TIDMJOG
RNS Number : 7983C
Jersey Oil and Gas PLC
20 April 2017
20 April 2017
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the year ended 31 December 2016
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and
gas company focused on the UK Continental Shelf region of the North
Sea, is pleased to announce its audited results for the year ended
31 December 2016.
Highlights
-- Successful, high impact, promoted farm-out of
interest in Licence P.2170, Blocks 20/5b & 21/1d
("Licence P.2170") to Statoil (U.K.) Limited ("Statoil"),
which contains the material Verbier prospect
o Retained an 18% equity interest with Statoil
to fund all costs up to US$25 million in respect
of the first exploration well
o US$540,000 received by JOG after payment made
to the Athena Consortium Partners
o JOG benefits from an additional 10% carry from
co-venturer CIECO Exploration and Production (UK)
Limited ("CIECO")
o Site survey completed on Verbier prospect
o Firm well commitment made to the Oil & Gas Authority
-- Successful farm-out of JOG's 50% interest in Licence
P.1989, Blocks 14/11, 12 & 16, to Azinor Catalyst
Limited ("Azinor") in return for contingent payments
of up to US$4 million
-- Interests in Licence P.1610, Block 13/23a ("Liberator"),
Licence P.1666, Block 30/11c ("Romeo") and Licence
P.1889, Blocks 12/26b & 27 ("Niobe") relinquished,
with Niobe relinquishment effective 31 December
2015
-- A very active year for JOG engaged in pursuing
multiple asset acquisition opportunities
-- Oversubscribed equity placing of GBP1.6m (gross)
in November 2016 to new and existing shareholders
-- Cash at 31 December 2016 of GBP1.9m
-- Arden Partners plc appointed as Broker
Post period end
-- The Company has conducted further technical studies
to improve and update it's understanding of the
Verbier prospect
-- Independent assessment of resource estimates
in relation to Licence P.2170 and its associated
prospects (Verbier and Cortina), has been completed
by ERC Equipoise Ltd ("ERCE")
o Mean Prospective Resources attributed to Licence
P.2170 for Verbier increased to 162 Million barrels
of oil equivalent ("MMboe") from 118 MMboe and
the chance of success increased to 29% from 26%
o Contingent Resources attributed to Verbier
for discovery well 20/5a-10Y
o Mean Prospective Resources attributed to Licence
P.2170 for the Cortina prospect increased to
124 MMboe from 91 MMboe with a chance of success
of 19%
-- Statoil has awarded a contract to Transocean
Drilling UK Limited for the semisubmersible rig,
Transocean Spitsbergen
-- Azinor has stated its intention to drill an exploration
well to test the Partridge prospect (previously
named Homer) on Licence P.1989, Blocks 14/11,
12 &16 later this year
-- BMO Capital Markets appointed as Joint Broker
Outlook
-- Exploration well to be drilled on Verbier prospect
in Summer 2017
-- Discussions continue with a major bank and other
funding partners, who remain keen to support
JOG as possible providers of capital for acquired
production assets
-- The Group continues to work actively on several
acquisition opportunities, with the aim of securing
UK producing oil and gas assets
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"2016 has been another transformational year for Jersey Oil and
Gas, during which we have achieved what we believe to be the first
promoted farm-out of an exploration licence in the UK North Sea in
over two years. With a rig contract announced post period end,
Verbier is now expected to be drilled during Summer 2017 and we
eagerly await the results."
"We continue to be involved in multiple sales processes and are
confident that we are well placed to deliver further shareholder
value through our production focused acquisition strategy. I am
particularly grateful to JOG's management team and employees who
have adeptly demonstrated that good people can lead to great
achievements. We have only recently started on JOG's journey and I
believe that our team, supported by our shareholders, is capable of
developing the Company much further from where we are today."
General enquiries:
Jersey Oil & Gas Andrew Benitz, C/o Camarco:
plc CEO Tel: 020 3757 4983
Strand Hanson Limited James Harris Tel: 020 7409 3494
Matthew Chandler
James Bellman
Arden Partners Chris Hardie Tel: 020 7614 5900
plc Benjamin Cryer
BMO Capital Markets Neil Haycock Tel: 020 7236 1010
Tom Rider
Camarco Billy Clegg Tel: 020 3757 4983
Georgia Edmonds
James Crothers
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
Notes to editors:
Jersey Oil and Gas is a UK E&P Company focused on the North
Sea. The company owns an 18% interest in the P.2170 licence, Blocks
20/5b & 21/1d, Inner Moray Firth, where it is participating in
a Statoil funded and operated exploration well on the Verbier
prospect in summer 2017. A recent Competent Persons Report, carried
out by ERC Equipoise Ltd attributes 162 MMboe gross mean
prospective resources to the Verbier prospect. The licence also
contains the Cortina prospect (124 MMboe gross mean prospective
resources) and Meribel lead which are both Upper Jurassic targets
like Verbier.
The Company plans to potentially build a major production
portfolio via acquisitions coinciding with the cyclical recovery in
the oil price and the opportune buying market available in the
North Sea. The Company is involved in multiple sales processes and
intends to draw on its management team's experience, knowledge and
expertise to deliver shareholder value from its stated production
acquisition strategy.
CHAIRMAN'S STATEMENT
Corporate Activities
The year ended 31 December 2016 saw Brent Crude oil trading at
the upper end of a US$30 to US$55 per barrel price range, with
companies continuing to adjust to a new pricing environment. In the
UK Continental Shelf ("UKCS") region of the North Sea we are seeing
some companies seeking to rationalise their portfolios. During the
year, Jersey Oil and Gas Plc ("JOG" or the "Company") has been in
many data rooms and evaluated in excess of 40 field interests, with
a view to acquiring production assets. In so doing, we continue to
apply a disciplined approach to any offers we make and seek a
pragmatic treatment of field abandonment liabilities. We continue
to receive strong shareholder interest and support for our
production asset acquisition strategy and have indicative bank
funding support.
The other part of our strategy is to rationalise and, if
possible, add value to our legacy asset portfolio. In October 2016,
we completed a farm-out of part of our interest in Licence P.2170,
Blocks 20/5b & 21/1d ("Verbier") to Statoil. The Company
retains an 18 per cent. interest in this licence area and benefits
from a 10 per cent. carry funded by its co-venturer CIECO. A
Competent Person's Report was completed in March 2017, which
indicated a significant uplift in Mean Prospective Resources for
Verbier, compared to the previously announced unaudited management
estimates, together with a modest increase in the chance of success
for this prospect, which was most encouraging.
