Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
ANNUAL REPORT AND ACCOUNTS 2022
Registration number: 05338258
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
24. Contingent liabilities and guarantees
The Group has no contingent liabilities in respect of legal claims arising from the ordinary course of business and
it is not anticipated that any material liabilities will arise from contingent liabilities other than those provided
for.
25. Ultimate controlling party
The company is quoted on the AIM market of the London Stock Exchange. At the date of the annual report there
was no one controlling party.
26. Events after the reporting period
There were no significant events.
Contents
Company Information
Chairman’s Report
Chief Executive Officer’s Report
Strategic Report
Directors’ Report
Directors’ Information
Corporate Governance Report
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and Company Statement of Cash Flows
Notes to the Financial Statements
Page
1
2
3
5
8
12
13
16
22
23
24
25
26
27
28
29
www.ntog.co.uk
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Company Information
Directors
Stephen Staley (Non-Executive Chairman)
Matt Lofgran (Chief Executive Officer)
John Stafford (Non-Executive Director)
Secretary
Paul Welch (Non-Executive Director)
D&A Secretarial Services Limited
Registered office
Salisbury House,
London Wall,
Registered number
London EC2M 5PS
Auditor
05338258 (England and Wales)
MAH, Chartered Accountants
nd
Floor
2
154 Bishopsgate
Nominated adviser
London EC2M 4LN
Beaumont Cornish Limited
Building 3
566 Chiswick High Road
Broker
London W4 5YA
Novum Securities Limited
nd
Floor, Lansdowne House
2
57 Berkeley Square
Solicitors
London W1J 6ER
Druces LLP
Salisbury House
London Wall,
Bankers
London EC2M 5PS
Barclays Bank plc
1 Churchill Place
Canary Wharf
Registrars
London E14 5HP
Share Registrars Ltd
The Courtyard
17 West Street
Farnham
Website
Surrey GU9 7DR
www.ntog.co.uk
1
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Chairman’s Report
2022 – Good progress in line with strategy
I am pleased to present Nostra Terra Oil & Gas Company PLC’s annual
2022.
report for the year ending 31 December
The past year saw the start, but sadly not the end, of the Russian invasion of Ukraine. The sanctions and boycotts
on Russian oil and the end of most covid-related restrictions on travel and work meant high oil prices in early 2022
and for much of the year. However, the continuing Chinese lockdowns served to act as something of a damper on
the global demand for goods, in turn reducing demand and hence the price of hydrocarbons. At the end of 2022,
the WTI spot benchmark stood at around $79.
As planned, Nostra Terra took advantage of the generally strong oil prices during the year to consolidate
production and to invest further into our existing acreage. Strong cash flows meant that we were able to drill both
the Fouke #2 (East Texas) and the Grant East #1 (Permian Basin) wells without diluting existing shareholders.
The Fouke well has been a good producer, though the Grant East well suffered from completion problems.
Also, in line with our strategy for 2022, further workovers on existing wells took place during the year. These have
supported our production volumes and our revenues.
All in all, 2022 provided the Company with the highest production and revenues since it was founded.
Toward the close of the year, this was a contributing factor to the increase in the borrowing base of the senior
facility provided to Nostra Terra by WAFD from $3,350,000 to $4,350,000, though increases in interest rates
globally also led to an increase in the interest rate associated with this facility.
, and at the time of writing, we await the outcome of the Texas Railroad Commission’s Field
After the year-end
Allowable Hearing on the Fouke Wells in the Pine Mills Field, East Texas. Our request to allow production at
significantly higher daily rates from these wells was unopposed; success would mean we can continue to benefit
from the full achievable flow rates of these prolific wells.
as the Company’s auditors. Jeffrey
no longer had sufficient capacity to service Nostra Terra and a number of others of its clients’ needs
In March 2023, we replaced Jeffrey Henry LLP with MAH, Chartered Accountants
Henry LLP
and so had to withdraw from providing audit services to several companies.
As always, Nostra Terra continues to actively seek out and assess new opportunities both in the US and further
afield. Thank you for your continuing support throughout the last year.
Non-Executive Chairman
Dr Stephen Staley
1 June 2023
2
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Chief Executive Officer’s Report
2022 was a record year of production and revenue for Nostra Terra, while keeping costs
relatively flat, resulting in a significant increase in gross profit. The Company remained
focused on growth without any dilution to shareholders.
At the beginning of the year, we brought on a new well in Pine Mills (32.5% working interest). Following this, the
Company drilled a new well on the newly acquired Grant East Lease (100% working interest). Both of these were
funded from existing resources.
Revenues for the year were $4,021,000, an increase of 76% from $2,282,000 in 2021, reflecting a combination of
a 19% increase in production sales and an improving commodity price environment (average $91.17 per barrel
sold in 2022 compared to $61.45 in 2021). Gross profit before non-cash items (depreciation, depletion, and
amortization) was $2,242,000, vastly improved from a gross loss of $574,000 in 2021.
The Board continues to focus on its stated aim of increasing cashflow and reserves for the year ended 2023.
United States
’
All of Nostra Terra
lifting costs and longer-life reserves than unconventional ones.
s operations in the US target conventional reservoirs (i.e., not shale), typically with lower
Area
East Texas
West Texas
South Texas
2022 Production
(Barrels sold)
37,341
3,681
3,076
Percentage of
Portfolio by sales
84.4%
8.4%
7.2%
East Texas (33- 100% WI)
’
Nostra Terra
s core asset is the Pine Mills field (100% WI) providing stable production. In 2022 production from
’
the area accounted for 84% of the Company
s sales (50-75% WI). Production remained stable throughout the year
Company’s
from the core producing wells, while the
focus was on growing production in the new farmout area.
“
”
At the beginning of 2022, the Fouke 2 (32.5% WI) well was drilled and put into production. The well was then
tested and flowed at a rate of 145 bopd over a 24-hour period with a 0% watercut and placed into continuous
production. This production rate exceeded that of the offset Fouke 1 well by 77% because the Fouke 1 had been
limited by field rules (
the test rate of the Fouke 2, the operator requested a substantial increase in the field allowable rate so that both
wells can be produced at higher and more efficient rates. The hearing took place in April of 2023 and a decision
is expected to be handed down during Q3 2023. Until a decision by the Texas Railroad Commission is made the
operator continues to produce both wells above the current allowable cap, to obtain sufficient technical
information to support the increased field allowable.
) to 82 bopd per well. As a result of the past performance of the Fouke 1 and
allowable
3
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Chief Executive Officer’s Report (continued)
West Texas (50 – 100% WI)
’
In 2022 production from the area accounted for 8.4% of the Company
s sales (50-75% WI). In April 2022, the
Company announced the Grant East lease acquisition (100% WI) and preparations to drill. Drilling took place in
May 2022. The well encountered 24 feet of gross reservoir section in the Upper Clear Fork and 108 feet of gross
reservoir section in the Lower Clear Fork, which compares favourably with the NTOG-operated wells on an
adjoining lease. However, during the completion operations the fracture stimulation propagated out of zone and
intersected a deeper water bearing horizon that produced at high water rates, rendering the well uneconomic to
produce. The Company has completed a technical study of the completion operations and this information will be
used in future operations to improve the completion results. The well was funded from existing resources, thus
avoiding dilution to shareholders.
South Texas (100% WI)
In 2020 the Company acquired the Caballos Creek asset, comprising two leases. There are no current plans for
expansion in this area. Production from this area accounted for 7.2% of Company sales.
Senior Lending Facility
In December 2022, the Company completed a redetermination of its Senior Lending Facility, resulting in a
significant increase in the Borrowing Base. The Borrowing Base was increased from $2,350,000 at the end of 2021
to US$4,350,000 based upon a combination of increased production volumes, reserves, pricing and subsequent
cashflows. The size of the Facility and Borrowing Base will continue to be reassessed at least twice yearly. The
interest rate ending December 2022 was 6.5%
The Facility is not restricted to any geographical region. Nostra Terra can deploy funds from the Facility for
operational purposes and acquisitions in its current areas of operation or in other areas of the world, should the
opportunity arise.
Outlook
The Company enjoyed a record year for revenue and cashflow. Two wells were drilled during the year using
existing resources, while debt levels were reduced. The Company plans to continue to pursue opportunities both
within and outside the existing asset portfolio where we believe value can be created for shareholders.
We’re grateful for the support of our shareholders throughout the year. On behalf of the entire team at Nostra
Terra, we thank you and look forward to continued success in the future.
Chief Executive Officer
Matt Lofgran
1 June 2023
4
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Strategic Report
Nostra Terra Oil and Gas Company plc (“the Company”) and its
subsidiaries (collectively “the Group”)
The directors present their Strategic Report for
Principal activity
The group’s principal activity is the exploitation of hydrocarbon resources
covering the year ended 31 December 2022.
Our strategy
, focusing currently on the USA.
1 Grow Production and Reserves from Permian Basin and Pine Mills
2 Increase cashflows
3 Make acquisitions that are accretive to shareholders
4 Use technical advances to extract further value from maturing assets
5 Develop strategic partnerships that allow the Company to leverage our existing assets to generate
returns or create value through new opportunities
Our business model
Nostra Terra is focused on achieving profitable and sustainable growth within established hydrocarbon provinces.
We see the scope for sustained profitable growth throughout many well-established hydrocarbon systems. Our
business model is to continue upgrading our exploration and production portfolio by identifying, screening, and
investing in a diverse portfolio of upstream assets, targeting the most attractive opportunities. We focus on
conventional reservoirs where assets have lower lifting costs and long-life reserves.
Review of business, future developments, trading outlook, and future strategy
are also noted in the Chairman’s Report on page 2 and the Chief Executive Officer’s Report on
The results for the year and the financial position of the Company and the Group are shown in the financial
statements. They
page 3.
Growth opportunities
Nostra Terra is focused on existing, proven basins with conventional reservoirs in Texas, USA. The Company is
also pursuing growth opportunities outside the USA.
Key Themes for 2022
•
•
•
•
•
Russia invades Ukraine, highlighting the importance of energy security.
An effective end to the global Covid crisis, China excepted.
Doing more with less: investors were focused on cash flows - putting capital to work in short cycle,
infrastructure-led opportunities.
An increasing focus on ESG, with larger oil companies increasing investment in projects focusing on the
environment.
Reduced funding for long lead time projects.
Key performance indicators
At this stage in the Company’s development, the directors regul
arly monitor key performance indicators primarily:
production rates, operating costs, general administrative expenses cash flows and bank balances;, which are
tightly controlled;.
