TIDMORCA
RNS Number : 0672X
Orcadian Energy PLC
18 December 2023
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF
UK DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018, AS AMED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO
BE IN THE PUBLIC DOMAIN.
18 December 2023
Orcadian Energy plc
("Orcadian Energy", "Orcadian" or the "Company")
Results for the Year ended 30 June 2023
Orcadian Energy (AIM:ORCA), the low-emissions North Sea oil and
gas development company, is pleased to announce its audited results
for the twelve months ended 30 June 2023.
Highlights:
-- Three licence applications made in the 33(rd) Round with results expected soon.
-- Since the end of the period under review:
o Execution of a conditional Sale and Purchase Agreement ("SPA")
with Ping Petroleum UK plc ("Ping") for an 81.25% interest in
Licence P2244, leaving Orcadian with a carried 18.75% interest in
the Licence to first oil;
o Two year extension to the Second Term of the P2244 (Pilot)
licence, subject to completion of the above transaction by end 1Q
2024
o Identified significant upside appraisal opportunities in Elke
and Narwhal supported by seismic attribute analysis undertaken by
TGS
o Requested an out of round process in partnership with Ping to
apply for the area of Licence P2320 which was relinquished in May
2023
Steve Brown, Orcadian's CEO, said:
"We close the calendar year of 2023 with real satisfaction that
we have signed an SPA with Ping and we look forward to progressing
this deal in 1Q 2024, with shareholder approval, and to potentially
taking the Pilot project forward under their new leadership. The
Elke and Narwhal asset definition has been much enhanced by recent
seismic work which we intend to build upon to maximise value from
these assets.
"We are also looking forward to the potential award of up to
three new licences as a result of the applications we made in
January 2023. We are excited that, if granted, the new awards will
enable us to bring forward new innovative projects that can
contribute to both energy security and the Government's Net Zero
target."
Report and Accounts and Annual General Meeting
A copy of the annual report and accounts for the year ended 30
June 2023 will be available on the Company's website (
https://orcadian.energy ) with effect from today. The Company will
be posting its annual report and accounts and notice of Annual
General Meeting ("AGM") to its shareholders on 19 December
2023.
The AGM will be held at the offices of Shakespeare Martineau, 60
Gracechurch Street, London, EC3V 0HR at 10:30am on the 17(th)
January 2024.
For further information on the Company please visit the
Company's website: https://orcadian.energy
Contact:
Orcadian Energy plc + 44 20 7920 3150
Steve Brown, CEO
Alan Hume, CFO
WH Ireland (Nomad and Broker) +44 20 7220 1666
Katy Mitchell / Andrew de Andrade (Nomad)
Harry Ansell / Fraser Marshall (Corporate
Broking)
Tavistock (PR) + 44 20 7920 3150
Nick Elwes / Simon Hudson orcadian@tavistock.co.uk
About Orcadian Energy
Orcadian is a North Sea focused, low emissions, oil and gas
development company . In planning its Pilot development, Orcadian
has selected wind power to transform oil production into a cleaner
and greener process. The Pilot project is moving towards approval
and will be amongst the lowest carbon emitting oil production
facilities in the world, despite being a viscous crude. Orcadian
may be a small operator, but it is also nimble, and the Directors
believe it has grasped opportunities that have eluded some of the
much bigger companies. As we strike a balance between Net Zero and
a sustainable energy supply, Orcadian intends to play its part to
minimise the cost of Net Zero and to deliver reliable energy to the
UK.
Orcadian Energy (CNS) Ltd, Orcadian's operating subsidiary, was
founded in 2014 and is the sole licensee of P2244, which contains
78.0 MMbbl of 2P Reserves in the Pilot discovery, and of P2482,
which contain a further 52.2 MMbbl of 2C Contingent Resources in
the Elke and Narwhal discoveries (as audited by Sproule, with both
numbers modified to take into account the TGS royalty, see the CPR
in the Company's Admission Document for more details). Within these
licences there are also 118 MMbbl of unrisked Prospective Resources
(modified for TGS royalty). These licences are in blocks 21/27a,
28/2a and 28/3a, and lie 150 kms due East of Aberdeen.
Pilot, which is the field with the largest reserves in
Orcadian's portfolio, was discovered by PetroFina in 1989 and has
been well appraised. In total five wells and two sidetracks were
drilled on Pilot, including a relatively short horizontal well
which produced over 1,800 bbls/day on test. Orcadian's proposed low
emissions, field development plan for Pilot is based upon a
Floating Production Storage and Offloading vessel (FPSO), with over
thirty wells to be drilled by a Jack-up rig and provision of power
from a floating wind turbine.
Orcadian has entered into a conditional sale and purchase
agreement with Ping Petroleum UK plc ("Ping") which details the
terms under which Ping will farm-in to the Pilot development
project. Upon conclusion of this deal Orcadian would have an 18.75%
stake in the Pilot development with all pre-first oil development
costs paid by Ping.
Emissions per barrel produced are expected to be about a tenth
of the 2021 North Sea average, and less than half of the lowest
emitting oil facility currently operating on the UKCS. On a global
basis this places the Pilot field emissions at the low end of the
lowest 5% of global oil production.
Chairman and CEO's Statement
Writing this statement in December 2023, and reviewing financial
year 2022-2023, we can look back at eighteen months of activity
which have culminated in the signature of a conditional Sale and
Purchase agreement ("SPA") with Ping Petroleum UK PLC ("Ping") for
our Pilot Licence. We believe this sets the Company on a path
towards production from one of the most exciting oil development
projects on the United Kingdom Continental Shelf (" UKCS").
This has been our objective since we founded Orcadian Energy
(CNS) Ltd in 2014. We set the Company up to apply for the Pilot
licence and bringing in a new operator and partner to develop the
field has been our objective from the outset of our business. It
has been a long process with many twists and turns, and, as we
endured the slings and arrows of outrageous fortune, we did wonder
if we would achieve our goal. Now, having been able to announce the
conditional agreement to farm-out an interest in Pilot, we believe
that it was all worth it.
We believe we started the process from a good place. When we
first licensed Pilot in 2014 we were of the opinion we had great
rocks. Great rocks make for great oil and gas projects and Pilot
can be one of those projects. The only challenge with Pilot was
that the oil was a tad viscous. At first we thought that steam
could be the answer, indeed our subsidiary was originally called
"The Steam Oil Production Company Limited". Steam would work very
well on Pilot, Sproule, our reserve auditors, thought we could
recover 113 MMbbl with a steam to oil ratio of three. But there
were two issues with this approach, the first is that CO(2)
emissions from a steam flood are very high - a steam oil ratio of
three typically equates to emissions of about 90kgCO(2) /bbl and
without CO(2) capture and storage that approach would not have been
acceptable to our regulator; but the second issue is the volatility
in gas prices which can rapidly render uneconomic a steam based
approach.
Fortunately in 2019 when we started the Concept Select process
we had followed the success of Chevron's polymer flood pilot on
Captain which was published in a landmark paper in 2018 (Poulsen,
2018). The efficacy of the polymer flood approach in the trial,
which had concluded in 2013, was astonishing. Pilot and Captain
share many characteristics, principal among them being that both
fields have great rocks. We had much to learn from the success of
the Captain trial and we believed we had chosen the right path for
Pilot when we attended an SNF hosted polymer conference in Aberdeen
in February of 2023. Ithaca, who now operate Captain, reported
"consistent success [applying polymer flood] across the Captain
field".
It does not appear that the trial had been a fluke, nor a
special case, rather we consider it had been the harbinger of great
performance on the rest of the Captain field. This has been further
confirmed when the Captain phase 2 polymer flood got approval from
the North Sea Transition Authority ("NSTA") in October of 2023.
Establishing that polymer flood works on viscous oil offshore, as
well as in models and in the laboratory, is really important for
two reasons:
-- Firstly, in our view, polymer flood significantly reduces
fluid handling requirements, indeed generally the higher the
concentration of polymer the lower the total fluid handling
requirement. By injecting a more viscous kind of water,
breakthrough of water is postponed, and the oil can be produced
with a more piston-like flood. This typically means that the scale
of the production facilities can be much smaller than for a
conventional water flood.
-- Secondly, by significantly reducing fluid handling
requirements we can reduce the energy consumed in pumping
production wells and in re-injecting water back into the reservoir.
Reducing energy consumption reduces emissions, and the key to
securing NSTA & Offshore Petroleum Regulator for Environment
and Decommissioning ("OPRED") approval of our Pilot field
development plan is to minimise emissions.
