TIDMEOG
RNS Number : 3626U
Europa Oil & Gas (Holdings) PLC
14 October 2010
Europa Oil and Gas (Holdings) plc
Unaudited preliminary final information for the year ended 31 July 2010
Highlights
Operational highlights
· Drilled Voitinel Gas Discovery - up to 415bcf gas-in-place on-block
(Europa interest 28.75%)
· Seismic 3D dataset being used to define high impact Berenx well - up to
1.5TCF in-place (Europa interest 100%)
· Production site and reserves upgrade at West Firsby
· Drilled Hykeham exploration well
· Acquired 200km of new 2D seismic data in Romania in thrust belt oil play
· Crude oil sales of 64,968 barrels, a decrease of 16% on 2009
Financial performance
· Revenue of GBP3.1 million (2009: GBP2.9 million)
· Two fundraisings raised GBP2,636,000 net of broker commission.
· Relinquished licence in Egypt and took write-off cost of GBP738,000
· Other exploration write-downs totaled GBP270,000
· Impairment charge for Crosby Warren wellsite GBP1,012,000
For further information, please contact:
+---------------------------------+---------------------------------+
| Europa Oil & Gas | |
+---------------------------------+---------------------------------+
| Philip Greenhalgh / Paul | Tel: +44 1235 553 266 |
| Barrett | |
+---------------------------------+---------------------------------+
| | |
+---------------------------------+---------------------------------+
| finnCap | |
+---------------------------------+---------------------------------+
| Sarah Wharry, Corporate Finance | Tel: +44 207 600 1658 |
| | |
+---------------------------------+---------------------------------+
| Henrik Persson, Corporate | Tel: +44 207 600 1658 |
| Finance | |
+---------------------------------+---------------------------------+
| Joanna Weaving, Corporate | Tel: +44 207 600 1658 |
| Broking | |
+---------------------------------+---------------------------------+
Chairman's statement
Dear Shareholders,
In the year to 31st July 2010, the Company participated in two exploration
wells. A notable success was our participation in the Voitinel discovery in
Romania, where dry gas flowed at commercial rates. This discovery opens up an
exciting gas play in the Carpathians where two wells on neighbouring licences
achieved good sustained flow rates. The detail of this discovery is contained in
the Operational Review with the operator estimating a gas in place figure of up
to 415 billion cubic feet (Europa interest 28.75%) leading to appraisal drilling
in 2011. In addition, 200km of new 2D seismic has been acquired in the
promising Romanian thrust belt oil play.
Work continues on the very prospective Berenx area in France (Europa interest
100%) which has discovered gas accumulations. The Company acquired an existing
3D seismic volume which is being incorporated into our modeling in order to
finalise resource numbers prior to securing a drilling partner. The structure,
which has a 500m gas column encountered in a 1969 well, has the potential for
reserves in excess of one trillion cubic feet.
Turning to the UK, the year saw average daily production of 178 barrels, a
decline of 16% on the previous period. Lost production, due to unscheduled well
shut-ins at the producing sites, was the main reason for the decline. This is
being addressed together with a major upgrade of surface facilities at West
Firsby. Workovers on several wells have been undertaken and present daily
production is averaging around 200 barrels. The Company's producing assets
provided a revenue stream of GBP3.1 million in the year.
The exploration well at Hykeham in Lincolnshire is currently suspended, having
encountered live oil but not having produced commercial quantities. It is
thought to have suffered formation damage and the most likely forward plan is to
plug and abandon the well whilst further work is undertaken on the remainder of
the PEDL150 licence area.
In contrast, a thorough technical review of the West Firsby field has led to an
upgrade in 2P reserves of one million barrels, a 250% increase. The drilling of
three development wells on the field would lead to a significant increase in
production if successful. The first of these wells is planned to be drilled in
late 2010 and enables the Company to maintain its production target of 500
barrels of oil per day.
There has been a significant increase in activity in Continental Europe by the
oil majors with regard to unconventional resources. Much of this activity has
focused on gas shales and extensive prospective acreage has now been licenced.
It is clear that the Early Namurian black shales are becoming an interesting
focus for UK shale gas potential. The Humber basin, where Europa has a large
acreage position, is an area that could hold considerable potential. During 2011
the Company will examine its commercial options in relation to this potential.
The Company acquired 2 licences to investigate Underground Coal Gasification
along the UK East coast near to our conventional assets. This exciting
technology has the potential to release up to 80% of the energy contained in the
coal and can be made virtually carbon neutral. Again, the Company will be
examining its commercial options during 2011.