2022
$’000
2021
$’000
Cash and cash equivalents
Administrative expenses
132
1,074
BOE
45
908
BOE
Production (net)
44,097
37,126
5
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Strategic Report (continued)
Principal risks and uncertainties
Managing Our Risk
Company. The Company maintains a Risk Register as a part of the Board’
Risk management is at the core of achieving our strategy and delivering long-term value to shareholders. The
Board, its committees, and the executive team are actively engaged in setting the risk agenda and managing risks
and opportunities of the
s fiduciary and
oversight responsibilities.
Definition of Risk
includes both “upside” (opportunity) and “downside” (threat) risks. Threats
A risk is defined here as a potential future event that may influence the achievement of business objectives. This
sources and can be directly related to the Company’s operational and commercial activities and support
and opportunities can come from
various
functions, or they can arise externally: from suppliers, regulators, competitors; from the economic environment
or political climate.
Risk Management
The Company is acutely aware of the oil and gas activity risks. Such risks range from global commercial risks, such
as stock market volatility and commodity pricing, to geopolitical risks in terms of market access, tariffs and
contractual relationships through to operational risks. In addressing the latter, ensuring the safety of our
personnel and subcontracting staff and protecting the environment in which we work are paramount.
The key risk in development and production is the technical risk of not finding and producing sufficient
hydrocarbons to be economic, While the US mid-continent is a proven hydrocarbon region and is seeing
resurgence through the application of new drilling and well completion technologies, there are also environmental
and economic risks, as there are in any hydrocarbon region. Further information relating to risk can be found on
note 20 of these accounts.
Companies Act S.172
The Directors acknowledge their duty under s.172 of the Companies Act 2006 and consider that they have,
individually and together, acted in the way that, in good faith, would most likely promote the company's success
for the benefit of its members as a whole. In doing so, they have had regard (amongst other matters) to:
the likely consequences of any decision in the long term. The Group’s long
•
•
•
•
•
-term strategic objectives, including
progress made during the year and principal risks to these objectives, are shown in the strategic report and
the interests of the Company’s employees. Our employees are fundamental to us achieving our long
the key performance indicators.
the impact of the Company’s ope
strategic objectives.
-term
rations on the community and the environment. The Group operates honestly
and transparently. We consider the impact on the environment on our day-to-day operations and how we can
minimise this.
the desirability of the Company maintaining a reputation for high standards of business conduct. We will
behave responsibly, operating within the high standard of business conduct and good corporate governance.
the need to act fairly as between members of the Company. We will behave responsibly towards our
shareholders and treat them fairly and equally so they may benefit from the successful delivery of our
strategic objectives.
6
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Strategic Report (continued)
This Strategic Report was approved by the board of directors on 1 June 2023 and signed on behalf of the board
by:
Chief Executive Officer
Matt Lofgran
7
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Directors’ Report
The directors present their annual report and audited financial statements for the year ended 31 December 2022.
The review of business and future developments has been undertaken in the strategic report for the year ending
31 December 2022.
Listing
The Company’s ordinary shares have been quoted on the AIM market of the London Stock Exchange since 20 July
is the Company’s nominated advisor and
Company’s broker.
2007. Beaumont Cornish Limited
Novum Securities Limited is the
The closing mid-market price at 31 December 2022 was 0.28p (2020: 0.32p).
Results and dividends
The loss for the year ended 31 December 2022 was $546,000, (2021: $1,088,000).
No dividends will be distributed for the year ended 31 December 2022 (2021: $nil).
Directors
The following directors have held office for the year ended 31 December 2022:
M B Lofgran
J Stafford
S Staley
P Welch (appointed 4 February 2022)
’
remuneration for the years ended 31 December 2022 and 2021 are summarised as follows:
The directors
M B Lofgran
S Staley
J Stafford
Total
P Welch
31 December 2021:
M B Lofgran
S Staley
Total
J Stafford
Salary
$
275,000
-
-
275,000
-
Salary
$
219,333
-
219,333
-
Fees
$
-
48,780
37,107
41,400
127,287
Fees
$
-
68,795
41,227
110,072
Share-based
payments
$
2022
Total
$
2,721
-
-
-
2,721
Share-based
payments
$
3,743
6,485
5,188
15,416
277,721
48,780
37,107
41,400
405,008
2021
Total
$
223,076
75,280
46,465
344,821
There were no benefit-in-kind payments during the year.
More detail on the share options issued to Directors’ during the year are disclosed within
note together with the outstanding options and warrants at the year-end, please refer to note 23.
the share-based payment
8
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Directors’ Report (continued)
, the directors’ beneficial interests in the
ompany’s issued share capital were as follows:
At 31 December 2022
Number of
ordinary shares
of 0.1 p each
31.12.22
C
Percentage of
issued share
capital
Number of
ordinary shares
of 0.1 p each
31.12.21
Percentage of
issued share
capital
M B Lofgran
50,705,463
J Stafford
2,500,000
S Staley
8,166,667
P Welch
-
Remuneration Committee and Policy
6.79%
0.33%
1.09%
-
50,705,463
2,500,000
8,166,667
-
7.2%
0.4%
1.2%
-
directors’ remuneration. The group’s policy is to pay competitive but
The Remuneration Committee takes into account both group and individual performance, market value, and sector
conditions in determining executive
affordable salaries compared with peer companies in the oil and gas sector, until the group has established a good
position with acreage, assets, income and cash at hand. All current salaries are without pension or benefits.
Substantial shareholders
As at 22 May 2023, the Company was aware of the following interests in its issued share capital:
Number of ordinary
shares of 0.1 p each
Percentage of issued
share capital
Interactive Investor Services Nominees Limited
HSDL Nominees Limited
Miton UK Microcap Trust PLC
M Lofgran
Hargreaves Lansdown (Nominees) Limited
J Bolitho
Discovery Energy Limited (E Ainsworth)
HSDL Nominees Limited
Barclays Direct Investing Nominees Limited
Interactive Investor Services Nominees Limited
Events after the reporting period
95,281,619
66,179,715
65,764,138
50,705,463
45,104,360
44,000,000
33,253,802
29,191,128
28,775,928
27,369,176
12.76%
8.87%
8.81%
6.79%
6.04%
5.89%
4.45%
3.91%
3.85%
3.67%
Refer to note 26 for details.
Publication of accounts on company website
website. The directors are responsible for the website’s
The company publishes the financial statements on its
maintenance and integrity, and their responsibility also extends to the financial statements contained therein.
9
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Directors’ Report (continued)
Indemnity of officers
The group may purchase and maintain, for any director or officer, insurance against any liability. The group
maintains appropriate insurance cover against legal action brought against its directors and officers.
Financial instruments
The group does not have formal policies on interest rate risk or foreign currency risk. The group would be exposed
to foreign currency risk on sales and purchases that are denominated in a currency other than United States Dollars
($). The group maintains a natural hedge that minimises its foreign exchange exposure by matching foreign
currency income with foreign currency costs. For the time being, the group does not consider it necessary to enter
into foreign exchange contracts to manage its foreign currency risk, given the nature of its business.
Going concern
The directors believe that, based on the forecasts and projections they have prepared, the resources available will
be sufficient for the Company and its subsidiaries to continue as a going concern for the foreseeable future when
taking into account proceeds generated from production. Going concern is discussed more fully in note 1.
The Directors have concluded that the Group will have adequate resources to continue in operational existence
for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the
annual report and accounts.
Statement of 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 are required to prepare the Group and Company financial statements in accordance with UK adopted
International Accounting Standards.
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 and
Company for that period.
•
In preparing these financial statements, the Directors are required to:
•
•
•
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent;
state whether the UK adopted International Accounting Standards have been followed, 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
Group and Company will continue in business.
10
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Directors’ Report (continued)
Statement of directors’ responsibilities (continued)
The Directors are responsible for keeping accounting records that are sufficient to show and explain the Group’s
and Company’s transactions. These records must disclose with reasonable accuracy at any time the financial
position of the Group and Company and to enable the Directors to ensure that any financial statements prepared
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and
Group and hence for taking reasonable steps for the prevention and detection of fraud, error, non-compliance with
law and regulations and other irregularities.
included on the Company’s website. Legislation in the United
The Directors are responsible for the maintenance and integrity of the corporate and financial information
Kingdom governing the preparation and
The Company is compliant with AIM Rule 26 regarding the Company’s website.
dissemination of financial statements may differ from legislation in other jurisdictions.
Statement as to disclosure of information to auditors
Each of the persons who is a Director at the date of approval of this annual report confirms that:
so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is
•
•
unaware; and
himself/herself aware of any relevant audit information and to establish that the Company’s auditor is
the Director has taken all the steps that he ought to have taken as a Director in order to make
aware of that information.
Auditors
MAH, Chartered Accountants were appointed as auditor and have expressed their willingness to continue in office
as auditor and will be proposed for reappointment at the next Annual General Meeting.
This report was approved by the board of directors on 1 June 2023 and signed on behalf of the board by:
Chief Executive Officer
Matt Lofgran
11
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Directors’ Information
Dr Stephen Staley Non-Executive Chairman
Dr Stephen Staley (63) has 39 years of wide-ranging management, technical and commercial experience in the
international oil, gas and power sectors. Steve was until October 2019 the CEO, director and co- founder of Upland
Resources Limited, a London-listed oil & gas company currently with assets onshore and offshore UK and onshore
Tunisia. Until March 2022 he was also non-executive chairman of Predator Oil & Gas Holdings PLC, an oil & gas
company on the Standard List of the London Stock Exchange. He is a non-executive director of 88 Energy Ltd,
which is listed on both AIM and the ASX and chairman of Elephant Oil Corp.
He has also co-founded and floated two further London-listed oil & gas companies and was both a technical
consultant to, and non-executive director of, Cove Energy plc
the highly successful East Africa focused explorer.
Prior to this he has worked for companies including Cinergy Corp. and Conoco. He holds a BSc (Hons.) in
Geophysics from Edinburgh University, a PhD in Petroleum Geology from Sheffield University and an MBA from
Warwick University. He is a Fellow of the Geological Society and a member of the EAGE, the PESGB and The Arctic
Club. Matt Lofgran Chief Executive Officer
–
Matt Lofgran (47) has wide experience of business development in the energy, real estate and communications
sectors. Prior to becoming CEO of Nostra Terra in July 2009, he was with Robson Energy, LLC, latterly as Vice
President of International Business Development. In this capacity, he launched the oil and gas, field services and
coal divisions, and was responsible for extending
Robson Energy’s activities
into Mexico.
Mr Lofgran holds a Bachelor of Business Management degree from the University of Phoenix and a Global MBA
from Thunderbird School of Global Management. Mr Lofgran is also a Director of Elephant Oil Corp.