As announced on 7 December 2023 (the "Announcement"), we have
now signed a conditional Sale and Purchase Agreement ("SPA") with
Ping, which details the terms of a potential farm-out of the Pilot
development project. Signing the SPA enabled us to request NSTA
approval for the assignment of an 81.25% interest in the licence to
Ping and to request that NSTA approve the appointment of Ping as
the operator of the licence. We believe this satisfies the first
condition in the licence extension offered by NSTA, however to
secure an extension until November 2025 the assignment to Ping has
to complete by end March 2024. The details of the deal are set out
in the Announcement, and the transaction is conditional on a number
of matters including Orcadian shareholder approval, but we would
draw to your attention that if approved we are not required to
finance the pre-first oil development costs for our remaining
18.75% interest in the Pilot project.
So, we end calendar year 2023 on a high note, ready to progress
with Ping and looking forward to the approval of the Pilot
development project.
During the year NSTA declined to further extend the P2320
licence. That was a disappointment to us as we had identified
significant prospectivity on that licence. In our interim results,
announced on 30 March 2023, we wrote extensively on the seismic
derivative parameter which we have found so useful in this area.
The parameter is relative extended elastic impedance, or rEEI, and
it effectively discriminates gas sands, oil sands and brine sands.
At shallow depths which apply to most of our prospects, the
parameter cannot distinguish between brine sands and shales, but we
don't believe that matters. Together with Ping, we have requested
an out-of-round licensing process for the acreage formerly covered
by P2320 as we remain excited by the potential of this acreage and
we believe the best way to manage associated gas produced with the
Pilot oil is to use the gas cap on the Feugh reservoir, which was
in P2320.
We also made a number of licence applications in the 33(rd)
Round, as we write we await the results of that process. We made
three licence applications, two in partnership with other companies
and one on its own. One of the applications builds upon Orcadian's
viscous oil experience whilst the other two applications are
focused on gas opportunities, including a potential gas-to-wire
project on an appraised discovery, with integrated carbon capture,
which could deliver baseload electricity with minimal emissions.
Early stage indications suggest that, net to Orcadian, the P50
sales gas resource applied for, across the two gas focused
applications, could amount to 114 bcf (billion cubic feet) in a
discovery, 153 bcf in a near drill-ready prospect and 377 bcf in
leads and less mature prospects. These are management estimates of
resources, are based upon seismic and well log data, are as
presented to the NSTA in the Licence Applications, and are provided
here for guidance purposes only.
We were pleased to hear that the government intend to run
licence rounds on an annual basis, we think that will help deliver
the twin objectives of maximising economic recovery and achieving
net zero emissions by 2050.
Financial Results
The Group incurred a loss for the year to 30 June 2023 of
GBP1,184,954 (30 June 2022 - loss of GBP1,586,727).
The loss mainly arose from salaries, consulting and professional
fees along with general administration expenses, the impairment of
intangible assets and new business development. The loss for the
year to 30 June 2023 is below that of the previous year largely due
to a foreign exchange gain of GBP42,000 in 2023 compared to a
foreign exchange loss of GBP156,000 in 2022, and a reduction in
expenditure in consultants and advisors in 2023.
Cash used in operations totalled GBP598,159 (30 June 2022 -
GBP1,323,836). As at 30 June 2023, the Group had a cash balance of
GBP109,705 (30 June 2022 - GBP271,439). At the date of this
announcement, the Group's cash balance was GBP112,098.
Oil Price Outlook
From the beginning of July 2022 to the end of June 2023 the oil
price fell from over $119/bbl to just over $74/bbl(1) . That was a
dramatic fall, some 37%, but we believe an oil price of $74/bbl is
still a good price for the industry. Since then, prices and
volatility have risen as geopolitical tensions rise. Would that
those tensions would evaporate and that peace could break out. We
would all trade whatever political risk premium there is in the
price of oil, for an end to the violence that has gripped the
Middle East and Ukraine.
(1) www.eia.gov
We consider that in the long run the fundamental question for
the oil market is when will the peak in production pass and whether
decline from that peak is demand driven or supply driven. We
believe global action on emissions reduction will surely impact
demand, but probably a lot slower than those most concerned about
climate would like; ultimately though we believe, geology will out
and maintaining supply will become just as hard as growing supply
once was.
If that happens, then we believe the world will become much more
dependent on OPEC and Russian supply. In that environment we
believe that prices will be robust and that investment in projects
such as Pilot, if it was to progress, will enjoy strong returns, at
least on a pre-tax basis.
UK Oil and Gas Sector
We consider the most pressing issue for the UK oil and gas
sector is clarity on what the tax rate will be. In 2022, we believe
the UK went from having one of the most competitive fiscal regimes
in the world, appropriate for a maturing basin, to the worst. The
UK may not have the highest tax rate, but with the Energy Profits
Levy having been introduced as a temporary measure, which on the
face of it had some merits, we believe its extension and increase
in November 2022 confirmed that volatility in the fiscal regime
would add to the volatility in commodity prices which oil and gas
investors are inured to.
The irony is that we believe we need some more changes to the
fiscal regime to fix the problem of uncertainty in the fiscal
regime. We gave evidence to the Treasury review of the oil and gas
fiscal regime and we are hopeful that a better fiscal framework
will emerge.
We welcomed the announcement of annual licensing rounds in the
King's Speech. Licensing rounds are the raw material that we work
with to generate new projects. We made three licence applications
in the 33(rd) round and, if granted, we are keen to get to work on
those licences to see if there are drilling or project
opportunities worthy of marketing to the industry.
Financial Condition
Clearly the Company needs to raise additional funds in the near
term for working capital and to repay the STASCO loan which is
currently due for repayment on 13 March 2024. We can confirm that
we are in active discussions, both with Shell in respect of the
loan, and with a number of financing counterparties in respect of
these requirements. We will update shareholders as these
discussions progress.
Business Outlook
The most important activity for the group in 2024 will be the
progressing of the deal we signed with Ping in November 2023. If it
completes, it will secure a two-year extension to the licence and
define the terms under which we will participate in the Pilot
project. Importantly we can achieve first oil on Pilot without
having to pay for our share of the pre-first oil costs. We have
huge confidence in the Pilot reservoir, the recovery mechanism
proposed and in the potential of the surrounding acreage on the
Western Platform.
We also look forward to securing some additional licences in the
33(rd) Round, we have innovative development concepts in mind and
look forward to being able to conceive attractive projects and
compelling prospects.
Joseph Darby, Chairman, and Stephen Brown, CEO
18 December 2023
Works Cited
Poulsen, A. S. (2018). Results of the UK Captain Field Interwell
EOR Pilot. SPE Improved Oil Recovery Conference. Tulsa, Oklahoma,
US.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF ORCADIAN ENERGY
PLC
Opinion
We have audited the financial statements of Orcadian Energy plc
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 30 June 2023 which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated and Parent Company
Statements of Financial Position, the Consolidated and Parent
Company Statements of Changes in Equity, the Consolidated and
Parent Company Statements of Cash flows and notes to the financial
statements, including 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 30
June 2023 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
-- the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards and as applied in accordance with the provisions of the
Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
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 as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 2.3 in the financial statements, which
indicates that the group incurred a net loss of GBP1,184,954 during
the year ended 30 June 2023 and that the group and company are
reliant on raising finance within the 12 months following the date
of approval of these financial statements in order to fund
forecasted expenditure over this period. As stated in note 2.3,
these events or conditions, along with the other matters as set
forth that note, indicate that a material uncertainty exists that
may cast significant doubt on the group and parent company's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group and company's
ability to continue to adopt the going concern basis of accounting
included:
-- Reviewing the accuracy of historical forecasts by comparison
to the actual results in the year to assess the accuracy of
management's forecasting process;
-- Assessing and challenging the key inputs and assumptions in
the underlying cashflow forecasts prepared by management covering
the going concern period; and
-- Discussing strategies regarding future availability of
funding and assessing the likelihood of the required funds being
successfully raised by considering the funds required and the
group's and company's ability to raise such funds.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures. We also determine a level of
performance materiality which we use to assess the extent of
testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a
whole. In determining our overall audit strategy, we assessed the
level of uncorrected misstatements that would be material for the
financial statements as a whole.
Materiality for the consolidated financial statements was set as
GBP80,000 (2022: GBP73,000) based upon gross assets. Materiality
has been based upon gross assets due to the group still being in
the exploration phase and thus the key balance of interest is the
capitalised exploration costs. Performance materiality and the
triviality threshold for the consolidated financial statements were
set at GBP56,000 (2022: GBP51,100) and GBP4,000 (2022: GBP3,650),
respectively, due to our accumulated knowledge in respect of the
group and the assessed level of risk.
Materiality for the parent company was set as GBP79,000 (2022:
GBP72,000) based upon gross assets. Gross assets was considered to
be an appropriate basis due to the fact that the most significant
balance within the parent company is the investment in the
subsidiary and incurred no expenditure in the year. Performance
materiality and the triviality threshold for the company were set
at GBP55,300 (2022: GBP50,400) and GBP3,950 (2022: GBP3,600),
respectively, due to our accumulated knowledge in respect of the
Company and the assessed level of risk.
