Last checked at 20 Oct 2009 07:00
Results for the year ended 31 July 2009
Europa Oil & Gas (Holdings) plc (EOG) the AIM listed oil & gas exploration andproduction group with assets in Europe and North Africa, today announces itsresults for the 12 months ended 31 July 2009.
Operational highlights
* Crude oil sales of 77,743 barrels, a decrease of 12% on 2008 * Drilled top hole section of Hykeham-1 well * Proved a potential 40% production increase for West Firsby * Reduced equity in Brates block to 20% * Secured extension to West Darag licence to 31 December 2009
Financial highlights
* Revenue of 2.9 million (2008: 4.4 million)
* Profit before tax of 0.4 million (2008: 2.1 million)
* Profit after tax from continuing operation of 0.1 million (2008: 0.4
million)
* Basic earnings per share from continuing operations 0.11 pence (2008: 0.71
pence)
Post balance sheet events
* Elected not to participate in any future Lilieci-1 development
* Placed 12.5 million shares to raise 1.7 million
* Drilled Voitinel-1. First test flowed gas at a rate of 1.6 mmscfpd
* 1.6 million of available funding at 30 September 2009, post drilling of
Voitinel
* Rig contract executed with BDF for the main section of Hykeham-1
Chairman's statement
The Group's financial year spans a period of unprecedented turbulence incommodity and equity markets, with Brent oil price falling from $120/bbl tounder $40/bbl during the twelve months. The fall in oil prices, albeit from anunsustainable and artificial peak, adversely affected Europa's productionrevenues which fell to 2.9 million from 4.4 million in 2008. The directorsreacted constructively to this situation by reducing their salaries by 20%while the oil price was below $50/bbl. Despite this challenging businessenvironment, the Group has posted a pre-tax profit of 0.4 million (2008: 2.1million).The Group's production stream was also impacted by a fire at West Firsby, whichcaused a shutdown of that site's production in June and July 2009, resulting inan annual average production of 213 bopd (2008: 242 bopd). Experimentalproduction optimisation at West Firsby, conducted in May, confirmed thepotential for around 40% production increase at the site by upgrading thefacilities. Although delayed by the fire, a programme of work to increaseproduction at both West Firsby and Crosby Warren fields is now on-track todeliver improvements by the end of 2009.
In the Aquitaine basin of SW France, the Group has reprocessed the existing seismic data over most of the Bearn des Gaves and Tarbes Val d'Adour permits. The forward programme is to develop a drilling location in conjunction with possible new seismic acquisition in 2010.
Further afield, we successfully negotiated an extension of Phase 1 of the West Darag concession in Egypt in order to undertake the acquisition of a new seismic survey. The seismic survey is due to commence in October 2009 and a decision will then be made regarding a commitment to enter Phase 2 on the concession.
In early 2009, Europa participated in the drilling of the Lilieci-1 well Bacau,Romania, which is currently suspended. The well was drilled as part of anagreement with the Operator whereby our costs were carried and we had an optionto back-in to the well, after testing, on payment of the carried costs plus apremium. Our assessment of the well tests was that there was insufficient gasin place to warrant backing-in to any future development and the option was notexercised. The results underlined the soundness of the decision to drill thiswell at almost nil cost to Europa.
The high profile Voitinel well Brodina, Romania spudded on 21 August 2009 and reached TD on 19 September 2009. The primary target of the prospect did not
contain hydrocarbons, however the Brodina group decideded that the gas shows in a secondary target at a shallower depth warranted testing. The test is currently in progress. Initial results are promising, with the first test flowing at a rate of 1.6 mmscfpd. The Operator will report when the tests are completed at the end of October.
