Last checked at 26 Feb 2020 07:11
88 ENERGY LIMITED
ASX LODGEMENT OF ANNUAL REPORT
88 Energy Limited (ASX:88E; AIM:88E) ("88 Energy" or "Company") advises that a copy of the Company's Annual Report for the year ended 31 December 2019 has been lodged on the ASX along with the Company's 2019 year-end Corporate Governance Statement and Appendix 4G.
Each of these documents is available on the Company's website at www.88energy.com and the Annual Report, which was sent to shareholders today, can be accessed at the following link - http://www.rns-pdf.londonstockexchange.com/rns/1691E_1-2020-2-26.pdf
Set out below is the Chairman's Statement as included in the Company's Annual Report.
Also set out below is a summary of the Company's audited financial information for the year ended 31 December 2019 as extracted from the Annual Report, being:
·; Consolidated Statement of Comprehensive Income;
·; Consolidated Statement of Financial Position;
·; Consolidated Statement of Changes in Equity; and
·; Consolidated Statement of Cash Flows.
Media and Investor Relations:
88 Energy Ltd
Dave Wall, Managing Director Tel: +61 8 9485 0990
Email: admin@88energy.com
Finlay Thomson, Investor Relations Tel: +44 7976 248471
Hartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cenkos Securities
Neil McDonald/Derrick Lee Tel: +44 131 220 6939
CHAIRMAN'S STATEMENT
Dear Shareholders
It is with great optimism that I present my Chairman's Report for the 2019 financial year.
As I write, Nordic Rig#3 is on location and preparing to spud the Charlie-1 well. The well is testing a conventional oil prospect, defined by 3D seismic, comprising a sequence of stacked Brookian sandstones, on the Alaskan north slope with a gross mean unrisked prospective resource of 1.6 billion barrels (480MMBO net to 88E). It is arguably one of the most significant wells to be drilled by an ASX listed entity in 2020 and offers substantial upside to 88E shareholders in the event of success.
Charlie-1 is effectively a step out of a discovery well drilled by BP some 3 decades ago. This nearology significantly lowers the prospect risk and was one of the factors that enabled 88E to procure a drilling partner to carry the well cost up to US$ 23 million, in what has been a challenging market for farmouts. That partner, UK based Premier Oil Plc, has a track record of successful exploration.
As we approach the drilling of the Charlie-1 well, it is worth reminding ourselves why 88E chose to explore in Alaska. At the outset, 88E cast the net far and wide in search of a project that could make a meaningful difference; one which would capture investor attention with transformational upside. The source rocks of Alaska have been described as unbelievably rich and prolific, having sourced the largest conventional oil pool in North America, the 15 billion barrel Prudhoe Bay field. Earlier this year, the USGS estimated there was almost 4 billion barrels of oil yet to be discovered, with most of that potential in the Brookian play that 88E is targeting. Almost all the remaining fields in Alaska are stratigraphic traps rather than anticlines and require a subtler exploration approach utilising modern seismic data, which 88E has spent the last three years acquiring and interpreting.
Our early initiative to target Alaska has been validated by recent exploration successes and the arrival of new entrants on the Alaskan exploration scene. Between 2014 and 2019 alone, some 4 billion barrels of new oil was discovered in the State. It is not surprising the December 2019 lease sale in Alaska by the Bureau of Land Management was hailed as the most successful in as many as 13 years. S&P Global Platts reported early in January 2020 that Oil companies could spend up to $24 billion on new production in the Alaska over the next ten years. Access to existing infrastructure; a very supportive and stable State Government and significant exploration upside have long been recognised by 88E.
During 2019, 88E continued to leverage its early mover advantage and is now Operator/Manager on several active Exploration Projects across 250,000 net acres. Unlike the lower 48 States, Alaskan leases have an attractive 10-year term with no mandatory relinquishment and a low base royalty. Our prospective land holding is now of a size one would normally associate with the big end of town and provides continued scope to attract partners.
The 2019 Alaskan program, which included the unsuccessful Winx-1 well and the Premier farm-out, has been competently executed by our Managing Director, David Wall, with the assistance of a small dedicated team including former senior geologist and Exploration Manager, Elizabeth Pattillo; petroleum engineer Hassan Fatahi; our Alaskan based Operations Manager, Erik Opstad and the full support of my fellow Directors.
88E has prudently raised additional capital in advance of the 2020 program. We all know the process of evaluation is not without risk; however, we look to the future with considerable optimism as we unlock both the conventional and unconventional potential of our Alaskan exploration acreage.
Before closing I would like to thank the Department of Natural Resources, the Alaska Oil and Gas Conservation Commission; the North Slope Borough and other regulatory agencies that have facilitated our exploration effort in the State.
Our mission would not be possible without your support as shareholders in what has been a challenging yet exciting environment. Our dual listing on both ASX and AIM has garnered a wide investor base and we have been ably supported by our brokers and advisers Hartleys and Cenkos.
We look forward to a successful 2020 year.
