TIDMLOGP

RNS Number : 1271R

Lansdowne Oil & Gas plc

26 June 2020

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 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Steve Boldy, the Chief Executive Officer of the Company (responsible for arranging release of this announcement).

26 June 2020

Lansdowne Oil & Gas plc

("Lansdowne" or "the Company")

Audited results for the year ended 31 December 2019

Lansdowne Oil & Gas ("Lansdowne" or "the Company") is pleased to announce its audited results, for the year ended 31 December 2019. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and the Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.

Lord Torrington, Independent Non-Executive Chairman, commented :

"2019 has proved another challenging year for the Company, however, the Board remains steadfast in its belief of the significant potential of Barryroe and is focused on unlocking its inherent value. The Board has been encouraged by the new Farm-Out campaign initiated in the fourth quarter of 2019 that has received a positive response from industry and we are now in detailed discussions with a potential counterparty that has been given a period of exclusivity in order to agree an appraisal work programme and develop commercial terms with the aim of concluding a binding Farm-Out agreement.

In addition to the challenges the Company already faced, the onset of the Coronavirus pandemic has impacted the entire global economy, resulting in a dramatic reduction in oil and gas consumption and a collapse in their prices.

In time the world will need to go back to work and oil and gas demand, and prices, will recover and this process is already underway.

We believe Barryroe remains an attractive opportunity, with substantial established oil and gas resources, in shallow water, close to existing infrastructure and with a low break-even price, estimated by the operator Providence to be c. $26/bbl.

The environmental concerns regarding oil and gas will not go away, but the evaluation of Carbon Capture and Storage options to accompany Barryroe development offers a responsible way to take the project forward whilst minimizing the carbon footprint.

Ireland will require diverse, cost effective and secure energy supplies as it rebuilds its economy and Barryroe can play an important role in this.

I would like to thank all our existing shareholders for the support and patience they have shown in 2019 and following the extraordinary events in 1H 2020. The Board believes Barryroe is a compelling appraisal asset with existing net 2C resources of 69MMboe (plus additional exploration potential), the Company is trading at a valuation of around US$0.11 per contingent resource barrel and, accordingly, we continue to believe there is the scope for a significant re-rating of the Company valuation upon announcement of a binding Farm-Out agreement and on future operational developments. Lansdowne is currently funded through to the end of 2020 and we look forward to updating shareholders on developments. "

Operational highlights

   --    Barryroe Oil Field (SEL 1/11) 

o Termination of the Farm-Out Agreement following the failure of APEC to fulfil the terms

Financial highlights

-- On 25 June 2019, the Company secured debt funding of GBP150,000 from LC Capital and GBP150,000 from Brandon Hill Capital Limited, both existing significant shareholders in the Company (the "Shareholder Loans").

   --    Cash balances at 31 December 2019 of GBP0.02 million (2018: GBP0.16 million). 
   --    Operating expenses for the year were GBP0.1 million (2018: GBP0.2 million). 
   --    Loss for the year after tax of GBP0.2 million (2018: loss GBP0.3 million). 
   --    Diluted loss per share of 0.03 pence (2018: loss 0.05 pence). 

Post-balance sheet events

Operational

   --    Barryroe Oil Field (SEL1/11) 

o The process of reassignment of equity back to Providence/EXOLA and Lansdowne from APEC progressed with the Department of Communications Climate Action and the Environment (DCCAE)

o New farm-out process led to the signing of a term-sheet with SpotOn Energy Limited and granting of exclusivity through to 31 October 2020 with a view to concluding a binding farm-out

Financial

-- In February 2020, the Company placed 83,333,333 new ordinary shares of 0.1 pence each ("Ordinary Shares") at a placing price of 0.6 pence a share to raise GBP500,000 before costs (the "Placing").

-- At the same time, the Shareholder Loans entered into with Brandon Hill Capital Ltd. and LC Capital in June 2019, were converted into new Ordinary Shares at the Placing Price.

-- In connection with the Placing and the conversion of the Shareholder Loans, the Company also granted a total of 139,368,491 warrants, on a one warrant per Placing or Loan Share basis, to subscribe for new Ordinary shares in the Company at a price of 1.2 pence per share, with an expiry of 31 December 2020.

-- With low corporate overhead costs, following the February 2020 capital raise, Lansdowne has sufficient working capital to the end of 2020.

-- The Company has net 2C Resources of 69 MMboe and is trading at a valuation of around $0.11 per contingent resource barrel.

