TIDMDELT
RNS Number : 8302W
Deltic Energy PLC
20 April 2023
20 April 2023
Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural
Resources
Deltic Energy Plc ("Deltic" or "the Company")
Final Results
Deltic Energy Plc, the AIM-quoted natural resources investing
company with a high impact exploration and appraisal portfolio
focused on the Southern and Central North Sea, is pleased to
announce its audited results for the year ended 31 December 2022
('FY 2022') and that it has released a results presentation. The
results presentation is available on the homepage at the Company's
website: www.delticenergy.com .
Highlights
-- Transformational gas discovery at Pensacola on Licence P2252
in the Southern North Sea ("SNS").
o Pensacola represents one of the largest natural gas
discoveries in the SNS in over a decade.
o Discovery contains P50 Estimated Ultimate Recovery of 302 BCF
of gas (90 BCF net to Deltic).
o Well opens a new Zechstein play in this mature basin.
o Working closely with partners to progress this significant
discovery to appraisal.
o Considering options in relation to Deltic's 30% interest
including potential full or partial monetisation, and appraisal and
development.
-- Committed to second potentially high impact exploration well on the Selene prospect.
o Selene is the largest undrilled structure of its kind in this
part of the SNS, with an estimated P50 recoverable resource of in
excess of 300 BCF (150 BCF net to Deltic).
o Deltic anticipates that Selene will be drilled around the
middle of 2024.
-- Deltic-Capricorn Joint Venture ("JV") continues to progress
technical work across five SNS licences. The key focus across the
licences has been the Carboniferous play, in which multiple leads
and prospects exist, as well as estimated significant volumes of
Gas Initially in Place totalling in excess of 2 TCF.
-- Completed the Phase A work programme to significantly de-risk
the Syros prospect located in the Central North Sea, and a farm-out
process, which commenced in late 2022, is ongoing.
-- In September Deltic successfully raised GBP16 million via an
oversubscribed equity placing and open offer.
-- Net cash outflow from operations and investing activity for
the year of GBP4.7 million (2021: GBP1.8 million), with GBP2.1
million relating to the drilling of the Pensacola well.
-- Cash position of GBP20.4 million at 31 December 2022 (2021:
GBP10.1 million) with no debt. Cash position of GBP15.1 million
(unaudited) at 31 March 2023. The Pensacola well cost was GBP12.8
million of which GBP5.6 million of the total well costs are to be
billed by the JV Partner subsequent to 31 March 2023.
-- Participated in the UK's 33(rd) Offshore Licensing Round,
with Deltic submitting multiple applications for blocks and part
blocks in both the Southern and Central North Sea focused on
bolstering and diversifying its portfolio.
Graham Swindells, Chief Executive of Deltic Energy,
commented:
"2022 saw a fundamental shift in the delivery of Deltic's
business model as the Pensacola well started drilling in November,
subsequently being announced as a highly material gas discovery in
February this year. Pensacola entirely vindicates our long-term
business strategy of identifying high-value exploration assets at a
very early stage and bringing them to fruition. We are now in the
enviable position of deciding how best to appraise and develop this
300 BCF discovery alongside our partners, and delivering value for
shareholders.
Moreover, we continue to advance our second potentially
high-value asset, the Selene gas prospect, also located in the
Southern North Sea. Together with our partner Shell, we expect to
drill this similar sized prospect to Pensacola in the summer of
2024. With this drilling activity coupled with additional
prospectivity from the rest of our portfolio and potential new
licence awards, I believe the future looks extremely positive for
Deltic, especially at a time when the UK should rightly be focused
on its longer-term energy security."
For further information please contact the following:
Deltic Energy Plc Tel: +44 (0) 20 7887
2630
Graham Swindells / Andrew Nunn / Sarah
McLeod
Allenby Capital Limited (Nominated Adviser) Tel: +44 (0) 20 3328
5656
David Hart / Alex Brearley (Corporate
Finance)
Stifel Nicolaus Europe Limited (Joint Tel: +44 (0) 20 7710
Broker) 7600
Callum Stewart / Simon Mensley / Ashton
Clanfield
Canaccord Genuity Limited (Joint Broker) Tel: +44 (0) 20 7523
Adam James / Gordon Hamilton 8000
Vigo Consulting (IR Adviser) Tel: +44 (0) 20 7390
0230
Patrick d'Ancona / Finlay Thomson / Kendall
Hill
About Deltic Energy Plc
Deltic has created a strategically located portfolio of
high-quality gas exploration licences in the Southern North Sea
over a number of licensing rounds. These licences are located in
areas that have been underexplored despite significant discoveries
such as Tolmount, Breagh, Pegasus and Cygnus, most of which have
gone on to be developed and could provide ready access to export
infrastructure for any future developments on Deltic's licence
acreage.
Chairman's Statement
The last year has seen high levels of uncertainty in global
economies. As the world slowly emerged from the global pandemic,
further disruption came from the Russian invasion of Ukraine
beginning in February 2022 and continuing today. As the world
supports Ukraine's resistance, the knock-on effect on trade and the
supply of food and energy has caused continuing challenges at a
global scale, national scale and to individual households.
A major re-structuring of the total energy system began at a
global scale in order to secure continued supplies while reducing
dependence upon Russian supplies. The dependence of Europe on
Russia for oil and gas became apparent, including leading economies
such as Germany which had grown over the years after previously
being self-sufficient. While UK dependence upon Russia was not so
directly felt as many EU countries, there was an indirect impact as
markets tightened.
The changing situation has caused policymakers and commentators
to better understand and emphasise the importance of security of
supply and the value of domestic supplies for energy security as
well as for jobs, treasury receipts and for greenhouse gas
emissions when compared with imports of the same resources.
At the same time, the rise in commodity prices associated with
tighter supplies, and increasing profits, at a time when people
were experiencing much higher energy bills from the same market
forces, brought negative attention to our sector. Government
interventions resulted in the introduction of the Energy Profits
Levy ('EPL'), such that the sector now has the highest taxes for
any UK industrial sector.
With all this going on in the outside world, our company
continued to follow its business plan of feeding a conveyor belt of
opportunities from licence round through technical evaluation; to
bringing in high quality partners and ultimately drilling
exploration wells.
During the year, our company applied for a number of licences in
the 33rd Offshore UK Licensing Round, worked on farming-out several
attractive prospects, advanced the evaluation of drilling
opportunities across many of our licences with our industry
partners, while securing commitment to drill Selene with Shell.
Pensacola became the first prospect the company has drilled
resulting in a very successful discovery of gas just off the
northeast coast of England.
