TIDMDELT
RNS Number : 9946J
Deltic Energy PLC
22 August 2023
22 August 2023
Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural
Resources
Deltic Energy Plc ("Deltic" or "the Company")
Interim 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 interim results for the six months ended 30 June
2023.
Highlights
-- Significantly increased estimate of oil and gas resources for
the transformational Pensacola discovery on Licence P2252 (Deltic
interest 30%) in the Southern North Sea ("SNS").
o Discovery contains total gross P50 Estimated Ultimate Recovery
("EUR") of c.99 mmboe, nearly double initial expectations
o Pensacola now estimated to contain material volumes of oil,
representing c. 30% of the combined recoverable hydrocarbons
o Work is progressing with partners to develop the appraisal and
development programme for Pensacola, with an appraisal well
targeted for Q4 2024
-- The well planning process for drilling the Selene prospect
(Deltic interest 50%) in the SNS is progressing well.
o The geophysical site survey currently underway with the
geotechnical survey planned for later in the year
o Selene still expected to be drilled in Q3 2024
-- Deltic is withdrawing from three Licences (P2560, P2561 and
P2562) it held with Capricorn Energy ("Capricorn"), and the
partnership will move to relinquish these licences as soon as
practicable.
-- Deltic intends to continue with Licences P2567 (Cadence) and
P2428 (Cupertino), the two most prospective licences in this
acreage, and apply for extensions to both licences as it seeks to
attract another partner.
-- Deltic has submitted multiple applications for blocks and
part blocks in the Southern and Central North Sea during the UK's
33rd Offshore Licensing Round in FY 2022, with awards expected to
be announced before the end of Q3 2023.
-- Cash position of GBP9.1 million at 30 June 2023 (31 December
2022: GBP20.4 million), with a net cash outflow for the period of
GBP11.3 million (H1 2022: GBP2.5 million). The first half of 2023
saw significant planned investment and use of capital to complete
the drilling of the Pensacola discovery.
Graham Swindells, CEO, commented:
"It is no exaggeration to say that the first half of 2023 has
been transformational for Deltic, following the discovery of
material quantities of hydrocarbons at Pensacola in the Southern
North Sea. With an estimated 100 million barrels of oil equivalent,
the majority of which is natural gas, this represents one of the
biggest UK discoveries in over a decade, and is particularly
significant considering the enormous energy security issues that
the country currently faces. I am very proud of the entire Deltic
team which has delivered this success, and I am confident that we
will continue to build upon this going forward."
C ha ir man's Statement
While a Chairman's statement rightly covers the broader outlook,
leaving the CEO and COO to focus on the results and plans, it
wouldn't make sense to open this statement without highlighting the
recent success of our well at Pensacola in the North Sea off the
coast of Teesside.
This prospect was acquired 100% by Deltic in an exploration
licence round. Following the thorough technical assessment which we
consider a hallmark of our operations, we were able to demonstrate
the potential to Shell and bring them on-board to work with us as
an experienced operator. We drilled the well together with a common
understanding that it had a roughly 50/50 chance of success. Not
only did it discover hydrocarbons, but subsequent evaluation of
data from the well by ourselves and the operator show it to be at
the high end of our expectations and approximately twice the
volumes of recoverable resource of our 'most likely' case prior to
drilling.
Doing this and doing it again and again is, quite simply, our
business model. I'll leave it to Graham and Andrew to go into
detail on this and our wider portfolio of exploration
opportunities.
Many have commented upon some tough external factors in recent
months and years, but we remain focused on the fundamental aspects
which support our business model.
Our portfolio is in the UK North Sea where we have a lot of
experience in a small team, primarily on gas in the Southern North
Sea ("SNS").
Over the years we have built a conveyor belt which begins with
high quality, low cost technical screening of available licences;
acquiring attractive licences; working acquired licences to the
level that attracts an operator with the technical, commercial and
financial resources to take a Joint Venture ("JV") through
exploration and to migrate theoretical in-place volumes to
discovered recoverable resources which can be developed.
We now have assets at all stages along this conveyor belt; a
portfolio of opportunities which are moving through the process
from a successful Pensacola discovery, far along the conveyor belt,
to Selene drilling plans, through to opportunities that are under
assessment, and back to licences expected to be added via the
current licensing round.
Alongside this, on the demand side, we have a society highly
dependent upon these resources, spending more on the import of
these resources than on national defence or education, based on the
Government's own figures for 2022. Imports are bad for jobs, bad
for Treasury receipts, bad for energy security and bad for
emissions compared with the domestic supply within our
portfolio.
