Predator Oil & Gas Holdings Plc
("Predator" or the "Company" and together with its subsidiaries "the Group")
Report and Interim Financial Statements for the 6 months to 30 June 2021
Financial highlights:
· Loss from operations for the 6 months period is £929,089 (2020: full year Loss of £1,689,521).
· Cash balance, at period end of £2,258,567 (2020 year end: £1,325,751).
· A further £1,083,298 (US$1,500,000) held as restricted cash and £487,477 by way of a loan to FRAM Exploration Trinidad Ltd. for the investment in the Pilot CO2 EOR Project.
· Fully-funded for Morocco drilling programme and Pilot CO2 EOR Trinidad.
· £3,285,000 (before expenses) raised through two over-subscribed Placings.
· 1,020,000 warrants issued exercisable at £0.105 before 12 March 2025.
· 600,000 warrants issued exercisable at £0.157 before 18 June 2025.
· No debt
Operational highlights:
· MOU-1, first exploration well for 35 years in Guercif Basin, Morocco commences on schedule.
· Initial drilling confirms extension of gas-producing Rharb Basin into Guercif Basin.
· Significant gas readings encountered whilst drilling.
· Phase 3 of Trinidad Pilot CO2 EOR Project commenced and 469 metric tonnes of anthropogenic CO2 injected.
· Changes in CO2 injection parameters result in an accelerated reservoir pressure increase of up
to 4 months ahead of pre-injection forecasts.
· Exclusivity over surplus liquid CO2 supply extended until 2023.
· Submission made to Cork County Council Development Plan to highlight role of the Mag Mell
FRSU Project in the context of security and diversification of Ireland's energy supply.
Post reporting date:
· MOU-1 completed for subsequent rigless testing.
· Six zones selected for perforating within the pre-drill seismic amplitude "bright spot"
· Re-correlation of the interval to be perforated supports MOU-1 having tested the western edge
of the MOU-4 Prospect (CPR (2020) gross Best Estimate resources of 393 BCF).
· Environmental Impact Assessment commenced for step-out wells to MOU-1 within the MOU-4
Prospect.
· Compressed Natural Gas development option independently costed for profile of 10 mm cfgpd.
· Operator of the Inniss-Trinity Incremental Production Services Contract unilaterally elects to
shut down the CO2 EOR Pilot Project.
· Predator Oil & Gas Trinidad Ltd. considering its next steps under the terms of the Inniss-Trinity
Well Participation Agreement.
· £1,300,000 (before expenses) raised through an over-subscribed Placing.
· Lonny Baumgardner appointed as Chief Operating Officer and Ronald Pilbeam steps down from
the Board.
Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas Company ("Predator" or "the Company") with operations in Morocco, Trinidad and Ireland focussed on gas as a sustainable lower carbon fuel for the Energy Transition, is pleased to announce its unaudited interim results for the six-month period ended 30 June 2021.
Chief Executive Officer's Report
Dear Shareholder,
The first six months of 2021 has been a busy period for the Company, thus far focussed on operations in Morocco and Trinidad. Despite the ongoing challenges created by the COVID pandemic we have successfully and safely executed the drilling of our first well as an approved operator. This is a significant milestone for the Company. The focus on gas exploration and appraisal drilling is consistent with the requirements of the Energy Transition whereby the reliance on carbon-intensive imported fuels (mainly coal and oil) can be reduced whilst maintaining economic growth on emergence from the COVID pandemic. The Company's drilling programme has paved the way to the opening up and de-risking of a new gas basin in northern Morocco with significant "running room" to add material gas resources. The industrial sector in Morocco is starved of indigenous gas resources and heavily reliant on imported fuel oil. The Company's development strategy is focussed on compressed natural gas ("CNG") distribution to industries isolated from gas pipeline infrastructure. This is attractive to potential end users and the Company has initiated discussions with several parties regarding aligning interests and commercial goals through joint venture participation at project level.
In Trinidad we commenced Phase 3 of the Inniss-Trinity Pilot Enhanced Oil Recovery using injected anthropogenic carbon dioxide ("Pilot CO2 EOR"). During the period under review the Government of Trinidad and Tobago established a Carbon Capture and Carbon Dioxide Enhanced Oil Recovery ("CO2 EOR") Steering Committee to give recognition to the vital role CO2 EOR could play in response to the need for emission mitigation and carbon management and Carbon Capture and Storage in the context of the Paris Agreement. This important and timely initiative has ensured that the Company, being the only CO2 EOR operator in Trinidad and with exclusivity over Trinidad's surplus liquid CO2 supply, is well-positioned to offer its technology and operations experience as a valuable catalyst to co-venture with other operators of producing oil fields onshore Trinidad and to help develop the Government's strategic carbon capture plans. Financing of the CO2 EOR services offered by the Company must be borne by those producers wishing to avail themselves of such services to further the development and retention of their assets mainly held under Incremental Production Service Contracts. Implementing CO2 EOR plans are crucial if inward investment in the energy sector in Trinidad is to be secured on the basis of compatibility with the demands to address the level of global CO2 emissions.
In Ireland the Company submitted its Floating Storage and Regasification Unit ("FSRU") LNG import solution ("Mag Mell") to the Draft Cork County Development Plan 2021 for public consultation. In addition, the Company also made a submission to the Department of Housing, Local Government and Heritage in respect of the Public Consultation on the Marine Protected Area ("MPA") Advisory Group's Report entitled "Expanding Ireland's Marine Protected Area Network." Both submissions focussed on Mag Mell's ability to address, at the earliest opportunity, Ireland's security and diversity of energy supply, particularly in relation to gas. The Company could never have foreseen how timely these submissions turned out to be in hindsight, as post the end of the period under review an "Energy Crisis" developed on a pan-European scale which saw supply constraints and unprecedented rises in wholesale gas prices.
It was emphasised in the submissions for the public consultations that Mag Mell offered one of the most attractive options to address security and diversity of energy supply, as the proposed technical solution utilised existing gas pipelines and required no new fixed infrastructure to be constructed, unlike other options, including those for renewable energy. Furthermore, the Mag Mell project could be advanced far more quickly than any other competing project.
Similar to Morocco, the developing "Energy Crisis" has forced end users of energy in Ireland to re-consider their options for securing access to different forms of indigenous energy to potentially create an economic buffer against times of volatility in the global energy markets and rising energy prices. The Company has maintained its position in relation to significant gas assets offshore Ireland and management has a deep understanding, based on experience, of the gas sector in Ireland. This creates an opportunity to develop commercial collaborations with downstream entities seeking to navigate themselves through the "Energy Crisis" and the Energy Transition.
Post period
The most significant event following the reporting period to 30 June 2021 was the completion of the MOU-1 well for perforating and rigless testing. The core focus of the Company has been re-aligned to prioritising step-out drilling from MOU-1 to appraise and develop the MOU-4 Prospect for a CNG development. With this strategy in mind Lonny Baumgardner, former Country Manager and Managing Director of SDX Energy Plc in Morocco, was appointed to the Board as Chief Operating Officer with Ronald Pilbeam stepping down. The developing "Energy Crisis" and a slow realisation of the requirement for gas for decades to come to support the Energy Transition, further underpins the Company's original decision in 2019 to enter Morocco to seek to find and develop gas resources.
Operational overview
Morocco
Despite COVID restrictions, the MOU-1 well commenced drilling on schedule at 01:00 hours on Sunday 20th June 2021.
The well was forecast to take up to 20 days to drill and to run wireline logs.
At the end of the period under review the well had reached its 95/8" casing point at 729 metres TVD KB.
Significant dry gas readings were encountered in the shallow section including formation gas shows, in line with drilling experiences in the gas-producing Rharb Basin to the west.
Initial drilling results in the shallow section confirmed the gas-generating potential of this area of the Guercif Basin, which had only before been tested by one well in 1972, long before the gas potential of the Rharb Basin was understood and realised.
