TIDMEDR
RNS Number : 6471W
Egdon Resources PLC
27 April 2021
27 April 2021
Embargoed for 7.00am
EGDON RESOURCES PLC
("Egdon" or "the Group" or "the Company")
Interim Results for the Six Months Ended 31 January 2021
Egdon Resources plc (AIM: EDR), a UK-based exploration and
production company primarily focused on the hydrocarbon-producing
basins of onshore UK, today announces its unaudited results for the
six months ended 31 January 2021 ("the period").
Overview and Highlights
Operational and Corporate
-- Production during the period was 92 barrels of oil equivalent
per day ("boepd") (H1 2020: 178 boepd) in-line with guidance of
90-100 boepd
-- Completion of the farm-outs for the Resolution and Endeavour
gas discoveries (P1929 and P2304) to Shell Oil U.K. Limited
-- Deferral of the Resolution 3-D seismic survey to February 2022
-- Planning consent extended to 31 December 2021 for the drilling of North Kelsey-1 (PEDL241)
-- PEDL143 Licence was relinquished
-- Commencement of free-flow test production at Wressle
following safe and successful operations to recomplete and
reperforate the Ashover Grit reservoir interval
Financial Performance
-- Oil and gas revenues during the period of GBP0.424 million
(H1 2020: GBP0.675 million) as a result of declining production and
weaker prices
-- Loss of GBP0.763 million (H1 2020: GBP1.044 million) before impairments
-- Overall loss for the period of GBP1.039 million including
GBP0.276 million of impairments (H1 2020: loss of GBP3.235 million,
GBP2.191 of impairments)
-- Cash and cash equivalents of GBP2.422 million (H1 2020: GBP0.781 million)
-- Net current liabilities as at 31 January 2021 of GBP0.126
million, which includes liability for GBP0.962 million convertible
loan (H1 2020: GBPNil) and GBP0.417 million deferred consideration
for Wressle (H1 2020: net current assets of GBP0.370 million;
including liability for Wressle deferred consideration of GBP0.417
million)
-- Net Assets at 31 January 2021 of GBP25.658 million (H1 2020: GBP27.812 million)
-- GBP1 million loan facility secured with Union Jack Oil plc
-- GBP1.051 million convertible loan notes issued following
approval at a General Meeting in January 2021
Subsequent Events
-- On 26 February 2021, Egdon submitted a planning application
for a side-track drilling operation, associated testing and
long-term oil production at the Biscathorpe-2 well site
-- On 23 April 2021, a memorandum of understanding was executed
with Creative Geothermal Solutions Limited ("CGS") to progress
geothermal projects within Egdon's existing portfolio and to look
at wider opportunities
Outlook
-- Production guidance for the full year of 110-130 boepd.(2020: 145 boepd)
Our key operational focus for the coming period will be:
-- Progressing the proppant squeeze at the Wressle oil field to
attain target production of 150 boepd net to Egdon
-- Securing planning consent for the Biscathrope-2Z side-track,
testing and long-term production
-- Progressing a farm-out of North Kelsey-1 and Biscathorpe-2Z
with a view to drilling during 2021-22
-- Progressing the acquisition of the planned 3-D seismic survey
over the Resolution and Endeavour gas discoveries in February
2022
-- Progressing drilling plans to target incremental oil
production / near field exploration opportunities at the Keddington
oil field and field redevelopment at Waddock Cross
-- Developing a detailed plan for geothermal repurposing of
either or both of the Dukes Wood and Kirklington wells.
-- Subject to lifting of the current moratorium on hydraulic
fracturing operations for shale-gas, progressing plans for further
testing of our extensive Gainsborough Trough unconventional
resources assets
Online Presentation
The Interim Results and Business Update presentation is
available on the Egdon website: www.egdon-resources.com
Commenting on the results, Philip Stephens, Chairman of Egdon
said;
" The most significant event during the period was the
completion of site and recompletion works and commencement of oil
flows at Wressle. We continue to await consent to proceed with the
proppant squeeze in order to bring production up to the expected
level of 500 bopd which will have a meaningful impact on our
production and cash flow. Additionally during the period, the
Company completed refinancing arrangements providing working
capital to pursue our key objectives. We continue to proactively
screen new low carbon Energy Transition opportunities, and are
pleased to have announced an initial MoU to explore the
possibilities for geothermal repurposing of some of our existing
assets. We look forward to pursuing our revised strategy in the
context of an improving operating backdrop compared to the last 12
months ."
For further information please contact:
Egdon Resources plc
Mark Abbott, Martin Durham 01256 702 292
Buchanan
Ben Romney, Chris Judd 020 7466 5000
Nominated Adviser & Joint Broker - WH Ireland Limited
Chris Hardie, Lydia Zychowska 020 7894 7000
Joint Broker - VSA Capital Limited
Andrew Monk (Corporate Broking) 020 3005 5000
Andrew Raca (Corporate Finance)
About Egdon
Egdon Resources plc (LSE: EDR) is an established UK-based
exploration and production company focused on onshore exploration
and production in the hydrocarbon-producing basins of the UK.