All of this will be more fully covered in the following reports
by our Chief Executive Officer Graham and Chief Operating Officer
Andrew, but at the highest level we can say that, through all of
the external challenges, as prices rise and fall and as sentiment
sees peaks and troughs, we are getting on with the job we set out
to do in becoming a leading North Sea exploration company.
Mark Lappin
Chairman
19 April 2023
Chief Executive's Statement
The last year has been transformational for our company and its
future. We started 2022 with just one committed exploration well
and now have a major discovery on the play-opening Pensacola
prospect as well as a further committed exploration well on our
Selene prospect. The drilling of the first well on one of our
licences represented a significant milestone in the evolution of
Deltic and we were delighted to achieve initial success in
discovering both gas and oil. The benefits of this are
wide-reaching in that in addition to it representing our first
discovery, it demonstrates the success of our model to identify
quality opportunities and create a conveyor belt of exploration
assets attracting the highest quality partners to facilitate the
progression from licensing to drilling. This has been further
highlighted by Shell's decision to drill the high impact, low risk
Selene prospect which is of a similar scale to Pensacola. In
addition to the further endorsement of the quality of our assets,
having a well at Selene to add to our discovery further de-risks
the investment proposition and provides a fantastic base from which
to continue to grow the Company. Accordingly, we are delighted with
how things have progressed and excited about the future development
of the Company.
Pensacola Discovery
In November 2022, Shell commenced the drilling of the first well
at Pensacola, with drilling operations continuing through to
February 2023 and we were delighted to announce a very significant
discovery of gas.
The well encountered 19 metres of reservoir on the edge of the
structure with higher than expected average porosity of 16% and
proved a hydrocarbon column of in excess of 100 metres. It was
particularly pleasing that following drilling, our pre-drill
estimate of gas volumes was confirmed at just over 300 BCF (P50
Estimated Ultimate Recovery) equivalent to 50 mmboe. On test, gas
flowed at a maximum rate of c. 5 mmscf/day which, while in line
with pre-test expectations, is not considered representative of the
much higher flow rates that would be expected on a horizontal
appraisal or production well drilled in the centre of the
structure.
The well also unexpectedly encountered oil with 34-36deg API
which has the potential to create further opportunity on the
licence. While the upside associated with the oil is still being
evaluated, the well has indicated the presence of a potentially
significant volume of oil which could lead to additional future
activity on Pensacola.
This first exploration well has resulted in a highly positive
outcome and, at approximately 300 BCF, is the largest natural gas
discovery in the Southern North Sea ("SNS") in over a decade and is
close to existing infrastructure. The discovery represents a major
milestone in the development of our company as we continue to
execute our exploration-led strategy and progress our portfolio of
high-quality drilling opportunities in order to create value for
our shareholders.
We are now entering a period of post well analysis which will
shape appraisal and development plans with appraisal drilling
anticipated late 2024. We are looking forward to working with our
partners, Shell and ONE-Dyas, as we continue to progress this
exciting and significant discovery and look forward to updating the
market in due course.
As well as opening a new Zechstein play in this mature basin,
this discovery highlights the remaining potential of the North Sea
as a source of further discoveries which can provide domestically
produced natural gas, supporting UK energy security while we
transition toward a Net Zero economy.
As a result of this discovery, Deltic now has a highly valuable
and marketable asset and in line with the Company's strategy,
Deltic is considering all options in relation to its interest in
Pensacola, including appraisal and development as well as potential
full or partial monetisation of value with a view to maximising
shareholder value from the discovery.
Selene
Throughout the year, the JV continued to refine its technical
and commercial assessment of the Company's Selene prospect on
Licence P2437. This work was rewarded in July when Shell confirmed
that they had taken the important step of making a positive well
investment decision and committed to drilling the prospect such
that Selene is now a firm well.
We continue to consider Selene the largest undrilled structure
of its kind in this part of the SNS. With estimated P50 resource of
in excess of 300 BCF (50 mmboe) and a high geological chance of
success (70%) we are excited to be drilling this prospect.
Well planning has begun and although a well slot has yet to be
confirmed it is currently anticipated that Selene will be drilled
in Q3 2024.
In the meantime, we expect the site survey to be carried out
later this year along with confirmation of rig contract.
Capricorn Energy JV - Licences P2560, P2561, P2562, P2567 and
P2428
2022 saw continued progress across the various licences held
jointly with Capricorn. The results of the new high quality modern
3D seismic survey were received, and reprocessing of existing
legacy data has been recently completed. The key area of focus
across the key licences has been the Carboniferous play in which
multiple leads and prospects exist. Significant volumes of gas are
estimated to exist across these licences, totalling in excess of 2
TCF of Gas Initially in Place ('GIIP'). We continue to work closely
with Capricorn and current activity is centred around refinement of
the assessment of risks and volumes in order to support a drilling
decision.
Deltic notes recent announcements by Capricorn as it undertakes
a strategic review, expected to be complete by the end of April,
and considers the future of its UK business as part of that
process. Deltic also notes Capricorn's recent cost base update
statement which indicated an intention to monetise or farm down its
UK exploration assets. Deltic's focus remains on expediting
drilling of its prospects and will continue to work with Capricorn
to seek to effect this within the licence timeframes. In the
meantime, Capricorn continues to meet all obligations under the
farm out entered in 2021 and the current phase of each of the
licences.
Central North Sea
Throughout the year, we made good progress in maturing our Syros
oil prospect on Licence P2542. The purchase of recently reprocessed
seismic data has facilitated a revised and more robust
interpretation of the prospect by our technical team. Following
this work, we consider Syros to be a low-risk prospect with
estimated P50 prospective resources of 25 mmboe and a 58%
geological chance of success. Syros also sits in close proximity to
existing infrastructure with multiple offtake opportunities, which
would allow it to be quickly and easily developed. This work has
allowed us to commence a farm out process and we are currently
engaging with a number of counterparties.
Fundraising
In September, we were very pleased to raise gross proceeds of
approximately GBP16 million in an oversubscribed placing and
accompanying open offer which was supported by all of our key
shareholders as well as a number of new institutional investors.
This fundraising was particularly important as, amongst other
things, it allowed Deltic to progress Selene into the drilling
phase of the licence following the positive well investment
decision. We appreciate the continued support of our shareholders
and welcome the addition of new institutional shareholders.
Energy Policy/Windfall Tax
In the course of 2022, gas prices rose to unprecedented levels
with governments finally waking up to the importance of energy
security. To that end, Deltic welcomed the UK Government's Energy
Security Strategy which was announced in April 2022 which as well
as recognising the importance of maintaining domestic production
(over higher emission imports of LNG), confirmed a new UK licensing
round which was launched towards the end of last year. However, the
Government subsequently bowed to pressure and introduced a windfall
tax in May in the form of the Energy Profits Levy ("EPL") which,
following further amendment in November, ultimately increased the
tax on profits to 75% and extended the tax to 2028. Deltic does not
have direct exposure to the EPL, however it has weighed heavily on
the sector and this lack of fiscal stability has impacted the
relative competitiveness of the UK in terms of attracting
investment.