We also successfully farmed out JOG's 50 per cent. interest in
Licence P.1989, Blocks 14/11, 12 & 16 to Azinor in return for
contingent payments of up to US$4 million. Azinor has recently
announced the completion of a site survey for a prospect on this
licence area in preparation for a well, intended to be drilled
later in 2017. Further details of both the Statoil and Azinor
farm-outs are set out in the Chief Executive Officer's Report.
Financial Results
Our pre-tax loss for the year amounted to GBP793,439, down from
GBP1.4 million in 2015. This reflects our continuing tight control
of costs, part of which involved the Directors and staff agreeing
to salary cuts of up to 50% for nine months of the year. Salary
levels have since been restored, although they remain low by
industry norms.
We continue to operate from our offices in Jersey and plan to
re-open a London office when circumstances allow.
Equity Placing
In November 2016, the Company raised GBP1.6 million (before
expenses) by way of a placing with new and existing shareholders at
a placing price of 110 pence per share. The placing was well
received by investors and was oversubscribed. As part of this
placing, the directors and certain members of senior management
subscribed for 120,454 shares at the placing price, raising GBP0.13
million (before expenses). The net proceeds are being utilised to
fund technical studies and evaluation work to improve the Company's
understanding of the Verbier prospect and provide additional
working capital.
As at 31 December 2016, available cash amounted to approximately
GBP1.9m.
Following completion of the placing, Arden Partners plc were
appointed as broker to the Company. Subsequently, in March 2017,
BMO Capital Markets were appointed as joint brokers.
Outlook
We look forward to the drilling of the Verbier prospect
exploration well later this year. Although we believe the prize for
success may be significant, as is the case with exploration wells
of this nature, success is not assured. We also have a contingent
interest in the outcome of a well that Azinor has stated it plans
to drill later this year. Alongside this, we will continue to
pursue our production asset acquisition strategy. We have observed
in the market some notable large scale asset acquisition
transactions and are confident that this can be replicated by the
Company at prices which yield a good return for shareholders.
On behalf of the Board, I would like to welcome the new
shareholders who supported our equity placing in 2016 and to thank
all of our employees who have continued to work on our exploration
and production plans, which I am confident have the potential to
provide long-term shareholder value.
Marcus Stanton
Non-Executive Chairman
20 April 2017
CHIEF EXECUTIVE OFFICER'S REPORT
Transformational Year
2016 proved to be another transformational year for JOG, during
which we successfully achieved what we believe to be the first
promoted farm-out of an exploration licence in the UK North Sea in
over two years. Statoil is now established as operator of Licence
P.2170 and we eagerly await the drilling of Verbier, a material and
moderately risked prospect. With a rig contract announced post
period end, Verbier is now expected to be drilled during summer
2017. We continue to be involved in multiple sales processes and
are confident that we are well placed to deliver further
shareholder value through our production asset acquisition
strategy.
Successful High Impact Farm-Out to Statoil and confirmation of
the drilling of the Verbier prospect
Together with CIECO, we successfully farmed-out a 70% interest
in Licence P.2170, Blocks 20/5b and 21/1d to Statoil and retain an
18 per cent. interest in this licence area. Against the backdrop of
low oil prices and a dearth of deal flow at that time, this was a
significant achievement for the Company and, we believe,
demonstrates the value potential that the Verbier prospect holds
for the Company.
Statoil, as the Licence's operator, has acquired the necessary
site survey and has recently contracted the Transocean Spitsbergen
for the drilling, this summer, of an exploration well on the
Verbier prospect. JOG has conducted further technical studies to
improve and update it's understanding of this prospect.
Subsequently, we contracted ERCE, to review its latest geological,
geophysical and petrophysical interpretations and produce a
Competent Person's Report on the P.2170 licence area and its
Verbier and Cortina prospects. We were pleased to report an
increase in the Mean Prospective Resources attributed to Licence
P.2170 for the Verbier prospect to 162 MMboe from 118 MMboe and in
the chance of success from 26% from 29%. In addition, Contingent
Resources relating to the historic third party discovery well
20/5a-10Y were identified. With respect to Cortina, the Mean
Prospective Resources were increased to 124 MMboe from 91 MMboe
with a chance of success of 19%.
Pursuant to the terms of the farm-out, Statoil is funding all
costs up to US$25 million in respect of the drilling of the Verbier
exploration well and following commencement of the work programme
for this well, the Company is also benefiting from a 10 per cent.
carry funded by CIECO in relation to the well programme's
costs.
Production Focused Acquisition Strategy
Over the past 18 months, JOG has significantly increased its
corporate intelligence with respect to its objective of
establishing a well-balanced portfolio of production assets. This
knowledge base gives us a competitive strength with respect to the
identification, evaluation and negotiation of potential asset
acquisitions. We have also built strong relationships with
potential financial partners, who have been and continue to be
actively involved with JOG in multiple sales processes.
The UK government's recent initiative to set up a panel of
industry experts to recommend a possible way forward regarding the
transfer of tax history from vendor to purchaser, if implemented,
will be of significant benefit to stimulating activity, leading to
a level playing field for the application of decommissioning tax
relief. We would welcome this action from the government, which we
believe would greatly help the Oil & Gas Authority's committed
strategy to MER (Maximise Economic Recovery) within the UK North
Sea.
We have observed an acceleration of deal-flow in the last few
months within the North Sea which is encouraging. Our investment
criteria remains disciplined both technically and commercially. I
am optimistic that we will succeed in securing acquisitions that
will provide shareholders with the prospect of significant long
term value creation.
Other Licence Activities
Early in the first half of the year, we were pleased to announce
the farm-out of our 50 per cent. interest in Licence P.1989, Blocks
14/11, 12 & 16 to Azinor which also acquired the remaining 50
per cent. interest from Norwegian Energy Company UK Limited
("Noreco") and was subsequently appointed as operator.
By way of consideration, Azinor will undertake certain firm work
commitments, including a drill-or-drop obligation in respect of an
exploration well, and make conditional payments of up to US$4m.
Post period end, Azinor has stated its intention to drill an
exploration well on the licence's Partridge prospect (previously
named Homer).
