TIDMCZN
RNS Number : 4794X
Curzon Energy PLC
30 April 2019
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
30 April 2019
Curzon Energy Plc
("Curzon" or the "Company")
Results for the Year Ended 31 December 2018
Curzon Energy plc (LON:CZN) the London Stock Exchange listed oil
and gas development company, pursuing a targeted strategy of
upstream North American natural gas appraisal and development
assets, announces its full year audited results for the year ended
31 December 2018.
A copy of the Company's annual report and financial statements
for 2018, extracts of which are set out below, will be made
available on the Company's website www.curzonenergy.com
shortly.
Highlights
-- MOU signed with Pared Energy to pursue a high-impact
multi-TCF potential gas project in Texas
-- Well re-work operations and long-term testing at Coos Bay
conducted throughout the year; focus on accessing deeper productive
coal seams
-- Board now considering go-forward options at Coos Bay to
include potentially drilling new wells alongside pursuit of farm-in
partnerships
-- Board of Directors streamlined and overall cost basis significantly reduced
-- Deepened investor exposure to the revolution in US natural
gas markets and associated LNG exports
-- Pre-tax loss of US$1.95m (2017: US$1.83m) after impairment of
exploration assets of US$0.575m
Scott Kaintz, Chief Executive Officer comments:
"2018 saw the evolution of Curzon into a leaner and more focused
entity with a clear and compelling investment offering for
investors. With the groundwork now in place to progress the
potential Texas Gas Project, coupled with the residual upside of
Coos Bay, the Company believes it is well positioned for success in
2019."
For further information please contact:
Curzon Energy Plc +44 (0) 20 7747 9980
Scott Kaintz
www.curzonenergy.com
SP Angel Corporate Finance LLP +44 (0) 20 3470 0470
Richard Hail
Richard Redmayne
Optiva Securities Limited +44 (0) 20 3137 1902
Christian Dennis
Chairman's Statement
I am pleased to present the annual report for the Company
covering its results for the year to 31 December 2018.
The Company was incorporated for the purpose of pursuing a
targeted acquisition strategy of oil and gas assets. The Company's
first acquisition occurred on 3 October 2017 when the Company
acquired 100% of the membership interests of Coos Bay Energy LLC
("Coos Bay"), which is the owner and operator of approximately
45,370 acres of coalbed methane leases ("CBM") in Coos Bay, Oregon,
USA, pursuant to a membership interest purchase agreement dated 20
May 2017.
During the course of the year the Company focused on extended
testing of the five existing wells at Coos Bay with particular
emphasis on gaining access to the deeper coal seams that had been
previously isolated. Following several efforts to rework the wells
gas flow proved inconsistent and inconclusive. Well re-entries
appeared to stir up additional coal fines in the wellbores
resulting in little net gains. Ultimately the view taken by the
Board was that as Curzon had inherited the wells, the observed
results were unlikely to be representative of the performance of
new wells drilled by the Company in locations of its choosing, and
so did not provide an accurate indication of the true commercial
potential of the Coos Bay project. Analysis of the data gathered
will be carried out to plan a new appraisal programme focusing on
the Lower Coaledo formation where 90%+ of the gas reserves are
located. The emphasis in any new efforts will be on controlling the
entirety of the appraisal process from picking representative well
locations to drilling and completing using the latest technologies
available with the clear goal of determining the commerciality of
the project.
In addition, the Company has announced a memorandum of
understanding ("MOU") with Pared Energy LLC to develop a
conventional gas fairway in the Claiborne Group in Texas. The
Company believes that the Texas Gas Project offers multi-TCF
potential with over 1,000ft of stacked pay with expansion
opportunities over 250,000 acres. In Texas, Curzon and Pared are
seeking to apply modern drilling and completion techniques,
including horizontal wells, to an area of known gas bearing
horizons where local techniques and methods have changed little
over past decades.
