TIDMUOG
RNS Number : 5131W
United Oil & Gas PLC
26 April 2021
26 April 2021
United Oil & Gas PLC ("United" or the "Company")
Final audited results for the year ended 31 December 2020,
Shareholder call and Notice of AGM
United Oil & Gas PLC (AIM: "UOG"), the growing oil and gas
company with a portfolio of production, development, exploration
and appraisal assets, is pleased to announce its audited results
for the year ended 31 December 2020.
A shareholder call hosted by management will take place at
12.00pm BST today. Should investors wish to participate in the
event, please click this link to register https://bit.ly/2S9mfow .
A confirmation email with details of the dialling in process will
be sent to your email address. A presentation and the 2020 Annual
Report will be made available today on www.uogplc.com
Brian Larkin, Chief Executive Officer commented:
"2020 was a landmark year for United Oil and Gas, building on
strong foundations to position ourselves as a full-cycle oil and
gas company with strong production, diverse assets, an exceptional
board and clearly defined avenues to deliver further material
growth. These were significant achievements despite one of the
toughest years for our sector and wider markets caused by the
COVID-19 pandemic."
"Building on this success is key for all at United Oil and Gas
and we look forward to driving further activity and material growth
in 2021 and beyond."
2020 Highlights:
Strategic - Completion of transformational acquisition,
strengthening the Board and shareholder base
-- Rockhopper Egypt acquisition completed following Egyptian
Government approval including successful equity placing and
re-admission of the enlarged Group to AIM
-- Significant strengthening of the Board with the appointment
of Ms Iman Hill and Tom Hickey as non-executive directors
-- Establishment of Environmental, Social and Governance (ESG)
Board Committee in September 2020 to drive forward the Group's
commitment to operating responsibly
-- Welcomed new institutional investors as a result of the
successful placing of Rockhopper Exploration plc's 18.3%
shareholding
Operational - Sustained low-cost production and reserves growth
across portfolio
-- Strong operational performance of Egyptian assets
o Group working interest production averaged 2,195 boepd *
o Success at the ASH-2 and ES-5 Development Wells increased
working interest production from 1,709 boepd on 1(st) March 2020 to
2,389 boepd on 31(st) December 2020
o Independent reserves report by Gaffney, Cline & Associates
from the end of 2020 indicates a 24 % increase in Abu Sennan Gross
2P Reserves to 16.8 Mmboe, representing a 198 % reserves
replacement ratio.
o Completion of ASH and Al Jahraa gas pipelines increasing
environmental efficiency of the Abu Sennan licence and contributing
an additional 312 boepd to United
-- High impact Jamaican exploration assets secured and progressed during the period
o 100% equity stake and operatorship of the Walton Morant
Licence in Jamaica along with 18- month extension secured.
o Prospective resources report on Jamaica by Gaffney Cline &
Associates showing unrisked mean prospective resource potential of
over 2.4 billion barrels assigned across 11 prospects and
leads(1)
-- New licence awards in the UK North Sea with of Blocks 15/18e
and 15/19c containing the Maria, Brochel and Maol Discoveries in
the UK's 32(nd) offshore licensing round.
Financial -Revenues delivering positive operating cashflow and
profits
-- Group Revenues of $9.1m*(2)
-- Profit for the year of $0.85m
-- Average realised oil price of $37.76/bbl and average realised gas price of $2.63/mmbtu(*2)
-- Cash operating cost $5.77/boe(2)
-- Cash capital expenditure $2.5m
-- Cash generated from operation activities $4.8m
-- Cash balance at 31 December 2020 $2.2m
* From completion of the Rockhopper Egypt acquisition to period
end, 28(th) February 2020 to 31 (st) December 2020
(1) Summation made by UOG management based on the GaffneyCline
analysis
(2) 22% interest net of government take
Post Year-end:
-- Significant success at the ASH-3 Development Well which
encountered 27.5m of net pay and tested at 7,720 boepd on 64/64
choke and 4,140 boepd on 30/64 choke
-- Discovery at the ASD-1X Exploration well, which encountered a
total of at least 22m net pay interpreted across a number of
reservoirs
2021 Guidance:
-- Group working interest production year to date ahead of
expectations; full year guidance raised to 2,500 to 2,700
boepd.
-- Success of the ASH-3 and ASD-1X wells in early 2021 is likely to lead to a reserves uplift
-- Group Capital Expenditure is forecast to be $6.0m, fully funded from existing assets
o c. $5.4m to be invested in Egypt with three firm wells
following the addition of the AJ-8 well to the programme offset by
savings on ASH-3 and AD1-X, five workovers, and facilities
upgrades
o c. $0.6m to be invested in our Jamaican, Italian and UK
assets
Outlook:
-- Cash generation is expected to continue strongly throughout
2021 in line with increased production and pricing, particularly in
the second half of the year as the capital expenditure associated
with the drilling campaign is phased almost entirely in the first
half
-- The formal farm-out campaign for the Walton Morant licence in
Jamaica commenced earlier this month and, following on from the
Prospective resources report on Jamaica by Gaffney Cline &
Associates, management look forward to discussing this opportunity
with prospective partners.
-- The Crown disposal milestone payment of $2.85m from Hibiscus,
payable on approval of the Marigold development plan by the by the
UK's Oil and Gas Authority, is currently expected to be received in
the second quarter of 2021.
-- Our portfolio provides a platform for organic growth but also
a base from which we can consider further growth opportunities in
2021 and beyond.
Annual General Meeting
In light of the Coronavirus (COVID-19) pandemic and the UK
Government's measures to restrict travel and public gatherings of
more than two people who do not live together, it will not be
possible to hold the AGM in its usual format. The meeting will be
held at 128 Lower Baggot Street, Dublin 02 A430, Ireland at 12:00
a.m. on 28 May 2021. This year's AGM will be organised as a closed
meeting. Shareholders must not attend the AGM in person and anyone
seeking to attend in person will be refused entry. The AGM Notice
and Form or Proxy will be posted to Shareholders and will be
available from today on www.uogplc.com . The Company will make
arrangements for a quorum to be present to transact the formal
business of the meeting as set out in the notice of the AGM.
Extracts from the Annual Report are set out below. The financial
information set out below does not constitute the Company's
statutory accounts for the periods ended 31 December 2020 or 31
December 2019 but it is derived from those accounts. Statutory
accounts for 31 December 2019 have been delivered to the Registrar
of Companies and those for 31 December 2020 will be delivered
following the Company's Annual General Meeting. The auditors have
reported on those accounts, their reports were unqualified and did
not contain statements under section 498(2) or (3) of the Companies
Act 2006.
The Company encourages shareholders to vote on the resolutions
or to appoint the Chairman of the AGM as a proxy to vote on their
behalf. Shareholders can vote on the resolutions using an online
portal, following the procedure below.
-- Visiting www.shareregistrars.uk.com and following the online
instructions. Through the website shareholders will be able to
access the Registrars' Portal, on which they will be able to
register to be able to vote. For security reasons, registration is
a two-stage authentication process. Once registered, shareholders
will be able to vote online via the platform.