Following the spudding of Voitinel-1 the directors took advantage of anopportunity to raise equity funds. This resulted in net proceeds of 1.7million. Directors and employees subscribed to 20% of the amount raised, withonly a 16.6% dilution to existing shareholders. This capital allows the Groupto quicken the pace on the production enhancement programmes, a process whichis already underway. It is anticipated that production will rise to over 350bopd after completion of these programmes. At 30 September 2009 Europa had 1.6million of available funding.Attention now switches to the East Midlands again with the Hykeham-1exploration well PEDL150, UK, a low risk drill offsetting our producing Whisbyoilfield. The well was spudded early in 2009 and drilled to 88m before beingsuspended due to summer bird breeding season drilling restrictions. TheHykeham-1 well targets 10mmbo in place and has all the essential elements for alow risk oilfield prospect. We believe the well has a 1 in 3 chance of success.We expect this well to be completed by January 2010 and if successful, could beput on production immediately providing an indicative Group production level ofover 500 bopd.Since June, oil prices have rallied and steadied in the $60-70/bbl range andmost economies have started to recover. This bodes well for a more stable andpredictable year ahead in terms of revenue stream. Combining this withincreased production, drilling in the UK, Romania and potentially France andEgypt, make for a very exciting 2010.Sir Michael OliverChairmanOperational reviewLicence Interests Table
Country Project Equity Operator Status UK Crosby Warren 100% Europa Production Oilfield UK West Firsby 100% Europa Production Oilfield UK Whisby Oilfield 65% BPEL Production (W4 only) UK PEDL143 40% Europa Exploration, Holmwood-1 well planned (Holmwood) 2010 UK PEDL150 75% Europa Exploration, Hykeham-1 well, West (SW Lincoln) Whisby prospect UK PEDL180 50% Europa Exploration, Wressle prospect (NE Lincs) UK PEDL181 50% Europa Exploration, Caister Horst prospect (NE Lincs) UK PEDL222 50% Valhalla Exploration, maturing prospects (Torksey Area) Romania EIII-1 Brodina 28.75% Aurelian Exploration, Voitinel-1 on test
Romania EPI-3 Brates 20% MND Exploration, Barchiz-1 well and Tazaul Mare prospect
Romania EIII-3 Cuejdiu 17.5% Aurelian Boistea-1 commercial feasibility
study Romania EIII-4 Bacau 19% Aurelian Exploration, 4 year extension secured
France Bearn des Gaves 100% Europa Exploration possible field
development France Tarbes val 100% Europa Field re-development, exploration d'Adour
Poland Blocks 434, 435, 2.5% * RWE-Dea Appraisal drilling of Pola oil
454 and 455 discovery to commence in late 2009 Egypt West Darag 60% Europa Exploration, seismic acquisition Onshore Western Bir Lehlou 100% Europa Inactive - force majeure Sahara Western Hagounia 100% Europa Inactive - force majeure Sahara
* Overriding royalty interest
Summary
The Group holds interests in 18 licences (see table), with 15 in Europe and 3in North Africa. The company strives to maintain a balanced portfolio and has,on an unrisked reserves potential basis, 2% of the portfolio in production, 9%in appraisal, 58% low risk exploration and 31% in high risk, high rewardexploration. We believe this balance allows the Group to use production tobuild revenue through low risk drilling, and pay for high reward wells.United KingdomProduction/DevelopmentCrosby Warren
Crosby Warren produces oil from the CW1 well, at about 45bopd. The CW2 well iscurrently shut-in awaiting a workover. The field is undergoing a productionenhancement programme which includes a larger pump on CW1 and a proppant fracstimulation on CW2, a technique which was used to great effect on CW1. Theseare scheduled to complete during the fourth quarter of 2009.
West Firsby
In May, a series of engineering studies proved that the West Firsby Oilfieldhad been underperforming and production could be increased by over 40% from itsaverage production of 120 bopd. An upgrade of the facilities will be requiredto maximize and sustain this production increase and ensure productionreliability. In September, OSL Consulting Limited were engaged to design thesemodifications. Work has already begun and is scheduled to complete in 16 weeks.
On the morning of 22 June 2009, a fire caused damage to two engines and pumps. The emergency shutdown system activated and damage was contained within the engine bund. There were no injuries, no spill of oil, and the equipment was fully insured. Production was quickly restored from the WF7 well and at the time of writing, production from the field was averaging 80 bopd. Work continues to bring both wells back to full production.