Egdon holds interests in 41 licences in the UK and has an active
programme of exploration, appraisal and development within its
portfolio of oil and gas assets. Egdon is an approved operator in
the UK. Egdon was formed in 1997 and listed on AIM in December
2004.
Qualified Person Review
In accordance with the AIM Rules - Note for Mining and Oil and
Gas Companies, this release has been reviewed by Mark Abbott,
Managing Director of Egdon, who is a geoscientist with over 30
years' experience and is a member of the Petroleum Exploration
Society of Great Britain and a Fellow of the Geological Society. Mr
Abbott has consented to the inclusion of the technical information
in this release in the form and context in which it appears.
Evaluation of hydrocarbon volumes has been assessed in
accordance with the 2018 Petroleum Resources Management System
(PRMS) prepared by the Oil and Gas Reserves Committee of the
Society of Petroleum Engineers (SPE) and reviewed and jointly
sponsored by the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), the Society of
Petroleum Evaluation Engineers (SPEE), the Society of Exploration
Geophysicists (SEG), the Society of Petrophysicists and Well Log
Analysts (SPWLA) and the European Association of Geoscientists
& Engineers (EAGE).
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
Chairman's Statement
I can report on the results for the six months ended 31 January
2021, a period which has seen continuing challenges for individuals
and businesses due to ongoing restrictions imposed in response to
the COVID-19 pandemic.
During this time, the primary focus and concern of the Company
has remained, the health and safety of our employees, contractors,
and other stakeholders. Egdon's office-based employees have
continued to work from home and our production and site operations
have remained largely unaffected due to the established procedures
and plans in place to ensure social distancing and continued safe
operation.
Commodity prices have improved during the period as worldwide
economic activity levels have increased. However, we continue to
take a prudent approach and continue to implement measures to
reduce our costs, with all employees and Directors continuing to
take a temporary 20% salary reduction and by maintaining a strong
focus on cost-control across our business.
Notwithstanding the significant headwinds encountered, we have
continued to make progress with a number of key projects and plan
to be in a position to benefit and grow as the UK and world economy
emerges from lockdown.
Key Events
Key events during the period were;
-- Production during the period was 92 boepd (2020: 178 boepd)
in-line with guidance of 90-100 boepd. Production was from the
Ceres gas field, the Keddington and Fiskerton Airfield oil fields
and briefly on 30 January 2021, from the recompleted and newly
developed Wressle oil field.
-- Completion in August 2020 of the farm-out of the Resolution
and Endeavour gas discoveries (P1929 and P2304) to Shell Oil U.K.
Limited ("Shell") and agreed licence extensions and new work
programme obligations with the Oil and Gas Authority ("OGA").
-- The planned 3-D seismic survey over the Resolution and
Endeavour gas discoveries, originally planned for February 2021 has
been deferred to February 2022, subject to final regulatory
approval.
-- Planning consent for the drilling of North Kelsey-1 (PEDL241)
was extended to 31 December 2021 and a farm-out process has
commenced for North Kelsey-1 and Biscathorpe-2Z.
-- PEDL143 (Holmwood) was relinquished during September 2020 as
a viable well site from which to drill the well, could not be
found.
-- Refinancing of the business via a GBP1 million loan facility
with Union Jack Oil plc and the issue of GBP1.05 million
convertible loan notes with a concert party of Petrichor Holdings
BV following shareholder approval at a General Meeting held on 22
January 2021.
-- Recompletion and reperforation operation safely and
successfully completed on the Wressle Ashover Grit reservoir ahead
of first oil flows on 30 January 2021. The well is undergoing an
Extended Well Test (EWT) ahead of the planned proppant squeeze.
-- Post-period, a planning application supported by a
comprehensive environmental statement was submitted for the
drilling of a side-track well, well-testing and long-term
production at Biscathorpe.
Financial and Statutory Information
Revenue from oil and gas production during the period was
GBP0.424 million (H1 2020: GBP0.675 million).
The Group recorded a net loss of GBP1.039 million for the
period, (H1 2020: loss of GBP3.235 million). This included
write-downs of GBP0.276 million due to the lapse of the farm-out
agreement for PL161/162 (H1 2020: including impairments totalling
GBP2.191 million). The operating loss before impairments was
GBP0.763 million (H1 2020: GBP1.044 million) .
The Group continues to focus on managing cash resources and at
the end of the period had cash and cash equivalents of GBP2.422
million (2020: GBP0.781 million) and net current liabilities of
GBP0.126 million (2020: net current assets of GBP0.370 million).
