TIDMDELT
RNS Number : 6357L
Deltic Energy PLC
14 September 2021
14 September 2021
Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural
Resources
Deltic Energy Plc ("Deltic" or "the Company")
Interim Results
Deltic Energy Plc, the AIM-quoted natural resources investing
company with a high impact exploration and appraisal portfolio
focused on the Southern and Central North Sea, is pleased to
announce its interim results for the six months ended 30 June
2021.
Highlights
-- Confirmation of first well to be drilled by Deltic on the Pensacola Prospect (Licence P2252)
o Deltic-Shell JV scheduled to drill Pensacola well in Q2
2022
o Well planning rapidly progressing with site survey
commenced
-- Transformational farm-out deal with Cairn Energy PLC ("Cairn") over five Deltic licences
o Introduction of Cairn further enhances Deltic's strong partner
base
o Endorsement of the quality of Deltic's assets, technical team
and strategy to identify opportunities and attract partners
o Will accelerate development of Deltic's core Southern North
Sea (SNS) licences and see significant investment through to a
drilling decision.
-- 3D seismic survey over P2428, the Cupertino Area, has commenced
-- The Company has retained a strong balance sheet with cash of
GBP11.1m as at 30 June 2021 (30 June 2020: GBP12.8m)
-- Loss for the period of GBP 691,754 (six months to 30 June 2020: GBP869,505)
-- Cash out flow for the period of GBP873, 064 ( six months to 30 June 2020: GBP1,030,654)
Graham Swindells, CEO, commented:
"I am extremely pleased with my team's achievements in 2021 so
far, with great progress across the portfolio. The decision to
drill Pensacola and transformational deal with Cairn have been
particular highlights. Both demonstrate our strategy to build a
diverse portfolio of opportunities and attract high quality
partners. We are looking forward to commencing our partnership with
Cairn, as well as continuing our work with Shell as we progress
towards drilling our high impact SNS gas prospects. The next twelve
months are set to be an exciting time for our company."
C ha ir man's Statement
Has the global population ever experienced a single event which
has so dominated its communities? Reading my Chairman's statement
from a year ago, in September 2020, the pandemic was a dominant
force. World leaders had no idea if this would cause health systems
to buckle; economies were on hold; and our sector faced pressures
from commodity price volatility.
A year on, while challenges as always remain in our sector, our
situation is again transformed. This time for the better.
Over the last 12 months, economies have begun to recover.
Pent-up demand on a global scale has driven the oil price from $40
- $45 per barrel to a stable $70 - $75 per barrel. Natural Gas
prices, a strategic aspect of the Deltic Energy business plan, have
reached all-time record highs of well over 100p/therm.
At a national level, the UK government has demonstrated that it
understands the necessity of these natural resources for our
economy and in the lives of people. Jobs and Treasury receipts, in
both direct and indirect tax income, all benefit from this
industry.
In the last year, the UK Government has recognised, through
formal policy such as the North Sea Transition Deal, that a healthy
domestic production of oil and gas, with mitigation, is part of the
solution, not part of the problem. The independent Committee on
Climate Change has effectively stated: "No gas means no net zero"
for 2050 greenhouse gas emissions.
Deltic's business model, strategy and daily operations are
entirely aligned with this country's energy requirements and this
government's view. We use gas to heat homes, light rooms and cook
meals. That's how simple it is; how fundamental our work is to the
way of life of families across the nations of the UK. We need
commodities such as natural gas and we should be producing it,
where possible, from domestic sources which are governed by some of
the strictest environmental controls globally. So let's control its
production and responsibly deal with the by-product rather than
assume (or ignore how) it will be dealt with elsewhere in the
world.
Deltic is fully committed to the government's net zero targets
and our gas focussed portfolio will allow us to play our part in
contributing to the energy transition. Our recently announced
multi-licence deal with Cairn over multiple gas prospects in
addition to our existing partnership with Shell is an example of
the repeatability of our business model and will allow us to
accelerate the development of our conveyor belt of UK gas assets in
a manner which supports the Government's climate change goals.
Mark Lappin
Chairman
14 September 2021
CEO Statement
Despite the UK being in lockdown for the majority of the first
three months of 2021, Deltic has had a very successful year to
date, making significant progress as we continue to execute our
natural gas focussed exploration strategy. Particular highlights
have been the achievement of a transformational deal with Cairn,
which will see Cairn farm in to five of Deltic's SNS gas licences,
as well as the positive well investment decision from Shell to
commit to the drilling of the Pensacola Prospect on our licence
P2252, both of which create a strong platform for further
success.
Cairn Energy Farm-in to Licences P2560, 2561, 2562, 2567 and
2428
Deltic started the year having recently been awarded six
additional North Sea licences. This success allowed the Company to
create an extremely strong strategic position of contiguous gas
licences in the Southern North Sea, built up through the previous
two licensing rounds. This provides the Company with a valuable
core of licences and significant running room to facilitate an
entire basin entry, as opposed to being confined to a single
licence farm-out.