Phase 1 of the Texas Gas Project will include the drilling and
completion of one vertical well with a second horizontal well to be
drilled thereafter. If successful, the parties intend to increase
their lease land position and to drill a three to five well
delineation programme before moving on to infill drilling and
further expansion. The Company considers the Texas Gas Project to
be an attractive high impact drill-ready opportunity where
appraisal success will bring immediate gas sales utilizing surplus
pipeline capacity in the region.
Overall the Board feels that the Texas Gas Project could provide
a highly complementary addition to the Company's existing project
at Coos Bay and together the expanded portfolio would provide
investors exposure to perhaps the most exciting story in the energy
space, the increasing importance of US natural gas and LNG to world
markets.
During the course of the year the Board underwent several
changes with the focus being to bolster our presence in the UK
where Curzon is listed, and to reduce overheads significantly.
Scott Kaintz joined the Board in June 2018 and was subsequently
appointed CEO in November of that year. Scott brings with him an
extensive background of running small cap natural resource
businesses and will be tasked to both drive the projects forward
while expanding our UK investor base.
The Group incurred a loss of US$1,953,708 in the period ended 31
December 2018. The majority of this loss comprised expenditures in
relation to the well testing and rework operations conducted at
Coos Bay during the course of the year, as well as an impairment of
US$575,316 reflecting specific investments into Coos Bay that may
not prove part of the future plans for the project.
With the first full year of trading now behind, my fellow
Directors and I look forward to pursuing our US focused natural gas
strategy with renewed vigour and look forward to updating
shareholders on our further progress in due course.
John McGoldrick
Non-Executive Chairman
29 April 2019
Strategic Report
Financial Results
The Company was formed in January 2016 to undertake acquisitions
in the oil and gas sector. During the year ended 31 December 2018,
the Company primarily conducted gas exploration and extended well
testing activities at Coos Bay while examining additional
opportunities in the natural gas sector.
The Group loss for the year to 31 December 2018 was US$1,953,708
(2017: US$1,833,381). There were no revenues and the majority of
the loss related to Company overheads and expenditures related to
appraisal activities at Coos Bay.
The loss per share was US$0.03 (2017: loss per share
US$0.03).
The Group's cash balances at the end of 2018 totalled US$125,621
(2017: US$1,595,035), and the Company's cash and undrawn borrowing
resources are considered sufficient to meet its obligations, in
particular following a significant reduction in corporate overheads
and staffing implemented during the latter half of 2018.
Following mixed results from well testing operations at Coos
Bay, the Directors are now focused on acquiring a working interest
in a Texas gas project and intend to reassess the Coos Bay results
in 2018 and then use that work to create revised go-forward plans.
As such an impairment loss of US$575,316 has been recognized in the
accounts to reflect that proportion of 2018 expenditure at Coos Bay
that is not deemed likely to be viable for future development.
The Board believes that the Company will be able to raise, as
required, sufficient cash and/or reduce its commitments to enable
it to continue these objectives, and to continue to meet, as and
when they fall due, its liabilities for at least the next twelve
months from the date of approval of these financial statements. The
financial statements have, therefore, been prepared on the going
concern basis.
Following reductions made during 2018, the Group has 3 members
of staff (including Directors).
Principal activities
The Company was incorporated in England and Wales on 29 January
2016 as an investment company to acquire oil and gas assets. Its
first acquisition was of Coos Bay. The Directors have identified a
second complementary gas project that they seek to acquire an
interest in, and they expect to return to the market to acquire
and/or raise funds for this and potentially other projects in the
future.
Coos Bay owns certain CBM and related assets, which it acquired
on 4 November 2016 by acquiring Westport Energy Acquisition, Inc.
and its wholly owned subsidiary Westport Energy LLC (the "US
Group") from Westport Energy Holdings Inc. (the "Acquisition"), a
publicly held company trading on the OTC Pink Market. The US Group
had been operating a CBM business in Coos Bay, Oregon for 6 years.