Operating performance for the year has been impacted by the GBP1 million
impairment write down and GBP1 million exploration write-off. This arose from
the decision to write down the carrying value of the Crosby Warren field and
write-off exploration costs incurred primarily in Egypt. At Crosby Warren, the
relatively low incremental production that the CW2 well has produced since its
drilling in 2007 has been a disappointment. Despite several attempts to
stimulate the well it has continued to underperform and for this reason the
Board decided to take the write down. The venture into Egypt was a higher
risk/reward play than our other investments. Though we saw some potential,
ultimately lack of time, resources and influence within the Egyptian General
Petroleum Corporation (EGPC) meant that Europa was unwilling to enter the second
phase of the concession and we relinquished the licence. I believe that the
exiting of Egypt is a positive step for Europa as it ensures a better focus on
the assets in UK, France and Romania.
The lower than expected production and cost of the well workovers has strained
our cash resources and puts a degree of uncertainty over our ability to fund the
2011 work programme. It is anticipated that this will lead to an "Emphasis of
Matter - going concern" comment in the auditor's report of the 2010 Annual
Report and Accounts. Based on latest cash projections and efforts which Europa
is making to raise additional funds, the Directors consider that the Group will
remain a going concern for the foreseeable future.
In April, Sir Michael Oliver retired as Chairman. Dr Erika Syba, co-founder of
the Company, resigned as Operations Director with effect from the end of August
2010. I thank both of them for their contributions to the Company and wish them
well in their future endeavours.
Bill Adamson
Chairman
Operational review
Europa's strategy is to develop a wide range of assets - from production through
to high impact exploration, within the EU. Current core areas are the UK,
France and Romania. Europa operates the majority of its joint ventures from its
headquarters near Oxford, UK. Having acquired three seismic surveys and drilled
as operator some 6 wells to date, the Company has an excellent safety and
environmental record.
Europa holds a varied asset portfolio across three EU jurisdictions and the
Western Sahara. These range from oil producing assets, through exciting
discoveries at the appraisal stage to exploration projects in established oil
and gas plays:
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
|Country | Area | Licence | Field/ | Operator | Equity | Status |
| | | | Prospect | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
| | | | | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
| UK | East | DL003 | West | Europa | 100% | Production |
| | Midlands | | Firsby | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | DL001 | Crosby | Europa | 100% | Production |
| | | | Warren | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | PL199/215 | Whisby-4 | BPEL | 65% | Production |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | PEDL150 | W. | Europa | 75% | Exploration |
| | | | Whisby | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | PEDL180 | Wressle | Europa | 50% | Exploration |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | PEDL222 | | Valhalla | 50% | Exploration |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | PEDL181 | Caister | Europa | 50% | Exploration |
+ +-------------+------------+---------------+--------------+--------------+-----------------------+
| | Weald | PEDL143 | Holmwood | Europa | 40% | Exploration |
+ +-------------+------------+---------------+--------------+--------------+-----------------------+
| | North | Holderness | Offshore | Europa | 90% | Exploration |
| | Sea | | UCG | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | Humber | Offshore | Europa | 90% | Exploration |
| | | South | UCG | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
| | | | | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
| France | Aquitaine | Béarn | Berenx | Europa | 100% | Exploration/Appraisal |
| | | des | | | | |
| | | Gaves | | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | Tarbes | Osmets/Jacque | Europa | 100% | Exploration/Appraisal |
| | | V.d'Adour | | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
| | | | | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
|Romania |Carpathians | EIII-1 | Voitinel | Aurelian | 28.75% | Exploration/Appraisal |
| | | Brodina | | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | EIII-3 | | Aurelian | 17.50% | Exploration |
| | | Cuejdiu | | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | EIII-4 | | Aurelian | 19% | Exploration |
| | | Bacau | | | | |
+ + +------------+---------------+--------------+--------------+-----------------------+
| | | EPI-3 | Barchiz | MND | 20% | Exploration |
| | | Brates | | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
| | | | | | | |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
|Western | Tindouf | Bir | | Europa | 100% | Exploration |
| Sahara | | Lehlou | | | | |
+ +-------------+------------+---------------+--------------+--------------+-----------------------+
| | Aaiuun | Hagounia | | Europa | 100% | Exploration |
+---------+-------------+------------+---------------+--------------+--------------+-----------------------+
UK
The core of Europa's portfolio in the UK is in the East Midlands, a basin with a
long history of successful oil exploration and production with potential for
additional reserves and vast unconventional resources.
Production - West Firsby and Crosby Warren (100%), Whisby-4 (65%)
The Company holds interests in three producing oilfields in the East Midlands.
The main operating base is at the West Firsby Field, 15km north of Lincoln. The
production is tankered by road to the refinery at Immingham in North East
Lincolnshire. Current 2P reserves are 1.4 mmbo, having recently been increased
due to the identification of additional Zone 1 reserves at West Firsby. This
resulted from a thorough review of the seismic and well data to calculate
revised oil-in-place figures and a detailed review of production history to
conclude that significant oil remains in the upper Zone 1 reservoir.