-- Shareholders can submit their completed Form of Proxy electronically by emailing the same to voting@shareregistrars.uk.com
-- Completing and returning the Form of Proxy to the Company's
Registrars, Share Registrars Limited, The Courtyard, 17 West
Street, Farnham, Surrey GU9 7DR no later than 48 hours before the
Annual General Meeting
In the event that further disruption to the AGM becomes
unavoidable or there are any changes to the current AGM
arrangements, the Company will announce any changes to the meeting
(such as timing or venue) as soon as reasonably practicably through
a Regulatory Information Service and the Company's website.
Pursuant to Rule 20 of the AIM Rules for Companies, copies of
both the Annual Report and the Notice will shortly be available for
inspection at www.uogplc.com .
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 as it forms part of UK
Domestic Law by virtue of the European Union (Withdrawal) Act 2018
("UK MAR").
CHAIRMAN'S STATEMENT
FOR THE YEARED 31 DECEMBER 2020
Dear Shareholders,
Introduction
I am very pleased to report that
2020 was one of the most important
and transformational years for the
Group. United is now a full cycle
oil and gas company with a portfolio
of production, development, exploration
and appraisal assets that underpin
our growth ambitions.
Our performance during an extremely
challenging year has been exemplary
and gives the Board and I great confidence
about the capability of our team,
our assets and our planned strategy
for future growth.
Key activities in 2020
The year began with completion of
the Rockhopper Egypt acquisition,
including a successful equity placing,
and the re-admission of the enlarged
group to AIM. The drilling success
that was achieved at ASH-2 at the
end of 2019, was followed by further
success at ES-5, increasing our production
and reserves, validating our original
assessment of the significant upside
potential of the assets. Our technical
team continue to play a very important
role in working closely with the
operator in maximising the returns
from these assets and their potential.
As part of the transaction, the seller
Rockhopper Exploration plc acquired
an 18.3% interest in the Group which
was then very successfully placed
later in the year with new institutional
investors.
In August, as a result of determined
efforts on the part of our executives,
the Group was awarded operatorship
and 100% ownership of the high impact
Walton Morant exploration licence
in Jamaica and secured an extension
to the exploration phase, allowing
more time to evaluate the prospectivity
of the licence and to seek potential
joint venture partners.
The Group was also awarded further
blocks containing discoveries in
the UK's latest offshore licensing
round.
Business development opportunities
across the full cycle continued to
be offered to and assessed by the
team in the course of 2020, and a
number of such opportunities are
still under consideration. However,
only the most attractive ones consistent
with our strategy will be taken forward.
Strengthening of our Board and governance
As the Company has grown, we have
recognised the need for an increased
range of skills, experience and diversity
among the non-executive directors
to support and challenge management
in the execution of United's strategy.
We believe we have more than achieved
this as a result of the appointments
during the period of Iman Hill and
Tom Hickey, both bring considerable
additional technical, operational,
financial and commercial experience
to the Board.
Further, to drive forward our commitment
to operating sustainably, the Board
established an Environmental, Social
and Governance Committee, chaired
by Iman, and also appointed Tom to
chair the Audit Committee whilst
I remain chair of the Remuneration
Committee and the AIM Rules Compliance
Committee.
In addition to these changes, we
approved a Remuneration Policy for
executive remuneration (which is
summarised later in this Report)
and made other changes to Board committee
composition to improve Board governance
and oversight.
Finally, Alberto Cattaruzza, who
had been a director of United since
our re-listing in 2017 and Stewart
MacDonald, who joined the board following
completion of the Rockhopper Egypt
acquisition, stepped down from their
roles in the Company. I would like
to thank them both again for their
valuable service as directors.
Strategy
Our strategy remains clear; continue
to grow our full cycle portfolio
of low-risk production, development
and exploration assets (as we have
in Egypt, Italy and the UK) complemented
by a few higher risk, low-cost and
high impact exploration opportunities.
In addition, we see opportunity to
deliver value to shareholders through
timely portfolio management as well
as through our technical expertise
and our drilling operations.
Financial Results for 2020
2020 was the first year in which
we received revenues, leading I am
very pleased to report to a profit
after tax of $0.85m. With our production
and revenues continuing strongly,
and with cash operating costs in
2020 of $5.77 per boe, we entered
2021 with an asset base resilient
to low oil prices and with a strong
balance sheet.
Post Year End
There has been further drilling success
since the year end with the ASH-3
wellbeing successfully drilled, tested
and brought into production and the
announcement of an exploration discovery
on the ASD-1X exploration well. The
ASH Field continues to outperform
our estimates, further demonstrating
the significant growth potential
of our Egyptian assets.
Impact to the Company of COVID-19
The human and economic impact of
the COVID-19 pandemic continues to
be very significant. The priority
of the Group remains the health and
wellbeing of our employees and wider
stakeholders and we are glad to report
that all of our employees are safe
and well.
In common with every company in the
oil and gas industry, and indeed
in all other areas of business, the
Company's activities have been affected
by COVID-19 uncertainty. However,
there has been no impact on our operations
in Egypt and the production and transport
of oil and gas has continued uninterrupted.
Dialogue with shareholders
Shareholders views on the Company,
its strategy, remuneration policy
and indeed all aspects of our business
and operations are very important
to the Board and we welcome every
opportunity to engage. However, appreciating
that physical meetings are not possible
at the moment we would be very happy
to hear from you in whatever manner
suits you best. I can be reached
via the Company Secretary at info@uogplc.com
Conclusion
2020 was another very successful
year for the company in the development
and pursuit of our strategy and I
would like to record my thanks to
our executives and staff for their
continued commitment and energy throughout
the year, which was an especially
challenging period, given the COVID
-19 pandemic and commodity price
fluctuations.
We look forward very positively to
the year ahead. We have a balanced
full cycle portfolio, the cash flow
to fund our business and exciting
new opportunities under review.
