TIDMPVR
Providence Resources P.l.c. -- 2019 Annual Results
Dublin and London -- June 3, 2020 - Providence Resources P.l.c. (PVR LN,
PRP ID), the Irish based Energy company, today announces its Annual
Results for the year ended December 31, 2019.
FINANCIAL HIGHLIGHTS
-- Operating loss for the period of EUR25.936 million versus EUR4.425
million in 2018
-- Loss for the year of EUR26.853 million versus EUR4.779 million in 2018
-- Loss per share of 4.39 cents versus 0.80 cents in 2018
-- At 31 December 2019 total cash and cash equivalents were EUR0.710 million
versus EUR7.617 million (at 31 December 2018)
-- The Company had no debt at 31 December 2019
-- The total issued and voting share capital comprises 835,397,852 ordinary
shares of EUR0.001 each as at 2 June 2020
2019 REVIEW
The international operating environment for the oil and gas sector was
relatively stable in 2019 with commodity prices generally favourable,
and with companies continuing to invest in new projects to meet ongoing
fossil fuel demand. However, in Ireland the oil and gas industry
suffered several setbacks, initially from the proposed Climate Emergency
Measures Bill and, more recently, because of the Government's climate
action agenda and the introduction of gas only exploration licences for
new licence acreage. The Government confirmed in December that existing
licences remain unchanged with exploration for and development of both
gas and oil permitted.
2019 was an extremely challenging year for Providence Resources on
several fronts. The management and board invested considerable resources
working with APEC to progress a farm-out agreement for the Barryroe
asset which, if successfully concluded, would have secured a field
appraisal work programme and the progression of a phased field
development plan. Despite comprehensive assurances received, and
multiple contract extensions granted, APEC failed to make their promised
investment in the project. The board eventually concluded that the
farm-out would not proceed to completion and notified APEC of their
breach of contract.
During the APEC farm out process, the joint venture partners applied for
a lease undertaking permit from the Government, based upon the agreed
farm out work programme. As an element of the lease undertaking
application, both Lansdowne and Providence transferred 50% of their
equity in SEL 1/11 to APEC. The terms of the transfer included a
provision, through operator power of attorney, to transfer the equity
back to the original owners should the farm out process fail to
complete. Providence has exercised the operator's power of attorney and
is working with DCCAE to finalise the reversion of the equity provisions
to Lansdowne and Providence, the original equity holders.
Providence raised c. EUR3.4m (c. $3.76 million) (before expenses) from
shareholders in September 2019 to support working capital requirements
until February 2020 and fund a full re-structure of the business. This
wider business re-structure resulted in a significant reduction in the
Providence team and associated overheads, including the departure of the
CEO and several Non-Executive Directors. The restructure was completed
during February 2020 and working capital extended through end April
2020, following the implementation of additional cost reduction
initiatives.
Alan Linn joined the business as CEO in January 2020 with a board
mandate to revise the business strategy and prioritise the farm out of
the Barryroe asset.
In early April 2020, Providence successfully raised c. EUR3m
(c.$3.3million) (before costs) through a placing and subscription and is
now funded until April 2021, ensuring sufficient time is available to
complete an economically attractive farm out of the Barryroe Asset.
The April fundraise took place during what has proven to be an
unprecedented worldwide health and economic emergency, with the world in
"lock down" and crude prices moving briefly into negative pricing for
the first time ever. Despite the difficult environment, the capital
raise was a success thanks to the support of our shareholders.
BARRYROE OIL AND GAS FIELD (SEL1/11)
Natural gas is recognised by the Irish government as a key transition
fuel and the development of the Barryroe Field for both Gas and Oil is
expected to make a significant contribution to the Irish economy,
particularly considering the economic impacts likely to be felt in
Ireland because of the lockdown process which commenced in March and is
expected to continue through July 2020.
The Barryroe Primary Reservoir, the Base Wealden Sand, has the potential
to produce 340 MMBOE of recoverable light sweet crude oil and gas. (NASI
CPR 2013), and this is expected to be confirmed during the proposed
appraisal programme.
In January 2020, the Barryroe farm out process was re-invigorated, and
several new parties introduced to the process. One of the groups was
SpotOn Energy. Their business model involves working with an
incentivised consortium of "world-class" service companies to deliver
low cost and high-quality projects. The service company consortium
contributes to the cost of the project and participates in project
equity through a share in production revenues. SpotOn Energy manage the
project interfaces and consider themselves to be a "facilitating
operator" and project manager.
Providence Resources has entered a period of exclusive negotiation with
SpotOn Energy in relation to the Barryroe farm-out until October 2020,
following SpotOn Energy's recent GBP500,000 investment in Providence.
LICENCE SUMMARY
The Providence licence portfolio contains several high risk/high reward
exploration licences offshore West of Ireland. The prospective basins
are in deep water; remain to be proven and are lightly explored.