West Firsby produces from two wells on a jet pump system at combined rates of up
to 105bopd. A programme of site improvements and production optimisation is
nearing completion and a new Zone 1 production well is expected to be drilled in
late 2010.
At Crosby Warren, in the grounds of the Scunthorpe steelworks, the two
production wells operate on traditional beam pumps or nodding donkeys, producing
up to 40bopd. All producing and exploration assets are tested annually for
possible impairment. In the case of Crosby Warren, the CW2 well, drilled in 2007
has continued to produce relatively small quantities of oil. This led to an
overall carrying value for the site which was not supported by the expected
future cash flows from existing oil production. As a result, the Board took the
decision to write down the book value of the Crosby Warren site from
GBP2,694,000 to GBP1,682,000, an impairment charge in the Statement of
Comprehensive Income of GBP1,012,000.
At Whisby, just to the west of Lincoln, a well drilled by Europa in early 2003
remains on steady production, currently producing around 88bopd gross (55 bopd
net to Europa) on beam pump.
Exploration - NE Lincolnshire (PEDL 180/181 - 50%), Lincoln area (PEDL 150 -
75%), Dorking area (PEDL 143 - 40%)
Europa operates a number of exploration licences in the UK, some with
'ready-to-drill' prospects.
In NE Lincolnshire, PEDL180 and PEDL181 licences contain two prospective areas:
the Wressle Prospect and the Caister Horst. The seismic database over these two
areas, comprising a mixed 2D/3D vintage dataset, has been reprocessed and work
is ongoing to develop drilling locations. Prospect size is in the region of 5
to 8 mmbo recoverable.
Within the PEDL150 concession, the Hykeham well was drilled in the year. Despite
encountering oil pay, the well has failed to flow oil to date, thought to be
principally as a result of formation damage incurred during drilling. Though the
likely forward plan is to plug and abandon the well, the investment has not been
written off as prospectivity within the rest of the block, which includes the
West Whisby feature, is believed to be good. Lessons learnt at Hykeham will be
applied in the drilling of other prospects in the same reservoir interval.
The PEDL222 licence (50%), situated to the north of the Whisby Field, does not
contain any prospects large enough to warrant drilling. The modest investment
to date has been written off and for the remainder of the licence term Europa
will assume operatorship to assess resource potential.
In PEDL 143 in the Weald Basin, Europa and its partners continue to work to
securing planning permission to drill the Holmwood-1 exploration well, south of
Dorking. It is hoped permission will be granted late in 2010.
Unconventional Resources - Underground Coal Gasification and Shale Gas
Europa has been awarded two licences (90%) by the UK Coal Authority to
investigate underground coal gasification of virgin coals along the eastern
coast of England. These licences are situated in areas with deep coal measures
with little structural complexity and a proximity to existing gas and utility
infrastructure.
Underground Coal Gasification (UCG) is a developing technology that recovers up
to 80% of the calorific value of in situ coal by a process of controlled
combustion. UCG, when combined with CO2 storage in the depleted coal seams,
creates a source of energy which rivals nuclear for low emissions and has lower
unit costs than conventional gas-fired power stations.
With only 30% utilisation rate for the coals, the estimated potential UCG energy
resource in these two licence areas is 36x1015 Joules or 6 billion barrels of
oil equivalent.
In addition, the Company's large holding of over 600km2 of the Humber Basin, has
potential for significant shale gas resources from Carboniferous basinal shales.
Whilst this is being evaluated, activities in shale gas exploration elsewhere
in the UK Carboniferous basins are being monitored with interest.
France
Europa holds two exclusive licence in the Aquitaine Basin, adjacent to the
world-class Lacq-Meillon gas developments.
Appraisal - The Berenx Structure (Béarn des Gaves Permit - 100%)
The main focus for Europa is the appraisal of the Berenx gas wells, where a high
pressure high temperature well encountered 500m of gross gas shows and mud gas
kicks in a similar reservoir to the nearby 5TCF Lacq Field. In mid-2010,
Europa took delivery of a reprocessed 3D seismic dataset covering the area
between Berenx and Lacq. The initial mapping indicates that the Berenx wells
were drilled on the western edge of a sizeable structure which could reservoir
in excess of 1 trillion cubic feet of recoverable gas reserve. The proximity
(20km) to the Lacq Field creates a straightforward export route, allowing the
gas to be processed in an existing facility with spare capacity.
The forward programme is for detailed mapping of the structure by experienced
Aquitaine geoscientists followed by securing joint venture partner(s) for the
drilling of an appraisal well for 2011/2012.
