Europa Oil & Gas (Holdings) plc, the AIM traded UK, Morocco and Ireland focused oil and gas exploration, development, and production company, announces its interim results for the six-month period ending 31 January 2022.
Financial performance
· Strongest interim financial performance since H1 2014 with significant revenue and profit as a result of asset performance and a strengthening oil price
· Revenue £2.2 million (H1 2021: £0.5 million)
· Pre-tax profit of £0.7 million (H1 2021: pre-tax loss £0.7 million)
· Net cash from operating activities £0.9 million (H1 2021: net cash used in operating activities £0.2 million)
· Unrestricted cash balance at 31 January 2022: £0.6 million (31 July 2021: £0.6 million)
Operational Highlights
Onshore UK – Wressle oilfield moving from strength to strength and new possibilities for West Firsby
Wressle Oil Field
· Wressle exceeded initial gross projections of 500 barrels of oil per day (“bopd”) in August, which increased to instantaneous flow rates in excess of 884 bopd and 480,000 cubic feet (“Mcf”) of gas by September following successful proppant squeeze and coiled tubing operations. This more than doubled Europa’s total net oil production to 208 bopd during H1 and provided a major boost to revenues against a backdrop of rising oil prices.
· ERCE Equipoise Ltd (“ERCE”), an independent energy consulting group, concluded from analysis of downhole pressure data that higher rates of up to 1,543 bopd can be realised if the facilities constraints on gas production can be alleviated.
· Further resources in the Wingfield Flags and Penistone Flags reservoirs are being reviewed for development and have the potential to increase net reserves.
West Firsby Oil Field
· CausewayGT and geothermal project partner Baker Hughes identified Europa’s West Firsby oil field in the Midlands as a suitable candidate for developing a closed-loop geothermal system.
· Future potential for West Firsby to continue delivering revenue and for additional well stock to be repurposed to generate emission-free geothermal energy is in line with the Company’s ESG strategy.
Offshore Morocco – high-impact exploration opportunity
· The farm out initiative of the Inzegane Offshore permit located in the Agadir Basin was formally launched in August. Europa has a 75% interest in Inzegane and operatorship of the License covering an area of 11,228 sq. km
o Inzegane represents a high-impact exploration opportunity in a highly underexplored area of the world – complementing Europa’s strategy of building a balanced portfolio of assets.
o Recent evaluation identified a significant volume of unrisked recoverable resources, in excess of 1 billion barrels (oil equivalent), in the top five ranked prospects alone.
o Morocco offers a highly attractive investment opportunity with excellent fiscal terms. Several major and mid-cap companies already hold acreage there, including ENI, Hunt, Genel and ConocoPhillips.
Offshore Ireland – Low risk / high reward infrastructure-led exploration in the proven Slyne Basin gas play
o Farmout initiative is continuing on Licence FEL 4/19 which holds the flagship 1.5 tcf Inishkea prospect adjacent to existing infrastructure at the producing Corrib gas field.
Post period
· Exercise of rights by DNO North Sea (UK) Limited to terminate the Sale and Purchase Agreement for acquisition by Europa of Irish exploration licence FEL 3/19.
· Successfully raised gross proceeds of £7.02m, approved by shareholders at the General Meeting on 25 March.
· Proposed acquisition of a 25% interest in the Serenity discovery in the North Sea as part of the Company’s strategy to build a balanced portfolio of assets.
Simon Oddie, CEO said:
“We are delighted to bring you our outstanding financial results for the first half, which saw revenue quadruple to £2.2 million and a swing back to profitability from recent years.
Europa’s positive H1 performance was driven by excellent production result at our Wressle oil field in North Lincolnshire, which saw our average daily production more than double compared to H1 2021 and coupled with elevated oil prices, which are now exceeding US$100 a barrel.
With the raising of £7.02 million and the proposed acquisition of a 25% interest in the Serenity discovery in the UK North Sea post reporting period, we have now also put in place the third leg of the business, the acquisition of a near-term appraisal and development opportunity. The year is shaping up to be transformational for both our diversified energy portfolio and our financial position.”
For further information please visit www.europaoil.com or contact:
Simon Oddie
Murray Johnson
Europa
Chairman’s Statement
“It has been a very eventful and truly game changing time for Europa. Our standout performer in the UK portfolio – Wressle – delivered and exceeded all expectations and the period also saw our ESG strategy gain momentum with the West Frisby oil field identified as a possible site for a closed loop geothermal project. The most material and transformational event came post period end with the raising of £7.02 million to fund the farm-in for 25% of North Sea block 13/23c which includes the Serenity oil discovery. This has the combined benefits of balancing our portfolio and offering the potential for significant short term value upside to Europa. We are now delivering on our stated strategy of developing a balanced portfolio of multi-stage hydrocarbon assets encompassing production, development, and exploration.
Wressle’s outstanding production performance during H1 saw average daily output more than double to over 200 bopd (net) – quadrupling revenues to £2.2 million, compared to H1 2021, amid a surging oil price environment. The average realised oil price increased by 75%, -compared to H1 2021, to US$77.84 per barrel during the first half. Our net cash figure was also positive versus a year ago. Also, there is further upside potential available for our standout asset as flagged by a report conducted by ERCE Equipoise Ltd (“ERCE”), an independent energy consulting group, which highlighted significant upside potential in production to 1,543bopd – provided certain conditions are met. The operator is currently working on satisfying these conditions to enable further increased production.
The farm out initiative of our Inezgane Offshore permit in offshore Morocco launched during the period also paves the way for additional growth vis a vis a high-impact exploration opportunity in a highly underexplored area. This is a high potential exploration licence where we have already mapped unrisked prospective oil resources in excess of 1 billion barrels.
Finally, on behalf of the Board I would like to thank the management, employees and consultants for their hard work over the course of the reporting period and beyond. I also want to thank our shareholders for their continued support during the period and look forward to updating the market on further developments during this exciting period for the Company.”
Mr Brian O’Cathain (non-executive Chairman)
13 April 2022