The field is being remapped with the aim of determining infill drillinglocations. This work is expected to be completed before the end of October.Planning permission has already been obtained for a new well at West Firsby andonce a location is determined, this well can be drilled relatively quickly
andcheaply.Whisby
Production continues along a well-defined decline curve for the W4 well. At the end of the reporting period, the well was producing 90 bopd (58 bopd net to Europa) with a cumulative production of approximately 350,000 bbls. No additional work is planned on the well.
Exploration
The UK onshore has several petroleum basins and our exploration efforts overthe past year have concentrated on the East Midlands Petroleum Basin and theWeald Basin in Southern England. The East Midlands has a long history of oiland gas production from the Carboniferous and currently produces mainly oil,with rates of up to 2,500 bopd. The Weald Basin produces both gas and oil fromJurassic reservoirs.
PEDL150 (75%) - Hykeham & West Whisby Prospects (East Midlands Petroleum Basin)
The Hykeham prospect received planning consent for drilling in 2008. Amoratorium during the bird breeding season at the adjacent Whisby Nature Parkmeans that the well cannot be drilled between the beginning of March and theend of August. For this reason, it was cost effective to spud the well inJanuary 2009 and drill to a depth of 88m before setting surface casing andsuspending until the end of the bird breeding season. Europa has signed acontract with British Drilling and Freezing Limited (BDF) for their Rig 28 todrill the main section of Hykeham-1 and it is anticipated that drilling willcommence in late 2009 after the rig's current campaign.Hykeham is a well-defined prospect with clear four-way dip closure and a commonspillpoint with the Whisby Oilfield, 1.5km to the northwest. The nearbyCaledonian Farm well encountered good oil shows in a 10m thick channelsandstone reservoir, significantly thicker than that seen in the WhisbyOilfield. The well is targeting 10 million barrels of oil in place and is givenan in-house risk assessment of better than a 1 in 3 chance of success.We are excited about drilling this well and regard it as having a good chanceof containing commercial hydrocarbons with an estimated 2.4 million barrels ofpotential recoverable oil. If successful, this well will more than double ourreserves and can immediately be in production and generate revenue.In April 2009 Europa received planning permission to drill an exploration wellat West Whisby on the same licence. The West Whisby Prospect has an estimated2.5 mmbo of most likely prospective reserves.
PEDL180 and PEDL181 (50%) (East Midlands Petroleum Basin)
These two licences cover an area of some 600km2 of the Humber Basin. On thisacreage the Wressle prospect, only 7 km from Crosby Warren, is the most-likelylow-risk first drill target. In addition, reprocessing of the Immingham 3Dseismic survey is underway and there is a strong possibility that the CaisterHorst lead, identified for the licence application, will develop into aSaltfleetby Field 'lookalike' (the largest onshore gasfield, with over 73bcf of2P reserves) and therefore mature into a 'must-drill' prospect.
Management believes that the acquisition of this large prospective area stole a march on the competition and will create a flow of high quality drillable prospects over the coming years.
PEDL222 (50%) (East Midlands Petroleum Basin)
This is primarily protection acreage, connecting the three disparate parts ofPEDL150, but also covering the Torksey Field, a subcommercial discovery withpotential stratigraphic upside. Work continues on the block, operated byValhalla.
PEDL143 (40%) - Holmwood Prospect (Weald Basin)
Following a lengthy process of environmental and planning management a planningapplication was lodged with Surrey County Council in January 2009. In April,the Council requested further information in order for the planning departmentto submit their recommendation to the committee. A planning decision isexpected in late 2009.There has been some local objection to this application due to its location inan Area of Outstanding Beauty in the Surrey Hills. While understandable, webelieve the objections are unjustified. Enormous effort has been made to ensurethat the location will not be adversely affected by this temporary developmentin a secluded, working, Forestry Commission conifer plantation site. Extensiveecological, archeological, noise, light and traffic assessments have beencommissioned and these have not revealed any specific causes for concern overthe proposed drilling.