The net current liabilities includes GBP0.962 million convertible
loan, which is expected to convert into shares at 1.55p per share
and GBP0.417 million deferred consideration for Wressle.
The loss per share for the period was 0.32p (H1 2020: loss of
1.07p).
During the period the Company secured a GBP1 million loan
facility with Union Jack Oil plc and issued GBP1.05 million of
convertible loan notes, convertible at 1.55p per share. with a
concert party of Petrichor Holdings BV following shareholder
approval at a General Meeting held on 22 January 2021.
Strategy
The Board has undertaken a review of the Company's existing
strategy in light of the opportunities and challenges presented by
the economic and political environment and the UK's move to Net
Zero carbon emissions by 2050. A key element of this review has
focused on energy transition opportunities which utilise the
Company's core skills, knowledge, and operating experience. We have
updated the Company's strategy as follows;
1) Maintain geographical focus on the UK
2) Focus on growth in production and revenue through
conventional production, appraisal and exploration
3) Maintain our significant portfolio of unconventional
resources assets whilst working to address the moratorium
4) A near term focus on developing low carbon energy transition
projects utilising Egdon's existing assets, knowledge of the UK
Onshore geology and core technical skills and operating
experience
We have already made progress in respect of the revised strategy
with the signing of an MoU with CGS to progress geothermal energy
opportunities within our portfolio as discussed further below.
The Board also recognise the need to minimise emissions from our
operations and are committed to using the best available techniques
approach to achieve this.
Political and Regulatory
Egdon was adversely impacted in November 2019 by the
Government's imposition of a moratorium on high volume hydraulic
fracturing for shale-gas. Egdon along with its industry peers
continues to be committed to working closely with the OGA and other
regulators to look to demonstrate that we can operate safely and in
an environmentally responsible manner, and we remain hopeful of
doing so by adopting a rigorous scientific approach. Each basin and
site is different and the Gainsborough Trough, where Egdon holds
its core licences, is characterised by its simple structure and
limited faulting.
The UK is committed by law to reaching Net Zero carbon emissions
by 2050. The public narrative around this tends to be the
demonisation of oil and gas with renewables fully displacing the
use of fossil fuels. However, the Climate Change Committee ("CCC")
in its December 2020 report again highlighted the need for an
energy mix in the UK. It is a fact that in the period to 2050 the
UK cannot rely on renewables alone for all energy needs and that
there will be a continuing need for oil and gas.
The UK would continue to have a gas import dependency under most
scenarios in the period to 2050 and beyond. The results of various
studies demonstrate that UK sourced shale-gas would have
significantly lower (up to 75% lower) pre-combustion carbon
emissions than gas imported via LNG or long-distance pipelines. UK
shale-gas could be an important part of the energy transition to
the UK moving to a Net Zero economy. The national and local
benefits of an indigenous supply of shale-gas are clearly evident
and even more compelling in the context of a post-COVID-19
recovery, with a positive impact on the balance of payments, tax,
business rates and employment. Without indigenous shale-gas, the UK
will simply offshore its emissions, employment, and fiscal
benefits.
Asset Portfolio
Egdon holds interests in 41 licences (2020: 44 licences) in the
UK at the period end with exposure to the full cycle of
opportunities from exploration through to development and
production. Egdon's website ( www.egdon-resources.com ) provides
further details of the Company's assets and operations. The Company
will maintain its current focus on the highest potential projects
whilst divesting certain non-core assets.
Production
Production during the period was 92 boepd, from Ceres,
Keddington and Fiskerton Airfield, with Wressle contributing from
the last days of January 2021. Key near-term projects identified to
increase production levels are summarised below.
Excellent progress has been made during the period at the
Wressle oil field development, culminating in commencement of oil
flows at the end of January following installation of surface
facilities and a safe and successful recompletion and reperforation
of the Ashover Grit reservoir. The well is currently undergoing
test production and clean-up with produced oil exported to the
Phillips 66 Humber refinery. The results to date are in line with
expectation and we look forward to receipt of consents for the next
stage of operations. When on full production, Wressle-1 is
projected to produce at an initial gross rate of 500 bopd, adding a
net 150 bopd to Egdon's production. The Wressle Field has been
independently audited (2016 Competent Person's Report ("CPR") ERCE)
with gross 2P Reserves of 0.62 million barrels of oil ("mmbo") and
2C Resources of 1.53 mmbo.
The Keddington oil field continues to produce from one well at a
gross rate of c.25 bopd (2020: 26 bopd). A detailed sub-surface
review of the Keddington oil field and the surrounding licence area
(PEDL005 (Remainder): Egdon 45%) has highlighted that gross Mean
Contingent Resources of 567,000 bbls remain to be produced. This
presents an opportunity to increase production via a development
side-track for which planning is already in place. In addition, a
near-field exploration opportunity exists at Keddington South,
which has a gross Mean Prospective Resource Volume of 635,000
barrels of oil and the Louth Prospect, with a gross Mean
Prospective Resource of 600,000 barrels of oil.
