
Statement of Financial Position
31 December 2019
2019 2018
GBP GBP
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment - -
Investments 3,998,388 4,307,617
Loans and other financial assets 1,048,978 1,013,129
Trade and other receivables 808,360 897,371
--------------------- ----------------
5,855,726 6,218,117
----------------------------------------- --------------------- ----------------
CURRENT ASSETS
Trade and other receivables 416,777 396,626
Cash and cash equivalents 69,387 233,138
486,164 629,764
----------------------------------------- --------------------- ----------------
TOTAL ASSETS 6,341,890 6,847,881
------------------------------------------ --------------------- ----------------
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 6,435,587 6,035,587
Share premium 10,095,358 9,756,759
Merger reserve 2,416,667 2,416,667
Capital redemption reserve 43,333 43,333
Retained earnings (13,260,713) (11,955,212)
------------------------------------------ --------------------- ----------------
TOTAL EQUITY 5,730,232 6,297,134
------------------------------------------ --------------------- ----------------
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities - borrowings
- Interest bearing loans and borrowings 386,523 360,000
------------------------------------------ --------------------- ----------------
CURRENT LIABILITIES
Trade and other payables 96,294 70,747
Financial liabilities - borrowings
- Interest bearing loans and borrowings 128,841 120,000
------------------------------------------
225,135 190,747
----------------------------------------- --------------------- ----------------
TOTAL LIABILITIES 611,658 550,747
------------------------------------------ --------------------- ----------------
TOTAL EQUITY AND LIABILITIES 6,341,890 6,847,881
------------------------------------------ --------------------- ----------------
Statements of Changes in Equity
for the year ended 31 December 2019
Capital
Share Merger redemption Retained
capital Share premium reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Balance at 1
January 2018 5,835,587 8,862,779 2,416,667 43,333 (12,735,116) 4,423,250
Changes in
equity
Profit for the
year - - - - 779,904 779,904
Issue of shares 200,000 1,000,000 - - - 1,200,000
Costs of shares
issued - (106,020) - - - (106,020)
Balance at 31
December 2018 6,035,587 9,756,759 2,416,667 43,333 (11,955,212) 6,297,134
---------------- ------------------ ------------------- ------------------ ------------------ --------------------- ------------------
Changes in
equity
Loss for the
year - - - - (1,300,669) (1,300,669)
Issue of shares 400,000 400,000 - - - 800,000
Costs of shares
issued - (66,233) - - - (66,233)
Lapse of share
options - 10,142 - - (10,142) -
Equity-settled
share based
payments - (5,310) - - 5,310 -
Balance at 31
December 2019 6,435,587 10,095,358 2,416,667 43,333 (13,260,713) 5,730,232
---------------- ------------------ ------------------- ------------------ ------------------ --------------------- ------------------
Prospex Oil and Gas Plc
Statement of Cash Flows
for the year ended 31 December 2019
2019 2018
GBP GBP
Cash flows from operations
(Loss)/profit before income tax (1,300,669) 779,904
Depreciation of property, plant and
equipment - 429
Decrease/(increase) in trade and other
receivables 105,929 (1,057,746)
Increase/(decrease) in trade and other
payables 10,436 (1,439)
(Profit)/loss on sale of investments (40,462) 8,407
Loss/(gain) on revaluation of fixed
asset investments and loans 473,925 (1,710,418)
Finance income (76,612) (92,283)
Finance costs 50,475 10,840
Net cash outflow from operations (776,978) (2,062,306)
--------------------------------------------- -------------------- --------------------
Cash flows from investing activities
Proceeds from sale of investments 119,014 67,223
Purchase of fixed asset investments - (246,040)
Interest received - 2
Dividend received - 5,261
--------------------------------------------- -------------------- --------------------
Net cash outflow from investing activities 119,014 (173,554)
--------------------------------------------- -------------------- --------------------
Cash flows from financing activities
New loan notes - 480,000
Loan (payment)/repayments (239,554) 44,958
Share issue 800,000 1,200,000
Costs of shares issued (66,233) (106,020)
--------------------------------------------- -------------------- --------------------
Net cash inflow from financing activities 494,213 1,618,938
--------------------------------------------- -------------------- --------------------
Decrease in cash and cash equivalents (163,751) (616,922)
Cash and cash equivalents at beginning
of year 233,138 850,060
--------------------------------------------- -------------------- --------------------
Cash and cash equivalents at end of
year 69,387 233,138
--------------------------------------------- -------------------- --------------------
Notes to the financial information
Year ended 31 December 2019
1 Basis of preparation and Accounting Policies
Prospex Oil and Gas Plc is a public limited company, is
registered in England and Wales and is quoted on the AIM Market of
the London Stock Exchange Plc. The Company's registered office
address is Stonebridge House, Chelmsford Road, Hatfield Heath,
Essex CM22 7BD.