Field Re-development and associated Exploration - Tarbes Val d'Adour Licence
(100%)
This licence contains several oil accumulations, previously produced by Elf but
abandoned in 1985 in times of low oil price. Europa commissioned the French
Geological Survey to map the potential field re-development area of Osmets and
Jacque from a reprocessed 2D data set and this work is now complete.
It is hoped that, with a partner, a re-development well can be drilled on one of
these fields in 2011.
Romania
Europa holds interests in 4 Romanian exploration licences, with non-operated
working interests varying from 17.5 to 28.75%. The work programme is moving to
a phase of appraisal of a 2009 gas discovery and exploration in the oil play.
Appraisal - The Voitinel Discovery (EPI-1 Brodina Licence - 28.75%)
The 2009 Voitinel-1 exploration well encountered gas in two sandstone intervals
at around 1400 and 1650m depth. The deeper of these tested dry gas at flow
rates of 3 mmscfpd, but appeared to be close to a reservoir boundary, limiting
the ability to maintain flow for long periods. A fracture stimulation was
undertaken which increased the volume of gas accessed by the well. The
Operator, Aurelian, has assessed that approximately 6bcf will be producible from
each conventional vertical well in this reservoir.
The Voitinel well was drilled close to the northern edge of the structural
trend. However, the play extends far to the south of the well, having been
proven by recent wells drilled by Romgaz at Paltinu. One well sustained gas
flow rates of 5mmscfpd for one week, indicating that the reservoir in the
southern part of the play could be better quality than in the discovery well.
The current resource estimates for the 'Greater Voitinel' play, including the
yet undrilled Solca structure, is that up to 290bcf is recoverable (84 bcf net)
from gross gas-in-place of 415bcf. It is anticipated that two appraisal wells
will be drilled in 2011.
Exploration - the Carpathian Thrust Belt Oil Play
The exploration strategy in the Romanian portfolio is moving away from the small
shallow gas play in the eastern part of the licences to explore in the thrust
belt oil play that is developed in the western part of all four of Europa's
Romanian licences. The US Geological Survey estimates mean undiscovered
potential reserves of over 2.9 billion barrels equivalent in the play and
Europa's first well targeting this play - Barchiz - is due to be spudded in
October 2010.
Barchiz (20%) is situated in the Brates Licence, immediately north of and along
trend from the Geamana oilfield (50 mmbo reserves). It is a relatively shallow
target with a depth of 1,400m and potential for up to 30 mmbo gross reserves.
A further highly prospective area in the same licence, underneath the existing
Tazlaul Mare gas condensate field, is anticipated to be matured for drilling in
2011/12.
In 2010, new seismic data acquisition was undertaken in three of Europa's four
licences and the results from this work will drive the exploration activity into
2011 and beyond.
Other Areas
Egypt
In December 2009, the Company relinquished its interest in the West Darag
concession, onshore Egypt. The decision, driven by the lack of identified
drill-ready prospects needed to commit to phase two of the concession, resulted
in a write-off of the GBP738,000 investment in Egypt.
Western Sahara (100%) - Tindouf Basin and Aiuun Basin Licences
Europa holds interests in Western Sahara through SADR covering almost 80,000km2
of exciting exploration acreage. The Tindouf licence has great potential for
both conventional and unconventional gas resources, being geologically similar
to the prolific Algerian Palaeozoic basins. The Aiuun Basin is an Atlantic
margin basin similar to that developed along the West African margin.
As these license areas remained in force majeure throughout the year, the Board
decided to write-down the intangible asset to nil value. Though the investment
has been written down, Europa retains its 100% interest in the 2 blocks.
Conclusion
The Company's broad asset base in the EU and is a perfect platform for growth -
two projects with Company-making potential will lift off in 2011 and the
management intend to additionally develop a strong exploration-focused new
venture strategy to take the Company to the next level.