 
 For further information please 
  contact: 
 
 Lansdowne Oil & Gas plc           +353 1 963 1760 
 Steve Boldy 
 
 SP Angel Corporate Finance 
  LLP                              +44 (0)20 3470 0470 
 Nominated Adviser and Joint 
  Broker 
 Stuart Gledhill 
 Richard Hail 
 
 Brandon Hill Capital Limited      +44 (0) 20 3463 5061 
 Joint Broker 
 Oliver Stansfield 
 

Notes to editors:

About Lansdowne

Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focused, oil and gas exploration and appraisal company quoted on the AIM market and head quartered in Dublin.

For more information on Lansdowne, please refer to www.lansdowneoilandgas.com

Results for the year ended 31 December 2019

Chairman's Statement

Introduction

2019 has proved another challenging year for the Company, however, the Board remains steadfast in its belief of the significant potential of Barryroe and is focused on unlocking its inherent value. The Board has been encouraged by the new Farm-Out campaign initiated in the fourth quarter of 2019 that has received a positive response from industry and we are now in detailed discussions with a potential counterparty that has been given a period of exclusivity in order to agree an appraisal work programme and develop commercial terms with the aim of concluding a binding Farm-Out agreement.

Prior to the new Farm-Out campaign, and despite being granted a number of extensions, APEC Energy Enterprise Limited ("APEC") failed to deliver funds to EXOLA (a wholly owned subsidiary of Providence Resources plc) as called for under the terms of the Farm-Out Agreement entered into in 2018 with respect to Standard Exploration Licence (SEL) 1/11, containing the Barryroe Field.

A final deadline was set for 30th September 2019, but funds did not arrive by that date, following which EXOLA advised APEC that it would commence with the licence reversion process of APEC's 50% working interest in SEL 1/11 to EXOLA and Lansdowne on a 40% and 10% basis, respectively.

The failure of APEC to deliver on the Barryroe Farm-Out Agreement was a bitter blow after such a long period of dialogue and planning.

The oil and gas industry in Ireland also faced regulatory and policy headwinds in 2019, culminating in the announcement in September 2019, that there would be no new licences granted for offshore oil exploration.

The Irish Department of Communications, Climate Action and Environment issued a Policy Statement in December 2019 that further clarified the position. This statement confirmed that all existing applications and authorisations in place before 23 September 2019 (such as SEL 1/11 containing Barryroe and the Helvick Lease Undertaking) can progress through the standard lifecycle stages for exploration, extraction and production of natural gas and/or oil.

Financial Results

With the delay and uncertainty regarding the Barryroe Farmout, on 25 June 2019 the Company entered into a Loan Agreement for GBP 300,000 (the "Loan") with two major shareholders - Lampe Conway & Co LLC and Brandon Hill Capital Limited (collectively the "Major Shareholders").

Under the Agreement, split equally between the Major Shareholders, Lansdowne was able to draw down funds at its discretion in part or in full.

The Group recorded an after tax loss of GBP0.2 million for the year ended 31 December 2019 compared to a loss of GBP0.3 million for the year ended 31 December 2018.

Group operating expenses for the year were GBP0.1 million, compared to GBP0.2 million in 2018.

Net finance expense for the year was GBP57,000 (2018:GBP100,000).

Cash balances of GBP0.02 million (2018: GBP0.16 million) were held at the end of the financial year

Total equity attributable to the ordinary shareholders of the Group was GBP13.6 million as at 31 December 2019 (GBP13.7 million as at 31 December 2018).

Post Balance Sheet Events

In February 2020, Providence confirmed that the regulatory process to transfer equity back to Exola and Lansdowne was progressing and that upon conclusion the licence interests would revert back to Exola DAC 80% and Lansdowne Celtic Sea Limited 20%.

In February 2020, it was also confirmed that a number of parties were reviewing the Barryroe opportunity, under the new Farm-Out initiative.

Attention was also drawn to the fact that Barryroe contains substantial amounts of gas, along with the identified oil resources. One of the uncertainties that is required to be addressed through the appraisal drilling is the exact split of oil versus gas and whether Barryroe is a large oil field with a gas cap, or a large gas field surrounded by an oil rim.

In April 2020, Providence announced that a non-binding term sheet had been signed with SpotOn Energy Limited ("SpotOn"). SpotOn is a Norwegian company working with a consortium of world leading service providers to deliver cost effective offshore oil and gas developments.

Providence announced that a period of exclusivity had been granted to SpotOn, through to 31 October 2020, during which the objective is to agree an appraisal work programme and commercial terms and conclude a binding farm-out agreement.