The groundwork for this transaction was laid during 2020 with
the identification of additional prospectivity on P2428 (Cupertino
Area), following the delivery of reprocessed seismic data. Three
distinct prospects were delineated in the Zechstein, Leman
Sandstone and the Carboniferous. A farm out process commenced
shortly before the start of the year, which attracted a significant
level of interest in this licence with the Plymouth Zechstein Reef
prospect emerging as the primary target. It quickly became apparent
that interest extended beyond that of P2428 to include a number of
the additional SNS licences awarded to Deltic in the 32(nd)
Licensing Round, including Licence P2567 which contains the Cadence
Prospect.
On 12 August 2021, the Company was delighted to announce that it
had entered into a binding, conditional farm-out agreement in
relation to five of its gas licences in the Southern North Sea with
Cairn . Under the terms of the farm-out, Cairn will acquire a 70%
working interest in licences P2560, P2561 and P2562 ( which are
located between the Breagh and Tolmount Gas Fields) and a 60%
interest in licences P2567 (Cadence) and P2428 (Cupertino Area). In
return, Cairn will pay an initial consideration of USD$1m on
completion and will fully carry Deltic through 100% of an agreed
work programme for each of the five licences, up to the point of
making a drill or drop decision on each licence. This includes the
shooting of new seismic data over Licence P2428. At the point of a
drilling decision on either of P2428 and P2567 (the two licences
with the most advanced prospects), Cairn will fund 70% of the costs
of whichever well is drilled first, subject to a gross well cost
cap of USD$25 million.
This agreement represents the commencement of a wide-ranging
partnership with Cairn, whose successful history of opening up new
basins is very much aligned with our exploration-focused strategy.
The partnership will result in a significant investment across
multiple licences within Deltic's Southern North Sea gas
exploration portfolio, as we jointly progress the next high impact
drilling targets. It also provides further endorsement of the
quality of the portfolio that our team has developed and our gas
focussed exploration strategy, as we continue to develop our
portfolio of opportunities and attract the highest quality
partners.
We are particularly excited at the prospect of building our
partnership with Cairn, a well-funded and highly experienced North
Sea operator. Both parties share a commitment to pursuing high
impact exploration opportunities in the Southern North Sea and
successfully developing these gas prospects.
The partnership is committed to immediate activity and this is
highlighted by the fact that the shooting of the new 3D seismic
survey over P2428 has already commenced.
Pensacola & Selene
We have continued to work closely throughout the year with
Shell, and we confirmed a positive well investment decision on the
Pensacola Prospect at the end of March. Well planning is now
progressing rapidly as we start to count down to the drilling of
the Company's first well in Q2 next year, while we also continue to
work towards reaching a positive well investment decision on the
Selene Prospect.
The decision to drill the Pensacola gas prospect followed an
extensive evaluation of the new 3D data acquired. This work led to
a significant de-risking of the prospect, resulting in the
geological chance of success (GCoS) increasing from 20% to 55%.
Well planning has been underway for some time with the site survey,
a key part of well planning, currently taking place following the
appointment of Fugro to carry out this work. Pensacola will be the
first well which Deltic drills and, if successful, will be
transformational and have a far reaching positive impact on the
business. The Zechstein reef play is an exciting emerging play -
the large Plymouth Reef prospect on licence P2428 is analogous to
Pensacola and is a key focus for the Deltic-Cairn JV.
As confirmed at the time, the Deltic-Shell JV expect the
Pensacola well to be drilled in Q2 2022. Well costs are being
refined, however Deltic remains fully funded for its 30% share of
well costs.
On the Selene Prospect on Licence P2437, the Company's other JV
with Shell, the partnership has continued to progress the technical
and commercial workflows required to support a well investment
decision. Deltic considers Selene to represent the largest
undrilled structure of its kind in this part of the SNS, and the
Company remains committed to progressing this prospect to
drilling.
Central North Sea
The Company continues to work on its key licences in the Central
North Sea, being P2352 (Dewar) and P2542 (Syros).
The Dewar Prospect remains an attractive, highly prospective
opportunity located close to existing infrastructure and one which
could be developed quickly. Appetite for oil prospects such as
Dewar was badly affected by the pandemic, however the Company
continues to believe this to be an attractive drill-ready prospect
with strong economics and therefore remains committed to seeking a
partner which will lead to the Dewar Prospect being drilled.
P2542 which contains the Syros Prospect, was awarded formally in
December 2020. Technical work has commenced and will continue into
next year with a view to commencing a farm out process in due
course.
Outlook
Looking ahead, Deltic will build on its groundbreaking
partnerships with Shell and Cairn, both on existing licences as
well as the potential to collaborate on other future licence
opportunities. We will continue to work with Shell on the planning
of the Pensacola well and towards a well investment decision on
Selene. Following the announcement of the partnership with Cairn we
are already starting to work with them on the various work
programmes with the seismic survey on P2428 having already
started.
