Annual Report and Financial Statements
EUROPA OIL & GAS (HOLDINGS) plc
For the year ended 31 July 2021
Company registration number 05217946
Introduction / Highlights
Europa Oil & Gas (Holdings) plc, the AIM traded Ireland, Morocco and UK focused oil and gas
exploration, development and production company, announces its final results for the 12 month period
ended 31 July 2021.
Operational highlights
Building a balanced portfolio of exploration and production assets
Onshore UK – Wressle more than doubles net production to over 200bopd
• First oil at Wressle achieved
o Production established in excess of target gross rate of 500bopd post period end
o Europa’s net share of Wressle production equates to over 150bopd
o With an estimated break-even oil price (excluding Europa’s corporate overheads) of
US$17.6 per barrel, Wressle production is highly profitable at current oil prices
o Well flow is continuing to clean-up and has not yet reached its full potential
• 93boepd was produced from Europa’s UK onshore fields during the year with early Wressle test
production covering the decline of three older fields and comparing favourably to 92boepd FY20
• Geothermal energy
o MOU signed with Causeway Geothermal (NI) Ltd to carry out studies to assess the
potential of Europa’s West Firsby field as a test site for sustainable, clean geothermal
energy systems
o West Firsby regarded as an ideal geothermal energy test site due to comprehensive dataset,
existing well bores and geothermal gradient
o Potential to convert onshore legacy oilfields into sources of clean and reliable energy forms
part of Europa's ESG strategy
Offshore Morocco - Farmout Launch of Inezgane Licence in the Agadir Basin, Morocco
• Follows completion of technical work which identified a significant volume of unrisked resource -
in excess of 2 billion barrels (oil equivalent) in the top five ranked prospects alone
•
Inezgane lies on the same geological trend which has led to major oil and gas discoveries along the
west coast of Africa with reservoirs and source rocks in common with the prolific West African
play
• Ongoing discussions with a number of potential co-venturers looking to farm-in
• One year extension to initial phase of the licence to November 2022 granted to allow for time lost
as a result of Covid-19
Offshore Ireland - Lower risk / very high reward infrastructure-led exploration in proven gas play
in the Slyne Basin
• Awaiting regulatory approval of acquisition of 100% interest in Frontier Exploration Licence
('FEL') 3/19, which includes the 1.2 tcf Edge prospect and lies close to the ~1tcf producing Corrib
gas field
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• FEL 3/19 lies close to Europa's FEL 4/19 which holds the 1.5 tcf Inishkea prospect
•
Farmout of FELs 3/19 and 4/19 commenced conditional on regulatory approval of the acquisition
of FEL 3/19
Covid-19
• Operational activity has continued at the four production sites
• London office has been exited generating cost saving
• All salaries and fees have been re-instated to levels pre Covid-19
• The Group has not taken any Covid government assistance since taking out the £50k Bounce back
loan in the prior year
Financial performance
• Revenue £1.4 million (2020: £1.2 million)
• Pre-tax loss of £0.85 million (2020: pre-tax loss £5.4 million including write-offs taken following
relinquishment of Irish licences)
• Net cash used in operating activities £0.5 million (2020: £0.8 million)
• Cash balance: at year end £0.6 million (2020: £0.8 million)
Board
• Appointment of Simon Oddie as CEO on a permanent basis in August 2020
• Appointment of Senior Independent non-executive Director Mr Brian O’Cathain as non-executive
Chairman
Post reporting period events
•
Inezgane licence farmout officially announced on 3rd August 2021
• Wressle achieved over 500 bopd after successful proppant squeeze operations in late August 2021
and this increased to 950 boepd in September which was over previous expectations
• Following the achievement of 500bopd oil flow rate as announced in August 2021, the Directors
consider that Wressle has met the requirements under IFRS6 for transfer to producing assets as of
that date
Simon Oddie, CEO of Europa, said:
“The milestones we achieved across our multistage portfolio of licences during the year under review have
laid the foundations for an exciting new phase in our growth trajectory. Notably, with the Wressle Oil Field
in North Lincolnshire delivering first oil and achieving its target of 500 barrels per day, Europa’s UK
onshore net production has doubled to over 200 bopd post period end. Wressle is showing capacity to
produce at significantly higher rates than the previous target and further major development potential exists
in other reservoirs. With oil prices above US$80/barrel, this achievement provides a massive boost to the
Company’s financial profile and in turn will give us a platform with which to pursue our strategy of
developing significant value accretive opportunities while minimising risk.
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“Elsewhere, we are also pleased with the response to the farmout launch for our highly prospective Inezgane
Licence in Agadir Basin, Morocco and the strong interest, to date, from potential operators. I am excited
about the future possibilities at Inezgane, which has the potential to hold over two billion barrels of unrisked
prospective resources and complements the Company’s goal to have a balanced portfolio of energy assets.
The technical work completed in the last 12 months has focused on the top five ranked prospects - each of
which have mean resources in excess of 200 mmboe at the Albian level.
“In Ireland, we are still awaiting regulatory approval for our acquisition of a 100% interest in Frontier
Exploration Licence (‘FEL’) 3/19 located close to Corrib - Ireland’s biggest producing gas field. Subject to
approvals, we will be progressing the farmout of both the newly acquired FEL 3/9 and our existing 100%-
owned FEL 4/19 – our two strategic offshore gas assets in the Slyne Basin.
“Europa is also advancing its ESG ambitions during the past year signing a MOU with Causeway
Geothermal (NI) Ltd in late June to investigate the potential of our mature oilfield at West Firsby in the
East Midlands, as a test site for the production of geothermal energy. This firmly aligns with our stated
objective of playing a key role in the UK’s transition to green energy. With much activity expected across
our existing portfolio as well as our continued evaluation of a number of potential late-stage
appraisal/development ventures, I look forward to updating the market on developments in the months
ahead.”
For further information please visit www.europaoil.com or contact:
Simon Oddie
Europa
Christopher Raggett / Simon Hicks
finnCap Ltd
James Pope / Andy Thacker
Turner Pope
mail@europaoil.com
+44 (0) 20 7220 0500
+44 (0) 20 3657 0050
Susie Geliher / Oonagh Reidy
St Brides Partners
+44 (0) 20 7236 1177
This announcement contains inside information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under
Article 17 of MAR..
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Contents
Introduction / Highlights ............................................................................................................................................ 1
Contents ......................................................................................................................................................................... 4
Chairman's statement ................................................................................................................................................... 5
Our portfolio ................................................................................................................................................................. 8
Our strategy ................................................................................................................................................................... 9
Operations .................................................................................................................................................................... 10
Risks and uncertainties ............................................................................................................................................... 13
Director’s statement under Section 172 (1) of the Companies Act 2006 .......................................................... 14
Chairman’s introduction to governance .................................................................................................................. 17
Audit Committee Report ........................................................................................................................................... 23
Remuneration Committee Report ............................................................................................................................ 24
Nominations Committee Report .............................................................................................................................. 24
Board of Directors ...................................................................................................................................................... 25
Directors’ report .......................................................................................................................................................... 27
Statement of Directors’ responsibilities .................................................................................................................. 29
Independent auditor’s report to the members of the Europa Oil & Gas (Holdings) plc ............................... 30
Consolidated statement of comprehensive income .............................................................................................. 39
Consolidated statement of financial position ......................................................................................................... 40
Consolidated statement of changes in equity ......................................................................................................... 41
Company statement of financial position ............................................................................................................... 42
Company statement of changes in equity ............................................................................................................... 43
Consolidated statement of cash flows ..................................................................................................................... 44
Company statement of cash flows ........................................................................................................................... 45
Notes to the financial statements ............................................................................................................................. 46
Directors and advisers ................................................................................................................................................ 71
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Europa Oil & Gas (Holdings) plc
Chairman's statement
Despite the ongoing Covid-19 situation and economic volatility, the financial year 2020/21 marked a
transformational period in Europa’s history. Oil prices have rebounded and major milestones achieved in the
year to 31 July 2021 include the Wressle Oil Field coming into production in early 2021, which has more than
doubled the Company’s net production to over 200bopd, and positive results from our technical work
programme on the Inezgane Licence in offshore Morocco - identifying a significant volume of potential resource
- in excess of 2 billion barrels.
In the period ahead, we look forward to well flow at Wressle achieving its full potential once the clean-up process
has been completed, at which point attention can be turned towards the additional development opportunities
on the licence. In the meantime, Wressle continues to produce at above 500bopd (over 150bopd net to the
Company) generating significant cash flow for the Company. In Morocco, we continue to showcase the
excellent results of our technical work programme to prospective partners and we look forward to updating the
market on developments of the farm out of Inezgane. We continue to evaluate potential additional assets to
improve the balance of our portfolio.
Elsewhere, the signing of an agreement with Causeway Geothermal (NI) Ltd in June to investigate West Firsby’s
potential as a geothermal production site in the UK was also another major milestone for the Company as it
looks to play a role in a clean energy future. Geothermal energy may provide a future role for our mature oilfields.
The news of the agreement with Causeway Geothermal inspired excitement among shareholders and the wider
investment community and we look forward to updating the market as work progresses.
Onshore UK
The headline story of the past 12 months across Europa’s portfolio has undoubtedly been the successful
commencement of test production at Wressle in early 2021 – which as a result has become the Company’s fourth
producing onshore oil field in the West Midlands. By adding 150bopd in late August 2021 Wressle has more
than doubled the Company’s net oil production to over 200 bopd from 92bopd in 19/20 financial year. This
excellent outcome followed the successful execution of the field development plan which included the successful
and safe completion of operations to recomplete the Wressle-1 well, followed by the reperforation of the
Ashover Grit reservoir interval and the proppant squeeze, which saw Wressle hit an initial gross production rate
of over 500bopd exceeding the pre-operations target.
Bringing Wressle-1 on stream is only just the beginning of the growth story at Wressle, with considerable upside
existing across other formations that were encountered by Wressle-1, such as the Penistone Flags, all of which
represent low cost/low risk follow-up opportunities. Wressle therefore provides a strong platform for future
growth. For now, with a break-even oil price of just US$17.6, and with oil prices currently above US$80/ barrel,
Wressle is set to be a huge driver of profitability and cash flow for the Company. This is in line with our
corporate goal of building a cash generative oil and gas company, one which provides shareholders with exposure
to multiple value creating opportunities, while minimising capital risk.
Other onshore UK opportunities are in line with our shift to contributing to the clean energy transition with the
signing of an MOU with Causeway Geothermal to investigate the potential of our West Firsby field as a
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Europa Oil & Gas (Holdings) plc
geothermal production site in the UK. The asset is regarded as an ideal geothermal energy test site due to a
comprehensive dataset, existing well bores and favourable geothermal gradient. The move highlights Europa’s
commitment to developing clean energy solutions and meeting our previously outlined ESG ambitions.
Offshore Morocco
In Morocco, we have made huge strides at our Inezgane licence in the Agadir Basin, which we acquired in 2019.
During the period under review, the Company completed technical work at the licence, which generated an
unrisked resource volume in excess of 2 billion barrels (oil equivalent) in the top five ranked prospects alone:
Alpha, Charlie, Falcon, Turtle and Sandpiper. This excellent result allowed the Company to launch its farm out
of this high-impact exploration opportunity in August 2021. Interest received to date from potential partners
has been very encouraging. Located on the same geological trend as major oil and gas discoveries along the west
coast of Africa, the farm out presents a substantial opportunity for potential partners and is in line with Europa’s
strategy of seeking to expose shareholders to impactful activity while minimising risk. Prominent energy players
already operating in the area include ENI and Hunt.
Offshore Ireland
Offshore Ireland, the Company’s focus remains on its gas interests in the Irish Sea located in close proximity to
the already producing Corrib gas field.
We are still awaiting approval from the Irish regulators for our acquisition of a 100% interest in Frontier
Exploration Licence (‘FEL’) 3/19 – building on our existing flagship project 1.5 tcf Inishkea gas prospect -
Frontier Exploration Licence (‘FEL’) 4/19 – located in the Slyne Basin.
Subject to regulatory sign-off, we plan to farm out our newly enlarged strategic position in the Slyne Basin, which
as per our Moroccan strategy, represents a massive opportunity for the Company, given the licences’ strategic
location beside the Corrib gas field, which although Ireland’s largest producing gas field, is in decline. Given the
proximity to existing infrastructure and location in a proven play, we regard our exploration licences in the Slyne
Basin as low development cost, low risk and, with 2.7tcf of potential gas resources in play, high reward. As 100%
owners of the two largest prospects located close to the producing Corrib gas field and existing processing
facilities, Europa’s strategic position in what is a key transition fuel is unparalleled in the Irish market.
Domestic gas plays a crucial role in Ireland’s overall energy mix. With no new domestic sources of supply on
the horizon, a pinch point is fast approaching - the energy regulator, the Commission for Regulation of Utilities
and grid operator EirGrid, has warned there is a real danger of electricity blackouts in the future. Together with
the forthcoming closure of power stations in Ireland and growing demand for energy from an increasing number
of power-hungry data centres, domestic gas production can offer a solution to Ireland’s energy needs during the
energy transition. With gas playing a vital role in the country’s future energy mix following the government’s
decision to phase out oil exploration in 2019, Europa’s assets have the potential therefore to play a vital part in
supplying Ireland’s future energy needs.
Board Changes
This past year has also seen major changes at senior management and board level with the appointment of
interim CEO and non-executive Chairman Simon Oddie as our permanent chief executive in August. In turn, I
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Europa Oil & Gas (Holdings) plc
took on Simon’s previous role as non-executive Chairman having formerly held the role of senior non-executive
director. Simon was appointed interim CEO and non-executive Chairman in November 2019 following the
departure of Hugh Mackay. In October, the Company’s long-serving Finance Director, Mr Phil Greenhalgh,
retired after over twelve years of service to the Company as Finance Director and Company Secretary. I would
like to thank Phil for his years of excellent service, and his contribution to the success of the Company, on behalf
of the board of directors and the shareholders.
Conclusion and Outlook
The Company is firmly on its way to achieving its previously stated goal of generating material production-based
revenues and also creating significant value-creating opportunities. Thanks to resilient oil prices over the past
year, which are currently above US$80/barrel, our investment in Wressle has paid off as a fully operational and
cash generative asset which has served to more than double Europa’s oil production and provide a major boost
to the Company’s profitability. This in turn will allow us to explore new opportunities both in the oil and gas
space but also across the wider energy sphere. Our aim remains to engage in potentially high reward activity
without putting the Company’s balance sheet at risk.
Looking ahead after a transformational 12 months, our focus is now on advancing our strategy of growing our
existing portfolio both organically and via acquisitions which may add to our existing assets to create a balanced
portfolio.
As previously stated, we are looking to add a third leg to the business which may include late-stage appraisal and
development ventures. To this end, we are currently evaluating a number of potential opportunities and I look
forward to updating the market on developments.
Finally, on behalf of the Board, I would like to thank the management, employees and consultants for their hard
work on behalf of our shareholders and stakeholders during the past year and who worked tirelessly despite the
ongoing Covid-19 restrictions. The fact that the Company achieved so much in the past year despite the
pandemic is a testament to the team’s dedication and focus.
Mr Brian O’Cathain (Non-Executive Chairman)
20 October 2021
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Europa Oil & Gas (Holdings) plc
Our portfolio
Country
Area
Licence
Field/ProspectProsp Operator
Equity
Status
Ireland
Slyne Basin
UK
East Midlands
FEL 4/19
Inishkea, Corrib North Europa
100% Exploration
FEL 3/19
Edge
DL 003
West Firsby
Europa
Europa
100%1 Exploration
99% Production
DL 001
Crosby Warren
Europa
100% Production
PL 199/215
Whisby-4
PEDL180
Wressle
PEDL181
BPEL
Egdon
Europa
65% Production
30% Development2
50% Exploration
PEDL182
Broughton North
Egdon
30% Exploration
PEDL299
Hardstoft
PEDL343
Cloughton
Ineos
Egdon3
25% Field rejuvenation
40%4 Appraisal
Morocco
Agadir Basin
Inezgane
Falcon & Turtle
Europa
75% Exploration
1 Subject to regulatory approval
2 Reported as an exploration asset pending the end of test production
3 Subject to regulatory approval
4 Subject to regulatory approval
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Europa Oil & Gas (Holdings) plc
Our strategy
Our strategy
Europa's objective is to create capital growth for its shareholders by building a balanced portfolio of assets.
Successful drilling of its high impact exploration portfolio in combination with the appraisal, development and
production parts of the business cycle will deliver significant value and our new ventures strategy is now focused
exclusively on opportunities in this area.
Our area of interest is the Atlantic seaboard, north Africa and northwest Europe. We are prepared to evaluate
and acquire quality assets wherever they become available provided that they are in countries that have low
political, regulatory and security risks and have
transparent
licensing processes
together with
acceptable commercial terms.
Strategy committee
Following the creation of the committee by the Board in 2019 to ensure delivery of the strategy, meetings were
held with SG Oddie as chair. SG Williams joined CW Ahlefeldt-Laurvig and BJ O’Cathain as a member.
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Europa Oil & Gas (Holdings) plc
Operations
Operational review
UK Production - East Midlands
Europa produces oil from four UK oilfields Wressle, West Firsby, Crosby Warren; and Whisby-4.
Commencement of oil flow at Wressle was achieved in Q1 2021. In line with the field development plan, the
field achieved the pre-operations gross production target of 500bopd post period end in August 2021. Europa
holds a 30% working interest in licences PEDL180 and 182 which hold Wressle and Broughton, alongside
Egdon Resources (operator, 30%), and Union Jack Oil (40%) and as a result, Europa’s net production currently
stands at over 200bopd – which marks a doubling of output versus a year ago. As Wressle achieved targeted
gross production of 500bopd post period end, in the financial year to 31 July 2021 an average of 93 boepd net
to Europa was recovered from its oil fields.