During the period under review SLR Consulting (Ireland) Ltd completed an independent study for the Company of scoping capital and operating costs for a CNG development option utilising potential gas produced at Guercif. The model assumed a scoping gas delivery profile of 10 mm cfgpd (3.65 BCF of gas annually) trucked to industrial customers and to the end of existing gas pipelines in the Rharb Basin. The preferred site of a CNG facility at the MOU-4 Prospect location is only 1.5 kilometres from the highway running westwards and connecting with Morocco's most significant industrial centres. Trucks would run on CNG rather than diesel fuel. Start-up CNG costs net to the Company (75%) facilities CAPEX estimates are US$12.21 million and net (75%) CNG operating costs are estimated at US$2.09/mcf. Costs exclude drilling costs and potential requirement for booster compression later in field life. At an average gas sales price of US$11/mcf to the Moroccan industrial market the commercial model for CNG gas sales is attractive.
As a consequence of the COVID pandemic the original term of the Initial Period of the Guercif Petroleum Agreement has been extended by one year to 18 September 2022.
Trinidad
Phase 3 of the of the Inniss-Trinity Pilot CO2 EOR project commenced in the period under review. The planned operations were in accordance with the Company's Project Proposal PRD25092019 submitted by the Operator (FRAM Exploration Trinidad Ltd. or "FRAM") of the Inniss-Trinity Incremental Production Services Contract, or "IPSC", as a consequence of which Heritage Petroleum Trinidad Ltd., the licence holder, granted FRAM a two-year extension to the IPSC and the Ministry of Energy and Energy Industries approved the commissioning of the CO2 EOR facilities at Inniss-Trinity.
It was planned for CO2 to be injected into the AT-13 well continuously over a period of up to 275 days during which production time rates would be recorded at AT-5X.
It became apparent very quickly that the AT-13 well was not suitable for CO2 injection at higher pressures and regulatory approval was sought and subsequently granted for CO2 injection to return to the original 2020 CO2 injector well AT-5X. AT-12, defined in the submitted Proposal PRD25092019 as a production well and included in the AT-4 Block Pilot CO2 EOR Project, remained available for continuous production. It was determined that additional wells within the AT-4 Block would be surveyed and investigated for potential workovers and the return to production. AT-6, AT-7 and AT-10 were considered for the restoration of production and IN-6 was considered as a candidate for perforating in the unperforated Herrera #2 Sand. Workover well costs were generated and approved internally.
From April 2021 469 metric tonnes of CO2 were injected through AT-5X. Operations were limited to daylight hours due to best practice HSE restrictions for handling CO2 at a time of COVID restrictions.
Curtailing injected daily CO2 volumes and restricting injection pressures had a beneficial effect on the rate of reservoir pressure build-up whilst establishing a preferred orientation and pattern for accelerated CO2 migration routes. Of five wells where pressure data could be interpreted, two were broadly in line with pre-injection forecasts whereas three showed accelerated reservoir pressure build-up relative to the pre-injection estimates. In the most notable case one well reached a static bottom hole pressure of 1,089 psi on 9 June 2021, whereas the pre-injection forecast estimated that this pressure was only to be achieved over four months later.
The encouraging results provide valuable information for the design and resulting effectiveness of CO2 EOR projects for the Herrera reservoir sands.
The implementation of CO2 EOR technology, the operational experience and the significant empirical database, combined with exclusivity over Trinidad's surplus liquid CO2 supply until at least 2023, has placed the Company in a unique position to offer CO2 EOR collaboration agreements to operators of mature producing fields onshore Trinidad.
The establishment of the CO2 EOR Steering Committee by the Government of Trinidad and Tobago during the reporting period has been the commercial catalyst for the Company to engage with local operators regarding CO2 EOR technology and services that the Company can provide to align operators with the strategically important Government initiative.
Ireland
During the period under review the Company changed the name of its subsidiary Predator LNG Ireland Ltd. to Mag Mell Energy Ireland Ltd., a name from Irish mythology that reflects the ethos behind the move to offshore LNG facilities below the horizon that can contribute with very much reduced environmental impact to security of energy supply during the Energy Transition.
In June a submission was made to the Draft Cork County Council Development Plan detailing the Mag Mell FSRU LNG Project and the potential benefits for the industries and communities of Cork, which historically has been the hub of Irish indigenous gas production. The vital role this project could have in addressing security of energy supply during the Energy Transition was also outlined in the Company's published document for the purpose of facilitating informed public consultation.
At the same time the Company made a submission to the Department of Housing, Local Government and Heritage in respect of the Public Consultation on the Marine Protected Area ("MPA") Advisory Group's Report entitled "Expanding Ireland's Marine Protected Area Network."
The steps taken are to ensure that the Mag Mell FSRU LNG Project was fully in the public domain ahead of a planned meeting later in the year of the Oireachtas Committee on the Environment to examine energy security, LNG and power usage by data centres.
Partnership building has been a key objective of the Company. The establishment of a FSRU technical and commercial solution specific to the environment and conditions of the Celtic Sea offshore Ireland is a significant tool to use to meet conditions for regulatory approvals and to develop partnerships to attract project finance to allow a Financial Investment Decision to be made. This is a long process, but the "Energy Crisis" post the reporting period has potentially provided a greater sense of urgency to address volatile energy markets during the Energy Transition.
The Company remains at the disposal of the regulatory authorities to accelerate the potential award of successor authorisations for the Corrib South and Ram Head projects. Both these projects are potentially valuable assets for indigenous gas production and gas storage that could assist an orderly progress through the Energy Transition.
Financial review
The Company reported an operating loss for the period to 30 June 2021 £929,089 (£784,156 for the period to 30 June 2020). The increase in operating loss is attributable to an increase in administrative costs for the period to 30 June 2021 which were £929,070 (£572,247 for the period to 30 June 2020) and which principally reflected adverse foreign exchange movements and increased directors', management and technical consultancy fees associated with the planning and execution of the Guercif drilling programme.
Administrative expenses for the period to 30 June 2021 also included £257,691 (£147,181 for the period to 30 June 2020) fair value adjustment to warrants and share options.
The Company is finishing the reporting period with cash reserves of £2,258,567 (£2,098,177 for the period to 30 June 2020) and restricted cash of £1,083,298 (£1,221,200 for the period ended 30 June 2020) in the form of the security deposit for the Guercif Bank Guarantee in favour of ONHYM. The balance outstanding of the loan by the Company to FRAM for the investment in the Pilot CO2 EOR Project was £487,477 (£396,136 for the period to 30 June 2020) at the end of the period to 30 June 2021.
During the period to 30 June 2021, we have completed two over-subscribed Placings to raise £3,285,000 (before expenses). As a result of these transactions 27,000,000 new shares have been issued and the issued share capital increased to 266,946,267 by the end of the period to 30 June 2021. This figure included the exercise of 267,750 existing warrants at £0.028. 1,020,00 new warrants exercisable at £0.105 before 12 March 2025 and 600,000 new warrants exercisable at £0.157 before 18 June 2025 were issued.
2,000,000 existing warrants exercisable at £0.12 had their original expiry date of 15 February 2021 extended to 15 February 2022. 2,053,678 existing warrants exercisable at £0.028 had their original expiry date of 24 May 2021 extended to 24 May 2022. The one-year extensions requested by the warrant holders to reflect the fact that drilling operations were delayed by one year due to the COVID pandemic were approved by the Board. By extending the warrants expiry date, the Group had to assess the impact of the extensions on the warrant's initial fair value assumptions. An expense of £24,366 has been recognised in respect of the fair value of the warrants as detailed in note 12.
Placing funds were to provide the working capital to fully fund the Company's planned operations in Morocco and Trinidad following the delays caused by the COVID pandemic.
As a result of the transactions successfully concluded during the period under review, the Company is well-capitalised, free of debt and is in a position to deploy prudent levels of administrative expenditure focussed on enhancing and promoting the potential of the Company's portfolio in order to attract potential partners to share in the costs of further developing its assets to realise shareholder value.
COVID pandemic
The Company took all commensurate steps during the period under review to minimise unnecessary capital expenditures and operating costs whilst COVID restrictions continue to impact the industry's business operations worldwide. Despite ongoing international travel restrictions that imposed a more complex logistical challenge to moving essential personnel across international borders, the Company successfully managed the planning and execution of its first well as operator.