We have had a successful year to date and the introduction of a
further first class partner in Cairn represents a major achievement
for our company. With multiple opportunities and two of the highest
quality partners following the farm-outs, we believe that we have
created a unique proposition within our space. This success
demonstrates the repeatability of our strategy and reflects the
quality of our team. We continue to focus on our strengths in UKCS
exploration and building a portfolio of predominantly gas focussed
assets. Our portfolio of gas assets, in addition to driving
shareholder value, has an increasingly important role to play in
supporting the UK's net zero targets and the energy transition.
Graham Swindells
Chief Executive Officer
14 September 2021
Ope r ati ng Revi ew
Despite what remains a challenging operating environment for oil
and gas companies, Deltic has continued to make impressive progress
in delivering a conveyor belt of drilling opportunities across its
portfolio of UKCS exploration assets. During the reporting period
the Company was focussed on technical engagement with other
operators, in particular Cairn Energy, across the SNS portfolio,
resulting in a successful farm-out as communicated post reporting
period in August. In parallel, the Deltic technical team has been
engaged with Shell in relation to the Pensacola site survey
planning and well design work to support next year's drilling
activity. Engagement with Shell on the Selene well investment
decision continues and we remain confident that a positive well
investment decision can be made before the end of 2021.
Over the coming months we look forward to progressing our work
with Cairn, accelerating the technical workflows required to
support drilling decisions across the five farm-in licences, and in
the acquisition of new seismic data.
P2 2 52 - Pensa c o la ( 3 0% Deltic)
On 29 March 2021 the Shell-Deltic JV confirmed its intention to
drill the Pensacola exploration well. The JV remains on schedule to
commence drilling activities in Q2 2022. Preparatory works to
support drilling activities are well advanced with the recent
commencement of site survey work.
Licence P2252, located in the Southern North Sea Gas Basin,
contains the Pensacola prospect. Pensacola is estimated to contain
gross P50 Prospective Resources of 309 BCF in a Zechstein carbonate
build-up. The licence was farmed out to Shell U.K. Ltd in February
2019, which resulted in the Company being fully carried through the
3D seismic acquisition and processing-based work programme through
to well investment decision. Following the well investment decision
on 29 March 2021, Deltic is now paying its 30% share of costs
associated with this well and remains fully funded to do so.
P2 4 37 - S e l ene ( 5 0% Deltic)
The Shell-Deltic JV continues to progress the Selene prospect in
anticipation of a well investment decision and Deltic remains
confident that a positive well decision can be made during 2021.
Given the delay in coming to a final well investment decision, it
is now anticipated that the earliest the Selene exploration well
could be drilled is the end of 2022.
Licence P2437 is located in the Leman Sandstone fairway of the
Southern North Sea Gas Basin and contains the Selene prospect which
we believe is the largest undrilled prospect in this mature play.
Deltic estimates that the Selene prospect contains gross P50
Prospective Resources of 271 BCF with a GCoS of 70%. The P2437
licence was farmed out to Shell U.K. Ltd in April 2019, with Deltic
retaining a 50% interest and operatorship until a final well
investment decision is made. Once the well investment decision is
taken, Shell will assume operatorship and will pay for 75% of the
costs of the initial exploration well, up to a gross well cost of
USD$25M.
P2 4 28 - C upe rti no Area ( 100% Deltic)
During the period, the focus of work on Licence P2428 was
securing a successful outcome to the farm-out process that
commenced in December 2020. This was achieved with the binding,
conditional farm-out to Cairn Energy PLC, announced on 12 August
2021. Work continues to discharge standard conditions related to
regulatory approvals required before the transaction becomes
unconditional and completes. Following completion, a 60% working
interest and licence operatorship will be transferred to Cairn.
The primary target in the P2428 licence area is the Plymouth
Zechstein reef prospect. New 3D seismic data will be acquired over
the Plymouth prospect throughout September and October, with final
data expected to be delivered mid-2022. A drilling decision will be
made once this new data has been fully evaluated by the
Cairn-Deltic JV.
The Plymouth prospect is a build-up of the Z2 Zechstein
carbonate, which is analogous to the Crosgan discovery and the
Pensacola prospect which the Company is due to drill with Shell in
2022. Deltic estimates that Plymouth contains gross P50 Prospective
Resources of 282 BCF with a GCoS of 19%, which we anticipate will
be significantly improved following acquisition of 3D seismic over
this area.
Significant additional upside exists across the licence area in
the Richmond prospect in the Leman Sandstone and in the deeper
Cupertino prospect in the Carboniferous. Both prospects will be
further evaluated following the acquisition of the new 3D seismic
data.