The audited financial information set out in this statement does
not constitute the Company's statutory accounts for the years ended
31 December 2019 or 31 December 2018, as defined in section 434 of
the Companies Act 2006.
Statutory accounts for 2018 have been delivered to the Registrar
of Companies and those for 2019 will be delivered in due course.
The Company's auditors, Adler Shine LLP, have reported on the 2019
accounts; their report was unqualified and did not contain
statements under s498 (2) or (3) Companies Act 2006. Their report
included a statement of material uncertainty relating to going
concern, drawing attention to the Going Concern policy below, the
reliance on future fund raising to continue the company's
activities as budgeted and the significant doubt on the ability to
continue as a going concern, should future fund raining be
unsuccessful. Their opinion is not modified in this respect. Whilst
the financial information included in this announcement has been
computed in accordance with International Financial Reporting
Standards as adopted by the EU ("IFRS") this announcement does not
itself contain sufficient information to comply with IFRS.
The principal accounting policies used in preparing this
preliminary results announcement are those that the Company applies
in its statutory accounts for the year ended 31 December 2019 and
are unchanged from those disclosed in the Company's Annual Report
and Accounts for the year ended 31 December 2018 except for the
adoption of new standards effective 1 January 2019 relating to IFRS
16 Leases. The adoption of IFRS 16 did not have a material impact
on the financial statements.
2 Going concern
The current economic environment is challenging, and the Company
has reported an operating loss for the year of GBP893,343. These
losses are expected to continue in the current accounting year to
31 December 2020.
The Company regularly carries out fund-raising exercises in
order that it can provide the necessary working capital and
investment funds for the Company. Since the year end, the Company
has raised GBP720,000 before expenses, through the issue of new
ordinary shares. The board expects to continue to raise additional
funding as and when required to cover the Group's development,
primarily from the issue of further shares or if available on
suitable terms, debt finance.
Furthermore, the directors have evaluated the impact to the
company in respect of the COVID-19 (Coronavirus) pandemic ongoing
at the time of approving these financial statements. The company's
investment activities through its subsidiary undertakings take
place in countries that have been impacted by the virus. Beyond a
short-term energy price drop, mid to long term prices remain only
marginally affected. The business has been affected but has been
able to transfer office-based activities to a "working from home"
in host countries in lock down. Fields activities so far have not
been affected but are minimal anyway. The industry by its nature
does, and is required to, interface with its regulators; to date
regulators in host countries are still engaging, via email. Whilst
it remains hard to assess the impact on timelines, the fact that
civil servants remain engaged is taken as a positive in a negative
environment. Financial markets remain volatile but have settled
down from the extremes seen in March and April 2020. The company
notes that the COVID-19 situation appears to be improving in Italy
and Spain and the UK is a few weeks behind. Whilst market
conditions, largely attributed to COVID-19, are currently tough the
directors believe the quality and long-term nature of the
underlying assets in the subsidiary undertakings will enable
further financing as required. As a result, the directors do not
consider there to be a material uncertainty to the company's
ability to continue as a going concern as a result of COVID-19.
The Directors have prepared detailed financial forecasts and
cash flows looking beyond 12 months from the date of the approval
of these financial statements. In developing these forecasts, the
Directors have made assumptions based upon their view of the
current and future economic conditions that are expected to prevail
over the forecast period. The Directors estimate that the cash held
by the Company together with known receivables will be sufficient
to support the current level of activities into the fourth quarter
of 2020. The Directors are continuing to explore sources of finance
available to the Company and based upon initial discussions with a
number of existing and potential investors they have a reasonable
expectation that they will be able to secure sufficient cash
inflows for the Company to continue its activities for not less
than 12 months from the date of approval of these financial
statements; they have therefore prepared the financial statements
on a going concern basis.
3 (Loss)/earnings per share
The loss and number of shares used in the calculation of
earnings per ordinary share are set out below:
2019 2018
GBP GBP
Basic:
(Loss)/profit for the financial
period (1,300,669) 779,904
------------------------------------ -------------- ------------------
Weighted average number of shares 1,536,880,807 1,202,086,287
(Loss)/earnings per share (0.08p) 0.06p
------------------------------------ -------------- ------------------
The loss and the weighted average number of shares used for
calculating the diluted loss per share are identical to those for
the basic loss per share. The outstanding share options and share
warrants would have the effect of reducing the loss per share and
would therefore not be dilutive under IAS 33 'Earnings per
Share'.
4 Publication of report and accounts
Full financial statements for the year ended 31 December 2019
will be posted to shareholders in due course and are now available
on the company's website www.prospexoilandgas.com .
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
FR DZGZKNMNGGZM
(END) Dow Jones Newswires
May 22, 2020 02:00 ET (06:00 GMT)
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