Following a detailed review, it was concluded that the likelihood of
progressing the extensive work programmes which these licences require,
are unlikely to progress in the mid-term in light of the uncertainty
created by the governmen's ban on oil exploration for new licences.
Several withdrawal applications have been submitted to the government
with the aim of further reducing the Providence cost base and
re-directing activity onto shallow water licences in proven basins with
near term value potential.
A summary of the remaining licences is provided in the Table.
Licence Issued Asset Operator Partners PVR % Type
----------- ------ -------- ----------- --------- ------ ---------------------
NORTH CELTIC SEA BASIN
------------------------------------------------------------------------------------
SEL 1/11 2011 Barryroe Providence* Lansdowne 80% Appraisal/Exploration
----------- ------ -------- ----------- --------- ------ ---------------------
SEL 2/07 2007 Hook Providence Atlantic, 72.5% Appraisal
Head Sosina
----------- ------ -------- ----------- --------- ------ ---------------------
Lease 2016 Helvick Providence Atlantic, 56.25% Appraisal
Undertaking MFDevCo,
Lansdowne
, Sosina
----------- ------ -------- ----------- --------- ------ ---------------------
Lease 2016 Dunmore Providence Atlantic, 65.25% Appraisal
Undertaking MFDevCo,
Sosina
----------- ------ -------- ----------- --------- ------ ---------------------
SOUTHERN PORCUPINE BASIN
------------------------------------------------------------------------------------
FEL 2/19 2019 Avalon Providence Sosina 80% Exploration
----------- ------ -------- ----------- --------- ------ ---------------------
FEL 3/04 2004 Dunquin Eni Sosina 26.85% Exploration
----------- ------ -------- ----------- --------- ------ ---------------------
KISH BANK BASIN
------------------------------------------------------------------------------------
SEL 2/11 2011 Kish Providence N/A 100% Exploration
Bank
----------- ------ -------- ----------- --------- ------ ---------------------
ST GEORGE'S CHANNEL BASIN
------------------------------------------------------------------------------------
SEL 1/07 2007 Dragon Providence N/A 100% Exploration/Appraisal
----------- ------ -------- ----------- --------- ------ ---------------------
*Held through a wholly owned subsidiary Exola DAC
Withdrawal application submitted
During 2019 and early 2020 the following licences have been relinquished
or withdrawal notices have been submitted.
Summary of recent relinquishments:
FEL 6/14 (Newgrange): Relinquished December 2019
FEL 2/14 (Diablo): Relinquished December 2019
FEL 2/14 (Spanish Point) Relinquishment expected to be effective June
2020 following a lengthy review process to agree work programme offsets
with the government.
Both FEL 2/19 and FEL 3/04 have been flagged with the government as
relinquishment candidates and the withdrawal process commenced for both
licences.
BOARD TRANSITION
Dr. Angus McCoss, one of our independent directors has decided to
re-enter industry in an executive capacity and will not be standing for
re-election at the AGM. Angus has served the company since June 2017,
helping to transition and stabilise the business in recent months. We
wish him every success in his new venture. Angus will remain in position
until the AGM on July 20 2020 when he will stand down as a director. A
process is underway to identify a replacement(s) and introduce
additional development and operational experience onto the board in line
with the strategy to focus primarily on the appraisal and development of
the Barryroe Oil and Gas Field.
INVESTOR ENQUIRIES
---------------------------
Providence Resources P.l.c. Tel: +353 1 219 4074
Alan S Linn,
Chief Executive Officer
Cenkos Securities plc Tel: +44 131 220 9771
Neil McDonald/Derrick Lee
J&E Davy Tel: +353 1 679 6363
Anthony Farrell
MEDIA ENQUIRIES
---------------------------
Murray Consultants Tel: +353 1 498 0300 / +35387 255 8300
Pauline McAlester
PROVIDENCE RESOURCES Plc
Condensed consolidated income statement
for the year ended 31 December 2019
Year ended 31 December 2019 Year ended 31 December 2018
Audited Audited
Notes EUR'000 EUR'000
--------------- ----------- ----------------------------------- -----------------------------
Continuing
operations
--------------- ----------- ----------------------------------- -----------------------------
Administration
expenses 2 (4,542) (3,368)
--------------- ----------- ----------------------------------- -----------------------------
Pre-licence
expenditure (273) (334)
--------------- ----------- ----------------------------------- -----------------------------
Impairment of
exploration
and evaluation
assets (21,121) (723)
--------------- ----------- ----------------------------------- -----------------------------
Operating loss 1 (25,936) (4,425)
--------------- ----------- ----------------------------------- -----------------------------
Finance income 30 96
--------------- ----------- ----------------------------------- -----------------------------
Finance expense 3 (947) (450)
--------------- ----------- ----------------------------------- -----------------------------
Loss before
income tax (26,853) (4,779)
--------------- ----------- ----------------------------------- -----------------------------
Income tax
expense - -
--------------- ----------- ----------------------------------- -----------------------------
Loss for the
financial
year (26,853) (4,779)
--------------- ----------- ----------------------------------- -----------------------------
Loss per share
(cent)
--------------- ----------- ----------------------------------- -----------------------------
Basic and
diluted loss
per share 7 (4.39) (0.80)
--------------- ----------- ----------------------------------- -----------------------------
The total loss for the year is entirely attributable to equity holders
of the Company.