At the time of the Acquisition, the US Group's CBM business
consisted of leases covering approximately 45,370 acres in Coos
Bay, Oregon.
The Group's business continues to be operated through the US
Group, with a focus on oil and gas exploration, appraisal and
development, with an initial goal of determining the ultimate
commerciality of the Coos Bay project, as well as progressing any
other projects that may be acquired.
The Company is a holding company with the following subsidiaries
being part of the US Group:
Name Country of Incorporation Proportion Principal activity
of equity
ownership
Coos Bay Energy Nevada, USA 100% Gas Exploration &
LLC Development
------------------------- ----------- -------------------
Westport Energy Delaware, USA 100% Holding Company
Acquisition,
Inc.
------------------------- ----------- -------------------
Westport Energy, Delaware, USA 100% Gas Exploration &
LLC Development
------------------------- ----------- -------------------
Coos Bay Energy LLC, which employs the Group's employees and
conducts operations in the Coos Bay Basin area, is held directly by
the Company. Its two indirectly owned subsidiaries are Westport
Energy Acquisition Inc. and its wholly-owned subsidiary, Westport
Energy LLC, which are held by Coos Bay Energy LLC.
Review of the business
2018 saw the Company conducting extensive well testing
operations at Coos Bay in Oregon where the gas flow rates proved
inconsistent and inconclusive. By the conclusion of the year the
Company felt that the observed well test results were unlikely to
be representative and so did not provide an accurate indication of
the true commercial potential of the Coos Bay project. Well
re-entries appeared to stir up additional coal fines in the
wellbores resulting in little net gains. This was exacerbated by
the fact that the wells tested were nearly ten years old and had
been shut in for most of that period, had been drilled and
completed by previous operators, and were largely not perforated in
the coal horizons where the majority of the gas reserves are
located.
As such, the Company announced its intention to augment the Coos
Bay project with a complementary project that offered significant
multi-trillion cubic feet ("TCF") of upside in an established oil
and gas region in Texas, USA. The Company proceeded to sign a
memorandum of understanding in December 2018 announcing its
intention to pursue joint development of this project.
Key performance indicators (KPIs)
The Directors have identified the following key performance
indicators ('KPIs') that the Company will track over 2019 and into
future years. These will be refined and augmented as the Group's
business matures.
The Directors consider that the KPIs are:
i) A well-funded business in terms of cash resources and operating cashflows; and
ii) Appraisal and drilling results of the Company's projects,
iii) Entering production and then monitoring levels of
production of gas and condensates; and
iv) Operating costs once in production.
Principal Risks and Risk Management
Exploration is an inherently high-risk business:
-- Even the most promising prospects can have failures for many reasons, such as:
o The gas assets may not be found in commercial quantities if
there are errors in the underlying geological assumptions or
analysis.
o Hydrocarbons may have been present but escaped due to
unexpected geological events.
o The reservoir may not flow hydrocarbons at commercially viable
rates of flow.
o The drilling may encounter technical problems which make it
impossible or too expensive to reach the target.
o The ability of the Group to exploit and develop gas reserves
depends on its current leases. There is no guarantee that existing
leases will be continued beyond their primary term or additional
leases acquired on attractive terms.
-- The Company may take on commitments for which it then cannot
find adequate funding. Although the Company can then potentially
sell all or part of its assets:
o There is no guarantee it could find a buyer.
o Even if it does find a buyer, the transaction may take too
long, and the Company's cash resources may become exhausted.
The Company's risk mitigation strategies include the
following:
-- Partnering with key experts that have demonstrated an ability
to determine the presence or absence of hydrocarbons.
-- Utilizing the Directors' experience who have excellent
technical, commercial or local knowledge as to where to locate
assets.
-- Securing the support of a number of key private shareholders,
and actively pursuing other sources of funding.
-- Utilizing third parties to assist with the management of currency risk.