Yours faithfully,
Michael EvansNon-Executive Chairman
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
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| Note | 2019 | 2018 |
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| $ | $ |
Revenue from continuing operations |
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Other income | 3(a) | 35,931 | 1,362,745 |
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Administrative expenses | 3(b) | (1,215,226) | (1,524,870) |
Occupancy expenses |
| (34,596) | (44,958) |
Employee benefit expenses | 3(c) | (1,983,685) | (1,879,007) |
Share-based payment expense | 18 | (95,276) | (21,750) |
Depreciation and amortisation expense |
| (58,110) | (50,609) |
Finance cost |
| (3,095,466) | (4,224,698) |
Other expenses | 3(d) | (30,277,141) | (149,010) |
Foreign exchange (loss) / gain |
| (56,888) | 538,564 |
Loss before income tax |
| (36,780,457) | (5,993,593) |
Income tax expense | 4 | - | - |
Loss after income tax for the year |
| (36,780,457) | (5,993,593) |
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Other comprehensive income / (loss) for the year Items that may be reclassified to profit or loss |
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Exchange differences on translation of foreign operations |
| 854,461 | 6,961,354 |
Other comprehensive income / (loss) for the year, net of tax |
| 854,461 | 6,961,354 |
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Total comprehensive income / (loss) for the year attributable to members of 88 Energy Limited |
| (35,925,996) | 967,761 |
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Loss per share for the year attributable to the members of 88 Energy Limited: |
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Basic and diluted loss per share | 5 | (0.005) | (0.001) |
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The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the notes to the financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019
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| Note | 2019 | 2018 | |
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| $ | $ | ||
ASSETS |
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Current Assets |
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Cash and cash equivalents | 6 | 15,903,117 | 21,722,211 | ||
Trade and other receivables | 7 | 1,120,550 | 2,101,501 | ||
Total Current Assets |
| 17,023,667 | 23,823,712 | ||
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Non-Current Assets |
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Plant and equipment | 8 | 12,900 | 11,172 | ||
Exploration and evaluation expenditure | 9 | 52,928,315 | 76,983,981 | ||
Other Assets | 10 | 23,615,216 | 22,977,103 | ||
Total Non-Current Assets |
| 76,556,431 | 99,972,256 | ||
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TOTAL ASSETS |
| 93,580,098 | 123,795,968 | ||
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LIABILITIES |
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Current Liabilities |
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Trade and other payables | 11 | 6,026,811 | 6,001,949 | ||
Provisions | 12 | 282,199 | 255,353 | ||
Total Current Liabilities |
| 6,309,010 | 6,257,302 | ||
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Non-Current Liabilities |
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Borrowings | 13 | 22,672,578 | 23,424,471 | ||
Total Non-Current Liabilities |
| 22,672,578 | 23,424,471 | ||
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TOTAL LIABILITIES |
| 28,981,588 | 29,681,773 | ||
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NET ASSETS |
| 64,598,510 | 94,114,195 | ||
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EQUITY |
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Contributed equity | 14 | 185,619,885 | 179,304,850 | ||
Reserves | 15 | 23,578,127 | 22,628,390 | ||
Accumulated losses |
| (144,599,502) | (107,819,045) | ||
TOTAL EQUITY |
| 64,598,510 | 94,114,195 | ||
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The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
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| Issued Capital | Reserves | Accumulated Losses | Total |
| $ | $ | $ | $ |
At 1 January 2019 | 179,304,850 | 22,628,390 | (107,819,045) | 94,114,195 |
Loss for the year | - | - | (36,780,457) | (36,780,457) |
Other comprehensive income | - | 854,461 | - | 854,461 |
Total comprehensive income/(loss) for the year after tax | - | 854,461 | (36,780,457) | (35,925,996) |
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Transactions with owners in their capacity as owners: |
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Issue of share capital | 6,750,000 | - | - | 6,750,000 |
Share-based payments | - | 95,276 | - | 95,276 |
Share issue costs | (434,965) | - | - | (434,965) |
Balance at 31 December 2019 | 185,619,885 | 23,578,127 | (144,599,502) | 64,598,510 |
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At 1 January 2018 | 141,711,466 | 15,645,286 | (101,825,452) | 55,531,300 |
Loss for the year | - | - | (5,993,593) | (5,993,593) |
Other comprehensive loss | - | 6,961,354 | - | 6,961,354 |
Total comprehensive income/(loss) for the year after tax | - | 6,961,354 | (5,993,593) | 967,761 |
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Transactions with owners in their capacity as owners: |
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Issue of share capital | 39,678,216 | - | - | 39,678,216 |
Share-based payments | - | 21,750 | - | 21,750 |
Share issue costs | (2,084,832) | - | - | (2,084,832) |
Balance at 31 December 2018 | 179,304,850 | 22,628,390 | (107,819,045) | 94,114,195 |
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The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANICAL YEAR ENDED 31 DECEMBER 2019
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| Note | 2019 | 2018 |
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| $ | $ |
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Cash flows from operating activities |
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Payment to suppliers and employees |
| (3,465,770) | (4,333,868) |
Interest received |
| 22,930 | 16,896 |
Interest & finance costs |
| (2,395,536) | (2,267,612) |
Net cash flows used in operating activities | 6(b) | (5,838,376) | (6,584,584) |
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Cash flows from investing activities |
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Payments for exploration and evaluation activities |
| (29,725,227) | (35,110,843) |
Contribution from JV Partners in relation to Exploration |
| 23,860,234 | 12,156,384 |
Net cash flows used in investing activities |
| (5,864,993) | (22,954,459) |
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Cash flows from financing activities |
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Proceeds from issue of shares |
| 6,530,000 | 39,677,293 |
Share issue costs |
| (461,498) | (2,124,000) |
Payment of borrowing costs |
| - | (1,126,456) |
Net cash flows from financing activities |
| 6,068,501 | 36,426,837 |
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Net increase/(decrease) in cash and cash equivalents |
| (5,634,867) | 6,887,794 |
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Cash and cash equivalents at the beginning of the year |
| 21,722,211 | 14,014,422 |
Effect of exchange rate fluctuations on cash held |
| (184,227) | 819,995 |
Cash and cash equivalents at end of year | 6(a) | 15,903,117 | 21,722,211 |
The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.