Graham Martin
Chairman
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2020
Notes Year to 31 December Year to 31 December 2019
2020
$ $
Revenue 1 9,053,657 -
Cost of sales 2 (6,505,011) -
Gross profit / (loss) 2,548,646 -
Administrative expenses:
------------------------- ------ ------------------------ -------------------------
Other administrative
expenses (1,707,168) (1,516,035)
Exploration expenses
written off (37,161) (2,111,319)
Gain on disposal of
intangible assets 4 - 2,881,976
Acquisition and AIM
expenses - (1,202,586)
------------------------- ------ ------------------------ -------------------------
Total administrative
expenses (1,744,329) (1,947,964)
Operating profit /
(loss) 3 804,317 (1,947,964)
Finance income 6 1,572,706 -
Finance expense 6 (1,580,842) (4,841)
Profit / (loss) before
taxation 796,181 (1,952,805)
Taxation 7 56,480 (186,270)
Profit / (loss) for the
financial year
attributable to the
Company's equity
shareholders 852,661 (2,139,075)
Earnings / (loss) per
share from continuing
operations
expressed in pence per
share: 8
Basic 0.15 (0.62)
======================== =========================
Diluted 0.14 (0.62)
======================== =========================
Consolidated Statement of Comprehensive
Income 2020 2019
$ $
Profit / (loss) for the financial year 852,661 (2,139,075)
Foreign exchange (losses)/ gains (337,713) 405,954
Total comprehensive income / (loss) for the
financial year attributable to the Company's
equity shareholders 514,948 (1,733,121)
Consolidated Balance Sheet as at
31 December 2020 Notes 2020 2019
Assets $ $
Non-current assets
Intangible assets 10 7,891,743 5,580,864
Property, plant and equipment 11 13,607,167 26,722
21,498,910 5,607,586
Current assets
Inventory 13 35,729 -
Trade and other receivables 14 5,454,307 3,524,655
Cash and cash equivalents 15 2,188,902 1,275,537
7,678,938 4,800,192
Current liabilities:
Trade and other payables 18 (2,996,115) (1,085,701)
Derivative financial instruments 21 (992,681) -
Borrowings 21 (2,133,655) -
Lease liabilities 20 (94,050) (26,030)
Current tax payable (135,388) (190,446)
------------ ------------
(6,351,889) (1,302,177)
Non-current liabilities:
Borrowings 21 (2,422,146) -
Derivative financial instruments 21 (647,376) -
Lease liabilities 20 (96,787) -
------------ ------------
(3,166,309) -
Net assets 19,659,650 9,105,601
============ ============
Equity and liabilities
Capital and reserves
Share capital 16 8,138,619 4,564,787
Share premium 16 16,047,975 9,912,988
Share-based payment reserve 17 1,922,090 1,591,808
Merger reserve (2,697,357) (2,697,357)
Translation reserve (348,940) (11,227)
Retained earnings (3,402,737) (4,255,398)
Shareholders' funds 19,659,650 9,105,601
============ ============
The financial statements were approved
by the Board of Directors and authorised
for their issue on 23 April 2021
and were signed on its behalf by:
Brian Larkin
Chief Executive Officer
Consolidated Statement of Changes
in Equity
Share-based
Share Share payments Retained Translation Merger
capital premium reserve earnings reserve reserve Total
$ $ $ $ $ $ $
For the year
ended 31
December 2020
Balance at 1
January 2020 4,564,787 9,912,988 1,591,808 (4,255,398) (11,227) (2,697,357) 9,105,601
Loss for the
year - - - 852,661 - - 852,661
Foreign
exchange
difference - - - - (337,713) - (337,713)
Total
comprehensive
income - - - 852,661 (337,713) - 514,948
Shares issued 3,573,832 6,640,081 - - - - 10,213,913
Share issue
expenses - (505,094) 62,516 - - - (442,578)
Share-based
payments - - 267,766 - - - 267,766
Balance at 31
December 2020 8,138,619 16,047,975 1,922,090 (3,402,737) (348,940) (2,697,357) 19,659,650
---------- ----------- ------------ ------------ ------------ ------------ ------------
For the year
ended 31
December 2019
Balance at 1
January 2019 4,564,787 9,912,988 1,465,036 (2,116,323) (417,181) (2,697,357) 10,711,950
Loss for the
year - - - (2,139,075) - - (2,139,075)
Foreign
exchange
difference - - - - 405,954 - 405,954
Total
comprehensive
income - - - (2,139,075) 405,954 - (1,733,121)
Share-based
payments - - 126,772 - - - 126,772
Balance at 31
December 2019 4,564,787 9,912,988 1,591,808 (4,255,398) (11,227) (2,697,357) 9,105,601
---------- ----------- ------------ ------------ ------------ ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER
2020 2019
$ $
Cash flow from operating activities
Loss for the financial year before tax 796,181 (1,952,805)
Share-based payments 267,766 126,772
Depreciation 2,628,990 94,026
Amortisation 3,862 -
Fair value gain on derivatives (1,572,706) -
Impairment of intangible assets 37,161 2,111,319
Gain on disposal of intangible assets 31,307 (2,881,976)
Gain on disposal of property, plant and equipment 42,318 -
Interest expense 1,580,842 4,841
Foreign exchange movements (189,918) 268,159
------------- ------------
3,625,803 (2,229,664)
Changes in working capital
Decrease in inventory 64,433 -
Decrease / (increase) in trade and other receivables 2,530,065 (61,527)
(Decrease) / increase in trade and other payables (1,390,182) 677,689
------------- ------------
Cash inflow/(outflow) from operating activities 4,830,119 (1,613,502)
Cash outflow from investing activities
Cash outflows on business combination (11,200,000) -
Cash acquired in business combination 46,543 -
Disposal of intangible assets - 950,000
Purchase of property, plant & equipment (2,816,460) (1,637)
Spend on exploration activities (1,457,307) (3,097,401)
Net cash used in investing activities (15,427,224) (2,149,038)
Cash flow from financing activities
Issue of ordinary shares net of expenses 5,835,834 -
Proceeds on issue of oil swap financing arrangement 7,760,288 -
Repayments on oil swap financing arrangement (1,666,116) -
Payments on oil price derivatives (70,431) -
Capital payments on lease (73,183) (88,387)
Interest paid on lease (5,753) (4,841)
Net cash generated/ (used in) from financing
activities 11,780,639 (93,228)
Net increase/(decrease) in cash and cash equivalents 1,183,534 (3,855,768)
Cash and cash equivalents at beginning of financial
year 1,275,537 5,149,907
Effects of exchange rate changes (270,169) (18,602)
Cash and cash equivalents at end of financial year 2,188,902 1,275,537
Notes to the Consolidated Financial
Statements
1. Segmental reporting
Operating segments
Operating segments are reported in
a manner consistent with the internal
reporting provided to the chief operating
decision maker. The chief operating
decision maker, who is responsible
for allocating resources, assessing
the performance of the operating
segment and making strategic decision,
has been identified as the Board
of Directors.
The Group operates in four geographic
areas - the UK, Europe and greater
Mediterranean, Latin America and
Egypt. The Group's revenue from external
customers and information about its
non-current assets (other than financial
instruments, investments accounted
for using the equity method, deferred
tax assets and post-employment benefit
assets) by geographical location
are detailed below.
2020
Latin
$ UK Other EU America Egypt Total
Revenue - - - 9,053,657 9,053,657
-------- ---------- ---------- ----------- -----------
Non-current assets 779,323 2,833,287 3,602,178 14,284,122 21,498,910
-------- ---------- ---------- ----------- -----------
2019
Latin
$ UK Other EU America Total
Revenue - - - -
-------- ---------- ---------- ----------
Non-current assets 511,009 2,336,837 2,759,740 5,607,586
-------- ---------- ---------- ----------
2. Cost of sales
2020 2019
$ $
Production costs 3,941,743 -
Depreciation, depletion & amortisation 2,563,268 -
========== =====
6,505,011 -
========== =====
3. Operating Profit/(loss)
2020 2019
$ $
Operating loss is stated after charging/(crediting):
Fees payable to the Company's auditors for the audit of the
annual financial statements 60,000 40,000
Fees payable to the Company's auditors and its associates for
other services to the Group:
* Reporting accountant services - 90,000
4. Disposal of Crown asset in prior
period
On 12 December 2019, United announced
the completion of the sale of its
95% share in the North Sea Blocks
12/18d and 15/19b (licence P2366)
to Anasuria Hibiscus UK limited.
The disposal was of the aforementioned
licence only, and the UOG Crown Limited
subsidiary company is retained in
the group.
