TIDMLOGP
RNS Number : 6050E
Lansdowne Oil & Gas plc
30 June 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the retained EU law version of the Market Abuse Regulations (EU)
No. 596/2014 ("MAR"). Upon the publication of this announcement via
Regulatory Information Service ("RIS"), this inside information is
now considered to be in the public domain. If you have any queries
on this, then please contact Steve Boldy, the Chief Executive
Officer of the Company (responsible for arranging release of this
announcement).
30 June 2023
Lansdowne Oil & Gas plc
("Lansdowne" or the "Company")
Audited Results for the year ended 31 December 2022
2022 Annual Report & Accounts and Notice of Annual General
Meeting
Lansdowne Oil & Gas ("Lansdowne" or "the Company") is
pleased to announce its audited results, for the year ended 31
December 2022. Lansdowne is an upstream oil and gas company,
focused on exploration and appraisal activities in the North Celtic
Sea Basin, off the south coast of Ireland.
Lansdowne is also pleased to announce that the Company's 2022
Annual Report & Accounts have been posted to shareholders along
with the notice of the Annual General Meeting ("AGM") to be held at
12.00 noon on 9 August 2023 at the offices of Pinsent Masons LLP,
30 Crown Place, Earl Street, London EC2A 4ES.
Copies of the 2022 Annual Report & Accounts and Notice of
AGM will shortly be available to download from the Company's
website, www.lansdowneoilandgas.com
Jeffrey Auld, Non-Executive Chairman of Lansdowne,
commented:
Lansdowne exited 2022 having spent the year pursuing the award
of a Lease Undertaking for the Barryroe oil and gas field.
Having discovered hydrocarbons on the Barryroe Licence in 2012
the Company has continued to move towards development of the
discovery. The Company and its partner duly submitted an
application for a Lease Undertaking in April 2021.
In 2019, eight years since Lansdowne acquired the Standard
Exploration Licence 1/11 (the licence upon which the Barryroe field
was discovered), the Department of the Environment, Climate and
Communications ("DECC") introduced new Financial Capability
Guidelines. These Financial Capabilities Guidelines are much more
onerous than those in place when Lansdowne acquired the licence and
discovered the Barryroe field and are considerably different from
those in extractive industries elsewhere.
Without evidence that Lansdowne and its joint-venture partner
has approval to proceed with the drilling of an appraisal well on
Barryroe, in the form of the Lease Undertaking, it is extremely
difficult to raise the full capital required to drill the well. The
Barryroe joint venture partners have repeatedly attempted to
correspond with DECC since the submission of the Lease Undertaking
Application in April 2021. Responses from DECC have taken many
months and repeated requests for meetings have been denied.
In October 2022 DECC provided a report of financial capability
to the Barryroe joint-venture partners indicating that the
arrangements put forward did not meet the financial capability
requirements and providing an opportunity for the Barryroe partners
to provide additional information. Both partners sought to respond
to the concerns outlined under the new and revised financial
capability guidelines in November 2022.
At year end 2022 this application continued to remain under
consideration by DECC.
Barryroe Offshore, as operator of the Joint Venture commenced
planning for drilling in 2024, in the expectation that a Lease
Undertaking would be granted and went out to the market enquiring
about rig availability in early May 2023.
However, on 19 May 2023, Barryroe Offshore Energy received a
letter from the Irish DECC advising that Eamon Ryan, Minister for
the DECC (the "Minister") was unwilling to grant the Lease
Undertaking, as sought, on grounds of financial capability. DECC
also confirmed in the letter that the application was satisfactory
from a technical perspective.
Outlook
As reported by the Sustainable Energy Authority of Ireland, in
2022:
"Oil (48.2%) and Gas (31.1%) remain the largest sources of
Ireland's energy, together accounting for just under four-fifths of
our national energy requirement. In 2022, 86.4% of Ireland's energy
was derived from fossil fuels, almost unchanged from their 2021
energy share of 86.1%.
Ireland's dependence on energy imports continued to increase in
2022. We imported 83.4% of our energy requirement, up from 80.5% in
2021, and 69.0% in 2018. Ireland's import dependency is relatively
high (the EU average was 57.5% in 2020), because we import all our
oil and coal products, and an increasing proportion of our gas, as
production from the Corrib gas-field declines. In 2022, 73.9% of
Ireland's gas was imported, up from 71.3% in 2021, and 38.6% in
2018."
Ireland will continue to require oil and gas in its energy mix
for decades to come.
It has been commented on many times that indigenous production
of oil and gas delivers greatly lower carbon emissions than
imported hydrocarbons.
As has been demonstrated on many occasions, Barryroe contains
significant quantities of oil and gas with the potential to deliver
much needed energy security for Ireland, lower carbon emissions
compared to imports and great value for all stakeholders.
Lansdowne has invested c. $20 million in the Barryroe project to
date and the results of the Competent Person Report carried out by
RPS ("RPS CPR") announced in February 2022, addressing simply the
first phase of a Barryroe development and solely the Basal Wealden
Oil reservoir, concluded that the P50 volumes were estimated at
81.2 million barrels of oil recoverable gross (16.24 million
barrels net to Lansdowne) from a Best Estimate of 278 million
barrels of oil in place (STOIIP).