The Waddock Cross oil field (PL090: Egdon 55%) is currently
shut-in. Independent reservoir modelling shows that a new
horizontal well on the field could yield commercial oil production
(500-800 bopd). Further work is ongoing to finalise a forward plan
for redevelopment of the field. Given the large in place oil volume
(Mean STOIIP: ca. 57 mmbls) this has been high graded by the
Company as planning consent and facilities are in place to test
this significant opportunity.
Exploration/Appraisal
The portfolio of conventional resource assets provides potential
for growth via exploration and appraisal drilling and the Company
continues to progress those opportunities that offer maximum
impact. The pace of exploration drilling activity is in part
dependent upon successful farm-outs as the Company carefully looks
to balance financial exposure and technical risk. Key projects for
the coming period are summarised below.
Egdon completed the farm-out Agreement with Shell U.K. Limited
("Shell") in relation to UK offshore licences P1929 and P2304 which
contain the Resolution and Endeavour gas discoveries respectively
(Egdon 30%). A Competent Person's Report (Schlumberger Oilfield UK
PLC) has reported Mean Contingent Gas Resources of 231 billion
cubic feet of gas ("bcf") attributable to the Resolution gas
discovery with Egdon estimating that the Endeavour gas discovery
contains Mean Contingent Resources of 18 bcf. We now look forward
to the acquisition of a proprietary 3-D seismic survey across both
discoveries, which is planned for February 2022, subject to final
OGA approval of an extension to the licence obligations. We are
encouraged by the recent news that Shell and Deltic have committed
to the drilling of the nearby Pensacola Prospect in 2022 which will
test the same play.
Evaluation of the results of the Biscathorpe-2 well, together
with the reprocessing of 264 square kilometres of 3-D seismic data
(PEDL253: Egdon 35.8%) identified a possible material and
commercially viable hydrocarbon resource remaining to be tested. A
planning application was submitted during February 2021 for
side-track drilling, testing and long-term production. Subject to
planning consent, the side-track will target the Dinantian
Carbonate, where a 68 metre oil column was discovered in
Biscathorpe-2 with gross Mean Prospective Resources of 2.55 million
barrels of oil (mmbo) has been assessed, overlain by the Basal
Westphalian Sandstone, where gross Mean Prospective Resources of
3.95 mmbo have been estimated by Egdon. Screening conducted by
Egdon indicates break-even full cycle economics to be US$18.07 per
barrel with an NPV (10) valuation of GBP55.60 million. A joint
farm-out process is currently ongoing.
The North Kelsey Prospect (PEDL241: Egdon 50%) has Mean
Prospective Resources of 6.47 million barrels. Planning consent has
been extended to 31 December 2021 and Egdon and Union Jack Oil plc
have completed the alignment of equity on a 50:50 basis. A joint
farm-out process is currently underway.
Partly dependent upon securing farm-outs on PEDL253 and PEDL241,
and receipt of planning consent, Egdon hopes to drill a side-track
at Biscathorpe and a new well on the North Kelsey prospect during
2021 - 2022.
Unconventional Resources
The Group's unconventional resources acreage position in
Northern England is 164,280 net acres (664km(2) net). This remains
a significant and potentially highly valuable position with Egdon
estimating Mean volumes of undiscovered GIIP of 47.6 TCF
(independently assessed by ERCE in 2016).
Although Egdon holds material interests in a number of key
prospective geological basins, our core area is the Gainsborough
Trough of Nottinghamshire, Lincolnshire and Yorkshire where the
Group holds interests in 71,361 net acres (2020: 82,000 net acres).
Here, the results from the 2019 Springs Road-1 well (Egdon 14.5%)
compare favourably with some of the best US commercial shale
operations and highlight a potentially world class resource in the
Gainsborough Shale.
Activity is currently on pause due to the moratorium on
hydraulic fracturing for shale-gas introduced in November 2019.
Egdon remains optimistic in being able to demonstrate that
hydraulic fracturing for shale-gas in the basins where we operate,
can be undertaken in a safe and environmentally responsible manner
and will justify a lifting of the hydraulic fracturing moratorium.
Activity levels will therefore be on a care and maintenance basis
during the coming period.
Energy Transition Opportunities
Utilising the core skills, knowledge, and operating experience
available within the Company, we have undertaken an initial review
of the geothermal potential within our existing wells and fields. A
number of these have been identified as having potential. The
review highlighted an anomalously high geothermal gradient in the
area of our shut-in wells at the Dukes Wood and Kirklington oil
fields making these wells initial potential candidates for
repurposing for geothermal heat production. During the period we
have extended the planning consent to retain the existing
Kirklington site whilst detailed feasibility studies are completed,
and the regulatory aspects are further explored.
