TIDMJOG
RNS Number : 1573M
Jersey Oil and Gas PLC
26 April 2018
26 April 2018
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the year ended 31 December 2017
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and
gas company focused on the UK Continental Shelf ("UKCS") region of
the North Sea, is pleased to announce its audited results for the
year ended 31 December 2017.
Highlights
-- Oil Discovery at Verbier sidetrack well 20/05b-13Z, with
estimated gross recoverable resources of up to 130 million barrels
of oil equivalent, with a minimum proven volume of 25 million
barrels of oil equivalent
-- Placing with new and existing institutional investors and
open offer completed in November 2017 raising GBP23.8m (gross) to
significantly strengthen the Company's balance sheet
-- The Company benefitted from a double carry on the exploration
programme, with Operator Statoil carrying well costs of up to $25
million on the 20/05b-13 well and JOG receiving a 10% cash carry
from its co-venturer CIECO of approximately GBP2.4m
-- Cash balances at year end of GBP25.4m and no debt
Post year end
-- 2018 work programme and budget approved for P2170 licence
which includes an appraisal well programme for the recent Verbier
oil discovery
-- Contracts awarded by P2170 Licence Operator, Statoil, for the
semi-submersible rig, West Phoenix, to drill an appraisal well,
with the possibility for a sidetrack well, on the Verbier oil
discovery in P2170 licence in the summer of 2018
-- The P2170 licence co-venturers have committed to pre-fund a
3D seismic survey over the P2170 licence area and certain offset
acreage, during Q2 2018 with delivery of final data expected in Q1
2019
Outlook
-- Global oil prices appear to be holding steady above the
$60/bbl level, providing increased clarity for
pursuit of the Group's growth strategy
-- Exciting year ahead with near-term drilling activity on Verbier in the summer of 2018
-- Additional 3D seismic survey will facilitate the potential
future development of the Verbier discovery and enhance our
understanding and evaluation of other drillable prospects in the
greater P2170 licence area
-- Ongoing licence-wide exploration effort looking for other
Verbier analogues, including Cortina and Meribel
-- Contingent plans for site survey and additional exploration well planning
-- The Company continues to pursue its dual strategy of
appraising and exploring P2170, while seeking to acquire oil and
gas production assets in the UK Continental Shelf ("UKCS") region
of the North Sea
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"2017 has been a significant and exciting year for Jersey Oil
and Gas and has been the culmination of years of hard work by the
Company. Our exploration drilling programme on our highly exciting
Verbier prospect in October delivered a stand out discovery in the
North Sea which we look forward to appraising this summer. Our
successful fundraising in October has meant that the Company is
well funded for the upcoming work programme on the P2170
licence."
"The board and I look forward to 2018 from a position of
optimism and would like to thank shareholders for their ongoing
support and look forward to updating them on further progress."
Enquiries:
Jersey Oil and Gas Andrew Benitz, C/o Camarco:
plc CEO Tel: 020 3757
4983
Strand Hanson Limited James Harris Tel: 020 7409
Matthew Chandler 3494
James Bellman
Arden Partners plc Chris Hardie Tel: 020 7614
Benjamin Cryer 5900
BMO Capital Markets Jeremy Low Tel: 020 7236
Limited Neil Haycock 1010
Tom Rider
Camarco Billy Clegg Tel: 020 3757
Georgia Edmonds 4983
James Crothers
Notes to Editors:
Jersey Oil & Gas is a UK E&P Company focused on building
a production-focussed company in the North Sea. The Company owns an
18% interest in the P.2170 licence, Blocks 20/5b & 21/1d, Outer
Moray Firth, in which the operator, Statoil (U.K.) Limited, owns a
70% interest and CIECO V&C (UK) Limited owns a 12% interest. In
October 2017, the Company announced the Verbier oil discovery, with
initial operator estimates of gross recoverable resources of
between 25 to130 million barrels of oil equivalent. A well, planned
for drilling in summer 2018, has been announced, to appraise the
Verbier discovery.
The Company plans to build a production portfolio via both
organic development and acquisitions coinciding with the cyclical
recovery in the oil price and the current opportune buying market
in the North Sea. The Company is involved in multiple sales
processes and intends to draw on its management team's considerable
experience, knowledge and expertise to deliver shareholder value
from its stated strategy.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
CHAIRMANS STATEMENT
Overview
The year ended 31 December 2017 was transformational for Jersey
Oil and Gas ("JOG" or the "Company" or, together with its
subsidiaries, the "Group"), led by the Verbier discovery in licence
P2170, in which the Company has an 18% working interest.
This discovery was a result of the drilling programme undertaken
in 2017, by Statoil as operator of licence P2170, which enabled us
to announce estimated gross recoverable resources of between 25 and
130 mmboe (million barrels of oil equivalent), with a minimum
proven volume of 25 mmboe. Besides being of major significance to
JOG, the Verbier discovery was also a positive endorsement of North
Sea exploration activity generally.
The Board believes that the results at Verbier provide
encouragement that in addition to the Verbier prospect there could
be a material amount of further resources within the P2170 licence
area, and we are approaching this potential prospectivity on a
number of fronts. An appraisal drilling programme for Verbier is
scheduled for which a work programme and budget have been agreed by
the P2170 co-venturers. In addition, we have recently announced a
major new 3D seismic survey, which will help with early stage
development planning, should the Verbier appraisal programme be
successful and also advance our exploration activity across the
rest of the P2170 licence, which includes the Cortina prospect, the
Meribel lead and other potential Verbier analogues. This work is
being undertaken both by Statoil, on behalf of the joint venture,
and by JOG on its own account, as we look to fully maximise the
value of the Verbier discovery.
Whilst further details of the discovery are covered in the Chief
Executive's Officers Report, it is clear that these are exciting
times for JOG, with the potential for generating significant
shareholder value, both from the Verbier prospect itself, and in
the areas beyond.
Economic Background
The economic background against which this was achieved included
Brent Crude Oil opening 2017 at $56 per barrel, falling back to $50
per barrel at the half way point, and then increasing to $66 per
barrel at the year end. The consensus view, at the beginning of
2018, was for a year-end Brent Crude Oil price of around $60, which
at the time of this statement is trading at c.$74 per barrel. In
terms of the long-term outlook, the majority of global projections
envisage the level of oil and gas demand in 2035 or 2040 to be in
excess of what is it today. In a UK Continental Shelf ("UKCS")
context, whilst we are past peak production, and a number of
companies are seeking to dispose of asset portfolios, there also
continues to be exploration activity, with notable successes, one
of which was the 2017 JOG discovery at Verbier.