Paul Barrett
Managing Director
Unaudited consolidated statement of comprehensive income for the year ended 31
July 2010
+--------------------------------------------+------+---------+---------+
| | | 2010 | 2009 |
+--------------------------------------------+------+---------+---------+
| |Note | GBP000 | GBP000 |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| Revenue | | 3,091 | 2,936 |
+--------------------------------------------+------+---------+---------+
| Other cost of sales | | (1,836) | (1,694) |
+--------------------------------------------+------+---------+---------+
| Exploration write-off | 2 | (1,008) | (297) |
+--------------------------------------------+------+---------+---------+
| Impairment of producing fields | 3 | (1,012) | - |
+--------------------------------------------+------+---------+---------+
| Total cost of sales | | (3,856) | (1,991) |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| Gross (loss) / profit | | (765) | 945 |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| Administrative expenses | | (709) | (545) |
+--------------------------------------------+------+---------+---------+
| Finance income | | 37 | 224 |
+--------------------------------------------+------+---------+---------+
| Finance expense | | (262) | (248) |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| (Loss) / profit before taxation | | (1,699) | 376 |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| Taxation | | (263) | (356) |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| (Loss) / profit for the year attributable | | (1,962) | 20 |
| to equity shareholders of the parent | | | |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| Other comprehensive income | | | |
+--------------------------------------------+------+---------+---------+
| Exchange gains arising on translation of | | 56 | 373 |
| foreign operations | | | |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
| Total comprehensive (loss) / income for | | (1,906) | 393 |
| the period attributable to the equity | | | |
| shareholders of the parent | | | |
+--------------------------------------------+------+---------+---------+
| | | | |
+--------------------------------------------+------+---------+---------+
+--------------------------------------------+------+---------+---------+
| |Note | Pence | Pence |
| | | per | per |
| | | share | share |
+--------------------------------------------+------+---------+---------+
| (Loss) / earnings per share (eps) | | | |
| attributable to equity shareholders of the | | | |
| parent | | | |
+--------------------------------------------+------+---------+---------+
| Basic eps | 4 | (2.60)p | 0.03p |
+--------------------------------------------+------+---------+---------+
| Diluted eps | 4 | (2.60)p | 0.03p |
+--------------------------------------------+------+---------+---------+
Unaudited consolidated statement of financial position as at 31 July 2010
+--------------------------------------------+----+-----------------------+-----------------------+
| | | 2010 | 2009 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | GBP000 | GBP000 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Assets | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Non-current assets | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Intangible assets | | 9,751 | 7,473 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Property, plant and equipment | | 4,504 | 5,554 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Total non-current assets | | 14,255 | 13,027 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Current assets | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Inventories | | 38 | 15 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Trade and other receivables | | 587 | 469 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Current tax asset | | 335 | - |
+--------------------------------------------+----+-----------------------+-----------------------+
| Cash and cash equivalents | | 4 | 4 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Total current assets | | 964 | 488 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Total assets | | 15,219 | 13,515 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | ===================== | ===================== |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Liabilities | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Current liabilities | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Trade and other payables | | (1,797) | (900) |
+--------------------------------------------+----+-----------------------+-----------------------+
| Current tax liabilities | | (2) | (588) |
+--------------------------------------------+----+-----------------------+-----------------------+
| Derivative | | (55) | (40) |
+--------------------------------------------+----+-----------------------+-----------------------+
| Short-term borrowings | | (900) | (767) |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Total current liabilities | | (2,754) | (2,295) |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Non-current liabilities | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Long-term borrowings | | (352) | (772) |
+--------------------------------------------+----+-----------------------+-----------------------+
| Deferred tax liabilities | | (3,240) | (2,651) |
+--------------------------------------------+----+-----------------------+-----------------------+
| Long-term provisions | | (1,395) | (1,137) |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Total non-current liabilities | | (4,987) | (4,560) |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Total liabilities | | (7,741) | (6,855) |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Net assets | | 7,478 | 6,660 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | =================== | =================== |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Capital and reserves attributable to | | | |
| equity holders | | | |
| of the parent | | | |
+--------------------------------------------+----+-----------------------+-----------------------+
| Share capital | | 822 | 626 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Share premium | | 7,132 | 4,692 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Merger reserve | | 2,868 | 2,868 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Foreign exchange reserve | | 408 | 352 |
+--------------------------------------------+----+-----------------------+-----------------------+
| Retained deficit | | (3,752) | (1,878) |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+-----------------------+-----------------------+
| Total equity | | 7,478 | 6,660 |
+--------------------------------------------+----+-----------------------+-----------------------+
| | | ================== | ================== |
+--------------------------------------------+----+-----------------------+-----------------------+
Unaudited consolidated statement of changes in equity for the year ended 31 July
2010
Attributable to the equity holders of the parent
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | Share | Share | Merger | Foreign | Retained | Total |
| | capital | premium | reserve | exchange | earnings | equity |
| | | | | reserve | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Balance at 1 | 626 | 4,692 | 2,868 | (21) | (1,994) | 6,171 |
| August 2008 | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Total | | | - | | | |
| comprehensive | - | - | | 373 | 20 | 393 |
| income for the | | | | | | |
| year | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Share based | - | - | - | - | 96 | 96 |
