Lansdowne Oil & Gas is pleased to announce its audited results, for the year ended 31 December 2021. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and the Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.
Lansdowne is also pleased to announce that the Company's 2021 Annual Report & Accounts have been posted to shareholders along with the notice of the Annual General Meeting ("AGM") to be held at 12.00 noon on 14 September 2021 at the offices of Pinsent Masons LLP, 30 Crown Place, Earl Street, London EC2A 4ES.
The financial information extracted from the Company's 2021 Annual Report and Accounts within this announcement should be read in conjunction with the full notes available in the Company's 2021 Annual Report and Accounts.
Jeffrey Auld, Non-Executive Chairman of Lansdowne, commented:
During 2021, several important third-party technical studies were carried out to evaluate the potential of a first phase of development of the Barryroe Field, centred around the 48/24-10z well and surrounding central parts of the Barryroe Field. These studies included reservoir modelling of the sub-area to be targeted in the Phase 1 development, updated well design and costings, and an updated conceptual development study, focused only on the oil-bearing Basal Wealden A Sand.
As a result of these additional technical studies the Barryroe Partners commissioned a new Competent Person's Report (CPR) to reflect the incremental understanding imparted by these studies. The CPR was prepared by RPS Group Plc. and the results were provided to shareholders in February 2022. The RPS CPR has addressed the potential oil volumes in the Basal Wealden A Sand, the reservoir reviewed in the earlier full-field CPR carried out by Netherland Sewell & Associates Inc. in 2012.
Overlaying the identified oil-bearing Basal Wealden A Sands are the important C Sands. During the initial drilling of the 48/24-10z well the well tested strong flow rates from the C Sands. The recent RPS Competent Persons Report did not address the gas volumes present in the overlying C Sand which Lansdowne believes are of significant volume and value. Whilst the Competent Persons Report has only addressed oil volumes in the sub-area of the Barryroe Field to be potentially targeted by the proposed Phase 1 development it is important to note the incremental value and considerable energy security available to Ireland that may be offered by the development of gas volumes in the C Sand.
The RPS CPR concluded that the Phase 1 development, in the P50 Case, has the potential to recover 81.2 million barrels of oil (16.24 million barrels net to Lansdowne) from a Best Estimate of 278 million barrels of oil in place (STOIIP).
An economic evaluation, documented in the RPS CPR, for the Phase 1 development in the 2C oil resources case, delivers an NPV10% for Lansdowne's 20% share of US$104 million under a Brent Oil Price assumption of US$68 per barrel in 2027, rising to $70/bbl in 2028 and 2029 and inflated at 2% per annum thereafter. This equates to a NPV10% of $6.40/bbl.
The volumes identified in the RPS CPR are of significant value to both Lansdowne and Ireland. Further work will be conducted on the gas volumes present in the overlying C Sands as this gas, combined with the already identified oil volumes offers a significant addition to Ireland's energy security. It is Lansdowne's belief that the development of Barryroe has taken on a critical energy security role for Ireland and we look forward to expediting the development of this asset.
With the completion of the site survey over the K location in November 2021, the ground is set for moving forward with the necessary appraisal well, which will address both the A and C Basal Wealden Sand reservoirs and clarify the split between oil and gas resource volumes.
Unfortunately, however, nothing can move forward without the granting of Lease Undertaking over Barryroe, the application for which was submitted in April 2021. This continues to remain under consideration by DECC.
Security of energy supply has become critical, following the Russian invasion of Ukraine. The EU is planning an embargo on Russian supplies of fossil fuels and has recently published a plan (REPower the EU) outlining actions to be taken to end the era of dependence on Russian fossil fuels.
One such core action is diversifying to find alternative energy supplies. The EU recognises that in the short-term "we need alternative supplies of gas, oil and coal as quickly as possible."
The actions planned under diversification include increasing LNG deliveries from the US, Canada and Norway; restarting energy dialogues with Algeria; exploring the export potential of sub-Saharan African countries like Nigeria, Senegal and Angola, intensifying co-operation with Azerbaijan on the Southern Gas Corridor and seeking to increase LNG supplies from Egypt and Israel.
It seems extraordinary that whilst the EU is contemplating this diverse range of actions to diversify supply, Barryroe remains languishing, unable to progress.
We will continue to press for an award of a Lease Undertaking so that the Barryroe partners can get back to work for the benefit of the Irish people and the wider EU community.
Operational highlights
· Barryroe Oil Field (SEL 1/11)
o Updated Lease Undertaking submitted to the Department of the Environment, Climate and Communications in April 2021, with an updated work program designed to move Barryroe to a declaration of commerciality, turning 2C (contingent) resources into 2P (proven) reserves
o Site survey completed over K area - to the south of 48/24-10z well, in November 2021. Operations carried out in a timely manner and under budget
o New reservoir and development studies carried out to assess potential of first Phase development of Barryroe, centered around the 48/24-10z area
o New CPR completed by RPS over Phase 1 development area estimated 2C Resources of 81.2 million barrels recoverable, 16.4 million barrels net to Lansdowne
Financial highlights
· Cash balances at 31 December 2021 of £0.20 million (2020: £0.6 million).
· Operating expenses for the year were £0.1 million (2020: £0.3 million).
· Loss for the year after tax of £0.1 million (2020: loss £0.4 million).
· Diluted loss per share of 0.02 pence (2020: loss 0.05 pence).
· The LC Capital Master Fund loan, due for repayment on 31 December 2021, was extended to 31 December 2022.
· As part of LCCMF's agreement to the Loan Extension, the warrants to subscribe for up to 26 million new ordinary shares in the Company, granted to LC Capital Targeted Opportunities Fund LP in December 2020 were extended to now expire on 31 December 2022, in line with the Loan Extension and the exercise price was adjusted to 0.525p/warrant (being the closing mid-market price on 29 December 2021).
· In March 2022, the Company placed 60,000,000 new ordinary shares with new and existing investors at a placing price of 0.5 pence per share, raising £300,000 before costs.
· Associated with the fund raise, 1,821,826 warrants were granted to LC Capital Targeted Opportunities Fund, LP in accordance with the provisions of LCCTOC's warrant instrument.
· LC now holds 27,821,826 warrants over ordinary shares and the strike price for these warrants has been amended to 0.5 pence per share from 0.525 pence per share pursuant to the LC warrant instrument.