Component materiality applied to the subsidiary undertaking was
GBP79,000 (2022: GBP72,000) based upon gross assets. We believe
assets to be the main drive of the business as the subsidiary is in
the exploration stage and no revenues are currently being
generated. Performance materiality and the triviality threshold
were set at GBP55,300 (2022: GBP50,400) and GBP3,950 (2022:
GBP3,600), respectively, for the same reasons as for the parent
company.
We also agreed to report any other differences below that
threshold that we believe warranted reporting on qualitative
grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements. In
particular we looked at areas involving significant accounting
estimates and judgements by the directors and considered future
events that are inherently uncertain, such as the recoverable value
of the capitalised exploration expenditure within the group and the
recoverable value of the parent company's investment in the
subsidiary. We also addressed the risk of management override of
internal controls, including among other matters consideration of
whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
A full scope audit was performed on the complete financial
information of both components of the group by us.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to
the matter described in the Material uncertainty related to going
concern section we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key Audit Matter How our scope addressed this matter
Carrying value and recoverability
of intangible assets (refer to
Notes 3 and 13)
========================================================================
As at 30 June 2023 and 30 June Our work in this area included:
2022 the carrying value of intangible
assets totalled GBP3,871,362 and * Testing a sample of additions to ensure costs have
GBP3,303,400, respectively within been capitalised in accordance with IFRS 6;
the Consolidated Statement of Financial
Position. The intangible assets
relate to capitalised exploration
and evaluation costs. * Obtaining confirmation that the group has good title
to the applicable exploration licences, including any
These capitalised costs fall within new licences or renewals obtained during the year;
the scope of IFRS 6 Exploration
for and evaluation of mineral resources
and there is a risk that items
have not been capitalised during * Reviewing management's assessment of impairment and
the year in accordance with this considering whether there are any indicators of
Standard, and with the group's impairment as per IFRS 6;
accounting policy. given the materiality
of the overall balance and the
judgement required in respect of
their capitalisation. * Reviewing the calculation of the impairment charge
recorded during the year, and understanding the
The carrying value of these assets circumstances leading to the impairment. Ensuring
is considered to be a key audit this has been recorded at an appropriate amount; and
matter due to the level of management
estimation and judgement required
in assessing whether or not these
material assets are recoverable. * Reviewing disclosures in the financial statements to
ensure that they are in line with IFRS 6.
During the current year, the renewal
of licence P2320 has been denied
and, as a result, the group recognised
an impairment charge amounting
to GBP356,532 to bring the carrying
value of the license to nil.
========================================================================
Carrying value of investment in
the subsidiary (refer to Note 16)
========================================================================
As at 30 June 2023 and 30 June Our work in this area included:
2022 the carrying value of investment * Verifying ownership of investment held;
in the subsidiary totalled GBP5,404,044
and GBP3,968,844, respectively
within the Parent Company Statement
of Financial Position. The investment * Obtaining a list of additions in the year. Vouching
in the subsidiary relates to the all additions to bank and considering whether these
initial cost of investment and advances are appropriate for capitalisation;
subsequent amounts advanced to
the subsidiary that have been capitalised.
There is a risk that the investment
in the subsidiary is materially * Obtaining and reviewing the impairment assessment
misstated as additions in the year prepared by management and challenging all key inputs
may have been inappropriately capitalised. and estimates included therein; and
The carrying value of the investment
is considered to be a key audit
matter due to the material nature
of the balance and the level of * Considering whether there is evidence of impairment
management estimation and judgement in accordance with IAS 36 Impairment of Assets ,
required in assessing whether the through reference to internal and external
investment is impaired. indicators. Considering the results of procedures
performed in respect of the carrying value of
exploration and evaluation assets as detailed above,
given that these are the underlying assets from which
the company hopes to recover the value of its
investment.
========================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of directors'
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the 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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the company and the sector in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management, industry research, application of
cumulative audit knowledge and experience of the sector.
-- We determined the principal laws and regulations relevant to
the company in this regard to be those arising from UK Company Law,
local environmental laws, rules applicable to issuers of the AIM
Market and UK-adopted international accounting standards.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the company with those laws and regulations. These procedures
included, but were not limited to:
o Discussion with management regarding compliance with laws and
regulations by the parent company and its subsidiary;
o Reviewing board minutes;
o A review of legal expenses incurred in the year; and
o Review of regulatory news announcements during the year.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that that the recoverable value of
the capitalised exploration expenditure and the investment in
subsidiaries were areas susceptible to fraud and we addressed this
by challenging the assumptions and judgements made by management
when auditing these significant accounting estimates.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
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.
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.
Imogen Massey (Senior Statutory 15 West ferry Circus
Auditor)
For and on behalf of PKF Littlejohn Canary Wharf
LLP
Statutory Auditor London E14 4HD
18 December 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEARED 30 JUNE 2023
2023 2022
Note GBP GBP
Revenue - -
Administrative expenses 5 (671,327) (1,694,576)
Pre-acquisition licence
expenses (129,867) -
Impairment of intangible
assets 13 (356,532) -
Operating Loss (1,157,726) (1,694,576)
----------- -----------
Finance costs 9 (77,228) (41,869)
Other income 7 50,000 466,667
Listing costs - (316,949)
Loss before tax (1,184,954) (1,586,727)
----------- -----------
Taxation 10 - -
Loss for the year (1,184,954) (1,586,727)
----------- -----------
Other comprehensive income:
Items that will or may be
reclassified to profit or
loss:
Other comprehensive income - -
----------- -----------
Total comprehensive income (1,184,954) (1,586,727)
----------- -----------
Earnings per share (basic
and diluted) - pence 11 (1.72) (2.51)
All operations are continuing.
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
2023 2022
Note GBP GBP
Non-current assets
Property, plant and equipment 12 2,508 3,414
Intangible assets 13 3,871,362 3,303,400
3,873,870 3,306,814
----------- -----------
Current assets
Trade and other receivables 14 48,828 1,055,829
Cash and cash equivalents 15 109,705 271,439
158,533 1,327,268
----------- -----------
Total assets 4,032,403 4,634,082
----------- -----------
Non-current liabilities
Borrowings 17 - (956,184)
- (956,184)
----------- -----------
Current liabilities
Trade and other payables 18 (567,629) (553,509)
Borrowings 17 (991,339) -
(1,558,968) (553,509)
----------- -----------
Total liabilities (1,558,968) (1,509,693)
----------- -----------
Net assets / (liabilities) 2,473,435 3,124,389
----------- -----------
Equity
Ordinary share capital 19 72,512 63,755
Share premium reserve 19 5,316,532 3,890,089
Share warrants reserve 19 15,000 15,000
Shares to be issued 20 - 901,200
Other reserve 4 (38,848) (38,848)
Retained earnings (2,891,761) (1,706,807)
----------- -----------
Total equity 2,473,435 3,124,389
----------- -----------
The consolidated Financial Statements of Orcadian Energy PLC
were approved by the Board of Directors and authorised for issue on
18 December 2023.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
The notes below form part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023 2023 2022
Note GBP GBP
Non-current assets
Investment in subsidiary 16 5,404,044 3,968,844
---------
5,404,044 3,968,844
--------- ---------
Current assets
Trade and other receivables 14 - 1,000,000
Cash and cash equivalents 15 2,779 -
---------
- -
--------- ---------
Total assets 5,406,823 4,968,844
--------- ---------
Non-current liabilities
Borrowings 17 - -
---------
- -
--------- ---------
Current liabilities
Trade and other payables 18 - 98,800
---------
- 98,800
--------- ---------
Total liabilities - -
--------- ---------
Net assets 5,406,823 4,870,044
--------- ---------
Equity
Ordinary share capital 19 72,512 63,755
Share premium reserve 19 5,316,532 3,890,089
Share warrants reserve 19 15,000 15,000
Shares to be issued 20 - 901,200
Retained earnings 2,779 -
--------- ---------
Total equity 5,406,823 4,870,044
--------- ---------
Orcadian Energy PLC, company number 13298968, has used the
exemption granted under s408 of the Companies Act 2006 that allows
for the non-disclosure of the Income Statement of the parent
company. The after-tax profit attributable to Orcadian Energy PLC
for the year to 30 June 2023 was GBP2,779 which is attributable to
bank interest income (2022: GBPnil), as all costs within the group
are borne by the subsidiary.