The development of activity in the UKCS continues to be actively
promoted through the Oil and Gas Authority's Maximising Economic
Recovery programme, which provides strategic influence on the
future development of the UKCS (which the Government estimates
could have up to 20 billion barrels of recoverable reserves
remaining). As part of this Government led incentivisation process,
the headline rate of tax in the UKCS was reduced to 40% in
2016.
Against this backdrop, we have continued to engage with multiple
vendors in connection with the acquisition of producing assets. As
in previous years, we continue to apply a rigorous and disciplined
approach to asset valuation and will not be swayed in the event of
what we see as uneconomic prices being offered by others, or
unrealistic terms being asked by vendors. A number of potential
transactions have reached very advanced stages of negotiation for
JOG but have not been completed, for a number of quite different,
deal-related reasons.
We believe that the level of divestment activity will most
likely increase following proposed tax changes, announced by the
Chancellor of the Exchequer in 2017 which, effective from November
2018, should allow the historical tax profile of an oil and gas
field to be transferred to the purchaser of a licence interest,
thereby allowing tax relief for future costs of abandonment
expenditure. Although our experience is that a number of vendors
are prepared to retain their abandonment obligations, this change
should enable asset purchasers, such as JOG, to take them on more
easily.
Equity Placing
In the third quarter of 2017 we raised approximately GBP24m
through a placing and open offer of new ordinary shares, largely in
order to fund our share of future appraisal and exploration costs
relating to the Verbier discovery. We were particularly pleased to
welcome new institutional shareholders via the placing and report a
94% take up of the maximum allocation of GBP4m under the open offer
to our existing shareholders.
Financial Results
Our pre-tax profit for the year amounted to GBP726k, up from a
loss of GBP793k in 2016. The main contributor to this profit was
the carry reimbursement we received in relation to the Verbier
drilling programme. Nonetheless, we continue to maintain a tight
control over our costs, both in the year just passed and going
forward.
Cash at year end was just over GBP25m and we are presently
budgeting for GBP9m to GBP11m of capital expenditure in relation to
the 2018 P2170 work programme, including the Verbier appraisal
well.
Outlook
The drilling of one or perhaps two appraisal wells on Verbier
later this year will clearly be an important milestone for JOG and
we will be working closely with our co-venturers on this major
opportunity. We will also continue to assess potential production
asset acquisitions, whilst maintaining our pricing discipline and
are cognisant not to overly dilute what may be significant value
for shareholders ahead of this summer's Verbier appraisal well.
Given the operating and economic environment in which JOG operates,
I believe that the JOG strategy of appraising the Verbier discovery
and additional exploration activity, together with an active
production acquisition programme leaves us in the right place, at
the right time, to develop significant value for shareholders, and
we will be working very hard to do so.
On behalf of the Board, I would like to welcome the new
shareholders who supported our equity placing in 2017 and to thank
those existing shareholders who have increased their shareholdings.
I would also like to thank all of our employees who have continued
to work on our exploration and production ambitions, not forgetting
the significant salary cuts that were taken in earlier years.
Marcus Stanton
Non-Executive Chairman
26 April 2018
CHIEF EXECUTIVE OFFICER'S REPORT
Overview
When our interim results were published on 28 September 2017, we
had just embarked on the drilling of the Verbier sidetrack well,
following a disappointing initial well earlier in the month.
Potential for hydrocarbons to exist up dip from the water-bearing
sands encountered in the initial well could not be ruled out, so a
decision by the joint venture was made to drill the sidetrack well.
We were subsequently delighted to announce, in early October, the
Verbier oil discovery in good quality sands with the results
exceeding pre-drill expectations for the sidetrack well. The
operator's initial estimates of gross recoverable resources
associated with the Verbier discovery were between 25 and 130
million barrels of oil equivalent, with a minimum proven
recoverable volume of 25 million barrels of oil equivalent. It is
our belief that this discovery was the largest conventional
discovery to be made in UKCS part of the North Sea during 2017 and
was a significant milestone for Jersey Oil and Gas.
Soon after the discovery, JOG completed a successful equity
placing that strengthened its balance sheet ahead of an expected
work programme of appraisal and further exploration across the
P2170 licence. Post year end, we were pleased to announce that the
West Phoenix, a sixth generation semi-submersible rig, has been
contracted for a summer 2018 appraisal programme to determine the
potential of our Verbier discovery. We have also recently announced
JOG's participation in a new 3D seismic survey that will cover
licence P2170 and further offset acreage, optimised to advance the
interpretation of Verbier and additional exploration analogues; a
clear demonstration of the licence co-venturers' optimism for the
acreage.
Operations
A key focus for JOG during 2017 was the build up of operations
and drilling on the P2170 licence area with respect to the Verbier
exploration well programme, operated by Statoil. Following our
successful farm-out to Statoil during 2016, JOG retained an 18%
interest in this licence. In April 2017, we were pleased to
announce the signing, by Statoil, of a contract for use of the
Transocean Spitsbergen rig. This set in motion detailed plans for
drilling of the Verbier exploration well, which commenced in August
2017.
Prior to the exploration drilling programme, JOG also furthered
its technical understanding of the two drill-ready prospects on the
licence, Verbier and Cortina, and in March 2017 we announced the
findings of an independent Competent Person's Report ("CPR"),
conducted by ERC Equipoise Limited, which ascribed prospective
resources and risks for these prospects. We were pleased with the
outcome of this independent study, as it reported an upgrade on our
previous management estimates, with mean prospective resources of
162MMbbls ascribed to Verbier with a chance of success of 29%, and
124MMbbls ascribed to Cortina with a chance of success of 19%.
In August, JOG announced the commencement of the drilling of the
Verbier exploration well, 20/05b-13. Unfortunately, although the
well was on time and within budget, after 29 days of drilling, JOG
was disappointed to announce that the well had failed to find any
commercial hydrocarbons. The well encountered water-bearing Upper
Jurassic sands, deeper than anticipated. This geological result was
indeed a surprise to the P2170 co-venturers. Led by the operator,
Statoil, the wireline log data from the well, together with the
pressure samples and seismic data, were subsequently evaluated. It
was concluded that potential for hydrocarbons to be present in an
accumulation up dip of the 20/05b-13 Verbier exploration well could
not be ruled out. Accordingly, JOG was pleased to support the
operator's recommendation to undertake the drilling of a sidetrack
exploration well which commenced in September 2017.