An economic evaluation, documented in the RPS CPR, covering the
Phase 1 development and in the 2C oil resources case, delivers an
NPV10% for Lansdowne's 20% share of $104 million under a Brent Oil
Price assumption of US$68 per barrel in 2027, rising to $70/barrel
(bbl) in 2028 and 2029 and inflated at 2% per annum thereafter. As
stated before, the RPS CPR has only addressed the oil in the Basal
Wealden A Sand, which allows it to be correlated to the earlier
work carried out by Netherland Sewell and Associates Inc.
("NSAI").
Gas was proven in the Basal Wealden C Sand reservoir in the
48/24-10z well that overlays the oil reservoir and this has
previously been estimated to hold a potential gas resource of c 400
billion cubic feet (BCF) Gas Initially in Place (GIIP). Lansdowne
believes this significant gas resource could make a vitally
important contribution to Ireland's energy mix as it transitions to
a zero net carbon economy and it is anticipated that any future
phased development programme will include consideration of this
important gas resource.
The decision by the Minister not to grant the Lease Undertaking
is disappointing not only for the Company, but also other
stakeholders, including Ireland, which continues to import
significant amounts of oil & gas, something the development of
Barryroe could help to address.
Given the lack of progress on the Lease Undertaking, Lansdowne
had already commenced discussions with external legal advisors on
the potential to pursue legal proceedings to protect its investment
in Barryroe, prior to receipt of the letter from DECC.
The Company has now advanced the engagement with external legal
counsel and has continued to pursue the steps required to move
towards arbitration to protect its investment in the Barryroe
Project. The Company believes there is clear evidence of the DECC
and the Minister failing to act in a fair and equitable manner with
the Barryroe Partners consistent with its obligations under Irish
law and also international law. Given Lansdowne is a UK domiciled
Company it will be pursuing its claim in international arbitration
pursuant to the investment protection regime established under the
Energy Charter Treaty to which both Ireland and the United Kingdom
are signatories.
Lansdowne's legal advisors, Ashurst LLP, have initiated
arbitration proceedings under the Energy Charter Treaty by
submitting a letter giving notice pursuant to Article 26 (2) (c) of
the ECT requiring Ireland to participate in discussions with a view
to settling the dispute.
Funding for this legal action is expected to be provided by
litigation funders, with no additional financial requirement from
the Company. The Company has been approached by litigation funding
firms and initial discussions are already underway, with positive
feedback thus far. The Company intends to wait to see the Irish
Government's response within the statutory 3-month timeframe, which
is already underway, before subsequently looking to formalise
litigation funding.
Further updates will be made with respect to the funding and
legal process as appropriate, along with more information on the
claims sought by Lansdowne in this matter.
In parallel the Company is also undertaking further cost-cutting
measures at the plc level given the status of the Barryroe licence.
The Company believes these initiatives will reduce its annual costs
consistent with the activity levels required to pursue the ECT
arbitration. As at 30 June 2023 the Company had cash of GBP15,000,
however based on conversations with its existing shareholders, the
Company believes it will be able to secure further equity funding
as required. However, there is no guarantee that the Company will
be able to secure such funding.
Our partner, and Operator of the Barryroe Joint Venture,
Barryroe Offshore Energy plc. ("BEY"), announced on 19 June 2023
that its shares would be suspended from trading and that it would
arrange an Extraordinary General Meeting in July 2023 to seek
shareholder approval to appoint a Liquidator to the Company through
a Creditors Voluntary Liquidation. In the meantime, discussions
will continue with BEY's major shareholders to secure renewed
funding.
Unlike Lansdowne, BEY being an Irish company, does not have
investor protection under the Energy Charter Treaty ("ECT") and so
would only have recourse to compensation through the Irish Courts,
rather than through the International Arbitration open to
Lansdowne.
Your company continues to seek to create value for shareholders,
whilst facing a number of headwinds. We had hoped to achieve this
through the appraisal and development of the Barryroe oil and gas
field to the benefit of all stakeholders, but now must turn to the
litigation pathway to seek compensation.
Operational highlights
-- Barryroe Oil Field (SEL 1/11)
o New reservoir and development studies to assess potential of
first Phase development of Barryroe, centred around the 48/24-10z
area were completed
o New CPR completed by RPS over Phase 1 development area
estimated 2C Resources of 81.2 million barrels recoverable, 16.4
million barrels net to Lansdowne
o In October 2022 correspondence was received from the
Department of the Environment, Climate and Communications ("DECC")
that an independent report had concluded that on the basis of
financial information provided to date, the parties to the Barryroe
Joint Venture Partnership had not yet demonstrated compliance with
the Financial Capability Assessment for Offshore Oil & Gas
Exploration and Appraisal Application Guidance (the "Financial
Capability Assessment").
o In November 2022, Lansdowne and it partner, Barryroe Offshore
Energy, submitted additional materials to DECC confirming financial
capability to deliver the work programme
o On 19 May 2023 a letter was received from DECC advising that
Eamon Ryan, the Minister for DECCwould not grant a Lease
Undertaking for Barryroe, on grounds of financial capability.
o Lansdowne has commenced arbitration proceedings as allowed for
under the Energy Charter Treaty.