The Financial Statements were approved by the Board of Directors
and authorised for issue on 18 December 2023.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2023
Ordinary Share Share warrants Shares to Other
Share premium reserve be issued reserve Retained
capital reserve earnings Total
Note GBP GBP GBP GBP GBP GBP GBP
Balance as at 1 July 2021 52,202 - - - (38,848) (120,080) (106,726)
Loss for the year and
total
comprehensive income - - - - - (1,586,727) (1,586,727)
-------- --------- -------------- ----------- -------- ----------- -----------
Issue of shares 19 7,625 3,042,375 - - - - 3,050,000
Conversion of loans 17 3,928 1,096,072 - 1,100,000
Shares to be issued - 30
June 2022 placing 20 - - - 901,200 - - 901,200
Issue of warrants 19 - (15,000) 15,000 - - - -
Share issue costs 19 - (233,358) - - - - (233,358)
-------- --------- -------------- ----------- -------- ----------- -----------
Total transactions with
owners 11,553 3,890,089 15,000 901,200 - - 4,817,842
-------- --------- -------------- ----------- -------- ----------- -----------
Balance as at 30 June 2022 63,755 3,890,089 15,000 901,200 (38,848) (1,706,807) 3,124,389
-------- --------- -------------- ----------- -------- ----------- -----------
Loss for the year and
total
comprehensive income - - - - - (1,184,954) (1,184,954)
-------- --------- -------------- ----------- -------- ----------- -----------
Issue of shares 19 8,757 1,581,243 - (1,000,000) - - 590,000
Share issue costs 19 - (154,800) - 98,800 - - (56,000)
-------- --------- -------------- ----------- -------- ----------- -----------
Total transactions with
owners 8,757 1,426,443 (901,200) - - 534,000
-------- --------- -------------- ----------- -------- ----------- -----------
Balance as at 30 June 2023 72,512 5,316,532 15,000 - (38,848) (2,891,761) 2,473,435
-------- --------- -------------- ----------- -------- ----------- -----------
Refer to note 19 for a description of the nature and purpose of
each reserve within equity.
The notes below form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2023
Share Shares to
Ordinary premium Share warrants be issued Retained
Share capital reserve reserve earnings Total
Note GBP GBP GBP GBP GBP GBP
Balance as at 30 June 2021 52,202 - - - - 52,202
Loss for the period and - -
total comprehensive income - - - -
-------------- --------- -------------- ----------- --------- ---------
Issue of shares 19 7,625 3,042,375 - - - 3,050,000
Conversion of loans 17 3,928 1,096,072 - 1,100,000
Shares to be issued - 30
June 2022 placing 20 - - - 901,200 - 901,200
Issue of warrants 19 - (15,000) 15,000 - - -
Share issue costs 19 - (233,358) - - - (233,358)
-------------- --------- -------------- ----------- --------- ---------
Total transactions with
owners 11,553 3,890,089 15,000 901,200 - 4,817,842
-------------- --------- -------------- ----------- --------- ---------
Balance as at 30 June 2022 63,755 3,890,089 15,000 901,200 - 4,870,044
profit for the year and
total comprehensive income - - - - 2,779 2,779
-------------- --------- -------------- ----------- --------- ---------
Issue of shares 19 8,757 1,581,243 - (1,000,000) - 590,000
Share issue costs 19 - (154,800) - 98,800 - (56,000)
-------------- --------- -------------- ----------- --------- ---------
Total transactions with
owners 8,757 1,426,443 - (901,200) - 534,000
-------------- --------- -------------- ----------- --------- ---------
Balance as at 30 June 2023 72,512 5,316,532 15,000 - 2,779 5,406,823
-------------- --------- -------------- ----------- --------- ---------
Refer to note 19 for a description of the nature and purpose of
each reserve within equity.
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2023
2023 2022
Note GBP GBP
Cash flows from operating activities
Loss before tax for the year (1,184,954) (1,586,727)
Adjustments for:
Depreciation 12 1,822 674
Unrealised foreign exchange (gain)
/ loss 5 (44,852) 151,629
Impairment of intangible assets 13 356,532 -
Interest received 9 (2,779) -
Finance costs in the year 9 80,007 41,869
Decrease trade and other receivables 14 7,001 32,720
Increase in trade and other payables 18 189,064 36,000
Cash generated from operations (598,159) (1,323,836)
----------- -----------
Income taxes received - -
----------- -----------
Net cash flows from operating activities (598,159) (1,323,836)
----------- -----------
Investing activities
Interest received 9 2,779 -
Purchases of property, plant and
equipment 12 (916) (2,246)
Purchases of exploration and evaluation
assets 13 (1,000,638) (1,348,677)
----------- -----------
Net cash used in investing activities (998,775) (1,350,923)
----------- -----------
Financing activities
Proceeds from issue of ordinary share
capital 19 1,590,000 3,000,000
Share issue costs paid 19 (154,800) (233,358)
Proceeds from issue of convertible
loan notes 17 - -
Repayment of convertible loan notes 17 - -
Interest paid - -
Net cash provided by financing activities 1,435,200 2,766,642
----------- -----------
Net increase in cash and cash equivalents (161,734) 91,883
Cash and cash equivalents at beginning
of period 15 271,439 179,556
----------- -----------
Cash and cash equivalents and end
of period 15 109,705 271,439
----------- -----------
There were no significant non-cash transactions in the year to
30 June 2023.
The notes below form part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2023
2023 2022
Note GBP GBP
Cash flows from operating activities
Profit for the year 2,779 -
Adjustments for:
Depreciation 12 - -
Interest received (2,779) -
Decrease in trade and other receivables 4 - -
Increase in trade and other payables 18 - -
Cash generated from operations - -
----------- -----------
Income taxes paid - -
----------- -----------
Net cash flows from operating activities - -
----------- -----------
Investing activities
Interest received 2,779 -
Funds advanced to subsidiary 16 (1,435,200) (2,776,642)
Purchases of exploration and evaluation
assets 13 - -
----------- -----------
Net cash used in investing activities (1,432,421) (2,776,642)
----------- -----------
Financing activities
Proceeds from issue of ordinary share
capital 19 1,590,000 3,000,000
Share issue costs paid 19 (154,800) (233,358)
----------- -----------
Net cash provided by financing activities 1,435,200 2,776,642
----------- -----------
Net increase in cash and cash equivalents 2,779 -
Cash and cash equivalents at beginning
of period 15 - -
----------- -----------
Cash and cash equivalents and end
of period 15 2,779 -
----------- -----------
There were no significant non-cash transactions in the year to
30 June 2023.
The notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Orcadian Energy PLC (the "Company") is a public limited company
which is domiciled and incorporated in England and Wales under the
Companies Act 2006 with the registered number 13298968. The
Company's registered office is 6(th) floor, 60 Gracechurch Street,
London, EC3V 0HR, and its ordinary shares are admitted to trading
on AIM, a market of the London Stock Exchange.
The principal activity of the Group is managing oil and gas
assets and the Group holds a 100% interest in, and is licence
administrator for, UKCS Seaward Licences P2244, which contains the
Pilot and Harbour heavy oil discoveries and P2482 which contains
the Elke and Narwhal discoveries. The Group also had a 50% working
interest in P2516, which contains a small part of the Fynn
discoveries. P2516 was administered by the Parkmead Group and
covers blocks 14/20g and 15/16g, which lie midway between the Piper
and Claymore fields. P2516 expired in November 2023.
The financial statements presented for Group are for the year
ended 30 June 2023 and these have are shown alongside figures for
the year ended 30 June 2022 for comparative purposes.
2. Summary of significant accounting policies
The principal accounting principles applied in the preparation
of these financial statements are set out below. These principles
have been consistently applied to all years presented, unless
otherwise stated.
2.1. Basis of preparation
The financial statements have been prepared on a going concern
basis using the historical cost convention and in accordance with
the UK-Adopted International Accounting Standards, and in
accordance with the provisions of the Companies Act 2006.
The financial statements have been prepared under the historical
cost convention unless otherwise stated.
2.2. Consolidation and acquisitions
The financial statements consolidate the financial information
of the Group and companies controlled by the Group (its
subsidiaries) at each reporting date. Control is achieved where the
Company has the power to govern the financial and operating
policies of an investee entity, has the rights to variable returns
from its involvement with the investee and has the ability to use
its power to affect its returns. The results of subsidiaries
acquired or sold are included in the financial information from the
effective date of acquisition or up to the effective date of
disposal, as appropriate. Where necessary, adjustments are made to
the results of acquired subsidiaries to bring their accounting
policies into line with those used by the Group. All intra-Group
transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are
adjusted, where necessary, to ensure the use of consistent
accounting policies.