Successful Verbier Sidetrack
In October 2017, JOG was delighted to announce an oil discovery
in the Verbier sidetrack well. Preliminary analysis indicated that
the well had proven a hydrocarbon accumulation in good quality
sands, up-dip of the water-bearing sands encountered in the initial
well. Extensive evaluation of the sidetrack well results, together
with the existing 3D seismic data, has been ongoing since the
discovery, with initial Statoil estimates of gross recoverable
resources associated with the discovery of between 25 and 130
million barrels of oil equivalent, with a minimum proven
recoverable volume of 25 million barrels of oil equivalent in the
immediate vicinity of the wellbore.
The Company's management has run notional development scenarios,
which include a subsea tie-back development scenario to
commercialise the minimum proven volume and a standalone platform
development for volumes in excess of the mean recoverable volume
estimate of 69 million barrels. For the Verbier upside case of 130
million barrels, management has estimated that full lifecycle costs
(including capex, opex and abex) have the potential to be under
$35/barrel. In the event of a low case of 25 million barrels
recoverable, development scenarios exist which management currently
believe could be commercially viable. When aggregating recoverable
prospective resource estimates for the Cortina prospect and Meribel
lead, the resource range for P2170 is estimated by management to be
70 MMboe in the low case to 273 MMboe in the upside case.
In addition to confirming the presence of oil in the Verbier
prospect, this discovery provides valuable information to help
better understand the prospectivity of the P2170 licence area,
incentivising the joint venture partners to increase their
exploration activities. In parallel with the excellent technical
analysis being conducted by licence operator Statoil, JOG has been
conducting its own technical studies post well results, for the
benefit of shareholders, which are fully aligned, and have been
presented to the co-venturers.
Other Licence Activity
In early 2016, JOG sold its interest in licence P1989, in which
the Partridge prospect was located, to Azinor Catalyst Limited
("Azinor") in return for a contingent financial interest, subject
to a discovery, of up to US$4m. During August 2017, Azinor
announced that drilling had begun on its Partridge prospect. While
the well encountered excellent quality reservoir rocks,
hydrocarbons were not present and it has now been plugged and
abandoned. Accordingly, no contingent payments will be received by
the Company from Azinor.
In 2014 the P1923 licence was relinquished in which JOG has a
30% working interest. During 2017, Centrica, the original operator,
identified an opportunity to recoup some of the costs incurred in
the reprocessing of the datasets. The sale of the data resulted in
a payment to JOG of GBP22,500.
As reported in previous years, Total E&P UK Limited
("TEPUK") has a conditional agreement to pay the Company GBP1m in
relation to the termination of its 2013 farm-in to Licence P2032,
Blocks 21/8c, 21/9c, 21/10c, 21/14a and 21/15b. TEPUK disputes that
the conditions giving rise to the obligation to pay the Company
have been satisfied. We continue efforts in pursuit of our
claim.
JOG's Acquisition Strategy
The Company has continued with its other main focus of seeking
to acquire value-enhancing North Sea production focused assets. The
Company now benefits from a stronger balance sheet, which will
provide vendors with greater confidence in its ability to execute
on potential acquisitions. The Company will also benefit from
having the necessary resources to undertake its own studies in
relation to the ongoing evaluation of numerous North Sea oil and
gas production focused prospects. The Company has a strong pipeline
of asset opportunities currently under evaluation. Following the
success with Verbier, JOG's management is mindful of the remaining
upside potential that a 2018 appraisal programme has for our
shareholders and whilst we are keen to expand our North Sea
portfolio, we remain sensitive about equity dilution and are
therefore increasingly disciplined in our approach to
acquisitions.
Financial review
Due to the beneficial nature of JOG's carry arrangements on
licence P2170, the Company ended the financial year posting a
profit of GBP0.7m. Following the successful farm out to Statoil
during 2016, JOG and its co-venturer CIECO benefitted from a cost
carry of $25m for expenditure relating to the 20/05b-13 well. This
well was drilled within budget and did not exceed this carry value.
In addition to the carry from Statoil, JOG benefitted from a double
carry arrangement receiving an additional 10% cash carry
reimbursement from CIECO for the exploration programme, which
included expenditure during the drilling of the sidetrack well.
Reimbursement cash received by JOG from its co-venturer, CIECO, in
relation to this carry arrangement was approximately GBP2.4m during
2017. Following the successful exploration programme in 2017, JOG's
carry arrangements have now ceased and any future expenditure on
this licence will be funded by JOG in proportion to its 18% working
interest in the licence.
Our Cost of Sales during the year was limited to ongoing work on
our remaining licence interest, P2170, where we have incurred
expenditure which is not recoverable from our co-venturers. This
included proprietary technical studies, commissioned by JOG, to
further our geological understanding of the Verbier prospect and an
independent competent person's report by ERC Equipoise Limited, the
results of which were announced in March 2017.
The Company has always been focused on controlling
administration costs and tries to keep these to a minimum. To this
end we have continued to maintain a low cost operation, comprising
only one very cost-effective office in Jersey. Overall, however,
costs have increased year-on-year as we expanded our cost base
slightly following the farm-out of licence P2170 and in the lead up
to drilling. We also incurred increased advisory costs relating to
potential asset acquisitions pursued during the period.
Looking Forward
The Company has worked hard over the last few years to deliver
value to our shareholders and in 2017 we achieved another
significant value-enhancing event with the Verbier oil discovery,
following on from the farm-out to Statoil in 2016. Further to the
successful fundraising in October 2017, the Company is well funded,
as we turn our attention to appraising Verbier. We are also
continuing our exploration activities with the recently announced
3D survey, to fully evaluate the prospectivity across the P2170
licence area.
We remain very excited by the opportunities currently available
to us in the year ahead. The significant investment being made by
our co-venturers in Verbier and the potential analogous
opportunities, in close proximity, provide us with the potential to
deliver significant further upside for our shareholders in the
coming years. I would like to take this opportunity to thank our
existing and new shareholders for their support and look forward to
providing updates as we progress another exciting drilling
programme during this year.