Corporate Responsibility
The Company takes its responsibilities as a corporate citizen
seriously. The Board's primary goal is to create shareholder value
but in a responsible way which serves all stakeholders.
Governance
The Board considers sound governance as a critical component of
the Company's success and the highest priority. The Company has an
effective and engaged Board, with a strong non-executive presence
drawn from diverse backgrounds and with well-functioning governance
committees. Through the Company's compensation policies and
variable components of employee remuneration, the Remuneration
Committee of the Board seeks to ensure that the Company's values
are reinforced in employee behaviour and that effective risk
management is promoted.
Analysis by Gender
Category Male Female
Directors 3 0
----- -------
Senior Managers 0 0
----- -------
Other Employees 0 0
----- -------
Employees and their development
The Company is dependent upon the qualities and skills of its
employees and their commitment plays a major role in the Company's
business success. Employees' performance is aligned to the
Company's goals through an annual performance review process and
via incentive programmes. The Company provides employees with
information about its activities through regular briefings and
other media. The Company operates a share option and warrant scheme
operated at the discretion of the Remuneration Committee.
Diversity and inclusion
The Company does not discriminate on the grounds of age, gender,
nationality, ethnic or racial origin, non-job-related-disability,
sexual orientation or marital status. The Company gives due
consideration to all applications and provides training and the
opportunity for career development wherever possible. The Board
does not support discrimination of any form, positive or negative,
and all appointments are based solely on merit.
Health and safety
The Company endeavours to ensure that the working environment is
safe and healthy and conducive to the wellbeing of employees who
are able to balance work and family commitments. The Company has a
Health and Safety at Work policy which is reviewed regularly by the
Board and is committed to the health and safety of its employees
and others who may be affected by the Company's activities. The
Company provides the information, instruction, training and
supervision necessary to ensure that employees are able to
discharge their duties effectively. The Health and Safety
procedures used by the Company ensure compliance with all
applicable legal, environmental and regulatory requirements, as
well as its own internal standards.
Outlook
The Company's near-term goals are to develop the business
through the acquisition of a meaningful interest in the Texas gas
project currently identified, while reassessing the way forward at
Coos Bay through a top-down clean-slate review process.
While the performance of the inherited wells at Coos Bay was
disappointing during 2018, the fact that the Company did not drill
its own wells nor conduct an industry standard appraisal programme
indicates that the commerciality of the field cannot yet be
definitively determined. With significant gas reserves previously
identified at Coos Bay, the Board believes that a detailed review
of all the technical data and operational activities to date by
both third parties historically and by the Company over the last
year, will provide insightful guidance for all future work
programmes at the Coos Bay project.
In Texas, the Company remains very excited by the potential to
take part in near-term drilling of a high-impact multi-TCF
conventional gas appraisal programme. The major attraction of the
Texas gas project stems from the substantial upside potential
expected from the application of modern drilling and completion
methods that have been highly successful in regional analogues
throughout the Texas Gulf Coast and across the border into Mexico,
to the project and the surrounding area, that continue to apply
traditional drilling methods and have not seen any substantial
changes in these techniques for many years. The Board also feels
the Texas gas project is complementary to its existing CBM asset at
Coos Bay.
Together the proposed Texas gas project and Coos Bay offer
Curzon's investors exposure to the rise of natural gas as the ideal
transition fuel to a decarbonized future, and both its production,
and now major gas exports on a wide scale from the United States in
the form of liquefied natural gas ("LNG"). These developments have
clearly impacted world gas markets and the continued growth of LNG
exports from the US is expected to have many positive effects from
changing the way gas is priced both in the US and abroad to
reducing European reliance on Russia and other potentially
politicised supplies. Curzon's gas focus positions it to benefit
from these significant ongoing energy developments over the coming
years.
Signed by order of the Board.