The Company's shares were admitted to trading on AIM, a market
operated by the London Stock Exchange, on 15 July 2021. In
connection with the admission to AIM, in the financial year to 30
June 2021, the Group undertook a Group reorganisation of its
corporate structure which resulted in the Company becoming the
ultimate holding company of the Group. Prior to the reorganisation
there was no ultimate holding company as Orcadian Energy (CNS) Ltd
("CNS") was a standalone entity. The transaction was accounted for
as a capital reorganisation rather than a reverse acquisition since
it did not meet the definition of a business combination under IFRS
3. In a capital reorganisation, the consolidated financial
statements of the Group reflect the predecessor carrying amounts of
CNS with comparative information of CNS presented for all periods
since no substantive economic changes have occurred. The difference
arising on acquisition has been accounted for with the recognition
of a merger reserve on the balance sheet following the
reorganisation of the share capital of the Group at the point of
completion of the transaction.
2.3. Going concern
The financial statements have been prepared on a going concern
basis. The Group is not yet revenue generating and an operating
loss has been reported. The Group has historically been reliant on
raising finance, both debt and equity, to enable it to meet its
obligations as they fall due.
The Directors have reviewed a detailed forecast based on the
funds expected to be raised and forecasted expenditure, including
all required spend to meet licence requirements. This forecast has
been stress tested by management in reaching their going concern
conclusion. Having made due and careful enquiry, the Directors
acknowledge that funds will need to be raised within the next 12
months to enable the Group to meets its obligations as they fall
due, however, the Directors are confident that the required funds
will successfully be raised through the equity market to fund its
operations over the next 12 months.
The Directors, therefore, have made an informed judgement, at
the time of approving financial statements, that the Group is a
going concern but they acknowledge that the dependence on raising
further funds during the next 12 months represents a material
uncertainty.
2.4. Changes in accounting policies
2.4.1. New standards, amendments to standards and interpretations
i) New and amended standards adopted by the Group
The International Accounting Standards Board (IASB) issued
various amendments and revisions to International Financial
Reporting Standards and IFRIC interpretations. A number of
amendments and revisions were applicable for the period ended 30
June 2023 but did not result in any material changes to the
financial statements of the Group.
Of the other IFRS and IFRIC amendments, none are expected to
have a material effect on the future Group Financial
Statements.
ii) New and amended standards not yet adopted by the Group
The Directors do not believe that the implementation of new
standards, amended standards and interpretations issued but not yet
effective will have a material impact once implemented in future
periods.
2.5. Foreign currency
2.5.1. Functional and presentation currency
Items in the company's financial statements are measured in the
currency of the primary economic environment in which the entity
operates (functional currency). he functional currency of the Group
and Company is Pounds sterling (GBP), which is also the
presentation currency for these financial statements.
Monetary amounts in these financial statements are rounded to
the nearest GBP.
2.5.2.Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement, except when deferred in
other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses
that relate to borrowings and cash and cash equivalents are
presented in the income statement within 'finance income or costs.'
All other foreign exchange gains and losses are presented in the
income statement within 'Other (losses)/gains.'
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary financial
assets measure at fair value are included in other comprehensive
income.
2.6. Other income
Grants are accounted for under the accruals model. Grants of a
revenue nature are recognised in the Consolidated Statement of
Comprehensive Income in the same period as the related expenditure,
in accordance with the attached conditions.
2.7. Taxation
Tax currently payable is based on taxable profit for the period.
Taxable profit differs from profit as reported in the income
statement because it excludes items of income and expense that are
taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. 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 is
calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset realised.
Deferred tax is charged or credited to profit or loss, except when
it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity. Deferred
tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
2.8. Leases
The Group assesses whether a contract is or contains a lease at
the inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
administrative expense on a straight-line basis over the term of
the lease unless another systematic basis is more representative of
the time pattern in which economic benefits from the leased assets
are consumed.
2.9. Intangible assets
Exploration and evaluation expenditures (E&E)
The Group applies the successful efforts method of accounting
for oil and gas assets, having regard to the requirements of IFRS 6
'Exploration for and Evaluation of Mineral Resources'. Costs
incurred prior to obtaining the legal rights to explore an area are
expensed immediately to the Statement of Comprehensive Income.
All licence acquisitions, exploration and evaluation costs are
capitalised, a share of administration costs is capitalised insofar
as they relate to exploration, evaluation and development
activities. These costs are written off to the Consolidated
Statement of Comprehensive Loss unless commercial reserves have
been established or the determination process has not been
completed and there are no indications of impairment. If a project
is deemed commercial all of the attributable costs are transferred
into Property, Plant and Equipment. These costs will then be
depreciated from the commencement of production on a unit of
production basis.
2.10. Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. This includes
consideration of the IFRS 6 impairment indicators for any
intangible exploration and evaluation assets capitalised as
intangible costs, and investment in the subsidiary. If any such
indication exists, or when annual impairment testing for an asset
is required, the Group makes an estimate of the asset's recoverable
amount.
An asset's recoverable amount is the higher of its fair value
less costs to sell and its value in use. This is determined for an
individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or Groups
of assets, and the asset's value in use cannot be estimated to be
close to its fair value. In such cases, the asset is tested for
impairment as part of the cash-generating unit to which it belongs.
When the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount, it is considered impaired and is
written down to its recoverable amount.
In assessing value in use, estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses relating to
continuing operations are recognised in those expense categories
consistent with the function of the impaired asset, unless the
asset is carried at revalued amount (in which case the impairment
loss is treated as a revaluation decrease). An assessment is also
made at each reporting date as to whether there is any indication
that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable
amount is estimated.
A previously recognised impairment loss is reversed only if
there has been a change in the estimates used to determine the
asset's recoverable amount since the last impairment loss was
recognised. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increased amount
cannot exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the Statement
of Comprehensive Income unless the asset is carried at revalued
amount, in which case the reversal is treated as a revaluation
increase. After such a reversal, the depreciation charge is
adjusted in future periods to allocate the asset's revised carrying
amount, less any residual value, on a systematic basis over its
remaining useful life.
2.11. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any accumulated impairment losses. Depreciation is
provided on all property, plant and equipment to write off the cost
less estimated residual value of each asset over its expected
useful economic life on a straight-line basis at the following
annual rates:
-- Property, plant and equipment - 3 years straight line.
All assets are subject to annual impairment reviews.
2.12. Financial Instruments
2.12.1 Initial recognition
A financial asset or financial liability is recognised in the
statement of financial position of the Group when it arises or when
the Group becomes part of the contractual terms of the financial
instrument.
2.12.2 Classification
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of
the following conditions are met:
(1) the asset is held within a business model whose objective is
to collect contractual cash flows; and
(2) the contractual terms of the financial asset generating cash
flows at specified dates only pertain to capital and interest
payments on the balance of the initial capital.
Financial assets which are measured at amortised cost, are
measured using the Effective Interest Rate Method (EIR) and are
subject to impairment. Gains and losses are recognised in profit or
loss when the asset is derecognised, modified or impaired.
There were no financial assets measured at fair value as at 30
June 2023, or 30 June 2022.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the
effective interest rate method include current borrowings and trade
and other payables that are short term in nature. Financial
liabilities are derecognised if the Group's obligations specified
in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the effective interest rate ("EIR"). The EIR amortisation
is included as finance costs in profit or loss. Trade payables
other payables are non-interest bearing and are stated at amortised
cost using the effective interest method.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are incurred for the purpose of
repurchasing in the near term. Gains or losses on liabilities held
for trading are recognised in the statement of profit or loss and
other comprehensive income.
2.12.3. Derecognition
A financial asset is derecognised when:
(1) the rights to receive cash flows from the asset have
expired, or
(2) the Group has transferred its rights to receive cash flows
from the asset or has undertaken the commitment to fully pay the
cash flows received without significant delay to a third party
under an arrangement and has either (a) transferred substantially
all the risks and the assets of the asset or (b) has neither
transferred nor held substantially all the risks and estimates of
the asset but has transferred the control of the asset.
2.12.4 Impairment of financial assets
The Group recognises a provision for impairment for expected
credit losses regarding all financial assets. Expected credit
losses are based on the balance between all the payable contractual
cash flows and all discounted cash flows that the Group expects to
receive. Regarding trade receivables, the Group applies the IFRS 9
simplified approach in order to calculate expected credit losses.
Therefore, at every reporting date, provision for losses regarding
a financial instrument is measured at an amount equal to the
expected credit losses over its lifetime without monitoring changes
in credit risk. To measure expected credit losses, trade
receivables and contract assets have been Grouped based on shared
risk characteristics.
2.13. Trade and other receivables
Trade and other receivables are initially recognised at fair
value when related amounts are invoiced then carried at this amount
less any allowances for doubtful debts or provision made for
impairment of these receivables.
2.14. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
are subject to an insignificant risk of changes in value.