P1545 (50%) - East Irish Sea blocks 109/5 and 112/30 (UK Offshore)
The existing 2D seismic database was reprocessed and amplitude variations withoffset (AVO) work undertaken to attempt to de-risk the presence of gas in thelarge structural closure. Amplitude anomalies in the anticipated reservoirsequence did not result in an AVO anomaly. Following this result, it wasdecided to allow the licence to lapse in 2009 without entering into a drillingcommitment.Romania
EIII-4 Bacau Concession (19%) - Lilieci Discovery
Lilieci-1 reached a total depth of 2,958m in December 2008 encountering anumber of gas-bearing sands. Three zones were tested at an aggregate flowrateof 4.6mmscfpd (800 boepd) in February. The Bacau group undertook a further testof extended duration in April-May 2009. The test flowed gas at 2mmscfpd, butdemonstrated linear pressure decline during the flow periods. Our assessment isthat the well is in contact with a limited volume of gas.The well was drilled as part of an agreement with the operator whereby Europa'scosts were carried and we had an option to back-in to the well after testing,on payment of the carried costs plus a premium. Following the results of theextended test, we elected not to participate in any development of thediscovery on commercial grounds.The consequence of this is that Europa foregoes its 19% working interest in theLilieci discovery but retains its interest in the remainder of the block,covering some 1,250km2 and including oil plays in the thrust belt in thewestern part of the licence. This area remains under explored and is likely tobenefit from further seismic investigation in 2010.
Work continues on maturing the prospectivity of the Bacau licence. A four-year extension has been secured which will allow work to progress on developing prospects in the western, thrustbelt, area of the block. In addition, it is expected that partner Romgaz will acquire seismic in late 2009 over the southern part of the licence.
EIII-1 Brodina Concession (28.75%) - Voitinel Prospect
The high potential Voitinel Prospect was spudded in August 2009. The welltargeted the sub-thrust Badenian sandstones which produce in the LopushnyaField to the north. Disappointingly, the primary target sandstones were dry.Several shallower sandstones had gas shows and the deepest of these flowed on test at a rate of 1.6 mmscfpd with a flowing pressure of 55 bar. The forward plan is to perforate additional zones and undertake multi-rate tests during late October and we will report the full results in due course.
The Voitinel-1 well was scheduled to take 52 days to reach total depth (TD) but actually reached TD in under 30 days. The savings achieved have allowed the Group to bring forward the UK production enhancement programmes.
EPI-3 Brates Concession (20%) - Barchiz and Deep Tazlaul Mare Prospectivity
Equity interest in the concession was previously split differently between Eastern and Western parts. During the year Europa agreed to reduce overall interest in the combined Brates block to 20%.
Specialised seismic processing of seismic data acquired in 2008 over thecomplex thrust belt area has demonstrated some remarkable improvement inimaging, notably in the Tazlaul Mare area. Structural modeling has postulatedthat a thrusted sequence of prospective Oligocene sediments must underpin theTazlaul Mare structure, where a gas condensate field has been developed in theshallower section. On conventional seismic data, it is not possible to see anyof the detailed structure of the deep Tazlaul Mare area, but trials of the newprocessing clearly demonstrates highly promising structural rollover with sizein the 50-100mmbo prospective resources range. Further lines will be processedusing this technique in order to mature this lead for drilling.
Elsewhere on the concession, the Barchiz Prospect, situated on the same structural trend as the 50mmbo Geamana Oilfield, is anticipated to be drilled in 2010.
EIII-3 Cuejdiu Concession (17.5%) - Boistea Gas Discovery
The Boistea-1 well tested gas at modest rates from Sarmatian sands aftersuffering formation damage during testing. It is clear from the flow rates atLilieci-1, where reservoir quality and pressure are similar, that un-damagedformation at Boistea should flow at significantly higher rates than theoriginal test. It is therefore possible that a reservoir frac treatment,coupled with a long-term test, could generate a viable commercial developmentfor Boistea.France
Europa holds two licences in the Aquitaine Basin.