John Stafford Non-Executive Technical Director
) has over 35 years’ experience in the oil & gas industry. As Vice President of Operations at Gulf
–
John Stafford (62
2017, he oversaw 40,000 bopd, having joined that Company as Manager,
Keystone (LSE: GKP) 2014
Geology & Geophysics in early 2009. John is a geoscientist, with specialist expertise in oil field development and
reserve certification and reporting.
Mr Stafford has worked with well-known companies in the oil and gas industry, such as ECL, Schlumberger and
PGS, managing projects in integrated field management and all aspects of reserves certification and reporting. This
includes the production of Competent Persons Reports.
John has further experience of fractured reservoir development and risk management.
Paul Welch Non-Executive Director
Paul (61) is an international energy executive with over 30 years of industry experience having worked for Shell
Oil Company and several large independents including Hunt Oil Company, Pioneer Natural Resources and as CEO
of AIM listed explorer Chariot Limited (previously Chariot Oil and Gas Limited) (AIM: CHAR) (2009-2012) and
CEO of Sea Dragon Energy (2013-2015) which in October of 2015 became SDX Energy plc (AIM: SDX) (2015-
2019) following the merger with Madison PetroGas. He was subsequently appointed CEO of Cosimo Holdings Ltd
in 2019, a private oil and gas company. He is currently Chairman and Executive Director of ACP Energy, a
company formed to make acquisitions in the energy sector and recently admitted to the Main Market in London.
Master’s
Paul graduated from the Colorado School of Mines with both a Bachelor and
Engineering. He also holds an MBA in Finance from the Southern Methodist University (SMU) in Dallas, Texas.
degrees in Petroleum
12
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Corporate Governance Report
As an AIM-quoted company, the Company is required to apply a recognised corporate governance code,
QCA Corporate Governance Code (the “QCA Code”).
demonstrating how the Group complies with such corporate governance code and where it departs from it.
The directors have formally taken the decision to apply the
The Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value
for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies, such as
Nostra Terra, have been created.
QCA Principles
The Board recognises the importance of corporate governance, and we therefore apply the QCA code.
QCA
Code
Principle
Disclosure
Nostra Terra Reference
1
2
3
4
5
6
7
8
9
10
Establish a strategy and business model which
promote long-term value for shareholders.
See Strategic Report of this 2022 Annual
the Chief Executive Officer’s Statement
Report
Seek to understand and meet shareholder needs
and expectations.
See
this 2022 Annual Report
of
Take into account wider stakeholder and social
responsibilities and their implications for long
term success.
Embed effective risk management, considering
both opportunities and threats throughout
the organisation.
Detailed within AIM Rule 26, available to
view via www.ntog.co.uk
See note 20 of this 2022 Annual Report
Maintain the board as a well-functioning
balanced team led by the Chair.
See the Corporate Governance Report of this
2022 Annual Report
Ensure that between them the directors have
the necessary up to date experience, skills
and capabilities.
Evaluate the Board performance based on
clear and relevant objectives, seeking
continuous improvement.
Detailed within AIM Rule 26, available to
view via www.ntog.co.uk
Nostra Terra’s board is small and extremely
focused on implementing the Company’s
strategy. Given the size and nature of Nostra
Terra, the Board does not consider it
appropriate to have a formal performance
evaluation procedure in place. As described
and recommended in Principle 7 of the QCA
Code, the board will closely monitor the
situation as it grows.
Promote a corporate culture that is based on
ethical values and behaviours.
Detailed within AIM Rule 26, available to
view via www.ntog.co.uk
Maintain governance structures and
processes that are fit for purpose and support
good decision making by the Board.
Communicate how the Company is governed
and is performing by maintaining a dialogue
with shareholders and other
relevant stakeholders.
Detailed within AIM Rule 26, available to
view via www.ntog.co.uk
See the Corporate Governance Report of this
2022 Annual Report
13
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Corporate Governance Report (continued)
Accountability
The Board of Directors
The board comprises one executive director and three non-executive directors. The non-executive directors are
considered independent. It meets at least four times a year, as issues arise which require board attention.
The board has a formal schedule of matters specially referred to it for decision.
•
The directors are responsible for:
•
•
•
Management structure and appointments
Consideration of strategy and policy
Approval of major capital investments and transactions
Significant financing matters
The board has Audit, Remuneration and Nomination Committees, the roles and responsibilities of which are
discussed below.
Audit Committee
The Audit Committee comprises Stephen Staley as Chairman, and John Stafford. Both have considerable and
relevant financial experience.
The Audit Committee has terms of reference agreed by the board and meets at least twice a year.
opportunity for reporting by the Company’s auditors, and
•
The committee provides an
is responsible for:
•
•
Monitoring, in discussion with the auditors, the integrity of the financial statements and announcements
Reviewing the Company’s internal financial controls and risk management
of the Company
Reviewing and monitoring the external auditor’s independence, and the objectivity and effectiveness of
systems
the audit process, taking into consideration relevant UK and other professional and
regulatory requirements
The Audit Committee is also responsible for making recommendations to the board to be put to shareholders for
auditors and to approve the external auditors’ remuneration and terms of engagement. Other responsibilities
their approval in general meeting in relation to the appointment, reappointment and removal of the external
arrangements by which the Group’s staff will be able to raise concerns about possible
include considering annually whether there is a need for an internal audit function and making a recommendation
to the board, and reviewing
improprieties in matters of financial reporting or other matters related to the Group.
Remuneration and Nomination Committees
The Remuneration and Nomination Committees, which meet at least twice a year, consist of Stephen Staley as
Chairman and John Stafford. Based on the terms of reference approved by the board, the Remuneration
Committee is responsible for:
•
•
•
•
•
•
Determining and agreeing with the board the framework or broad policy for the remuneration of the
Chief Executive Officer and other members it is designated to consider
Setting the remuneration for all executive directors and the Company Secretary
Recommending and monitoring the level and structure of remuneration for senior management
Determining targets for any performance-related pay schemes operated by the Group
Determining the policy and scope of pension arrangements for each executive director
Ensuring that contractual terms on termination and any payments made are fair to the individual and
the Company.
14
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Corporate Governance Report (continued)
Remuneration and Nomination Committees (continued)
The Remuneration Committee determines the terms and conditions of service of executive directors. This includes
agreeing the policy for authorising claims for expenses from the Chief Executive Officer and, within the terms of
the agreed policy, recommending the total individual remuneration package of any executive director including,
where appropriate, bonuses, incentive payments and share options.
The Nomination Committee is responsible for ensuring all director appointments are considered by the Committee
before their formal recommendation to the board for approval.
Shareholder Relations
Communications with shareholders are very important and are given a priority. The Company maintains a website,
information about the Company’s activities and annual and interim
www.ntog.co.uk, to improve information flow to shareholders and potential investors. It contains, inter alia,
reports.
Shareholders are welcome to make enquiries on any matters relating to the business and to their shareholdings.
The Company encourages shareholders to attend the Annual General Meeting, at which they will be given the
opportunity to put questions to the chairman and other members of the board.
All regulatory information is published via a Regulatory Information Service before anywhere else.
Internal Financial Control
The board is responsible for establishing and maintaining the Company’s system of internal
the Company’s assets and to ensure the reliability of
controls and for
reviewing their effectiveness. They are designed to safeguard
the financial information for both internal use and external publication. The controls, that include financial,
operational and compliance matters and management, are reviewed on an ongoing basis.
A system of internal control can provide only reasonable, and not absolute, assurance that material financial
irregularities will be detected or that risk of failure to achieve business objectives is eliminated. The board has
considered the need for an internal audit function but because of the size and nature of its operations does not
consider it necessary at this time.
Non-Executive Chairman
Dr Stephen Staley
1 June 2023
15
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Independent Auditor’s Report
To the members of Nostra Terra Oil and Gas Company plc
Opinion
We have audited the financial statements of Nostra Terra Oil & Gas Company Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December
2022 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated and company statements of
financial position, the consolidated and company statements of cash flows, the consolidated and company
statements of changes in equity and notes to the financial statements, including a summary of significant
accounting policies.
The16 financial reporting framework that has been applied in the preparation of the financial statements is
applicable law and UK adopted International Accounting Standards.
p’s and of the parent company’s affairs as at 31 December
In our opinion the financial statements,
and of the group’s loss for the year then ended;
give a true and fair view of the state of the grou
2022
•
•
•
have been properly prepared in accordance with UK adopted International Accounting Standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
of the financial statements section of our report. We are independent of the company in accordance with the ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which indicate that the incurred group loss of $546k
during the year ended 31 December 2022 and, at that date, the net current liabilities of $389k and net liabilities of
$1,083k. As stated in note 1, these events or conditions indicate that a material uncertainty exists that may cast
s ability to continue as a going concern. Our opinion is not modified in respect
significant doubt on the company
’
’
of this matter.
In auditing the financial statements, we have concluded that the director
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors
’
’
s use of the going concern basis of
assessment of the entity
s ability to continue to adopt the going concern basis of accounting included a critical
assessment on budgets, including challenging models and undertaking stress tests, and a detailed discussion with
management on the key cashflow pinch points, including loan repayments and funding available to the Group.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgments, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that
are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
16
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Independent Auditor’s Report (continued)
To the members of Nostra Terra Oil and Gas Company plc
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls, and the industry in which they operate.
’
The Group financial statements are a consolidation of 3 reporting units, comprising the Group
s operating
businesses and holding companies.
’
We performed audits of the complete financial information of Nostra Terra Oil & Gas Company Plc, New Horizons
Energy LLC and Buccaneer Operating LLC which were individually financially significant and accounted for 100%
s absolute loss before tax (i.e. the sum of the numerical values
of the Group
s revenue and 100% of the Group
’
without regard to whether they were profits or losses for the relevant reporting units).
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, 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) 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. This is not a complete list of all
risks identified by our audit.
Key audit matters
Carrying value of producing oil and gas assets
How our audit addressed the key audit matter
Carrying value of producing oil and gas assets
The Group holds multiple leases over producing oil
and gas assets (wells) which are recorded as both
tangible and intangible assets. Carrying values
at the year-end are:
•
•
Intangibles: $2,224k (2021: $2,014k)
Tangibles: $1,308k (2021: $918k)
We have understood and assessed the methodology
used in the capitalisation of these assets.
A review of the producing wells was undertaken with
a view of identifying any indication of impairment.
This entailed comparing oil reserves and net present
values from the independent reserves report
produced by APN Consultants LLC to the asset
carrying values, and a detailed review of producing
wells.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a
whole.
17
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Independent Auditor’s Report (continued)
To the members of Nostra Terra Oil and Gas Company plc
Our application of materiality (continued)
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
$60,000
$58,000
How we determined it
1.5% of revenue
2.5% of net assets
Rationale for
benchmark applied
The Group has invested heavily in leases
and equipment in the past years to drive
revenue growth and profits. As such we
believe that revenue is the primary
measure used by the shareholders in
assessing the performance of the Group,
and is a generally accepted
auditing benchmark.