With an election looming, once again our sector is a political
football, but we should have confidence that the demand is there
and we have the supply. The external environment may seem hostile
at times, but the political environment isn't picking on Deltic
specifically. With or without future licensing, the Deltic
portfolio remains robust.
Mark Lappin
Chairman
21 August 2023
CEO Statement
The first half of 2023 has been transformational for Deltic,
having drilled our first exploration well at Pensacola and
resulting in a major discovery. At the same time, the Company has
continued to progress its other key licence with Shell over the
Selene gas prospect while also maintaining the potential to further
enhance the Company's portfolio of assets through the current UK
licensing round.
Having commenced drilling towards the end of last year, we were
delighted to announce details of a very significant discovery of
gas at Pensacola in February which was very much in line with
pre-drill estimates. The well also discovered relatively light oil,
although at that point it was too early to provide a meaningful
indication of the scale of the oil opportunity.
Following the discovery, the JV has carried out the necessary
post-well analysis which has allowed us to quantify the potential
volume of the oil and associated gas, and we were delighted to
report in July that the contribution of the oil and associated gas
has led to a near doubling in our original expectations of P50
Estimated Ultimate Recovery from approximately 50 mmboe to 99
mmboe.
The positive results of the post-well analysis mean that
Pensacola is now at the upper end of our expectations. At current
estimated volumes, Pensacola is the largest discovery in the SNS in
a decade and arguably one of the most significant discoveries in
the North Sea in many years, particularly bearing in mind
Pensacola's play opening potential.
The JV will now move forward its appraisal and development plans
while assessing development concepts and is working towards an
appraisal well being drilled in Q4 2024.
This well has been a fantastic result for Deltic. This first
discovery reinforces the quality of our technical team and the
Deltic model of taking licences from award through to successful
drilling. Critically for Deltic, this well moves Pensacola from an
exploration opportunity to being a highly valuable appraisal and
development asset and the Company is now undertaking a process to
seek to farm down an element of its interest in Pensacola while
retaining exposure to its successful development and ensuing cash
flow.
We look forward to working with our partners, Shell and ONE-Dyas
to continue moving this exciting asset through the appraisal phase
and onward towards development.
Having achieved success at our first well at Pensacola, we are
increasingly excited about the prospect of drilling our next
exploration well at Selene, again with Shell as our JV partner.
Selene is another similarly-sized prospect with gross P50
Prospective Resources of 318 BCF, in excess of 50 mmboe. Unlike the
play-opening Pensacola discovery, Selene is an established play,
with a high (70%) geological chance of success and in close
proximity to existing infrastructure.
The planning process for Selene is already well underway with
the focus on detailed well design, planning, rig procurement and
other key preparations to support drilling operations. Long lead
items are in the process of being ordered and the geophysical site
survey over the proposed well location has already commenced. We
also anticipate the rig contract for Selene to be put in place in
the coming months which will represent another significant
milestone as we move further down the runway towards the drilling
of this high impact prospect. Depending on the exact timing of the
Pensacola appraisal well, Selene and Pensacola may also have the
added benefit of forming part of the same drilling programme.
Having found gas and oil at our first well at Pensacola, we are
excited about drilling this prospect and having the potential to
add another discovery to Deltic's asset base. Accordingly, we look
forward to providing regular updates as we progress through the
planning phase towards the commencement of operations.
Having only brought Capricorn Energy PLC ("Capricorn") into our
five contiguous licences in an underexplored area of the SNS in
2021, changes in ownership, management and strategy have prevented
Capricorn from being able to continue to invest in assets outside
of Egypt, resulting in their withdrawal from these licences.
Despite this, as a result of promising technical work already
undertaken, Deltic has decided to focus on the two most prospective
licences in this acreage, being P2567 (Cadence) and P2428
(Cupertino) and retain 100% equity in each of these licences. An
extensive work programme has been progressed by Capricorn over
these licences which has identified multiple prospects and leads in
the Carboniferous, with a total estimated P50
gas-initially-in-place of more than 2.6 TCF.
As the current phase of licences P2567 and P2428 ends on 30
November 2023 and 31 March 2024 respectively, Deltic is applying to
the North Sea Transition Authority ("NSTA") to seek an extension to
both of the licences to allow time to attract another partner with
the ultimate aim of drilling one or more of these prospects.
This year has also presented Deltic with the opportunity to
further enhance its portfolio of licences. Applications over
various blocks and licences were made in the UK's 33(rd) Licensing
Round in January. The Company had its interviews with the NSTA in
June and awards are expected to be made before the end of Q3
2023.