One very positive aspect of the EPL which Deltic supports was
the introduction of the Investment Allowance which allows companies
which are subject to the EPL an investment allowance resulting in a
91% cost saving on new investment. This means that for EPL paying
companies, the value and hence attractiveness of Deltic's assets is
materially enhanced and we would therefore hope to benefit from
this as we continue to progress drilling activity and seek further
high calibre partners.
Outlook
While gas prices have inevitably come down significantly from
the unprecedented highs experienced in 2022, as the energy crisis
and the war in Ukraine has continued, a structural shift in gas
markets appears to have occurred with long term gas prices expected
to remain significantly higher than historic averages. While we do
not seek to predict commodity prices, nor do our projects require
inflated prices, we believe the long term pricing outlook should
strongly support ongoing investment in new gas projects.
The outlook for Deltic remains extremely bright. The first,
successful, well has been drilled on one of our licences which made
a very significant discovery of gas. This fundamentally changes
Deltic's model, as we now have a valuable development asset, as
opposed to being purely exploration-driven. We now anticipate
appraisal activity on Pensacola as the next step towards its
commercial development as well as another exploration well at
Selene, each of which will be high impact catalysts. More widely,
we have demonstrated that potential exists for further exploration
success in the SNS and the critical role that companies like Deltic
have in supporting future domestic production and energy
security.
We are continuing to work with Capricorn on our other SNS
licences and our farm out process on our Syros prospect is ongoing.
In line with our strategy to continue to grow our asset base, we
have also applied for a number of new licences in the latest UK
licensing round and, assuming success, this will give us the
opportunity to further enhance our portfolio of drilling
opportunities.
I would like to take this opportunity to thank the Deltic team
for their hard work and commitment throughout the last year and our
shareholders for their ongoing support as we strive to create
value.
Graham Swindells
Chief Executive Officer
19 April 2023
Operational Review
P2252 Pensacola (30% Deltic, 65% Shell, 5% ONE-Dyas) & P2558
Pensacola North (30% Deltic, 70% Shell)
The key activity for the P2252 Pensacola licence, and the
Company during the period was the drilling of the 41/05a-2
discovery well on the Pensacola prospect, with well operations
commencing on 23 November 2022. The well successfully met all its
key pre-drill objectives, including the discrimination between two
competing geological models, confirmation of hydrocarbons
significantly in excess of minimum economic volumes within the
Pensacola structure, and a demonstration of hydrocarbon
mobility.
Well 41/05a-2, operated by Shell, reached a total depth of
1,965m TVDSS and the presence of mobile oil and gas in the primary
Zechstein Hauptdolomite carbonate target interval was confirmed via
core and wireline logs. The well encountered top Hauptdolomite
reservoir in a slope facies with a reservoir thickness of 18.8m
with an average porosity of 15.8%. A probable gas-oil contact was
observed in the well, indicating a substantial hydrocarbon column
and the deeper oil-water contact has not been proven by the well.
Based on our current mapping of the Pensacola prospect, it appears
that hydrocarbons are present below the 4-way dip closed structure
and work is ongoing to understand the additional potential upside
that may be associated with a deeper oil-water contact.
On test, the well flowed at a rate of 4.75mmscf/day, approaching
a stable rate of around 1.75mmscf/day after 12 hours with water
production also rapidly declining over the testing period. In
addition, the well flowed black oil (34-36 API deg ) at a rate of
approximately 18bbls/day. The test rates were in-line with pre-test
expectations based on the reservoir facies intersected and the
down-dip location of the well. Significantly improved flow rates
are predicted from horizontal wells targeting the thicker, higher
quality oolitic dolomites, which preliminary post-well analysis
indicates are present across the top of the structure and contain
the bulk of the recoverable gas resource.
In light of the data collected during drilling and testing,
Deltic has updated its volumetric estimates for Pensacola and now
estimates the Pensacola discovery to contain a P50 Estimated
Ultimate Recovery ('EUR') of 302 BCF (P90 to P10 Range = 164 to 519
BCF) which is in-line with pre-drill estimates. The significance of
the oil recovered during testing is being evaluated, however
preliminary evaluation is suggesting that the volumes of oil
involved could potentially be very material.
Deltic believes the well results materially de-risk follow-on
prospectivity associated with the Pensacola North prospect on
adjacent licence P2558, located immediately to the north, and will
provide an update once the post-well laboratory analysis has been
fully integrated into the regional geological model.
The information gathered from this well and the ongoing
laboratory work on samples collected during drilling and testing
will now be integrated into the geological model for Pensacola and
the associated follow-on prospectivity and inform the next steps on
the licence, with appraisal drilling anticipated late 2024.
P2437 Selene (50% Deltic, 50% Shell)
On 26 July, Deltic was delighted to announce that the JV had
made a positive well investment decision and following approval
from the North Sea Transition Authority (or "NSTA"), the JV
received formal confirmation that the P2437 licence had moved into
the next phase of the licence on 31 October 2022. As planned, Shell
also assumed Operatorship of the P2437 licence as part of the
process of moving into the drilling phase.
While rig selection and scheduling is yet to be confirmed by the
Operator, well engineering and planning work has commenced and we
expect a site survey to be completed in the second half of 2023 in
anticipation of drilling commencing in Q3 2024.
The well will be located and designed to prove the presence of
gas in excess of the minimum economic volume required to support a
future development of the lowest possible cost and to collect the
additional geotechnical information required to support field
development planning.
Deltic remains convinced that the Selene prospect is one of the
largest unappraised structures in the Leman Sandstone fairway of
the Southern Gas Basin and estimates that it contains gross P50
Prospective Resources of 318 BCF of gas (with a P90 to P10 range of
132 to 581 BCF) with a geological chance of success of 70%.
P2428 Cupertino Area and P2567 Cadence Area (40% Deltic, 60%
Capricorn)
Work during the period focused on completion of the processing
work on the 680km(2) of new 3D seismic shot over licence P2428 in
2021 which was delivered in mid-2022 and the reprocessing of the
legacy VE08 3D survey over licence P2567, with final products
delivered in early 2023. This newly delivered data has been
integrated into the regional geological dataset and is being used
to refine the JV's assessment of the prospectivity across the
blocks.
The Capricorn JV has been focusing on the Carboniferous play and
has identified a number of potentially material leads and prospects
with some similarities to nearby producing fields such as Breagh
and discoveries such as Pegasus and Andromeda which are located
immediately to the south of these licences.