P2567 - Cadence (100% Deltic)
Licence P2567 contains prospects in both the Carboniferous and
Triassic Bunter Sandstone and was included in the farm-out to Cairn
Energy announced on 12 August. Work continues to discharge standard
conditions related to regulatory approvals required before the
transaction completes and becomes unconditional. Following
completion, a 60% working interest and licence operatorship will be
transferred to Cairn Energy.
It is anticipated that technical work over the coming months
will focus on the reprocessing of the legacy 3D seismic survey that
covers 100% of the licence area, which will in turn be followed by
detailed technical evaluation of the previously identified
prospectivity. In line with the licence conditions, the latest the
OGA can be informed of the JV's intentions in relation to future
drilling activity on the licence is early September 2023. Deltic
are fully carried by Cairn for the pre-well investment technical
work programme through to a drill or drop decision.
P2560, P2561 & P2562 - South Breagh Area ( 1 0 0% D eltic)
Licences P2560, P2561 and P2562 were also awarded in the most
recent 32(nd) Licensing Round. The licences contain early stage
exploration opportunities located between the Breagh and Tolmount
gas fields and have significant potential in the Carboniferous
sandstones, Permian Leman Sandstones and the Zechstein carbonates.
The area is covered by a mixture of legacy 2D and older 3D seismic
data which requires modern reprocessing, which will be the key
focus over the coming year.
All three licences were included in the farm-out to Cairn Energy
announced on 12 August. Work continues to discharge standard
conditions related to regulatory approvals required before the
transaction becomes unconditional and completes. Following
completion, a 70% working interest in each of the three licences,
along with licence operatorship, will be transferred to Cairn
Energy.
P2 3 52 - De w ar ( 1 0 0% Deltic)
Licence P2352, located in the Central North Sea, was awarded to
the Company in the 30th UK Offshore Licensing Round with an
effective date of 1 October 2018. The primary prospect on Licence
P2352 is the Dewar prospect, which is estimated to contain gross
P50 Prospective Resources of 39.5 MMBO in a Forties Sandstone
channel. The Dewar Prospect is supported by a clear amplitude
versus offset (AVO) anomaly and has a GCoS of 41%.
In the event of exploration success, the Dewar Prospect is a
highly attractive commercial proposition as it is located
approximately 5km east of BP's Eastern Trough Area Project (ETAP)
Central Processing Facility. A commercial feasibility study
commissioned by the Company in 2019 demonstrated that the project
would be highly economic.
With the recent recovery in oil prices, there appears to be a
renewed interest in the Central North Sea, demonstrated by a modest
increase in M&A activity. Over the coming months we will
continue to pursue farm-out discussions with several companies,
building on the positive dialogues established prior to the COVID
enforced lockdowns.
Other Licences
Licence P2435, which is operated by The Parkmead Group, and
contains the Blackadder prospect, has effectively been on a 'care
and maintenance' footing over the last 18 months due to the COVID
pandemic. However, with restrictions lifting and an improved gas
price environment we will continue work with Parkmead to establish
the technical and commercial way forward for this licence. The
Phase A period of this Licence runs until 30 September 2022.
Licence P2542 was awarded to Deltic in the most recent 32(nd)
Licensing Round. Technical work on this licence, which is located
in the Central North Sea and contains the Syros prospect, has
commenced. Work over the next 12 months will focus on maturing that
prospect, such that farm-out marketing can be commenced in
mid-2022.
Portfolio Management
During the period our technical review of Licence P2424 was
completed and, although we have identified significant resource
potential associated with this licence, the prospects identified
are particularly high risk when compared to other opportunities
within the portfolio. It is considered unlikely that these
opportunities can be matured into viable drilling targets,
particularly with the currently available seismic datasets. In line
with Deltic's business model, which centres upon the rigorous
screening of large areas of geologically prospective acreage, and
then focusing investment on the opportunities that are most likely
to be attractive to potential partners and ultimately result in
drilling activity, the Company has taken the decision to allow this
licence to lapse at the end of its Phase A on 30 September
2021.
Similarly, Licence P2384 in the Central North Sea was awarded as
a remnant of a much larger multi-block licence application in the
30(th) Offshore Licensing Round and retained purely for its option
value. However, following a review of the prospectivity associated
with this very small licence, it is clear that it only captures the
very fringes of the prospects targeted in the original licence
application. Given that there is no obvious drilling target located
on block it has been decided to hand back this licence. This will
take effect on 30 September 2021 being the end of Year 3 of the
Licence.
Andrew Nunn
Chief Operating Officer
14 September 2021
Qualified Person
Andrew Nunn, a Chartered Geologist and Chief Operating Officer
of Deltic, is a "Qualified Person" in accordance with the Guidance
Note for Mining, Oil and Gas Companies, June 2009 as updated 21
July 2019, of the London Stock Exchange. Andrew has reviewed and
approved the information contained within this announcement.