Financial highlights
-- Cash balances at 31 December 2022 of GBP0.01 million (2021: GBP0.20 million).
-- Operating expenses for the year were GBP0.2 million (2021: GBP0.1 million).
-- Loss for the year after tax of GBP0.4 million (2021: loss GBP0.1 million).
-- Diluted loss per share of 0.04 pence (2020: loss 0.02 pence).
-- The LC Capital Master Fund loan, due for repayment on 31
December 2022, was extended to 31 December 2023.
-- In March 2022, the Company placed 60,000,000 new ordinary
shares with new and existing investors at a placing price of 0.5
pence per share, raising GBP300,000 before costs.
-- Associated with the fund raise, 1,821,826 warrants were
granted to LC Capital Targeted Opportunities Fund, LP in accordance
with the provisions of LCCTOC's warrant instrument.
-- LC now holds 27,821,826 warrants over ordinary shares and the
strike price for these warrants has been amended to 0.5 pence per
share from 0.525 pence per share pursuant to the LC warrant
instrument.
For further information please contact:
Lansdowne Oil & Gas plc +353 1 963 1760
Steve Boldy
SP Angel Corporate Finance LLP +44 (0) 20 3470 0470
Nominated Adviser and Joint
Broker
Stuart Gledhill
Richard Hail
Tavira Financial Limited +44 (0) 20 3192 1739
Joint Broker
Oliver Stansfield
Notes to editors:
About Lansdowne
Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focused,
oil and gas exploration and appraisal company quoted on the AIM
market and head quartered in Dublin.
For more information on Lansdowne, please refer to
www.lansdowneoilandgas.com .
Results for the year ended 31 December 2022
Chairman's Statement
Introduction
Lansdowne exited 2022 having spent the year pursuing the award
of a Lease Undertaking for the Barryroe oil and gas field.
Having discovered hydrocarbons on the Barryroe Licence in 2012
the Company has continued to move towards development of the
discovery. The Company and its partner duly submitted an
application for a Lease Undertaking in April 2021.
In 2019, eight years since Lansdowne acquired the Standard
Exploration Licence 1/11 (the licence upon which the Barryroe field
was discovered), the Department of the Environment, Climate and
Communications ("DECC") introduced new Financial Capability
Guidelines. These Financial Capabilities Guidelines are much more
onerous than those in place when Lansdowne acquired the licence and
discovered the Barryroe field and are considerably different from
those in extractive industries elsewhere.
Without evidence that Lansdowne and its joint-venture partner
has approval to proceed with the drilling of an appraisal well on
Barryroe, in the form of the Lease Undertaking, it is extremely
difficult to raise the full capital required to drill the well. The
Barryroe joint venture partners have repeatedly attempted to
correspond with DECC since the submission of the Lease Undertaking
Application in April 2021. Responses from DECC have taken many
months and repeated requests for meetings have been denied.
In October 2022 DECC provided a report of financial capability
to the Barryroe joint-venture partners indicating that the
arrangements put forward did not meet the financial capability
requirements and providing an opportunity for the Barryroe partners
to provide additional information. Both partners sought to respond
to the concerns outlined under the new and revised financial
capability guidelines in November 2022.
At year end 2022 this application continued to remain under
consideration by DECC.
Barryroe Offshore, as operator of the Joint Venture commenced
planning for drilling in 2024, in the expectation that a Lease
Undertaking would be granted and went out to the market enquiring
about rig availability in early May 2023.
However, on 19 May 2023, Barryroe Offshore Energy received a
letter from the Irish DECC advising that Eamon Ryan, Minister for
the DECC (the "Minister") was unwilling to grant the Lease
Undertaking, as sought, on grounds of financial capability. DECC
also confirmed in the letter that the application was satisfactory
from a technical perspective.
Financial Results
The Group recorded an after tax loss of GBP0.4 million for the
year ended 31 December 2022 compared to a loss of GBP0.1 million
for the year ended 31 December 2021.
Group operating expenses for the year were GBP0.2 million,
compared to GBP0.1 million in 2021. Net finance expense for the
year was GBP146,000 (2021: GBP49,000). Cash balances of GBP0.01
million (2021: GBP0.2 million) were held at the end of the
financial year.
The spend incurred on the Barryroe Licence area for the year
totalled GBP211,000 (2021: GBP435,000). Total equity attributable
to the ordinary shareholders of the Group was GBP14.8 million as at
31 December 2022 (GBP14.7 million as at 31 December 2021).
In March 2022, the Company placed 60,000,000 new ordinary shares
with new and existing investors at a placing price of 0.5 pence per
share, raising GBP300,000 before costs.
Associated with the fund raise, 1,821,826 warrants were granted
to LC Capital Targeted Opportunities Fund, LP in accordance with
the provisions of LCCTOC's warrant instrument, the terms of which
were announced previously on 31 December 2021. LC now holds
27,821,826 warrants over ordinary shares and the strike price for
these warrants has been amended to 0.5 pence per share from 0.525
pence per share pursuant to the LC warrant instrument.
