Europa Oil & Gas has announced its final audited results for the 12-month period ended 31 July 2023.

Financial performance

• Revenue remained stable at £6.7 million despite a lower oil price and weaker pound (2022: £6.6 million)
• Gross profit increased 53% to £3.4 million (2022: £2.2 million)
• Pre-tax loss of £0.9 million after non-cash impairment loss of £1.7 million (2022: pre-tax profit £1.4 million)
• Net cash generated in operating activities: £2.8 million (2022: £2.5 million)
• Cash balance: £5.2 million (2022: £8.3 million)

Operational highlights - Building a balanced portfolio of exploration and production assets

Onshore UK - net production increased 8% to 265 barrels of oil per day ('bopd') (2022: 245 bopd) following excellent Wressle performance

• Wressle continued to exceed expectations
  • Gross production averaged 710 bopd throughout the period (2022: 597 bopd), with Europa's net share equating to 213 bopd (2022: 179 bopd) 
  • Three microturbines were connected at the Wressle site during January and February 2023, resulting in a 10% increase in oil production
  • New seismic interpretation across the Wressle field has highlighted a potentially significant increase in reserves from the Ashover Grit
  • Gas monetisation project under development with potential for significant oil production gains as a result
• Total net production of 265 bopd was produced from Europa's UK onshore fields during the year with Wressle contributing roughly 81% of this and the remainder coming from the three older fields
• Future potential for West Firsby to continue delivering revenue is being assessed and studies are underway to identify activities which could utilise the existing connection to the local power grid so that the site can be repurposed to generate emission-free renewable energy. This is directly in line with the Company's ESG strategy
• A reassessment of  the estimated decommissioning liability for Crosby Warren resulted in a reversal of amounts previously impaired of £177k.

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

• The seismic reprocessing of the FEL 4/19 data has resulted in a marked improvement in the imaging of both the Inishkea West and Inishkea prospects, with the Inishkea West structure now being mapped as a large 4-way closure, with a prospective resource Pmean of 1,554 BCF
• The reprocessed seismic has materially improved the subsurface imaging and provided more confidence in the quality of the seal and trap at Inishkea West, which in turn has increased the chance of success of the prospect. In addition, Inishkea West is prognosed as a shallower structure by some 900 meters which means that the reservoir quality will be better than at Inishkea
• Inishkea West is within easy tie-back range of the Corrib gas field situated some 18 kilometres to the southeast. This proximity to the Corrib infrastructure, the mapped 4-way closure, the large prospective resource and the reduced seal risk means that the Inishkea West prospect has become the primary exploration target on the FEL 4/19 licence.
• Given the significant improvement seen in the reprocessed data, it is expected that the subsurface imaging can be further enhanced by reprocessing the data at 30Hz.
• The farm-out process has been paused until the further reprocessing has been completed.
• In November 2022, DECC gave consent to extend the first phase of our 100% owned FEL 4/19 licence to 31 January 2024. Given the nature of the reprocessing it has taken longer than expected to complete the work programme and as a result we have since applied for a further extension to allow us to continue with the reprocessing work and then find a suitable partner to drill an exploration well.

Offshore UK - 25% interest in the Serenity discovery in the North Sea

• Progress continues with the development of the Serenity oil discovery in the Central North Sea alongside our partner i3 Energy plc
• Despite drilling an appraisal well in October 2022 that failed to encounter hydrocarbons, the partners believe that a one-well development in the eastern area of the field around the discovery well is economically viable. However, we believe that the Serenity field is geologically connected to the neighbouring Tain field and together with i3 Energy we are assessing the feasibility for unitisation of the two fields
• A number of potential development scenarios are available given local infrastructure, with a future development potentially resulting in approximately 1,000 bopd net to Europa's 25% interest

UK offshore licensing round

• Europa participated in the UK Government's 33rd offshore oil and gas licensing round