As the company is a holding
company, we believe net assets is
the primary measure used by the
shareholders in assessing the
performance of the Company and is
a generally accepted
auditing benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was between $55,000 and $58,000.
Other information
’
The other information comprises the information included in the annual report other than the financial statements
s report thereon. The directors are responsible for the other information contained within the
and our auditor
annual report. 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. 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.
Opinions on other matters prescribed by the Companies Act 2006
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.
18
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Independent Auditor’s Report (continued)
To the members of Nostra Terra Oil and Gas Company plc
Matters on which we are required to report by exception
’
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 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 directors
responsibilities statement as set out on pages 10-11, 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 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
s report that includes our opinion.
material misstatement, whether due to fraud or error, and to issue an auditor
’
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in 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.
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.
19
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Independent Auditor’s Report (continued)
To the members of Nostra Terra Oil and Gas Company plc
The extent to which the audit was considered capable of detecting irregularities
including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, was as follows:
•
•
•
•
the senior statutory auditor ensured the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we focused on specific laws and regulations which we considered may have a direct material effect on the
financial statements or the operations of the Group, including AIM rules and the Companies Act 2006.
we assessed the extent of compliance with the laws and regulations identified above through making
enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained
alert to instances of non-compliance throughout the audit.
’
We assessed the susceptibility of the Group
s financial statements to material misstatement, including obtaining
•
an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their
knowledge of actual, suspected and alleged fraud;
•
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and
regulations.
•
To address the risk of fraud through management bias and override of controls, we:
•
•
•
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in
Note 2 were indicative of potential bias;
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures
which included, but were not limited to:
•
•
•
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims;
There are inherent limitations in our audit procedures described above. The more removed those laws and
regulations are from financial transactions, the less likely it is that we would become aware of non-compliance.
Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations
to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if
any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may
involve deliberate concealment or collusion.
’
A further description of our responsibilities for the audit of the financial statements is located on the Financial
s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
Reporting Council
’
auditor
s report.
20
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Independent Auditor’s Report (continued)
To the members of Nostra Terra Oil and Gas Company plc
Use of this report
’
This report is made solely to the 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 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 the company and the company
members as a body, for our audit work, for this report, or for the opinions we have formed.
s
Senior Statutory Auditor
Mohammed Haque
For and on behalf of MAH, Chartered Accountants
Statutory Auditor
nd
Floor, 154 Bishopsgate,
2
London EC2M 4LN
1 June 2023
21
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Consolidated Income Statement
For the year ended 31 December 2022
Continuing operations
REVENUE
COST OF SALES
Production costs
Exploration
Well impairment
Total cost of sales
Depletion, depreciation, amortisation
GROSS PROFIT
Share based payment
Administrative expenses
Foreign exchange gain/(loss)
OPERATING LOSS
Finance costs
Other income/(charges)
LOSS BEFORE TAX
Income tax
LOSS FOR THE YEAR
ATTRIBUTABLE TO:
Owners of the company
EARNINGS PER SHARE
Notes
2022
$’000
2021
$’000
4,021
2,282
(1,779)
-
(897)
(3,215)
(539)
806
(156)
(1,074)
26
(398)
(1,708)
-
-
(2,108)
(400)
174
(68)
(908)
(130)
(932)
(199)
51
(546)
(175)
19
(1,088)
-
(546)
-
(1,088)
(546)
(1,088)
7
5
6
8
Continued operations
Basic & diluted (cents per share)
10
(0.07)
(0.16)
The accompanying accounting policies and notes are an integral part of these financial statements
22
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
LOSS FOR THE PERIOD
OTHER COMPREHENSIVE INCOME:
2022
$’000
(546)
2021
$’000
(1,088)
Currency translation differences
Total comprehensive income for the year
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO:
-
(546)
(546)
-
(1,088)
(1,088)
Owners of the company
The accompanying accounting policies and notes are an integral part of these financial statements
23
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Consolidated Statement of Financial Position
As at 31 December 2022
Notes
2022
$’000
2021
$’000
ASSETS
NON-CURRENT ASSETS
Intangible assets
Total non-current assets
Property, plant and equipment, Oil and gas assets
CURRENT ASSETS
Trade and other receivables
Deposits and prepayments
Other assets
Total current assets
Cash and cash equivalents
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Total current liabilities
Lease liabilities
NET CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Decommissioning liabilities
Borrowings
Total non-current liabilities
Lease liabilities
NET LIABILITIES
EQUITY
Share capital
Share premium
Share based payment reserve
Translation reserve
Total equity
Retained losses
11
12
15
16
17
18
13
17
18
13
19
2,224
3,532
1,308
2,014
2,932
918
558
66
-
756
132
1,051
94
1,145
-
(389)
340
3,886
4,226
-
(1,083)
8,142
22,115
423
(676)
(1,083)
(31,087)
348
16
-
409
45
948
518
1,466
-
(1,057)
302
2,459
2,761
-
(886)
8,087
21,976
306
(676)
(886)
(30,579)
The financial statements were approved and authorised for issue by the Board of Directors on 1 June 2023 and
were signed on its behalf by:
M B Lofgran
Director
Company registration number: 05338258
The accompanying accounting policies and notes are an integral part of these financial statements
24
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Company Statement of Financial Position
As at 31 December 2022
Notes
2022
$’000
2021
$’000
ASSETS
NON-CURRENT ASSETS
Fixed asset investments
Intangible assets
Total non-current assets
Property, plant and equipment, Oil and gas assets
CURRENT ASSETS
Trade and other receivables
Total current assets
Cash and cash equivalents
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Total current liabilities
Borrowings
NET CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Decommissioning liabilities
Total non-current liabilities
Borrowings
NET LIABILITIES
EQUITY
Share capital
Share premium
Share based payment reserve
Translation reserve
Total equity
Retained losses
14
11
12
15
16
17
18
17
18
19
-
305
449
144
22
39
17
-
345
457
112
9
25
16
2,842
2,936
94
518
1,262
1,780
(2,897)
(1,755)
22
152
130
13
409
396
(2,600)
(1,707)
8,142
22,115
423
(676)
(2,600)
(32,604)
8,087
21,976
306
(676)
(1,707)
(31,400)
The parent company’s loss for the financial
year was $1,242,000 (2021: $1,310,000).
The financial statements were approved and authorised for issue by the Board of Directors on 1 June 2023 and
were signed on its behalf by:
M B Lofgran
Director
Company registration number: 05338258
The accompanying accounting policies and notes are an integral part of these financial statements
25
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share
capital
Deferred
shares
Share
premium
$’000
$’000
$’000
Share
option
reserve
$’000
Translation
reserve
Retained
losses
$’000
$’000
1,369
6,549
21,508
142
(676)
(29,491)
Total
$’000
(599)
-
-
169
-
-
-
-
-
-
-
-
-
529
(61)
-
-
-
-
-
-
-
-
-
-
-
-
1,538
-
6,549
-
21,976
164
306
-
(676)
-
(30,579)
(1,088)
(1,088)
(1,088)
(1,088)
-
-
-
698
(61)
-
164
(886)
-
-
55
-
-
-
-
-
-
-
-
-
139
-
-
-
1,593
-
6,549
-
22,115
-
-
-
-
(38)
155
423
-
-
-
-
-
(546)
(546)
(546)
(546)
-
-
38
194
-
-
-
(676)
-
(31,087)
155
(1,083)
As at 1 January
2021
Loss for the year
Total
comprehensive
loss for the year
Shares issued
Cost of shares
issued
Exercise of
warrants
Share based
As at 31
payments
December
2021
Loss for the year
Total
comprehensive
loss for the year
Shares issued
Cost of shares
issued
Expired options
& warrants
Share based
As at 31
payments
December
2022
The accompanying accounting policies and notes are an integral part of these financial statements.
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of those
shares net of share issue expenses. Share issue expenses in the year comprise costs incurred in respect of the issue
of new shares.
Share based payment reserve is a reserve used to recognize the cost and equity associated with the fair value of
issues of share options and warrants.
Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of a prior
accounting period.
Retained loss represents the cumulative losses of the company attributable to owners of the company.
26
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Company Statement of Changes in Equity
For the year ended 31 December 2022
Share
capital
Deferred
shares
Share
premium
$’000
$’000
$’000
Share
option
reserve
$’000
Translation
reserve
Retained
losses
Total
$’000
$’000
$’000
1,369
6,549
21,508
142
(676)
(30,090)
(1,198)
-
-
169
-
-
-
-
-
-
-
-
-
529
(61)
-
-
-
-
-
-
-
-
-
-
-
(1,310)
(1,310)
(1,310)
(1,310)
-
-
-
698
(61)
-
-
1,538
-
6,549
-
21,976
164
306
-
(676)
-
(31,400)
164
(1,707)
-
-
55
-
-
-
-
-
-
-
-
-
139
-
-
-
1,593
-
6,549
-
22,115
-
-
-
-
(38)
155
423
-
-
-
-
-
(1,242)
(1,242)
(1,242)
(1,242)
-
-
38
194
-
-
-
(676)
-
(32,604)
155
(2,600)
As at 1 January
2021
Loss for the year
Total
comprehensive
loss for the year
Shares issued
Cost of shares
issued
Exercise of
warrants
Share based
As at 31
payments
December 2021
Loss for the year
Total
comprehensive
loss for the year
Shares issued
Cost of shares
issued
Expired options
& warrants
Share based
As at 31
payments
December 2022
The accompanying accounting policies and notes are an integral part of these financial statements.
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of those
shares net of share issue expenses. Share issue expenses in the year comprise costs incurred in respect of the issue
of new shares.
Share based payment reserve is a reserve used to recognize the cost and equity associated with the fair value of
issues of share options and warrants.
Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of a prior
accounting period.
Retained loss represents the cumulative losses of the company attributable to owners of the company.