To facilitate progress in relation to geothermal energy
opportunities we have signed a memorandum of understanding (MoU)
with Creative Geothermal Solutions Limited (CGS). CGS are a team of
highly experienced engineers and service providers who will work
jointly with Egdon and our partners to progress these
opportunities.
Outlook
Production guidance for the full financial year 2020-21 is
110-130 boepd although the timing of the proppant squeeze treatment
at Wressle may impact this.
Operationally, in the short-term we will continue to focus on
key highlighted projects within our conventional portfolio whilst
maintaining our substantial acreage position in the nascent
shale-gas play and working with our Industry partners and peers to
demonstrate to the regulators that we can operate safely to deliver
lower emission UK shale-gas to support the energy transition.
Our key activities and focus for the coming year will be:
-- Progressing the proppant squeeze at the Wressle oil field to
attain target production of 150 boepd net to Egdon
-- Securing planning consent for the Biscathrope-2Z side-track,
testing and long-term production
-- Progressing a farm-out of North Kelsey-1 and Biscathorpe-2Z
with a view to drilling during 2021-22
-- Progressing the acquisition of the planned 3-D seismic survey
over the Resolution and Endeavour gas discoveries in February
2022
-- Progressing drilling plans to target incremental oil
production / near field exploration opportunities at the Keddington
oil field and field redevelopment at Waddock Cross
-- Developing a detailed plan for geothermal repurposing of
either or both of the Dukes Wood and Kirklington wells
-- Subject to lifting of the current moratorium on hydraulic
fracturing operations for shale-gas, progressing plans for further
testing of our extensive Gainsborough Trough unconventional
resources assets
As always, I would like to thank our shareholders for their
continued patience and support and the unwavering effort of the
Egdon team on behalf of shareholders through the current highly
challenging times.
Philip Stephens
Chairman
26 April 2021
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 January 2021
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31-Jan-21 31-Jan-20 31-July-20
GBP'000 GBP'000 GBP'000
Revenue 424 675 964
----------------------------------------------- ------------ ------------ ------------
Cost of sales - exploration costs written-off
and pre-licence costs (63) (95) (194)
Cost of sales - impairments of intangible
fixed assets (276) (528) (1,172)
Cost of sales - impairments of property,
plant and equipment - (1,663) (1,663)
Cost of sales - depreciation, excluding
impairments (61) (45) (100)
Cost of sales - amortisation of right-of-use
asset (56) (36) (63)
Cost of sales - direct production costs (473) (737) (1,216)
Release of Ceres contract asset - (100) (100)
Cost of sales - other, including shut-in
fields (69) (90) (188)
----------------------------------------------- ------------ ------------ ------------
Total cost of sales (998) (3,294) (4,696)
Gross loss (574) (2,619) (3,732)
Administrative expenses (469) (576) (956)
Other operating income 100 21 61
(943) (3,174) (4,627)
Finance income - 1 1
Finance income - net investment in sub-lease 25 21 47
Finance costs - convertible loans (4) - -
Finance costs (20) - -
Finance costs - unwinding of decommissioning
discount (30) (28) (56)
Finance costs - lease liability charge (67) (55) (113)
Loss before taxation (1,039) (3,235) (4,748)
Taxation - - -
Loss for the period (1,039) (3,235) (4,748)
----------------------------------------------- ------------ ------------ ------------
Other comprehensive income for the period - - -
Total comprehensive income for the period
attributable to equity holders of the
parent (1,039) (3,235) (4,748)
----------------------------------------------- ------------ ------------ ------------
Loss per share - note 3
Basic loss per share (0.32)p (1.07)p (1.53)p
Diluted loss per share (0.32)p (1.07)p (1.53)p
----------------------------------------------- ------------ ------------ ------------
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 January 2021
Unaudited Unaudited Audited
31-Jan-21 31-Jan-20 31-Jul-20
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 2 21,127 21,642 21,451
Property, plant and equipment 8,330 8,090 7,986
---------------------------------- ------ ----------- ----------- -----------
Right-of-use asset 671 584 709
---------------------------------- ------ ----------- ----------- -----------
Net investment in sub-lease 426 414 403
---------------------------------- ------ ----------- ----------- -----------
Total non-current assets 30,554 30,730 30,549
---------------------------------- ------ ----------- ----------- -----------
Current assets
Inventory - - 5
Trade and other receivables 719 1,588 1,832
Cash and cash equivalents 4 2,422 781 847
---------------------------------- ------ ----------- ----------- -----------
Total current assets 3,141 2,369 2,684
---------------------------------- ------ ----------- ----------- -----------
Current liabilities
Trade and other payables (2,170) (1,886) (2,868)
Loans and borrowings 5 (962) - -
Lease liability within
one year (135) (113) (149)
Total current liabilities (3,267) (1,999) (3,017)
---------------------------------- ------ ----------- ----------- -----------
Net current (liabilities)/assets (126) 370 (333)
---------------------------------- ------ ----------- ----------- -----------
Total assets less current
liabilities 30,428 31,100 30,216
Non-current liabilities
Lease liability after one
year (1,112) (844) (1,068)
Loans and borrowings 5 (1,020) - -
Provisions (2,638) (2,444) (2,478)
---------------------------------- ------ ----------- ----------- -----------
Total non-current liabilities (4,770) (3,288) (3,546)
