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2
Annual Report and
Financial Statements
For the year ended 31 December 2022
Contents
Highlights
Chair’s letter
Strategic report
Strategy and business model
Key performance indicators
Co-Chief Executive Officers’ Review of Operations
Financial Review
Principal Risks and uncertainties
Corporate Governance
Board of directors
Directors’ report
Corporate governance report
Directors’ remuneration report
Environmental, Social & Governance
Statement of directors’ responsibilities
Financial Statements
Independent auditor’s report
Primary Financial Statements
Notes to the financial statements
Other Information
Glossary
Corporate Information
1
2
4
5
7
11
13
16
18
19
27
30
32
33
38
43
74
75
Highlights
Reporting period ending 31 December 2022
Portfolio developments
Post Period End
Sale of Corallian and its Victory licence in which
Reabold held a 49.99% interest to Shell U.K. Limited
in November 2022 for gross cash consideration
of £32 million; Reabold’s share of net proceeds c.
£12.7 million after fees and other costs
Acquisition of Simwell Resources Limited for £1 million
which includes interests in four Southern North Sea
licences east of onshore West Newton, providing
interesting exploration opportunities and valuable
geological insight for our understanding of West Newton
Acquisition of Corallian’s six North Sea licences by
Reabold for £250,000 in May 2022
West Newton developments: planning granted and
Competent Person’s Report (“CPR”) confirmed gross 2C
unrisked technically recoverable resources of 197.6 bcf
of sales gas, with an estimated 86% geological chance of
success. Technical analysis confirmed future exploratory
drilling at the West Newton B site
CPR released on four of Reabold’s North Sea licences
including P2478, which includes the West Dunrobin
prospect confirming significant resource potential
Rathlin to potentially bring in an industry partner to
support licence activity, with West Newton B-2 drilling
targeted for Q4 2023, subject to final regulatory
approvals and rig availability
Reabold’s California assets exchanged for a 42% stake in
Daybreak Oil & Gas Inc
Potentially highly significant discovery in Crawberry Hill,
part of the PEDL 183 licence
Board and balance sheet
Appointment of Chief Financial Officer Chris Connolly in
March 2022; former Finance Director Anthony Samaha
appointed as Non-Executive Director
Cash of £5.5 million at year end, no debt
Net assets of £46.5 million
Share buyback programme commenced during
April 2023
Acquired a 3.1% interest in LNEnergy for cash
consideration of £250,000, receiving options to acquire
further shares in LNEnergy which, if exercised, would
result in Reabold holding a 25.0% shareholding in
LNEnergy for aggregate cash and equity consideration of
£3.8 million.
1
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Chair’s letter
Jeremy Edelman
Chair
We are pleased to report that the financial year ending
31st December 2022 saw significant progress in evolving the
portfolio of the company. The sale of Corallian, which held
the Victory gas discovery in the West of Shetland, to Shell in
November 2022 was a key milestone for us. The sale is an
encouraging demonstration of our ability to monetise assets at
a higher valuation, execute successfully with large oil companies
and use the flexibility of our investment model to achieve a
value-enhancing transaction. Importantly, the sale also enabled
Reabold to acquire six additional North Sea licences contained
in the Corallian portfolio, expanding its UK acreage for a
minimal sum of £250,000. The CPR published on four of the
licences post year end is encouraging.
At West Newton, planning was granted for drilling and
production at Rathlin’s West Newton A site, as well as an
extension for further exploratory drilling at the West Newton
B site. We announced our conceptual development plan and a
CPR which confirmed gross 2C unrisked technically recoverable
resources of 197.6 bcf of sales gas, with an estimated 86%
geological chance of success. Given the significant technical
analysis that has been completed to date, culminating in the
JV partnership agreeing the well path for West Newton B-2,
and in line with prudent risk management, Rathlin has decided
to potentially reduce its significant working interest position in
PEDL 183 by bringing in an industry partner to participate in
drilling on PEDL 183. Reabold’s balance sheet has more than
sufficient funding for its direct share of the planned drilling on
the licence and we will support Rathlin in exploring funding
options to enable the drilling of this well in Q4 2023. There is
potential for Reabold to fund Rathlin’s share upon receipt of the
second tranche of the Corallian sale proceeds later in 2023 but
this decision has not been made.
Our insight into the emerging Zechstein trend eastwards and
offshore of PEDL 183 (which holds the West Newton licence)
has been enhanced through the acquisition of Simwell
Resources for £1 million, which completed in January 2023.
Simwell has high quality 3D seismic data over this offshore
area and this provides further exploration opportunities
and geological insight valuable for our understanding of
West Newton. Post year end it was exciting to announce,
in April 2023, the potentially highly significant existing
discovery in Crawberry Hill, which was originally drilled by
Rathlin in 2013. The potential discovery could add materially
to the already sizeable resource offered from the West
Newton trend.
The corporate activity we pursued in 2022 increased the
exposure of our portfolio to the UK and it is encouraging to see
that the security of UK oil and gas production remains a key part
of the British Government’s plan to transition to a lower carbon
economy, as published in the recent ‘Powering up Britain’
review.
In the US we converted drilling and production success in
Reabold California LLC into a 42% stake in Daybreak Oil &
2
Reabold Resources Plc Financial statements for the year ended 31 December 2022 capital allocation decisions and we are pleased that we have
started to return cash to shareholders via a share buyback,
whilst retaining the financial flexibility to continue investing in
our assets to generate attractive monetisation opportunities.
Jeremy Edelman
Chair
26 May 2023
Gas Inc (“Daybreak”, an OTC traded, Californian oil and gas
operator). The transaction in May 2022 creates liquidity for
Reabold and formed a new, cash flow producing business with
growth and investment prospects which we expect will evolve
over the next few years.
Overall, 2022 saw some significant milestones for Reabold.
As we progress into 2023 it is clear that the trajectory of this
business has various catalysts to drive value including the
receipt of funds from Shell, the confirmation of funding for
Rathlin’s share of the West Newton project drilling and the
progression of our other assets such as a farm out of some
of our North Sea licences. As a Board, we are encouraged by
the strength of our balance sheet (£5.5 million cash at end
FY 2022 and no debt) and our approach to the diversification
of investment risk. We will always consider this when making
3
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Strategic Report
Strategy and business model
Our strict investment criteria drives our portfolio potential.
We focus on:
Reabold is an oil and gas investing company with
a diversified portfolio of exploration, appraisal and
development projects. Reabold’s strategy is to invest in
low-risk, near-term projects which it considers to have
significant valuation uplift potential, with a clear monetisation
plan and where receipt of such proceeds will be returned to
shareholders and re-invested into further growth projects.
The sale of Reabold’s share in Corallian and its Victory
licence in 2022 for net consideration of £12.7 million
demonstrates the Reabold model:
•
•
•
•
•
Reabold’s share of net proceeds £12.7 million after fees
and other costs
Victory asset valuation a significant uplift on Reabold’s
total investment of £7.5 million in Corallian
Acquisition of North Sea licences from Corallian for very
attractive price of £250,000
Quality of counterparty reflects Reabold management’s
strong capabilities in identifying, advancing and
monetising undervalued, strategic assets
Reabold proposes to return a share of the net sale
proceeds to shareholders in 2023 and re-invest into
further growth projects. A share buyback programme
commenced in April 2023.
Each investment the company makes must have low
geological risk and clear exit opportunities.
We primarily identify oil & gas assets at the appraisal stage
where there is a clear value creation opportunity between
the investment required to progress the asset and the asset’s
value at the point of monetisation. We invest in and provide
modest funding for a diverse range of low risk, high impact
projects with near term catalysts to create value. We are
disciplined in our exit routes and consider selling assets prior
to full project development in order to maximise the value of
the whole Reabold portfolio.
Geology
Reabold invests in projects that are substantially de-risked
from a technical perspective due to previous drilling. Each
project should have existing regional production and historic
discovery wells nearby or on the asset. Each asset must
also possess sufficient running room to turn initially small
projects into substantial regional businesses.
Economics
Each project must deliver extremely attractive returns at
current and lower commodity price levels. Reabold seeks
robust, fast cycle projects that require limited capital
expenditure and have low geopolitical risks. As projects
are low cost, they typically exhibit materially lower carbon
intensity than the industry average. Reabold’s non-operator
model helps to keep costs low and allows the company to
manage a diversified portfolio.
Investment Returns
Investment returns are key for Reabold. Projects must
demonstrate the potential to deliver high returns over a short
time frame and the opportunity to scale up and increase
project returns beyond our initial project period.
Exit
Identifying the optimal time to exit a project is critical
to Reabold’s strategy. Doing so effectively will allow the
company to scale and deploy more capital over time.
Reabold has a highly-experienced small executive team with
significant investment experience in oil and gas projects,
company evaluation and commercial industry expertise.
Reabold’s highly qualified Board of Directors bring significant
public oil and gas company experience. The biographies of
the Board are summarised on pages 16 and 17.
4
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Key performance indicators (KPIs)
The group’s main business is to invest in direct and indirect
interests in exploration and producing projects. Reabold’s
long-term strategy is to re-invest capital generated through
monetisation of its investments into new projects in order
to grow the company and create value for its shareholders.
The company tracks its new business development
objectives through the building of a risk-balanced portfolio
of assets. The company reviews its KPIs on an ongoing basis
as it moves through the lifecycle of its strategy to ensure
they continue to serve as a useful measure of our strategic
performance.
The Board assesses the performance of the group across
measures and indicators that our consistent with the
Reabold’s strategy and investor proposition.
The KPIs are:
KPI
KPI 1
Definition
Performance
Portfolio enhancements
• Six North Sea licences acquired from Corallian. The licences provide Reabold significant
Grow value through material
investments, project delivery and
commercial discoveries
prospective resources and opportunities to create value.
KPI 2
Future financial prosperity
Liquidity events, and successful
fundraising
• Sale of Corallian and its Victory licence in which Reabold held a 49.99% interest to
Shell plc in September 2022 for gross cash of £32 million; Reabold’s share of net
proceeds c £12.7 million
KPI 3
Financial discipline
• Cash position as at 31 December 2022 was £5.5 million. Reabold is fully funded for
Ensuring business is run to budget
via accurate forecasting, maintaining
significant cash buffer and resilient
balance sheet
all intended activities and commitments in 2023.
• Net assets as at 31 December 2022 were £46.5 million
KPI 4
Growth in NAV per share
• Broker risked NAV increased from 0.71 – 0.86p/share in March 2022 to 1.2p/share in
KPI 5
Total shareholder return over a
calendar year
KPI 6
Risk and controls
Zero recordable incidents, ethical
misconduct, breeches of laws or
regulations, penalties. Accurate and
compliant financial resources data
March 2023
• The share price started the year at 0.18p and finished the year at 0.21p
• The company did not have any recordable incidents or injuries in 2022. There were
no instances of misconduct, breeches of laws or regulations, regulatory actions or
penalties. The company was compliant with all its financial reporting deadlines and
shared resource data via CPRs prepared by RPS Energy on its PEDL 183 licence and
Dunrobin prospect.
5
Reabold Resources Plc Financial statements for the year ended 31 December 2022Strategic Report West Newton
6
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Sachin Oza
Co-Chief Executive Officer
Stephen Williams
Co-Chief Executive Officer
Co-Chief Executive Officers’ Review
of Operations
We have had an active year and have evolved the portfolio
significantly: the sale of Corallian to Shell, exchanging
Reabold California for a 42% stake in Daybreak, acquiring
new licences in the North Sea, and in 2023, the acquisition
of Simwell, whilst increasing our cash balance to £5.5
million. We will discuss the details of each project below.
UK Onshore
Rathlin Energy (UK) Limited and West Newton -
PEDL183
West Newton is an onshore hydrocarbon discovery located
north of Hull, England. To date, three wells have been
drilled at West Newton (A-1, A-2 and B-1Z) confirming a
major discovery - potentially one of the largest hydrocarbon
fields discovered onshore UK. Rathlin Energy (UK) Limited
(“Rathlin”) is the operator of the licence and holds a
66.67% interest. Reabold has a 59.5% shareholding
in Rathlin and a direct 16.67% in the licence giving the
company an aggregate c. 56% economic interest in
West Newton.
During 2022, the conceptual development plan for West
Newton progressed well, following extensive third-party
technical analysis and confirmation of the resource potential.
The development plan consists of an initial five well
development drilling campaign with first gas anticipated
mid-2026. The Joint Operation intends to drill the low-cost
wells in a manner which phases the development cost,
significantly de-risking the financial profile of the project.
The first development well, planned for Q4 2023, will
materially de-risk the project at modest cost.
In addition, Rathlin commissioned a CPR effective 30 June
2022 to evaluate the oil and gas resources contained within
PEDL 183. The report was finalised and announced on
29 September 2022, which identified the following:
•
•
Estimated geological chance of success at West Newton
of 86%
Gross 2C unrisked technically recoverable resource of
197.6 bcf of sales gas
•
•
•
Prospective resource potential from adjacent sites
at Spring Hill, Withernsea and Ellerby of a combined
gross 2U unrisked recoverable resource of 363.7 bcf of
sales gas
Estimated geological chance of success at Spring Hill,
Withernsea and Ellerby of 43%
NPV10 of US$396 million on a 100% basis for West
Newton equating to US$222 million net for Reabold’s
economic interest.
The full CPR can be found on our website: www.Reabold.com.
Based on the reservoir characterisation and modelling work
completed by RPS, horizontal wells extending approximately
1,500 metres through the Kirkham Abbey reservoir are the
preferred development drilling method. Horizontal wells
have a greater likelihood of encountering reservoir “sweet
spots” and sections of reservoir with natural fractures that
will enhance the productive capability of future wells. This
is consistent with the development methods employed in
European equivalents to the Kirkham Abbey Formation,
especially in the northeast Netherlands fields.
Reabold and the partners to the joint operation, have
determined the optimum location and orientation for a
horizontal well which is intended to be drilled at West
Newton B site in Q4 2023.
Rathlin has made applications to the Environment Agency
(“EA”) for the use of oil-based fluids for drilling operations
through the hydrocarbon-bearing Permian strata. Analyses
undertaken by CoreLab have determined that the Kirkham
Abbey Formation is sensitive to water-based fluids and that
these fluids are a significant source of formation damage.
Approval of the applications associated with the West
Newton A site and the West Newton B site are still pending.
Also, during 2022, Rathlin submitted proposals to the
North Sea Transition Authority (“NSTA”) to modify the work
programme for PEDL 183. The NSTA has formally agreed
with Rathlin’s proposal to reduce the PEDL 183 licence area
to a single retention area and substitute the outstanding
seismic commitment for the drilling operations that took
place at WNB-1 and WNB-1Z, thus fulfilling the obligation.
In a subsequent application made to the NSTA, during
December 2022, Rathlin proposed to reorder the additional
components of the PEDL 183 work programme such that
the drilling and testing of a new Kirkham Abbey deviated or
7
Reabold Resources Plc Financial statements for the year ended 31 December 2022Strategic Report horizontal appraisal well will be undertaken by June 2024,
the recompletion or sidetrack and testing of the WNA-1,
WNA-2, or WNB-1Z well also be completed in that same
timeframe, and a field development plan be submitted by
June 2025. Formal approval of this application was received
in Q1 2023, and Reabold and its partners are actively
working on plans to meet these work commitments.
In the first half of 2023, Reabold has continued to appraise
other opportunities within the PEDL 183 licence. Reabold
has undertaken a technical review of its Zechstein play
prospectivity in the UK, including the licences acquired
through the Simwell transaction and PEDL 183, combining
the significant quantity of seismic data, historical wells, core
analysis and other proprietary data and analysis assembled
by the company.
Through this analysis, Reabold has identified on PEDL 183
a significant potential discovery, Crawberry Hill, which was
drilled by Rathlin in 2013. The company’s priority now is
to develop plans with the aim of making this a drill-ready
appraisal opportunity. This could add materially to the
already significant resource within PEDL 183 offered from
the West Newton trend. The Crawberry Hill-1 well, drilled in
2013, intersected 141m of Kirkham Abbey Formation with
good indications of gas shows and porosity. The well was
originally drilled to test a deeper target and does not have a
full suite of logs over the Kirkham Abbey interval.
ERC Equipoise Ltd (ERCE) has undertaken a petrophysical
analysis of the conventional reservoir of the Kirkham Abbey
formation in the Crawberry Hill and Risby-1 wells and
interprets average porosities greater than 15% in the top
20m of the Kirkham Abbey formation in Crawberry Hill-1.
ERCE also interprets probable gas saturations in the top 6m
of the Kirkham Abbey formation in the Crawberry Hill-1 well.
The Risby-1 well was drilled in the water leg but good
porosity was calculated from the well logs and the potentially
very good permeability indicated from well cuttings, which
is supported by a drill-stem test in the Kirkham Abbey
Formation. Detailed seismic mapping is underway to define
the extent of the Crawberry Hill accumulation, which could
add materially to the already significant resource within PEDL
183 offered from the West Newton trend.
In conclusion, Reabold believes the apparent discovery
at Crawberry Hill to be an exciting appraisal opportunity
potentially significantly enhancing the already strategic asset
that is PEDL 183.
Given the significant technical analysis that has been
completed to date, culminating in the JV partnership
agreeing the well path for WN B-2 and the emergence of
8
the Crawberry Hill opportunity, and in line with prudent risk
management, Rathlin has decided to reduce its significant
working interest position in PEDL 183 with the aim of
potentially bringing in an industry partner to participate in
drilling on PEDL 183.
Rathlin holds a 66.67% licence interest in and is operator of
PEDL 183. Reabold has a c. 56% economic interest in PEDL
183 via its 16.665% direct licence interest and through its
c. 59% equity ownership of Rathlin. Reabold is sufficiently
funded for its 16.665% direct share of the costs for this well
with its existing cash resources.
Should Rathlin’s efforts to reduce their working interest
position not fully meet their objective, Reabold could provide
additional funding for Rathlin upon receipt of the second
tranche payment from Shell relating to the sale of the Victory
asset, which would allow WN B-2 to be drilled at the earliest
opportunity, subject to Environment Agency permit approvals
and rig availability. The exact timing and amount of the
second tranche payment from Shell is currently uncertain,
however the second tranche payment will be c. £9.5 million,
assuming the development and production consent for the
Victory gas field is secured from the North Sea Transition
Authority by 1 December 2023. If consent has not been
received by this date, then Reabold expects to receive
£5.2 million within 3 business days of this date, with the
balancing payment to come at a later consent date. The net
proceeds to be received by Reabold would be sufficient to
meet Rathlin’s share of the drilling costs of WN B-2, leaving
Reabold financial flexibility for its capital allocation strategy
of balancing portfolio investment with shareholder returns.
UK Offshore – Northern Area Licences
Corallian Energy Limited – 49.99% interest
(sold 1 November 2022)
Licences - P2605, P2493, P2464, P2504 (all 100%)
and P2478 (36%)
During 2022, the Board of Directors of Corallian agreed
to sell the entire issued share capital of Corallian to Shell
U.K. Limited for a gross consideration of £32 million, with
Reabold’s share of net proceeds being £12.7 million.
The sale completed on 1 November 2022 and is a major
milestone for the company in demonstrating the execution of
its strategy by way of monetising its investment.
The payment of the consideration from Shell is staged,
related to progress of the Victory gas field development.
On completion of the transaction, Shell paid an initial
consideration of £10 million (£3.2 million net to Reabold).
This will be followed by a further single payment of
Reabold Resources Plc Financial statements for the year ended 31 December 2022 £22 million (£9.5 million net to Reabold), assuming that the
development and production consent for the Victory gas
field is secured from the NSTA, on or before 1 December
2023. If consent has not been granted by this date, then
Shell will have the option to either: i) pay £12 million
(£5.1 million net to Reabold), with the remaining £10 million
(£4.4 million net to Reabold) being paid at a later consent
date; or ii) offer to transfer-back the Victory licence to the
current Corallian shareholders for £1 consideration. The
transfer-back offer protection has been added for Corallian
shareholders’ benefit, to mitigate against the highly unlikely
event of the Victory project not being progressed sufficiently.
The Corallian sale valuation represents a significant uplift on
Reabold’s total investment of £7.5 million in Corallian since
late 2017.
Prior to the sale of Corallian and the Victory licence,
Reabold acquired Corallian’s remaining six exploration and
appraisal assets for £250,000 with an economic effective
date of 4 May 2022. On 15 September 2022, Reabold
announced the completion of the acquisition of the licences
being P2396, P2464, P2493, P2504 and P2605 (all at
100% working interest) and P2478 (36% working interest).
Reabold subsequently relinquished licence P2396.
Four of the licences are located near existing infrastructure
and adjacent to analogue fields. There are significant
prospective resources and opportunities to create value.
The company believes that the prospects represent low to
moderate geological risk with relatively low drilling costs and
are strong candidates for farmout opportunities.
Reabold commissioned a CPR on licence P2478 which was
released in Q1 2023. The key points from the CPR are set
out below:
•
•
•
•
•
201 mmboe1 aggregate gross unrisked2 Pmean
Prospective Resources on licence P2478
The Dunrobin West prospect (“Dunrobin West”), agreed
by the JV to be the proposed location of the first
exploration well on the licence, would target 119 mmboe
aggregate gross unrisked Pmean Prospective Resources3
34% Chance of Geologic Discovery (Pg) on Dunrobin
West Jurassic primary target
Secondary Triassic target at Dunrobin West, which
along with the Jurassic can be tested by a single vertical
borehole, included in formal resource assessment for the
first time with a Pg of 12%
Dunrobin West dry hole drilling costs to a total depth of
800 metres estimated by the JV to be £8.6 million gross
•
•
•
The company believes that Dunrobin West is geologically
analogous to the Beatrice field, which produced
164 mmboe
Success at Dunrobin West would significantly de-risk
Dunrobin Central & East and Golspie analogous
prospects
Reabold’s acquisition of, inter alia, licence P2478 from
Corallian has provided the company with additional net
unrisked Pmean Prospective Resources from P2478 of
72 mmboe
In addition to the separate CPR on P2478 published in
February 2023, Reabold commissioned a CPR covering
licences P2464, P2504 and P2605 and includes the CPR
covering P2478. The CPR highlights the potential across
all of Reabold’s key central and northern North Sea assets,
namely: the Inner Moray Firth, East Shetland Basin and
the North West of Shetland. The opportunities comprise
a number of play types of both gas and oil with proven
potential from analogue fields. The full CPR can be found on
Reabold’s website at www.Reabold.com.