Wressle is now the Company’s single biggest producing oil field. Our other three fields are in decline, however,
investigations into ways to improve recovery rates at a number of wells on the fields are underway – including
potential workovers at the West Firsby field.
UK Development – Wressle Oil Field
We have continued to actively progress our efforts at our UK onshore acreage with the focus on establishing
the free flow of oil at Wressle on our PEDL 180 and 182 licences in North Lincolnshire. We hold a 30% working
interest in the licences, alongside Egdon Resources UK Limited (30% and the operator) and Union Jack Oil
(40%). Wressle was discovered in 2014 by the Wressle-1 conventional exploration well which intersected three
productive reservoir horizons.
Earlier this year, we were advised by the operator that the proppant squeeze operation on the Ashover Grit
reservoir interval in the Wressle-1 well had been completed safely and successfully. This involved the injection
of a total of 146 cubic metres of gelled fluid and 17.3 tonnes of ceramic proppant into the Ashover Grit
formation in line with the authorised programme.
Following the proppant squeeze, we announced that Wressle - 1 was producing at above the targeted initial gross
rate of 500bopd. At this rate, Europa's 30% interest in the field translates into 150bopd net to the Company,
which, when combined with the 83 bopd produced by our three existing fields in the East Midlands, increases
overall production to over 200 bopd. This, together with oil prices trading at over US$80 per barrel, means that
Wressle has resulted in a sustainable step-up in the Company's net production and revenues.
The commencement of oil flow at Wressle does not represent the sum of development ambitions for our existing
onshore UK portfolio. Scope remains to increase production across our fields, specifically by improving
recovery rates and targeting proven intervals. We intend to further evaluate the potential to undertake workovers
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Europa Oil & Gas (Holdings) plc
on wells at the West Firsby field. Any development activity undertaken is likely to be relatively low cost and low
risk.
The same can be said for future development work at Wressle where a number of follow-up opportunities have
already been identified on PEDLs 180 and 182. In September 2016, a Competent Person's Report ('CPR')
provided independent estimates of reserves and contingent and prospective oil and gas resources for Wressle of
2.15 million stock tank barrels classified as discovered (2P+2C). Further development of Wressle, including
producing additional reserves existing in the Penistone Flags formation, is expected in the future. Our existing
onshore UK assets therefore offer considerable run room to build on our success at Wressle and grow
production and revenues further.
Exploration: Offshore Morocco
The Inezgane licence in Morocco remains a hugely valuable asset for the Company and we were delighted to
have recently launched the official farmout of this licence – a move which we believe will be a significant event
for our shareholders. We were awarded a 75% interest in the licence in September 2019 and since then have
undertaken a great deal of technical work which has involved the reprocessing and interpreting of historic 3D
seismic data. Using state of the art processes it has helped to focus our efforts on identifying the sizeable
prospects in the Lower Cretaceous play, a prolific producer in West Africa.
We are now seeking a partner to work with us to take the licence forward to maximise its potential. With this
in mind, we have been encouraged by the interest generated by the launch of the farmout among major players.
There have been a number of discoveries over recent years on the same trend line (and with similar geological
horizons) both in oil and in gas. Morocco is an excellent place to do business and the country is certainly at the
forefront of taking its ESG responsibilities very seriously. It is a country that generates a great deal of power
from hydroelectric, wind and solar, however oil and gas still have a significant part to play as Morocco transitions
towards a sustainable energy future.
Exploration: Offshore Ireland
As has been previously outlined, Europa’s offshore Ireland portfolio has undergone a shift from early-stage oil
exploration in unproven basins to infrastructure-led gas exploration in the proven Slyne Basin. For what was a
nominal sum, we acquired a 100% interest in FEL 3/19 which holds the 1.2 tcf Edge prospect and is located
close to the producing Corrib gas field as well as our own 1.5 tcf Inishkea prospect on FEL 4/19.
We are awaiting regulatory sign-off and subject to receiving this, Europa will control a 100% interest in the only
two known 1 tcf plus gas prospects that lie close to Corrib and its production and processing facilities.
The focus is to attract a potential partner for these assets which would help accelerate high impact development
activity.
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Europa Oil & Gas (Holdings) plc
Financials
Revenue was £1,372,000 (2020: £1,244,000). The average oil price achieved was US$56.6/bbl (2020:
US$48.0/bbl) and the average Sterling exchange rate was US$1.37 (2020: US$1.27). An average of 93 boepd
(2020: 92 boepd) was recovered from our four UK onshore fields. Production (bopd) was 23 at West Firsby, 27
at Crosby Warren, 33 net at Whisby and 10 net at Wressle.
Stringent cost controls continued to be implemented. Cost of sales was £1,249,000 (2020: £1,438,000).
Administrative expenses of £717,000 (2020: £823,000) included £171,000 on new licence evaluations (2020:
£81,000).
Net cash spent on operating activities was £535,000 (2020: cash spent £884,000).
Purchase of intangible fixed assets of £985,000 (2020: £1,148,000) was spent advancing the portfolio.
The Group’s cash balance at 31 July 2021 was £0.6 million (31 July 2020: £0.8 million).
Non-financial Key Performance Indicators (‘KPIs’)
There were no reportable accidents or incidents in the year (2020: zero).
Conclusion and Outlook
As a result of progress made, the Company is firmly on track to achieve its twin objectives of generating material
production-based revenues and also creating significant value-creating opportunities. Thanks to resilient oil
prices over the past year, which are currently above US$80/barrel, our investment in Wressle has paid off as a
fully operational and cash generative asset which at a stroke has more than doubled Europa’s oil production and
scaled up the Company’s profitability. This in turn will allow us to explore new opportunities as we look to
expose our shareholders to potentially high reward activity while preserving the integrity of the Company’s
balance sheet.
In the year ahead, shareholders can expect the management team to continue to advance our strategy of growing
our existing portfolio both organically and via acquisition as we look to add a third leg to the business, specifically
a late-stage appraisal and development venture. We will also continue to evaluate further opportunities in the
renewable space in addition to geothermal energy, as we increase efforts to play a key role in the UK’s transition
to green energy.
Qualified Person Review
This release has been reviewed by Alastair Stuart, engineering advisor to Europa, who is a petroleum engineer
with over 35 years' experience and a member of the Society of Petroleum Engineers and has consented to the
inclusion of the technical information in this release in the form and context in which it appears.
Simon Oddie (CEO)
20 October 2021
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Europa Oil & Gas (Holdings) plc
Risks and uncertainties
The various activities of Europa subject the Company to a range of financial risks including commodity prices,
liquidity, exchange rates and loss of operational equipment or wells. These risks are managed with the oversight
of the Board and the Audit Committee through ongoing review, considering the operational, business and
economic circumstances at that time. The primary risk facing the business is that of liquidity.
Key risk
Description and impact
Employees and consultants’ health.
Safety of operations and compliance with permits.
Safe travel to and from the workplace for London personnel.
Covid-19
Mitigation
Switched to home working for all office-
based personnel. Terminated London
office lease. Operations staff designated
as keyworkers, kept to separate bubbles.
Able to maintain key services and full
compliance with permits through
lockdowns.
Significant expenditure is required to establish the extent of oil
and gas reserves through seismic surveys and drilling and there
can be no certainty that oil and gas reserves will be found.
Detailed cash forecasts are prepared
regularly and reviewed by management
and the Board.
Funding
Licences may be revoked by the relevant issuing authority if
commitments under those licences are not met. Further details
of current licence commitments are given in notes 11 and 25,
also note comments on going concern in the note 1.
Commodity
price and
foreign
exchange
Customer
Exploration,
drilling and
operational
Each month’s oil production is sold at a small discount to Brent
price in US Dollars. These funds are matched where possible
against expenditures within the business. As most capital and
operating expenditures are Sterling denominated, US Dollars are
periodically sold to purchase Sterling. A fall in oil price could
make some projects economically unviable.
All oil production is sold to one UK based refinery – if they were
to stop buying Europa’s crude, additional transportation costs
would be incurred.
The business of exploration and production of oil and gas involves
a high degree of risk. Few prospects that are explored are
ultimately developed into producing oil and gas fields.
There are numerous risks inherent in drilling and operating wells,
many of which are beyond the Company’s control. Operations
may be curtailed, delayed or cancelled as a result of environmental
hazards, industrial accidents, occupational and health hazards,
technical failures, weather, reservoir pressures, shortage or delays
in the delivery of rigs and other equipment, labour disputes and
compliance with governmental requirements.
Drilling may involve unprofitable efforts, not only with respect to
dry wells, but also to wells which, though yielding some oil or gas,
are not sufficiently productive to justify commercial development.
Completion of a well does not assure a profit on the investment
or recovery of drilling, completion and operating costs.
The Group’s production provides a
monthly inflow of cash and is the main
source of working capital and project
finance. Additional cash is available
through the placing of Europa shares in
the market and potentially by the trading
of assets.
The Board has considered the use of
financial instruments to hedge oil price
and US Dollar exchange rate
movements. To date, the Board has not
hedged against price or exchange rate
movements but intends to regularly
review this policy.
Other refineries are known to Europa
Current production comes from six oil
wells located at four different sites. This
diversity of producing assets gives
Europa resilience in the event of a
problem with one well or site.
Appropriate insurance is obtained
annually which covers some of Europa’s
exploration, development and
production activities.
Securing planning consent for onshore wells takes time and the
outcome of planning applications is not certain.
The Group engages planning and legal
specialists in the field.
Planning risk
On behalf of the Board
Simon Oddie, CEO
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Europa Oil & Gas (Holdings) plc
Director’s statement under Section 172 (1) of the
Companies Act 2006
Section 172 (1) of the Companies Act obliges the Directors to promote the success of the Company for the
benefit of the Company’s members as a whole.
This section specifies that the Directors must act in good faith when promoting the success of the Company
and in doing so, have regard (amongst other things) to:
the likely consequences of any decision in the long term;
a)
b) the interests of the Company’s employees;
c)
the need to foster the Company’s business relationship with suppliers, customers
and others;
d) the impact of the Company’s operations on the community and environment;
e)
the desirability of the Company maintaining a reputation for high standards of business
conduct; and
the need to act fairly as between members of the Company.
f)
The Board of Directors is collectively responsible for formulating the Company’s strategy, which is to develop
significant value accretive opportunities across a balanced portfolio of energy assets while minimising risk to
shareholders.
The Board of Directors confirm that during the last year under review it acted in accordance with section 172
(1) of the 2006 Companies Act, which requires the Board to promote the long-term success of the Company
for the benefit of shareholders.
The strategies developed and executed by the Company has resulted in achieving value creation and de-risking
of its development plans adopting the step-by-step approach under the leadership and guidance of the Board of
Directors.
Some of the key decisions taken by the Directors during the year under review and the significant outcomes
achieved by the Company aimed at delivering on its strategies included:
• The appointment of Simon Oddie as Chief Executive (CEO) on a permanent basis in August 2020
following his successful tenure as interim CEO held since November 2019. Simon brings a wealth of
experience to the role and the decision to appoint him to the role on a permanent basis ensures
continuity of strategy at senior management level and minimal disruption to both the company and its
employees. The board concluded that Mr Oddie was the best candidate for the job and will help deliver
on the long-term goals of the Company.
• The appointment of Mr Brian O’Cathain as non-executive Chairman of the Company - taking over
from Mr Oddie who previously held the role. The decision to appoint him to the role was made on the
basis of having already held the role of Senior Independent non-executive Director, plus his in-depth
knowledge and experience of the energy sector.
• The achievement of first oil production at the Wressle field in North Lincolnshire at a target gross rate
of 500bopd post period end in August 2021 (Europa’s net share: 150bopd) following extensive work
completed during the year to 31 July 2021 has served to double the Company’s UK onshore net
production and deliver a huge boost to our revenue profile, benefitting shareholders and employees
alike. It also pays heed to our stated corporate aim of delivering significant value accretive opportunities
while minimising risk.
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Europa Oil & Gas (Holdings) plc
• The signing of an MOU signed with Causeway Geothermal (NI) Ltd to assess the potential of our West
Firsby oil field in the East Midlands as a test site for a sustainable, clean geothermal energy system (see
page 1). The move is in line with the Company’s ESG strategy and stated desire to participate in the
national energy transition and holds the potential, in turn, to deliver long term benefits not only to the
Company and its shareholders but also the UK’s national energy grid and the local community in West
Firsby.
• The raising of £1.44 million (net of fees) via a placement and broker option in February 2021 in order
to fund work programmes necessary for future longevity of the Company including the evaluation of
recovery improvement initiatives onshore UK and the pursuit of late-stage appraisal/development
projects to rebalance the existing portfolio of production and exploration assets.
• Cost management strategies including the reduction of the salaries of Board members and fees by 50%
in response to the Covid-19 pandemic in the first half of the year with all cuts reinstated in the second
half.
• The Board also issued share options of 13,450,000 ordinary shares at 1 pence each to certain Directors
and Company employees in response to the salary cuts that the Board and staff have taken in response
to recent market volatility, while board members were issued with stock grants based on 50% of salary
with an assumed exercise price. These measures served to incentivise both staff and the Board members
alike following the recent pay cuts.
• The drawdown of a Director’s Loan of £225,000 in January 2021 from CW Ahlefeldt-Laurvig in order
to ensure the necessary liquidity was in place for the Company’s ongoing operations following the
decision in November 2020 to defer the workover operations and final commissioning at the Wressle
oil field during the Christmas shutdown period until January 2021. The loan was later repaid in March
2021.
• The launch of the farmout of the high potential Inezgane Offshore Permit located in offshore Morocco
in August (see page 11) which is in line with the Company’s strategy of seeking to develop a balanced
portfolio of assets.
• The Directors have also decided to launch the farmout of the Frontier Exploration Licence (FELs)
3/19 and 4/19 located in our offshore Ireland gas fields once regulatory approval of acquisition of FEL
3/19 is received from the Irish authorities (see page 11). This will allow the Company to maximise the
revenue potential of the licences’ – given their strategic location beside Ireland‘s largest producing gas
field.
• The table below shows how the Group engages with Stakeholders
Stakeholder
Shareholders
Government regulators
Joint Venture partners
How the Group Engages with Stakeholder
Websites - all announcements
Email notices
Company’s Twitter account
Online meetings
OGA - Letter, online portal, seminars and meetings
PPRS – Monthly Submissions and Website Data
Input
Environment Agency Bi-annual reports, soliciting a
CAR Report and Site Visits
HSE Site visits, meetings, inspections
ONHYM Letter and Email correspondence
DECC (formerly PAD) Letter and Email
correspondence
Email, Letter Correspondence and Annual
TCM/OCM formal meetings
15
Europa Oil & Gas (Holdings) plc
Suppliers and advisors
Local community
Email, orders and payments, letter and KYC work
This is site specific but includes personal and group
meetings
Compliance Assessment Report
CAR
DECC Department of the Environment and Climate Change (Ireland)
HSE Health and Safety Executive
KYC Know Your Customer
OCM Operations Committee Meeting
OGA Oil & Gas Authority (UK)
ONHYM Office National des Hydrocarbures et des Mines (Morocco)
TCM
Technical Committee Meeting
16
Europa Oil & Gas (Holdings) plc
Chairman’s introduction to governance
How we govern the Group
As Chairman of Europa Oil & Gas (Holdings) plc, it is my responsibility to ensure that the Board is performing
its role effectively and has the capacity, ability, structure and support to enable it to continue to do so.
The information on Corporate Governance set out below and on the website www.europaoil.com is, in the
opinion of the Board, fully in accordance with the revised requirements of AIM Rule 26.
The Board has determined that the Quoted Companies Alliance (QCA) Corporate Governance Code for small
and mid-size quoted companies is the most appropriate for the Group to adhere to.
The QCA Code is constructed around 10 broad principles and a set of disclosures. The QCA has stated what it
considers to be appropriate arrangements for growing companies and asks companies to provide an explanation
of how they are meeting the principles through the prescribed disclosures. We have considered how we apply
each principle to the extent that the Board judges these to be appropriate in the circumstances, and below we
provide an explanation of the approach taken in relation to each. The Board considers that it does not depart
from any of the principles of the QCA Code during the period under review.
The last 12 months have seen, amongst others, the following governance developments:
• SG Oddie, and BJ O’Cathain met with major shareholders
• Retirement of Finance Director (Phil Greenhalgh)
• A Board evaluation review in September 2021, the main action points arising being:
o To strengthen the management team
o To obtain more from meetings of the Board
o To improve board diversity
For the purposes of clarity, the description of how the Group complies with the 10 principles of the QCA Code
begins with a summary of those areas where the Group does not fully comply, followed by a review of each of
the principles in turn.
Principle 6:
Action
The Board has resolved to look for a Chief Financial Officer (CFO) and
Deputy CEO giving due consideration to all candidates but especially to
female candidates. Any appointment made will be on merit.
Ensure that between them the
Directors have the necessary up-to-
date experience, skills and
capabilities
The Board should understand and
challenge its own diversity,
including gender balance, as part of
its composition.
Review of each of the QCA principles
Principle 1:
Our strategy is described here:
Establish a strategy and business
model which promote long-term
value for shareholders
http://www.europaoil.com/strategy.aspx
Also note:
•
In January 2019 following a review of strategy led by BJ O’Cathain,
the Board resolved to establish a Strategy Committee to provide
support to the executive in implementing the strategy.