Andrew Benitz
Chief Executive Officer
26 April 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2017 2016
Note GBP GBP
Revenue 3 - -
Cost of sales (13,498) (4,950)
----------- -----------
GROSS LOSS (13,498) (4,950)
Other income 6 2,440,248 214,110
Gain on disposal of asset 7 - 239,724
Administrative expenses (1,705,068) (1,244,393)
----------- -----------
OPERATING PROFIT/(LOSS) 721,682 (795,509)
Finance costs 8 - -
Finance income 8 5,010 2,070
----------- -----------
PROFIT/(LOSS) BEFORE TAX 9 726,692 (793,439)
Tax 10 - -
----------- -----------
PROFIT/(LOSS) FOR THE YEAR 726,692 (793,439)
TOTAL COMPREHENSIVE PROFIT/(LOSS)
FOR THE YEAR 726,692 (793,439)
Total comprehensive profit/(loss)
for the year attributable
to:
Owners of the parent 726,692 (793,439)
=========== ===========
Profit/Loss per share expressed
in pence per share:
Basic 11 6.49 (9.28)
Diluted 11 6.03 (9.28)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2017 2016
Note GBP GBP
NON-CURRENT ASSETS
Intangible assets - Exploration
costs 12 1,357,959 48,363
Property, plant and equipment 13 - 372
1,357,959 48,735
----------- ------------
CURRENT ASSETS
Trade and other receivables 15 356,107 122,872
Cash and cash equivalents 16 25,415,410 1,882,310
----------- ------------
25,771,517 2,005,182
----------- ------------
TOTAL ASSETS 27,129,476 2,053,917
=========== ============
EQUITY
Called up share capital 17 2,466,144 2,347,017
Share premium account 93,851,526 71,170,230
Share options reserve 20 1,231,055 1,495,921
Accumulated losses (71,666,579) (72,763,959)
Reorganisation reserve (382,543) (382,543)
TOTAL EQUITY 25,499,603 1,866,666
----------- ------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 18 1,629,873 187,251
TOTAL LIABILITIES 1,629,873 187,251
----------- ------------
TOTAL EQUITY AND LIABILITIES 27,129,476 2,053,917
=========== ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called
up Share Share
share premium options Accumulated Reorganisation Total
capital account reserve losses reserve equity
GBP GBP GBP GBP GBP GBP
At 1 January 2016 2,331,767 69,569,978 1,381,133 (71,970,520) (382,543) 929,815
Loss and total
comprehensive loss
for the year - - - (793,439) - (793,439)
Issue of share
capital 15,250 1,600,252 - - - 1,615,502
Share based payments - - 114,788 - - 114,788
At 31 December
2016 and 1 January
2017 2,347,017 71,170,230 1,495,921 (72,763,959) (382,543) 1,866,666
Profit and total
comprehensive Profit
for the year - - - 726,692 - 726,692
Issue of share
capital 119,127 22,681,296 - - - 22,800,423
Share based payments - - 105,822 - - 105,822
Exercised share
options - -(370,688) 370,688 - -
At 31 December
2017 2,466,144 93,851,526 1,231,055 (71,666,579) (382,543) 25,499,603
========= ========== ========= ============ ============== ==========
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Called up share capital Represents the nominal value of shares
issued
Share premium account Amount subscribed for share capital in
excess of nominal value
Share options reserve Represents the accumulated balance of
share-based payment charges recognised in respect of share options
granted by the Company less transfers to retained deficit in
respect of options exercised or cancelled/lapsed
Accumulated losses Cumulative net gains and losses recognised in
the Consolidated Statement of Comprehensive Income
Reorganisation reserve Amounts resulting from the restructuring
of the Group at the time of the Initial Public Offering (IPO) in
2011
CONSOLIDATED STATEMENT OF CASH FLOWS
2017 2016
Note GBP GBP
Cash flows from operating
activities
Cash used in operations 22 2,036,892 (927,144)
Net interest received 8 5,010 2,070
Net cash used in operating
activities 2,041,902 (925,074)
----------- ---------
Cash flows from investing
activities
Purchase of intangible assets 12 (1,309,225) (85,993)
Proceeds on sale of intangible
fixed assets 7 - 414,966
Net cash generated from/(used
in) investing activities (1,309,225) 328,973
----------- ---------
Cash flows from financing
activities
Net proceeds from share
issue 22,800,423 1,615,501
----------- ---------
Net cash generated from
financing activities 22,800,423 1,615,501
----------- ---------
Increase in cash and cash
equivalents 22 23,533,100 1,019,400
Cash and cash equivalents
at beginning of year 22 1,882,310 862,910
----------- ---------
Cash and cash equivalents
at end of year 22 25,415,410 1,882,310
----------- ---------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Jersey Oil and Gas plc (the "Company") and its subsidiaries
(together, the "Group") are involved in the upstream oil and gas
business in the UK.
The Company is a public limited company incorporated and
domiciled in the United Kingdom and quoted on AIM, a market
operated by London Stock Exchange plc. The address of its
registered office is 10 The Triangle, ng2 Business Park,
Nottingham, NG2 1AE.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
Basis of Accounting
These financial statements have been prepared under the historic
cost convention, in accordance with International Financial
Reporting Standards and IFRS IC interpretations as adopted by the
European Union ("IFRSs") and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
Going Concern
The Company is required to have sufficient resources to cover
the expected running costs of the business for a period of 12
months after the issue of these financial statements. Taking into
account the P2170 licence 2018 approved work programme and budget,
our current cash reserves are, expected to more than exceed the
estimated liability of the Company. Based on these circumstances,
the Directors have considered it appropriate to adopt the going
concern basis of accounting in preparing its consolidated financial
statements.
Changes in Accounting Policies and Disclosures
(a) New and amended standards adopted by the Company:
There are no new standards that came into effect during
2017.
(b) The following standards have been published and are
mandatory for the Group's accounting periods beginning on or after
1 January 2018, but the Group has not adopted them early. The Group
does not expect the adoption of these standards to have a material
impact on the financial statements.
-- IFRS 15 'Revenue from contracts with customers' is effective
for accounting periods beginning on or after 1 January 2018.
-- IFRS 9 'Financial 'instruments' is effective for accounting
periods beginning on or after 1 January 2018.
-- IFRS 16 'Leases' is effective for accounting periods beginning on or after 1 January 2019.
Amendments have also been made to the following standards
effective on or after 1 January 2017. The Group does not expect the
amendments to have a material impact on the Group's financial
statements.