We relinquished our interests in a number of licences,
comprising Licence P.1610, Block 13/23a (Liberator), Licence
P.1666, Block 30/11c (Romeo) and Licence P.1889 (Niobe) - Niobe
relinquished effective 31 December 2015 as they were considered to
be non-prospective and the associated licence fees were
onerous.
As reported in previous years, Total E&P UK Limited
("TEPUK") has a conditional agreement to pay the Company GBP1m in
relation to the termination of its 2013 farm-in to Licence P.2032,
Blocks 21/8c, 21/9c, 21/10c, 21/14a and 21/15b. TEPUK disputes that
the conditions giving rise to the obligation to pay the Company
have been satisfied. We continue efforts in pursuit of our
claim.
Financial review
During the year, the Company's revenue-stream ceased.
Previously, this was largely associated with our interest in the
Athena Oil Field. As announced in July 2015, we ring-fenced our
liabilities to the Athena Consortium with respect to the Athena Oil
Field. The result of this was that we subsequently no longer had
any real economic exposure to the field and, as a consequence, the
Group no longer accounts for the income and expenses of the Athena
Oil Field in its results.
Our cost of sales largely relate to ongoing work on our
remaining licence interest P.2170 and our active pursuit of several
production asset acquisition targets.
We were also in receipt of a small refund of just under
GBP90,000 from our insurers in the period, as a result of a return
of premiums on various policies and, in addition, the Group
received a refund of prepaid well costs from the operator on the
Niobe exploration well, due to the actual costs of the well having
been less than had been billed. These items are shown as other
income in the accounts.
The Company has taken a sharp focus on administration costs over
the last couple of years and these costs were lowered further in
January 2016, as is reflected in the reduction of such costs
compared to the Group's 2015 results for the comparable period.
There are also no exceptional items in the current year (2015
GBP3.3m).
In November 2016, we successfully closed a significantly
oversubscribed equity placing of GBP1.6m (before expenses), which
ensures that we have sufficient working capital through into 2018.
Part of the net proceeds have been used for technical studies
conducted by the Company on the Verbier prospect as we continue to
enhance our knowledge of this prospect ahead of the drilling
campaign. This work has provided us with a better understanding of
the Verbier prospect and has led to the recent upgrade in
prospective resources attributed to both Verbier and Cortina.
Overall, there was a loss of GBP793,439 (2015: GBP1,430,078) in
the year and cash balances stood at GBP1,882,310 (2015: GBP862,910)
at the end of December 2016.
Looking Forward
We look forward to the drilling of the Verbier prospect set to
commence this summer. Together with the nearby Cortina prospect,
this holds significant potential for the Company. We continue to
manage our existing cash resources prudently and in addition to the
Statoil carry we are also benefiting from the CIECO carried
interest with respect to the drilling of the Verbier prospect.
The market is now firmly open for M&A activity within the
North Sea sector and we look forward to executing on the production
side of our strategy, although it should be noted that we will
continue to focus on doing the right deal for shareholders rather
than executing a deal just simply to acquire production.
I am particularly grateful to JOG's management team and
employees who have adeptly demonstrated that good people can lead
to great achievements. We have only recently started on JOG's
journey and I believe that our team is capable of developing the
Company much further from where we are today.
I was very pleased with the interest we generated from our
placing in November and I welcome the new shareholders to our
register. We remain tightly held, with just under 10 million shares
in issue. Management retains a significant shareholding and as such
is closely aligned with the interests of shareholders.
Andrew Benitz
Chief Executive Officer
20 April 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2016
2016 2015
Note GBP GBP
Revenue 3 - 4,065,794
Cost of sales (4,950) (7,006,952)
----------- -----------
GROSS LOSS (4,950) (2,941,158)
Other operating income 6 214,110 -
Gain on disposal of asset 7 239,724 -
Exceptional items 8 - 3,257,725
Administrative expenses (1,244,393) (1,595,283)
----------- -----------
OPERATING LOSS (795,509) (1,278,716)
Finance costs 9 - (164,399)
Finance income 9 2,070 13,037
----------- -----------
LOSS BEFORE TAX 10 (793,439) (1,430,078)
Tax 11 - -
----------- -----------
LOSS FOR THE YEAR (793,439) (1,430,078)
TOTAL COMPREHENSIVE LOSS
FOR THE YEAR (793,439) (1,430,078)
Total comprehensive loss
for the year attributable
to:
Owners of the parent (793,439) (1,430,078)
=========== ===========
Loss per share expressed
in pence per share:
Basic and diluted 12 (9.28) (29.21)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
2016
2016 2015
Note GBP GBP
NON-CURRENT ASSETS
Intangible assets - Exploration
costs 13 48,363 138,323
Intangible assets - Data
licence costs 13 - -
Property, plant and equipment 14 372 5,055
48,735 143,378
------------ ------------
CURRENT ASSETS
Trade and other receivables 16 122,872 227,718
Cash and cash equivalents 17 1,882,310 862,910
------------ ------------
2,005,182 1,090,628
------------ ------------
TOTAL ASSETS 2,053,917 1,234,006
============ ============
EQUITY
Called up share capital 18 2,347,017 2,331,767
Share premium account 71,170,230 69,569,978
Share options reserve 21 1,495,921 1,381,133
Accumulated losses (72,763,959) (71,970,520)
Reorganisation reserve (382,543) (382,543)
TOTAL EQUITY 1,866,666 929,815
------------ ------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 19 187,251 304,191
TOTAL LIABILITIES 187,251 304,191
------------ ------------
TOTAL EQUITY AND LIABILITIES 2,053,917 1,234,006
============ ============
The financial statements were approved by the Board of Directors
and authorised for issue on 20 April 2017.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2016
Called
up Share Share
share premium options Accumulated Reorganisation Total
capital account reserve losses reserve equity
GBP GBP GBP GBP GBP GBP
At 1 January 2015 2,271,693 68,321,083 1,786,425 (70,945,734) (382,543) 1,050,924
Loss and total
comprehensive loss
for the year - - - (1,430,078) - (1,430,078)
Issue of share
capital 60,074 1,248,895 - - - 1,308,969
Lapsed share options - - (405,292) 405,292 - -
At 31 December
2015 and 1 January
2016 2,331,767 69,569,978 1,381,133 (71,970,520) (382,543) 929,815
Loss and total
comprehensive loss
for the year - - - (793,439) - (793,439)
Issue of share
capital 15,250 1,600,252 - - - 1,615,502
Share based payments - - 114,788 - - 114,788
At 31 December
2016 2,347,017 71,170,230 1,495,921 (72,763,959) (382,543) 1,866,666
========= ========== ========= ============ ============== ===========