• The Strategy Committee met once in 2020-21
• Strategy is actively assessed and adjusted by discussion between the
Directors
17
Europa Oil & Gas (Holdings) plc
• Strategy is by necessity opportunity driven
Principle 2:
The Company engages with shareholders by:
Seek to understand and meet
shareholder needs and expectations
• Conducting regular interviews with Proactive Investors and
appearing on virtual forums
•
Issuing Regulatory News Service (RNS) announcements and
emailing to its subscriber list
• Maintaining an active Twitter account.
• Replying directly to investor questions sent to
mail@europaoil.com
• Conducting at least twice-yearly meetings with major shareholders
on its results roadshows to obtain a balanced understanding of
their issues and concerns
Shareholder liaison is the responsibility of the CEO and Chairman, with
assistance from the SID.
At the last (closed) AGM, voting did not indicate any specific shareholder
concerns.
Principle 3:
Key stakeholders are:
Take into account wider
stakeholder and social
responsibilities and their
implications for long-term success
Principle 4:
Embed effective risk management,
considering both opportunities and
threats, throughout the
organisation
• Regulators (OGA, DECC (Department of Environment, Climate
and Communications (Ireland)), ONHYM (Office National des
Hydrocarbures et des Mines), EA, HSE, Local Authorities)
• Host Governments
• Local communities
• Partners and Co-venturers
• Employees and consultants
• Phillips 66, (who purchase our produced crude oil)
The CEO provides a weekly report to the Board which includes a section
on Stakeholder and Social Responsibility. This includes stakeholder
feedback from multiple sources.
Europa is a member of the Irish Offshore Operators’ Association
(‘IOOA’) which has been highly active in promoting the need for oil and
gas exploration in Ireland and in particular the role of indigenous gas.
The finance department prepares a risk register for the Group that
identifies key operational and financial risks. All members of the Board are
provided with a copy of the register. The register is updated as and when
necessary.
The Audit Committee monitors the integrity of the financial statements
and related announcements, reviews the Company’s internal control
processes and risk management systems, and reports its conclusions to the
Board. The committee regularly reviews the effectiveness of the Company’s
systems and risk management.
Within the scope of the annual audit, specific financial risks including
foreign currency, interest rates, liquidity and credit are evaluated in detail.
All members of staff and contractors are provided with a handbook which
includes sections on share dealing, bribery and whistleblowing. The
handbook is updated and reissued regularly.
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Europa Oil & Gas (Holdings) plc
We do not currently have a risk management framework, a risk
management improvement programme a risk training programme,
workshops, risk appetite or monitoring dashboard but will review if any of
these would be beneficial in the coming year.
Principle 5:
All of the three NEDs are considered by the Board to be independent.
Maintain the Board as a well-
functioning, balanced team led by
the chair
Biographies are available at:
http://www.europaoil.com/Directors.aspx
Two of the Board’s Non-Executive Directors, SA Williams and BJ
O’Cathain, hold share options. Whilst recognising that the granting of
options to Non-Executive Directors can be deemed to compromise
independence in accordance with the principles of the QCA Corporate
Governance Code, the Board views this to be part of a balanced
remuneration package to attract and retain high quality candidates and
considers the numbers of options to have no effect upon the independence
of these Directors as the sums are insignificant in the context of the
individual’s financial circumstances.
One of the Board’s Non-Executive Directors, CW Ahlefeldt-Laurvig, has
been a member for more than the nine years recommended by the QCA
Corporate Governance Code and holds 5.8% of the Group’s shares. The
Board believes him to be independent in character and free from any other
relationship that could affect his independent judgement. This is
demonstrated by his objective and active contribution in Board meetings
and their voting record.
The appointment of SA Williams in March 2020 compensated somewhat
for his seniority and reduced the average tenure of the Board. Directors
serving more than six years will continue to be proposed for re-election at
each AGM.
SG Oddie (CEO) is a full-time employee.
BJ O’Cathain (Non-Executive Chairman), SA Williams and CW Ahlefeldt-
Laurvig (all Non-Executive Directors) are all expected to devote such time
as is necessary for the proper performance of their duties including
attendance at Board meetings, the AGM, and Board committee meetings.
The minimum numbers of meetings for committees are: Audit Committee
– two; Remuneration Committee – one; and Nominations Committee -
one. Meetings held and attendance records of all Directors for the period 1
August 2020 to 31 July 2021 are set out below.
The Board is balanced in terms of experience, and the split between
Executive and Non-Executive Directors.
All Board and Board committee members received agenda and associated
papers a few days in advance of meetings.
Members of the Board of Directors are listed at
http://www.europaoil.com/Directors.aspx
including their relevant experience, skills and personal qualities. There is an
appropriate breadth of experience covering the key aspects of the business
including technical, operational, financial and international although there
will be a requirement for a CFO/deputy CEO as the company grows. The
gender balance also needs to be addressed and will be considered at the
same time. It is the responsibility of each Director to keep skills up to date
with the assistance of the Chairman who has a core responsibility in
addressing the development needs of the Board as a whole with a view to
enhancing its overall effectiveness.
Board Committees call on external advisers where this is deemed necessary.
19
Principle 6:
Ensure that between them the
Directors have the necessary up-to-
date experience, skills and
capabilities
Europa Oil & Gas (Holdings) plc
No significant matters of a corporate governance nature arose during the
period covered by the 2021 Annual Report nor subsequently to the date of
this statement on which it was considered necessary for the Board or any
of its committees to seek specific external advice, although the Board
consults with its Nominated Adviser and other professional advisers on
routine matters arising in the ordinary course of its business.
The main internal advisory functions are those of Senior Independent
Director and Company Secretary.
New Directors receive training from the Company Nominated Adviser and
broker.
Principle 7:
Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement
The third effectiveness review used the Thinking Board Evaluator from the
company Independent Audit was undertaken during the year. Each
Director fed back to the Chairman and results were assimilated and
considered at the following Board meeting. The main areas requiring
attention were:
o Strengthening the management team. Since the retirement
of the Finance Director/Company Secretary in November
2020 these functions have been provided by internal non-
Board appointees. As the Company grows, Directors
recognise the need to recruit a Chief Financial Officer on
the Board who can also act as a deputy to the CEO.
o Obtaining more from meetings of the Board. The restricted
nature of virtual meetings during the pandemic has limited
the scope and benefit. The return to physical meetings (the
first held 7th September 2021) resumption of site visits,
physical technical presentations and informal exchanges of
ideas around meetings are expected to improve this
situation significantly.
o Board diversity. This will be addressed as the management
team is strengthened.
The Board has concluded that the fourth review, in 2022 should include an
external third-party component.
Principle 8:
Promote a corporate culture that is
based on ethical values and
behaviours
Members of the Board are committed to observing and promoting the
highest standards of ethical conduct in the performance of their
responsibilities on the Board of Europa. The Board believes that a culture
that is based on the highest ethical standards provides a competitive
advantage and is consistent with fulfilment of the Group’s strategy.
Board meetings have been held virtually on Zoom with the resumption of
physical meetings on 7th September 2021. The previous practice of holding
a meeting once a year at one of the production sites will be resumed.
Directors are encouraged to spend time with, listen to, and act upon any
concerns of, staff members and contractors.
• The Board considers that cultural differences between UK and
Ireland are not material.
• We do not have a culture policy, nor a specific culture related
employee training / induction programme but resolve to review
the need for such a programme annually.
• Culture and strategy are deeply aligned.
• The Board ensures that the Company has the means to determine
that ethical values and behaviours are recognised and respected.
20
Europa Oil & Gas (Holdings) plc
Principle 9:
Maintain governance structures and
processes that are fit for purpose
and support good decision making
by the Board
Role of the Chairman – BJ O’Cathain (from 4 August 2020, previously SG
Oddie)
• Runs the Board and sets its agenda.
• Promotes the highest standards of corporate governance.
• Ensures that the members of the Board receive accurate, timely and
clear information, to promote the success of the Group.
• Ensures effective communication with shareholders.
• Takes the lead in identifying and meeting the development needs of
individual Directors, ensuring that the performance of individuals and
of the Board as a whole and its committees is evaluated at least once a
year.
Role of the CEO – SG Oddie (from 4th August 2020, previously SG Oddie
as Interim CEO)
• Develops Group objectives and strategy
• Executes strategy following approval by, the Board.
• Identifies and executes licence acquisitions and disposals, joint venture
opportunities, approves major work programmes.
• Leads geographic diversification initiatives.
• Identifies and executes new business opportunities outside the current
core activities.
• Manages the Group’s risk profile, including the health and safety
performance of the business, in line with the extent and categories of
risk identified as considered acceptable by the Board.
Role of the SID – SA Williams (from 4 August 2020, previously BJ
O’Cathain).
• Works closely with the Chairman, acting as a sounding board and
providing support.
• Acts as an intermediary for other Directors as and when necessary.
• Is available to shareholders and other non-Executives to address any
concerns or issues they feel have not been adequately dealt with
through the usual channels of communication.
• Meets at least annually with the non-Executives to review the
Chairman’s performance and carrying out succession planning for the
Chairman’s role.
• Attends sufficient meetings with major shareholders to obtain a
balanced understanding of their issues and concerns.
Role of the Company Secretary – Murray Johnson (from 14th October
2020, previously Phil Greenhalgh)
• Distributes documents to the Board.
• Is available to the Audit, Remuneration, Nominations and Strategy
Committees as required.
• Keeps minutes of meetings.
• Updates Companies House records for the Company and subsidiaries.
Committee Terms of Reference and Matters Reserved for the Board are
available at: http://www.europaoil.com/corporatedocuments.aspx
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Europa Oil & Gas (Holdings) plc
The Board intends to continuously review its governance framework in line
with the Company’s plans for growth.
Principle 10:
Communicate how the company is
governed and is performing by
maintaining a dialogue with
shareholders and other relevant
stakeholders
Owing to Covid-19 restrictions it has not been possible for SG Oddie and
BJ O’Cathain to meet major shareholders since March 2020, but such
meetings will now resume
The Audit Committee met to review the interim and preliminary accounts
for the Group and held meetings with the external auditor without
executives present.
The Remuneration Committee met once during the year to review
remuneration and incentives.
During the year the Company has focused on advancing its portfolio and
looked at new asset opportunities.
Past Notice of AGMs are available at
http://www.europaoil.com/reportsandpresentations.aspx
Board
The Board is responsible for the overall governance of the Company. Its responsibilities include setting the
strategic direction of the Company, providing leadership to put the strategy into action and to supervise the
management of the business.
The Board comprises three Non-Executive Directors (‘NEDs’) and the CEO. Biographies of the Directors are
on pages 25-26. All NEDs are considered by the Board to be independent. The roles and responsibilities of the
Chairman, CEO, Senior Independent Director (‘SID’) and Company Secretary are set out on the website and
summarised below.
BJ O'Cathain is Non-Executive Chairman, SA Williams is the SID, CW Ahlefeldt-Laurvig is NED.
Terms of Reference
The Terms of Reference of all Board Committees are available on the website.
Record of meetings
Meetings held and attendance records of all Directors for the period 1 August 2020 to 31 July 2021 are set out
below:
Board
Attended
/Possible
9 / 9
9 / 9
9 / 9
9 / 9
3 / 3
Audit
Committee
Attended
/Possible
2 / 2
2 / 2
2 / 2
2 / 2
Remuneration
Committee
Attended
/Possible
1 / 1
1 / 1
1 / 1
1 / 1
Nominations
Committee
Attended
/Possible
0 / 0
0 / 0
0 / 0
0 / 0
Strategy
Committee
Attended
/Possible
1 / 1
1 / 1
1 / 1
1 / 1
SG Oddie
CW Ahlefeldt-Laurvig
BJ O'Cathain
SA Williams
P Greenhalgh
BJ O’Cathain
Chairman
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Europa Oil & Gas (Holdings) plc
Audit Committee Report
The Audit Committee meets twice a year and is chaired by SA Williams. CW Ahlefeldt-Laurvig and BJ O’Cathain
are members. During the year, the committee has reviewed:
•
Internal financial controls systems and other internal control and risk management systems;
• The statements to be included in the annual report concerning internal control, risk management and
the going concern statement;
• The carrying values of the producing and intangible assets;
• The adequacy and security of the Company’s arrangements for its employees and contractors to raise
concerns about possible wrongdoing in financial reporting or other matters;
• The procedures for detecting fraud;
• The systems and controls for the prevention of bribery;
• The need for an internal audit function.
The committee has overseen the relationship with the external auditor, including:
• Approved their remuneration for audit and non-audit services;
• Approved their terms of engagement and the scope of the audit;
• Satisfied itself that there are no relationships between the auditor and the Company which could
adversely affect the auditor’s independence and objectivity;
• Monitored the auditor’s processes for maintaining independence, its compliance with relevant UK law,
regulation, other professional requirements and the Ethical Standard, including the guidance on the
rotation of audit partner and staff;
• Assessed the qualifications, expertise and resources, and independence of the external auditor and the
effectiveness of the external audit process;
• Evaluated the risks to the quality and effectiveness of the financial reporting process in the light of the
external auditor’s communications with the committee;
• Met with the external auditor without management being present, to discuss the auditor’s remit and any
issues arising from the audit;
• Discussed with the external auditor the factors that could affect audit quality and reviewed and approved
the annual audit plan, ensuring it is consistent with the scope of the audit engagement, having regard to
the seniority, expertise and experience of the audit team.
The committee reviewed the findings of the audit with the external auditor, including:
• A discussion of issues which arose during the audit, including any errors identified during the audit; and
the auditor’s explanation of how the risks to audit quality were addressed;
• Key accounting and audit judgements;
• The auditor’s view of their interactions with senior management;
• A review of any representation letters requested by the external auditor before they were signed by
management;
• A review of the management letter and management’s response to the auditor’s findings and
recommendations;
• A review of the effectiveness of the audit process, including an assessment of the quality of the audit,
the handling of key judgements by the auditor, and the auditor’s response to questions from the
committee.
SA Williams
Audit Committee Chair
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Europa Oil & Gas (Holdings) plc
Remuneration Committee Report
The Remuneration Committee reviews the scale and structure of the Executive Directors' remuneration and the
terms of their service contracts. The remuneration and terms and conditions of appointment of the Non-
Executive Directors are set by the Board.
BJ O’Cathain chairs the committee. CW Ahlefeldt-Laurvig and SA Williams are members. The Remuneration
Committee met once in the year.
In setting the remuneration for the Executive Directors and key staff, the Committee compares published
remuneration data for other AIM and Main LSE Board oil and gas companies of a similar market capitalisation
and seeks to ensure that the remuneration of the Executive Directors is broadly comparable to their peers in
other similarly sized organisations. In 2020-21:
• There were no changes to remuneration policy, pension rights and any compensation payments.
• Directors, London based staff and consultants agreed a temporary salary/rate cut of 20% since 1 April
2020 this was reinstated from 1st March 2021. Directors agreed a further salary/rate cut to 50% from
1st August 2020 which was also reinstated from 1st March 2021.
• Two employees took on more responsibility on the retirement of the Finance Director and received a
corresponding salary increase
• There were no other changes to pay and employment conditions across the Company or Group.
• An executive bonus scheme for the calendar year 2020 was suspended when salaries were cut. A revised
executive bonus scheme was implemented for the calendar year commencing 1st January 2021.
Brian O’Cathain
Remuneration Committee Chair
Nominations Committee Report
The Nominations Committee reviews the size, structure and composition of the Board and considers succession
planning. The committee identifies and nominates candidates to fill Board vacancies for approval of the Board.
Brian O’Cathain chairs the committee. CW Ahlefeldt-Laurvig and SA Williams are members. The Nominations
Committee sat last in 2019-20.
•
It was re-iterated that the Company would look for a female Board member at the next opportunity.
• The committee reviewed succession planning and agreed who would step into senior roles in the event
of an emergency.
• The time commitment required of the NEDs was considered to be appropriate.
Brian O’Cathain
Nominations Committee Chair
24
Europa Oil & Gas (Holdings) plc
Board of Directors
Members of the Board of Directors are listed below, including their relevant experience, skills and personal
qualities. There is an appropriate breadth of experience for current activities covering the key aspects of the
business including technical, operational, financial and international. The gender balance will be considered for
the next appointment. It is the responsibility of each Director to keep skills up to date with the assistance of the
Chairman who has a core responsibility in addressing the development needs of the Board as a whole with a
view to enhancing its overall effectiveness.
Board Committees call on external advisers where this is deemed necessary. During 2020-21 this has not been
required.
The main internal advisory functions are that of Senior Independent Director (SA Williams) and Company
Secretary (Murray Johnson).
SG Oddie, CEO
Simon joined the Board as non-executive Chairman in January 2018, was appointed Interim CEO in November
2019 and then permanent CEO on 4th August 2020 whilst stepping down as non-executive Chairman.
He has over 40 years of relevant experience as a petroleum engineer, technical consultant, manager and
investment adviser in upstream oil and gas. He has previously worked with Schlumberger, ERC Energy Resource
Consultants, Enterprise Oil and Gemini Oil and Gas Advisors LLP.
He was CEO of Enterprise Italy during its first operated exploration drilling both on and offshore. Simon more
recently was the architect of the Gemini Oil and Gas royalty funds where he established a solid track record in
fundraising, investor relations, and origination, evaluation and execution of oil and gas deals.
He has completed the Advanced Management Program (AMP 155) at Harvard Business School, holds an MSc.
in Petroleum Engineering from Imperial College and a BSc (First Class) in Electronics from Manchester
University. Simon keeps his skills up to date through participation in key professional societies, industry groups,
and seminars.