-- IFRS 2 'Share-based Payment'
-- IFRS 4 'Insurance Contracts'
-- IFRS 12 'Disclosure of Interests in Other Entities'
-- IAS 7 'Statement of Cash Flows'
-- IAS 12 'Income Tax'
-- IAS 28 'Investment in Associates and Joint Ventures'
-- IAS 40 'Investment Property'
All other amendments to accounting standards not yet effective
and not included above are not material or applicable to the
Group.
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management
to make estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities at the date of the
financial statements. If in future such estimates and assumptions,
which are based on management's best judgement at the date of the
financial statements, deviate from the actual circumstances, the
original estimates and assumptions will be modified as appropriate
in the period in which the circumstances change. The Group's
accounting policies make use of accounting estimates and judgements
in the following areas:
-- the estimation of share based payment costs (note 20).
Impairments
The Group tests its capitalised exploration licence costs for
impairment when facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. The recoverable amounts of
Cash Generating Units are determined based on value-in-use
calculations. There were no impairment triggers in 2017 and no
impairment charge has been recorded.
Share Based Payments
The Group currently has a number of share schemes that give rise
to share based charges. The charge to operating profit for these
schemes amounted to GBP105,822 (2016: GBP114,788). For the purposes
of calculating the fair value of the share options, a Black-Scholes
option pricing model has been used. Based on past experience, it
has been assumed that options will be exercised, on average, at the
earliest exercise date. The share price volatility of 40% used in
the calculation is based on the actual volatility of the Company's
shares as well as that of comparable companies. The risk free rate
of return is based on the implied yield available on zero coupon
gilts with a term remaining equal to the expected lifetime of the
options at the date of grant
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power
to govern their financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. The Group also
assesses existence of control where it does not have more than 50
per cent. of the voting power but is able to govern the financial
and operating policies by virtue of de-facto control. De-facto
control may arise in circumstances where the size of the Group's
voting rights relative to the size and dispersion of holdings of
other shareholders give the Group the power to govern the financial
and operating policies.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date the Group ceases to have control.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree is re-measured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(b) Changes in ownership interests in subsidiaries without
change of control
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
Acquisitions, Asset Purchases and Disposals
Acquisitions of oil and gas properties are accounted for under
the purchase method where the business meets the definition of a
business combination.
Transactions involving the purchase of an individual field
interest, farm-ins, farm-outs, or acquisitions of exploration and
evaluation licences for which a development decision has not yet
been made that do not qualify as a business combination, are
treated as asset purchases. Accordingly, no goodwill or deferred
tax arises. Consideration from farm-ins/farm-outs is adequately
credited from, or debited to, the asset. The purchase consideration
is allocated to the assets and liabilities purchased on an
appropriate basis. Proceeds on disposal are applied to the carrying
amount of the specific intangible asset or development and
production assets disposed of and any surplus is recorded as a gain
on disposal in the Consolidated Statement of Comprehensive
Income.
Revenue Recognition
Revenue is recognised to the extent that it is probable that
economic benefits will flow to the Group and the revenue can be
reliably measured. It is measured at the fair value of
consideration received or receivable for the sale of goods.
Revenue derived from the production of hydrocarbons in which the
Group has an interest with joint venture partners is recognised on
the basis of the Group's working interest in those properties. It
is recognised when the significant risks and rewards of ownership
have been passed to the buyer.
Revenue from strategic partners is recognised in the period in
which services are provided to such partners by the Group or the
date a trigger event occurs if this is later.
Exploration and Evaluation Costs
The Group accounts for oil and gas and exploration and
evaluation costs using IFRS 6 "Exploration for and Evaluation of
Mineral Resources". Such costs are initially capitalised as
Intangible Assets and include payments to acquire the legal right
to explore, together with the directly related costs of technical
services and studies, seismic acquisition, exploratory drilling and
testing.
Exploration costs are not amortised prior to the conclusion of
appraisal activities.
Exploration costs included in Intangible Assets relating to
exploration licences and prospects are carried forward until the
existence (or otherwise) of commercial reserves has been determined
subject to certain limitations including review for indications of
impairment on an individual license basis. If commercial reserves
are discovered, the carrying value, after any impairment loss of
the relevant assets, is then reclassified as Property, plant and
equipment under Production interests and fields under development.
If, however, commercial reserves are not found, the capitalised
costs are charged to the Consolidated Statement of Comprehensive
Income. If there are indications of impairment prior to the
conclusion of exploration activities, an impairment test is carried
out.
Property, Plant and Equipment
Property, plant and equipment is stated at historic purchase
cost less accumulated depreciation. Asset lives and residual
amounts are reassessed each year. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use.
Depreciation on these assets is calculated on a straight line
basis as follows:
Computer & - 3 years
office equipment
Joint Ventures
The Group participates in joint venture agreements with
strategic partners, where revenue is derived from annual retainers
and success fees in a combination of cash and carried interests.
The Group accounts for its share of assets, liabilities, income and
expenditure of these joint venture agreements and discloses the
details in the appropriate Statement of Financial Position and
Statement of Comprehensive Income headings in the proportion that
relates to the Group per the joint venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less
accumulated impairment in the Company's Statement of Financial
Position and reviewed for impairment if there are any indications
that the carrying value may not be recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes
party to the contractual provisions of the instrument. The Group
does not have any derivative financial instruments.
Cash and cash equivalents include cash in hand and deposits held
on call with banks with a maturity of three months or less.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for doubtful debts. A provision for
doubtful debts is established when there is objective evidence that
the Group will not be able to collect all amounts due according to
the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency
in payments (more than 30 days overdue) are considered indicators
that the recoverability of the trade receivable is doubtful. The
amount of the provision is the difference between the asset's
carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The
carrying amount of the asset is reduced through the use of an
allowance account, and the amount of the loss will be recognised in
the Consolidated Statement of Comprehensive Income within
administrative expenses. Subsequent recoveries of amounts
previously provided for are credited against administrative
expenses in the Consolidated Statement of Comprehensive Income.
Trade payables are stated initially at fair value and
subsequently measured at amortised cost.
Exceptional Items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material items of income or expense that have been shown separately
due to the significance of their nature or amount.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit. Deferred taxation liabilities
are provided, using the liability method, on all taxable temporary
differences at the reporting date. Such assets and liabilities are
not recognised if the temporary difference arises from goodwill or
from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profits will be available against
which the temporary differences can be utilised. The carrying
amount of deferred tax assets is reviewed at each reporting
date.