Tarbes Val d'Adour (100%)
In Tarbes Val d'Adour, effort is focused on the potential re-development of theOsmets Oilfield. This field was shut-in by Total during a time of very low oilprice in the mid 80's. Europa has reprocessed a large amount of seismic,including 600km of 2D data in the vicinity of the Osmets play and is workingwith BRGM, the French Geological Survey, to undertake a regional geologicalstudy. With the early production data now received from Total, Europa intendsto re-interpret the area with the expertise of BRGM, with the aim of finding asuitable well location in 2010 to re-develop the Osmets Oilfield.
Bearn des Gaves (100%)
In the Bearn des Gaves permit, there are a number of wells that have showedgas, including the deep Berenx-1 well, which encountered high pressure gas inthe same reservoir as the 5TCF Lacq gasfield. In the western part of thelicence, several shallow wells drilled in the early part of the 20th centuryflowed oil and gas. This western part of the licence is therefore the primaryfocus for exploration.Poland
An early stage investment for Europa was in the North Carpathian area of Poland, home to a number of oil and gas fields in similar settings to the Company's Romanian acreage. As a result of this initial working interest in Blocks 434, 435, 454 and 455 in southern Poland, Europa acquired a 2.5% overriding royalty interest in any oil and gas production.
The current operator RWE Dea, the E&P arm of the German utility, has recentlydrilled several wells in the licence areas and plans to drill a number ofappraisal wells to the Pola-1 oil discovery starting in November 2009. Inadvance of any production from these Blocks, the Company is in the process ofclarifying the legal status of the royalty.
Egypt
Europa, along with its partner Solaris Energy plc, has identified severalstructural leads each with reserves potential of 15 - 35mmbo recoverable in theSukhna area of the concession. Sukhna is a coastal plain where the Gulf of Suez(GOS) rift comes onshore and its proven petroleum system is indicated to extendinto the area of these mapped leads. The GOS, despite its small overall size,is an extraordinarily prolific petroleum system, having produced over 5 billionbarrels to date.Although Europa has made significant progress with the existing seismic data,we have been unable to reprocess as planned due to degradation of the originaltape records. We have therefore decided to progress directly to seismicacquisition with the objective of firming up drillable targets. The cost of thesurvey, detailed in the winning tender, will for the most part be covered bythe existing letter of guarantee that Europa provided in favour of EgyptianGeneral Petroleum Corporation (EGPC).
In June EGPC granted Europa a six month extension on the first phase of the West Darag concession in order to permit the acquisition of approximately 350km of 2D seismic data prior to making the decision to enter into Phase 2. The preferred contractor for this new seismic acquisition has indicated its availability to undertake the survey starting in October.
Western Sahara
Europa holds two large exploration permits, Bir Lehlou and Hagounia in WesternSahara licensed by the Saharawi Arab Democratic Republic. Due to the ongoingdispute over sovereignty between the indigenous Saharawi people and theMoroccan state, the licences are effectively in force majeure until such timeas a resolution is reached.Bir Lehlou (100%)
The Bir Lehlou permit is located in southwest of the Tindouf Basin. This is asub-set of the large Palaeozoic basin which once covered North Africa andshares a common history with the Sirte and Murzuq Basins in Libya, along withthe Ghadammes and Reggane Basins in Algeria. While these analogous basins haveworld-class volumes of proven hydrocarbons, the Tindouf is almost totallyunexplored. This is primarily a function of it remote location and the factthat the basin is thought to be over mature for oil but remains gas bearing inthe southern portion, where the Bir Lehlou permit is located. The basin isestimated to contain over 8000 metres of sediment and if found to behydrocarbon bearing could be equally as prolific as the Libyian and AlgerianBasins.Hagounia (100%)The Hagounia permit lies in the El Aaiun Basin in the coastal region of WesternSahara in a setting similar to other West African coastal margin basins, suchas Mauritania. The basin formed as an extensional rift system during the LateTriassic to Lower Jurassic, followed by subsidence and renewed rifting duringthe Cretaceous period. Source rocks which were deposited in the basin during theJurassic are now mature for oil and overlain by Cretaceous clastics and furtherorganic-rich marine shales. Triassic age organic-rich shales may also provide asecond deeper petroleum system.Although there has been little exploration in the El Aaiun, gas shows have beenrecorded in Triassic through Tertiary age sediments. Oil shows were present inone well in Jurassic age sediments and the Cap Juby Field, which lies on trendin Morocco, produced heavy oil on test at a rate of 2,400 bopd from Jurassiccarbonates.Ukraine
A letter of intent was signed between the company and a Swedish-listed oil andgas company in anticipation of an outright sale of the Ukraine assets. Progresshas been slow due to the legal process in Ukraine but we move towardscompletion.Paul BarrettManaging DirectorFinancial reviewResults for the year
Group revenue for the year was 2,936,000 (2008: 4,418,000).
