Europa Oil & Gas, the AIM quoted UK, Ireland and West Africa focused oil and gas exploration, development and production company, has announced its unaudited interim results for the six-month period ended 31 January 2024.
Financial Performance
- Revenue £1.4 million (H1 2023: £3.7 million)
- Gross loss £0.1 million (H1 2023: £1.5 million profit)
- Pre-tax loss of £1.0 million (H1 2023: pre-tax loss £1.3 million) after impairment charge of £0.2 million (H1 2023: exploration impairment charge £1.7 million)
- Net cash used in operating activities £0.3 million (H1 2023: £1.7 million generated by operating activities)
- Cash balance at 31 January 2024: £3.8 million (31 July 2023: £5.2 million), of which £1.1 million is restricted (see note 8 of the financial statements)
Operational Highlights
Onshore UK
- Over the three months to January 2024, after the completion of the jet pump installation at Wressle, production has averaged over 530 boepd (net 160 boepd to Europa), which is above the forecast upside case from the recent independent technical report (the "CPR")
- Total production across our whole portfolio net to Europa averaged 116 bopd during the H1 period, a 57% decrease on H1 last year
- Wressle net production to Europa decreased 57%, from 207 bopd in H1 2023 to 88 bopd during H1 2024, due to a three-month shutdown period required to source and install a jet pump for artificial lift on the Wressle-1 well
- Wressle continues to be the second most productive onshore UK oilfield
- During March 2024 the well is produced with 24.3% water cut and remains materially cash generative
- A new seismic interpretation and mapping exercise across the Wressle field has highlighted a potentially significant increase in resources from the Ashover Grit and the results of the analysis are now being incorporated into the field development plan. The intention is that two back-to-back development wells will be drilled from the existing Wressle site and planning and permitting work for these wells is ongoing. The wells will be drilled at the earliest opportunity, subject to receipt of regulatory approval
- In addition to the two development wells, work is ongoing to monetise the associated gas being produced from Wressle by connecting to a local gas distribution network. This work is expected to be completed around the same time as the development wells and is subject to the same regulatory approvals
- The revised CPR on Wressle was completed in H1 2024 by ECRE which incorporated the new field interpretation, historical production performance data and the field development plan. The key highlights of the CPR included:
- 263% increase in 2P Reserves compared to 2016 CPR
- Reclassification of 1,883 mboe in Penistone Flags Contingent Resources to 2P Reserves
- 59% upgrade to the Ashover Grit and Wingfield Flags Estimated Ultimate Recoverable
- 23% upgrade to Broughton North Prospective 2U Resources
- At Cloughton we continue with our stakeholder engagement and believe that we have identified a number of suitable pad locations for an appraisal well which, following commercial rates being established from the appraisal well, could subsequently be used to develop the discovery. Negotiations with landowners to secure a pad are ongoing
Equatorial Guinea
- Europa announced a ground-breaking deal in December 2023 with the acquisition of a 42.9% stake in Antler Global Limited ("Antler"), which has an 80% working interest in licence EG-08 offshore Equatorial Guinea. This gives rise to a joint venture arrangement (note 8)
- Europa agreed a US$3 million cash subscription for new ordinary shares in Antler, with the payments being made in four instalments (see note 8 of the financial statements)
- EG-08 is a highly prospective licence which already has three drill-ready prospects, with internally estimated total prospective resources of 1.4 trillion cubic feet of gas equivalent ("TCFE")
- Antler expects to commence a farm-down process in Q2 this year with a view to bringing in a partner for drilling
Offshore Ireland - Low risk / high reward infrastructure-led exploration in the proven Slyne Basin gas play
- The FEL 4/19 licence extension was granted by the Irish Government, extending the licence term to 31 January 2026
- Licence FEL 4/19 contains the Inishkea West gas exploration prospect, estimated by Europa to hold 1.5 TCF of recoverable gas
- Following the license extension, a farm-out process has begun again with the aim of bringing in a partner to assist with the drilling of the prospect
Offshore UK
- Progress continues with the potential development of the Serenity oil discovery in the Central North Sea alongside our partner i3 Energy plc, ahead of the licence's current expiry date in September 2024
- The partners believe that Serenity offers a commercially viable development opportunity with a number of potential development scenarios available given local infrastructure
- A future development could result in approximately 1,000 bopd net to Europa's 25% interest
- Whilst we continue to assess various development scenarios for Serenity, we are concerned about possible future UK fiscal changes in the event of a change of government which could negatively impact the economics of the project
ESG
- The Company continues to build on the ESG review performed last year which focused on integrating the ESG principles adopted by Europa into the Company's planning and wider strategy. As part of this process, an emissions data gathering process has been initiated to establish an emissions baseline to benchmark Europa against our peers and to potentially establish targets for future cuts
- Europa contributes to the Wressle Community Fund, which has been operating since early 2022 and provides funds to meet the needs of local charities and community groups. The Company and its Wressle JV partners make an annual contribution of around £100,000 to the fund
Board
- Following consultations with shareholders, Simon Oddie and Stephen Williams withdrew their candidacy for re-election at the 2023 Annual General Meeting held on 23 November. This left the board without a majority of non-executive directors
- On 21 December 2023 Mr Simon Ashby-Rudd was appointed to the board as a senior independent non-executive director. Simon has extensive experience in the upstream energy sector, which includes 30 years in investment banking roles at large financial institutions, and brings to the board his significant global experience in advising energy companies on corporate strategy and capital structuring. He has spent much of his career focused on Europe and Africa
Post Period
- On 14 February 2024, the North Sea Transition Authority ("NSTA") notified Europa that it has agreed to a two-year extension of the Initial Term to 20 July 2026 and a two-year extension of the Second Term to 20 July 2028 for PEDL 343 (Cloughton)
- On 8 April 2024 Dr Eleanor Rowley was appointed to the board as independent non-executive director. Eleanor is a proven hydrocarbon finder who has extensive experience in the upstream energy sector working as a geoscientist in both exploration and development projects. Her extensive knowledge of exploration and appraisal asset evaluation will complement the existing strengths of the board very well and her appointment as independent non-executive director enhances the independent governance at Europa, returning the board to a majority of independent directors
Will Holland, CEO of Europa, said:
'It has been an exciting first half to the financial year with Europa entering into a ground-breaking deal in Equatorial Guinea in West Africa. The acquisition of a 42.9% stake in Antler gives the Company material exposure to highly prospective exploration acreage in a genuinely exciting geography. I have always believed that Europa could extend its vast knowledge base into new territories and am very hopeful for the future that in our new licence provides.
We continue to progress our activities offshore West Ireland and I am very pleased that the Irish Government granted us an extension to licence FEL 4/19 containing the 1.5TCF Inishkea West gas prospect, located only 18km from existing infrastructure and the European gas network. I remain very optimistic about our chances of farming this out to a credible industry partner who can then carry us through the exploration phase of the licence.
Despite the lower revenues during the interim period, due to the temporary shutdown to install the jet pump at Wressle, our balance sheet remains robust and we expect to continue generating meaningful cashflow from our UK assets. This sets Europa up well for the future and will allow us to work up our well balanced portfolio and deliver value for shareholders.'
Source: Europa Oil & Gas
