Europa Oil & Gas, the AIM traded UK, Ireland and Morocco focused oil and gas exploration, development, and production company, announces its audited final results for the 12 month period ended 31 July 2022.

Financial performance

• Revenue more than quadrupled to £6.6 million (2021: £1.4 million)
• Pre-tax profit of £1.4 million (2021: pre-tax loss £0.85 million)
• Net cash generated in operating activities £2.5 million (2021: used in operations £0.5 million)
• Cash balance (including restricted cash): £8.3 million (2021: £0.9 million)

Operational highlights

Onshore UK – net production increases 163% to 245 bopd following excellent Wressle performance (2021: 93 bopd)

• First oil at Wressle achieved in January 2021
• Post proppant squeeze gross production rates of 500 bopd increased throughout the period to over 750 bopd
• Net share of Wressle production at 597 bopd equates to 179 bopd (Europa 30% interest)
• With an estimated break-even oil price (excluding Europa’s corporate overheads) of US$16.1 per barrel, Wressle production is highly profitable at current oil prices
• Further resources in the Wingfield Flags and Penistone Flags reservoirs are being planned for development and have the potential to materially increase net reserves
• Gas monetisation project under development with potential for significant oil production gains as a result
• Total net production of 245 boepd was produced from Europa’s UK onshore fields during the year with Wressle contributing roughly three quarters of this and the remainder coming from the three older fields
• CausewayGT and geothermal project partner Baker Hughes identified Europa’s West Firsby oil field in the East Midlands as a potential candidate for developing a closed-loop geothermal system
• Future potential for West Firsby to continue delivering revenue and for additional well stock to be repurposed to generate emission-free geothermal energy, directly in line with the Company’s ESG strategy

Offshore UK – acquisition of a 25% interest in the Serenity discovery in the North Sea

• In March 2022, Europa announced the proposed farm-in to the Serenity appraisal well from i3 Energy plc which involved acquiring a 25% interest by paying 46.25% of the cost of the well
• This was accompanied by a successful equity raise of £7 million at a price of 1.8 pence per share
• This fulfilled the Company’s promised goal of adding an appraisal asset to the Europa portfolio and is in line with our long-term strategy to create a balanced portfolio of highquality assets

Offshore Morocco – farm-out of Inezgane Licence in the Agadir Basin

• Europa has a 75% interest in Inezgane and operatorship of the Licence covering an area of 11,228 km²
• Inezgane represents a high-impact exploration opportunity in a highly underexplored area of the world – complementing Europa’s strategy of building a balanced portfolio of assets
• Recent evaluation identified a significant volume of unrisked recoverable resources, in excess of 1 billion barrels (oil equivalent), in the top five ranked prospects alone
• Morocco offers an attractive investment opportunity with excellent fiscal terms. Several major and mid-cap companies already hold acreage there, including ENI, Hunt and Genel
• One year extension to initial phase of the licence to November 2022 granted to allow for time lost as a result of Covid-19
• Farm-out exercise has continued throughout the year

Offshore Ireland – lower risk / very high reward infrastructure-led exploration in proven gas play in the Slyne Basin

• Farm-out initiative is continuing on 100%-owned Licence FEL 4/19 which holds the flagship 1.5 tcf Inishkea prospect adjacent to existing infrastructure at the producing Corrib gas field
• Completed all work commitments for the first phase of the licence.

Board

• Appointment of Will Holland as CFO and Executive Director in June 2022

Post reporting period events

• The Serenity appraisal well commenced drilling in September and was completed in early October. The well did not encounter any oil-bearing sands but has provided valuable technical data and furthered our understanding of the field. The Company, in conjunction with Operator i3 Energy plc, is currently assessing development options for the field
• The net cost to Europa of the Serenity well is forecast to be £4.8 million (£2 million below budget net to Europa), which is expected to provide tax relief against the Energy Profits Levy (Windfall Tax) on the Company’s profits generated from its ongoing onshore production
• Consent granted by the Irish authorities to extend the first phase of licence FEL 4/19 to 31 January 2024
• The extension will enable further technical work and allow more time to secure a partner to advance development of the licence.
• On 8 September 2022 the Company entered into a loan agreement with Union Jack Oil plc (“UJO”). The key features of the loan were: £1 million loan amount, 18-month term, interest rate of 11% per annum, repayable at any point during the term without penalty and secured against 10% interest in the Wressle field (PEDL180, and PEDL182). The loan was to provide additional liquidity during the drilling of the Serenity appraisal well. The loan was repaid in full on 18 October 2022.

Simon Oddie, CEO of Europa, said:
“The 2021/2022 period has seen significant change at Europa and this is clearly demonstrated in our numbers. Revenue from operating activities has quadrupled and net cash generated for the period is £2.5 million, resulting in a healthy balance sheet on which to continue to execute on our stated strategy of building a more balance portfolio of assets.

Wressle continues to perform above expectations and further development activities to increase production through implementing a gas solution and drilling the Penistone horizon within the Wressle field are planned over the next 12-18 months. In addition, we plan to drill the Broughton North prospect, which is a Wressle lookalike and can be produced through the existing infrastructure at Wressle.

We will also continue to seek new appraisal opportunities to add to our portfolio. The Serenity appraisal well was disappointing, but the data that we have acquired will help optimise the development of the field and the funds spent on the appraisal well will now go to offset our exposure to the Energy Profits Levy.

Our assets all supply (or will supply when in production) local markets and as such help to satisfy local demand for hydrocarbons with minimal total emissions. This is epitomised by our Inishkea exploration prospect offshore Ireland, which could be tied into the existing infrastructure at Corrib and has the potential to meet Ireland’s domestic retail demand for the next 17 years. This would displace imported gas and significantly reduce the emissions associated with Ireland’s gas consumption.

These are exciting times for Europa with plenty of operational activities that can all deliver additional shareholder value whilst we continue to build on our existing asset base.”

KeyFacts Energy: Europa Oil & Gas UK country profile