1
2
3
The CPR reports oil and gas Prospective Resources. The oil equivalent
value of the gas resources has been estimated by the company using a
factor of 5.8bcf per mmboe.
The unrisked aggregation was performed by the company and assumes
that all prospects at all levels are successful.
The unrisked aggregation of Dunrobin West was performed by the
company. The volumes were presented for each reservoir in the CPR and,
at the company request, were not aggregated probabilistically.
UK Offshore – Southern Area Licences
Licences – P2332 (30%) P2329, P2427, P2486
(all 10%)
Reabold completed the acquisition of Simwell Resources
Limited in January 2023 which includes interests in four
Southern North Sea licences: P2332 (Reabold 30%, Shell
U.K Limited 70%, operator) and P2329, P2427 and P2486
(Reabold 10%, Horizon Energy Partners Ltd 77.5%, operator
and Ardent Oil Ltd 12.5%). The transaction substantially
increases Reabold’s footprint in the emerging Zechstein
trend, complementing its onshore position in PEDL183,
including the West Newton project. The licences have a
number of prospects covered with high quality 3D seismic
data.
The breakdown of the consideration paid was as follows:
•
£363,835.76, by way of initial consideration, satisfied
through the issue of 134,753,985 new Ordinary Shares
•
£305,157.71 to certain Simwell creditors satisfied by the
9
Reabold Resources Plc Financial statements for the year ended 31 December 2022Strategic Report issue of 113,021,374 new Ordinary Shares
USA – Daybreak
On 26 May 2022, Reabold announced the completion of
the equity exchange agreement with Daybreak. Reabold
California LLC, which holds, inter alia, licence interests in
California, became a wholly owned subsidiary of Daybreak,
which, in exchange, issued 160,964,489 new Daybreak
shares to Reabold, equating to 42% of Daybreak’s currently
issued share capital. The transaction has created a
self-funded, OTC traded, Californian oil and gas operator
with significant growth potential. Daybreak will utilise its
existing in-state management team and expertise to grow the
portfolio through development of existing licences as well as
considering strategic acquisition opportunities.
For more information see Note 3 and Note 15.
Production from the Californian licences, West Brentwood
and Monroe Swell, in which Reabold had a 50% working
interest, for the period from 1 January 2022 to 25 May
2022 (the day prior to the completion of the equity exchange
agreement) was 7,587boe net to Reabold, generating
revenues of US$736,000 (or £560,000 using the average
rate between 1 January 2022 and 25 May 2022).
Sachin Oza
Co-Chief Executive
Officer
26 May 2023
Stephen Williams
Co-Chief Executive
Officer
•
£373,398.36 paid in cash to certain Simwell creditors
A contingent deferred consideration of £150,000 is payable
to the sellers if, inter alia, the operator of licence P2332
undertakes to the NSTA that the licensees will commit to drill
a well pursuant to a defined work programme and within the
applicable timescales.
Romania – Danube Petroleum Limited
Reabold has a 50.8% equity position in Danube Petroleum
Limited (“Danube”), with ASX listed ADX Energy Ltd (“ADX”)
holding the remaining 49.2%. Danube has a 100% interest
in the Parta exploration and Iecea Mare production licence in
Western Romania, which include the IMIC-1 discovery and
the IMIC-2 prospect.
During 2022, the partnership continued to seek further
industry funding through farmout discussions with
third parties for both the exploration area (Parta) and the
production licence (Iecea Mare) for infill opportunities.
Several very low risk oil and gas infill and side-track
opportunities have been identified within the licence area.
The operator has also commenced investigating geothermal
opportunities within the Parta Exploration and Iecea Mare
licences. The very high geothermal gradient (6 degrees/100
meters) in several parts of the Parta licence could make
electrical power generation from geothermal energy feasible
and, given the very high trends in electricity prices, highly
economic. The operator has been approached by several
local communities in relation to geothermal projects mainly
for district heating, given its drilling experience and extensive
2D and 3D seismic database in the area. This energy source
is expected to receive increasing investment funding in
Romania from the EU.
In the second half of the year, the operator engaged with
the Romanian authorities in order to compile an application
to extend the Parta licence term without any further
commitments. The technical focus was on the Iecea Mare
production licence where available 3D seismic covers the
IMIC-2 exploration prospect. (Note: The total validity of
the Iecea Mare production licence is 20 years and is not
affected). The governing authority, the National Agency of
Mineral Resources (NAMR) is supporting the extension
which can be granted through a government process.
10
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Financial review
Group Income Statement
The group’s loss for the year ended 31 December 2022 was
£45,000 (2021: loss of £2,675,000).
Net sales volumes for the year comprised 7,587boe (2021:
24,457boe). The reduced volumes were primarily due to
the fact that Reabold held a direct 50% working interest
in the Californian licences for the first five months only in
2022 as a result of the completion of the equity exchange
agreement in May 2022. The sales volumes generated total
2022 revenues of £0.6 million (2021: £1.2 million). This
represented an average realised sales price of US$97.0/boe
(2021: US$65.4/boe).
The gross loss for 2022 of £0.3 million (2021: gross loss of
£0.2 million) was after overall cost of sales of £0.8 million
(2021: £1.3 million). This comprised £0.4 million of
production costs (2021: £0.7 million), royalties of
£0.1 million (2021: £0.2 million) and £0.3 million of
non-cash depreciation charges on oil and gas assets (2021:
£0.4 million).
The gain in respect of the disposal of the entire 49.99%
interest in Corallian Energy Limited was £7.3 million.
Proceeds received from the disposal of Corallian in 2022
were £3.2 million. The carrying amount of Reabold’s
investment in Corallian prior to disposal was £4.6 million.
At 31 December 2022, contingent consideration relating to
the disposal of Corallian amounted to £8.7 million receivable
within one year.
As a result of the completion of the equity exchange
agreement with Daybreak on 26 May 2022, Reabold no
longer consolidates Reabold California LLC from that date.
On the date of completion, Reabold recognised the fair value
of its investment in Daybreak, treating it prospectively as a
financial asset at fair value. The resulting loss attributable
to the equity exchange agreement in May 2022 was
£2.3 million. The fair value loss of Reabold’s investment
in Daybreak since completion to 31 December 2022 was
£1.9 million.
Reabold’s share of loss of associates was £1.6 million (2021:
£0.8 million). The increase was largely due to non-cash
impairment charges in Corallian. See Note 14 for more
information.
Administrative expenses were in line with prior year at
£1.7 million (2021: £1.7 million).
In 2022, Reabold incurred £0.2 million, classed as
non-underlying items (see Note 25), in legal and professional
fees in relation to the successful defence from the attempt,
from a group of five beneficial shareholders, to remove
the entire Board of directors of Reabold and replace them
with four new directors. All resolutions proposed by the
requisitioning shareholders were rejected at a General
Meeting held in November 2022.
Currency gains of £635,000 (2021: £47,000), arose on
US dollar denominated loan receivables and financial assets.
Group Balance Sheet
At completion of the equity exchange agreement, Reabold
no longer had “control” over Reabold California as set out
under UK adopted international accounting standards. As a
result, net assets of £7.7 million including exploration and
evaluation assets of £3.5 million and oil and gas assets of
£4.5 million were derecognised from the balance sheet and
the fair value of the investment in Daybreak was recognised.
At 31 December 2022, the value of Reabold’s investment in
Daybreak was £3.5 million.
Exploration and evaluation assets of £6.8 million showed
a decrease from £9.1 million at the end of 2021 reflecting
the divestment of Reabold California, offset by £0.3 million
as a result the acquisition of six North Sea licences from
Corallian, £0.3 million of additions at West Newton and
£0.4 million as a result of decommissioning and exchange
adjustments.
Property, plant and equipment decreased from £4.3 million
at year end 2021 to £nil as a result of the divestment of
Reabold California.
Other balance sheet items that showed reductions since
December 2021 as a result of the equity exchange with
Daybreak were goodwill (decrease of £0.3 million), restricted
cash (decrease of £0.2 million), trade and other payables
(decrease of £0.1 million) and deferred tax liabilities
(decrease of £0.3 million).
Total investment in associates decreased from £27.7 million
at year end 2021 to £22.3 million at 31 December 2022,
primarily as a result of the disposal of Corallian during the
year. See Note 14 for further information.
The group recognised £8.7 million of deferred contingent
consideration receivable relating to the disposal of Corallian.
See Note 15 for further information.
11
Reabold Resources Plc Financial statements for the year ended 31 December 2022Strategic Report The decommissioning provision at PEDL 183 increased from
£0.2 million to £0.4 million as a result of changes to the
underlying assumptions around inflation and discount rates.
The group does not have any other significant liabilities.
Liquidity
Cash balances increased from £4.9 million at 31 December
2021 to £5.5 million at 31 December 2022. The group has
no debt.
Overall, net assets have remained steady at £46.5 million
(2021: £46.5 million).
Commitments
Group cash flow statement
Net cash used in operating activities for the year ended
31 December 2022 was £1.8 million, £0.7 million higher
than in 2021 reflecting reduced revenues as a result of the
deconsolidation of Reabold’s revenue generating California
business in May 2022, as part of the equity exchange
agreement with Daybreak.
The group generated net cash of £2.4 million from investing
activities, a £4.5 million net increase from 31 December
2021. This was primarily due to the £3.2 million initial
proceeds received from the sale of Corallian, as well as
reduced capital expenditure at West Newton.
The group did not generate or use any cash related to
financing activities in 2022. Net cash provided by financing
activities for the year ended 31 December 2021 was £6.9
reflecting the issuance of 1,363,636,363 new ordinary
shares at 0.55 pence per share, for gross proceeds of
£7.5 million (£6.9 million net of issuance costs). The
proceeds were primarily used to fund additional appraisal
activity at West Newton as well as to provide additional
contingency across the group’s investment portfolio.
The group does not have any signed contractual capital
commitments as at 31 December 2022 (2021: nil), however
the group does have obligations to carry out defined work
programmes on its licences, under the terms of the award of
rights to these licences. The company is not obliged to meet
other joint venture partner shares of these programmes.
PEDL 183
The Joint operation between Rathlin, Reabold and Union
Jack have a commitment to drill and test a new Kirkham
Abbey deviated or horizontal appraisal well by June 2024.
The company estimates it’s 16.67% share of costs to be
c.£1.4 million for drilling a new well and £0.6 million for
testing the well.
UK North Sea
Reabold estimates its share of firm exploration and appraisal
work commitments on its North Sea portfolio to be
c.£0.5 million over the next 2 years. The company has not yet
taken a decision on whether to drill on any of its North Sea
licences.
12
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Principal risks and uncertainties
Reabold operates in an environment subject to inherent risks and uncertainties. The Board regularly considers the principal
risks to which the group is exposed and monitors any agreed mitigating actions. The overall strategy for the protection of
shareholder value against these risks is to carry a broad portfolio of assets with varied risk/reward profiles, and to retain
adequate working capital.
The risks discussed below, separately or in combination, could have a material adverse effect on the implementation of our
strategy, our business, financial performance, liquidity, prospects, shareholder value and returns and reputation.
Risks
Mitigation
Strategic and Commercial risks
Investment Returns: Stock market support
may be eroded, lowering investor appetite and
obstructing fundraising if we fail to scale our
business at pace, make poor investment choices
or fail to sustain and develop a high-quality
portfolio of assets.
Prices and Markets: Decreases in oil and/or
gas prices could have an adverse effect on the
demand for oil and/or gas. If these reductions
are significant or for a prolonged period, we
may have to write down assets and investments
and reassess the viability of certain projects,
which may impact future cash flows, profit,
capital expenditure, the ability to work within
our financial frame and maintain our investment
programme.
Accessing, progressing and delivering
hydrocarbon projects: Inability to access and
progress hydrocarbon resources could adversely
affect delivery of our strategy.
Liquidity, financial capacity and financial
exposure: Insufficient liquidity and funding
capacity of the group and its investee companies
could adversely impact the implementation
of the group’s strategy and restrict work
programmes due to lack of capital.
Joint arrangements: Varying levels of control
over the standards, operations and compliance
of our partners could result in legal liability and
reputational damage.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Management regularly communicates its strategy to shareholders.
Focus is placed on building a diverse and resilient asset portfolio capable of offering
prospectivity throughout the business cycle. The group continually reviews its
portfolio of assets to identify internal growth opportunities.
The company seeks to limit its financial dependence on any one single asset by
holding a diversified portfolio and re-investing capital generated through monetisation
of its investments into new projects in order to grow the company and create value for
its shareholders.
The group engages with a range of advisers and active competitor monitoring to
provide a range of opportunities for screening.
The group also engages third-party assurance experts to review, challenge and,
where appropriate, make recommendations to improve the processes for project
management, cost control and governance of projects.
Contingency is built into the evaluation, planning and budgeting process to allow for the
downside movements in commodity prices.
Reabold’s business model is to invest in undervalued oil and gas assets that would be able
to deliver profitably under any reasonable oil/gas price assumptions, are at the lower end
of the industry cost curve and will be competitive against other sources of hydrocarbons.
The group and its investee companies undertake extensive analysis of available
technical information to determine work programmes.
Appraisal programmes are designed to de-risk the overall field development. Well
and seismic data is continually reviewed to best allocate capital and make drilling
decisions.
Downside risk can be reduced by entering into risk sharing arrangements.
The group retains working capital reserves to cover any delays or cost overruns
Management has a clear strategy for value realisation and creation as evidenced by
the realisation of value from the Corallian sale in 2022
The group maintains a strong balance sheet by maximising cash to ensure sufficient
liquidity within the business. The group has no debt.
Cash forecasts are monitored including considering multiple scenarios.
The company has demonstrated it can raise incremental capital if needed
The group continually monitors its capital allocation and will only pursue programs
that are of appropriate size and risk relative to the group’s capital resources.
The group continually engages with its operating partners and closely monitors the
operation of its assets.
The group completes thorough due diligence reviews before entering future partnerships
to ensure that their strategic and operational objectives are aligned with those of
the group.
13
Reabold Resources Plc Financial statements for the year ended 31 December 2022Strategic Report Risks
Mitigation
Climate change: A global transition to alternative
energy sources could have an adverse impact
on demand for oil and gas, commodity prices
and/or the group’s access to and cost of
capital. Developments in policy, law, regulation,
technology and markets including societal and
investor sentiment, related to the issue of climate
change and the transition to a lower carbon
economy could increase costs, constrain our
operations and affect our business plans and
financial performance.
Talent and capability: Inability to attract,
develop and retain people with necessary skills
and capabilities could negatively impact delivery
of our strategy.
Geopolitical: Exposure to a range of political
developments and consequent changes to the
operating and regulatory environment (including
the continued impact of COVID-19 and events
relating to the Russia-Ukraine conflict) could
cause business disruption.
Digital infrastructure, cyber security and data
protection: Breach or failure of our third parties’
digital infrastructure or cyber security, including
loss or misuse of sensitive information could
damage our operations, increase costs and
damage our reputation.
Compliance and control risks
Regulation: Changes in the law and regulation
in countries in which Reabold has a presence
with partners could increase costs, constrain
our operations and affect our strategy, business
plans and financial performance. The UKCS
licensing regime under which most of Reabold’s
operational rights and obligations are defined
may be subject to future change.
Reporting: Failure to accurately report our data
could lead to regulatory action, legal liability and
reputational damage.
•
•
•
•
Management looks for opportunities to deliver low carbon intensity production into the
UK market by using low carbon intensity facilities, including potential re-use of existing
infrastructure.
The group’s “investment horizon” is considered to fall within time frames too short to be
materially affected by the Paris Agreement 2˚C scenario.
The group’s resources are weighted towards gas which is playing a key role in the national
energy transition.
Recruitment and retention of key staff through providing competitive remuneration
packages and stimulating and safe working environment. Balancing salary with longer
term incentive plans.
• Management maintains regular communication with regulatory authorities.
•
•
•
•
The company aligns its standards and objectives with government policies as closely as
possible.
Reabold demonstrates a flexible approach to working from home whilst supporting
appropriate working practices in London office spaces.
The group does not consider that it has a material adverse exposure to the geopolitical
situation with respect to the sanctions imposed on Russia, although recognises the
evolving situation is causing price volatility. The group will continue to monitor its position
to ensure it remains compliant with any sanctions in place.
The group employs specialist support to detect and monitor threats using security
protection tools.
• We build awareness with our employees and share information for continuous learning.
•
Our business seeks to identify, assess and manage legal and regulatory risk relevant
to our operations, strategy, business plans and financial performance. To support this
work, we seek to develop co-operative relationships with governmental authorities to
allow appropriate focus on areas of potential risk or uncertainty while also protecting
Reabold’s interests within the law.
•
Our finance team provide assurance of the control environment and are accountable for
building control and compliance into finance processes and digital systems.
14
Reabold Resources Plc Financial statements for the year ended 31 December 2022 West Newton
Board of Directors
Jeremy Edelman - Non-Executive Chairman
Appointed: 19 December 2012
Jeremy Edelman holds Bachelor degrees in Commerce and Law together with a Master’s degree in
Applied Finance. Jeremy is admitted as a solicitor to the Supreme Courts of Western Australia and
New South Wales. Jeremy subsequently worked for some of the world’s leading investment banks,
including Bankers Trust and UBS Warburg in debt and acquisition finance. He has held consulting
and director positions in listed companies in the UK and Australia, such as Mt Grace Resources
NL, with a focus on resource exploration and development, including investment companies
established with the specific objective of investing in resources projects. He also has corporate
finance experience, having been responsible for co-coordinating a number of companies in
making acquisitions in a variety of resource sectors, including oil and gas, uranium, molybdenum,
base metals and coal. He has worked in various regions of the world, including the Republic of
Kazakhstan, Russia, South Africa and Australia. Jeremy served as a Non-Executive Director of
Leni Gas Cuba Limited until 12 July 2016, a Director of Altona Energy Plc (also known as Altona
Resources Plc) until 4 July 2006, Executive Director of Leni Gas & Oil PLC from August 2006 to
December 2010 and Director of Braemore Resources Plc until 27 July 2005.
Sachin Oza - Co-Chief Executive Officer
Appointed: 19 October 2017
Sachin Oza has 19 years of investment experience, including 15 years covering the energy
sector. He joined Guinness Asset Management in April 2016, having previously worked as an
investment analyst at M&G Investments for 13 years, where he covered the Utility, Transport,
Mining and Oil & Gas sectors on a global basis. Sachin has also held investment analyst roles at
Tokyo Mitsubishi Asset Management and JP Morgan Asset Management.
Stephen Williams - Co-Chief Executive Officer
Appointed: 19 October 2017
Stephen Williams has 18 years of experience in the energy sector. He joined Guinness Asset
Management in April 2016, having previously worked as an investment analyst at M&G between
2010 and 2016, where he focussed on energy and resources. Prior to this, Stephen worked as
an energy investment analyst for Simmons & Company International between 2005 and 2010
and from 2003 to 2005 he worked as an analyst at ExxonMobil.
16
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Anthony Samaha - Non-Executive Director
Appointed: Board: 19 December 2012; Non-Executive Director: 1 July 2022
Anthony Samaha is a Chartered Accountant who has over 30 years’ experience in accounting
and corporate finance, including resources development. Anthony worked for over 10 years
with international accounting firms, including Ernst & Young, principally in corporate finance,
gaining significant experience in valuations, IPOs, independent expert reports, and mergers and
acquisitions. Anthony has extensive experience in the listing and management of AIM quoted
companies and served as Finance Director for the company up until 30 June 2022 before
becoming a Non-Executive Director on 1 July 2022.
Mike Felton - Non-Executive Director
Appointed: 17 September 2018
Mike Felton is an experienced fund manager in the City and brings over 30 years of financial
expertise to the company. Mike previously served as Head of UK Retail Equities at M&G
Investments and was Manager of the M&G UK Select Fund, growing the fund’s assets from £110m
to c. £550m at its peak. Mike has also previously served as Joint Head of Equities at ISIS Asset
Management and Manager of ISIS UK Prime Fund, as well as Chief Investment Officer at Lumin
Wealth, a position he still retains part-time. Mr Felton sits on the International Tennis Federation’s
Investment Advisory Panel and is a Business Ambassador for Anthony Nolan, the UK’s blood
cancer charity and bone marrow register.
Marcos Mozetic - Non-Executive Director
Appointed: 17 September 2018
Marcos Mozetic, an exploration geologist, brings over 43 years of international technical
experience in the oil and gas industry to the company. His most recent experience was in
designing, implementing and leading Repsol S.A’s exploration strategy between 2004 and 2016.
During this period, Repsol become a leader in reserve replacement and participated in some
of the most exciting discoveries worldwide. Previous to this, Marcos worked as a development
geologist in 1975 with Bridas, before moving into the exploration department, which he later
led. Following this, Marcos worked for BHP Petroleum and BHP Minerals as Chief Geologist for
Argentina and later Country Leader. Marcos holds a BSc and Post-Graduate degree in Petroleum
Geology from the University of Buenos Aires.
17
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance Directors’ Report
For the year ended 31 December 2022
The Directors submit their report and the audited financial
statements of the group and company for the year ended
31 December 2022.
Directors and their interests
The names of the Directors who held office during the year
and their shareholdings are shown below.
Principal activities
The principal activity of the group and company is investment
in pre-cash flow upstream oil and gas projects, primarily
as significant interests in unlisted oil and gas companies or
majority interests in unlisted oil and gas companies with non-
operating positions on licences.
Business Review and Future Developments
A review of the business and the future developments of
the group is presented in the Strategic Report (including
a Review of Operations and Financial Review) and Chair’s
letter (all of which, together with the Corporate Governance
Statement, are incorporated by reference into this Directors’
Report).