Committees: S (chair of the Strategy Committee)
BJ O’Cathain, Non-Executive Chairman
Brian has worked as a geologist and petroleum engineer in the oil and gas sector since 1984. He began his career
with Shell International and worked at Enterprise Oil and Tullow Oil in senior roles. He served as CEO of
Afren plc to 2007, and as CEO of Petroceltic International plc, until 2016. He was a Non-Executive Director
of Eland Oil and Gas, an AIM listed company producing over 20,000 bopd in Nigeria, until its successful sale
to Seplat plc in December 2019. He is also a Non-Executive Director of Nephin Energy, a private gas producing
company which is the largest equity holder in the Corrib Gas Field in Ireland. Nephin Energy is a 100%
subsidiary of Canadian Pension Plan Investment Board, one of the world’s largest Pension Funds with assets of
US $419 billion under management. He is a founding director and chair of Causeway Geothermal Limited a
geothermal company.
His skills include market understanding, fund-raising, and the technical, legal and financial aspects of running a
publicly listed Oil and Gas company. He led and negotiated the agreed nil-premium merger of Petroceltic and
Melrose Resources in 2012.
He holds a BSc (First Class) in Geology from the University of Bristol. Brian keeps his knowledge and awareness
current by participation in industry conferences, IOD workshops, and by networking with other directors and
executives in the Oil and Gas industry.
Committees: A R N S (chair of the Remuneration and Nomination Committees)
CW Ahlefeldt-Laurvig, Non-Executive Director
William helped take Europa onto AIM and remains one of its largest shareholder. He started his career at Maersk
as a petroleum engineer in 1982, followed, in 1987, by IPEC, a London based consultancy, where he was
responsible for field reserves estimations.
In 1990, he became an independent consultant, undertaking field and portfolio evaluations for acquisitions and
field development work on a range of projects in the North Sea, former Soviet Union and Middle East. He was
also, in 1991, a founder and Non-Executive Director of IFX Infoforex Ltd which was successfully sold in 2000.
25
Europa Oil & Gas (Holdings) plc
William has continued to work as an independent consultant petroleum engineer, latest in 2013 – 2016 for a
client in Norway.
Committees: A R N S
SA Williams, Non-Executive Director
Since October 2017, Mr Williams has held the position of Co-CEO of Reabold Resources, an AIM traded,
upstream oil & gas company focused on investing in late-stage upstream opportunities. At Reabold, Mr Williams
has played a leading role in raising capital, building a diversified portfolio of investments in the UK, Romania
and the US and, since August 2018, the company's participation in nine wells, eight of which have resulted in
discoveries. Prior to Reabold, Mr Williams held various positions within both the energy and financial sectors
including as a fund manager at Guinness Asset Management and, between 2010 and 2016, as an investment
analyst at M&G focused on energy and resources. Between 2005 and 2010, Mr Williams worked as an energy
investment analyst for Simmons & Company International and from 2003 to 2005 as an analyst at ExxonMobil.
Committees: A R N S (chair of the Audit Committee)
26
Europa Oil & Gas (Holdings) plc
Directors’ report
Business review
A detailed review of the Group’s business is set out in the Chairman’s statement (page 5) and Our strategy (page
9).
Future developments
Details of expected future developments for the Group are set out in the Chairman’s statement (page 5) and
Our strategy (page 9).
Dividends
The Directors do not recommend the payment of a dividend (2020: £nil).
Directors and their interests
The Directors’ interests in the share capital of the Company at 31 July were:
CW Ahlefeldt-Laurvig 1
BJ O’Cathain
SG Oddie
SA Williams
Number of ordinary
shares
2021
34,906,288
634,615
884,615
141,131
2020
33,752,442
250,000
500,000
141,131
Number of ordinary
share options
2021
-
2,950,000
9,200,000
2,500,000
2020
-
1,200,000
1,200,000
1,200,000
1. CW Ahlefeldt-Laurvig holds his shares with HSBC Global Custody Nominee (UK) Limited.
Details of the vesting conditions of the Directors’ stock options are included in note 23.
Directors’ interests in transactions
No Director had, during the year or at the end of the year, other than disclosed above, a material interest in any
contract in relation to the Group’s activities except in respect of service agreements.
Subject to the conditions set out in the Companies Act 2006, the Company has arranged appropriate Directors’
and Officers’ insurance to indemnify the Directors against liability in respect of proceedings brought by third
parties. Such provisions remain in force at the date of this report.
Financial instruments
See note 1 and note 24 to the financial statements.
Related party transactions
See note 27 to the financial statements.
Post reporting date events
See note 28 to the financial statements.
Capital structure and going concern
Further details on the Group’s capital structure are included in note 22. Comments on going concern are
included in note 1
Accounting policies
A full list of accounting policies is set out in note 1 to the financial statements. No new accounting standards
were adopted in the period.
Disclosure of information to the auditor
In the case of each person who was a director at the time this report was approved:
▪
▪
So far as that Director was aware there was no relevant available information of which the Company’s
auditor was unaware; and
That Director had taken all necessary steps to make themselves aware of any relevant audit information,
and to establish that the Company’s auditor was aware of that information.
27
Europa Oil & Gas (Holdings) plc
Auditor
A resolution to re-appoint the auditor, BDO LLP, will be proposed at the next Annual General Meeting.
On behalf of the Board
Simon Oddie
CEO
28
Europa Oil & Gas (Holdings) plc
Statement of Directors’ responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the Group and Company financial statements in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act 2006. Under Company law
the Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the profit or loss of the Group for that year. The
Directors are also required to prepare financial statements in accordance with the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and accounting estimates that are reasonable and prudent;
• State whether they have been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006, subject to any material departures
disclosed and explained in the financial statements; and
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on
a website. Financial statements are published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility
of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements
contained therein.
29
Europa Oil & Gas (Holdings) plc
Independent auditor’s report to the members of the Europa
Oil & Gas (Holdings) plc
Opinion on the financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 July 2021 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006;
the Parent Company financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act and as applied in
accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements of Europa Oil & Gas (Holdings) plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 July 2021 which comprise the consolidated statement of
comprehensive income, the consolidated and Company statements of financial position, the consolidated and
the Company statements of changes in equity, the consolidated and Company statements of cash flows and
notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and
international accounting standards in conformity with the requirements of the Companies Act 2006 and as
regards the Parent Company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
30
Europa Oil & Gas (Holdings) plc
The Directors have prepared cash flow forecasts to support their assessment of the going concern position of
the Group and Company as disclosed in note 1 to the financial statements. Due to the judgements and estimates
around future oil prices and production from the new Wressle well in order to generate sufficient cash during
the period without a requirement to raise additional funds, we considered going concern to be a key audit matter.
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt
the going concern basis of accounting and in response to the key audit matter included:
• Reviewing the Directors cash flow forecasts for the period to 31 December 2022 and evaluating the
level of cash headroom available and the assumptions including oil production, oil prices, operating
expenditure and capital expenditure. In doing so we compared production forecasts to recent actual
performance trends and considered the oil price assumptions against consensus market prices. We
compared the reasonableness of forecast costs with historical expenditure.
• Considering whether previous forecasts were consistent with actuals, to ascertain whether the Directors
had a history of accurate forecasting which is not subject to bias.
• Reviewing board minutes and RNS announcements for any indicators regarding operating costs and
production that may have an impact on the Group’s ability to continue as a going concern.
• Reviewing Director’s sensitivity analysis performed in respect of key assumptions underpinning the
forecasts including reviewing the oil price sensitivity by comparing the sensitivity to market data,
production levels from the Wressle well to recent performance trends and limiting capital expenditure
to committed levels.
• Reviewing licences for commitments to check these have been reflected in the cash flow forecasts.
• Reviewing the adequacy and consistency of the disclosure included within the financial statements in
respect of going concern against the requirement of the accounting standards and the results of our
audit testing and to ensure consistency with the detail of the directors’ going concern assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Overview
Coverage
Key audit matters
Materiality
97% (2020: 91%) of Group loss before tax
100% (2020: 100%) of Group revenue
99% (2020: 98%) of Group total assets
Carrying value of producing
assets
Carrying value of exploration
and evaluation assets
Going concern
Group financial statements as a whole
2021
☒
☒
☒
2020
☒
☒
☒
£120,000 (2020: £100,000) based on 1.5% (2020: 1.5%) of total
assets.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the
Group’s system of internal control, and assessing the risks of material misstatement in the financial statements.
31
Europa Oil & Gas (Holdings) plc
We also addressed the risk of management override of internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented a risk of material misstatement.
Our Group audit scope focused on the Group’s principal three operating subsidiaries, Europa Oil & Gas
Limited, Europa Oil and Gas New Ventures Limited and Europa Oil & Gas (Inishkea) Limited, all being located
in the UK, which were all subject to full scope audits. Together with the Parent Company which was also subject
to a full scope audit, these represent the significant components of the Group. All of the significant components
were audited by BDO UK LLP.
Four components of the Group were considered non-significant based on their relative size and risk. The
financial information of these components were principally subject to analytical review procedures performed
by Group audit team to confirm there were no significant risks of material misstatements within these
components.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the
matter described in the Conclusions related to going concern section of our report, we have determined the
matters below to be the key audit matters to be communicated in our report.”
32
Europa Oil & Gas (Holdings) plc
Key audit matter
How the scope of our audit addressed the
key audit matter
Carrying
value
producing
assets
of
of
the
As detailed in notes 1 and
12, the assessment of any
impairment to the carrying
value
three
producing fields requires
significant estimation and
judgement
by
management. Based on the
assumptions set out, no
was
impairment
recognised in 2021.
The key estimates and
include oil
judgements
price,
reserves, decline
rate, and discount rate.
Judgement is required by
management
in
determining whether there
is an impairment to be
recognised or whether
there has been an increase
in value that should give
rise to any
impairment
reversals.
Management is required to
prepare
appropriate
disclosure in accordance
with applicable accounting
standards.
and
critically
challenged
We reviewed management’s discounted cash
flow forecasts for each of the three producing
fields
the
appropriateness of the key estimates and
assumptions used by management in the
discounted cash flow models which included
a comparison of oil price forecasts to market
outlook reports, recalculation of discount
rates by involving our internal valuations
experts to assess the appropriateness of the
discount rate applied, performing sensitivity
analysis in respect of significant inputs and
comparing the reasonableness of cost and
production assumptions to historical data in
the year.
We reviewed the reserves and decline rates
used in the models and compared them to the
most recent independent competent persons
the objectivity,
reports
competence and
independence of those
experts as well as the suitability of the work of
those experts for our purposes
assessed
and
We reviewed the licences to check whether or
not they remain valid.
We met with operational management to
evaluate the basis for forecast increases in
production associated with well stimulation
activities, considered the historical impact of
such activities and evaluated the extent to
which appropriate costs were included in the
forecasts.
We challenged management’s sensitivity
assessments
and performed our own
sensitivity calculations in respect of oil prices,
decline rates and discount rate.
We considered the appropriateness of the
related disclosures given in notes 1 and 12 in
line with the requirements of the applicable
accounting standards.
Key observations:
judgements made by
the
We consider
management in respect of the carrying value
of the producing assets to be reasonable. The
disclosures in the notes, including the critical
line with accounting
judgments are
standards.
in
33
Europa Oil & Gas (Holdings) plc
of
Carrying
value
exploration
and
evaluation
assets
The
non-producing
exploration assets of the
Group are classified as
intangible assets within
non-current assets in the
financial
of
statement
position. As detailed in
notes 1 and 11, there are
inherent
uncertainties
around the recoverability
of
and
exploration
evaluation assets. One UK
licence was
impaired
during the year and this
management
involved
considering
judgement
factors
the
such
anticipated conversion to a
production licence and
the future plans.
as
In addition, management
assessed that the Wressle
the
project was within
6
IFRS
scope
of
Exploration
and
for
of Mineral
Evaluation
Resources as the project was
still under evaluation at
year end. This assessment
required judgement based
on
of
exploration in the year and
the project
in
commissioning and testing
phase.
is still
results
the
The impairment reviews
and
judgment
require
in determining
estimate
of
whether
indicators
in
impairment exist
the
accordance with
requirements of IFRS 6.
in
Management is required to
appropriate
prepare
disclosure in accordance
with applicable accounting
standards.
As a result of these factors
this
represented a key
focus area for our audit
and a key audit matter.
The impairment review did not note any
potential for material reversal of previously
recognised impairment.
We reviewed and challenged management’s
impairment assessment which was carried out
in accordance with IFRS 6 in order to
determine whether management’s assessment
that there were no indicators of additional
impairment was appropriate.
We confirmed there is an ongoing plan to
continue to explore and evaluate the licence
areas and verified that the licences remain
valid for assets that have not been impaired.
Our specific audit testing in this regard
included:
• The verification of licence status, in
order to confirm legal title.
• Reviewing exploration activity to assess
whether there was any evidence from
exploration results to date which would
indicate a potential impairment.
• Obtaining approved budgets, assessing
the consistency of budget with going
concern cash flow forecast and minutes
of Board meetings to confirm whether
or not the Group intended to continue
licences either
to explore specific
through a potential transaction such as a
farm out, or
through exploration
undertaken by the Group.
We challenged management’s assessment,
through inquiry of operational management
and review of board minutes, of whether or
is still under
not
evaluation and within the scope of IFRS 6 as
at year end.
the Wressle project
included
We assessed the appropriateness of the
disclosures
financial
statements given in notes 1 and 11, in line
with the requirements of the applicable
accounting standards.
the
in
inappropriate
Key observations:
Our work has identified no material instances
impairment conclusions.
of
The disclosures in the notes, including the
critical judgments are in line with accounting
standards.
34
Europa Oil & Gas (Holdings) plc
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Group financial statements
2021
£
120,000
2020
£
100,000
1.5% of total assets (rounded).
Parent company financial
statements
2021
£
40,000
1.5% of total assets (rounded).
2020
£
40,000
We consider total assets to be the financial metric of the most interest to
shareholders and other users of the financial statements, given the Group’s
and Parent Company’s principal activity in oil and gas exploration. We
therefore consider this to be an appropriate basis for materiality.
90,000
75,000
30,000
30,000
for
of Group Materiality
75%
considering the nature of activities
and the low level of expected
misstatements.
75% of Parent company Materiality
considering the nature of activities
and
level of expected
low
the
misstatements.
for
Materiality
Basis
determining
materiality
Rationale for the
benchmark
applied
Performance
materiality
Basis
determining
performance
materiality
Component materiality
We set materiality for each component of the Group based on a percentage of between 14% and 95% Group
materiality dependent on the size or results of an individual component and our assessment of the risk of material
misstatement of that component. Component materiality ranged from £17,000 to £114,000 (2020: ranging from
£11,000 to £90,000). In the audit of each component, we further applied performance materiality levels of 75%
of the component materiality to our testing to ensure that the risk of errors exceeding component materiality
was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of
£2,400 (2020: £2,000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the Annual report and financial statements other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
35
Europa Oil & Gas (Holdings) plc
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described
below.
Strategic
report
Directors’
report
and
Matters
on
which we are
to
required
report
by
exception
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Directors’ report for the
financial year for which the financial statements are prepared is consistent
with the financial statements; and
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
•
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the Parent Company,
or returns adequate for our audit have not been received from branches
not visited by us; or
the Parent Company financial statements are not in agreement with the
accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
36
Europa Oil & Gas (Holdings) plc
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below:
Holding discussions with management and the audit committee to understand the laws and regulations relevant
to the Group and the Parent company. These included the significant laws and regulations relating to the oil and
gas industry in the UK, Ireland and Morocco, the financial reporting framework, QCA Code, tax legislation and
environmental regulations. Our procedures included the following:
• We understood how the Group is complying with these laws and regulations by holding discussions
with management, the audit committee, and those responsible for legal and compliance procedures to
determine any known or suspected instances of non-compliance with laws and regulations or fraud
identified by them. We corroborated our enquiries through our review of board minutes and other
supporting documentation;
• Reviewing the licences to assess the extent to which the Group was in compliance with the conditions
of the licence and considering management’s assessment of the impact of instances of non-compliance
where applicable;
We assessed the susceptibility of the financial statements to material misstatement, including fraud and
considered the fraud risk areas to be manipulation of the financial result through journal entries and the
assumptions and estimates used in the impairment assessment for producing assets. Our procedures included
the following:
• Testing the appropriateness of journal entries made through the year by applying specific criteria to
detect possible irregularities and fraud;
• Performing a detailed review of the Group’s year-end adjusting entries and investigating any that appear
unusual as to nature or amount and agreeing to supporting documentation;
• For significant and unusual transactions, particularly those occurring at or near year-end, obtaining
evidence for the rationale of these transactions;
• Assessing the judgements made by management when making key accounting estimates and
judgements, and challenging management on the appropriateness of these judgements (refer to key audit
matters above); and
• Communicating relevant identified laws and regulations and potential fraud risks to all engagement team
members and remaining alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent
Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
37
Europa Oil & Gas (Holdings) plc
the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Jack Draycott (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London,
United Kingdom
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
38
Europa Oil & Gas (Holdings) plc
Consolidated statement of comprehensive income
For the year ended 31 July
Revenue
Cost of sales
Impairment of producing fields
Total cost of sales
Gross profit/(loss)
Exploration write-off
Administrative expenses
Finance income
Finance expense
Loss before taxation
Taxation credit
Loss for the year
Other comprehensive income
Items which will not be reclassified to profit /(loss)
Loss on investment revaluation
Total other comprehensive loss
Total comprehensive loss for the year attributable to the equity shareholders of
the parent
Note
2
2
12
11
6
7
3
8
9
2021
£000
1,372
(1,249)
-
(1,249)
----------------------------------
123
(12)
(717)
3
(242)
------------------------------------
(845)
127
------------------------------------
(718)
====================
(2)
------------------------------------
(2)
====================
(720)
===================
2020
£000
1,244
(1,438)
(160)
(1,598)
----------------------------------
(354)
(4,004)
(823)
7
(266)
------------------------------------
(5,440)
-
------------------------------------
(5,440)
======================
(197)
------------------------------------
(197)
======================
(5,637)
=====================
Earnings per share (EPS) attributable to the equity shareholders of the parent
Note
Pence
per share
Pence per
share
Basic and diluted EPS
10
(0.15)p
(1.22)p
The accompanying notes form part of these financial statements.