UK oil revenues during the year ended 31 July 2009 were 77,743 barrels or 213bopd (2008: 88,710 barrels or 242 bopd). Crosby Warren production was down by7,931 barrels or 22 bopd due to technical problems with the CW2 well.Approximately 2,000 barrels of West Firsby production was delayed as a resultof reduced production following the fire on 22 June 2009.The selling price for Europa's UK production is contracted at a small discountto Brent crude price. Average price achieved in the year to 31 July 2009 was$62.30 per barrel (2008: $99.45).
A stronger US Dollar in the year to 31 July 2009 meant that some of the reduced Dollar revenue was recovered as the sales were translated to Sterling at an average rate of $1.6533 (2008: $2.0050).
The Crosby Warren field sells a very small quantity of gas to the nearby Corus steelworks.
Cost of sales increased due to site maintenance and higher chemicals costs. Forthe calculation of the depletion charge included in cost of sales, the Groupadopted the findings of the reserves report issued by Energy ResourceConsultants Limited dated 23 November 2008. The intangible asset associatedwith the East Irish Sea exploration was written off in the year. Administrativeexpenses increased as a result of a charge in respect of stock options grantedto two directors in the previous year.Finance income and finance costs were both affected by exchange fluctuations.The cost of an out-of-the-money interest rate swap with current fair value of 40,000 was recognised.
The results for 2009 show a profit before taxation of 423,000 (2008: 2,054,000).
Taxation
The total tax charge (current and deferred) for the year was 356,000 (2008: 1,609,000). All of the charge relates to UK activities where the 20%Supplemental Charge applies to producing fields. The Field Allowance incentiveannounced by HMRC in April 2009, will exempt future UK onshore discoveries
fromthe Supplemental Charge.Profit after tax
The results for 2009 show a profit from continuing activities after taxation of 67,000 (2008: 445,000).
Discontinued operationsAs announced in 2008, Europa has entered into discussions with a Swedish oiland gas company to divest the Group's remaining assets in Ukraine. The assetswere substantially written down in 2007 and are presented as a discontinuedactivity, with a full provision.
Cashflow
Net cash inflow from operating activities was 1,411,000 (2008: 2,942,000).Net cash used in investing activities was 1,121,000 (2008: 4,058,000). Thenet overdraft at the end of the year was 292,000 (2008: 1,019,000).
Financial risk
Europa's activities are subject to a range of financial risks including commodity prices, liquidity within the business and of counterparties, exchange rates and loss of operational equipment or wells. These risks are managed through ongoing review taking into account the operational, business and economic circumstances at that time.
Commodity price and currency
The Board has considered the use of financial instruments to hedge oil price and US Dollar exchange rate movements. To date, the Board has not hedged against price or exchange movements, but intends to regularly review this policy.
Sales revenue is generated primarily in US Dollars and these funds are matchedwhere possible against expenditures within the business. However, most capitaland operating expenditures are Euro and Sterling denominated which results in acurrency exposure. US Dollar receipts have been used to purchase Euros andSterling.
Liquidity
Detailed cash forecasts are prepared frequently and reviewed by management and the Board.