Under the deal for this disposal
of the Crown licence, United received
$950,000 in 2019 on completion, with
a further receivable of $2,850,000
which is contingent upon approval
of an FDP, the latter amount being
reflected in current receivables
in the balance sheet. In the event
of non-payment of the latter amount,
the Group would retain ownership
of the licence asset.
Having acquired the licence in 2018
and incurred costs on a work programme,
some in-house technical work, and
the costs of disposal the Group reported
a profit on disposal before tax in
its 2019 Income Statement of $2,881,976.
5. Directors and employees
The aggregate payroll costs of the
employees, including Executive Directors
and Non-Executive directors, were
as follows:
2020 2019
$ $
Staff costs
Wages and salaries 1,700,487 675,928
Share-based payments 267,766 126,772
Pension 135,059 -
Social security 60,640 31,958
========== ========
2,163,952 834,658
========== ========
Average monthly number of persons
employed by the Group during the
year was as follows:
2020 2019
Number Number
By activity:
Administrative 6 3
Directors 6 5
======= =======
12 8
======= =======
2020 2019
$ $
Remuneration of Directors
Emoluments and fees for qualifying services 1,149,729 450,450
Share-based payments 229,040 112,015
Pension 53,251 -
Social security 21,743 13,881
---------- --------
1,453,763 576,346
========== ========
Key management personnel are identified
as the Executive Directors.
No share warrants have been exercised
by any of the directors.
6. Finance income and expense
Finance income 2020 2019
$ $
Fair value gain on derivatives 1,572,706 -
---------
1,572,706 -
========= ====
Finance expense 2020 2019
$ $
Effective interest on borrowings 1,576,607 -
Interest expense on lease liabilities 4,235 4,841
---------
1,580,842 4,841
========= =====
7. Taxation
2020 2019
$ $
Profit/(Loss) before tax 796,181 (1,952,805)
--------- -----------
Loss on ordinary activities multiplied by standard
rate of corporation tax in the UK of 19% (2019:
19%) 151,274 (371,033)
Tax effects of:
Utilisation of tax losses (151,274) -
Adjustment to previous period (56,480) -
Unrelieved tax losses carried forward - 557,303
---------
Corporation tax (credit)/charge (56,480) 186,270
========= ===========
The Group has accumulated tax losses
of approximately $8m (2019: $4m).
No deferred tax asset was recognised
in respect of these accumulated tax
losses as there is insufficient evidence
that the amount will be recovered
in future years.
8. Earnings / (loss) per share
The Group has issued share warrants
and options over Ordinary shares
which could potentially dilute basic
earnings per share in the future.
Further details are given in note
17.
Basic earnings / (loss) per share
is calculated by dividing the profit
/ (loss) attributable to ordinary
shareholders by the weighted average
number of ordinary shares outstanding
during the year.
Due to the losses incurred during
the prior year, a diluted loss per
share has not been calculated as
this would serve to reduce the basic
loss per share. There were 130,510,730
(2019: 93,329,853) share warrants
and options outstanding at the end
of the year that could potentially
dilute basic earnings per share in
the future.
Basic and diluted earnings / (loss)
per share 2020 2019
Cents Cents
Basic earnings / (loss) per share from continuing
operations 0.15 (0.62)
----- ------
Diluted earnings / (loss) per share from continuing
operations 0.14 (0.62)
----- ------
The profit / (loss) and weighted
average number of ordinary shares
used in the calculation of basic
earnings / (loss) per share are as
follows: 2020 2019
$ $
Profit / (loss) used in the calculation of total
basic and diluted loss per share 852,661 (2,139,075)
------- -----------
Number of shares 2020 2019
Number Number
Weighted average number of ordinary shares for the
purposes of basic earnings / (loss) per share 578,248,726 345,613,985
Dilutive shares 23,207,377 -
----------- -----------
Weighted average number of ordinary shares for the
purposes of diluted earnings / (loss) per share 601,456,103 345,613,985
----------- -----------
9. Subsidiaries
Details of the Group's subsidiaries
in 2020 are as follows:
Name & Principal activity Class Place of % ownership
address of of shares incorporation held by the
subsidiary and operation Group
2020 2019
UOG
Holdings
plc
200
Strand,
London, Intermediate England and
WC2R 1DJ holding company Ordinary Wales 100 100
UOG Ireland
Limited*
9 Upper
Pembroke
Street,
Dublin Intermediate
2, Ireland holding company Ordinary Ireland 100 100
UOG PL090
Ltd*
200
Strand,
London, Oil and gas England and
WC2R 1DJ exploration Ordinary Wales 100 100
UOG Italia
Srl*
Viale
Gioacchino
Rossini 9,
00198,
Rome, Oil and gas
Italy exploration Ordinary Italy 100 100
UOG Jamaica
Ltd*
200
Strand,
London, Oil and gas England and
WC2R 1DJ exploration Ordinary Wales 100 100
UOG Crown
Ltd*
200
Strand,
London, Oil and gas England and
WC2R 1DJ exploration Ordinary Wales 100 100
UOG Colter
Ltd*
200
Strand,
London, Oil and gas England and
WC2R 1DJ exploration Ordinary Wales 100 100
UOG Egypt Oil and gas Ordinary Australia 100 -
Pty exploration
Sydney
2000, New
South
Wales,
Australia
*held indirectly by United Oil &
Gas Plc
10. Intangible assets Exploration and Computer software
Evaluation assets $ Total
$ $
Cost
At 1 January 2019 5,226,219 - 5,226,219
Additions 3,086,027 11,374 3,097,401
Disposals (792,033) - (792,033)
Foreign exchange
differences 207,925 - 207,925
------------------ ------------
At 31 December 2019 7,728,138 11,374 7,739,512
Acquired in
business
combinations 3,181,362 - 3,181,362
Additions 1,457,307 - 1,457,307
Transfer to
production assets (2,538,981) - (2,538,981)
Disposals (31,307) - (31,307)
Foreign exchange
differences 335,459 1,070 336,529
------------------ ------------
At 31 December 2020 10,131,978 12,444 10,144,422
------------------ ------------
Amortisation and
impairment
At 1 January 2019 - - -
Charge for the - - -
year
Impairment 2,111,319 - 2,111,319
Foreign exchange
differences 47,329 - 47,329
At 31 December 2019 2,158,648 - 2,158,648
Charge for the year - 3,862 3,862
Impairment 37,161 - 37,161
Foreign exchange
differences 52,722 286 53,008
------------------ ------------
At 31 December 2020 2,248,531 4,148 2,252,679
------------------ ------------
Net book value
At 31 December 2020 7,883,447 8,296 7,891,743
======================== ================== ============
At 31 December 2019 5,569,490 11,374 5,580,864
======================== ================== ============
At 31 December 2020 the Group's E&E
carrying values of $7.9m related
to our exploration prospects in Abu
Sennan in Egypt, gas development
Selva asset in Italy, our high impact
exploration activity in Jamaica,
and the UK North Sea and Wessex basin
exploration/development work programmes.
During the year we completed the
acquisition of Rockhopper Egypt Pty
which came with a portfolio of exploration
prospects and commitments, successfully
applied and were awarded the Maria
field in the OGA 32(nd) North Sea
licencing round, gained full 100%
operatorship of our Jamaican high
impact exploration licence after
Tullow Jamaica Limited relinquished
their 80% share, and have made the
decision to write down remaining
expenditure on the Colter wells after
they were relinquished in January
2021.