The Carboniferous play as a whole is considered low risk with
very material in-place prospective resources of approximately 2 TCF
(mid-case estimate) across the two licences.
Ongoing work is focusing on the assurance of volumes and risks
associated with individual prospects and leads in order to high
grade potential drilling opportunities across both licences.
P2560, P2561 and P2562 - South Breagh Area (30% Deltic, 70%
Capricorn)
Work during the period focused on the integration and upgrading
of legacy datasets including the reprocessing of the Lochran 3D
survey covering much of Licence P2560 and the northern part of
P2562. Final reprocessing products were delivered in January 2023
and the focus has been on maturing a small number of leads across
the licence area using this new data. The lack of high quality 3D
seismic is hampering the assessment of prospectivity over much of
P2561 and P2562 and the JV will take a view on the future of those
licences in the coming months. The primary prospect is the
intra-Carboniferous Lochran Deep structure on Licence P2560 which
has the potential to contain material volumes of gas, significantly
in excess of that estimated by previous Operators.
Deltic notes Capricorn's recent cost base update statement which
among other things indicated that as part of a strategic review,
the board of Capricorn had concluded that its near-term strategic
focus should be primarily on Egypt, and to farm down, monetise or
exit exploration concessions outside Egypt. While Deltic cannot
comment on Capricorn's strategic review and its plans to farm down
or monetise any of the five licences Deltic holds jointly with
Capricorn, work progresses across those licences and Capricorn
continues to meet all obligations under the farm out entered in
2021 and the obligations under each phase of the licences.
Phase A of each of the licences ends on 30 November 2023 with
the exception of P2428 which ends on 31 March 2024.
P2542 Syros (100% Deltic)
Deltic has now completed the Phase A work programme on licence
P2542 located in the Central North Sea, which contains the Syros
prospect. This work included the purchase of the latest 3D
Evolution seismic dataset across the acreage and the completion of
a Joint Impedance and Facies Inversion (Ji-Fi) inversion of the
seismic data, in conjunction with IKON Science. This work has
significantly de-risked the Syros prospect and Deltic considers it
to be 'drill ready'.
The Syros prospect is located immediately to the west of the
Montrose-Arbroath production platforms and in close proximity to a
number of fields which produce from the same Fulmar sandstones
which are expected to be present within the Syros rotated fault
block.
The Syros prospect is expected to contain a gassy light oil,
similar to producing offset fields and is estimated to contain P50
prospective resources of 24.5mmboe (P90 to P10 Range = 13.7 to 39.7
mmboe) with a geological chance of success of 58%.
As previously announced, a farm-out process was commenced late
in 2022 and Deltic has had significant engagement with a number of
credible operators in relation to Syros and management are
confident of attracting a joint venture partner.
Portfolio Management
As previously reported, Deltic was informed by the Operator of
licence P2435, The Parkmead Group, that a farm out partner could
not be found to assist in the maturation of the Blackadder prospect
within the required licence timeframe, and therefore recommended
that the licence should be relinquished. Relinquishment of Licence
P2435 was confirmed on 30 September 2022.
Similarly, a farm out partner could not be found to participate
in the drilling of the Dewar prospect within the required licence
timelines and, in line with previously stated intentions, the
licence was relinquished on 30 September 2022.
33(rd) Licensing Round
The NSTA announced the launch of the 33(rd) licensing round on 7
October 2022, with 931 blocks and part blocks available for
licensing. The round closed for applications on 12 January 2023 and
following an extensive review of a large number of opportunities
Deltic submitted a number of applications for blocks and part
blocks in both the Southern and Central North Sea.
Significant interest from the industry was noted, with the NSTA
reporting that 115 bids across 258 blocks were received across the
licensing round, with a total of 76 different companies submitting
applications. Deltic expects the NSTA to start awarding new
licences resulting from the 33(rd) round from Q3 2023.
Andrew Nunn
Chief Operating Officer
19 April 2023
Portfolio and Resource Summary
The Company's current licence portfolio and prospect inventory,
as of the end of March 2023, is summarised below:
Southern North Sea - Discoveries
Licence Block Deltic Project ID Discovered Net to Deltic GCoS%
Ref: ID Equity (D) P50 Estimated Ultimate
Recovery
(BCF)
-----------------------------
P90 P50 P10
Low Best High
-------- --------- --------
41/5a,
41/10a
P2252(1) & 42/1a 30% Pensacola - Zechstein D 49.5 90.6 155.7 100
---------- --------- ----------------------- ------------ -------- --------- -------- -------
P2437(1) 48/8b 50% Sloop - Leman D 4 9 19 100
----------- ---------- --------- ----------------------- ------------ -------- --------- -------- -------
(1) Operated by Shell
Southern North Sea - Prospects and Leads
Licence Block Deltic Project ID Net to Deltic GCoS%
Ref: ID Equity Prospective Resource
(BCF)
---------------------------
Prospect P90 P50 P10
(P) Low Best High
Lead
(L)
------- -------- --------
P2558(1) 41/5b 30% Pensacola North To Be Determined
& 42/1b - Zechstein
----------- ----------- --------- ------------------- ------------------------------------------------
P2437(1) 48/8b 50% Selene - Leman P 66 159 290 70
----------- ----------- --------- ------------------- ---------- ------- -------- -------- -------
Endymion - Leman L 18 24 31 27
----------- ----------- --------- ------------------- ---------- ------- -------- -------- -------
Rig & Jib - Leman L 7 18 29 35
----------- ----------- --------- ------------------- ---------- ------- -------- -------- -------
P2428(2) 43/7 40% Cupertino To Be Determined
&
43/8
----------- ----------- --------- ------------------- ------------------------------------------------
Cupertino NE
----------- ----------- --------- ------------------- ---------- ------- -------- -------- -------
Cambridge
-------------------
Chelmsford
-------------------
Callander
------------------- ---------- ------- -------- -------- -------
Richmond - Leman L 25 84 219 20
----------- ----------- --------- ------------------- ---------- ------- -------- -------- -------
P2567(2) 43/11 40% Cadence To Be Determined
&
43/12b
----------- ----------- --------- ------------------- ------------------------------------------------
Cadence North
----------- ----------- --------- ------------------- ---------- ------- -------- -------- -------
Cadence West
-------------------
Chester
------------------- ---------- ------- -------- -------- -------
Bassett - Bunter
Sst L 14 51 121 37
------------------- ---------- ------- -------- -------- -------
Bathurst - Bunter
Sst L 48 110 228 22
----------- ----------- --------- ------------------- ---------- ------- -------- -------- -------
P2560(2) 42/13b 30 Lochran Deep To Be Determined
42/17
& 42/18
----------- ----------- --------- ------------------- ------------------------------------------------
P2561(2) 42/19 30% To Be Determined
& 42/20b
----------- ----------- --------- ---------------------------------------------------------------------
P2562(2) 42/22 30% To Be Determined
& 42/23
----------- ----------- --------- ---------------------------------------------------------------------
(1) Operated by Shell
(2) Operated by Capricorn Energy
Central North Sea
Licence Block Deltic Project ID Discovery Net to Deltic GCoS%
Ref: ID Equity (D) Prospective Resource
Prospect (MMBOE)
(P)
Lead (L)
---------------------------
P90 P50 P10
Low Best High
------- -------- --------
P2542 22/17a 100% Syros - Fulmar P 13.7 24.5 39.7 58
-------- --------- ---------------- ----------- ------- -------- -------- -------
Andrew Nunn
Chief Operating Officer
19 April 2023
Financial Review
Overview
The Company had a cash balance of GBP20,409,692 at the end of
the year (2021: GBP10,092,205). In September, the Company raised
GBP15,958,850 (gross) by issuing 455,967,137 ordinary shares as
part of a placing and open offer at 3.5 pence per share ("the
Fundraise").