The Group's production provides a monthly inflow of cash and is the main sourceof working capital and project finance. Additional cash is available from a 1million multi option facility and a 1 million term loan provided by Europa'sbankers. The principal interest rate risk for the Group is the interest chargearising from utilisation of this facility.On 12 March 2008, with the bank facility fully utilised, short term funding wasprovided by the Sherborne Trust, a discretionary trust of which C WAhlefeldt-Laurvig was a beneficiary. The Trust provided a 512,000 loan. On 2April 2008 this loan was assigned to C W and Mrs M Ahlefeldt-Laurvig. The loan,plus 25,000 of accrued interest, was outstanding at 31 July 2008 but fullyrepaid in August 2008.On 1 December 2008 the share finance facility with Headstart terminated. Sincethe facility was put in place on 1 June 2006 three draw downs were made for atotal 300,000 in exchange for the issue of new ordinary shares. On 31 May2009, 300,000 warrants which were issued to the Headstart Group of Funds aspart of the above financing arrangement expired.
Exploration, drilling and operational risk
The business of exploration and production of oil and gas involves a high degree of risk. Few properties that are explored are ultimately developed into producing oil and gas fields.
Significant expenditure is required to establish the extent of oil and gasreserves through seismic surveys and drilling and there can be no certaintythat oil and gas reserves will be found. The exploration and development of oiland gas assets may be curtailed, delayed or cancelled by unusual or unexpectedgeological formation pressures, oceanographic conditions, hazardous weatherconditions or other factors.
There are numerous risks inherent in drilling and operating wells, many of which are beyond the company's control. The Group's operations may be curtailed, delayed or cancelled as a result of environmental hazards, industrial accidents, occupational and health hazards, technical failures, shortage or delays in the delivery of rigs and/or other equipment, labour disputes and compliance with governmental requirements.
Drilling may involve unprofitable efforts, not only with respect to dry wells,but also to wells which, though yielding some oil or gas, are not sufficientlyproductive to justify commercial development. Completion of a well does notassure a profit on the investment or recovery of drilling, completion andoperating costs.
Appropriate insurance cover is obtained annually for all of Europa's exploration, development and production activities.
Accounting policies
The Group has not made any material changes to its accounting policies in the year to 31 July 2009
Phil GreenhalghFinance Director
Consolidated income statement for the year ended 31 July 2009
2009 2008 GBP000 GBP000Continuing operationsRevenue 2,936 4,418Other cost of sales (1,694) (1,548)Exploration write-off (297) (1)Total cost of sales (1,991) (1,549) -------- --------Gross profit 945 2,869 Administrative expenses (498) (376)Finance income 224 12Finance costs (248) (451) -------- --------Profit before taxation 423 2,054Taxation (356) (1,609) -------- --------Profit for the year from continuing operations 67 445 -------- --------Discontinued operationsLoss for the year from discontinued operations (47) (296) -------- --------Profit for the year attributable tothe equity shareholders of the parent 20 149 ======== ======== 2009 2008 Pence PenceEarnings / (loss) per share (eps) per share per shareBasic eps from continuing operations 0.11p 0.71pBasic eps from discontinued operations (0.08)p (0.47)p
Basic eps from continuing and discontinued operations 0.03p 0.24p Diluted eps from continuing operations
0.11p 0.70pDiluted eps from discontinued operations (0.08)p (0.47)p
Diluted eps from continuing and discontinued operations 0.03p 0.24p
Consolidated balance sheet as at 31 July 2009
2009 2008 GBP000 GBP000AssetsNon-current assetsIntangible assets 7,473 7,241Property, plant and equipment 5,554 5,996 -------- --------Total non-current assets 13,027 13,237 -------- --------Current AssetsInventories 15 16Trade and other receivables 469 656Cash and cash equivalents 4 3 -------- --------Total current assets 488 675 -------- --------Total assets 13,515 13,912 ======== ========LiabilitiesCurrent liabilities