PROVIDENCE RESOURCES Plc
Condensed consolidated statement of comprehensive income
for the year ended 31 December 2019
Year ended 31 December 2019 Year ended 31 December 2018
Audited Audited
Notes EUR'000 EUR'000
------------------------------------------------------------- ----- --------------------------- ---------------------------
Loss for the financial year (26,853) (4,779)
------------------------------------------------------------- ----- --------------------------- ---------------------------
Other comprehensive loss
------------------------------------------------------------- ----- --------------------------- ---------------------------
Other items of comprehensive income that may be reclassified
into profit and loss:
------------------------------------------------------------- ----- --------------------------- ---------------------------
Foreign exchange translation differences 3 1,195 2,703
------------------------------------------------------------- ----- --------------------------- ---------------------------
Total comprehensive loss for the year (25,658) (2,076)
------------------------------------------------------------- ----- --------------------------- ---------------------------
The total comprehensive loss for the year is entirely attributable to
equity holders of the Company.
PROVIDENCE RESOURCES Plc
Condensed consolidated statement of financial position
as at 31 December 2019
31 December 2019 31 December 2018
Audited Audited
Notes EUR'000 EUR'000
--------------------------------------------------- ----- ---------------- ----------------
Assets
--------------------------------------------------- ----- ---------------- ----------------
Exploration and evaluation assets 4 65,377 81,867
--------------------------------------------------- ----- ---------------- ----------------
Property, plant and equipment 38 28
--------------------------------------------------- ----- ---------------- ----------------
Total non-current assets 65,415 81,895
--------------------------------------------------- ----- ---------------- ----------------
_______ _______
--------------------------------------------------- ----- ---------------- ----------------
Trade and other receivables 398 464
--------------------------------------------------- ----- ---------------- ----------------
Cash and cash equivalents 710 7,617
--------------------------------------------------- ----- ---------------- ----------------
Total current assets 1,108 8,081
--------------------------------------------------- ----- ---------------- ----------------
_______ _______
--------------------------------------------------- ----- ---------------- ----------------
Total assets 66,523 89,976
--------------------------------------------------- ----- ---------------- ----------------
Equity
--------------------------------------------------- ----- ---------------- ----------------
Share capital 5 71,512 71,452
--------------------------------------------------- ----- ---------------- ----------------
Share premium 5 251,300 247,918
--------------------------------------------------- ----- ---------------- ----------------
Undenominated capital 623 623
--------------------------------------------------- ----- ---------------- ----------------
Foreign currency translation reserve 10,087 8,892
--------------------------------------------------- ----- ---------------- ----------------
Share based payment reserve 642 1,745
--------------------------------------------------- ----- ---------------- ----------------
Retained deficit (274,898) (248,759)
--------------------------------------------------- ----- ---------------- ----------------
Total equity attributable to equity holders of the
Group 59,266 81,871
--------------------------------------------------- ----- ---------------- ----------------
Liabilities
--------------------------------------------------- ----- ---------------- ----------------
Decommissioning provision 6 5,733 7,406
--------------------------------------------------- ----- ---------------- ----------------
Lease liability 9 -
--------------------------------------------------- ----- ---------------- ----------------
Total non-current liabilities 5,742 7,406
--------------------------------------------------- ----- ---------------- ----------------
Trade and other payables 1,515 699
--------------------------------------------------- ----- ---------------- ----------------
Total current liabilities 1,515 699
--------------------------------------------------- ----- ---------------- ----------------
Total liabilities 7,257 8,105
--------------------------------------------------- ----- ---------------- ----------------
Total equity and liabilities 66,523 89,976
--------------------------------------------------- ----- ---------------- ----------------
PROVIDENCE RESOURCES Plc
Condensed consolidated statement of changes in Equity
for the year ended 31 December 2019
Foreign Share
Currency Based
Share Undenominated Share Translation Payment Retained
Capital Capital Premium Reserve Reserve Deficit Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------- ------- ------------- ------- ----------- ------- --------- --------
At 1 January
2018 71,452 623 247,918 6,189 1,502 (243,980) 83,704
-------------- ------- ------------- ------- ----------- ------- --------- --------
Total
comprehensive
expense
-------------- ------- ------------- ------- ----------- ------- --------- --------
Loss for
financial
year - - - - - (4,779) (4,779)
-------------- ------- ------------- ------- ----------- ------- --------- --------
Currency
translation - - - 2,703 - - 2,703
-------------- ------- ------------- ------- ----------- ------- --------- --------
Total
comprehensive
expense - - - 2,703 - (4,779) (2,076)
-------------- ------- ------------- ------- ----------- ------- --------- --------
Transactions
with owners,
recorded
directly in