The Company moved into a more operational phase during the year
and drilling operations commenced at Pensacola in November and
continued through to February 2023.
Loss for the year
The Company incurred a loss for the year to 31 December 2022 of
GBP2,989,404 (2021: GBP1,935,052). Administrative expenses of
GBP2,745,350 (2021: GBP1,912,987) were incurred during the
year.
The prior year loss included a gain of GBP298,173 associated
with the farm-out of five gas licences in the Southern North Sea to
Capricorn Energy PLC as part of the USD $1 million consideration
Deltic received as a contribution to historic costs. The prior year
gain is included as other operating income in the Income Statement
for the prior year.
A write down of GBP347,610 is recognised in the year resulting
from the relinquishment of licences P2435 (Blackadder Prospect) and
P2537 (Dewar Prospect) ('the Write Down'). In 2021, a write down of
GBP288,551 was recognised relating to the relinquishment of Licence
P2384 (Manhattan Prospect) and P2424 (Cortez Prospect).
Finance income of GBP129,301 (2021: GBP2,905) was earned on
short term high interest-bearing deposits on surplus funds
following the Fundraise. Finance costs of GBP25,745 (2021:
GBP34,592) were recognised as interest charged on a lease liability
relating to the office lease.
Balance Sheet
The Company continues to retain a strong balance sheet with
total Capital and Reserves at 31 December 2022 of GBP24,192,695
(2021: GBP11,663,005). As at 31 December 2022, there were
1,861,931,992 (2021: 1,405,964,855) ordinary shares in issue. The
increase reflects the additional shares issued as part of the
Fundraise. Additionally, a total of up to 162,840,450 (2021:
128,840,450) new ordinary shares may be issued pursuant to the
exercise of share options.
The value of exploration assets increased by GBP7,566,359 to
GBP9,769,477 (2021: GBP2,203,118) mainly reflecting commencement of
Pensacola drilling operations in November 2022, offset by the Write
Down.
Drilling operations continued through to February 2023 and the
value of work undertaken during 2022 was GBP5,981,947 (2021:
GBP1,152,403), and accordingly part of the cost of the Pensacola
well will be incurred during 2023. The total net cost to Deltic of
drilling the Pensacola well is GBP12.8 million reflecting certain
additional operational requirements during drilling, weather
conditions, additional testing costs, as well as market influences,
including inflation and exchange rate movements.
In accordance with IAS 37, the Company recognised a provision
with a corresponding asset of GBP1,281,000 for the planned plug and
abandonment of the Pensacola well in February 2023.
The Company spent GBP651,022 (2021: GBP335,756) further
progressing the Company's exploration licence portfolio, in
particular the Syros Licence. This was partially offset by the
Write Down recognised during the year. All costs associated with
the five licences held jointly with Capricorn Energy PLC are paid
in full by Capricorn Energy PLC until a well investment decision is
reached.
Property, plant and equipment of GBP279,545 (2021: GBP385,240)
includes a right of use asset relating to the office lease with a
net book value of GBP188,837 (2021: GBP269,767). Property, Plant
and Equipment reduced by GBP105,695 to GBP279,545, mainly
reflecting the depreciation charge for the year on the office
lease, fixtures and fittings and computer equipment.
The Company's cash position at 31 December 2022 was
GBP20,409,692 (2021: GBP10,092,205) with the year-on-year increase
mainly arising from the Fundraise.
Total current liabilities, which include short-term creditors,
accruals, provisions and lease liabilities increased to
GBP6,359,439 (2021: GBP1,030,143). Liabilities of GBP3,301,809
(2021: GBP256,860) are due to the Joint Venture partner for
payments associated with Pensacola drilling operations. Other
payables and accruals of GBP1,259,172 (2021: GBP197,089) mainly
represent drilling value of work done but yet to be billed by the
Joint Venture partner. A provision of GBP1,281,000 has been
recognised at the year end for the costs expected to be incurred in
early 2023 for the planned plug and abandonment of the Pensacola
exploration well.
The Company has no debt.
Cash flow
As at 31 December 2022, the Company held cash and cash
equivalents totalling GBP20,409,692 (2021: GBP10,092,205). The
Company had a net cash inflow for the year of GBP10,317,487 (2021:
outflow GBP1,876,653).
A net cash outflow from operating activities of GBP2,182,387
(2021: GBP1,623,057) was incurred for general and administrative
costs.
Net cash of GBP2,509,979 (2021: GBP136,781) was used in
investing activities including GBP2,557,582 (2021: GBP853,744) on
exploration and evaluation assets. The total net cost of drilling
the Pensacola well is GBP12.8 million of which GBP2,102,352 (2021:
GBP584,355) cash was paid to the joint venture partner during 2022
and the remaining cost of the drilling operations is payable in
2023.
A further GBP455,230 (2021: GBP269,389) was spent developing the
other licences in the exploration portfolio. In the prior year,
GBP719,953 was received as proceeds, as a contribution to historic
costs, from the farm-in by Capricorn Energy PLC on five Southern
North Sea licences. Interest of GBP56,606 (2021: GBP2,905) was
received on high interest-bearing deposits on surplus funds
following the Fundraise.
The cash increase in the year is driven by the Fundraise
proceeds of GBP15,958,850 (2021: nil) offset by GBP824,258 of
expenses associated with the Fundraise (2021: nil).
Going concern
The Directors have assessed the Company's ability to continue as
a going concern. Although the oil and gas industry faces a period
of change under the current geopolitical environment, the Company
does not anticipate any negative issues impacting its ability to
operate as a going concern. Having raised funds in 2022 the Company
is currently well funded for its existing commitments that fall due
for a minimum of 12 months from signing these financial statements.