In February 2020, the Company announced that it had placed 83,333,333 new ordinary shares at a placing price of 0.6 pence a share to raise GBP500,000 before costs.

In addition, the loans entered into with Brandon Hill Capital Ltd. ("BHC") and LC Capital Targeted Opportunities Fund ("LCCTOF") in June 2019, which had been fully drawn down, were converted into new ordinary shares at the Placing Price. This resulted in the issuing of 25,934,246 new ordinary shares to each of BHC and LCCTOF.

In connection with the Placing and the conversion of the Shareholder Loans, the Company also granted a total of 139,368,491 warrants, on a one warrant per Placing or Loan Share basis, to subscribe for new ordinary shares in the Company at a price of 1.2 pence per share, with an expiry of 31 December 2020.

The placing shares and the majority of the loan conversion shares were issued under the existing shareholder authorities, with the remainder of the loan conversion shares and the warrants being formally approved by shareholders at a General Meeting of the Company held in March 2020.

The proceeds of the Placing are expected to be sufficient to fund the Company's share of costs on the Barryroe Licence and for on-going working capital requirements to the end of 2020.

Outlook

In addition to the challenges the Company already faced, the onset of the Coronavirus pandemic has impacted the entire global economy, resulting in a dramatic reduction in oil and gas consumption and a collapse in their prices.

Despite all of this, we believe Barryroe remains an attractive opportunity, with substantial established oil and gas resources, in shallow water, close to existing infrastructure and with a low break-even price, estimated by the operator Providence to be c. $26/bbl.

In time, the world will need to go back to work and oil and gas demand, and prices, will recover.

The environmental concerns regarding oil and gas will not go away, but the evaluation of Carbon Capture and Storage options to accompany Barryroe development offers a responsible way to take the project forward whilst minimizing the carbon footprint.

Ireland will require diverse, cost effective and secure energy supplies as it rebuilds its economy and Barryroe can play an important role in this.

One of our Non-Executive Directors, John Aldersey-Williams, has decided not to stand for re-election at the forthcoming Annual General Meeting. John joined the Lansdowne Board in 2012, when he was CEO of Sea Energy PLC, at that time a significant shareholder in Lansdowne. John has made a wide contribution to Lansdowne and we thank him for all his efforts and wish him well as he moves to focus his work in the zero-carbon energy sector. John will continue as a Director until the Annual General Meeting when he will stand down.

I would like to thank all our existing shareholders for their support and patience they have shown in 2019 and following the extraordinary events in 1H 2020. The Board believes Barryroe is a compelling appraisal asset with existing net 2C resources of 69MMboe (plus additional exploration potential), the Company is trading at a valuation of around US$0.11 per contingent resource barrel and, accordingly, we continue to believe there is the scope for a significant re-rating of the Company valuation upon announcement of a binding Farm-Out agreement and on future operational developments. Lansdowne is currently funded through to the end of 2020 and we look forward to updating shareholders on developments.

Lord Torrington

Chairman

24 June 2020

Lansdowne Oil & Gas plc

Consolidated Statement of Financial Position

As at 31 December 2019

 
 
                                              2019       2018 
                                   Note    GBP'000    GBP'000 
 Assets 
 Non- current assets 
 Intangible assets                  4       15,543     15,311 
 
 
 Current Assets 
 Trade and other receivables                    20         47 
 Cash and cash equivalents                      16        159 
                                         ---------  --------- 
                                                36        206 
                                         ---------  --------- 
 
   Total Assets                             15,579     15,517 
                                         =========  ========= 
 
   Equity and Liabilities 
 Shareholders' Equity 
 Share capital                      5       11,722     11,718 
 Share premium                      5       26,864     26,833 
 Currency translation reserve                   59         59 
 Share-based payment reserve                   923        923 
 Accumulated deficit                      (26,005)   (25,826) 
                                         ---------  --------- 
 
   Total Equity                             13,563     13,707 
                                         ---------  --------- 
 Non-Current Liabilities 
 Provisions                                    316        316 
 
 
  Current Liabilities 
  Shareholder loan                           1,305      1,046 
  Trade and other payables                     395        448 
                                         ---------  --------- 
 Total Liabilities                           2,016      1,810 
                                         ---------  --------- 
 
 
 
   Total Equity and Liabilities             15,579     15,517 
                                         =========  ========= 
 

Lansdowne Oil & Gas plc

Consolidated Income Statement

For the year ended 31 December 2019

 
                                              2019      2018 
                                    Note   GBP'000   GBP'000 
 
   Administrative expenses                   (122)     (193) 
 
 Operating loss                              (122)     (193) 
 Finance costs                                (57)     (100) 
 
 Loss for the year before tax                (179)     (293) 
 Income tax                                      -         - 
                                          --------  -------- 
 Loss for the year                           (179)     (293) 
                                          --------  -------- 
 
 Loss per share (pence): 
 Basic loss per ordinary share       3     (0.03p)   (0.05p) 
                                          --------  -------- 
 Diluted loss per ordinary share     3     (0.03p)   (0.05p) 
                                          --------  -------- 
 
 

The results for the year all arise on continuing operations. The group has no other comprehensive income or expense in the current or prior year.