Maintaining adequate cash reserves and delivering a high impact drilling programme in Morocco focussed on the opportunity to supply gas to the Moroccan industrial market is a prudent risk-reward proposition for our shareholders. Continuing with demonstrating the capability of delivering CO2 sequestration using CO2 EOR technology in Trinidad is an important contribution to helping to reduce CO2 emissions during the Energy Transition. These Company objectives have been sustained during the COVID pandemic and are allowing the Company to demonstrate to potential partners its ability to perform and create exciting business development opportunities compatible with the requirements for an effective Energy Transition.
Summary
During the period under review, the Company has successfully overcome challenges posed by COVID to achieve key operational objectives within our strict budget guidelines.
De-risking the gas potential of the Guercif Basin after 35 years without drilling activity, has set up a timely opportunity to appraise, develop and deliver gas to the Moroccan gas market on very favourable commercial terms and with manageable capital requirements for a Company with our current market capitalisation. Partnering with downstream off-takers of gas is a sensible solution to reducing our financial requirements for developing our CNG business model. This is the overriding objective of the Company in 2022.
In Trinidad we are firmly established as the country's only CO2 EOR services provider following the technical and operational success of the Inniss-Trinity pilot CO2 EOR project and the important lessons that have been learnt. The establishment by the Government of Trinidad and Tobago of the Steering Committee for Carbon Capture and CO2 EOR supports our efforts to partner with indigenous, well-financed, onshore producers to provide ESG support and credentials through CO2 sequestration and to provide secondary recovery technology, expertise and experience to increase profits from mature fields. Our services will need to be funded by the producers with profit sharing thereafter to be negotiated.
In Ireland we have an environmentally aware technical and commercial solution to Ireland's lack of security and diversity of gas supply. We are making excellent progress with regard to the hugely important public consultation process. Regulators are aware of what the Mag Mell FSRU project has to offer Ireland. Sentiment is being forced to adapt to the realities of the Energy Transition and the volatility in energy markets. Post the period under review the Oireachtas Committee on the Environment met to examine energy security, LNG and power usage by data centres. The requirement for gas in Ireland is a necessity for years to come and the Company is well-positioned to seek partnerships with indigenous companies in the Irish energy sector where our assets, expertise and specific Irish offshore experience can be traded for a strong balance sheet that allows us to close out opportunities with multi-nationals to develop our niche position in Ireland. This position has been nurtured through unfashionable times to a point where the "Energy Crisis" makes gas fashionable again.
During the period under review we have taken the opportunity, when possible and advisable to do so, to raise funds in the public markets. This is necessary for us to maintain our projects in good standing and to strengthen our hand in commercial negotiations with much larger potential partners. Our management is under-valued in the public markets based on what it has achieved with limited financial resources. We have three exciting projects on three continents, managed by a small team of experienced professionals. Post period, on 17 September 2021 the Company was trading at a 77.08% premium to its original IPO share price despite COVID, Brexit, financial market volatility and after investing in value-creating projects and operations.
On behalf of the Board, I would like to thank our shareholders for their patience and continued support of the Company through what has been a unique period dominated by COVID and now the emerging "Energy Crisis". We look forward over the next 12 months to continue to make positive progress in further developing the Company's assets.
Paul Griffiths
Chief Executive Officer
28 October, 2021
Paul Griffiths, Chief Executive of Predator, commented:
"Despite the recent "demonisation" of certain parts of the upstream and downstream Energy Sector, gas has a vital role to play in ensuring a stable Energy Transition and reducing the volatility in the energy markets that is leading to unprecedented spikes in the cost of energy for consumers. We are focussed on developing our gas asset in Morocco as a replacement for carbon-intensive imported fuel oil and coal. In Ireland gas is important for restoring confidence in securing gas supplies that do not ultimately become wholly dependent on the Interconnector with the UK. In Trinidad we retain the ability to offer commercial CO2 sequestration which at present cannot be offered by renewable energy. Pragmatism is therefore required during the Energy Transition and integrated practical solutions to achieve the common goal of reducing CO2 emissions. This has been a busy year so far for us in developing these goals whilst maintaining a commercial perspective and we look forward to further progress over the next 12 months".
This announcement contains inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 on market abuse
For more information, please visit the Company's website at www.predatoroilandgas.com:
Enquiries:
| Predator Oil & Gas Holdings Plc Dr. Stephen Staley Non-executive Chairman Paul Griffiths Chief Executive Officer Lonny Baumgardner Chief Operating Officer | Tel: +44 (0) 1534 834 600
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| Novum Securities Limited Jon Belliss
Optiva Securities Limited Christian Dennis | Tel: +44 (0) 207 399 9425
Tel: +44 (0) 203 137 1902 |
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| Flagstaff Strategic and Investor Communications Tim Thompson Mark Edwards Fergus Mellon | Tel: +44 (0) 207 129 1474
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Notes to Editors:
Predator is operator of the Guercif Petroleum Agreement onshore Morocco which is prospective for Tertiary gas in prospects less than 10 kilometres from the Maghreb gas pipeline. The MOU-1 well has been completed and a follow-up drilling programme is under review.
Predator is an oil and gas exploration company participating with FRAM in further developing the remaining oil reserves and sequestrating anthropogenic carbon dioxide in the producing Inniss Trinity oil field onshore Trinidad, primarily through the application of CO2 EOR technology. Potential for cash flow exists by pursuing Enhanced Oil Recovery using locally sourced liquid carbon dioxide for injection into and storage within the oil reservoirs. Near-term expansion and production growth potential is focussed on upscaling the CO2 EOR operations in the Inniss-Trinity oil field, subject to all necessary approvals.
In addition, Predator also owns and operates exploration and appraisal assets in licensing options offshore Ireland, for which Successor Authorisations have been applied for. These are adjoining Vermilion's Corrib gas field in the Slyne Basin on the Atlantic Margin and east of the Kinsale gas field and Barryroe oil field in the Celtic Sea.
The Company has a highly experienced management team with a proven track record in the oil and gas industry.
The interim management report and interim results are set out in the following pages.
The Directors present their report and the unaudited consolidated financial statements together with related notes, of Predator Oil & Gas Holdings Plc and its subsidiaries ("the Group") for the six months ended 30 June 2021. The statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at the year ended 31 December 2020. The results for the period ended 30 June 2021 are unaudited. These statements are in agreement with accounting records which have been properly kept in accordance with Article 103 of the Companies (Jersey) Law 1991.
Responsibility Statement
We confirm that to the best of our knowledge:
- The Interim Report has been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU and applicable law
- The condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.10
- The Interim Report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year and
- The Interim Report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.
The Interim Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by
Dr. Stephen Staley
Chairman
28 October 2021
COVID statement and global outlook
The six-month period ended 30 June 2021, has continued to be dominated by the COVID pandemic and the resulting impact on travel, restrictions on operations, commodity prices, financial markets, overall investment sentiment and, at the beginning of the period, the slowdown of the global economy. Businesses have learnt how to adapt to these prevailing circumstances in order to navigate through very challenging times.
At the end of the period under review, COVID restrictions are being relaxed and global economies are beginning to rebound rapidly. This in turn creates new challenges in the form of rising demand for services and equipment which is likely to lead to an increase in costs as the pool of services and equipment has contracted due to COVID. Supply chain delays for key well equipment are to be expected as manufacturing output was curtailed during COVID and surplus inventory used up. Maintenance of key equipment is likely to have been postponed and time will be required to make such equipment fully operational again.
Public awareness of climate change concerns and unsustainable accelerating levels of CO2 emissions is now fully developed. The fossil fuel industry has been the primary focus of attention during this time, given its high-profile current and historical contribution to generating CO2 emissions through use by, largely, third parties of its products. This has created a difficult environment for attracting equity and debt finance as banks and institutions react to pressure to disassociate themselves from fossil fuel investments. This has resulted in reduced investment in fossil fuel infrastructure, field development and exploration drilling (needed to replace declining reserves).
An inclusive and informed debate regarding the short-term future of the fossil fuel industry has not matured in the context of the Energy Transition.