Scott Kaintz
Chief Executive Officer
29 April 2019
Independent auditor's report to the members of Curzon Energy
Plc
Opinion
We have audited the consolidated financial statements of Curzon
Energy Plc and its subsidiaries (the "Group") for the year ended 31
December 2018 which comprise the consolidated statement of
comprehensive income, the consolidated and company statements of
financial position, the consolidated and company statements of cash
flows, the consolidated and company statements of changes in equity
and notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and company's affairs as at 31 December 2018
and of its loss for the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European Union;
-- the company financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union as
applied in accordance with the provisions of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
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 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, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 to the financial statements, which
details the factors the company has considered when assessing the
going concern position. As detailed in note 2, the uncertainty
surrounding the availability of funds to finance ongoing working
capital requirements indicates the existence of a material
uncertainty that may cast significant doubt on the company's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the financial statements as a whole to be $55,000,
based on 2% of gross assets.
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and directors' remuneration.
We agreed with the Audit Committee to report to it all
identified errors in excess of GBP3,000. Errors below that
threshold would also be reported to it if, in our opinion as
auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
There are two components of the Group, Curzon Energy Plc as an
entity and the US Group headed by Coos Bay Energy LLC. The audit of
Curzon Energy Plc was conducted from the UK. The accounting records
were provided to us by management. The company engaged a US firm to
undertake the audit work on the US group. The specified audit
procedures were performed under our direction. We issued
instructions to the US firm that detailed the significant risks to
be addressed through the audit procedures and indicated the
information we required to be reported. We reviewed their working
papers and discussed key findings.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our
audit.
Key audit matter How the scope of our audit addressed
the key audit matter
==================================== ============================================================
Valuation of Intangible assets We reviewed management's assessment
The group's primary focus which concluded that no further impairment
is on exploration activities charge was required.
in the Coos Bay Basin. The In considering this assessment we
exploration assets at 31 December reviewed the following sources of
2018 totalled $2.6m and an evidence:
impairment of $0.6m was recognised * The primary lease agreement in place supporting the
in the year in relation to company's right of extraction;
unsuccessful exploration costs
capitalised in the period.
* The Competent Persons Report (CPR) that formed the
Given the impairment recognised basis of the valuation;
we considered the risk that
the residual intangible assets
relating to the Coos Bay Basin * Board minutes, budgets and other operational plans
was impaired. relating to the commercial appraisal of the asset;
* Compared the valuation methodology to the prior
year's approach and the independent third party
valuation commissioned in 2017;
* Assessed the reasonability of the inputs and key
underlying assumptions, challenging management's
inputs and assessing the impact of independently
derived inputs on the valuation model;
* Discussed plans and intentions with management.
We also considered the appropriateness
of the disclosure.
Key observations
We reviewed the valuation methodology
and concur that it is consistent with
that used in prior years. We assessed
the key inputs and assumptions used
in the valuation model and consider
them to be reasonable.
==================================== ============================================================
Our audit procedures in relation to this matter were designed in
the context of our audit opinion as a whole. They were not designed
to enable us to express an opinion on these matters individually
and we express no such opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, 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
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. 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 the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion based on the work undertaken in the course of our
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 directors' report and strategic 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
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit
Responsibilities of the directors for the financial
statements
As explained more fully in the directors' responsibilities
statement set out on page 17, 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 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 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.
We designed our audit approach to be capable of detecting
irregularities, including fraud. In particular:
We gained an understanding of the legal and regulatory framework
applicable to the Group and considered the risk of acts by the
Group which were contrary to applicable laws and regulations,
including fraud.
We designed audit procedures to respond to the risk, recognising
that the risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment
Our tests included, but were not limited to: review of the
financial statement disclosures to underlying supporting
documentation and enquiries of management. There are inherent
limitations in the audit procedures described above and the further
removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we would become aware of it.
We did not identify any key audit matters relating to
irregularities, including fraud. As in all of our audits we also
addressed the risk of management override of internal controls,
including testing journals and evaluating whether there was
evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by the Board on 26 March 2019 to audit the
financial statements for the year ended 31 December 2018. Our total
uninterrupted period of engagement is 3 years, covering the period
ended 31 December 2016 to 31 December 2018.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the company and we remain independent of the
group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of our 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.