Fina n ci al Rev i ew
I am pleased to advise that Deltic finished the period to 30
June 2021 in strong financial health with a cash position of
GBP11.1m (30 June 2020: GBP12.8m) having seen the full benefits of
some of the decisive steps Deltic took during 2020 to minimise
expenditure, preserve cash and focus on progressing core
assets.
Income Statement
The C o m pany incurred a l oss for the peri od of GBP691,754 co
m pared with a l oss of GBP869,505 f or the six mo nths to 30 June
2 020.
The operating loss of GBP674,718 (six months to 30 June 2020:
GBP920,238) included cash expenditure of GBP607,626 (six months to
30 June 2020: GBP791,415), n on-cash share-based pay ment ex pense
of GBP61,435, (six months to 30 June 2020: GBP85,501), and other
non-cash costs of GBP62,585 not directly attribu ted to existi ng
licences (six months to 30 June 2020: GBP54,576).
Expenditure directly relati ng to invest ment in the C om pan
y's N orth Sea licences is capitalised to intangible assets;
reflecting the o ng oing technical in vestment in the Co m pan y's
p ortf olio of lice nces. Expenditure on inta ngible assets t
otalled GBP210,884 during the peri o d (six months to 30 June 2020:
GBP155,585).
Trade and other payables of GBP352,811 ( 31 Dece m ber 2 020:
GBP252,167) increased by GBP199,375, all of which related to
operating activities.
Balance Sheet
The Company's cash position was GBP11,095,794 at 30 June 2021
(31 December 2020: GBP11,968,858) reflecting a net cash outflow of
GBP873,064 for the period (six months to 30 June 2020:
GBP1,030,654). Cash used in operating activities for the six months
to 30 June 2021 was GBP607,626 (six months to 30 June 2020:
GBP791,415). A further GBP210,993 was used in investing activities
(six months to 30 June 2020: GBP204,285) including GBP210,884
relating to expenditure capitalised in intangible assets (six
months to 30 June 2020: GBP181,246) and GBP1,393 relating to the
purchase of property, plant and equipment (six months to 30 June
2020: GBP87,366).
While expenditure and cash outflow for the first six months of
the year are significantly lower than for the first half of 2020,
expenditure is expected to increase in the second half of the year
now that Deltic is responsible for its 30% share of costs
associated with drilling the well on Pensacola and as well planning
progresses.
Sarah McLeod
Chief Financial Officer
14 September 2021
UNAUDITED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE
LOSS
For the period ended 30 June 2021
Note Period Period Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Unaudited Unaudited Audited
GBP GBP GBP
Administrative expenses (674,718) (920,238) (1,699,344)
Operating loss (674,718) (920,238) (1,699,344)
Finance income 1,284 57,732 59,818
Finance costs (18,320) (6,999) (26,049)
Loss before tax (691,754) (869,505) (1,665,575)
Income tax expense - - -
------------ ------------ --------------
Loss and comprehensive loss
for the period attributable
to equity holders of the
Company (691,754) (869,505) (1,665,575)
Loss per share from continuing
operations expressed in
pence per share:
Basic and diluted 3 (0.05)p (0.06)p (0.12)p
UNAUDITED BALANCE SHEET
As at 30 June 2021
Note 30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP GBP GBP
NON-CURRENT ASSETS
Intangible Assets 1,859,523 1,283,527 1,430,915
Property, Plant and Equipment 443,076 537,690 496,542
Other receivables 37,422 91,110 37,422
------------ ------------ ------------
2,340,021 1,912,327 1,964,879
CURRENT ASSETS
Trade and other receivables 84,740 97,344 53,887
Cash and cash equivalents 11,095,794 12,818,746 11,968,858
------------ ------------ ------------
11,180,534 12,916,090 12,022,745
TOTAL ASSETS 13,520,555 14,828,417 13,987,624
CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY HOLDERS OF THE COMPANY
Share capital 4 7,029,824 7,029,824 7,029,824
Share premium 20,296,030 20,296,030 20,296,030
Share-based payment reserve 1,051,813 928,145 990,378
Accumulated retained deficit (15,570,251) (14,082,427) (14,878,497)
------------ ------------ ------------
TOTAL EQUITY 12,807,416 14,171,572 13,437,735
CURRENT LIABILITIES
Trade and other payables 352,811 252,167 153,436
Lease liability 94,388 56,612 92,605
------------ ------------ ------------
447,199 308,779 246,041
NON-CURRENT LIABILITIES
Lease liability 265,940 348,066 303,848
------------ ------------ ------------
TOTAL LIABILITIES 713,139 656,845 549,889
TOTAL EQUITY AND LIABILITIES 13,520,555 14,828,417 13,987,624
UNAUDITED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2021
Share-based Accumulated
Share Share payment Retained Total
capital premium reserve deficit equity
GBP GBP GBP GBP GBP
Balance at 1 January 2021 7,029,824 20,296,030 990,378 (14,878,497) 13,437,735
Comprehensive income for
the year
Loss for the period - - - (691,754) (691,754)
------------------------------------ ---------- ----------- ------------ ------------- ------------