Our Italian development at the Selva
field continued to make progress
in 2020. Factoring in the impact
of Covid-19, we are now targeting
first production by mid- 2022. Formal
technical environmental approval
from the Italian Environmental Ministry
was granted in January 2020 and preliminary
work has commenced on the development
programme preparing for first gas.
Testing has previously indicated
rates of 150,000scm/day with UOG's
economic interest being 20%. At the
Balance Sheet date $2,659,922 had
been capitalised for our Italian
asset.
In August 2020, the Group was assigned
Tullow Jamaica Ltd.'s 80% equity
in the Walton Morant licence meaning
United now operate 100%. The initial
exploration period was extended until
31 January 2022 when an initial drill-or-drop
decision is required. The Group has
commenced a work programme to further
de-risk the high-graded Colibri prospect
and perform detailed interpretation
of the numerous follow-on targets.
This work will have an impact on
the continuing farm-down process.
As at 31 December 2020 the Group
are carrying $3,602,178 for Jamaica
in its Intangibles assets.
In the UK North Sea, Licence P2519,
containing two blocks including the
Palaeocene Maria discovery, was acquired
in the OGA's 32(nd) licensing round
which is only 10KM from our previously
awarded acreage in the 31(st) licencing
round. Together with the awards in
the 31(st) round United has an exciting
work programme in place and costs
to date on the balance sheet of $214,082
are capitalised. The work programme
continues on the Waddock Cross development
with current capitalised costs at
yearend of $565,241. In the Wessex
Basin United decided with its partners
to relinquish the PEDL licences,
effective 31 January 2021. As a result,
costs remaining capitalised of $37,161
were written down.
A key achievement in 2020 was the
completion of the acquisition of
Rockhopper Egypt Pty Limited which
came with valuable exploration licences.
Several exploration opportunities
and prospects exist within the Abu
Sennan licence and an exploration
commitment ASD 1X well was drilled
during early 2021 leading to a discovery.
As at the Balance Sheet date United
had $842,024 capitalised as E&E in
UOG Egypt Pty Limited.
Management reviews the intangible
exploration assets for indications
of impairment at each balance sheet
date based on IFRS 6 criteria. Commercial
reserves have not yet been established
and the evaluation and exploration
work is ongoing. The Directors believe
the only impairment indicators relate
to Colter (as described above) and
have impaired all associated costs
to date accordingly, with all remaining
assets described continuing to be
carried at cost.
11. Property, plant and equipment
Production Computer Fixtures Right of
assets equipment and use asset Total
$ $ fittings $ $
$
Cost
At 1 January
2019 - 6,952 - - 6,952
Transition to
IFRS 16 - - - 72,453 72,453
Additions - 1,637 - 41,860 43,497
Foreign
exchange
differences - - - 462 462
At 31 December
2019 - 8,589 114,775 123,364
Acquired in
business
combinations 10,630,944 - - 61,127 10,692,071
Transfer from
E&E assets 2,538,981 - - 2,538,981
Additions 2,806,734 6,755 2,971 204,763 3,021,223
Disposals - - - (186,700) (186,700)
Foreign
exchange
differences - (1,638) - 10,799 9,161
At 31 December
2020 15,976,659 13,706 2,971 204,764 16,198,100
Depreciation
At 1 January
2019 - 2,235 - - 2,235
Charge for the
year - 3,562 - 90,464 94,026
Foreign
exchange
differences - 15 - 366 381
At 31 December
2019 - 5,812 - 90,830 96,642
Charge for the
year 2,563,268 3,169 231 62,322 2,628,990
Disposals - - - (144,382) (144,382)
Foreign
exchange
differences - (1,665) 17 11,331 9,683
At 31 December
2020 2,563,268 7,316 248 20,101 2,590,933
Net book
value
At 31 December
2020 13,413,391 6,390 2,723 184,663 13,607,167
=========== =========== =========== =========== ===========
At 31 December
2019 - 2,777 - 23,945 26,722
=========== =========== =========== =========== ===========
Depreciation is recognised within
administrative expenses.
12. Business combinations
On 28 February 2020, the Company
announced that it had completed the
acquisition of 100% of the equity
share capital of UOG Egypt Pty Ltd
(formerly Rockhopper Egypt Pty Ltd).
from Rockhopper Exploration plc ("Rockhopper").
The acquisition was transformational
for the Group delivering a solid
production base and transitioning
the company to a full cycle E&P company.
The Acquisition, which had an effective
date of 1 January 2019, included
a 22% non-operating interest in the
producing Abu Sennan concession,
onshore Egypt. The consideration
payable to Rockhopper for the Acquisition
was US$16 million which was funded
by:
* the issue to Rockhopper of 114,503,817 Consideration
Shares at 3 pence per Ordinary Share representing
18.5% of the Company's Enlarged Ordinary Share
Capital,
* a pre-payment financing structure of US$8 million
provided by BP ('the BP Facility') and
* the issue of 150,616,669 Placing Shares at 3 pence
per share with certain existing and new investors and
8,419,498 Subscription Shares also at 3 pence per
share.
No goodwill has been recognised on
the acquisition because the fair
value of the identifiable net assets
was the same as the fair value of
the consideration transferred, as
shown in the table below. $
Fair value of consideration transferred
Cash 11,500,000
Liabilities assumed 3,259,090
Shares issued 3,933,276
18,692,366
Recognised amounts of identifiable
net assets
Intangible assets 3,181,362
Property, plant and equipment 10,692,071
-----------
Total non-current assets 13,873,433
Inventory 100,162
Trade and other receivables 4,759,717
Cash at bank and in hand 46,543
Total current assets 4,906,422
Trade and other payables (25,337)
Lease liabilities (62,152)
-----------
Total current liabilities (87,489)
Fair value of net assets acquired 18,692,366
The fair value of acquired receivables
was equal to the contractual amounts
receivable and all cash flows were
collected.
$
Net cash outflow on acquisition of subsidiary
Consideration paid in cash 11,500,000
Less: cash and cash equivalent balances acquired (46,543)
-----------
Total 11,453,457
===========
Post-acquisition contribution
The acquisition of UOG Egypt contributed
$9,053,657 revenue and $2,136,680
profit to the Group's results for
the year acquired.
If UOG Egypt had been acquired on
1 January 2020, revenue of the Group
for the year would have been $11,192,276
and profit for the year would have
been $5,754,327
13. Inventory
2020 2019
$ $
Oil in tanks 35,729 -
35,729 -
======= =====
14. Trade and other receivables
2020 2019
$ $
Other tax receivables 77,529 334,636
Prepayments 7,984 340,019
Accrued income 2,518,794 -
Crown disposal proceeds due 2,850,000 2,850,000
5,454,307 3,524,655
========== ==========
The Directors consider that the carrying
values of trade and other receivables
are approximate to their fair values.
No expected credit losses exist in
relation to the Group's receivables
as at 31 December 2020 (2019: $nil).
Accrued Income relates to two months
Oil & Gas invoices for the Abu Sennan
producing assets in Egypt under the
receivable terms of the agreement
with EGPC.
Prepayments and deposits relate to
monies paid in advance in relation
to the Rockhopper acquisition completed
after the balance sheet date, and
2 months advance rent on the office.