---------------------------------- ------ ----------- ----------- -----------
Net assets 25,658 27,812 26,670
---------------------------------- ------ ----------- ----------- -----------
Equity
Share capital 15,234 14,984 15,234
Share premium 26,967 26,742 26,967
Share-based payment reserve 123 123 123
Convertible debt option 27 - -
reserve
Retained deficit (16,693) (14,037) (15,654)
25,658 27,812 26,670
---------------------------------- ------ ----------- ----------- -----------
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 January 2021
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31-Jan-21 31-Jan-20 31-Jul-20
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (1,039) (3,235) (4,748)
Adjustments for:
Depreciation and impairments of non-current
assets 404 2,282 3,017
Increase in decommissioning provision
written off to cost of sales 6 - 2
Onerous contract provision written off 119 - -
to cost of sales
Gain on disposal of fixed assets - - (5)
Foreign exchange loss - - 13
Decrease/(Increase) in inventory 5 - (5)
Decrease/(increase) in trade and other
receivables 1,106 86 (103)
(Decrease)/increase in trade and other
payables (698) 508 1,491
Finance costs 121 83 169
Finance income (25) (22) (48)
Share based remuneration charge - 9 9
Net cash flow used in operating activities (1) (289) (208)
Investing activities
Finance income - 1 1
Payments for exploration and evaluation
assets (164) (390) (842)
Proceeds from sale of exploration and 212 - -
evaluation assets
Purchase of property, plant and equipment (400) (82) (59)
Sale of property, plant and equipment - - 31
Net cash flow used in capital expenditure
and financial investment (352) (471) (869)
--------------------------------------------- ------------ ------------ -----------
Financing activities
Issue of shares - - 500
Costs associated with issue of shares - - (25)
Proceeds on issue of convertible loan 28 - -
notes - equity element
Costs associated with issue of convertible (1) - -
loan notes - equity element
Proceeds on issue of convertible loan 1,023 - -
notes - debt element
Costs associated with issue of convertible (65) - -
loan notes - debt element
Proceeds from loans acquired 1,000 - -
Principal paid on lease liabilities (15) (42) (91)
Interest paid on lease liabilities (42) (35) (65)
Net cash flow generated from financing 1,928 (77) 319
--------------------------------------------- ------------ ------------ -----------
Net increase/(decrease) in cash and cash
equivalents 1,575 (837) (758)
Cash and cash equivalents at the start
of the period 847 1,618 1,618
--------------------------------------------- ------------ ------------ -----------
Effects of exchange rate changes on the
balance of cash held in foreign currencies - - (13)
--------------------------------------------- ------------ ------------ -----------
Cash and cash equivalents at the end
of the period 2,422 781 847
--------------------------------------------- ------------ ------------ -----------
In the period to 31 January 2021, there were no significant
non-cash transactions. In the year to 31 July 2020 significant
non-cash transactions included the recognition of a right of use
asset and a lease liability on implementation of IFRS 16.
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 January 2021
Share
based Convertible
Share payment debt option Retained
Share capital premium reserve reserve earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
31 July 2019 14,984 26,742 114 - (10,846) 30,994
---------------------- -------------- --------- --------- -------------- ---------- -------------
Effect of adoption
of IFRS 16 - - - - 44 44
---------------------- -------------- --------- --------- -------------- ---------- -------------
1 August 2019
as restated 14,984 26,742 114 - (10,802) 31,038
---------------------- -------------- --------- --------- -------------- ---------- -------------
Total comprehensive
income for the
period - - - - (3,235) (3,235)
---------------------- -------------- --------- --------- -------------- ---------- -------------
Share based
payment - - 9 - - 9
---------------------- -------------- --------- --------- -------------- ---------- -------------
Balance as at
31 January 2020 14,984 26,742 123 - (14,037) 27,812
---------------------- -------------- --------- --------- -------------- ---------- -------------
Adjustment to
effect of adoption
of IFRS 16 (104) (104)
---------------------- -------------- --------- --------- -------------- ---------- -------------
Total comprehensive
income for the
period - - - - (1,513) (1,513)
---------------------- -------------- --------- --------- -------------- ---------- -------------
Issue of shares 250 250 - - - 500
---------------------- -------------- --------- --------- -------------- ---------- -------------
Share issue
costs - (25) - - - (25)
---------------------- -------------- --------- --------- -------------- ---------- -------------
Balance as at
31 July 2020 15,234 26,967 123 - (15,654) 26,670
---------------------- -------------- --------- --------- -------------- ---------- -------------
Total comprehensive
income for the
period - - - - (1,039) (1,039)
---------------------- -------------- --------- --------- -------------- ---------- -------------
Issue of convertible
loans - - - 27 - 27
---------------------- -------------- --------- --------- -------------- ---------- -------------
Balance as at
31 January 2021 15,234 26,967 123 27 (16,693) 25,658
---------------------- -------------- --------- --------- -------------- ---------- -------------
1. General information
Egdon Resources plc ('the Company' and ultimate parent of the
Group) is a public limited company listed on the AIM market of the
London Stock Exchange plc (AIM) and incorporated in England. The
registered office is The Wheat House, 98 High Street, Odiham,
Hampshire, RG29 1LP.