Lansdowne Oil & Gas plc

Consolidated Statement of Changes in Equity

For the year ended 31 December 2019

 
                                                           Share       Currency 
                                    Share       Share      based    translation     Accumulated       Total 
                                  capital     premium    payment       reserves         deficit      equity 
                                  GBP'000     GBP'000    Reserve        GBP'000         GBP'000     GBP'000 
                                                         GBP'000 
 
 
 Balance at 1 January 2018         11,571      25,126        923             59        (25,533)      12,146 
 Loss for the financial year            -           -          -              -           (293)       (293) 
 
 Total comprehensive loss 
  for the year                          -           -          -              -           (293)       (293) 
 Issue of new shares - gross 
  consideration                       147       1,810          -              -               -       1,957 
 Cost of share issues                   -       (103)          -              -               -       (103) 
                               ----------  ----------  ---------  -------------  --------------  ---------- 
 Balance at 31 December 2018       11,718      26,833        923             59        (25,826)      13,707 
                               ----------  ----------  ---------  -------------  --------------  ---------- 
 
 Balance at 1 January 2019         11,718      26,833        923             59        (25,826)      13,707 
 Loss for the financial year            -           -          -              -           (179)       (179) 
                               ----------  ----------  ---------  -------------  --------------  ---------- 
 Total comprehensive loss 
  for the year                          -           -          -              -           (179)       (179) 
 Issue of new shares - gross 
  consideration (note 5)                4          31          -              -               -          35 
 Balance at 31 December 2019       11,722      26,864        923             59        (26,005)      13,563 
                               ==========  ==========  =========  =============  ==============  ========== 
 

Lansdowne Oil & Gas plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2019

 
                                                           2019      2018 
                                                 Note   GBP'000   GBP'000 
 
 Cash flows from operating activities 
 Loss for the year                                        (179)     (293) 
 
 Adjustment for: 
 Interest payable and similar charges                        58        98 
 (Increase)/decrease in trade and other 
  receivables                                                28      (24) 
 Increase in trade and other payables                      (53)        80 
 
 Net cash used in operating activities                    (146)     (139) 
                                                       --------  -------- 
 
   Cash flows from investing activities 
 Acquisition of intangible exploration assets     4       (232)     (639) 
 Net cash used in investing activities                    (232)     (639) 
                                                       --------  -------- 
 
 Cash flows from financing activities 
 Proceeds from the issue of share capital                    35     1,025 
 Cost of raising shares                                       -     (103) 
 Proceeds from new loan                                     200         - 
                                                       --------  -------- 
 Net cash from financing activities                         235       922 
                                                       --------  -------- 
 
 Net increase/(decrease) in cash and cash 
  equivalents                                             (143)       144 
 Cash and cash equivalents at 1 January                     159        15 
                                                       --------  -------- 
 Cash and cash equivalents at 31 December                    16       159 
                                                       ========  ======== 
 

Lansdowne Oil & Gas plc

Notes to the Financial Information

For the year ended 31 December 2019

   1.        Basis of presentation 

The consolidated financial statements are presented in Sterling, the Company's functional currency, and all values are rounded to the nearest thousand (GBP'000) except where otherwise indicated.

The Directors have prepared the financial statements on the going concern basis which assumes that Group and company will continue in operational existence for at least twelve months from the date of the approval of these financial statements.

The Directors have carried out a detailed assessment of the Group's ability to continue as a going concern including assessing its current and prospective exploration activity, its relationship with the holder of its loan note and preparing cash flow projections for the period to 30 June 2021.

In February 2020, the Company raised GBP500,000 before costs by placing 83,333,333 new ordinary shares with new and existing investors. On 25 June 2019, LC Capital Targeted Opportunities Fund, L.P. and Brandon Hill Capital Limited both entered into shareholder loan agreements in the aggregate of GBP300,000 with Lansdowne, following which all facilities under the loan agreements were fully drawn by Lansdowne. As part of the equity fundraising event in February 2020, both LC Capital and Brandon Hill also agreed to convert the full amount of the outstanding liabilities on their respective shareholder loans into new ordinary shares in the Company.