27
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Consolidated and Company Statement of Cash Flows
For the year ended 31 December 2022
LOSS FOR THE YEAR
ADJUSTMENTS FOR:
Depreciation
Amortisation
Depletion
Well impairment
Foreign exchange
Share based payments
Other income
Operating cash flows
Decrease/(increase) in receivables
(Increase)/decrease in other assets
(Decrease)/increase in payables
(Increase)/decrease in deposits & prepayments
Interest paid
Net cash generated / (used) in operating
activities
Cash flows from investing activities:
Purchase of plant and equipment
Purchase of intangibles
Disposals
Increase in decommissioning liabilities
Net cash used in investing activities
Cash flows from financing activities
Shares issued
Costs of shares issued
Net borrowing
Finance costs
Lease payments
Net cash from / (used) in financing activities
Net (decrease)/increase in cash and cash
equivalents
GROUP
2022
$’000
2021
$’000
COMPANY
2022
$’000
2021
$’000
(546)
(1,088)
(1,242)
(1,310)
299
202
38
897
26
156
(51)
1,021
(211)
-
105
(50)
199
846
(719)
(1,318)
40
38
(1,959)
194
-
1,003
(199)
(16)
982
208
173
38
-
-
68
(21)
(622)
66
-
285
26
175
(70)
(346)
(160)
-
36
(470)
794
(61)
(29)
(175)
(16)
513
18
40
8
-
28
156
-
(992)
(13)
-
1,543
-
26
564
(50)
-
-
9
(41)
194
-
(690)
(26)
-
(522)
13
40
-
-
-
68
-
(1,189)
98
-
852
-
110
(129)
(49)
-
-
9
(40)
794
(61)
(452)
(110)
-
171
87
(27)
1
2
Cash and cash equivalents at the beginning of the
Cash and cash equivalents at the end of the
year
year
45
132
72
45
16
17
14
16
The accompanying accounting policies and notes are an integral part of these financial statements.
28
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements
For the year ended 31 December 2022
General Information
report. The principal activity of the group is described in the directors’ report.
Nostra Terra Oil and Gas Company plc (Nostra Terra) is a company incorporated in England and Wales and quoted
on the AIM market of the London Stock Exchange. The address of the registered office is disclosed on the company
information page of this annual
1. Summary of significant accounting policies
The financial statements are presented in United States Dollars, rounded to the nearest $’000, as that is the
currency of the primary environment in which the Group operates.
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with UK adopted International Financial Reporting
Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) (IFRS) and
with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in note 2.
Going concern
The financial statements have been prepared on the assumption that the group is a going concern. When assessing
The Group’s business activities, together
the foreseeable future, the directors have looked at a period of 12 months from the date of approval of this report.
position are set out in the Chief Executive Officer’s report and Directors’ report. In addition, note 20 to the financial
with the factors likely to affect its future development, performance and
statements includes the group’s objectives, policies and pr
ocesses for managing its capital, its financial risk
The Group’s forecasts and projections, taking account of reasonable possible changes in trading performance,
management objectives and its exposures to credit risk and liquidity risk.
to the Group’s abi
show that the group should be able to operate within the level of its current cash resources, however a material
uncertainty exists in relation
lity to repay its liabilities as they become due. We note that as at
the balance sheet date, the group has net current liabilities of $389k and net liabilities of $1,083k.
After making enquiries, the directors have a reasonable expectation that the company and group have adequate
resources to continue in operational existence for the foreseeable future. They continue to adopt the going concern
exists which may cast significant doubt on the Group’s ability to continue operating as a going concern.
basis in preparing the annual report and financial statements, however as noted above a material uncertainty
29
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
New standards, amendments and interpretations adopted by the Group and
Company
The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1
January 2022. Their adoption has not had any material impact on the disclosures or on the amounts reported in
these financial statements:
Standards /interpretations
Application
Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16
IFRS 3 amendments
Interest rate benchmark reform
Business Combinations
IAS 16 amendments
Property, Plant and Equipment
IAS 37 Amendments
Provisions, Contingent Liabilities and Contingent Assets
N/A
Annual Improvements to IFRS Standards 2018-2020 Cycle
New standards, amendments and interpretations not yet adopted
Standards /interpretations
Application
IAS 1 amendments
IAS 1 amendments
IAS 8 amendments
IAS 12 amendments
IFRS 16 amendments
IFRS 17
Presentation of Financial Statements: Classification of
Liabilities as Current or Non-Current and Non-Current
Liabilities with Covenants Date: Effective 1 January 2024
Presentation of Financial Statements and IFRS Practice
Statement 2: Disclosure of Accounting Policies:
Effective 1 January 2023
Changes in Accounting Estimates and Errors: Definition of
Accounting estimates: Effective 1 January 2023
Deferred Tax related to Assets and Liabilities
arising from a Single Transaction: Effective 1 January 2023
Lease Liability in a Sale and Leaseback: Effective 1 January
2024
Insurance Contracts: Effective 01 January 2023
There are no IFRS’s or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Company or Group.
Basis of consolidation
Where the company has the power, either directly or indirectly, to govern the financial and operating policies of
ts present the results of the company and its subsidiaries (“the Group”) as if they
another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The
consolidated financial statemen
formed a single entity. Intercompany transactions and balances between group companies are therefore
eliminated in full.
method. In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities
The consolidated financial statements incorporate the results of business combinations using the purchase
are initially recognised at their fair values at the acquisition date. The results of acquired operations are included
in the consolidated statement of comprehensive income from the date on which control is obtained. They are
deconsolidated from the date control ceases.
30
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Subsidiaries
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of
an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill.
values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of
If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the group.
Goodwill
acquisition over the fair value of the group’s share of the net
Goodwill represents the excess of the cost of an
subsidiaries is included in ‘intangible assets’. Separately recognised goodw
identifiable assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisitions of
ill is tested annually for impairment
and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains
and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The group allocates goodwill to each business segment in each country
in which it operates.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested
annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or
recognised for the amount by which the asset’s
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
carrying amount exceeds its recoverable amount. The recoverable
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible
reversal of the impairment at each reporting date.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimated of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately,
unless the relevant asset is carried art a revalued amount in which case the reversal of impairment loss is treated
a revaluation increase.
31
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Property, plant and equipment
Tangible non-current assets are stated at historical cost less depreciation. Historical cost includes expenditure that
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
is directly attributable to the acquisition of the items.
only when it is probable that future economic benefits associated with the item will flow to the group and the cost
of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs
and maintenance are charged to the income statement during the financial year in which they are incurred.
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:
The assets’ residual values an
Plant and machinery
of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the
d useful economic lives are reviewed, and adjusted if appropriate, at each statement
asset’s carrying amount is greater than its estimated r
over 7 years
–
ecoverable value. Gains and losses on disposals are
determined by comparing the proceeds with the carrying amount and are recognised within other (losses) or gains
in the income statement. When revalued assets are sold, the amounts included in other reserves are transferred
to retained earnings.
Investments
Investments are stated at cost less provision for any impairment value.
Cash and cash equivalents
Included in the statement of financial position comprise cash at bank and in hand and other short-term highly
liquid investments with original maturities of three months or less.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. A provision for impairment is established when there is
objective evidence that the group will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation, and default or delinquency in payments are considered indicators that the trade
receivable is impaired.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value
is recognised in the income statement over the year of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of
the liability for at least 12 months after the balance sheet date.
32
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Functional currency translation
(i) Functional and presentation currency
Items included in the financial statements of the group are measured using the currency of the primary economic
ts are presented in United States Dollars (US$), which is the group’s presentation currency.
environment in which the entity operates (the functional currency), which is mainly United States Dollars (US$).
The financial statemen
(ii) Transactions and balances
Foreign currency transactions are translated into the presentational currency using exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement.
(iii) Group Companies
All consolidated entities are presented in US$ and so no translation is required on consolidation.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is
based on the taxable profit for the year. Taxable profit differed from net profit as reported in the income statement
items that are never taxable or deductible. The entity’s liability for current ta
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
x is calculated using tax rates that
have been enacted or substantively enacted by the statement of financial position date.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using
the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary arises from goodwill or from the initial recognition) other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.
The carrying amount of deferred tax is reviewed at each statement of financial position date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or
the asset realised. Deferred tax is charged or credited directly to equity; in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on a net basis.
33
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are initially classified as measured at amortised cost, fair value through
other comprehensive income, or fair value through profit and loss when the group becomes a party to the
contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash
flows expire, or the group no longer retains the significant risks or rewards of ownership of the financial asset.
Financial assets are classified dependent on the group’s business model for managing the financial and the cash
Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.
flow characteristics of the asset. Financial liabilities are classified and measured at amortised cost except for
trading liabilities, or where designated at original recognition to achieve more relevant presentation. The group
classifies its financial assets and liabilities into the following categories:
Financial assets at amortised cost
The group’s financial assets at amortised cost comprise trade and other receivables. These represent debt
instruments with fixed or determinable payments that represent principal or interest and where the intention is
to hold to collect these contractual cash flows. They are initially recognised at fair value, included in current and
non-current assets, depending on the nature of the transaction, and are subsequently measured at amortised cost
using the effective interest method less any provision for impairment.
Impairment of trade and other receivables
In accordance with IFRS 9 an expected loss provisioning model is used to calculate an impairment provision. We
have implemented the IFRS 9 simplified approach to measuring expected credit losses arising from trade and other
receivables, being a lifetime expected credit loss. This is calculated based on an evaluation of our historic
experience plus an adjustment based on our judgement of whether this historic experience is likely reflective of
our view of the future at the balance sheet date. In the previous year the incurred loss model is used to calculate
the impairment provision.
Financial liabilities at amortised cost
Financial liabilities at amortised cost comprise finance lease obligations and trade and other payables. They are
classified as current and non-current liabilities depending on the nature of the transaction, are subsequently
measured at amortised cost using the effective interest method.
Financial assets at fair value through profit and loss
The group holds a derivative against the price of oil held for operation purposes. These are recognised and
measured at fair value using the most recent available market price with gains and losses recognised immediately
in the profit and loss.
alue measurement of the group’s financial and non
The fair v
- financial assets and liabilities utilises market
ble the inputs used in the valuation technique utilised are (the ‘fair
observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised
into different levels based on how observa
value
hierarchy’).
34
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Financial assets at fair value through profit and loss (continued)
Level 1 Quoted prices in active markets
Level 2 Observable direct or indirect inputs other than Level 1 inputs
Level 3 Inputs that are not based on observable market data
The group measures financial instruments relating to platform holdings at fair value using Level 1.
The company provides financial guarantees to licensed banks for credit facilities extended to a subsidiary
company. The fair value of such financial guarantees is not expected to be significantly different as the probability
of the subsidiary company defaulting on the credit lines is remote.
Oil and gas assets
The group applies the successful efforts method of accounting for oil and gas assets and has adopted IFRS 6
Exploration for and evaluation of mineral resources.
Exploration and evaluation (“E&E”) assets
Under the successful efforts method of accounting, all licence acquisition, exploration and appraisal costs are
initially capitalised in well, field or specific exploration cost centres as appropriate, pending determination.
Expenditure incurred during the various exploration and appraisal phases is then written off unless commercial
reserves have been established or the determination process has not been completed.
Pre-licence costs
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income
statement as they are incurred.