| payment | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Balance at 31 | 626 | 4,692 | 2,868 | 352 | (1,878) | 6,660 |
| July 2009 | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | =================== | ================= | ================= | ================= | ================== | ================== |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | Share | Share | Merger | Foreign | Retained | Total |
| | capital | premium | reserve | exchange | earnings | equity |
| | | | | reserve | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Balance at 1 | 626 | 4,692 | 2,868 | 352 | (1,878) | 6,660 |
| August 2009 | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Total | | | - | | | |
| comprehensive | | | | | | |
| income/(loss) | - | - | | 56 | (1,962) | (1,906) |
| for the year | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Share based | - | - | - | - | 88 | 88 |
| payment | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Issue of share | | | | | | |
| capital (net | 196 | 2,440 | - | - | - | 2,636 |
| of issue | | | | | | |
| costs) | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- | ------------------- |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| Balance at 31 | 822 | 7,132 | 2,868 | 408 | (3,752) | 7,478 |
| July 2010 | | | | | | |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
| | ================== | ================= | ================= | ================= | =================== | ================= |
+----------------+---------------------+---------------------+---------------------+---------------------+---------------------+---------------------+
Unaudited consolidated statement of cash flows for the year ended 31 July 2010
+--------------------------------------------+----+------------------------+-----------------------+
| | | 2010 | 2009 |
+--------------------------------------------+----+------------------------+-----------------------+
| | | GBP000 | GBP000 |
+--------------------------------------------+----+------------------------+-----------------------+
| Cash flows from operating activities | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| (Loss) / profit after tax | | (1,962) | 20 |
+--------------------------------------------+----+------------------------+-----------------------+
| Adjustments for: | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| Share based payments | | 73 | 96 |
+--------------------------------------------+----+------------------------+-----------------------+
| Depreciation | | 498 | 576 |
+--------------------------------------------+----+------------------------+-----------------------+
| Exploration write-off | | 1,008 | 297 |
+--------------------------------------------+----+------------------------+-----------------------+
| Impairment of property, plant & equipment | | 1,012 | - |
+--------------------------------------------+----+------------------------+-----------------------+
| Finance income | | (37) | (224) |
+--------------------------------------------+----+------------------------+-----------------------+
| Finance expense | | 262 | 248 |
+--------------------------------------------+----+------------------------+-----------------------+
| Taxation expense | | 263 | 356 |
+--------------------------------------------+----+------------------------+-----------------------+
| (Increase)/decrease in trade and other | | (66) | 187 |
| receivables | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| (Increase)/decrease in inventories | | (23) | 1 |
+--------------------------------------------+----+------------------------+-----------------------+
| Increase / (decrease) in trade and other | | 592 | 34 |
| payables | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+------------------------+-----------------------+
| Cash generated from operations | | 1,620 | 1,591 |
+--------------------------------------------+----+------------------------+-----------------------+
| Income taxes paid | | (597) | (180) |
+--------------------------------------------+----+------------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+------------------------+-----------------------+
| Net cash from operating activities | | 1,023 | 1,411 |
+--------------------------------------------+----+------------------------+-----------------------+
| | | ===================== | ========== |
+--------------------------------------------+----+------------------------+-----------------------+
| Cash flows from investing activities | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| Purchase of property, plant and equipment | | (222) | (191) |
+--------------------------------------------+----+------------------------+-----------------------+
| Purchase of intangible assets | | (3,075) | (930) |
+--------------------------------------------+----+------------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+------------------------+-----------------------+
| Net cash used in investing activities | | (3,297) | (1,121) |
+--------------------------------------------+----+------------------------+-----------------------+
| | | ====================== | ===================== |
+--------------------------------------------+----+------------------------+-----------------------+
| Cash flows from financing activities | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| Proceeds from issue of share capital (net | | 2,653 | - |
| of issue costs) | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| Proceeds from long-term borrowings | | - | 1,000 |
+--------------------------------------------+----+------------------------+-----------------------+
| Repayment of borrowings | | (469) | (585) |
+--------------------------------------------+----+------------------------+-----------------------+
| Finance costs | | (101) | (138) |
+--------------------------------------------+----+------------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+------------------------+-----------------------+
| Net cash from financing activities | | 2,083 | 277 |
+--------------------------------------------+----+------------------------+-----------------------+
| | | ===================== | ==================== |
+--------------------------------------------+----+------------------------+-----------------------+
| | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| Net (decrease) /increase in cash and cash | | (191) | 567 |
| equivalents | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| Exchange gain on cash and cash equivalents | | 8 | 160 |
+--------------------------------------------+----+------------------------+-----------------------+
| Cash and cash equivalents at beginning of | | (292) | (1,019) |
| year | | | |
+--------------------------------------------+----+------------------------+-----------------------+
| | | -------------------- | -------------------- |
+--------------------------------------------+----+------------------------+-----------------------+
| Cash and cash equivalents at end of year | | (475) | (292) |
+--------------------------------------------+----+------------------------+-----------------------+
| | | ===================== | ==================== |
+--------------------------------------------+----+------------------------+-----------------------+
Unaudited notes to the financial statements (continued)
1 Basis of preparation
The principal accounting policies adopted in the preparation of the financial
statements are will be set out in the Group's annual report. The policies have
been consistently applied to all the years presented, unless otherwise stated.