This interim report was authorised for issue by the Directors on
the 26 April 2021.
Basis of preparation
The financial information set out in this interim report has
been prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006. The
"requirements of the Companies Act 2006" here means accounts being
prepared in accordance with "international accounting standards" as
defined in section 474(1) of that Act, including where the Company
also makes use of standards which have been adopted for use within
the United Kingdom in accordance with regulation 1(5) of the
International Accounting Standards and European Public Limited
Liability Company (Amendment etc.) (EU Exit) Regulations 2019.
Adoption of new and revised standards
New standards, interpretations and amendments
New standards impacting the Group that have been adopted in the
interim financial statements for the six months ended 31 January
2021, but have not had a significant effect on the Group are as
follows:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Disclosure Initiative - Definition of Material);
and
-- Revisions to the Conceptual Framework for Financial Reporting.
-- Definition of a Business (Amendments to IFRS 3);
-- Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments
to IFRS 9, IAS 39 and IFRS 7); and
-- COVID-19-Related Rent Concessions (Amendments to IFRS 16).
New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided
not to adopt early.
The following amendments are effective for the period beginning
1 July 2022:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
-- References to Conceptual Framework (Amendments to IFRS 3).
Non-statutory accounts
The financial information set out in this interim report does
not constitute the Group's statutory financial statements for that
period within the meaning of Section 434 of the Companies Act 2006.
The statutory financial statements for the year ended 31 July 2020
have been delivered to the Registrar of Companies. The auditors
reported on those financial statements; their report was
unqualified and did not contain a statement under either Section
498 (2) or Section 498 (3) of the Companies Act 2006. However, in
their report on the statutory financial statements for the year
ended 31 July 2020, the auditor drew attention to the material
uncertainty regarding the Group's ability to continue as a going
concern. Additionally, the auditor drew attention, by way of
emphasis of matter paragraphs, to material uncertainties related to
the carrying value of the unconventional assets and the impact of
the moratorium on hydraulic fracturing for shale-gas in
England.
The financial information for the six months ended 31 January
2021 and 31 January 2020 is unaudited.
Accounting policies
The condensed financial statements have been prepared under the
historical cost convention, except for the inclusion of certain
financial instruments at fair value.
The same accounting policies, presentation and methods of
computation are followed in these condensed financial statements as
were applied in preparation of the Group's financial statements for
the year ended 31 July 2020.
Going concern
The Directors have prepared the financial statements on the
going concern basis, which assumes that the Group and the Company
will continue in operational existence without significant
curtailment of its activities for the foreseeable future.
Forward cash flows necessarily make assumptions as to the timing
and value of cash flows from production at the Group's producing
sites. Whilst there is currently no evidence that the timing or
value of these revenues is unrealistic, the Directors acknowledge
that volatility in both oil and gas prices, well performance
uncertainties and realising of amounts invoiced to joint venture
partners, give some level of uncertainty in respect of the timing
of future cash flows.
The Group also plans to access additional sources of funding via
debt and/or equity to fund certain future activities. Whilst, after
having made enquiries of our advisors, there is a high expectation
on the part of the Directors that such debt and/or equity will be
available in the market as and when required, a level of
uncertainty exists in relation to this.
The Group has flexibility in relation to the timing and quantum
of future expenditures and will continue to look to balance
financial exposure and risk by minimising its exposure to future
cash expenditure on existing projects during the coming period.
Impact of the COVID-19 pandemic
The coronavirus pandemic represents a significant national and
international public health emergency. The primary concern and
focus for the Company is the health and safety of our employees,
contractors and other stakeholders. In this regard, Egdon's
office-based employees have been working from home since March 2020
and will continue to do so until government guidance changes.