Exploration and evaluation (“E&E”) costs
Costs of E&E are initially capitalised as E&E assets. Payments to acquire the legal right to explore, together with
the directly related costs of technical services and studies, seismic acquisition, exploratory drilling and testing are
Tangible assets used in E&E activities (such as the group’s drilling rigs, seismic equipment and other property,
capitalised as intangible E&E assets.
plant and equipment used by the company’s exploration function) are classified as property, plant and equipment.
However, to the extent that such a tangible asset is consumed in developing an intangible E&E asset, the amount
reflecting that consumption is recorded as part of the cost of the intangible asset. Such intangible costs include
directly attributable overheads, including the depreciation of property, plant and equipment utilised in E&E
activities, together with the cost of other materials consumed during the exploration and evaluation phases.
E&E costs are not amortised prior to the conclusion of appraisal activities.
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets relating to each exploration licence/prospect are carried forward until the existence (or
otherwise) of commercial reserves has been determined, subject to certain limitations including review for
indications of impairment. If commercial reserves are discovered the carrying value, after any impairment loss of
the relevant E&E assets, is then reclassified as development and production assets. If, however, commercial
reserves are not found, the capitalised costs are charged to expense after conclusion of appraisal activities.
35
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Development and production assets
Development and production assets are accumulated generally on a field-by-field basis and represent the cost of
developing the commercial reserves discovered and bringing them into production, together with the E&E
expenditures incurred in finding commercial reserves transferred from intangible E&E assets as outlined above.
The cost of development and production assets also includes the cost of acquisitions and purchases of such assets,
directly attributable overheads and the cost of recognising provisions for future restoration and decommissioning.
Decommissioning liability
Where a material liability for the removal of production facilities and site restoration at the end of the productive
life of the assets exist, a provision for decommissioning liability is recognised. The amount recognised is the
present value of estimated future expenditure determined in accordance with local conditions and requirements.
An intangible asset of an amount equivalent to the provision is recognised and depreciated on a unit production
basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and
the associated intangible asset. Period changes in the present value arising from discounting are included in
depletion, depreciation and amortisation cost in cost of sales.
Commercial reserves
Commercial reserves are proven and probable oil and gas reserves, which are defined as the estimated quantities
of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate
with a specified degree of certainty to be recoverable in future years from known reservoirs and which are
considered commercially producible.
Depletion, amortisation and impairment of oil and gas assets
All expenditure carried within each field is amortised 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
commercial reserves at the end of the period plus the production in the period, on a field-by-field basis. Costs used
in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field
development costs to access the related commercial reserves. Changes in the estimates of commercial reserves or
future field development costs are dealt with prospectively.
Where there has been a change in economic conditions that indicates a possible impairment in an oil and gas asset,
scounted future cash flows based on management’s expectations of future oil and gas prices and future costs.
the recoverability of the net book value relating to that field is assessed by comparison with the estimated
di
Any impairment identified is charged to the income statement as additional depletion and amortisation. Where
conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as
a credit to the income statement, net of any depreciation that would have been charged since the impairment.
36
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Depletion, amortisation and impairment of oil and gas assets
All expenditure carried within each field is amortised 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
commercial reserves at the end of the period plus the production in the period, on a field-by-field basis. Costs used
in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field
development costs to access the related commercial reserves. Changes in the estimates of commercial reserves or
future field development costs are dealt with prospectively.
Where there has been a change in economic conditions that indicates a possible impairment in an oil and gas asset,
discounted future cash flows based on management’s expectations of future oil and gas prices and future costs.
the recoverability of the net book value relating to that field is assessed by comparison with the estimated
Any impairment identified is charged to the income statement as additional depletion and amortisation. Where
conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as
a credit to the income statement, net of any depreciation that would have been charged since the impairment.
Share-based compensation
ee and suppliers’ services received in exchange for the grant of the options is
The fair value of the employ
recognised as an expense. The total amount to be expensed over the vesting year is determined by reference to the
fair value of the options granted, excluding the impact of any non-market vesting conditions (for example,
profitability and sales growth targets).
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest.
At each statement of financial position date, the entity revises its estimates of the number of options that are
expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with
a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options are exercised.
The fair value of share-based payments recognised in the statement of comprehensive income is measured by use
instruments. The expected life used in the model is adjusted; based on management’s best estimate, for the effects
of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity
factor used in the calculation is based on management’s best estimate of future share price behaviour and is
of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage
selected based on past experience, future expectations and benchmarks against peer companies in the industry.
The Group does not operate any cash-settled share-based payments and as such are not affected by the
amendments to IFRS 2
Revenue recognition
Share-based payments.
–
Revenue comprises the fair value of the consideration received or receivable in relation to the proceeds by the
prospects which the company has a working interest in. Revenue is shown net of value-added tax, returns, rebates
is despatched and received by the customers. The directors consider this the point when the Company’s
and discounts and after eliminating sales within the group. Revenue is recognised when the oil and gas produced
performance obligation is satisfied.
The directors consider that revenue generation is exclusively for oil production in the US and so no further
segmentation is required.
37
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
Leased assets
The Group as a lessee
A lease is defined as ‘a contract, or part of a contract, that conveys
for a period of time in exchange for consideration’.
the right to use an asset (the underlying asset)
•
To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:
•
•
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group
the Group has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract
assess whether it has the right to direct ‘how and for what purpose’ the asset is used
the Group has the right to direct the use of the identified asset throughout the period of use. The Group
throughout the period
of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet.
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of
the lease, and any lease payments made in advance of the lease commencement date (net of any incentives
received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses
the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
Group’s incremental borrowin
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the
g rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in
substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual
value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It
is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit
and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are
recognised as an expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment
and lease liabilities have been included in trade and other payables.
38
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
1. Summary of significant accounting policies (continued)
2. Critical accounting estimates and judgements
The preparation of consolidated financial statements requires the group to make estimates and assumptions that
affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and
are based on historical experience and other factors including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates. The estimates and
assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and
liabilities are discussed below:
Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that
epared on the basis of management’s assumptions
the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount
is determined based on value in use calculations pr
and estimates.
Recoverability of exploration and evaluation costs
E&E assets are assessed for impairment when circumstances suggest that the carrying amount may exceed its
recoverable value including decommissioning costs. This assessment involves judgment as to (i) the likely future
commerciality of the asset and when such commerciality should be determined, and (ii) future revenues and costs
pertaining to the asset in question, and the discount rate to be applied to such revenues and costs for the purpose
of deriving a recoverable value.
Share-based payments
s out the group’s accounting policy on share
Note 1 set
-based payments, specifically in relation to the share options
and warrants that the company has granted. The key assumptions underlying the fair value of such share-based
payments are discussed in note 23. The fair value amounts used by the group have been derived by external
consultants using standard recognised valuation techniques.
39
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
3. Segmental analysis
In the opinion of the directors, the group has one class of business, being the exploitation of hydrocarbon
The group’s primary reporting format is determined by geographical
resources.
hydrocarbon assets. The group’s reportable segments under IFRS 8 in the year are as follows:
segment according to the location of the
United Kingdom - being the location of the head office.
•
US Mid-Continent properties at year end included the following:
•
•
•
East Texas: 100% working interest in the Pine Mills oilfield
East Texas: 32.5% working interest in the Cypress farmout area of Pine Mills
West Texas: 50-100% working interest leases located in the Permian Basin
The chief operating decision maker’s internal report for the year ended 31 December 20
South Texas: 100% working interest in the Caballos Creek oilfield
location of the oil properties as disclosed in the below table:
SEGMENTAL RESULTS
US mid-continent
2022
$’000
22 is based on the
Head office
2022
$’000
Total
2022
$’000
Revenue
Operating profit (loss) before
depreciation, well impairment, share-
based payment charges, restructuring
costs and gain (loss) on sale of assets
and foreign exchange:
Depreciation of tangibles
Amortisation of intangibles
Exploration
Well impairment
Share based payments
Operating profit/ (loss)
Realised exchange loss
Finance expense
Profit/ (loss) before taxation
Other income (expense)
SEGMENTAL ASSETS
Property, plant and equipment
Intangible assets
Cash and cash equivalents
Trade and other receivables
-
4,021
(1,087)
1,130
-
-
-
-
(156)
(1,215)
28
(299)
(202)
-
(897)
(156)
(398)
26
(27)
(1,242)
-
(199)
(546)
51
-
-
17
39
22
1,308
2,224
132
4,288
624
4,021
2,217
(299)
(202)
-
(897)
-
817
(2)
(172)
696
51
1,308
2,224
115
4,249
602
40
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
3. Segmental analysis (continued)
The chief operating decision maker’s internal report for the year ended
location of the oil properties as disclosed in the below table (restated):
SEGMENTAL RESULTS
US mid-continent
2021
$’000
31 December 2021 is based on the
Head office
2021
$’000
Total
2021
$’000
Revenue
Operating profit (loss) before
depreciation, well impairment, share-
based payment charges, restructuring
costs and gain (loss) on sale of assets
and foreign exchange:
Depreciation of tangibles
Amortisation of intangibles
Exploration
Well impairment
Share based payments
Operating profit/ (loss)
Realised exchange loss
Finance expense
Profit/ (loss) before taxation
Other income (expense)
SEGMENTAL ASSETS
Property, plant and equipment
Intangible assets
Cash and cash equivalents
Trade and other receivables
2,282
616
(209)
(173)
-
-
-
232
(2)
(65)
167
-
2,014
918
9
3,296
355
-
2,282
(970)
(354)
-
-
-
-
(68)
(1,166)
(128)
(209)
(173)
-
-
(68)
(934)
(130)
(110)
(1,255)
21
(175)
(1,088)
21
-
-
36
45
9
2,014
918
45
3,341
364
41
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
4. Employees and Directors
Directors’ fees
Directors’
remuneration
Social security costs
2022
$’000
2021
$’000
127
275
416
14
2022
Number
110
219
348
19
2021
Number
The average monthly number of employees (including directors)
during the year was as follows:
Directors
4
3
Directors’ remuneration
Other than the directors, the group had no other employees. Total remuneration paid to directors during the
The director’s emoluments and other benefits for the year ended 31 December 20
year was as listed above.
M B Lofgran
5. Finance expense
22 is as follows:
2022
$’000
2021
$’000
275
219
2022
$’000
2021
$’000
Finance expense
199
175
Finance expense relates to interest charged on borrowings. Further details for which can be found in note 18.
6. Other income
Other income/ (charge)
2022
$’000
51
51
2021
$’000
19
19
Other income relates to sundry income received from operating oil wells in addition to the oil sales.