equity
-------------- ------- ------------- ------- ----------- ------- --------- --------
Share based
payments
expense - - - - 243 - 243
-------------- ------- ------------- ------- ----------- ------- --------- --------
Share options
lapsed in
year - - - - - - -
-------------- ------- ------------- ------- ----------- ------- --------- --------
Transactions
with owners,
recorded
directly in
equity - - - - 243 - 243
-------------- ------- ------------- ------- ----------- ------- --------- --------
At 31 December
2018 71,452 623 247,918 8,892 1,745 (248,759) 81,871
-------------- ------- ------------- ------- ----------- ------- --------- --------
At 1 January
2019 71,452 623 247,918 8,892 1,745 (248,759) 81,871
-------------- ------- ------------- ------- ----------- ------- --------- --------
Total
comprehensive
expense
-------------- ------- ------------- ------- ----------- ------- --------- --------
Loss for
financial
year - - - - - (26,853) (26,853)
-------------- ------- ------------- ------- ----------- ------- --------- --------
Currency
translation - - - 1,195 - - 1,195
-------------- ------- ------------- ------- ----------- ------- --------- --------
Total
comprehensive
expense - - - 1,195 - (26,853) (25,658)
-------------- ------- ------------- ------- ----------- ------- --------- --------
Transactions
with owners,
recorded
directly in
equity
-------------- ------- ------------- ------- ----------- ------- --------- --------
Share based
payments
expense - - - - 40 - 40
-------------- ------- ------------- ------- ----------- ------- --------- --------
Share options
lapsed in
year - - - - (1,143) 1,143 -
-------------- ------- ------------- ------- ----------- ------- --------- --------
Shares issued
in year 60 - 3,382 - - (429) 3,013
-------------- ------- ------------- ------- ----------- ------- --------- --------
Transactions
with owners,
recorded
directly in
equity 60 - 3,382 - (1,103) 714 3,053
-------------- ------- ------------- ------- ----------- ------- --------- --------
At 31 December
2019 71,512 623 251,300 10,087 642 (274,898) 59,266
-------------- ------- ------------- ------- ----------- ------- --------- --------
PROVIDENCE RESOURCES Plc
Condensed consolidated statement of cash flows
for the year ended 31 December 2019
Year ended Year ended
31 31
December December
2019 2018
------------------------------------------------------ ---------- ----------
Audited Audited
------------------------------------------------------ ---------- ----------
EUR'000 EUR'000
------------------------------------------------------ ---------- ----------
Cash flows from operating activities
------------------------------------------------------ ---------- ----------
Loss after tax for year (26,853) (4,779)
------------------------------------------------------ ---------- ----------
Adjustments for:
------------------------------------------------------ ---------- ----------
Depletion and depreciation 35 55
------------------------------------------------------ ---------- ----------
Amortisation of intangible assets - 88
------------------------------------------------------ ---------- ----------
Impairment of exploration and evaluation assets 21,121 723
------------------------------------------------------ ---------- ----------
Finance income (30) (96)
------------------------------------------------------ ---------- ----------
Finance expense 947 450
------------------------------------------------------ ---------- ----------
Equity settled share payment charge 40 243
------------------------------------------------------ ---------- ----------
Foreign exchange (122) (677)
------------------------------------------------------ ---------- ----------
Change in trade and other receivables 66 7,196
------------------------------------------------------ ---------- ----------
Change in trade and other payables 825 (10,885)
------------------------------------------------------ ---------- ----------
Net cash outflow from operating activities (3,971) (7,682)
------------------------------------------------------ ---------- ----------
Cash flows from investing activities:
------------------------------------------------------ ---------- ----------
Interest received 30 96
------------------------------------------------------ ---------- ----------
Acquisition of exploration and evaluation assets (6,075) (5,043)
------------------------------------------------------ ---------- ----------
Acquisition of property, plant and equipment (56) (21)
------------------------------------------------------ ---------- ----------
Net cash used in investing activities (6,101) (4,968)
------------------------------------------------------ ---------- ----------
Proceeds from issue of share capital 3,442 -
------------------------------------------------------ ---------- ----------
Issue costs (429) -
------------------------------------------------------ ---------- ----------
Net cash from financing activities (3,013) -
------------------------------------------------------ ---------- ----------
Net decrease in cash and cash equivalents (7,059) (12,650)
------------------------------------------------------ ---------- ----------
Cash and cash equivalents at 1 January 7,617 19,603
------------------------------------------------------ ---------- ----------
Effect of exchange rate fluctuations on cash and cash
equivalents 152 664
------------------------------------------------------ ---------- ----------
Cash and cash equivalents at 31 December 710 7,617
------------------------------------------------------ ---------- ----------
PROVIDENCE RESOURCES Plc
Note 1
Reporting entity
Providence Resources Plc ("the Company") is a company domiciled in
Ireland. The registered number of the Company is 268662 and the address
of its registered office is Paramount Court, Corrig Road, Sandyford
Business Park, Dublin 18, D18 R9C7.