At our well sites we have established procedures and plans to
ensure continued safe operations are maintained in full compliance
with existing Government regulations and guidelines. We will
continue to monitor the situation and act within Government
guidelines as matters develop, but at this stage do not anticipate
any adverse impacts to our production operations.
We do not anticipate that COVID-19 will have a significant
negative impact on the cash flow position of the Group, and
therefore on its ability to continue to operate as a going
concern.
2. Impairments - Intangibles
An impairment charge of GBP276,362 has been recognised in
relation to licences PL161 and PL162. The impairment arises as
these licenses are no longer deemed to have value following the
lapse of the related farm-out.
3. Loss per share
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31-Jul-20
31-Jan-21 31-Jan-20 p
p p
Basic (0.32) (1.07) (1.53)
Diluted (0.32) (1.07) (1.53)
The basic loss per share has been calculated on the loss on
ordinary activities after taxation of GBP1.039m (January 2020:
GBP3.235m; July 2020: GBP4.748m) divided by the weighted average
number of ordinary shares in issue of 328,315,625 (January 2020:
303,315,625; July 2020: 309,822,474). The diluted loss per share
has been calculated on the loss on ordinary activities after
taxation of GBP1.039m (January 2020: GBP3.235m; July 2020:
GBP4.748m) divided by the diluted weighted average number of
ordinary shares in issue of 328,315,625 (January 2020: 303,315,625;
July 2020: 309,822,474). In all of the reported periods, all share
options in issue were excluded as their inclusion would have been
anti-dilutive.
4. Cash and cash equivalents
Unaudited Unaudited Audited
31-Jan-21 31-Jan-20 31-Jul-20
GBP'000 GBP'000 GBP'000
Cash at bank at floating
interest rates 1,439 126 716
Restricted cash at bank - 208 -
Non-interest bearing
cash at bank 983 447 131
----------- -------------------------- ------------------------------
2,422 781 847
Cash at bank at floating interest rates consisted of money
market deposits which earn interest at rates set in advance for
periods up to three months by reference to Sterling LIBOR.
Restricted cash at bank represents amounts lodged in support of
guarantee commitments, earning interest at short term rates based
on Sterling LIBOR.
The January 2020 balance for Restricted cash at bank represented
funds held in escrow accounts under arrangements relating to
decommissioning and similar obligations at Keddington. Agreements
renegotiated in 2020 have resulted in no ongoing requirement to
hold these amounts in escrow and balances previously disclosed as
Restricted cash at bank are now shown with Cash at bank.
5. Loans and borrowings
Unaudited Unaudited Audited
31-Jan-21 31-Jan-20 31-Jul-20
GBP'000 GBP'000 GBP'000
Current
Convertible debt (962) - -
Non-current
Other loans (1,020) - -
(1,982) - -
Current loans
On 22 January 2021 Egdon announced it had issued GBP1.051
million of nominal 8% unsecured convertible loan notes with a
concert party of Petrichor Holdings BV. Interest accrues daily and
is payable annually. The principal amount of the loan is repayable
12 months from the date of issue at its total face value of
GBP1.051 million or can be converted at any time into shares at the
holder's option at the conversion price of GBP0.0155 per share.
Accrued, but unpaid interest may be either settled in cash or
converted at the time of conversion.
As the conversion feature results in the conversion of a fixed
amount of stated principal into a fixed number of shares, it
satisfies the 'fixed for fixed' criterion and, therefore, it is
classified as an equity instrument.
The value of the liability component and the equity conversion
component were determined at the date the instrument was
issued.
The fair value of the liability component, included in current
borrowings, at inception was calculated using a market interest
rate for an equivalent instrument without conversion option. The
discount rate applied was 11%.
Non-current loans
On 26 November 2020 Egdon announced that it had entered into a
GBP1 million loan facility with Union Jack Oil plc. The loan has an
18 month term with the principal sum payable at end of the term or
in part or in full at any earlier time at the borrower's
discretion. Interest accrues on a daily basis on the outstanding
loan amount at an interest rate of 11% per annum and is payable
quarterly commencing on the earlier of the quarter following first
production or on April 2021. The loan is secured against an
unencumbered 25% interest in the Wressle Project (PEDL180, and
PEDL182), including the Wressle development project and associated
infrastructure.
6. Dividend
T he Directors do not recommend payment of a dividend.
7. Subsequent events
On 26 February 2021, Egdon submitted a planning application for
a side-track drilling operation, associated testing and long-term
oil production at the Biscathorpe-2 well site
On 23 April 2021, a memorandum of understanding was executed
with Creative Geothermal Solutions Limited ("CGS" to progress
geothermal projects within Egdon's existing portfolio and to look
at wider opportunities
8. Publication of the Interim Report
This interim report is available on the Company's website
www.egdon-resources.com .
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END
IR VQLFLFZLZBBX
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