Total comprehensive loss
for the period - - - (691,754) (691,754)
Contributions by and distributions
to owners
Share-based payment - - 61,435 - 61,435
Total contributions by and
distributions to owners - - 61,435 - 61,435
---------- -----------
Balance at 30 June 2021
(Unaudited) 7,029,824 20,296,030 1,051,813 (15,570,251) 12,807,416
------------------------------------ ---------- ----------- ------------ ------------- ------------
Balance at 1 January 2020 7,029,824 20,296,030 842,644 (13,212,922) 14,955,576
Comprehensive income for
the year
Loss for the period - - - (869,505) (869,505)
------------------------------------ ---------- ----------- ------------ ------------- ------------
Total comprehensive loss
for the period - - - (869,505) (869,505)
Contributions by and distributions
to owners
Share-based payment - - 85,501 - 85,501
Total contributions by and
distributions to owners - - 85,501 - 85,501
---------- -----------
Balance at 30 June 2020
(Unaudited) 7,029,824 20,296,030 928,145 (14,082,427) 14,171,572
------------------------------------ ------------ ------------- ------------
Balance at 1 January 2020 7,029,824 20,296,030 842,644 (13,212,922) 14,955,576
Comprehensive income for
the year
Loss for the year - - - (1,665,575) (1,665,575)
Total comprehensive loss
for the year - - - (1,665,575) (1,665,575)
Contributions by and distributions
to owners
Share-based payment - - 147,734 - 147,734
Total contributions by and
distributions to owners - - 147,734 - 147,734
---------- ----------- ------------ ------------- ------------
Balance at 31 December 2020
(Audited) 7,029,824 20,296,030 990,378 (14,878,497) 13,437,735
UNAUDITED STATEMENT OF CASH FLOWS
For the period ended 30 June 2021
Period ended 30 June 2021 Period ended 30 June 2020 Year ended 31 December
2020
Unaudited Unaudited Audited
GBP GBP GBP
Cash flows from operating
activities
Loss before tax (691,754) (869,505) (1,665,575)
Adjustments for:
Finance income (1,284) (57,732) (59,818)
Finance costs 18,320 6,999 26,049
Depreciation 57,317 50,590 106,029
Amortisation 5,268 3,986 6,711
Impairment of intangible
assets - - -
Income from farm-out licence
interest - - 2,783
Share-based payment 61,435 85,501 147,734
-------------------------- -------------------------- --------------------------
(550,698) (780,161) (1,436,087)
Increase in trade and other
receivables (30,853) (56,927) 38,270
Increase in trade and other
payables (26,075) 45,673 29,700
-------------------------- -------------------------- --------------------------
Net cash used in operating
activities (607,626) (791,415) (1,368,117)
Cash flows from investing
activities
Purchase of intangible
assets (210,884) (181,246) (358,672)
Purchase of property, plant
and equipment (1,393) (87,366) (190,108)
Property, plant and
equipment landlord
contributions - - 30,222
Interest received 1,284 64,326 59,818
Net cash used in investing
activities (210,993) (204,286) (458,740)
Cash flows from financing
activities
Payment of principal portion
of lease liabilities (36,125) (34,331) (27,635)
Interest on lease
liabilities (18,320) (622) (26,050)
-------------------------- -------------------------- --------------------------
Net cash used in financing
activities (54,445) (34,953) (53,685)
Decrease increase in cash
and cash equivalents (873,064) (1,030,654) (1,880,542)
Cash and cash equivalents at
beginning of period / year 11,968,858 13,849,400 13,849,400
-------------------------- -------------------------- --------------------------
Cash and cash equivalents at
end of period / year 11,095,794 12,818,746 11,968,858
NOTES TO THE FINANCIAL INFORMATION
For the period ended 30 June 2021
1. GENERAL
The interim financial information for the period to 30 June 2021
is unaudited and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006.
2. ACCOUNTING POLICIES
The interim financial information in this report has been
prepared on the basis of the accounting policies set out in the
audited financial statements for the period ended 31 December 2020
together with new and amended standards applicable to periods
commencing 1 January 2021, which complied with International
Accounting Standards in conformity with the requirements of the
Companies Act 2006, and with those parts of the Companies Act 2006
applicable to companies reporting under International Financial
Reporting Standards (IFRS).
IFRS is subject to amendment and interpretation by the
International Accounting Standards Board ("IASB") and the IFRS
Interpretations Committee and there is an on-going process of
review and endorsement by the UK Endorsement Board since January
2021 (previously the European Commission).
The financial information has been prepared on the basis of IFRS
that the Directors expect to be applicable as at 31 December 2021,
with the exception of IAS 34 Interim Financial Reporting.