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
29 April 2019
Consolidated statement of comprehensive income
for the year ended 31 December 2018
2018 2017
US$ US$
------------------------------------------ ------------ ------------
Well field expenses - (293,867)
Administrative expenses (1,363,949) (1,662,619)
------------------------------------------ ------------ ------------
Loss from operations (1,363,949) (1,956,486)
Finance expense, net (14,443) (102,288)
Impairment of exploration and evaluation
assets (575,316) -
Other income - 225,393
------------------------------------------ ------------ ------------
Loss before taxation (1,953,708) (1,833,381)
Income tax expense - -
------------------------------------------ ------------ ------------
Loss for the year attributable to
equity holders of the parent company (1,953,708) (1,833,381)
------------------------------------------ ------------ ------------
Other comprehensive income/(expense)
Gain/(loss) on translation of parent
net assets and results from functional
currency into presentation currency (70,245) 44,624
------------------------------------------ ------------ ------------
Total comprehensive loss for the year (2,023,953) (1,788,757)
------------------------------------------ ------------ ------------
Loss per share
Basic and diluted, US$ (0.03) (0.03)
Consolidated statements of financial position
as at 31 December 2018
2018 2017
US$ US$
-------------------------------------- ------------- -------------
Assets
Non-current assets
Intangible assets 2,559,000 2,559,000
Restricted cash 125,000 125,440
Total non-current assets 2,684,000 2,684,440
-------------------------------------- ------------- -------------
Current assets
Prepayments and other receivables 36,157 148,616
Cash and cash equivalents 125,621 1,595,035
-------------------------------------- ------------- -------------
Total current assets 161,778 1,743,651
-------------------------------------- ------------- -------------
Total assets 2,845,778 4,428,091
-------------------------------------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 506,894 463,413
Borrowings 213,812 578,599
-------------------------------------- ------------- -------------
Total current liabilities 720,706 1,042,012
-------------------------------------- ------------- -------------
Total liabilities 720,706 1,042,012
-------------------------------------- ------------- -------------
Capital and reserves attributable
to shareholders
Share capital 1,024,036 964,575
Share premium 3,563,122 3,199,004
Share-based payments reserve 454,026 114,659
Warrants reserve 191,011 191,011
Merger reserve 31,212,041 31,212,041
Foreign currency translation reserve (63,774) 6,471
Accumulated losses (34,255,390) (32,301,682)
-------------------------------------- ------------- -------------
Total capital and reserves 2,125,072 3,386,079
-------------------------------------- ------------- -------------
Total equity and liabilities 2,845,778 4,428,091
-------------------------------------- ------------- -------------
The financial statements were approved and authorised for issue
by the Board of Directors on 29 April 2019 and were signed on its
behalf by:
Scott Kaintz
Director
Consolidated statements of changes in equity
Other Accumulated
Share capital Share premium reserves losses Total
US$ US$ US$ US$ US$
--------------------- -------------- -------------- ----------- ------------- -------------
Equity as at
1 January 2017 639,925 763,854 31,173,888 (30,468,301) 2,109,366
--------------------- -------------- -------------- ----------- ------------- -------------
Loss for the
year - - - (1,833,381) (1,833,381)
Other comprehensive
income for the
year - - 44,624 - 44,624
--------------------- -------------- -------------- ----------- ------------- -------------
Total comprehensive
loss for the
year - - 44,624 (1,833,381) (1,788,757)
Issue of shares 324,650 2,921,855 - - 3,245,505
Share issue costs - (486,705) - - (486,705)
Issue of share
warrants - - 191,011 - 191,011
Issue of share
options - - 114,659 - 114,659
At 31 December
2017 964,575 3,199,004 31,524,182 (32,301,682) 3,386,079
Loss for the
year - - - (1,953,708) (1,953,708)
Other comprehensive