Foreign Currencies
Monetary assets and liabilities in foreign currencies are
translated into sterling at the rates of exchange ruling at the
reporting date. Transactions in foreign currencies are translated
into sterling at the rate of exchange ruling at the date of the
transaction. Gains and losses arising on retranslation are
recognised in the Consolidated Statement of Comprehensive Income
for the year.
Employee Benefit Costs
Payments to defined contribution retirement benefit schemes are
recognised as an expense when employees have rendered service
entitling them to contributions.
Share Based Payments
Equity settled share based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The total amount to be
expensed is determined by reference to the fair value of the
options granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
The fair value determined at the grant date of the equity
settled share based payments is expensed on a straight line basis
over the vesting period, based on the Group's estimate of equity
instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding
adjustment to the equity settled employee benefits reserve.
Equity settled share based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the service.
Exercise proceeds net of directly attributable costs are
credited to share capital and share premium.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
ordinary shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of taxes) is deducted
from equity attributable to the Company's equity holders until the
shares are cancelled or reissued. Where such ordinary shares are
subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related
tax effects is included in equity attributable to the Company's
equity holders.
Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Board of Directors.
3. SEGMENTAL REPORTING
The Directors consider that the Group operates in a single
segment, that of oil and gas exploration, appraisal, development
and production, in a single geographical location, the North Sea of
the United Kingdom and do not consider it appropriate to
disaggregate data further from that disclosed.
During 2017 and 2016 the Group had no turnover. During the 2017
year the Group did receive GBP2,417,748 (2016: GBP87,528) for
carried cost reimbursements from co-venturers which is shown in
Other Income.
4. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to financial risks and its
overall risk management programme focuses on minimising potential
adverse effects on the financial performance of the Group. The
Company's activities are also exposed to risks through its
investments in subsidiaries and is accordingly exposed to similar
financial and capital risks as the Group.
Risk management is carried out by the Directors and they
identify, evaluate and address financial risks in close
co-operation with the Group's management. The Board provides
written principles for overall risk management, as well as written
policies covering specific areas, such as mitigating foreign
exchange risks and investing excess liquidity.
Credit Risk
The Group's credit risk primarily relates to its trade
receivables. Responsibility for managing credit risks lies with the
Group's management.
A debtor evaluation is typically obtained from an appropriate
credit rating agency. Where required, appropriate trade finance
instruments such as letters of credit, bonds, guarantees and credit
insurance will be used to manage credit risk.
The Group also has a number of joint venture arrangements where
co-ventureres have made commitments to fund certain expenditure.
Management evaluate the credit risk associated with each contract
at the time of signing and regularly monitor the credit worthiness
of our partners.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The Group
manages its liquidity through continuous monitoring of cash flows
from operating activities, review of actual capital expenditure
programmes, and managing maturity profiles of financial assets and
financial liabilities.
Capital Risk Management
The Group seeks to maintain an optimal capital structure. The
Group considers its capital to comprise both equity and net
debt.
The Group monitors its capital structure on the basis of its net
debt to equity ratio. Net debt to equity ratio is calculated as net
debt divided by total equity. Net debt is calculated as borrowing
less cash and cash equivalents. Total equity comprises all
components of equity.
The ratio of net debt to equity as at 31 December 2017 is Nil
(2016: Nil).
Maturity analysis of financial assets and liabilities
Financial Assets
2017 2016
GBP GBP
Up to 3 months 356,107 122,872
3 to 6 months - -
Over 6 months - -
------- -------
356,107 122,872
======= =======
Financial Liabilities
2017 2016
GBP GBP
Up to 3 months 1,629,872 187,251
3 to 6 months - -
Over 6 months - -
--------- -------
1,629,872 187,251
========= =======
5. EMPLOYEES AND DIRECTORS
2017 2016
GBP GBP
Wages and salaries 795,389 429,553
Social security costs 64,409 38,690
Share based payments (note 20) 105,822 114,788
Other pensions costs 42,407 24,367
--------- -------
1,008,027 607,398
========= =======
Other pension costs include employee and Company contributions
to money purchase pension schemes.
The average monthly number of employees during the year was as
follows:
2017 2016
Directors 5 5
Employees 7 6
12 11
==== ====
2017 2016
GBP GBP
Directors' remuneration 489,000 210,500
Directors' pension contributions
to money purchase schemes 20,000 11,000
Benefits 5,231 4,665
514,231 226,165
======= =======
The average number of Directors to whom
retirement benefits were accruing was as
follows:
2017 2016
Money purchase schemes 1 1
====== ====
Information regarding the highest 2017 2016
paid Director is as follows:
GBP GBP
Aggregate emoluments and benefits 153,924 68,000
Pension contributions - -
153,924 68,000
======= ======
The Directors did not exercise any
share options during the year.
Key management compensation
Key management includes Directors (Executive and Non-Executive)
and the Company Secretary. The compensation paid or payable to key
management for employee services is shown below;
2017 2016
GBP GBP
Wages and short-term employee benefits 519,544 230,353
Share based payments (note 20) 52,978 82,411
Pension Contributions 24,375 14,375
------- -------
596,897 327,139
======= =======
6. OTHER INCOME
2017 2016
GBP GBP
Refund of well insurance - 37,380
Refund of joint venture well costs - 89,202
Sale of datasets 22,500 -
Carried costs reimbursement 2,417,748 87,528
2,440,248 214,110
========= =======
Carried costs reimbursement: Reimbursement of well-related costs
received as a result of the carried interest arrangement with CIECO
V&C (UK) Limited in relation to licence P2170
Refund of well insurance: A return of prepaid insurance premiums
on various policies
Sale of datasets Income generate from the sale of data relating
to a relinquished licence
Refund of joint venture well costs: Refund of prepaid well costs
from the operator on the Niobe exploration well due to the actual
costs of the well having been less than had been billed. These
costs were initially capitalised as intangible assets under IFRS 6
and subsequently impaired in 2015. This has been reflected in the
intangible assets note 12.
7. GAIN ON DISPOSAL OF ASSET
2017 2016
GBP GBP
Proceeds from Statoil - 414,966
Net book value of asset - (175,242)
Gain on disposal of asset - 239,724
======== =================
During the prior year licence P2170, which contains the Verbier
oil discovery and other exploration prospects was farmed out to
Statoil. The Group retains an 18% interest in this licence.