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Called up share capital Represents the nominal value of shares
issued
Share premium account Amount subscribed for share capital in
excess of nominal value
Share options reserve Represents the accumulated balance of
share based payment charges recognised in respect of share options
granted by the Company less transfers to retained deficit in
respect of options exercised or cancelled/lapsed
Accumulated losses Cumulative net gains and losses recognised in
the Consolidated Statement of Comprehensive Income
Reorganisation reserve Amounts resulting from the restructuring
of the Group at the time of the IPO in 2011
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2016
2016 2015
Note GBP GBP
Cash flows from operating
activities
Cash used in operations 23 (927,144) (4,163,979)
Net interest received 2,070 9,358
Net cash used in operating
activities (925,074) (4,154,621)
--------- -----------
Cash flows from investing
activities
Purchase of intangible assets 13 (85,993) (2,722,853)
Proceeds on sale of intangible
fixed assets 7 414,966 -
Purchase of property, plant
and equipment 14 - (147,868)
Net cash generated from/(used
in) investing activities 328,973 (2,870,721)
--------- -----------
Cash flows from financing
activities
Proceeds from share issue 18 1,615,501 813,970
--------- -----------
Net cash generated from
financing activities 1,615,501 813,970
--------- -----------
Increase/(Decrease) in cash
and cash equivalents 23 1,019,400 (6,211,372)
Cash and cash equivalents
at beginning of year 23 862,910 7,074,282
--------- -----------
Cash and cash equivalents
at end of year 23 1,882,310 862,910
--------- -----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARED 31
DECEMBER 2016
1. GENERAL INFORMATION
Jersey Oil and Gas and its subsidiaries (together, "the Group")
are involved in upstream oil and gas business in the UK.
The Company is a public limited company, which is quoted on AIM,
a market operated by the London Stock Exchange plc and incorporated
and domiciled in the United Kingdom. The address of its registered
office is 10 The Triangle, ng2 Business Park, Nottingham, NG2
1AE.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
Basis of Accounting
These financial statements have been prepared under the historic
cost convention, in accordance with International Financial
Reporting Standards and IFRS IC interpretations as adopted by the
European Union ("IFRSs") and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
Going Concern
The Company is expected to have sufficient resources to cover
the expected running costs of the business for a period of 12
months after the issue of these financial statements. Taking into
account the carry from Statoil and the anticipated cash receivable
from CIECO in relation to our carry from them on the P.2170
(Verbier) well drilling and given the current anticipated well
costs, the Statoil carry and proceeds receivable from CIECO, as
well as our current cash reserves, are in a dry hole case expected
to more than exceed the estimated liability of the Company. Should
the well be successful as we hope, further testing and well
activity will be required and the Company will seek to approve
budgets with our partners and raise additional finance in order to
cover this eventuality and its share of the expected additional
costs. Whilst there can be no certainty of the success of any fund
raising, the Directors believe the successful well result in this
scenario would position the Company favourably in order to source
additional capital. Based on these circumstances, the directors
have considered it appropriate to adopt the going concern basis of
accounting in preparing its consolidated financial statements.
Changes in Accounting Policy and Disclosures
(a) New and amended standards adopted by the Company
There are no new standards that came into effect during
2016.
(b) The following standards have been published and are
mandatory for the Group's accounting periods beginning on or after
1 January 2018, but the Group has not adopted them early. The Group
does not expect the adoption of these standards to have a material
impact on the financial statements.
-- IFRS 15 'Revenue from contracts with customers' is effective
for accounting periods beginning on or after 1 January 2018.
-- IFRS 9 'Financial instruments' is effective for accounting periods on or after 1 January 2018.
-- IFRS 16 'Leases' is effective for accounting periods beginning on or after 1 January 2019.
Amendments have also been made to the following standards
effective on or after 1 January 2017. The Group does not expect the
amendments to have a material impact on the Group's financial
statements.
-- IFRS 2 'Share-based Payment'
-- IFRS 4 'Insurance Contracts'
-- IFRS 12 'Disclosure of Interests in Other Entities'
-- IAS 7 'Statement of Cash Flows'
-- IAS 12 'Income Tax'
-- IAS 28 'Investment in Associates and Joint Ventures'
-- IAS 40 'Investment Property'
All other amendments to accounting standards not yet effective
and not included above are not material or applicable to the
Group.
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management
to make estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities at the date of the
financial statements. If in future such estimates and assumptions,
which are based on management's best judgement at the date of the
financial statements, deviate from the actual circumstances, the
original estimates and assumptions will be modified as appropriate
in the period in which the circumstances change. The Group's
accounting policies make use of accounting estimates and judgements
in the following areas:
-- impairment (note 13),
-- the estimation of share based payment costs (note 21).
Impairments
The group tests its capitalised exploration licence costs for
impairment when facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. The recoverable amounts of
CGUs are determined based on value-in-use calculations. These
calculations require the use of estimates. An impairment charge of
GBP710 arose relating to licence P1989 during the course of the
2016 year, resulting in the carrying amount of the licence being
written down to its recoverable amount of GBPnil.
Share Based Payments
The Group currently has a number of share schemes that give rise
to share based charges. The charge to operating profit for these
schemes amounted to GBP114,788 (2015: GBPnil). For the purposes of
calculating the fair value of the share options, a Black-Scholes
option pricing model has been used. Based on past experience, it
has been assumed that options will be exercised, on average, at the
earliest exercise date. The share price volatility used in the
calculation of 40% is based on the actual volatility of the Group's
shares as well as that of comparable companies. The risk free rate
of return is based on the implied yield available on zero coupon
gilts with a term remaining equal to the expected lifetime of the
options at the date of grant.
These are described in more detail in the relevant accounting
policies within note 2.