2.15. Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.16. Share premium
Share premium account represents the excess of the issue price
over the par value on shares issued. Incremental costs directly
attributable to the issue of new ordinary shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.17. Shares to be issued
Shares to be issued qualifies as equity as it satisfies the
requirements under IAS 32, whereby subscription agreements for
Ordinary shares ("the Obligation") represents a contract that will
be settled by the Company delivering a fixed number of its Ordinary
shares in exchange for a fixed amount of cash. When the Obligation
arises the net value of share subscriptions to be received is
recognised as an equity reserve, net of costs, with a corresponding
receivable being recognised as an asset, and costs recorded as an
accrued expense. Upon issue of the Ordinary shares, the Shares to
be issued reserve is transferred to Share capital and Share
premium. The receivable is discharged upon receipt of cash
subscriptions from shareholders, and the accrued expense discharged
upon payment to third party suppliers.
2.18. Trade payables
These financial liabilities are all non-interest bearing and are
initially recognised at the fair value of the consideration
payable.
2.19. Convertible loan notes and borrowings
Convertible loan notes classified as financial liabilities and
borrowings are recognised initially at fair value, net of
transaction costs incurred. After initial recognition, loans are
measured at the amortised cost using the effective interest rate
method. Any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the income
statement over the period of the borrowings using the effective
interest rate method.
2.20. Finance income and finance costs
Finance income comprises interest income on bank funds. Interest
income is recognised as it accrues in profit or loss, using the
effective interest method. Finance costs comprise interest expense
on borrowings. Borrowing costs are recognised in profit or loss in
the year in which they are incurred.
2.21. Earnings per share
Basic Earnings per share is calculated as profit attributable to
equity holders of the parent for the period, adjusted to exclude
any costs of servicing equity (other than dividends), divided by
the weighted average number of ordinary shares, adjusted for any
bonus element.
2.22. Operating segments
The Chief Operating Decision Maker (CODM) is considered to be
the Board of Directors. They consider that the Group operates in a
single segment, that of oil and gas exploration, appraisal and
development, in a single geographical location, the North Sea of
the United Kingdom. As a result, the financial information of the
single segment is the same as set out in the statement of
comprehensive income, statement of financial position, statement of
Changes in Equity and Statement of Cashflows.
2.23. Investment in subsidiaries
The consolidated financial statements incorporate the financial
statements of the company and entities controlled by the Group (its
subsidiaries). Control is achieved where the Group has the power to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in total comprehensive income from the effective
date of acquisition and up to the effective date of disposal, as
appropriate using accounting policies consistent with those of the
parent. All intra-group transactions, balances, income and expenses
are eliminated in full on consolidation.
Investments in subsidiaries are accounted for at cost less
impairment in the individual financial statements. Advances that
are made to the subsidiary that are not expected to be repaid in
the short term are capitalised by the Company. All advances made
for the year have been capitalised.
2.24. Share-based payments
The fair value of services received in exchange for the grant of
share warrants is recognised as an expense in share premium or
profit or loss, in accordance with the nature of the service
provided. A corresponding increase is recognised in equity.
3. Significant accounting estimates and judgements, estimates and assumptions
The preparation of financial statements using accounting
policies consistent with IFRS requires the Directors to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities and the reported amounts of income and expenses. The
preparation of financial statements also requires the Directors to
exercise judgement in the process of applying the accounting
policies. Changes in estimates, assumptions and judgements can have
a significant impact on the financial statements.
Recoverable value of intangible assets (refer to note 13)
As at 30 June 2023, the Group held oil and gas exploration and
evaluation intangible assets of GBP3,871,362 (2022: GBP3,303,400).
The carrying values of intangible assets are assessed for
indications of impairment, as set out in IFRS 6, on an annual
basis. As part of this impairment assessment, the recoverable value
of the intangible assets is required to be estimated.
When estimating the recoverable value of the intangibles
Management consider the proved, probable and potential resources
per the latest CPR
(https://orcadian.energy/wp-content/uploads/2021/07/110650.Orcadian.FinalReport.pdf),
likely production costs and the forecasted oil prices.
The Group held 100% interest in UKCS Seaward Licence P2320 ("the
Licence"), which contains the Blakeney, Feugh, Dandy & Crinan
discoveries. The Licence had Phase A work commitments that were due
to be completed by 14 May 2023. The Group applied to the North Sea
Transition Authority ("NSTA") for an extension to completion time
of Phase A work commitment. The NSTA declined the request for
extension and the Licence determined on 14 May 2023. The Group has
impaired the full value of the Licence recognised as an Intangible
Asset on the Consolidated Statement of Financial Position with an
impairment charge of GBP356,532 being charged to the Consolidated
Statement of Comprehensive Loss.
As a result of the budget exploration costs, the licenses being
valid and the assessed recoverable value of the intangibles being
in excess of the carrying value, Management do not consider that
any further impairment of intangible assets are impaired as at 30
June 2023, with the exception of the impairment charge detailed
above.
These estimates and assumptions are subject to risk and
uncertainty and therefore a possibility that changes in
circumstances will impact the assessment of impairment
indicators.
There was only one critical judgement identified, apart from
those involving estimations (which are dealt with separately above)
that the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
4. Group reorganisation under common control
The acquisition in the year ended 30 June 2021 met the
definition of a group reorganisation due to the Company and the
subsidiary being under common control at the date of acquisition.
As a result, and since Orcadian Energy Plc did not meet the
definition of a business per IFRS 3, the acquisition fell outside
of the scope of IFRS 3 and the predecessor value method was used to
account for the acquisition.
These consolidated financial statements represent a continuation
of the consolidated financial statements of Orcadian Energy (CNS)
Ltd and include:
a. The assets and liabilities of Orcadian Energy (CNS) Ltd at
their pre-acquisition carrying amounts and the results for both
periods; and
b. The assets and liabilities of the Company as at 11 May 2021
and its results from 11 May to 30 June 2021.
On 11 May 2021, the Company issued 52,201,601 shares entire
issued share capital of Orcadian Energy (CNS) Ltd.
The net assets of Orcadian Energy (CNS) Ltd at the date of
acquisition was as follows:
GBP
Property Plant & Equipment 1,357
Intangible Assets 1,719,292
Current Assets 447,425
Current Liabilities (284,745)
Non-Current Liabilities (1,869,975)
---------------------------- ------------
Net assets 13,354
---------------------------- ------------
The reserve that arose from the acquisition is made up as
follows:
Year ended
30 June 2021
GBP
------------------------------------------------- --------------
As at start of year -
Cost of the investment in Orcadian Energy (CNS)
Ltd 52,202
Less: net assets of Orcadian Energy (CNS) Ltd
at acquisition (13,354)
As at end of year 38,848
------------------------------------------------- --------------
5. Administrative expenses
2023 2022
GBP GBP
Office costs, rates and services 22,610 21,925
Wages and salaries* 293,403 384,750
Consultants and advisers 254,452 783,454
Audit fees (note 6) 32,250 27,500
Insurance 2,256 33,504
Other expenses 39,432 181,402
National Insurance 67,091 105,241
Foreign Exchange (41,989) 156,126
Depreciation 1,822 674
671,327 1,694,576
-------- ---------
*refer to note 13 for details on wages and salaries capitalised
to intangible assets.
6. Auditor's Remuneration
During the year, the Company obtained the following services
from the Company's auditors and its associates:
2023 2022
GBP GBP
Audit of the financial statements 32,250 27,500
Transaction services - 15,000
Informal interim review - 1,750
------ ------
32,250 44,250
------ ------
7. Other Income
2023 2022
GBP GBP
33(rd) licencing round income 50,000 -
OGA grant - 466,667
Other Income 50,000 466,667
------ -------
In January 2023 the Company applied for certain licences in the
33(rd) Seward licencing round. One of the applications was in
partnership with Triangle Energy Pty. To enter into the joint
application Triangle Energy Pty paid the Company GBP50,000.
In December 2021 Orcadian was awarded a grant of GBP466,667 by
the OGA (now NSTA) to evaluate an alternative concept for the
electrification of key producing oil and gas fields in the Central
Graben area of the North Sea. All attached conditions in respect of
the grant were met during the year and therefore this income has
been recognised in full as the underlying costs have been incurred
in the year.
8. Staff numbers and costs
Group Group
2023 2022
Staff costs (including directors) GBP GBP
------- -------
Wages and salaries 599,375 790,000
Social security costs 67,091 105,241
------- -------
666,466 895,241
------- -------
Refer to the Directors Remuneration Report for further
information on Director wages and salaries.
Wages and salaries includes GBP305,972 that was capitalised to
the value of the intangible asset (2022: GBP405,250) (refer to note
13).
No pension benefits are provided for any Directors (2022:
GBPnil).