The Company has no debt. Based on the cash and cash equivalents
balance at year end and the Company's commitments, the Directors
are of the opinion that the Company has adequate financial
resources to meet its operational and drilling costs commitments,
based upon anticipated drilling costs and pre-drilling work
schedules, and working capital requirements, and accordingly will
be able to continue and meet its liabilities as they fall due for a
minimum of 12 months from the date of signing these financial
statements.
Sarah McLeod
Chief Financial Officer
19 April 2023
Investing Policy
In addition to the development of the North Sea gas licences the
Company has acquired to date, the Company proposes to continue to
evaluate other potential oil and gas projects in line with its
investing policy, as it aims to build a portfolio of resource
assets and create value for shareholders. As disclosed in the
Company's AIM Admission Document in May 2012, the Company's
substantially implemented Investment Policy is as follows:
The proposed investments to be made by the Company may be either
quoted or unquoted; made by direct acquisition or through farm-ins;
either in companies, partnerships or joint ventures; or direct
interests in oil & gas and mining projects. It is not intended
to invest or trade in physical commodities except where such
physical commodities form part of a producing asset. The Company's
equity interest in a proposed investment may range from a minority
position to 100% ownership.
The Board initially intends to focus on pursuing projects in the
oil & gas and mining sectors, where the Directors believe that
a number of opportunities exist to acquire interests in attractive
projects. Particular consideration will be given to identifying
investments which are, in the opinion of the Directors,
underperforming, undeveloped and/or undervalued, and where the
Directors believe that their expertise and experience can be
deployed to facilitate growth and unlock inherent value.
The Company will conduct initial due diligence appraisals of
potential projects and, where it is believed further investigation
is warranted, will appoint appropriately qualified persons to
assist with this process. The Directors are currently assessing
various opportunities which may prove suitable although, at this
stage, only preliminary due diligence has been undertaken.
It is likely that the Company's financial resources will be
invested in either a small number of projects or one large
investment which may be deemed to be a reverse takeover under the
AIM Rules. In every case, the Directors intend to mitigate risk by
undertaking the appropriate due diligence and transaction analysis.
Any transaction constituting a reverse takeover under the AIM Rules
will also require Shareholder approval.
Investments in early stage and exploration assets are expected
to be mainly in the form of equity, with debt being raised later to
fund the development of such assets. Investments in later stage
projects are more likely to include an element of debt to equity
gearing. Where the Company builds a portfolio of related assets, it
is possible that there may be cross holdings between such
assets.
The Company intends to be an involved and active investor.
Accordingly, where necessary, the Company may seek participation in
the management or representation on the Board of an entity in which
the Company invests with a view to improving the performance and
use of its assets in such ways as should result in an upward
re-rating of the value of those assets.
Given the timeframe the Directors believe is required to fully
maximise the value of an exploration project or early stage
development asset, it is expected that the investment will be held
for the medium to long term, although disposal of assets in the
short term cannot be ruled out in exceptional circumstances.
The Company intends to deliver Shareholder returns principally
through capital growth rather than capital distribution via
dividends, although it may become appropriate to distribute funds
to Shareholders once the investment portfolio matures and
production revenues are established.
Given the nature of the Investing Policy, the Company does not
intend to make regular periodic disclosures or calculations of its
net asset value.
The Directors consider that as investments are made, and new
investment opportunities arise, further funding of the Company will
be required.
This strategic report contains certain forward-looking
statements that are subject to the usual risk factors and
uncertainties associated with the oil and gas exploration and
production business. Whilst the Directors believe the expectation
reflected herein to be reasonable in light of the information
available up to the time of their approval of this report, the
actual outcome may be materially different owing to factors either
beyond the Company's control or otherwise within the Company's
control but, for example, owing to a change of plan or strategy.
Accordingly, no reliance may be placed on the forward-looking
statements.
On behalf of the Board
Mark Lappin Graham Swindells
Chairman Chief Executive Officer
19 April 2023 19 April 2023
Qualified Person
Andrew Nunn, a Chartered Geologist and Chief Operating Officer
of Deltic, is a "Qualified Person" in accordance with the Guidance
Note for Mining, Oil and Gas Companies, June 2009 as updated 21
July 2019, of the London Stock Exchange. Andrew has reviewed and
approved the information contained within this announcement.
Glossary of Technical Terms
PRMS: Petroleum Resources Management System (2018)
degAPI a measure of the density of crude oil, as defined
by the American Petroleum Institute
Bbls Barrels
BCF Billion Cubic Feet
GIIP Gas Initially In Place
Mmbbl Million barrels
mmboe Million barrels of oil equivalent
SCF: Standard Cubic Feet
STOIIP Stock-Tank Oil Initially In Place
TCF Trillion Cubic Feet
Prospective Resources Are estimated volumes associated with undiscovered
accumulations. These represent quantities of
petroleum which are estimated, as of a given
date, to be potentially recoverable from oil
and gas deposits identified on the basis of indirect
evidence but which have not yet been drilled.
Chance of Success (GCoS) for prospective resources, means the chance or
probability of discovering hydrocarbons in sufficient
quantity for them to be tested to the surface.
This, then, is the chance or probability of the
prospective resource maturing into a contingent
resource. Prospective resources have both an
associated chance of discovery (geological chance
of success) and a chance of development (economic,
regulatory, market and facility, corporate commitment
and political risks). The chance of commerciality
is the product of these two risk components.
These estimates have been risked for chance of
discovery but not for chance of development.
Estimated Ultimate Recovery Estimated Ultimate Recovery is defined as those
('EUR') quantities of petroleum which are estimated,
on a given date, to be potentially recoverable
from an accumulation, plus those quantities already
produced therefrom.
P90 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 90% probability
that the quantities actually recovered will equal
or exceed the estimate. This is therefore a low
estimate of resource.
P50 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 50% probability
that the quantities actually recovered will equal
or exceed the estimate. This is therefore a median
or best case estimate of resource.
P10 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 10% probability
that the quantities actually recovered will equal
or exceed the estimate. This is therefore a high
estimate of resource.
Pmean is the mean of the probability distribution for
the resource estimates. This is often not the
same as P50 as the distribution can be skewed
by high resource numbers with relatively low
probabilities.
The GIIP volumes, Estimated Ultimate Recovery and Prospective
Resources have been presented in accordance with the 2018 Petroleum
Resources Management System (PRMS) prepared by the Oil and Gas
Reserves Committee of the Society of Petroleum Engineers (SPE),
reviewed, and jointly sponsored by the World Petroleum Council
(WPC), the American Association of Petroleum Geologists (AAPG) and
the Society of Petroleum Evaluation Engineers (SPEE).