Basis of preparation
The consolidated preliminary financial results announcement of the
Company, for the year ended 31 December 2019 comprises of the Company
and its subsidiaries (together referred to as the "Group").
The financial information included in this consolidated preliminary
financial results announcement has been extracted from the Group's
Financial Statements for the year ended 31 December 2019 and is prepared
based on the accounting policies set out therein, which are consistent
with those applied in the prior year with the exception of the effect of
the new accounting standards listed below. As permitted by European
Union (EU) law and in accordance with AIM/ESM rules, the Group Financial
Statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) and their interpretations issued by the
International Accounting Standards Board (IASB) as adopted by the EU.
The financial information prepared in accordance with IFRSs as adopted
by the EU included in this report does not include all the information
and disclosures required in the full statutory financial statements. The
Group Financial Statements will be filed with the Company's annual
return in the Companies Registration Office and circulated to
shareholders in due course.
The information included has been derived from the Group Financial
Statements which were approved by the Board of Directors on 2 June 2020.
The auditors have reported on the financial statements for the year
ended 31 December 2019 and their report was unqualified and contains a
"material uncertainty related to going concern" paragraph (see going
concern note below for further details). The financial information for
the year ended 31 December 2018 represents an abbreviated version of the
Group's statutory financial statements on which an unqualified audit
report was issued and which have been filed with the Companies
Registration Office. The financial information is presented in Euro,
rounded to the nearest thousand where applicable.
The preparation of the condensed consolidated preliminary financial
information requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts
of assets and liabilities, income and expenses. Actual results could
differ materially from these estimates. In preparing this financial
information, the significant judgements made by management in applying
the Company's accounting policies and the key sources of estimation
uncertainty are the same as those that applied to the consolidated
financial statements as at and for the year ended 31 December 2018,
except as noted below.
Changes in significant accounting policies
Adoption of IFRS 16 Leases
The Group has initially adopted IFRS 16 Leases from 1 January 2019.
IFRS 16 introduced a single, on-balance sheet accounting model for
lessees. As a result, the Group, as a lessee, has recognised
right-of-use assets representing its rights to use the underlying assets
and lease liabilities representing its obligation to make lease
payments. The Group has applied IFRS 16 using the modified
retrospective approach. Accordingly, the comparative information
presented for 2018 has not been restated - i.e. it is presented, as
previously reported, under IAS 17 and related interpretations.
The adoption of IFRS 16 eliminated the classification of leases as
either operating leases or finance leases and introduced a single lessee
accounting model. The Group now assesses whether a contract is or
contains a lease based on the new definition of a lease. Under IFRS 16,
a contract is, or contains, a lease if the contract conveys a right to
control the use of an identified asset for a period of time in exchange
for consideration.
Impact of adoption of IFRS 16
The Group presents right-of-use assets in 'property, plant and
equipment', in the same line item as it presents underlying assets of
the same nature that it owns. The carrying amounts of right-of-use
assets are as follows.
Land and
-------------------- --------- -------
buildings Total
-------------------- --------- -------
EUR'000 EUR'000
-------------------- --------- -------
At 1 January 2019 46 46
-------------------- --------- -------
At 31 December 2019 27 27
-------------------- --------- -------
The Group presents lease liabilities in 'creditors' in the balance
sheet. The carrying amounts of lease liabilities are as follows.
Current Non-current
-------------------- ----------- ----------- -------
lease lease
-------------------- ----------- ----------- -------
liabilities liabilities Total
-------------------- ----------- ----------- -------
EUR'000 EUR'000 EUR'000
-------------------- ----------- ----------- -------
At 1 January 2019 18 28 46
-------------------- ----------- ----------- -------
At 31 December 2019 18 9 27
-------------------- ----------- ----------- -------
The right-of-use asset is initially measured at cost, and subsequently
at cost less any accumulated depreciation and impairment losses and
adjusted for certain remeasurements of the lease liability. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, restoration costs and lease payments made
at or before the commencement date less any lease incentives received.
The right-of-use asset is depreciated on a straight-line basis over the
shorter of its estimated useful life and the lease term. Where the
lease contains a purchase option the asset is written off over the
useful life of the asset when it is reasonably certain that the purchase
option will be exercised. Right-of-use assets are subject to impairment
testing.