As a result of all these factors and a surge in economic activity following the break-out from COVID restrictions, significant volatility in the energy markets (particularly in relation to gas) is now occurring. This is resulting in unsustainable increases in electricity and gas prices that threaten the economic welfare of consumers and the growth plans of industry alike. New unforeseen political alliances are being forged to guarantee security of gas supply. The inability to secure adequate gas resources is leading to an increased reliance on carbon-intensive fuels. Ireland, a pioneer of renewable energy, is a classic example of inverse logic. Ireland is now burning more imported coal than previously and as a result is increasing its CO2 emissions. Many countries, including China, are burning coal which has resulted in increased prices paid for coal whilst fuelling demand for this product. In hindsight therefore the blanket "demonisation" of the fossil fuel industry is now resulting in increased CO2 emissions in a number of countries, political instability and rising costs of living. This is counter to the longer term common, all-inclusive goal to reach a sustainable level of CO2 emissions.
The Energy Transition has a key role to play in navigating the way to lowering of CO2 emissions by gas replacing coal and oil. The wind does not always blow, the sun does not always shine and large amounts of electricity cannot yet be stored! It is therefore inevitable that gas will be required for years to come as a back-up energy supply when renewables cannot meet the demand. The fossil fuel industry produces gas. The fossil fuel industry has the knowledge and expertise to develop underground reservoirs for CO2 sequestration. Investment should be focussed on these aspects of the industry to address the "Energy Crisis" and the Energy Transition. Like the response to climate change, too little is being done too late to make a difference.
It is inevitable that our industry will contract unless informed pragmatic and practical action is taken. At Company level we are already, and have been for some time, implementing an Energy Transition strategy focussed on gas and CO2 sequestration. It allows us to work with energy users and producers to align our strategic and commercial objectives to grow organically our respective businesses to the mutual benefit of our different shareholders - until such time as financial institutions and governments realise that a commercially viable Energy Transition is the only way to meet the longer-term common goal of reducing CO2 emissions.
| Predator Oil & Gas Holdings Plc |
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| Condensed consolidated statement of comprehensive income |
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| For the 6 months to 30 June 2021 |
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| 01.01.2021 to 30.06.2021 | 01.01.2020 to 30.06.2020 | 01.01.2020 to 31.12.2020 |
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| (unaudited) | (unaudited) | (audited) |
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| Notes | £ | £ | £ |
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| Administrative expenses | 3 | (929,070) | (572,247) | (1,464,162) |
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| Operating loss |
| (929,070) | (572,247) | (1,464,162) |
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| Finance expense |
| (19) | (211,909) | (225,359) |
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| Loss for the period before taxation |
| (929,089) | (784,156) | (1,689,521) |
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| Taxation |
| - | - | - |
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| Loss for the period after taxation |
| (929,089) | (784,156) | (1,689,521) |
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| Other comprehensive income |
| - | - | - |
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| Total comprehensive loss for the period attributable to the owner of the parent |
| (929,089) | (784,156) | (1,689,521) |
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| Loss per share basic and diluted (pence) | 4 | (0.4) | (0.4) | (0.8) |
| Condensed consolidated statement of financial position |
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| As at 30 June 2021 |
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| 30.06.2021 |
| 31.12.2020 | |
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| (unaudited) |
| (audited) | |
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| Notes | £ |
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| Non-current assets |
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| Tangible fixed assets | 6 | 7,104 |
| 5,592 | |
| Project Guercif - Morocco | 5 | 1,672,671 |
| - | |
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| 1,679,775 |
| 5,592 | |
| Current assets |
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| Trade and other receivables | 7 | 1,602,346 |
| 1,577,858 | |
| Cash and cash equivalents | 8 | 2,258,567 |
| 1,325,751 | |
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| 3,860,913 |
| 2,903,609 | |
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| Total assets |
| 5,540,688 |
| 2,909,201 | |
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| Equity attributable to the owner of the parent |
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| Share capital | 9 | 10,125,061 |
| 6,832,564 | |
| Reconstruction reserve |
| 2,568,321 |
| 2,797,421 | |
| Other reserves |
| 716,531 |
| 458,840 | |
| Retained deficit |
| (8,192,205) |
| (7,263,116) | |
| Total equity |
| 5,217,708 |
| 2,825,709 | |
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| Non-current liabilities |
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| Convertible loan notes | 10 | - |
| - | |
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| Current liabilities |
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| Trade and other payables | 11 | 322,980 |
| 83,492 | |
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|
|
|
| |
| Total liabilities |
| 322,980 |
| 83,492 | |
|
|
|
|
|
| |
| Total liabilities and equity |
| 5,540,688 |
| 2,909,201 | |
|
|
|
|
|
| |
| Condensed consolidated statement of changes in equity |
|
|
| ||
| For the 6 months to 30 June 2021 |
|
|
|
|
|
|
| Attributable to owner of the parent |
| |||
|
| Share Capital | Reconstruction reserve | Other reserves | Retained deficit | Total |
|
| £ | £ | £ | £ | £ |
|
|
|
|
|
|
|
| Balance at 31 December 2019 | 2,346,336 | 3,270,648 | 256,416 | (5,573,595) | 299,805 |
|
|
|
|
|
|
|
| Loss for the period | - | - | - | (784,156) | (784,156) |
|
|
|
|
|
|
|
| Total comprehensive loss for the period | - | - | - | (784,156) | (784,156) |
|
|
|
|
|
|
|
| Issue of ordinary share capital | 4,486,228 | - | - | - | 4,486,228 |
|
|
|
|
|
|
|
| Fair value movement of share options | - | - | 46,730 | - | 46,730 |
|
|
|
|
|
|
|
| Fair value of warrants | - | - | 100,451 | - | 100,451 |
|
|
|
|
|
|
|
| Listing costs capitalised | - | (473,227) | - | - | (473,227) |
|
|
|
|
|
|
|
| Total transactions with owners | 4,486,228 | (473,227) | 147,181 | - | 4,160,182 |
|
|
|
|
|
|
|
| Balance at 30 June 2020 | 6,832,564 | 2,797,421 | 403,597 | (6,357,751) | 3,675,831 |
|
|
|
|
|
|
|
| Loss for the period | - | - | - | (905,365) | (905,365) |
|
|
|
|
|
|
|
| Total comprehensive loss for the period | - | - | - | (905,365) | (905,365) |
|
|
|
|
|
|
|
| Fair value of share options | - | - | 55,243 | - | 55,243 |
|
|
|
|
|
|
|
| Total transactions with owners | - | - | 55,243 | - | 55,243 |
|
|
|
|
|
|
|
| Balance at 31 December 2020 | 6,832,564 | 2,797,421 | 458,840 | (7,263,116) | 2,825,709 |
|
|
|
|
|
|
|
| Loss for the period | - | - | - | (929,089) | (929,089) |
|
|
|
|
|
|
|
| Total comprehensive loss for the period | - | - | - | (929,089) | (929,089) |
|
|
|
|
|
|
|
| Issue of ordinary share capital | 3,292,497 | - | - | - | 3,292,497 |
|
|
|
|
|
|
|
| Fair value of warrants | - | - | 195,327 | - | 195,327 |
|
|
|
|
|
|
|
| Fair value movement of share options | - | - | 62,364 | - | 62,364 |
|
|
|
|
|
|
|
| Listing costs capitalised | - | (229,100) | - | - | (229,100) |
|
|
|
|
|
|
|
| Total transactions with owners | 3,292,497 | (229,100) | 257,691 | - | 3,321,088 |
|
|
|
|
|
|
|
| Balance at 30 June 2021 | 10,125,061 | 2,568,321 | 716,531 | (8,192,205) | 5,217,708 |
| Condensed consolidated statement of cash flows |
|
|
|
|
| |
| For the 6 months to 30 June 2021 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 01.01.2021 to |
| 01.01.2020 to 30.06.2020 |
| 01.01.2020 to 31.12.2020 |
|
|
| (unaudited) |
| (unaudited) |
| (audited) |
|
|
| £ |
| £ |
| £ |
| Cash flows from operating activities |
|
|
|
|
| |