Engagement with Employees, Suppliers and
Customers
Information regarding Reabold’s engagement with
employees, suppliers and customers is included in the
Section 172 statement on pages 24 to 26.
Results and dividends
The loss for the year was £45,000 (2021: loss of
£2,675,000) The company has not declared any dividends
during the year (2021: £nil). The Directors do not propose
the payment of a final dividend.
Financial Instruments
The group’s financial risk management objectives and
policies are discussed in note 20.
Events since Balance Sheet Date
Details of post reporting date events are disclosed in Note 26
of the financial statements.
18
Director
Jeremy Edelman*
Sachin Oza
At
31 December 2022
173,545,454
At
1 January 2022
173,545,454
75,750,299
36,551,821
Stephen Williams
47,304,697
29,643,953
Michael Felton
Anthony Samaha
Marcos Mozetic
25,240,599
25,240,599
7,818,182
4,545,454
7,818,182
4,545,454
* includes 173,545,454 shares held by Saltwind Enterprises Ltd, a company
connected with Jeremy Edelman.
Details of Directors’ share options are included in the
Directors Remuneration Report and Note 22.
Indemnity provisions
The company maintains a directors’ and officers’ liability
policy on normal commercial terms which includes third
party indemnity provisions.
Political and charitable contributions
The company made no contributions to charitable or political
bodies during the year (2021: £Nil).
Auditor
In accordance with section 489 of the Companies Act 2006,
a resolution to reappoint Mazars LLP was put to the Annual
General Meeting held on 29 June 2022 and was approved.
The auditor, Mazars LLP, will be proposed for reappointment
in accordance with Section 485 of the Companies Act 2006.
Mazars LLP has signified its willingness to continue in office
as auditor.
Statement of disclosure to auditor
So far as the Directors are aware, there is no relevant audit
information of which the company’s auditor is unaware, and
they have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant
audit information and to establish that the company’s auditor
is aware of that information.
The Directors’ report was approved by the Board and signed
on its behalf by Chris Connolly, company secretary, on
26 May 2023.
Reabold Resources plc
Registered in England and Wales No. 3542727
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Corporate governance report
Chair’s Corporate Governance Statement
During 2022 we saw good strategic progress with the
completion of the equity exchange with Daybreak, the
acquisition of six North Sea licences from Corallian, the sale of
Corallian to Shell, and in the first half of 2023, the acquisition
of Simwell Resources and the initial investment in LNEnergy.
The importance of maintaining strong relationships and
engaging with our shareholders continues and underpins
the success of the business. The Board strives to ensure
that there are numerous opportunities for investors to
engage with both the Board and Executive Directors. During
2022 the Board welcomed shareholders in person at the
Annual General Meeting. The company also held a General
Meeting in November 2022 and early 2023. This provided
shareholders with an opportunity to raise questions in
connection with the company’s strategy and express their
support for Reabold’s Board.
I am pleased with the productive working relationship that
exists between the Board and the leadership team. We have
found the high degree of trust between them allows for
greater constructive challenge, rigour and scrutiny. It has also
made our decision-making processes swifter, allowing us to
be more responsive to challenging circumstances.
I would like to thank Reabold’s shareholders for placing your
faith in Reabold during 2022, and for the engagement we have
had with you. The Board will work to retain and repay that faith.
The company adopts the QCA Code which it believes to
be the most appropriate recognised corporate governance
code for the company. The QCA has ten principles which
the company is required to adhere to and to make certain
disclosures both within this report and on its website. These
principles are:
1) Principle One: Establish a strategy and
business model which promote long-term
value for shareholders
Please see Reabold’s strategy and business model on
page 4.
2) Principle Two: Seek to understand and
meet shareholder needs and expectations
We value the feedback we receive from our shareholders,
and we take every opportunity to ensure that where
possible their wishes are duly considered. The Board
engages with shareholders to understand their priorities
and concerns through a range of engagement activities.
In 2022, management made a commitment to improve
communication with shareholders. Management is now
committed to shareholder engagement events every
two months. This could take the form of corporate
presentations published on our website, live online
interactive presentations or investor events subsequently
shared on our website. In Q1 2023, the company launched
a new website so that shareholders and other stakeholders
can more easily navigate company updates and
communications. The website includes a Q&A page which
answers some of the most common investor questions.
All shareholders are encouraged to attend the company’s
Annual General Meeting and any general meetings
held by the company, which present an opportunity for
shareholders to speak with the Executive Directors in
a formal environment and in more informal one to one
meetings.
The primary communication tool with our shareholders
is through the Regulatory News Service (“RNS”) on
regulatory matters and matters of material substance.
The company’s new website, launched in March 2023,
provides details of the business, investor presentations
and details of the Board, changes to major shareholder
information and QCA Code disclosure updates under
AIM Rule 26. Changes are promptly published on the
website to enable the shareholders to be kept abreast
of company’s affairs. The company’s Annual Report
and Notice of Annual General Meetings are available
to all shareholders. The Interim Report and investor
presentations are also available on our website.
Investor events are held with shareholders throughout
the year. By providing a variety of ways to communicate
with investors the company feels that it reaches out to
engage with a wide range of its stakeholders.
3) Principle Three: Take into account wider
stakeholder and social responsibilities and
their implications for long-term success
The Board recognises that the long term success of the
company is reliant upon the efforts of the employees of
the company and its contractors, suppliers, regulators
and other stakeholders. The Board has put in place a
range of processes and systems to ensure that there
is close oversight and contact with its key resources
and relationships. The company has close ongoing
relationships with a broad range of its stakeholders and
provides them with the opportunity to raise issues and
provide feedback to the company. A description of how the
group considers key stakeholders in its decision-making
is included in the section 172 statement on page 24.
The company’s ESG statement is on page 30.
19
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance
4) Principle Four: Embed effective
risk management, considering both
opportunities and threats, throughout the
organisation
The Board ensures that procedures are in place and such
procedures are being implemented effectively to identify,
evaluate and manage the significant risks faced by the
company. Key business challenges and risks are detailed
on pages 13 and 14.
The Executive Directors have regular conference calls with
the company’s Nominated Adviser and, when relevant,
the company’s corporate communications advisers to
discuss – amongst other items – operations, key risks,
and other relevant matters. Additionally, the group also
has structured weekly operational and management
conference calls with its JV partners to identify and
discuss key business challenges and risk areas. The
Board believes that this regular programme of internal
communications provides an effective opportunity for
potential or real-time risks to be identified, considered
and – where necessary – addressed in a timely manner.
Given the company’s current size, the Board considers that
the Executive Management team—with oversight from the
Non-Executive Board of Directors and relevant advisers, is
sufficient to identify risks applicable to the company and
its operations and to implement an appropriate system of
controls. Accepting that no systems of control can provide
absolute assurance against material misstatement or loss,
the Directors believe that the established systems for
internal control within the group are appropriate to the
size and cost structure of the business. An internal audit
function is not considered necessary or practical due to
the size of the company and the close day to day control
exercised by the Executive Directors. However, the Board
will continue to monitor the need for an internal audit
function. The Board has established appropriate reporting
and control mechanisms to ensure the effectiveness of its
control systems.
5) Principle Five: Maintain the Board as a
well-functioning, balanced team led by the
chair
As at the date of publication, the Board comprised
of Jeremy Edelman as the Non-Executive Chairman,
Marcos Mozetic, Michael Felton and Anthony Samaha as
Non-Executive Directors and Sachin Oza and Stephen
Williams, the Co-Chief Executive Directors. Biographical
details of the current Directors are set out on pages 16
and 17 of this Annual Report.
20
The Executive and Non-Executive Directors are subject to
re-election at the second annual general meeting of the
company after their last appointment or reappointment,
if not before.
The Board retains ultimate accountability for ensuring
that the company has a robust governance framework in
place, ensuring that governance is appropriately embedded
throughout the business. The Board meets at least six times
per annum. The Board has agreed that appointments to the
Board are made by the Board as a whole and so has not yet
created a Nominations Committee.
The Chair has overall responsibility for the management of
the Board which in turn oversees the company’s strategy
and operational and financial performance. The role of the
Chairman is to provide leadership of the Board and ensure
its effectiveness on all aspects of its remit to maintain
control of the company. In addition, the Chairman is
responsible for the implementation and practice of sound
corporate governance. The Chairman is considered to
have adequate separation from the day-to-day running of
the company.
Michael Felton and Marcos Mozetic are considered to
be Independent Directors. The Board notes that the
QCA recommends a balance between executive and
non-executive Directors and recommends that there be
two independent non-executives. The Board will review
further appointments as scale and complexity grows.
The company has adopted a share dealing code and
policy which the Board regards as appropriate for an AIM
quoted company and is compliant with the UK Market
Abuse Regulations. The company takes all reasonable
steps to ensure it is compliant with Market Abuse
Regulations and AIM Rules.
The Board has two committees as detailed below.
Audit Committee
The Audit Committee consists of Michael Felton as
Chairman, Jeremy Edelman and Anthony Samaha.
This Committee provides a forum through which the
group’s finance functions and auditors, report to the
non-executive Directors. Meetings may be attended,
by invitation, by the company’s Nominated Adviser,
company Secretary, other directors and the company’s
auditors. The principal duties and responsibilities of the
Audit Committee include:
•
overseeing the group’s financial reporting disclosure
process; this includes the choice of appropriate
accounting policies;
Reabold Resources Plc Financial statements for the year ended 31 December 2022
•
•
•
•
monitoring the group’s internal financial controls and
assess their adequacy;
Adviser provides training on AIM Rules and the UK
Takeover Code when required.
reviewing key estimates, judgements and
assumptions applied by management in preparing
published financial statements;
The Board regularly consults with its legal advisers to
ensure compliance with the Companies Act and other
relevant legislation.
annually assessing the auditor’s independence and
objectivity; and
making recommendations in relation to the
appointment, re-appointment and removal of the
company’s external auditor.
7) Principle Seven: Evaluate Board
performance based on clear and
relevant objectives, seeking continuous
improvement
The Board has not published an audit committee report,
which the Board considers to be appropriate given the
size and stage of development of the company.
Remuneration Committee
Detailed information on the remuneration committee can
be found on pages 27 to 29.
The Board will implement a Nomination committee at the
appropriate time in line with changes to the structure,
size and composition of the Board.
6) Principle Six: Ensure that between them the
directors have the necessary up-to-date
experience, skills and capabilities
The Board currently consists of six Directors. The
company believes that the current balance of skills in
the Board as a whole, reflects a very broad range of
commercial and professional skills across geographies
and industry sectors. The complementary skills and
experience of our Board are included on pages 16 and
17. If the company identifies an area where additional
skills are required, the company will often contract an
appropriately qualified third party to advise as required.
The Board recognises that it currently has a limited
diversity, including a lack of gender balance, and this will
form a part of any future recruitment consideration if the
Board concludes that replacement or additional directors
are required.
The Board shall review annually the appropriateness and
opportunity for continuing professional development
whether formal or informal. The company secretary
supports the chairman and executives in addressing
the training and development needs of Directors, and
their membership of appropriate professional and
industry associations. These professional associations
have ongoing professional development requirements,
which the company supports. The company’s Nominated
Internal evaluation of the Board and individual Directors
is undertaken on an annual basis in the form of peer
appraisal and discussions to determine the effectiveness
and performance in various applicable areas to their role
as well as the Directors’ continued independence.
The results and recommendations that come out of
the appraisals for the Directors shall identify the key
corporate and financial targets that are relevant to each
Director and their personal targets in terms of career
development and training. Progress against previous
targets shall also be assessed where relevant.
During the reporting period, the Board undertook a
performance evaluation of the Executive Directors. For
the 2022 performance period it was determined that no
bonuses would be paid to the executive directors. Please
see the Directors’ remuneration report on page 27. In
Q1 2023, the Remuneration Committee undertook
a thorough and robust engagement process with
independent remuneration specialists to design a share
plan and incentive scheme for the executive directors and
senior management. Please see note 26 post balance
sheet events – Long Term Incentive Plan Awards for
further details.
The Board performance evaluation is to be undertaken
annually and includes an assessment of achievement
of KPIs by Executive Directors. The Remuneration
Committee undertakes a review of the remuneration of
Executive Directors at least annually and may consult
with external consultants to assist in the evaluation
and determination of appropriate compensation and
incentivisation schemes to ensure the company remains
competitive in retaining management.
There is a strong flow of communication between the
Directors, and in particular between the Co-Chief Executive
Officers, Chief Financial Officer and the Chair, with
consideration being given to the strategic and operational
needs of the business. Minutes are drawn up to reflect the
true record of the discussions and decisions made.
21
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance
The Directors have a wide knowledge of the company’s
business and understand their duties as directors of
a quoted company. The Directors have access to the
company’s Nominated Adviser, auditors and solicitors as
and when required. The company’s Nominated Adviser
provides Board room training on applicable matters.
These advisors are available to provide formal support
and advice to the Board from time to time and do so in
accordance with good practice.
The company secretary, who is also the Chief Financial
Officer, helps keep the Board up to date with developments
in corporate governance and liaises with the Nominated
Adviser on areas of AIM requirements. The company
secretary has frequent communication with the Chair,
Co-Chief Executive Officers and chairs of the Committees
and is available to other members of the Board as required.
The Directors are also able, at the company’s expense, to
obtain advice from external advisers if required.
The Board is to consider periodically a succession plan.
Executive Directors are to have sufficient length of notice
periods to ensure the appointment of new personnel and
ensure sufficient time to handover responsibilities.
8) Principle Eight: Promote a corporate
culture that is based on ethical values and
behaviours
The Board recognises that their decisions regarding
strategy and risk will impact the corporate culture of
the company as a whole and that this will impact the
performance of the company.
The Board is very aware that the tone and culture set by
the Board will greatly impact all aspects of the company
as a whole and the way that employees behave. The
corporate governance arrangements that the Board
has adopted are designed to ensure that the company
delivers long term value to its shareholders and that
shareholders have the opportunity to express their views
and expectations for the company in a manner that
encourages open dialogue with the Board. A large part
of the company’s activities is centred upon what needs
to be an open and respectful dialogue with employees,
clients and other stakeholders. Therefore, the importance
of sound ethical values and behaviours is crucial to
the ability of the company to successfully achieve its
corporate objectives. The Board places great importance
on this aspect of corporate life and seeks to ensure that
this flows through all that the company does.
The Board considers that at present the company has
an open culture facilitating comprehensive dialogue and
22
feedback and enabling positive and constructive challenge.
The company has a code for Directors’ and employees’
dealings in the company’s securities, which was updated
in 2022, and is appropriate for a company whose
securities are traded on AIM and is in accordance with
the requirements of the UK Market Abuse Regulation. The
company takes all reasonable steps to ensure it is compliant
with the Market Abuse Regulations and AIM Rules.
9) Principle Nine: Maintain governance
structures and processes that are fit for
purpose and support good decision-
making by the Board
Ultimate authority for all aspects of the company’s
activities rests with the Board with the respective
responsibilities of the Chair and the Executive Directors
arising as a consequence of delegation by the Board. The
Board has adopted appropriate delegations of authority
which set out matters which are reserved to the Board.
The Chair is responsible for the effectiveness of the Board,
while management of the company’s business and primary
contact with shareholders has been delegated by the
Board to the Co-Chief Executive Directors.
In accordance with the Companies Act 2006, the Board
complies with: a duty to act within their powers; a duty to
promote the success of the company; a duty to exercise
independent judgement; a duty to exercise reasonable
care, skill and diligence; a duty to avoid conflicts
of interest; a duty not to accept benefits from third
parties and a duty to declare any interest in a proposed
transaction or arrangement.
The role of the Chair is to provide leadership of the Board
and ensure its effectiveness on all aspects of its remit to
maintain control of the company. In addition, the Chair is
responsible for the implementation and practice of sound
corporate governance. The Chair is considered to have
adequate separation from the day-to-day running of the
company.
Details of the Audit Committee and the Remuneration
Committee are provided under principle 5.
The Board of Directors is responsible for the success
of the group, but given the size and complexity of its
operations the day-to-day operations of the group are
managed on a delegated basis by the Executive Directors.
The schedule of matters reserved for the Board include:
•
approval of the group’s strategic plan, oversight of
the group’s operations and review of performance in
the view of the group’s strategy, objectives, business
Reabold Resources Plc Financial statements for the year ended 31 December 2022
plans and budgets, and ensuring that any necessary
corrective action is taken;
ultimate oversight of risk, including determining the
group’s risk profile and risk appetite;
culture and succession planning;
investments, acquisitions, divestments and other
transactions outside delegated limits;
financial reporting and controls, including approval of
the half-year interim results, full-year results, approval
of the Annual Report and Financial Statements,
approval of any significant changes in accounting
policies or practices and ensuring maintenance of
appropriate internal control and risk management
systems;
ensuring the Annual Report and Financial Statements
present a fair, balanced and understandable
assessment of the group’s position and prospects;
assessment of the group’s ability to continue as a
going concern;
capital expenditure, including the annual approval
of the capital expenditure budgets and any material
changes to them in line with the group-wide policy on
capital expenditure;
dividend policy, including the annual review of the
dividend policy and recommendation and declaration
of any dividend;
appointment of Directors;
shareholder documentation, including approval of
resolutions and corresponding documentation to be
put to shareholders and approval of all material press
releases concerning matters decided by the Board;
terms of reference of Board committees and
appointment of members to the committees; and
key business policies, including approval of
remuneration policies.
•
•
•
•
•
•
•
•
•
•
•
•
The Board considers its current governance structures
and processes to be in line and appropriate for its current
size and complexity, as well as its current capacity,
appetite and tolerance for risk. The Board will continue to
monitor the appropriateness of its governance structures
and processed towards their evolution over time in
parallel with the group’s objectives, strategy and business
model to reflect the development of the group.
Attendance at Board and Committee Meetings
In order to be efficient, the Board meets formally and
informally both in person and by telephone. To date there
have been at least bimonthly meetings of the Board, and
the volume and frequency of such meetings is expected to
continue at least at this rate. The company had 13 Board
meetings during the year and reports below on the number
of Board and committee meetings attended by Directors.
Jeremy Edelman
Sachin Oza
Stephen Williams
Anthony Samaha
Marcos Mozetic
Michael Felton
Board
12
Audit
Committee
2
Remuneration
Committee
1
13
13
12
11
11
-
-
1
-
2
-
-
-
1
1
10) Principle Ten: Communicate how
the company is governed and is
performing by maintaining a dialogue
with shareholders and other relevant
stakeholders
The Board is committed to maintaining good
communication and having constructive dialogue with
its shareholders. The company has close ongoing
relationships with its private shareholders. Institutional
shareholders and analysts have the opportunity to
discuss issues and provide feedback at meetings with
the company. Page 24 of this Annual Report provides a
section 172 statement which discusses how the group
considers the interests of shareholders and other relevant
stakeholders in its decision making.
All shareholders are encouraged to attend the company’s
Annual General Meeting and any general meetings held
by the company.
The company’s financial and operational performance is
summarised in the Annual Report and the Interim Report,
with regular updates provided to stakeholders in other
forums through the year, including press releases and
regular updates to the company’s website.
Jeremy Edelman
Chair
26 May 2023
23
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance
Section 172(1) statement
In accordance with the requirements of Section 172 of the
Companies Act 2006, the directors consider that, during
the financial year ended 31 December 2021, they have
acted in a way that they consider, in good faith, would most
likely promote the success of the company for the benefit
of the members as a whole, having regard to the likely
consequences of any decision in the long term and the
broader interests of other stakeholders, as required by the
Act. The Board delegates day-to-day management of the
business of the company to the Co-CEOs, save for those
matters which are reserved for the Board’s approval. More
information on how the Board has regard to the Section 172
factors are outlined below.
S172(1) (A) “The likely consequences of any
decision in the long term”
The Board of Directors is collectively responsible for the
decisions made towards the long-term success of the
company and the way in which the strategic, operational
and risk management decisions have been implemented
throughout the business is detailed in our Strategy and
business model on page 4 and throughout the Strategic
Report.
S172(1) (B) “The interests of the company’s
employees”
At the end of 2022, the company had 4 employees: two
Co-Chief Executive Officers, the CFO and a technical
manager. Our people are crucial to delivering our strategy.
We aim to recruit talented people and in 2022, we recruited
Chris Connolly as CFO. Chris has over 16 years’ experience
in the extractive industries sector, primarily in oil and gas.
Chris joined us from EnQuest PLC where he was Group
Financial Controller. We also added Donal O’Driscoll, our
technical manager to the team. Donal has worked for
38 years as a petroleum geologist/technical manager with
operating oil companies in the UK, contributing to drilling
over 50 offshore wells and developing 16 oil and gas fields,
which have produced over 2 billion barrels of oil equivalent.
Donal has a Ba(mod) Geology, MSC Petroleum Geology and
MSC business strategy. We focus our attraction, recruitment,
development and retention activities to provide the support
and skills our employees need in order to help Reabold thrive
and succeed.
In April 2023, we launched the Reabold Resources plc
long-term incentive plan for our full-time senior management
team. Reabold aims to invest in competitive rewards for our
people.
24
Our employees are one of the primary assets of our business
and the Board recognises that our employees are the key
resource which enables the delivery of the company’s vision
and goals.
We ensure that:
•
•
•
•
•
Health, Safety and the Environment are considered
paramount throughout the organisation (both on-shore
and off-shore).
Annual pay and benefit reviews are carried out to
determine whether all levels of employees are benefitting
fairly and to retain and encourage skills vital for the
business.
There are freely available company policies and
procedures.
Personal development reviews and work appraisals are
conducted.
Employees are informed of the results and important
business decisions and are encouraged to feel engaged
•
Working conditions are favourable
The Remuneration Committee oversees and makes
recommendations of executive remuneration and any
long-term share awards.
S172(1) (C) “The need to foster the company’s
business relationships with suppliers, customers
and others”
Delivering our strategy requires strong mutually beneficial
relationships with suppliers, customers, governments,
and joint-venture partners. We aim to have a positive and
enduring impact on the communities in which we operate,
through partnering with national and local suppliers, and
through payments to governments in taxes and other fees.