The lease liability is initially measured at the present value of
certain lease payments to be made over the lease term. The lease
payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by the
Group and payments of penalties for terminating a lease, if the lease
term reflects the Group exercising the option to terminate. The
variable lease payments that do not depend on an index or a rate are
recognised as an expense in the period in which the event or condition
that triggers the payment occurs. The Group has elected to avail of the
practical expedient not to separate lease components from any associated
non-lease components.
Going concern
The Group has a net asset position of EUR59.3m, including cash on hand
of EUR0.7m at 31 December 2019. It recognised a loss for the year then
ended of EUR26.9m.
The Directors have considered both current and future expenditure
commitments and the options available to fund such commitments including
further farm-out arrangements; equity funding alternatives and the
implementation of further cost cutting measures.
In April 2020, the Group announced that it had entered into an exclusive
non-binding agreement with SpotOn Energy for a period of six months.
This period of exclusivity provides time for the Group and SpotOn Energy
to progress financial terms and a work program which will materially
reduce the Group's appraisal and development cost exposure. Under the
term sheet, SpotOn Energy commits to funding the Barryroe appraisal and
development program and contributing to certain operator costs. This
outcome is dependent upon the successful completion of the farm-out
arrangement with SpotOn Energy.
In April 2020, the Company raised c.EUR3m (c. USD $3.3m) (before related
costs) through an equity and subscription placing. SpotOn Energy
participated in the subscription placing, committing to invest
GBP300,000 as part of the placing. The placing and subscription
securities comprised of 1 ordinary share of EUR0.001, one 3p warrant
(exercisable until May 2021) and one 9p warrant (exercisable until May
2022).
On 28 May 2020, the Company received the further GBP200,000 from SpotOn
Energy that had been committed to be paid within six weeks of the
announcement of the placing.
The Directors have reviewed the current climate legalisation and the
commitment by the Irish government to meet the Paris targets on climate
change and assessed the implications this is likely to have upon the
business. They note that, whilst future oil exploration is now banned in
Irish waters, all existing hydrocarbon licences will be allowed to run
their full course. This change in policy does not impact the appraisal
and development of Barryroe field.
The Directors have considered carefully the financial position of the
Group and, within this context, have prepared cash flow forecasts for
the period to 30 June 2021. The Directors have concluded based on their
consideration of these cash flow forecasts, including the factors
outlined above, taking all information that is currently available into
account and noting the main risk factor in these cashflow forecasts
being the completion of a commercially acceptable farm-out arrangement
with SpotOn Energy or obtaining an alternative farm-out partner, that
the Group will have sufficient funds to cover the levels of working
capital and capital expenditure expected over the next 12 months,
consistent with its strategy as an exploration and development company.
These events and conditions including the completion of a farm-out
arrangement with SpotOn Energy represents a material uncertainty that
may cast significant doubt upon the Group and Company's ability to
continue as a going concern, and the Directors note that the Group and
Company may, as a consequence, be unable to realise its assets and
discharge its liabilities in the normal course of business. Nevertheless,
after making enquiries and considering the uncertainties described above,
the Directors have a reasonable expectation that the Group and Company
have adequate resources to continue in operational existence for the
foreseeable future. For these reasons, the Directors have adopted the
going concern basis in preparing the annual financial statements and the
financial statements do not include any adjustments that would be
necessary if this basis were inappropriate.
Operating segments
Operating segment information is presented in the consolidated financial
statements in respect of the Group's geographical segments which
represent the financial basis by which the Group manages its business.
Performance is measured based on segment result and total asset value as
included in the internal management reports that are reviewed by the
Group's board of Directors, who are determined to be the chief operating
decision maker ("CODM"), which management believe is the most relevant
information when evaluating the results of certain segments relative to
other entities that operate within that industry.
