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LONDON (Alliance News) - Europa Oil & Gas (Holdings) PLC on Monday said its operations became unprofitable in its most recently completed financial year but said a lower level of exploration write-offs still allowed a narrower loss to be recorded.
Europa said revenue in the year to the end of July amounted to USD1.3 million with total cost of sales coming in a fraction higher compared to the previous year when revenue totalled GBP2.2 million with cost of sales of GBP1.9 million.
Exploration write-offs, however, dropped to GBP1.2 million from GBP2.2 million, and the company avoided booking any impairments in the period, whereas last year they amounted to GBP1.1 million.
The write-offs this year were made against the exploration on Bearn des Gaves, onshore in France, whereas last year the write-offs were against exploration on PEDL181, with the impairment linked to the West Firsby field, onshore in East Midlands, England.
That meant the gross loss for the recent 12-month period came in at GBP1.2 million compared to the loss of GBP3.0 million the year before. Administrative costs fell to GBP593,000 from GBP975,000.
Overall, the results led to a pretax loss for the year of GBP1.9 million, narrowed from the GBP4.1 million loss reported in the corresponding period a year earlier.
"In the face of difficult market conditions for the oil and gas sector, we have delivered a strong performance. We have reduced costs by one third, our UK production is set to double, we are preparing to drill a high-impact well onshore UK at Holmwood, we have delivered three deals, landed seven new licences in the UK and Ireland and perhaps most importantly built a leading position in Atlantic Ireland," said Chief Executive High Mackay.
"We will continue to mature our Irish portfolio with the intention of delivering half a dozen drill-ready prospects - any one of which has the potential to be a company maker for Europa," Mackay added.
Production from Europa's onshore fields in the UK averaged 123 barrels of oil equivalent each day in the financial year compared to 141 barrels per day in the prior year. That resulted in a net cash outflow for the year of GBP300,000, the same as the previous year, but its new Wressle discovery, when producing, should return the company to positive cashflow.
"If Wressle were to produce at the expected initial flowrate of 500 barrels of oil per day gross, even at today's sub USD50 per barrel oil price, Europa will return to a positive operating cashflow," said the company.
Net cash at the end of July stood at GBP1.7 million compared to the balance of GBP3.2 million one year ago.
"In the UK, with Wressle moving from discovery to producer, we are poised to see an increase in production, revenue and cashflow, which should coincide with work preparing for the exploration well at Holmwood," Europa added.
Holmwood, subject to a positive planning decision being made by authorities, should be drilled "in 2017".
Numerous London-listed oil and gas firms won new licenses onshore the UK under the latest licensing round, and Europa was awarded three new licenses, one of which was subsequently rejected by the company. It also secured five new licensing options offshore Ireland during the financial year, which alone are thought to contain 2.1 billion barrels of oil equivalent and 1.5 trillion cubic feet of gas in gross mean unrisked prospective and indicative resources.
Europa shares were trading flat on Monday morning at 4.75 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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