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. The Group also
assesses existence of control where it does not have more than 50
per cent. of the voting power but is able to govern the financial
and operating policies by virtue of de-facto control. De-facto
control may arise in circumstances where the size of the Group's
voting rights relative to the size and dispersion of holdings of
other shareholders give the Group the power to govern the financial
and operating policies.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date the Group ceases to have control.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree is re-measured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(b) Changes in ownership interests in subsidiaries without
change of control
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
Acquisitions, Asset Purchases and Disposals
Acquisitions of oil and gas properties are accounted for under
the purchase method where the business meets the definition of a
business combination.
Transactions involving the purchase of an individual field
interest, farm-ins, farm-outs, or acquisitions of exploration and
evaluation licences for which a development decision has not yet
been made that do not qualify as a business combination, are
treated as asset purchases. Accordingly, no goodwill or deferred
tax arises. Consideration from farm-ins/farm-outs are adequately
credited from, or debited to, the asset. The purchase consideration
is allocated to the assets and liabilities purchased on an
appropriate basis. Proceeds on disposal are applied to the carrying
amount of the specific intangible asset or development and
production assets disposed of and any surplus is recorded as a gain
on disposal in the Consolidated Statement of Comprehensive
Income.
Revenue Recognition
Revenue is recognised to the extent that it is probable that
economic benefits will flow to the Group and the revenue can be
reliably measured. It is measured at the fair value of
consideration received or receivable for sale of goods.
Revenue derived from the production of hydrocarbons in which the
Group has an interest with joint venture partners is recognised on
the basis of the Group's working interest in those properties. It
is recognised when the significant risks and rewards of ownership
have been passed to the buyer.
Revenue from strategic partners on the identification of
opportunities for application for a licence to explore further and
is recognised in the period in which the services are provided or
the date a trigger event occurs if this is later.
Exploration and Evaluation Costs
The Group accounts for oil and gas and exploration and
evaluation costs using IFRS 6 "Exploration for and Evaluation of
Mineral Resources". Such costs are initially capitalised as
Intangible Assets and include payments to acquire the legal right
to explore, together with the directly related costs of technical
services and studies, seismic acquisition, exploratory drilling and
testing.
Exploration costs are not amortised prior to the conclusion of
appraisal activities.
Exploration costs included in Intangible Assets relating to
exploration licences and prospects are carried forward until the
existence (or otherwise) of commercial reserves have been
determined subject to certain limitations including review for
indications of impairment on an individual license basis. If
commercial reserves are discovered, the carrying value, after any
impairment loss of the relevant assets, is then reclassified as
Property, plant and equipment under Production interests and fields
under development. If, however, commercial reserves are not found,
the capitalised costs are charged to the Consolidated Statement of
Comprehensive Income. If there are indications of impairment prior
to the conclusion of exploration activities, an impairment test is
carried out.
Property, Plant and Equipment
Property, plant and equipment is stated at historic purchase
cost less accumulated depreciation. Asset lives and residual
amounts are reassessed each year. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use.
Depreciation on these assets is calculated on a straight line
basis as follows:
Computer & - 3 years
office equipment
Joint Ventures
The Group participates in joint venture agreements with
strategic partners, where revenue is derived from annual retainers
and success fees in a combination of cash and carried interests.
The Group accounts for its share of assets, liabilities, income and
expenditure of these joint venture agreements and discloses the
details in the appropriate Statement of Financial Position and
Statement of Comprehensive Income headings in the proportion that
relates to the Group per the joint venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less
accumulated impairment in the Company only Statement of Financial
Position and reviewed for impairment if there are any indications
that the carrying value may not be recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes
party to the contractual provisions of the instrument. The Group
does not have any derivative financial instruments.
Cash and cash equivalents include cash in hand and deposits held
on call with banks with a maturing of three months or less.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for doubtful debts. A provision for
doubtful debts is established when there is objective evidence that
the Group will not be able to collect all amounts due according to
the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency
in payments (more than 30 days overdue) are considered indicators
that the recoverability of the trade receivable is doubtful. The
amount of the provision is the difference between the asset's
carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The
carrying amount of the asset is reduced through the use of an
allowance account, and the amount of the loss will be recognised in
the Consolidated Statement of Comprehensive Income within
administrative expenses. Subsequent recoveries of amounts
previously provided for are credited against admin expenses in the
Consolidated Statement of Comprehensive Income.
Trade payables are stated initially at fair value and
subsequently measured at amortised cost.
Loan notes are stated initially at fair value and subsequently
measured at amortised cost of the investment as agreed in the loan
instrument.
Exceptional Items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the group. They are
material items of income or expense that have been shown separately
due to the significance of their nature or amount.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit. Deferred taxation liabilities
are provided, using the liability method, on all taxable temporary
differences at the reporting date. Such assets and liabilities are
not recognised if the temporary difference arises from goodwill or
from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profits will be available against
which the temporary differences can be utilised. The carrying
amount of deferred tax assets is reviewed at each reporting
date.
Foreign Currencies
Monetary assets and liabilities in foreign currencies are
translated into sterling at the rates of exchange ruling at the
reporting date. Transactions in foreign currencies are translated
into sterling at the rate of exchange ruling at the date of the
transaction. Gains and losses arising on retranslation are
recognised in the Consolidated Statement of Comprehensive Income
for the year.
Employee Benefit Costs
The Group operates a defined contribution pension scheme.
Matching contributions are made by the employer and employees up to
10% of salary each via a salary sacrifice scheme. Contributions
payable are charged to the Statement of Comprehensive Income in the
period to which they relate. No further obligations remain once
contributions have been paid.
Share Based Payments
Equity settled share based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The total amount to be
expensed is determined by reference to the fair value of the
options granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
The fair value determined at the grant date of the equity
settled share based payments is expensed on a straight line basis
over the vesting period, based on the Group's estimate of equity
instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding
adjustment to the equity settled employee benefits reserve.
Equity settled share based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the service.
Exercise proceeds net of directly attributable costs are
credited to share capital and share premium.
Share Capital
Ordinary shares are classified as equity.
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.
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of taxes) is deducted
from equity attributable to the Company's equity holders until the
shares are cancelled or reissued. Where such ordinary shares are
subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related
tax effects is included in equity attributable to the Company's
equity holders.
Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Board of Directors.
3. SEGMENTAL REPORTING
The Directors consider that the Group operates in a single
segment, that of oil and gas exploration, appraisal, development
and production, in a single geographical location, the North Sea of
the United Kingdom and do not consider it appropriate to
disaggregate data further from that disclosed.