8. NET FINANCE INCOME
2017 2016
GBP GBP
Finance income:
Joint venture finance charge - 26
Interest received 5,010 2,044
5,010 2,070
----- -----
Finance costs:
Unwinding of discount on the decommissioning - -
liability
Joint venture finance charge - -
- -
----- -----
Net finance income 5,010 2,070
===== =====
.
9. PROFIT/(LOSS) BEFORE TAX
The loss before tax is stated after
charging/(crediting):
2017 2016
GBP GBP
Depreciation 372 4,683
Impairment of intangible assets (note
12) - 710
Auditors' remuneration - audit of
parent company and consolidation 28,500 28,500
Auditors' remuneration - audit of
subsidiaries 11,500 11,500
Foreign exchange (gain)/loss 4,980 (33,326)
Directors' remuneration (note 5) 514,231 226,165
Employee costs (note 5) 387,974 266,445
Share based payments (notes 5 & 20) 105,822 114,788
10. TAX
Reconciliation of tax charge
2017 2016
GBP GBP
Profit/Loss before tax 726,692 (793,439)
Tax at the domestic rate of 19.25%
(2016: 20%) 138,072 (158,688)
Capital allowances in excess of depreciation (276,257) -
Expenses not deductible for tax purposes
and non-taxable income 20,034 1,338
Deferred tax asset not recognised 118,151 157,350
Total tax expense reported in the - -
Consolidated Statement of Comprehensive
Income
========= =========
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2017 or for the year ended 31
December 2016.
The Group has not recognised a deferred tax asset due to the
uncertainty over when the tax losses can be utilised. At the year
end the tax losses within the Group were approximately
GBP25million.
11. PROFIT/LOSS PER SHARE
Basic profit/(loss) per share is calculated by dividing the
losses attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
Diluted profit/(loss) per share is calculated using the weighted
average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares. As a loss was recorded for the
prior year, the issue of potential ordinary shares would have been
anti dilutive (see note 20 for share options in place at the end of
the year).
Profit/(Loss) Weighted Per
attributable average share
to ordinary number amount
shareholders of shares pence
GBP
Year ended 31 December
2017
Basic and Diluted
EPS
Basic 726,692 11,203,777 6.49
Diluted 726,692 12,056,036 6.03
============== =========== ========
Year ended 31 December
2016
Basic and Diluted
EPS
Loss attributable
to ordinary shareholders (793,439) 8,545,612 (9.28)
============== =========== ========
12. INTANGIBLE ASSETS
Exploration
costs
GBP
COST
At 1 January 2016 16,629,877
Additions 85,992
Disposals (175,242)
Refund of prior additions (94,202)
At 31 December 2016 16,446,425
-------------
Additions 1,309,596
Disposals (16,222,821)
At 31 December 2017 1,533,200
-------------
AMORTISATION, DEPLETION
& DEPRECIATION
At 1 January 2016 16,491,554
Charge for the year -
Impairment charge for the
year 710
Refund on prior year additions
(note 6) (94,202)
At 31 December 2016 16,398,062
-------------
Amortisation on disposal (16,222,821)
At 31 December 2017 175,241
-------------
NET BOOK VALUE
At 31 December 2017 1,357,959
=============
At 31 December 2016 48,363
=============
At 31 December 2015 138,323
=============
During 2017, the Group retained an 18% equity interest in
Licence P2170 (Verbier) and a commercial interest in P1989
(Partridge)
During 2016, the P2170 licence was farmed out to Statoil, under
the terms of which we disposed of 42% of our 60% interest
(retaining an 18% interest) in the licence. The disposal recorded
in the previous year within this note reflects this reduced
interest.
At 31 December 2017 the remaining exploration asset (P2170 -
Verbier) was reviewed and the then carrying value of GBP1,357,959
was considered reasonable based on on-going exploration work on the
licence area and as a result no further impairments have been
considered necessary.
13. PROPERTY, PLANT AND EQUIPMENT
Computer
and
office
equipment
GBP
COST
At 1 January 2016 286,022
Additions -
At 31 December 2016 286,022
-----------
Disposals (160,236)
At 31 December 2017 125,786
-----------
ACCUMULATED AMORTISATION,
DEPLETION & DEPRECIATION
At 1 January 2016 280,967
Charge for the year 4,683
At 31 December 2016 285,650
-----------
Charge for the year 372
Disposals (160,236)
At 31 December 2017 125,7856
-----------
NET BOOK VALUE
At 31 December 2017 -
===========
At 31 December 2016 372
===========
At 1 January 2016 5,055
===========
14. IMPAIRMENTS
2017 2016
GBP GBP
Exploration assets - 710
- 710
==== ====
15. TRADE AND OTHER RECEIVABLES
2017 2016
Current: GBP GBP
Trade receivables (net) 277,710 -
Other receivables 67 67
Value added tax 52,085 19,513
Prepayments and accrued revenue 26,245 103,292
356,107 122,872
========= ========
As at 31 December 2017 there were no trade receivables
past due nor impaired. There are no credit quality
concerns over the trade receivables balance outstanding
at the year end.
16. CASH AND CASH EQUIVALENTS
2017 2016
GBP GBP
Unrestricted cash in bank accounts 25,415,410 1,882,310
The cash balances are placed with
a creditworthy financial institution.
17. CALLED UP SHARE CAPITAL
Issued and fully paid:
Number: Class Nominal 2017 2016
value GBP GBP
21,829,227
(2016: 9,916,478) Ordinary 1p 2,466,144 2,347,017
========== =========
During the year the company issued 11,912,749
ordinary shares for which it received c.GBP24m
gross
18. TRADE AND OTHER PAYABLES
2017 2016
Current: GBP GBP
Trade payables 1,279,870 46,413
Accrued expenses 219,586 98,587
Other payables 8,169 10,391
Taxation and Social Security 122,248 31,860
1,629,873 187,251
========= =======
19. CONTINGENT LIABILITY
In accordance with a 2015 settlement agreement reached with the
Athena Consortium, although Trap Oil Limited remains a Licensee in
the joint venture, any past or future liabilities in respect of its
interest can only be satisfied from the Group's share of the
revenue that the Athena Oil Field generates and up to 60 per cent.
of net disposal proceeds or net petroleum profits from the Group's
interests in the P2170 and P1989 licences which are the only
remaining assets still held that were in the Group at the time of
the agreement with the Athena Consortium who hold security over
these assets. Any future repayments, capped at 125% of the unpaid
liability associated with the Athena Oil Field, cannot be
calculated with any certainty, and any remaining liability still in
existence once the Athena Oil Field has been decommissioned will be
written off. A payment was made in 2016 to the Athena Consortium in
line with this agreement following the farm-out of P2170 (Verbier)
to Statoil and the subsequent receipt of monies relating to that
farm-out.