The Directors have assessed the Company's ability to continue as
a going concern. Although the oil and gas industry is currently
facing the dual challenge of recent commodity price volatility
coupled with the effects of Covid-19, fortunately, as a gas focused
explorer the Company does not have direct exposure to the oil price
and, having taken the decision to raise funds in 2019 to protect
itself from capital market volatility, is currently well funded
with no debt. Based on the cash and cash equivalents balance at the
period end and the Company's commitments, the Directors are of the
opinion that the Company has adequate financial resources to meet
its budgeted exploration programme and working capital
requirements, and accordingly will be able to continue and meet its
liabilities as they fall due for a minimum of 12 months from the
date of these interim financial statements.
The condensed financial information for the period ended 31
December 2020 set out in this interim report does not comprise the
Group's statutory accounts as defined in section 434 of the
Companies Act 2006.
The statutory accounts for the year ended 31 December 2020,
which were prepared under International Accounting Standards in
conformity with the requirements of the Companies Act 2006, and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS, have been delivered to the Registrar of
Companies. The auditors reported on these accounts; their report
was unqualified and did not contain a statement under section
498(2) or 498(3) of the Companies Act 2006.
3. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Given the Company's reported loss for the period, share options
and warrants are not taken into account when determining the
weighted average number of ordinary shares in issue during the year
and therefore the basic and diluted loss per share are the
same.
Basic and diluted loss per share
Period ended Period ended Year ended
30 June 2021 30 June 31 December 2020
2020
Loss for the period (GBP) (691,754) (869,505) (1,665,575)
Weighted average number of ordinary shares (number) 1,405,964,857 1,405,964,855 1,405,964,855
Loss per share from continuing operations (0.05)p (0.06)p (0.12)p
============== ============== ==================
4. SHARE CAPITAL
a) Share Capital
The Company has one class of ordinary share which carries no
right to fixed income nor has any preferences or restrictions
attached.
Issued and fully paid:
30 June 30 June 31 December
2021 2020 2020
GBP GBP GBP
1,405,964,855 ordinary shares
of 0.5p each (30 June 2020:
1,405,964,855 ordinary shares) 7,029,824 7,029,824 7,029,824
5. SUBSEQUENT EVENTS
On 12 August 2021 the Company announced that it had entered into
a farm-out agreement with Cairn Energy PLC. Under the terms of the
farm-out, Cairn will acquire a 70% working interest in licences
P2560,2561 and 2562 and a 60% interest in licences P2567 and P2428.
In return, Cairn will pay initial consideration of $1m on
completion and will fully carry Deltic through the work programme
on each of the licences up to the point of making a well investment
decision. Completion of the farm-out is conditional on the entering
into of a Joint Operating Agreement and obtaining standard
regulatory consents from the Oil & Gas Authority, subject to a
three-month backstop.
6. COPIES OF INTERIM REPORT
Copies of the interim report are available to the public free of
charge from the Company at Deltic Energy Plc, First Floor, 150
Waterloo Road, London, SW1P 3JS during normal office hours,
Saturdays and Sundays excepted, for 14 days from today and will
shortly be available on the Company's website at
www.delticenergy.com .
I n v e st i ng po l i cy
In addition to the development of the North Sea Oil & Gas
assets Deltic Energy Plc has acquired to date, the Company proposes
to continue to evaluate other potential oil & gas and mining
projects globally in line with its investing policy, as it aims to
build a portfolio of resource assets and create value for
shareholders. As disclosed in the Company's AIM Admission Document
in May 2012, the Company's Investment Policy is as follows:
The proposed investments to be made by the Company may be either
quoted or unquoted; made by direct acquisition or through farm-ins;
either in companies, partnerships or joint ventures; or direct
interests in oil & gas and mining projects. It is not intended
to invest or trade in physical commodities except where such
physical commodities form part of a producing asset. The Company's
equity interest in a proposed investment may range from a minority
position to 100 per cent. ownership.
The Board initially intends to focus on pursuing projects in the
oil & gas and mining sectors, where the Directors believe that
a number of opportunities exist to acquire interests in attractive
projects. Particular consideration will be given to identifying
investments which are, in the opinion of the Directors,
underperforming, undeveloped and/or undervalued, and where the
Directors believe that their expertise and experience can be
deployed to facilitate growth and unlock inherent value.
The Company will conduct initial due diligence appraisals of
potential projects and, where it is believed further investigation
is warranted, will appoint appropriately qualified persons to
assist with this process. The Directors are currently assessing
various opportunities which may prove suitable although, at this
stage, only preliminary due diligence has been undertaken.
It is likely that the Company's financial resources will be
invested in either a small number of projects or one large
investment which may be deemed to be a reverse takeover under the
AIM Rules. In every case, the Directors intend to mitigate risk by
undertaking the appropriate due diligence and transaction analysis.
Any transaction constituting a reverse takeover under the AIM Rules
will also require Shareholder approval.
Investments in early stage and exploration assets are expected
to be mainly in the form of equity, with debt being raised later to
fund the development of such assets. Investments in later stage
projects are more likely to include an element of debt to equity
gearing. Where the Company builds a portfolio of related assets, it
is possible that there may be cross holdings between such
assets.