The Company on 30 December 2022 announced that it had entered
into an agreement with LC Capital Master Fund ("LCCMF") to extend
the payment date of its outstanding loan of GBP1.08 million (the
"Loan") which was due for repayment on 31 December 2022. The
repayment date on the loan has been extended to 31 December
2023.
Post year end, in January 2023, the Company placed 60,000,000
new ordinary shares of 0.1 pence each in the Company ("ordinary
shares") with new and existing investors at a placing price of 0.5
pence per share, raising GBP300,000 before costs.
In association with the Placing, 3,000,000 Broker Warrants were
granted to the broker Tavira Financial Limited, with an exercise
price of 0.5p per ordinary share. The Broker Warrants are
exercisable up until the third anniversary of Admission.
In connection with the Placing, the Company also granted a total
of 60,000,000 warrants ("Investor Warrants") to placees
participating in the Placing, on a one Investor Warrant per new
ordinary share basis, to subscribe for new ordinary shares in the
Company at a price of 1.0 pence per share. The Investor Warrants
will be exercisable until the second anniversary of Admission. In
the event all of the Investor Warrants are exercised before their
expiry, the Company would receive a further GBP0.60 million in
cash.
Separately, 1,788,000 warrants have been granted to LC Capital
Targeted Opportunities Fund, LP ("LC") in accordance with the
provisions of LC's warrant instrument, the terms of which have been
previously announced on 31 December 2021. LC now holds 29,609,826
warrants over ordinary shares at a strike price of 0.5 pence per
share. In addition, in the event that the Investor Warrants and
Broker Warrants are exercised in full prior to the maturity date of
the LC warrants, LC will be granted up to an additional 1,877,400
warrants over ordinary shares in accordance with the provisions of
LC's warrant instrument.
Outlook
As reported by the Sustainable Energy Authority of Ireland, in
2022:
"Oil (48.2%) and Gas (31.1%) remain the largest sources of
Ireland's energy, together accounting for just under four-fifths of
our national energy requirement. In 2022, 86.4% of Ireland's energy
was derived from fossil fuels, almost unchanged from their 2021
energy share of 86.1%.
Ireland's dependence on energy imports continued to increase in
2022. We imported 83.4% of our energy requirement, up from 80.5% in
2021, and 69.0% in 2018. Ireland's import dependency is relatively
high (the EU average was 57.5% in 2020), because we import all our
oil and coal products, and an increasing proportion of our gas, as
production from the Corrib gas-field declines. In 2022, 73.9% of
Ireland's gas was imported, up from 71.3% in 2021, and 38.6% in
2018.
Ireland will continue to require oil and gas in its energy mix
for decades to come.
It has been commented on many times that indigenous production
of oil and gas delivers greatly lower carbon emissions than
imported hydrocarbons.
As has been demonstrated on many occasions, Barryroe contains
significant quantities of oil and gas with the potential to deliver
much needed energy security for Ireland, lower carbon emissions
compared to imports and great value for all stakeholders.
Lansdowne has invested c. $20 million in the Barryroe project to
date and the results of the Competent Person Report carried out by
RPS ("RPS CPR") announced in February 2022, addressing simply the
first phase of a Barryroe development and solely the Basal Wealden
Oil reservoir, concluded that the P50 volumes were estimated at
81.2 million barrels of oil recoverable gross (16.24 million
barrels net to Lansdowne) from a Best Estimate of 278 million
barrels of oil in place (STOIIP).
An economic evaluation, documented in the RPS CPR, covering the
Phase 1 development and in the 2C oil resources case, delivers an
NPV10% for Lansdowne's 20% share of $104 million under a Brent Oil
Price assumption of US$68 per barrel in 2027, rising to $70/barrel
(bbl) in 2028 and 2029 and inflated at 2% per annum thereafter. As
stated before, the RPS CPR has only addressed the oil in the Basal
Wealden A Sand, which allows it to be correlated to the earlier
work carried out by Netherland Sewell and Associates Inc.
("NSAI").
Gas was proven in the Basal Wealden C Sand reservoir in the
48/24-10z well that overlays the oil reservoir and this has
previously been estimated to hold a potential gas resource of c 400
billion cubic feet (BCF) Gas Initially in Place (GIIP). Lansdowne
believes this significant gas resource could make a vitally
important contribution to Ireland's energy mix as it transitions to
a zero net carbon economy and it is anticipated that any future
phased development programme will include consideration of this
important gas resource.
The decision by the Minister not to grant the Lease Undertaking
is disappointing not only for the Company, but also other
stakeholders, including Ireland, which continues to import
significant amounts of oil & gas, something the development of
Barryroe could help to address.
Given the lack of progress on the Lease Undertaking, Lansdowne
had already commenced discussions with external legal advisors on
the potential to pursue legal proceedings to protect its investment
in Barryroe, prior to receipt of the letter from DECC.