The average number of persons (including directors) employed by
the Company during the year was:
Group and Company 2023 2022
Management and Administration 5 6
5 6
---- ----
9. Finance costs
2023 2022
GBP GBP
Interest received (2,779) -
Interest expense 80,007 41,869
77,228 41,869
10. Taxation
Analysis of charge for the year:
2023 2022
GBP GBP
Current income tax charge - -
R&D tax credits - -
Deferred tax charge - -
---- ----
Total taxation credit/(charge) - -
---- ----
Taxation reconciliation
The below table reconciles the tax charge for the year to the
theoretical charge based on the result for the year and the
corporation tax rate.
2023 2022
GBP GBP
Loss before income tax (1,184,954) (1,586,727)
Tax at the applicable rate of 19%
(2022: 19%) (225,141) (301,478)
Effects of:
R&D tax credits - -
Expenses not deducted for tax purposes 68,172 1,333
Unutilised tax losses 156,969 300,145
------------ ------------
Total income tax credit / (expense) - -
------------ ------------
As at 30 June 2023, the Group had potential deferred tax assets
not recognised in respect of unused tax losses of GBP560,656 (2022:
GBP439,912) which is due to uncertainty over the availability of
future taxable profits to offset these losses against.
11. Earnings per share
The calculation of the basic and diluted earnings per share is
calculated by dividing the loss for the year for continuing
operations for the Company by the weighted average number of
ordinary shares in issue during the year.
There is no difference between the basic and diluted earnings
per share as the Group recorded a loss for the year, and where a
loss is recorded the basic and diluted loss is the same. Refer to
note 19 for details on details of warrants on issue as at 30 June
2023 that would have a dilutive effect on earnings per share.
2023 2022
GBP GBP
-------------------------------------------- ------------ ------------
Loss for the purposes of basic earnings
per share being net loss attributable
to the owners (1,184,954) (1,586,727)
Weighted average number of Ordinary Shares 68,876,857 63,278,315
Loss per share - pence (1.72p) (2.51p)
-------------------------------------------- ------------ ------------
12. Property, plant and equipment
IT hardware
& software Office equipment Total
GBP GBP GBP
Cost
As at 30 June 2021 4,794 202 4,996
----------- ---------------- -----
Additions 2,246 - 2,246
As at 30 June 2022 7,040 202 7,242
----------- ---------------- -----
Additions 916 - 916
----------- ---------------- -----
As at 30 June 2023 7,956 202 8,158
----------- ---------------- -----
IT hardware
& software Office equipment Total
GBP GBP GBP
Depreciation
As at 30 June 2021 2,952 202 3,154
----------- ---------------- -----
Charged in the year 674 - 674
As at 30 June 2022 3,626 202 3,828
----------- ---------------- -----
Charged in the year 1,822 - 1,822
As at 30 June 2023 5,448 202 5,650
----------- ---------------- -----
Net book value as at 30 June 2023 2,508 - 2,508
----------- ---------------- -----
Net book value as at 30 June 2022 3,414 - 3,414
----------- ---------------- -----
The depreciation expense is recognised in administrative
expenses as set out in note 5.
13. Intangible assets
Oil and gas
exploration
assets
GBP
Cost
------------
As at 30 June 2021 1,814,615
------------
Additions 1,488,785
------------
As at 30 June 2022 3,303,400
------------
Additions 924,494
Impairment (356,532)
------------
As at 30 June 2023 3,871,362
------------
Wages and salaries totalling GBP305,972 (2022: GBP405,250) were
capitalised during the year (refer to note 8).
The carrying value of the prospecting and exploration rights is
supported by the estimated resource and current market values as
contained in the Competent Person's Report date 1 April 2021 which
was prepared by Sproule B.V.
https://orcadian.energy/wp-content/uploads/2021/07/110650.Orcadian.FinalReport.pdf
Refer to Note 3 for details of impairment charge.
14. Trade and other receivables
Group Group Company Company
2023 2022 2023 2022
GBP GBP GBP GBP
VAT receivable 47,440 55,829 - -
Other receivables 1,388 1,000,000 - 1,000,000
Prepayments relating to the - -
issue of equity - -
Prepayments other - - - -
------ --------- ------- ---------
48,828 1,055,829 - 1,000,000
------ --------- ------- ---------
Other receivables of GBP1,000,000 in the year to 30 June 2022
represented the gross value of share subscriptions receivable as at
reporting date pursuant to a share placement that was announced on
30 June 2022 but for which shares were not formally issued until
post-reporting date, in July 2022. There were GBP98,800 of share
issue costs which were accrued for as at 30 June 2022 in respect of
this placing. (Refer to notes 2.17 and 20).
The fair value of other receivables is the same as their
carrying values as stated above.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Company does not hold any collateral as security.
15. Cash and cash equivalents
Group Group Company Company
2023 2022 2023 2022
GBP GBP GBP GBP
------- ------- ------- -------
Cash at bank and in hand 109,705 271,439 2,779 -
------- ------- ------- -------
There is no material difference between the fair value of cash
and cash equivalents and their book value.
16. Investment in subsidiary
Name Address of the Nature of business Proportion
registered office of ordinary
shares held
directly by
parent (%)
----------------- -------------------- -------------------- -------------
6(th) floor,
60 Gracechurch
Orcadian Energy Street, London, Managing oil and
(CNS) Ltd EC3V 0HR gas assets 100
The acquisition of Orcadian Energy (CNS) Ltd took place on 11
May 2021. Refer to note 4 for further details.
GBP
As at 30 June 2022 3,968,844
Additions 1,435,200
As at 30 June 2023 5,404,044
---------
The additions during the year were advances to enable the
subsidiary to continue work on the oil and gas exploration assets
owned directly by the subsidiary. These costs have been capitalised
rather than treated as an intercompany loan as they represent
capital contributions and hence increase in value of the parent's
investment.
17. Borrowings
2023
----------------
STASCO Loan
GBP
As at 30 June 2022 956,184
Interest accrued 80,007
Effect of foreign exchange (44,852)
------------------------------- -------------
As at 30 June 2023 991,339
------------------------------- -------------
The STASCO loan was entered in to on 22 July 2019. The total
loan facility was US$1,000,000 which has been fully drawn down. The
term of the loan facility is 4 years and is subject to interest at
LIBOR plus 5% which is accrued quarterly. The total interest charge
for the year was US$98,427 GBP80,007 (2022: $57,118 (GBP41,869)),
and a GBP44,852 unrealised foreign exchange gain (2022: loss of
GBP151,629) was incurred in the year in respect of this loan. The
loan is due to be repaid by 13 March 2024 (Refer to note 26 for
further detail).
2022
-------------------------------------------------------
Convertible Convertible STASCO Loan Total
loan note loan note GBP GBP
2020 2021
GBP GBP
As at 30 June 2021 380,000 720,000 762,686 1,862,686
Conversion in to ordinary
shares (380,000) (720,000) - (1,100,000)
Interest accrued - - 41,869 41,869
Effect of foreign exchange - - 151,629 151,629
---------------------------- ------------ ------------ ------------- ------------
As at 30 June 2022 - - 956,184 956,184
---------------------------- ------------ ------------ ------------- ------------
On 15 July 2021, all Convertible Loan Notes ("CLNs") were
converted in to ordinary shares at a price of 28 pence each, which
was a 30% discount to the fundraise price. In total 3,928,572
ordinary shares were issued in full discharge of the CLNs. No
interest was paid on the CLNs as they were converted in to ordinary
shares.
On 15 July 2021, all CLNs were converted in to ordinary shares
at a price of 28 pence each, which was a 30% discount to the
fundraise price. In total 3,928,572 ordinary shares were issued in
full discharge of the CLNs. No interest was paid on the CLNs as
they were converted in to ordinary shares.
18. Trade and other payables - due within one year
Group Group Company Company
2023 2022 2023 2022
GBP GBP GBP GBP
Trade payables 196,354 184,636 - -
Accruals 371,275 334,631 - 98,800
Other creditor - 34,242 - -
------- ------- ------- -------
567,629 553,509 - 98,800
------- ------- ------- -------
The carrying values of trade and other payables are considered
to be a reasonable approximation of the fair value and are
considered by the Directors as payable within one year.
19. Ordinary share capital and share premium
Group & Company
Number of shares Ordinary Share
share capital premium
Issued GBP GBP
As at 30 June 2021 52,201,601 52,202 -
Issue of shares 7,625,000 7,625 3,042,375
Share issue costs - - (233,358)
Value of warrants issued - - (15,000)
Conversion of loans 3,928,572 3,928 1,096,072
---------------- -------------- ----------
As at 30 June 2022 63,755,174 63,755 3,890,089
---------------- -------------- ----------
Issue of shares 8,757,143 8,757 1,581,243
Share issue costs - - (154,800)
---------------- -------------- ----------
As at 30 June 2023 72,512,317 72,512 5,316,532
---------------- -------------- ----------
The ordinary shares confer the right to vote at general meetings
of the Company, to a repayment of capital in the event of
liquidation or winding up and certain other rights as set out in
the Company's articles of association.