Crown disposal proceeds due are being
carried at the full value expected
to be received (see note 3).
15. Cash and cash equivalents
2020 2019
$ $
Cash at bank (GBP) 132,913 263,536
Cash at bank (EUR) 25,561 21,465
Cash at bank (USD) 16,980 990,536
Cash at bank (EGP) 2,013,448 -
2,188,902 1,275,537
========== ==========
At 31 December 2020 and 2019 all
significant cash and cash equivalents
were deposited in creditworthy financial
institutions in UK, Ireland and Egypt.
16. Share capital and share premium
Allotted, issued, and fully paid:
2020
Share capital Share premium
No $ $
Ordinary shares of GBP0.01 each
At 1 January 2020 345,613,985 4,564,787 9,912,988
Allotments:
Shares issued in consideration
for business combination 114,503,817 1,463,002 2,470,274
Shares issued for cash 159,036,167 2,031,987 4,051,541
Shares issued for cash (exercise
of warrants) 6,000,000 78,843 118,266
Share issue expenses - - (505,094)
At 31 December 2020 625,153,969 8,138,619 16,047,975
2019
Share capital Share premium
No $ $
Ordinary shares of GBP0.01 each
At 1 January and 31 December 2019 345,613,985 4,564,787 9,912,988
As regards income and capital distributions,
all categories of shares rank pari
passu as if the same constituted
one class of share.
17. Share-based payments
Options
Details of the number of share options
and the weighted average exercise
price (WAEP) outstanding during the
year are as follows:
2020
Number of WAEP
Options GBP
Outstanding at the beginning of the year 11,117,647 0.05
Issued 35,650,043 0.04
Outstanding at the year end 46,767,690 0.04
Number vested and exercisable at 31 December 2020 - -
2019
Number of WAEP
Options GBP
Outstanding at the beginning of the year 11,117,647 0.05
Issued - -
Outstanding at the year end 11,117,647 0.05
Number vested and exercisable at 31 December 2019 - -
The fair values of share options
issued in the current financial year
were calculated using the Black Scholes
model as follows:
Share Share Share Share Share Share
options options options options options options
Date of 27 Oct 29 Sep 1 July 17 June 20 March 24 June
grant 2020 2020 2020 2020 2020 2019
Number
granted 1,481,481 1,565,741 6,107,843 14,767,500 8,060,811 3,666,667
Share price GBP0.03 GBP0.03 GBP0.03 GBP0.03 GBP0.01 GBP0.04
at date of
grant
Exercise GBP0.03 GBP0.03 GBP0.03 GBP0.04 GBP0.04 GBP0.03
price
Expected
volatility 85.31% 85.27% 82.66% 82.01% 65.31% 45.95%
Expected
life from
date of
grant
(years) 6.5 6.5 6.5 6.5 6.5 6.5
Risk free
rate -0.0384% -0.0821% -0.0280% -0.0322% 0.2543% 0.5769%
Expected
dividend
yield 0% 0% 0% 0% 0% 0%
Fair value GBP0.018 GBP0.019 GBP0.018 GBP0.019 GBP0.004 GBP0.021
at date of
grant
Earliest 27 Oct 29 Sep 1 July 17 June 20 March 24 June
vesting 2023 2023 2023 2023 2023 2022
date
Expiry date 27 Oct 29 Sep 1 July 17 June 20 March 24 June
2030 2030 2030 2030 2030 2029
Expected volatility was determined
based on the historic volatility
of the Company's shares for a period
averaging 1 year. The expected life
used in the model has been adjusted,
based on management's best estimate,
for the effects of non-transferability,
exercise restrictions and behavioural
considerations.
The Group recognised total expenses
of $267,766 (2019: $126,772) in the
income statement in relation to share
options accounted for as equity-settled
share-based payment transactions
during the year.
Warrants
Details of the number of share warrants
and the weighted average exercise
price (WAEP) outstanding during the
year are as follows:
2020
Number of WAEP
Warrants GBP
Outstanding at the beginning of the year 82,212,206 0.04
Issued 7,530,834 0.03
Exercised (6,000,000) 0.03
Outstanding at the year end 83,743,040 0.04
Number vested and exercisable at 31 December 2020 83,743,040 0.04
2019
Number of WAEP
Warrants GBP
Outstanding at the beginning of the year 82,212,206 0.04
Outstanding at the year end 82,212,206 0.04
Number vested and exercisable at 31 December 2019 82,212,206 0.04
The fair values of share warrants
issued or extended in the current
financial year were calculated using
the Black Scholes model as follows:
Share warrants
Date of grant 28 Feb 2020
Number granted 7,530,834
Share price at date of grant GBP0.03
Exercise price GBP0.03
Expected volatility 49.57%
Expected life from date of grant (years) 1.5
Risk free rate 0.2813%
Expected dividend yield 0%
Fair value / incremental fair value at date of grant GBP0.0064
Earliest vesting date 28 Feb 2020
Expected volatility was determined
based on the historic volatility
of a comparable company's shares
for a period averaging 1 year. The
expected life used in the model has
been adjusted, based on management's
best estimate, for the effects of
non-transferability, exercise restrictions
and behavioural considerations.
The Group recognised total expenses
of $62,516 (2019: $nil) in relation
to share warrants accounted for as
equity-settled share-based payment
transactions during the year in relation.
These were recognised as follows:
$62,516 (2019: $nil) as a deduction
from share premium related to share
warrants accounted for as equity-settled
share-based payment transactions
during the year.
18. Trade and other payables
2020 2019
$ $
Trade payables 836,759 403,816
Tax and social security - 26,151
Other payables 1,431,078 200,074
Deferred shares (note 19) 40,739 39,804
Accruals 687,539 415,856
2,996,115 1,085,701
========== ==========
19. Deferred shares
On 12 October 2015, the Company issued
30,000 Deferred Shares of GBP1 for
GBP30,000 to the founder, which have
an entitlement to a non-cumulative
annual dividend at a fixed rate of
0.1 per cent of their nominal value.
The Deferred Shares have no voting
rights attached to them and may be
redeemed in their entirety by the
Company for an aggregate redemption
payment of GBP1.
20. Leases
Right of use assets
The Group used leasing arrangements
relating to property, plant and equipment.
As the Group has the right of use
of the asset for the duration of
the lease arrangement, a "right of
use" asset is recognised within property,
plant and equipment.
When a lease begins, a liability
and right of use asset are recognised
based on the present value of future
lease payments.
