Lansdowne Oil Regulatory News (LOGP)

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. If you have any queries on this, then please contact Steve Boldy, the Chief Executive Officer of the Company (responsible for arranging release of this announcement).

28 June 2019

Lansdowne Oil & Gas plc

("Lansdowne" or "the Company")

Audited results for the year ended 31 December 2018

Lansdowne Oil & Gas plc (AIM: LOGP) is pleased to announce its audited results for the year ended 31 December 2018.

Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and the Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.

Lord Torrington, Independent Non-Executive Chairman, commented:

"Our major achievement in 2018 was in entering into a farm-out agreement in respect of the Barryroe Field to APEC. We believe this material event has the ability to prove transformational for shareholders, as we seek to unlock the fundamental value inherent in Barryroe, by delivering a comprehensive appraisal programme on this substantial oil and gas accumulation (346 MMBOE 2C Resources).

"Unfortunately, a legal challenge by a third party relating to the process followed by the Irish regulator in awarding the original site survey permit to the operator, EXOLA, prevented them from advancing the asset in Q4 2018 as originally planned. Since the end of the period and following further consultation with the relevant authorities, the operator has submitted a new application for a site survey and subject to the expected receipt of regulatory consents and financing, the well-site survey operations are now expected to be carried out in Q3 2019 in advance of the Drilling Programme.

"We continue to believe in the fundamental value of the Barryroe Field and, despite these delays, we shall continue our efforts to demonstrate and crystallise its value."

Operational highlights

· Barryroe Oil Field (SEL 1/11)

o In March 2018, Lansdowne, along with the Operator EXOLA (a 100% subsidiary of Providence Resources), signed a Farm-Out Agreement ("FOA") with APEC Energy Enterprises Limited ("APEC") for a multi-well Drilling Programme

o In September 2018, following the necessary government approvals, a binding FOA was signed and a 50% working interest was assigned to APEC

o The Updated FOA provided for us to be fully cost-carried for a programme comprising of the drilling and testing of four vertical wells and one horizontal side-track, plus the optional drilling of two further horizontal wells, together with cash advances to EXOLA for certain agreed project and operational costs totalling $19.5 million (since increased to $24 million)

o Under the FOA, APEC acquired a 50% working interest in SEL 1/11, with EXOLA retaining 40% and Lansdowne 10%

o During the year, extensive work was carried out on well planning

o Permission for the well site survey operations was granted in October 8, 2018 by the Minister, but this was subject to a legal challenge and the Barryroe partners decided not to act on this, but rather to submit a new application

· Helvick Oil Field

o The Operator MFDEVCO continued evaluation work as required under the Farm-Out Agreement

Financial highlights 

· Share Placing completed in April 2018 at 1.3p per share to raise £900,000 before costs

· At the same time, LC Capital converted a substantial portion of its existing Loan, amounting to £680,000, into new shares, at the placing price

· Brandon Hill Capital converted its entire existing Loan, amounting to £326,911, into new shares also at the placing price

· In October 2018 and January 2019 Brandon Hill Capital exercised warrants in the Company, which resulted in an additional £85,000 in funding into the Company

· Cash balances at 31 December 2018 of £0.16 million (2017: £0.02 million)

· Operating expenses for the year of £0.2 million (2017: £0.2 million)

· Loss for the year after tax of £0.3 million (2017: loss of £0.3 million)

· Diluted loss per share of 0.05 pence (2017: loss of 0.1 pence)

Corporate

· In July 2018 Brandon Hill Capital Limited was appointed as Broker to the Company

· Steve Lampe resigned from the Board in September 2018, but remains involved as a major shareholder and in an observer capacity at Board meetings

· In November 2018 SP Angel was appointed as Nominated Adviser to the Company

Post-balance sheet events

Operational

· Barryroe Oil Field (SEL1/11)

o In February 2019, the COSL Innovator was nominated to carry out the Barryroe Drilling Programme

o Also in February 2019, a new application was submitted to conduct a site survey

o In April 2019, an application was submitted to convert SEL1/11 into a Lease Undertaking

o In June 2019, further amendments to the FOA were announced, with an increase in the loan advances to EXOLA from US$ 19.5 million to US$ 24 million to reflect an increase in the scope of work

o The Barryroe partners also agreed an extension for the receipt of the initial US$ 9 million payment to EXOLA to 5 July 2019

o Subject to receipt of regulatory consents and financing, the well-site survey operations are now expected to be carried out in Q3 2019

Financial

· On 25 June 2019, the Company secured debt funding of £150,000 from LC Capital and £150,000 from Brandon Hill Capital Limited. With monthly overhead costs of circa £35,000, this is expected to provide sufficient working capital until progress is made on the aforementioned work programme

· Also in June LC Capital Master Fund agreed to extend the repayment date of its outstanding loan of £1,046,000 to 31 December 2019. All other terms of the loan remain unchanged.