| Loss for the period before taxation | (929,089) |
| (784,156) |
| (1,689,521) | |
| Adjustments for: |
|
|
|
|
| |
| Fair value of share options | 62,364 |
| 46,730 |
| 101,973 | |
| Fair value of warrants | 195,327 |
| 100,451 |
| 100,451 | |
| Finance expense | 19 |
| 115,315 |
| 128,765 | |
| Share issue costs | - |
| 195,000 |
| 195,000 | |
| Amortisation of transaction costs | - |
| 96,594 |
| 96,594 | |
| Depreciation | 1,118 |
| 871 |
| 1,642 | |
| Foreign exchange | 318,285 |
| 417,803 |
| 252,867 | |
| (Increase)/decrease in trade and other receivables | (29,523) |
| 29,941 |
| 25,919 | |
| Increase/(decrease) in trade and other payables | 239,488 |
| (214,338) |
| (196,346) | |
|
|
|
|
|
|
|
|
| Net cash (used)/generated in operating activities | (142,011) |
| 4,211 |
| (982,656) | |
|
|
|
|
|
|
|
|
| Cash flow from investing activities |
|
|
|
|
| |
| Loan advances | (25,940) |
| (177,323) |
| (290,419) | |
| Purchase of computer equipment | (2,629) |
| - |
| (842) | |
| Disposal of computer equipment | - |
| - |
| 767 | |
|
|
|
|
|
|
|
|
| Net cash used from investing activities | (28,569) |
| (177,323) |
| (290,494) | |
|
|
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
| |
| Proceeds from issuance of shares, net of issue costs | 3,055,900 |
| 3,535,550 |
| 3,535,550 | |
| Project Guercif - Morocco | (1,672,671) |
| - |
| - | |
| Proceeds from share option warrants exercises | 7,497 |
| - |
| - | |
| Redemption of convertible loan notes | - |
| (746,000) |
| (746,000) | |
| Finance expense paid | (19) |
| (115,315) |
| (115,315) | |
|
|
|
|
|
|
|
|
| Net cash generated from financing activities | 1,390,707 |
| 2,674,235 |
| 2,674,235 | |
|
|
|
|
|
|
|
|
| Effect of exchange rates on cash | (287,311) |
| (512,662) |
| (185,049) | |
|
|
|
|
|
|
|
|
| Net increase in cash and cash equivalents | 932,817 |
| 1,988,461 |
| 1,216,035 | |
|
|
|
|
|
|
| |
| Cash and cash equivalents at the beginning of the period | 1,325,751 |
| 109,716 |
| 109,716 | |
| Cash and cash equivalents at the end of the period | 2,258,567 |
| 2,098,177 |
| 1,325,751 | |
Notes to the condensed consolidated interim financial statements
For the 6 months to 30 June 2021
General information
Predator Oil & Gas Holdings Plc ("the Company") and its subsidiaries (together "the Group") are engaged principally in the operation of an oil and gas development business in the Republic of Trinidad and Tobago and an exploration and appraisal portfolio in Morocco and Ireland. The Company's ordinary shares are on the Official List of the UK Listing Authority in the standard listing section of the London Stock Exchange.
Predator Oil & Gas Holdings plc was incorporated in 2017 as a public limited company under Companies (Jersey) Law 1991 with registered number 125419. It is domiciled and registered at 3rd Floor, Standard Bank House, 47-49 La Motte Street, Jersey, JE2 4SZ, Channel Islands.
Basis of preparation
The condensed consolidated interim financial statements are prepared under the historical cost convention and on a going concern basis and in accordance with International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS") and with those parts of the Companies (Jersey) Law, 1991 applicable to companies preparing their accounts under IFRS.
The condensed consolidated interim financial statements contained in this document do not constitute statutory accounts under Companies (Jersey) Law 1991. In the opinion of the directors, the condensed consolidated interim financial statements for this period fairly presents the financial position, result of operations and cash flows for this period.
The condensed consolidated interim financial statements have not been audited, nor have they been reviewed by the Company's auditors in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board.
Statutory financial statements for the year ended 31 December 2020 were approved by the Board of Directors on 27th May 2021. The report of the auditors on those financial statements was unqualified with a Key Audit Matter relating to the recoverability of the loan from FRAM.
The Board of Directors approved this Interim Financial Report on 28 October 2021.
Statement of compliance
The Interim Report includes the consolidated interim financial statements which have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2020, which have been prepared in accordance with IFRS as adopted by the European Union and applicable law.
Going Concern
Notwithstanding the operating loss incurred during the period under review and following two successful placings to raise a total of £3,285,000 before expenses and a further successful placing post the reporting period to raise £1,300,000 before expenses, the Directors have a reasonable expectation that the Group will not need to raise funds to continue operations and to meet all of its current contractual liabilities for the foreseeable future.
The two planned major initiatives for 2021 were drilling in Morocco and the continuance of CO2 EOR operations in Trinidad with enhanced oil production. The well (MOU-1) has been successfully drilled and completed for rigless testing. The costs for the well are within the pre-drill budget forecasts and no cost overruns are forecast to have occurred. A negotiation with ONHYM is to take place with respect to the return of US$1,000,000 of the US$1,500,000 Bank Guarantee following rigless testing of MOU-1 in 2022. The Company has included a work programme in the Going Concern cash flow forecast for seismic reprocessing and desk-top studies to complete the remainder of the Petroleum Agreement work programme to enable return of US$500,000 of the US$1,500,000 Bank Guarantee.
The Company is planning a discretionary drilling programme in Guercif in 2022 which is subject to funding at the project level via a farmin or other form of financial arrangement for project equity. If successful, the Company will enter the next phase of the Guercif Licence at which time the discretionary work programme completed in 2022 will contribute towards the work programme agreed for the next phase of the Guercif Licence and the Bank Guarantee may be rolled over too.
CO2 EOR operations have not required additional working capital relative to that allowed for in previous budget estimates. Post the end of the period under review, the Operator of the Inniss-Trinity Incremental Production Services Contract ("IPSC"), FRAM, unilaterally elected to terminate the Inniss-Trinity CO2 EOR Pilot Project without informing the licence holder Heritage Petroleum Trinidad Ltd. ("Heritage"). As a result, no further funds are being invested in the project and there are no residual liabilities to be incurred by the Company. The Well Participation Agreement ("WPA") remains in force with FRAM and all accrued entitlements due to the Company arising from the WPA currently remain in place, as does the Loan advanced to FRAM, which is repayable from the profits of the sale of enhanced oil production. It is expected that a negotiation will ensue with FRAM regarding recovery of the Loan. Until negotiations are concluded with either a positive or negative outcome and given the uncertain financial status of the parent company of FRAM, the Directors have made provisions in the Going Concern forecast that the Loan may never be recovered and no profits from enhanced oil production in Inniss-Trinity will be forthcoming. This provision was only reflected in the Going Concern forecast to ensure that the Company had sufficient resources to continue operating for the foreseeable future even on a worst-case scenario. It was decided by the Directors that the loan was not to be provided for until further discussions are held. In order to potentially recoup some of its investment in the Inniss-Trinity CO2 EOR Pilot Project, the Company has lodged an expression of interest with the licence holder Heritage to, at its sole discretion, take over the Inniss-Trinity IPSC should it become available.
For the Going Concern if there were to be a projected working capital shortfall within the next 12 months, then the directors will institute a programme of cuts to directors' and consultant's remuneration and other third-party corporate costs until such time as US$500,000 of the Guercif Bank Guarantee is returned after delivering to ONHYM the data from the seismic reprocessing and desk-top studies. This would be extended to include the return of the US$1,000,000 of the Guercif Bank Guarantee after rigless testing of MOU-1 and delivery of all the well data to ONHYM. If either or both of these events were delayed then the Directors would seek to raise additional funds in the equity markets, assuming that no farmout of project equity had occurred by such time as additional working capital was required.
The Company has no debt.