42
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
7. Operating loss
The operating loss the year ended 31 December is stated after
after charging/ (crediting)
Depreciation of property, plant and equipment
Amortisation of intangibles
Well impairment
The analysis of administrative expenses in the consolidated income
statement by nature of expense:
Directors’ remuneration
Depreciation on ROU asset
Directors’ fees
Social security costs
Travelling and entertainment
Accountancy fees
Auditors’ remuneration
Legal and professional fees
Bad debt costs
Other expenses
8. Income tax
The income tax charge for the year was as follows:
Current tax
Corporation tax
TOTAL
Overseas corporation tax
Loss before tax
Loss on ordinary activities before taxation multiplied by the
standard rate of UK corporation tax of 19% (2021:19%)
Effects of:
Non-deductible expenses
Other tax adjustments
CURRENT TAX CHARGE
Foreign tax
2022
$’000
Restated
2021
$’000
299
202
897
275
-
14
127
23
81
218
27
-
1,074
309
209
173
-
219
16
19
110
35
44
183
6
-
908
276
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
(546)
(1,088)
(104)
(207)
30
74
-
-
-
207
-
-
At 31 December 2022, the Company had an estimated excess management expenses to carry forward of
$5,942,883 (2021: $5,552,821). The deferred tax asset at 19% (2021: 19%) on these tax losses of $1,129,000
(2021: $1,055,000) has not been recognised due to the uncertainty of recovery. The current US corporate tax
rate is 21%.
43
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
9. Loss of Parent Company
presented as part of these financial statements. The parent company’s loss for the financial
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not
year was $1,242,000
(2021: $1,310,000).
10. Earnings per share
The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number
of ordinary shares in issue during the year. For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The group had
ge market price of the group’s ordinary shares during the year, and
two classes of dilutive potential ordinary shares, being those share options granted to employees and suppliers
where the exercise price is less than the avera
warrants granted to directors and one former adviser.
2022
2021
Details of the adjusted earnings per share are set out below:
GROUP
shareholders ($’000)
Loss attributable to ordinary
(546)
(1,088)
Weighted average number of shares
CONTINUED OPERATIONS:
BASIC AND DILUTED EPS – LOSS (cents)
732,742,452
692,287,657
(0.07)
(0.16)
The diluted loss per share is the same as the basic loss per share as the loss for the year has an antidilutive
effect.
Gross profit/(loss) before depreciation, depletion, amortisation and
impairment
EPS on gross profit before depreciation, depletion, amortisation and
impairment (cents)
RECONCILIATION FROM GROSS LOSS TO GROSS PROFIT BEFORE
DEPLETION, DEPRECIATION, AMORTISATION AND IMPAIRMENT
Gross profit/(loss)
ADD BACK:
Exploration
Well impairment
Depletion, depreciation and amortisation
Gross profit before depletion, depreciation, amortisation and impairment
2022
$’000
2,242
0.30
806
-
897
539
2,242
44
Restated
2021
$’000
574
0.08
174
-
-
400
574
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
11. Intangible assets
GROUP
COST
At 1 January 2021
Additions
Disposals
At 31 December 2021
Additions
Disposals
At 31 December 2022
PROVISON
At 1 January 2021
Charge for the year
Impairment
Disposals
At 31 December 2021
Charge for the year
Impairment
Disposals
At 31 December 2022
CARRYING VALUE
At 31 December 2022
At 31 December 2021
Exploration &
evaluation
assets
$’000
Development
& production
assets
$’000
Licences
$’000
1,939
2,823
10
-
1,949
-
(10)
1,939
1,939
-
-
-
1,939
-
-
-
1,939
150
-
2,973
1,319
-
4,292
796
173
-
-
969
202
897
-
2,068
Total
$’000
5,286
160
-
5,446
1,319
(10)
6,755
3,259
173
-
-
3,432
202
897
-
4,531
-
2,224
2,224
10
2,004
2,014
524
-
-
524
-
-
524
524
-
-
-
524
-
-
-
524
-
-
The Group assesses at each reporting date whether there is an indication that the intangible assets may be
impaired, by considering the net present value of discounted cash flows forecasts. If an indication exists an
impairment review is carried out by reference to available engineering information. At the year-end, $897,000
(2021: $nil) was provided for the well at Grant East #1.
Amortisation, impairment charges and any profit or loss on disposal of the capitalised intangible costs is included
within cost of sales in the consolidated income statement.
45
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
11. Intangible assets (continued)
COMPANY
COST
At 1 January 2021
Additions
Disposals
At 31 December 2021
Additions
Disposals
At 31 December 2022
PROVISON
At 1 January 2021
Charge for the year
Impairment
Disposals
At 31 December 2021
Charge for the year
Impairment
Disposals
At 31 December 2022
CARRYING VALUE
At 31 December 2022
Development
& production
assets
$’000
398
-
-
398
-
-
398
13
40
-
-
53
40
-
-
93
Total
$’000
398
-
-
398
-
-
398
13
40
-
-
53
40
-
-
93
305
305
At 31 December 2021
345
345
The Company assesses at each reporting date whether there is an indication that the intangible assets may be
impaired, by considering the net present value of discounted cash flows forecasts. If an indication exists an
impairment review is carried out by reference to available engineering information. At the year-end, $nil (2021:
$nil) was provided.
Amortisation, impairment charges and any profit or loss on disposal of the capitalised intangible costs is included
within cost of sales in the consolidated income statement.
46
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
Office space –
right of use
$’000
Plant & equipment –
oil and gas assets
$’000
12. Property, plant and equipment
GROUP
COST
At 1 January 2021
Additions
Adjustment on translation to IFRS 16
Disposals
At 31 December 2021
Additions
Disposals
At 31 December 2022
DEPRECIATION
At 1 January 2021
Charge for the year
Disposals
At 31 December 2021
Charge for the year
Disposals
At 31 December 2022
CARRYING VALUE
At 31 December 2022
At 31 December 2021
48
-
-
-
48
-
-
48
32
16
-
48
-
-
48
-
-
Total
$’000
1,270
346
-
-
1,616
719
(30)
2,305
490
208
-
698
299
-
997
1,222
346
-
-
1,568
719
(30)
2,257
458
192
-
650
299
-
949
1,308
1,308
918
918
Depreciation charges are included within cost of sales in the Consolidated Income Statement.
In addition, the directors are of the opinion that no impairment should be provided.
47
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
12. Property, plant and equipment (continued)
COMPANY
COST
At 1 January 2021
Additions
Adjustment on translation to IFRS 16
Disposals
At 31 December 2021
Additions
Disposals
At 31 December 2022
DEPRECIATION
At 1 January 2021
Charge for the year
Disposals
At 31 December 2021
Charge for the year
Disposals
At 31 December 2022
CARRYING VALUE
At 31 December 2022
At 31 December 2021
Plant & equipment –
oil and gas assets
$’000
Total
$’000
79
49
-
-
128
50
178
-
3
13
-
16
18
-
34
144
112
79
49
-
-
128
50
178
-
3
13
-
16
18
-
34
144
112
Depreciation charges are included within cost of sales in the Consolidated Income Statement.
In addition, the directors are of the opinion that no impairment should be provided.
48
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
13. Leases
Lease liabilities are presented in the statement of financial position as follows:
2022
$’000
2021
$’000
Current –
Non-current –
within 1 year
–
within 1
2 years
-
-
-
-
-
-
The Group has a lease for the office space in Dallas, Texas, USA. The lease is reflected on the balance sheet as a
right-of-use asset and a lease liability. The Group classifies its right-of-use assets in a consistent manner to its
property, plant and equipment (see Note 12). The lease term ended on 31 December 2021. The company has
entered into a new short term lease effective from 1 January 2022. Included within the interest expense is $nil
(2021: $1k) which relates to the unwinding on the lease liability. The Group does not hold any other office leases.
14. Fixed Asset Investments
COMPANY
COST
At 1 January 2021
Additions
Reductions
At 31 December 2021
Additions
Disposals
At 31 December 2022
PROVISON
At 1 January 2021
Charge for the year
Reductions
At 31 December 2021
Charge for the year
At 31 December 2022
CARRYING VALUE
At 31 December 2022
At 31 December 2021
Investment in
subsidiaries
$’000
Loans to
subsidiaries
$’000
Total
$’000
1
-
-
1
1
1
-
-
1
1
-
-
15,434
15,435
-
-
15,434
-
-
15,435
15,434
15,435
(15,434)
(15,435)
-
-
(15,434)
-
-
(15,435)
(15,434)
(15,435)
-
-
-
-
49
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
14. Fixed Asset Investments (continued)
In the opinion of the directors, the aggregate value of the company’s investment in subsidiary undertakings is
Historically, loans to participating interests are reported as in increase in the Company’s investment in
not less than the amount included in the statement of financial position.
the joint
venture, but have been provided for. As the Group acquired 100% shareholding in the joint venture in 2017 this
balance had been transferred to loan to subsidiaries.
The details of the subsidiaries held at 31 December 2022 are as set out below:
Shareholding
Country of
incorporation
Nature of
business
New Horizon Energy 1 LLC (NHE)
Buccaneer Operating, LLC
(Buccaneer)
15. Trade and other receivables
CURRENT
100%
100%
USA
USA
Oil & gas
exploration
Oil & gas
exploration
GROUP
2022
$’000
2021
$’000
COMPANY
2022
$’000
2021
$’000
Trade and other receivables
Other taxes and receivables
52
558
506
271
348
77
-
22
22
-
9
9
The directors consider the carrying value of the receivables to approximate their fair value.
16. Cash and cash equivalents
GROUP
2022
$’000
2021
$’000
COMPANY
2022
$’000
2021
$’000
Bank current accounts
132
45
17
16
17. Trade and other payables
CURRENT
Trade payables
Accruals and deferred income
Other taxes payables
Decommissioning liability
GROUP
2022
$’000
2021
$’000
COMPANY
2022
$’000
2021
$’000
777
273
1,051
1
340
783
146
948
19
302
2,771
70
2,842
1
22
1,243
-
1,262
19
13
Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going
expenses. The directors consider that the carrying amount of trade and other payables approximates their fair
value.
50
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
17. Trade and other payables (continued)
Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going
expenses. The directors consider that the carrying amount of trade and other payables approximates their fair
value.
and an inflation factor of 3%. This is comparable to the Group’s options at the time of the well in
Included in trade payables is the decommissioning liability, this has been calculated at a discount rate of 10%
-service dates.