Both tThe parent company financial statements and the Group financial statements
have will bebeen prepared and approved by the Directors in accordance with
International Financial Reporting Standards IFRS's and IFRIC interpretations,
issued by the International Accounting Standards Board (ISAB) as endorsed for
use in the EU ("Endorsed IFRSs") and those parts of the Companies Act 2006 that
are applicable to companies that prepare their financial statements under IFRS.
The unaudited financial information presented for the years ended 31 July 2010
and 31 July 2009 does not constitute statutory accounts as defined by section
435 of the Companies Act 2006 but is extracted from the unaudited accounts for
the year ended 31 July 2010 and the audited accounts for the year ended 31 July
2009. The 31 July 2009 accounts have been delivered to the Registrar of
Companies. The 31 July 2010 accounts will be delivered to Companies House within
the statutory filing deadline. The auditors have yet to report on those
accounts; their report is anticipated to be unqualified but contain an emphasis
of matter paragraph in respect of the going concern basis of preparation of the
financial information.
As described in the Chairman's statement, the Directors have considered the cash
position of the Company, and based on latest cash projections and efforts which
Europa is making to raise additional funds, they consider that the Group will
remain a going concern for the foreseeable future.
2 Intangible assets
+---------------------------------------------+-----------------------+----------------------+
| | 2010 | 2009 |
+---------------------------------------------+-----------------------+----------------------+
| | GBP000 | GBP000 |
+---------------------------------------------+-----------------------+----------------------+
| | | |
+---------------------------------------------+-----------------------+----------------------+
| At 1 August | 7,473 | 7,241 |
+---------------------------------------------+-----------------------+----------------------+
| Additions | 3,286 | 529 |
+---------------------------------------------+-----------------------+----------------------+
| Exploration write-off | (1,008) | (297) |
+---------------------------------------------+-----------------------+----------------------+
| | --------------------- | -------------------- |
+---------------------------------------------+-----------------------+----------------------+
| At 31 July | 9,751 | 7,473 |
+---------------------------------------------+-----------------------+----------------------+
| | ==================== | ==================== |
+---------------------------------------------+-----------------------+----------------------+
+--------------------------------------------+----------------------+---------------------+
| | 2010 | 2009 |
| | GBP000 | GBP000 |
| | | |
+--------------------------------------------+----------------------+---------------------+
| Romania | 7,191 | 5,874 |
+--------------------------------------------+----------------------+---------------------+
| Egypt | - | 434 |
+--------------------------------------------+----------------------+---------------------+
| France | 308 | 139 |
+--------------------------------------------+----------------------+---------------------+
| Western Sahara | - | 105 |
+--------------------------------------------+----------------------+---------------------+
| UK PEDL143 (Holmwood) | 186 | 177 |
+--------------------------------------------+----------------------+---------------------+
| UK PEDL150 (SW Lincoln) | 1,904 | 588 |
+--------------------------------------------+----------------------+---------------------+
| UK PEDL180 (NE Lincs) | 63 | 52 |
+--------------------------------------------+----------------------+---------------------+
| UK PEDL181 | 99 | 63 |
+--------------------------------------------+----------------------+---------------------+
| UK PEDL222 (Torksey area) | - | 41 |
+--------------------------------------------+----------------------+---------------------+
| | -------------------- | ------------------- |
+--------------------------------------------+----------------------+---------------------+
| Total | 9,751 | 7,473 |
+--------------------------------------------+----------------------+---------------------+
| | ==================== | =================== |
+--------------------------------------------+----------------------+---------------------+
Intangible assets comprise the Group's pre-production expenditure on licence
interests as follows:
+----------------------------------------------+------------------------+----------------------+
| | 2010 | 2009 |
| | GBP000 | GBP000 |
+----------------------------------------------+------------------------+----------------------+
| Exploration write-off | | |
+----------------------------------------------+------------------------+----------------------+
| Egypt | 738 | - |
+----------------------------------------------+------------------------+----------------------+
| Western Sahara | 184 | - |
+----------------------------------------------+------------------------+----------------------+
| UK - PEDL222 | 55 | - |
+----------------------------------------------+------------------------+----------------------+
| UK - PEDL180/181 pre licence costs | 31 | - |
+----------------------------------------------+------------------------+----------------------+
| UK - East Irish sea block 109/5 | - | 297 |
+----------------------------------------------+------------------------+----------------------+
| | ---------------------- | -------------------- |
+----------------------------------------------+------------------------+----------------------+
| At 31 July | 1,008 | 297 |
+----------------------------------------------+------------------------+----------------------+
| | ===================== | =================== |
+----------------------------------------------+------------------------+----------------------+
In December 2009, the Company relinquished its interest in the West Darag
concession, onshore Egypt. The decision, driven by the lack of identified
drill-ready prospects needed to commit to phase 2 of the concession, resulted in
a write-off of the investment in Egypt.