Income Statement
for the year ended 31 December 2022
Notes 2022 2021
Continuing operations GBP GBP
Administrative expenses:
Write down on relinquished intangible
assets 3 (347,610) (288,551)
Other administrative expenses (2,745,350) (1,912,987)
------------------------------------------- ------- ------------- -------------
Total administrative expenses (3,092,960) (2,201,538)
Other operating income 3 - 298,173
------------- -------------
Operating loss (3,092,960) (1,903,365)
Finance income 129,301 2,905
Finance costs (25,745) (34,592)
------------------------------------------- ------- ------------- -------------
Loss before tax (2,989,404) (1,935,052)
Income tax expense - -
------------------------------------------- ------- ------------- -------------
Loss for the year (2,989,404) (1,935,052)
------------------------------------------- -------
Loss per share from continuing operations
expressed in pence per share:
Basic 2 (0.20)p (0.14)p
------------------------------------------- ------- ------------- -------------
Statement of Comprehensive Income
for the year ended 31 December 2022
2022 2021
GBP GBP
Loss for the year (2,989,404) (1,935,052)
Other comprehensive income - -
-------------------------------------------- ------------- -------------
Total comprehensive expense for the year
attributable to the equity holders of the
Company (2,989,404) (1,935,052)
--------------------------------------------- ------------- -------------
Balance Sheet
as at 31 December 2022
Notes 2022 2021
GBP GBP
Assets
Non-current assets
Intangible assets 3 9,769,477 2,203,118
Property, plant and equipment 4 279,545 385,240
Other receivables 37,422 37,422
--------------------------------------------- ------- -------------- --------------
Total non-current assets 10,086,444 2,625,780
Current assets
Trade and other receivables 181,102 190,398
Cash and cash equivalents 20,409,692 10,092,205
--------------------------------------------- ------- -------------- --------------
Total current assets 20,590,794 10,282,603
Total assets 30,677,238 12,908,383
--------------------------------------------- ------- --------------
Capital and reserves attributable to the
equity holders of the Company
Shareholders' equity
Share capital 9,309,660 7,029,824
Share premium 33,150,786 20,296,030
Share-based payment reserve 1,535,202 1,150,700
Accumulated retained deficit (19,802,953) (16,813,549)
--------------------------------------------- ------- -------------- --------------
Total equity 24,192,695 11,663,005
--------------------------------------------- ------- -------------- --------------
Liabilities
Current liabilities
Trade and other payables 4,988,307 931,148
Lease liabilities 90,132 98,995
Provisions 1,281,000 -
--------------------------------------------- ------- -------------- --------------
Total current liabilities 6,359,439 1,030,143
--------------------------------------------- ------- -------------- --------------
Non-current liabilities
Lease liabilities 125,104 215,235
--------------------------------------------- ------- -------------- --------------
Total non-current liabilities 125,104 215,235
--------------------------------------------- ------- -------------- --------------
Total liabilities 6,484,543 1,245,378
--------------------------------------------- ------- -------------- --------------
Total equity and liabilities 30,677,238 12,908,383
--------------------------------------------- ------- -------------- --------------
Statement of Changes in Equity
for the year ended 31 December 2022
Share Share Share-based Accumulated Total
capital premium payment retained equity
reserve deficit
GBP GBP GBP
GBP GBP
Balance at 1 January 2022 7,029,824 20,296,030 1,150,700 (16,813,549) 11,663,005
Comprehensive income for the
year
Loss for the year - - - (2,989,404) (2,989,404)
-------------------------------------------- ----------- ------------ ------------- -------------- -------------
Total comprehensive loss for
the year - - - (2,989,404) (2,989,404)
Contributions by and distributions
to owners
Issue of shares 2,279,836 13,679,014 - - 15,958,850
Costs of share issue - (824,258) - - (824,258)
Share-based payment - - 384,502 - 384,502
Total contributions by and distributions
to owners 2,279,836 12,854,756 384,502 - 15,519,094
Balance at 31 December 2022 9,309,660 33,150,786 1,535,202 (19,802,953) 24,192,695
-------------------------------------------- ----------- ------------ ------------- -------------- -------------
Balance at 1 January 2021 7,029,824 20,296,030 990,378 (14,878,497) 13,437,735
Comprehensive income for the
year
Loss for the year - - - (1,935,052) (1,935,052)
-------------------------------------------- ----------- ------------ ------------- -------------- -------------
Total comprehensive loss for
the year - - - (1,935,052) (1,935,052)
Contributions by and distributions
to owners
Share-based payment - - 160,322 - 160,322
Total contributions by and distributions
to owners - - 160,322 - 160,322
Balance at 31 December 2021 7,029,824 20,296,030 1,150,700 (16,813,549) 11,663,005
-------------------------------------------- ----------- ------------ ------------- -------------- -------------
Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
GBP GBP
Cash flows from operating activities
Loss before tax (2,989,404) (1,935,052)
Finance income (129,301) (2,905)
Finance costs 25,745 34,592
Gain from farm-out of licence interest - (298,173)
Depreciation 114,698 115,355
Amortisation - 5,625
Loss on disposal of property, plant and
equipment - 1,842
Write down on relinquished intangible assets 347,610 288,551
Share-based payment 384,502 160,322
(2,246,150) (1,629,843)
Decrease/(increase) in other receivables 81,991 (136,511)
(Decrease)/increase in trade and other payables (18,228) 143,297
------------------------------------------------------ ------------- -------------
Net cash outflow from operating activities (2,182,387) (1,623,057)
------------------------------------------------------ ------------- -------------
Cash flows from investing activities
Purchase of intangible assets (2,557,582) (853,744)
Purchase of property, plant and equipment (9,003) (5,895)
Proceeds from exploration licence farm-in - 719,953
Interest received 56,606 2,905
Net cash outflow from investing activities (2,509,979) (136,781)
------------------------------------------------------ ------------- -------------
Cash flows from financing activities
Proceeds from share issue 15,958,850 -
Expense of share issue (824,258) -
Payment of principal portion of lease liabilities (98,994) (82,223)
Lease interest paid (25,745) (34,592)
Net cash inflow / (outflow) from financing
activities 15,009,853 (116,815)
------------------------------------------------------ ------------- -------------
Increase / (decrease) in cash and cash
equivalents 10,317,487 (1,876,653)
Cash and cash equivalents at beginning
of year 10,092,205 11,968,858
------------------------------------------------------ ------------- -------------
Cash and cash equivalents at end of year 20,409,692 10,092,205
------------------------------------------------------ ------------- -------------
Cash and cash equivalents comprise the following items:
2022 2021
GBP GBP
Cash at bank and in hand 2,909,692 10,092,205
Short term bank deposits 17,500,000 -
------------ ------------
20,409,692 10,092,205
------------ ------------
Notes to the Financial Statements
for the year ended 31 December 2022
1. Accounting Policies
Basis of preparation
The financial statements have been prepared in accordance with
UK adopted International Accounting Standards ('IAS') and with
those parts of the Companies Act 2006 applicable to companies
reporting under International Accounting Standards ('IAS').