The Company has now advanced the engagement with external legal
counsel and has continued to pursue the steps required to move
towards arbitration to protect its investment in the Barryroe
Project. The Company believes there is clear evidence of the DECC
and the Minister failing to act in a fair and equitable manner with
the Barryroe Partners consistent with its obligations under Irish
law and also international law. Given Lansdowne is a UK domiciled
Company it will be pursuing its claim in international arbitration
pursuant to the investment protection regime established under the
Energy Charter Treaty to which both Ireland and the United Kingdom
are signatories.
Lansdowne's legal advisors, Ashurst LLP, have initiated
arbitration proceedings under the Energy Charter Treaty by
submitting a letter giving notice pursuant to Article 26 (2) (c) of
the ECT requiring Ireland to participate in discussions with a view
to settling the dispute.
Further updates will be made with respect to the legal process
as appropriate, along with more information on the claims sought by
Lansdowne in this matter.
Our partner, and Operator of the Barryroe Joint Venture,
Barryroe Offshore Energy plc. ("BEY"), announced on 19 June 2023
that its shares would be suspended from trading and that it would
arrange an Extraordinary General Meeting in July 2023 to seek
shareholder approval to appoint a Liquidator to the Company through
a Creditors Voluntary Liquidation. In the meantime, discussions
will continue with BEY's major shareholders to secure renewed
funding.
Unlike Lansdowne, BEY being an Irish company, does not have
investor protection under the Energy Charter Treaty ("ECT") and so
would only have recourse to compensation through the Irish Courts,
rather than through the International Arbitration open to
Lansdowne.
Your company continues to seek to create value for shareholders,
whilst facing a number of headwinds. We had hoped to achieve this
through the appraisal and development of the Barryroe oil and gas
field to the benefit of all stakeholders, but now must turn to the
litigation pathway to seek compensation.
Jeffrey Auld
Chairman
30 June 2023
Lansdowne Oil & Gas plc
Consolidated Income Statement
For the year ended 31 December 2022
2022 2021
Notes GBP'000 GBP'000
Administrative expenses (218) (82)
------------ ---------
Operating loss (218) (82)
Finance costs 16 (146) (49)
------------ ---------
Loss for the year before
tax (364) (131)
Income tax 17 - -
------------ ---------
Loss for the year (364) (131)
============ =========
Loss per share (pence):
Basic loss per ordinary share 3 (0.04p) (0.02p)
Diluted loss per ordinary
share 3 (0.04p) (0.02p)
============ =========
The results for the year all arise on continuing operations.
Lansdowne Oil & Gas plc
Consolidated Statement of Financial Position
As at 31 December 2022
Assets Notes 2022 2021
Non-Current Assets GBP'000 GBP'000
Intangible assets 4 16,336 16,125
-------- --------
Current Assets
Trade and other receivables 6 19 21
Cash and cash equivalents 15 199
-------- --------
34 220
-------- --------
Total Assets 16,370 16,345
======== ========
Equity and Liabilities
Shareholders' Equity
Share capital 12 11,990 11,930
Share premium 12 28,475 28,284
Currency translation reserve 59 59
Share-based payment reserve 15 - 316
Warrants reserve 9 115 -
Accumulated deficit (25,889) (25,936)
-------- --------
Total Equity 14,750 14,653
-------- --------
Non-Current Liabilities
Provisions 10 512 388
-------- --------
512 388
-------- --------
Current Liabilities
Shareholder loan 8 979 1,027
Trade and other payables 7 129 277
-------- --------
Total Liabilities 1,620 1,692
-------- --------
Total Equity and Liabilities 16,370 16,345
======== ========
Lansdowne Oil & Gas plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
Notes GBP'000 GBP'000
Cash flows from operating activities
Loss for the year (364) (131)
Adjustments for:
Interest payable and similar charges 146 48
Decrease/(increase) in trade and other
receivables 2 (4)
(Decrease)/increase in trade and other
payables (23) 86
------------------ -------
Net cash used in operating activities (239) (1)
------------------ -------
Cash flows from investing activities
Acquisition of intangible exploration
assets 4 (211) (435)
------------------ -------
Net cash used in investing activities (211) (435)
------------------ -------
Cash flows from financing activities
Proceeds from the issue of share capital 300 -
Cost of raising shares (34) -
------------------ -------
Net cash from financing activities 266 -
------------------ -------
Net (decrease) in cash and cash equivalents (184) (436)
Cash and cash equivalents at 1 January 199 635
------------------ -------
Cash and cash equivalents at 31 December 15 199
================== =======
Lansdowne Oil & Gas plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share Currency
Share Share Based Payment Translation Warrants Accumulated Total
Capital Premium Reserve Reserve Reserve Deficit Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2021 11,930 28,284 923 59 - (26,412) 14,784
Loss for the
financial
year - - - - - (131) (131)
---------- ---------- --------------- ------------- ----------- -------------- ----------
Total
comprehensive
loss for the year - - - - - (131) (131)
Lapse of share
options - - (607) - - 607 -
---------- ---------- --------------- ------------- ----------- -------------- ----------
Balance at 31
December
2021 11,930 28,284 316 59 - (25,936) 14,653
---------- ---------- --------------- ------------- ----------- -------------- ----------
Balance at 1
January
2022 11,930 28,284 316 59 - (25,936) 14,653
Loss for the
financial
year - - - - - (364) (364)
---------- ---------- --------------- ------------- ----------- -------------- ----------
Comprehensive loss
for the year - - - - - (364) (364)
Issue of new shares
- gross
consideration
(note 12) 60 240 - - - - 300
Issue of shares -
warrants (Note 9) - (15) - - 15 - -
Issue of warrants
to holder of loan
notes (Note 9) - - - - 100 95 195
Cost of share issues - (34) - - - - (34)
Lapse of share
options - - (316) - - 316 -
Balance at 31
December
2022 11,990 28,475 - 59 115 (25,889) 14,750
========== ========== =============== ============= =========== ============== ==========
Lansdowne Oil & Gas plc
Notes to the Financial Information
For the year ended 31 December 2022
1. Basis of presentation
The consolidated financial statements are presented in Sterling,
the Company's functional currency, and all values are rounded to
the nearest thousand (GBP'000) except where otherwise
indicated.