As the license areas in Western Sahara remained in force majeure throughout the
year, the Board decided to write-down the intangible asset to nil value.
With a lack of identified prospects in the PEDL222 concession, the Board also
decided to write down the investment to nil value.
Within the PEDL150 concession, the Hykeham well was drilled in the year. Though
the likely forward plan is to plug and abandon the well, the investment has not
been written off as prospectivity within the rest of the concession area, which
is considered as one cost pool, is good.
3 Property, plant and equipment
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | Furniture | Leasehold | Producing | Total |
| | & | building | fields | |
| | computers | | | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Cost | | | | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 1 August 2008 | | | | |
| | 27 | 437 | 7,213 | 7,677 |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Additions | 12 | - | 122 | 134 |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ---------------------- | ----------------------- | ------------------------ | ------------------------ |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 31 July 2009 | | 437 | | 7,811 |
| | 39 | | 7,335 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | | | | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Additions | 16 | - | 444 | 460 |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Impairment | - | - | (1,331) | (1,331) |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ------------------------- | ------------------------- | ------------------------- | ------------------------- |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 31 July 2010 | | 437 | | 6,940 |
| | 55 | | 6,448 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ======================== | ======================== | =================== | ======================== |
| | | | === | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Depreciation and | | | | |
| depletion | | | | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 1 August 2008 | | 52 | | 1,681 |
| | 6 | | 1,623 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Charge for year | | 25 | | 576 |
| | 9 | | 542 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ------------------------- | ------------------------- | ------------------------- | ------------------------- |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 31 July 2009 | | 77 | | 2,257 |
| | 15 | | 2,165 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | | | | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Charge for year | | 8 | | 498 |
| | 10 | | 480 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Impairment | - | - | (319) | (319) |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ------------------------ | ------------------------- | ------------------------- | ------------------------- |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 31 July 2010 | | 85 | | 2,436 |
| | 25 | | 2,326 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ========================= | ========================= | ======================= | ========================= |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | | | | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| Net Book Value | | | | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 31 July 2010 | | 352 | | 4,504 |
| | 30 | | 4,122 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ========================== | ======================== | ======================== | ======================== |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 31 July 2009 | | 360 | | 5,554 |
| | 24 | | 5,170 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ========================= | ========================= | ========================= | ======================== |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| At 31 July 2008 | | 385 | | 5,996 |
| | 21 | | 5,590 | |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
| | ======================== | ======================== | ========================= | ======================== |
+-------------------+----------------------------+---------------------------+---------------------------+---------------------------+
The producing fields referred to in the table above are the production assets of
the Group, namely the oilfields at Crosby Warren and West Firsby, and the
Group's interest in the Whisby W4 well.
The carrying value of each producing field was tested for impairment. As a
result, the Board decided to write down value of the Crosby Warren field by
GBP1,012,000 (gross cost of GBP1,331,000 and accumulated depreciation of
GBP319,000).
4 Earnings per share
Basic earnings per share (EPS) has been calculated on the loss or profit after
taxation divided by the weighted average number of shares in issue during the
period. Diluted EPS uses an average number of shares adjusted to allow for the
issue of shares, on the assumed conversion of all in the money options.
The Company's average share price for the year to 31 July 2010 was 14.6p
resulting in a dilution of 26,020 shares.
The Company's average share price for the year to 31 July 2009 was lower than
the exercise price of the share options in issue. Therefore the share options in
issue had no dilutive effect and there is no difference between the basic and
diluted earnings per share.
The calculation of the basic and diluted (loss)/earnings per share is based on
the following:
+---------------------------------------------+------------+------------+
| | 2010 | 2009 |
+---------------------------------------------+------------+------------+
| | GBP000 | GBP000 |
+---------------------------------------------+------------+------------+
| (Losses)/earnings | | |
+---------------------------------------------+------------+------------+
| (Loss)/profit after tax | (1,962) | 20 |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| Weighted average number of shares | | |
+---------------------------------------------+------------+------------+
| for the purposes of basic eps | 75,520,873 | 62,563,730 |
+---------------------------------------------+------------+------------+
| for the purposes of diluted eps | 75,546,893 | 62,563,730 |
+---------------------------------------------+------------+------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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