39
Europa Oil & Gas (Holdings) plc
Consolidated statement of financial position
As at 31 July
Note
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets
Investments
Inventories
Trade and other receivables
Restricted cash
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Loans
Trade and other payables
Total current liabilities
Non-current liabilities
Loans
Trade and other payables
Long-term provisions
Total non-current liabilities
Total liabilities
Net assets
Capital and reserves attributable to equity holders
of the parent
Share capital
Share premium
Merger reserve
Retained deficit
Total equity
11
12
13
14
15
16
18
17
18
17
21
22
22
22
2021
£000
6,438
369
----------------------------------
6,807
----------------------------------
42
23
522
230
641
----------------------------------
1,458
----------------------------------
8,265
====================
(10)
(1,556)
------------------------------------
(1,566)
------------------------------------
(40)
(17)
(3,393)
----------------------------------
(3,450)
----------------------------------
(5,016)
-----------------------------------
3,249
====================
5,665
21,157
2,868
(26,441)
----------------------------------
3,249
======================
2020
£000
4,965
476
----------------------------------
5,441
----------------------------------
44
12
234
245
768
----------------------------------
1,303
----------------------------------
6,744
====================
(2)
(1,013)
------------------------------------
(1,015)
------------------------------------
(48)
(31)
(3,163)
----------------------------------
(3,242)
----------------------------------
(4,257)
-----------------------------------
2,487
===================
4,447
21,010
2,868
(25,838)
----------------------------------
2,487
====================
These financial statements were approved by the Board of Directors and authorised for issue on 20th October
2021 and signed on its behalf by:
Simon Oddie, CEO
Company registration number 05217946
The accompanying notes form part of these financial statements.
40
Europa Oil & Gas (Holdings) plc
Consolidated statement of changes in equity
Attributable to the equity holders of the parent
Balance at 1 August 2019
Comprehensive loss for the
year
Loss for the year attributable to
the equity shareholders of the
parent
Other comprehensive loss
attributable to the equity
shareholders of the parent
Total comprehensive loss for
the year
Contributions by and
distributions to owners
Share-based payments (note 23)
Total contributions by and
distributions to owners
Balance at 31 July 2020
Balance at 1 August 2020
Comprehensive loss for the
year
Loss for the year attributable to
the equity shareholders of the
parent
Other comprehensive loss
attributable to the equity
shareholders of the parent
Total comprehensive loss for
the year
Contributions by and
distributions to owners
Issue of share capital
Issue of share warrants(note 23)
Share-based payments (note 23)
Total contributions by and
distributions to owners
Balance at 31 July 2021
Share
capital
£000
4,447
Share
premium
£000
Merger
reserve
£000
Retained
deficit
£000
21,010
2,868
(20,204)
Total
equity
£000
8,121
-
-
-
(5,440)
(5,440)
-
----------------------------------
-
----------------------------------
-
----------------------------------
-
----------------------------------
4,447
====================
Share
capital
£000
4,447
-
----------------------------------
-
----------------------------------
-
----------------------------------
-
----------------------------------
21,010
====================
-
---------------------------------
-
---------------------------------
-
----------------------------------
-
---------------------------------
2,868
====================
(197)
------------------------------
(5,637)
------------------------------
3
---------------------------------
3
------------------------------
(25,838)
======================
Share
premium
£000
Merger
reserve
£000
Retained
deficit
£000
21,010
2,868
(25,838)
(197)
-------------------------------
(5,637)
-------------------------------
3
------------------------------
3
-------------------------------
2,487
==================
Total
equity
£000
2,487
-
-
-
(718)
(718)
-
----------------------------------
-
----------------------------------
1,218
-
-
----------------------------------
1,218
----------------------------------
5,665
===================
-
---------------------------------
-
---------------------------------
-
-
-
----------------------------------
-
---------------------------------
2,868
===================
(2)
------------------------------
(720)
------------------------------
-
78
39
---------------------------------
117
------------------------------
(26,441)
=====================
(2)
-------------------------------
(720)
-------------------------------
1,443
-
39
------------------------------
1,482
-------------------------------
3,249
==================
-
----------------------------------
-
----------------------------------
225
(78)
-
----------------------------------
147
----------------------------------
21,157
===================
41
The accompanying notes form part of these financial statements.
Europa Oil & Gas (Holdings) plc
Company statement of financial position
As at 31 July
Assets
Non-current assets
Property, plant and equipment
Investments
Amounts due from Group companies
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Loans
Trade and other payables
Total current liabilities
Loans
Trade and other payables
Total non-current liabilities
Total liabilities
Net assets
Capital and reserves attributable to equity holders of the parent
Share capital
Share premium
Merger reserve
Retained deficit
Total equity
Note
12
13
24
15
18
17
18
17
22
22
22
2021
£000
2020
£000
23
2,343
588
------------------------------------
2,954
------------------------------------
69
272
--------------------------------------
341
---------------------------------------
3,295
======================
(10)
(652)
------------------------------------
(662)
------------------------------------
(40)
(11)
------------------------------------
(51)
----------------------------------
(713)
------------------------------------
2,582
====================
55
2,341
430
------------------------------------
2,826
------------------------------------
53
288
--------------------------------------
341
---------------------------------------
3,167
=====================
(2)
(515)
------------------------------------
(517)
------------------------------------
(48)
(17)
------------------------------------
(65)
----------------------------------
(582)
------------------------------------
2,585
====================
5,665
21,157
2,868
(27,108)
--------------------------------------
2,582
======================
4,447
21,010
2,868
(25,740)
--------------------------------------
2,585
========================
The Company has taken advantage of the exemption provided under Section 408 of the Companies Act 2006
not to publish its individual statement of comprehensive income and related notes. The loss dealt with in the
financial statements of the parent Company is £1,485,000 (2020: loss of £3,072,000).
These financial statements were approved by the Board of Directors and authorised for issue on 20th October
2021
and signed on its behalf by:
S Oddie
CEO
Company registration number 05217946
The accompanying notes form part of these financial statements.
42
Europa Oil & Gas (Holdings) plc
Company statement of changes in equity
Balance at 1 August 2019
originally stated
Comprehensive loss for the
year
Loss for the year attributable to
the equity shareholders of the
parent
Total comprehensive loss for
the year
Contributions by and
distributions to owners
Share-based payments (note 23)
Total contributions by and
distributions to owners
Balance at 31 July 2020
Balance at 1 August 2020
originally stated
Comprehensive loss for the
year
Loss for the year attributable to
the equity shareholders of the
parent
Total comprehensive loss for
the year
Contributions by and
distributions to owners
Issue of share capital
Issue of share warrants(note 23)
Share-based payments (note 23)
Total contributions by and
distributions to owners
Balance at 31 July 2021
Share
capital
£000
4,447
Share
premium
£000
21,010
Merger
reserve
£000
2,868
Retained
deficit
£000
(22,671)
Total
equity
£000
5,654
-
----------------------------------
-
-
----------------------------------
-
-
---------------------------------
-
(3,072)
------------------------------
(3,072)
(3,072)
-------------------------------
(3,072)
-
----------------------------------
-
----------------------------------
4,447
===================
Share
capital
£000
4,447
-
----------------------------------
-
----------------------------------
21,010
==================
-
----------------------------------
-
---------------------------------
2,868
==================
3
---------------------------------
3
------------------------------
(25,740)
=====================
Share
premium
£000
21,010
Merger
reserve
£000
2,868
Retained
deficit
£000
(25,740)
3
------------------------------
3
-------------------------------
2,585
=================
Total
equity
£000
2,585
-
----------------------------------
-
-
----------------------------------
-
-
---------------------------------
-
(1,485)
------------------------------
(1,485)
(1,485)
-------------------------------
(1,485)
1,218
-
-
----------------------------------
1,218
----------------------------------
5,665
====================
225
(78)
-
----------------------------------
147
----------------------------------
21,157
===================
-
-
-
----------------------------------
-
78
39
---------------------------------
-
117
---------------------------------
2,868
==================
------------------------------
(27,108)
=======================
1,443
-
39
------------------------------
1,482
-------------------------------
2,582
=================
The accompanying notes form part of these financial statements
43
Europa Oil & Gas (Holdings) plc
Consolidated statement of cash flows
For the year ended 31 July
Note
23
12
12
11
6
7
8
22
Cash flows used in operating activities
Loss after tax from continuing operations
Adjustments for:
Share-based payments
Depreciation
Impairment of producing field
Exploration write off
Finance income
Finance expense
Taxation credit recognised in profit and loss
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in trade and other payables
Net cash used in operations
Income taxes repayment received
Net cash used in operating activities
Cash flows used in investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Cash guarantee re Morocco
Sale of part interest in licence – associated costs
Interest received
Net cash used in investing activities
Cash flows from/ (used in) financing activities
Gross proceeds from issue of share capital
Costs incurred on issue of share capital
Proceeds from borrowings
Repayment of borrowings
Lease liability payments
Lease liability interest payments
Finance costs
Net cash from/ (used in) financing activities
Net decrease in cash and cash equivalents
Exchange loss on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The accompanying notes form part of these financial statements.
44
2021
£000
2020
£000
(718)
(5,440)
39
107
-
12
(3)
242
(127)
(288)
(11)
85
------------------------------------
(662)
127
------------------------------------
(535)
=======================
-
(985)
(4)
-
3
-----------------------------------
(986)
====================
1,583
(140)
225
(225)
(35)
(2)
(7)
-----------------------------------
1,399
=====================
(122)
(5)
768
-----------------------------------
641
=====================
3
186
160
4,004
(7)
266
-
72
7
(95)
------------------------------------
(844)
-
------------------------------------
(844)
==================
(100)
(1,148)
(1)
(12)
7
-----------------------------------
(1,254)
======================
-
-
50
-
(73)
(3)
(1)
-----------------------------------
(27)
=====================
(2,125)
(12)
2,905
-----------------------------------
768
=====================
Europa Oil & Gas (Holdings) plc
Company statement of cash flows
For the year ended 31 July
Cash flows used in operating activities
Loss after tax from continuing operations
Adjustments for:
Share-based payments
Depreciation
Exploration write off
Movement in intercompany loan provision
Finance income
Finance expense
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flows used in investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Movement on loans to Group companies
Interest received
Net cash used in investing activities
Cash flows from/(used in) financing activities
Gross proceeds from issue of share capital
Costs incurred on issue of share capital
Proceeds from borrowings
Repayment of borrowings
Lease liability principal payment
Lease liability interest payment
Finance costs
Net cash from/ (used in) financing activities
Net decrease in cash and cash equivalents
Exchange gain on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
23
12
11
24
22
2021
£000
2020
£000
(1,485)
(3,072)
39
32
-
1,921
(654)
5
(16)
36
-----------------------------------
(122)
=======================
-
-
(1,306)
-
-----------------------------------
(1,306)
=======================
1,583
(140)
225
(225)
(26)
(75)
(1)
(4)
-----------------------------------
1,412
=======================
(16)
-
288
-----------------------------------
272
=====================
3
66
371
3,075
(680)
3
17
11
-----------------------------------
(206)
=====================
(3)
(69)
(1,981)
2
-----------------------------------
(2,051)
======================
-
-
50
-
(63)
-
(3)
-
-----------------------------------
(16)
====================
(2,273)
8
2,553
-----------------------------------
288
====================
The accompanying notes form part of these financial statements.
45
Europa Oil & Gas (Holdings) plc
1
Notes to the financial statements
Accounting Policies
General information
Europa Oil & Gas (Holdings) plc is a Company incorporated and domiciled in England and Wales with
registered number 05217946. The address of the registered office is 55 Baker Street, London, W1U 7EU.
The functional and presentational currency of the Company is Sterling (UK£).
Basis of accounting
The consolidated and individual Company financial statements have been prepared in accordance with
applicable International Accounting Standards in conformity with the requirements of Companies Act 2006.
Exploration and evaluation assets are measured at historical cost and tested at least twice annually for indications
of impairment. Internally generated intangibles are measured at historic cost.
The accounting policies that have been applied in the opening statement of financial position have also been
applied throughout all periods presented in these financial statements. These accounting policies comply with
each IFRS that is mandatory for accounting periods ending on 31 July 2021.
Going concern
The Directors have prepared a cash flow forecast for the period ending 31 December 2022, which considers the
continuing and forecast cash inflow from the Group’s producing assets, the cash held by the Group at September
2021, less administrative expenses and planned capital expenditure. The impact of Covid on the Group and
Company has been limited to date but its future impact has also been considered in making this assessment.
The Directors performed sensitivities on the cashflow allowing for a 30% fall in the expected oil price from a
base case price of $78 per barrel and, separately, a 58% fall in the expected Wressle production from a base case
of 560 barrels per day. Oil price estimates are based upon industry analyst expectations, whilst production
estimates are sourced from the Group’s internal modelling for Wressle and recent actual production.
These sensitivities have been modelled as a reverse stress test, and the Directors consider the likelihood of such
movements to be very low. The Directors have also run sensitivities allowing for reasonably possible
simultaneous falls in oil price and in Wressle production, and the Group and Company had sufficient cash
resources to meet their obligations.
The Directors have concluded, as at the date of approval of these financial statements, that there is a reasonable
expectation that the Group and Company will still have sufficient cash resources to be able to continue as a
going concern and meet its obligations as and when they fall due over the going concern period.
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect those variable returns. Control is
reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of
control. Intra Group balances are eliminated on consolidation. Unrealised gains on transactions between the
Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
The Group is engaged in oil and gas exploration, development and production through unincorporated joint
operations.
Joint arrangements
Joint arrangements are those arrangements in which the Group holds an interest on a long-term basis which are
jointly controlled by the Group and one or more venturers under a contractual arrangement. When these
arrangements do not constitute entities in their own right, the consolidated financial statements reflect the
relevant proportion of costs, revenues, assets and liabilities applicable to the Group’s interests in accordance
with IFRS 11. The Group’s exploration, development and production activities are presently conducted jointly
with other companies in this way.
For the licences where the Group does not hold 100% equity (refer to the licence interests table on page 7) a
joint arrangement exists. The equity and voting interest of the Group is disclosed in the table, activities are typical
for activities in the oil and gas sector and are strategic to the Group’s activities. The principal place of business
for all the joint arrangements is the UK.
46
Europa Oil & Gas (Holdings) plc
Revenue recognition
The Group follows IFRS 15. The standard provides a single comprehensive model for revenue recognition. The
core principle of the standard is that an entity shall recognise revenue when control passes on the transfer of
promised goods or services to customers at an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue
recognition model with a measurement approach that is based on an allocation of the transaction price. This is
described further in the accounting policies below. Contracts with customers are presented in an entity's balance
sheet as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity’s
performance and the customer’s payment. The Group's accounting policy under IFRS 15 is that revenue is
recognised when the Group satisfies a performance obligation by transferring oil to a customer. The title to oil
and gas typically transfers to a customer at the same time as the customer takes physical possession of the oil or
gas. Typically, at this point in time, the performance obligations of the Group are fully satisfied.
Revenue is measured based on the consideration to which the Group expects to be entitled under the terms of
a contract with a customer. The consideration is determined by the quantity and price of oil and gas delivered
to the customer at the end of each month.
Non-current assets
Oil and gas interests
The financial statements with regard to oil and gas exploration and appraisal expenditure have been prepared
under the full cost basis. This accords with IFRS 6 which permits the continued application of a previously
adopted accounting policy. The unit of account for exploration and evaluation assets is the individual licence.
Pre-production assets
Pre-production assets are categorised as intangible assets on the statement of financial position. Pre-licence
expenditure is expensed as directed by IFRS 6. Expenditure on licence acquisition costs, geological and
geophysical costs, costs of drilling exploration, appraisal and development wells, and an appropriate share of
overheads (including Directors’ costs) are capitalised and accumulated on a licence-by-licence basis. These costs
which relate to the exploration, appraisal and development of oil and gas interests are initially held as intangible
non-current assets pending determination of technical feasibility and commercial viability. On commencement
of production these costs are tested for impairment prior to transfer to production assets. If licences are
relinquished, or assets are not deemed technically feasible or commercially viable, accumulated costs are written
off to cost of sales.
Production assets
Production assets are categorised within property, plant and equipment on the statement of financial position.
With the determination of commercial viability and approval of an oil and gas project the related pre-production
assets are transferred from intangible non-current assets to tangible non-current assets and depreciated upon
commencement of production within the appropriate cash generating unit.
Impairment tests
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units) as disclosed in notes 11 and 12. As a result, some assets are tested
individually for impairment and some are tested at cash generating unit level.
Impairment tests are performed when indicators as described in IAS 36 are identified. In addition, indicators
such as a lack of funding or farmout options for a licence which is approaching termination or the implied value
of a farmout transaction are considered as indicators of impairment.