The Directors have prepared the financial statements on the
going concern basis which assumes that the Group and Company will
continue in operational existence for at least twelve months from
the date of the approval of these financial statements as described
below.
The Directors have carried out a detailed assessment of the
Group's current and prospective activity, its relationship with the
holder of its loan note, and have prepared cash flow projections
for the period to 30 June 2024. The following represent the key
assumptions underpinning the cash flow projections:
Regulatory considerations
Lansdowne exited 2022 having spent the year pursuing the award
of a Lease Undertaking for the Barryroe oil and gas field.
In October 2022, DECC provided a report of financial capability
to the Barryroe joint-venture partners. Both partners sought to
respond to the concerns outlined under the new and revised
financial capability guidelines in November 2022.
On 19 May 2023, Barryroe Offshore Energy received a letter from
the Irish Department of the Environment, Climate and Communications
("DECC") advising that Eamon Ryan, Minister for the Environment,
Climate and Communications (the "Minister") was unwilling to grant
the Lease Undertaking, as sought, on grounds of financial
capability. DECC also confirmed in the letter that the application
was satisfactory from a technical perspective.
Funding options
In February 2021 the Irish Minister at the Department of the
Environment, Climate and Communications, Eamonn Ryan announced that
the Government would introduce legislation to end the award of any
new licences for both oil and gas exploration. This has since been
passed into law.
It was again confirmed that the legislation will not affect
existing authorisations (such as SEL1/11 - Barryroe), whereby
existing licences can progress to production.
Should this change, the Company stated previously that it would
pursue strenuously claims for compensation.
Now that the Minister has refused to award a Lease Undertaking
for Barryroe, pursuing compensation through legal proceedings is
that path that is being followed.
It is anticipated that the Company's loan note holder will
extend the maturity of its loan notes which currently mature on 31
December 2023 should this be requested in line with previous
experience. In addition, the Company will seek new funds to pursue
legal proceedings for compensation for Barryroe, either from a
further equity placing, via shareholder loans, or accessing other
potential forms of less dilutive funding available to the Company
that includes, but is not limited to, combinations of the
following:
(i) a convertible instrument or
(ii) external litigation funders or
(iii) financial support from either a strategic partner or
(iv) debt funding
This legal action will only be pursued on the condition that
sufficient additional funds are raised to finance this
undertaking.
Based on the cash flow projections prepared by the Directors,
planned future fund-raisings will be adequate to ensure that the
Group and Company will be able to discharge all liabilities as they
fall due.
The Directors believe that the Company will be able to secure
further debt or equity funding as may be required. However, there
is no guarantee that the Company will be able to secure such
funding.
The Directors have considered the various matters set out above
and have concluded that a material uncertainty exists that may cast
significant doubt on the ability of the Group and Company to
continue as going concern and that the Group and Company may
therefore be unable to realise their assets and discharge their
liabilities in the normal course of business. Nevertheless, after
making enquiries and considering the uncertainties described above,
the Directors are of the view that the Group and Company will have
sufficient cash resources available to meet their liabilities and
continue in operational existence for at least 12 months from the
date of approval of these financial statements.
On that basis, the Directors consider it appropriate to prepare
the financial statements on a going concern basis. These financial
statements do not include any adjustment that would result from the
going concern basis of preparation being inappropriate.
2. Segmental Reporting
The Group has one reportable operating and geographic segment,
which is the exploration for oil and gas reserves in Ireland. All
operations are classified as continuing and currently no revenue is
generated from the operating segment.
3. Loss per ordinary share
2022 2021
GBP'000 GBP'000
The loss for the year was wholly from continuing
operations
Loss for the year attributable to equity
holders (364) (131)
---------------- ---------------
Weighted average number of ordinary shares
in issue - basic and diluted 919,974,501 873,618,337
---------------- ---------------
Loss per share arising from continuing
operations attributable to the equity holders
of the Company - basic and diluted (in
pence) 0.04 0.02
================ ===============
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The Group has one class of
potential ordinary shares being share options. As a loss was
recorded for both 2022 and 2021, potentially issuable shares would
have been anti-dilutive. The number of potentially issuable shares
at 31 December 2022 is 30,821,826 (2021: 27,445,970).