Over the first half of the year our sector has, as ever, been
impacted by certain challenges. Gas prices have inevitably
continued to soften from the record levels seen in the course of
2022, but nonetheless remain above long term historic averages. In
any event, our projects do not rely on elevated gas prices and
remain economically robust at very low gas prices.
The Windfall Tax and political risk have also been factors which
have created uncertainty, albeit the investment allowance
associated with the Energy Profits Levy continues to make the
economics associated with investing in Deltic projects very
attractive. Despite these factors, Deltic has continued to deliver
on its business plan of taking licences from award through to
drilling and now has its all-important first major discovery. The
success at Pensacola also now means that we expect to be drilling
wells at both Selene and Pensacola next year such that Deltic and
our shareholders have much to look forward to as we progress
towards these key catalysts.
I would like to take this opportunity to thank the entire Deltic
team for their continued hard work which has been instrumental in a
successful first half of the year.
Graham Swindells
Chief Executive Officer
21 August 2023
Ope r ati ng Revi ew
Southern North Sea Assets
P2252 Pensacola (30% Deltic, 65% Shell, 5% ONE-Dyas) & P2558
Pensacola North (30% Deltic, Shell 70%)
Following the announcement of the successful flow of
hydrocarbons to surface from the Shell-operated well 41/5a-2 on the
Pensacola structure on 8 February 2023, work has focused on the
completion of the post-well laboratory analysis and integration of
the various geotechnical datasets into the geological and reservoir
models for the Pensacola discovery.
This work included the updating of the intra-salt seismic
interpretation, velocity model and depth conversion using the
recently acquired well base data as well as updating various
reservoir parameters including porosity and permeability based on
the revised geological model and updated analogue analysis. This
work predicts the presence of thicker, higher quality oolitic shoal
reservoir over the reef top area and when combined with the updated
depth conversion pushing the southern part of Pensacola slightly
deeper, results in the northern part of Pensacola being filled with
gas while the southern part is anticipated to be filled with
oil.
Based on the outcome of this work, Deltic updated its volumetric
assessment of the Pensacola discovery and now estimates that
Pensacola contains P50 Estimated Ultimate Recovery of 99 mmboe as
reported on 12 July 2023. The majority of this increase has
resulted from the incorporation of the oil resources into the model
and these liquids now comprise approximately 30% of the total
combined recoverable resources.
PENSACOLA DISCOVERY - EUR (gross, Deltic WI: 30%)
Hydrocarbon Units P90 P50 P10
Type
Gas BCF 198 320 499
Oil MMBO 11 30 67
Associated
gas BCF 24 95 272
COMBINED
TOTAL MMBOE* 48 99 196
* Gas is converted at 5.98 BCF to 1 MMBOE
Licence P2252 which contains the Pensacola discovery is operated
by Shell
Deltic continues to work closely with Shell and our JV partners
to develop the appraisal programme for the Pensacola discovery.
Subject to JV and other regulatory approvals, the drilling of an
appraisal well on Pensacola remains targeted for Q4 2024. In
parallel, the JV will undertake various studies to define optimal
development plans for the Pensacola discovery.
In line with the Company's stated strategy, Deltic has also
commenced a formal process to pursue the value crystallisation
options that exist for the Pensacola discovery which may involve
monetisation and/or farm down of an element of its equity interest
in it.
P2437 - Selene (50% Deltic, 50% Shell)
Following the progression of Licence P2437 into Phase C on 31
October 2022, and with Shell assuming the role of Licence Operator,
the preparatory work to support drilling operations at Selene has
continued at pace during the period. While rig schedules for 2024
are yet to be finalised, the JV is still working towards a spud
date during Q3 2024.
The geophysical site survey is already underway and the
geotechnical survey is planned for later this year. Following
completion of the well design process, critical long lead items
including casing have been identified with procurement processes
underway. It is expected that final well costings will not be
available until after a suitable rig has been contracted, however
Deltic is planning for gross well costs in the order of
US$30-40m.
Given the increase in drilling costs since the farm-out to Shell
in 2019, Deltic is also planning to reduce its working interest
position in Licence P2437, and therefore capital exposure to the
Selene well, and has launched a farm-out process to attract
interest from industry in the Selene opportunity.
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 & P2567 Cadence (Deltic 40%, Capricorn
60%)
Following Capricorn's well publicised change in corporate
strategy away from exploration to focus on building an Egyptian
production-focused company, Capricorn and Deltic have agreed to end
the JV over five licences P2428, P2567, P2560, P2561 and P2562. As
part of ongoing rationalisation and high grading of its portfolio,
Deltic has decided to withdraw from three of the Licences (P2560,
P2561 and P2562) and therefore the JV partnership will move to
relinquish these three licences as soon as practicable.