18. Financial liabilities - borrowing
Maturity of the borrowings is as follows:
Repayable within one year
Bank loan
Repayable after one year
Other loans
Bank loan
Other loans
GROUP
2022
$’000
2021
$’000
COMPANY
2022
$’000
2021
$’000
-
94
3,756
3,980
130
202
316
2,459
2,977
-
-
94
-
224
130
202
316
396
914
-
include a facility where the loans are secured against the group’s interest in its assets. At the year
Borrowings
end the outstanding balance was $3,756k (2021: $2,459k). Interest is currently charged for any day per annum
at 6.50%. In September 2021 the facility was extended by three years to 29 January 2025 and the nominal facility
size was increased to $10 million. The Borrowing Base has been increased to US$4,350,000 based on improved
production and cashflow during 2022. The size of the Facility and Borrowing Base will be reassessed at least
twice yearly. The Board anticipates the Facility and Borrowing Base will increase as the Company's production
and reserves increase.
Borrowings also include an unsecured loan with a balance at year-end of $Nil (2021: $202k). Interest is charged
at 12% per annum and loan is fully repayable within the year.
The group also has a loan agreement in place with related parties, with a total outstanding balance as at the year-
end of $224k (2021: $316k). Further details can be found in Note 22.
19. Share capital
Number
Class
Nominal
value
2022
$’000
2021
$’000
746 million (2021: 703 million
restated)
Ordinary
0.1
1,593
1,538
4,110 million (2021: 4,110 million)
Deferred
0.098p
6,549
6,549
During the year there were a number of share issues:
•
•
–
1 April 2022
–
warrants.
1 June 2022
24,000,000 new ordinary shares issued at 0.35p per share in respect of exercise of
19,000,000 new ordinary shares issued at 0.35p per share in respect of exercise of warrants.
51
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
20. Risk and sensitivity analysis
The group’s activities expose it to a variety of financial risks: interest rate risk, liquidity risk, foreign currency
risk, capital risk and credit risk. The group’s activities also expose it to
environment risk. The group’s overall risk management programme focuses on unpredictability and seeks to
non-financial risks: market, legal and
minimise the potential adverse effects on the group’s financial performance. The board, on a regular basis,
reviews key risks and, where appropriate, actions are taken to mitigate the key risks identified.
Capital risk
The group’s objectives when managing capital are to safeguard the ability to continue as a going concern in order
to provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
Market risk
The group also faces risks in conducting operations in US mid-continent, which include but are not limited to:
Fluctuations in the global economy could disrupt the group’s ability to operate its business in the US
•
Mid-Continent and could discourage foreign and local investment and spending, which could adversely
affect its production.
Environmental risk
The group faces environmental risks in conducting operations in the US Mid-Continent which include but are not
•
limited to:
additional costs, which might hinder the group’s ability to operate its business.
If the group is found not to be in compliance with applicable laws or regulations, it could be exposed to
Credit risk
The group’s principal financial assets are bank balances and cash, trade and other receivables. The group’s credit
risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of
allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss
which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.
Volatility of crude oil prices
A material part of the group’s revenue will be derived from the sale of oil that it expects to produce. A
or extended decline in prices for crude oil and refined products could adversely affect the group’s revenues, cash
substantial
d ability to finance its planned capital expenditure. West Texas Intermediate (“WTI”) oil
flows, profitability an
prices ranged from $73.17 to $120.93 in 2022 and $47.20 to $85.39 in 2021. The group had no hedging activity
during 2022.
Interest rate risk
The group does not hedge this risk. At 31 December 2022, the group had borrowings of $3,980 (2021: $2,977k),
with total interest for the year of $199k (2021: $175k). A 100-basis point change in the rates will increase finance
costs by $38k.
52
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
20. Risk and sensitivity analysis (continued)
Liquidity risk
The group expects to fund its exploration and development programme, as well as its administrative and
operating expenses throughout 2022, principally using existing working capital and expected proceeds from the
sale of future crude oil production. The group had a bank balance of approximately $132,000 at 31 December
2022 (2021: $45,000).
Cash flow risk
The group expects to have sufficient working capital to continue operations and to remain cash flow positive
through 2022. This will be continuously monitored and reviewed by the directors through the inclusion of
regular cash flow forecasts in management reports.
21. Financial commitments
Capital commitments
The group had no material capital commitments at the year-end.
22. Related party transactions
Group
No related party transactions other than those highlighted below.
Company
At the year end, the Company owed its subsidiaries $2,246,000 (2021: $727,000) in respect of intercompany
loans that are unsecured and interest-free.
The Company has the following loans outstanding with related parties:
Discovery Energy Ltd
Discovery Energy Ltd previously had a common director with the Company, E Ainsworth. At the year end, the
balance outstanding owed to Discover Energy Limited was $224k (2021: $316k). Interest charged in the year
was $17k (2021: $27k). The loan is unsecured, bears interest at the rate of 8% per annum.
53
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
23. Share-based payments
The group has a share-ownership compensation scheme for senior executives of the group whereby senior
executives may be granted options to purchase ordinary shares in company. The group has previously issued
warrants to senior executives as a welcome incentive and to third parties as consideration for their services.
A share-based payment charge of $155,000 (2021: $68,287) for share options was expensed during the year.
Date of
grant
Restated
At 31.12.21
Granted
Exercised
Expired
At
31.12.22
Exercise
price
pence
Exercise/ vesting
date
From
To
Warrants
07/02/17
750,000
08/04/20
73,611,000
02/09/20
3,000,000
25/09/20
196,000,000
08/01/21
Options
108,000,000
29/10/14
675,000
21/07/17
2,666,666
21/07/17
2,666,667
21/07/17
2,666,667
04/06/18
9,500,000
29/09/20
5,000,000
29/09/20
5,000,000
29/09/20
5,000,000
29/09/20
29/09/20
733,333
733,333
29/09/20
733,334
29/09/20
1,666,666
29/09/20
1,666,667
29/09/20
1,666,667
29/09/20
1,333,333
29/09/20
1,333,333
29/09/20
1,333,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(750,000)
-
2.55
06/02/17
06/02/22
-
73,611,000
0.60
08/04/20
08/04/23
(3,000,000)
(43,000,000)
(153,000,000)
-
-
0.60
0.35
02/09/20
02/09/22
25/09/20
25/09/22
108,000,000
0.85
08/01/21
08/01/23
-
675,000
-
-
-
9,500,000
0.4
3
4.5
6
5
29/10/14
28/10/24
21/07/17
21/07/22
21/07/17
21/07/22
21/07/17
21/07/22
04/06/18
03/06/25
5,000,000
0.5
29/09/20
29/09/27
5,000,000
0.75
29/09/20
29/09/27
5,000,000
733,333
1
0.5
29/09/20
29/09/27
29/09/20
29/09/27
733,333
0.75
29/09/20
29/09/27
733,334
1,666,666
1
0.5
29/09/20
29/09/27
29/09/20
29/09/27
1,666,667
0.75
29/09/20
29/09/27
1,666,667
1,333,333
1
0.5
29/09/20
29/09/27
29/09/20
29/09/27
1,333,333
0.75
29/09/20
29/09/27
1,333,334
1
29/09/20
29/09/27
(2,666,666)
(2,666,667)
(2,666,667)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
23. Share-based payments (continued)
The total number of options and warrants outstanding at 31 December 2022 and 31 December 2021 are as
Total at 31 December 2022: 217,986,000
follows:
Total at 31 December 2021: 425,736,000 (restated)
The number of options and warrants outstanding to the directors at the year-end were as follows:
Warrants
Options
Director
2022
2021
2022
2021
Total Warrants & Options
2021
2022
M Lofgran
S Staley
Total
J Stafford
16,000,000
2,000,000
18,000,000
-
16,000,000
2,000,000
1,800,000
-
21,600,000
5,000,000
38,100,000
5,500,000
27,600,000
5,000,000
38,100,000
5,500,000
43,600,000
7,000,000
50,100,000 56,100,000
5,500,000
37,600,000
7,000,000
5,500,000
The estimated fair value of the warrants issued in previous years was calculated by applying the Black-Scholes
option pricing model. Volatility is based on historic share prices of the Company. The assumptions used in the
calculation were as follows (the warrants issued on 8 April 2020 were to subscribers of shares in a fundraising
and are not considered to be share based payments):
23 June 2015 7 Feb 2017
25 Sep 2020
02 Sep 2020
8 Jan 2021
Warrants
Share price at
grant date
Exercise price
Option life in
years
Risk free rate
Expected
volatility
Expected
dividend yield
Fair value of
option/warrant
Weighted
average
remaining life
(years)
1.60p
8.77p
2.53p
0.23p
2.55p
0.6p
0.3p
0.35p
0.53p
0.85p
5 years
5 years
2 years
2 years
2 years
1%
50%
0%
1%
50%
1%
50%
0%
0%
1%
50%
0%
0.5%
50%
0%
0.24p
1.08p
0.01p
0.07p
0.07p
-
-
-
-
-
55
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
23. Share-based payments (continued)
Options
28 Oct 2014
21 July 2017
21 July 2017
21 July 2017
4 June 2018 –
Service
providers
Share price at
grant date
Exercise price
Option life in
years
Risk free rate
Expected
volatility
Expected
dividend yield
Fair value of
option/warrant
Weighted
average
remaining life
(years)
Options
Share price at
grant date
Exercise price
Option life in
years
Risk free rate
Expected
volatility
Expected
dividend yield
Fair value of
option/warrant
Weighted
average
remaining life
(years)
2.65p
1.55p
1.55p
1.55p
2.50p
0.4p
3p
4.5p
6p
5.p
10 years
5 years
5 years
5 years
2 years
1%
50%
0%
1%
50%
0%
1%
50%
0%
1%
50%
0%
1%
50%
0%
0.13p
0.52p
0.35p
0.25p
0.87p
1.83
-
-
-
-
4 June 2018 -
Directors
29 Sep 2020
29 Sep 2020
29 Sep 2020
2.50p
5.p
0.38p
0.5p
0.38p
0.75p
0.38p
1p
7 years
7 years
7 years
7 years
1%
50%
0%
1%
50%
0%
1%
50%
0%
1%
50%
0%
1.85p
0.16p
0.50p
0.26p
2.43
4.75
4.75
4.75
56
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Nostra Terra Oil and Gas Company Annual Report and Accounts 2022
Notes to the Financial Statements (continued)
For the year ended 31 December 2022
24. Contingent liabilities and guarantees
The Group has no contingent liabilities in respect of legal claims arising from the ordinary course of business and
it is not anticipated that any material liabilities will arise from contingent liabilities other than those provided
for.
25. Ultimate controlling party
The company is quoted on the AIM market of the London Stock Exchange. At the date of the annual report there
was no one controlling party.
26. Events after the reporting period
There were no significant events.
Contents
Company Information
Chairman’s Report
Chief Executive Officer’s Report
Strategic Report
Directors’ Report
Directors’ Information
Corporate Governance Report
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and Company Statement of Cash Flows
Notes to the Financial Statements
Page
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