Board

• Simon Oddie retired as CEO in March 2023, but remains on the Board as a non-executive director
• William Holland was appointed as CEO in March 2023, having been CFO since April 2022
• William Ahlefeldt retired as non-executive director in April 2023
• Alastair Stuart was appointed as COO and executive director in April 2023, having been a technical consultant to the Company since 2012

Post reporting period events

• Operations to install a jet pump for artificial lift on the Wressle-1 well are underway. The original completion was removed from the well and a new completion, including the sub-surface pump, has been successfully run in the well as of early October 2023. All that remains is for the required surface pump and associated flowlines and electrics to be installed, which is expected to be completed before the end of October.
• PEDL 181 was relinquished during September 2023. The asset was not deemed to be adequately attractive. It had zero carrying value on the balance sheet.
• Applied to DECC to extend licence FEL 4/19 from 31 January 2024 to undertake further reprocessing and secure a farm-in partner.

William Holland, CEO of Europa, said:
"Europa made significant progress, both operationally and financially, during the 2022/23 financial year, including continued development work at our flagship asset, the Wressle oilfield, which consistently performs above initial expectations. As planned, we have initiated multiple projects designed to increase oil production and gas monetisation from the field, and in the first half of the year, we executed the initial phase of the gas utilisation project, which has led to a c. 10% increase in oil production. Even though Wressle is already exceeding expectations, having produced 710 bopd during the financial year, we remain focused on realising the full potential of the field, with the completion of these additional projects and drilling the Penistone horizon being one of Europa's priority medium-to-long-term projects.

In the year, we delivered revenue from operating activities of £6.7 million and generated net cash from operating activities of £2.8 million, demonstrating the financial resilience of the Company and maintaining our strong track record of positive cash generation. It has been a year of considerable administrative transition for Europa: we set up a new London office, strengthened our in-house technical and managerial capabilities with new staff members and expanded our business development activity levels; all with the purpose of delivering our strategy faster and more efficiently.

We have impressed on both the Irish Government and Europa stakeholders the significant role our offshore Ireland FEL 4/19 licence could play in minimising Ireland's dependence on costly and carbon-intensive gas imports and enhancing the country's strategic energy security. FEL 4/19 contains an estimated prospective resource of 1.55 TCF of gas, and in June 2023, I hand-delivered a document detailing our licence's potential to senior Irish Government officials during an exclusive energy summit hosted by the Taoiseach Leo Varadkar. We have continued to be proactive in both executing advanced technical reprocessing work and seeking a suitable farm-in partner for our FEL 4/19 licence and remain committed to continuing our efforts to work constructively with the Department of the Environment, Climate and Communications to progress FEL 4/19 to drilling. In October 2023 we announced the results of our seismic reprocessing which has materially improved the subsurface imaging and provided more confidence in the quality of the seal and trap at Inishkea West, which in turn has increased the chance of success of the prospect whilst also increasing the size of the prospect to 1.55 TCF. In addition, Inishkea West is prognosed as a shallower structure by some 900 meters which means that the reservoir quality will be better than at Inishkea and as a result this has become our primary prospect on the licence.

Progress continues with the development of the Serenity oil discovery in the Central North Sea, and we are collaborating with our partner i3 Energy to determine the best strategic direction for the prospect, with a variety of development scenarios being diligently considered including a development incorporating the Tain discovery that could be tied back to the Blake field or potentially developed with low-cost infrastructure as a standalone field.

In July 2023, we assumed operatorship of our onshore UK licence PEDL343, which holds the Cloughton gas discovery. Our technical team has already performed an audit of the existing subsurface data and established a range of gas in place volumes with a Pmean of 192 bcf gross. Our team is now working on a conceptual development plan for the field, which we expect will demonstrate the material potential value of the licence. Concurrently we are engaged with stakeholders to secure the necessary permits and approvals required to drill an appraisal well, which we believe will demonstrate the reservoir can deliver the production rates required for a commercial development of the field.

We are continually assessing opportunities to further diversify our asset portfolio. We are encouraged by the reaffirmation of UK Government support for offshore and onshore hydrocarbon exploration and production and remain optimistic about our future growth prospects."