Since the farm-out to Capricorn was completed in November 2021,
Deltic has been fully carried through an extensive subsurface work
programme which has included the acquisition of nearly 700km(2) of
new 3D seismic and reprocessing of a number of legacy 3D data sets,
which has confirmed the significant exploration potential within
licences P2428 and P2567. The Capricorn-led work has matured 17
leads and prospects with a combined P50 GIIP of more than c. 2.6
TCF within the early Carboniferous play, which has been proven at
Pegasus and Andromeda located immediately to the south of the
licences.
Deltic recognises the significant prospectivity identified and
intends to continue with these two licences at the 100% level. The
current licence terms of P2567 and P2428 are due to expire on 30
November 2023 and 31 March 2024 respectively and, once Deltic has
been re-appointed as Administrator of these licences, Deltic
intends to request an extension of the current licence terms from
the NSTA. If the extension requests are approved by the NSTA,
Deltic would continue to assure and high grade the prospects
identified by Capricorn while seeking to attract another partner or
partners to assist with future drilling activity across the
licences.
The firm work programme has been completed in relation to both
licences and Deltic does not anticipate further capital expenditure
in relation to either licence unless, and until, a suitable partner
to progress drilling activity on theses licences opportunity can be
secured.
Central North Sea Assets
P2542 - Syros (Deltic 100%)
The Syros prospect is located immediately to the west of the
Montrose-Arbroath production platforms in the Central North Sea 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 estimated to
contain P50 Prospective Resources of 24.5 mmboe (P90 to P10 Range =
13.7 to 39.7 mmboe), with a geological chance of success of
58%.
While efforts are ongoing to find a partner to drill the Syros
opportunity, Deltic has experienced a significant drop-off in
interest in the farm-out process for this particular asset
following the UK Government's introduction of further windfall
taxes on the industry in November 2022.
The firm work programme has been completed in relation to Syros
and there has been no material expenditure on the P2542 licence
during the reporting period. Phase A of the current licence runs
until 30 November 2024 and Deltic does not anticipate further
capital expenditure in relation to this licence unless a suitable
partner to progress this attractive opportunity can be secured.
33rd Offshore Licensing Round
The NSTA announced the launch of the 33rd 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.
Deltic attended licensing interviews with the NSTA on 14 June
2023. Following completion of that process we expect that the NSTA
will begin to award new licences resulting from the 33rd Licensing
Round before the end of Q3 2023.
Andrew Nunn
Chief Operating Officer
21 August 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.
Fina n ci al Rev i ew
Overview
Following, Deltic's equity fundraise of GBP16.0 million (gross)
in September 2022 ("the Fundraise"), the Company started the year
with a cash balance of GBP20.4 million and ended the period to 30
June 2023 with a cash balance of GBP9.1 million. The first half of
2023 saw significant planned investment and use of capital to
complete the drilling of the Pensacola discovery. Over the period,
the Company invested GBP10.0 million (2022: GBP2.1 million) on
completing Pensacola drilling operations.
Income Statement
The C o m pany incurred a l oss for the peri od of GBP1.2
million co m pared with a l oss of GBP 1.0 million f or the six
months to 30 June 2022. Administrative expenses of GBP1.4 million (
1H 2022 : GBP1.0 million) were incurred during the period. Finance
income of GBP0.2 million ( 1H 2022 : nil) was earned on short term
high interest-bearing deposits on surplus funds following the
Fundraise. Corporation tax is payable on finance income earned, and
accordingly the Company has recognised an income tax expense in the
period of less than GBP0.1 million (1H 2022: nil).
Balance Sheet
The Company continues to retain a strong balance sheet with
total Capital and Reserves at 30 June 2023 of GBP23.2 million
(2022: GBP24.2 million). On 25 May 2023, the Company undertook a
Share Consolidation (the 'Consolidation'). The Consolidation
consisted of a consolidation of the existing 1,861,932,000 Ordinary
Shares of 0.5 pence each in the capital of the Company ("Existing
Ordinary Shares"), such that every 20 Existing Ordinary Shares were
consolidated into one new ordinary share of 10p each ("New Ordinary
Shares"). Following the Consolidation, the Company has a single
class of ordinary shares of 10p each in issue, being 93,096,600 New
Ordinary Shares.
