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(Sharecast News) - Europa Oil & Gas reported a challenging financial performance for the year ended 31 July on Monday, as revenue declined 46% to £3.6m, reflecting reduced oil production, including a three-month shutdown at its Wressle site, and lower realised oil prices.
The AIM-traded firm said gross profit dropped to £0.3m, down from £3.4m in 2023, as it recorded a pre-tax loss of £6.8m, primarily due to a £5m non-cash exploration impairment.
Cash reserves at the end of the year stood at £1.5m - significantly lower than the £5.2m reported at the end of 2023.
The company said it made significant operational developments, particularly with its Equatorial Guinea project.
Europa acquired a 42.9% stake in Antler Global, which holds an 80% interest in the EG-08 offshore licence, which includes three drill-ready prospects and an internally-estimated mean prospective resource of 2.1 trillion cubic feet of gas equivalent.
Europa and Antler were working on a farm-down process to bring in a partner for drilling, which could start as early as next year.
The proximity of the prospects to existing gas infrastructure offered the potential for quick tie-backs if a discovery was made.
Offshore Ireland, Europa said it was focussed on the Inishkea West gas prospect in the Slyne Basin.
The Irish government extended the FEL 4/19 licence term to January 2026, allowing the company to restart its farm-out process to secure a drilling partner.
It said the Inishkea West prospect, 18 kilometres from the Corrib gas field, was considered a prime target due to its proximity to infrastructure and its large prospective resource, estimated at 1.5 trillion cubic feet of recoverable gas.
Onshore in the UK, Europa said its net production fell 48% to 137 barrels of oil per day, largely due to planned maintenance and increased water cut at the Wressle oilfield.
Europa said it had started preparations to monetise its Cloughton asset, targeting its 192 billion cubic feet gas-in-place potential, with drilling planned for 2026, subject to permitting.
The Wressle field, which contributed 78% of Europa's net UK production, saw average gross production fall to 357 barrels per day from 710 last year.
A jet pump installation in late 2023 disrupted output, and further development was under review following a recent seismic interpretation that suggested a potential resource increase.
However, planning permission for the development wells could be rescinded due to a legal challenge following the Finch Supreme Court ruling on scope three emissions, necessitating additional environmental assessments.
The company said it decided not to extend its Serenity licence in the North Sea, which expired in September, due to regulatory uncertainties and a less favourable economic outlook.
That decision resulted in a £4.9m impairment for associated capitalised costs.
Europa also opted out of a proposed shared licence in the North Sea Transition Authority's 33rd licensing round, citing limited resources and a focus on its new Equatorial Guinea assets.
Board changes included the resignations of Simon Oddie and Stephen Williams in November last year, and the subsequent appointments of Simon Ashby-Rudd in December and Eleanor Rowley in April.
Looking ahead, Europa said it planned to drill two new development wells at Wressle following recent planning approval, although legal proceedings could delay progress.
"Following the expected activity from our new-country entry into Equatorial Guinea, progress with our onshore UK projects at Cloughton and Wressle along with our Irish acreage, I believe we are well positioned to continue to grow the company, and I look forward to updating shareholders over the coming 12 months," said chief executive officer William Holland.
At 1010 GMT, shares in Europa Oil & Gas Holdings were down 13.29% at 0.74p.
Reporting by Josh White for Sharecast.com.