The Directors do not believe that either COVID or Brexit will adversely influence the Group's business development strategy. Operations in Morocco have been maintained this year and in Trinidad throughout the COVID crisis. Brexit will only create more uncertainty for Ireland's security of gas supply, thereby enhancing the Company's LNG import project for Ireland by creating an alternative source of gas not tied to the UK-Ireland gas transmission infrastructure.
Relaxation of COVID restrictions is likely to create more opportunities for the Company to divest assets if required to do so as the appetite for gas assets and ESG credentials increases as a result of the "Energy Crisis" and investors concerns regarding aligning investment with ESG credibility.
The directors having made due and careful enquiry, are of the opinion that the Group has adequate working capital to execute its operations over the next 12 months given that current spending commitments will prevail. The Group will therefore continue to adopt the going concern basis in preparing the Annual Report and Financial Statements.
Cyclicality
The interim results for the six months ended 30 June 2021 are not necessarily indicative of the results to be expected for the full year ending 31 December 2021. Due to the nature of the entity, the operations are not affected by seasonal variations at this stage.
New Standards adopted at 1 January 2021
There are no accounting pronouncements which have become effective from 1 January 2021 that have a significant impact on the Group's interim condensed consolidated financial statements.
Significant accounting policies
The accounting policies applied by the Group in these half-yearly results are the same as those applied by the Group in its consolidated financial information in its 2020 Annual Report and Accounts, with the exception of IFRS 6 - Exploration and evaluation costs of mineral resources.
IFRS 6 - Exploration and evaluation costs of mineral resources
The group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to:
(a) acquisition of rights to explore
(b) topographical, geological, geochemical and geophysical studies
(c) exploratory drilling
(d) trenching
(e) sampling; and
(f) activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral
resource.
The capitalisation of pre-production expenditure ceases when each particular asset is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost and amortised on a systematic basis over their useful lives (unless the asset has an indefinite useful life, in which case it is not amortised).
Areas of estimates and judgement
When preparing the Group's consolidated interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.
The judgements, estimates and assumptions applied in the Group's consolidated interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 December 2020, with the exception of the recognition of assets under IFRS 6 - Exploration and evaluation costs of mineral resources.
Impairment of intangible assets - exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 30 June 2021 of £1,672,670 (2020: £nil). The intangible asset capitalised during the period, relates to Project Guercif. Each exploration project will be subject to an annual review by either a consultant or by a member of management that holds relevant knowledge and experience in the field in order to determine if the exploration asset has had a change in the future economic value and requires impairment. This exploration asset review will take into consideration long term resource prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision may be made to discontinue the exploration, which will result in an impairment charge been recognised in the Income Statement.
Foreign currencies
The functional currency of the Group and all of its subsidiaries is the British Pound Sterling.
Transactions entered into by the Group entities in a currency other than the currency of the primary economic
environment in which it operates (the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the date of the statement of financial position. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are similarly recognised immediately in profit or loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation.
1 Financial risk management
The Board continually assesses and monitors the key risks of the business. The key risks that could affect the Group's medium-term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2020 Annual Report and Financial Statements, a copy of which is available from the Group's website: www.predatoroilandgas.com. The key financial risks are market risk (including cash flow interest rate risk and foreign currency risk), credit risk and liquidity.
2 Segmental analysis
The Group operates in one business segment, the exploration, appraisal and development of oil and gas assets. The Group has interests in three geographical segments being Africa (Morocco), Europe (Ireland) and the Caribbean (Trinidad and Tobago).
The Group's operations are reviewed by the Board (which is considered to be the Chief Operating Decision Maker ('CODM')) and split between oil and gas exploration and development and administration and corporate costs.
Operating segments are disclosed below on the basis of the split between exploration and development and administration and corporate.
|
| Europe | Caribbean | Africa | Corporate |
|
| £ | £ | £ | £ |
|
|
|
|
|
|
| Gross Loss |
|
|
|
|
| Administrative and overhead expenses | (84,716) | (80,609) | (134,679) | (380,083) |
| Share option and warrant expense | - | - | - | (233,326) |
| Finance expense | - | - | (19) | - |
| Loss for the year from continuing operations | (84,716) | (80,608) | (134,698) | (613,409) |
| Addition to intangible assets | - | - | 1,672,670 | - |
| Total reportable segment assets | 1,619 | 489,860 | 2,817,210 | 2,231,999 |
| Total reportable segment liabilities | (14,012) | (8,528) | (210,049) | (90,391) |
There are no non-current assets held in the Group's country of domicile, being Jersey, Channel Islands (2020: £nil).
|
|
| 30.06.2021 | 30.06.2020 | 31.12.2020 |
|
|
| (unaudited) | (unaudited) | (audited) |
| 3 Administrative expenses |
| £ | £ | £ |
|
|
|
|
|
|
| Technical Consultancy fees |
| 70,524 | 128,137 | 286,204 |
| Listing costs |
| 78,255 | 109,601 | 131,152 |
| Broker fees |
| 12,467 | - | 23,505 |
| Project costs |
| - | 96,144 | 150,078 |
| Directors fees |
| 222,460 | 85,262 | 160,643 |
| Fair value adjustment share options |
| 62,364 | 46,730 | 101,973 |
| Fair value adjustment warrants |
| 195,327 | 100,451 | 100,451 |
| Administration fees |
| 42,732 | 40,604 | 81,004 |
| Bank charges |
| 36,035 | 36,184 | 42,396 |
| Legal and professional fees |
| 22,820 | 35,200 | 85,963 |
| Travel expenses |
| 32,502 | 34,216 | 36,901 |
| Non-executive director fees |
| 44,998 | 27,498 | 73,746 |
| Computer/system costs/IT support |
| 3,904 | 10,733 | 23,301 |
| Design, publishing, presentation and printing fees |
| 1,036 | 7,621 | 14,621 |
| Insurance |
| 19,373 | 4,738 | 10,788 |
| Formation costs |
| - | 3,275 | 3,275 |
| Accountancy fees |
| - | 3,000 | 3,000 |
| Sundry expenses |
| 2,539 | 1,653 | 2,355 |
| Annual return fee |
| 669 | 940 | 940 |
| Depreciation |
| 1,118 | 871 | 1,642 |
| Website costs |
| 2,370 | 649 | 2,630 |
| Foreign exchange |
| 61,826 | (201,260) | 105,094 |
| Audit fee |
| 15,750 | - | 22,500 |
|
|
|
|
|
|
|
|
| 929,070 | 572,247 | 1,464,162 |
|
| 30.06.2021 | 30.06.2020 | 31.12.2020 |
| 4 Loss per share | (unaudited) | (unaudited) | (audited) |
|
|
|
|
|
| Weighted average number of shares | 244,534,481 | 179,747,732 | 209,959,715 |
|
|
|
|
|
| Loss attributable to ordinary equity holders of the company | (929,089) | (784,156) | (1,689,521) |
|
|
|
|
|
| Total basic and diluted loss per share attributable to the ordinary equity holders (pence) | (0.4) | (0.4) | (0.8) |
Diluted loss per Ordinary share equals basic loss per ordinary share as, due the losses incurred in 2021 and 2020, there is no dilutive effect from the subsisting share options.
| 5 Other intangible assets |
| Project Guercif |
| Total |
|
|
|
|
|
|
| Gross carrying amount |
|
|
|
|
| Balance at 1 January 2021 |
| - |
| - |
| Additions, separately acquired |
| 1,672,671 |
| 1,672,671 |
| Balance at 30 June 2021 |
| 1,672,671 |
| 1,672,671 |
|
|
|
|
|
|
| Depreciation and impairment |
|
|
|
|
| Balance at 1 January 2021 |
| - |
| - |
| Depreciation |
| - |
| - |
| Balance at 30 June 2021 |
| - |
| - |
|
|
|
|
|
|
| Carrying amount 30 June 2021 |
| 1,672,671 |
| 1,672,671 |
On 18 March 2021, the Company announced scoping and development and operating costs for a pilot Compressed Natural Gas ("CNG") Project at Guercif in Morocco based on a 10mm cfgpd profile for 10 years, with net capital costs to the Company of £8.2 to £8.6 million.