· On 28 June 2019, SP Angel was appointed a Joint Broker to the Company, as well as continuing in its role as Nominated Adviser, alongside Lansdowne's existing broker - Brandon Hill Capital Limited

Notice of Annual General Meeting

The Company will be holding its AGM at the offices of Pinsent Masons LLP, 30 Crown Place, Earl Street, London EC2A 4ES on 29th August 2019 at 12 noon.

Forms of proxy must be completed, signed and returned so as to be received by the Company's Registrars by no later than 12 noon on 27th August 2019. Full details are set out on in the Notice of Annual General Meeting, which will be available on the Company's website later today (https://www.lansdowneoilandgas.com/).

Notes to editors:

About Lansdowne

Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focused, oil and gas exploration and appraisal company quoted on the AIM market and head quartered in Dublin.

For more information on Lansdowne, please refer to www.lansdowneoilandgas.com 

Results for the year ended 31 December 2018

Chairman's Statement

Introduction

The key event during 2018 was entering into a Farm-Out Agreement ("FOA"), along with EXOLA, a wholly owned subsidiary of Providence Resources plc, in respect of Standard Exploration Licence (SEL) 1/11, containing the Barryroe Field, to APEC Energy Enterprises Limited ("APEC").

APEC is a privately-owned Chinese Company, which has a strategic partnership with other Chinese companies for the investment and development of offshore oil and gas opportunities worldwide utilising Chinese drilling units, services and equipment.

The terms of the FOA, were initially announced in March 2018, but were updated in September 2018, following the signing of a binding legal agreement, after receiving the necessary governmental consents.

The Updated FOA provided for a full cost-carried firm drilling programme comprising of the drilling and testing of four vertical wells and one horizontal side-track (collectively the "Drilling Programme"), plus the optional drilling of two further horizontal wells, together with cash advances to EXOLA for certain agreed project and operational costs totalling $19.5 million.

Under the FOA, APEC acquired a 50% working interest in SEL 1/11, with EXOLA retaining 40% and Lansdowne 10%.

During the year, extensive work was carried out on well planning and, as announced in September, the site survey was planned for late 2018. The permission for the well site survey operations was granted to EXOLA on October 8, 2018 by the Minister, with the operations scheduled to be carried out in Q4 2018.

However, on November 15, 2018, the Company was notified that An Taisce issued legal proceedings on November 12, 2018 against the Minister and the Attorney General regarding the issuance of the permission for EXOLA to conduct well site survey operations at Barryroe. Specifically, in its application, An Taisce sought to challenge by way of Judicial Review the process by which permission for the well site survey operations had been granted by the Minister.

Given the questions surrounding the Site Survey approval, a decision was taken by EXOLA and its Barryroe partners not to act on the well site survey permission as-granted, but rather to submit a new application.

Financial Results

In April 2018, the Company announced that it had placed 69,230,761 new ordinary shares at a placing price of 1.3p/share to raise £900,000 before costs.

In addition, Brandon Hill Capital agreed to convert its entire existing Loan, amounting to £326,911 (including interest), into new shares at the placing price. Furthermore, LC Capital agreed to convert a substantial portion of its existing Loan, amounting to £680,000, into new shares, also at the placing price.

In May 2018, at a General Meeting of the Company, these conversions were formally approved by shareholders.

In October 2018 and January 2019 Brandon Hill Capital exercised the conversion of warrants in the Company, which resulted in the delivery of an additional £85,000 to the company.

The Group recorded an after-tax loss of £0.3 million for the year ended 31 December 2018 compared to a loss of £0.3 million for the year ended 31 December 2017.

Group operating expenses for the year were £0.2 million, compared to £0.2 million in 2017.

Net finance expense for the year was £100,000 (2017: £121,000).

Cash balances of £0.16 million (2017: £0.02 million) were held at the end of the financial year.

Total equity attributable to the ordinary shareholders of the Group was £13.7 million as at 31 December 2018 (£12.1 million as at 31 December 2017).

Post Balance Sheet Events

Further progress toward drilling has continued in 2019, with the announcement in February that COSL nominated their 6th generation "COSL Innovator" semi-submersible drilling unit, which is currently based in the Norwegian North Sea, to carry out the Barryroe Drilling Programme.

EXOLA submitted a new application for a well-site survey in February 2019 to the Irish regulatory authorities. A number of questions were subsequently raised by the regulator and replies to all of these were supplied by EXOLA and the application is currently the subject of adjudication by the regulatory authorities.

In April 2019, an application was made to convert SEL 1/11 to a Lease Undertaking.