In 2014 the Group assigned its lease of 35 King Street to a
third party, however the Group is still acting as Authorised
Guarantor for all liabilities of the assignee in relation to the
lease agreement, which terminates on 30 October 2018.
20. SHARE BASED PAYMENTS
The Group operates a number of share option schemes. Options are
exercisable at the prices set out in the table below. Options are
forfeited if the employee leaves the Group through resignation or
dismissal before the options vest.
Equity settled share based payments are measured at fair value
at the date of grant. The fair value determined at the date of
grant of equity settled share based payments is expensed on a
straight line basis over the vesting period, based upon the Group's
estimate of shares that will eventually vest.
The Group's share option schemes are for Directors, Officers and
employees. The charge for the year was GBP105,822 (2016:
GBP114,788l) and details of outstanding options are set out in the
table below.
No. of No. of
shares shares
for which Options for which
options lapsed/non options
Exercise outstanding vesting outstanding
Date price Vesting Expiry at 1 Options Options during at 31
Of Grant (pence) date date Jan 2017 issued Exercised the year Dec 2017
Mar
2011 100 Vested Mar 2021 24,138 - 20,974 - 3,164
Mar
2011 4,300 Vested Mar 2021 5,809 - - - 5,809
Mar Mar
2011 4,300 2014 Mar 2021 4,355 - - - 4,355
Mar Mar
2011 4,300 2015 Mar 2021 5,809 - - - 5,809
Jul Jul
2011 4,300 2011 Jul 2021 523 - - - 523
Jul Jul
2011 4,300 2012 Jul 2021 523 - - - 523
Jul Jul
2011 4,300 2014 Jul 2021 523 - - - 523
Dec Dec
2011 2,712 2012 Dec 2021 1,650 - - - 1,650
Dec Dec
2011 2,712 2014 Dec 2021 1,650 - - - 1,650
Dec Dec
2011 2,712 2015 Dec 2021 - - - - -
May May
2013 1,500 2014 May 2023 9,500 - - - 9,500
May May
2013 1,500 2015 May 2023 9,500 - - - 9,500
May May
2013 1,500 2015 May 2023 - - - - -
Nov Nov
2016 110 2016 Nov 2021 260,000 - 13,333 - 246,667
Nov Nov
2016 110 2017 Nov 2021 260,000 - - 13,333 246,667
Nov Nov
2016 110 2018 Nov 2021 260,000 - - 13,333 246,667
Apr Apr
2017 310 2017 Apr 2022 - 20,000 - - 20,000
Apr Apr
2017 310 2018 Apr 2022 - 20,000 - - 20,000
Apr Apr
2017 310 2019 Apr 2022 - 20,000 - - 20,000
Total 843,007
The weighted average fair value of options granted during the
year determined using the Black-Scholes valuation model was 41.55p
per option. The significant inputs into the model were the
mid-market share price on the day of grant or 1p exercise price as
shown above and an annual risk-free interest rate of 2 per cent.
The volatility measured at the standard deviation of continuously
compounded share returns is based on a statistical analysis of
daily share prices from the date of admission to AIM to the date of
grant on an annualised basis.
21. RELATED UNDERTAKINGS AND ULTIMATE CONTROLLING PARTY
The Group and Company do not have an ultimate controlling party,
or parent Company.
County of Registered
Subsidiary % owned Incorporation Principal Activity Office
Predator Oil England &
Ltd 100% Wales Non Trading 1
England &
Trap Oil Ltd 100% Wales Oil Exploration 1
Trap Oil & Gas
Ltd 100% Scotland Non Trading 2
Trap Petroleum
Ltd 100% Scotland Non Trading 2
Trap Exploration
(UK) Ltd 100% Scotland Non Trading 2
Jersey Oil & Management
Gas E & P Ltd 100% Jersey services 3
Registered Offices
1 10 The Triangle, NG2 Business Park, Nottingham, NG2 1AE
2 6 Rubislaw Terrace, Aberdeen, AB10 1XE
3 Howard House, 9 The Esplanade St Helier, Jersey, Channel Islands, JE2 3QA
22. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
2017 2016
GBP GBP
Profit/(loss) for the year before
tax 726,692 (793,439)
Adjusted for:
Amortisation, impairments, depletion
and depreciation - 5,393
Share based payments (net) 105,822 114,788
Gain on disposal of assets - (239,724)
Finance costs - -
Finance income (5,010) (2,070)
827,504 (915,052)
(Increase)/Decrease in trade and
other receivables (233,235) 104,846
Increase/(Decrease) in trade and
other payables 1,442,623 (116,938)
--------- ---------
Cash Generated from/(used in) operations 2,036,892 (927,144)
CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect
of Cash and cash equivalents are in respect of these statements of
financial position amounts:
Year ended 2017
31 Dec 1 Jan 2017
2017
GBP GBP
Cash and cash equivalents 25,415,410 1,882,310
Year ended 2016
31 Dec 2016 1 Jan 2016
GBP GBP
Cash and cash equivalents 1,882,310 862,910
Analysis of net cash
At 1 Cash At 31
Jan flow Dec
2017 2017
GBP GBP GBP
Cash and cash equivalents 1,882,310 23,533,100 25,415,410
---------- ----------- -----------
Net cash 1,882,310 23,533,100 25,415,410
========== =========== ===========
23 AVAILABILITY OF THE ANNUAL REPORT 2017
A copy of these results will be made available for inspection at
the Company's registered office during normal business hours on any
weekday. The Company's registered office is at 10 The Triangle, ng2
Business Park, Nottingham NG2 1AE. A copy can also be downloaded
from the Company's website at www.jerseyoilandgas.com. Jersey Oil
and Gas plc is registered in England and Wales with registration
number 7503957.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAFLSADNPEAF
(END) Dow Jones Newswires
April 26, 2018 02:00 ET (06:00 GMT)
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