AIM-listed Beacon Energy, the energy company seeking growth through acquisition or farm-in to interests in discovered upstream projects, has announced its half-yearly report for the six months ended 31 October 2022.
The Interim Report will be available from the Company's website www.beaconenergyplc.com
Mark Rollins, Non-Executive Chairman, issued the following statement:
Dear fellow shareholders,
I am delighted to present the following statement in support of the interim results for the six months ended 30 October 2022.
Following the disappointing outcome on the Buffalo well announced in January 2022, the Board has refocused the strategy for the Company and substantially reduced its cost base in order to preserve cash on behalf of shareholders and assess the next steps.
In this context, the Company's strategy, which is to create a self-funding oil and gas production company taking advantage of growth opportunities being generated as industry players reshape their portfolios to manage the energy transition to net-zero emissions, remains both appropriate and compelling.
To implement this strategy, on 26 July 2022 the Company successfully raised £425,000 from new and existing shareholders, including £80,000 from Directors of the Company, to support the pursuit of value enhancing acquisition opportunities. The Board appreciates the continued support shown by shareholders during this fund raise.
On 9 September 2022, the Company announced that it had entered into a non-binding Heads of Terms ("HoT") with the majority owner of a European oil and gas company. Under the HoT, the Company would acquire the European company for a combination of new shares in the Company and an earn out based on oil production (the 'Potential Acquisition'). The HoT included standard conditions, including an exclusivity period and the completion of satisfactory due diligence.
Subsequently, and in anticipation of the Potential Acquisition, the Company sought approval from shareholders to change the Company's name to Beacon Energy plc. The change of name was to reflect an exciting new chapter in the Company's story and the rebrand process was delivered in a highly cost effective manner.
On 16 December 2022, the Company was delighted to announce that it had entered into a conditional Share Purchase Agreement ("SPA") with Tulip Oil Holding B.V. ("Tulip") and Deutsche Rohstoff A.G. ("DRAG") (collectively, the "Sellers") relating to the purchase of the entire issued and to be issued share capital of Rhein Petroleum GmbH ('Rhein Petroleum'), (the 'Proposed Transaction').
The Board of Beacon Energy ("Board") considers the Proposed Transaction to represent a transformational, value enhancing transaction for shareholders, which is fully aligned with Beacon Energy's growth strategy.
The Board believes the Proposed Transaction will deliver:
- A full-cycle portfolio of largely operated production, development, appraisal and exploration assets located onshore Germany, a low political risk jurisdiction
- A near-term active work programme designed to enhance production and cash flow
- An experienced operating team in Rhein Petroleum that has a track record of exploration, appraisal, development and production operations
- Strong HSE record and a firm commitment to environmentally responsible hydrocarbon production
- A well-understood existing production base, generating immediate revenue
- A material 2P net reserve base of 3.85 mmbbl and a 2C net contingent resource base of 22.96 mmbbl, located across four core assets as assessed by SGS Nederland B.V, and included in a Competent Person's Report ("CPR"), which will form part of the Admission Document to be sent to shareholders in due course
- A commercially attractive programme with the economic results of the CPR describing an NPV10 valuation of 52.8 million from the development and production of the 2P reserve base, assuming, inter alia, capex of 15.7 million for a 3 well programme and facilities upgrade and utilising forward oil pricing as at 14 November 2022
- Access to a built-in growth pipeline of onshore, material, high-margin, low-risk and near-term development and appraisal opportunities
The Proposed Transaction is considered a reverse transaction under the AIM Rules for Companies and is therefore subject, inter alia, to the issue of a new AIM Admission Document and obtaining shareholder approval for the Proposed Transaction.
Full details of the terms and conditions of the Proposed Transaction are available on the Company's website, and in particular the Company's announcement dated 16 December 2022.
In addition to the Proposed Transaction, the Company was delighted to announce that Interim CEO Larry Bottomley has agreed to become CEO on a permanent basis. Larry's appointment will provide certainty and continuity for the Company as we progress the Proposed Transaction, and Larry's transition into the permanent role reflects the focused determination that he has delivered through this year and his significant experience and expertise in leadership roles of this kind.
It only remains for me to thank our shareholders for their ongoing support for the Company, management team and our strategy. We are very excited about the Proposed Transaction which, if successful, will underpin your Company with cash flow, proven Reserves and Resources, and an active work programme designed to create long-term value for Beacon's shareholders. We very much see the Proposed Transaction as a first step in our strategy to build a material international upstream oil and gas business with a focus on cash generative assets and those with the potential to add significant value in the short to medium term. We look forward to providing updates on our progress as we move through the rest of the year.
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Source: Beacon Energy
