Europa Oil & Gas, the AIM traded West Africa, UK and Ireland focused oil and gas exploration, development and production company, announces its final audited results for the 12-month period ended 31 July 2024. 

Financial performance

• Revenue declined 46% to £3.6 million, reflecting lower oil production (which included a three- month shut in period at Wressle) and lower realised oil prices (2023: £6.7 million)
• Gross profit of £0.3 million (2023: £3.4 million)
• Pre-tax loss of £6.8 million after non-cash exploration impairment loss of £5.0 million (2023: pre-tax loss of £0.9 million after non-cash impairment loss of £1.7 million)
• Net cash used in operating activities £0.6 million (2023: £2.8 million net cash generated by operations)
• Cash balance at 31 July 2024: £1.5 million (2023: £5.2 million)

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

Equatorial Guinea

• Europa announced a ground-breaking deal in December 2023 with the acquisition of a 42.9% stake in Antler Global Limited, which has an 80% working interest in licence EG-08 offshore Equatorial Guinea. This gives rise to a joint venture arrangement
• Europa agreed a US$3 million cash subscription for new ordinary shares in Antler, with the payments being made in four instalments and which has now completed
• EG-08 is a highly prospective licence which has three drill-ready prospects, with internally estimated Mean Prospective Resource of 1.4 TCF of gas equivalent
• Antler and our technical team has further evaluated the seismic data across the block and has identified additional prospectivity, resulting in a Mean Prospective Resource of 2.1 TCF of gas equivalent
• Antler commenced a farm-down process in Q3 this year with a view to bringing in a partner for drilling, potentially in 2025
• A discovery from only one of the three main prospects could be quickly tied back to existing gas infrastructure located 9km to the south

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

• Licence FEL 4/19 contains the Inishkea West gas exploration prospect, which has been mapped as a large four-way closure with a prospective resource Pmean of 1.5 TCF of recoverable gas
• The FEL 4/19 licence extension was granted by the Irish Government, extending the licence term to 31 January 2026
• Following the licence extension, a farm-out process has begun again with the aim of bringing in a partner to assist with the drilling of the prospect
• 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 four-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

Onshore UK - net production declined 48% to 137 barrels of oil per day ("bopd") (2023: 265 bopd) following planned downtime and increased water cut on the Wressle oilfield

• We continue to progress our Cloughton asset to determine if commercial rates can be obtained using modern completion techniques so that the 192 BCF (Pmean) GIIP potential can be monetised.  Terms have been agreed for the site and work has now commenced to secure the necessary permits required to drill an appraisal well, expected to be in 2026. Given the proximity to the UK gas network and quality of the natural gas contained within the reservoir, a successful appraisal well could be quickly brought online, displacing LNG imports and reducing global emissions
• Wressle production declined throughout the period
  • Gross production averaged 357 bopd throughout the period (2023: 710 bopd), with Europa's net share equating to 107 bopd (2023: 213 bopd) 
  • A jet pump was installed on the Wressle-1 well that took three months to complete and resulted in interrupted production between mid-August through to early November 2023
• A new seismic interpretation and mapping exercise across the Wressle field has highlighted a potentially significant increase in resources from the Ashover Grit and the results of the analysis are now being incorporated into the field development plan. The intention is that two back-to-back development wells will be drilled from the existing Wressle site. Planning consent was received for the project in September, however the North Lincolnshire Council's decision to grant planning permission has subsequently been challenged in light of the Finch Supreme Court judgement which ruled that scope three emissions must be considered in planning applications for oil and gas developments. This is expected to result in the planning approval being rescinded. The Wressle Joint Venture is now going to submit further information that covers potential scope three emissions such that a future planning process could be approved. The wells will be drilled at the earliest opportunity, once the necessary consents and regulatory approvals have been received 
• In addition to the two development wells, work is ongoing to monetise the associated gas being produced from Wressle by connecting to a local gas distribution network. This work is expected to be completed around the same time as the development wells and is subject to the same regulatory approvals
• The revised CPR on Wressle was completed in H2 2023 by ECRE which incorporated the new field interpretation, historical production performance data and the field development plan. The key highlights of the CPR included: 263% increase in 2P Reserves compared to 2016 CPR, reclassification of 1,883 mboe in Penistone Flags Contingent Resources to 2P Reserves, 59% upgrade to the Ashover Grit and Wingfield Flags Estimated Ultimate Recoverable and 23% upgrade to Broughton North Prospective Resources
• Total net production of 137 bopd was produced from Europa's UK onshore fields during the year with Wressle contributing roughly 78% of this and the remainder coming from the three older fields

Offshore UK - Serenity discovery in the North Sea

• The recent change in government in the UK and the continued uncertainty of the domestic regulatory and fiscal environment has sharply increased the possibility of future fiscal changes for the oil and gas industry, which we believe could negatively impact the economics of the Serenity project
• Given that the Serenity licence was due to expire at the end of September 2024, we have therefore taken the decision to allow the licence to lapse, which has resulted in a £4.9 million impairment of the capitalised costs associated with the project

UK offshore licensing round

• In 2022, Europa participated in the UK Government's 33rd offshore oil and gas licensing round and in May 2024 the Company was contacted by the North Sea Transition Authority (the "NSTA") who proposed a licence-sharing arrangement between Europa and another party for a new licence. After careful consideration, the Company has decided not to accept the proposed shared licence given the recent new country entry into the highly prospective EG-08 licence and the limited resources of the Company. The Board believes that the risk/reward proposition for new assets in the UK is currently challenging

Board

• Simon Oddie resigned in November 2023
• Stephen Williams resigned in November 2023
• Simon Ashby-Rudd was appointed in December 2023
• Eleanor Rowley was appointed in April 2024

Post reporting period events

• In September 2024, we were delighted that planning approval was awarded for two new development wells on the Wressle field which we expect to drill back-to-back next year. As a result of the Finch Supreme Court ruling and a proposed legal challenge to the granting of planning permission for the next phase of the Wressle development, it is expected that the planning consent will be rescinded once the court process has concluded. The Wressle Joint Venture plan to submit further information that covers potential scope three emissions such that a future planning process could be approved
• We have decided against applying to extend the Serenity licence in the North Sea following its expiry at the end of September 2024 and given the ongoing uncertainties around the oil and gas fiscal regime in the UK

KeyFacts Energy: Europa Oil & Gas UK country profile