During 2016 the group had no turnover. In 2015 revenue from one
major customer exceeded 10%, and amounted to GBP4.1m.
4. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to financial risks and its
overall risk management programme focuses on minimising potential
adverse effects on the financial performance of the Group. The
Company's activities are also exposed to risks through its
investments in subsidiaries and is accordingly exposed to similar
financial and capital risks as the Group.
Risk management is carried out by the Directors and they
identify, evaluate and address financial risks in close
co-operation with the Group's management. The Board provides
written principles for overall risk management, as well as written
policies covering specific areas, such as mitigating foreign
exchange risks and investing excess liquidity.
Credit Risk
The Group's credit risk primarily relates to its trade
receivables. Responsibility for managing credit risks lies with the
Group's management.
A customer evaluation is typically obtained from an appropriate
credit rating agency. Where required, appropriate trade finance
instruments such as letters of credit, bonds, guarantees and credit
insurance will be used to manage credit risk.
The Group also has a number of joint venture arrangements where
partners have made commitments to fund certain expenditure.
Management evaluate the credit risk associated with each contract
at the time of signing and continually monitor the credit
worthiness of our partners.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The Group
manages its liquidity through continuous monitoring of cash flows
from operating activities, review of actual capital expenditure
programmes, and managing maturity profiles of financial assets and
financial liabilities.
Capital Risk Management
The Group seeks to maintain an optimal capital structure. The
Group considers its capital to comprise both equity and net
debt.
The Group monitors its capital structure on the basis of its net
debt to equity ratio. Net debt to equity ratio is calculated as net
debt divided by total equity. Net debt is calculated as borrowing
less cash and cash equivalents. Total equity comprises all
components of equity.
The ratio of net debt to equity as at 31 December 2016 is Nil
(2015: Nil).
Maturity analysis of financial assets and liabilities
Financial Assets
2016 2015
GBP GBP
Up to 3 months 122,872 227,718
3 to 6 months - -
Over 6 months - -
------- -------
122,872 227,718
======= =======
Financial Liabilities
2016 2015
GBP GBP
Up to 3 months 187,251 304,191
3 to 6 months - -
Over 6 months - -
------- -------
187,251 304,191
======= =======
5. EMPLOYEES AND DIRECTORS
2016 2015
GBP GBP
Wages and salaries 429,553 555,682
Social security costs 38,690 71,954
Share based payments (note 21) 114,788 -
Other pensions costs 24,367 46,950
------- -------
607,398 674,586
======= =======
Post-employment benefits include employee and Company
contributions to money purchase pension schemes.
The average monthly number of employees during the year was as
follows:
2016 2015
Directors 5 3
Employees 6 4
11 7
==== ====
2016 2015
GBP GBP
Directors' remuneration 210,500 144,744
Compensation for loss of office/
variation in contract - 73,333
Directors' pension contributions
to money purchase schemes 11,000 18,333
221,500 236,410
======= =======
The average number of Directors to whom
retirement benefits were accruing was as
follows:
2016 2015
Money purchase schemes 1 1
====== ====
Information regarding the highest 2016 2015
paid Director is as follows:
GBP GBP
Aggregate emoluments 66,000 65,267
Compensation for loss of office/
variation in contract - 73,333
------ -------
66,000 138,600
====== =======
Pension contributions - 18,333
====== =======
The Directors did not exercise any
share options during the year.
Key management compensation
Key management includes Directors (Executive and Non-Executive)
and the Company Secretary. The compensation paid or payable to key
management for employee services is shown below;
2016 2015
GBP GBP
Wages and short-term employee benefits 225,688 475,946
Share based payments (note 21) 82,411 -
Pension Contributions 14,375 54,658
------- -------
322,474 530,604
======= =======
6. OTHER INCOME
2016 2015
GBP GBP
Refund of well insurance 37,380 -
Refund of JV well costs 89,202 -
Carried costs reimbursement 87,528 -
214,110 -
======= ====
Income from JV partners: Reimbursement of well-related costs
received as a result of the carried interest arrangement with CIECO
Exploration in relation to P.2170
Refund of well insurance: A return of prepaid insurance premiums
on various policies
Refund of JV well costs: Refund of prepaid well costs from the
operator on the Niobe exploration well due to the actual costs of
the well having been less than had been billed. These costs were
initially capitalised as intangible assets under IFRS 6 and
subsequently impaired in 2015. This has been reflected in the
intangible assets note 12.
7. GAIN ON DISPOSAL OF ASSET
2016 2015
GBP GBP
Proceeds from Statoil 414,966 -
Net book value of asset (175,242) -
Gain on disposal of asset 239,724 -
========= ====
During the year licence P.2170, which contains the Verbier
prospected was farmed out to Statoil. The group still retain an 18%
carried interest in this licence.
8. EXCEPTIONAL ITEMS
2016 2015
GBP GBP
Impairment of Goodwill on Business
Acquisition - (569,884)
Release from contractual agreements
with Creditors - 3,827,609
- 3,257,725
==== =========
The impairment of goodwill relates to the acquisition of Jersey
Oil E&P Ltd during 2015 and the GBP3.8m relates to the
settlement agreement reached with the Athena Consortium and
CGG.
9. NET FINANCE INCOME
2016 2015
GBP GBP
Finance income:
Joint venture finance charge 26 9,238
Interest received 2,044 3,799
2,070 13,037
----- ---------
Finance costs:
CGG Services (UK) Limited interest - 2,776
Unwinding of discount on the decommissioning
liability - 160,720
Joint venture finance charge - 903
- 164,399
----- ---------
Net finance income/(costs) 2,070 (151,362)
===== =========
10. LOSS BEFORE TAX
The loss before tax is stated after
charging/(crediting):
2016 2015
GBP GBP
Depreciation 4,683 120,168
Impairment of oil assets - 147,868
Intangible asset amortisation - 833,332
Impairment of intangible assets (note
13) 710 3,955,329
Onerous contract provision - (4,177,609)
Auditors' remuneration - audit of
parent company and consolidation 28,500 27,500
Auditors' remuneration - audit of
subsidiaries 11,500 11,500
Foreign exchange gain (33,326) (86,813)
Directors' remuneration (note 5) 220,500 236,410
Employee costs (note 5) 272,110 438,106
Share based payments (notes 5 & 21) 114,788 -
11. TAX
Reconciliation of tax charge
2016 2015
GBP GBP
Loss before tax (793,439) (1,430,078)
Tax at the domestic rate of 20% (2015:
20%) (158,688) (286,016)
Expenses not deductible for tax purposes
and non-taxable income 1,338 2,010
Deferred tax asset not recognised 157,350 284,006
Utilisation of prior year trading - -
losses
Total tax expense reported in the - -
Consolidated Statement of Comprehensive
Income
========= ===========
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2016 or for the year ended 31
December 2015.