The group values all of its suppliers and aims to build
strong positive relationships through open communication
and adherence to trade terms. The group is committed
to being a responsible entity and doing the right thing
for its customers, suppliers and business partners. The
Board upholds ethical business behaviour across all of
the company’s activities and encourages management to
seek comparable business practices from all suppliers and
customers doing business with the company. We value the
feedback we receive from our stakeholders and we take
every opportunity to ensure that where possible their wishes
are duly considered. The Board engages with stakeholders
to understand their priorities and concerns through a range
of engagement activities. In 2022, management made a
commitment to improve communication with shareholders.
Management is now committed to shareholder engagement
Reabold Resources Plc Financial statements for the year ended 31 December 2022 events every two months. This could take the form of
corporate presentations published on our website, live online
interactive presentations, investor events subsequently
shared on our website. In Q1 2023 the company launched a
new website so that shareholders and other stakeholders can
more easily navigate company updates and communications.
The website includes a Q&A page which answers some of the
most common investor questions.
Ultimately, Board decisions are taken against the backdrop of
what it considers to be in the best interest of the long-term
financial success of the group and its stakeholders, including
shareholders, employees, the community and environment,
our suppliers and customers. We value our customer
relationships and aim to work closely with our customers to
develop and maintain strong relationships and understand
their evolving needs so that we can improve and adapt to
meet them.
Further information can be found within our Environmental,
Social and Governance (ESG) Statement on page 30.
S172(1) (D) “The impact of the company’s
operations on the community and the environment”
This aspect is inherent in our strategic ambitions, most
notably on our ambitions to thrive through the energy
transition and to sustain a strong societal licence to
operate. As such, the Board receives information on these
topics to provide relevant information for specific Board
decisions. Executive Directors conduct site visits of various
investee company operations and hold external stakeholder
engagements, where feasible.
At present Reabold does not ‘operate’ any of the assets in
its portfolio. Our operational assets are managed by our
associate companies who are responsible for the adequacy
of standards, operations and compliance. Reabold seeks to
influence how risk is managed in arrangements where we are
not operator by ensuring we have a member of the executive
team on the Board of our associate companies. This gives
Reabold assurance that operations are and will be carried
out in a sustainable and safe manner.
Further information can be found within our ESG Statement
on page 30, and within the principal risks and uncertainties
section on page 13.
S172(1) (E) “The desirability of the company
maintaining a reputation for high standards of
business conduct”
The company is incorporated in the UK and governed by the
Companies Act 2006. The company has adopted the Quoted
Companies Alliance Corporate Governance Code 2018
(the “QCA Code”) and the Board recognises the importance
of maintaining a good level of corporate governance, which
together with the requirements to comply with the AIM Rules
ensures that the interests of the company’s stakeholders are
safeguarded. Please see the Chair’s Corporate Governance
statement on pages 19 to 23.
Reabold aims to achieve the production of hydrocarbons
that meet the world’s growing need for energy solutions in
ways which are economically, environmentally and socially
responsible. The Board periodically reviews and approves
clear frameworks, such as Reabold’s Code of Conduct, and
specific Ethics & Compliance policies, to ensure that its
high standards are maintained both within Reabold and the
business relationships we maintain. This, complemented
by the various ways the Board is informed and monitors
compliance with relevant governance standards, help ensure
its decisions are taken, and that Reabold investee companies
act in, ways that promote high standards of business
conduct.
S172(1) (F) “The need to act fairly as between
members of the company”
The Board is committed to maintaining good communication
and having constructive dialogue with its shareholders. The
company has close ongoing relationships with its private
shareholders. Institutional shareholders and analysts have
the opportunity to discuss issues and provide feedback at
meetings with the company. All shareholders are encouraged
to attend the company’s Annual General Meeting and any
general meetings held by the company, which present an
opportunity for shareholders to speak with the Executive
Directors in a formal environment and in more informal one
to one meetings.
The primary communication tool with our shareholders is
through the Regulatory News Service (“RNS”) on regulatory
matters and matters of material substance. The company’s
new website launched in March 2023 provides details
of the business, investor presentations and details of the
Board, changes to major shareholder information and QCA
Code disclosure updates under AIM Rule 26. Changes
are promptly published on the website to enable the
shareholders to be kept abreast of company’s affairs. The
company’s Annual Report and Notice of Annual General
Meetings are available to all shareholders. The Interim Report
and investor presentations are also available on our website.
Investor events are held with shareholders throughout the
year. By providing a variety of ways to communicate with
investors the company feels that it reaches out to engage
with a wide range of its stakeholders.
25
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance Key decisions made
Investment in LNEnergy
On 9 May 2023, Reabold announced it acquired a
3.1% interest in LNEnergy for cash consideration of £250,000,
receiving options to acquire further shares in LNEnergy
which, if exercised, would result in Reabold holding a 25.0%
shareholding in LNEnergy for aggregate cash and equity
consideration of £3.8 million. The Board agreed the investment
was in line with Reabold’s strategy to progress high quality
pre-cash flow projects that can deliver material returns to
shareholders. LNEnergy’s primary asset is an option over a 90%
interest in the Colle Santo gas field, onshore Italy in the Abruzzo
region. With 65Bcf of 2P reserves, as estimated by RPS as of
30 September 2022, this is a highly material undeveloped
onshore gas resource, particularly in the context of onshore
Western Europe, and subject to the necessary approvals
and permits, is development ready with no additional drilling
required. First gas is targeted for early 2025. See note 26 for
further details.
The Board delegates day-to-day management of the
business of the company to the Co-CEOs. The responsibility
for the execution of this delegation of authority, including
regularly monitoring it, is retained by the Board. We outline
some of the principal decisions made by the Board over the
year, and how directors have performed their duty under
Section 172.
Sale of Corallian
We completed the sale of Corallian Energy Limited in
November 2022. The Board discussed the sale with
the executive team throughout 2022 as the opportunity
matured in order to review the proposed terms. The Board
recognised that this sale would be a significant valuation
uplift on Reabold’s investment in Corallian and would allow
Reabold to progress its strategy given the improved financial
flexibility. Reabold is now comfortably fully funded for its
share of the West Newton development well and is able to
make shareholder distributions.
Acquisition of North Sea Licences
We completed the acquisition of six North Sea licences in
2022 for £250,000. The Board discussed the acquisition
with the executive team throughout 2022 as the opportunity
matured in order to review the business case and what it
offered. The Board recognised with these licences, there
was a low cost opportunity to expand Reabold’s presence in
the North Sea. The Board saw the acquisition as an exciting
opportunity to create value from a number of prospects
with significant resource potential and relatively low
geological risk.
Acquisition of Simwell Resources Limited
Reabold completed the acquisition of Simwell Resources
Limited in January 2023. The Board discussed the
acquisition through the second half of 2022. The Board
recognised the acquisition would significantly increase
Reabold’s footprint in the emerging Zechstein trend,
complementing its onshore position in PEDL 183, including
the West Newton project. See note 26 for further details.
26
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Directors’ Remuneration Report
Role of the remuneration committee
The role of the committee is to determine and recommend to
the Board the remuneration of the Chair, executive directors
and CFO. The remuneration committee reviews remuneration
policy, share schemes and the incentivisation of the
workforce. The Committee assists the Board in discharging
its oversight responsibilities relating to the attraction,
compensation, evaluation and retention of Executive Directors
and senior management. The Committee aims to ensure
that the company has the right skills and expertise needed
to enable the company to achieve its goals and strategies
and that fair and competitive compensation is awarded with
appropriate performance incentives across the company.
Key responsibilities
•
•
•
Prepare the remuneration report.
Approve the principles of any equity plan.
Ensure termination terms and payments to executive
directors and CFO are appropriate.
Membership
Marcos Mozetic
Member and chair since September 2018
Jeremy Edelman
Member
Michael Felton
Member
•
•
Recommend to the Board the remuneration principles and
policies for the executive directors and CFO.
Meetings and attendance
Set and approve the terms of engagement, remuneration,
benefits and termination of employment for the executive
directors and CFO.
The committee met once during the year. All members
attended the meeting.
Executive Directors’ pay for the year ended 31 December 2022
Salary
Annual bonusa
Benefits
Pension
Performance shares
Total remuneration
Sachin Oza
Co-CEO
2022
£230,875
Nil
Nil
Stephen
Williams
Co-CEO
2022
£230,875
Nil
Nil
Anthony
Samahab
FD
2022
£50,000
Nil
Nil
£11,419
£11,419
£1,250
Nil
Nil
Nil
Sachin Oza
Co-CEO
2021
£230,875
£50,000
Nil
£11,419
Nil
Stephen
Williams
Co-CEO
2021
£230,875
£50,000
Nil
£11,419
Nil
Anthony
Samaha
FD
2021
£73,333
Nil
Nil
Nil
Nil
£242,294
£242,294
£51,250
£292,294
£292,294
£73,333
a The annual bonus paid in 2021 related to the 2020 performance year. From 2022, annual bonuses are accrued in the year in which they are earned.
b Anthony Samaha resigned as finance director on 30 June 2022
Overview of outcomes
Executive directors service contracts
Sachin Oza’s and Stephen Williams’ salaries were not
increased in 2022. No bonuses were awarded for either the
2022 or 2021 performance year (see footnote a above). The
directors receive no benefits from the company apart from
the pension contributions shown in the table above. The
directors have never been awarded shares in the company as
part of share option plans (see share option plans below).
The company’s policies on directors’ service contracts are
indicated below:
Director
Sachin Oza
Effective Term
5 September 2018
Notice period
6 months
Stephen Williams
5 September 2018
6 months
27
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance Share option plans
As at 31 December 2022, 125,000,000 options granted by the company were outstanding. These options were originally
granted in March 2018. No options were granted in 2022.
At 1 Jan 2022 Granted Exercised
-
20,000,000
-
Expired
At 31 Dec
2022
- 20,000,000
Option
price
Date from which
first exercisable
Expiry date
0.60p 30 Sep 2022 19 Mar 2023a
Director
Sachin Oza
Sachin Oza
Sachin Oza
Sachin Oza
Sachin Oza
Sachin Oza
20,000,000
20,000,000
30,000,000
30,000,000
30,000,000
Stephen Williams 20,000,000
Stephen Williams 20,000,000
Stephen Williams 20,000,000
Stephen Williams 30,000,000
Stephen Williams 30,000,000
Stephen Williams 30,000,000
Anthony Samaha 10,000,000
Anthony Samaha 10,000,000
Anthony Samaha
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 20,000,000
0.90p 31 Dec 2022 19 Mar 2023a
- 20,000,000
1.20p 31 Dec 2022 19 Mar 2023a
(30,000,000)
(30,000,000)
(30,000,000)
-
-
-
0.50p 30 Sep 2021
19 Oct 2022
0.75p 31 Dec 2021
19 Oct 2022
1.00p 31 Mar 2022
19 Oct 2022
- 20,000,000
0.60p 30 Sep 2022 19 Mar 2023a
- 20,000,000
0.90p 31 Dec 2022 19 Mar 2023a
- 20,000,000
1.20p 31 Dec 2022 19 Mar 2023a
(30,000,000)
(30,000,000)
(30,000,000)
(10,000,000)
(10,000,000)
-
-
-
-
-
0.50p 30 Sep 2021
19 Oct 2022
0.75p 31 Dec 2021
19 Oct 2022
1.00p 31 Mar 2022
19 Oct 2022
0.50p 30 Sep 2021
19 Oct 2022
1.00p 31 Dec 2021
19 Oct 2022
-
5,000,000
0.60p 30 Sep 2022 19 Mar 2023a
125,000,000
a The company amended the expiry date and vesting conditions of 125,000,000 existing options on 17 February 2022, such that their expiry dates were extended
by 12 months to 19 March 2023.
As at the date of publication of this report, all of the above options have expired. The directors have never been awarded
shares in the company to date.
Directors’ shareholdings
Key areas of focus for 2023
The directors’ have built personal shareholdings in the
company as shown below:
Director
Jeremy Edelman*
Sachin Oza
At
31 December 2022
173,545,454
At
1 January 2022
173,545,454
75,750,299
36,551,821
Stephen Williams
47,304,697
29,643,953
Michael Felton
Anthony Samaha
Marcos Mozetic
25,240,599
25,240,599
7,818,182
4,545,454
7,818,182
4,545,454
* includes 173,545,454 shares held by Saltwind Enterprises Ltd, a company
connected with Jeremy Edelman.
•
•
•
•
Undertake a thorough and robust engagement process
with independent remuneration specialists to design
a share plan and incentive scheme for the executive
directors and senior management
Design and implement directors and senior management
scorecards
Agree a framework for the 2023 bonus plan
Consider and agree a programme for the grant of any LTIP
awards for 2023
28
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Chair and non-executive directors’
remuneration
Jeremy Edelman (Chair)
Michael Felton
Macros Mozetic
Anthony Samahaa
Fees (£)
2022
66,000
38,000
38,000
20,500
2021
60,000
35,000
35,000
-
b Anthony Samaha was appointed as non-executive director on 1 July 2022
External appointments
The Board supports executive directors taking up
appointments outside the company to broaden their
knowledge and experience. Each executive director is
permitted to retain any fee from their external appointments.
Such external appointments are subject to agreement by the
chair and reported to the Board. Any external appointment
must not conflict with a director’s duties and commitments to
Reabold. Details of appointments as non-executive directors
of publicly listed companies during 2022 are shown below.
Stephen Williams
Appointee company
Europa Oil & Gas
(Holdings) plc
Additional
position
held at
appropriate
company
Director
Total
fees (£)
31,000
The directors’ remuneration report was approved by the
Board and signed on its behalf by Chris Connolly, company
secretary on 26 May 2023.
29
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance Environmental,
Social & Governance
Environmental, Social and Governance (ESG)
Statement
Reabold is committed to the highest standards of
environmental, social and governance processes and we
incorporate these responsibilities into our operational
decision-making and investments. We regularly review our
approach, policies, and processes across key areas.
At present Reabold does not ‘operate’ any of the assets in
its portfolio. Our operational assets are managed by our
associate companies who are responsible for the adequacy
of standards, operations and compliance. The group does
not have any assets that are yet in the development or
production stage and therefore the business has no scope 1
or scope 2 greenhouse gas emissions.
Environment
Reabold is committed to preserving and protecting
our natural environment for future generations.
Reabold complies with the standards of the international oil
industry, environmental laws and regulations. We recognise
and support the basis of the Paris Agreement to strengthen
the global response to the threat of climate change.
Our focus is on minimising carbon emissions and the
environmental footprint of the projects we invest in, whilst
continuing to contribute positively to the demand for energy
and products that require hydrocarbons in the supply chain.
The pace of transition to a lower carbon economy and
cleaner fuels is uncertain, but oil and natural gas demand is
expected to remain a key element of the energy mix for many
years based on stated government policies, commitments
and announced pledges to reduce emissions. The challenge
is to meet the world’s energy needs sustainably and
efficiently, which requires managing and reducing harmful
emissions.
Reabold actively encourages and expects its investee
companies / operators of its oil and gas interests to respond
to this by continuously striving to minimise the potential
environmental impact of operations by:
•
•
•
•
Implementing controls to identify and prevent potential
environmental risks
Implementing controls during operations to avoid
accidental spills, or leaks of polluting materials
Managing water with due consideration
Targeting high energy efficiency levels in drilling and
other activities
30
•
•
•
Limiting unnecessary wastage
Handling waste products in an environmentally
responsible manner
Regularly assessing the environmental consequences of
operations
The operators have developed systems, controls and
processes to integrate climate related considerations, in
order to meet these objectives. For example one can read the
approach and policies of Rathlin Energy, operator of the West
Newton PEDL 183 licence, on its website at www.rathlin-
energy.co.uk.
Focus on energy efficient extraction and
drilling to reduce carbon intensity
Reabold’s assets are primarily small to medium sized,
proven oil and gas fields at relatively shallow depth. As
such, the intensity of drilling required is considered low
relative to industry standards and we do not conduct energy
intensive prospecting activities, reducing the impact on the
environment. We encourage the operators of our assets to
use the most energy efficient drilling methods. As the energy
mix evolves towards a higher percentage of renewables
in the countries in which we operate (e.g. increasing wind
power in the UK and Romania, solar in California), we
anticipate a greater share of our energy consumption will be
purchased from green sources.
United Kingdom
Our investee company sites in the United Kingdom are
located close to areas with a high demand for energy.
Consequently, we expect that hydrocarbons produced
locally and consumed locally will displace imported
hydrocarbons thereby resulting in lower carbon emissions
overall. This will provide greater security of supply to the
UK as well as providing jobs and supporting UK industry,
compared to the alternative of importing fuel. The COVID-19
pandemic highlighted the importance of our critical national
infrastructure and this has become even more apparent in
recent times with the war in Ukraine.
We believe that natural gas has an important role to play in
the energy transition, bridging the gap on the journey from
fossil fuels to a renewable, zero-carbon future and helping
to supply stable and affordable energy to UK homes and
businesses as part of a lower-carbon energy supply mix.
To that end, we continue to explore ways to invest in gas
projects such as the Victory project, which was subsequently
sold to Shell in November 2022.
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Reabold is committed to being part of the overall reduction
in carbon intensity in the UK. As part of this objective, we
were very pleased with the West Newton development
plan being given an AA rating by GaffneyCline in 2020 for
carbon intensity, the best possible grade for low carbon
emissions from potential upstream crude oil production.
The study stated that the West Newton field has carbon
intensities “significantly lower than the UK average and
also compared to onshore analogues”. Based on the study,
GaffneyCline estimated that West Newton could produce
the equivalent of just 5 grams of CO2 per megajoule of
energy created (“gCO2eq./MJ”). The study did not include
the review of any carbon offsetting measures, which could
further limit West Newton’s net carbon emissions. The study
also highlighted that this number could be further reduced
to just 3.5 gCO2eq./MJ by applying, inter alia, gas to grid
technologies. The study used specific West Newton reservoir
and fluid parameters, notional development plans and
analogous field development plans. The result of this study
was benchmarked against other field analogues using the
Global field database. Reabold intends that the development
at West Newton will seek to utilise the best fit for purpose
technologies, including gas to grid technologies, and tight
leak-rate specifications to minimise any venting, flaring or
fugitive emissions.
Daybreak, USA
Daybreak’s production sites are located in California, a state
with very high renewable energy generation which feeds into
the energy required for hydrocarbon extraction. By industry
standards, our oil and gas activities require a very low level of
energy to extract the hydrocarbons, ensuring it is one of the
most energy efficient of its type in California.
Romania
Romania is in the midst of creating a more sustainable
energy mix by transitioning away from coal fired generation
and ageing nuclear plants towards renewable energy
sources. However, during this transition period, the
country needs indigenously sourced natural gas as a fuel to
ensure the security of supply of energy. By developing and
producing gas from the Parta site, Danube Petroleum Limited
is able to contribute to the country’s efforts to implement
this energy strategy. In 2022, a regional geothermal study
was conducted over the Parta licence, and a detailed report
was completed for the Iecea Mare production licence
with a special focus on the IMIC-1 well. The operator has
been approached by several local communities in relation
to geothermal projects mainly for district heating, given
its drilling experience and extensive 2D and 3D seismic
database in the area. A very high geothermal gradient was
encountered while drilling the well in the order of 6°C per
100 metres which is of interest for a potentially viable
geothermal project.
Managing our environmental footprint and reducing our
emissions are important objectives for Reabold Resources.
We regularly review and revise our policies, as necessary.
Health & Safety
Reabold wishes to build value through developing
sustainable relationships with partners and the
community.
We comply with all applicable legislation; and design
and manage our activities to prevent pollution, minimize
environmental and health impact and provide workplaces
free of safety hazards.
The company is committed to high standards of health,
safety and environmental protection; these aspects
command equal prominence with other business
considerations in the decision-making process.
Health, safety and environmental protection are
responsibilities shared by everyone working for the company
and the full support of all staff, partners and contractors
is vital to the successful implementation of the policy. We
ensure, as far as reasonably practicable, that all personnel
are aware of their delegated health, safety and environmental
responsibilities and are properly trained to undertake these.
We strive for continuous improvement in our HSE
performance and measure this by setting objectives and
targets consistent with the aims of this policy.
HSE performance is routinely monitored and reported
regularly to the Board of Directors, which will ensure that the
necessary resources are provided to support this policy fully.
Governance
As an AIM-quoted company, Reabold is required to apply a
recognised corporate governance code, demonstrating how
the company complies with such corporate governance code
and where it departs from it.
The Directors of the company have formally applied the QCA
Code. 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 Reabold,
have been created. Please see pages 19 to 23 for the Chair’s
corporate governance statement and how Reabold has
applied the 10 principles of the QCA code.
31
Reabold Resources Plc Financial statements for the year ended 31 December 2022Corporate Governance Statement of Directors’
Responsibilities
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable
accuracy at any time the financial position of the company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for ensuring the annual report
and the financial statements are made available on a website.
Financial statements are published on the company’s
website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial
statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the company’s
website is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of the
financial statements contained therein.
The Directors are responsible for preparing the Strategic
report, the Directors’ report and the financial statements in
accordance with applicable law and regulations.
UK company law requires the Directors to prepare financial
statements for each financial year. Under such law the
Directors have elected to prepare financial statements in
accordance with international accounting standards in
conformity with the requirements of the Companies Act
2006. Under company law the Directors must not approve
the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the group and
company and of the profit or loss of the group for that period.