2020 2019
$ $
Interest expense on lease liabilities 4,235 4,841
Total cash outflow for leases (78,936) (93,228)
Additions to right-of-use assets 265,890 114,313
Disposals from right-of-use assets (42,318) -
Depreciation charge - right of use assets (62,322) (90,464)
Foreign exchange movement on right of use assets (532) 96
Right of use assets - carrying amount at the 23,945 -
beginning
of the year:
-------------- --------------
Carrying amount at the end of the year: 184,663 23,945
============== ==============
Lease liabilities 2020 2019
$ $
Current 94,050 26,030
Non-current 96,787 -
------------- ------------
190,837 26,030
============= ============
21. Borrowings and derivatives
Amounts payable on borrowings held
by the Group falling due within one
year and in more than one year are:
2020 2019
$ $
Secured - at amortised cost
4,555,801 -
* Other loans
Current 2,133,655 -
Non-current 2,422,146 -
4,555,801 -
The assets of the Group are held
as security against the loan. 2020 2019
$ $
Separated embedded derivative
904,702 -
* Loan derivative liability (current)
647,376 -
* Loan derivative liability (non-current)
========== =====
- 1,552,078 -
Other derivative financial instruments
87,979 -
* Hedge derivative liability (current)
Summary of borrowing arrangements:
In February 2020, the Group entered
into a prepaid commodity swap arrangement
for $8 million to part-finance the
acquisition of Rockhopper Egypt Pty
Ltd. The funds will be repaid through
30 monthly repayments which are structured
as a fixed notional amount with variations
based on movements in oil prices.
Due to the price structure, the arrangement
includes an embedded derivative (a
forward contract). For financial
reporting purposes, this must be
separately accounted for at fair
value at each balance sheet date.
The balance of proceeds that did
not relate to the derivative were
treated as the opening carrying amount
of the loan which will then be measured
at amortised cost over its life,
with finance charges recognised to
give an even return over the loan
life and repayments of capital allocated
appropriately.
As at 31 December 2020, a fair value
gain has been recognised (as finance
income) as a result of oil price
movements in the period and on forward
price rates.
During the year modifications were
agreed to the loan whereby there
was a three-month period where payments
were suspended and the deferred amounts
will be rolled into payments in the
final 12 months of the loan.
Further put option hedging contracts
were entered into in the second half
of the year to manage oil price risk
. Each of these contracts is a standalone
derivative and those that were outstanding
at the end of the year were measured
at fair value, with gains and losses
in the income statement. Some arrangements
are still in place, extending to
June 2021.
The valuations of the host debt and
derivative on initial recognition
and valuation of the remaining embedded
derivative as at 31 December 2020
were undertaken using data provided
by independent third parties.
The fair value of the contracts has
been estimated using a valuation
technique that maximises the use
of observable market inputs. These
are classified as Level 2 in the
fair value hierarchy (see note 22).
Reconciliation of liabilities arising
from financing activities
2020 At 1 At 31
January Cash Interest Repaid Fair value FX December
2020 received accrued in cash movements movements 2020
$ $ $ $ $ $ $
Loan - 4,853,381 1,576,607 (1,866,712) - (7,475) 4,555,801
Embedded
derivative - 2,906,907 - 200,596 (1,731,116) 175,691 1,552,078
Derivative - - - (70,431) 158,410 - 87,979
- 7,760,288 1,576,607 (1,736,547) (1,572,706) 168,216 6,195,858
============================ ========== ---------- ------------ ------------ ---------- ==========
Fair value movements are recognised
in finance income (see note 6).
22. Financial instruments
Classification of financial instruments
The fair value hierarchy groups financial
assets and liabilities into three
levels based on the significance
of inputs used in measuring the fair
value of the financial assets and
liabilities.
The fair value hierarchy has the
following levels:
Level 1: quoted prices (unadjusted)
in active markets for identical assets
or liabilities;
Level 2: inputs other than quoted
prices included within Level 1 that
are observable for the asset or liability,
either directly (i.e. as prices)
or indirectly (i.e. derived from
prices); and
Level 3: inputs for the asset or
liability that are not based on observable
market data (unobservable inputs).
The level within which the financial
asset or liability is classified
is determined based on the lowest
level of significant input to the
fair value measurement.
The only financial instruments measured
at fair value in the balance sheet
are the embedded derivatives and
standalone derivatives which are
classified as Level 2 according to
the above definitions. There were
no transfers in or out of Level 2
in the year.
There are no financial instruments
classified at Level 1 or Level 3
in the years presented.
The tables below set out the Group's
accounting classification of each
class of its financial assets and
liabilities.
Financial assets measured at amortised cost 2020 2019
$ $
Accrued income (note 14) 2,518,794 -
Crown disposal proceeds due (note 14) 2,850,000 2,850,000
Cash and cash equivalents (note 15) 2,188,902 1,275,537
---------- ----------
7,557,696 4,125,537
========== ==========
All of the above financial assets'
carrying values are approximate to
their fair values, as at 31 December
2020 and 2019.
Financial liabilities
Measured at amortised cost
2020 2019
$ $
Trade payables (note 18) 836,759 403,816
Other payables (note 18) 1,431,078 200,074
Lease liabilities (note 20) 190,837 26,030
Borrowings (note 21) 4,555,801 -
Accruals (note 18) 687,539 415,856
7,702,014 1,045,776
In the view of management, all of
the above financial liabilities'
carrying values approximate to their
fair values as at 31 December 2020
and 2019.
Measured at fair value through profit or loss
2020 2019
$ $
Derivative financial 1,640,057 -
instruments (note 21)
1,640,057 -
Fair value measurements
This note provides information about
how the Group determines fair values
of various financial assets and financial
liabilities.
Fair value of financial assets and
financial liabilities that are not
measured at fair value on a recurring
basis
The directors consider that the carrying
amounts of financial assets and financial
liabilities recognised in the consolidated
financial statements approximate
their fair values (due to their nature
and short times to maturity).
Fair value of financial liabilities
that are measured at fair value on
a recurring basis
The fair value of derivative financial
instruments has been estimated using
a valuation technique that maximises
the use of observable market inputs.
.
23. Financial instrument risk exposure
and management
The Group's operations expose it
to degrees of financial risk that
include liquidity risk, credit risk,
interest rate risk.
This note describes the Group's objectives,
policies and process for managing
those risks and the methods used
to measure them. Further quantitative
information in respect of these risks
is presented in notes 14,15,18,20,21,22
and 24
Liquidity risk
Liquidity risk is dealt with in note
24 of these financial statements.
Credit risk
The Group's credit risk is primarily
attributable to its cash balances.
The credit risk on liquid funds is
limited because the third parties
are large international banks with
a minimum investment grade credit
rating.
The Group's total credit risk amounts
to the total of other receivables
and cash and cash equivalents. Credit
assessments are routinely reviewed
on all of the Group's joint venture
partners and other counterparties.
Interest rate risk
The Group's only exposure to interest
rate risk is the interest received
on the cash held on deposit, which
is immaterial. The Group's borrowings
outstanding at 31 December 2020 are
structured in such a way that the
notional interest charge is fixed
and therefore there is no interest
rate risk. There were no borrowings
as at 31 December 2019.
Price risk
The Group manages its exposure to
commodity price risk on an ongoing
basis. As described in note 12, the
loan for the acquisition of Rockhopper
Egypt also involved a derivative
arrangement to manage the exposure
arising from having the loan payments
based on oil quantities rather than
a fixed cash price. Further arrangements
were initiated and closed during
the reporting period, and others
remain outstanding and will be settled
based on contract timing into 2021.
The combined put and call arrangements
provide the Group with protection
against price movements on either
side of a protected corridor.
Foreign exchange risk
The Group is exposed to foreign exchange
movements on monetary assets and
liabilities denominated in currencies
other than USD. The Group's transactions
are carried out in GBP, EUR and USD.
Equity funding transactions are carried
out in GBP. Operational transactions
are carried out predominantly in
USD but also in GBP and EUR.