4. Intangible assets
Group Exploration/
Appraisal
assets
GBP'000
Cost
At 1 January 2021 15,690
Additions 435
---------------
At 31 December 2021 16,125
---------------
At 1 January 2022 16,125
Additions 211
---------------
At 31 December 2022 16,336
---------------
Oil and gas project expenditures, all of which relate to
Barryroe, including geological, geophysical and seismic costs, are
accumulated as intangible assets prior to the determination of
commercial reserves. The directors have assessed the current
ongoing activities and future planned activities and are satisfied
that the carrying value is appropriate.
Under IFRS 6 the following considerations have been reviewed
1) Whether the period for exploration has expired or is near
expiry and is not expected to be renewed: Licence SEL 1/11 expired
in July 2021 and, as allowed for under the terms of the Licence, an
application for a follow on authorization, a Lease Undertaking, was
submitted in April 2021 and was expected to be awarded.
2) Whether significant expenditures on further E&E
activities are not budgeted or planned: The work program submitted
with the application consisted of an appraisal well with an
expected costs of $40 million gross $8 million net to
Lansdowne.
3) Whether the entity has decided to discontinue E&E
activities due to lack of exploration success: Barryroe is an oil
and gas discovery and the entity planned to continue activities,
with the expectation that development of the field would follow on
from a successful appraisal well.
4) Whether the entity has sufficient data indicating that the
book cost is unlikely to be recovered from a successful development
or from a sale: The most recent independent CPR completed in 2022
indicated a value of $104 million for a Phase 1 development of the
Barryroe Field for Lansdowne's 20% share, greatly in excess of the
current book value of c. $20 million.
Following the drilling of the 48/24-10z well a Competent Persons
Report (CPR) was produced by Netherland Sewell and Associates Inc
(NSAI). This concluded that the Basal Wealden oil bearing A Sand
had 2C resources of 266 million barrels of oil and 187 billion
cubic feet of associated gas.
A CPR carried out previously by RPS on the Middle Wealden oil
bearing sands concluded that these contained 2C resources of 45
million barrels and 21 billion cubic feet of gas.
The total combined audited gross on block 2C recoverable
resources at Barryroe therefore amount to 346 million barrels of
oil equivalent, comprising 311 million barrels of oil and 207
billion cubic feet of gas.
A further CPR was carried out by RPS to assess the potential oil
recoverable from a first phase of development of the central area
of Barryroe. This work concluded in February 2022. The total
estimated 2C resources for a Phase 1 development of the Basal
Wealden oil bearing A Sand, amounted to 81.2 million barrels of oil
recoverable gross (16.24 million barrels net to Lansdowne) from a
Best Estimate of 278 million barrels of oil in place (STOIIP).
An economic evaluation, documented in the RPS CPR, covering the
Phase 1 development in the 2C oil resources case, delivers an
NPV10% for Lansdowne's 20% share of $104 million (GBP82.5 million
at GBP1 = $1.26) under a Brent Oil Price assumption of US$68 per
barrel in 2027, rising to $70/bbl in 2028 and 2029 and inflated at
2% per annum thereafter.
The Brent Oil Price is currently $75/bbl and the forward curve
remains above $62/bbl through to the end of 2030.
Importantly, no CPR has assessed the volumes and value of the
gas contained in the Basal Wealden C Sand that was tested with
strong flow rates in the 48/24-10z well. Previous work by
Providence indicated this reservoir could contain c. 400 billion
cubic feet of gas.
As at the period end the Board considers that no impairment of
the assets is required for a variety of reasons explored below.
Subsequent to the period end the Board believed that the Lease
Undertaking would be provided. The Board went as far as committing
expense to the provision of a capital guarantee that was designed
to meet the financial capabilities test. The Board also considered
that given the extremely high energy prices of late 2022, the
continuing war in Ukraine impacting oil and gas supplies to Europe
and the greatly increased focus on energy security, that the lease
undertaking would be granted. Well into the second quarter of 2023
the Board felt this expectation to be reasonable.
In October 2022 DECC provided a report of financial capability
to the Barryroe joint-venture partners indicating that the
arrangements put forward did not meet the financial capability
requirements and providing an opportunity for the Barryroe partners
to provide additional information. Both partners sought to respond
to the concerns outlined under the new and revised financial
capability guidelines in November 2022.
Barryroe Offshore Energy (previously Providence Resources) put
forward a EUR40 million convertible loan from its largest
shareholder, Vevan. This amount was sufficient to cover the entire
costs of the minimum work programme commitment put forward in the
Barryroe Lease Undertaking Application.
Lansdowne put in place a letter of support to provide a loan of
more than enough to cover its share of the work programme
(estimated at $8 million).
In dialogue with DECC it was also established that EUR1.25
million had already been expended by the Barryroe partners on
various items included in the work programme for preparatory works
prior to drilling.
At year end, this application continued to remain under
consideration by the DECC but a decision was finally made as
detailed in the Post Balance Sheet event in Note 6.