The directors are also required to prepare financial statements
in accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
In preparing these financial statements, the Directors are
required to:
•
•
•
•
select suitable accounting policies and then apply them
consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether the financial statements comply with
international accounting standards in conformity with the
requirements of the Companies Act 2006; and
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
32
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Independent Auditor’s Report to the
members of Reabold Resources Plc
Opinion
We have audited the financial statements of Reabold
Resources PLC (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 December 2022 which
comprise the Group Statements of Comprehensive Income,
the Group Statements of Financial Position, the Company
Statement of Financial Position, the Group Statements of Cash
Flows, the Company Statements of Cash Flows, the Group
Statements of changes in equity, the company statement
of changes in equity and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted
international accounting standards and, as regards the
parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion, the financial statements:
•
•
give a true and fair view of the state of the group’s and of
the parent company’s affairs as at 31 December 2022
and of the group’s loss for the year then ended; and
have been properly prepared in accordance with
UK-adopted international accounting standards and,
as regards the parent company financial statements,
as applied in accordance with the provisions of the
Companies Act 2006; and
Our audit procedures to evaluate the directors’ assessment
of the group’s and the parent company’s ability to continue
to adopt the going concern basis of accounting included but
were not limited to:
•
•
•
•
Obtaining management’s formal going concern
assessment;
Critically assessed and challenged the key assumptions,
corroborating to supporting documentation where
applicable;
Considering the impact of climate change and the current
socio-political environment on the value of the group’s
assets; and
Reviewing the disclosures included in the financial
statements related to going concern to endure consistent
with our findings.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s and the parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
•
have been prepared in accordance with the requirements
of the Companies Act 2006.
Key audit matters
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the “Auditor’s responsibilities for the audit
of the financial statements” section of our report. We are
independent of the group and the parent company in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) 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.
We summarise below the key audit matter in forming our
opinion above, together with an overview of the principal
audit procedures performed to address each matter and our
key observations arising from those procedures.
These matters, together with our findings, were
communicated to those charged with governance through
our Audit Completion Report.
3333
Reabold Resources Plc Financial statements for the year ended 31 December 2022Financial Statements Key Audit Matter
How our scope addressed this matter
Carrying value of exploration & evaluation (E&E) assets and oil & gas assets (group and parent company risk)
The carrying value of exploration & evaluation and oil & gas
assets in the Group accounts total £6,815k (2021: £9,123k).
The parent company has a carrying value £6,451k (2021:
£5,968k).
The group’s accounting policy in respect of this area is set out
in the accounting policy notes in the accounts.
The Group is involved in the extraction of oil and gas.
Under IFRS 6, Exploration for and Evaluation of Mineral
Resources, management must establish an accounting policy
specifying which expenditures are recognised as exploration
and evaluation assets and apply it consistently. The risk is
associated with the valuation, both initial recognition and
impairment, of the assets.
Our procedures included, but were not limited to, the following:
• reviewing the accounting policy in place to ensure that the point at which
exploration and evaluation assets are recognised is reasonable and in line
with IFRS 6 requirements;
• critically assessing a sample of transactions throughout the company,
subsidiary and associated companies to ensure additions have been
treated in accordance with the accounting policy;
• reviewing the status of specific on-going projects, with specific
reference to any external market information, to gain assurance over the
recoverability of capitalised exploration and evaluation expenditure;
• making enquires of management of the potential impact of socio-economic
and climate related factors on determining the carrying values of the assets;
• holding discussions with component auditors and reviewing their work
performed on E&E assets to ensure appropriate and sufficient audit
evidence had been obtained around the carrying value of oil & gas assets
by associated undertaking; and
• Obtaining and challenging management’s assessments as to whether
there were indicators of impairment.
Our observations
Based on the results of our procedures performed we consider that the
value of exploration &evaluation and oil & gas assets are appropriate. We
have not identified material misstatements in the disclosure of these assets
in the financial statements.
Our application of materiality and an overview
of the scope of our audit
Rationale for
benchmark
applied
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 on the financial statements as a whole. Based on our
professional judgement, we determined materiality for the
financial statements as a whole as follows:
Materiality
Overall
materiality
Consolidated group; £707,000
Parent company; £707,000
How we
determined it
This has been calculated with reference to total
assets, of which it represents approximately 1.5%
for the group company.
Performance
materiality
Reporting
threshold
Total assets have been identified as the principal
benchmark within the financial statements as it is
considered to be the focus of the shareholders due
to the investments, namely the subsidiaries and
associated entities, being at an early stage of revenue
generation.
1.5% has been chosen to reflect the level of
understanding of the stakeholders of the group
in relation to the inherent uncertainties around
accounting estimates and judgements.
Performance materiality is set to reduce to
an appropriately low level the probability that
the aggregate of uncorrected and undetected
misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £565,600 for
both the Group and the parent company, which
represents 80% of overall materiality in both
cases. This percentage was applied due to the
experience we have in auditing the group and the
parent company, our assessment of the group’s
and the parent company’s control environment,
and the volume of transactions.
We agreed with the directors that we would report
to them misstatements identified during our audit
above £21,200 for both the group and parent
company as well as misstatements below that
amount that, in our view, warranted reporting for
qualitative reasons. This threshold represents 3% of
financial materiality.
3434
Reabold Resources Plc Financial statements for the year ended 31 December 2022 For each component in the scope of the Group audit, we
allocated a materiality that was less than our overall Group
materiality. The range of performance materiality allocated
across the components was between £184,000 and
£565,500.
As part of designing our audit, we assessed the risk of
material misstatement in the financial statements, whether
due to fraud or error, and then designed and performed audit
procedures responsive to those risks. In particular, we looked
at where the directors made subjective judgements, such as
assumptions on significant accounting estimates.
We tailored the scope of our audit to ensure that we
performed sufficient work to be able to give an opinion on
the financial statements as a whole. We used the outputs
of our risk assessment, our understanding of the group and
the parent company, their environment, controls, and critical
business processes, to consider qualitative factors to ensure
that we obtained sufficient coverage across all financial
statement line items.
Our group audit scope included an audit of the group and the
parent company financial statements of Reabold Resources
Plc. Based on our risk assessment, all entities within the
group, except for Reabold Resources Limited and Gaelic
Resources Limited (which are holding companies with no
impact on the consolidated financial statements) were
subject to full scope audit, which was performed by the
group audit team. Two of the group’s associated undertakings
were subject to audit procedures by component auditors.
Group instructions were sent to these component auditors
by the group audit team. Discussions were held with the
component auditors and specific component audit working
papers were reviewed by senior members of the group
audit team to assess the sufficiency and appropriateness of
their audit procedures for the purposes of the group audit
opinion. Audit procedures in relation to the other associated
undertaking was completed by the group engagement team.
At the parent company level, the group audit team also
tested the consolidation process and carried out analytical
procedures to confirm our conclusion that there were no
significant risks of material misstatement of the aggregated
financial information.
Other information
The other information comprises the information included
in the Annual Report and Financial Statements, other than
the financial statements and our auditor’s report thereon.
The directors are responsible for the other information.
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 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.
Matters on which we are required to report by
exception
In light of the knowledge and understanding of the group
and the parent company and their environment obtained
in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified
by law are not made; or
we have not received all the information and explanations
we require for our audit.
3535
Reabold Resources Plc Financial statements for the year ended 31 December 2022Financial Statements Responsibilities of Directors
As explained more fully in the directors’ responsibilities
statement set out on page 32, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that
an audit conducted in 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.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
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.
Based on our understanding of the group and the
parent company and their industry, we considered that
non-compliance with the following laws and regulations
might have a material effect on the financial statements:
employment regulation, health and safety regulation, oil and
gas laws and regulations, anti-money laundering regulation,
AIM listing rules and GDPR regulations.
To help us identify instances of non-compliance with these
laws and regulations, and in identifying and assessing the
risks of material misstatement in respect to non-compliance,
our procedures included, but were not limited to:
•
•
•
•
•
•
Gaining an understanding of the legal and regulatory
framework applicable to the group and the parent
company, the industry in which they operate, and the
structure of the group, and considering the risk of acts by
the group and the parent company which were contrary
to the applicable laws and regulations, including fraud;
Inquiring of the directors, management and, where
appropriate, those charged with governance, as to
whether the group and the parent company is in
compliance with laws and regulations, and discussing
their policies and procedures regarding compliance with
laws and regulations;
Inspecting correspondence with relevant licensing or
regulatory authorities;
Reviewing minutes of directors’ meetings in the year;
Discussing amongst the engagement team the laws
and regulations listed above, and remaining alert to any
indications of non-compliance; and
Considering the risk of acts by the group and the parent
company which were contrary to applicable laws and
regulations, including fraud.
We also considered those laws and regulations that have a
direct effect on the preparation of the financial statements,
such as tax legislation, AIM Rules and the Companies
Act 2006.
In addition, we evaluated the directors’ and management’s
incentives and opportunities for fraudulent manipulation of
the financial statements, including the risk of management
override of controls, and determined that the principal risks
related to posting manual journal entries to manipulate
financial performance, management bias through
judgements and assumptions in significant accounting
estimates, in particular in relation to relation to the carrying
value of exploration and evaluation and oil & gas assets,
revenue recognition (which we pinpointed to the occurrence
assertion), and significant one-off or unusual transactions.
3636
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Use of the audit 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’s
members as a body for our audit work, for this report, or for
the opinions we have formed.
Stephen Brown (Senior Statutory Auditor) for and on
behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
26 May 2023
Our audit procedures in relation to fraud included but were
not limited to:
•
•
•
•
Making enquiries of the directors and management on
whether they had knowledge of any actual, suspected or
alleged fraud;
Gaining an understanding of the internal controls
established to mitigate risks related to fraud;
Discussing amongst the engagement team the risks of
fraud;
Addressing the risks of fraud through management
override of controls by performing journal entry testing;
Our audit procedures in relation to fraud through revenue
recognition, specific to occurrence included, but were not
limited to:
•
Recalculating 100% of the Group’s share of revenue
in the year based on the contractual terms of the
production sharing contract and each monthly third party
oil statement.
There are inherent limitations in the audit procedures
described above and the primary responsibility for the
prevention and detection of irregularities, including fraud,
rests with both those charged with governance and
management. As with any audit, there remained a risk
of non-detection of irregularities, as these may involve
collusion, forgery, intentional omissions, misrepresentations
or the override of internal controls.
The risks of material misstatement that had the greatest
effect on our audit are discussed in the “Key audit matters”
section of this report.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
3737
Reabold Resources Plc Financial statements for the year ended 31 December 2022Financial Statements Group Income
Statement
for the year ended 31 December
Continuing operations
Revenue
Cost of sales
Gross loss
Net (loss) gain in financial assets measured at fair value through profit or
loss
Other income
Share of losses of associates
Other expenses
Net gains on sale of businesses
Exploration expense
Administration expenses
Non-underlying items
Share based payments expense
Foreign exchange gains
Operating loss
Finance costs – unwinding of discount on decommissioning provisions
Finance income
(Loss) before tax for the year
Taxation
(Loss) for the year
Attributable to:
Reabold shareholders
Earnings per share
(Loss) for the year attributable to Reabold shareholders
Per ordinary share (pence)
Basic
Diluted
Note
4
5
15
14
2
25
22
9
10
10
2022
£’000
560
(834)
(274)
(1,851)
50
(1,576)
(89)
4,997
(74)
(1,702)
(191)
(22)
635
(97)
(16)
68
(45)
–
(45)
(45)
(45)
2021
£’000
1,160
(1,312)
(152)
55
51
(801)
–
–
–
(1,710)
–
(152)
47
(2,662)
(14)
1
(2,675)
–
(2,675)
(2,675)
(2,675)
(0.0005)
(0.0005)
(0.0341)
(0.0341)
3838
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Group Statement of
Comprehensive Income
For the year ended 31 December
Loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences
Exchange (gains) on translation of foreign operations reclassified
to loss on sale of business
Other comprehensive income
Total comprehensive income
Attributable to
Reabold Shareholders
Note
2
2022
£’000
(45)
71
(80)
(9)
(54)
(54)
2021
£’000
(2,675)
48
–
48
(2,627)
(2,627)
3939
Reabold Resources Plc Financial statements for the year ended 31 December 2022Financial Statements Balance Sheet
as at 31 December
Non-current assets
Exploration & evaluation assets
Property, plant & equipment
Investments in associates
Goodwill on acquisition
Investments in subsidiaries
Other investments
Current assets
Inventory
Prepayments
Trade and other receivables
Other investments
Restricted cash
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Accruals
Non-Current liabilities
Deferred tax liability
Provision for decommissioning
Total liabilities
Net assets
EQUITY
Share capital
Share premium account
Capital redemption reserve
Share based payment reserve
Foreign currency translation reserve
Retained earnings
Total Equity
Registered Number: 3542727
Group
2022
£’000
6,815
–
Group
2021
£’000
9,123
4,303
Company
Company
2022
£’000
6,451
–
2021
£’000
5,968
–
22,272
27,716
22,272
27,716
–
–
3,484
32,571
–
120
181
8,728
25
5,511
14,565
47,136
198
111
309
–
367
367
676
329
–
570
–
3,470
15
–
3,536
570
42,041
32,208
37,790
20
79
172
–
211
4,883
5,365
47,406
314
83
397
329
188
517
914
–
116
629
8,728
25
5,511
15,009
47,217
198
111
309
–
367
367
676
–
79
4,842
–
25
4,622
9,568
47,358
16
83
99
-
146
146
245
46,460
46,492
46,541
47,113
9,044
29,033
200
1,920
–
6,263
46,460
9,044
29,033
200
1,898
9
6,308
46,492
9,044
29,033
200
1,920
–
6,344
46,541
9,044
29,033
200
1,898
–
6,938
47,113
Note
11
12
14
2
13
15
16
15
17
17
18
2
19
21
22
The loss for the company was £0.59 million for the year ended 31 December 2022 (2021: loss of £2.43 million). In accordance
with the exemption granted under section 408 of the Companies Act 2006, a separate income statement for the company has not
been presented.
Approved by the Board on 26 May 2023
Sachin Oza
Co-Chief Executive Officer
Stephen Williams
Co-Chief Executive Officer
4040
Reabold Resources Plc Financial statements for the year ended 31 December 2022
Statement of Changes
in Equity
for the year ended 31 December
Group
At 1 January 2021
Loss for the year
Other comprehensive income
Total comprehensive income
Share-based payments
Issue of share capital, net of direct
issue costs
At 31 December 2021
Loss for the year
Other comprehensive income
Total comprehensive income
Share-based payments
At 31 December 2022
Note
22
22
Share capital
£’000
7,211
–
–
–
–
1,833
9,044
–
–
–
–
9,044
Share
premium
account
£’000
20,819
–
–
–
–
8,214
29,033
–
–
–
–
29,033
Company
At 1 January 2021
Loss for the year
Total comprehensive income
Share-based payments
Issue of share capital, net of direct issue costs
At 31 December 2021
Loss for the year
Total comprehensive income
Share-based payments
At 31 December 2022
Note
22
22
Share capital
£’000
7,211
–
–
–
1,833
9,044
–
–
–
9,044
Capital
redemption
reserve
£’000
200
–
–
–
–
–
Share based
payments
reserve
£’000
1,746
–
–
–
152
–
200
–
–
–
–
200
Share
premium
account
£’000
20,819
–
–
–
8,214
29,033
–
–
–
29,033
1,898
–
–
–
22
1,920
Capital
redemption
reserve
£’000
200
–
–
–
–
200
–
–
–
200
Foreign
currency
translation
reserve
£’000
(39)
–
48
48
–
–
9
–
(9)
(9)
–
–
Share based
payments
reserve
£’000
1,746
–
–
152
–
1,898
–
–
22
1,920
Retained
earnings
£’000
8,983
(2,675)
–
(2,675)
–
–
6,308
(45)
–
(45)
–
6,263
Retained
earnings
£’000
9,368
(2,430)
(2,430)
–
–
6,938
(594)
(594)
–
6,344
Total
£’000
38,920
(2,675)
48
(2,627)
152
10,047
46,492
(45)
(9)
(54)
22
46,460
Total
£’000
39,344
(2,430)
(2,430)
152
10,047
47,113
(594)
(594)
22
46,541
Share Capital
The balance on the share capital account represents the aggregate nominal value of all ordinary and preference shares in issue.
Share premium account
The balance on the share premium account represents the amounts received in excess of the nominal value of the ordinary and preference
shares.
Capital redemption reserve
The balance on the capital redemption reserve represents the aggregate nominal value of all the ordinary shares repurchased and cancelled.
Share based payments reserve
The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key
management personnel, as part of their remuneration. Refer to Note 22 for further details of these plans.
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising from the translation of the financial statements of foreign
operations. Upon disposal of foreign operations, the related accumulated exchange differences are reclassified to the income statement.
Following the equity exchange with Daybreak, £80,000 was reclassified to the income statement. See Note 2 – Disposals.
Retained earnings
The balance held on this reserve is the accumulated retained profits and losses of the group/company
4141
Reabold Resources Plc Financial statements for the year ended 31 December 2022Financial Statements Cash Flow Statement
for the year ended 31 December
Note
5
13
15
2
14
22
11
2
Operating activities
(Loss) for the period
Adjustments to reconcile loss for the period to net cash
used in operating activities
Depreciation
Impairment of investments in subsidiaries
Net loss (gain) on financial assets at fair value through
profit or loss
Net gain on sale of businesses
Share of losses from associates
Net finance (income) costs
Share–based payments expense
Other non–cash movements
Unrealised currency translation (gains)
Net cash used in operating activities before working
capital movements
(Increase) decrease in inventories
(Increase) decrease in other current assets
Increase in other current liabilities
Net cash used in operating activities
Investing activities
Expenditure on oil and gas assets
Expenditure on exploration & evaluation assets
Acquisition of North Sea Licences
Investments in associates
Total cash capital expenditure
Proceeds from disposal of associate
Interest received
Acquisition of convertible loan notes
Sale of convertible loan notes
Movements in restricted cash
Net cash disposed from sale of business
Loan to subsidiary
Net cash generated by (used in) investment activities
Financing activities
Share placement net proceeds
Net cash provided by financing activities
Currency translation differences relating to cash and cash
equivalents
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period 17
17
Cash and cash equivalents at the end of the period
4242
Group
2022
£’000
Group
2021
£’000
Company
Company
2022
£’000
2021
£’000
(45)
(2,675)
(594)
(2,430)
318
–
1,851
(4,997)
1,576
(52)
22
89
(616)
(1,854)
(24)
(149)
243
(1,784)
(8)
(366)
(343)
–
(717)
3,175
6
–
–
(33)
(16)
–
2,415
–
–
(3)
628
4,883
5,511
358
–
(55)
–
801
13
152
–
–
(1,406)
14
214
140
(1,038)
(40)
(1,497)
–
(16)
(1,553)
–
1
(1,000)
500
–
–
–
(2,052)
6,881
6,881
(47)
3,744
1,139
4,883
–
5,163
(75)
(7,342)
1,576
(72)
22
–
–
(1,322)
–
(426)
210
(1,538)
–
(276)
–
–
(276)
3,175
6
–
–
–
–
(479)
2,426
–
–
1
888
4,622
5,511
–
–
(55)
–
801
2
152
–
–
(1,530)
–
205
25
(1,300)
–
(1,412)
(16)
(1,428)
–
1
(1,000)
500
–
–
(92)
(2,019)
6,881
6,881
–
3,562
1,060
4,622
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Notes to the Financial Statements
For the year ended 31 December 2022
1. Significant accounting policies, judgements, estimates and assumptions
Authorisation of financial statements and statement of compliance with International Financial Reporting
Standards
The consolidated financial statements of Reabold Resources PLC and its subsidiaries (collectively referred to as Reabold or
the group) for the year ended 31 December 2022 were approved and signed by the Co-Chief Executive Officers on 26 May
2023 having been duly authorised to do so by the board of directors. Reabold is a public limited company incorporated and
domiciled in England and Wales with its registered office at 20 Primrose Street, London, EC2A 2EW. The principal activity of
the company and the group is to invest in pre-cash flow upstream oil and gas projects to create value and generate returns.
The company’s ordinary shares are traded on AIM. The group’s and company’s financial statements have been prepared in
accordance with UK-adopted International Accounting Standards in conformity with the requirements of the Companies Act
2006. The significant accounting policies and accounting judgements, estimates and assumptions of the group are set out
below.
Basis of preparation
The financial statements for the group and company have been prepared on a going concern basis and in accordance with
IFRS and IFRS Interpretations Committee (IFRIC) interpretations issued and effective for the year ended 31 December 2022.
The accounting policies that follow have been consistently applied to all years presented, except where otherwise indicated.
The consolidated financial statements have been prepared on a historical cost basis, except for the fair value remeasurement of
certain financial instruments as set out in the accounting policies, and are presented in £ sterling and all values are rounded to
the nearest thousand pounds (£000), except where otherwise indicated.
Going concern
The directors consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.
At 31 December 2022, the group held cash and cash equivalents of £5.5 million with a further £9.5 million expected in 2023
as part of the consideration for the sale of Corallian.
The group regularly monitors its cash, funding and liquidity position. Near term cash projections are revised and underlying
assumptions reviewed. Longer-term projections are also updated regularly. Reabold has no borrowings and its capital
commitments can be funded from existing cash resources. In assessing the appropriateness of the going concern assumption
over the going concern period, management have stress tested Reabold’s most recent financial projections to incorporate a
range of potential future outcomes by considering Reabold’s principal risks. The group’s financial forecasts demonstrate that
the group believes that it has sufficient financial resources to meet its obligations as they fall due indicating the group will
continue to operate as a going concern for at least 12 months from the date of approval of the financial statements. As such,
the Financial Statements continue to be prepared on the going concern basis.
Significant accounting policies: use of judgements, estimates and assumptions
Inherent in the application of many of the accounting policies used in preparing the consolidated financial statements is the
need for Reabold management to make judgements, estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual
outcomes could differ from the estimates and assumptions used. The accounting judgements and estimates that have a
significant impact on the results of the group, including, where potentially significant, the impact of climate change and the
transition to a lower carbon economy on the consolidated financial statements are set out below, and should be read in
conjunction with the information provided in the Notes on financial statements.
43
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Sources of estimation uncertainty
Determining the fair value of contingent consideration receivable
The contingent consideration relates to the disposal of Corallian which is a financial asset classified as measured at fair value
through profit or loss. The fair value is determined using an estimate of discounted future cash flows that are expected to be
received based on the contractual terms and is considered a level 3 valuation under the fair value hierarchy. The deferred
consideration receivable is modelled using the maximum available external information. The discount rate used is based on a
risk-free rate adjusted for asset-specific risks. (see note 15 for further information).