All exploration and evaluation assets held by the Group are located in
the Republic of Ireland and accordingly the Group has identified one
reporting segment, being:
--Republic of Ireland exploration assets: oil and gas exploration assets
in the Republic of Ireland
Note 2
Administration expenses
Year Year ended
ended 31 31
December December
2019 2018
------------------------------------------------------- --------- ----------
Audited Audited
------------------------------------------------------- --------- ----------
EUR'000 EUR'000
------------------------------------------------------- --------- ----------
Corporate, exploration and development expenses 3,897 4,766
------------------------------------------------------- --------- ----------
Restructuring costs 1,170 -
------------------------------------------------------- --------- ----------
Foreign exchange gain (120) (216)
------------------------------------------------------- --------- ----------
Total administration expenses for the year 4,947 4,550
------------------------------------------------------- --------- ----------
Capitalised in exploration and evaluation assets (Note
4) (405) (1,182)
------------------------------------------------------- --------- ----------
Total charged to the income statement 4,542 3,368
------------------------------------------------------- --------- ----------
Note 3
Finance Expense
Year ended Year ended
31 December 31 December
2019 2018
---------------------------------------------------- ----------- -----------
Audited Audited
---------------------------------------------------- ----------- -----------
EUR'000 EUR'000
---------------------------------------------------- ----------- -----------
Recognised in income statement:
---------------------------------------------------- ----------- -----------
Unwind of discount on decommissioning provision 521 382
---------------------------------------------------- ----------- -----------
Foreign exchange loss on decommissioning provision 424 68
---------------------------------------------------- ----------- -----------
Interest on right to use asset 2 -
---------------------------------------------------- ----------- -----------
Total finance expense recognised in income statement 947 450
---------------------------------------------------- ----------- -----------
Recognised in other comprehensive income:
---------------------------------------------------- ----------- -----------
Foreign exchange translation differences on foreign
operations 1,195 2,703
---------------------------------------------------- ----------- -----------
Note 4
Exploration and evaluation asset
EUR'000
------------------------------ --------
Cost and net book value
------------------------------ --------
At 1 January 2018 74,831
------------------------------ --------
Additions 7,499
------------------------------ --------
Administration expenses 1,182
------------------------------ --------
Cash calls received in year (3,638)
------------------------------ --------
Impairment charge (723)
------------------------------ --------
Foreign exchange translation 2,716
------------------------------ --------
At 31 December 2018 81,867
------------------------------ --------
Additions 5,670
------------------------------ --------
Administration expenses 405
------------------------------ --------
Impairment charge (see below) (23,763)
------------------------------ --------
Foreign exchange translation 1,198
------------------------------ --------
At 31 December 2019 65,377
------------------------------ --------
The exploration and evaluation asset balance at 31 December 2019 relates
to the Barryroe asset. The directors assessed all activities ongoing
within exploration and evaluation assets and determined that an
impairment charge of EUR23.8 million (2018: EUR0.7 million) was required
at 31 December 2019. Following this assessment and impairment of
certain assets, the directors reassessed the probable decommissioning
period which resulted in a fair value credit of EUR2.6m to the income
statement in the abandonment provision (see note 16). The net of these
adjustments, EUR21.2m, is presented as impairment of exploration and
evaluation assets within the income statement.
The directors recognise that the future realisation of the Barryroe
asset is dependent on future successful exploration and appraisal
activities and the subsequent economic production of hydrocarbon
reserves.
Note 5
Share Capital and Share Premium
Number
('000) EUR'000
Authorised
Deferred shares of EUR0.011 each (a) at beginning
of year 1,062,442 11,687
Deferred shares of EUR0.011 each (a) each at end of
year 9,944,066 109,385
Ordinary shares of EUR0.10 each at beginning of year 986,847 98,685
Ordinary shares of EUR0.001 each at end of year 986,847 987
(a) The deferred shares do not entitle the shareholder to receive
a dividend or other distribution, do not entitle the shareholder to
receive notice of or vote at any general meeting of the Company, and do
not entitle the shareholder to any proceeds on a return of capital or
winding up of the Company.
Note 5
Share Capital and Share Premium (continued)
Issued Share Share
--------------------------------------- --------- ------- -------
Number capital premium
--------------------------------------- --------- ------- -------
000's EUR'000 EUR'000
--------------------------------------- --------- ------- -------
Deferred Shares of EUR0.011 each
--------------------------------------- --------- ------- -------
At 31 December 2018 1,062,442 11,687 5,691
--------------------------------------- --------- ------- -------
Re-designated as Ordinary Shares at 30
--------------------------------------- --------- ------- -------
September 2019 (see below) 5,378,931 59,168 -
--------------------------------------- --------- ------- -------
At 31 December 2019 6,441,373 70,855 5,691
--------------------------------------- --------- ------- -------
Ordinary Shares of EUR0.001 each
At 31 December 2018 (Ordinary
--------------------------------------- --------- ------ -------
Shares of EUR0.1 each) 597,659 59,765 242,227
--------------------------------------- --------- ------ -------
Re-designated as Ordinary Shares at 30
--------------------------------------- --------- ------ -------
September 2019 (see below) 597,659 597 242,227
--------------------------------------- --------- ------ -------
Shares issued during the year 59,766 60 3,382
--------------------------------------- --------- ------ -------
At 31 December 2019 (Ordinary
--------------------------------------- --------- ------ -------
Shares of EUR0.001) 657,425 657 245,659
--------------------------------------- --------- ------ -------
At 31 December 2019 (Total
--------------------------------------- --------- ------ -------
Deferred and Ordinary Shares) 7,098,798 71,512 251,300
--------------------------------------- --------- ------ -------
On 30 September 2019, the Company carried out a sub-division and
re-designation of Ordinary shares, whereby each EUR0.10 Ordinary Share
was converted into a EUR0.001 Ordinary Share and 9 Deferred Shares of
EUR0.011 each.