The monetary assets and liabilities
denominated in currencies other than
USD are relatively immaterial (see
notes 14 and 15) and transactional
risk is considered manageable.
The Group does not hold material
non-domestic balances and currently
does not consider it necessary to
take any action to mitigate foreign
exchange risk due to the immateriality
of that risk.
24. Liquidity risk
Prudent liquidity risk management
includes maintaining sufficient cash
balances to ensure the Group can
meet liabilities as they fall due.
In managing liquidity risk, the main
objective of the Group is therefore
to ensure that it has the ability
to pay all of its liabilities as
they fall due. The Group monitors
its levels of working capital to
ensure that it can meet its debt
repayments as they fall due. The
table below shows the undiscounted
cash flows on the Company's / Group's
financial liabilities as at 31 December
2020 and 2019, on the basis of their
earliest possible contractual maturity.
Within Within Within Within
Payable Within 2 2 -6 6 - 12 1-2 2-5
Total on demand months months months years years
$ $ $ $ $ $ $
At 31
December
2020
Trade
payables 836,759 - 836,759 - - - -
Other
payables 1,431,078 1,431,078 - - - - -
Lease
liabilities 210,007 - 22,081 31,937 54,630 93,963 7,396
Borrowings 6,288,305 - 533,346 1,066,692 1,918,320 2,769,947 -
Derivative
financial
instruments 87,980 - - - 87,980 - -
Accruals 687,539 - - 687,539 - - -
---------- ---------- ---------- ---------- ---------- ---------- -------
9,541,668 1,431,078 1,392,186 1,786,168 2,060,930 2,863,910 7,396
At 31
December
2019
Trade
payables 403,816 - 403,816 - - -
Other
payables 200,074 200,074 - - - -
Lease
liabilities 26,446 - 17,631 8,815 - -
Accruals 415,856 - - 415,856 - -
1,046,192 200,074 421,447 424,671 - -
25. Capital management
The Group's capital management objectives
are:
* To provide long-term returns to shareholders
* To ensure the Group's ability to continue as a going
concern
The Group defines and monitors capital
on the basis of the carrying amount
of equity plus borrowings less cash
and cash equivalents as presented
on the face of the balance sheet
and as follows:
2020 2019
$ $
Equity 19,659,650 9,105,601
Borrowings 4,555,801 -
Cash and cash equivalents (2,188,902) (1,275,537)
------------ ------------
22,026,549 7,830,064
============ ============
The Board of Directors monitors the
level of capital as compared to the
Group's commitments and adjusts the
level of capital as is determined
to be necessary by issuing new shares.
The Group is not subject to any externally
imposed capital requirements.
These policies have not changed in
the year. The Directors believe that
they have been able to meet their
objectives in managing the capital
of the Group.
26. Related party transactions
Key management personnel are identified
as the Executive Directors, and their
remuneration is disclosed in note
5.
27. Financial commitments
As at 31 December 2020, the Group's
commitments comprise their producing
assets and exploration expenditure
in Egypt, exploration expenditure
interests in Waddock Cross, Crown,
and the Walton-Morant licence, and
development expenditure in Italy.
These commitments have been summarised
below:
Exploration/Production Year Year
licence ending 31 ending 31
December December
2020 2021
$ $
Abu Sennan - 4,629,900
Crown 9,952 140,000
Colter 6,774 -
Walton-Morant licence 103,407 402,500
Selva Malvezzi 177,883 82,564
Waddock Cross 47,314 47,198
345,330 5,302,162
----------------- -----------------
28. Ultimate controlling party
The directors do not consider there
to be an ultimate controlling party.
29. Events after the balance sheet
date - to complete closer to sign
off
1. ASH 3 Well Test Update
On the 23 of February 2021 the company
announced an update on the testing
of the ASH-3 development well in
the Abu Sennan concession, onshore
Egypt. The ASH-3 well was spudded
on 4 of January 2021, reached a total
depth of 4.087 metres on the 8 February
2021 which was ahead of schedule
and under budget. Gross hydrocarbons
indicates a column of 59m in the
primary AEB reservoir target, 27.5m
of which is estimated to be net pay.
The well was immediately brought
onstream through the existing ASH
facilities and is producing at an
average of over 4,000 boepd (880
boepd net) since coming onstream
on 5 March 2021, of which United
holds a 22% non-operating interest.
2. Discovery at ASD-1X Well, Abu
Sennan Concession, Egypt
On the 6 of April United announced
the preliminary results of the ASD
1X exploration well discovery, which
encountered a total of at least 22m
net oil pay across a number of reservoirs.
Well testing is ongoing, and if successful,
will be followed by an application
to Egyptian General Petroleum Company
('EGPC') for a development lease
over this new discovery. The ASD-1X
exploration well, located 12KM to
the north-east of the producing Al
Jahraa Field, safely reached Total
Depth (TD) of 3,750 MD on 30 March
2021, several days ahead of schedule
and under-budget.
Glossary
Non-IFRS measures
The Group uses certain measures of
performance that are not specifically
defined under IFRS or other generally
accepted accounting principles.
Cash-operating costs per barrel
Cash operating costs are defined
as cost of sales less depreciation,
depletion and amortisation, production
based taxes, movements in inventories
and certain other immaterial cost
of sales.
Cash operating costs are then divided
by barrels of oil equivalent produced
to demonstrate the cash cost incurred
to producing oil and gas from the
Group's producing assets. Year
ended
31 December
2020
Audited
$
Cost of Sales 6,505,011
Less
Depreciation, depletion and amortisation -2,563,268
Inventories -64,433
Cash operating costs 3,877,310
Production
(BOEPD) 2,195
Cash Operating Cost
BOE ($) 5.77
EBITDAX
EBITDAX is earnings from continuing
activities before interest, tax,
depreciation, amortisation, reversal
of impairment, and exploration expenditure
and exceptional items in the current
year.
Year
ended
31 December
2020
Audited
$
Operating Income (Loss) 804,318
Depreciation, Depletion
& Amortisation 2,628,990
Exploration Expense 37,161
3,470,469
=============
For more information, please visit
the Company's website at www.uogplc.com
or contact:
United Oil & Gas Plc (Company)
Brian Larkin, CEO brian.larkin@uogplc.com
Beaumont Cornish Limited (Nominated
Adviser)
Roland Cornish and Felicity Geidt +44 (0) 20 7628 3396
Optiva Securities Limited (Broker)
Christian Dennis +44 (0) 20 3137 1902
Murray (PR Advisor) +353 (0) 87 6909735
Joe Heron jheron@murrayconsultants.ie
Camarco (Financial PR/IR)
Billy Clegg +44 (0) 20 3757 4983
James Crothers uog@camarco.co.uk
Notes to Editors
United Oil & Gas is a high growth oil and gas company with a
portfolio of low-risk, cash generative production and development
assets across Egypt, UK, Italy and a high impact exploration
licence in Jamaica.
The Company is led by an experienced management team with a
strong track record of growing full cycle businesses and partnered
with established industry players and well positioned to deliver
future growth through portfolio optimisation and targeted
acquisitions.
United Oil & Gas is listed on the AIM market of the London
Stock Exchange. For further information on United Oil and Gas
please visit https://www.uogplc.com/
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