Decommissioning provision
Amounts used in recording a provision for decommissioning are estimates based on current legal and constructive
requirements and current technology and price levels for the removal of facilities and plugging and abandoning of wells. Due to
changes in relation to these items, the future actual cash outflows in relation to decommissioning are likely to differ in practice.
To reflect the effects due to changes in legislation, requirements and technology and price levels, the carrying amounts of
decommissioning provisions are reviewed on a regular basis. The effects of changes in estimates do not give rise to prior year
adjustments and are dealt with prospectively. While the group uses its best estimates and judgement, actual results could differ
from these estimates (see note 19 for further information).
Use of judgements
Assessment as not an investment entity
Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at FVPL
rather than consolidate them. The criteria which define an investment entity are, as follows:
•
•
An entity that obtains funds from one or more investors for the purpose of providing those investors with investment
management services
An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income, or both
• An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis
Reabold holds direct interests in several exploration and appraisal assets. How these assets will be monetised is not
determined at the outset, and could take several forms e.g a sale, an IPO, a farmout or taking the assets through to production.
Reabold does not commit to its investors that its business purpose is to invest funds solely for returns from capital appreciation
or investment income.
The Board has concluded that the business does not meet the definition of an investment entity. These conclusions will be
reassessed on a continuous basis, if any of these criteria or characteristics change.
Investments in Daybreak, Rathlin and Danube
Judgement is required in assessing the level of control or influence over another entity in which the group holds an interest. For
Reabold, the judgements that the group does not have significant influence over Daybreak, and continues to have significant
influence over Rathlin and Danube are significant.
Significant influence is defined in IFRS as the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control of those policies. Significant influence is presumed when an entity owns 20% or more
of the voting power of the investee. Significant influence is presumed not to be present when an entity owns less than 20% of
the voting power of the investee. IFRS identifies several indicators that may provide evidence of significant influence, including
representation on the board of directors of the investee and participation in policy-making processes.
44
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 Daybreak
Following Reabold’s announcement on 26 May 2022 regarding the completion of the equity exchange agreement with
Daybreak, Reabold assessed whether it has significant influence over Daybreak. Judgement is required in assessing the level
of control or influence over another entity in which the group holds an interest. For Reabold, the judgement that the group does
not have significant influence over Daybreak even though it holds 42% of the voting rights is significant.
Reabold does not have any directors on the Board of Daybreak, nor can it appoint any directors and it does not actively
participate in the financial and operating policy decisions of Daybreak. All significant decisions are taken by the executive
management team of Daybreak, which does not include any director, employee or contractor of Reabold. Reabold does not
exchange technical information with Daybreak nor is there any interchange of managerial personnel. Reabold is a passive
investor and does not have the ability to exercise significant influence over the operating and financial policies of Daybreak.
Reabold’s management considers, therefore, that the group does not have significant influence over Daybreak, as defined by
IFRS. As a consequence of this judgement, Reabold accounts for its interest in Daybreak as a financial asset measured at fair
value within ‘Other investments’. See Note 15 for further information.
Rathlin
Whilst Reabold holds an equity stake in Rathlin of 59.5%, it is considered to only have significant influence and not control
over Rathlin. Pursuant to the existing Rathlin Shareholders’ Agreement, Reabold has the right to appoint only one director to
the Board of Rathlin, which comprises five directors. Reabold’s 59.5% interest in Rathlin is as a result of Rathlin’s funding
requirements and Reabold’s desire to increase its economic interest in the West Newton Project, rather than an objective
by Reabold to seek control over Rathlin. As a consequence of this judgement, Reabold does not consolidate Rathlin as a
subsidiary, but instead treats Rathlin as an associate and incorporates the results, assets and liabilities of Rathlin in the
consolidated financial statements using the equity method of accounting.
Danube
Reabold holds an equity stake in Danube of 50.8%, it is considered to only have significant influence and not control over
Danube. Pursuant to the existing Danube Shareholders’ Agreement, Reabold has the right to appoint only one director to the
Board of Danube, which comprises three directors. Reabold’s 50.8% interest in Danube is as a result of Danube’s funding
requirements and Reabold’s desire to increase its economic interest in Danube’s projects in Romania, rather than an objective
by Reabold to seek control over Danube. As a consequence of this judgement, Reabold does not consolidate Danube as a
subsidiary, but instead treats Danube as an associate and incorporates the results, assets and liabilities of Danube in the
consolidated financial statements using the equity method of accounting.
Exploration and appraisal intangible assets
Judgement is required to determine whether it is appropriate to continue to carry costs associated with exploration wells on the
balance sheet. This includes costs relating to exploration licences. It is not unusual to have such costs remaining suspended
on the balance sheet for several years while additional appraisal drilling and seismic work on the potential oil and natural gas
field is performed or while the optimum development plans and timing are established. The costs are carried based on the
current regulatory and political environment or any known changes to that environment. All such carried costs are subject to
regular technical, commercial and management review on at least an annual basis to confirm the continued intent to develop,
or otherwise extract value from, the discovery. Where this is no longer the case, the costs are immediately expensed.
The carrying amount of capitalised costs are included in note 11.
The energy transition may affect the future development or viability of exploration prospects. The recoverability of intangibles
was considered during 2022 and no write-offs were identified. These assets will continue to be assessed as the energy
transition progresses.
Basis of consolidation
The consolidated group financial statements consolidate the financial statements of Reabold Resources PLC and its
subsidiaries drawn up to 31 December each year. Subsidiaries are consolidated from the date of their acquisition, being the
45
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements date on which the group obtains control, including when control is obtained via potential voting rights, and continue to be
consolidated until the date that control ceases.
The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent
accounting policies. Intragroup balances and transactions have been eliminated.
If the group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, other components
of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
Interests in other entities
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The identifiable assets acquired and liabilities assumed
are recognised at their fair values at the acquisition date.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred, the amount recognised for any
non-controlling interest and the acquisition-date fair values of any previously held interest in the acquiree over the fair value of
the identifiable assets acquired and liabilities assumed at the acquisition date. The amount recognised for any non-controlling
interest is measured at the present ownership’s proportionate share in the recognised amounts of the acquiree’s identifiable
net assets. At the acquisition date, any goodwill acquired is allocated to each of the cash generating units, or groups of
cash-generating units, expected to benefit from the combination’s synergies. Following initial recognition, goodwill is measured
at cost less any accumulated impairment losses.
Goodwill may arise upon investments in joint ventures and associates, being the surplus of the cost of investment over
the group’s share of the net fair value of the identifiable assets and liabilities. Any such goodwill is recorded within the
corresponding investment in joint ventures and associates.
Goodwill may also arise upon acquisition of interests in joint operations that meet the definition of a business. The amount of
goodwill separately recognised is the excess of the consideration transferred over the group’s share of the net fair value of the
identifiable assets and liabilities.
Acquisitions, Asset Purchases and Disposals
Acquisitions of oil and gas properties are accounted for under the acquisition method when the assets acquired and liabilities
assumed constitute a business.
Transactions involving the purchase of an individual field interest, or a group of field interests, that do not constitute a business,
are treated as asset purchases. Accordingly, no goodwill and no deferred tax gross up arises, and the consideration is allocated
to the assets and liabilities purchased on an appropriate basis. Proceeds from the entire disposal of a development and
production asset, or any part thereof, are taken to the income statement together with the requisite proportional net book value
of the asset, or part thereof, being sold.
Interests in joint arrangements
Certain of the group’s activities are conducted through joint operations. Reabold recognises, on a line-by-line basis in the
consolidated financial statements, its share of the assets, liabilities and expenses of these joint operations incurred jointly with
the other partners, along with the group’s income from the sale of its share of the output and any liabilities and expenses that
the group has incurred in relation to the joint operation.
Full details of Reabold’s working interests in those petroleum and natural gas exploration and production activities classified as
joint operations are included in the Review of Operations.
Interests in associates
The results, assets and liabilities of associates are incorporated in these consolidated financial statements using the equity
method of accounting as described below.
46
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 The equity method of accounting
Under the equity method, an investment is carried on the balance sheet at cost plus post-acquisition changes in the group’s
share of net assets of the entity, less distributions received and less any impairment in value of the investment. The group
income statement reflects the group’s share of the results after tax of the equity-accounted entity. The group’s share of amounts
recognised directly in equity by an equity-accounted entity is recognised in the group’s statement of changes in equity.
Financial statements of equity-accounted entities are prepared for the same reporting year as the group.
The group assesses investments in equity-accounted entities for impairment whenever there is objective evidence that the
investment is impaired. If any such objective evidence of impairment exists, the carrying amount of the investment is compared
with its recoverable amount, being the higher of its fair value less costs of disposal and value in use. If the carrying amount
exceeds the recoverable amount, the investment is written down to its recoverable amount.
Segmental reporting
The group’s operating segments are established on the basis of those components of the group that are evaluated regularly
by the co-chief executive officers, Reabold’s chief decision makers, in deciding how to allocate resources and in assessing
performance. The accounting policies of the operating segments are the same as the group’s accounting policies described in
this note.
Foreign currency translation
In individual subsidiaries and associates, transactions in foreign currencies are initially recorded in the functional currency of
those entities at the spot exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated into the functional currency at the spot exchange rate on the balance sheet date. Any resulting
exchange differences are included in the income statement. Non-monetary items, other than those measured at fair value, are
not retranslated subsequent to initial recognition.
In the consolidated financial statements, the assets and liabilities of non-£ sterling functional currency subsidiaries and related
goodwill, are translated into £ sterling at the spot exchange rate on the balance sheet date. The results and cash flows of non-£
sterling functional currency subsidiaries are translated into £ sterling using average rates of exchange. In the consolidated
financial statements, exchange adjustments arising when the opening net assets and the profits for the year retained by non-£
sterling functional currency subsidiaries are translated into US dollars are recognised in a separate component of equity
and reported in other comprehensive income. On disposal of a non-£ sterling functional currency subsidiary, the related
accumulated exchange gains and losses recognised in equity are reclassified from equity to the income statement.
Intangible assets - Oil and gas exploration and evaluation expenditure
Oil and gas exploration and evaluation expenditure is accounted for using the successful efforts method of accounting.
Pre-licence costs
Pre-licence costs are expensed in the period in which they are incurred.
Licence and property acquisition costs
Exploration licence and acquisition costs are capitalised in intangible assets. Licence costs paid in connection with a right
to explore in an existing exploration area are capitalised and are reviewed at each reporting date to confirm that there is no
indication that the carrying amount exceeds the recoverable amount. This review includes confirming that exploration drilling
is still under way or firmly planned, or that it has been determined, or work is under way to determine that the discovery is
economically viable based on a range of technical and commercial considerations and that sufficient progress is being made on
establishing development plans and timing. If no future activity is planned or the licence has been relinquished or has expired,
the carrying value of the licence and property acquisition costs are written off. Upon recognition of proved reserves and
internal approval for development, the relevant expenditure is transferred to oil and gas properties.
47
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Exploration and evaluation costs
Exploration and evaluation activity involves the search for hydrocarbon resources, the determination of technical feasibility
and the assessment of commercial viability of an identified resource. Once the legal right to explore has been acquired, costs
directly associated with an exploration well are capitalised as exploration and evaluation intangible assets until the drilling of
the well is complete and the results have been evaluated. These costs include directly attributable employee remuneration,
materials and fuel used, rig costs and payments made to contractors. Geological and geophysical costs are recognised in
the statement of profit or loss and other comprehensive income, as incurred. If no potentially commercial hydrocarbons are
discovered, the exploration asset is expensed.
If extractable hydrocarbons are found and, subject to further appraisal activity (e.g., the drilling of additional wells), it is
probable that they can be commercially developed, the costs continue to be carried as an intangible asset while sufficient/
continued progress is made in assessing the commerciality of the hydrocarbons. Costs directly associated with appraisal
activity undertaken to determine the size, characteristics and commercial potential of a reservoir following the initial discovery
of hydrocarbons, including the costs of appraisal wells where hydrocarbons were not found, are initially capitalised as an
intangible asset. All such capitalised costs are subject to technical, commercial and management review, as well as review for
indicators of impairment at least once a year. This is to confirm the continued intent to develop or otherwise extract value from
the discovery. When this is no longer the case, the costs are expensed.
When proved reserves of oil and gas are identified and development is sanctioned by management, the relevant capitalised
expenditure is first assessed for impairment and (if required) any impairment loss is recognised, then the remaining balance is
transferred to oil and gas properties.
Property, plant and equipment – Oil and gas assets
Capitalisation
Oil and gas properties are stated at cost, less any accumulated depreciation and accumulated impairment losses. Oil and
gas properties are generally accumulated into single field cost centres and represent the cost of developing the commercial
reserves and bringing them into production together with the E&E expenditures incurred in finding commercial reserves
previously transferred from E&E assets as outlined in the policy above.
Depreciation
The net book values of producing assets are depreciated generally on a field-by-field basis using the unit-of-production
method by reference to the ratio of production in the year and the related commercial reserves of the field, taking into account
the future development expenditure necessary to bring those reserves into production.
Impairment of property, plant and equipment and intangible assets (oil and gas exploration and evaluation
expenditure)
The group assesses assets or groups of assets, called cash-generating units (CGUs), for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset or CGU may not be recoverable; for example, changes
in the group’s business plans to dispose rather than retain assets, changes in the group’s assumptions about commodity prices,
evidence of physical damage or, for oil and gas assets, significant downward revisions of estimated reserves or increases in
estimated future development expenditure or decommissioning costs. If any such indication of impairment exists, the group
makes an estimate of the asset’s or CGU’s recoverable amount. Individual assets are grouped into CGUs for impairment
assessment purposes at the lowest level at which there are identifiable cash inflows that are largely independent of the cash
inflows of other groups of assets. A CGU’s recoverable amount is the higher of its fair value less costs of disposal and its value
in use. If it is probable that the value of the CGU will be primarily recovered through a disposal transaction, the expected
disposal proceeds are considered in determining the recoverable amount. Where the carrying amount of a CGU exceeds its
recoverable amount, the CGU is considered impaired and is written down to its recoverable amount.
48
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of consumable materials is determined using the
weighted average method and includes expenditures incurred in acquiring the stocks, and other costs incurred in bringing
them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
Investments
In its separate financial statements the company recognises its investments in subsidiaries at cost less any provision for
impairment.
Financial assets
Financial assets are recognised initially at fair value, normally being the transaction price. In the case of financial assets
not measured at fair value through profit or loss, directly attributable transaction costs are also included. The subsequent
measurement of financial assets depends on their classification, as set out below. The group derecognises financial assets
when the contractual rights to the cash flows expire or the rights to receive cash flows have been transferred to a third party
and either substantially all of the risks and rewards of the asset have been transferred, or substantially all the risks and rewards
of the asset have neither been retained nor transferred but control of the asset has been transferred. The group classifies its
financial assets as measured at amortised cost, fair value through other comprehensive income or fair value through profit
or loss. The classification depends on the business model for managing the financial assets and the contractual cash flow
characteristics of the financial asset.
Financial assets measured at amortised cost
Financial assets are classified as measured at amortised cost when they are held in a business model the objective of which is
to collect contractual cash flows and the contractual cash flows represent solely payments of principal and interest. Gains and
losses are recognised in profit or loss when the assets are derecognised or impaired. This category of financial assets includes
trade and other receivables.
Financial assets measured at fair value through other comprehensive income
Financial assets are classified as measured at fair value through other comprehensive income when they are held in a business
model the objective of which is both to collect contractual cash flows and sell the financial assets, and the contractual cash
flows represent solely payments of principal and interest. The group does not measure any financial assets at fair value through
other comprehensive income.
Financial assets measured at fair value through profit or loss
Financial assets are classified as measured at fair value through profit or loss when the asset does not meet the criteria to be
measured at amortised cost or fair value through other comprehensive income. Such assets are carried on the balance sheet at
fair value with gains or losses recognised in the income statement.
Investments in equity instruments
Investments in equity instruments are subsequently measured at fair value through profit or loss.
Cash and cash equivalents
Cash and cash equivalents include balances with banks and short-term investments with original maturities of three months or
less at the date acquired.
Equity instruments
Equity instruments issued by the company are recorded in equity at the proceeds received, net of direct issue costs.
49
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Financial liabilities
Financial liabilities are recognised when the group becomes party to the contractual provisions of the instrument. The
group derecognises financial liabilities when the obligation specified in the contract is discharged, cancelled or expired. The
measurement of financial liabilities depends on their classification. The group’s financial liabilities include trade and other
payables and accruals which are measured at amortised cost.
Financial liabilities measured at amortised cost
The group’s financial liabilities are initially recognised at fair value, net of directly attributable transaction costs. The group’s
financial liabilities currently include trade and other payables and accruals. Obligations for loans and borrowings are
recognised when the group becomes party to the related contracts and are measured initially at the fair value of consideration
received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the income
statement when the liabilities are derecognised as well as through the amortisation process.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants. The group categorises assets and liabilities measured at fair value into one of three levels depending on
the ability to observe inputs employed in their measurement. Level 1 inputs are quoted prices in active markets for identical
assets or liabilities. Level 2 inputs that are observable, either directly or indirectly, other than quoted prices included within
level1 for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications
to observable related market data or Reabold’s assumptions about pricing by market participants.
Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.
Decommissioning
Liabilities for decommissioning costs are recognised when the group has an obligation to plug and abandon a well, dismantle
and remove a facility or an item of plant and to restore the site on which it is located. Liabilities may arise upon construction
of such facilities, upon acquisition or through a subsequent change in legislation or regulations. The amount recognised is the
estimated present value of future expenditure determined in accordance with local conditions and requirements. An amount
equivalent to the decommissioning provision is recognised as part of the corresponding intangible asset (in the case of an
exploration or appraisal well) or property, plant and equipment. The decommissioning portion of the property, plant and
equipment is subsequently depreciated at the same rate as the rest of the asset. Other than the unwinding of discount on or
utilisation of the provision, any change in the present value of the estimated expenditure is reflected as an adjustment to the
provision and the corresponding asset where that asset is generating or is expected to generate future economic benefits.
Share-based payments
Equity-settled transactions
The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments on
the date on which they are granted and is recognised as an expense over the vesting period, which ends on the date on which
the employees become fully entitled to the award. A corresponding credit is recognised within equity. Fair value is determined
by using an appropriate, widely used, valuation model. In valuing equity-settled transactions, no account is taken of any vesting
conditions, other than conditions linked to the price of the shares of the company (market conditions). Non-vesting conditions
are taken into account in the grant-date fair value, and failure to meet a non-vesting condition, where this is within the control
of the employee is treated as a cancellation and any remaining unrecognised cost is expensed.
50
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 Income taxes
The tax charge represents the sum of current and deferred tax.
Current tax payable is based on taxable profits for the year. Taxable profits differ from net profits as reported in the income
statement because it excludes items that are taxable or deductible in other years and items that are not taxable or deductible.
The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the
balance sheet date.
Deferred tax is the tax expected to be payable or recoverable 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 liability method. Deferred tax liabilities are recognised for all temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available against which temporary differences
can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet 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 assets
are offset when there is a legally enforceable right to offset current tax assets against current liabilities and when deferred tax
assets and deferred tax liabilities relate to income taxes levied by the same tax authority on either the same taxable entity or
different taxable entity where there is an intention to settle on a net basis.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability or the asset is realised.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at
an amount that reflects the consideration to which the group expects to be entitled to in exchange for those goods or services.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods
provided in the normal course of business, net of discounts, customs duties and sales taxes. The group has concluded that it
is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the
customer.
The sale of crude oil, gas or condensate represents a single performance obligation. This generally occurs when the product is
physically transferred into the customer’s tanker, pipeline or other delivery mechanism. Revenue is accordingly recognised for
this performance obligation when control over the corresponding commodity is transferred to the customer.
Finance income
Finance revenue chiefly comprises interest income from cash deposits on the basis of the effective interest rate method and is
disclosed separately on the face of the income statement.
Earnings per share
Earnings per share is calculated using the weighted average number of ordinary shares outstanding during the period. Diluted
earnings per share is calculated based on the weighted average number of ordinary shares outstanding during the period
plus the weighted average number of shares that would be issued on the conversion of all relevant potentially dilutive shares
to ordinary shares. Where the impact of converted shares would be anti-dilutive, these are excluded from the calculation of
diluted earnings.
51
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements New and amended standards and interpretations
There are no new or amended standards or interpretations adopted from 1 January 2022 onwards that have a significant
impact on the financial information.
Standards issued but not yet effective
There are no standards, amendments or interpretations in issue but not yet effective that the directors anticipate will have a
material effect on the reported income or net assets of the group.
2. Disposals
Gain on sale of businesses
Disposal of Corallian
Loss on sale of business
Disposal of Reabold California
Net gains on sale of businesses
Group
2022
£’000
7,342
7,342
(2,345)
(2,345)
4,997
Group
2021
£’000
-
-
-
-
Company
2022
£’000
7,342
7,342
-
-
7,342
Company
2021
£’000
-
-
-
-
-
The net gain in respect of the disposal of the company’s entire 49.99% interest in Corallian Energy Limited was £7.3 million.
Proceeds from the disposal of Corallian in 2022 were £3.2 million. The carrying amount of Reabold’s investment in Corallian
prior to disposal was £4.5 million. At 31 December 2022, contingent consideration relating to the disposal of Corallian
amounted to £8.7 million receivable within one year. The undiscounted contingent consideration receivable amounts to
£9.5 million. Contingent consideration is reported within Other investments on the balance sheet – see Note 15 for further
information.
On 26 May 2022, Reabold announced the completion of the equity exchange agreement with Daybreak. At completion of the
equity exchange agreement, Reabold no longer had “control” over Reabold California as set out under UK adopted international
accounting standards. As a result, net assets of £7.7 million, including goodwill of £329,000 and an associated deferred tax
liability of £329,000, were derecognised from the balance sheet of the group and the fair value of the investment in Daybreak
was recognised at completion at £5.3 million. In addition, accumulated exchange gains of £80,000 which were previously
charged to equity were reclassified to the income statement resulting in a loss on sale of business of £2.3 million.