The Group have not recognised a deferred tax asset due to the
uncertainty over when the tax losses can be utilised. At the year
end the tax losses within the Group were approximately GBP25m.
12. LOSS PER SHARE
Basic loss per share is calculated by dividing the losses
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Diluted loss per share is calculated using the weighted average
number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares. As a loss was recorded for the current
and prior year, the issue of potential ordinary shares would have
been anti dilutive (see note 21 for share options in place at the
end of the year).
Loss Weighted
attributable average
to ordinary number Per share
shareholders of amount
GBP shares pence
Year ended 31 December 2016
Basic and Diluted EPS
Loss attributable to ordinary shareholders
(793,439) 8,545,612 (9.28)
Year ended 31 December 2015
Basic and Diluted EPS
Loss attributable to ordinary shareholders
(1,430,078) 4,895,881 (29.21)
13. INTANGIBLE ASSETS
Exploration
costs
GBP
COST
At 1 January 2015 13,907,024
Additions 2,722,853
At 31 December 2015 16,629,877
------------
Additions 85,993
Disposals (175,242)
Refund of Prior additions
(note 6) (94,202)
At 31 December 2016 16,446,426
------------
AMORTISATION, DEPLETION
& DEPRECIATION
At 1 January 2015 12,536,225
Charge for the year -
Impairment charge for the
year 3,955,329
At 31 December 2015 16,491,554
------------
Impairment charge for the
year 710
Refund on prior year additions
(note 6) (94,202)
At 31 December 2016 16,398,062
------------
NET BOOK VALUE
At 31 December 2016 48,363
============
At 31 December 2015 138,323
============
At 31 December 2014 1,370,799
============
* Impairments relate to the following licences included in Cost
of sales in the Consolidated Statement of Comprehensive Income:
GBP
Licence P.1989 - Homer 710
===
Following completion of geoscience evaluation activities in
2015, four North Sea licences (P.1556 29/1c (Orchid), P.1889 12/26b
& 27 (Niobe), P.1768 14/14b, 18c & 19c (Bordeaux, Brule)
and P.1666 30/11c (Romeo)) were relinquished as they were
considered to be non-prospective and the associated licence fees
were onerous.
Following these relinquishments the Group retained two licences:
Licence P.2170 (Verbier) and P.1989 (Homer).
The P.2170 licence was farmed out to Statoil, under which we
disposed of 42% of our 60% interest (retaining an 18% interest) in
the licence. The disposal recorded within the note reflects this
reduced interest.
At 31 December 2016 the remaining exploration asset (P.2170 -
Verbier) was reviewed and the then carrying value of GBP48,363 was
considered reasonable based on ongoing exploration work in the
licence block and as a result no further impairments have been
considered necessary.
14. PROPERTY, PLANT AND EQUIPMENT
Production
interests
and fields Computer
under and office
development equipment Total
GBP GBP GBP
COST
At 1 January 2015 29,305,027 286,022 29,591,049
Additions 147,868 - 147,868
At 31 December 2015 29,452,895 286,022 29,738,917
------------- ---------------- -----------
Additions - - -
At 31 December 2016 29,452,895 286,022 29,738,917
------------- ---------------- -----------
ACCUMULATED AMORTISATION,
DEPLETION & DEPRECIATION
At 1 January 2015 29,305,027 160,799 29,465,826
Charge for the year - 120,168 120,168
Impairment charge for the
year 147,868 - 147,868
At 31 December 2015 29,452,895 280,967 29,733,862
------------- ---------------- -----------
Charge for the year - 4,683 4,683
At 31 December 2016 29,452,895 285,650 29,738,545
------------- ---------------- -----------
NET BOOK VALUE
At 31 December 2016 - 372 372
============= ================ ===========
At 31 December 2015 - 5,055 5,055
============= ================ ===========
At 1 January 2015 - 125,223 125,223
============= ================ ===========
Following the contract negotiations on the Athena production
field the costs incurred on the licence have been impaired as the
asset does not have a value to the Group.
15. IMPAIRMENTS
2016 2015
GBP GBP
Production asset - 147,868
Exploration assets 710 3,955,329
710 4,103,197
==== =========
16. TRADE AND OTHER RECEIVABLES
2016 2015
Current: GBP GBP
Trade receivables (net) - 124,526
Other receivables 67 68
Deposits - 15,000
Value added tax 19,513 26,253
Prepayments and accrued revenue 103,292 61,871
122,872 227,718
======= =======
17. CASH AND CASH EQUIVALENTS
2016 2015
GBP GBP
Unrestricted cash in bank accounts 1,882,310 862,910
18. CALLED UP SHARE CAPITAL
Issued and fully paid:
Number: Class Nominal 2016 2015
value GBP GBP
9,916,478 (2015:
8,391,477) Ordinary 1p 2,347,017 2,331,767
========= =========
19. TRADE AND OTHER PAYABLES
2016 2015
Current: GBP GBP
Trade payables 46,413 29,202
Accrued expenses 98,587 150,560
Other payables 10,391 101,390
Taxation and Social Security 31,860 23,039
187,251 304,191
======= =======
20. CONTINGENT LIABILITY
In 2015 the settlement agreement reached with our partners in
the Athena Consortium means that, although Trap Oil Limited remains
a Licensee in the joint venture, any past or future liabilities in
respect of its interest can only be paid from the revenue that the
Athena Oil Field generates and 60 per cent. of net disposal
proceeds or net profits from the P.2170 and P.1989 licences which
are the only remaining assets still held that were in the Group at
the time of the agreement with the consortium partners who hold
security over these assets. Any future repayments, capped at 125%
of the unpaid liability associated with the Athena Oil Field,
cannot be calculated with any certainty, and any remaining
liability still in existence once the Athena Oil Field has been
decommissioned will be written off. A payment was made in 2016 to
the Athena Consortium in line with this agreement following the
farm-out of P.2170 (Verbier) to Statoil and the subsequent receipt
of monies relating to that farm-out.