An impairment loss is recognised and charged to cost of sales for the amount by which the asset's or cash
generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair
value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow
evaluation. All assets are subsequently reassessed for indications that an impairment loss previously recognised
may no longer exist.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes
directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and
removing items. The corresponding liability is recognised within provisions.
Depreciation
All expenditure within tangible non-current assets is depreciated from the commencement of production, on a
unit of production basis, which is the ratio of oil and gas production in the period to the estimated quantities of
proven plus probable commercial reserves at the end of the period, plus the production in the period. Costs
47
Europa Oil & Gas (Holdings) plc
used in the unit of production calculation comprise the net book value of capitalised costs plus the estimated
future field development costs within each licence. Changes in the estimates of commercial reserves or future
field development costs are dealt with prospectively.
Furniture and computers are depreciated on a 25% per annum straight line basis.
Reserves
Proven and probable oil and gas reserves are estimated quantities of commercially producible hydrocarbons
which the existing geological, geophysical and engineering data shows to be recoverable in future years. The
proven reserves included herein conform to the definition approved by the Society of Petroleum Engineers
(SPE) and the World Petroleum Congress (WPC). The probable and possible reserves conform to definitions
of probable and possible approved by the SPE/WPC using the deterministic methodology. Reserves used in
accounting estimates for depreciation are updated periodically to reflect management’s view of reserves in
conjunction with third party formal reports. Reserves are reviewed at the time of formal updates or as a
consequence of operational performance, plans and the business environment at that time.
Reserves are adjusted in the year that formal updates are undertaken or as a consequence of operational
performance and plans, and the business environment at that time, with any resulting changes not applied
retrospectively.
Future decommissioning costs
A provision for decommissioning is recognised in full at the point that the Group has an obligation to
decommission an appraisal, development or producing well. A corresponding non-current asset (included within
producing fields in note 12) of an amount equivalent to the provision is also created. The amount recognised is
the estimated cost of decommissioning, discounted to its net present value and is reassessed each year in
accordance with local conditions and requirements. For producing wells, the asset is subsequently depreciated
as part of the capital costs of production facilities within tangible non-current assets, on a unit of production
basis. Any decommissioning obligation in respect of a pre-production asset is carried forward as part of its cost
and tested annually for impairment in accordance with the above policy.
Changes in the estimates of commercial reserves or decommissioning cost estimates are dealt with prospectively
by recording an adjustment to the provision, and a corresponding adjustment to the decommissioning asset.
The unwinding of the discount on the decommissioning provision is included within finance expense.
Acquisitions of exploration licences
Acquisitions of exploration licences through acquisition of non-operational corporate structures that do not
represent a business, and therefore do not meet the definition of a business combination, are accounted for as
the acquisition of an asset. Related future consideration that is contingent is not recognised as an asset or liability
until the contingent event has occurred.
Taxation
Current tax is the tax payable based on taxable profit / (loss) for the year.
Deferred income taxes are calculated using the balance sheet liability method on temporary differences. Deferred
tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax
bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition
of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided
if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not
occur in the foreseeable future. Tax losses available to be carried forward as well as other income tax credits to
the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent
that it is probable that the underlying deductible temporary difference will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply
to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of
comprehensive income, except where they relate to items that are charged or credited directly to equity in which
case the related deferred tax is also charged or credited directly to equity.
Foreign currency
48
Europa Oil & Gas (Holdings) plc
The Group and Company prepare their financial statements in Sterling.
Transactions denominated in foreign currencies are translated at the rates of exchange ruling at the date of the
transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at
the reporting date. Non-monetary items that are measured at historical cost in a foreign currency are translated
at the exchange rate at the date of transaction. Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date the fair value was determined.
Any exchange differences arising on the settlement of items or on translating items at rates different from those
at which they were initially recorded are recognised in the Statement of comprehensive income in the period in
which they arise. Exchange differences on non-monetary items are recognised in the Statement of changes in
equity to the extent that they relate to a gain or loss on that non-monetary item taken to the Statement of changes
in equity, otherwise such gains and losses are recognised in the Statement of comprehensive income.
Europa Oil & Gas (Holdings) plc is domiciled in the UK, which is its primary economic environment and the
Company’s functional currency is Sterling. The Group’s current operations are based in the UK and Ireland and
the functional currencies of the Group's entities are the prevailing local currencies in each jurisdiction. Given
that the functional currency of the Company is Sterling, management has elected to continue to present the
consolidated financial statements of the Group and Company in Sterling.
Investments
Investments, which are only investments in subsidiaries, are carried at cost less any impairment. Additions
include the net value of share options issued to employees of subsidiary companies less any lapsed, unvested
options.
Financial instruments
Financial assets and financial liabilities are recognised in the statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost, at fair value through other
comprehensive income (‘FVTOCI’) or at fair value through profit or loss (‘FVPL’) depending upon the business
model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial
asset.
A loss allowance for expected credit losses is determined for all financial assets, other than those at FVPL, at
the end of each reporting period. The Group applies a simplified approach to measure the credit loss allowance
for trade receivables using the lifetime expected credit loss provision. The lifetime expected credit loss is
evaluated for each trade receivable taking into account payment history, payments made subsequent to year end
and prior to reporting, past default experience and the impact of any other relevant and current observable data.
The group applies a general approach on all other receivables classified as financial assets. The general approach
recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial
recognition.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group’s obligations are discharged, cancelled or
have expired.
Fair value through other comprehensive income
The Group has a number of strategic investments in listed and unlisted entities which are not accounted for as
subsidiaries, associates or jointly controlled entities. For those investments, the Group has made an irrevocable
election to classify the investments at fair value through other comprehensive income rather than through profit
or loss as the Group considers this measurement to be the most representative of the business model for these
assets. They are carried at fair value with changes in fair value recognised in other comprehensive income and
accumulated in the fair value through other comprehensive income reserve. Upon disposal any balance within
fair value through other comprehensive income reserve is reclassified directly to retained earnings and is not
reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost
of the investment, in which case the full or partial amount of the dividend is recorded against the associated
investment’s carrying amount.
49
Europa Oil & Gas (Holdings) plc
Purchases and sales of financial assets measured at fair value through other comprehensive income are
recognised on settlement date with any change in fair value between trade date and settlement date being
recognised in the fair value through other comprehensive income reserve.
Amortised cost
This category is the most relevant to the Company. Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an active market. The losses arising from impairment
are recognised in a separate line in the income statement. This category generally applies to trade and other
receivables.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and include all highly liquid investments with a maturity of three
months or less.
Restricted cash are those amounts held by third parties on behalf of the Group and are not available for the
Group’s use; these are accounted for separately from cash and cash equivalents.
Financial Liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial
liability was issued and its characteristics. All purchases of financial liabilities are recorded on trade date, being
the date on which the Group becomes party to the contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group’s financial liabilities approximate to their fair values. The
Group’s financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at
fair value through profit or loss.
Trade and other payables
Trade and other payables are initially recorded at fair value and subsequently carried at amortised cost.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual
obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the statement of
comprehensive income.
Treatment of finance costs
All finance costs are expensed through the income statement. The Group does not incur any finance costs that
qualify for capitalisation.
Defined contribution pension schemes
The pension costs charged against profits are the contributions payable to the scheme in respect of the
accounting period.
Inventories
Inventories comprise oil in tanks stated at the lower of cost and net realisable value. Cost is determined by
reference to the actual cost of production in the period.
Share-based payments
All goods and services received in exchange for the grant of any share-based payment are measured at their fair
values. Where employees are rewarded using share-based payments, the fair values of employees' services are
determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is
appraised at the grant date and excludes the impact of non-market vesting conditions (for example, profitability
and sales growth targets).
All equity-settled share-based payments are ultimately recognised as an expense in the statement of
comprehensive income with a corresponding credit to reserves. Where options over the parent Company’s
shares are granted to employees of subsidiaries of the parent, the charge is recognised in the statement of
comprehensive income of the subsidiary. In the parent Company accounts there is an increase in the cost of the
investment in the subsidiary receiving the benefit.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to vest. Estimates are subsequently
revised if there is any indication that the number of share options expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is
made to any expense recognised in prior periods if the number of share options ultimately exercised is different
to that initially estimated.
50
Europa Oil & Gas (Holdings) plc
Upon exercise of share options, the proceeds received, net of attributable transaction costs, are credited to share
capital, and where appropriate share premium.
Critical accounting judgements and key sources of estimation uncertainty
Details of the Group’s significant accounting judgements and critical accounting estimates are set out in these
financial statements and include:
• Carrying value of intangible assets (note 11) – carrying values are justified with reference to indicators
of impairment as set out in IFRS 6. Based on judgements at 31 July 2021 there was £12k write off of
costs on the PEDL 299 licence (2020: impairment of 5 oil-prone Irish licences and costs written off).
• Carrying value of property, plant and equipment (note 12) – carrying values are justified by reference to
future estimates of cash flows, discounted at appropriate rates.
• Deferred taxation (note 20) – assumptions regarding the future profitability of the Group and whether
the deferred tax assets will be recovered.
• Decommissioning provision (note 21) – inflation and discount rate estimates (3% and 10% respectively)
are used in calculating the provision, along with third party estimates of remediation costs.
2
Operating segment analysis
In the opinion of the Directors the Group has four reportable segments as reported to the Chief Executive
Officer, being the UK, Ireland, Morocco and new ventures.
The reporting on these segments to management focuses on revenue, operating costs and capital expenditure.
The impact of such criteria is discussed further in the Chairman’s statement and strategic report of this annual
report.
Income statement for the year ended 31 July 2021
UK
Ireland
Morocco
Revenue
Cost of sales
Impairment of producing fields
Cost of sales
Gross profit
Exploration write-off
Administrative expenses
Finance income
Finance costs
Loss before tax
Taxation
Loss for the year
£000
1,372
(1,249)
-
(1,249)
---------------------------------
123
(12)
(545)
3
(242)
-----------------------------------
(673)
-
-----------------------------------
(673)
Total
£000
1,372
(1,249)
-
(1,249)
---------------------------------
123
(12)
(717)
3
(242)
-----------------------------------
(845)
127
-----------------------------------
(718)
£000
-
-
-
-
---------------------------------
-
£’000
-
-
-
-
---------------------------------
-
New
ventures
£000
-
-
-
-
---------------------------------
-
-
-
-
(109)
-
-
---------------------------------
(109)
127
---------------------------------
18
(1)
-
-
---------------------------------
(1)
-
---------------------------------
(1)
(62)
-
-
---------------------------------
(62)
-
---------------------------------
(62)
51
Europa Oil & Gas (Holdings) plc
Segmental assets and liabilities as at 31 July 2021
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Other segment items
Capital expenditure - cashflow
Depreciation
Share-based payments
UK
Ireland
Morocco
£000
4,489
1,228
-----------------------------------
5,717
-----------------------------------
(3,450)
(1,203)
-----------------------------------
(4,653)
-----------------------------------
£000
1,661
-
-----------------------------------
1,661
-----------------------------------
-
(363)
-----------------------------------
(363)
-----------------------------------
644
107
117
105
-
-
£000
657
230
-----------------------------------
887
-----------------------------------
-
-
-----------------------------------
-
-----------------------------------
236
-
-
New
Ventures
£’000
-
-
--------------------------------
-
--------------------------------
-
-
---------------------------------
-
--------------------------------
-
-
-
Total
£000
6,807
1,458
-----------------------------------
8,265
-----------------------------------
(3,450)
(1,566)
-----------------------------------
(5,016)
-----------------------------------
985
107
117
Income statement for the year ended 31 July 2020
UK
Ireland
Morocco
New
ventures
£000
-
-
-
-
---------------------------------
-
£’000
-
-
-
-
---------------------------------
-
-
-
(49)
-
-
---------------------------------
(49)
-
---------------------------------
(49)
(16)
-
-
---------------------------------
(16)
-
---------------------------------
(16)
Total
£000
1,244
(1,438)
(160)
(1,598)
---------------------------------
(354)
(4,004)
(823)
7
(266)
-----------------------------------
(5,440)
-
-----------------------------------
(5,440)
Revenue
Cost of sales
Impairment of producing fields
Cost of sales
Gross profit
Exploration write-off
Administrative expenses
Finance income
Finance costs
Loss before tax
Taxation
Loss for the year
£000
1,244
(1,438)
(160)
(1,598)
---------------------------------
(354)
-
(750)
7
(266)
-----------------------------------
(1,363)
-
-----------------------------------
(1,363)
£000
-
-
-
-
---------------------------------
-
(4,004)
(8)
-
-
---------------------------------
(4,012)
-
---------------------------------
(4,012)
52
Europa Oil & Gas (Holdings) plc
Segmental assets and liabilities as at 31 July 2020
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Other segment items
Capital expenditure
Depreciation
Share-based payments
UK
Ireland
Morocco
£000
3,660
1,058
-----------------------------------
4,718
-----------------------------------
(3,242)
(259)
-----------------------------------
(3,501)
-----------------------------------
£000
1,482
-
-----------------------------------
1,482
-----------------------------------
-
(733)
-----------------------------------
(733)
-----------------------------------
139
186
3
734
-
-
£000
299
245
-----------------------------------
544
-----------------------------------
-
(23)
-----------------------------------
(23)
-----------------------------------
275
-
-
New
Ventures
£’000
-
-
--------------------------------
--------------------------------
-
-
---------------------------------
-
--------------------------------
-
-
-
Total
£000
5,441
1,303
-----------------------------------
6,744
-----------------------------------
(3,242)
(1,015)
-----------------------------------
(4,257)
-----------------------------------
1,148
186
3
100% of the total revenue (2020: 100%) relates to UK based customers. Of this figure, one customer (2020:
one) commands more than 99% of the total. UK revenue by site was as follows: West Firsby £321,000 (2020:
£394,000); Crosby Warren £390,000 (2020: £355,000); Whisby £487,000 (2020: £495,000); and Wressle
£174,000 (2020: £nil).
3
Loss before taxation
Loss before taxation is stated after charging:
Depreciation and amortisation on property, plant &
equipment
Staff costs including Directors
Diesel
Business rates
Site safety and security
Exploration write-off
Impairment
Fees payable to the auditor for the audit
Operating leases – land and buildings
Amount of inventory recognised as an expense
Foreign exchange loss
12
5
11
12
4
Directors’ emoluments
Directors’ salaries and fees – Company and Group
CW Ahlefeldt-Laurvig
RJHM Corrie (to 12 March 2020)
P Greenhalgh (to 14 October 2020)
HGD Mackay (to 21 November 2019)
BJ O’Cathain
SG Oddie (CEO from 21 November 2019, previously Chairman)
S Williams (appointed 12 March 2020)
2021
£000
107
652
104
52
68
12
-
55
42
-
3
==========
2021
£000
18
-
32
-
28
146
21
-----------------------------------
245
=====================
2020
£000
186
1,025
95
63
72
4,004
160
53
42
7
16
=========
2020
£000
23
22
138
183
23
130
10
-----------------------------------
529
===================
53
Europa Oil & Gas (Holdings) plc
Directors’ pensions
P Greenhalgh (to 14 October 2020)
HGD Mackay
2021
£000
3
-
-----------------------------------
3
=====================
The above charge represents premiums paid to money purchase pension plans during the year.
Directors’ share-based payments
SG Oddie
BJ O’Cathain
S Williams
2021
£000
20
4
4
==================
2020
£000
17
5
-----------------------------------
22
=====================
2020
£000
-
-
3
================
The above represents the accounting charge in respect of share options. No share options were exercised during
the period (2020: none).
Directors’ total emoluments
Salaries and fees
Social security costs
Pensions
Share-based payments
5
Employee information
Average monthly number of employees including Directors - Group
Management and technical
Field exploration and production
Staff costs - Group
Wages and salaries (including Directors’ emoluments)
Social security
Pensions
Share-based payments (note 23)
Average monthly number of employees including Directors -
Company
Management and technical
Staff costs - Company
Wages and salaries (including Directors’ emoluments)
Social security
Pensions
Share-based payment
54
2021
£000
245
28
3
28
----------------------------------
304
==================
2021
Number
7
4
----------------------------------
11
===================
2021
£000
528
62
27
35
-----------------------------------
652
===================
2021
Number
7
----------------------------------
7
====================
2021
£000
345
39
12
33
-----------------------------------
429
====================
2020
£000
529
64
22
3
------------------------------------
618
==================
2020
Number
9
4
----------------------------------
13
===================
2020
£000
864
106
52
3
-----------------------------------
1,025
====================
2020
Number
9
----------------------------------
9
==================
2020
£000
680
83
37
3
-----------------------------------
803
==================
Europa Oil & Gas (Holdings) plc
6
Finance income
Bank interest received
7
Finance expense
Unwinding of discount on decommissioning provision (note 21)
Other finance expense
8
Taxation
Movement in deferred tax asset (note 20)
Movement in deferred tax liability (note 20)
R&D tax credits
Tax credit
2021
£000
3
------------------------------
3
==================
2021
£000
230
12
------------------------------------
242
===================
2021
£000
(176)
176
127
------------------------------------
127
====================
2020
£000
7
------------------------------
7
===================
2020
£000
246
20
------------------------------------
266
====================
2020
£000
(16)
16
-
------------------------------------
-
==================
UK corporation tax is calculated at 30% (2020: 30%) of the estimated assessable profit for the year being the
applicable rate for a ring-fence trade excluding the Supplementary Charge of 10%.
