Europa Oil & Gas (Holdings) plc, Morocco and UK focused oil and gas exploration, development and production company, announces its interim results for the six month period ended 31 January 2020.
Operational highlights
Onshore UK
• Wressle Development granted planning consent on appeal
• 90bopd produced from Europa’s three producing UK onshore fields during H1 – matches H1 2019 and FY 2019 performance
• Net production on course to more than double to over 200bopd when the Wressle oil field comes on stream later this year at an expected initial rate of 500bopd
Offshore Ireland
• Refocus of portfolio towards the proven gas play in the Slyne Basin - follows the Irish Government’s recognition of gas’ key role in the country’s transition to renewable energy and its intention to phase out oil exploration
• Discussions ongoing with prospective partners to farm-out 100%-owned FEL4/19, which is home to the 1.5tcf Inishkea prospect
• See post period reporting events below
Offshore Morocco
• Awarded large Inezgane licence covering 11,192 square km in the Agadir Basin offshore Morocco in September 2019
• Shell, ENI, Repsol, Hunt and Genel currently active in the area
• Data tapes received from ONHYM in preparation for seismic reprocessing
• Large prospects with resource estimates in excess of 250mmbbls have already been identified in the Lower Cretaceous fan sand play, a prolific producer in West Africa
• Licence attracting interest from a number of operators looking to farm-in
COVID-19
• At the reporting date of 31 January 2020 there was no impact from coronavirus
Financial performance
• Revenue £0.8 million (H1 2019: £0.9 million)
• Pre-tax loss before exploration write-off / write-back £0.5 million (H1 2019: £0.4 million)
• Pre-tax loss of £3.5 million including write-offs taken following relinquishment of Irish licences (see post period reporting events below) (H1 2019: pre-tax loss £0.4 million)
• Net cash used in operating activities £0.4 million (H1 2019: £0.3 million)
• Cash balance at 31 January 2020: £1.5 million (31 July 2019: £2.9 million)
Post reporting period events
• COVID-19. Directors, London based staff and consultants have been home based since 16 March, and agreed a temporary salary/rate cut of 20% since 1 April. Operations continue at the three production sites.
• Updated economic model confirms production at Wressle would be economically robust in the current low oil price environment - estimated break-even oil price (excluding Europa’s corporate overheads) of US$17.62 per barrel
• Applications submitted for the relinquishment of three licences offshore Ireland where primary prospectivity is oil - LO16/19, LO16/22, FEL 2/13 - total non-cash write-off of £1.7 million
• Application submitted for a 2 year extension and merger of FELs 3/13 and 1/17- should the merger not be granted then FEL 3/13 will be relinquished, and the Company has elected to write-off the £1.3 million intangible asset in these accounts
• Appointment of Stephen Williams as independent Non-Executive director replacing Roderick Corrie
Simon Oddie, Interim CEO and Executive Chairman of Europa, said: “The standout corporate events of the six month review period were the granting of planning consent for the development of Wressle and the award of the Inezgane permit offshore Morocco. Expected to come on stream at a rate of 500bopd in the second half, Wressle will transform Europa’s net production and revenue profile. Together with measures we have taken to reduce our already low cost base and, following the repositioning of our portfolio towards gas, we believe Europa will be well placed to withstand a sustained period of oil price volatility and weakness.
“While the ongoing COVID-19 pandemic may impact activity on the ground, there is much we are still able to get on with, notably working towards the farm-out of our strategic position in the Slyne Basin and continuing desktop work and launching the farm-out of our licence offshore Morocco. With gas set to play a key role in Ireland’s energy mix and our licences located in a gas play proven by the producing Corrib field, Inishkea represents a compelling investment opportunity with an attractive risk / reward profile. While offshore Morocco is at an earlier stage, we are already talking to a number of parties who expressed an interest in our Inezgane licence, even before we had identified multiple targets with up to 250mmbls of prospective resources.
“These are clearly challenging times for everyone and our priority has to be to ensure the health and safety of all our employees and stakeholders. With this in mind, we will continue
to follow the latest government advice and as a result, timescales for certain activities and milestones, including our efforts to add a third leg to our business by securing a late stage appraisal project, may well need to be lengthened. Importantly, the roadmap we have to increase our onshore UK production and to expose our shareholders to potentially value creating events offshore Ireland and Morocco remains in place.”