The value of exploration assets increased by GBP6.5 million to
GBP16.3 million (2022: GBP9.8 million), mainly reflecting the
completion of Pensacola drilling operations in February 2023. The
value of Pensacola work done in the period to 30 June 2023 was
GBP6.3 million. The total net cost to Deltic of drilling the
Pensacola well is GBP12.8 million.
The Company spent GBP0.2 million further progressing the
Company's exploration licence portfolio, in particular the Syros
and Selene licences. The Selene pre-drill expenditure will largely
be incurred in H2 2023. All costs associated with the five licences
held jointly with Capricorn Energy PLC were fully paid by Capricorn
Energy PLC.
Property, plant and equipment of GBP0.2 million (2022: GBP0.3
million) includes a right of use asset relating to the office lease
with a net book value of GBP0.1 million (2022: GBP0.2 million). The
Property, Plant and Equipment reduction reflects the depreciation
charge for the year on the office lease, fixtures and fittings and
computer equipment.
The Company's cash position at 30 June 2023 was GBP9.1 million
(2022: GBP20.4 million), with the year-on-year decrease arising
from the investment and use of cash to drill the Pensacola
discovery. As at 30 June 2023, Deltic is still to pay Shell, as
operator of the Pensacola licence, approximately GBP2 million in H2
2023.
Total current liabilities, which include short-term creditors,
accruals, provisions and lease liabilities decreased by GBP3.9
million to GBP2.5 million (2022: GBP6.4 million). Trade creditors
of GBP1.1 million (2022: GBP3.3 million) are due to Shell for
payments associated with Pensacola drilling operations. Other
payables and accruals of GBP1.1 million (2022: GBP1.3 million)
mainly represent the Pensacola discovery drilling value of work
done but yet to be billed by Shell. At 31 December 2022, a
provision of GBP1.3 million was recognised for the costs incurred
in early 2023 for the planned and completed plugging and
abandonment of the Pensacola exploration well.
The Company continues to operate with no debt.
Cash Flow
As at 30 June 2023, the Company held cash and cash equivalents
totalling GBP9.1 million (2022: GBP20.4 million). The Company had a
net cash outflow for the period of GBP11.3 million (1H 2022: GBP2.5
million).
A net cash outflow from operating activities of GBP1.5 million
(1H 2022: GBP1.3 million) was incurred for general and
administrative costs.
Net cash of GBP9.8 million was used in investing activities (1H
2022: GBP1.2 million). GBP10.1 million (1H 2022: GBP1.3 million)
was invested on exploration and evaluation assets. The total net
cost of drilling the Pensacola discovery well is GBP12.8 million of
which GBP10.0 million cash (1H 2022: GBP1.0 million) was paid to
Shell during the period. A further GBP0.1 million (1H 2022: GBP0.3
million) was spent developing the other licences in the exploration
portfolio. Bank interest of GBP0.3 million (1H 2022: nil) was
earned on short term high interest-bearing deposits on surplus
funds following the Fundraise.
Sarah McLeod
Chief Financial Officer
21 August 2023
UNAUDITED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE
LOSS
For the period ended 30 June 2023
Note Period Period Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
Unaudited Unaudited Audited
GBP GBP GBP
Write down on relinquished
intangible assets - (48,188) (347,610)
Other administrative expenses (1,372,918) (980,673) (2,745,350)
--------------------------------- ----- ------------ ------------ --------------
Total administrative expenses (1,372,918) (1,028,861) (3,092,960)
Operating loss (1,372,918) (1,028,861) (3,092,960)
Finance income 239,309 11,662 129,301
Finance costs (9,366) (14,081) (25,745)
Loss before tax (1,142,975) (1,031,280) (2,989,404)
Income tax expense (77,060) - -
------------ ------------ --------------
Loss and comprehensive loss
for the period attributable
to equity holders of the
Company (1,220,035) (1,031,280) (2,989,404)
Loss per share from continuing
operations expressed in pence
per share:
Basic and diluted 3 (1.31)p (1.47)p* (3.94)p*
* Following the Share Consolidation on 25 May 2023, loss per
share amounts in the interim financial statements and notes thereto
have been retroactively adjusted for all periods presented to
illustrate the effect of the Share Consolidation.