Also, as outlined in the Post Balance Sheet event in Note 6, the
Intangible asset of GBP16.3 million and related decommissioning
provision were written off post year end in May 2023.
5. Share capital
2022 2021
Authorised
933,618,337 ordinary shares at 0.1 pence
each 933,618,337 873,618,337
============ ============
Issued, called up and Number of Share Share Premium
fully paid: Ordinary Capital GBP'000 Total
Shares GBP'000 GBP'000
At 1 January 2021 873,618,337 11,930 28,284 40,214
-------------- --------- -------------- ----------
At 31 December 2021 873,618,337 11,930 28,284 40,214
-------------- --------- -------------- ----------
At 1(st) January 2022 873,618,337 11,930 28,284 40,214
Issued in year 60,000,000 60 240 300
Share issue costs - - (34) (34)
Share warrant issue
costs - - (15) (15)
-------------- --------- -------------- ----------
At 31 December 2022 933,618,337 11,990 28,475 40,465
============== ========= ============== ==========
In March 2022, the Company placed 60,000,000 new ordinary shares
with new and existing investors at a placing price of 0.5 pence per
placing share, raising GBP300,000 before costs. Warrants were also
awarded as part of this placing and details of these are outlined
in note 9.
6. Post Balance Sheet events
Share Placing:
In January 2023, the Company placed 60,000,000 new ordinary
shares with new and existing investors at a placing price of 0.5
pence per placing share, raising GBP300,000 before costs.
In association with the Placing, 3,000,000 warrants (Broker
Warrants) have been granted to Tavira Financial Limited, with an
exercise price of GBP0.5p per ordinary share. The Broker Warrants
are exercisable up until the third anniversary of Admission 1
February 2026.
In connection with the Placing, the Company will also grant a
total of 60,000,000 warrants (Investor Warrants) to places
participating in the Placing, on a one Investor Warrant per Placing
Share basis, to subscribe for new ordinary shares in the Company at
a price of GBP1.0 pence per share. The Investor Warrants will be
exercisable until the second anniversary of Admission 1 February
2025. In the event all of the Investor Warrants are exercisable
before their expiry, the Company would receive a further GBP0.6
million in cash.
Separately, 1,788,000 warrants have been granted to LC Capital
Targeted Opportunities Fund, LP(LC) in accordance with the
provisions of LC's warrant instrument, the terms of which have been
previously announced on 31 December 2021. LC holds 29,609,826
warrants over ordinary shares at a strike price of 0.5 pence per
share. In addition, in the event that the Investor Warrants and
Broker Warrants are exercised in full prior to the maturity date of
the LC warrants, LC will be granted up to an additional 1,877,400
warrants over ordinary shares in accordance with the provisions of
LC's warrant instrument.
Lease Undertaking:
On 19 May 2023, Barryroe Offshore Energy received a letter from
the Irish Department of the Environment, Climate and Communications
("DECC") advising that Eamon Ryan, Minister for the Environment,
Climate and Communications (the "Minister") was unwilling to grant
the Lease Undertaking, as sought, on grounds of financial
capability. DECC also confirmed in the letter that the application
was satisfactory from a technical perspective.
The decision by the Minister not to grant the Lease Undertaking
is disappointing not only for the Company, but also other
stakeholders, including Ireland, which continues to import
significant amounts of oil & gas, something the development of
Barryroe could help to address.
Given the lack of progress on the Lease Undertaking, Lansdowne
had already commenced discussions with external legal advisors on
the potential to pursue legal proceedings to protect its investment
in Barryroe, prior to receipt of the letter from DECC.
The Company has now advanced the engagement with external legal
counsel and has continued to pursue the steps required to move
towards arbitration to protect its investment in the Barryroe
Project. These discussions are already well advanced, and the
Company believes there is clear evidence of the DECC and the
Minister failing to act in a fair and equitable manner with the
Barryroe Partners consistent with its obligations under Irish law
and also international law. Given Lansdowne is a UK domiciled
Company it expects to pursue its claim in international arbitration
pursuant to the investment protection regime established under the
Energy Charter Treaty to which both the Ireland and the United
Kingdom are signatories.
Lansdowne's legal advisors, Ashurst LLP, have initiated
arbitration proceedings under the Energy Charter Treaty by
submitting a letter giving notice pursuant to Article 26 (2) (c) of
the ECT requiring Ireland to participate in discussions with a view
to settling the dispute.
Further updates will be made with respect to the legal process
as appropriate, along with more information on the claims sought by
Lansdowne in this matter.
In light of the above, the Directors have determined that this
is a non adjusting event as at 31 December 2022 under the
provisions of IAS 10 Event After the Reporting Period. However, the
Intangible asset of GBP16.3 million and related decommissioning
provision were written off post year end in May 2023.
7. Accounts
Copies of the annual accounts for the year ended 31 December
2022 will be sent to shareholder shortly and will be available from
the Group's office at Paramount Court, Corrig Road, Sandyford
Business Park, Dublin 18 Ireland and the Group's website
www.lansdowneoilandgas.com.
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END
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