Share warrants
On 15 July 2021 the Company issued 75,000 broker warrants in
connection with the Raise. These warrants are fully vested, have an
exercise price of 40p and are exercisable for a period of three
years.
The fair value of warrants is valued using the Black-Scholes
pricing model. A fair value charge of GBP15,000 has been applied as
a direct deduction to the Share Premium Reserve in the year to 30
June 2022.
The inputs into the Black-Scholes pricing model are as
follows:
Grant date 15 Jul 2021
Exercise price 40.0 pence
Expected life 3 years
Expected volatility 77.32%
Risk free rate
of interest 0.0242%
Dividend yield Nil
Fair value of option 20.0 pence
Volatility has been estimated based on the average historic
volatility of the share prices of a selection of three peer
companies for a period equal to the expected term from the grant
date.
Nature and purpose of equity and reserves
Equity and Reserve Description and purpose
Ordinary share Represents the nominal value of shares issued
capital
Share premium reserve Amount subscribed for share capital in excess
of nominal value
Share warrants Value of warrants issued
reserve
Shares to be issued Value of shares to be issued where share subscription
agreements have been executed and the share
placement completing post-reporting date.
Other reserve Reserve created in accordance with the acquisition
of Orcadian Energy (CNS) Ltd on 11 May, 2021
Retained earnings (Refer to Note 4)
Cumulative net gains and losses recognised
in the Consolidated Statement of Comprehensive
Income
20. Shares to be issued
As at 30 June 2022 the Shares to be issued represented the issue
of 2,857,143 shares at 35 pence each that completed on 6 July 2022.
The value of the Shares to be issued reserve reflected the gross
proceeds of the share placement of GBP1,000,000, less GBP98,800 of
share issue costs which were accrued for at 30 June 2022. Upon
completion the value of Shares to be issued were re-allocated to
Share capital and Share premium (Refer to note 2.17 for the Group's
accounting policy for Shares to be issued).
21. Related parties
21.1 Transactions with related parties
The Company had the following related party transactions:
(1) The Company makes use of an office at 70 Claremont Road
which is currently provided to the Company by Mrs Julia
Cane-Honeysett and Mr Stephen Brown at a rental of GBP1,000 per
calendar month. The company pays for the services and business
rates associated with the property.
21.3. Key management personnel
Directors of the Company are considered to be key management
personnel. The remuneration of the Directors has been set out in
note 8.
22. Ultimate controlling party
The Directors consider Stephen Brown and Julia Cane-Honeysett to
be the ultimate controlling parties given their combined holding of
40.22% of the issued capital of the Company.
23. Financial instruments
The Company holds the following financial instruments:
Financial assets
Group Group Company Company
2023 2022 2023 2022
Financial assets
at amortised cost: GBP GBP GBP GBP
Other receivables 1,500 1,000,000 - 1,000,000
Other financial assets - - - -
at amortised cost
Cash and cash equivalents 109,705 271,439 2,779 -
------- --------- ------- ---------
111,205 1,271,439 2,779 1,000,000
------- --------- ------- ---------
The maximum exposure to credit risk at the end of the reporting
period is the carrying amount of each class of financial assets
mentioned above.
Financial liabilities
Group
2023 2022
Financial liabilities at amortised GBP GBP
cost:
Trade payables 196,354 184,636
Borrowings - current 991,339 -
Borrowings - non-current - 956,184
--------- ---------
1,187,693 1,140,820
--------- ---------
24. Financial risk management
24.1 Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk, credit risk and liquidity risk. The Group's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse
effects on the Group's financial performance.
Risk management is carried out by the executive management
team.
a) Market risk
The Group is exposed to market risk, primarily relating to
interest rate, foreign exchange and commodity prices. The Group
does not hedge against market risks as the exposure is not deemed
sufficient to enter into forward contracts. The Group has not
sensitised the figures for fluctuations in interest rates, foreign
exchange or commodity prices as the Directors are of the opinion
that these fluctuations would not have a significant impact on the
Financial Statements at the present time. The Directors will
continue to assess the effect of movements in market risks on the
Group's financial operations and initiate suitable risk management
measures where necessary.
b) Credit risk
Credit risk arises from cash and cash equivalents as well as
outstanding receivables. To manage this risk, the Group
periodically assesses the financial reliability of customers and
counterparties.
The amount of exposure to any individual counter party is
subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk. The Group
will only keep its holdings of cash with institutions which have a
minimum credit rating of 'A'.
c) Liquidity risk
The Group's continued future operations depend on the ability to
raise sufficient working capital through the issue of equity share
capital or debt. The Directors are reasonably confident that
adequate funding will be forthcoming with which to finance
operations. Controls over expenditure are carefully managed.
The following table summarizes the Group's significant remaining
contractual maturities for financial liabilities at 30 June 2023,
and 30 June 2022.
Contractual maturity analysis as at 30 June 2023
Less than 1 - 5 Total
12 Years GBP
Months GBP
GBP
-------------------------- ------------- --------------- ------------
Accounts payable 196,354 - 196,354
Accrued liabilities 371,275 - 371,275
Other creditor - - -
STASCO Loan 991,339 - 991,339
---------------------------- ------------- --------------- ------------
1,558,968 - 1,558,968
-------------------------- ------------- --------------- ------------
There were no contractual liabilities with maturity of greater
than 5 years as at 30 June 2023.
Contractual maturity analysis as at 30 June 2022
Less than 1 - 5 years Total
12 months GBP GBP
GBP
-------------------------- ------------- --------------- ------------
Accounts payable 184,636 - 184,636
Accrued liabilities 334,631 - 334,631
Other creditor 34,242 - 34,242
STASCO Loan - 956,184 956,184
---------------------------- ------------- --------------- ------------
553,509 956,184 1,509,693
-------------------------- ------------- --------------- ------------
There were no contractual liabilities with maturity of greater
than 5 years as at 30 June 2022.
d) Foreign exchange risk
Foreign exchange risk arises where the Group has financial
assets and liabilities in a different currency to the functional
currency of the Group. Where this arises the Group will be exposed
to gains and losses that arise on movements in the base currency of
the financial asset/liability and the functional currency of the
Group. For the year ended 30 June 2023, the Group's borrowings were
denominated in US Dollars and thus is exposed to gains and losses
arising on the value of the US Dollar relative to Pound Sterling
(Refer to note 17).
24.2 Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, in order to
enable the Group to continue its exploration and development of oil
and gas resources. In order to maintain or adjust the capital
structure, the Group may adjust the issue of shares or sell assets
to reduce debts.
The Group defines capital based on the total equity and reserves
of the Group. The Group monitors its level of cash resources
available against future planned operational activities and may
issue new shares in order to raise further funds from time to
time.
25. Commitments
The Group has the following non-cancellable ongoing commitments
required in order to maintain the Group's licences in good
standing:
2023 2022
GBP GBP
Due within one year 218,208 246,498
Later than one year but not later
than five years 1,407,168 1,360,821
--------- ---------
Total commitments 1,625,376 1,607,319
--------- ---------
26. Events after the reporting period
On 23 August 2023, the Company announced that the US$1 million
loan agreement with STASCO (refer to note 17) was extended to 13
September 2023.
On 13 September 2023, the Company announced that the US$1
million loan agreement with STASCO (refer to note 17) was extended
to 13 March 2024.
On 18 September the Company announced that it had entered into a
non-binding Heads of Agreement to farm out a 81.25% interest in the
Pilot field development for a full carry to first oil and certain
other payments.
On 2 October the Company announced that it had issued 2,916,666
ordinary shares at 12p per share to raise new funds of
GBP350,000.
On 30 November 2023 P2516 expired and an impairment adjustment
of GBP144,971 has been made in respect of the costs capitalised
relating to the expired licence. As at reporting date the directors
did not have sufficient reason to believe that the licence would
expire and applied judgement that the most appropriate date to make
the impairment was the date of expiry.
On 1 December 2023 the Company announced that it had submitted a
request to the NSTA to
1. consent to an assignment under, and in accordance with,
clause 40(1) of the Licence to the Operator; and
2. approval of appointment of the Operator as operator under,
and in accordance with, clause 24 of the P2244 Licence.
On 7 December 2023 the Company announced the signature of an SPA
for the disposal of an 81.25% interest in the Pilot field licence
P2244 with Ping Petroleum UK PLC.
-ends-
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FR NKOBDFBDDOBD
(END) Dow Jones Newswires
December 18, 2023 02:00 ET (07:00 GMT)
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