In June 2019, further amendments to the Barryroe Farm-Out Agreement were announced.

A total of US$ 24 million (previously US$ 19.5 million) has now been allocated to fund the forward costs of EXOLA as Operator of the Barryroe Project. Such costs are associated with carrying out the well-site survey operations, consenting the drilling programme and other project-related costs. This increased sum reflects an agreed augmented scope of Operator-related costs associated with the drilling programme.

Of the US$ 24 million, US$ 9 million is to specifically cover the costs associated with front-end well-site survey operations and pre-drill well consenting, which have not been incurred yet due to the previously disclosed legal challenge to the well-site survey consent. The balance of US$ 15 million is payable prior to the spudding of the first well and is to cover Operator-related drilling costs.

Such costs are to be financed by APEC pursuant to a non-recourse loan facility (the "Loan") which, as announced previously, is drawable against the budget for the Drilling Programme

Under the original terms of the Updated FOA, which envisaged well-site survey operations during Q4 2018, it was agreed that APEC would proceed to make an advance to EXOLA under the Loan of an initial US$ 9 million shortly after the signing of the Updated FOA. This advance was not received during Q4 2018 as originally expected. However, given the delays to the programme (see below), EXOLA did not, in fact, require the funds at that time to finance the front-end well-site survey operations and pre-drill well consenting.

The Barryroe Partners have agreed a series of amendments to the Updated FOA over recent months which provided for extensions to the date by APEC of the initial loan advance US$ 9 million, with the extension date now set at July 5 2019.

Subject to receipt of regulatory consents and financing, the well-site survey operations are now expected to be carried out in Q3 2019.

The company has entered into a Loan Agreement ("Loan") for GBP 300,000 with its major shareholders, LC Capital and Brandon Hill Capital Limited, who will each provide £150,000 for working capital to the Company.

Under the Agreement Lansdowne is able to draw down funds at its discretion in part or in full. A coupon of 12% per annum will be applied only to those funds drawn by the Company. There are no options, warrants or convertible aspect to the loan and no fee owed to Brandon Hill Capital for providing the funds. The Loan is unsecured and is repayable in full on 25 July 2020.

Brandon Hill and LC Capital are Significant Shareholders in Lansdowne and therefore the Loan is considered a related party transaction for the purposes of the AIM Rules. The Directors of Lansdowne consider, having consulted with the Company's nominated adviser, that the terms of the Loan are fair and reasonable insofar as the Company's shareholders are concerned.

In November 2018 the Company announced the appointment of SP Angel Corporate Finance LLP as nominated adviser and they have now been further appointed as joint-broker.

Outlook

We had thought that 2018 was the year that Lansdowne finally turned the corner with the signing of the Farm-Out Agreement for Barryroe which was expected would lead to a comprehensive appraisal programme on this substantial oil and gas accumulation (346 MMBOE 2C Resources).

Unfortunately, however, regulatory delays in the permitting of the site survey operations and delay to the delivery of funding to EXOLA as called for under the Farm-Out Agreement, have delayed the Drilling Programme.

A wider threat to all oil and gas activity offshore Ireland is posed by the Bill put forward in the Irish Parliament that effectively seeks to block the award of any new hydrocarbon licence arrangements. The debate on this Bill is continuing. The concept behind this measure is to address carbon dioxide emissions and thus Climate Change.

Whilst recognising that we are in a transition from dependence on fossil fuels to a future where renewables will become the dominant energy source, all projections indicate that we will continue to require fossil fuels, especially gas, for many years to come.

The Bill that has been tabled would, if passed, not result in any reduction in emissions and would leave Ireland entirely reliant on imports for its hydrocarbon requirements.

Given all of the above, the outlook is somewhat uncertain, but we continue to believe in the value of our equity in Barryroe, a substantial oil accumulation in shallow water, and we will continue our efforts to demonstrate and crystallise this value.

In September 2018, upon the signing of the binding Farm-out Agreement on Barryroe, Steven Lampe stepped down from the Board, but remains involved with the Company in an observer status. I would like to thank him for his service and his continuing support.

Tim Torrington

Chairman

Lansdowne Oil & Gas plc

Consolidated Statement of Financial Position

As at 31 December 2018

Lansdowne Oil & Gas plc

Consolidated Income Statement

For the year ended 31 December 2017

The results for the year all arise on continuing operations. The group has no other comprehensive income or expense in the current or prior year.Lansdowne Oil & Gas plc

Consolidated Statement of Changes in Equity

For the year ended 31 December 2018

Lansdowne Oil & Gas plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2018

Lansdowne Oil & Gas plc

Notes to the Financial Information

For the year ended 31 December 2018

1. Basis of presentation

The consolidated financial statements are presented in Sterling, the Company's functional currency, and all values are rounded to the nearest thousand (£'000) except where otherwise indicated.