The Directors confirmed that on the 20 June 2021, MOU-1 well was spudded at 01:00 hours with drilling ahead in progress to the first planned 133/8" casing point. The well was forecast to take up to 20 days to drill and to run wireline logs.
The Directors announced on 6 July 2021 the completion of the drilling of MOU-1, which is operated in a joint venture with the Office National des Hydrocarbures et des Mines ("ONHYM") acting on behalf of the State (25%) and that formation gas was recorded. The well was completed for rigless testing.
All costs relating to Project Guercif have been capitalised and will be depreciated once gas discovery is declared commercial and a Plan of Development has been approved.
| 6 Property, plant and equipment |
|
| Computer equipment |
| Total |
|
|
|
|
|
|
|
| Gross carrying amount |
|
|
|
|
|
| Balance at 1 January 2021 |
|
| 8,551 |
| 8,551 |
| Additions |
|
| 2,629 |
| 2,629 |
| Balance at 30 June 2021 |
|
| 11,180 |
| 11,180 |
|
|
|
|
|
|
|
| Depreciation and impairment |
|
|
|
|
|
| Balance at 1 January 2021 |
|
| (2,959) |
| (2,959) |
| Depreciation |
|
| (1,118) |
| (1,118) |
| Balance at 30 June 2021 |
|
| (4,077) |
| (4,077) |
|
|
|
|
|
|
|
| Carrying amount 31 December 2020 |
|
| 5,592 |
| 5,592 |
| Carrying amount 30 June 2021 |
| 7,104 |
| 7,104 | |
|
|
| 30.06.2021 |
| 30.06.2020 |
| 31.12.2020 |
|
|
| (unaudited) |
| (unaudited) |
| (audited) |
| 7 Trade and other receivables |
| £ |
| £ |
| £ |
| Current |
|
|
|
|
|
|
| Security deposit (US$1,500,000) |
| 1,083,298 |
| 1,221,200 |
| 1,099,546 |
| FRAM Exploration Trinidad Limited (i) |
| 487,477 |
| 396,136 |
| 468,212 |
| Prepayments and other receivables |
| 31,571 |
| 6,080 |
| 10,100 |
|
|
|
|
|
|
|
|
|
|
| 1,602,346 |
| 1,623,416 |
| 1,577,858 |
The Company's subsidiary, Predator Gas Ventures Limited, on 19 March 2019, provided a bank guarantee of US$1.5 million to Office National des Hydrocarbures et des Mines, who act for the Moroccan State, as a condition of being granted the Guercif exploration licence. Predator Gas Ventures Limited was required to lodge a security deposit of US$1.5 million with Barclays Bank Plc to secure the guarantee facility. The restricted access cash balance of £1,083,298 represents the aforesaid security deposit and is denominated in US Dollars. These funds are refundable on the completion of the Minimum Work Programme set out in the terms of the Guercif Petroleum Agreement and Association Contract. All other receivables are denominated in Pound Sterling.
(i) As at the year ended 30 June 2021 £487,477 (2020: £396,136) comprises of:
• USD$360,096 (2020: USD$270,988) advanced as cash in line with a loan agreement signed and dated 24 July 2019 and subsequent 5 addendums (2020: 3 addendums); and
• USD$314,894 (USD$215,586) advanced as equipment.
The loans are in place to provide FRAM with funds for the purpose of meeting current and future expenses.
The loans balance are unsecured, interest free and repayable at the discretion of Predator Oil & Gas Trinidad Limited provided not less than a notice of 7 working days is given.
|
|
| 30.06.2021 |
| 30.06.2020 |
| 31.12.2020 |
|
|
| (unaudited) |
| (unaudited) |
| (audited) |
| 8 Cash and cash equivalents |
| £ |
| £ |
| £ |
|
|
|
|
|
|
|
|
| Pound Sterling |
| 360,977 |
| 597,845 |
| 165,138 |
| United States Dollar |
| 1,842,736 |
| 1,500,332 |
| 1,160,613 |
| Moroccan Dirham |
| 54,854 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
| 2,258,567 |
| 2,098,177 |
| 1,325,751 |
| 9 Share capital |
|
|
| Number of shares |
| Nominal value |
|
|
|
|
|
|
|
|
| Issued and fully paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Opening Balance |
|
|
| 239,678,517 |
| 6,832,564 |
|
|
|
|
|
|
|
|
| 15 March 2021 |
|
|
|
|
|
|
| Warrant option exercised |
|
|
| 267,750 |
| 7,497 |
| 26 March 2021 |
|
|
|
|
|
|
| Share issue |
|
|
| 5,215,155 |
| 547,591 |
| 18 June 2021 |
|
|
|
|
|
|
| Share issue |
|
|
| 11,784,845 |
| 1,237,409 |
| 18 June 2021 |
|
|
|
|
|
|
| Share issue |
|
|
| 10,000,000 |
| 1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| 266,946,267 |
| 10,125,061 |
|
|
| 30.06.2021 |
| 30.06.2020 |
| 31.12.2020 |
|
|
| (unaudited) |
| (unaudited) |
| (audited) |
| 10 Convertible loan notes |
| £ |
| £ |
| £ |
|
|
|
|
|
|
|
|
| Arato Global Opportunities LLC |
|
|
|
|
|
|
| Brought forward |
| - |
| 918,406 |
| 918,406 |
| Drawdowns |
| - |
| - |
| - |
| Redemptions |
| - |
| (1,015,000) |
| (1,015,000) |
| Transaction costs |
| - |
| - |
| - |
| Amortisation of transaction costs |
| - |
| 96,594 |
| 96,594 |
|
|
|
|
|
|
|
|
| Carried forward |
| - |
| - |
| - |
The remaining balance of the convertible loan was repaid on 15 May 2020.
|
|
| 30.06.2021 |
| 30.06.2020 |
| 31.12.2020 |
|
|
| (unaudited) |
| (unaudited) |
| (audited) |
| 11 Trade and other payables |
| £ |
| £ |
| £ |
| Current |
|
|
|
|
|
|
| Trade payables |
| 1,507 |
| 4,059 |
| 83,492 |
| Accruals |
| 321,473 |
| 61,441 |
| - |
|
|
|
|
|
|
|
|
|
|
| 322,980 |
| 65,500 |
| 83,492 |
12 Share based payments
Share options
The Group operates a share option plan for directors. There were no options issued for the six months ended 30 June 2021. For the six months ended 30 June 2021, the Group has recognised £62,364 of share-based payment expense in the statement of profit or loss (30 June 2020: £46,730).
Warrants
During the period, the Company has granted the below warrants to Novum Securities Limited ("Novum"):
• On 12 March 2021, 1,020,000 warrants were granted to Novum, which were based on 6% of the total share placing of 17,000,000 shares. The Warrants initially had an expiry date of 12 March 2024, however, Novum has requested that the expiry date be extended by a further year to 12 March 2025
• On 18 June 2021, 600,000 warrants were granted to Novum, which were based on 6% of the total share placing of 10,000,000 shares. The Warrants initially had an expiry date of 18 June 2024, however, Novum has requested that the expiry date be extended by a further year to 18 June 2025
As at 30 June 2021, the total number of warrants in issue at are:
1. 2,321,428 exercisable at 2.8p before 24 May 2021. The original expiry date was extended by a further year to 24 May 2022, following a request by the holders, which was approved by the Directors. As at 30 June 2021, 267,750 warrants have been exercised, with the outstanding exercisable warrants total being 2,053,678.
2. On 15 February 2019 4,083,333 warrants were issued exercisable at 12p with an initial expiry date of 15 February 2021, with an option to extend the expiry date by one year. Of the total, 2,083,333 warrants were issued to Arato Global Opportunities LLP and expired on 15 February 2021 as the option to extend was not actioned. The exercise date on the remaining 2,000,000 warrants issued to Novum Securities Ltd was extended by one year to 15 February 2022 and as at 30 June 2021 remain outstanding.
3. 4,450,000 exercisable at 4p before 27 February 2023.
4. 1,020,000 exercisable at 10.5p before 12 March 2024. The original expiry date was extended by a further year to 12 March 2025, following a request by the holders, which was approved by the Directors.