Trade and other payables (900) (1,752)Current tax liabilities (588) (380)Fair value through profit or loss (40) -Short-term borrowings (767) (1,548) -------- --------Total current liabilities (2,295) (3,680) -------- --------Non-current liabilitiesLong-term borrowings (772) (302)Deferred tax liabilities (2,651) (2,701)Long-term provisions (1,137) (1,058) -------- --------Total non-current liabilities (4,560) (4,061) -------- --------Total liabilities (6,855) (7,741) -------- --------Net assets 6,660 6,171 ======== ======== Capital and reserves attributableto equity holders of the parentShare capital 626 626Share premium account 4,692 4,692Merger reserve 2,868 2,868Forex reserve 352 (21)Retained earnings (1,878) (1,994) -------- --------Total equity 6,660 6,171 ======== ========
Consolidated statement of changes in equity for the year ended 31 July 2009 Attributable to the equity holders of the parent
Share Share Merger Forex Retained Total capital premium reserve reserve earnings equity GBP000 GBP000 GBP000 GBP000 GBP000 GBP000Balance at 1 August 2007 620 4,597 2,868 5 (2,140) 5,950Exchange difference on translation of foreign operations - - - (26) - (26)Profit for the year - - - - 149 149 ------- ------- ------- ------- ------- -------Total recognised incomeand expense for the year - - - (26) 149 123Share based payment - - - - (3) (3)Issue of share capital 6 95 - - - 101 ------- ------- ------- ------- ------- -------Balance at 31 July 2008 626 4,692 2,868 (21) (1,994) 6,171 ======= ======= ======= ======= ======= =======Balance at 1 August 2008 626 4,692 2,868 (21) (1,994) 6,171Exchange difference on translationof foreign operations - - - 373 - 373Profit for the year - - - - 20 20 ------- ------- ------- ------- ------- -------Total recognised incomeand expense for the year - - - 373 20 393Share based payment - - - - 96 96 ------- ------- ------- ------- ------- -------Balance at 31 July 2009 626 4,692 2,868 352 (1,878) 6,660 ======= ======= ======= ======= ======= =======
Consolidated cash flow statement for the year ended 31 July 2009
2009 2008 GBP000 GBP000
Cash flows from operating activities
Profit after taxation from continuing operations 67 445Adjustments for:Share based payments 96 (3)Depreciation 576 590Exploration write-off 297 1Loss on sale of non-current assets - 2Finance income (224) (12)Finance expense 248 451Taxation expense 356 1,609Decrease in trade and other receivables 187 351Decrease in inventories 1 20Increase / (decrease) in trade and other payables 34 (190) -------- --------Cash generated from continuing operations 1,638 3,264Loss after taxation from discontinued operations (47) (296)Adjustment for:Depreciation including exploration and write offs - 296 -------- --------Cash used in discontinued operations (47) -Income taxes paid (180) (322) -------- --------Net cash from operating activities 1,411 2,942 -------- --------Cash flows used in investing activitiesPurchase of property, plant and equipment (191) (1,438)Purchase of intangible assets (930) (3,655)Proceeds from sale of property, plant and equipment - 23Proceeds from sale of discontinued operations - 1,000Interest received - 12 -------- --------Net cash used in investing activities (1,121) (4,058) -------- --------Cash flows from financing activitiesProceeds from issue of share capital - 100Underwriting fee - (5)Proceeds from long-term borrowings 1,000 496Repayment of borrowings (585) (452)Interest paid (138) (144) -------- --------Net cash from / (used in) financing activities 277 (5) -------- --------
Net increase /(decrease) in cash and cash equivalents 567 (1,121) Exchange gain / (loss) on cash and cash equivalents 160 (47) Cash and cash equivalents at beginning of year
(1,019) 149 -------- --------Cash and cash equivalents at end of year (292) (1,019) ======== ========
Notes
1. The financial information here presented is extracted from the audited
accounts of the Group for the 12 months to 31 July 2009.
2. Basic earnings per share is calculated based on an average number of shares
in issue of 62,563,730 (2008: 62,401,492).
3. Diluted earnings per share includes the effect of stock options and uses an
average number of shares of 62,563,730 (2008: 63,180,482).
4. The accounts were approved by the Board on 19 October 2009. They will be
posted to shareholders next week and available on the company
website www.europaoil.com later today.
EUROPA OIL & GAS (HOLDINGS) PLC