Loss before tax
Tax reconciliation
Loss multiplied by the standard rate of corporation tax in the UK including
Supplementary Charge of 40% (2020: 40%)
Expenses not deductible for tax purposes
Deferred tax asset not recognised
R&D tax credit received re prior years
Other reconciling items
Total tax credit
9
Other comprehensive income
Loss on investment revaluation
2021
£000
(718)
==================
(287)
94
(99)
127
292
---------------------------------
127
===================
2020
£000
(5,440)
=====================
(2,176)
1,672
505
-
(1)
---------------------------------
-
=================
2021
£000
(2)
===================
2020
£000
(197)
================
On 8 May 2019, the Group sold its interest in PEDL143 to UK Oil & Gas Plc (‘UKOG’) for 25,951,557 UKOG
shares. At the time of the sale the shares were worth 1.156p each, resulting in a total value of £300,000. The
investment was revalued at the year end to £42,000 (0.163p per share (2020: £44,000 (0.17p per share)). An
irrevocable election has been made to record gains and losses arising on the shares as Other Comprehensive
Income.
55
Europa Oil & Gas (Holdings) plc
10
Earnings per share
Basic earnings per share (‘EPS’) has been calculated on the loss 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.
As the Group made a loss from continuing operations in both the current and prior years, any potentially dilutive
instruments are considered to be anti-dilutive. Therefore, the diluted EPS is equal to the basic EPS. As at 31
July 2021 there were 26,029,154 (2020: 24,203,458) potentially dilutive instruments in issue.
The calculation of the basic and diluted earnings per share is based on the following:
Loss for the year attributable to the equity shareholders of the parent
Weighted average number of shares
For the purposes of basic and diluted EPS
11
Intangible assets
Intangible assets – Group
At 1 August
Additions
Exploration write-off
At 31 July
2021
£000
(718)
=======================
2020
£000
(5,440)
==========================
494,420,476
444,691,599
2021
£000
4,965
1,485
(12)
-----------------------------------
6,438
=======================
2020
£000
7,818
1,151
(4,004)
-----------------------------------
4,965
=====================
Intangible assets comprise the Group’s pre-production expenditure on licence interests as follows:
Ireland FEL 4/19 (Inishkea)
UK PEDL180 (Wressle)
UK PEDL181
UK PEDL182 (Broughton North)
UK PEDL299 (Hardstoft)
UK PEDL343 (Cloughton)
Morocco (Inezgane)
Total
Disposal
UK PEDL143 (Holmwood)
Exploration write-off
UK PEDL299 (Hardstoft)
Ireland FEL 2/13 (Doyle A, B, C, Kilroy, Keane & Kiely)
Ireland FEL 3/13 (Beckett, Wilde, Shaw)
Ireland FEL 1/17
Ireland LO 16/19
Ireland LO 16/22
Total
2021
£000
1,662
3,893
113
34
-
79
657
--------------------------------
6,438
=======================
-
==================
12
-
-
-
-
-
-----------------------------------
12
==================
2020
£000
1,482
2,947
118
29
12
78
299
--------------------------------
4,965
===================
10
=================
-
1,445
1,343
845
94
277
-----------------------------------
4,004
===================
If the Group elects not to continue in any other licence, then the impact on the financial statements will be the
impairment of some or all of the intangible assets disclosed above. Details of commitments are included in note
25.
56
Europa Oil & Gas (Holdings) plc
Intangible assets - Company
At 1 August
Additions
Transfer to Group companies
Exploration write-off
At 31 July
Exploration write-off
Ireland LO 16/19
Ireland LO 16/22
Total
2021
£000
-
-
-
-
----------------------------------------
-
===================
2021
£000
-
-
-------------------------------------
-
=======================
2020
£000
302
69
-
(371)
----------------------------------------
-
===================
2020
£000
94
277
-------------------------------------
371
=================
LO 16/22 and LO 16/19 were relinquished in 2020 due to a lack of commercial prospects and the £371,000
spent to date was written off.
12
Property, plant & equipment
Property, plant & equipment - Group
Cost
At 31 July 2019
Additions
On transition
Disposals
At 31 July 2020
Additions
Disposals
At 31 July 2021
Depreciation, depletion and impairment
At 31 July 2019
Charge for year
Disposal
Impairment in year
At 31 July 2020
Charge for year
Disposal
Impairment in year
At 31 July 2021
Net Book Value
At 31 July 2019
At 31 July 2020
At 31 July 2021
Furniture &
computers
£000
Producing
fields
£000
Right of use
assets
£000
53
3
-
(50)
-------------------------------
6
-
(1)
-------------------------------
5
====================
52
1
(50)
-
-------------------------------
3
1
(1)
-
-------------------------------
3
===================
10,790
97
-
-
-------------------------------
10,887
-
-
-------------------------------
10,887
====================
10,216
112
-
160
-------------------------------
10,488
64
-
-
-------------------------------
10,552
======================
-
-
147
-
-------------------------------
147
-
(80)
-------------------------------
67
=================
-
73
-
-
-------------------------------
73
42
(80)
-
-------------------------------
35
=================
Total
£000
10,843
100
147
(50)
-------------------------------
11,040
(81)
-------------------------------
10,959
======================
10,268
186
(50)
160
-------------------------------
10,564
107
(81)
-
-------------------------------
10,590
====================
1
===============================
3
===============================
2
===============================
574
===============================
399
===============================
335
===============================
-
===============================
74
===============================
32
===============================
575
===============================
476
===============================
369
===============================
57
Europa Oil & Gas (Holdings) plc
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 by comparing the carrying value with the
value-in-use. The value-in-use was calculated using a discounted cash flow model with production decline rates
of 10-15%, Brent crude prices ranging from US$68 per barrel in 2022 to US$63 per barrel in 2023. The post-
tax discount rate of 10% is high because of the applicable rates of tax in the UK. Cash flows were projected over
the expected life of the fields which is expected to be longer than five years.
Based on the assumptions set out above, no impairment was required (2020: West Firsby £160,000 impairment).
The recoverable amount was calculated at a discount rate of 10% (2020: 10%).
Sensitivity to key assumption changes
Variations to the key assumptions used in the value-in-use calculation would cause impairment of the
producing fields as follows:
Impairment of producing
fields £000
Production decline rate (current assumption 10-15%)
12%
15%
Brent crude price per barrel (current assumption US$68/bbl in
2022 reducing to US$63/bbl in 2023)
$50 flat
$63 flat
Pre-tax discount rate (current assumption 10%)
20%
25%
-
89
720
15
19
300
58
Europa Oil & Gas (Holdings) plc
Property, plant & equipment - Company
Cost
At 31 July 2019
At transition
Additions
Disposals
At 31 July 2020
Additions
Disposals
At 31 July 2021
Depreciation
At 31 July 2019
Charge for year
Disposals
At 31 July 2020
Charge for year
Disposals
At 31 July 2021
Net Book Value
At 31 July 2019
At 31 July 2020
At 31 July 2021
13
Investments - Group
Investment in shares
At 1 August
Current year additions
Write off on revaluation
At 31 July
Furniture &
computers
£000
Right of use
assets
£000
53
-
3
(50)
-------------------------------
6
-
(1)
-------------------------------
5
====================
52
1
(50)
-------------------------------
3
1
(1)
-------------------------------
3
====================
-
117
-
-
-------------------------------
117
-
(80)
-------------------------------
37
======================
-
65
-
-------------------------------
65
31
(80)
-------------------------------
16
==================
Total
£000
53
117
3
(50)
-------------------------------
123
-
(81)
-------------------------------
42
=======================
52
66
(50)
-------------------------------
68
32
(81)
-------------------------------
19
===================
1
===============================
3
===============================
2
===============================
-
===============================
52
===============================
21
===============================
1
===============================
55
===============================
23
===============================
.
2021
£000
44
-
(2)
-----------------------------------------
42
===================
2020
£000
241
-
(197)
-----------------------------------------
44
===================
On 8 May 2019, the Group sold its interest in PEDL143 to UK Oil & Gas Plc (‘UKOG’) for 25,951,557
UKOG shares. At the time of the sale the shares were worth 1.156p each, resulting in a total value of
£300,000. The investment was revalued at the year end to the value of £42,000 (0.163p per share) (2020:
£44,000 (0.17p per share) with the loss being recorded in Other Comprehensive Income (note 9).
Investments - Company
Investment in subsidiaries
At 1 August
Current year additions
At 31 July
2021
£000
2,341
2
-----------------------------------------
2,343
=======================
2020
£000
2,341
-
-----------------------------------
2,341
===================
59
Europa Oil & Gas (Holdings) plc
The Company’s investments at the reporting date include 100% of the share capital in the following unlisted
companies:
the UK.
• Europa Oil & Gas Limited, which undertakes oil and gas exploration, development and production in
• Europa Oil & Gas (West Firsby) Limited, which is non-trading.
• Europa Oil & Gas (Ireland West) Limited, which held the interest in the FEL 2/13 licence.
• Europa Oil & Gas (Ireland East) Limited, which held the interest in the FEL 3/13 and FEL 1/17
• Europa Oil & Gas (Inishkea) Limited, which holds the interest in the FEL 4/19 and FEL 3/19 licences.
• Europa Oil & Gas (New Ventures) Limited, which holds the interest in the Moroccan licence.
licences.
All six companies are registered in England and Wales, all having their registered office at 55 Baker Street,
London W1U 7EU.
The results of the six companies have been included in the consolidated accounts.
Europa Oil & Gas Limited owns 100% of the ordinary share capital of Europa Oil & Gas (UK) Limited
(registered in England and Wales and non-trading).
14
Inventories - Group
Oil in tanks
15
Trade and other receivables
2021
£000
23
======================================
2020
£000
12
======================================
Current trade and other receivables
Trade receivables
Other receivables
Prepayments
Non-current other receivables
Owed by Group undertakings (note 24)
Group
Company
2021
£000
330
67
125
--------------------------------
522
=================
-
===================
2020
£000
111
25
98
-----------------------------------
234
====================
-
===================
2021
£000
-
11
58
-----------------------------------
69
====================
588
==================
2020
£000
-
2
51
-----------------------------------
53
===================
430
===================
16
Restricted cash
Cash guarantee
Group
Company
2021
£000
230
===================================
2020
£000
245
===================================
2021
£000
-
===================================
2020
£000
-
===================================
A requirement of the petroleum agreement with the National Office of Hydrocarbons and Mines (‘ONHYM’),
was the setting up of a guarantee for $315,000 (£230,000) (2020: $315,000 (£245,000)). This is treated as
restricted cash.
60
Europa Oil & Gas (Holdings) plc
17
Trade and other payables
Current trade and other payables
Trade payables
Other payables
Group
Company
2021
£000
963
593
--------------------------------------
1,556
===================
2020
£000
507
506
--------------------------------------
1,013
====================
2021
£000
503
149
---------------------------------------
652
====================
2020
£000
364
151
---------------------------------------
515
========================
Non-current trade and other payables
Lease liabilities
17
31
11
17
18
Borrowings
Loans repayable in less than 1 year
Bounce Back Loan
Total short-term borrowing
Loans repayable in 1 to 2 years
Bounce Back Loan
Loans repayable in 2 to 5 years
Bounce Back Loan
Loans repayable in over 5 years
Bounce Back Loan
Group
Company
2020
£000
2
--------------------------------------
2
===================
2021
£000
10
---------------------------------------
10
======================
2020
£000
2
---------------------------------------
2
======================
10
30
8
10
30
-
10
30
8
2021
£000
10
--------------------------------------
10
==================
10
30
-
Total long-term borrowing
--------------------------------------
40
=====================
--------------------------------------
48
====================
---------------------------------------
40
========================
---------------------------------------
48
=======================
In June 2020 the Group received a Bounce Back loan for £50,000 under the Government’s Covid 19 policies.
The loan is to be repaid within 6 years of drawdown but with a 12-month holiday so repayments started in July
2021 and will be repaid over the following 5 years. The annual rate of interest is 2.5%.
On 19th January the Group entered into a related party loan agreement with CW Ahlefeldt-Laurvig (a Group
Non-Executive director and shareholder). Under this agreement, Europa Oil & Gas drew funds of £225,000
on 20th January 2021 for a term of 4 months (with the option of early repayment). The loan was unsecured and
interest accrued on a daily basis at an effective interest rate of 12.57% per annum. The loan and accrued interest
was fully repaid in March 2021.
61
Europa Oil & Gas (Holdings) plc
19
Leases
The balance sheet shows the following amounts relating to leases
Asset
Office lease
Company van
Company van
Company van
Company van
Total
1 August
2020
£000
23
16
14
16
5
-------------------------------
74
===================
Depreciation
charge for the
year
£000
(23)
(4)
(3)
(5)
(4)
-------------------------------
(39)
=====================
31 July
2021
1 August
2019
£000
-
12
11
11
1
-------------------------------
35
=======================
£000
80
20
18
20
9
-------------------------------
147
========================
Depreciation
charge for the
year
£000
(57)
(4)
(4)
(4)
(4)
-------------------------------
(73)
=====================
31 July
2020
£000
23
16
14
16
5
-------------------------------
74
========================
Lease liability
Balance at 1
August 2020
Payments
made in year
Payment
allocation
from prior
year
prepayments
Interest
element of
payments
Balance at 31
Jul 2021
Office lease
Company van
Company van
Company van
Company van
£000
19
15
13
14
5
----------------------
66
========================
£000
£’000
£000
(19)
(5)
(4)
(5)
(4)
----------------------
(37)
===========================
-
-
-
-
-
----------------------
-
===========================
-
1
1
-
-
---------------------
2
===========================
£000
-
11
10
9
1
----------------------
31
===========================
Lease liability
Balance at 1
August 2019
Payments
made in year
Payment
allocation
from prior
year
prepayments
Interest
element of
payments
Balance at 31
Jul 2020
£000
2
1
-
-
-
---------------------
3
===========================
£000
19
15
13
14
5
----------------------
66
===========================
Office lease
Company van
Company van
Company van
Company van
Lease liability
Current
Non-current
Lease liability
£000
80
20
18
20
9
--------------------
147
========================
£000
£’000
(8)
-
-
-
-
----------------------
(8)
===========================
2020
£000
35
31
--------------------------------------
66
=====================
(55)
(6)
(5)
(6)
(4)
----------------------
(76)
===========================
2021
£000
14
17
--------------------------------------
31
====================
62
Europa Oil & Gas (Holdings) plc
The income statement shows the following amounts relating to leases:
Interest on lease liabilities (included in
finance cost)
Expenses related to leases of land for
extraction of oil & gas
2021
£000
2
42
2020
£000
3
42
--------------------------------------
44
======================
--------------------------------------
45
=====================
Amounts recognised in the statement of cashflows
Total cash outflow for leases
2021
£000
37
================================
2020
£000
76
================================
20
Deferred Tax – Group
Recognised deferred tax asset:
As at 1 August
(Charged)/credited to statement of comprehensive income
At 31 July
2021
£000
-
-
------------------------------------------
-
======================
2020
£000
-
-
------------------------------------------
-
=======================
The Group has a deferred tax liability of £1,290,000 (2020: £1,114,000) arising from accelerated capital
allowances and a deferred tax asset of £1,290,000 (2020: £1,114,000) arising from trading losses which will be
utilised against future taxable profits. These were offset against each other resulting in a £nil net asset/liability
(2020: £nil net asset/liability). This offsetting was required because the Group settles current tax assets and
liabilities on a net basis.
Non-recognised long-term deferred tax asset
The Group has a non-recognised deferred tax asset of £4,259,000 (2020: £4,359,000), which arises in relation
to ring-fence UK trading losses of £4.8 million (2020: £4.6 million), non-ring-fence UK trading losses of £11.7
million (2020: £11.7 million) and subsidiary losses of £1.8 million (2020: subsidiary losses of £1.8 million) that
have not been recognised in the accounts as the timing of the utilisation of the losses is considered uncertain.
No deferred tax assets or liabilities are recognised in the Company.
21
Provisions – Group
Decommissioning provisions are based on third party estimates of work which will be required and the
judgement of Directors. By their nature, the detailed scope of work required and timing are uncertain.
Long-term provisions
As at 1 August
Charged to statement of comprehensive income (note 7)
At 31 July
2021
£000
3,163
230
--------------------------------
3,393
===================
2020
£000
2,917
246
--------------------------------
3,163
====================
63
Europa Oil & Gas (Holdings) plc
Sensitivity to key assumption changes
Variations to the key assumptions used in the decommissioning provision estimates would cause increases /
(reductions) to the provision as follows:
Inflation rate (current assumption 3%)
2%
4%
Discount rate (current assumption 10%)
5%
15%
No provisions have been recognised in the Company.
22
Called up share capital
Allotted, called up and fully paid ordinary shares of 1p
At 1 August 2020: 444,691,599 shares (1 August 2019: 444,691,599)
Issued in the year: 121,775,386 shares (2020: nil shares)
At 31 July: 566,466,985 shares (2020: 444,691,599)
Further
decommissioning
provision £000
(192)
203
930
(677)
2021
£000
4,447
1,218
--------------------------------
5,665
============
2020
£000
4,447
-
--------------------------------
4,447
=============
Ordinary shares issued
Date
Type of
Issue
Number of
shares
Issue
price
22 February 2021
10 March 2021
Placing
Placing/
Brokers offer
Total
38,461,538 0.013
83,313,848
---------------------------------------------------------
121,775,386
=================
0.013
--------------------------------
1,583
=========
Raised
gross
£000
500
1,083
Raised net
of costs
£000
445
920
Nominal
value
£000
385
833
--------------------------------
1,365
=========
--------------------------------
1,218
=========
The costs of £218,000 incurred on the issue of share capital include £78,000 of non-cash expenses. All of the
allotted shares are ordinary shares of the same class and rank pari passu. The following describes the purpose of
each reserve within owners’ equity:
Reserve
Share premium
Merger reserve
Retained deficit
Description and purpose
Amount subscribed for share capital in excess of nominal value
Reserve created on issue of shares on acquisition of subsidiaries in prior years
Cumulative net gains and losses recognised in the consolidated statement of
comprehensive income
23
Share-based payments
The Group operates an approved Enterprise Management Incentive (‘EMI’) share option scheme for employees
and an unapproved scheme for grants in excess of EMI limits and for non-employees. Both schemes are equity-
settled share-based payments as defined in IFRS 2 Share-based payments. A recognised valuation methodology
is employed to determine the fair value of options granted as set out in the standard. The charge incurred relating
to these options is recognised within operating costs.