Notwithstanding the equity raised and conversion of shareholder loans into new ordinary shares, the cash flow projections indicate that the Group's and Company's ability to continue as a going concern is dependent on securing additional debt or equity funding.

The Directors have considered the various matters set out above and determined that these events and conditions constitute a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern and that they may therefore be unable to realise assets and discharge liabilities in the normal course of business. The Directors remain confident that the Group and company will be in a position to secure such funding as may be required and will have sufficient cash resources available to meet their liabilities for at least 12 months from the date of approval of these financial statements. On that basis, the directors consider it appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustment that would result from the going concern basis of preparation being inappropriate.

   2.        Segmental reporting 

The Group has one reportable operating and geographic segment, which is the exploration for oil and gas reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the operating segment.

   3.        Loss per ordinary share 

The loss for the year was wholly from continuing operations.

 
                                                              2019          2018 
                                                           GBP'000       GBP'000 
 Loss for the year attributable to equity holders            (179)         (293) 
 Weighted average number of ordinary shares in 
  issue - basic and diluted                            665,071,764   613,569,327 
 Loss per share arising from continuing operations 
  attributable to the equity holders of the Company 
  - basic and diluted (in pence)                            (0.03)        (0.05) 
 

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one class of potential ordinary shares being share options. As a loss was recorded for both 2019 and 2018, potentially issuable shares would have been anti-dilutive. The number of potentially issuable shares at 31 December 2019 is 146,685,452 (2018: 146,685,452).

   4.        Intangible assets 
 
                            Exploration / 
                         appraisal assets 
 Group                            GBP'000 
 Cost 
 At 1 January 2018                 14,672 
 Additions                            639 
 At 31 December 2018               15,311 
                       ------------------ 
 
 At 1 January 2019                 15,311 
 Additions                            232 
 At 31 December 2019               15,543 
                       ------------------ 
 

Oil and gas project expenditures, all of which relate to Barryroe, including geological, geophysical and seismic costs, are accumulated as intangible assets prior to the determination of commercial reserves. The directors have assessed the current ongoing activities and future planned activities and are satisfied that the carrying value is appropriate. The directors recognise that the future realisation of the Group's exploration appraisal assets are dependent on further successful exploration activities.

During 2019, the Barryroe Partners (Providence and Lansdowne) agreed a series of amendments to the Updated FOA, which provided for extensions to the date by APEC of the initial loan advance US$ 9 million.

A final deadline was set at 30th September 2019, but the funds did not arrive from APEC. Following this non-performance by APEC of their obligations under the FOA, action was taken by the Barryroe Partners to commence the regulatory process required to transfer APEC's 50% equity in Standard Operating Licence 1/11, which contained the Barryroe field, back to Providence and Lansdowne, with their equity interest reverting back to 80% and 20% respectively. The necessary paperwork is advancing through the Department of Communications, Climate Action and Environment.

Subsequently the Barryroe Partners also commenced the remarketing of a Joint Venture interest in Operating Licence 1/11 leading to an announcement on 6th April that a Term Sheet had been signed with SpotOn Energy Limited for a potential Barryroe Farmout, thus demonstrating the potential value of the Barryroe project even in a low oil price environment.

   5.        Share capital - Group and Company 
 
                                                        2019          2018 
 Authorised 
 665,349,846 ordinary shares at GBP0.01 pence 
  each                                           665,349,846   661,849,846 
 
 
 Issued, called up and fully 
  paid: 
                                                 Share      Share 
                                  Number of    Capital    premium       Total 
                                     shares    GBP'000    GBP'000     GBP'000 
                               ------------  ---------  ---------  ---------- 
 At 1 January 2018              510,164,394     11,571     25,126      36,697 
 Issued in year                 151,685,452        147      1,810       1,957 
 Share issue costs                        -          -      (103)       (103) 
 At 31 December 2018            661,849,846     11,718     26,833      38,551 
                               ------------  ---------  ---------  ---------- 
 
   Issued in year                 3,500,000          4         31          35 
 Share issue costs                        -          -          -           - 
                               ------------  ---------  ---------  ---------- 
 At 31 December 2019            665,349,846     11,722     26,864      38,586 
                               ------------  ---------  ---------  ---------- 
 
   6.        Accounts 

Copies of the annual accounts for the year ended 31 December 2019 will be sent to shareholders shortly and will be available from the Group's office at Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18 Ireland and the Group's website www.lansdowneoilandgas.com .

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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