UNAUDITED BALANCE SHEET
As at 30 June 2023
Note 30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP GBP GBP
NON-CURRENT ASSETS
Intangible Assets 4 16,303,338 3,129,688 9,769,477
Property, Plant and Equipment 222,450 328,993 279,545
Other receivables 37,422 37,421 37,422
------------ ------------ ------------
16,563,210 3,496,102 10,086,444
CURRENT ASSETS
Trade and other receivables 145,019 72,578 181,102
Cash and cash equivalents 9,075,911 7,627,843 20,409,692
------------ ------------ ------------
9,220,930 7,700,421 20,590,794
TOTAL ASSETS 25,784,140 11,196,523 30,677,238
CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY HOLDERS OF THE COMPANY
Share capital 5 9,309,660 7,029,824 9,309,660
Share premium 33,145,477 20,296,030 33,150,786
Share-based payment reserve 1,789,860 1,287,041 1,535,202
Accumulated retained deficit (21,022,988) (17,844,829) (19,802,953)
------------ ------------ ------------
TOTAL EQUITY 23,222,009 10,768,066 24,192,695
CURRENT LIABILITIES
Trade and other payables 2,310,088 162,516 4,988,307
Current tax payable 77,060 - -
Lease liability 105,806 90,588 90,132
Provisions - - 1,281,000
------------ ------------ ------------
2,492,954 253,104 6,359,439
NON-CURRENT LIABILITIES
Lease liability 69,177 175,353 125,104
------------ ------------ ------------
TOTAL LIABILITIES 2,562,131 428,457 6,484,543
TOTAL EQUITY AND LIABILITIES 25,784,140 11,196,523 30,677,238
UNAUDITED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2023
Share-based Accumulated
Share Share payment Retained Total
capital premium reserve deficit equity
GBP GBP GBP GBP GBP
Balance at 1 January 2023 9,309,660 33,150,786 1,535,202 (19,802,953) 24,192,695
Comprehensive income for
the year
Loss for the period - - - (1,220,035) (1,220,035)
------------------------------------ ---------- ----------- ------------ ------------- ------------
Total comprehensive loss
for the period - - - (1,220,035) (1,220,035)
Contributions by and distributions
to owners
Share consolidation / Issue
of shares - 22 - - 22
Costs of share consolidation
/ issue - (5,331) - - (5,331)
Share-based payment - - 254,658 - 254,658
Total contributions by
and distributions to owners - (5,309) 254,658 - 249,349
---------- -----------
Balance at 30 June 2023
(Unaudited) 9,309,660 33,145,477 1,789,860 (21,022,988) 23,222,009
------------------------------------ ---------- ----------- ------------ ------------- ------------
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 period - - - (1,031,280) (1,031,280)
------------------------------------ ---------- ----------- ------------ ------------- ------------
Total comprehensive loss
for the period - - - (1,031,280) (1,031,280)
Contributions by and distributions
to owners
Share-based payment - - 136,341 - 136,341
Total contributions by
and distributions to owners - - 136,341 - 136,341
---------- -----------
Balance at 30 June 2022
(Unaudited) 7,029,824 20,296,030 1,287,041 (17,844,829) 10,768,066
------------------------------------ ---------- ----------- ------------ ------------- ------------
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 (Audited) 9,309,660 33,150,786 1,535,202 (19,802,953) 24,192,695
UNAUDITED STATEMENT OF CASH FLOWS
For the period ended 30 June 2023
Period ended 30 June 2023 Period ended 30 June 2022 Year ended 31 December
2022
Unaudited Unaudited Audited
GBP GBP GBP
Cash flows from operating
activities
Loss before tax (1,142,975) (1,031,280) (2,989,404)
Adjustments for:
Finance income (239,309) (11,662) (129,301)
Finance costs 9,366 14,081 25,745
Depreciation 57,615 57,276 114,698
Loss on disposal of
property, plant and
equipment - (279) -
Write down on relinquished
intangible assets (441) 48,188 347,610
Share-based payment 254,658 136,341 384,502
-------------------------- -------------------------- --------------------------
(1,061,086) (787,335) (2,246,150)
Decrease in trade and other
receivables 10,402 64,467 81,991
Decrease in trade and other
payables (427,968) (432,495) (18,228)
-------------------------- -------------------------- --------------------------
Net cash used in operating
activities (1,478,652) (1,155,363) (2,182,387)
Cash flows from investing
activities
Purchase of intangible
assets (10,102,094) (1,257,542) (2,557,582)
Purchase of property, plant
and equipment (520) (749) (9,003)
Interest received 302,412 11,662 56,606
Net cash used in investing
activities (9,800,202) (1,246,629) (2,509,979)
Cash flows from financing
activities
Proceeds from share
consolidation / issue 22 - 15,958,850
Expense of share
consolidation / issue (5,331) - (824,258)
Payment of principal portion
of lease liabilities (40,252) (48,289) (98,994)
Interest on lease
liabilities (9,366) (14,081) (25,745)
-------------------------- -------------------------- --------------------------
Net cash (outflow)/inflow
from financing activities (54,927) (62,370) 15,009,853
(Decrease) / increase in
cash and cash equivalents (11,333,781) (2,464,362) 10,317,487
Cash and cash equivalents at
beginning of period / year 20,409,692 10,092,205 10,092,205
-------------------------- -------------------------- --------------------------
Cash and cash equivalents at
end of period / year 9,075,911 7,627,843 20,409,692
NOTES TO THE FINANCIAL INFORMATION
For the period ended 30 June 2023
1. GENERAL
The interim financial information for the period to 30 June 2023
is unaudited and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006.