On 30 September 2019, the Company issued 59,765,890 Ordinary Shares
which raised approximately EUR3.44m ($3.76 million) before expenses.
Note 6
Decommissioning provisions
2019 2018
--------------------------------------------- ------- -------
EUR'000 EUR'000
--------------------------------------------- ------- -------
At beginning of year 7,406 6,956
--------------------------------------------- ------- -------
Unwinding of discount 521 382
--------------------------------------------- ------- -------
Foreign exchange loss 448 68
--------------------------------------------- ------- -------
Fair value adjustment in provision liability (2,642) -
--------------------------------------------- ------- -------
At end of year 5,733 7,406
--------------------------------------------- ------- -------
Decommissioning costs are expected to be incurred over the remaining
lives of the fields, which are estimated to be between 2025 and 2027.
During the year, the Group reassessed the estimated decommissioning
period and this has resulted in a fair value adjustment of EUR2.6m. This
adjustment was netted against the exploration and evaluation impairment
line within the income statement. The provision for decommissioning is
reviewed annually. The provision has been calculated assuming industry
established oilfield decommissioning techniques and technology at
current prices and is discounted at 10% (2018: 10%) per annum,
reflecting the associated risk profile.
Note 7
Earnings per share
31
December 31 December
2019 2018
----------------------------------------------------- ---------- -----------
Audited Audited
----------------------------------------------------- ---------- -----------
EUR'000 EUR'000
----------------------------------------------------- ---------- -----------
Total Total
----------------------------------------------------- ---------- -----------
Loss attributable to equity holders of the Company (26,853) (4,799)
----------------------------------------------------- ---------- -----------
The basic weighted average number of ordinary shares
in issue is calculated as follows:
----------------------------------------------------- ---------- -----------
In issue at beginning and end of year ('000s) 597,659 597,659
----------------------------------------------------- ---------- -----------
Adjustment for share issue in year 14,308
----------------------------------------------------- ---------- -----------
Weighted average number of ordinary shares ('000s) 611,967 597,659
----------------------------------------------------- ---------- -----------
Basic and diluted loss per share (cent) (4.39) (0.80)
----------------------------------------------------- ---------- -----------
There is no difference between the basic loss per ordinary share and the
diluted loss per ordinary share for the current year as all potentially
dilutive ordinary shares outstanding are anti-dilutive in relation to
continuing operations.
Note 8
Related party transactions
Mr. Tony O'Reilly, Chief Executive, held a service contract, effective
from 1 April 2017, with the Company in respect of services outside of
the Republic of Ireland through a company beneficially owned by him,
Kildare Consulting Limited. This contract was renewed on 1 April 2019.
The renewed contract was a for a two-year duration and was subject to a
one-year notice's period. On the 6 December 2019, this contract was
terminated by the Company. The emoluments and fees payable under the
above-mentioned contract amounted to EUR865,950 for the year ended 31
December 2019. The above figure includes a settlement payment of
EUR448,500 for the early termination of his contract.
Note 9
Commitments
The Group has capital commitments of approximately EUR0.6m to contribute
to its share of costs of exploration and evaluation activities during
2020.
Note 10
Post Balance Sheet Events
In April 2020, the Company signed an exclusivity agreement with SpotOn
Energy Limited ('SpotOn') covering the period to 31 October 2020. The
objective of the agreement is to allow the Group and SpotOn to agree an
appraisal work program for the development of the Barryroe field and to
develop commercial terms with the aim of concluding a binding agreement
within that period.
In April 2020, the Company announced that it raised c. EUR3m (c. $3.3m)
(before expenses) in a placing and subscription of securities of the
Company. Each of these securities comprised one of Ordinary share, one
3p warrant and one 9p warrant. SpotOn Energy invested GBP300,000
through the subscription agreement and has committed to investing a
further c. EUR200,000 within 6 weeks of the placing announcement at the
then market price by way of a further share subscription. All
resolutions associated with the equity raising were passed at the
Extraordinary General Meeting held on 5 May 2020.
On 28 May 2020, the Company received the GBP200,000 from SpotOn Energy
and will issue the new shares based on the closing price of May 21, 2020
of GBP0.0327.
The Group is monitoring the impact of Covid-19 on its business and notes
that it has had a negative impact on global demand due to the lockdowns
which have been implemented around the world. While the Group does not
currently produce oil or gas, the pandemic could have an impact on the
timelines for working through our projects. The potential related
impacts are considered non-adjusting events for these financial
statements. Consequently, there is no impact on the recognition and
measurement of assets and liabilities.
There have been no other significant events since the balance sheet date
which would require disclosure in or amendment of these financial
statements apart from the above.
(END) Dow Jones Newswires
June 03, 2020 09:48 ET (13:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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