5. 600,000 exercisable at 15.7p before 18 June 2024. The original expiry date was extended by a further year to 18 June 2025, following a request by the holders, which was approved by the Directors.
The total warrant agreements for the aforesaid 1,620,000 warrants issued on 12 March 2021 and 18 June 2021 do not contain vesting conditions and therefore the full share-based payment charge, being the fair value of the warrants using the Black-Scholes model, has been recorded immediately.
The valuation of these warrants involves making a number of estimates relating to price volatility, future dividend yields and continuous growth rates.
The Black Scholes model has been used to fair value the options, the inputs into the model were as follows:
| Grant date |
|
|
| 12 March 2021 |
| 18 June 2021 |
| Share price |
|
|
| £0.120 |
| £0.158 |
| Exercise price |
|
|
| £0.105 |
| £0.150 |
| Term |
|
|
| 3 years |
| 3 years |
| Expected volatility |
|
|
| 80% |
| 80% |
| Expected dividend yield |
|
|
| 0% |
| 0% |
| Risk free rate |
|
|
| 0.25% |
| 0.28% |
| Fair value per warrants |
|
|
| £0.093 |
| £0.125 |
| Total fair value of the warrants |
|
|
| £95,821 |
| £75,140 |
In addition to the warrants fair value movement of £95,821 and £75,140, a further £24,366 (2020: £nil) was recognised in the period, reflecting the impact of the warrants extension mentioned in the above note.
| 13 Investment in subsidiaries | Principal activity | Country of | Ownership | ||
|
|
|
|
| incorporation | interest |
| Predator Oil and Gas Ventures Limited | Licence options in offshore Ireland | Jersey | 100% | ||
|
|
|
| |||
| Predator Oil and Gas Trinidad Limited | Profit rights for production revenues from a CO2 enhanced oil recovery project | Jersey | 100% | ||
|
|
|
| |||
| Predator Gas Ventures Limited | Exploration licence onshore Morocco
| Jersey | 100% | ||
|
|
|
| |||
| Mag Mell Energy Ireland Ltd (formerly Predator LNG Ireland Limited) | Licence application to import liquified natural gas | Jersey | 100% | ||
On 18 June 2021, Predator LNG Ireland Limited changed its name to Mag Mell Energy Ireland Ltd.
14 Related party transactions
Transactions with key management personnel
Key management of the Group are the board of directors. Key management personnel remuneration includes the following expenses:
|
| 30.06.2021 | 30.06.2020 | 31.12.2020 |
|
| (unaudited) | (unaudited) | (audited) |
|
| £ | £ | £ |
| Short-term employee benefits |
|
|
|
| Executive and non-executive directors including bonuses | 267,458 | 203,302 | 520,593 |
|
|
|
|
|
| Share option scheme | 62,364 | 46,730 | 101,973 |
|
|
|
|
|
|
| 329,822 | 250,032 | 622,566 |
|
|
|
|
|
| The average number of personnel (including directors) during the period was: |
|
|
|
| Management - (Executive Directors) | 2 | 2 | 2 |
| Non-management - (Non-executive Directors) | 2 | 2 | 2 |
|
| 4 | 4 | 4 |
Four Directors at the end of the period have share options receivable under long term incentive schemes. The highest paid Director received an amount of £116,667 (2020: £77,350). The Group does not have employees. All personnel are engaged as service providers.
15 Financial instruments
The Group's financial instruments comprise cash and items arising directly from its operations such as trade receivables and trade payables.
|
|
|
|
|
|
| 30.06.2021 |
|
|
|
|
|
|
| (unaudited) |
| Categorisation of financial instruments |
|
|
|
|
| £ |
| Financial assets measured at amortised cost: |
|
|
|
|
|
|
| Trade and other receivables |
|
|
|
|
| 1,602,346 |
|
|
|
|
|
|
|
|
| Financial assets that are debt instruments measured at amortised cost: |
| |||||
| Cash and cash equivalents |
|
|
|
|
| 2,258,567 |
|
|
|
|
|
|
| 3,860,913 |
|
|
|
|
|
|
|
|
| Financial liabilities measured at amortised cost: |
|
|
|
|
|
|
| Trade and other payables |
|
|
|
| (322,980) | |
|
|
|
|
|
|
| (322,980) |
16 Subsequent events
Board changes
On 12 July 2021, the Company announced the appointment of Mr. Lonny Baumgardner, former Country Manager and Managing Director of SDX Energy in Morocco, as Chief Operating Officer. Mr. Baumgardner's extensive drilling and gas marketing experience in Morocco will make a significant contribution to the Company's plans to develop a gas business in Morocco in 2022.
On 28 July 2021, the Company announced that Mr. Ronald Pilbeam had stepped down from the Board.
Operations
Morocco
On 6 July 2021, the Company announced an initial update on the MOU-1 drilling operations. Significant gas readings were encountered whilst drilling and the well was logged and completed for rigless testing. Evidence of thermogenic gas generation confirmed the potential gas-generating potential of this part of the Guercif Basin. Further detailed technical evaluation of the well data is to be undertaken but initial results were sufficiently positive to warrant the commissioning of an Environmental Impact Assessment over the proposed MOU-4 well location in preparation for drilling.
On 28 September 2021, the Company announced a more comprehensive operational update. MOU-1 was drilled within budget at a cost of US$3.3 million. The pre-drill primary target, a seismic amplitude "bright spot", was validated. Six zones within the primary target are to be perforated and evaluated by a rigless well test. Similar geology to the gas producing Rharb Basin was confirmed. If MOU-1 confirms a sustained gas rate of 5 mm cfgpd on rigless testing an initial CNG development is anticipated to be profitable. Based on the de-risking of the MOU-4 Prospect as a result of the MOU-1 drilling results, drilling plans are being advanced to drill step-out wells MOU-4 and MOU-5 in Q1 2022. A new Jurassic prospect for drilling, MOU-NE, was identified for drilling within a prospective area of 105km². Potential pre-development investment was highlighted involving those indigenous industries seeking to access gas supplies in an increasingly uncertain and volatile market.
Trinidad
On 28 September 2021, the Company announced that it had been invited by the CO2 EOR Steering Committee (established on 19 February 2021), chaired by the Permanent Secretary at the Ministry of Energy and Energy Industries, to provide an update on the Inniss-Trinity CO2 EOR operations.
Regretfully the Committee was made aware of the fact that the operator, FRAM, of the Inniss-Trinity Incremental Production Services Contract ("IPSC") had unilaterally ordered Predator Oil & Gas Trinidad Ltd. ("POGT"), without prior notice, to suspend immediately its CO2 EOR operations and remove all equipment "within 24 hours", even though the succeeding day was a bank holiday in Trinidad. The Committee was unaware of this request.
The Well Participation Agreement ("WPA") with FRAM remains in place and all benefits that have accrued to POGT under the WPA and the Loan advanced to FRAM still apply. POGT continues to closely monitor the situation.
POGT has informed Heritage Petroleum in writing that it wishes to be considered for the Inniss-Trinity IPSC were the IPSC to be become available in 2022.
Financial
On 19 July 2021, the Company announced that it had conditionally placed 26 million new ordinary shares of no-par value in the Company at a placing price of £0.05 per share to raise £1,300,000 (before expenses). The proceeds received from the placing will be used to build rapidly upon the safe and successful MOU-1 drilling campaign by further appraising, in consultation with its partner, the large MOU-4 Target. Commercial discussions will be advanced with gas off-takers in the industrial sector in Morocco to seek joint venture partnerships to secure first rights for a future potential gas offtake agreement. The placing shares were admitted to listing on the Official List (standard listing segment) and to trading on the London Stock Exchange's main market for listed securities on 3 August 2021. Following Admission of the Placing Shares the enlarged Share Capital is 292,946,267 ordinary shares of no-par value.
The Company also reported that it was in the process of appointing advisers in respect of seeking admission of its shares to trading on the AIM market, which provides more flexibility for high growth companies. AIM represents a market better suited both to the mature level of development of the Company's Energy Transition portfolio of projects across upstream and downstream sectors and for developing M & A activity.
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