The preparation of financial statements in conformity with IAS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
factors that are believed to be reasonable under the circumstance,
the result of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from this
estimate. The areas involving a higher degree of judgement or
complexity, or where assumptions and estimates are significant to
the financial statements, are disclosed later in this note.
Operating loss is stated after charging and crediting all items
excluding finance income and expenses.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision only
affects that period or in the period of revision and future periods
if the revision affects both current and future periods.
Going concern
The Directors have assessed the Company's ability to continue as
a going concern. Although the oil and gas industry faces a period
of change under the current geopolitical environment, the Company
does not anticipate any negative issues impacting its ability to
operate as a going concern. Having raised funds in 2022 the Company
is currently well funded for its existing commitments that fall due
for a minimum of 12 months from signing these financial statements.
The Company has no debt. Based on the cash and cash equivalents
balance at year end and the Company's commitments, the Directors
are of the opinion that the Company has adequate financial
resources to meet its operational and drilling costs commitments,
based upon anticipated drilling costs and pre-drilling work
schedules, and working capital requirements, and accordingly will
be able to continue and meet its liabilities as they fall due for a
minimum of 12 months from the date of signing these financial
statements.
2. Loss per Share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Due to the losses incurred during the year, a diluted loss per
share has not been calculated as this would serve to reduce the
basic loss per share. There were 162,840,450 (2021: 128,840,450)
share options outstanding at the end of the year that could
potentially dilute basic earnings per share in the future.
Basic and diluted loss per share
2022 2021
Loss per share from continuing operations (0.20)p (0.14)p
-------------------------------------------- --------- ---------
The loss and weighted average number of ordinary shares used in
the calculation of loss per share are as follows:
2022 2021
GBP GBP
Loss used in the calculation of total basic
loss per share (2,989,404) (1,935,052)
---------------------------------------------- ------------- -------------
Number of shares 2022 2021
Number Number
Weighted average number of ordinary shares
for the purposes of basic loss per share 1,518,395,110 1,405,964,855
--------------------------------------------- --------------- ---------------
3. Intangible Assets
Exploration Software
& evaluation licences Total
assets GBP GBP
GBP
Cost
At 1 January 2021 1,425,290 39,257 1,464,547
Additions 1,488,159 - 1,488,159
Farm-out of licence (421,780) - (421,780)
Write down on relinquished assets (288,551) - (288,551)
At 31 December 2021 2,203,118 39,257 2,242,375
Additions 7,913,969 - 7,913,969
Write down on relinquished assets (347,610) - (347,610)
------------------------------------- --------------- ----------- -----------
At 31 December 2022 9,769,477 39,257 9,808,734
------------------------------------- --------------- ----------- -----------
Amortisation and impairment
At 1 January 2021 - 33,632 33,632
Charge for the year - 5,625 5,625
At 31 December 2021 - 39,257 39,257
Charge for the year - - -
At 31 December 2022 - 39,257 39,257
------------------------------------- --------------- ----------- -----------
Net Book Value
At 31 December 2022 9,769,477 - 9,769,477
------------------------------------- --------------- ----------- -----------
At 31 December 2021 2,203,118 - 2,203,118
------------------------------------- --------------- ----------- -----------
At 1 January 2021 1,425,290 5,625 1,430,915
------------------------------------- --------------- ----------- -----------
The net book value of exploration and evaluation assets at 31
December 2022 and 2021 relates solely to the Company's North Sea
Licences.
Additions of GBP7,913,969 (2021: GBP1,488,159) differ to the
cash flows in the Statement of Cash Flows owing to an increase in
trade and other payables of GBP3,052,066 (2021: GBP634,415) and an
increase in provisions of GBP1,281,000 (2021: GBPnil) relating to
the plug and abandonment of the Pensacola exploration well that was
completed in February 2023.
A charge of GBP347,610 was recognised during the year (2021:
GBPnil) resulting from the write down on relinquished intangible
assets following the decision to relinquish Licence P2435
(Blackadder) and Licence P2537 (Dewar).
A charge of GBPnil (2021: GBP288,551) was recognised resulting
from the write down on relinquished intangible assets following the
decision to relinquish Licences P2384 (Manhattan Prospect) and
P2424 (Cortez Prospect).
During the prior year, aggregate cash proceeds arising from the
farm-out of five Licences (P2428, P2567, P2560, P2561 and P2562) to
Capricorn amounted to GBP719,953. An amount of GBP421,780 was
deducted from exploration and evaluation assets, being the
previously capitalised expenditure relating to that licence. The
surplus of the proceeds over the carrying value amounted to
GBP298,173 and was recognised as a gain on disposal of the partial
interest and included as other operating income in the Income
Statement for 2021.
4. Property, Plant and Equipment
Leasehold Office Fixtures Computer
improvements lease and fittings equipment Total
GBP GBP GBP GBP GBP
Cost
At 1 January 2021 86,452 404,650 42,662 37,920 571,684
Additions 1,317 - 3,138 1,440 5,895
Disposals - - - (4,121) (4,121)
------------------------ ---------------- --------- --------------- ------------ ---------
At 31 December 2021 87,769 404,650 45,800 35,239 573,458
Additions 3,931 - - 5,072 9,003
At 31 December 2022 91,700 404,650 45,800 40,311 582,461
------------------------ ---------------- --------- --------------- ------------ ---------
Depreciation
At 1 January 2021 7,583 53,953 3,095 10,511 75,142
Charge for year 18,344 80,930 6,663 9,418 115,355
Disposals - - - (2,279) (2,279)
At 31 December 2021 25,927 134,883 9,758 17,650 188,218
Charge for year 18,901 80,930 6,870 7,997 114,698
At 31 December 2022 44,828 215,813 16,628 25,647 302,916
------------------------ ---------------- --------- --------------- ------------ ---------
Net Book Value
At 31 December 2022 46,872 188,837 29,172 14,664 279,545
------------------------ ---------------- --------- --------------- ------------ ---------
At 31 December 2021 61,842 269,767 36,042 17,589 385,240
------------------------ ---------------- --------- --------------- ------------ ---------
At 1 January 2021 78,869 350,697 39,567 27,409 496,542
------------------------ ---------------- --------- --------------- ------------ ---------
The office lease category reflects a right of use asset relating
to the office premises occupied by the Company.
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