The Directors have prepared the financial statements on the going concern basis which assumes that the Group and Company will continue in operational existence for at least twelve months from the date of the approval of these financial statements as described below.

The Directors have carried out a detailed assessment of the Group's current and prospective exploration activity, its relationship with the holder of its loan note, and have prepared cash flow projections for the period to 30 June 2020. The following represent the key assumptions underpinning the cash flow projections:

Barryroe farm out

Under the terms of the Farm-Out Agreement entered into between the Barryroe partners (Providence and Lansdowne) and APEC Energy Enterprises, all costs will be borne by APEC through the planning and drilling of the appraisal well programme.

The Barryroe Partners have agreed a series of amendments to the Updated FOA over recent months which provided for extensions to the date by APEC of the initial loan advance US$ 9 million, with the extension date now set at 5 July 2019. The Directors continue to expect that APEC will fulfil its commitments under the FOA.

Funding options

On 25 June 2019, the Company secured debt funding of GBP 150,000 from LC Capital and GBP 150,000 from Brandon Hill Capital Limited by way of loan note the terms of which are summarised as follows:

- funds can be drawn down at Lansdowne's discretion

- the amount of the drawdown is limited to GB £50,000 per calendar month

- the Lender is to provide funds within 5 business days upon receipt of drawdown notice

- Lansdowne is able to draw down funds at its discretion in part or in full

- a coupon of 12% per annum will be applied only to those funds drawn by Lansdowne.

- there are no options, warrants or convertible aspect to the loan

- no fee is payable to either LC Capital or Brandon Hill Capital Ltd for providing the funds.

- the loan is unsecured.

In addition, LC Capital agreed to extend the term of the remaining amounts under its existing Loan Note to 31 December 2019. At this time the Directors anticipate further forbearance on repayment from LC Capital Master Fund Limited whereby the Company will not be required to discharge amounts due under this loan note prior to 30 June 2020.

It is intended that the new Debt Facility will provide sufficient funds to carry the Company through to the end of 2019, by which time the Directors expect the Barryroe Site Survey to have been approved and competed and the Integrated Project Management Contract (Drilling Contract) to have been signed with COSL, in accordance with the farm out agreement announced in September 2018.

Based on the cash flow projections prepared by the Directors, the debt funding secured will not be adequate to ensure that the Group and Company will be in a position to discharge all liabilities as they fall due. The Directors believe that the Company will be able to secure further debt or equity funding as may be required to address any shortfall arising. However, there is no guarantee that the Company will be able to secure such funding.

The Directors are aware of the proposals put forward in the Petroleum and Other Minerals Development Bill 2018 ("Climate Emergency Measures Bill 2018") that has been put forward in the Irish Parliament (Dáil Éireann). Whilst it is uncertain whether it will advance and also whether it will be subject to amendments, should the Climate Emergency Measures Bill 2018 be enacted in its current form, the Company's ability to progress its licences may be negatively impacted. In this event it is expected that the Company would pursue strenuously claims for compensation.

The Directors have considered the various matters set out above and have concluded that a material uncertainty exists that may cast significant doubt on the ability of the Group and Company to continue as going concerns and that the Group and Company may therefore be unable to realise their assets and discharge their liabilities in the normal course of business. Nevertheless, after making enquiries and considering the uncertainties described above, the Directors are of the view that the Group and Company will have sufficient cash resources available to meet their liabilities and continue in operational existence for at least 12 months from the date of approval of these financial statements.

On that basis, the Directors consider it appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustment that would result from the going concern basis of preparation being inappropriate.

2. Segmental reporting

The Group has one reportable operating and geographic segment, which is the exploration for oil and gas reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the operating segment.

3. Loss per ordinary share

The loss for the year was wholly from continuing operations.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one class of potential ordinary shares being share options. As a loss was recorded for both 2018 and 2017, potentially issuable shares would have been anti-dilutive. The number of potentially issuable shares at 31 December 2018 is 146,685,452 (2017: 513,204,394).

4. Intangible assets

Oil and gas project expenditures, all of which relate to Barryroe, including geological, geophysical and seismic costs, are accumulated as intangible assets prior to the determination of commercial reserves. The directors have assessed the current ongoing activities and future planned activities and are satisfied that the carrying value is appropriate. The directors recognise that the future realisation of the Group's exploration appraisal assets is dependent on future successful exploration activities.

5. Share capital - Group and Company

6. Accounts

Copies of the annual accounts for the year ended 31 December 2018 will be sent to shareholders shortly and will be available from the Group's office at Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18 Ireland and the Group's website www.lansdowneoilandgas.com.