Combined information for the two schemes operated by the Group is set out below.
There are 26,029,154 ordinary 1p share options/warrants outstanding (2020: 24,203,458).
64
Europa Oil & Gas (Holdings) plc
These are held as follows:
Holder
31 July 2021
31 July 2020
RJHM Corrie
P Greenhalgh
HGD Mackay
BJ O’Cathain
SG Oddie
SA Williams
Employees of the Group
Consultants and advisers
-
-
-
2,950,000
9,200,000
2,500,000
3,425,000
7,954,154
---------------------------------------------------
26,029,154
====================
The fair values of options were determined using a Black Scholes Merton model or, in the case of ones issued
to advisors as part of the share issue, the fair value was deemed to be the share issue price. Volatility is based on
the Company's share price volatility since flotation.
450,000
3,900,000
11,700,000
1,200,000
1,200,000
1,200,000
2,330,000
2,223,458
---------------------------------------------------
24,203,458
====================
Total
In the year 21,404,154 options/warrants were granted, 2,223,458 expired, 17,355,000 were forfeited, and none
were exercised (2020: 1,200,000 granted, 1,235,000 expired, none forfeited, none exercised).
Outstanding at the start of the year
Granted - employees/directors
Granted - consultants
Granted - advisors
Expired
Forfeited
Outstanding at the end of the year
Exercisable at the end of the year
2021
Number of
options
24,203,458
13,450,000
2,000,000
5,954,154
(2,223,458)
(17,355,000)
-------------------------------------------------
26,029,154
9,814,154
2021
Average
exercise
price
8.15p
1.23p
1.23p
1.3p
2.8p
12.85p
-----------------------------------
2.37p
2.84p
2020
Number of
options
2020
Average
exercise price
24,238,458
1,200,000
-
-
(1,235,000)
-
-------------------------------------------------
24,203,458
12,583,458
8.76p
1.28p
-
-
13.09p
-
-----------------------------------
8.16p
9.48p
The 15,450,000 options granted in August 2020 vest 5,515,000 after each of 12, 24 and 36 months, are exercisable
conditional upon the Europa Oil & Gas (Holdings) plc closing average mid-market share price being above
2.46p for 30 consecutive trading day and expire on the 6th or 2nd anniversary of the grant date. The inputs used
to determine their values are detailed in the table:
Grant date
Number of options
Share price at grant
Exercise price
Volatility
Dividend yield
Risk free investment rate
Option life in years
Fair value per option
4 August 2020
13,450,000
1.20p
1.23p
60.0%
nil
0.133%
6
0.41p
4 August 2020
2,000,000
1.20p
1.23p
60.0%
nil
0.068%
2
0.21p
The 5,954,154 warrants issued in February and March 2021 were issued to an advisor as part of the share fund
raise. The fair value to the options warrants was the 1.3p issue share price.
The 1,200,000 options granted in March 2020 vest 400,000 after each of 18, 30 and 42 months, are exercisable
conditional upon the Europa Oil & Gas (Holdings) plc closing average mid-market share price being above 3p
for 30 consecutive trading day and expire on the 10th anniversary of the grant date. The inputs used to determine
their values are detailed in the table:
65
Europa Oil & Gas (Holdings) plc
Grant date
Number of options
Share price at grant
Exercise price
Volatility
Dividend yield
Risk free investment rate
Option life in years
Fair value per option
12 March 2020
1,200,000
1.3p
1.28p
57.5%
nil
0.009%
5
0.32p
Based on the fair values above, the charge arising from employee share options was £35,000 (2020: £3,000). The
charge relating to non-employee share options was £4,000 (2020: £nil). The charge allocated direct to equity,
relating to the issue of options on the issue of share capital, was £78,000 (2020: £nil).
Share options/warrants outstanding at the end of the period have exercise prices ranging from 1.23p to 10.0p
and the weighted average remaining contractual life at the end of the period was 3.8 years (2020: 2 years).
24
Financial instruments
The Group’s and Company’s financial instruments comprise cash and cash equivalents, bank borrowings, loans,
and items such as trade and other receivables and trade and other payables which arise directly from its
operations. Europa’s activities are subject to a range of financial risks, the main ones being credit; liquidity;
interest rates; commodity prices; foreign exchange; and capital. These risks are managed through ongoing review
considering the operational, business and economic circumstances at that time.
Financial assets
Amortised cost
Amortised cost
Fair value
through other
comprehensive
income
Fair value
through other
comprehensive
income
Investments
Trade and other receivables
Restricted cash
Cash and cash equivalents
2021
£’000
-
397
230
641
2021
£’000
-
136
245
768
2021
£’000
42
-
-
-
2020
£’000
44
-
-
-
Total financial assets
--------------------
1,268
--------------------
1,149
-----------------------
42
--------------------------
44
================================
================================
=====================================
=====================================
Financial liabilities
Amortised cost
Amortised cost
Trade and other payables
Loans
Total financial liabilities
2021
£’000
(1,556)
(67)
--------------------
(1,623)
2020
£’000
(1,044)
(50)
--------------------
(1,094)
Fair value
through other
comprehensive
income
Fair value
through other
comprehensive
income
2021
£’000
-
-
2020
£’000
-
-
---------------------
-----------------------
-
-
================================
================================
=====================================
=====================================
66
Europa Oil & Gas (Holdings) plc
Credit risk
The Group is exposed to credit risk as all crude oil production is sold to one multinational oil company. The
customer is invoiced monthly for the oil delivered to the refinery in the previous month and invoices are settled
in full on the 15th of the following month. At 31 July 2021 trade receivables were £297,000 representing one
month of oil revenue, part of a second month of oil revenue and partner billings (2020: £96,000 representing
one month of oil revenue). The fair value of trade receivables and payables approximates to their carrying value
because of their short maturity. Any surplus cash is held on short-term deposit with Royal Bank of Scotland.
The maximum credit exposure in the year was £175,000 being the highest month’s oil revenue (2020: £137,000).
The Company exposure to third party credit risk is negligible. The intercompany balances with its subsidiaries
have been provided due to the questionability of their recovery.
Liquidity risk
The Company currently has no overdraft or overdraft facility with its bankers.
The Group and Company monitor their levels of working capital to ensure they can meet liabilities as they fall
due. The following table shows the contractual maturities (representing the undiscounted cash flows) of the
Group’s and Company’s financial liabilities.
At 31 July
6 months or less
Total
At 31 July
6 to 12 months
1 to 2 years
2 to 5 years
Over 5 years
Total
Group
Trade and other payables
2020
£000
1,013
--------------------------------------
1,013
================================
2021
£000
1,556
--------------------------------------
1,556
================================
Company
Trade and other payables
2021
£000
652
---------------------------------------
652
=====================================
2020
£000
515
---------------------------------------
515
=====================================
Group
Loans
Company
Loans
2021
£000
5
5
10
30
--------------------------------------
50
=====================
2020
£000
2
10
30
8
--------------------------------------
50
======================
2021
£000
5
5
10
30
---------------------------------------
50
=========================
2020
£000
2
10
30
8
---------------------------------------
50
========================
Cash and cash equivalents in both Group and Company are all available at short notice.
Trade and other payables do not normally incur interest charges. There is no difference between the fair value
of the trade and other payables and their carrying amounts.
Interest rate risk
The Group has no interest-bearing liabilities.
Commodity price risk
The selling price of the Group’s production of crude oil is set at a small discount to Brent prices. The table
below shows the range of prices achieved in the year and the sensitivity of the Group’s loss before taxation
(‘LBT’) to such movements in oil price. There would be a corresponding increase or decrease to net assets.
There is no commodity price risk in the Company.
Oil price
Highest
Average
Lowest
Month
July 21
October 2020
2021
Price
US$/bbl
$73.60
$55.80
$39.10
2021
LBT
£000
(420)
(845)
(1,262)
2020
Price
US$/bbl
$65.80
$48.50
$18.20
2020
LBT
£000
(4,991)
(5,440)
(6,216)
67
Europa Oil & Gas (Holdings) plc
Foreign exchange risk
The Group’s production of crude oil is invoiced in US$. Revenue is translated into Sterling using a monthly
exchange rate set by reference to the market rate. The table below shows the range of average monthly US$
exchange rates used in the year and the sensitivity of the Group’s LBT to similar movements in US$ exchange.
There would be a corresponding increase or decrease in net assets.
US Dollar
Highest
Average
Lowest
Month
May 2021
Sep 2020
2021
Rate
US$/£
1.418
1.271
1.292
2021
LBT
£000
(902)
(845)
(775)
2020
Rate
US$/£
1.321
1.271
1.218
2020
LBT
£000
(5,477)
(5,440)
(5,376)
The table below shows the Group’s currency exposures. Exposures comprise the net financial assets and
liabilities of the Group that are not denominated in the functional currency.
Currency Item
Euro
Cash and cash equivalents
Trade and other payables
US Dollar Cash and cash equivalents
Trade and other receivables
Total
Group
Company
2021
£000
2
(458)
339
290
----------------------------
173
====================
2020
£000
57
(352)
355
100
----------------------------
160
===================
2021
£000
2
(397)
6
-
----------------------------
(389)
======================
2020
£000
5
(483)
7
-
----------------------------
(471)
======================
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and maintain an optimal capital structure to reduce the cost
of capital. The Group defines capital as being the consolidated shareholder equity (note 22) and bank borrowings
(currently £50,000). The Board monitors the level of capital as compared to the Group’s long-term debt
commitments and adjusts the ratio of debt to capital as is determined to be necessary, by issuing new shares,
reducing or increasing debt, paying dividends and returning capital to shareholders. The Group has a £50k loan
subject to an annual 2.5% interest charge and repayable over 6 years with a 1-year holiday. Repayments
commenced in July 2021.
Intercompany loans
The loans to the subsidiaries are not classified as repayable on demand. IFRS 9 requires consideration of the
expected credit risk associated with the loan. As the subsidiary company does not have any liquid assets to sell
to repay the loan, should it be recalled, the conclusion reached was that the loan should be categorised as stage
3.
As part of the assessment of expected credit losses of the intercompany loan receivable, the Directors have
considered the published chance of success for Inishkea, and applying the same 33% general wildcat exploration
success rate to Inezgane, the loans to Europa Oil & Gas Inishkea and Europa Oil & Gas New Ventures have
thus been 67% provided.
The loan to Europa Oil & Gas (Ireland West) and Europa Oil & Gas (Ireland East) have been provided in full
due to the relinquishment of the licence held by the subsidiaries.
The movement in the provision was as follows:
Europa
Oil &
Gas
Limited
£000
16,517
2,068
---------------------------------
Europa
Oil &
Gas
(Ireland
West)
Limited
£000
Europa
Oil &
Gas
(Ireland
East)
Limited
£000
505
258
---------------------------------
961
519
---------------------------------
68
Total
Europa
Oil &
Gas
(Inishkea)
Limited
Europa
Oil &
Gas (New
Ventures)
Limited
£000
424
109
---------------------------------
£000
216
121
---------------------------------
£000
18,623
3,075
---------------------------------
Provision at 31 July 2019
Movement in the year
Europa Oil & Gas (Holdings) plc
Provision at 31 July 2020
Movement in the year
Provision at 31 July 2021
Gross loan balances
Loan balance at 31 July 2019
Movement in loan
Loan balance at 31 July 2020
Movement in loan
Loan balance at 31 July 2021
Provisions
Provision at 31 July 2019
Movement in provision
Provision at 31 July 2020
Movement in provision
Provision at 31 July 2021
Net loan balance at 1 August 2019
2012018
Net loan balance at 31 July 2020
Net loan balance at 31 July 2021
18,585
1,593
---------------------------------
20,178
===========
==
16,517
2,068
18,585
1,593
20,178
(16,517)
(2,068)
(18,585)
(1,593)
(20,178)
-
-
-
763
-
---------------------------------
763
=============
1,480
-
---------------------------------
1,480
=============
533
154
---------------------------------
687
=============
337
174
---------------------------------
511
=============
21,698
1,921
---------------------------------
23,619
=============
754
9
763
-
763
(505)
(258)
(763)
-
(763)
249
-
-
1,434
46
1,480
-
1,480
(961)
(519)
(1,480)
-
(1,480)
473
-
-
632
164
796
228
1,024
(424)
(109)
(533)
(154)
(687)
208
263
337
324
180
504
258
762
(216)
(121)
(337)
(174)
(511)
108
167
251
19,661
2,467
22,128
2,079
24,207
(18,623)
(3,075)
(21,698)
(1,921)
(23,619)
1,038
430
588
25
Capital commitments and guarantees
The outstanding work commitment on Inezgane offshore licence for 2021 totals £400,000 and relates to finding
the original seismic acquisition tapes, sorting through them for quality, nav-merging the location with the trace
recordings, and reprocessing the seismic volume to get best quality visual based in time and then converting the
volume to a pre stack depth migrated (PSDM) state reprocessed data pack. A payment is made to NAMR for
training local personnel, usually technical individuals.
For PEDL181 there is a commitment to reprocess 2D seismic, integrate Grav.mag. data and interpret it by June
2022. The total price for this is estimated to be £80,000 (with the Group’s share being 50%)
If the Group is not able to farm-down, extend licences or elects not to continue in an exploration licence, then
the impact on the financial statements will be the impairment of the relevant intangible asset disclosed in note
11.
26
Operating lease commitments
Europa Oil & Gas Limited pays annual site rentals for the land upon which the West Firsby and Crosby Warren
oil field facilities are located.
• The West Firsby lease runs until September 2022 and can be terminated on two months’ notice. The
annual cost is currently £22,000 (2020: £22,000) increasing annually in line with the retail price index.
• The Crosby Warren lease runs until December 2022 and can be terminated on three months’ notice.
The annual cost is currently £20,000 (2020: £20,000).
Future minimum lease payments are as follows:
Less than 1 year
2-5 years
Total
2021
£000
9
-
---------------------------------
9
============
2020
£000
9
-
---------------------------------
9
=============
69
Europa Oil & Gas (Holdings) plc
27
Related party transactions
Key management are those persons having authority and responsibility for planning, controlling and directing
the activities of the Group. In the opinion of the Board, the Group’s and the Company’s key management are
the Directors of Europa Oil & Gas (Holdings) plc. Information regarding their compensation is given in note
4.
During the year, the Company provided services to subsidiary companies as follows:
Europa Oil & Gas Limited
Europa Oil & Gas (Ireland West) Limited
Europa Oil & Gas (Ireland East) Limited
Europa Oil & Gas (Inishkea) Limited
Europa Oil & Gas (New Ventures) Limited
Total
2021
£000
1,208
-
-
38
25
---------------------------------
1,271
============
2020
£000
1,496
3
6
25
57
---------------------------------
1,587
==========
At the end of the year, after provisions, the Company was owed the following amounts by subsidiaries:
Europa Oil & Gas (Ireland West) Limited
Europa Oil & Gas (Ireland East) Limited
Europa Oil & Gas (Inishkea) Limited
Europa Oil & Gas (New Ventures) Limited
Total
2021
£000
-
-
337
251
---------------------------------
588
============
2020
£000
-
-
263
167
---------------------------------
430
=============
On 19th January the Group entered into a related party loan agreement with CW Ahlefeldt-Laurvig (a Group
Non-Executive director and shareholder). Under this agreement, Europa Oil & Gas drew funds of £225,000
on 20th January 2021 for a term of 4 months (with the option of early repayment). The loan was unsecured and
interest accrued on a daily basis at an effective interest rate of 12.57% per annum. The loan and accrued interest
was fully repaid in March 2021.
28
Post reporting date events
Inezgane licence farmout officially announced on 3rd August 2021
•
• Wressle achieved over 500 bopd after successful proppant squeeze operations in late August 2021 and
this increased to 950 boepd in September which was over previous expectations
• Following the achievement of 500bopd oil flow rate as announced in August 2021, the Directors
consider that Wressle has met the requirements under IFRS6 for transfer to producing assets as of
that date
70
Europa Oil & Gas (Holdings) plc
Directors and advisers
Company registration number
5217946
Registered office
Directors
Secretary
Banker
Solicitor
Auditor
Nominated adviser and broker
Broker
Registrar
55 Baker Street
London
W1U 7EU
CW Ahlefeldt-Laurvig – Non-Executive Director
BJ O’Cathain – Non-Executive Chairman (from 4 August 2020,
previously Non-Executive Director)
SG Oddie – Chief Executive Officer (from 4 August 2020, previously
Non-Executive Chairman)
SA Williams - Non-Executive Director (from 12 March 2020)
M Johnson
Royal Bank of Scotland plc
1 Albyn Place
Aberdeen
AB10 1BR
Charles Russell Speechlys LLP
5 Fleet Place
London
EC4M 7RD
BDO LLP
55 Baker Street
London
W1U 7EU
finnCap Ltd
One Bartholomew Close
London
EC1A 7BL
Turner Pope Investments (TPI) Limited
8 Frederick’s Place
London
EC2R 8AB
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
71