52
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 3. Segmental analysis
The Directors consider the group to have two segments, being Business Stream 1 (which encompasses the UK/European
based investments in Corallian, Danube, Rathlin and PEDL183) and Business Stream 2 (which encompasses the USA).
Corporate costs relate to the administration and financing costs of the company and are not directly attributable to the
individual investments and projects.
Year ended 31 December 2022
Revenue
Cost of Salesa
Net (loss) gain in financial assets measured at fair value
through profit or loss
Other income
Other expenses
Net gain (loss) on sale of businesses
Exploration expense
Administration expenses
Share based payments expense
Foreign exchange gain
Profit (loss) on ordinary activities
Share of losses of associates
Finance costs – unwinding of discount on
decommissioning provisions
Finance income
Profit (loss) before tax for the year
Taxation
Profit (loss) for the year
Segment assets
Segment liabilities
Additions to non-current assetsb
Business
Stream 1
UK/Europe
£’000
-
-
75
-
-
Business
Stream 2
USA
£’000
560
(834)
(1,926)
-
(89)
7,342
(2,345)
(74)
-
Consolidation
adjustments and
eliminations
£’000
-
Corporate
£’000
-
-
-
61
-
-
-
-
-
(11)
-
-
-
Total
£’000
560
(834)
(1,851)
50
(89)
4,997
(74)
(12)
(1,892)
11
(1,893)
-
-
-
7,343
(1,576)
(16)
63
-
-
(22)
635
(4,646)
(1,218)
-
-
-
-
-
5
5,814
(4,646)
(1,213)
-
-
-
5,814
(4,646)
(1,213)
38,155
3,470
(439)
1,483
-
247
5,511
(237)
-
-
-
-
-
-
-
-
-
-
-
(22)
635
1,479
(1,576)
(16)
68
(45)
-
(45)
47,136
(676)
1,730
a Cost of sales of Business Stream 2 includes depreciation of oil and gas assets of £318,000.
b
Includes additions to property, plant and equipment; goodwill; intangible assets; investments in joint ventures; and investments in associates.
53
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Year ended 31 December 2021
Revenue
Cost of salesa
Other income
Net gain on financial assets measured at FVTPL
General and administration expenses
Share based payments expense
(Loss) on ordinary activities
Share of losses of associates
Finance costs
Finance income
(Loss) before tax for the year
Taxation
(Loss) for the year
Segment assets
Segment liabilities
Additions to non-current assetsb
Business
Stream 1
UK/Europe
£’000
-
-
-
-
-
-
-
(801)
(14)
-
Business
Stream 2
USA
£’000
1,160
(1,312)
-
-
Corporate
£’000
-
-
51
55
(92)
(1,571)
-
(152)
(244)
(1,617)
-
-
-
-
-
1
(815)
(244)
(1,616)
-
-
-
(815)
(244)
(1,616)
Consolidation
adjustments and
eliminations
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
£’000
1,160
(1,312)
51
55
(1,663)
(152)
(1,861)
(801)
(14)
1
(2,675)
-
(2,675)
34,279
8,044
(146)
(5,129)
4,594
125
9,873
(429)
-
(4,790)
47,406
4,790
-
(914)
4,719
a Cost of sales of Business Stream 2 includes depreciation of oil and gas assets of £358,000.
b
Includes additions to property, plant and equipment; goodwill; intangible assets; investments in joint ventures; and investments in associates.
4. Revenue
Oil sales
Gas Sales
Of the total oil and gas sales, 99% were sold to a single customer in 2022: 2021: 98%.
2022
£’000
552
8
560
2021
£’000
1,140
20
1,160
54
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 5. Cost of Sales
Production costs
Royalties
Depreciation of oil and gas assets (see note 12)
6. Auditor’s Remuneration
Total audit fees
No fees were paid to Mazars LLP for non-audit services in 2022 or 2021.
7. Remuneration of senior management and non-executive directors
Remuneration of directors
Group and company
Total for all directors
Emoluments
Amounts received under incentive schemes
Total
Emoluments
2022
£’000
404
112
318
834
2022
£’000
83
2022
£’000
698
-
698
2021
£’000
722
232
358
1,312
2021
£’000
75
2021
£’000
788
-
788
These amounts comprise fees paid to the non-executive chair and the non-executive directors and, for executive directors,
salary and benefits earned during the relevant financial year, plus cash bonuses awarded for the year.
Further information
Full details of individual Directors’ remuneration are given in the Directors’ remuneration report on page 27.
Remuneration of directors and senior management
Group and company
Total for all senior management and non-executive directors
Short-term employee benefits
Pension costs
Share-based payments
Total
2022
£’000
781
29
22
832
2021
£’000
765
23
152
940
55
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Senior management comprises the executive directors, finance director and chief financial officer. Anthony Samaha resigned as
finance director on 30 June 2022, at which point he was appointed a non-executive director. Chris Connolly, the current CFO,
joined the senior management team on 28 March 2022.
Short-term employee benefits
These amounts comprise fees and benefits paid to the non-executive chair and non-executive directors, as well as salary,
benefits and cash bonuses for senior management.
Pensions
The amounts represent the cost to the group of providing pensions to senior management in respect of the current year of service.
Share-based payments
This is the cost to the group of senior management’s participation in share-based payment plans, as measured by the fair value
of options and shares granted, accounted for in accordance with IFRS 2 ‘Share-based Payments’.
8. Employee costs and numbers
Group and company
Wages and Salaries
Social security costs
Pension costs
Share-based payments
2022
£’000
649
84
30
22
785
2021
£’000
635
84
23
152
894
Employee costs do not include fees paid to non-executive directors.
Pension benefits are provided through defined contribution plans.
The average number of persons employed by the group and company during the year was 4 (2021:3), with 3 in senior management
functions (2021:3) and 1 in technical functions (2021:nil). All employees are based in the UK.
The employee costs noted above relate to those employees with contracts of employment in the name of Reabold Resources
PLC. Of these costs, £35,000 are borne by other undertakings within the group.
9. Taxation
Tax charged in the income statement
Current tax
Deferred tax
Tax charge in the income statement
56
2022
£’000
-
-
-
2021
£’000
-
-
-
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 Reconciliation of the total tax charge
Accounting profit (loss) before taxation
Statutory rate of corporation tax in the UK of 19% (2021: 19%)
Share of operating loss of associates not taxable
Expenses not deductible for tax purposes
Overseas tax impacts
Gain on sale not taxable
Deferred tax asset not recognised
Tax charge reported in income statement
Unrecognised tax losses
2022
£’000
(45)
(9)
299
4
52
(949)
603
-
2021
£’000
(2,675)
(508)
152
51
-
-
305
-
The group has total unused UK tax losses of £12.5 million (2021: £9.2 million) for which no deferred tax asset has been recognised
at the balance sheet date due to the uncertainty of recovery of these losses. The unused tax losses have no fixed expiry date.
Changes to UK corporation tax legislation
On July 14, 2022, the Energy (Oil & Gas) Profits Levy Act 2022 (EPL) was enacted in the UK which applies an additional tax of
25% on the profits earned by oil and gas companies from the production of oil and gas on the United Kingdom Continental Shelf.
In the fourth quarter 2022, the EPL percentage was increased to 35% and the end date was extended from December 31, 2025
to March 31, 2028. The enactment of the EPL has no impact on the current or deferred tax position of the group or company.
Company
The company has £10.5 million (2021: £9.2 million) of UK corporation tax losses which are not recognised as deferred tax
assets. The unused tax losses have no fixed expiry date.
10. Earnings per share
Basic earnings or loss per ordinary share amounts are calculated by dividing net profit or loss for the year attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted
earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the company by
the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary
shares that would be issued on the conversion of dilutive potential ordinary shares granted under share-based payment plans
(see note 22) into ordinary shares. If the inclusion of potentially issuable shares would decrease loss per share, the potentially
issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per
share. The following reflects the income and share data used in the basic and diluted earnings per share computations:
Profit (loss) for the year attributable to Reabold ordinary shareholders
2022
£’000
(45)
2021
£’000
(2,675)
57
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Basic weighted average number of ordinary shares
Potential dilutive effect of ordinary shares issuable under employee
share-based payment plans
Weighted average number of ordinary shares outstanding used to
calculate diluted earnings per share
Basic earnings per share
Diluted earnings per share
2022
Number
£’000
8,929,613
-
2021
Number
£’000
8,599,375
-
8,929,613
8,599,375
2022
Pence per share
2021
Pence per share
(0.00)
(0.00)
(0.03)
(0.03)
The number of ordinary shares outstanding at 31 December 2022 was 8,929,612,550. Between 31 December 2021
and 25 May 2023, the latest practicable date before the completion of these financial statements, there was an increase of
247,775,359 of ordinary shares as a result of the acquisition of Simwell Resources Limited (see note 26).
11. Exploration and evaluation assets
At 1 January
Exchange adjustments
Acquisitions
Additions
Disposals
At 31 December
Group
Group
2022
£’000
9,123
240
343
572
(3,463)
6,815
Group
2021
£’000
7,586
40
-
1,497
-
9,123
Company
2022
£’000
5,968
-
-
483
-
6,451
Company
2021
£’000
4,556
-
-
1,412
-
5,968
The 2022 disposal of £3.5 million represents the derecognition of E&E assets in California as a result of the equity exchange
agreement with Daybreak.
The 2022 acquisition represents the acquisition of North Sea licences from Corallian.
Additions at 31 December 2022 include £504,000 in the UK primarily relating to the PEDL 183 licence at West Newton and
£68,000 in the US relating to the California assets (2021: £1,412,000 in the UK relating to the PEDL 183 licence at West
Newton and £85,000 in the US relating to the California assets).
Company
Additions at 31 December 2022 include £483,000 in the UK relating to the PEDL 183 licence at West Newton (2021: £1,412,000).
For information on significant judgements made in relation to oil and natural gas accounting see Oil and gas exploration and
evaluation expenditure in Note 1.
58
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 12. Property, Plant and Equipment
Cost
At 1 January 2021
Exchange adjustments
Additions
At 31 December 2021
Exchange adjustments
Additions
Disposals
At 31 December 2022
Depreciation
At 1 January 2021
Exchange adjustments
Charge for the period (note 5)
At 31 December 2021
Exchange adjustments
Charge for the period (note 5)
Disposals
At 31 December 2022
Net book amount
At 31 December 2022
At 31 December 2021
At 1 January 2021
Oil and gas
properties
£’000
5,502
71
40
5,613
429
179
(6,221)
-
933
19
358
1,310
114
318
(1,742)
-
-
4,303
4,569
The entire disposal amount in 2022 represents the derecognition of oil and gas properties in California as a result of the equity
exchange agreement with Daybreak.
Company
The company has no property, plant or equipment.
59
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements 13. Investments in Subsidiaries
Company – Investment in Subsidiaries
Cost
At 1 January 2021
Additions
At 31 December 2021
Additions
At 31 December 2022
Amounts provided
At 1 January 2021
Additions
At 31 December 2021
Additions
At 31 December 2022
Net book amount:
31 December 2022
31 December 2021
31 December 2020
Total
£’000
1,933
1,603
3,536
5,097
8,633
-
-
-
5,163
5,163
3,470
3,536
1.933
In 2022 £5.1 million of the loan to Reabold California was assigned to Gaelic Resources Limited and subsequently capitalised
(2021: £1.6 million). An impairment charge of £5.2 million was recognised in 2022 (2021: nil) following an impairment
review in line with the requirements of IAS 36. Taking into account the decrease in the market value of Daybreak, management
concluded that an impairment was necessary in terms of a deterioration of fair value less costs to dispose. The impairment
charge related to the company’s investment in Gaelic Resources Limited.
Details of the company’s subsidiaries as at 31 December 2022 are shown below:
Subsidiaries
Reabold North Sea Limited
Reabold Resourcing Limited
Gaelic Resources Limited
% Country of incorporation
100 England & Wales
100 England & Wales
100 Isle of Man
Principal activities
Exploration and Evaluation
Investment holding
Investment holding
The registered office of the company subsidiaries incorporated in England & Wales is The Broadgate Tower 8th Floor, Primrose
Street, London, England, EC2A 2EW.
The registered office of Gaelic Resources is 14 Albert Street, Douglas, Isle of Man, IM1 2QA.
On 3 January 2023, the company acquired 100% of the issued share capital of Reabold Southern North Sea Limited (formerly
Simwell Resources Limited). Reabold Southern North Sea Limited is an Exploration company incorporated in England and
Wales. See note 26 for further details.
60
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 14. Investments in associates
The movement in investments in associates for the group and company including the amounts recognised in the income
statement (losses from associates) and balance sheet (investment in associate at 31 December) are shown below. On 30 June
2022, Reabold classified its investment in Corallian as held for sale and equity accounting for Corallian ceased at this point,
therefore the amounts recognised in the income statement as it relates to Corallian represent the first 6 months to 30 June
2022. The additions in Corallian in the year represent the conversion of loan notes into equity of Corallian – see note 15 for
further information. The disposal of Corallian completed on 1 November 2022. See Note 2 Disposals, for further information.
For further information on the judgements in respect of investments in associates see Note 1 – Investment in Daybreak, Rathlin
and Danube.
Investment in associate at 1 January
Rathlin
18,342
Danube
4,744
Corallian
2022
Rathlin
Total
4,630 27,716 18,922
Danube
4,835
£’000
2021
Total
1,578 25,335
Corallian
Additions
-
-
636
636
-
-
3,182
3,182
Losses from associates
(738)
(76)
(762)
(1,576)
(580)
(91)
(130)
(801)
Disposals
-
-
(4,504)
(4,504)
-
-
-
-
Investment in associate at 31 December
17,604
4,668
- 22,272 18,342
4,744
4,630 27,716
The following table provides summarised financial information for the group’s and company’s associates for 2022 and 2021.
The information is presented on a 100% basis.
Revenue
Profit (loss) for the year
Non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Group’s share in equity
Goodwill attributable to Reabold’s share of associate
Reabold’s share of currency translation differences
Reabold’s share of share-based payments
Group’s carrying amount of investment
Rathlin
-
2022
Danube
-
(1,034)
(149)
20,538
4,232
24,770
580
1,493
2,073
22,697
13,504
4,253
-
(154)
8,658
340
8,998
112
366
478
8,520
4,328
406
(66)
-
Rathlin
-
(976)
19,800
6,142
25,942
939
1,324
2,263
23,679
14,089
4,253
-
-
£’000
Gross amount
2021
Corallian
-
(280)
2,687
639
3,326
1,025
-
1,025
2,301
1,551
3,079
-
-
Danube
-
(178)
8,256
586
8,842
14
289
303
8,539
4,338
406
-
-
17,604
4,668
18,342
4,744
4,630
61
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements
Transactions between the group and its associates are summarised below.
Sales to associates
Consultancy services
Purchases from associates
Exploration and evaluation assets
2022
Amount receivable
at 31 December
14
Sales
50
2022
Amount payable at
31 December
-
Purchases
275
£’000
2021
Amount receivable
at 31 December
12
Sales
51
£’000
2021
Purchases
1,412
Amount payable at
31 December
-
Reabold enters into arm’s length transactions with its associates including consultancy services. These amounts are recognised
within other income on the income statement.
The terms of outstanding balances receivable from associates are 30 days. The balances are unsecured and will be settled
in cash. There are no provisions for doubtful debts relating to these balances and no expenses recognised in the income
statement in respect of bad or doubtful debts.
The purchases from associates relate to Reabold’s 16.67% share of expenditure on the PEDL183 licence as part of the joint
operation with Rathlin and Union Jack Oil. These amounts are recognised within exploration and evaluation on the balance
sheet. Rathlin, the operator of the licence, is also an associate of Reabold by virtue of Reabold’s 59.5% interest in Rathlin.
For information on capital commitments in relation to associates see Note 23.
Reabold’s share of impairment charges taken by associates in 2022 was £688,000 and forms part of share of losses of
associates in the income statement. This amount related to writing down the ‘non-Victory’ assets to their recoverable amount in
light of the disposal proceeds Corallian received from Reabold for the acquisition of the licences as detailed on pages 8 and 9.
Details of the company’s associates as at 31 December 2022 are shown below:
Associates
Rathlin Energy (UK) Limited
Danube Petroleum Limited
15. Other investments
Investment in Connaught Oil and Gas Ltd
Convertible loan notes
Contingent consideration
Investment in Daybreak
% Country of incorporation
59.5 England & Wales
50.8 England & Wales
Principal activities
Exploration and Evaluation
Exploration and Evaluation
Current
-
-
8,728
-
8,728
2022
Non-current
15
-
-
3,469
3,484
£’000
2021
Non-current
15
555
-
-
570
Current
-
-
-
-
-
The convertible loan notes issued by Corallian in 2021 are financial assets measured at fair value through profit or loss and are
considered a level 3 valuation under the fair value hierarchy. As a result of the sale of Corallian in Q4 2022, the loan notes converted
at £3.20 per share, adding £636,000 to the investment in Corallian. The investment in Corallian at the date of disposal was
£4.6 million. See note 2 Disposals for further details.
62
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022
The contingent consideration relates to amounts arising on the disposal of Corallian which are financial assets classified as measured
at fair value through profit or loss. The payment of the contingent consideration from Shell will be staged as follows:
A single payment of £22 million (£9.5 million net to Reabold) will be made, assuming the development and production consent for
the Victory gas field is secured from the North Sea Transition Authority, on or before 1 December 2023. If consent has not been
granted by this date, then Shell will have the option to either: i) pay £12 million (£5.1 million net to Reabold), with the remaining
£10 million (£4.4 million net to Reabold) being paid at a later consent date; or ii) offer to transfer-back the Victory licence to the
current Corallian shareholders for £1 consideration.
The fair value is determined using an estimate of discounted future cash flows that are expected to be received and is considered
a level 3 valuation under the fair value hierarchy. The future cash flows are estimated based on the terms of the sales contract and
management’s best estimate of the expected consideration receivable. The discount rate used is based on a risk-free rate adjusted for
asset-specific risks. A reasonably possible change in the assumptions used would not have a material impact on the net assets of the
group primarily because it is the only the timing of the development and production consent from the North Sea Transition Authority
which is considered reasonably uncertain. Making reasonable changes to this assumption would not have a material effect on the net
assets of the group.
The investment in Daybreak completed on 26 May 2022. On the date of completion Reabold recognised the fair value of its
investment in Daybreak, treating it prospectively as a financial asset at fair value. The market value of Daybreak is based on level one
of the fair value hierarchy, its market price.
The table below summarises the change in fair value of other investments as reported in the income statement.
Investment in Connaught Oil and Gas Ltd
Convertible loan notes
Contingent consideration
Investment in Daybreak
16. Trade and other receivables
Due within one year
Amounts owed by group undertakings
Trade receivables
Amounts recoverable from JV partners
Amounts receivable from associates
VAT recoverable
Other receivables
Change in fair value
2022
£’000
-
18
57
(1,926)
(1,851)
2021
£’000
-
55
-
-
55
Company
Company
2022
£’000
479
-
15
87
48
629
2021
£’000
4,790
-
-
12
40
-
4,842
Group
2022
£’000
-
-
16
15
102
48
181
Group
2021
£’000
-
119
-
12
41
-
172
None of the group’s receivables are considered impaired and there are no financial assets past due but not impaired at the year end.
The Directors consider the carrying amount of trade and other receivables approximates to their fair value.
Management considers that there are no unreasonable concentrations of credit risk within the group or company.
63
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements
In May 2022, prior to the equity exchange with Daybreak, £5.1 million of the receivable from Reabold California to the company
was assigned to Gaelic Resources Limited and subsequently capitalised (2021: £1.6 million). The remainder of the receivable,
c.£232,000 was repaid in cash by Reabold California in H2 2022 following the completion of the equity exchange agreement with
Daybreak.
The amounts receivable by group undertakings in 31 December 2022 represent amounts receivable from Reabold North Sea
Limited.
The amounts owed by group undertakings at 31 December 2022 have not been secured, have no maturity and bear no interest.
17. Cash and cash equivalents and Restricted cash
Cash and cash equivalents
Restricted cash
Group
2022
£’000
5,511
25
Group
2021
£’000
4,883
211
Company
Company
2022
£’000
5,511
25
2021
£’000
4,622
25
Cash and cash equivalents earn interest at floating rates based on daily bank deposit rates.
The restricted cash is in respect of surety bonds in the amount of £25,000 (2021: £25,000) to cover restoration of the PEDL183
West Newton site.
The group’s exposure to credit risk arises from potential default of a counterparty, with a maximum exposure equal to the carrying
amount. The group seeks to minimise counterparty credit risks by only depositing cash surpluses with major banks of high quality
credit standing.
Financial institutions, and their credit ratings, which held greater than 10% of the group’s cash and short-term deposits at the balance
sheet date were as follows:
Barclays Bank plc
18. Trade and other payables
S&P
rating
A-1
Current:
Trade payables
Other payables
Group
2022
£’000
5,511
Group
2022
£’000
164
34
198
Group
2021
£’000
4,622
Group
2021
£’000
92
222
314
Company
Company
2022
£’000
5,511
2021
£’000
4,622
Company
Company
2022
£’000
164
34
198
2021
£’000
16
-
16
Trade payables are non-interest bearing and are generally on 15 to 30 day terms.
The Directors consider the carrying amount of trade and other payables approximates to their fair value.