The Company intends to be an involved and active investor.
Accordingly, where necessary, the Company may seek participation in
the management or representation on the Board of an entity in which
the Company invests with a view to improving the performance and
use of its assets in such ways as should result in an upward
re-rating of the value of those assets.
Given the timeframe the Directors believe is required to fully
maximise the value of an exploration project or early stage
development asset, it is expected that the investment will be held
for the medium to long term, although disposal of assets in the
short term cannot be ruled out in exceptional circumstances.
The Company intends to deliver Shareholder returns principally
through capital growth rather than capital distribution via
dividends, although it may become appropriate to distribute funds
to Shareholders once the investment portfolio matures and
production revenues are established.
Given the nature of the Investing Policy, the Company does not
intend to make regular periodic disclosures or calculations of its
net asset value.
The Directors consider that as investments are made, and new
investment opportunities arise, further funding of the Company will
be required.
Fo rw a rd l ooking statements
This interim rep ort c o ntains certain f orward-lo oking state
ments that are subject to the usual risk facto rs and uncertainties
ass ociated with the oil and gas ex plo ration and pro ducti on
business. Whilst the Direct ors believe the ex pectati on reflected
herein to be reaso n a ble in light of the info r mati on available
up to the ti me of their appro val of this report, the actual o
utcome may be materially different owing to fact ors either beyo nd
the Co m pan y 's control or otherwise within the C o m pan y's c o
ntrol b ut, f or ex a m ple, owing to a change of plan or strategy.
Accordingly, no reliance may be placed on t he fo rwar d-looking
state ments.
Gl o s sa ry of T e c hn ic al T e r ms
AVO: Amplitude Versus Offset - AVO analysis is a technique that
geo p h ysicists can execute on seis mic data to deter mine a r
ock's fluid co nte nt, p o r osit y, density or seis mic vel ocit
y, shear wave info r mati o n, fluid indicators (h y drocarb on
indicatio ns).
P RM S: Pet r oleum Res o urces Management System ( 2 0 0 7)
BCF: Billion Cubic Feet
m m b o : Million barrels of oil
P rospect i ve Res o urces: Are estimated volumes associated
with undiscovered accumulations. These represent quantities of
petroleum which are estimated, as of a given date, to be
potentially recoverable from oil and gas deposits identified on the
basis of indirect evidence but which have not yet been drilled.
Chance of Succe ss (GC oS): for pr ospecti ve re s o urces,
means the chance or pr o b a bility of disc o vering h y drocarb o
ns in sufficient quantity f or th em to be tested to t he surface.
This, then, is t he chance or pro bability of t he p r ospecti ve
reso u rce maturing into a co ntingent reso urce. Prospect i ve res
ources have b oth an associated chan ce of disc o very ( g e o l o
gical chan ce of s uccess) and a chance of de vel o pment (ec o no
mic, re gulat ory, market and facility, corp orate co mm itment and
p olitical risks). T he chance of commerciality is the pro du ct of
t h ese two risk c om p o n e nts. T hese e stim ates have been
risked for chance of disc o very but not f or chance of de vel o
pment.
P 5 0 reso urc e: reflects a v olu me esti mate that, assu ming
the accum ulation is d e vel o ped, there is a 5 0% p r o bability
t hat the quantities actual ly recove red will equal or exceed the
estim ate. This is theref ore a median or best case est i mate of
reso urce.
The P r o s pective Res o urces have b een prese nted in acc
ordan ce with the 2 0 07 Pet r oleum Reso u rces Manag e ment S
ystem ( P R MS) p repared by t he Oil and Gas Reser ves Com mittee
of the Society of Pet r oleum Engin eers (S PE), rev iewed, and
jointly sp o nso red by the W orld Petroleum C o uncil (W PC), the
American Association of Petro leum Ge olo gists (AA PG) and the S
ociety of Pet r oleum E valuation Enginee rs (SPEE).
**ENDS**
For further information please contact the following:
Deltic Energy Plc Tel: +44 (0) 20 7887
2630
Graham Swindells / Andrew Nunn / Sarah McLeod
Allenby Capital Limited (Nominated Adviser Tel: +44 (0) 20 3328
& Joint Broker) 5656
David Hart / Alex Brearley (Corporate Finance)
Kelly Gardiner (Sales and Corporate Broking)
Stifel Nicolaus Europe Limited (Joint Broker) Tel: +44 (0) 20 7710
7600
Callum Stewart / Simon Mensley / Ashton
Clanfield
Vigo Consulting (IR & PR Adviser) Tel: +44 (0) 20 7390
0230
Patrick d'Ancona / Chris McMahon / Oliver
Clark
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END
IR DKNBBCBKDBCD
(END) Dow Jones Newswires
September 14, 2021 02:00 ET (06:00 GMT)
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