2. ACCOUNTING POLICIES
The interim financial information in this report has been
prepared on the basis of the accounting policies set out in the
audited financial statements for the period ended 31 December 2022
together with new and amended standards applicable to periods
commencing 1 January 2023, which complied with UK adopted
International Accounting Standards in conformity with the
requirements of the Companies Act 2006, and with those parts of the
Companies Act 2006 applicable to companies reporting under UK
adopted International Financial Reporting Standards (IFRS).
UK adopted IFRS is subject to amendment and interpretation by
the International Accounting Standards Board ("IASB") and the IFRS
Interpretations Committee and there is an on-going process of
review and endorsement by the UK Endorsement Board since January
2021 (previously the European Commission).
The financial information has been prepared on the basis of IFRS
that the Directors expect to be applicable as at 31 December 2023,
with the exception of IAS 34 Interim Financial Reporting.
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 taken the decision to raise
funds in 2022 the Company is currently funded during the going
concern period with no debt. Based on the cash and cash equivalents
balance at 30 June 2023 and the Company's commitments in the going
concern period, the Directors are of the opinion that the Company
has adequate financial resources to fund the final working capital
commitments on the Pensacola exploration programme, Pensacola
appraisal pre-drilling costs and Selene pre-drilling costs, based
upon anticipated costs per the planned work schedule, and its
general 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 interim financial
statements.
The condensed financial information for the period ended 31
December 2022 set out in this interim report does not comprise the
Group's statutory accounts as defined in section 434 of the
Companies Act 2006.
The statutory accounts for the year ended 31 December 2022,
which were prepared under UK adopted International Accounting
Standards in conformity with the requirements of the Companies Act
2006, and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS, have been delivered to the
Registrar of Companies. The auditors reported on these accounts;
their report was unqualified and did not contain a statement under
section 498(2) or 498(3) of the Companies Act 2006.
3. 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 period.
Given the Company's reported loss for the period, share options
and warrants are not taken into account when determining the
weighted average number of ordinary shares in issue during the year
and therefore the basic and diluted loss per share are the
same.
Basic and diluted loss per share
Period ended 30 June 2023 Period ended 30 June 2022 Year ended 31 December
2022
Loss for the period (GBP) (1,220,035) (1,031,280) (2,989,404)
Weighted average number of
ordinary shares (number) 93,096,600 70,298,243 75,919,756
Loss per share from
continuing operations (1.31)p (1.47)p * (3.94)p *
=========================== =========================== ===========================
* Following the Share Consolidation on 25 May 2023, loss per
share amounts in the interim financial statements and notes thereto
have been retroactively adjusted for all periods presented to
illustrate the effect of the Share Consolidation.
4. INTANGIBLE ASSETS
Exploration Software
& evaluation licences Total
assets GBP GBP
GBP
Cost
At 1 January 2022 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
Additions 6,533,861 - 6,533,861
At 30 June 2023 16,303,338 39,257 16,342,595
--------------------------------- ------------- --------- ----------
Amortisation and impairment
At 1 January 2022 - 39,257 39,257
Charge for the year - - -
At 31 December 2022 - 39,257 39,257
Charge for the period - - -
At 30 June 2023 - 39,257 39,257
--------------------------------- ------------- --------- ----------
Net Book Value
At 30 June 2023 16,303,338 - 16,303,338
--------------------------------- ------------- --------- ----------
At 31 December 2022 9,769,477 - 9,769,477
--------------------------------- ------------- --------- ----------
At 1 January 2022 2,203,118 - 2,203,118
--------------------------------- ------------- --------- ----------
The net book value of exploration and evaluation assets at 30
June 2023 and 31 December 2022 relates solely to the Company's
North Sea Licences.
Additions in H1 2023 of GBP6.5 million (2022: GBP7.9 million)
mainly reflect the completion of Pensacola drilling operations in
February 2023. The value of Pensacola work done in the period to 30
June 2023 was GBP6.3 million. The total net cost to Deltic of
drilling the Pensacola well is GBP12.8 million.