In 2014 the Group assigned its lease of 35 King Street to a
third party, although the Group is still acting as Authorised
Guarantor for all liabilities of the assignee in relation to the
lease agreement, which terminates on 30 October 2018.
21. SHARE BASED PAYMENTS
The Group operates a number of share option schemes. Options are
exercisable at the prices set out in the table below. Options are
forfeited if the employee leaves the Group through resignation or
dismissal before the options vest.
Equity settled share based payments are measured at fair value
at the date of grant. The fair value determined at the date of
grant of equity settled share based payments is expensed on a
straight line basis over the vesting period, based upon the Group's
estimate of shares that will eventually vest.
The Group share option schemes are for Directors, Officers and
employees. The charge for the year was GBP114,788 (2015 nil) and
details of outstanding options are set out in the table below.
No. of No. of
shares shares
for which Options for which
options lapsed/non options
Exercise outstanding vesting outstanding
Date price Vesting Expiry at 1 Options during at 31
Of Grant pence date date Jan 2016 issued the year Dec 2016
March
2011 100 Vested Mar 2021 24,138 - - 24,138
Mar 2011 4,300 Vested Mar 2021 5,809 - - 5,809
Mar 2011 4,300 Mar 2014 Mar 2021 4,355 - - 4,355
Mar 2011 4,300 Mar 2015 Mar 2021 5,809 - - 5,809
Jul 2011 4,300 Jul 2011 Jul 2021 523 - - 523
Jul 2011 4,300 Jul 2012 Jul 2021 523 - - 523
Jul 2011 4,300 Jul 2014 Jul 2021 523 - - 523
Dec 2011 2,712 Dec 2012 Dec 2021 1,650 - - 1,650
Dec 2011 2,712 Dec 2014 Dec 2021 1,650 - - 1,650
Dec 2011 2,712 Dec 2015 Dec 2021 - - - -
May 2013 1,500 May 2014 May 2023 9,500 - - 9,500
May 2013 1,500 May 2015 May 2023 9,500 - - 9,500
May 2013 1,500 May 2015 May 2023 - - - -
Nov 2016 110 Nov 2016 Nov 2021 - 260,000 - 260,000
Nov 2016 110 Nov 2017 Nov 2021 - 260,000 - 260,000
Nov 2016 110 Nov 2018 Nov 2021 - 260,000 - 260,000
Total 843,980
The weighted average fair value of options granted during the
year determined using the Black-Scholes valuation model was 41.55p
per option. The significant inputs into the model were the
mid-market share price on the day of grant or 1p exercise price as
shown above and an annual risk-free interest rate of 2 per cent.
The volatility measured at the standard deviation of continuously
compounded share returns is based on a statistical analysis of
daily share prices from the date of admission to AIM to the date of
grant on an annualised basis.
22. RELATED UNDERTAKINGS AND ULTIMATE CONTROLLING PARTY
The Group and Company do not have an ultimate controlling party,
or parent Company.
County of Registered
Subsidiary % owned Incorporation Principal Activity Office
Predator Oil England &
Ltd 100% Wales Non Trading 1
England &
Trap Oil Ltd 100% Wales Oil Exploration 1
Trap Oil & Gas
Ltd 100% Scotland Non Trading 2
Trap Petroleum
Ltd 100% Scotland Non Trading 2
Trap Exploration
(UK) Ltd 100% Scotland Non Trading 2
Jersey Oil & Management
Gas E & P Ltd 100% Jersey services 3
Registered Offices
1 10 The Triangle, NG2 Business Park, Nottingham, NG2 1AE
2 6 Rubislaw Terrace, Aberdeen, AB10 1XE
3 Howard House, 9 The Esplanade St Helier, Jersey, Channel Islands, JE2 3QA
23. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
2016 2015
GBP GBP
Loss for the year before tax (793,439) (1,430,078)
Adjusted for:
Amortisation, impairments, depletion
and depreciation 5,393 5,901,697
Share based payments (net) 114,788 -
Gain on disposal assets (239,724) -
Finance costs - 164,399
Finance income (2,070) (13,037)
(915,052) 4,622,981
Decrease in inventories - 858,060
Decrease in trade and other receivables 104,846 9,798,988
Decrease in trade and other payables (116,938) (19,444,008)
--------- ------------
Cash used in operations (927,144) (4,163,979)
CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect
of Cash and cash equivalents are in respect of these statements of
financial position amounts:
Year ended 2016
31 Dec 1 Jan 2016
2016
GBP GBP
Cash and cash equivalents 1,882,310 862,910
Year ended 2015
31 Dec 2015 1 Jan 2015
GBP GBP
Cash and cash equivalents 862,910 7,074,282
Analysis of net cash
At 1 Jan 2016 cash flow At 31 Dec 2016
GBP GBP GBP
Cash and cash equivalents
862,910 1,019,400 1,882,310
Net cash 862,910 1,019,400 1,882,310
24 CONTINGENT ASSET
The P.1989 licence was farmed out in 2016 to Azinor Catalyst and
as such has no value in use at the year end. By way of
consideration, Azinor undertook to:
-- carry out certain firm work commitments (the "Firm
Commitments Work Programme"), as set out in the terms of the
Licence, including the drill-or-drop obligation in respect of an
exploration well; and
-- make certain payments to each of Noreco and JOG contingent on
the occurrence of certain future events, namely:
o US$2m within 90 days of the date when an exploration well,
drilled within the Licence area, exceeds a threshold of net-pay
with a vertical extent of no less than twenty metres of sands with
a hydrocarbon saturation above sixty per cent. and a permeability
cut-off of 1mD; and
o a further US$2m within 90 days of the date when a Field
Development Plan in respect of the aforementioned exploration well
is approved by the Secretary of State for Energy and Climate
Change.
25 AVAILABILITY OF THE ANNUAL REPORT 2016
A copy of these results will be made available for inspection at
the Company's registered office during normal business hours on any
weekday. The Company's registered office is at 10 The Triangle, ng2
Business Park, Nottingham NG2 1AE. A copy can also be downloaded
from the Company's website at www.jerseyoilandgas.com. Jersey Oil
and Gas plc is registered in England and Wales with registration
number 7503957.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAALEADLXEEF
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April 20, 2017 02:01 ET (06:01 GMT)
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