income for the
year - - (70,245) - (70,245)
--------------------- -------------- -------------- ----------- ------------- -------------
Total comprehensive
loss for the
year - - (70,245) (1,953,708) (2,023,953)
Issue of shares 59,461 416,223 - - 475,684
Share issue costs - (52,105) - - (52,105)
Issue of share
options - - 339,367 - 339,367
At 31 December
2018 1,024,036 3,563,122 31,793,304 (34,255,390) 2,125,072
--------------------- -------------- -------------- ----------- ------------- -------------
Other Reserves
Foreign
Share-based currency
Merger payments Warrants translation Total Other
reserve reserve reserve reserve reserves
US$ US$ US$ US$ US$
--------------------- ------------- ------------ --------- ------------- -------------
Equity as at
1 January 2017 31,212,041 - - (38,153) 31,173,888
--------------------- ------------- ------------ --------- ------------- -------------
Loss for the - - - - -
year
Other comprehensive
income for the
year - - - 44,624 44,624
--------------------- ------------- ------------ --------- ------------- -------------
Total comprehensive
loss for the
year - - - 44,624 44,624
Issue of share
warrants - - 191,011 - 191,011
Issue of share
options - 114,659 - - 114,659
At 31 December
2017 31,212,041 114,659 191,011 6,471 31,524,182
Loss for the - - - - -
year
Other comprehensive
loss for the
year - - - (70,245) (70,245)
--------------------- ------------- ------------ --------- ------------- -------------
Total comprehensive
loss for the
year - - - (70,245) (70,245)
Issue of share
options - 339,367 - - 339,367
At 31 December
2018 31,212,041 454,026 191,011 (63,774) 31,793,304
--------------------- ------------- ------------ --------- ------------- -------------
Consolidated statement of cash flows
2018 2017
US$ US$
------------------------------------------------ ------------ ------------
Cash flow from operating activities
Loss before taxation (1,953,708) (1,833,381)
Adjustments for:
Finance cost, net 42,321 86,473
Income from payable write off - (225,393)
Share-based payments charge 339,367 111,367
Impairment of exploration assets 575,316 -
Unrealised foreign exchange movements (27,878) 50,184
Operating cashflows before working capital
changes (1,024,582) (1,810,750)
Changes in working capital:
(Decrease)/increase in payables (22,541) 66,576
Decrease/(increase) in receivables 112,461 (118,542)
------------------------------------------------ ------------ ------------
Net cash used in operating activities (934,662) (1,862,716)
------------------------------------------------ ------------ ------------
Investing activities
Capitalised exploration costs (575,316) -
------------------------------------------------ ------------ ------------
Net cash outflow from investing activities (575,316) -
------------------------------------------------ ------------ ------------
Financing activities
Issue of ordinary shares - 3,087,266
Costs of share issue (52,105) (295,694)
Proceeds from new borrowings 100,000 250,000
Net cash flow from financing activities 47,895 3,041,572
------------------------------------------------ ------------ ------------
Net (Decrease)/increase in cash and cash
equivalents in the period (1,462,083) 1,178,856
Cash and cash equivalents at the beginning
of the period 1,595,035 370,722
Restricted cash held on deposits 125,440 125,315
------------------------------------------------ ------------ ------------
Total cash and cash equivalents at the
beginning of the period, including restricted
cash 1,720,475 496,037
------------------------------------------------ ------------ ------------
Effect of the translation of cash balances
into presentation currency (7,331) 45,457
(Charge)/Interest on restricted cash (440) 125
Cash and cash equivalents at the end
of the period 125,621 1,595,035
Restricted cash held on deposits 125,000 125,440
------------------------------------------------ ------------ ------------
Total cash and cash equivalents at the
end of the period, including restricted
cash 250,621 1,720,475
------------------------------------------------ ------------ ------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR ILMTTMBBTTIL
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