64
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022
19. Provision for decommissioning
At 1 January 2022
Exchange adjustments
Revisions during the year
Unwinding of discount
Deletions
At 31 December 2022
Classified as:
Current
Non-current
Group
£’000
188
3
479
16
(319)
367
-
367
Company
£’000
146
-
207
14
-
367
-
367
The decommissioning provision at 31 December 2022 comprises the future costs of decommissioning the group’s 16.67% interest
in wells at West Newton. The costs are expected to be incurred in 2033. The liability has been discounted at a rate of 4% (2021:
10%) and the unwinding of discount has been classified as a finance cost. The estimation of costs, inflation and discount rates are
considered to be judgemental although changes in single variables are not individually considered to have a significant impact. A
1.0 percentage point increase in the nominal discount rate applied, could decrease the group’s provision balance by approximately
£37,000 (2021: £21,000)
20. Financial instruments and financial risk factors
The accounting classification of each category of financial instruments and their carrying amounts are set out below:
Group
£’000
Measured
at fair
value
through
profit or
loss
Measured at
amortised cost
Note
Company
£’000
Total carrying
amount
Measured at
amortised
cost
Measured
at fair value
through profit
or loss
Total carrying
amount
15
16
17
17
18
-
12,213
12,213
181
5,511
25
(198)
(111)
-
-
-
-
181
5,511
25
(198)
(111)
-
629
5,511
25
(198)
(111)
8,743
-
-
-
-
-
8,743
629
5,511
25
(198)
(111)
5,408
12,213
17,621
5,856
8,743
14,599
At 31 December 2022
Financial assets
Other investments
Trade and other receivables
Cash and cash equivalents
Restricted cash
Financial liabilities
Trade and other payables
Accruals
65
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements
Group
£’000
Measured
at fair
value
through
profit or
loss
570
-
-
-
-
-
Measured at
amortised cost
Note
15
16
17
17
18
-
172
4,883
211
(314)
(83)
Company
£’000
Total carrying
amount
Measured at
amortised
cost
Measured
at fair value
through profit
or loss
Total carrying
amount
570
172
4,883
211
(314)
(83)
-
4,842
4,622
25
(16)
(83)
570
-
-
-
-
-
570
4,842
4,622
25
(16)
(83)
At 31 December 2021
Financial assets
Other investments
Trade and other receivables
Cash and cash equivalents
Restricted cash
Financial liabilities
Trade and other payables
Accruals
4,869
570
5,439
9,390
570
9,960
For all financial instruments within the scope of IFRS 9, the carrying amount is either the fair value, or approximates the fair
value.
Financial risk factors
It is management’s opinion that the group is not exposed to significant interest, credit or currency risks arising from its financial
instruments other than as discussed below:
•
•
•
Cash credit risks are mitigated through placing funds with institutions carrying acceptable published credit ratings to
minimise counterparty risk.
Reabold has no history of non-payment of trade receivables. Where Reabold operates joint ventures on behalf of partners
it seeks to recover the appropriate share of costs from these third parties. The majority of partners in these ventures are
established oil and gas companies. In the event of non-payment, operating agreements typically provide recourse through
increased venture shares.
Reabold retains certain non-£ cash holdings and other financial instruments relating to its operations. The £ reporting
currency value of these may fluctuate from time to time causing reported foreign exchange gains and losses. Reabold
maintains a broad strategy of matching the currency of funds held on deposit with the expected expenditures in those
currencies. Management believes that this mitigates most of any actual potential currency risk from financial instruments.
(a) Market Risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance
of a business.
The components of market risk for Reabold are foreign currency exchange risk and interest rate risk, each of which is discussed
below:
66
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 (i) Foreign currency exchange risk
The group enters into transactions denominated in currencies other than its GBP£ reporting currency. Non-GBP denominated
balances, subject to exchange rate fluctuations, at year-end were as follows:
Other investments
Cash and cash equivalents (US Dollar)
Restricted cash (US Dollar)
Trade and other receivables (US Dollar)
Trade and other payables (US Dollar)
Group
2022
£’000
3,469
132
-
-
-
Group
2021
£’000
-
261
186
120
(298)
Company
Company
2022
£’000
-
132
-
-
-
2021
£’000
-
1
-
4,790
-
The following table demonstrates the group’s sensitivity to a 10% increase or decrease in the US Dollar against the Pound
sterling. The sensitivity analysis includes only foreign currency denominated monetary items and adjusts their translation at the
year-end for a 10% change in the foreign currency rate.
Increase/decrease in foreign exchange rate
10% strengthening of £ against US$
10% weakening of £ against US$
(ii)
Interest rate risk
Effect on profit
before tax 2022
£’000
Effect on profit
before tax 2021
£’000
(360)
360
(27)
27
The group’s interest rate risk is minimal as the group has no debt. The group is exposed to interest rate movements through
its cash and cash equivalents. If interest rates were to have changed by one percentage point, assuming the cash balance at
the balance sheet date was constant throughout the whole year, and all other variables were held constant, the group’s and
company’s finance income for 2022 would have changed by approximately £55,000.
(b) Credit Risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due
causing financial loss to the group. The group’s and company’s exposure to credit risk is equal to the carrying value as at
the balance sheet date. Cash and treasury credit risks are mitigated through the placement of funds at institutions carrying
acceptable published credit ratings to minimise counterparty risk. Where Reabold operates joint ventures on behalf of
partners, it seeks to recover the appropriate share of costs from the third-party counterparties. The partners in these ventures
are established oil and gas companies. In the event of non-payment, operating agreements typically provide recourse through
increased venture shares. Receivable balances are monitored on an ongoing basis with appropriate follow-up action taken
where necessary.
(c) Liquidity Risk
Liquidity risk is the risk that suitable sources of funding for the group’s business activities may not be available. The group’s
liquidity is managed centrally by the treasury function which will arrange to fund subsidiaries’ requirements.
The group continues to maintain suitable levels of cash and cash equivalents, amounting to £5.5 million at 31 December 2022
(2021: £4.9 million), invested with highly rated banks and readily accessible at immediate and short notice. The group and
company has no debt.
67
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements
The table below summarises the maturity profile of the group and company’s financial liabilities based on contractual
undiscounted payments.
Group
Year ended 31 December 2022
Trade and other payables
Accruals
Year ended 31 December 2021
Trade and other payables
Accruals
Company
Year ended 31 December 2022
Trade and other payables
Accruals
Year ended 31 December 2021
Trade and other payables
Accruals
Capital Management
Within 1 year
£’000
198
111
Within 1 year
£’000
314
83
Within 1 year
£’000
198
111
Within 1 year
£’000
16
83
Total
£’000
198
111
Total
£’000
314
83
Total
£’000
198
111
Total
£’000
16
83
The primary objective of the group’s capital management is to maintain appropriate levels of funding to meet the commitments
of its forward programme of exploration, development and investment expenditure, and to safeguard the entity’s ability to
continue as a going concern and create shareholder value. At 31 December 2022, capital employed of the group amounted to
£46.5 million (comprised of £46.5 million of equity shareholders’ funds and £nil of borrowings), compared to £46.5 million at
31 December 2021 (comprised of £46.5 million of equity shareholders’ funds and £nil of borrowings).
At 31 December 2022, capital employed of the company amounted to £46.5 million (comprised of £46.5 million of equity
shareholders’ funds and £nil of borrowings), compared to £47.1 million at 31 December 2021 (comprised of £47.1 million of
equity shareholders’ funds and £nil of borrowings).
21. Called-up Share Capital
The allotted, called-up and fully paid share capital at 31 December was as follows:
Issued (Group and company)
“A” deferred shares of 1.65p
Shares thousand
6,916
2022
£’000
114
Shares thousand
6,916
Ordinary shares of 0.1 pence each
At 1 January
Placing and subscription
Acquisition for shares
At 31 December
Total
68
8,929,613
8,930
-
-
8,929,613
8,936,529
-
-
8,930
9,044
7,096,982
1,363,637
468,994
8,929,613
8,936,529
2021
£’000
114
7,097
1,364
469
8,930
9,044
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022
The holders of ordinary shares are entitled to one vote per share at the meetings of the company and to dividends as declared
in proportion to the amounts paid up on the ordinary shares. No shares of the company are currently redeemable or liable to
be redeemable at the option of the holder or the company.
The “A” deferred shares carry no voting rights. The holders of “A” deferred shares do not have any right to receive written notice
of or attend, speak or vote at any general meeting of the company, or to any dividend declared by the company. They may
however be redeemed by the company at any time at its option for one penny for all the “A” Deferred shares without obtaining
sanction of such holders.
As of 25 May 2023, the latest practicable date before completion of these financial statements, 248 million further ordinary
shares were issued in relation to the acquisition of Simwell Resources Limited on 3 January 2023, see note 26.
22. Share-Based Payments
As at 31 December 2022, 125,000,000 options granted by the company were outstanding. These options were granted in
March 2018. No options were granted in 2022. The options vest on the vesting dates shown in the table below and can be
exercised at any time after vesting, prior to the expiry date, based on the exercise prices shown in the table below. There are no
other vesting conditions.
In 2021 10,000,000 options (2020: nil) were granted to Anthony Samaha, the company’s Finance Director, exercisable at
1.0p, on or before 19 October 2022, vesting on 31 December 2021. The exercise price represented a premium of 72%
to the company’s closing share price of 0.58p on the date prior to grant of 25 February 2021. These options expired on
19 October 2022.
On 17 February 2022, the company announced amendments to the terms of certain existing options currently held by the
Executive Directors. In common with many businesses, the COVID-19 pandemic significantly constrained the company’s
activities, delaying management’s ability to continue the successful implementation of its medium-term strategy. Therefore,
in order to further incentivise the executive management of the company and further align their interests with shareholders,
Reabold’s Remuneration Committee amended the following Existing Options such that their expiry dates were extended by
12 months, to 19 March 2023, and additional extended vesting terms are applicable, as outlined below. The exercise prices of
the Existing Options remain unchanged. The incremental fair value granted as a result of the modifications was £10,833. The
options below represent the only options outstanding as at 31 December 2022. As at the date of publication this report, all
options granted to directors prior to 31 December 2022 have now expired. Further information can be found in the Directors’
remuneration report on pages 27 to 29.
Executive
Sachin Oza
Position
Co-CEO
Stephen Williams
Co-CEO
Anthony Samaha
Finance Director
Existing
Options
Held
20,000,000
20,000,000
20,000,000
20,000,000
20,000,000
20,000,000
5,000,000
Exercise
Price
0.60p
0.90p
1.20p
0.60p
0.90p
1.20p
0.60p
Current
Expiry
19-Mar-22
19-Mar-22
19-Mar-22
19-Mar-22
19-Mar-22
19-Mar-22
Amended
Expiry
19-Mar-23
19-Mar-23
19-Mar-23
19-Mar-23
19-Mar-23
19-Mar-23
19-Mar-22
19-Mar-23
Current
Vesting
Status
Vested
Vested
Vested
Vested
Vested
Vested
Vested
Amended
Vesting
Dates
30-Sep-22
31-Dec-22
31-Dec-22
30-Sep-22
31-Dec-22
31-Dec-22
30-Sep-22
69
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options
during the year:
Outstanding as at 1 January
Granted during the year
Expired during the year
Exercised during the year
2022
Number
325,000,000
2022
WAEP
pence
0.78
2021
Number
315,000,000
-
-
10,000,000
(200,000,000)
-
0.71
-
-
-
Outstanding as at 31 December
125,000,000
0.89
325,000,000
Exercisable at 31 December
125,000,000
0.89
265,000,000
2021
WAEP
pence
0.80
0.10
-
-
0.78
0.72
The weighted average remaining contractual life of options outstanding as at 31 December 2022 is 0.2 years (2021: 0.6
years).
For the options amended on 17 February 2022, the fair values were calculated using the Black-Scholes model. The key inputs
into the model were as follows:
Amended 17 February 2022
Risk free rate
0.15%
Share price
volatility
69.45%
Expected life
1.08 years
Share price at date
of grant
0.26p
Expected volatility was determined by calculating the historical volatility of the company’s share price.
The company recognised total expenses relating to equity-settled share-based payment transactions during the year of
£22,000 (2021: £152,000). The balance on the share-based payments reserve at 31 December 2022 is £1.9 million
(2021: £1.9 million).
23. Capital Commitments
Authorised future capital expenditure by group companies for which contracts had been signed at 31 December 2022
amounted to £nil (2021: £nil). However, the group does have obligations to carry out defined work programmes on its licences,
under the terms of the award of rights to these licences. The company is not obliged to meet other joint venture partner shares
of these programmes.
PEDL 183
The Joint operation between Rathlin, Reabold and Union Jack have a commitment to drill and test a new Kirkham Abbey
deviated or horizontal appraisal well by June 2024. The company estimates it’s 16.67% share of costs to be c.£1.4 million for
drilling a new well and £0.6 million for testing the well.
UK North Sea
Reabold estimates its share of firm exploration and appraisal work commitments on its North Sea portfolio to be c.£0.5 million
over the next 2 years. The company has not yet taken a decision on whether to drill any of its North Sea licences.
70
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022
24. Related Party Transactions and Transactions with Directors
Transactions between the group and its associates is disclosed in Note 14. There are no related party transactions, or
transactions with Directors that require disclosure except for the remuneration items disclosed in the Directors Remuneration
Report and note 7 above. The disclosures in note 7 include the compensation of key management personnel. The company’s
related parties consist of its subsidiaries and the transactions and amounts due to/due from them are disclosed in the
accompanying notes to the company financial statements.
25. Non-underlying items
Non-underlying items are charges or credits included in the financial statements that Reabold has decided to disclose
separately because it considers such disclosure to be meaningful and relevant to investors. They are items that management
considers not to be part of underlying business operations and are disclosed in order to enable investors to understand
better and evaluate the group’s financial performance. In 2022, Reabold incurred £191,000 in legal and professional fees in
relation to the successful defence from the attempt, from a group of five beneficial shareholders, to remove the entire Board
of directors of Reabold and replace them with four new directors. All resolutions proposed by the requisitioning shareholders
were rejected at a General Meeting held in November 2022.
26. Events after the reporting period
Acquisition of Simwell Resources Limited
On 3 January 2023, Reabold completed the acquisition of the entire issued share capital Simwell Resources Limited (now
Reabold Southern North Sea Limited) in January 2023. which includes interests in four Southern North Sea licences – P2332
(Reabold 30%, Shell U.K Ltd 70%, operator) and P2329, P2427 and P2486 (Reabold 10%, Horizon Energy Partners Ltd
77.5%, operator and Ardent Oil Ltd 12.5%). The transaction substantially increases Reabold’s footprint in the emerging
Zechstein trend, complementing its onshore position in PEDL183, including the West Newton project. The licences have a
number of prospects covered with high quality 3D seismic data.
The breakdown of the consideration paid was as follows:
• £363,835.76, by way of initial consideration, satisfied through the issue of 134,753,985 new Ordinary Shares
• £305,157.71 to certain Simwell creditors satisfied by the issue of 113,021,374 new Ordinary Shares
• £373,398.36 paid in cash to certain Simwell creditors.
A contingent deferred consideration of £150,000 is payable to the sellers if, inter alia, the operator of licence P2332
undertakes to the NSTA that the licensees will commit to drill a well pursuant to a defined work programme and within the
applicable timescales.
Authority to buyback shares and capital reduction
On 28 February 2023, the company held a general meeting at which shareholders granted the company authority to make
market purchases of up to 2,294,346,977 ordinary shares of £0.001 each in the capital of the company and approved the
cancellation of the company’s share premium account. The court approved the cancellation of the company’s share premium
account on 28 March 2023.
71
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Commencement of a share buyback programme of up to £750,000.
On 28 April 2023, the company announced the commencement of a share buyback programme of up to £750,000 in
accordance with the authority granted by shareholders at the company’s General Meeting on 28 February 2023.
Reabold’s Board believes that the current market value of the company’s ordinary shares makes the buyback an attractive
investment. Furthermore, the quantum of the buyback programme has been set by the Board after having considered the
current capital position and future capital needs of the company, such that it retains financial flexibility whilst maintaining an
efficient balance sheet.
The Board will keep the Programme under review to ensure that it continues as an efficient and effective means of generating
value for Reabold shareholders. While the company has launched the Programme, there is no certainty on the volume of shares
that may be acquired, nor any certainty on the pace and quantum of acquisitions.
The Ordinary Shares repurchased will be held in Treasury, to meet the obligations from employee share option programmes
or other allocations of shares to employees of the company, or to re-issue such Ordinary Shares held in Treasury outside of a
pre-emptive offer.
The Programme is expected to continue until the company’s next Annual General Meeting, which will be held on 29 June 2023.
Operational Update
On 28 April 2023, the company announced an operational update on its UK onshore and offshore assets, all of which is
detailed in the review of operations on pages 7 to 10.
Long Term Incentive Plan Awards
On 28 April 2023, the company announced it had granted nil cost options over a total of 390,000,000 ordinary shares of 0.1p
each (“Ordinary Shares”) (representing approximately 4.25% of the company’s issued share capital) in accordance with the
rules of the new Reabold Resources plc 2023 Long Term Incentive Plan (“LTIP”). The award has been made to members of the
group’s executive team and senior management. All previous share option plans in the company expired on 19 March 2023.
These awards include a total of 150,000,000 Ordinary Shares to each of the Co-Chief Executive Officers and 90,000,000
Ordinary Shares to the Chief Financial Officer, as set out in the table below and are subject to vesting criteria that are designed
to incentivise performance that delivers value for all shareholders. Awards are subject to standard malus and clawback
provisions.
The vesting criteria is based on Total Shareholder Return (“TSR”) over a three-to-five-year period. For the awards to vest in full,
the TSR of a share must be at or more than six times (6x) the market value of a share at the grant date using a 30-trading day
average. The first measurement date shall be at the end of year three, the second measurement date at the end of year four
and the final measurement date at the end of year five. If TSR is less than 2.5x market value, 0% of the award vests. If TSR is at
2.5x market value, 30% of the award vests and if TSR is at 4x market value, 60% of the award vests. Performance between TSR
thresholds shall be calculated on a straight-line basis.
Director/PDMR
Sachin Oza
Stephen Williams
Chris Connolly
Position
Co-Chief Executive Officer
Number of Ordinary Shares awarded
150,000,000
Co-Chief Executive Officer
150,000,000
Chief Financial Officer
90,000,000
72
Notes to the Financial StatementsFor the year ended 31 December 2022Reabold Resources Plc Financial statements for the year ended 31 December 2022 Investment in LNEnergy
On 9 May 2023, Reabold announced that it had entered into a conditional subscription and option agreement (the
“Subscription Agreement”) with LNEnergy Limited (“LNEnergy”) and a conditional shareholder option agreement with certain
existing shareholders of LNEnergy (the “Shareholder Option Agreement”) (together, the “Agreements”). Pursuant to the terms of
the Agreements, Reabold will initially acquire an interest of 3.1% of LNEnergy for cash consideration of £250,000, and receive
options to acquire, at its sole discretion, further shares in LNEnergy which, if exercised, would result in Reabold holding a
25.0% shareholding in LNEnergy for aggregate cash and equity consideration of £3.8 million.
LNEnergy’s primary asset is an option over a 90% interest in the Colle Santo gas field, onshore Italy in the Abruzzo region.
With 65Bcf of 2P reserves, as estimated by RPS as of 30 September 2022, this is a highly material undeveloped onshore
gas resource, particularly in the context of onshore Western Europe, and subject to the necessary approvals and permits,
is development ready with no additional drilling required. First gas is targeted for early 2025. This project is aligned with
Reabold’s strategy to help to progress high quality pre-cash flow projects that can deliver material returns to shareholders.
Under the terms of the Subscription Agreement, Reabold has initially subscribed for 32 new LNEnergy shares (representing
3.1% of LNEnergy’s enlarged share capital) for an aggregate consideration of £250,000 (the “Initial Subscription”), to be
satisfied through existing cash resources. In addition, Reabold will receive an option to acquire a further 36 new LNEnergy
shares (representing 3.3% of LNEnergy’s enlarged share capital at such time) for an aggregate cash consideration of £500,000
(the “First Option”) and a second option to acquire a further 127 new LNEnergy shares (representing 10.5% of LNEnergy’s
enlarged share capital at such time) for an aggregate cash consideration of £1,800,000 (the “Second Option”), each of which
would be satisfied through existing cash resources in the event that they are exercised.
In conjunction with the Subscription Agreement, Reabold has entered into the Shareholder Option Agreement, whereby
Reabold will receive an option to acquire 108 existing LNEnergy shares (representing 10.0% of LNEnergy’s enlarged share
capital at such time) from certain LNEnergy shareholders for an aggregate consideration of £1,500,000, payable through the
issue of new ordinary shares in the capital of the company (the “Shareholder Option”), which must be exercised simultaneously
with the First Option in order to enable the First Option to be exercised.
Under the terms of the Agreements, which are inter-conditional, Reabold is only committed to the Initial Subscription, whereas
the First Option, Shareholder Option and Second Option are all exercisable at the company’s sole discretion. Should they
be exercised, the First Option, Shareholder Option and Second Option can only be exercised in full. The First Option and
Shareholder Option will expire on 31 May 2023 and the Second Option will expire on 30 November 2023.
73
Reabold Resources Plc Financial statements for the year ended 31 December 2022Notes to the Financial Statements Reabold Resources Plc Financial statements for the year ended 31 December 2022
Glossary
2C resources, 2C
Best estimate contingent resource, being quantities of hydrocarbons which are estimated, on a given date, to be potentially
recoverable from known accumulations but which are not currently considered to be commercially recoverable.
bcf
Billion standard cubic feet.
boe
Barrels of oil equivalent.
boe/d
Barrels of oil equivalent per day.
CPR
Competent Persons Report.
ESG
Environmental, Social and Governance.
IFRS
International Financial Reporting Standards.
mmboe
million barrels of oil equivalent
UKCS
United Kingdom Continental Shelf
74
Reabold Resources Plc Financial statements for the year ended 31 December 2022 Corporate Information
Registered Office
20 Primrose Street
London
EC2A 2EW
Nominated Adviser
Strand Hanson Limited
26 Mount Row
London
W1K 3SQ
Brokers
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
finnCap Ltd
1 Bartholomew Close
London
England
EC1A 7BL
Auditor
Mazars LLP
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
Bankers
Barclays
Company Secretary
Anthony Samaha (resigned 9 May 2022)
Christopher Connolly (appointed 9 May 2022)
Registrar
Neville Registrars Limited
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
Legal adviser
Hill Dickinson LLP
20 Primrose Street
London
EC2A 2EW
Public Market Admission
AIM, London
Symbol: RBD
Website
www.reabold.com
Company Number
3542727
75
Reabold Resources Plc Financial statements for the year ended 31 December 2022
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