5. SHARE CAPITAL
a) Share Capital
The Company has one class of ordinary share which carries no
right to fixed income nor has any preferences or restrictions
attached.
Issued and fully paid:
30 June 30 June 31 December
2023 2022 2022
GBP GBP GBP
93,096,600 ordinary shares
of 10p each (30 June 2022:
1,405,964,855 ordinary shares
of 0.5p each) 9,309,660 7,029,824 9,309,660
On 30 September 2022, the Company announced that it had raised
approximately GBP16 million, before expenses, through the aggregate
placing and subscription and open offer of 455,967,137 new ordinary
shares at 3.5 pence per share. The shares were allotted and
admitted to trading on AIM on 3 October 2022.
On 25 May 2023, the Company undertook a Share Consolidation. The
Share Consolidation consisted of a consolidation of the existing
ordinary shares of 0.5 pence each in the capital of the Company
("Existing Ordinary Shares"), such that every 20 Existing Ordinary
Shares were consolidated into one new ordinary share of 10p each
("New Ordinary Shares"). Following the Share Consolidation, the
Company has a single class of ordinary shares of 10p each in issue,
being the New Ordinary Shares.
6. SUBSEQUENT EVENTS
Following Capricorn Energy's publicly stated decision to exit
from its assets outside of Egypt, the Company has been formally
notified of Capricorn Energy's intention to withdraw from the
licences that were farmed out to Capricorn Energy in 2021. As part
of ongoing rationalisation and high grading of its portfolio,
Deltic has also decided to withdraw from three of these licences
(P2560, P2561 and P2562) and therefore the partnership will move to
relinquish these three licences as soon as practicable.
With respect to Licences P2567 and P2428, Deltic recognises the
significant prospectivity highlighted by the technical work
programmes completed by Capricorn, on behalf of the JV, and intends
to continue with these two licences following the withdrawal of
Capricorn. Deltic has been fully carried by Capricorn, and
accordingly there is no impairment to be recognised.
7. COPIES OF INTERIM REPORT
Copies of the interim report are available to the public free of
charge from the Company at Deltic Energy Plc, First Floor, 150
Waterloo Road, London, SW1P 3JS during normal office hours,
Saturdays and Sundays excepted, for 14 days from today and will
shortly be available on the Company's website at
www.delticenergy.com .
I n v e st i ng Po l i cy
In addition to the development of the North Sea Oil & Gas
assets Deltic Energy Plc has acquired to date, the Company proposes
to continue to evaluate other potential oil & gas and mining
projects globally 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 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 per cent. 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.
Fo rw a rd l ooking statements
This interim rep ort c o ntains certain f orward-lo oking state
ments that are subject to the usual risk facto rs and uncertainties
ass ociated with the oil and gas ex plo ration and pro ducti on
business. Whilst the Direct ors believe the ex pectati on reflected
herein to be reaso n a ble in light of the info r mati on available
up to the ti me of their appro val of this report, the actual o
utcome may be materially different owing to fact ors either beyo nd
the Co m pan y 's control or otherwise within the C o m pan y's c o
ntrol b ut, f or ex a m ple, owing to a change of plan or strategy.
Accordingly, no reliance may be placed on t he fo rwar d-looking
state ments.
Gl o s sa ry of T e c hn ic al T e r ms
BCF: Billion Cubic Feet
Estimated Ultimate Recovery Estimated Ultimate Recovery
or EUR: is defined as those quantities
of petroleum which are estimated,
on a given date, to be potentially
recoverable from an accumulation,
plus those quantities already
produced therefrom
---------------------------------------
Gas Initially in Place or GIIP: The quantity of gas that is
estimated to exist originally
in naturally occurring accumulations
before any extraction or production
---------------------------------------
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.
---------------------------------------
MMBO: Million Barrels of Oil
---------------------------------------
MMBOE or million barrels of million barrels of oil equivalent.
oil equivalent: Gas is converted at 5.98 BCF
to 1 MMBOE
---------------------------------------
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
---------------------------------------
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.
---------------------------------------
PRMS: the June 2018 Society of Petroleum
Engineers ("SPE") Petroleum
Resources Management System
---------------------------------------
TCF: Trillion Cubic Feet
---------------------------------------
WI: Working Interest
---------------------------------------
Standard
Estimates of resources have been prepared in accordance with the
PRMS as the standard for classification and reporting.
**S**
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 Broker) Tel: +44 (0) 20 7710
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
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END
IR NKDBDBBKBPFB
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August 22, 2023 02:00 ET (06:00 GMT)
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